Crompton Greaves

The Directors are pleased to present their Seventy First Annual Report
 on the business- and operations of the Company and the accounts for the
 Financial Yearended 31 March 2008.
 
 During the year, the Company joined together with other companies led
 by Mr GautamThapar to create a new Brand Identity - the Avantha Group.
 The US$ 3 billion Avantha Group has business interests in diverse areas
 including pulp and paper, horticultures food processing, farm forestry,
 chemicals, infrastructure, power transmission and distribution
 eguipment and information technology. Steered by Mr Gautam Thaparand
 supported by strong professional management teams worldwide, Avantha
 demonstrates strong leadership globally and has emerged as a focused
 Organisation, leveraging its knowledge, leadership and operations, for
 the Groups continuous endeavours to increase value for all its
 stakeholders.
 
 This initiative aims at identifying commonalities and articulating the
 elements that provide synergy across Group companies.  This event is a
 significant milestone for the companies led by Mr Gautam Thapar,
 
 collaborating for higher ambitions, by leveraging mutual strengths.
 The name Avantha has Indo-Luropean origins.  In Sanskrit the word
 avni means the earth andthacomesfromsthapnawhich means to
 establish, logcther they represent stability and a strong foundation.
 In French,avancer meansto advance which represents forward movement
 and growth.
 
 The name Avantha represents the strong foundation that the Group gives
 the individual companies for advancement, growth and
 diversification.The Group Brand will be an umbrella brand-over and
 above the Companys brand. Your Company willt herefore retain its name
 and logo. the Group identity will positively impact the Companys
 positioning in the eyes of our stakeholders and also influence, as well
 as, articulate the overarching Culture and Values that wili be the
 bonding force amongst the several Group companies.
 
 The manufacturing sector has been averaging 9% growth during 2004 -
 2007. Indias manufacturing base, which is the fourth-largest amongst
 emerging economies, is among the fastest growing, and has witnessed
 greater investments as a proportion of Gross Domestic Product than any
 country, except China.  ndian manufacturers, with the tremendous
 expertise gained in the domestic market, are progressively spreading
 their wings to reach out to Global markets.  Indian Corporates have
 been actively taking aggressive steps through both Acquisitions and
 Greenfield investments abroad. All these initiatives are boosting
 Brand lndiain the Global arena.
 
 During the first half of 2007-08, the cumulative expansion of
 industrial output was approx.  9.70%. Manufacturing output expanded by
 10.40% during the same period and the rate of expansion of electricity
 generation was at  7.20%.
 
 Since August 2007, the World financial markets and US as well as
 European lenders have been adversely affected as the sub- prime
 mortgage phenomenon unraveled.  Considerable pressure continues on the
 prices of oil, food and other raw materials, which indicates that
 inflation management in 2008-09 will be a greater challenge. The
 variations in related Global prices, which exhibit volatility based on
 changes in the exchange rate, are an important force which has, and
 will continue to impinge on the competitiveness of Indian manufacturing
 and its future profitability.
 
 In anticipation, your Company has already intensified its marketing
 efforts to address this potential economic slowdown.The efforts
 centeraround building greater customer contact, strengthening of
 networks, new products commercialisation and improved value
 propositions from existing products.  The Company has also shortened
 several dimensions of its marketing processes through introduction of
 an order allocation process between different geographies, direct order
 placement and greater e-enablement of processes for dealer business.The
 Company has also forged necessary alliances to strengthen its entry
 into new market segments.
 
 The various market centric initiatives undertaken, coupled with focus
 on a Product- Solutions domain has enabled the Company to achieve a
 turnover of Rs. 42225.98 million, during theyear under review, as
 compared with Rs. 36599.76 million during the previous year 2006-07, a
 rise of 15%.
 
 The synergy generated through the Pauwels, Ganzand Microsol
 acquisitions, resulted in the consolidated turnover of the Company
 increasing from Rs. 59340.39 million to Rs.  71813.78 million, an
 increase of 21%.
 
 The rising crude oil, steel, copper and aluminum prices exerted
 considerable pressure on profitability. However, by expansion of its
 dedicated vendor base and strategic purchase contracts, the Company has
 been able to retain its edge in terms of costs. E-sourcing has helped
 the Company to develop and implement an effective Company-wide,
 collaborative purchasing process, thus significantly lowering costs by
 co-ordinating and leveraging common purchases across the Company.
 Further, better capacity utilisation, value engineering, improved
 execution, better order selection and control over operating expenses,
 offset the adverse impact of material cost increases to a large extent.
 
 With CGs progressive Global footprint, the need to strive forOne
 World Qualityis becoming increasingly imminent, and, this will require
 changing our attitudes to a much higher quality mind-set, to
 consistently deliver Quality as expected by our Global customers.  Our
 efforts in this direction will realise its results through adoption of
 best-in-class standards at all locations worldwide. Better design
 platforms are being initiated in all our major business areas to
 facilitate faster designs, with greater operational and energy
 efficiency and, which also consume reduced material content.This will
 yield the twin objectives of satisfying customer expectations, whilst
 at the same time improving the Companys profitability.
 
 The thrust on Six Sigma and the Crompton Greaves Productivity System
 (CGPS), continues with increased vigour, in driving the Companys
 initiatives towards Quality, as perceived by the Customerand further
 increasing productivity from all its plants worldwide.
 
 All these above efforts resulted in the Company recording a noteworthy
 profit before tax of Rs. 4856.52 million, an increase of 58% as
 compared with last year.The consolidated profit before tax increased
 from Rs. 4359.56 million to Rs.6152.39million.
 
 2007; the Record Date for this purpose was 5 November 2007 and the
 Interim Dividend was paid on 16 November 2007.
 
 Rs.0.80 per equity share (40%) aggregating to a total dividend payout
 of Rs.343.09 million (including dividend tax) declared on 30 January
 2008; the Record Date for this purpose was 5 February 2008 and the
 Interim Dividend was paid on 15 February 2008.
 
 Rs.0.40 per equity share (20%) aggregating to a total dividend payout
 of Rs. 171.55 million (including dividend tax) declared on 28 March
 2008; the Record Date for this purpose was 4 April 2008 and the Interim
 Dividend was paid on 17 April 2008.
 
 The abovementioned dividend payout as a percentage of the share capital
 works out to 80%.
 
 The Reserves at the beginning of the year were Rs.6009.80 million. The
 Reserves atthe end of the year are Rs. 8574.30 million.
 
 Mr GThapar and Mr STalwar are the Directors who retire by rotation at
 the forthcoming Annual General Meeting, and being eligible, offer
 themselves for re-appointment to the Board.
 
 MrSMTrehansterm as Managing Director would have concluded on 2 May
 2009. In consideration of his contributions to the Companys
 operational and financial progress; the successful acquisitions, the
 integration of the acquired companies and the strides that the Company
 has made under his leadership, the Board of Directors, at its Meeting
 held on 30 January 2008, has approved extension of his term as Managing
 Director for a further period of two years from 3 May 2009 to 2 May
 2011.  Members approvai is being sought to his re- appointment and the
 terms related thereto.
 
 The details of the Directors being recommended for re-appointment are
 contained in the accompanying Notice of the forthcoming Annual General
 Meeting.
 
 The Company has planned its product portfolio upto the year 2010, to
 steer and align its R&D with its business drivers.Towards achieving
 this core purpose, during the year the CG Global R&D Centre
 concentrated on developing new platform technologies, as well as,
 improving the existing product technologies. R&D has developed and
 implemented a New Product Development System (NPD) across all
 
 locations in India for monitoring the progress of platform and
 breakthrough technologies identified as future business drivers. A
 Business Development Cell has been formed within CG Global R&D Centre
 to monitor and ensure successful commercialisation of R&D projects.
 
 During the year, the Company was Nationally recognised, by being
 bestowed the prestigious National Award for the Best R&D EffortsTor
 its outstanding achievements in the Electrical Engineering Sector from
 the Department of Scientific and Industrial Research (DSIR).The
 Companyalso received other awards such as Golden Peacock Innovation
 Awardand Best Product Awardat Elecrama 2007.
 
 CG Global R&D Centre has also received accreditation from the National
 Accreditation Board forTesting and Calibration Laboratories (NABL)
 which isaformal recognition of its technical competency as a testing /
 calibration laboratoryforlSO/IEC17025standards.This accreditation,
 besides being testimony to CG
 
 Global R&Ds high levels of professionalism, will facilitate acceptance
 of test results and measurement data amongst 52 accreditation bodies
 representing 45 countries.
 
 New products and processes developed are detailed in the Annexure.
 
 During the year, Mr. GautamThapar created d a separate brand identity
 for the companies under his ownership and christened it as
 AvanthaGroup.The Avantha Group includes some companies of the
 BMThapar Group, since vested with Mr. Gautam Thapar and the erstwhile
 LMThapar Group companies bequeathed to Mr. GautamThapar.The BM Thapar
 Groupand LMThapar Group were recognised by the Securities and Exchange
 Board of India by its Order dated 8 October 2001 (as modified from time
 to time).
 
 Therefore, Crompton Greaves Limited, along with the following entities,
 constitutes a Group as defined under the Monopolies and Restrictive
 Trade Practices Act, 1969:
 
 Ballarpur Industries Limited, Bilt Graphic Paper Products Limited,
 Ballarpur International Holdings B.V., Ballarpur Paper Holdings B.V.,
 Ballarpur Graphic Paper Holdings B.V., Ballarpur International Paper
 Holdings BY, Ballarpur International Graphic Paper Holdings B.V. (under
 incorporation), Sabah Forest Industries Sdn. Bhd., BiltTreeTech
 Limited, NewQuest Corporation Limited, Bilt Paper Holdings Limited, KCT
 Papers Limited, KCT Chemicals & Electricals Limited, APR Sacks
 Limited,The Paperbase Company Limited, Janpath Investments and Holdings
 Limited, Bilt Industrial Packaging Company Limited, Biltech Building
 Elements Limited, UHL Power Limited, Asia Aviation Limited,Toscana
 Lasts Limited, Toscana Footwear Components Limited, NQC Global
 (Mauritius) Limited, NQC International (Mauritius) Limited, NewQuest
 Services Private Limited, AvanthaTechnologies Limited, NewQuest
 Insurance Broking Services Limited, Avantha Power& Infrastructure
 Limited, Global Green Company Limited, Global Green USA Limited, GG
 International N.V., Intergarden NY, Intergarden (India) Private
 Limited, Dunakiliti Kanzervuzem Kft, Greenhouse Agraar Kft, Floragarden
 Tarim Gida Sanay ve Ticaret A.S., Solaris Holdings Limited, Solaris
 Chemtech Limited, Solaris Chemtech Industries Limited, Solaris
 Industrial Chemicals Limited, Salient Business Solutions Limited,
 Salient Knowledge
 
 Solutions Limited, Salient Financial Solutions Limited, Salient
 Business Solutions USA, Inc, CG Energy Management Private Limited
 [formerly, CG Motors Private Limited], CG Capital & Investments
 Limited, CG-PPI Adhesive Products Limited, Malanpur Captive Power
 Limited, Brook Crompton Greaves Limited, CG Actaris Electricity
 Management Limited, CG Lucy Switchgear Limited, International
 Components India Limited, CG International BY, Pauwels International
 NY, Pauwels Americas Inc, PT PauwelsTrafo Asia, Pauwels Trafo Gent NY,
 Pauwels Canada Inc, Pauwels Transformers Inc, PauwelsTrafo Ireland
 Limited, Pauwels France SA,PauwelsTrafo Belgium N.V., PauwelsTrafo
 Service NY, Pauwels Middle East Trading and Contracting Limited,
 Crompton Greaves Hungary Kft, Transverticum Kft, Ganz Transelektro
 Villamossagi Zrt, Microsol Holdings Limited, Microsol Limited, Viserge
 Limited, Microsol (UK) Limited,Tricon Controls Limited and Microsol
 Inc.
 
 The Company has four Indian subsidiaries viz CG Energy Management
 Private Limited  [formerly, CG Motors Private Limited] (CEM), CG
 Capital & Investments Limited (CG Capital), CG-PPI Adhesive Products
 Limited (CG PPI) and MalanpurCaptive Power Limited (MCPL).  CEM, CG
 Capital and MCPL are subsidiaries of the Company, and CG PPI, being a
 subsidiary of CG Capital, in terms of the provisions of the Companies
 Act, 1956, is also the Companys subsidiary.
 
 The Netherlands-based CG International B.V. a 100% subsidiary of the
 Company, is the ultimate holding company of the Pauwels, Ganz and the
 Microsol Group, comprising 19 downstream subsidiaries, asunder:
 
 Pauwels International NY
 Pauwels Americas Inc
 PTPauwelsTrafo Asia
 PauwelsTrafo Gent NY
 Pauwels Canada Inc
 Pauwels Transformers Inc
 PauwelsTrafo Ireland Ltd
 Pauwels France SA
 PauwelsTrafo Belgium NY
 PauwelsTrafo Service NY
 Crompton Greaves Hungary Kft
 Transverticum Kft
 Ganz Transelektro Villamossagi Zrt.
 Microsol Holdings Limited
 Picrosol Limited
 Viserge Limited
 Microsol (UK) Limited
 Tricon Controls Limited
 Microsol Inc
 
 In totality, the Company has 24 subsidiaries, 4 Indian and 20foreign,
 
 The Company has obtained an exemption under Section 212 of the
 Companies Act, 1956, from annexing to this Report, the Annual Reports
 of the abovementioned 4 Indian subsidiaries and 20 foreign
 subsidiaries, for the yearended31 March 2008. 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.
 
 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 Page 99 of the Annual Report.
 
 As required by Accounting Standards AS-21 and AS-23ofthe Institute of
 Chartered Accountants of India, the financial statements of the Company
 reflecting the consolidation of the Accounts of the Company, its 24
 subsidiaries mentioned above, and 5 Associate Companies, are annexed to
 this Report. The Associate Companies are Brook Crompton Greaves
 Limited, CG Actaris Electricity Management Limited, CG Lucy Switchgear
 Limited, International Components India Limited and Pauwels Middle East
 Trading and Contracting Limited.
 
 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)ofthe
 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 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 Companys 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(1 B) of the Companies Act, 1956.
 
 Currently, the Company has discontinued acceptance of fresh deposits
 and also renewal of existing deposits. 208 persons had not claimed
 repayment of their matured deposits amounting to Rs.2.61 million asat
 31 March 2008. At the date of this Report, an amount of Rs. 0.24
 million therefrom has been claimed and repaid.
 
 Intime Spectrum Registry Limited continues to be the Companys
 Registrars for all matters related to the Companys Fixed Deposit
 Scheme.The contact details of Intime Spectrum are mentioned in the
 Report on Corporate Governance.
 
 Effective 1 December 2007, the Company changed its Registrar STransfer
 Agents from Sharepro Services (India) Pvt Limited to Datamatics
 Financial Services Ltd (DFSL).
 
 DFSL is a SEBI-registered Registrars Transfer Agent. The contact
 details of DFSL are mentioned in the Report on Corporate Governance.
 
 Investors are requested to address their queries, if any to DFSL;
 however, in case of difficulties, as always, they are welcome to
 contact the Companys Investor Services Department, the contact
 particulars of which are contained in the Report on Corporate
 Governance.
 
 The Company is committed to ensuring the health and safety of all its
 employees, contractors, visitors and other persons at its workplace.
 The Company regularly invests in requisite resources and infrastructure
 that ensures safe and healthy work environment for its employees.
 
 To emphasise the importance on day-to-day practices in this area,
 health and safety has been chosen as one of the focus themes
 articulated in CGs Code of Business Practices.The Company also has a
 Healths Safety policy, which has been implemented across all its
 locations.The Health & Safety Committeeatall locations ensures review
 and adequate compliance of the Companys Health & Safety Policy.
 
 Conducting of training programmes on safety and environment, product
 training sessions for newlyjoined technicians and trainees, fire-
 fighting drills, health check-ups for executives, HIV/AIDS awareness
 and voluntary blood donation camps are some of the initiatives
 undertaken as part of the Companys on-going programmes.
 
 All the manufacturing units of the Company have received ISO 14001
 Environmental Standards and Management Certification and OHSAS 18001
 Certification for Occupational Health & Safety Management Systems.
 
 The Company propagates usage of environmentally safe technologies in
 its product design processes.The Company is also increasing its focus
 on developing transformers and power quality products for usage in
 projects based on wind, solar, renewable and other non-conventional
 sources of energy.  During the year, the Company won the Greentech Gold
 Award 2007 in the Engineering Sector for Environmental Management
 Systems for green products and process technologies developed within
 the Company.
 
 The Directors acknowledge and appreciate the support and co-operation
 extended by the Financial Institutions, Banks, Government Authorities,
 Customers, Vendors and Members during the year under review and look
 forward towards continued support from them.  The Directors also wish
 to convey their appreciation to all the Companys employees for their
 dedication, hard work and commitment which is a significant
 contribution for achieving the Companys performance.
 
 
                                    On behalf of the Board of Directors
 
                                                     GTHAPAR
                                                    CHAIRMAN
 Mumbai,23May2008