Philips India

We have audited the attached Balance Sheet of Philips Electronics India
 Limited (the Company) as at 31 December 2008, and also the Profit and
 Loss Account and 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 the auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 As required by the Companies (Auditors Report) Order, 2003 (the
 Order) issued by the Central Government of India in terms of
 sub-section (4A) of Section 227 of the Companies Act, 1956 (the Act),
 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 in the paragraph
 above, we report that:
 
 (a) we have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 (b) in our opinion, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 (c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 (d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the Accounting
 Standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956;
 
 (e) on the basis of written representations received from the directors
 of the Company as at 31 December 2008 and taken on record by the Board
 of Directors, we report that none of the directors is disqualified as
 at 31 December 2008 from being appointed as a director of the Company
 under clause (g) of sub-section (I) of Section 274 of the Companies
 Act, 1956; and
 
 (f) in our opinion, and to the best of our information and according to
 the explanations given to us, the said accounts 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:
 
 (i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31 December 2008;
 
 (ii) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Annexure to the Auditors Report
 
 With reference to the Annexure referred to in the Auditors Report to
 the members of Philips Electronics India Limited (the Company) on the
 financial statements for the year ended 31 December 2008, we report the
 following:
 
 1.  (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) We are informed that the Company physically verifies its assets
 over a three year period, except for certain assets which are verified
 on the basis of third party confirmations. In our opinion, this
 periodicity of physical verification is reasonable having regard to the
 size of the Company and the nature of its assets. In accordance with
 this policy, the Company has physically verified certain fixed assets
 during the year and we are informed that no material discrepancies were
 identified on such verification.
 
 (c) Fixed assets disposed off during the year were not substantial and
 therefore do not affect the going concern assumption.
 
 2.  (a) The inventory, excluding materials in transit, has been
 physically verified by management during the current year. Material
 inventories with third parties have either been physically verified by
 management or confirmed based on certificates/statements of account
 received from such third parties. In our opinion, the frequency of such
 verification is reasonable.
 
 (b) The procedures for the physical verification of inventories
 followed by 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.
 Discrepancies identified on physical verification of inventories as
 compared to book records were not material and have been properly dealt
 with in the books of account.
 
 3.  The Company has neither granted nor taken any loans, secured or
 unsecured, to or from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 
 4.  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 nature of its business with regard to
 the purchase of inventories and fixed assets and with regard to the
 sale of goods and services. In our opinion, and according to the
 information and explanations given to us, there is no continuing
 failure to correct major weaknesses in the internal control system.
 
 5.  (a) In our opinion and according to the information and
 explanations given to us, the particulars of contracts or arrangements
 referred to in Section 301 of the Companies Act, 1956 have been entered
 in the register required to be maintained under that section.
 
 (b) In our opinion, and according to the information and explanations
 given to us, the transactions made in pursuance of contracts and
 arrangements referred to in (a) above and exceeding the value of Rs 5
 lakh with any party during the year have been made at prices which are
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6.  In our opinion, and according to the information and explanations
 given to us, the Company has complied with the provisions of Section
 58A, Section 58AA or other relevant provisions of the Companies Act,
 1956 and the rules framed thereunder/the directives issued by the
 Reserve Bank of India (as applicable) with regard to deposits accepted
 from the public. Accordingly, there have been no proceedings before the
 Company Law Board or National Company Law Tribunal (as applicable) or
 Reserve Bank of India or any Court or any other Tribunal in this matter
 and no order has been passed by any of the aforesaid authorities.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and the nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 maintenance of cost records under Section 209(1)(d) of the Companies
 Act, 1956 in respect of Electric Lamps and Fluorescent Tubes and are of
 the opinion that prima facie, the prescribed accounts and records have
 been made and maintained. However, we have not made a detailed
 examination of the records.
 
 9.  (a) According to the information and explanations given to us and
 on the basis of our examination of the records of the Company, amounts
 deducted/accrued in the books of account in respect of undisputed
 statutory dues including Provident Fund, Investor Education and
 Protection Fund, Employees State Insurance, Wealth tax, Excise Duty,
 Service Tax, Customs Duty, Sales Tax, Income Tax and other material
 statutory dues have generally been regularly deposited during the year
 by the Company with the appropriate authorities. There were no dues on
 account of cess under Section 441A of the Companies Act, 1956 since the
 date from which the aforesaid section comes into force has not yet been
 notified by the Central Government. 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, Wealth tax, Excise Duty, Income Tax, Service Tax,
 Customs Duty, Sales tax and other material statutory dues were in
 arrears as at 31 December 2008 for a period of more than six months
 from the date they became payable.
 
 (b) According to the information and explanations given to us, there
 are no dues of Wealth tax, Service tax and Customs duty which have not
 been deposited on account of any dispute. The dues of Income tax, Sales
 tax and Excise duty as disclosed in Appendix I have not been deposited
 by the Company on account of disputes.
 
 10.  The Company does not have any accumulated losses at the end of the
 financial year and has not incurred cash losses in the financial year
 and in the immediately preceding financial year.
 
 11. In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to its
 bankers or to any financial institutions. The Company did not have any
 outstanding debentures during the year.
 
 12.  According to the information and explanations given 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.
 
 13.  In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund/ nidhi/mutual benefit
 fund/society.
 
 14.  According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 15.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 16.  In our opinion and according to the information and explanations
 given to us, the term loan taken by the Company has been applied for
 the purpose for which it was raised.
 
 17.  According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we are of
 the opinion that the funds raised on short-term basis have not been
 used for long- term investment.
 
 18.  The Company has not made any preferential allotment of shares to
 companies/ firms / parties covered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 19.  The Company did not have outstanding debentures during the year.
 
 20.  The Company has not raised any money by public issues during the
 year.
 
 21.  According to the information and explanations given to us, no
 fraud on or by the Company, that causes a material misstatement to the
 financial statements, has been noticed or reported during the course of
 our audit.
 
                                                     For B S R & Co.
                                               Chartered Accountants
 
                                                        Vijay Mathur
                                                             Partner
 Gurgaon, Haryana, 
 March 13, 2009                                Membership No: 046476