Annual Report - Crompton Greaves - 2009-2010

CROMPTON GREAVES LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

To,
THE MEMBERS,

Your Directors are pleased to present their Seventy Third Annual Report on
the business and operations of the Company and the accounts for the
financial year ended 31 March 2010.



OPERATIONS

After the world-wide economic and financial turmoil of 2008, the global
economic outlook has improved with a positive growth of above 3% predicted
for 2010 after a decline of 1.1% in 2009. Global trade showed signs of
bouncing back in the second half of 2009. However, the Sustainability of
credit revival after the withdrawal of stimulus packages across the world
is still to be tested.

Regarding the transmission and distribution (T&D) segment - to which your
Company pre-dominantly belongs -the story is somewhat mixed. There are two
clear positives. First, the power transformer business is seeing
significant growth in India, China, South-East Asia and the Middle East.
Second, there is a definite surge in demand for renewables, especially
wind. This is true everywhere, but especially so in Europe, the USA and
Canada. Equally, there is a negative factor. The housing sector in Europe
and the USA remains in doldrums. Consequently, the distribution
transformers segment continues to be badly affected.

Overall, however, demand is growing, with power transformers, wind and
renewables, and the business of providing end-to-end solutions doing well,
and counteracting the decline in sale of distribution transformers. An
overriding focus on public as well as private investment in transmission
systems by many countries, and the drive for energy efficiency, have so far
kept the T&D market reasonably buoyant - although not as it was in 2006-07
and 2007-08.

In response to market conditions, your Company has enhanced its competitive
momentum by forcefully targeting the growth oriented utility power
transformer segment to offset the slowdown in industry demand for
distribution transformers and motors. The Company's order backlog of
Rs.6,370 crore is marginally lower than the position a year ago. However, a
healthy order intake growth of 21 % in the last quarter suggests that the
momentum is accelerating.

Your Company is also building competencies and pursuing new attractive
segments such as renewable energy, ultra high voltage and energy
automation. Its SL IM. transformers remain a market leader in wind farm
installations. The Company secured major long term agreements from Siemens
Wind Power, Enercon, Multibrid and other players in this market. Besides
its product strengths, the Company made a successful foray into turnkey
solutions for the renewable segment. Its maiden project of designing and
building the transmission grid connection for a 165 MW offshore
windpark'Belwind', located 50 kilometers into the coastal waters of
Belgium, in consortium with other reputed players is making good progress
and will be commissioned in September 2010.

Emerging market economies including India have led the global recovery,
driven by domestic demand and recovering exports. The reforms announced by
the United Progressive Alliance Government in 2009-10 have set the agenda
for India's growth. Pushed to a low growth level of 6.7% in 2008-09 by the
consequences of the worldwide slowdown, after averaging over 9% in the
preceding three years, the Indian economy has grown more than 7% in 2009-
10. During April-January 2009-10, Index of Industrial Production (IIP)
growth was 9.6% compared to 3.3% during AprilJanuary 2008-09.

In the Eleventh Five Year Plan, the Government of India has fixed an
ambitious target of 78,700 MW of power capacity addition. It is pursuing,
through the Central Transmission Utility of India, the 765kV Ultra High
Voltage (UHV) upgrading of the current infrastructure. For a couple of
years now, your Company has been harnessing its technological competence in
the UHV segment. In partnership with its Hungarian subsidiary and ZTR
Ukraine, it has secured major orders from the Power Grid Corporation of
India Limited (PGCIL) in this area. These projects - won against stiff
global competition from Indian and multinational companies - denote a
strategic entry of the Company in the UHV market. With the PGCIL orders,
your Company has become the first Indian corporation to firmly establish
itself as a major and reliable player in the UHV segment.

For the Indian business, the most encouraging event was the recovery of
capital goods industry with 11.1 % growth and resurgence of the consumer
durables industry with 12.5% growth - which resulted in growth for the
Company's Industrial Systems and Consumer Products businesses. The
Company's Industrial Systems SBU grew by 11.3% over previous year through
introduction of new products for different markets, such as small motors
for agro applications and extension of range up to 5 MW of large rotating
machines for several industrial applications. Capacity expansion for
several models of traction machines were undertaken during the year. Your
Company became the largest supplier of alternators in the domestic market
for the smaller range. Specially designed Slip Ring alternators were
introduced in the rural market, amidst stiff operating conditions.

The Company's Consumer Products SBU grew by 22%, growing 1.5 times the
market. The business has made an entry into Integrated Security and Home
Automation, Light Emitting Diode (LED) lighting systems, industrial fans
and industrial pumps during the year. A focus area for the Consumer
Products business is tapping the vast potential of the Indian rural
markets, estimated at Rs.65,000 crore for FMCG products and Rs.5,000 crore
for consumer durables. To implement this, changes have been made in the
SBU's organisation structure, with a dedicated Head of Rural Marketing and
his team of managers.

Margin expansion continued to be a thrust area. This has been driven by
several factors: various value engineering initiatives, better product
designs, higher efficiencies in supply chain management and cycle time
reduction undertaken by the businesses during the year. The Company-wide
global sourcing initiative for critical components, including renegotiation
of prices with suppliers and approving new supply sources, resulted in
substantial reduction in operations costs - thus ensuring the
Sustainability of the Company's margin expansion.

Through all these expansion activities, the Company retained its focus on
quality. It implemented the One World Quality, Manufacturing Excellence and
Project Unipower initiatives, with rigour. The Company's Consumer business
renewed its thrust on enhanced after-sales service by commissioning its
Customer Call Centre and a network of franchisee-based 'Authorised Service
Centres' in metro locations. It also formalised its service promise of
'Respond in 6 hours and Resolve in 72 hours'.

On 15 October 2009, the Company unveiled its new Brand Identity, 'CG'.
Today, CG is the common brand expression across all the Company's
subsidiaries, operating in various businesses, in diverse geographies
across the world. The new brand reflects the ability of the Company to
provide 'Smart solutions' and the value that is placed on 'Strong
relationships' across all its businesses, geographies and customers. The
new brand identity is an important step in the integration of newly
acquired companies, reflecting the effective transition of the Company from
an Indiabased electrical equipment manufacturer to a global solutions
organisation.

To enhance its solutions capabilities, the CG Group acquired one more
company towards the end of the year. On 29 March 2010, the Company acquired
Power Technology Solutions Limited (PTS), located in the United Kingdom.
PTS is a high voltage electrical engineering company which provides
consultancy, technical and engineering support to Regional Electricity
Companies (RECs) including, but not limited to conceptual engineering/
system studies and also complete EPC detailed engineering, spanning
electrical (relay/control, SCADA and sub-station automation) and
civil/structural (site foundation, development and structural design).

The above initiatives have enabled the Company to achieve a stand-alone net
turnover of Rs.5,284 crore, during the year under review, as compared with
Rs.4,611 crore during the previous year 2008-09, a rise of 15%.

The consolidated net turnover of the Company increased from Rs.8,737 crore
to Rs.9,141 crore, an increase of 5%.

The Company has recorded a noteworthy stand-alone Profit Before Tax (before
extraordinary item) of Rs.870 crore, an increase of 42% as compared with
last year. The consolidated Profit Before Tax (before extraordinary item)
increased from Rs.867 crore to Rs. 1,189 crore. The Company has also
recorded a significant stand-alone Profit After Tax (before extraordinary
item) of Rs.577 crore, an increase of 45% as compared with last year, and
Profit After Tax (including an extraordinary item) of Rs.617 crore, an
increase of 55% as compared with last year. The consolidated Profit After
Tax (before extraordinary item) increased from Rs.563 crore to Rs.824 crore
and Profit After Tax, minority interest, share of profit / loss in
associate companies (including an extraordinary item) increased from Rs.560
crore to Rs.860 crore.

FINANCIAL HIGHLIGHTS

CG STAND-ALONE CGIBV CG-CONSOLIDATED**
CONSOLIDATED*@

PARTICULARS 31.3.10 31.3.09 31.3.10 31.3.09 31.3.10 31.3.09
IN RS. CRORE

(a) Gross Sales 5516 4904 3824 4128 9375 9031

(b) Less: Excise
Duty 232 293 0 0 234 294

(c) Net Sales 5284 4611 3824 4128 9141 8737

(d) Less: Operating
Expenses 4427 3973 3442 3794 7864 7742

(e) Operating Profit 857 638 382 334 1277 995

(t) Add: Dividend
and Other Income 69 36 32 22 94 59

(g) Profit before
Interest,
Depreciation,
Amortisation
and Taxes 926 674 414 356 1371 1054

(h) Less:
Interest (net) 4 15 17 43 27 85

(i) Profit before
Depreciation,
Amortisation
and Taxes 922 659 397 313 1344 989

j) Less:
Depreciation,
Amortisation and
Impairment 52 45 97 71 155 122

(k) Profit Before
Tax 870 614 300 242 1189 867

(l) Less:
Provision for
Current Year Tax 274 200 37 59 314 261

(m) Less: Provision
for Deferred Tax 19 12 30 24 51 38

(n) Less: Provision
for Fringe Benefit
Tax 0 5 0 0 0 5

(o) Profit After Tax 577 397 233 159 824 563

(p) Minority
Interest 0 0 0 1 (2) (2)

(q) Share of Profit/
(Loss) of Associate
Companies 0 0 0 0 3 (1)

(r) Profit after
tax, minority
interest and share
of profit/(loss)
of Associate
Companies 577 397 233 160 825 560

(s) Extraordinary
Item 40 0 0 0 35 0

(t) Profit available
for distribution 617 397 233 160 860 560

(u) Balance brought
forward from
previous years 811 540 0 0 0 0
Appropriation/
Distribution

(v) Transfer to
General Reserve (62) (40) 0 0 0 0

(w) Interim
Dividend (81) (73) 0 0 (81) (73)

(x) Corporate Tax
on Dividend (13) (13) 0 0 (14) (13)

BALANCE CARRIED
TO BALANCE SHEET 1272 811 233 160 765 474

* Consolidated Accounts of CG International BV, the holding company for
CG's international operations

** Includes results of CG Stand-alone and CGI13V Consolidated.

@ Figures have been regrouped for the purposes of consolidation.

The Profit Before Interest and Tax of the respective Business Groups,
compared with last year is given below:

SBU IN RS. CRORE 2009-2010 2008-2009

Power Systems (CG stand-alone) 462 349

Industrial Systems (CG stand-alone) 260 204

Consumer Products 230 146

Power Systems (including
International operations) 769 625

Industrial Systems (including
International operations) 276 213

A detailed review of the operations and performance of each Business Group
as well as the Company's International operations is contained in the
Management Discussion and Analysis Report, which is given as a separate
chapter in the Annual Report.

DIVESTMENT OF MALANPUR CAPTIVE POWER LIMITED

In the year 2006, to gain experience in the power generation and
distribution business, the Company had acquired a 59% shareholding in
Malanpur Captive Power Limited (MCPL), which was developing a 26.19 MW gas
based captive power plant at Malanpur, Madhya Pradesh. This investment was
made at the face value of Rs 10/- per share.

CG STAND-ALONE CGIBV CG-CONSOLIDATED**
CONSOLIDATED'@

PARTICULARS 31.3.10 31.3.09 31.3.10 31.3.09 31.3.10 31.3.09
IN EURO MILLION

(a) Gross Sales 817 748 567 630 1390 1378

(b) Less: Excise
Duty 34 45 0 0 35 45

(c) Net Sales 783 703 567 630 1355 1333

(d) Less: Operating
Expenses 656 606 510 579 1166 1181

(e) Operating Profit 127 97 57 51 189 152

Add: Dividend and
Other Income 10 6 5 3 14 9

(g) Profit before
Interest,
Depreciation,
Amortisation and
Taxes 137 103 62 54 203 161

(h) Less: Interest
(net) 0 2 3 6 4 10

(i) Profit before
Depreciation,
Amortisation
and Taxes 137 101 59 48 199 151

j) Less:
Depreciation,
Amortisation and
Impairment 8 7 14 11 23 19

(k) Profit
Before Tax 129 94 45 37 176 132

(l) Less:
Provision for
Current Year Tax 40 31 6 9 46 40

(m) Less: Provision
for Deferred Tax 3 2 4 4 8 6

(n) Less: Provision
for Fringe Benefit
Tax 0 1 0 0 0 1

(o) Profit After Tax 86 60 35 24 122 85

(p) Minority
Interest 0 0 0 0 0 0

(q) Share of
Profit/(Loss) of
Associate Companies 0 0 0 0 0 0

(r) Profit after
tax, minority
interest and share
of profit/floss)
of Associate
Companies 86 60 35 24 122 85

(s) Extraordinary
Item 6 0 0 0 5 0

(t) Profit
available for
distribution 92 60 35 24 127 85

(u) Balance brought
forward from
previous years 135 94 0 0 0 0
Appropriation/
Distribution

(v) Transfer to
General Reserve (9) (6) 0 0 0 0

(w) Interim
Dividend (12) (11) 0 0 (12) (11)

(x) Corporate Tax
on Dividend (2) (2) 0 0 (2) (2)

BALANCE CARRIED
TO BALANCE SHEET 204 135 35 24 113 72

* Consolidated Accounts of CG International BV, the holding company for
CG's international operations.

** Includes results of CG Stand-alone and CGIBV Consolidated.

@ Figures have been regrouped for the purposes of consolidation.

Note: Average exchange rate considered for 1 EURO in 2009-10 is Rs.67.4706
and in 2008-09 is Rs.65.5385.

Pursuant to the Company's investment in Avantha Power & Infrastructure Ltd,
(APIL) last year, engaged in the business of generation, transmission and
distribution of electricity, it was felt that it would be better aligned,
if, in future, the business of MCPL was managed by APIL. The divestment to
APIL was completed in March 2010 at a price of Rs 51.4 crore, which worked
out to Rs 46.63 per share.

MERGER OF BROOK CROMPTON GREAVES LIMITED

In August 2009, the Company, acquired 81,60,000 equity shares comprising 51
share capital of Brook Crompton Greaves Limited (BCGL), a joint venture
between the Company and BTR (European Holding) BV. BCGL thus became a 100%
subsidiary of the Company.

Since opportunities for synergy and operational efficiencies existed
between BCGL and the Company's LT Motors division, the Company and BCGL
have entered into a Scheme of Amalgamation, in which all the assets and
liabilities of BCGL will be transferred to the Company. The entire share
capital of BCGL will be cancelled and the authorised share capital of the
Company will be enhanced to the extent of the authorised share capital of
BCGL.

Pursuant to the Scheme of; Amalgamation, filed by BCGL with the High Court
of Judicature at Bombay, the regulatory procedures are in an advanced stage
progress, and are expected to be completed by June, 2010.

CG STAND-ALONE CGIBV CG-CONSOLIDATED**
CONSOLIDATED*@

PARTICULARS 31.3.10 31.3.09 31.3.10 31.3.09 31.3.10 31.3.09
IN USD MILLION

(a) Gross Sales 1155 1054 801 887 1964 1941

(b) Less: Excise
Duty 48 63 0 0 49 63

(c) Net Sales 1107 991 801 887 1915 1878

(d) Less:
Operating
Expenses 927 854 721 815 1647 1664

(e) Operating
Profit 180 137 80 72 268 214

(f) Add: Dividend
and Other Income 14 8 7 4 20 12

(g) Profit before
Interest,
Depreciation,
Amortisation
and Taxes 194 145 87 76 288 226

(h) Less:
Interest (net) 1 3 4 9 6 14

(i) Profit before
Depreciation,
Amortisation
and Taxes 193 142 83 67 282 212

(1) Less:
Depreciation,
Amortisation
and Impairment 11 10 20 15 32 26

(k) Profit
Before Tax 182 132 63 52 250 186

(l) Less:
Provision for
Current Year Tax 57 43 8 13 66 56

(m) Less:
Provision for
Deferred Tax 4 3 6 5 11 8

(n) Less:
Provision for
Fringe Benefit Tax 0 1 0 0 0 1

(o) Profit After Tax 121 85 49 34 173 121

(p) Minority
Interest 0 0 0 0 (1) 0

(q) Share of
Profit/(Loss) of
Associate Companies 0 0 0 0 1 0

(r) Profit after
tax, minority
interest and share
of profit/(loss)
of Associate
Companies 121 85 49 34 173 120

(s) Extraordinary
Item 8 0 0 0 7 0

(t) Profit available
for distribution 129 85 49 34 180 120

(u) Balance
brought forward
from previous years 193 135 0 0 0 0
Appropriation/
Distribution

(v) Transfer to
General Reserve (13) (9) 0 0 0 0

(w) Interim
Dividend (17) (16) 0 0 (17) (16)

(x) Corporate Tax
on Dividend (3) (2) 0 0 (3) (2)

BALANCE CARRIED TO
BALANCE SHEET 290 193 49 34 160 102

* Consolidated Accounts of CG International BV, the holding company for
CG's international operations.

** Includes results of CG Stand-alone and CGIBV Consolidated.

@ Figures have been regrouped for the purposes of consolidation.

Note: Average exchange rate considered for 1 USD in 2009-10 is Rs.47.7446
and in 2008-09 is Rs.46.5363.

INVESTMENT IN AVANTHA POWER & INFRASTRUCTURE LIMITED

As mentioned in last year's Annual Report, CG holds 32% in Avantha Power
and Infrastructure Limited (APIL). This translates to 206.36 million equity
shares of APIL at Rs.11 per share - or an investment of Rs.227 crore. APIL,
an Avantha Group company, is engaged in the generation, transmission and
distribution of electricity. APIL has filed a draft Red Herring Prospectus
with the Securities and Exchange Board of India (SEBI) for a public issue
in the near future. As a significant investor, CG is supporting this IPO.

BONUS SHARES

In terms of Members' approval accorded at its Extra-Ordinary General
Meeting held on 24 February 2010, the Company issued Bonus Shares in the
proportion of 3 (three) new equity shares for every 4 (four) equity shares
of Rs.2/- each. The Record Date for the issue of Bonus Shares was 9 March
2010.

DIVIDEND

The Company declared two interim dividends during the year: o Rs.0.80 per
equity share (40%) aggregating to a total dividend payout of Rs.34 crore
(including dividend tax) declared on 27 October 2009; the Record Date for
this purpose was 3 November 2009 and the Interim Dividend was paid on 16
November 2009.

* Rs.1.40 per equity share (70%) aggregating to a total dividend payout of
Rs.60 crore (including dividend tax) declared on 28 January 2010; the
Record Date for this purpose was 5 February 2010 and the Interim Dividend
was paid on 16 February 2010.

The above mentioned dividend payout as a percentage of the share capital
works out to 110%.

RESERVES

The Reserves at the beginning of the year were Rs.1,169 crore. The Reserves
at the end of the year are Rs.1,636 crore.

DIRECTORATE

Mr. S Prabhu was appointed as an Additional Director on the Company's Board
of Directors with effect from 28 January 2010. He holds office upto the
date of the forthcoming Annual General Meeting, and considering that the
Company will benefit from his continuance as a Director, his appointment is
being recommended.

Dr. O Goswami and Ms. M Pudumjee are the Directors who retire by rotation
at the forthcoming Annual General Meeting, and being eligible, offer
themselves for reappointment to the Board. The details of the Directors
being recommended for appointment and re-appointment are contained in the
accompanying Notice Of the forthcoming Annual General Meeting.

PROMOTER GROUP

The Avantha Group is the promoter of the Company. For the purposes of the
SEBI (Substantial Acquisition of Shares And Takeovers) Regulations, 1997,
the names of the Promoter entities and other entities comprising the
'Group' as defined under the Monopolies and Restrictive Trade Practices
Act, 1969, are detailed in Annexure 1 to this Report.

RESEARCH AND DEVELOPMENT

The Company's 'Technology Vision 2015' envisions a scenario in which 25% of
the Company's revenues would be achieved through new products. There would
be 5 Breakthrough Platform Technologies, reduction in Product Development
Cycle time by 75% of the existing cycle time and annual filing of 1000
IPRs. This Vision envisages an enhanced role for the Global R&D Centre
wherein the R&D budget would progressively grow to 4% of the total
revenues.

The above initiatives have resulted in a greater focus on development of
new products. During the year, 20% of the turnover generated in India was
through products less than 5 years old. The Company had also rolled out
approvals for 6 platform technologies which will be pursued in the near
future.

New products and processes developed during the year are detailed in
Annexure 2 to this Report.

The Company has also entered into an agreement with New York State, to
establish a US R&D facility and take advantage of a New York State funded
public/private partnership at the 'Albany Nanotech Facility'. This facility
is considered as one of the most advanced silicone wafer R&D and prototype
manufacturing facilities in the world and one of the most advanced
Nanopower facilities in the US. The Company's facility will be located at
the Energy and Environmental Technology Applications Center (E2TAC) of the
Nanotech Facility and will be focused on R&D activities in the fields of
smart grid technologies and renewable energy applications. The R&D Centre
will provide the Company a brand exposure and recognition in the USA. At
E2TAC, the Company will work side by side with industry leaders in smart
grid technologies, alongwith reputed industrial entities, electrical
utilities and universities. The Company will enjoy shared access to state-
of-the-art world-class equipment for nanotechnology, electronics and
advanced materials as well as a large pool of highly skilled workforce.

R&D as a function is undergoing a process of global integration. It has
undertaken several projects by synergizing multi-functional teams of
executives drawn from various geographies in which the Company operates.
Initiatives on analytics and electronics design were extended to the global
level, towards better integration in this area.

SUBSIDIARY COMPANIES

The Company has four Indian subsidiaries viz CG Energy Management Limited
(CEM), CG Capital & Investments Limited (CG Capital), CG-PPI Adhesive
Products Limited (CG PPI) and Brook Crompton Greaves Limited (BCGL). CEM,
CG Capital and BCGL 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 Company's subsidiary.

To reflect the new Brand Identity of the Company, names of its
international subsidiaries acquired over the years, through various
acquisitions were changed and now the legal entity names start with 'CG',
to identify with the CG parentage.

The Netherlands-based CG International B.V. a 100% subsidiary of the
Company, is the ultimate mother holding company of the 20 downstream
subsidiaries, as under:

* CG HOLDINGS BELGIUM N.V. (formerly known as Pauwels International N.V.)

* CG POWER SYSTEMS BELGIUM N.V. (formerly known as Pauwels Trafo Belgium
N.V.)

* PAUWELS TRAEO GENT N.V.

* CG POWER SYSTEMS IRELAND LIMITED (formerly known as Pauwels Trafo Ireland
Ltd)

* CG SALES NETWORKS FRANCE S.A. (formerly known as Pauwels France S.A.)

* CG SERVICE SYSTEMS CURACAO N.V. (formerly known as Pauwels Trafo Service
N.V.)

* CG HOLDINGS HUNGARY KFT (formerly known as Crompton Greaves Hungary Kft)

* CG ELECTRIC SYSTEMS HUNGARY ZRT (formerly known as Ganz Transelektro
Villamossagi Zrt)

* CG POWER SYSTEMS CANADA INC (formerly known as Pauwels Canada Inc)

* CG POWER SYSTEMS USA INC (formerly known as Pauwels Transformers Inc)

* PT CG POWER SYSTEMS INDONESIA (formerly known as PT Pauwels Trafo Asia)

* CG POWER HOLDINGS IRELAND LIMITED (formerly known as Microsol Holdings
Ltd)

* CG AUTOMATION SYSTEMS UK LTD (formerly known as Microsol UK Ltd)

* CG AUTOMATION SYSTEMS USA INC (formerly known as Microsol Inc.)

* VISERGE LTD

* MICROSOL LTD

* CG SERVICE SYSTEMS FRANCE SAS (formerly known as
Societe Nouvelle de Maintenance Transformateurs)

* MSE POWER SYSTEMS INC

CG HOLDINGS GERMANY GMBH (formerly known as Crompton Greaves Germany GmbH)

* CG SALES NETWORKS AMERICAS INC (formerly known as Pauwels Americas Inc.)

In totality, the Company has 25 subsidiaries, 4 Indian and 21 foreign,

The Company has obtained an exemption under Section 212 of the Companies
Act, 1956, from annexing to this Report, the Annual Reports of the above
mentioned 4 Indian subsidiaries and 21 foreign subsidiaries, for the year
ended 31 March 2010. 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 accounts of the subsidiaries are also available on
the Company's website.

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 119 of the Annual Report.

CONSOLIDATION OF ACCOUNTS

As required by Accounting Standards AS-21 and AS-23 of the Institute of
Chartered Accountants of India, the financial statements of the Company
reflecting the consolidation of the Accounts of the Company, its 25
subsidiaries mentioned above, and 5 Associate Companies, are annexed to
this Report, The Associate Companies are Avantha Power & Infrastructure
Limited, CG Actaris Electricity Management Private Limited, CG Lucy
Switchgear Limited, International Components India Limited and Pauwels
Middle East Trading and Contracting Limited.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
AND OUTGO

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 Annexure 2 to this Re port.

PARTICULARS OF EMPLOYEES

The statement of particulars required pursuant to Section 217(2A) of the
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.

DIRECTORS' RESPONSIBILITY STATEMENT

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.

AUDITORS

The Company's Auditors, Sharp &Tannan, hold office upto the conclusion
ofthe forthcoming Annual General Meeting and, being eligible, are
recommended for reappointment 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.

FIXED DEPOSITS

Currently, the Company has discontinued acceptance of fresh deposits and
also renewal of existing deposits. 93 persons have not claimed repayment of
their matured deposits amounting to Rs.12,34,000 as at 31 March 2010. At
the date ofthis Report, an amount of Rs.41,000 has been claimed and repaid
therefrom, or transferred to the Investor Education Protection Fund, on
completion of seven years.

Link Intime India Pvt. Ltd (formerly Intime Spectrum Registry Limited)
continues to be the Company's Registrars for all matters related to the
Company's Fixed Deposit Scheme. The contact details of Link Intime India
Pvt:. Ltd are mentioned in the Report on Corporate Governance.

SHARE REGISTRAR & TRANSFER AGENT

The Company's Registrar & Transfer Agents for shares continues to be
Datamatics Financial Services Ltd (DFSL), DFSL is a SEBI-registered
Registrar & 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
Company's Investor Services department, the contact particulars of which
are contained in the Report on Corporate Governance.

ENVIRONMENT, HEALTH & SAFETY

The Company is committed to ensuring the health and safety of all its
employees, contractors, visitors and other persons at the Company's
workplace and protecting the environment.

The Company has Health and Safety Committees at all locations which
regularly monitor the divisions' compliance with the Company's Health &
Safety policy. The Company trains and motivates its employees to understand
health and safety responsibilities and to participate actively in its
health and safety programmes.

The Company conducts regular health check-ups for its employees engaged in
handling hazardous materials. It also arranges several seminars and
training sessions on AIDS awareness, cardiac awareness and other fatal
diseases. Safety audits are undertaken by independent assessors to assess
the safety effectiveness at locations.

The Company has also initiated a Group Life Insurance Policy for its
Executives, through which, the family of deceased Executives will receive a
pre-determined amount, in case ofthe Executive's unfortunate and untimely
death during service, due to any cause.

All the manufacturing units of the Company have received ISO 14001
Environmental Standards and Management Certification and OHSAS 18001
Certification for Occupational Health & Safety Assessment Systems, The
Company periodically conducts surveillance audits of both ISO 14001 and
OHSAS 18001, to ensure continued conformity with these standards.

Increasing focus is being placed on innovative, energy efficient and green
products. The Company actively solicits opportunities in the renewable
energy segment, which includes supplying products suitable for usage in
windmills and solar power projects.

Disposal of hazardous waste is undertaken in compliance with the
environmental policies and regulations.

The Company has identified Environment Protection as an important agenda in
its Corporate Social Responsibility arena, and has undertaken many
initiatives in the area of tree plantation, rain water harvesting etc.

ACKNOWLEDGEMENTS

The Directors acknowledge and are grateful for the encouragement 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 sincere appreciation to the
Company's employees, at all levels, for their continued dedication, hard
work and commitment which has been a significant enabler in achieving the
Company's performance.

On behalf of the Board of Directors

G. THAPAR
Chairman
Mumbai, 13 May 2010

ANNEXURE 1 TO DIRECTORS' REPORT

List of Group Entities The following entities and persons, along with
Crompton Greaves Limited constitute the Group as defined under the
Monopolies and Restrictive Trade Practices Act, 1969:

Gautam Thapar

Bilt Graphic Paper Products Limited

BaIIarpur International Holdings B.V.

Ballarpur Paper Holdings B.V.

Ballarpur International Paper Holdings B.V.

Ballarpur International Graphic Paper Holdings B.V.

Avantha International Holdings B.V.

TAF Asset 2 B.V.

Avantha International Asset B.V.

Sabah Forest Industries Sdn. Bhd.

BallarpurSpeciality Paper Holdings B.V.

Ballarpur Packaging Holdings

B.V. Ballarpur International Packaging Holdings B.V.

Ballarpur Packaging Holdings Private Limited

Bilt Tree Tech Limited

JG Containers (Malaysia) Sdn. Bhd.

Mirabelle Holdings LLC

Mirabelle Trading Pte. Limited

MTP NEW Ocean (Mauritius) Limited

Corella Investments Limited

Lustre International Limited

Avantha Holdings Limited (formerly known as NewQuest Corporation Limited)

Bilt Paper Holdings Limited

Karam Chand Thapar & Bros. Limited

KCT Papers Limited

KCT Chemicals & Electricals Limited

APR Sacks Limited THE Paperbase Company Limited

Avantha Realty Limited
(formerly known as 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

Avantha Technologies Limited

NewQuest Insurance Broking Services Limited

Avantha Power & Infrastructure Limited Korba West Power Company Ltd.

TKS Developers Ltd.

Jhabua Power Ltd.

Jhabua Power Investment Private Ltd.
(formely known as Gleneagles Healthcare Holdings Private Ltd.)

Prestige Wines and Spirits (P) Limited Global Green Company Limited

Global Green USA Limited

GG International N.V.

Intergarden N.V.

Intergarden (India) Private Limited Dunakiliti Kanzervuzem Kft

Greenhouse Agraar Kft

Floragarden Tarim Gida Sanay ve Ticaret A.S.

Puszta Konserv Kft

Solaris Holdings 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.

Sairam Infra Projects Private Limited

Ballarpur Industries Limited

CG Energy Management Limited

CG Capital & Investments Limited

CG-PPI Adhesive Products Limited

Malanpur Captive Power Limited

Brook Crompton Greaves Limited

CG Actaris Electricity Management Private Limited

CG Lucy Switchgear Limited

International Components India Limited

CG International B.V.

CG Holdings Belgium N.V.

CG Sales Networks Americas Inc.

PT CG Power Systems Indonesia

Pauwels Trafo Gent N.V.

CG Power Systems Canada Inc.

CG Power Systems USA Inc.

CG Power Systems Ireland Limited

CG Sales Networks France SA

CG Power Systems Belgium N.V.

CG Service Systems Curacao N.V.

Pauwels Middle East Trading & Contracting Limited

CG Holdings Hungary Kft

CG Electric Systems Hungary Zrt.

CG Power Holdings Ireland Limited

Microsol Limited

Viserge Limited

CG Automation Systems UK Limited

CG Automation Systems USA Inc.

CG Service Systems France SAS

MSE Power Systems Inc.

CG Holdings Germany GmbH

Power Technology Solutions Limited

Imerys NewQuest (India) Private Ltd.

Sohna Stud Farms P. Ltd.

Vani Agencies P. Ltd.

ASA Agencies (P) Limited

Topscore Tradevariety (P) Limited

Venus Financial Services Limited

The Pioneer Limited

Arizona Printers & Packers Private Limited

Avantha Foundation

Blue Horizon Investments Limited

Gyanodaya Prakashan Private Limited

Krebs & CIE (India) Limited

Leading Line Merchant Traders Private Limited

Orient Engineering & Commercial Company Limited

Oyster Buildwell Private Limited

Saraswati Travels Private Limited

Seer Buildwell Private Limited

Ultima Hygiene Products Private Limited

Vanity Propbuild Private Limited

Varun Prakashan Private Limited.

Content Services & Publishing Private Limited.

ANNEXURE 2 TO DIRECTORS'REPORT

Information under Section 217(1)(e) of the Companies Act, 1956

A. Conservation Of Energy

A. ENERGY CONSERVATION MEASURES TAKEN:

During the year, several energy efficient technologies and processes have
been implemented by the Company's divisions in fulfillment of the Company's
commitment to conserve energy and reduce the adverse impact of consumption
of fossil fuels on the environment. Energy consumption and usage of
renewable energy is regularly monitored across all divisions/offices of the
Company.

Efforts are also made to conserve energy through implementation of green
technology and manufacturing of low noise products. During the year, the
Company won the National Energy Conservation Award from the Ministry of
Power for its efforts in improving efficacy of FTL Lamps. The typical
measures taken towards energy conservation are:

* Automation in seasoning process for better optimization of on-off cycle
of heater, resulting in energy saving

* Doing reactive power compensation to enhance power factor

* Change of reciprocating compressor by screw compressor

* Installation of electronic chokes in light fittings resulting in reduced
energy wastage associated with conventional chokes

* Installation of new regenerative oven at Bhopal plant resulting in useful
utilization of otherwise wasted heat

* Usage of solar lamps in street lighting within the factory

B. ADDITIONAL INVESTMENTS

AND PROPOSALS, IF ANY, BEING IMPLEMENTED FOR REDUCTION IN CONSUMPTION OF
ENERGY:

* Replacement of Aluminum fans with FRP fans in Industrial 3 phase exhaust
fans to reduce energy requirements

* Installation of LPG fired furnace instead of LDO/Electric fired furnace

* Achieving superior control and reduced energy consumption in milling
machine by using retrofitting motor drive

* Reduction in motor working hours by replacing mechanical clutching system
with electrical clutching in boring machine

* Commissioning of dedicated smaller DG set for street & emergency
lightings for reducing diesel consumption

* Connection of regenerative drive to motor test set up for feeding energy
back to the grid

C. IMPACT OF THE MEASURES AT (A) AND (B) FOR REDUCTION OF ENERGY

CONSUMPTION AND CONSEQUENT IMPACT ON THE COST OF PRODUCTION:

The above measures have resulted into effective management and utilization
of energy resources and have resulted in cost savings for the Company.
However, since the Company's manufacturing processes are not energy
intensive, the energy conservation measures have a negligible impact on the
Company's overall cost of production of goods.

B. Technology Absorption

RESEARCH AND DEVELOPMENT (R&D)

1. Specific areas of significance in which R&D is carried out by the
Company:

R&D priorities of the Company are aligned with the Company's strategic
Business plan and market indicators. R&D continues its thrust on offering
smart solutions through development of new technologies and new products.
During the year, R&D concentrated on development of high impact platform
technologies such as developing newer applications which leverage on
nanotechnology, process development of new grade electrical steels which
optimize motor performance, new insulating systems for HV applications,
development of Intelligent Electronic Devices for HT Machines and virtual
design processes.

2. Benefits derived as a result of the above R&D:

New products developed Power Systems

* 200MVA,420/21 kV single phase largest rating generator transformer

* 315MVA, 400/220/33 kV 3 phase largest rating auto transformer

* 45MVA 21 /11.5 kV 3 phase unit auxiliary transformer

* 800 kV 50kA gas circuit breaker, first time manufactured in India under
UHV switchgear

* 72.5 kV gas circuit breaker with 'Arc Assist' technology

* 400 kV 50 kA spring pneumatic gas circuit breaker without grading
capacitor

* ANSI Bushings range - 69kV, 138kV, 230kV

* 420 kV extra high creepage current transformer

* Numerical Relays CGM 4N for SCADA applications

* 12 kV, 31.5 kA/40 kA vacuum circuit breaker for outdoor kiosk

* 12 kV, 50 kA indoor vacuum circuit breaker for higher end market segments

* 36 kV, 26.3 kA indoor vacuum circuit breaker

* 12 kV, 26.3 kA porcelain clad vacuum circuit breaker

* 12 kV,20 kA indoor split vacuum circuit breaker

* 24 kV 16 kA 630 A, vacuum interrupter for RMU application

* 36 kV voltage transformer with 1.9 voltage factor for 8 hours for exports
market Capacitor switch with SMARTVAR 3

* 3 phase 3 Wire, 180 WAR rating 'Statcom' power quality improvement
solutions

* 145 kV instrument voltage transformer

R&D from CG Power (overseas locations)

The Company has also benefited from the Research and Development work
undertaken at CG Power (Overseas locations) as under:

* Track side transformers for high speed trains

* Hybrid transformer with paper/nomex insulation system for off shore wind
industry 750 MVA, 380 kV: biggest MVA rating ever produced by the Company

* 230 kV mobile substation for North American market

* Phase shifting transformer with bi-directional voltage variation

* Universal re-connectable generator step up transformer

* XGate substation gateway

* Distribution automation self-healing networks

* 3 winding transformer with interleaved LV windings allowing close
impedance matching for Inverter applications

* Green power transformer capable of maintaining reverse power flow to tie
green projects to the grid

* New series of HVDC converter transformers

* Onshore Booster Sub-station concept for Offshore wind applications

Industrial Systems

* NEMA premium efficiency motors for range 90-132, with CSA approval

* 160 Frames, 15kVA, 1 phase high efficiency alternator for OEMs

* Range extension of ND 450 frame motor - 10 pole & 6 pole

* E560 frame flameproof motors

* Low cost GD series motors with energy efficiency

* 2 MW, 2 pole motor in closed air circuit air cooled (CACA) enclosure

* 2.7MW, 4 pole motor in CACA enclosure

* 5.4 MW, 6 pole motor in CACA enclosure

* 2.5 MW, 8 pole Vertical 1700 flange size air cooled (1700 VTPC) motor

* 2.5 MW, 10 pole 1700 VTPC motor

* 2.1 MW, 12 pole 1700 VTPC motor

* 2 MW, 14 pole motor in vertical air cooled enclosure

* Vertical totally enclosed tube ventilated slip ring motor

* 1.4 MW, 16 pole motor in vertical air cooled enclosure

* Wide voltage motor (110-260V) with intelligent electronic controller

* Robust & economical 'Sheetal Series Motors' for rural India

* Compact & light weight 'Lite Series Motors' for exports

onsumer Products

* High Pressure Geyser - Magna, first time in India with 10 Bar pressure
withstanding capacity

* Fans for Automobile applications BUZEE

* Ceiling Fans - Trimster, Iris Underlight, Winzer (Institutional), Lotus

* Ceiling Fans - Range extensions for Scorpio, Smart Breeze, Power Saver,
Briz Air

* Table/Wall/Pedestal Fans - Hi Flo Wave, Rapid Pedestal, Wind Flo

* Exhaust fans - 150 mm Drift Air Plus, Brisk Air

* LED luminaires - LED Crom-star - 4W, LED 90/120W, LED Tile

* Office luminaire - Luxus range, Oscillar pendant range

* Factory lighting - Well Glass & Highbay induction lamps.

* Streetlight with T5 lamps, with ingress protection of IP65 class

* Garden lighting - High-end post tops

* 4' submersible pump Popular Series with jacketed stainless steel tube

* 8' submersible pumpsets

* 20HP & 25HP dewatering pumps

* Control panels for pumps

* Monobloc MB, MBG series pumpsets

* Vertical openwell submersible pumpsets for agro sector

* Horizontal split case pumps

* End suction pumps

New Processes Implemented/

Processes Improved

* Conversion of notching tools to carbide tools leading to productivity
improvement in stampings

* Conversion of gang slotting to progressive based stamping tools to
enhance utilization factor of laminations

* Optimisation of materials to enhance life of components in sintering
furnace

* Development of process to enable recycling of critical materials in lamp
manufacture

* Improvement of wiping assembly for bimproved repeatability in lamp making

Technology Competence Achieved

* Developed a new range of SF6 Breakers with 'Arc assist' platform
technology requiring low energy for operating mechanism, enhancing breaker
reliability

* Developed new ceiling fan prototype which has the lowest wattage
consumption in its category based on motor technology

* New process of designing for HT Motors which targets 'first time right'
and which improves features, performance and breduces design cycle time

* New motor technology adapted to newer applications like fans for
automotive applications which reduces size, enhances efficiency and
maintenance needs

* Developed alternators with newer topology which offer enhanced power to
weight ratio compared to existing technology

* Developed new process for electrical steel which has the potential to
become a platform for all requirements of FHP band LT motors

* Patents During the year the Company filed 151 patents in India, which
together with 244 patents filed earlier, are pending for registration. No
patents have been granted during the year.

3. Future Plan of Action

During the year the Company has formalized its technology strategy, which
includes identification of products and platform technologies upto the year
2015. R&D would focus on development of products which are knowledge based
and provide solutions to the customers. Besides, the Company has also set
threshold levels of growth expected in future from the sale of new products
developed by the Company. The product development life cycle will also be
benchmarked with the best-in-class in the industry. R&D will also leverage
its capabilities by entering into collaborations with the external bodies
and universities.

4. Expenditure on R&D
31 MARCH 2010

(a) Capital 21

(b) Revenue 34

(c) Total (a+b) 55

(d) Total R&D expenditure:
as a percentage of net 1.04%
turnover

as a percentage ofprofitbefore 6.32%
tax and extraordinary item

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Efforts and Benefits:

The Company is now leveraging on the technology of several companies it had
acquired in the last few years to address gaps in its technology portfolio.
During the year, the Company has collaborated on protocol development for
relays and GIS development, with its Irish and Hungarian counterparts
respectively. During the year, the Company's US subsidiary acquired the
technology of ADMS (Advanced Distribution Management System) for Wind SCADA
system which is one of the leading Wind SCADA products for managing and
controlling wind farms.

The Company has also entered into an agreement with the New York State to
establish its US R&D facility at Albany Nanotech Facility which will enable
it to undertake R&D activities in the fields of smart grid technologies and
renewable energy applications.

2. Imported Technology: Nil

C. Foreign Exchange Earnings And Outgo

A. ACTIVITIES RELATING TO EXPORTS; INITIATIVES TAKEN TO INCREASE EXPORTS;
DEVELOPMENT OF NEW EXPORT MARKETS FOR PRODUCTS AND SERVICES; AND EXPORT
PLANS:

The Company's activities and initiatives relating to exports are contained
in the Management Discussion and Analysis Report.

B. TOTAL FOREIGN EXCHANGE EARNED AND USED:

31 MARCH 2010 RS.CRORE

Total Foreign Exchange 1,233
Earned

Total Foreign Exchange Used 558

On behalf of the Board of Directors

G THAPAR
Chairman
Mumbai, 13 May 2010

MANAGEMENT DISCUSSION AND ANALYSIS

CG: THE NEW BRAND IDENTITY

15 October 2009 was a very important day in the history of an energetic and
ever-growing 73 year old global company. Crompton Greaves ('CG' or 'the
Company') launched its new corporate brand identity - not just in India but
simultaneously across the world.

CG: Smart solutions. Strong relationships.

Why the need for a uniform corporate brand identity?

In becoming a global corporation, CG has not only been expanding its indian
operations but also acquiring key global facilities spread across the
world. The main global acquisitions have been:

* 2005, PAUWELS: The Company acquired the Pauwels group of Belgium, which
operates in the areas of power and distribution transformers,
withmanufacturing facilities at Belgium, Ireland, the USA, Canada and
Indonesia.

* 2006, GANZ: A high technology company in Hungary, with a consistent track
record in power transformers, GIS Switchgear and rotating machines, as well
as in the supporting areas of design, erection and commissioning.

* 2007, MICROSOL: With operations in Ireland, the USA and the UK,
Microsol's expertise is in sub-station automation for medium voltage (M\~
and high voltage (H\~ sub-stations.

* 2008, SONOMATRA: Located in France, Sonomatra specialises in providing
services of on-site maintenance/repair of power transformers and on-load
tap changers, oil analysis, oil treatment and retro-filling,

* 2008, MSE; Based in the USA, MSE is engaged in engineering, procurement
and construction (EPC) of high voltage electric power applications. It is a
systems integrator in international EPC business, especially in the
renewable energy (wind) segment. In addition, CG India has three main
businesses: o POWER SYSTEMS: Manufacturing a large range of transformers,
Switchgear, and providing transmission and distribution (T&D) solutions
with its engineering projects and services capabilities.

* INDUSTRIAL SYSTEMS:

Producing a wide spectrum of high tension (HT) and low tension (LT)
rotating machines, namely motors and generators, as well as related
solutions.

* CONSUMER PRODUCTS: Manufacturing and marketing a large variety of
industrial and household solutions in lighting, fans, pumps and home
appliances. Today, CG is a market leader in most business areas, and has
over 8,000 employees worldwide, spanning various nationalities and
cultures. It has enhanced and consolidated its global footprint by
emphasising a corporate culture built on values, quality and customer
service. Till 15 October 2009, all CG's foreign entities had their
individual corporate brand names. To amalgamate these entities into the CG
family, the Company first integrated processes, systems and technologies
across all its operations worldwide. That was not enough. The Company
needed to discover that one single inspirational idea common to all
companies in the CG fold - an idea that represented a shared philosophy
through which CG could present one unified face to the world, and speak
with one consistent voice.

The first step in this discovery was extensive research among all CG's
stakeholders worldwide, to identify common beliefs. It helped CG to
ascertain its shared philosophy, which was 'Our core strength is the value
we place on relationships, and the ability to provide solutions, which, in
turn, strengthen these relationships'. Significant traits that also emerged
across all the companies in the CG family were that we are passionate,
responsive, down-to-earth and trustworthy.

The next step was choosing a corporate brand! name. We chose 'CG' because
it links all our foreign companies with CG. It establishes our common
lineage, and unites every company in our family with a common face.

Our shared philosophy - the value we place on relationships and solutions -
was translated into the new brand identity through:

* A VISUAL: Two equal forces, 'C' and 'G', which unite to create a synergic
new form, 'CG' - where the whole is greater than the sum-total of its
parts.

* A BRAND LINE: 'Smart solutions. Strong relationships.'

The entire group's commitment to the new brand identity can be gleaned from
a simple fact, In just one day, 15 October 2009, the new corporate brand
was implemented across all group companies throughout the world. From that
day, every official document, presentation, letterhead, e-mail, visiting
card, advertisement, poster, billboard, communication and all else that
underscored the common corporate brand carried the new brand identity.
Today, it has become a part of the group's DNA.

ACQUISITIONS, INVESTMENT AND DIVESTMENT

On 29 March, 2010, in its drive to becoming a 'Provider of Integrated
Solutions, Services and Products', CG acquired Power Technology Solutions
Limited (PTS), a UK-based high voltage electrical engineering company. PTS
provides consulting as well as technical and engineering support to
regional electricity companies in the UK. Such services include conceptual
engineering and system studies, and complete engineering, procurement and
construction (EPC) solutions for sub-stations that cover electrical, civil
and structural aspects. The approximate acquisition value was #30 million.

In addition, on 29 April 2010, CG concluded an arrangement for the
acquisition ofthree businesses of Nelco Limited - traction electronics,
SCADA and industrial drives for a value of approximately Rs.92 crore. This
acquisition should enable CG to become a stronger and more comprehensive
player in its railways business and also build capabilities in drives. This
is a significant acquisition for CG's Industrial Systems business.

As mentioned in last year's Annual Report, CG holds 32% in Avantha Power
and Infrastructure Limited (APIL). This translates to 206.36 million equity
shares of APIL at Rs.11 per share - or an investment of Rs.227 crore. APIL,
an Avantha Group company, is engaged in the generation, transmission and
distribution of electricity.

APIL has filed a draft Red Herring Prospectus with the Securities and
Exchange Board of India (SEBI) for a public issue in the near future. As a
significant investor, CG is supporting this IPO,

FY2010 also saw a divestment. CG divested its 59% shareholding in Malanpur
Captive Power Limited to APIL. This transaction involved the sale of 11.02
million equity shares (face value of Rs. 10 each), at a price of Rs.46.63
per share. Thus, CG earned an extraordinary revenue of Rs.51.4 crore, which
translated to an extraordinary profit of Rs.40.38 crore. This transaction
reflects in the stand-alone and consolidated profit and loss account of CG.

KEY PERFORMANCE

The key performance highlights of CG for FY201 0 is given in the graphs on
the left.

STRATEGIC BUSINESS UNITS (SBUS)

CG has three SBUs: (i) CG Power, dealing with power systems, (ii) CG
Industrial Systems and (iii) CG Consumer Products. Chart A gives the
comparative shares of business of the three SBUs on a consolidated global
basis for FY2009 and FY2010.

* Thanks to the aftermath of the global economic crisis, CG Power's net
revenues were flat - recording Rs.6,204 crore in FY2010 versus Rs.6,174
crore in FY2009. At the average exchange rate, CG Power's top line was US$
1.3 billion. o Net revenue from CG Industrial Systems increased by 9% -from
Rs.1,150 crore in FY2009 to Rs.1,259 crore in FY2010.

* Net revenue from CG Consumer Products rose by 22% from Rs.1,322 crore in
FY2009 to Rs.1,612 crore in FY2010.

CG Power accounts for 68% of CG's consolidated net revenues; followed by
17% for CG Consumer Products; and 14% for CG Industrial Systems. Chart B
shows this.

CG POWER: CONSOLIDATED PERFORMANCE

CG Power includes the consolidated global transmission and distribution
businesses, and is CG's largest SBU. It manufactures power transformers,
distribution transformers, extra high voltage (EHV) and medium voltage (MV)
circuit breakers, gas insulated Switchgear (GIS), EHV instrument
transformers, lightning arrestors, isolators, vacuum interrupters and
electronic energy meters, It has been moving into providing turnkey
solutions for T&D through customised sub-station projects, EPC and other
integrated end-to-end contracts that encompass solutions, design, products,
procurement, construction, erection and servicing.

The facilities of CG Power in India and overseas are:

In India

* KANJUR MARG (MUMBAI), MALANPUR AND MANDIDEEP (MADHYA PRADESH):

Power and distribution transformers.

* NASIK AND AURANGABAD (MAHARASHTRA), BANGALORE

(KARNATAKA): EHV and MV circuit breakers, EHV and MV instrument
transformers, vacuum interrupters, isolators, lightning arrestors, power
quality products and solutions and electronic energy meters. o GURGAON
(HARYANA): Engineering Projects Division (EPD).

Overseas

* MECHELEN (BELGIUM): Manufactures custom-made medium and large power
transformers, large distribution transformers, mobile sub-stations, and is
engaged in contracting.

* CAVAN (IRELAND): Smaller single-phase and three-phase distribution
transformers and micro-substations.

* CHARLEROI (BELGIUM): The services division.

* WASHINGTON (MISSOURI. USA): Threephase and pad-mounted transformers,
unitised sub-stations and small power transformers.

* WINNIPEG (CANADA): Medium and large power transformers, mobile sub-
stations and high voltage direct current (HVDC) converter transformers.

* BOGOR (INDONESIA): Power transformers from 10 MVA to 260 MVA.

* TAPIOSZELE (HUNGARY): Transformers, gas insulated Switchgear (GIS), and
engages in contracting and services. It also manufactures traction motors
(see section on CG Industrial Systems).

* DUBLIN (IRELAND), JARROW (UK), SEYMOUR (CONNECTICUT. USA) AND EAGLE
(IDAHO, USA): These facilities focus on the manufacture of sub-station and
distribution automation products and systems; and project delivery and
sales management for Europe, the Middle East and the US markets.

* NORTHERN FRANCE: These facilities are for servicing of power systems like
providing on-site maintenance, repairing of power transformers and offering
oil analysis, oil treatment and retro-filling solutions.

* ALBANY (USA): A key EPC player of high voltage power transformer systems,
especially in renewable energy (wind), sub-stations, aerial lines and wind-
plant information and communications systems

1. CONSOLIDATED FINANCIAL PERFORMANCE OF CG POWER RS. CRORE

YEAR ENDED 31 MARCH FY 2009 FY2010 GROWTH

Net Sales 6,174 6,204 0%

EBIDTA 713 882 24%

EBIT 625 769 23%

Capital Employed 1,533 1,678 9%

ROCE 40.8% 45.8% 5% pts

Unexecuted Order Book 6,163 5,987 -3%

NOTE: Figures have been regrouped wherever necessary to make them
comparable.

- with offices in Maryland, Pennsylvania, Florida, Texas and Arizona.

* NOTTINGHAM (UK): A new acquisition. Power Technology Solutions Limited
(PTS), a high voltage electrical engineering company, which provides
consulting, technical and engineering support, including EPC services to
regional electricity companies.

Thanks to the after-effects of the global economic crisis, the performance
of CG Power has been muted, especially outside India. This is due to a
sharp drop in the demand for distribution transformers, arising out of
major de-growth in housing projects; and a general 'watch-and-wait'
approach of many customers before taking final delivery of products and
services.

The financial performance of CG Power is given in Table 1. This includes CG
Power's Indian and global operations.

As mentioned, the lack of lop-line growth in CG Power has been due to the
sharp fall in sales of distribution transformers (DT) in Europe and the USA
during FY201 0. The outlook for DT remains difficult and uncertain in FY201
1. Although there has been a slight uptick in the UB housing starts in 01
2010' (January to March), the growth is very modest. Moreover, as in March
2010, newly built single unit houses have, on average, remained unsold for
over 14 months - a number that has remained persistently high over the last
six months. For each single unit home that is actually sold, there is stock
of 7.6 completed and saleable homes in the market, In such a scenario, it
is likely that sales of DT for the housing market will remain muted in the
US. The story is similar in Ireland, Spain, Portugal, the UK and most other
parts of western Europe.

Things are different for power transformers (PT), wind, sub-stations and
systems integration. This is particularly true of Asia, especially India
and south-east Asia, where CG has a strong geographical presence. Demand
for PT remains strong in India; so too PT as well as DT in the rest of
Asia. After a year of slowdown, largely on account of the extra-cautious
approach of banks and financial institutions, renewable energy,
particularly wind, is again back in the fore. With its leadership position
in SLIM. transformers for windmills and its proven ability to implement
integrated solutions that connect wind-farms to transmission grids via sub-
stations, CG Power is well positioned to garner growth will be accounted
for by India and China. With it, there will be a steady increase in demand
for T&D equipment and solutions - for replacement and for new projects.
India will see a huge growth in power sector investments, which has become
already apparent within a year of the new government being in power. The
investments will span generation, transmission and distribution, and
involve supplying of T&D equipment as well as providing end-to-end
solutions. CG Power is well placed to exploit these opportunities.

CG Power India: Financial Performance

There is a clear difference in the demand for power equipment and services
between Asia and India on the one hand, and the western developed nations
on the other, In India, demand has been growing for T&D equipment and
solutions. And CG Power India has performed very well in FY201 0. The
financial performance of CG Power India is given in Table 2.

2. PERFORMANCE OF CG POWER (INDIA) RS. CRORE

YEAR ENDED 31 MARCH FY2009 FY2010 GROWTH

Net Sales (net of exciseduty) 2,224 2,510 13%

EBIDTA 370 484 31

EBIT 349 462 32%

Capital Employed 430 498 16%

ROCE 81.2% 92.8% 11.6% pts

Unexecuted Order Book 2,431 3,038 25%

Net sales of CG Power India grew by an increasing share of the renewable
business. Indeed, CG Power is increasingly finding new profitable
opportunities in developing, constructing and supplying end-to-end power
projects in various parts of the world.

While the short term outlook may be flat - growth in solutions, services
and PT being countervailed by difficulties in the DT markets - the medium
and longer term outlook for CG Power continues to remain robust,

As we stated last year, the world's demand for primary energy will rise
from 11.4 billion metric tons of oil equivalent in 2008 to about 17.7
billion metric tons in 2030. Almost three-fourths of this 13% over last
year to reach Rs.2,510 crore. EBIDTA increased by 31% to Rs.484 crore, EBIT
rose by 32% to Rs,462 crore. Return on year-end capital employed (ROCE) was
at 92,8% - up 11.6 per cent points over the previous year. The unexecuted
order book (UEOB) grew by 25% to Rs.3,038 crore.

CG Power Overseas: Financial Performance

The financial performance of the CG Power Overseas is given in Table 3.

Driven by falling demand for distribution transformers (DT), the top-line
of CG Power Overseas shrank by 7% to reach Rs.3,733 crore (US$ 782
million). Despite this, EBIDTA rose by 17% to Rs.400 crore (US$

3. PERFORMANCE OF CG POWER (OVERSEAS) RS. CRORE

YEAR ENDED 31 MARCH FY2009 FY2010 GROWTH

Net Sales 4,034 3,733 -7%
EBIDTA 342 400 17%
EBIT 276 307 11%
Capital Employed 1,103 1,180 7%
ROCE 25% 26% 1% pt
Unexecuted Order Book 3,732 2,949 -21%

84 million). EBIT grew by 11% to Rs.307 crore (US$ 64 million). ROCE grew
by 1 per cent point to 26%, Adverse demand conditions show up in the
unexecuted order book (UEOB) which, as on 31 March 2010, fell by 21% to
Rs.2,949 crore (US$ 618 million).

CG Power: Key Developments

FY2010 saw several significant developments in CG Power, some of which are
given below:

* CG Power India, along with ZTR of Ukraine, booked orders for 86 units of
765 kV ultra-high voltage (UHV) reactors valued at Rs.600 crore. The
customer is the Power Grid Corporation of India Limited (PGCIL). CG will be
producing 43 such reactors, valued at Rs.352 crore.

* CG Power India saw a significant turnaround in its Engineering Projects
Division (EPD), In January 2010, EPD entered the arena of 765 kV sub-
stations by bagging the order for the 765 kV / 400 kV Unnao sub-station
project in Uttar Pradesh for Rs.302 crore. EPD also successfully completed
and handed over the 400 kV Rarmer sub-station project in Rajasthan within a
period of nine months. EPD also bagged an orderworth Rs.125 crore from the
Chhattisgarh State Power Transmission Company Limited to construct a 400 kV
/ 220 kV sub-station at Raipur.

* CG Power India's transformer division at Kanjur Marg, Mumbai, became the
first Rs.1,000 crore division in CG Power worldwide. o CG Power India's
Switchgear division entered the UHV segment by indigeneously designing and
developing India's first 800 kV, 50 kA gas circuit breaker, which was
successfully type-tested in laboratories in South Korea and India. The
division has already received orders for eight such circuit breakers.

* CG Power India won a prestigious order for supplying two 500 MVA power
transformers for the Commonwealth Games in New Delhi. This is the highest
MVA rating for a 400 kV system,

* CG Power Overseas remains the number 1 for SLIM(R) transformers and wind
farm: installations. Its products and services involve many long term
agreements with companies such as Siemens Wind Power, Enercon, Multibrid
and other players in this market. Introduced a SLIM. transformer for the US
distribution transformer market.

* CG Power Overseas has gained a foothold in the solar power market by
developing a three-winding transformer designed around solar power
applications,

* CG Power (Power Transformer, Belgium) has developed, manufactured, tested
and is delivering a 750 MVA power transformer to the Saudi Electricity
Company. This will replace existing units at Hawiyah 380 sub-station
located in eastern Saudi Arabia, which primarily feeds the electricity
needs of the oil industry, namely Aramco. This transformer is designed
according to the advanced specifications enabling it to meet requirements
in terms of inter-changeability, advanced controls and cooling.

* The Systems Division of CG Power (Belgium) has designed, engineered and
are building the transmission grid connection for a 165 MW offshore
windfarm called Belwind, located 50 km in the coastal waters of Belgium.
This system connects offshore wiind-farms to the main high voltage grid.
The project also involved manufacturing, transporting and installing of a
185 MVA power transformer in a totally metal enclosed sub-station that is
located on an offshore seabed foundation.

* MSE has interconnected a fourth of all wind power in the USA to the grid,
In the process, it has proven itself to be a leader in this business.
Today, it can execute an order-to-commission of a sub-station in 16 weeks,
MSE has developed balance of plant solutions for photo-voltaic solar
plants, and is completing its first project of 6 MW in Pennsylvania, In
April 2010, MSE and CG Automation Systems acquired the Advanced
Distribution Monitoring System (ADMS) technology to monitor wind turbine
systems from Second Wind Systems Inc, USA. This has strengthened MSE's
offerings of feature-rich inter-connection systems essential for smart-grid
solutions.

* CG Power (Belgium) has been developing track side transformers, for high
speed trains; and hybrid transformers with Nomex. paper-based insulation
systems for the offshore wind industry,

* The Washington (USA) plant of CG Power Overseas began to supply medium
power transformers from 10 MVA to 60 MVA, with a rating of up to 850 KV BIL
(basic impulse level). The plant at Winnipeg (Canada) produced its first
230 kV mobile sub-station for the North American market. It also produced
the first phase shifting transformer with bidirectional voltage variation;
and the first universal re-connectable generator step-up transformer.

* CG Automation Systems, earlier Microsol, introduced the XGate sub-station
gateway and distribution automation selfhealing networks, and has received
good customer reviews. It also delivered and commissioned the division's
first IEC61850 compliant sub-station automation system with integrated
protection and control.

* Through the Unipower (power transformer unification) initiative, CG Power
is on target to achieve technology leadership in the transformer business.
Power transformer plants at Kanjur Marg and Mandideep in india, Belgium,
Canada, Indonesia, and Ganz in Hungary are operating as a seamless whole,
in matters of technology and design.

4. PERFORMANCE OF THE CG INDUSTRIAL SYSTEMS BUSINESS RS. CRORE

YEAR ENDED 31 MARCH FY2009 FY2010 GROWTH

Net Sales (net ofexcise duty) 1,150 1,259 9%
EBIDTA 230 295 28%
EBIT 213 276 30%
Capital Employed 240 230 -4%
ROCE 88.8% 120.0% 31.2% pts
Unexecuted Order Book 403 378 -6%

CG INDUSTRIAL SYSTEMS

The CG Industrial Systems SBU manufactures the following types of products:

* High tension (HT) motors
* Railway transportation equipment
* Low tension (LT) motors
* Direct current (DC) motors

AC drives

* Railway signalling equipment
* Fractional horse power (FHP) motors
* AC generators
* Stampings

Its facilities are located at;

* MADHYA PRADESH- Mandideep (HT motors and rail transportation equipment)
and Pithampur (railway signalling equipment).

MAHARASHTRA: Mumbai, KanjurMarg (stampings) and Ahmednagar (LT motors,
alternators, AC drives and stampings). Nelco's facilities at Mahape
(traction electronics, SCADA and industrial drives).

* GOA: LT motors and FHP motors.

* HUNGARY: Tapioszele (rotating machines).

The financial performance of the Industrial Systems is given in Table 4.

* FY2010 saw a significant growth in demand and top-line, especially during
the second half of the year for LT Motors. LT Motors has maintained the
number 1 position in India for AC motors; improved from number 2 to number
1 in India for alternators by quantity and maintained its number 2 position
in DC motors. The range of slip ring alternators for rural market
applications showed a steady increase in demand and sales. There was also a
significant spurt in demand for the smaller range of motors in the second
half of FY2010. The division has grown faster than the market across all
its segments; and also increased EBIT and ROCE in the process. Additional
facility was created at Goa (Thivim) to cater to the growing demand in the
lower range of motors; the range of motors was increased to Frame 450, so
as to widen the range of manufacture up to 750 KW (four pole). Licensed
capacity of unit at Ahmednagar was doubled to 10 million HP. o The M7 and
the railway signalling divisions, which makes HT motors, rail
transportation equipment and railways signalling equipment, have also
performed well in FY201 0. Net sales increased by 16% to Rs.326 crore. In
physical terms, almost all products manufactured in M7 showed double-digit
growth. The unit's ROCE continued to be in healthy tripledigits.
Significant reduction in delivery period as well as in work content through
better engineering enabled M7 to execute more orders. Increases in
manufacturing capacity as well changes in the plant layout to create
additional shop floor space helped improve production as well as
productivity. Overall improvement in supply chain management, including new
vendor development, helped with costs and in reducing the raw material-to-
sales ratio.

* The railway signalling division bagged the highest ever order for
carriage fans (BLDC fans) from Indian Railways. The contract is for the
supply of 25,791 fans valued at Rs.6.7 crore. As far as rail transportation
and railways signalling equipment goes, CG maintains a very strong presence
in relays, point machines and BLDC fans - with market shares varying; from
32% to 85% and it maintains the number 1 position in all the three
products.

* In a difficult scenario for industrial motors in Europe, CG Hungary
Rotating Machine (RM) Unit had some notable successes. It executed major
orders for the cement industry in UK and Israel, and supplied another motor
for a global cement major's unit at Benin (Africa), A five-year on-site
maintenance contract was signed for 220 MVA generators that were earlier
supplied to a power plant in Hungary. Two 31 MVA generators were supplied
for transformer testing plants. The RM unit has installed a 100 metric ton
crane for large motors and generators; and a 100 metric ton trolley for
moving components between the bays and the finished products to the
painting chamber. It has signed agency contracts for Germany, Italy,
Slovakia and Czech Republic, the Scandinavian countries, Russia and
Bulgaria.

5) PERFORMANCE OF THE CG CONSUMER PRODUCTS BUSINESS RS. CRORE

YEAR ENDED 31 MARCH FY2009 FY 2010 GROWTH

Net Sales (net ofexcise duty) 1,322 1,612 22%

EBIDTA 153 237 55%

EBIT 146 230 58%

Capital Employed 56 51 -9%

ROCE 260.7% 451.0% 190.3% pts

CG CONSUMER PRODUCTS

The CG Consumer Products business supplies fans, lighting equipment (light
sources and luminaires), pumps, integrated security systems, home
automation and a range of electrical household appliances. The SBU has the
following facilities:

* BETHORA AND KUNDAIM (GOA): fans and appliances,

* BADDI (HIMACHAL PRADESH): fans.

* KANJUR MARG (MAHARASHTRA):

luminaires.

* AHMEDNAGAR (MAHARASHTRA):

Pumps.

* VADODARA (GUJARAT): light sources.

The financial performance of Consumer Products is given in Table 5.

* CG is one of the fastest growing consumer product brands in India. It is
the market leader in fans with a strong brand image; occupies the number 2
position in lighting, and is expanding its product portfolio; is the
fastest growing brand in home appliances; and is the leader in the domestic
pumps segment. O CG's fans retained its 'Superbrand' status, for the fourth
time in succession. It continued to enjoy overall leadership status - with
sale of 6.5 million units in FY2010 and a 24% market share. New products
accounted for over 25% of total fan sales. A new range of industrial fans
were introduced during the year, such as axial flow and centrifugal fans,
The fans division is developing a range of energy efficient fans with Star
ratings, including low wattage models that will aspire to attain the 5-Star
plus category. The division has acquired a new plot at Baddi (Himachal
Pradesh) to augment capacities. o CG's lighting retained its 'Superbrand'
status for the third consecutive time. It maintained its overall number 2
position in India, with leadership in high intensity discharge lamps used
for public lighting. The division achieved 11 % growth in fluorescent
tubular lamps (FTL) against an industry de-growth of 3%. The Company's FTL
won the First Prize of the National Energy Conservation Award 2009 for the
category. The lighting division has been the first to launch a series of
'High Power Factor' direct fit compact fluorescent lamps (CFL-DF). CG was
the first in India to indigenously produce a highly energy efficient light
emitting diode (LED) lamp - consuming just 5 watts of power, with the light
equivalent of a 40 watt bulb, and an average life of 50,000 burning hours.
The division is making serious efforts at popularising these LED lamps, for
privateand government-sector applications, In addition, the division has
positioned itself as a solution provider in a growing space in modern urban
India - that of integrated security, home automation and wiring
accessories.

* The pumps division achieved sales growth of 33% in FY201 0, which was
significantly greater than the market growth of 18%. CG's pumps retained
their leadership position in the domestic segment. The division is
seriously focusing on pumps for agricultural use. It has also entered the
industrial pumps segment with horizontal split case pumps and end suction
pumps. New products accounted for 37% of total pump sales. The division has
acquired a new plot at Ahmednagar for expanding operations. It is also
moving towards developing a set of product-based solutions under the rubric
of 'integrated water management systems'. o CG's appliances division has
emerged as a strong brand - growing the fastest in India. It has become a
prominent player in geysers, In FY2010, it launched Solarium Plus geyser -
that was awarded a Five-Star rating by the Bureau of Energy Efficiency. It
was also the first to launch a 10-bar geyser, which is for use in high rise
buildings. The year saw a focus on the introduction of new products, such
as an induction cooker and new varieties of gas stoves. The division has
commissioned an Appliances Product Development Centre to hasten the process
of development and introduction of new products.

* RESEARCH & DEVELOPMENT (R&D)

CG's growth leverages R&D - its ability to capitalise on relevant research
and product development to introduce superior offerings to its customers.
This section summarises the Company's achievements in FY2010 across five
key areas: ~ new product development; (ii) technology initiatives; (iii)
Intellectual Property Right (IPR) achievements; (iv) developing technology
networks; and (v) integration with CG's overseas units.

* NEW PRODUCT DEVELOPMENT:

The Company has a clear metric to measure new product (NP) developments, In
FY2010, for CG Power India, NP accounted for 17% of revenues. For CG
Industrial Systems, it was 22%. And for CG Consumer Products, it was 23%.
Some of the new products include a 200MVA, 420/21 kV single phase generator
transformer, 315MVA, 400/220/33 kV 3 phase auto transformer, 800 kV 50kA
gas circuit breaker, NEMA premium efficiency motors for range 90-132, high
efficiency alternators, a 10 Bar pressure geyser and fans for automobile
applications. For more details, see the Directors' Report.

* TECHNOLOGY INITIATIVES: During FY2010, several platform technology
initiatives were identified. Some of these involved areas such as noise
vibration, nano-dielectrics, GIS technology, medium voltage drives and
vacuum interrupter technology. Two new technology groups were formed,
covering product reliability and analysis of power systems; and two R&D
centres were globalised. These were the Analytics Centre, and the
Electronic Design Centre.

* PR ACHIEVEMENTS: FY201 0 Saw CG apply for 151 patents, and 116 design
registrations, In addition, R&D has been focusing on publications, In the
year, there were 40 publications - 13 in international conferences, 24 in
national conferences, and three in international journals.

* TECHNOLOGY NETWORKS: R&D has created and sustained 11 technology networks
comprising experts and their laboratories in India and abroad. Seven of
these were added during FY2010. These networks cover power systems, power
quality, HV products, dielectrics, drives, reliability, electronics and
others.

* INTEGRATION WITH CG'S OVERSEAS UNITS: There were 19 R&D projects
initiated during FY2010 in association with CG's overseas units: eight in
Belgium, four in Hungary, three in Ireland, and two each in Canada and the
US. Nine of these were completed by the end of the year.

SIX SIGMA AND QUALITY

The Six Sigma movement is central to Crompton Greaves, and is led from the
top. Quarterly reviews of Six Sigma projects are conducted by the Managing
Director with the Six Sigma Core Committee. During FY2010, the Company
achieved the following milestones:

* EXECUTED 66 SIX SIGMA BLACK BELT PROJECTS, in addition to 98 projects
last year, across all divisions. Our methods and results were appreciated
by key customers.

* SUPPLIER QUALITY POLICY (SQP) REACHED MATURITY. Anyvendorwho manufactures
critical-to-quality (CTQ) products is passed only after a rigorous
assessment of the vendor's design, manufacturing and quality systems by
CG's quality auditors. SQP is now fully integrated with the Company's SAP
system. Thus, if a supplier does not meet the quality benchmarks set by the
Company, SAP blocks any purchase order involving such a vendor. FY2010 saw
443 CTQ vendor audits. Thanks to CG's consistent drive towards improving
vendor quality, 440 of these passed the Company's stringent quality and
process standards.

* LAUNCHED THE COMPANY'S CORRECTIVE ACTION PREVENTIVE ACTION (CAPA)
SOFTWARE. Jointly developed by CG's IT and Quality teams, this software
logs in daily quality issues, and identifies: (i) what went wrong; (ii) why
it went wrong; (iii) what was the impact of it going wrong; (iv) what
corrective action was taken, and by whom and when; (v) whether the
corrective action worked; and if so (vi) what has been put in place to
ensure that the problem does not repeat itself. Today, a shop-floor manager
can review all such information on his computer.

HUMAN RESOURCES (HR)

CG has viewed HR in an integrated manner - that of aligning all facets of
its human capital with business and organisational transformation, In fact,
HR is being progressively viewed and managed as 'human capital', with the
objective of delivering better and more sustainable business performance,
while simultaneously enriching the capabilities and careers of CG's
employees.

Eighteen months earlier, CG launched its global talent pipeline programme
called 'Leading a Global Organisation' (LAGO). It is designed to steer the
Company's global plans, and yield future business leaders.

Towards the end of FY201 0, one more international company joined the CG
fold, Power Technology Solutions of the UK. If we add to that the
acquisition of Nelco's businesses, then, between 2005 and now, the addition
to the CG fold is seven. With CG steadily expanding its global footprint,
there should be more to follow. In such a scenario, LAGO becomes a
critically important initiative.

LAGO had its first module in Belgium; completed its second module in India;
and the third module is scheduled to be held in the US during FY201 1. CG's
'Business Leadership Programme' (BLP) for promising middle management
candidates was successfully concluded during

FY2010. LAGO and BLP were facilitated b reputed, high calibre faculty from
national as well as international universities and business management
schools.

During FY2010, the approach to training and development at CG was re-
oriented. Moving away from a traditional focus on 'training needs', CG's
training calendar was re-directed towards a 'business driver' approach. The
HR Council, consisting of the SBU heads, identified the key business
drivers to achieve CG's longterm goals, and the training initiatives
required for this purpose. This new approach has led to better
synchronicity and enhanced alignment between HR and the business. Internal
training continues to be supplemented by sponsoring high performing-high
potential executives for training programmes conducted by business schools
such as the IIMs, Harvard Business School, IMD (Lausanne, Switzerland), and
others.

While the Company's HR philosophy focuses on meritocracy, performance and
potential, it also recognises the need for CG to become a preferred
employer among its competitors. To this end, CG conducted its third
Employee Engagement Survey, called 'Sparsh' (or 'touch').

The first surrey in 2003 covered only executives; the next, in 2006,
covered executives and management staff. The latest 2009 survey also
covered the blue collar workforce. The participation rate for the 2009
surrey, including blue collar employees, was 97% - which was a landmark in
the Indian context. The results have shown an increase in mean scores from
the previous surrey; but have also indicated that we have a long journey to
cover to reach global benchmarks. An action plan has been formulated, and
the Company will strive to do all it can to foster employee engagement as a
work ethic in CG. Similar surreys are being planned at all the overseas
units in FY2011.

Given CG's objective of having greater employee involvement, a dedicated
initiative was launched in FY2010. In this, the senior leadership held open
houses at various units, to directly hear the voice of employees. Areas of
concern that emerged were addressed in a time bound manner.

CGHR4U, the Company's HR Portal, continues to grow in strength and
coverage. Today, it is one of the most talked about HR e-enablement
initiatives in the industry. During FY2010, the training and development
module was re-structured to respond to the new 'business driver' alignment
for training. The retiral fund processes for provident fund, superannuation
and gratuity have been end-to-end e-enabled - providing employees with
greater transparency, efficiencies in settlements, and also facilitating
investment decisions, through better real-time information.

CG's blue collar employees support the Company's plans in all areas. It is
with this spirit of understanding and collaboration that the Company has
successfully concluded its long-term wage settlements with the unions at
Kanjur Marg, the Switchgear complex at Ambad, and the pumps division. These
settlements, based on a workforce commitment of 133% of the norms given in
the CG Production Systems (CGPS), are expected to further increase
productivity as well as manpower and plant utilisation. CG did not
experience a single day's work stoppage or industrial unrest during FY2010.

Mention must be made of the CGPS implementation at the Company's Indonesia
operations. During FY2010, the plant achieved 158% of the CGPS norm - 25
per cent points greater than the 133% benchmark. The year saw the start of
CGPS implementation in Hungary and Canada. In FY201 1, CG plans to extend
the CGPS methodology to its plants at Belgium, Ireland and America.

At CG, business excellence is an additional domain for HR. The Company has
adopted the CII-EXIM Bank Business Excellence framework, which is based on
the European Foundation for Quality Management (EFQM) model of business
excellence. In FY2010, CG was awarded a 'Commendation Certificate for
Significant Achievement'.

CORPORATE SOCIAL RESPONSIBILITY (CSR) The CSR movement at CG is in its
fourth year, and is actively supported by employees at all levels. Given
below are the key initiatives.

Giving Back to the Communities These involve CSR projects in communities
that adjoin various plant locations, and have been adopted by the plants.

SANITATION

* Nandurvaidya village, sponsored by the Switchgear complex: toilets for
100 families.

* Hingangaon village, sponsored by LT Motors: toilets for 90 households.

* Lighting division, Baroda: built a toilet block at the local school in
Chitral, in addition to 20 toilets at the village of Gametha.

* The Fans division adjoins the village of Kasarwara, which caters to a
migrant population. A retainer wall was built over the main drainage in the
village.

HEALTH

* LT Motors has set-up a fully equipped gymnasium for the youth of
Hingangaon village, at the community centre.

* LT Motors also created a regular health check-up camp in collaboration
with the Anand Rishiji Hospital. A mobile van from the hospital visits the
village of Hingangaon on a weekly basis, and provides check-up as well as
free medicines.

WOMEN'S EMPOWERMENT

* CG believes in empowering the women of the communities. The Kanjur
complex works with 46 self-help groups, of which 20 have been recognised by
the Brihanmumbai Municipal Corporation. The total number of beneficiaries
are 250. To enable the women to learn from groups like their own, a visit
to the Sadbhav Foundation at Karjat was organised in FY2010.

* The Fans division organised a threemonth course in tailoring for women of
Kasarwara village, to enable them generate a livelihood.

* LT Motors organised training in production of masala and papad-making for
30 women of Hingangaon village.

EDUCATION

* Lighting division provided a facelift to the anganwadi primary school in
the village of Gametha. The school received a fresh coat of paint, new
desks and benches, and the entire courtyard was re-paved. Toilets and
drinking water facilities were also upgraded, together with lighting and
fans in the school.

* Stampings division, Ahmednagar, undertook the plastering of the external
and internal walls of the school in Nimgaon Wagha. In addition, the school
was provided with new desks and benches; as well as new electricity poles
to ensure reliable electricity supply.

* The Ahmedabad branch of the Western region has adopted the Ramdev Nagar
School in Ahmedabad, which caters exclusively for backward class students.
It has provided the school with new desks and benches, and has also set up
a student library.

OTHER INITIATIVES

* Three community meetings were organised with an NGO at Nandurvaidya
village to introduce innovative agricultural practices such as water
harvesting, organic farming, horticulture as well as ways to improve their
current cattle breed.

* Over 200 students were covered in eight different courses at the Graphics
and Multimedia Training Centre, which is supported by the Northern region.

* An Academy of Fashion Design & Handicrafts has been opened in
Sundernagri, a deprived community in New Delhi. It aims to provide training
to women from the weaker sections of society. The premises were renovated
and six automatic stitching machines, one fashion-maker, three dummies, and
an LCD TV were installed by the Northern Region. The Centre was inaugurated
on 8 September 2009, with the first batch consisting of 45 students across
various courses at highly subsidised fees.

* A joint initiative of all the factories located in Menara Permai
Industrial Estate contributed towards pre-school education to 40 poor
children of Dayeuh village, near the Company's plant at Indonesia,
Similarly, educational scholarships were provided to 10 orphaned students
to continue their studies by CG Power Indonesia.

* On-the-job training was provided to three batches of six students each
from the Technical High School at Cileungsi, by CG Power Indonesia.

HIV/AIDS Prevention

The focus on HIV/AIDS has extended significantly from the workplace to the
Company's supply chain and community, with several divisions and regions
taking the lead. The total coverage during the year was 3,930 employees of
our business partners. World AIDS Day continues to be observed on 1
December across all CG divisions.

Industry-Academia Interface

On 18 August 2009, CG signed a Memorandum of Understanding (MoU) with the
ITI in Satpur, Nasik, under Government of India's Public Private
Partnership (PPP) programme, for a period of five years. Through this MoU,
CG has committed to:

* Introducing a 'Learn and Earn' environment at the ITI. o Altering the
syllabus to cater to the needs of local industries. o Ensuring
employability by creating a recruitment cell at the ITI and facilitating
industry networking. o Creating sought after finished products (students
and products) at the ITI. o Ensuring that the ITI becomes a profit centre.

Affirmative Action

CG continues with its commitment to the CII Code of Conduct on Affirmative
Action. During FY2010, it pursued the following initiatives:

* M7 division recruited 24 Affirmative Action apprentices from ITI Bhopal.

The LT Motors division in Ahmednagar held the fourth batch of coaching
classes for 25 Affirmative Action students, to prepare them for the Common
Entrance Examination.

* At ITI Nasik, a six-month electrician's course was held for 25
Affirmative Action candidates, who had been sponsored by the Switchgear
complex.

Environment

CG is committed to protecting the earth's natural resources and has taken
the following steps towards conserving water, electricity and reducing
pollution.

* Pumps division has 5-star energy ratings for most of its products. Their
employees also came forward and planted 320 trees.

* Employees of M7 division responded to the call given by the Chief
Minister of MP to the citizens of Bhopal to help save the lake. They
gathered en masse at the site and helped de-silt the lake bed.

* At the T2 unit, Malanpur, water harvesting was undertaken to help
conserve water and 800 trees were planted.

* Kanjur complex distributed 10,000 CFLs in Kanjur village at highly
subsidised cost to help conserve carbon emissions. It also distributed 500
saplings to various community members and institutions.

* World Environment Day continues to be celebrated on 5 June at CG's
office/factory premises as well as in the surrounding communities - with
large scale tree planting drives taking place at every location.

Volunteerism

* Voluntary blood donation was organised on 21 April 2009 at the Cegled
City Hospital by CG Power Hungary.

* Voluntary blood donation continued to be observed on 1 October across all
units in India. In 2009, CG's employees contributed 1,182 units of blood.

Fund Raising

* CG Power Ireland provided aid to cancer patients through its support of
Charity Christmas Cards.

* CG Power Indonesia made a significant donation to the relief fund for
the Jogjakarta earthquake victims.

* Relay for Life (a national fund raiser for cancer research) was
supported by CG Power USA via sponsorship of a card tournament, a
motorcycle run and a silent auction through which employees raised a
significant amount for the cause.

* CG Power USA worked with United Way, a community fundraiser that benefits
over 20 local area organizations. The Company's contribution was publicly
recognised.

* CG Power Canada undertook: (i) fundraising for Canadian National
Institute for the Blind; (i) 'Biking to the Viking', a fundraising event
for the Multiple Sclerosis Society of Canada; and (iii) sponsoring the
Andrew Dunn Foundation, which assists individuals from adjoining
communities in dealing with depression.

Diversity

CG has affirmed its commitment towards diversity by releasing its Diversity
Policy. As a transnational Corporation, Crompton Greaves values its
employees and people of all cultures, races, religions, nationalities and
ethnicities, regardless of gender or sexual orientation. The Company
encourages a diverse workforce, and strives to create a work environment
that respects individuals, acknowledges their contributions, and fosters
innovation.

INFORMATION TECHNOLOGY (IT)

CG has a robust IT network spanning all locations in India and abroad with
high speed connectivity using multi-protocol label switching technology. It
has a well equipped data centre at Kanjur Marg, which houses all servers
running critical applications such as SAP, Business Warehouse, Dealer
Portal, After-Sales Service portal, CGHR4U and Six Sigma. The Company has a
disaster recovery site at Chennai, with a full-fledged, and frequently
tested, disaster recovery plan. CG has an IT policy that covers key aspects
of security: physical and electronic access to information; access to
critical areas; electronic distribution and sharing of information.

The key initiatives during FY2010 were:

* Global e-mail system: As a part of the common branding exercise, CG moved
all its enterprises and employees - in India and abroad - to a new and
universal e-mail domain: cgglobal.com. The migration was done rapidly at an
optimal cost, with no Impact to any business globally.

* An After-Sales Service portal was integrated with a Call Centre to
provide superior level of after-sales service. With the facility of toll-
free numbers and multilingual call center support, customers throughout
India can now share their product-related service needs.

* A SAP integrated financial accounts closure software has been deployed to
reduce accounts closure time. The SAP MIS module has standardised the
financial reporting system across CG.

* There is a SAP-integrated dealer portal which uses the web. There is also
a SAP integrated price authorisation portal among CG's key dealers.

* CG Power Europe (excluding Hungary) will see an enhanced SAP fully rolled
out by June 2010, This will be followed by CG Power USA during the course
of FY2011.

* E-payments have been successfully executed throughout the Company. E-
sourcing has helped CG to implement an effective company-wide purchasing
process that has significantly lowered total costs by coordinating and
leveraging common purchases across all divisions.

6. STAND-ALONE PERFORMANCE OF CG

YEAR ENDED 31 MARCH (IN RS. CRORE, EXCEPT EPS) FY2009 FY2010

Gross Sales And Services 4,904 5,516

Less: Excise Duty 293 232

Net Sales And Services 4,611 5,284

Manufacturing, Construction & Operating Expenses 3,197 3,623

Staff Expenses 229 256

Selling And Administration Expenses 547 548

Operating EBIDTA 638 857

Other Income (OI) 36 69

EBIDTA Including OT 674 926

Interest And Commitment Charges (Net) 15 4

Depreciation, Amortisation And Impairment 45 52

Operating PBT 578 801

PBT Including OI (Before Extraordinary Item) 614 870

Less: Provision For Taxes

Current Tax 200 274

Deferred Tax 12 19

Fringe Benefit Tax 5 -

PAT (Before Extraordinary Item) 397 577

Extraordinary Item (Net of Tax) - 40

PAT (After Extraordinary Item) 397 617

Balance Brought Forward From Previous Year 540 811

Transfer To General Reserve (40) (62)

Interim Dividend (Including Corporate Dividend Tax) (86) (94)

Balance Carried Forward To The Balance Sheet 811 1,272

Basic And Diluted EPS, Before Extraordinary
Item (In Rs.) 6.2 9.0

(Face Value Of Equity Share of Rs. 2 Each)

Basic And Diluted EPS, After Extraordinary
Item (In Rs.) 6.2 9.6
(Face Value Of Equity Share of Rs. 2 Each)

7. STAND-ALONE PERFORMANCE OF CG - KEY RATIOS

YEAR ENDED 31 MARCH FY 2009 FY 2010

Profitability Ratios

Operating EBIDTA w/o Other Income/Net Sales 13.8% 16.2%

EBIDTA With OI/Net Sales 14.6% 17.5%

PBT /Net Sales 13.3% 16.5%


RONW 32.0% 35.0%
ROCE (At Year-End Capital Employed) 46.3% 46.6%
Cash ROLE 49.6% 49.4%
Per Share Ratios

EPS, Before Extraordinary Item (In Rs. Per Share) 6.2 9.0

EPS, After Extraordinary Item (In Rs. Per Share) 6.2 9.6

Cash EPS, Before Extraordinary Item
(In Rs. Per Share) 7.1 10.1

Cash EPS, After Extraordinary Item
(In Rs. Per Share) 7.1 10.7

Leverage Ratios

Total Debt To Equity 0.0 0.0

Interest Coverage Ratio 46.1 231.5

Assets Efficiency Ratios

Net Sales To Gross Working Capital (Times) 2.4 2.4

Net Sales To Net Working Capital (Times) 8.1 8.5

FINANCIAL PERFORMANCE

We first highlight CG's stand-alone results, after which we discuss the
financial performance of overseas entities and, finally, the consolidated
financials for the Company as a whole.

CG: Stand-alone Performance

The stand-alone results of CG for the year ended 31 March 2010 is detailed
In Table 6. Table 7 gives the key ratios (profitability, assets efficiency
and leverage ratios) ofthe stand-alone entity for FY2009 and FY2010.

* Gross sales grew by over 12% to reach Rs.5,516 crore. Net sales increased
by 15% to Rs.5,284 crore.

* Manufacturing, construction and operating expenses as a percentage to net
sales has remained constant at 69%.

* Operating earnings before interest, depreciation, amortisation and taxes
(operating EBIDTA) grew by 34% over the previous year to Rs.857 crore.
Operating EBIDTA to net sales margin increased by 240 basis points, from
13.8% in FY2009 to 16.2% in FY2010.

* Other income (OI) increased from Rs.36 crore in FY2009 to Rs.69 crore in
FY2010, largely on account of exchange rate gain.

* Operating profit before taxes (operating PBT) grew by 39% to Rs.801 crore
in FY2010.

* Profit after tax (PAT) grew 55% to Rs.617 crore. Excluding extraordinary
item, PAT increased by 45% to Rs.577 crore.

* Return on year end capital employed (ROCE) was 46.6%; and return on net
worth (RON' stood at 35%. Earnings per share before extraordinary item
increased from Rs.6.2 for each Rs.2 share in FY2009 to Rs.9 in FY2010.
After extraordinary item, the EPS is Rs.9.6.

* As a stand-alone entity, CG is a debt free company, with an interest
coverage ratio that exceeds 231.

CG Overseas

The consolidated financial performance of ail overseas entities is given in
Table 8.

For the CG overseas entities: o Net sales reduced by 7% in rupee terms to
clock Rs.3,824 crore in FY2010. This has much to do with the uncertainties
in western Europe and the US in the aftermath of the global economic and
financial crisis. In US$ terms, it decreased by 10% to US$801 million.

* Even so, there was a growth in profitability, Operating EBIDTA grew by
14% to reach Rs.382 crore in FY2010; and by 11% in US$ to US$ 80 million.

* PBT grew by 24% in rupees to Rs.300 crore: and by 21 % in US$ to US$ 63
million.

* PAT increased by 47% to Rs.233 crore; and by 44% to US$ 49 million.

CG: Consolidated Performance

Table 9 gives the consolidated performance of CG. Table 10 sets out the key
ratios of the consolidated entity.

Key financial achievements of CG as a consolidated entity were:

* Net sales and services; CG exceeded the US$ 1.9 billion mark in FY2010,
or Rs.9,141 crore.

* Operating EBIDTA: Stood at US$ 268 million, or Rs.1,277 crore. It grew by
28% in rupees, and 25% is US$, o Operating PBT: Was US$ 230 million, or
Rs,1,095 crore. It increased by 36% in rupees, and 32% in US$.

* PAT (after accounting for minority interests and share of associate
companies, and before extraordinary item) increased by 47% to Rs.825 crore.
PAT (after accounting for minority interests and share of associate
companies, and after extraordinary item) increased by 54% to Rs.860 crore.

RISK MANAGEMENT

Crompton Greaves has a robust and well-defined risk management policy for
risk assessment and mitigation across all divisions and branches - both in
India and abroad. CG's Risk Management department along with divisional
risk owners conduct risk assessment and suggest the mitigation procedure to
the Risk Management Committee of the Board.

The Risk Management Committee of the Board of Directors reviews the
adequacy of the risk management framework of CG, conducts quarterly reviews
of major risks and their mitigation measures. During FY 2010, there was a
comprehensive evaluation of the risks associated with the various
dimensions of CG's businesses - operations, technology, financial,
insurance, natural disasters, information security and record management
systems.

8. CONSOLIDATED FINANCIAL PERFORMANCE OF THE OVERSEAS ENTITIES

FY2009 FY2010
Rs. Crore US $ Million Rs. Crore US $ Million

Gross Sales & Services 4,128 887 3,824 801

Net Sales & Services 4,128 887 3,824 801


Operating EBIDTA 334 72 382 30

Other Income (OI) 22 4 32 7

EBIDTA Including OI 356 76 414 87

Interest & Commitment

Charges 43 9 17 4

Depreciation,
Amortisation &
Impairment 71 15 97 20

Operating PBT 220 48 268 56

PBT Including OI 242 52 300 63

Less: Provision For
Taxes

Current Tax 59 13 37 8

Deferred Tax 24 5 30 6

PAT 159 34 233 49

Minority Interest 1 0 - -

Share Of Profit/(Loss)
Of Associates 0 0 0 0

Balance Carried Forward
To The Balance Sheet 160 34 233 49

Foreign Exchange Rate
For US $ 1 46.5363 47.7446

For the India and overseas operations, there are pre-planned cycle of
presenting risk reports to the Risk Committee of both CG India and
overseas.

Two independent Directors, including the chairman of CG's Risk Management
Committee, along with the Managing

9. CONSOLIDATED FINANCIAL PERFORMANCE OF CG

FY 2009 FY 2010

Rs. Crore US $ Million Rs. Crore US $ Million

Gross Sales & Services 9,031 1,941 9,375 1,964

Less: Excise Duty 294 63 234 49

Net Sales & Services 8,737 1,878 9,141 1,915

Manufacturing,
Construction &
Operating Expenses 5,694 1,224 5,797 1,214

Staff Expenses 1,065 229 1,113 233

Selling &
Administration
Expenses 983 211 954 200

Operating EBIDTA 995 214 1,277 268

Other Income (OI) 59 12 94 20

EBIDTA Including OI 1,054 226 1,371 288

Interest & Commitment
Charges (Net) 65 14 27 6

Depreciation,
Amortisation &
Impairment 122 26 155 32

Operating PBT 808 174 1,095 230

PBT Including OI 867 186 1,189 250

Less: Provision For
Taxes

Current Tax 261 56 314 66

Deferred Tax 38 8 51 11

Fringe Benefit Tax 5 1 0 0

PAT 563 121 824 173

Minority Interest (2) 0 (2) (1)

Share Of Profit/
(Loss) Of Associates (1) 0 3 1

PAT After Minority
Interest & Share Of
Associates 560 121 825 173

Extraordinary Item 0 0 35 7

PAT After
Extraordinary Item 560 121 860 180

Dividend (Including
CDT) (86) (18) (95) (20)

Balance Carried Forward
To The Balance Sheet 474 102 765 160

Foreign Exchange
Rate For US $ 1 46.5363 47.7446

10. CONSOLIDATED FINANCIAL PERFORMANCE OF CG - KEY RATIOS

FY 2009 FY 2010
Profitability Ratios

EBIDTA w/o Other Income (OI)/Net Sales 11.4% 14.0%

EBIDTA with OI/Net Sales 12.1% 15.0%

PBT/Net Sales 9.9% 13.0%

RONW 31.4% 34.3%

ROCE (terminal) 36.4% 40.3%

Cash ROLE (terminal) 41.1% 45.5%

Per Share Ratios

EPS (w/o Extraordinary Item)
(In Rs. Per Share) 8.7 12.9

EPS (with Extraordinary Item)
(In Rs. Per Share) 8.7 13.4

Cash EPS (w/o Extraordinary Item)
(In Rs. Per Share) 11.2 16.1

Cash EPS (with Extraordinary Item)
(In Rs. Per Share) 11.2 16.6

Leverage Ratios

Total Debt To Equity 0.4 0.2

Interest Coverage Ratio 16.1 50.8

Assets Efficiency Ratios

Net Sales To Gross Working
Capital (Times) 2.2 2.2

Net Sales To Net Working
Capital (Times) 9.0 8.4

Director, conduct quarterly reviews of the risks at CG's overseas
establishments.

INTERNAL CONTROLS AND THEIR

ADEQUACY

CG in India and overseas have strong and independent internal audit
departments responsible for assessing and improving the effectiveness of
Internal control and governance. Internal Audit focuses on operational as
well as systems audit.

Extensive programmes of risk-based as well as transactions-based internal
audits cover all businesses, divisions, plants, branches and the different
areas of operations. The Audit Committee of the Board is updated every
quarter on significant internal audit observations, compliance with
accounting standards, risk management and control systems. The Audit
Committee assesses the adequacy and effectiveness of inputs given by
internal audit and suggests improvement for strengthening the internal
control systems from time to time.

CG has put in place an extensive budgetary control system, which is
periodically examined by management vis-a-vis actual performance. It has a
welldefined Management Information System (MIS) with clear organisation
structures and authorisation levels for conducting business transactions.
The internal audit teams continuously review the authorisation matrix for
the segregation of duties in the SAP system. Internal audit also
extensively interacts with the external auditors.

OUTLOOK

The outlook for FY2011 is somewhat mixed. CG sees significant growth in its
power systems business in India and Asia; but less so in Europe and the
Americas. This is due to the muted outlook of the housing markets in the
developed world - which affects the Company's distribution transformers
business, The good news is that wind energy is back in the fray, and CG
should be able to leverage its strengths in this sector to increase its
market potential.

While it is difficult to give a definite estimate of growth in FY201 1, it
is becoming increasingly clear that success in the future will depend upon
being an endto-end solutions provider, especially in the power business.
Given CG's acquisitions up to date, and potential acquisitions that it is
pursuing, the Company is well poised to becoming such an end-to-end
solutions provider.

Cautionary Statement

The management of Crompton Greaves has prepared and is responsible forthe
financial statements that appear in this report. These are in conformity
with accounting principles generally accepted in India and, therefore, may
include amounts based on informed judgements and estimates. The management
also accepts responsibility for the preparation of other financial
information that is included in this report. Statements in this Management
Discussion and Analysis describing the Company's objectives, projections,
estimates and expectations may be 'forward looking statements' within the
meaning of applicable laws and regulations. Management has based these
forward looking statements on its current expectations and projections
about future events. Such statements involve known and unknown risks,
significant changes in political and economic environment in India or key
markets abroad, tax laws, litigation, labour relations, exchange rate
fluctuations, interest and other costs and may cause actual results to
differ materially.

SM TREHAN
Managing Director

Mumbai, 13 May 2010