1.  We have audited the attached Balance Sheet of Philips Electronics
 India Limited (the Company) as at 31 December 2009, 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.
 
 2.  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.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 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.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 (a) we have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 (b) in our opinion, proper books of account as required by law have
 been kept by the Company, so far as appears from our examination of the
 books;
 
 (c) the Balance Sheet, 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, Balance Sheet, Profit and Loss Account and the 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 2009 and taken on record by the Board
 of Directors, we report that none of the directors is disqualified from
 being appointed as a director of the Company in terms of clause (g) of
 sub-section (I) of Section 274 of the Act; 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 Balance Sheet, of the state of affairs of the
 Company as at 31 December 2009;
 
 (ii) in the case of Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 Annexure to the Auditors Report (Referred to in our report of even
 date)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) The Company physically verifies its assets over a three year period
 so as to cover all 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 No material discrepancies were
 noticed on such verification.
 
 (c) Fixed assets disposed off during the year were not substantial and
 therefore do not affect the going concern assumption.
 
 (ii) (a) The inventory, excluding materials in transit, has been
 physically verified by the management during the current year
 Inventories with the third parties have either been physically verified
 by the management or confirmed based on certificates/statements of
 accounts received from such 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 has maintained 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 accounts.
 
 (iii) 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.
 
 (iv) In our opinion and according to the information and explanations
 given to us, and having regard to the explanation that purchases of
 certain items of inventories are for the Companys specialized
 requirements and similarly certain goods and services sold are for the
 specialized requirement of the buyer and suitable alternative sources
 are not available to obtain comparable quotations, there is an adequate
 internal control system commensurate with the size of the Company and
 the nature of its business with regard to purchase of inventories and
 fixed assets and with regard to 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.
 
 (v) (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 Act 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.
 
 (vi) The Company has not accepted any deposits from the public.
 
 (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 maintained by the
 Company pursuant to the rules prescribed by the Central Government for
 maintenance of cost records under section 209(l)(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.
 
 (ix) (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, Employees State Insurance,
 Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise
 duty, Cess and other material statutory dues have generally been
 regularly deposited with the appropriate authorities.There are 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, Employees State Insurance, Income tax, Sales tax,
 Wealth tax, Service tax, Customs duty, Excise duty, Cess and other
 material statutory dues were in arrears as at 31 December 2009 for a
 period of more than six months from the date they became payable. As
 explained to us, the Company did not have any dues on account of
 Investor Education and Protection Fund during the year
 
 (b) According to the information and explanations given to us, there
 are no dues of Wealth tax and Customs duty which have not been
 deposited on account of any dispute. The dues of Income tax, Sales tax,
 Service tax and Excise duty as disclosed in Appendix I have not been
 deposited by the Company on account of disputes.
 
 (x) 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.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 financial institutions. The Company did not have any outstanding
 debentures during the year
 
 (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) In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund or a nidhi/ mutual benefit
 fund/ society.
 
 (xiv) According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, debentures and
 other investments.
 
 (xv) 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.
 
 (xvi) The Company has not obtained any term loans during the year.
 
 (xvii) 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.
 
 (xviii) As per information and explanations given to us, the Company
 has not made any preferential allotment of shares.
 
 (xix) The Company did not have any outstanding debentures during the
 year.
 
 (xx) The Company has not raised any money by public issues.
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
 
 Appendix I to Annexure to the Auditors Report
 
 (Rs in Min)
 
 Name of the 
 Statute/                          Forum where dispute is pending    
 Period to which   Nature of dues   Appellate
 the amount                        authority 
                                    upto        Tribunal    High Court
 relates                           Commissioner
                                    (Appeals)
 
 Central Excise 
 Act, 1944
 
 2008-09                                -           -            -
                  Excise duty
 2007-08      including interest        _           _            -
 
 3-7 years    and penalty               -         66.44          -
              where applicable
 
 Above 7 years                          -        135.12        5.00
 
 Service Tax, 
 Finance Act 1994
 
 2008-09                                -           -            -
 
               Service tax
 2007-08      including interest        -           -            - 
               and penalty
 
 3-7 years                            38.70         -            -
              where applicable
 
 Above 7 years                          -           -            -
 
 Central Sales 
 Tax Act, 1956 and
 Individual 
 State Sales 
 Tax Act
 
 2008-09                                -           -            -  
 
             Sales tax including        -           -            -
 2007-08       interest and             -           -            -
             penalty where
 
 3-7 years   applicable              104.70       10.10        41.80
 
 Above 7 years                        14.30      212.50        12.40
 
 Income Tax 
 Act, 1961
 
 2008-09                                -           -            -
 
             Income tax
 2007-08   including interest           -           -            -
            and penalty              254.40         -            -        
 
 3-7 years   where applicable           -           -            -
 
 Above 7 years                          -           -            -
 
 
 
 
 
                                                 For B S R & Co.
                                           Chartered Accountants
 
                                                   Vikram Advani
 
 Place : Gurgaon                                         Partner
 
 Date : March 30, 2010                    Membership No.: 091765