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Auditor Report of Havells India Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Havells India Limited ("the Company"), which comprise the Balance Sheet as at March 31st, 2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31st, 2015, its profit, and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s report) Order, 2015 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) On the basis of written representations received from the directors as on March 31st, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31st, 2015, from being appointed as a director in terms of section 164 (2) of the Act;

(f) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 30(A)(a),(d),(e) and 30(D) to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company

Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date Re: Havells India Limited (the Company)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) All fixed assets were physically verified by the management in the previous year in accordance with a planned programme of verifying them once in two years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, provisions of clauses 3(iii) (a) and (b) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. The Company''s activity does not involve any sale of services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the manufacture of electrical goods, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding as on March 31st, 2015 of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, value added tax and cess on account of any dispute, are as follows.

Name of the Statute Nature of the Dues Amount (Rs. in crores)

Income Tax Act, 1961 Disallowances and additions to 5.33 taxable income.

Income Tax Act, 1961 Disallowances and additions to 27.64 taxable income.

Central Excise Act, 1944 Excise duty demand/ disallowance10.85 of Cenvat credit on various items.

Central Excise Act, 1944 Excise duty demand/ disallowance17.32 of Cenvat credit on various items.

Sales Tax/ VAT Sales tax / VAT demand on various 5.54 matters.



Name of the Statute Period to which Forum where dispute is pending the amount relates

Income Tax Act, 1961 AY 2004-05 Income Tax Appellate Tribunal, New to Delhi AY 2008-09

Income Tax Act, 1961 AY 2004-05 Commissioner of Income Tax to (Appeals), New Delhi

AY 2011-12

Central Excise Act, 1944 FY 2004-05 Commissioner of Excise (Appeals), to New Delhi FY 2009-10

Central Excise Act, 1944 FY 2004-05 CESTAT (New Delhi, Ahmedabad) to FY 2012-13

Sales Tax/ VAT FY 2009-10 Joint Commissioner (Appeals) to FY 2013-14

Name of the Statute Nature of the Dues Amount (Rs. in crores)

Sales Tax/ VAT Sales tax / VAT demand on various 0.19 matters.

Sales Tax/ VAT Sales tax / VAT demand on various 10.12 matters.

Sales Tax/ VAT Sales tax / VAT demand on various 2.28 matters.

Sales Tax/ VAT Sales tax / VAT demand on various 0.37 matters

Sales Tax/ VAT Sales tax / VAT demand on various 0.39 matters

The Rajasthan tax of entry Demand of entry tax in the state 1.07 of goods into local areas Act of Rajasthan on purchase of few ,1999 items.

The Himachal Pradesh tax of Demand of entry tax in the state of 4.75 entry of goods into local areas Himachal Pradesh on purchase of Act , 2010 few items.

Odisha Entry Tax Act, 1999 Demand of entry tax in the state of 2.22 Orissa on purchase of few items

West Bengal Entry Tax Act, Demand of entry tax in the state of 2.98 2012 West Bengal on purchase of few items.



Name of the Statute Period to which Forum where dispute is pending the amount relates



Sales Tax/ VAT FY 2007-08 Commissioner (Appeals)

Sales Tax/ VAT FY 2011-12 Special Commissioner (Appeals)

Sales Tax/ VAT FY 2007-08 Tribunal (Commercial Tax) to

FY 2011-12

Sales Tax/ VAT FY 2007-08 Deputy Commissioner (Appeals) to FY 2010-11

Sales Tax/ VAT FY 2007-08 Additional Commissioner (Appeals) to FY 2010-11

The Rajasthan tax of entry of goods into local areas Act ,1999 FY 2007-08 High Court of Rajasthan to FY 2014-15

The Himachal Pradesh tax of entry of goods into local areas Act , 2010 FY 2010-11 High Court of Himachal Pradesh to FY 2014-15

Odisha Entry Tax Act, 1999 October, 2009 High court of Odisha to March, 2015

West Bengal Entry Tax Act, 2012 FY 2013-14 High court of Calcutta

to FY 2014-15

(d) According to the information and explanations given to us, the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

(viii) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(ix) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks. The Company did not have any outstanding dues in respect of a financial institution or debenture holders during the year.

(x) According to the information and explanations given to us, the Company has given guarantee for loans taken by its wholly owned subsidiaries from banks and financial institutions, the terms and conditions whereof, in our opinion, are not prima facie prejudicial to the interest of the Company.

(xi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. Batliboi & CO. LLP For V.R. Bansal & Associates

Chartered Accountants Chartered Accountants

ICAI Firm Registration Number: 301003E ICAI Firm Registration Number: 016534N

per Manoj Kumar Gupta per V.P Bansal

Partner Partner

Membership Number: 83906 Membership Number: 8843

Place : Noida

Date : May 11,2015


Mar 31, 2014

We have audited the accompanying financial statements of Havells India Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956, read with General Circular 8/2014 dated 4 April 2014 issued by the Ministry of Corporate Affairs. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Companies Act, 1956 ("the Act") 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 March 31, 2014;

(b) in the case of the Statement of Profit and Loss, 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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, 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 purpose 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956, read with General Circular 8/2014 dated 4th April, 2014 issued by the Ministry of Corporate Affairs;

(e) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date

Re: Havells india limited (the company)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification.

(c) There was no disposal of a substantial part of fixed assets during the year.

(ii) (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. Inventories lying with outside parties have been confirmed by them as at year end.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, frms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Order are not applicable to the Company and hence not commented upon

(b) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(e) to (g) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. The activities of the Company do not involve sale of services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company 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 size of the Company and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, related to the manufacture of electric goods, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales- tax, customs duty, excise duty cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:



name of the Statute nature of the dues amount (Rs. in crores)

Income-Tax Act, 1961 Disallowances and 5.37 additions to taxable income.

Income-Tax Act, 1961 Disallowances and 24.77 additions to taxable income.

Central excise Act, 1944 Excise duty demand/ 4.10 disallowance of Cenvat credit on various items.

Central excise Act, 1944 Excise duty demand/ 8.63 disallowance of Cenvat credit on various items.

Sales Tax/ VAT Sales tax / VAT demand on 0.07 various matters.

Sales Tax/ VAT Sales tax / VAT demand on 2.51 various matters.

Sales Tax/ VAT Sales tax / VAT demand on 0.16 various matters.

Sales Tax/ VAT Sales tax / VAT demand on 10.12 various matters.

Sales Tax/ VAT Sales tax / VAT demand on 5.67 various matters.

Sales Tax/ VAT Sales tax / VAT demand on 0.69 various matters

The Rajasthan tax of Demand of entry tax in 0.86 entry of goods into local the state of Rajasthan on areas Act,1999 purchase of few items.

West Bengal Entry Tax Demand of entry tax in the 0.23 Act, 2012 state of West Bengal on purchase of few items.

The Himachal Pradesh Demand of entry tax in the 2.93 tax of entry of goods into state of Himachal Pradesh local areas Act, 2010 on purchase of few items.

Name of the Statute Period to which Forum where dispute is the amount relates pending

Income-Tax Act, 1961 AY 2004-05 Income Tax Appellate To Tribunal, New Delhi AY 2008-09

Income-Tax Act, 1961 AY 2006-07 Commissioner of Income Tax To (Appeal) New Delhi AY 2010-11

Central excise Act, 1944 FY 2011-12 Commissioner of Custom (Appeal), New Delhi

Central excise Act, 1944 FY 1998-99 CESTAT (New Delhi, to Ahmedabad) FY 2010-11

Sales Tax/VAT FY 2012-13 Joint Commissioner (Appeals), Uttar Pradesh

Sales Tax/VAT FY 2007-08 Additional Commissioner to (Appeals) FY 2011-12

Sales Tax/VAT FY 2007-08 Commissioner (Appeals)

Sales Tax/VAT FY 2011-12 Special Commissioner (Appeals)

Sales Tax/VAT FY 2007-08 Tribunal (Commercial Tax) to FY 2010-11

Sales Tax/VAT FY 2007-08 Deputy Commissioner to (Appeals) FY 2010-11

The Rajasthan tax of FY 2007-08 High Court of Rajasthan entry of goods into local to FY 2013-14 areas Act, 1999

Wet Bengal Entry Tax Act, 2012 FY 2013-14 High Court of West Bengal

The Himachal Pradesh FY 2010-11 High Court of Himachal tax of entry of goods into to Pradesh local arears Act, 2010 FY 2013-14

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks. The Company has no outstanding dues to financial institution or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced before us, the Company has not granted loans and advances on the basis of security 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 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by others from banks, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised money by way of public issue of shares/ debentures in the current year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.



For S.R. Batliboi & cO. llP For V.R. Bansal & associates

Chartered Accountants Chartered Accountants

ICAI Firm Registration Number: 301003E ICAI Firm Registration Number: 016534N



per manoj Kumar Gupta per V.P Bansal

Partner Partner

Membership Number: 83906 Membership Number: 8843



Place: Noida

Date : 28 May 2014


Mar 31, 2013

We have audited the accompanying financial statements of Havells India Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the act 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 March 31, 2013;

(b) in the case of the Statement of Profit and Loss, 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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, 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 purpose 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date

Re: Havells India Limited (the company)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) All fixed assets were physically verified by the management in the previous year in accordance with a planned programme of verifying them once in two years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, provisions of clauses 4(iii) (a) to (d) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company and hence not commented upon.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, provisions of clauses 4(iii) (e) to (g) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. The Company''s activity does not involve any sale of services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, related to the manufacture of electrical goods, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows.

Name of the Statute Nature of the Dues Amount (Rs. in crores)

Disallowances and additions to Income-Tax Act, 1961 taxable income. 5.30

Disallowances and additions to Income-Tax Act, 1961 taxable income. 6.60

Excise duty demand/ disallowance Central excise Act, 1944 of Cenvat credit on various items. 0.39

Cutsom duty demand on import of Central excise Act, 1944 modular plates under notification 2.07 no. 25/99

Excise duty demand/ disallowance Central excise Act, 1944 14.03 of Cenvat credit on various items.

Sales tax / VAT demand on Sales Tax/ VAT 0.12 various matters.

Sales tax / VAT demand on Sales Tax/ VAT 2.49 various matters.

Sales tax / VAT demand on Sales Tax/ VAT 0.16 various matters.

Sales tax / VAT demand on Sales Tax/ VAT 5.38 various matters.

Sales Tax/ VAT Sales Tax/ VAT demand on 3.79 various matters.

Sales Tax/ VAT Sales tax / VAT demand on 0.46 various matters

The Rajasthan tax of Demand of entry tax in the state entry of goods into local of Rajasthan on purchase of few 0.98 areas Act ,1999 items.

The Himachal Pradesh Demand of entry tax in the state tax of entry of goods into of Himachal Pradesh on purchase 1.84 local areas Act , 2010 of few items.

Name of the Statute Period to which Forum where dispute is the amount relates pending

Income-Tax Act, 1961 AY 2006-07 to Income Tax Appellate AY 2008-09 Tribunal, New Delhi

Income-Tax Act, 1961 AY 2009-10 Commissioner of Income Tax (Appeal) New Delhi

Central excise Act, 1944 FY 1987-88 to FY 1990-91 and Commissioner (Appeals) FY 2009-10

Central excise Act, 1944 Settlement Commission, FY 2007-2013 New Delhi

Central excise Act, 1944 FY 1998-99 to FY 2011-12 CESTAT, New Delhi

Sales Tax/ VAT FY 2001-02 Joint Commissioner (Appeals), Faridabad

Sales Tax/ VAT FY 2007-08 to Additional Commissioner FY 2011-12 (Appeals)

Sales Tax/ VAT FY 2007-08 to FY 2009-10 Commissioner (Appeals)

Sales Tax/ VAT FY 2010-11 Special, Commissioner (Appeals)

Sales Tax/ VAT FY 2007-08 & FY 2010-11 Tribunal (Commercial Tax)

Sales Tax/ VAT FY2008-09 & Deputy Commissioner FY 2009-10 (Appeals)

The Rajasthan tax of entry of goods into local areas Act, 1999 FY 2010-11 & FY 2012-13 High Court of Rajasthan

The Himachal Pradesh tax of entry of goods into local areas Act, 2010 FY 2010-11 & High Court of Himachal FY 2012-13 Pradesh

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to banks. The Company has no outstanding dues to financial institutions or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security 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 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by its subsidiaries from banks and financial institutions, the terms and conditions whereof, in our opinion, are not prima-facie prejudicial to the interest of the Company.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii)The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised money by way of public issue of shares/ debentures in the current year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. Batliboi & CO. LLP For V.R. Bansal & Associates

Chartered Accountants Chartered Accountants

ICAI Firm Registration Number: 301003E ICAI Firm Registration Number: 016534N

per Manoj Gupta per V.P Bansal

Partner Partner

Membership Number: 83906 Membership Number: 8843

Noida, May 28, 2013


Mar 31, 2011

We have audited the attached Balance Sheet of Havells India Limited, as at 31st March, 2011 and also the Profit and Loss Account of the Company for the year ended on that date annexed thereto and the Cash Flow Statement for the period ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order 2004, issued by the Central Government in terms of subsection (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.

Further to our comments in the Annexure referred to above, we report that:

i) we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit;

ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns for the purpose of our audit have been received in respect of branches not visited by us;

iii) the Balance Sheet, the Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv) in our opinion, the Balance Sheet , the 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 Companies Act, 1956.

v) on the basis of written representations received from the directors, as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi) in the absence of the notification in the Official Gazette of the Central Government, the Company has not made any provision for cess payable under section 441A of the Companies Act, 1956. As per the explanations given to us, the required provision for cess payable shall be made in accordance with the notification, as and when issued by the Central Government in its Official Gazette.

vii) Without qualifying our opinion, we draw your attention to Note no. 11 of Schedule 18, that pursuant to the Scheme of arrangement u/s 391, 392 and 394 of the Companies Act, 1956 and as approved by the Honble High Court of Judicature at Delhi vide their order dated 19th August 2010, certain expenses and other items as prescribed therein have been adjusted from the Business Reconstruction Reserve account. Had the said adjustments not been made and treated in accordance with the generally accepted accounting principles:-

i) The net profit after tax for the year (inclusive of the effect of MAT credit) would have been lower by Rs. 0.12 crore,

ii) The provision for current tax and MAT credit entitlement would have been lower by Rs. 0.04 crore and Rs. 0.02 crore respectively.

viii) 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 polices and notes thereon, 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, 2011 and

b) in the case of Profit and Loss Account, of the profit of the Company for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.





ANNEXURE TO THE AUDITORS REPORT

In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) The fixed assets have been physically verified by the management at reasonable intervals. As explained to us, the discrepancies noticed on physical verification of fixed assets were not material in relation to the size and nature of fixed assets and have been properly dealt with in the books of accounts. In our opinion, the frequency of the physical verification is reasonable having regard to the size of the Company and the nature of its business.

(c) In our opinion, the fixed assets disposed off during the year do not constitute substantial part of fixed assets of the Company and such disposal, in our opinion, has not affected the going concern status of the Company.

(ii) (a) The inventories have been physically verified during the year by the management at reasonable intervals.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of stocks as compared to book records were not material and have been properly dealt with in the books of account.

(iii) In our opinion and as per the informations given to us, the Company has not granted or taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii) (a to g) of the Order are not applicable to the Company.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination and according to the information and explanations given to us, no major weaknesses in the aforesaid internal control system has been noticed.

(v) (a) As per prima facie examination of the register maintained under section 301 of the Act, we are of the opinion that the transactions that need to be entered in the register in pursuance of section 301 of the Act have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made during the year, aggregating in value of Rupees five lakhs or more with each party have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted deposits from public. Therefore, directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and rules framed thereunder are not applicable for the year under audit.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) The Company is engaged in the manufacturing of electrical cables, electric motors, fans, printed circuit boards and compact fluorescent lamps, the cost records in respect of which have been prescribed u/s 209(1)(d) of the Companies Act 1956. We have broadly reviewed the same and are of the opinion that the prima facie, the prescribed records and accounts are being maintained. We have not, however, made a detailed examination of the same.

(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, VAT / Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess or any other statutory dues with the appropriate authorities. There are no arrears of outstanding statutory dues as at 31st March 2011 for a period of more than six months from the date they become payable. However, the Company has not made any provision towards cess payable u/s 441A of the Companies Act, 1956, since the required notification has not been issued by the Central Government in this regard.

(b) The particulars of dues of Income Tax/Sales Tax/VAT/Custom Duty/Service Tax/Excise Duty/Cess or any other Government dues which have not been deposited on account of any dispute are disclosed in Note No. 25 of Schedule 18 to the Balance Sheet.

(x) The Company has no accumulated losses as at 31st March, 2011 and has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

(xi) The Company has not defaulted in repayment of dues to any financial institution or banks. The Company has not issued any debentures.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The provisions of any special statute applicable to a chit fund/nidhi/mutual benefit fund/ societies are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing or trading in shares, debentures, securities and other investments. Accordingly, the provisions of clauses 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanation given to us, the Company has given following guarantees for and on behalf of subsidiaries as under:

(a) The Company has given a corporate guarantee of Rs. 215.02 crores (Euro 34 millions) for and on behalf of wholly owned subsidiary company Havells Netherlands Holding B.V., in respect of Asian Terms Facility Agreement entered with Barclays Capital and State Bank of India on 13th March, 2007, against the loan taken by the said subsidiary. The outstanding loan as on the date of the Balance sheet is Rs. 63.24 crores (Euro 10 Millions)

(b) The Company has given an irrevocable and unconditional corporate guarantee of Rs. 31.62 crores (Euro 5 millions) to Deutsche Bank in respect of credit facilities and other financial accommodation sanctioned to the step-down subsidiary company Havells Sylvania Europe Limited . The outstanding amount of the said credit facility as on the date of the Balance Sheet is Rs. 11.88 crores (Euro 1.88 Million)

(c) The Company has given a corporate guarantee of Rs. 100 crores to Yes Bank Limited in respect of Standby letter of credit facility sanctioned to its subsidiary company Havells Exim Limited. The outstanding amount of the said credit facility as on the date of the Balance Sheet is Rs. 25.60 crores.

In our opinion, the terms and conditions on which such guarantees and commitments have been given are not prima facie prejudicial to the interests of the Company, since the same are on account of commercial expediency.

(xvi) On the basis of examination of accounting records and cash flow statements, and as per the explanations given to us, we are of the opinion that, the term loans were applied for the purpose for which the loans were obtained.

(xvii) On the basis of examination of accounting records and cash flow statements, and as per the explanations given to us, we are of the opinion that the funds raised on short-term basis have not been used for long-term investments.

(xviii) The Company has made allotment of 2219000 Equity Shares of Rs. 5/- each fully paid-up shares to parties and companies covered under register maintained under section 301 of the Act during the year in pursuance of Scheme of Arrangement u/s 391, 392 of the Companies Act, 1956 and as approved by the Honble High Court of Judicature at Delhi vide their order dated 19.08.2010 and the price at which such shares are issued are not prejudicial to the interests of the Company.

(xix) The Company has not issued any debentures. Accordingly, the provisions of clauses 4(xix) of the Order are not applicable to the Company.

(xx) During the year, the Company has not raised any money by way of public issue.

(xxi) During the checks carried out by us and as per information made available to us, no fraud on or by the Company has been noticed or reported during the year under audit.

For V. R. BANSAL & ASSOCIATES

Chartered Accountants

Registration No.016534N

(V.P. BANSAL)

Dated : 27th May, 2011 Partner

Place : NOIDA Membership No. : 8843


Mar 31, 2010

We have audited the attached Balance Sheet of Havells India Limited, as at 31st March, 2010 and also the Profit and Loss Account of the Company for the year ended on that date annexed thereto and the Cash Flow Statement for the period ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with 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 the management, as well as evaluating the overall Financial Statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order 2004 issued by the Central Government in terms of subsection (4A) of section 227 of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that :

i) we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit;

ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns for the purpose of our audit have been received in respect of branches not visited by us;

iii) the Balance Sheet, the Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv) in our opinion, the Balance sheet , the 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 Companies Act, 1956.

v) on the basis of written representations received from the directors, as on 31st March, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi) in the absence of the notification in the official gazette of the Central Government, the Company has not made any provision for cess payable under section 441A of the Companies Act, 1956. As per the explanations given to us, the required provision for cess payable shall be made in accordance with the notification, as and when issued by the Central Government in its official gazette.

vii) without qualifying our opinion, we draw your attention to the following:-

a) Note no. 12 of Schedule 20 of the financial statements regarding diminution in the value of long term investment in wholly owned subsidiary company ‘Havells Holdings Limited. The said note indicates alongwith other matters that the Company has invested a sum of Rs. 531.40 crores and there is an accumulated loss of Rs. 751.74 crores in the said subsidiary company. With regard to provision for diminution in the value of the aforesaid investments, we have relied upon the management representations that the diminution in the value of investments is of temporary in nature and hence no provision is called for. We have considered the adequacy of the disclosures made in this regard in forming our opinion on the financial statements.

b) Note no. 13 of Schedule 20, that pursuant to the Scheme of arrangement u/s 391, 392 and 394 of the Companies Act, 1956 and as approved by the Honble High Court of Judicature at Delhi vide their order dated 19th August, 2010, a separate reserve account titled as Business Reconstruction Reserve has been created by transferring a sum of Rs.400 crores from Securities Premium Account for the adjustment of certain expenses and other items as prescribed therein . Had the said adjustments not been made against the Business Reconstruction Reserve account and treated in accordance with the generally accepted accounting principles:- i) The net profit after tax for the year (inclusive of the effect of the deferred tax ) would have been lower by Rs. 0.17 crores,

ii) The security premium account would have been higher by Rs. 400 crores and capital reserve account would have been lower by Rs.1.11 crores.

iii) The provision for deferred tax and current tax would have been lower by Rs. 0.04 crores each.

viii) 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 polices and notes thereon, 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, 2010 and

b) in the case of Profit and Loss Account, of the profit of the Company for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:

(i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) The fixed assets have been physically verified by the management during the year at reasonable intervals. As explained to us, the discrepancies noticed on physical verification of fixed assets were not material in relation to the size and nature of fixed assets and have been properly dealt with in the books of accounts. In our opinion, the frequency of the physical verification is reasonable having regard to the size of the Company and the nature of its business.

(c) In our opinion, the fixed assets disposed off during the year do not constitute substantial part of fixed assets of the Company and such disposal, in our opinion, has not affected the going concern status of the Company.

(ii) (a) The inventories have been physically verified during the year by the management at reasonable intervals.

(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of stocks as compared to book records were not material and have been properly dealt with in the books of account.

(iii) In our opinion and as per the informations given to us, the Company has not granted or taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b to d) of the Order are not applicable to the Company.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. Further, on the basis of our examination and according to the information and explanations given to us, no major weaknesses in the aforesaid internal control system has been noticed.

(v) (a) As per prima facie examination of the register maintained under section 301 of the Act, we are of the opinion that the transactions that need to be entered in the register in pursuance of section 301 of the Act have been so entered.

(b) In our opinion and according to the information and explanations given to us , the transactions made during the year, aggregating in value of Rupees five lakhs or more with each party have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted deposits from public. Therefore, directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and rules framed thereunder are not applicable for the year under audit.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) The Company is engaged in the manufacturing of electrical cables, electric motors, fans, and compact fluorescent lamps, the cost records in respect of which have been prescribed u/s 209(1)(d) of the Companies Act 1956. We have broadly reviewed the same and are of the opinion that the prima facie, the prescribed records and accounts are being maintained. We have not, however, made detailed examination of the same.

(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, VAT / Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess or any other statutory dues with the appropriate authorities. There are no arrears of outstanding statutory dues as at 31st March 2010 for a period of more than six months from the date they become payable. However, the Company has not made any provision towards cess payable u/s 441A of the Companies Act, 1956, since the required notification has not been issued by the Central Government in this regard.

(b) The particulars of dues of Income Tax/Sales Tax/VAT/Custom Duty/Service Tax/Excise Duty/Cess or any other Government dues which have not been deposited on account of any dispute are disclosed to in Note No. 26 of Schedule 20 to the Balance Sheet.

(x) The Company has no accumulated losses as at 31st March, 2010 and has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

(xi) The Company has not defaulted in repayment of dues to any financial institution or banks. The Company has not issued any debentures.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The provisions of any special statute applicable to a chit fund/nidhi/mutual benefit fund/ societies are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing or trading in shares, debentures, securities and other investments.

(xv) According to the information and explanation given to us, the Company has given following guarantees for and on behalf of subsidiaries as under:

(a) The Company has given a corporate guarantee of Rs. 205.90 crores (Euro 34 millions) for and on behalf of wholly owned subsidiary company ‘Havells Netherlands Holding B.V., Netherlands in respect of Asian Terms Facility Agreement entered with Barclays Capital and State Bank of India on 13th March, 2007, against a loan of Rs. 202.44 crores (Euro 30 million) taken by the said subsidiary. The loan outstanding as on 31.03.2010 is Rs.100.95 crores (Euro 16.67 million).

(b) The Company has given an irrevocable and unconditional corporate guarantee to Deutsche Bank in respect of credit facilities and other financial accomodation availed by step-down subsidiary ‘Havells Sylvania Europe Limited upto the amount of Rs. 30.28 crores (Euro 5 millions). The outstanding obligation against the said guarantee is Rs.12.23 crores (Euro 2.025 Million) as at the end of the year.

In our opinion, the terms and conditions on which such guarantees and commitments have been given are not prima facie prejudicial to the interests of the Company, since the same are on account of commercial expediency.

(xvi) On the basis of examination of accounting records and cash flow statements, and as per the explanations given to us, we are of the opinion that, the term loans were applied for the purpose for which the loans were obtained.

(xvii) On the basis of examination of accounting records and cash flow statements, and as per the explanations given to us, we are of the opinion that the funds raised on short-term basis have not been used for long-term investments.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered under register maintained under section 301 of the Act during the year.

(xix) The Company has not issued any debentures during the year.

(xx) During the year, the Company has not raised any money by way of public issue.

(xxi) During the checks carried out by us and as per information made available to us, no fraud on or by the Company has been noticed or reported during the year under audit.

For V.R. BANSAL & ASSOCIATES

Chartered Accountants

Registration No. : 016534N

Dated : August 27, 2010 (V.P. BANSAL)

Place : NOIDA Partner

Membership No. : 8843

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