Crompton Greaves

We have audited the attached Balance Sheet of Crompton Greaves Limited
 as at 31st March, 2009, 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 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 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 provisions of Section 227 of the Companies Act 1956,
 we report that:
 
 1.  As required by the Companies (Auditors Report) Order, 2003 and as
 amended by the Companies (Auditors Report) (Amendment) Order, 2004
 issued by the Central Government of India in terms of Section 227 (4A)
 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 information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 (b) in our opinion, proper books of account as required by law have
 been kept by the Company, so far as appears from our examination of
 those books;
 
 (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (d) in our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in Section 211 (3C) of the Companies
 Act, 1956; and
 
 (e) on the basis of the written representations received from directors
 of the Company as on 31st March, 2009, and taken on record by the Board
 of Directors, we report that none of the directors is disqualified as
 on 31st March, 2009 from being appointed as a director in terms of
 Section 274 (1)(g) of the Companies Act, 1956.
 
 In our opinion, and to the best of our information and according to the
 explanations given to us, the said accounts, read together with the
 Significant Accounting Policies in Schedule A and the Notes on the
 Balance Sheet and Profit and Loss Account in Schedule B, give the
 information required by the Companies Act, 1956, in the mannet so
 required and give a true and fair view in conformity with the
 accounting principles generally accepted in India:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2009;
 
 (ii) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) in case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 (REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE)
 
 (i) (a) The Company is maintaining proper records to showfull
 particulars, including quantitative details and situation of all fixed
 assets.
 
 (b) As explained to us, these fixed assets have been physically
 verified by the management, in accordance with a phased programme of
 verification, which in our opinion, is reasonable, considering the size
 of the Company and nature of its assets. The frequency of physical
 verification is reasonable and no material discrepancies were noticed
 on such verification.
 
 (c) The Company has not disposed off any substantial part of its fixed
 assets during the year, so as to affect its going concern status.
 
 (ii) (a) As explained to us, the inventories have been physically
 verified by the management during the year. In our opinion, the
 frequency of such verification is reasonable.
 
 (b) As per the information given to us, the procedures of physical
 verification of inventory followed by the management are, in our
 opinion, 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. The
 discrepancies noticed on verification between the physical stocks and
 the book records, which were not material, have been properly dealt
 with in the books of account.
 
 (iii) (a) According to the information and explanations given to us,
 the Company has not granted any loans, secured or unsecured, to
 companies, firms and other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956.  Accordingly, paragraphs
 4(iii)(b), (c) and (d) of the Companies (Auditors Report) Order, 2003
 are not applicable to the Company.
 
 (b) According to the information and explanations given to us, the
 Company has not taken any loans, secured or unsecured, from companies,
 firms and other parties covered in the register maintained under
 Section 301 of the Companies Act, 1956.  Accordingly,
 paragraphs4(iii)(f) and (g) of the Companies (Auditors Report) Order,
 2003 are not applicable to the Company.
 
 (iv) In our opinion, and according to the information and explanations
 given to us, there is adequate internal control system commensurate
 with the size of the Company and nature of its business, for the
 purchase of inventory and fixed assets and for the sale of goods and
 services. During the course of audit, we have neither come across nor
 have been informed of any continuing failure to correct major
 weaknesses in the aforesaid internal control system.
 
 (v) (a) According to the information and explanations given to us, we
 are of the opinion that the particulars of contracts or arrangements
 that need to be entered in the register maintained under Section 301 of
 the Companies Act, 1956, 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 entered in the register maintained under Section 301 of
 the Companies Act, 1956 and exceeding the value of rupees five lakhs in
 respect of any party during the year, have been made at prices which
 are reasonable having regard to the prevailing market prices at the
 relevant time.
 
 (vi) The Company has accepted deposits from the public and in our
 opinion and according to the information and explanations given to us,
 the directives issued by the Reserve Bank of India and the provisions
 of Sections 58A, 58AA and other relevant provisions of the Companies
 Act, 1956 and the rules framed thereunder, where applicable, have been
 complied with. We are informed that no order has been passed by the
 Company Law Board or National Company Law Tribunal or Reserve Bank of
 India or any Court or any other Tribunal.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 (viii) We have broadly reviewed the books of account and records
 maintained by the Company pursuant to the rules prescribed by the
 Central Government for the maintenance of cost records under Section
 209 (1) (d) of the Companies Act, 1956, in respect of electric fans,
 motors, power driven pumps, transformers and electric lamps and are of
 the opinion that prima facie the prescribed accounts and records have
 been made and maintained. The contents of these accounts and records
 have not been examined by us.
 
 (ix) (a) According to the information and explanations given to us, in
 our opinion, the Company has been regular in depositing undisputed
 statutory dues including provident fund, investor education and
 protection fund, employees state insurance, income-tax, sales tax,
 wealth tax, service tax, custom duty, excise duty, cess and other
 material statutory dues, as applicable, with the appropriate
 authorities.  According to the information and explanations given to
 us, no undisputed amounts were in arrears as at 31st March, 2009, for a
 period of more than six months from the date they become payable.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of income tax,
 sales tax, service tax, excise duty and cess as at 31st March, 2009,
 which have not been deposited on account of dispute, are as under:
 
 Name of            Nature           Amount
 the Statute        of the           Rs. crore *
                    disputed
                    dues
 
 The Income         Tax and
 Tax Act, 1961      interest            4.31
 The Central        Tax, interest       0.01
 Sales Tax Act,     and penalty
 1956, Local
 Sales Tax Acts                         6.63
 and Works
 Contract Tax
 Act
                                       16.63
                                        0.08
 The Central        Duty,
 Excise Act,        service tax         0.09
 1944 and           and penalty
 Service tax
 under the
 Finance Act,
 1994                                   5.95
                                        0.13
 
 Period to       Forum where
 which the       disputes are
 amount          pending
 relates
 
 1997-98 to      ITAT
 2004-05
 1996-97         High Court
 1992-93,
 1995-96,
 1998-99,        Tribunal
 2000-01 to
 2003-04
 1995-96 to      Commissionerate
 2006-07
 1998-99         Assessing Officer
 2001-02 and
 2002-03,        High Court
 2005-06
 1975-76 to
 1981-82,
 1991-92,
 1999-2000 to    CESTAT
 2002-03,
 2004-05,
 2006-07
 2005-06 to
 2008-09         Commissionerate
 
 * Net of pre-deposit paid in getting the stay / appeal admitted
 
 (x) The Company has no accumulated losses as at 31st March, 2009 and it
 has not incurred any cash losses in the financial year ended on that
 date and in the immediately preceding financial year.
 
 (xi) According to the information and explanations given to us, in our
 opinion the Company has not defaulted in the repayment of dues to any
 financial institutions or bank as at the balance sheet date. The
 Company has not issued any debentures.
 
 (xii) According to the information and explanations given to us, the
 Company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 (xiii) The provisions of any special statute applicable to chit fund /
 nidhi / mutual benefit fund / society are not applicable to the
 Company.
 
 (xiv) In our opinion and according to the information and explanations
 given to us, the Company is not dealing in or trading in securities.
 The Company has invested surplus fund in mutual funds. According to the
 information and explanations given to us, proper records have been made
 of the transactions and contracts and timely entries have been made
 therein. The investments in mutual funds have been held by the Company
 in its own name.
 
 (xv) In our opinion and according to the information and explanations
 given to us, the terms and conditions of guarantee given by the Company
 for loans taken by others from banks or financial institutions are not
 prima fade prejudicial to the interests of the Company, except a
 guarantee amounting to Rs. 5.68 crore to Power Equipment Limited, where
 no details were available for our comment.
 
 (xvi) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purposes for
 which they were obtained.
 
 (xvii) According to the information and explanations given to us and on
 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
 investments.
 
 (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, during the year.
 
 (xix) The Company has not issued any debentures during the year. Hence,
 reporting on paragraph 4 (xix) of the Companies (Auditors Report)
 Order, 2003 pertaining to creation of security or charge for debentures
 does notarise.
 
 (xx) The Company has not raised any money by public issues during the
 year. Accordingly, paragraph 4 (xx) of the Companies (Auditors Report)
 Order, 2003 is not applicable to the Company.
 
 (xxi) During the course of our examination of books and records of the
 Company, carried out in accordance with the generally accepted auditing
 practices in India, and according to the information and explanations
 given to us, we have neither come across any instances of material
 fraud on or by the Company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
                                                    For SHARP &TANNAN
                                                CHARTERED ACCOUNTANTS
 
                                                      L. Vaidyanathan
                                                              PARTNER
 Mumbai, 20th May, 2009                          Membership No. 16368