Bajaj Inroduction

Preliminary Placement Document Not for Circulation Serial Number [●]

Dated December 7, 2009

BAJAJ ELECTRICALS LIMITED

(Incorporated as a public company with limited liability under the (Indian) Companies Act, 1913 pursuant to a certificate of incorporation dated July 14, 1938. Our Company commenced its business on September 12,1938 pursuant to a certificate of

commencement of business issued by the Registrar of Joint Stock Company, Punjab .The CIN Number of our Company is L31500MH1938PLC009887. The registered office of our Company is located at 45-47, Veer Nariman Road, Mumbai-400001, India )

Bajaj Electricals Limited (“ Company” / “Issuer’) is issuing [●] equity shares of face value Rs. 10/- each, (“Equity Shares”), at a price of Rs.[●] per Equity Shares, including a premium of Rs. [●] per Equity Shares, aggregating to Rs. [●] Lacs, (“Offering”).

OFFERING PURSUANT TO THE PROVISIONS OF CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009

THIS OFFERING AND THE DISTRIBUTION OF THIS PRELIMINARY PLACEMENT DOCUMENT IS BEING UNDERTAKEN PURSUANT TO THE PROVISIONS OF CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED, (“SEBI REGULATIONS”), AND OUTSIDE THE UNITED STATES IN RELIANCE ON REGULATION S (“REGULATION S”) UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”). THIS PRELIMINARY PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR, AND DOES NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTOR WITHIN OR OUTSIDE INDIA.

Any invitation, offer and sale of the Equity Shares shall only be made pursuant to this Preliminary Placement Document, the Application Form and the Confirmation of Allocation Note. See “Issue Procedure” in this Preliminary Placement Document. The distribution of this Preliminary Placement Document or the disclosure of its contents to any person, other than Qualified Institutional Buyers (as defined in Regulation 2(1)(zd) of the SEBI Regulations), (“QIBs”), and persons retained by QIBs, to advise them with respect to their purchase of the Equity Shares, is unauthorised and prohibited. Each prospective Investor, by accepting delivery of this Preliminary Placement Document agrees to observe the foregoing restrictions, and not to make copies of this Preliminary Placement Document or any other document referred herein. THIS PRELIMINARY PLACEMENT DOCUMENT HAS NOT BEEN REVIEWED BY THE SECURITIES AND EXCHANGE BOARD OF INDIA (“SEBI”), THE RESERVE BANK OF INDIA (“RBI”), THE BOMBAY STOCK EXCHANGE LIMITED (THE “BSE”), THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED (THE “NSE”), THE DELHI STOCK EXCHANGE LIMITED, (“DSE”), (“COLLECTIVELY REFERRED TO AS “STOCK EXCHANGES”) OR ANY OTHER REGULATORY OR LISTING AUTHORITY AND IS INTENDED ONLY FOR USE BY QIBS. This Preliminary Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies (“RoC”) in India, and will not be circulated or distributed to the public in India or any other jurisdiction and will not constitute a public offer in India or any other jurisdiction. The Offering is meant only for QIBs on a private placement basis and is not an offer to the public or any other class of investor. Investments in equity and equity-related securities involve a certain degree of risk and prospective Investors should not invest any amount in this Offering unless they are prepared to bear the risk of losing all or part of the amount invested by them. Prospective Investors are advised to carefully read the chapter titled “Risk Factors” before deciding to invest in this Offering. Each Eligible Investor is advised to consult its respective advisers about the particular consequences of an investment in the Equity Shares being issued pursuant to this Preliminary Placement Document. The information on our Company’s website or any website directly or indirectly linked to our Company’s website does not form part of this Preliminary Placement Document and prospective investors should not rely on such information contained in, or available through, such websites. All of our Company’s outstanding equity shares of face value Rs. 10/- each, (“Equity Shares”), are listed on the Stock Exchanges. Applications shall be made for the listing of the Equity Shares offered through this Preliminary Placement Document on the Stock Exchanges. The Stock Exchanges assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Equity Shares to trading on the Stock Exchanges should not be taken as an indication of the merits of our Company or the Equity Shares. YOU MAY NOT BE AND ARE NOT AUTHORISED TO (1) DELIVER THIS PRELIMINARY PLACEMENT DOCUMENT TO ANY OTHER PERSON; OR (2) REPRODUCE THIS PRELIMINARY PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER. ANY DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY RESULT IN A VIOLATION OF THE SEBI REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS. A copy of this Preliminary Placement Document has been delivered to the Stock Exchanges. A copy of the Placement Document will be filed with the Stock Exchanges. A copy of the Placement Document will also be delivered to SEBI for record purposes in accoradnce with SEBI Regulations.

THIS PRELIMINARY PLACEMENT DOCUMENT HAS BEEN PREPARED BY OUR COMPANY SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH THE PROPOSED OFFERING OF THE EQUITY SHARES DESCRIBED IN THIS PRELIMINARY PLACEMENT DOCUMENT. The Equity Shares have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Equity Shares are being offered and sold under the Securities Act outside the United States in reliance on Regulation S. For further information, see sections titled “Selling Restrictions” and “Transfer Restrictions” This Preliminary Placement Document is dated December 7, 2009.

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TABLE OF CONTENTS

NOTICE TO INVESTORS .......................................................................................................................... i REPRESENTATIONS BY INVESTORS .................................................................................................. ii OFFSHORE DERIVATIVE INSTRUMENTS......................................................................................... vi DISCLAIMER CLAUSE OF THE STOCK EXCHANGES ................................................................... vi PRESENTATION OF FINANCIAL AND OTHER INFORMATION ................................................ viii INDUSTRY AND MARKET DATA ......................................................................................................... ix FORWARD-LOOKING STATEMENTS .................................................................................................. x ENFORCEMENT OF CIVIL LIABILITIES .......................................................................................... xii EXCHANGE RATE INFORMATION................................................................................................... xiii CERTAIN DEFINITIONS AND ABBREVIATIONS ........................................................................... xiv SUMMARY OF THE OFFERING ........................................................................................................ xviii SUMMARY OF BUSINESS...................................................................................................................... xx SELECTED FINANCIAL INFORMATION OF OUR COMPANY.................................................. xxiv RISK FACTORS .......................................................................................................................................... 1 MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE EQUITY SHARES ..................................................................................................................................... 14 USE OF PROCEEDS................................................................................................................................. 18 CAPITALISATION ................................................................................................................................... 19 DIVIDEND POLICY ................................................................................................................................. 20 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................................................................................................................. 21 INDUSTRY OVERVIEW.......................................................................................................................... 37 BUSINESS................................................................................................................................................... 42 BOARD OF DIRECTORS AND SENIOR MANAGEMENT................................................................. 57 PRINCIPAL SHAREHOLDERS.............................................................................................................. 70 REGULATIONS AND POLICIES........................................................................................................... 74 ISSUE PROCEDURE ................................................................................................................................ 77 PLAN OF DISTRIBUTION ...................................................................................................................... 87 SELLING RESTRICTIONS ..................................................................................................................... 88 TRANSFER RESTRICTIONS ................................................................................................................. 91 THE SECURITIES MARKET OF INDIA .............................................................................................. 92 DESCRIPTION OF THE EQUITY SHARES....................................................................................... 104 TAXATION .............................................................................................................................................. 111 LEGAL PROCEEDINGS........................................................................................................................ 116 MATERIAL DEVELOPMENTS............................................................................................................ 121 GENERAL INFORMATION.................................................................................................................. 122 FINANCIAL STATEMENTS ................................................................................................................. 123 DECLARATION ...................................................................................................................................... 124

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NOTICE TO INVESTORS Our Company accepts full responsibility for the information contained in this Preliminary Placement Document and to the best of its knowledge and belief, having made all reasonable enquiries, confirms that this Preliminary Placement Document contains all information with respect to our Company and the Equity Shares, which is material in the context of this Offering. The statements contained in this Preliminary Placement Document relating to our Company and the Equity Shares are, in all material respects, true and accurate and not misleading, the opinions and intentions expressed in this Preliminary Placement Document with regard to our Company and the Equity Shares are honestly held, have been reached after considering all relevant circumstances, are based on information presently available to our Company and are based on reasonable assumptions. There are no other facts in relation to our Company and the Equity Shares, the omission of which would, in the context of the Offering, make any statement in this Preliminary Placement Document misleading in any material respect. Further, all reasonable enquiries have been made by our Company to ascertain such facts and to verify the accuracy of all such information and statements. The Sole Global Co-ordinator and Book Running Lead Manager has not separately verified all the information contained in this Preliminary Placement Document (financial, legal or otherwise). Accordingly, neither the Sole Global Co-ordinator and Book Running Lead Manager nor any of its members, employees, counsel, officers, directors, representatives, agents or affiliates makes any express or implied representation, warranty or undertaking, and no responsibility or liability is accepted, by the Sole Global Co-ordinator and Book Running Lead Manager, as to the accuracy or completeness of the information contained in this Preliminary Placement Document or any other information supplied in connection with the Equity Shares. Each person receiving this Preliminary Placement Document acknowledges that such person has neither relied on the Sole Global Co-ordinator and Book Running Lead Manager nor on any person affiliated with any of the Sole Global Co-ordinator and Book Running Lead Manager in connection with its investigation of the accuracy of such information or its investment decision, and each such person must rely on its own examination of our Company and the merits and risks involved in investing in the Equity Shares issued pursuant to the Offering. No person is authorised to give any information or to make any representation not contained in this Preliminary Placement Document and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of our Company or the Sole Global Co-ordinator and Book Running Lead Manager. The delivery of this Preliminary Placement Document at any time does not imply that the information contained in it is correct as at any time subsequent to its date. The Equity Shares have not been approved, disapproved or recommended by any regulatory authority in any jurisdiction. No authority has passed on or endorsed the merits of this Offering or the accuracy or adequacy of this Preliminary Placement Document. The distribution of this Preliminary Placement Document and the issue of the Equity Shares in certain jurisdictions may be restricted by law. As such, this Preliminary Placement Document does not constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has been taken by our Company and the Sole Global Co-ordinator and Book Running Lead Manager which would permit an Offering of the Equity Shares or distribution of this Preliminary Placement Document in any jurisdiction, other than India. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Preliminary Placement Document nor any Offering materials in connection with the Equity Shares may be distributed or published in or from any country or jurisdiction. In making an investment decision, investors must rely on their own examination of our Company and the terms of this Offering, including the merits and risks involved. Investors should not construe the contents of this Preliminary Placement Document as legal, tax, accounting or investment advice. Investors should consult their own counsel and advisors as to business, legal, tax, accounting and related matters concerning this Offering. In addition, neither our Company nor the Sole Global Co-ordinator and Book Running Lead Manager are making any representation to any offeree or purchaser of the Equity Shares regarding the

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legality of an investment in the Equity Shares by such offeree or purchaser under applicable legal, investment or similar laws or regulations. Each purchaser of the Equity Shares in this Offering is deemed to have acknowledged, represented and agreed that it is eligible to invest in India and in our Company under Chapter VIII of the SEBI Regulations and is not prohibited by SEBI or any other regulatory authority from buying, selling or dealing in securities. Each purchaser of Equity Shares also acknowledges that it has afforded an opportunity to request from us and has reviewed information relating to our Company and our Equity Shares. This Preliminary Placement Document contains summaries of certain terms of certain documents, which summaries are qualified in their entirety by the terms and conditions of such documents.

REPRESENTATIONS BY INVESTORS By subscribing to any Equity Shares under the Offering, you are deemed to have represented to us and the Sole Global Co-ordinator and Book Running Lead Manager and agreed as follows: • you are a QIB as defined in Regulation 2(1)(zd) of the SEBI Regulations and undertake to acquire,

hold, manage or dispose of any Equity Shares that are allocated to you for the purposes of your business in accordance with Chapter VIII of the SEBI Regulations;

• if you are Allotted Equity Shares pursuant to the Offering, you shall not, for a period of one year

from the date of Allotment, sell the Equity Shares so acquired except on the Stock Exchanges; • you are aware that the Equity Shares have not been and will not be registered under the SEBI

regulations or under any other law in force in India. The Preliminary Placement Document has not been verified or affirmed by the SEBI or the Stock Exchanges and will not be filed with the Registrar of Companies. The Preliminary Placement Document has been filed with the Stock Exchanges for record purposes only and has been displayed on the websites of our Company and the Stock Exchanges;

• you are entitled to subscribe for the Equity Shares under the laws of all relevant jurisdictions

which apply to you and that you have fully observed such laws and obtained all such governmental and other consents in each case which may be required thereunder and complied with all necessary formalities;

• you are entitled to acquire the Equity Shares under the laws of all relevant jurisdictions and that

you have all necessary capacity and have obtained all necessary consents and authorities to enable you to commit to this participation in the Offering and to perform your obligations in relation thereto (including, without limitation, in the case of any person on whose behalf you are acting, all necessary consents and authorities to agree to the terms set out or referred to in the Preliminary Placement Document) and will honor such obligations;

• you confirm that, either: (i) you have not participated in or attended any investor meetings or

presentations by our Company or its agents (“Company’s Presentations”) with regard to our Company, the Equity Shares or the Issue; or (ii) if you have participated in or attended any Company’s Presentations: (a) you understand and acknowledge that the Sole Global Co-ordinator and Book Running Lead Manager may not have knowledge of the statements that our Company or its agents may have made at such Company’s Presentations and are therefore unable to determine whether the information provided to you at such Company’s Presentations may have included any material misstatements or omissions, and, accordingly you acknowledge that the Sole Global Co-ordinator and Book Running Lead Manager have advised you not to rely in any way on any information that was provided to you at such Company’s Presentations, and (b) confirm that, to the best of your knowledge, you have not been provided any material information that was not publicly available;

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• neither we nor the Sole Global Co-ordinator and Book Running Lead Manager is making any recommendations to you, advising you regarding the suitability of any transactions it may enter into in connection with the Offering and that participation in the Offering is on the basis that you are not and will not be a client of the Sole Global Co-ordinator and Book Running Lead Manager and that the Sole Global Co-ordinator and Book Running Lead Manager has no duties or responsibilities to you for providing the protection afforded to their clients or customers or for providing advice in relation to the Offering and is in no way acting in a fiduciary capacity to you;

• all statements other than statements of historical fact included in the Preliminary Placement

Document, including, without limitation, those regarding our Company’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to our Company’s business), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our Company’s present and future business strategies and environment in which our Company will operate in the future. You should not place undue reliance on forward-looking statements, which speak only as at the date of Preliminary Placement Document. Our Company assumes no responsibility to update any of the forward-looking statements contained in the Preliminary Placement Document;

• you have been provided a serially numbered copy of the Preliminary Placement Document and

have read the Preliminary Placement Document in its entirety, including, in particular, the section titled “Risk Factors”;

• you are aware and understand that the Equity Shares are being offered only to QIBs and are not

being offered to the general public and the Allotment of the same shall be on a discretionary basis;

• you have made, or been deemed to have made, as applicable, the representations set forth under section titled “Transfer Restrictions”;

• you have been provided a serially numbered copy of the Preliminary Placement Document and

Placement Document and have read them in their entirety;

• that in making your investment decision, (i) you have relied on your own examination of our Company and the terms of the Offering, including the merits and risks involved, (ii) you have made and will continue to make your own assessment of our Company, the Equity Shares and the terms of the Offering based on such information as is publicly available, (iii) you have consulted your own independent advisors or otherwise have satisfied yourself concerning without limitation, the effects of local laws, (iv) you have relied solely on the information contained in the Preliminary Placement Document and no other disclosure or representation by our Company or any other party; and (v) you have received all information that you believe is necessary or appropriate in order to make an investment decision in respect of our Company and the Equity Shares;

• you have such knowledge and experience in financial and business matters as to be capable of

evaluating the merits and risks of the investment in the Equity Shares and you and any accounts for which you are subscribing the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares; (ii) will not look to our Company and/or the Sole Global Co-ordinator and Book Running Lead Manager for all or part of any such loss or losses that may be suffered; (iii) are able to sustain a complete loss on the investment in the Equity Shares; (iv) have no need for liquidity with respect to the investment in the Equity Shares; and (v) have no reason to anticipate any change in your or their circumstances, financial or otherwise, which may cause or require any sale or distribution by you or them of all or any part of the Equity Shares;

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• the Sole Global Co-ordinator and Book Running Lead Manager has not provided you with any tax advice or otherwise made any representations regarding the tax consequences of the Equity Shares (including but not limited to the Issue and the use of the proceeds from the Equity Shares). You will obtain your own independent tax advice and will not rely on the Sole Global Co-ordinator and Book Running Lead Manager when evaluating the tax consequences in relation to the Equity Shares (including but not limited to the Issue and the use of the proceeds from the Equity Shares). You waive and agree not to assert any claim against the Sole Global Co-ordinator and Book Running Lead Manager with respect to the tax aspects of the Equity Shares or the Issue or as a result of any tax audits by tax authorities, wherever situated;

• that where you are acquiring the Equity Shares for one or more managed accounts, you represent

and warrant that you are authorised in writing, by each such managed account to acquire the Equity Shares for each managed account; and to make the acknowledgements and agreements herein for and on behalf of each such account, reading the reference to “you” to include such accounts;

• you are not a Promoter and are not a person related to the Promoters, either directly or indirectly

and your Application does not directly or indirectly represent the Promoters or Promoter Group of our Company;

• you have no rights under a shareholders agreement or voting agreement with the Promoters or

persons related to the Promoters, no veto rights or right to appoint any nominee director on the Board of Directors of our Company other than the acquired in the capacity of a lender which shall not be deemed to be a person related to the Promoter;

• you have no right to withdraw your Application after the Issue Closing Date;

• you are eligible to apply and hold Equity Shares so Allotted and together with any Equity Shares

held by you prior to the Offering. You further confirm that your holding upon the Offering of the Equity Shares shall not exceed the level permissible as per any applicable regulation;

• the application form submitted by you would not eventually result in triggering a tender offer

under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended (the “Takeover Code”);

• to the best of your knowledge and belief together with other prospective Investors in the Offering

that belong to the same group or are under common control as you, the Allotment under the Offering shall not exceed 50 percent of the Offering. For the purposes of this representation:

a. the expression ‘belongs to the same group’ shall derive meaning from the concept of

‘companies under the same group’ as provided in sub-section (11) of Section 372 of the Companies Act.

b. ‘control’ shall have the same meaning as is assigned to it by clause (c) of Regulation 2 of the

Takeover Code. • you shall not undertake any trade in the Equity Shares credited to your Depository Participant

account until such time that the final listing and trading approval for the Equity Shares is issued by the Stock Exchanges;

• you are aware that applications have been made to the Stock Exchanges for in-principle approval for listing and admission of the Equity Shares to trading on the Stock Exchanges’ market for listed securities;

• you are aware and understand that the Sole Global Co-ordinator and Book Running Lead Manager

has entered into a Placement Agreement with our Company whereby the Sole Global Co-ordinator

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and Book Running Lead Manager has, subject to the satisfaction of certain conditions set out therein, undertaken to use its reasonable endeavours as agents of our Company to seek to procure subscription for the Equity Shares;

• that the contents of this Preliminary Placement Document are exclusively the responsibility of our

Company and that neither the Sole Global Co-ordinator and Book Running Lead Manager nor any person acting on its behalf has or shall have any liability for any information, representation or statement contained in this Preliminary Placement Document or any information previously published by or on behalf of our Company and will not be liable for your decision to participate in the Offering based on any information, representation or statement contained in this Preliminary Placement Document or otherwise. By accepting a participation in this Offering, you agree to the same and confirm that you have neither received nor relied on any other information, representation, warranty or statement made by or on behalf of the Sole Global Co-ordinator and Book Running Lead Manager or our Company or any other person and neither the Sole Global Co-ordinator and Book Running Lead Manager nor our Company nor any other person will not be liable for your decision to participate in the Offering based on any other information, representation, warranty or statement that you may have obtained or received;

• that the only information you are entitled to rely on, and on which you have relied in committing

yourself to acquire the Equity Shares is contained in this Preliminary Placement Document, such information being all that you deem necessary to make an investment decision in respect of the Equity Shares and that you have neither received nor relied on any other information given or representations, warranties or statements made by the Sole Global Co-ordinator and Book Running Lead Manager or our Company and the Sole Global Co-ordinator and Book Running Lead Manager will be liable for your decision to accept an invitation to participate in the Offering based on any other information, representation, warranty or statement;

• you agree to indemnify and hold our Company and the Sole Global Co-ordinator and Book

Running Lead Manager harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations and warranties in this section. You agree that the indemnity set forth in this section shall survive the resale of the Equity Shares by or on behalf of the managed accounts;

• that our Company, the Sole Global Co-ordinator and Book Running Lead Manager and others will

rely on the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to the Sole Global Co-ordinator and Book Running Lead Manager on their own behalf and on behalf of our Company and are irrevocable;

• that you are eligible to invest in India under applicable law, including the Foreign Exchange

Management (Transfer or Issue of Security by Person Resident Outside India) Regulations, 2000, as amended from time to time, and have not been prohibited by the SEBI from buying, selling or dealing in securities;

• that you understand that the Sole Global Co-ordinator and Book Running Lead Manager does not

have any obligation to purchase or acquire all or any part of the Equity Shares purchased by you in the Issue or to support any losses directly or indirectly sustained or incurred by you for any reason whatsoever in connection with the Issue, including non-performance by us of any of our respective obligations or any breach of any representations or warranties by us, whether to you or otherwise;

• that you are a reputed investor who is seeking to purchase the Equity Shares for your own

investment and not with a view to distribution; In particular, you acknowledge that (i) an investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment, (ii) you have sufficient knowledge, sophistication and experience in financial and business matters so as to be capable of evaluating the merits and risk of the purchase of the Equity Shares, and (iii) you are experienced in investing in private

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placement transactions of securities of companies in a similar stage of development and in similar jurisdictions and have such knowledge and experience in financial, business and investments matters that you are capable of evaluating the merits and risks of your investment in the Equity Shares; and

• that all references to “you” are to the prospective Investors in the Equity Shares; and that each of

the representations, warranties, acknowledgements and undertakings set out above shall continue to be true and accurate at all times up to and including the Allotment of the Equity Shares.

OFFSHORE DERIVATIVE INSTRUMENTS Under Regulation 15A(1) of the Securities Exchange Board of India (Foreign Institutional Investors) Regulation, 1995, as amended no foreign institutional investors as defined therein, or their sub-accounts, (together referred to as “FIIs”), including affiliates of the Sole Global Co-ordinator and Book Running Lead Manager who are FIIs may issue, deal in or hold, off-shore derivative instruments such as participatory notes, equity linked notes or any other similar instruments against Equity Shares allocated in this Offering (all such off-shore derivative instruments referred to herein as “P-Notes”), listed or proposed to be listed on any stock exchange in India only in favor of those entities which are regulated by any relevant regulatory authorities in the countries of their incorporation or establishment subject to compliance of “know your client” requirements. An FII or sub-account shall also ensure that no further issue or transfer of any instrument referred to above is made to any person other than a regulated entity. P-Notes have not been and are not being offered or sold pursuant to this Preliminary Placement Document. This Preliminary Placement Document neither contains nor will contain any information concerning P-Notes or the issuer(s) of any P-Notes, including, without limitation, any information regarding any risk factors relating thereto. P-Notes have not been and are not being offered or sold pursuant to this Preliminary Placement Document. Neither this document nor the Placement Document contains or will contain any information concerning P-Notes or the issuer(s) of any P-Notes, including, without limitation, any information regarding any risk factors relating thereto. Any P-Notes that may be issued are not securities of our Company and do not constitute any obligations of, claim on, or interests in our Company. Our Company has not participated in any offer of any P-Notes, or in the establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P-Notes. Any P-Notes that may be offered are issued by, and are solely the obligations of, third parties that are unrelated to our Company. Our Company and its affiliates do not make any recommendation as to any investment in P-Notes and do not accept any responsibility whatsoever in connection with any P-Notes. Any P-Notes that may be issued are not securities of the Sole Global Co-ordinator and Book Running Lead Manager and do not constitute any obligations of, or claim on the Sole Global Co-ordinator and Book Running Lead Manager. Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate disclosures as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any P-Notes or any disclosure related thereto. Prospective investors are urged to consult with their own financial, legal, accounting and tax advisors regarding any contemplated investment in P-Notes, including whether P-Notes are issued in compliance with applicable laws and regulations.

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES As required, a copy of this Preliminary Placement Document has been submitted to the Stock Exchanges. The Stock Exchanges do not in any manner: 1. warrant, certify or endorse the correctness or completeness of any of the contents of the

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Preliminary Placement Document; 2. warrant that our Company’s Equity Shares will be listed or will continue to be listed on the Stock

Exchanges; or 3. take any responsibility for the financial or other soundness of our Company, its Promoters, its

management or any scheme or project of our Company;

and it should not for any reason be deemed or construed to mean that the Preliminary Placement Document has been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquire any Equity Shares may do so pursuant to an independent inquiry, investigation and analysis and shall not have any claim against the Stock Exchanges whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this Preliminary Placement Document, unless the context otherwise indicates or implies, references to “you,” “offeree,” “purchaser,” “subscriber,” “recipient,” “investors” and “potential investor” are to the prospective investors in this Offering, references to our “Company”, the “Company” or the “Issuer” are to Bajaj Electricals Limited. In this Preliminary Placement Document, references to “USD”, “$” and “U.S. dollars” are to the legal currency of the United States and references to “Rs.” and “Rupees” are to the legal currency of India. All references herein to the “U.S.” or the “United States” are to the United States of America and its territories and possessions and all references to “India” are to the Republic of India and its territories and possessions. Unless otherwise stated, references in this Preliminary Placement Document to a particular year are to the calendar year ended on December 31 and to a particular “fiscal” or “fiscal year” are to the fiscal year ended on March 31. Our Company publishes its financial statements in Rupees. Our Company’s financial statements included herein have been prepared in accordance with Indian GAAP and the Companies Act. Unless otherwise indicated, all financial data in this Preliminary Placement Document are derived from our Company’s financial statements prepared in accordance with Indian GAAP. Indian GAAP differs in certain significant respects from International Financial Reporting Standards (“IFRS”) and U.S. GAAP. Our Company does not provide a reconciliation of its financial statements to IFRS or U.S. GAAP financial statements. The financial statements of our Company, including the audited financial statements of our Company for Fiscal 2007, Fiscal 2008 and Fiscal 2009 were prepared in accordance with Indian GAAP and the unaudited financial results for the half year ended September 30, 2009, which have been prepared in accordance with the requirements of the Listing Agreement and reviewed in accordance with Standard on Review Engagement (SRE) 2400, Engagements to Review Financial Statements issued by the Institute of Chartered Accountants of India are included in this Preliminary Placement Document and are referred to herein as the “Financial Statements”.

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INDUSTRY AND MARKET DATA

Information regarding market position, growth rates and other industry data pertaining to businesses of our Company contained in this Preliminary Placement Document consists of estimates based on data reports compiled by government bodies, professional organizations and analysts, data from other external sources and knowledge of the markets in which our Company competes. The statistical information included in this Preliminary Placement Document relating to the various sectors in which our Company operates has been reproduced from various trade, industry and government publications and websites. This data is subject to change and cannot be verified with complete certainty due to limits on the availability and reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. In many cases, there is no readily available external information (whether from trade or industry associations, government bodies or other organizations) to validate market-related analysis and estimates, so our Company has relied on internally developed estimates. Neither our Company nor the Sole Global Co-ordinator and Book Running Lead Manager have independently verified this data and neither our Company nor the Sole Global Co-ordinator and Book Running Lead Manager makes any representation regarding the accuracy of such data. Similarly, while our Company believes its internal estimates to be reasonable, such estimates have not been verified by any independent sources and neither our Company nor the Sole Global Co-ordinator and Book Running Lead Manager can assure potential investors as to their accuracy.

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FORWARD-LOOKING STATEMENTS

Certain statements contained in this Preliminary Placement Document that are not statements of historical fact constitute “forward-looking statements.” Investors can generally identify forward-looking statements by terminology such as “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “objective”, “plan”, “potential”, “project”, “pursue”, “shall”, “should”, “will”, “would”, or other words or phrases of similar import. All statements regarding our Company’s expected financial condition and results of operations and business plans and prospects are forward-looking statements. These forward-looking statements include statements as to our Company’ business strategy, revenue and profitability, planned projects and other matters discussed in this Preliminary Placement Document that are not historical facts. These forward-looking statements and any other projections contained in this Preliminary Placement Document (whether made by our Company or any third party) are predictions and involve known and unknown risks, uncertainties, assumptions and other factors that may cause our Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. All forward-looking statements are subject to risks, uncertainties and assumptions about our Company that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our Company’s expectations include, among others: • General, political, economic, social and business conditions in India and other countries;

• Our Company’s ability to successfully implement its strategy, its growth and expansion plans and technological changes;

• Performance of the Indian debt and equity markets;

• Occurrence of natural calamities or natural disasters affecting the areas in which our Company has operations;

• Changes in laws and regulations that apply to companies in India;

• The current worldwide economic recession;

• Conditions in the Indian securities market affecting the price or liquidity of Equity Shares;

• Restrictions on daily movements in the price of the Equity Shares that may affect the price/ability to sell such shares;

• Taxes payable in India on income arising from capital gains;

• Transfer restrictions set forth in this Preliminary Placement Document;

• Dilution of holdings by additional issuances of equity;

• Significant change in the Government’s economic liberalization and deregulation policies;

• Terrorist attacks and other acts of violence or war involving India or other countries;

• Financial difficulty and other problems in certain financial institutions in India;

• Decline in India’s foreign exchange reserves;

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• Downgrading of India’s debt rating by an international rating agency;

• Anti takeover provisions under Indian law;

• Risk of fluctuation in the price of Equity Shares;

• Changes in the foreign exchange control regulations in India; and

• Other factors discussed in this Preliminary Placement Document, including under the section titled “Risk Factors”.

All forward-looking statements are subject to risks, uncertainties and assumptions about our Company that could cause actual results and property valuations to differ materially from those contemplated by the relevant statement. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Company”, “Industry Overview” and “Business”. The forward-looking statements contained in this Preliminary Placement Document are based on the beliefs of management, as well as the assumptions made by and information currently available to management. Although our Company believes that the expectations reflected in such forward-looking statements are reasonable at this time, it cannot assure investors that such expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. If any of these risks and uncertainties materialise, or if any of our Company’s underlying assumptions prove to be incorrect, our Company’s actual results of operations or financial condition could differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent forward-looking statements attributable to our Company are expressly qualified in their entirety by reference to these cautionary statements.

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ENFORCEMENT OF CIVIL LIABILITIES

Our Company is a limited liability company incorporated under the laws of India. All of our Company’s directors and key managerial personnel named herein are residents of India and all or a substantial portion of assets of our Company or such persons are located in India. As a result, it may be difficult for investors to affect service of process upon our Company or such persons outside India or to enforce judgments obtained against such parties outside India. Recognition and enforcement of foreign judgments is provided for under Section 13 of the Code of Civil Procedure, 1908 (the “Civil Code”) on a statutory basis. Section 13 of the Civil Code provide that a foreign judgment shall be conclusive regarding any matter directly adjudicated upon except: (i) where the judgment has not been pronounced by a court of competent jurisdiction; (ii) where the judgment has not been given on the merits of the case; (iii) where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural justice; (v) where the judgment has been obtained by fraud; and (vi) where the judgment sustains a claim founded on a breach of any law in force in India. Under the Civil Code, a court in India shall, upon the production of any document purporting to be a certified copy of a foreign judgment, presume that the judgment was pronounced by a court of competent jurisdiction, unless the contrary appears on record. India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. However, Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior court within the meaning of that section in any country or territory outside India which the Government has by notification declared to be in a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalties. Each of the United Kingdom, Singapore and Hong Kong has been declared by the Government to be a reciprocating territory for the purposes of Section 44A of the Civil Code but the United States has not been so declared. A judgment of a court in a jurisdiction which is not a reciprocating territory may be enforced only by a fresh suit upon the judgment and not by proceedings in execution. The suit must be filed in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with public policy. Further, any judgment or award in a foreign currency would be converted into Rupees on the date of such judgment or award and not on the date of payment. A party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI to repatriate outside India any amount recovered pursuant to the execution of such a judgment. In addition, any judgment in a foreign currency would be converted into Indian Rupees on the date of the judgment and not on the date of payment.

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EXCHANGE RATE INFORMATION

Fluctuations in the exchange rate between the Rupee and the U.S. Dollar will affect the U.S. Dollar equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the conversion into U.S. Dollars of any cash dividends paid in Rupees on the Equity Shares. The following table sets forth, for the periods indicated, information with respect to the exchange rate between the Rupee and the U.S. dollar (in Rupees per U.S. dollar) based on the reference rates released by the Reserve Bank of India. In 1994, the Rupee was permitted to float fully for the first time. The exchange rate as at September 30, 2009 was Rs. 48.04 = USD 1. (Source: Reserve Bank of India). No representation is made that the Rupee amounts actually represent such amounts in U.S. dollars or could have been or could be converted into U.S. dollars at the rates indicated, any other rates or at all.

Year ended March 31 Period End Average High Low (Rs. Per USD 1.00) 2007...................................................................... 43.59 45.29 46.95 43.14 2008...................................................................... 39.97 40.24 43.15 39.27 2009...................................................................... 50.95 45.91 52.06 39.89 Quarter ends First Quarter 2010 (ended June 30, 2009)......... 47.87 48.67 50.53 50.53 Second Quarter 2010 (ended September 30, 2009)... 48.04 48.42 49.40 47.54

Source: Reserve Bank of India

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CERTAIN DEFINITIONS AND ABBREVIATIONS

Our Company has prepared this Preliminary Placement Document using certain definitions and abbreviations which you should consider when reading the information contained herein. The terms defined in this section shall have the meaning set forth herein, unless specified otherwise in the context thereof, and references to any statue or regulations or policies shall include amendments thereto, from time to time. Company Related Terms

Term Description Articles/Articles of Association The Articles of Association of our Company Board of Directors The Board of Directors of our Company or committees constituted thereof “Company” or “the Issuer” or “our” or “we” or “us”

Bajaj Electricals Limited

Equity Shares Equity shares of face value Rs. 10/- each of Bajaj Electricals Limited, and shall deem to include unless repugnant to the context, the equity shares of face value Rs. 10/- each offered and to be issued and allotted pursuant to the Offering

ESOP Scheme The employees stock option scheme of our Company as approved by the shareholders of our Company pursuant to a resolution passed by the shareholders of our Company at their meeting held on July 26, 2007

Memorandum or Memorandum of Association

The Memorandum of Association of our Company

SBUs The strategic business units of our Company, namely appliances, lighting, luminaires, fans, and engineering and projects

Offering Related Terms

Term Description Allocated /Allocation The allocation of Equity Shares following the determination of the Issue Price to

Investors on the basis of Application Forms submitted by them, in consultation with the Sole Global Co-ordinator and Book Running Lead Manager in compliance with Chapter VIII of the SEBI Regulations

Allotment/Allotted Unless the context otherwise requires, the allotment and issue of Equity Shares pursuant to this Offering

Allottees Persons to whom Equity Shares of our Company are issued pursuant to the Offering Application (s) An offer by a QIB pursuant to the Application Form for subscription to Equity

Shares under this Issue. Application Form The form (including any revisions thereof) pursuant to which a QIB subscribes for

the Equity Shares Articles/Articles of Association The Articles of Association of our Company Auditors M/s Dalal & Shah , Chartered Accountants, the statutory auditors of our Company CAN/Confirmation of Allocation Note

Note or advice or intimation to not more than 49 QIBs confirming the Allocation of Equity Shares to such QIBs after discovery of the Issue Price

Cut-off Price The Issue Price of the Equity Shares which shall be finalised by our Company in consultation with the Sole Global Co-ordinator and Book Running Lead Manager

Delisting Regulations Securities Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, as amended from time to time.

Depository A depository registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996

Depository Participant A depository participant as defined under the Depositories Act Escrow Bank YES BANK Limited Floor Price The floor price of Rs. 782.44 for the Equity Shares, which has been calculated in

accordance with Chapter VIII of the SEBI Regulations

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Term Description Escrow Bank Account

A special bank account opened by our Company with each Escrow Bank in terms of the arrangement between our Company, the Sole Global Co-ordinator and Book Running Lead Manager and the Escrow Bank, into which the application monies payable by QIBs in connection with subscription to Equity Shares pursuant to the Offering shall be deposited.

Stock Exchanges BSE , NSE and DSE Issue Closing Date [●] Issue Opening Date [●] Issue Period The period between the Issue Opening Date and Issue Closing Date inclusive of

both dates during which prospective Investors can submit their Applications Issue Price A price per Equity Shares of Rs. [●] Issue Size The issue of [●]Equity Shares aggregating to Rs. [●] lacs Lock-up Letter The lock-up letter issued by our Company, Mr. Shekhar Bajaj, Mr. Niraj Bajaj, Mr.

Rahul Bajaj and Mr. Madhur Bajaj and our Promoter Group to the Sole Global Co-ordinator and Book Running Lead Manager.

Offering/Issue The offer and placement of the [●] Equity Shares to QIBs, pursuant to Chapter VIII of the SEBI Regulations

P-Notes Derivative instruments such as participatory notes, equity-linked notes or any other similar instruments.

Pay-in Date Last date specified in the CAN sent to QIBs, as applicable Placement Document The Placement Document to be issued in accordance with the provisions of

Regulation 84 in Chapter VIII of the SEBI Regulations Preliminary Placement Document

This Preliminary Placement Document dated December 7, 2009 issued in accordance with Chapter VIII of the SEBI Regulations

Promoters The Promoters of our Company, being Mr. Madhur Bajaj, Mr. Shekhar Bajaj, Mr. Rahul Bajaj and Mr. Niraj Bajaj

Promoter Group The promoter group of our Company holding Equity Shares in our share capital as on November 27, 2009, namely Ms. Deepa Bajaj, Ms. Kiran Bajaj, Ms. Kumud Bajaj, Ms. Minal Bajaj, Ms. Neelima Bajaj, Mr. Anant Bajaj, Master Nirvanayan Bajaj, Ms. Ruparani Bajaj, Mr. Sanjivnayan Bajaj, Ms. Sunaina Kejriwal, Bachhraj and Company Private Limited, Bajaj Holdings & Investment Limited, Bajaj International Private Limited, Bajaj Sevashram Private Limited, Hind Musafir Agency Limited, Jamnalal Sons Private Limited, Shekhar Holdings Private Limited, Mr. V.S. Raghavan, (as trustee of Bajaj Auto Employees Welfare Fund) and Mr. Kevin D’Sa (as trustee of Bajaj Auto Employees Welfare Fund)

QIBs or Qualified Institutional Buyers

Qualified Institutional Buyer as defined under Regulation 2(1)(zd) of the SEBI Regulations

QIP Qualified Institutions Placement under Chapter VIII of the SEBI Regulations RBI The Reserve Bank of India Registered Office The registered office of our Company is at 45-47, Veer NarimanRoad, Mumbai-

400001, India RoC Registrar of Companies, Maharashtra Sole Global Co-ordinator and Book Running Lead Manager

Sole Global Co-ordinator and Book Running Lead Manager to the Offering, in this case being, Edelweiss Capital Limited

Conventional and General Terms/ Abbreviations

Term/Abbreviation Full Form

AS Accounting Standards issued by the Institute of Chartered Accountants of India AY Assessment Year BOLT BSE On-line Trading. BSE Bombay Stock Exchange Limited BIFR Board for Industrial and Financial Reconstruction CAGR Compounded Annual Growth Rate CDSL Central Depository Services (India) Limited CIN Corporate Identification Number Civil Code The Code of Civil Procedure, 1908 Companies Act The Companies Act, 1956, as amended

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CPCB Central Pollution Control Board Depositories Act The Depositories Act, 1996 DER Debt Equity Ratio DP/Depository Participant A depository participant as defined under the Depositories Act, 1996 DP ID Depository Participant’s Identity DIPP the Indian Department of Industrial Policy and Promotion, Ministry of Commerce and

Industry, Government of India DSE Delhi Stock Exchange Limited EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation ECB External Commercial Borrowings ECS Electronic Clearing Service EGM Extraordinary General Meeting EIA Notification The Indian Environment Impact Assessment Notification S.O.60(E), issued on 27

January, 1994 under the provisions of the Environment (Protection) Act 1986 EPS Earnings Per Share, i.e., profit after tax for a fiscal year divided by the weighted

average outstanding number of equity Equity Shares during that fiscal year FDI Foreign Direct Investment FEMA The Foreign Exchange Management Act, 1999 FII Foreign Institutional Investor (as defined under the Securities and Exchange Board of

India (Foreign Institutional Investors) Regulations,1995) registered with SEBI under applicable laws in India

Financial Statements Our audited financial statements as of and for the years ended March 31, 2009, March 31, 2008 and March 31, 2007 which have been prepared in accordance with Indian GAAP and our reviewed, unaudited financial results for the six months period ended September 30, 2009.

Financial Year/Fiscal/FY Period of twelve months ending March 31 of that particular year FIPB Foreign Investment Promotion Board GDP Gross Domestic Product GIR Number General Index Registry Number. ICAI Institute of Chartered Accountants of India IFRS International Financial Reporting Standards India The Republic of India Indian GAAP Generally Accepted Accounting Principles followed in India IT Information Technology IT Act Indian Income Tax Act, 1961 ITES Information technology enabled services Mn/Million Million Mutual Fund A mutual fund registered with SEBI under the SEBI (Mutual Funds) Regulations,

1996 MW Mega Watts NSDL National Securities Depositaries Limited NSE National Stock Exchange of India Limited p.a. per annum P/E Ratio Price/Earnings Ratio PAN Permanent Account Number PAT Profit After Tax PBT Profit Before Tax Registration Act Indian Registration Act, 1908 Regulation S Regulation S under the Securities Act Rs. or Rupees Rupees, being the lawful currency for the time being of India SCB Scheduled Commercial Bank SEBI Act The SEBI Act, 1992 SEBI The Securities Exchange Board of India SEBI Regulations/ SEBI ICDR Regulations

The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended

Securities Act The US Securities Act of 1933 SICA Sick Industrial Companies (Special Provisions) Act, 1985 SPCB State Pollution Control Board

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STT Securities Transaction Tax Stamp Act Indian Stamp Act, 1899 Takeover Code SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 TP Act The Transfer of Property Act, 1882 UAE United Arab Emirates UIN Unique Identification Number US GAAP Generally Accepted Accounting Principles in the United States of America US$ or US Dollars US dollars, the lawful currency for the time being of the United States of America Technical and Industry terms


CFL Compact Flourescent Lamp CIS Commonwealth of Independent States CTV Colour Television D/t Diameter-to-thickness EER Energy Efficiency Rate ERP Enterprise Resource Planning FTL Flourescent Tube Light GLS lamps General Lighting Service lamps HVAC Heating Ventilating and Air Conditioning IBEF India Brand Equity Foundation IMF International Monetary Fund ISO International Organization for Standardization LED Light Emmiting Diode MMT Million metric tonnes MT Metric tonnes MTPA Metric tonnes per annum NCAER National Council for Applied Economic Research OTG Oven Toaster Griller REC Rural Electrification Corporation SAP Systeme, Anwendungen und Produkte in der Datenverarbeitung SEZ Special Economic Zone TLT Transmission Line Towers

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SUMMARY OF THE OFFERING

The following is a general summary of the terms of the Offering:

Issuer Bajaj Electricals Limited

Issue size [●] Equity Shares of our Company of par value Rs. 10 each.

Issue Price Rs. [●] per Share.

Eligible Investors QIBs as defined in Regulation 2(1)(zd) of the SEBI Regulations. See section titled “Issue Procedure - Qualified Institutional Buyers”.

Equity Shares issued and outstanding immediately prior to the Offering

1,74,40,810 Equity Shares of face value Rs. 10 each, aggregating Rs. 17,44,08,100

Equity Shares issued and outstanding immediately after the Offering

[●] Equity Shares

Listing Our Company has made applications to each of Stock Exchanges to obtain in-principle approvals for the listing of the Equity Shares on the Stock Exchanges.

Lock-up Our Company along with our Promoters and our Promoter Group have agreed that it will not, for a period of up to 120 (one hundred and twenty) days from the Closing Date (as defined in the Placement Agreement entered into by our Company with the Sole Global Co-ordinator and Book Running Lead Manager for the purposes of this Offering), without the prior written consent of the Sole Global Co-ordinator and Book Running Lead Manager, directly or indirectly: (a) issue, offer, lend, pledge, sell, contract to sell or issue, sell any option, or contract to sell or issue, grant any option, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares, or any securities convertible into or exercisable or exchangeable for Equity Shares or publicly announce an intention with respect to any of the foregoing, (b) enter into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic consequences of ownership of Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares, (c) publicly announce any intention to enter into any transaction whether any such transaction described in (a) or (b) above is to be settled by delivery of Equity Shares, or such other securities, in cash or otherwise, or (d) deposit Equity Shares or any securities convertible into or exercisable or exchangeable for Equity or which carry the right to subscribe for or purchase Equity Shares in depository receipt facilities or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale of Equity Shares or deposit of Equity Shares in any depositary receipt facility, or publicly announce any intention to enter into any such transaction. Provided however, that he foregoing restrictions shall not be applicable to: (a) any issue by the Company, or sale, transfer or disposition of Equity Shares, by the Promoters or the Promoter Group to the extent such issue, sale, transfer or disposition, as the case may be, is mandatory pursuant to any

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Indian statutory and/or regulatory provision, (b) inter-se transfer, sale or other disposition of any Equity Shares, amongst the Promoters, and/or the Promoters and the Promoter Group, provided that such transferee agrees to comply with and be bound by the terms and conditions of this letter, to the same extent as applicable to transferring Promoter/ Promoter Group entity or person/s as the case may be, (c) any pledge with respect to Equity Shares of the Company which currently are held, or in the future may be held by the Promoters and/or the Promoter Group, in connection with any credit facilities availed by the Company, (d) any purchase of Equity Shares in the secondary market by the Promoters and/or the Promoter Group, and (e) the issue and allotment of Equity Shares which are issued and allotted pursuant to any employee stock option plan, stock purchase plan or stock ownership plan of the Company as in effect on the date hereof.

Transferability Restrictions

The Equity Shares being Allotted pursuant to this Offering shall not be sold for a period of one year from the date of Allotment except on the Stock Exchanges.

Use of Proceeds The total proceeds of this Offering will be Rs. [•] lacs. After deducting the issue expenses of approximately Rs. [•] lacs, the net proceeds of this Offering will be approximately Rs. [•] lacs.

For further details, please refer Chapter “ Use of Proceeds”.

Risk Factors See section titled “Risk Factors” for a discussion of factors you should consider before deciding whether to buy Equity Shares of our Company.

Closing The Allotment of the Equity Shares offered pursuant to this Offering is expected to be made on or about [●], 2009 (“Closing Date”).

Ranking The Equity Shares being issued shall be subject to the provisions of our Company’s Memorandum and Articles of Association and shall rank pari passu in all respects with the existing Equity Shares including rights in respect of dividends. The shareholders will be entitled to participate in dividends and other corporate benefits, if any, declared by our Company after the Closing Date, in compliance with the Companies Act. shareholders may attend and vote in shareholders’ meetings on the basis of one vote for every Share held. See section titled “Description of the Equity Shares and Key Provisions of our Articles of Association”.

Security Codes for the Equity Shares

ISIN : INE193E01017

BSE Code : 500031

NSE Code : BAJAJELEC

DSE Code : 02031

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SUMMARY OF BUSINESS

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this Preliminary Placement Document. In addition to this summary, our Company urges you to read the entire Preliminary Placement Document carefully, especially the risks of investing in the Equity Shares discussed under section titled “Risk Factors” before deciding whether to buy Equity Shares. In this section “our Company”, “we”, “us” and “our” refers to Bajaj Electricals Limited. OVERVIEW Our Company is a part of the Bajaj conglomorates of businesses and industries, (“Bajaj Group”), one of the oldest business groups in India. The Bajaj Group has a diversified business line, having interests in a range of businesses which amongst others, include manufacturing of two wheeler and three wheeler automobiles, life and general insurance products, financial services, steel, consumer durables, lighting, luminaires, electric fans, electrical appliances, engineering and projects implementation, power transmission line towers, rural electrification and manufacture of high masts, galvanized poles and power tools.

Our Company is currently engaged in the businesses of marketing and distribution of appliances, fans, lighting products, luminaries, manufacture of fans, high masts, towers and poles, and undertakes projects for stadium lighting, road lighting, transmission towers, high masts and rural electrification, among other projects. Our businesses can be broadly categorized in five major strategic business units, (“SBUs”), namely, appliances, fans, lighting, luminaires and engineering and projects. Brief history of our Company Our Company was incorporated as Radio Lamp Works Limited under the Indian Companies Act, 1913 as a public company limited by shares, pursuant to a certificate of incorporation dated July 14, 1938. Subsequently the name of our Company was changed to Bajaj Electricals Limited, pursuant to a fresh certificate of incorporation dated October 1, 1960. In 1964, Matchwell Electricals (India) Limited, (“Matchwell”), a manufacturer of electric fans became a subsidiary of our Company and subsequently, with effect from July 1, 1984, the business and undertaking of Matchwell was amalgamated with our Company. In the financial year 1993-1994, our Company entered into a joint venture with Black & Decker Corporation, United States, for the manufacture and marketing of power tools, household appliances, and related accessories, through a separate company named Black & Decker Bajaj Private Limited, (“Black & Decker Bajaj”). During the financial year 1999-2000, Black & Decker Bajaj became a 100% subsidiary of our Company upon our Company acquiring a further 50% of the shareholding thereof from Black & Decker Corporation, pursuant to which Black & Decker Bajaj was renamed as Bajaj Ventures Limited. However, in the financial year 2002-2003, our Company divested 50% of its shareholding in Bajaj Ventures Limited and Bajaj Ventures Limited ceased to be a subsidiary of our Company. In January 1998, our Company established a new manufacturing unit at Chakan near Pune and commenced operations of manufacturing of fans and die-cast components. The production of fans at our manufacturing activities of the Matchwell unit also was gradually shifted to our Chakan unit. In September 1999, our Company established and commissioned a wind energy generation unit with an installed capacity of 2.8 mega watts at Village Vankusawade, Tal. Patan, District Satara, Maharashtra. In the year 2000-2001, our Company set-up our manufacturing facilities including a fabrication unit and a galvanizing plant at Ranjangaon, near Pune for the manufacture of high masts, lattice towers, and related

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products, and the said manufacturing facilities commenced commercial production with effect from April 1, 2001. In November 2002, our Company entered into a technical collaboration and brand licensing agreement with Morphy Richards, United Kingdom, for the sales and marketing of electrical appliances under the brand name of “Morphy Richards” in India. In the financial year 2002-2003 our Company discontinued manufacturing die-cast components. In the year 2005 our company entered into a Distribution agreement with Trilux Lenze of Germany for high end technical lighting. In the year 2007, we acquired 32% of the share capital of Starlite Lighting Limited, a company engaged in the manufacture of Compact Fluorescent Lamps (“CFLs”). Strategic Business Units We offer a diverse range of products and services including sales, distribution and marketing of electrical appliances, manufacture of fans and high masts, poles and towers and products relating to industrial, commercial, and domestic lighting, undertaking turnkey, commercial and rural lighting projects, design, manufacture, erection and commissioning of high masts, poles and towers. • Appliances: We market various household range of products in our appliances division. We are

one of the leading players for products such as irons, OTGs, water heaters, toasters and sandwich makers and air coolers under our own brand name and under the brand name of “Morphy Richards” (which is one of the largest players in the home appliances market in the United Kingdom). We market irons, toasters, OTGs, electric kettles, coolers, room heaters, storage water heaters, instant water heaters, immersion heaters, microwave ovens, mixers, food processor, emergency light, coffee makers, DVD players, gas stoves, gas hobs, cooker hoods, rice cookers, water filters and vacuum cleaners under the “Bajaj” brand. We market mixer grinders, juicer mixer grinders, juicers, toasters, steam irons, dry irons, electric cookers, coffee makers, electric kettles, hand blenders, OTGs, hair dryers and portable heaters under the “Morphy Richards” brand.

• Fans: In the fans business, our products include ceiling, table, pedestal and wall mounted fans,

industrial and domestic exhaust fans, air circulators, personal fans, children’s fans, cooler kits and pumps. We manufacture fans and related components at our Chakan unit, and also procure fans and related components from our vendors located at Hyderabad, Himachal Pradesh, Uttarakhand and China. We have also executed an agreement with Midea, to sell and market table, pedestal and wall mounted fans, and have also entered into an agreement with Walt Disney for the sale and marketing of children’s fans using Disney characters and designs.

• Lighting: Under this division we market various products ranging from GLS lamps, FTLs, CFLs,

and LED torches, among other products. A major portion of the electrical lamps and tubes marketed by us are manufactured by Hind Lamps Limited, a Bajaj Group company, from their manufacturing facilities located at Shikohabad and Kosi in Uttar Pradesh. Majority of our CFL lamps are manufactured by Starlite Lighting Limited, from their manufacturing facility at Nashik, Maharashtra. With respect to lamps, tube lights, and torches, we are viewed as one of the leading brands in terms of price and image in India.

• Luminaires: Our luminaires division is engaged in industrial, commercial, decorative and street

lighting, commissioning and marketing of flood lights, light emitting diodes, lighting electronics, lighting controls, mercury and sodium vapour lamps, metal halide lamps and compact florescent lamps. We are one of the leading players in the market for street lights, flood lights and industrial lighting applications. Under this SBU we market various luminiare products, which include decorative luminaires in various sizes and designed with different types of louvers, diffusers, mirror optic reflectors suitable for surface, recess and suspension mounting, luminaires for information

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technology parks, offices, banks and shopping mall applications, CFL down lighter luminaires with dimming solutions, luminaires for auditorium, conference room and art gallery lighting, industrial lighting applications, sports lighting applications, roadway lighting applications, hazardous area lighting, street lighting products, energy conservation concepts and allied accessories. Our luminaires products are sourced from dedicated vendors at Daman, Himachal Pradesh and through imports from China. We have recently forayed into a distribution relationship with Delta Controls of Canada for Building management systems and HVAC products and with Securiton of Switzerland for Fire alarms and Security systems.

• Engineering and Projects: Our engineering and projects business can be broadly categorised into

three divisions, namely, (a) special projects, where we undertake turnkey lighting assignments, fibre optic lighting, factory lighting, air-port lighting, sports lighting and rural electrification projects, among others, (b) high masts and street lighting, where we undertake design, supply, erection and commissioning of high masts, signages and poles, and (c) towers, where we undertake design, supply, erection and commissioning of transmission lines, telecommunication towers and monopoles, and other related products and services. Our Company carries out galvanizing, fabrication and manufacture of high masts, lattice towers at our Ranjangaon unit, which has a state of the art galvanizing plant.

OUR COMPETITIVE STRENGTHS 1. Established track record and brand name

We have been present in the electrical products industry for several years, which, has helped us in understanding the changing needs and demands of our customers in India. With constant improvement in performance of our products, augmented with quality and recognition of our brand, we believe that we enjoy considerable brand equity and reliability in the market.

2. Diversified business with wide range of products and services

Our revenue stream comes from diverse domains and caters to the requirements of both our domestic consumers and our customers in the industrial/infrastructure sectors, which in turn reduces our Company's dependence on a particular product or division. This ability to have a diversified revenue streams differentiates us from most of our competitors. We offer products and services ranging from marketing and distribution of appliances, manufacture of fans, high masts, poles and towers, services and products relating to industrial, commercial, and domestic lighting, undertaking turnkey, commercial and rural lighting projects, design, manufacture, erection and commissioning of high masts, poles and towers.

3. Extensive manufacturing facilities and sourcing arrangements Our Company has two manufacturing facilities located at Chakan and Ranjangaon in District Pune, Maharashtra. Our Chakan unit, which primarily manufactures fans and related components, is also equipped with a TLT fabrication facility. Our Ranjangaon unit hosts a state of the art galvanizing plant. Majority of our electrical lamps and tubes are manufactured by Hind Lamps Limited, a Bajaj Group company, from their manufacturing facilities located at Shikohabad and Kosi in Uttar Pradesh. Majority of our CFL lamps are manufactured by Starlite Lighting Limited from their manufacturing facility at Nashik, Maharashtra. Our products are also sourced from various manufacturers and vendors situated across the country, and imports from China. Our Company capitalizes on its diversified competencies by maintaining good and cordial relations with our suppliers. We are equipped with latest machines, equipment, technology and facilities to monitor quality and other specification related requirements.

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4. Research and development capabilities

We have established a state-of-the-art research and development facility at Mumbai which has been approved by the Government of India as a recognized Test House for lighting testing and luminaires. We also have a consumer durables technical services centre for our appliances business in Mumbai. Further we have an in-house fan designing and development centre at Pune and also have in-house capabilities of design and development of lighting, civil and structural engineering and electrical systems. Our research and development capablities coupled with our technology and our stringent quality and testing standards allow us to offer a wide range of products which are abreast with the latest tecnological advancements, and help us meet the expectations and demands of our consumers and customers.

5. Technical, marketing and other strategic collaborations

Our Company has entered into various strategic alliances, technical collaborations and sourcing arrangements with leading global corporates such as Morphy Richards Limited, United Kingdom and Nardi, Italy for our appliances business, Midea and Walt Disney for our fans business, Trilux Lenze, Germany, Disano, Italy, Ruud Lighting, USA, Delta Controls, Canada and Securiton, Switzerland for our luminaires business and Abacus, United Kingdom for sports lighting components and equipment. These alliances and collaborations have enabled our Company to augment the position of our brands, enhance our sales and marketing capabilities and offer new and diversified range of products to our customers and consumers.

6. Sales and marketing capabilities and strong dealer network

Our senior management has an understanding of the trade segment of the market. Through this understanding, we have been able to establish a strong dealer network countrywide, enabling our products to reach our consumers and customers easily. Presently we have a chain of approximately 1,000 distributors, 3,000 dealers, and over 240 service franchises spread across India. This network of retailers and dealers provides our customers with a first point of contact for us in each of our markets and our marketing efforts are further complimented by the direct involvement of our marketing team for each inquiry and order.

7. Experienced management

Our management team consists of individuals with academic backgrounds related to business management, engineering and commerce. They hold qualifications in engineering, designing, business management and accounting. In addition, our management team has considerable experience of the electrical, consumer durables, lighting, engineering and projects industries with some members of this team having worked in the industry for over 30 years. The members of our senior management have other diverse skills which have helped us to grow and develop us further. Our management team's skills include marketing, sales management, strategic sourcing, supply chain management, domestic capital raising and implementing expansion projects.

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SELECTED FINANCIAL INFORMATION OF OUR COMPANY

The summary selected financial and operating data set forth below are the audited financial statements of our Company for Fiscal 2007, Fiscal 2008 and Fiscal 2009. The selected financial and operating data have been derived from the financial statements of our Company included elsewhere in this Preliminary Placement Document. The financial information included in this Preliminary Placement Document does not reflect our Company’s results of operations, financial position and cash flows for the future and its past operating results are no guarantee of its future operating performance. Our Company’s financial statements are prepared and presented in accordance with Indian GAAP. For a summary of our Company’s significant accounting policies and the basis of presentation of its financial statements, see the notes to the financial statements under the section titled “Financial Statements”, of this Preliminary Placement Document.

The selected financial and operational data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited financial statements for Fiscal 2007, Fiscal 2008 and Fiscal 2009.

Financial Year 2006-07

Balance Sheet as at 31st March, 2007

As at

31. 03. 2007 As at

31. 03. 2006 (Rs. Lacs) (Rs. Lacs) I. SOURCES OF FUNDS : (1) Shareholders’ Funds (a) Share Capital 864.29 1,024.29 (b) Reserves and Surplus 10,818.15 8,053.44 11,682.44 9,077.73 (2) Loans : (a) Secured Loans 16,903.09 11,740.28 (b) Unsecured Loans 6,813.97 7,541.97 23,717.06 19,282.25 (3) Deferred Tax Adjustment (a) Liability 1,192.03 1,209.18 (b) Assets (465.58) (342.90) 726.45 866.28

Total 36,125.95 29,226.26 II. APPLICATION OF FUNDS : (1) Fixed Assets (a) Gross Block 13,635.80 13,241.70 (b) Less: Depreciation 4,290.83 3,633.57 (c) Net Block 9,344.97 9,608.13 Less : Impairment of Assets of Discontinued

Operations 258.83 205.85

9,086.14 9,402.28

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As at

31. 03. 2007 As at

31. 03. 2006 (Rs. Lacs) (Rs. Lacs) (d) Capital Work-in-Progress 56.62 3.67 9,142.76 9,405.95 (2) Investments 2,229.53 1,493.94 (3) Current Assets, Loans & Advances (a) Inventories 11,988.80 10,314.83 (b) Sundry Debtors 35,793.15 27,784.01 (c) Cash & Bank Balances 2,936.62 1,910.17 (d) Other Current Assets 2.67 2.88 (e) Loans & Advances 5,841.71 3,836.46 56,562.95 43,848.35 Less : Current Liabilities & Provisions (a) Liabilities 30,087.46 23,538.74 (b) Provisions 1,724.70 2,046.46 31,812.16 25,585.20 Net Current Assets 24,750.79 18,263.15 (4) Miscellaneous Expenditure 2.87 63.22 (to the extent not written-off or adjusted)

Total 36,125.95 29,226.26

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Profit & Loss for the year ended 31st March, 2007

Year Ended 31.03.2007


(Rs. Lacs) (Rs. Lacs) INCOME

Sales

111,300.50 87,786.73 Less: Discount 732.75 635.26 Less: Excise duty 2,838.20 2,782.33 Net Sales 107,729.55 84,369.14 Operating Income 156.61 220.09 Other Income 430.38 195.71 108,316.54 84,784.94 EXPENSES

Cost of Goods Traded & Materials Consumed 82,002.28 63,147.50 Personnel Cost 4,426.14 3,698.81 Other Expenditure 12,584.11 10,343.59 Interest 2,307.33 1,795.66 Amounts Written Off 230.16 484.94 Depreciation

756.28 666.09 Less: Transferred from Revaluation Reserve 27.69 728.59 27.92 638.17 Contract Work-in-Progress c/f (48.67) - 102,229.94 80,108.67 Operating Profit before Extra Ordinary Items and Tax 6,086.60 4,676.27 Add/(Less):Impact of Discontinued Operations (57.53) 316.98 Less : Damage of Material due to floods (Net of Insurance Claim) - (294.67) Profit before Tax 6,029.07 4,698.58 Taxation - Current (including Wealth Tax) 2,075.00 1,385.00 Taxation - Deferred (32.42) 140.17 Taxation - Fringe Benefit Tax 125.00 190.00 Profit for the year after Tax 3,861.49 2,983.41 Prior Period Expenses (2.43) (26.71) Tax in respect of earlier years - Income Tax (6.32) (2.76) Deferred Tax - (132.96) 3,852.74 2,820.98 Add : Balance b/f from previous year 700.00 506.00

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(Rs. Lacs) (Rs. Lacs) Balance available for Appropriation : 4,552.74 3,326.98 APPROPRIATIONS: Capital Redemption Reserve 160.00 840.00 Interim Dividend on Preference shares 12.36 87.04 Interim Dividend on Equity Shares (Refer Directors' Report) 691.43 - Proposed Dividend (Refer Directors' Report) - 518.57 Tax on Preference Share Dividend 1.74 12.21 Tax on Equity Share Dividend 96.97 72.73 Tax on Corporate Dividend 98.71 84.94 Transferred to General Reserve 2,500.00 1096.43 Balance carried to Balance Sheet 1090.24 700.00 4,552.74 3,326.98 EPS - Numerator 3,838.64 2,721.73 Nominal value per Share Rs. 10/- 10/- Basic & diluted (Rs.) 44.41 31.49

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As at

31.03.2008 As at

31.03.2007 (Rs. Lacs) (Rs. Lacs) I. SOURCES OF FUNDS : (1) SHAREHOLDERS’ FUNDS (a) Share Capital 1,728.58 864.29 (b) Stock options Outstanding 131.51 - (c) Reserves and Surplus 15,617.72 10,818.15 17,477.81 11,682.44 (2) LOANS : (a) Secured Loans 15,592.58 16,903.09 (b) Unsecured Loans 8,077.34 6,813.97 23,669.92 23,717.06 (3) DEFERRED TAX ADJUSTMENT (a) Liability 1,177.49 1,192.03 (b) Assets (764.95) (465.58) 412.54 726.45

Total 41,560.27 36,125.95 II.APPLICATION OF FUNDS : (1) FIXED ASSETS (a) Gross Block 14,400.19 13,635.80 (b) Less: Depreciation 4,979.40 4,290.83 (c) Net Block 9,420.79 9,344.97 Less: Impairments of Assets of Discontinued

Operations 258.83 258.83 9,161.96 9,086.14 (d) Capital Work-in-Progress 30.03 56.62 9,191.99 9,142.76 (2) INVESTMENTS 2,232.76 2,229.53 (3) CURRENT ASSETS, LOANS & ADVANCES (a) Inventories 16,217.50 11,988.80 (b) Sundry Debtors 42,534.71 35,793.15 (c) Cash & Bank Balances 3,195.55 2,936.62 (d) Other Current Assets 2.18 2.67 (e) Loans & Advances 8,895.35 5,841.71 70,845.29 56,562.95 Less: CURRENT LIABILITIES & PROVISIONS (a) Liabilities 36,452.64 30,087.46 (b) Provisions 4,257.13 1,724.70 40,709.77 31,812.16

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As at

31.03.2008 As at

31.03.2007 (Rs. Lacs) (Rs. Lacs) NET CURRENT ASSETS 30,135.52 24,750.79 (4) MISCELLANEOUS EXPENDITURE - 2.87 (to the extent not written-off or adjusted)

Total 41,560.27 36,125.95

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Profit and Loss Account for the year ended 31st March 2008



(Rs. Lacs) (Rs. Lacs)

INCOME Sales 140,328.66 111,300.50 Less: Discount 711.30 732.75 Less: Excise duty 2,300.84 2,838.20 Net Sales 137,316.52 107,729.55 Operating Income 131.09 156.61 Other Income 501.39 430.38 137,949.00 108,316.54

EXPENSES Cost of Goods Traded and Materials Consumed 100,810.18 82,002.28 Personnel Cost 6,363.40 4,426.14 Other Expenditure 15,477.57 12,584.11 Interest 2,934.15 2,307.33 Amounts Written Off 474.70 230.16 Depreciation 771.50 756.28 Less: Transferred from Revaluation Reserve (26.26) 745.24 (27.69) 728.59 Less: Contract WIP C/F - (48.67) 126,805.24 102,229.94 Operating Profit before Extra Ordinary Items & Tax 11,143.76

6,086.60

Add/(Less): Impact of Discontinued Operations -

(57.53)

Profit before Tax 11,143.76 6,029.07 Taxation Current (including Wealth Tax) 4,000.00 2,075.00 Deferred (313.91) (32.42) Fringe Benefit Tax 145.00 125.00

Profit for the year after Tax

7,312.67

3,861.49

Prior Period Expenses

(2.73)

(2.43)

Tax in respect of earlier years-Income Tax -

(6.32) 7,309.94 3,852.74 Add : Balance b/f from previous year 1,090.24 700.00 Balance available for Appropriation : 8,400.18 4,552.74 APPROPRIATIONS: Capital Redemption Reserve - 160.00 Interim Dividend on Preference shares - 12.36

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Interim Dividend on Equity Shares

- 691.43 Proposed Dividend 1,382.86 -

Tax on Preference Share Dividend - 1.74 Tax on Equity Share Dividend 235.01 96.97 Tax on Corporate Dividend 235.01 98.71 Transferred to General Reserve 5,000.00 2,500.00 Balance carried to Balance Sheet 1,782.31 1,090.24 8,400.18 4,552.74

EPS – Numerator

7,309.94

3,838.64 Nominal value per Share Rs. 10/- 10/-

Basic (Rs.)

42.29

22.54

Diluted (Rs.)

41.96

22.54

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As at 31.03.2009 As at

31.03.2008 (Rs. Lacs) (Rs. Lacs) I. SOURCES OF FUNDS : (1) SHAREHOLDERS' FUNDS (a) Share Capital 1,728.58 1,728.58 (b) Stock options Outstanding 284.43 131.51

(c) Reserves and Surplus 22,488.34 15,617.72 24,501.35 17,477.81 (2) LOANS : (a) Secured Loans 14,803.10 15,592.58 (b) Unsecured Loans 6,582.09 8,077.34 21,385.19 23,669.92 (3) DEFERRED TAX ADJUSTMENT (a) Liability 1,168.39 1,177.49 (b) Assets (853.67) (764.95) 314.72 412.54

Total 46,201.26 41,560.27 II.APPLICATION OF FUNDS : (1) FIXED ASSETS (a) Gross Block 15,447.28 14,400.19 (b) Less: Depreciation 5,728.42 4,979.40 (c) Net Block 9,718.86 9,420.79 Less : Impairment of Assets of Discontinued Operations 258.86 258.83 9,460.00 9,161.96 (d) Capital Work-in-Progress 247.70 30.03 9,707.70 9,191.99 (2) INVESTMENTS 3,155.85 2,232.76 (3) CURRENT ASSETS, LOANS &

ADVANCES (a) Inventories 17,770.48 16,217.50 (b) Sundry Debtors 55,915.82 42,534.71 (c) Cash & Bank Balances 5,381.35 3,195.55 (d) Other Current Assets 0.43 2.18 (e) Loans & Advances 11,304.30 8,895.35 90,372.38 70,845.29 Less : CURRENT LIABILITIES &

PROVISIONS (a) Liabilities 51,908.82 36,452.64

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As at 31.03.2009 As at

31.03.2008 (Rs. Lacs) (Rs. Lacs) (b) Provisions 5,125.85 4,257.13 57,034.67 40,709.77 NET CURRENT ASSETS 33,337.71 30,135.52 (4) MISCELLANEOUS EXPENDITURE - - (to the extent not written-off or adjusted)

Total 46,201.26 41,560.27

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INCOME Sales 179,904.08 140,328.66 Less: Discount 743.33 711.30 Less: Excise duty 2,271.55 2,300.84 Net Sales 176,889.20 137,316.52 Operating Income 164.81 131.09 Other Income 570.10 293.34 177,624.11 137,740.95

EXPENSES Cost of Goods Traded and Materials Consumed 131,492.79 100,810.18 Personnel Cost 7,711.33 6,363.40 Other Expenditure 19,557.15 15,269.52 Interest 3,697.19 2,934.15 Amounts Written Off 482.16 474.70 Depreciation 880.98 771.50 Less: Transferred from Revaluation

Reserve (26.26) 854.72 (26.26) 745.24 Contract Work-in-Progress carried forward (172.90) - 163,622.44 126,597.19 Profit before Tax 14,001.67 11,143.76 Taxation Current Tax (including wealth tax) 5,000.00 4,000.00 Deferred (97.82) (313.91) Fringe Benefit Tax 165.00 145.00 Profit after Tax 8,934.49 7,312.67 Prior Period Expenses (21.41) (2.73) 8,913.08 7,309.94 Add : B/f from previous year 1,782.31 1,090.24 Balance available for Appropriation : 10,695.39 8,400.18 APPROPRIATIONS: Proposed Dividend 1,728.58 1382.86 Tax on Equity Share Dividend 293.77 235.01 Transferred to General Reserve 6,500.00 5,000.00 Balance carried to Balance Sheet 2,173.04 1,782.31 10,695.39 8,400.18

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(Rs. Lacs) (Rs. Lacs) EPS - Numerator 8,913.08 7,309.94 Nominal value per Share Rs. 10/- 10/- Basic (Rs.) 51.56 42.29 Diluted (Rs.) 49.77 41.56

1

RISK FACTORS

An investment in equity shares involves a high degree of risk. You should carefully consider all the information in this Preliminary Placement Document, including the risks and uncertainties described below, before making an investment in the Equity Shares of our Company. If any of the following risks, or other risks that are not currently known or are now deemed immaterial, actually occur, our Company’s business, results of operations and financial condition could suffer, the price of the Equity Shares could decline, and all or part of your investment may be lost. Unless otherwise stated, our Company is not in a position to specify or quantify the financial or other risks mentioned herein. Wherever used in this section the terms “we”, “us” “our” shall be deemed include Bajaj Electricals Limited, unless otherwise stated. INTERNAL RISK FACTORS

1. Steel and zinc are the primary raw materials for the manufacture of our masts, towers and pillars whereas copper and aluminium are the primary raw material for the manufacture of fans by us, and the fans and other appliances marketed by us. Consequently, volatility in the supply or price of steel, copper, aluminium and/or zinc could adversely affect our operations and profitability.

Steel and zinc are the primary raw material for the manufacture of our masts, towers and pillars whereas copper and aluminium are the primary raw material for the manufacture of fans by us, and the fans and other appliances marketed by us. We are exposed to volatility in the price of steel, copper, aluminium and/or zinc which represents the largest component of the cost of the said products. The prices of the aforesaid commodities are highly volatile and cyclical in nature. Numerous factors, most of which are beyond our control, drive the cycles of the steel, coppeer, aluminium and zinc industries and influence their respective prices. Some of these factors include general economic conditions, worldwide production capacity, capacity-utilization rates, downturns in purchase by traditional bulk end users of these commodities or their customers, a slowdown in basic manufacturing industries, import duties and other trade restrictions and currency exchange rates. If the price of steel, copper, aluminium, and/or zinc increase in the future, there can be no assurance that we will be able to absorb the cost increase or pass along such increases to our customers, thereby adversely affecting our margins and profits. Increased prices of these commodities may also cause potential customers to defer purchase of our products, which would have an adverse effect on our operations, financial condition and profitability.

2. We have not entered into long term contracts with the suppliers of raw material and components for

our manufacturing facilities and with the vendors of the products marketed and sold by us. Our inability to obtain raw material and/or source our products from our suppliers/vendors in a timely manner, in sufficient quantities and/or at competitive prices could adversely affect our operations, financial condition and/or profitability.

If our suppliers/vendors are unable to supply (a) the raw material and/or components required for the manufacture of our products, and/or (b) the products that are marketed and sold by us which are sourced from third paries, in sufficient quantities, or there is a loss of one or more significant suppliers/vendors, our ability to obtain our raw material, components and/or products at competitive rates could be adversely affected. In such event, our cost of purchasing such raw material/components/products from alternate sources could be higher thereby adversely affecting our operating margins and our results of operations. Further we do not enter into long term agreements with the suppliers of raw material and components for our manufacturing facilities and with the vendors of the products marketed and sold by us. Any severance of our relations with our suppliers and/or vendors could adversely affect our operations and profitability.

3. Our Operations and profitability may be adversely affected if any of our SBUs are unable to procure sufficient orders or register sufficient sales.

2

Our profitability depends significantly on the financial performance of each of our 5 SBUs, namely appliances, lighting, fans, luminaires and engineering and projects. If any of the aforementioned SBUs are unable to procure sufficient orders and/or register sufficient sales, our overall financial condition and profitability could be adversely affected. Further, our manufacturing facilities at Chakan and Ranjangaon may not be utilised to the full extent of their respective capacities, in the event we are unable to procure sufficient orders, which in turn would adversely affect the results of our operations.

4. Our future operating results are difficult to predict. Any unfavorable changes in the factors affecting our operating results may adversely affect our operations and profitability.

Our business and results of operations may be adversely affected by, among other factors, the following:

• extended sales cycle for our products;

• timing and integration of acquired businesses, if any;

• the size, timing and profitability of significant contracts in various infrastructure and lighting projects in the forthcoming years;

• the timing and success of the submission of engineering and project tenders and contracts to certain geographic areas and more mature markets;

• economic downturns or stagnant economies in India and global markets;

• a decrease in international and domestic prices for our products and services;

• delays in project schedules and adverse changes in purchasing practices of our customers;

• the ability to raise the finance required for investments; and/or an increase in interest rates at which we can raise debt financing;

• strikes or work stoppages by our employees;

• competition from global and Indian electrical companies, including new entrants in the market;

• changes in government policies, including introduction of or adverse changes in tariff or non-tariff barriers, affecting our industry generally in India or globally;

• accidents and natural disasters; and

• the time required to train new employees in order to use their skills effectively.

All of the above factors may affect our revenues and therefore have an impact on our operating results.

5. Our operating expenses include fixed costs that are not dependent upon our order bookings. As a result, any decline in our operating performance may be magnified because we may be unable to reduce expenses immediately in response to a potential shortfall in order bookings. Our operating expenses also include significant variable costs which may adversely impact our profitability.

Our operating expenses include various fixed costs, which are as such, not dependent on our order bookings. Our fixed costs include primarily our employment related expenses and are incurred whether contracts for products are booked or not. Any shortfall in order bookings and execution may cause significant variations in operating results in any particular quarter, as we would not be able to reduce our fixed operating expenses in the short term. The effect of any decline in order bookings may thereby be magnified because a portion of our earnings are committed to paying these fixed costs. Accordingly, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future performance. Thus, it is possible that in the future some

3

of our financial results may be below the expectations of the public, market analysts and investors which could have a material adverse effect on the overall financial performance of our Company.

A significant portion of our operating expenses are variable costs which include transportation, and raw material costs. An increase in these costs may adversely affect our profitability.

6. Any prolonged business interruption at our manufacturing facilities could have a material adverse effect on results of operation and financial conditions.

Any material interruption at our manufacturing facilities, including power failure, fire and unexpected mechanical failure of equipment, could reduce our ability to meet our book orders and earnings for the affected period.

Irregular or interrupted supply of power or water, electricity shortages or government intervention, particularly in the form of power rationing are factors that could adversely affect our daily operations. If there is an insufficient supply of electricity or water to satisfy our requirements or a significant increase in electricity prices, we may need to limit or delay our production, which could adversely affect our business, financial condition and results of operations. We cannot assure you that we will always have access to sufficient supplies of electricity in the future to accommodate our production requirements and planned growth. Similarly, there is no assurance that those of our manufacturing facilities unaffected by an interruption will have the capacity to increase their output to manufacture products for the affected manufacturing facilities, to the extent that all outstanding orders will be filled in a timely manner. In the event of prolonged interruptions in the operations of our manufacturing facilities, we may have to import various supplies and products in order to meet our production requirements, which could affect our profitability.

7. Our inability to maintain the stability of our distribution network and attract additional distributors may have an adverse affect on our results of operations and financial condition.

The challenge in our business lies in reaching a geographically dispersed end-user at the right time at the right place with the right product. We rely on our distribution network and dealerships to reach the end customer and sell our products in each of the regions in which we operate. Our business is dependent on maintaining good relationships with our distributors and dealers and ensuring that our distributors and dealers find our products to be commercially remunerative and have continuing demand from customers. Furthermore, our growth depends on our ability to attract additional distributors to our distribution network. There can be no assurance that our current distributors and dealers will continue to do business with us, or that we can continue to attract additional distributors and dealers to our network. If we do not succeed in maintaining the stability of our distribution network and attracting additional distributors to our distribution network, our market share may decline and our products may not reach the end customers, materially affecting our results of operations and financial condition.

8. Our manufacturing operations are currently geographically concentrated in one state, namely, the State of Maharashtra, thereby exposing us to regional risks.

Our manufacturing operations are currently geographically concentrated in one state, namely, Maharashtra. Our manufacturing activities are therefore significantly dependent on the general economic condition and activity in the State of Maharashtra, and the Central and State Government policies relating to our manufacturing activities. Moreover, we may not be able to take advantage of any expansion opportunities outside our current markets. This may place us at a competitive disadvantage and limit our growth opportunities. Further, any change in the policies of the Central and the State governments, any local social unrest, natural disaster or breakdown of services and utilities in the State of Maharashtra or at the locations where our manufacturing facilities are situated could have an adverse effect on our business and results of operations.

9. We are dependent on third party transportation providers for the supply of raw materials and delivery of our products.

4

We use third party transportation providers for the supply of most of our raw materials and products sourced from our vendors and delivery of our products to domestic and overseas customers. Transportation strikes by members of various Indian truckers' unions have had in the past, and could again have in the future, an adverse affect on supplies and deliveries to and from our customers and suppliers. In addition, raw materials and products maybe lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of raw materials and products which may also affect our business and results of operation negatively. An increase in the freight costs or unavailability of freight for transportation of products to export markets may have an adverse effect on our business and results of operations.

10. Stringent environmental, health and safety laws and regulations or stringent enforcement of existing environmental, health and safety laws and regulations may result in increased liabilities and increased capital expenditures, which could have a material adverse impact on our operations and profitability.

Our operations are subject to environmental, health and safety and other regulatory and/or statutory requirements in the jurisdictions in which we operate. The discharge, storage and disposal of such hazardous wastes are subject to environmental regulations. Non-compliance with these regulations, which among other things, limit or prohibit emissions or spills of toxic substances produced in connection with our operations, could expose us to civil penalties, criminal sanctions and revocation of key business licences. Stringent statutory and/or regulatory requirements in connection with environment, health and safety in India is likely to result in increased environmental capital expenditures and costs for environmental compliance. In addition, due to the possibility of unanticipated regulatory or other developments, the amount of future environmental expenditures may vary widely from those currently anticipated. Further we may be required to suspend and/or stop our manufacturing activities, in order to ensure that suitable modifications are carried out therein for ensuring compliance with such statutory and/or regulatory requirements. Our failure to comply with any statutory and/or regulatory requirements in connection with environment, health and safety could affect our operations, financial condition and profitability.

11. We may not be able to implement any proposed acquisition, partnership or alliance as part of our business or growth strategy successfully or timely and may require additional capital to fund such proposed acquisition, partnership or alliance, which would adversely affect our operations and profitability.

Our ability to implement fully or successfully any future acquisitions, partnership or alliance we make in the future as part of our business strategy is dependent upon our ability to identify new opportunities for acquisitions, partnerships or alliances to enhance our presence in the domestic markets and/or improve our production efficiency and reduce production costs. Our results of future operations may be materially adversely affected if we are unable to implement such growth strategies.

12. Our failure to accurately forecast and manage inventory could result in an unexpected shortfall and/or surplus of products, which could have a material adverse impact on our profitability.

We monitor our inventory levels based on our own projections of future demand. Because of the length of time necessary to produce commercial quantities of our products, we make production decisions well in advance of sales. An inaccurate forecast of demand for any product can result in the unavailability/surplus of products. This unavailability of products in high demand may depress sales volumes and adversely affect customer relationships. Conversely, an inaccurate forecast can also result in an over-supply of products, which may increase costs, negatively impact cash flow, reduce the quality of inventory, erode margins substantially and ultimately create write-offs of inventory. Any of the aforesaid circumstances could have a material adverse effect on our business, results of operations and financial condition.

13. Our profitability may be adversely affected in the event any investments made by our Company in connection with our existing business may not yield favourable results.

5

Our Company has and may continue to invest in businesses in connection with our existing lines of businesses and matters incidental thereto, for instance, we invested in acquiring 32% of Starlite Lighting Limited with an object of sourcing CFL lamps for our lighting and luminaires buisinesses. We cannot assure that such investments made by us would yield desired results. If our Company is unable to benefit from the synergies or efficiencies expected from these investments, or if such investments do not yield desired results, our profitability may be adversely affected.

14. We are subject to risks associated with product warranty, recall and product liability costs due to defects in our products, that may not be covered by insurance, which could generate substantial claims, adverse publicity or adversely affect our business, results of operations or financial condition.

Defects, if any, in our products could require us to undertake service actions or product recalls. These actions could require us to expend considerable resources in correcting these problems and could adversely affect demand for our products. We are not completely covered by insurance for product liability claims. Repeated successful warranty claims would adversely affect our results of operations. Management resources could also be diverted away from our business towards defending such claims. As a result, our business, results of operations and financial condition could suffer. We cannot assure you that the limitations of liability set forth in our contracts will be enforceable in all instances or will otherwise protect us from liability for damages.

15. Limits on intellectual property and other statutory/regulatory protection may make us vulnerable to competition from other parties that use similar technology and expertise. Accordingly, our inability to procure protection on the intellectual property rights with respect to the processes and/or technology could adversely affect our profitability.

While we may in the course of our research and development develop processes and/or technology which differentiates our processes and/or technology from those of our competitors, such processes and/or technology may not be capable of being adequately protected by intellectual property rights and may be subject to statutory or regulatory restrictions in certain jurisdictions. Accordingly, our inability to procure protection on the intellectual property rights with respect to the processes and/or technology could adversely affect our profitability.

16. Our inability to register the trade and service marks used by us for the purposes of our business, in a timely manner or at all could adversely affect our operations, brand position, goodwill and profitability.

The applications for registration of some of the trade and service marks used by us are pending before the relvant trademark authorities. Our inability to register such trademarks and/or service marks in a timely manner or at all, could adversely affect our goodwill, brand position and/or profitability.

17. We sell our products in highly competitive markets. Inability to compete effectively may lead to lower market share or reduced operating margins, and adversely affect our operations and profitability.

We sell our products in highly competitive markets, and competition in these markets is based primarily on demand and price. Further the consumer durables sector is highly unorganised. As a result, to remain competitive in our markets, we must continuously strive to reduce our production, transportation and distribution costs and improve our operating efficiencies. If we are unable to respond effectively to these competitive pressures, our competitors may be able to sell their products at prices lower than our prices, which would have an adverse effect on our market share and results of operations.

Certain of our competitors may be larger than us in terms of production capacity and/or a more extensive global operation, and may benefit from greater economies of scale and operating efficiencies. There can be no assurance that we can continue to effectively compete with such manufacturers in the future, and failure to compete effectively may have an adverse effect on our business, financial condition and results of operations.

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18. Our success significantly depends on our management and operational teams and other skilled professionals. If we fail to retain, motivate and/or attract such personnel, our business may be unable to grow and our revenues could decline, which may decrease the value of our Equity Shares.

We are highly dependent on the senior members of our management and operational team. Our ability to execute contract engagements and to obtain new clients depends in large part on our ability to attract, train, motivate and retain highly skilled professionals. If we cannot hire and retain additional qualified personnel, our ability to bid on and obtain new contracts and to continue to expand may be impaired and our revenues could decline. We believe that there is significant competition for electrical engineering and products professionals with the necessary skill-sets. Although we provide an extensive mentoring, career counselling and constant development opportunities to meet the challenge of employee attrition among our professionals, we may not be able to hire and retain enough skilled and experienced employees to replace those who leave. Additionally, we may not be able to redeploy and retrain our employees to keep pace with continuing changes, evolving standards and changing client preferences. If we fail to retain, motivate and/or attract such personnel, our business may be unable to grow and our revenues could decline, which may decrease the value of our Equity Shares.

19. The operations of our engineering and projects division is dependent upon the demand for power generation, transmission and distribution and any slowdown in the growth of these industries would seriously impact our growth and may result in decline in profits.

The results of our business and operations relating to our engineering and projects division are dependent on the demand for power in India, which in turn is closely linked to the economic growth of the country and the policy and regulatory framework pertaining to the power sector. With growth of the economy, economic activities, such as industrial production and personal consumption, also tend to increase, which increases the demand for power. Moreover, the capacity of power generation and transmission is largely dependant on the reformative policies of the government relating to the power sector and the realisation of the various schemes and plans formulated by the government in this regard. If the economy does not continue to grow at the current rate, or if industrial production and personal consumption decline or stagnate, demand for power in India is likely to decline, which may adversely affect our operations and profitability. Further, any slowdown in governmental reforms relating to the power sector, or failure to realise various plans formulated with regard to power generation and transmission may adversely affect our operations and financial conditions.

20. We may be affected by labour strikes or other disruptions in connection with labor that could adversely affect our operations, profitability and financial condition.

We cannot assure you that we will not experience labour unrest in the future, which may delay or disrupt our operations. If work stoppages, work slow-downs or lockouts at our facilities occur or continue for a prolonged period of time, our results of operations and financial condition could be adversely affected.

21. Most of the properties used by our Company for the purposes of its operations are not owned by our Company. Any termination of the lease and/or leave and license agreements or our failure to renew the same could adversely affect our operations.

Currently, 96 of the 102 properties used by us, including our registered office, are not owned by us, of which 46 properties are held by us on a leasehold basis and 50 properties are held pursuant to leave and license agreements. Any termination of the lease and/or leave and license agreements or our failure to renew the same, and upon favourable conditions, in a timely manner or at all could adversely affect our operations.

22. Our inability to renew or maintain our statutory and regulatory permits and approvals required to operate our business would adversely affect our operations and profitability.

We are required to obtain and maintain various statutory and regulatory permits and approvals to operate our business. In the future, we will be required to renew such permits and approvals and obtain new permits and approvals for any proposed operations. While we believe that we will be able to renew or

7

obtain such permits and approvals as and when required, there can be no assurance that the relevant authorities will issue any of such permits or approvals in the time-frame anticipated by us or at all. Failure by us to renew, maintain or obtain the required permits or approvals may result in the interruption of our operations and may have a material adverse effect on our business, financial condition and results of operations.

23. Any unfavorable outcome in legal proceedings initiated by or against us may adversely affect our operations and profitability.

A number of judicial, arbitral, administrative and other proceedings have been initiated by and/or against our Company and are pending adjudication before various authorities, which have arisen in the ordinary course of business of our Company. In the event that a substantial portion of these proceedings or one or more of the proceedings involving a substantial amount are decided against us, our operations and profitability could be adversely affected. The material legal proceedings initiated by or against our Company can be summarised as follows: Legal proceedings initiated against us:

Nature of Proceedings Number of Proceedings Pending Aggregate approximate amount involved (in Rs. in lacs)

Civil and Arbitral 12 156.13 Tax Related Proceedings 37 44.80

Legal proceedings initiated by us:

Nature of Proceedings Number of Proceedings Pending Aggregate approximate amount involved (in Rs. in lacs)

Criminal 36 70.64 Civil 18 490.33 Tax Related Proceedings 145 595.4 Intellectual Property 5 Cannot be quantified

For further details, please refer to the section titled “Legal Proceedings”.

24. Our inability to procure and/or maintain adequate insurance cover in connection with our business may adversely affect our operations and profitability.

Our operations are subject to inherent risks, such as defects, malfunctions and failures of manufacturing equipment, fire, riots, strikes, explosions, loss-in-transit for our products, accidents and natural disasters. Our insurance may not be adequate to completely cover any or all of our liabilities. Further, there is no assurance that the insurance premiums payable by us will be commercially viable or justifiable. Our inability to procure and/or maintain adequate insurance cover in connection with our business could adversely affect our operations and profitability.

25. Our operations are subject to high working capital requirements. Our inability to obtain and/or maintain sufficient cash flow, credit facilities and other sources of funding, in a timely manner, or at all, to meet our requirement of working capital or pay our debts, could adversely affect our operations, financial condition and profitability.

Our operations require a substantial amount of working capital. We are required to obtain and/or maintain adequate cash flows and funding facilities, from time to time, in order to, inter-alia, finance the purchase of raw materials, products and components, upgrade and maintain our manufacturing facilities. Our inability to obtain and/or maintain sufficient cash flow, credit facilities and other sources of funding, in a

8

timely manner, or at all, to meet our requirement of working capital or pay our debts, could adversely affect our operations, financial condition and profitability.

26. If we are unable to obtain the necessary funds for our growth plans, our business and operations will be adversely affected.

Our funding requirements for new projects are substantial, and our ability to finance these plans is subject to a number of risks, contingencies and other factors, some of which are beyond our control, including general economic and capital markets conditions and our ability to obtain financing on acceptable terms.

We cannot assure you that debt or equity financing or our internal accruals will be available or sufficient to meet the funding of our growth plans.

Our ability to obtain required capital on acceptable terms is subject to a variety of uncertainties, including:

• limitations on our ability to incur additional debt, including as a result of prospective lenders’ evaluations of our creditworthiness and pursuant to restrictions on incurrence of debt in our existing and anticipated credit facilities;

• investors' and lenders' perception of, and demand for, debt and equity securities of power generation and transmission companies, as well as the offerings of competing financing and investment opportunities in India by our competitors;

• whether it is necessary to provide credit support or other assurances from our Promoter on terms and conditions and in amounts that are commercially acceptable to them;

• limitations on our ability to raise capital in the capital markets and conditions of the Indian, U.S. and other capital markets in which we may seek to raise funds; and

• our future results of operations, financial condition and cash flows.

Any inability to raise sufficient capital to fund our projects could have a material adverse effect on our business and results of operations.

27. The conditions and restrictions imposed by our financing and other agreements could adversely affect our ability to conduct our business and operations.

Most of our financing arrangements are secured by substantially all of our movable and immovable assets. Many of our financing agreements also include numerous conditions and covenants that require us to obtain lenders consents prior to carrying out certain activities and entering into certain transactions. Failure to obtain these consents or observe these covenants could have significant consequences on our business and operations.

Any failure to comply with the requirement to obtain a consent, or other condition or covenant under our financing agreements that is not waived by our lenders or is not otherwise cured by us, may lead to a termination of our credit facilities, acceleration of all amounts due under such facilities and trigger cross default provisions under certain of our other financing agreements and may adversely affect our ability to conduct our business and operations or implement our business plans.

28. If any of our contingent liabilities materialise, our liquidity, business, prospects, financial condition and results of operations could be adversely affected.

If any of the contingent liabilities not provided for in the financial statements of our Company as on March 31, 2009, materialise, our liquidity, business, prospects, financial condition and results of

9

operations could be adversely affected. For further details please refer to the section titled “Financial Statements” of the Preliminary Placement Document.

29. Hind Lamps Limited, a company in which our Company is a promoter, has been declared as a sick

industrial company under the SICA, pursuant to an order passed by the BIFR.

Pursuant to an order passed by the BIFR, Hind Lamps Limited, was declared as a Sick Industrial Company under the SICA. Our Company holds 50% of the equity share capital of Hind Lamps Limited and has been classified as a promoter thereof. Further we source a major portion of the electrical lamps and tube lights marketed and distributed by us from Hind Lamps Limted. Further, our Company pursuant to a letter dated July 2, 2009, has agreed to extend financial and other assistance in relation to the business of Hind Lamps Limited until the accumulated losses of Hind Lamps Limited are cleared and it is able to sustain its operations and meet its obligations. Consequently, any unfavourable outcome in the proceedings under SICA pending before the BIFR and/or any unfavourable terms of a scheme of rehabilitation that may be framed, in connection with Hind Lamps Limited, may adversely affect profitability.

EXTERNAL RISK FACTORS

30. Political instability or changes in the policies formulated by the Government of India from time to time could affect the liberalization of the Indian economy and adversely affect our business, results of operations and financial condition.

We are incorporated in India and a significant portion of our fixed assets and human resources are located in India. Our business, and the market price and liquidity of the Equity Shares may be adversely affected by changes in foreign exchange rates and regulations, interest rates, government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India.

The rate of economic liberalisation in India could change in future, and statutory/regulatory requirements and/or policies the general economic environment in India, foreign investment, the securities market, currency exchange and other matters affecting our business and/or investment in our securities could change as well. Any significant change in liberalisation and deregulation of policies in India could adversely affect business and economic conditions in India generally and our business, operations and profitability in particular.

31. The Government of India may regulate the prices of steel. Consequently, the prices that we are able to receive for our steel products in India may decline.

The Government of India formulates policies for the growth and development of the Indian steel industry from time to time. Although, today the Indian steel industry has been deregulated and steel prices are now subject to market forces, no assurance can be given that the Indian Government will not introduce price controls in the future. If the Government of India intervenes in determining the price of steel in India, our results of operations for our engineering and projects SBU could be adversely affected which in turn may adversely affect our financial condition.

32. Natural calamities could have a negative impact on the Indian economy and harm our business.

India has experienced natural calamities such as earthquakes, floods, drought and a tsunami in recent years. The extent and severity of these natural disasters determines their impact on the Indian economy. Prolonged spells of abnormal rainfall and other natural calamities could have an adverse impact on the Indian economy which could adversely affect our business and the price of our Equity Shares.

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33. A slowdown in the economic growth in India or in the economy globally could significantly affect our growth rates.

Our operations are primarily located in India and our business operations and performance are dependent on the overall economy, the gross domestic product (“GDP”) growth rate and the economic cycle in India. The Indian economy could be adversely affected by a number of factors. Any slowdown in the Indian economy or volatility in global commodity prices, in particular oil and steel prices, could adversely affect the Indian economy. The Indian economy could also be adversely affected by a general rise in interest rates and unfavourable weather conditions adversely affecting agriculture. A slowdown in the Indian economy could adversely affect our business and results of operations.

Additionally, any global economic slowdown could significantly affect our growth rates. An adverse change in the global economy may result in decreased business from existing customers as well as increased difficulty in finding new customers.

34. There may be less company information available in Indian securities markets than more developed countries.

There is a difference between the level of regulation, disclosure and monitoring of the Indian securities markets and the activities of investors, brokers, intermediaries and other participants and that of markets in the United States and other developed economies. There may, however, be less publicly available information about Indian companies than is regularly made available by public companies in more developed economies. As a result, you may have access to less information about our business, results of operations and financial conditions, and those of our competitors whose securities are listed on stock exchanges in India on an ongoing basis than you may have in the case of companies subject to reporting requirements of other more developed countries.

35. The lack of efficacious judicial remedies in India, and the inability of our Company and/or our shareholders to obtain any favourable order, judgment or decree from a court of competent jurisdiction in India in a timely manner, or at all, may adversely affect their respective rights.

In comparison with the judicial systems in other developed countries, the judicial system in India is slow and suffers from procedural impediments. Consequently, it may be difficult for our Company and/or our shareholders to enforce their legal rights in a timely manner, or at all, in legal proceedings initiated by our Company and/or our shareholders. Moreover, our Company and/or our shareholders may be unable to obtain a favourable order, judgment or decree, as the case may be, from a court of competent jurisdiction in India in a timely manner or at all, which may adversely affect the rights of our shareholders and/or the financial performance and operations of our Company.

36. Significant differences exist between Indian GAAP and other accounting principles with which investors may be more familiar, such as the IFRS and the US GAAP.

Accounting, financial and other reporting standards prescribed by various statutory and/or regulatory bodies/authorities in India may differ from those prevalent in more developed countries, inter-alia including the IFRS and the US GAAP. Consequently, there might be substantial differences between the accounting standards and disclosure norms prevalent in India and in other countries in connection with valuation of properties and other assets, accounting for depreciation, deferred taxation, contingent liabilities and foreign exchange transactions. As a result, investors in our securities may be exposed to a relatively lesser degree of information, which may affect their interests adversely.

37. Pursuant to an order of an Industrial Tribunal, we may be directed to regularise or absorb contract labour employed by us, which may result in an increase in our expenses and may adversely affect our profitability.

We are registered as a principal employer under the Contract Labour (Regulation and Abolition) Act, 1970. Pursuant to any application made by contract labourers employed by us, an Industrial Court or

11

Tribunal may direct us to regularise or absorb such contract labour. Further, the State Government may prohibit the employment of contract labour. If either of the above should occur, we may be required to induct such labourers on our payroll, as employees, which may result in increased expenses and consequently, may adversely affect our profitability.

38. Financial instability in other countries, particularly emerging market countries, could adversely impact our business.

The Indian market and the Indian economy are influenced by economic and market conditions in other countries, particularly countries with emerging markets. Any slowdown of economic growth in such countries, particularly those located in Asia may adversely affect the Indian economy. Although economic conditions are different in each country, investors' reaction to developments in one country can have adverse effects on the securities of companies in other countries, including India. A loss of investor confidence in the financial systems of emerging and other markets may cause increased volatility in Indian financial markets which may adversely affect the market price of our Equity Shares.

39. Terrorist attacks, civil disturbances, regional conflicts and other acts of violence in India and abroad may disrupt or otherwise adversely affect our Company’s business and its profitability.

Certain events that are beyond the control of our Company, such as terrorist attacks and other acts of violence or war, including those involving India, the United Kingdom, the United States or other countries, may adversely affect worldwide financial markets and could potentially lead to a severe economic recession, which could adversely affect our Company’s business, results of operations, financial condition and cash flows, and more generally, any of these events could lower confidence in India’s economy. Southern Asia has, from time to time, experienced instances of civil unrest and political tensions and hostilities among neighbouring countries, including India, Pakistan and China. India recently witnessed a major terrorist attack in Mumbai on November 26, 2008, which led to an escalation of political tensions between India and Pakistan. Political tensions could create a perception that there is a risk of disruption of services provided by India-based companies, which could have an adverse effect on our Company’s business, future financial performance and price of the Equity Shares. Furthermore, if India were to become engaged in armed hostilities, particularly hostilities that are protracted or involve the threat or use of nuclear weapons, the Company's operations might be significantly affected.

India has from time to time experienced social and civil unrest and hostilities, including riots, regional conflicts and other acts of violence. Events of this nature in the future could have a material adverse effect on our Company’s ability to develop its business. As a result, our Company’s business, results of operations and financial condition may be adversely affected.

40. Our Company’s ability to raise foreign capital may be constrained by Indian law.

As an Indian company, our Company is subject to exchange controls that regulate borrowing in foreign currencies. Such regulatory restrictions limit our Company’s financing sources and hence could constrain its ability to obtain financing on competitive terms and refinance existing indebtedness. In addition, our Company cannot assure you that the required approvals will be granted to it without onerous conditions, if at all. Limitations on raising foreign debt may have an adverse effect on our Company’s business growth, financial condition and results of operations.

There are provisions in Indian law that may delay, deter or prevent a future takeover or change in control of our Company. Although these provisions have been formulated to ensure that interests of investors/shareholders are protected, these provisions may also discourage a third party from attempting to take control of our Company. Consequently, even if a potential takeover of our Company would result in the purchase of the Equity Shares at a premium to their market price or would otherwise be beneficial to its stakeholders, it is possible that such a takeover would not be attempted or consummated because of Indian takeover regulations.

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41. The market value of your investment may fluctuate due to the volatility of the Indian securities market.

Indian securities markets may be more volatile than the securities markets in other developed countries. The Stock Exchanges have, in the past, experienced substantial fluctuations in the prices of listed securities.

The Stock Exchanges have experienced problems, inter alia, including temporary exchange closures, broker defaults, settlement delays and strikes by brokers and/or other intermediaries in the securities market. If such or similar problems were to continue or recur, could affect the market price and liquidity of the securities of Indian companies, including the Equity Shares. In addition, the governing bodies of the Stock Exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price movements and margin requirements.

42. Shareholders will bear the risk of fluctuations in the price of the Equity Shares.

The price of the Equity Shares on the Stock Exchanges may fluctuate after this offering as a result of several factors, including: volatility in the Indian and global securities market; operations and performance of the Company; performance of its competitors and the perception in the market about investments in the electrical products and services industry; adverse media reports on the Company or the Indian electrical industry; changes in the estimates of the Company’s performance or recommendations by financial analysts; significant developments in India’s economic liberalization and deregulation policies; and significant developments in India’s fiscal and environmental regulations. There can be no assurance that the prices at which the Equity Shares are initially traded will correspond to the prices at which the Equity Shares will trade in the market subsequently.

43. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a shareholder’s ability to sell, or the price at which it can sell Equity Shares at a particular point in time

The Company is subject to a daily circuit breaker imposed by all stock exchanges in India which does not allow transactions beyond certain volatility in the price of the Equity Shares. This circuit breaker operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on Stock Exchanges. The percentage limits on the Company’s circuit breakers are set by the NSE, BSE and the DSE. The NSE, BSE and the DSE does not inform the Company of the percentage limit of such circuit breakers and may change it without the Company’s knowledge. This circuit breaker effectively limits the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, there can be no assurance regarding the ability of the Company’s Equity Shareholders to sell the Equity Shares or the price at which shareholders may be able to sell their Equity Shares at a particular point in time.

44. Fluctuation in the exchange rate between the Rupee and any other currency could have a material adverse effect on the value of the Equity Shares, independent of the Company’s operating results.

The Equity Shares are quoted in Rupees on the BSE, NSE and the DSE. Any dividends in respect of the Equity Shares will be paid in Rupees and may subsequently be converted into other currencies for repatriation to any non-resident shareholder. Any adverse movement in exchange rates during the time it takes to undertake such conversion may reduce the net dividend to investors. In addition, any adverse movement in exchange rates during a delay in repatriating outside India the proceeds from a sale of Equity Shares, for example, because of a delay in regulatory approvals that may be required for the sale of Equity Shares may reduce the net proceeds received by shareholders. Further any fluctuations in the exchange rates between the Rupee and any other currency may adversely affect the value of our Equity Shares.

45. Future issuances or sales of the Equity Shares could significantly affect the trading price of our Equity Shares, and may dilute your shareholding in our Company.

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The future issuances of Equity Shares by the Company or the disposal of Equity Shares by any of the major shareholders of our Company or the perception that such issuance or sales may occur may significantly affect the trading price of the Equity Shares. Further, any issuance of any Equity Shares pursuant to the conversion or exchange of securities of our Company, or otherwise, may dilute your shareholding in our Company.

There can be no assurance that our Company will not issue further Equity Shares or that the shareholders will not dispose of, pledge or otherwise encumber their Equity Shares.

46. There is no guarantee that the Equity Shares issued pursuant to the Issue will be listed on the BSE, NSE and the DSE in a timely manner or at all.

In accordance with Indian law and practice, permission for listing and trading of the Equity Shares issued pursuant to the Issue will not be granted until after those Equity Shares have been issued and allotted. Approval will require all other relevant documents authorising the issuing of Equity Shares to be submitted. There could be a failure or delay in listing the Equity Shares on the BSE, NSE and the DSE. Any failure or delay in obtaining the approval would restrict your ability to dispose of your Equity Shares. Further, historical trading prices, therefore, may not be indicative of the prices at which the Equity Shares will trade in the future.

47. Foreign investors are subject to foreign investment restrictions under Indian law that limit the Company’s ability to attract foreign investors, which may adversely impact the market price of the Equity Shares.

Under the foreign exchange regulations currently in force in India, transfers of Equity Shares between non-residents and residents are freely permitted (subject to certain restrictions) if they comply with the pricing guidelines and reporting requirements specified by the RBI. If the transfer of Equity Shares, which are sought to be transferred is not in compliance with such pricing guidelines or reporting requirements or falls under any of the exceptions referred to above, then the prior approval of the RBI will be required. Additionally, shareholders who seek to convert the Rupee proceeds from a sale of Equity Shares in India into foreign currency and repatriate that foreign currency from India will require a no objection/ tax clearance certificate from the income tax authority. The Company cannot assure investors that any required approval from the RBI or any other statutory and/or regulatory authority or agency can be obtained on any particular terms or at all.

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MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE EQUITY SHARES

Our Company was incorporated as Radio Lamp Works Limited under the Indian Companies Act, 1913 as a public company limited by shares, pursuant to a certificate of incorporation dated July 14, 1938. Subsequently the name of our Company was changed to Bajaj Electricals Limited, pursuant to a fresh certificate of incorporation dated October 1, 1960. As of December 2, 2009, 17,440,810 of our Equity Shares were subscribed and paid up. Equity Shares of the Company are listed on the DSE, BSE and NSE. The Equity Shares of our Company have been listed on the Stock Exchanges. Our Company’s Equity Shares were listed on BSE w.e.f August 27, 1966, DSE w.e.f November July 25, 1958 and on the NSE w.e.f November 02, 2007. The tables below set forth, for the periods indicated, the high, low and average market prices and the trading volumes on BSE and NSE for our Company’s Equity Shares. There is no trading volume data of our Company’s share for DSE as they are not frequently traded in the past 3 years. As of December 2, 2009, 17,440,810 Equity Shares of face value of Rs. 10 each are issued and subscribed. The following tables set forth the reported high and low of closing market prices of our Equity Shares (of face value of Rs. 10 each) on the BSE and the NSE and the number of Equity Shares traded on the days such high and low prices were recorded, for the Fiscal years 2007, 2008 and 2009. BSE

Fiscal Year

High (Rs.)

Date of High

Number of

Equity Shares traded on date of high

Volume on date of high (Rs. In

Million)

Low (Rs.)

Date of Low

Number of

Equity Shares traded on date of low

Volume on date of low (Rs. In

Million)

Average price

for the year (Rs.)*

2007 601.05 April 12, 2006

5,334 3.30 378.75 December 11, 2006

1,503 0.58 471.48

2008 704.15 December 31, 2007

1,42,661 102.23 289.80 October 19, 2007

4,104 1.19 468.44

2009 492.25 May 21, 2008

1,587 0.76 139.55 March 09, 2009

2,642 0.37 331.20

* Average of the daily closing prices Source: Market Price Information is sourced from www.bseindia.com. Notes: High and low prices are of the daily closing prices.

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NSE Fiscal Year

High (Rs.)

Date of High

Number of



Million)

Low (Rs.)

Date of Low

Number of



Million)

Average price

for the year (Rs.)*

2008# 703.75 December 31, 2007

60,900 43.52 333.15 November 06, 2007

731 0.25 477.64

2009 491.85 May 15, 2008

1,451 0.70 136.30 March 09, 2009

1,593 0.22 330.75

# Trading of our Equity Shares began on NSE w.e.f November 02, 2007 * Average of the daily closing prices Source: Market Price Information is sourced from www.nseindia.com. Notes: High and low prices are of the daily closing prices. The following tables set forth the reported high and low closing prices of our Equity Shares on the NSE and the BSE, the number of Equity Shares traded on the days such high and low prices were recorded and the volume of securities traded in each month during the last six months preceding the date of filing of the Preliminary Placement Document. BSE

Month,

Year High (Rs.)

Date of High

Number of Equity Shares

traded on date of

high


Million)

Low (Rs.)

Date of Low

Number of



Million)

Average price for the month (Rs.)*

June, 2009

443.65 June 01, 2009

1,53,605 68.15 392.05 June 25, 2009

5,897 2.32 413.77

July, 2009

506.85 July 29, 2009

40,429 20.17 375.65 July 09, 2009

681 0.26 418.92

August, 2009

593.50 August 31, 2009

2,723 1.61 486.55 August 03, 2009

5,425 2.65 547.85

September, 2009

655.45 September 18, 2009

1,879 1.22 603.50 September 01, 2009

8,684 5.23 630.18

October, 2009

803.35 October 16, 2009

9,387 7.51 612.75 October 05, 2009

1,147 0.71 745.54

November, 2009

800.35 November 16, 2009

2,737 2.19 751.15 November 04, 2009

4,020 2.99 781.99

* Average of the daily closing prices Source: Market Price Information is sourced from www.bseindia.com. Notes: High and low prices are of the daily closing prices. In case of two days with the same closing price, the date with higher volume has been considered.

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NSE

Month, Year

High (Rs.)

Date of High

Number of



Million)

Low (Rs.)

Date of Low

Number of



Million)

Average price

for the month (Rs.)*

June, 2009 443.20 June 01, 2009

1,00,281 44.48 390.25 June 25, 2009

4,689 1.85 413.59

July 2009 506.30 July 29, 2009

43,487 21.61 376.20 July 09, 2009

953 0.36 419.44

August 2009

591.70 August 31, 2009

7,951 4.69 486.90 August 03, 2009

8,496 4.16 547.61

September, 2009

649.50 September 18, 2009

1,346 0.87 602.25 September 02, 2009

4,731 2.85 629.58

October, 2009

804.35 October 16, 2009

11,735 9.40 626.45 October 06, 2009

2,056 1.27 747.78

November, 2009

801.50 November 16, 2009

7,708 6.16 745.05 November 3, 2009

5,108 3.85 782.08

* Average of the daily closing prices Source: Market Price Information is sourced from www.nseindia.com. Notes: High and low prices are of the daily closing prices. In case of two days with the same closing price, the date with higher volume has been considered. Details of the number of equity shares and volumes of business transacted during the last six months and the fiscal years ended March 31, 2007, March 31, 2008 and March 31, 2009 on the Stock Exchanges are given below.

Month BSE NSE

Volume

(No. of Shares) Turnover

(in INR mn) Volume

(No. of Shares) Turnover

(in INR mn) November, 2009 1,62,743 124.56 1,06,035 83.24 October, 2009 2,65,247 201.79 3,94,264 301.65 September, 2009 2,03,642 125.32 1,08,619 68.73 August, 2009 1,73,612 94.06 2,67,641 145.58 July, 2009 3,19,409 142.73 3,92,364 174.91 June, 2009 3,27,918 140.97 2,24,023 96.76 Fiscal 2009 20,50,628 769.89 4,96,666 162.65 Fiscal 2008 20,92,890 1,064.87 3,85,000# 208.94# Fiscal 2007 6,02,877 288.80 N.A. N.A. Source: www.nseindia.com; www.bseindia.com

17

The following table sets forth the market price of our Equity Shares on the Stock Exchanges on October 14, 2009, the first working day following the day of the Board meeting approving the Issue.

Date BSE NSE Open High Low Close Number

of Equity Shares traded

Volume (Rs. In

Million)

Open High Low Close Number of

Equity Shares traded

Volume (Rs. In

Million)

October 14, 2009

780.05 816.95 779.90 790.45 27,768 22.24 780.00 816.00 780.00 787.50 63,193 50.61

Source: www.nseindia.com; www.bseindia.com Please note that the Equity Shares of our Company have not been traded on the DSE for the last three years preceding the date of this Preliminary Placement Document.

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USE OF PROCEEDS

The total proceeds of this Offering will be Rs. [•] lacs. After deducting the issue expenses of approximately Rs. [•] lacs, the net proceeds of this Offering will be approximately Rs. [•] lacs. Subject to compliance with applicable laws and regulations, our Company intends to use the net proceeds received from this Offering to accelerate further growth, fund various expansion plans, long-term working capital requirements, to finance investment opportunities, for repayment of our borrowings and existing credit facilities and for general corporate purposes and for any other uses that may be permissible under applicable statutory and/or regulatory requirements. In accordance with the policies set up by the Board of Directors of our Company and as permissible under applicable laws and government policies, the management of our Company will have the flexibility in deploying the proceeds received from this Offering. Pending utilization for the purposes described above, our Company intends to use the proceeds to temporarily invest in credit worthy instruments, including money market mutual funds and deposits with banks and corporates (to temporarily reduce its working capital borrowings). Such investments would be in accordance with the investment policies approved by the Board of Directors from time to time.

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CAPITALISATION

Our Company’s Board of Directors have, pursuant to a resolution dated October 12, 2009, approved this Offering and the shareholders of our Company have, pursuant to a resolution dated November 18, 2009, under Section 81(1A) of the Companies Act, authorised this Offering. Upon completion of this Offering, our Company’s Board of Directors, (or a committee thereof) shall pass a resolution authorising the issuance of the Equity Shares. The following table sets forth our Company’s indebtedness and capitalisation as of March 31, 2009, which has been extracted from our Company’s audited financial statements which were prepared in accordance with Indian GAAP and shows the effect of adjusting for this Offering. This capitalisation table should be read together with “Summary Financial Information”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and the “Financial Statements” and related notes included elsewhere in this Preliminary Placement Document.

As on March 31, 2009

(Rs. in Lacs)

Unadjusted As Adjusted

Indebtedness Secured Loans • Long Term Loans 3,180.10 3,180.10 • Working Capital Loans 9,084.57 9,084.57 • Short Term Loans 2,500.00 2,500.00 • Car Loans 38.43 38.43 Sub Total (A1) 1,4803.10 1,4803.10 Unsecured Loans 6,582.09 6,582.09Sub Total (A2) 6,582.09 6,582.09Total Indebtedness (A=A1+A2) 21,385.19 21,385.19

Shareholders’ Funds • Share Capital** 1,728.58 [●]* • Stock options outstanding** 284.43 284.43 • Reserves and Surplus 22,488.34 [●]* Total Shareholders’ Funds (B) 24,501.35 [●]*

Total Capitalisation (A+B) 45,886.54 [●]* *: Will be inserted once the Issue Price is determined. **: Our Company allotted 1,55,050 Equity Shares under our ESOP Scheme, pursuant to resolutions dated August 11, 2009, and September 22, 2009, respectively, passed by the committee of our Board.

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DIVIDEND POLICY

Under the Companies Act unless the Board of Directors recommends the payment of a dividend, the shareholders at a general meeting have no power to declare any dividend. The shareholders at a general meeting may declare a lower, but not higher, dividend than that recommended by the Board. The dividend recommended by the Board and approved by the shareholders at a general meeting is distributed and paid to shareholders in proportion to the paid-up value of their Equity Shares on the record date for which such dividend is payable. Dividends are payable within 30 days from the date of the general meeting of the shareholders in which such dividends are approved. No shareholder is entitled to a dividend while any lien in respect of unpaid calls on any of his Equity Shares is outstanding. The Company’s Articles of Association under Article 182 provide for the authority to Board of Directors to pay interim dividend. Under the Companies Act, our Company may only pay a dividend in excess of 10 percent of paid-up capital in respect of any year out of the profits of that year after it has transferred to the reserves of our Company a percentage of its profits for that year ranging between 2.5 percent to 10 percent, depending on the rate of dividend proposed to be declared in that year. The Equity Shares to be issued pursuant to this Offering shall qualify for any dividend that is declared in respect of the financial year in which they have been allotted. Dividend Policy The declaration and payment of dividend will be recommended by the Board of Directors and approved by the shareholders at their discretion and will depend on our Company’s revenues, cash flows, financial condition (including capital position) and other factors. The declaration and payment of equity dividend would be governed by the applicable provisions of the Companies Act and Articles of Association of our Company. The following table details the dividend declared by our Company on the Equity Shares for the Financials Years ended March 31, 2007, 2008 and 2009:

Particulars March 31, 2007 March 31, 2008 March 31, 2009 Face Value of Shares (Rs. per share) 10.00 10.00 10.00 Rate of Dividend (%) 80.00 80.00 100.00 Dividend per equity share (Rs.) 8.00 8.00 10.00 Total Dividend declared (Rs. In Lacs) 691.43 1,382.86 1,728.58 Tax on Total Dividend paid (Rs. in Lacs) 96.97 235.01 293.77 The amounts paid as dividend in the past are not necessarily indicative of the dividend amounts, if any, payable or to be paid in the future.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations together with the Financial Statements, the notes and significant accounting policies thereto and the reports thereon, in the section titled “Financial Statements”. The Financial Statements are based on Indian GAAP, which differ in certain significant respects from accounting principles in other jurisdictions, such as the US GAAP and the IFRS. Our financial year ends on March 31 of each year, so all references to a particular Fiscal are to the twelve-month period ended March 31 of that year. This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those set forth in the section titled “Risk Factors”. Overview

Our Company is a part of the Bajaj conglomerate of businesses and industries, (“Bajaj Group”), one of the oldest conglomerate of businesses in India. The Bajaj Group has a diversified business line, having interests in a range of businesses which amongst others, include manufacturing of two wheeler and three wheeler automobiles, life and general insurance products, steel, consumer durables, lighting, electrical appliances, engineering and project implementation, power transmission, and manufacture of high masts and power tools.

Our Company is currently engaged in the businesses of marketing and distribution of appliances, fans, lighting products, luminaires and undertakes projects for stadium lighting, road lighting, transmission towers, high masts and rural electrification, among other projects. Our businesses can be broadly categorized in five major strategic business units, (“SBUs”), namely, appliances, fans, lighting, luminaires and engineering and projects. In the financial year 2008-09, the turnover including other income of the Company has increased to Rs.1,77,624.11 lacs as against Rs. 1,37,740.95 lacs in FY 2008 , registering a growth of 28.96%. Key factors affecting our financial performance

The primary factors affecting our financial performance are the prices of key raw materials like Zinc, steel, aluminium and copper, our capacity levels, our product mix, Outsourcing arrangements with our vendors for the Consumer durables business and lighting business, Indian government policies and regulations and purchasing power of Indian consumers.

• Raw Material Costs and Availability

Our Key raw materials include Zinc and steel used in the manufacturing of products of the Engineering & Projects SBU and aluminium and copper which are used in products of Consumer durables and lighting segment. In the Engineering and Projects SBU typical business cycle range anywhere between 4-6 months for the highmast & poles business, 12-18 months for special projects business and upto 24-30 months for the transmission line towers business. Highmast and poles contracts and special projects contracts are generally fixed price contracts, which exposes us to the risk in fluctuations in the raw material prices.

Incase of our consumer durables and lighting segment, we enter into outsourcing contracts with

22

various third party vendors to manufacture the goods designed and developed by us. In case of these contracts any fluctuation in the raw material prices has to be made good by us to the vendors which indirectly exposes us to the risk in upward fluctuation in raw material prices.

• Product Mix

Our product mix also affects our financial results. The breadth of our product range gives us the flexibility to adapt our product mix to market demands and to maximize margins. We intend to increase the proportion of high margin and high value products in our product mix so as to better withstand market dynamics and to offer a broad range of products to meet the growing requirements of customers.

• Purchasing Power of Indian consumers

Around 42.81% of our Net Sales / Income from Operations was contributed by our Consumer durables business unit in FY 2009. Our Consumer durable business is sensitive to a number of factors that influence the levels of consumer spending, including political and economic conditions such as recessionary environments, the levels of disposable consumer income. Any decline in consumer spending on consumer durables could have an adverse effect on our operating results. This business is also affected by changes in the statutory levies such as custom duty, excise duty and VAT.

• Government policies, budgetary allocations and capital expenditure plans of public sector

companies particularly in the infrastructure sector.

Demand for our Engineering & project business is primarily dependent on sustained economic development and government policies relating to infrastructure development. It is also significantly dependent on budgetary allocations made by governments to these sectors, as well as funding provided by Indian, international and multilateral development finance institutions for development of such sectors. Investments by the private sector companies in infrastructure projects are dependent on the potential returns from such projects and are therefore linked to government policies relating to private sector participation and the sharing of risks and returns from such projects.

Our ability to continue to capitalize on such increased activities in Power, Roads, Highways, bridges, ports and such other areas wherein we operate is key to our future business growth.

• Outsourcing arrangements with Vendors

In our consumer durables and Lighting Business unit, we also operate on the outsourcing model, wherein we outsource the manufacturing of some of the products to third party vendors In the event, our suppliers/vendors are unable to supply the products / components that are sourced from them in sufficient quantities or there is a loss of one or more significant suppliers/vendors, our ability to obtain products/ components and/or at competitive rates could be adversely affect our perfomance.

• Competition

We compete with players both in the organised and unorganised segment. We face competition from both domestic and foreign manufacturers for our consumer durables and Lighting business. In order to compete effectively, we continue to focus on enhancing revenue growth through introduction of new products, expansion of the dealer and retailer network, along with good brand building efforts in addition to the taking measures for effective cost control, value engineering, competitive sourcing and improving credit discipline. We also strive to continuously improve the technology and quality in order to gain a competitive advantage. However, certain of our competitors may be larger than us in terms of production capacity and/or a more extensive global operation, and may benefit from greater economies of scale and operating efficiencies. Our failure to compete effectively with such manufacturers may have an adverse effect on our business, financial condition and results of operations.

23

Significant Accounting Policies for FY 2009

The financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the Generally Accepted Accounting Principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 to the extent applicable as adopted consistently by the Company. For a full description of our significant accounting policies adopted in the preparation of the Financial Statements, please refer section titled “Financial Statements ”. System of Accounting : i) The Company generally follows the accrual basis of accounting both as to income and expenditure except those with significant uncertainties. ii) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of the changing value in the purchasing power of money. iii) The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the financial statements. Revenue Recognition: Income: The Company recognizes income on accrual basis. However, where the ultimate collection of the same lacks reasonable certainty, revenue recognition is postponed to the extent of uncertainty. (1) Sales : (a) Domestic Sales are accounted for on dispatch from the point of sale. (b) Export sales are recognized on the basis of the dates of the Mate’s Receipt and initially recorded at the

relevant exchange rates prevailing on the date of transaction. (2) Interest is accrued over the period of the loan/investment. (3) Dividend is accrued in the year in which it is declared whereby a right to receive is established. (4) Profit/Loss on sale of investment is recognized on the contract date. (5) Benefit on account of entitlement to import goods free of duty under the “Duty Entitlement Pass Book

Scheme” is accounted in the year of export. (6) Revenue from erection contracts is recognised based on the stage of completion determined with

reference to the costs incurred on contracts and their estimated total costs. Provision for foreseeable losses/ construction contingencies on erection contracts is made on the basis of technical assessments of costs to be incurred and revenue to be accounted for.

Fixed Assets: i) Freehold Land, Leasehold Land, Buildings (including Leasehold Land appurtenant thereto) and Premises on Ownership basis have been revalued as on 30th September, 1994 and are accordingly carried thereafter at revalued figures less accumulated depreciation / amortisation thereon, except freehold land which are carried at their revalued figures. Additions thereafter are carried at their cost of acquisition less accumulated depreciation. ii) Capital goods manufactured by the Company for its own use are carried at their cost of production (including duties and other levies, if any) less accumulated depreciation and other fixed assets are carried at cost of acquisition (including cost of specific borrowings) less accumulated depreciation.

24

Depreciation: i) a) Depreciation on all Fixed Assets (other than Leasehold Land which is amortized over the period of lease and those mentioned in (ii) and (iii) below) is being provided on “Straight Line Method” at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. b) Pursuant to the revision in the rates prescribed in Schedule XIV to the Companies Act, 1956 vide Notification No. GSR 756(E) dt.16.12.93 issued by the Ministry of Law, Justice and Company Affairs, depreciation has been calculated at new rates only on additions to assets made after the said date. ii) The depreciation on increased value due to revaluation of buildings and the premises on ownership basis, is being provided on Straight Line Method at the rates specified considering the balance period of life of the assets. The additional charge of depreciation on increased value due to revaluation of buildings and the premises on ownership basis, has been transferred from Revaluation Reserve to the Profit and Loss Account. iii) The Company has provided 100% depreciation on items of Plant & Machinery costing Rs.5,000/- or less upto 15.12.93. Consequent to the amendment in the schedule as indicated in Note (i) (b) above from 16.12.93, on all additions to fixed assets costing Rs.5,000/- or less, 100% depreciation is provided. Impairment of Assets: The Company, at each balance sheet date, assesses individual fixed assets and groups of assets constituting “Cash Generating Units” (CGU) for impairments, if circumstances indicate a possibility or warrant such assessment. Provision is made for impairment to state the assets or CGUs at their realizable value or economic value, as the case may be. Foreign Currencies Transactions: The export sales are accounted with reference to the Mate’s Receipt at the exchange rates prevailing on the transaction date. Foreign exchange gains or losses on realisation are dealt with, as such, in the Profit and Loss account. At the close of the year, all foreign currency loans, liabilities and current assets are stated at the relevant exchange rate prevailing at the close of the year. The exchange difference arising from foreign currency transactions are dealt with, as such, in the Profit & Loss Account. Foreign Exchange Contracts: i) Premium/Discounts are recognized over the life of the contract. ii) Profits and losses arising from either cancellation or utilization of the contract and revalorizing the contract at the close of the year are recognized in the Profit and Loss account as detailed in the Notes to Account in the Annual Report under the schedule on notes to accounts. Investments: Investments are valued at cost of acquisition less provisions made for diminution in the value of investments which, in the judgment of the management are necessary. Inventory Valuation: Costs of inventories have been computed to include all costs of purchases, cost of conversion and other cost incurred in bringing the inventories to their present location and condition. A. Finished Goods and Work-in-Process : a) Finished Goods: (i) Traded finished goods and spares are valued at cost, determined on “First In First Out” basis or net realisable value whichever is lower. (ii) Finished goods manufactured by the Company are valued at lower of cost, determined on “First In First Out” basis or net realizable value. Galvanized structures / products manufactured by the Company are valued at cost, determined on Specific Identification method or net realizable value, whichever is lower. b) Work-in-Process is valued at cost unless circumstances require the cost to be written down to realizable value.

25

B. Raw Materials: Raw materials are valued at weighted average cost unless circumstances require the cost to be written down to realizable value. C. Stores, Spares and Packing Materials: Stores, spares and packing material are valued at monthly weighted average cost unless circumstances require the cost to be written down to realizable value. D. Obsolete and non-moving inventory of raw material, stores and spares is carried at cost or market value, whichever is lower. Obsolete and non-moving inventory of galvanized structures are valued at scrap rate. Employee Benefits:

i. Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering the service are classified as short term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia etc. are recognised in the period in which the employee renders the related service.

ii. Post Employment Benefits:

A. Gratuity:

The Company is making contributions on an actuarial basis as determined by the Life Insurance Corporation of India (LIC), through Bajaj Electricals Limited Employees' Group Gratuity Trust, to the "Group Gratuity-cum-Life Assurance Scheme" under the Cash Accumulation Policy, which also covers employees who are entitled to gratuity after attainment of retirement age. However, any deficits in plan assets managed by LIC as compared to the acturial liability, is recognized as a liability immediately.

B. Superannuation:

Defined contributions to Superannuation fund is being made to Life Insurance Corporation of India as per the Scheme of the Company.

C. Provident Fund :

Employees own and Employer's contribution (after paying Family Pension Scheme portion to Provident Fund Authority) are paid to the Trustees "Bajaj Electricals Limited Employees' Provident Fund Trust" / Concerned Authorities. Deficits in the assets, as compared to the obligations outstanding, are contributed by the Company, as and when they arise.

D. Employees’ Pension Scheme : Defined contributions to Employees’ Pension Scheme 1995 is made to the Government Provident Fund Authority.

E. Leave Entitlement :

Encashable leave entitlements are recognized as a liability, in the calendar year of rendering of service, as per the rules of the company. Being in the nature of long term benefits, the liability is recognized on the basis of the present value of the future benefit obligation as determined by the actuarial valuation.

Employee Stock Option Scheme : The Company has granted Stock Options to its employees under the Growth Option as well as Loyalty Option. In respect Options granted under the Employees Stock Options Plan, in accordance with guidelines issued by the SEBI and in compliance with the Guidance Note on Accounting for Employee Share-based

26

Payments issued by the Institute of Chartered Accounts of India in the year 2005 and applicable for the period on or after 1st April 2005, the cost of stock options granted to employees are accounted by the Company using the intrinsic value method and the cost based on excess of market value over the exercise price is recognized in Profit & loss Account, over vesting period on time proportion basis and included in the ‘Salaries, wages, bonus etc.’ in Schedule 12 of the Financial Statements. Should any employee leave in the subsequent year, before exercise of the Option, the value of Option accrued in their favour is written back to the General Reserve.

Export Incentives : Export incentives are accounted for on export of goods; if entitlement can be estimated with reasonable accuracy and conditions precedent to claim are fulfilled. Borrowing Costs: Borrowing costs are recognised in the financial statements except in respect of specific borrowing raised for acquisition of capital asset until such time the asset is ready to be put to use for its intended purpose, which are added to carrying cost of such asset. Taxation: i) Deferred tax assets and liabilities are recognised for the future tax liability arising on account of timing difference between the taxable income and the profits as per the financial statements. ii) Deferred tax assets representing carried forward business losses and unabsorbed depreciation are recognised to the extent the management is virtually certain that they are going to be realised in future. iii) Deferred tax assets and liabilities have been recognised by considering the tax rate, which has been enacted or substantively enacted by the Balance Sheet date. iv) Deferred tax assets and liabilities, as the case may be, arising on adjustments to Reserves are netted off against the respective adjustments. Discontinued Operations : Assets and Liabilities of discontinued operations are assessed at each Balance Sheet date. Impacts of any impairments and write backs are dealt with in the Profit and Loss Account.

Impacts of discontinued operations are distinguished from the ongoing operations of the Company, so that their impact on the Profit and Loss Account for the year can be perceived. Provisions : Provisions are recognised for current obligations, which are likely to entail outflow of economic resources in the future periods consequent to obligating events prior to the close of the year. However, such obligations, not likely to entail outflows in future periods and contingent on the future outcome of events, are disclosed as a matter of information as “Contingent Liabilities”. Results of Operations

The table below sets forth, for the periods indicated, certain revenue and expense items for our operations, expressed as a percentage of total Income:

27

FY 2009 FY 2008 FY 2007

Particulars Rs in lacs

% of Total

Income Rs in lacs

% of Total

Income Rs in lacs

% of Total

Income INCOME

Net Sales

1,76,889.20 99.59 1,37,316.52 99.69

1,07,729.55 99.46

Operating Income

164.81 0.09 131.09 0.10 156.61 0.14

Other Income

570.10 0.32 293.34 0.21

430.38 0.40 Total Income 1,77,624.11 100.00 1,37,740.95 100.00 1,08,316.54 100.00 EXPENSES Cost of goods traded and materials consumed

1,31,492.79 74.03 1,00,810.18 73.19

82,002.28 75.71

Personnel cost

7,711.33 4.34 6,363.40 4.62

4,426.14 4.09

Other Expenditure

19,557.15 11.01 15,269.52 11.09

12,584.11 11.62

Interest

3,697.19 2.08 2,934.15 2.13

2,307.33 2.13

Amounts written off

482.16 0.27 474.70 0.34

230.16 0.21

Depreciation

880.98 0.50 771.50 0.56

756.28 0.70 Less : Transferred from Revaluation Reserve

(26.26)

(0.01)

(26.26) (0.02)

(27.69)

(0.03)

854.72 0.48 745.24 0.54 728.59 0.67 Contract Work in Progress carried forward

(172.90) (0.10) - -

(48.67)

(0.04)

Total Expenses

1,63,622.44 92.12 1,26,597.19 91.91

1,02,229.94 94.38 Operating Profit before Tax and extra ordinary items

14,001.67 7.88

11,143.76 8.09

6,086.60 5.62

Add/ (Less) impact of discontinued operations - -

(57.53) (0.05)

Profit before Tax

14,001.67 7.88

11,143.76 8.09

6,029.07 5.57 Taxation Current tax ( including wealth tax)

5,000.00 2.81

4,000.00 2.90

2,075.00 1.92

Deferred Tax

(97.82) (0.06)

(313.91) (0.23)

(32.42)

(0.03)

Fringe Benefit Tax

165.00 0.09

145.00 0.11

125.00 0.12

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FY 2009 FY 2008 FY 2007

Particulars Rs in lacs

% of Total

Income Rs in lacs

% of Total

Income Rs in lacs

% of Total

Income

Profit after Tax

8,934.49 5.03

7,312.67 5.31

3,861.49 3.57

Prior period expenses

(21.41)

(0.01)

(2.73) 0.00

(2.43) 0.00 Tax in respect of earlier years 0.00 0.00

(6.32)

(0.01)

Add: Balance brought forward from previous years

1,782.31 1.00

1,090.24 0.79

700.00 0.65

Balance available for Appropriation:

10,695.39 6.02

8,400.18 6.10

4,552.74 4.20

APPROPRIATIONS: Capital Redemption Reserve

-

-

-

-

160.00

0.15

Interim Dividend on Preference shares

-

-

-

-

12.36 0.01

Interim Dividend on Equity Shares

-

-

-

-

691.43 0.64

Proposed Dividend

1,728.58 0.97

1,382.86 1.00

- - Tax on Preference Share Dividend

-

-

-

- 1.74

-

Tax on Equity Share Dividend 293.77 0.17 235.01 0.17 96.97 0.09 Transferred to General Reserve

6,500.00 3.66

5,000.00 3.63

2,500.00 2.31

Balance carried to Balance Sheet

2,173.04 1.22

1,782.31 1.29

1,090.24 1.01

10,695.39

8,400.18

4,552.74

Principal Components of Results of Operations

Income

Sales consist of revenue derived from our business units namely:

Lighting - that includes Lamps, Tubes, Luminaries; Consumer Durables – that includes Appliances & Fans; Engineering & Projects - that includes Transmission Line towers, Telecommunications Towers, Highmast, Poles and Special Projects and Others – that includes Wind Energy.

Other Income

Amongst other things, other Income consists of Rent income, Dividend income, Profit/ (loss) from sale of assets, Profit/ (Loss) from sale of investments, and Miscellaneous Income.

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Expenditure

Our total expenditure comprises of the following:

Cost of Goods traded and Materials consumed

Cost of goods traded and Materials consumed consist of: raw materials consumed such as Zinc and Steel used in the manufacturing of products in the Engineering & Projects business unit and aluminium and copper used in manufacture of fans which is part of Consumer durables business, purchase of finished goods for consumer durable business and lighting business, components processing charges and payments to sub contractors for the projects undertaken by the Engineering & Projects business unit.

Personnel Cost

Personnel costs include Salaries, wages and incentives payable to employees; contributions to provident and other funds and schemes; Welfare expenses; and amortisation of compensation under voluntary retirement scheme.

Other Expenditure

Other Expenditure comprises of various administrative and selling expenses like Rent, Insurance, printing & stationery, Advertising & publicity expenses, promotion expenses related to various products, loss on account of foreign exchange fluctuations etc.

Interest

Interest consists of interest to banks on term loans and working capital loans

Amounts written off

The amounts written off mainly pertain to, fixed assets, amortisation of leasehold land and Bad debts written off.

Depreciation

Depreciation represents depreciation of Fixed assets.

Comparison of the Financial Year ended March 31, 2009 and 2008

Income

Net sales increased by 28.82% on a year on year (“Y-O-Y”) basis to Rs 176,889.20 lacs for the year ended March 31, 2009 as against Rs 137,316.52 lacs for the year ended March 31, 2008. The increase in the Net sales was mainly on account of increase in revenues from Consumer durables segment which increased by 25.67% Y-O-Y and increase in income from Engineering and projects by 44.09% on a Y-O-Y basis mainly contributed by growth in the number of rural electrification projects undertaken for the period under consideration

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Segment Revenue

Segment Revenue FY 2009

(Rs. In Lacs)

As a % of revenues

FY 2008

(Rs. In Lacs)

As a % of revenues

a) Lighting 48,831.20 27.58 40,729.19 29.63

b) Consumer Durables 75,796.21 42.81 60,316.04 43.88

c) Engineering & Projects 52,261.79 29.52 36,271.29 26.39

d) Others 164.81 0.09 131.09 0.10

Net Sales / Income from Operations

1,77,054.01 100.00 1,37,447.61 100.00

The consumer durables segment continued to dominate the revenue share by contributing 42.81% of the Net Sales / Income from Operations for the year ended March 31, 2009 with income from Engineering & projects contributing 29.52% and Lighting segment contributing 27.58% for the aforesaid period.

Other Income

Other Income increased by 94.35% to Rs.570.10 lacs in FY 2009 from Rs. 293.34 lacs in FY 2008. This increase was primarily due to increase in Miscellaneous income that increased from Rs 285.57 lacs in the year ended March 31, 2008 to Rs 561.92 lacs for the year ended March 31, 2009 of which Rs 269.03 lacs were on account of write back of liabilities that are no longer payable.

Expenditure


Cost of Goods traded and Materials consumed increased by 30.44% Y-O-Y to Rs. 131,492.79 lacs in FY 2009 from Rs.1,00,810.18 lacs in FY 2008. This constituted 74.03 % of the total income in FY 2009 compared with 73.19 % of total income in FY 2008. The nominal increase in percentage was due to the increase in commodity prices during the year.

Personnel Cost

Personnel costs increased by 21.18 % to Rs. 7,711.33 lacs in FY 2009 from Rs. 6,363.40 lacs in FY 2008. Personnel cost as a percentage of Total income decreased marginally from 4.62% in FY 2008 to 4.34% in FY 2009. Increase in personnel Y-O-Y cost can be attributed to revision in salaries, incentives and recruitment of staff in the Engineering and Projects division.

Other Expenditure

Other Expenditure increased 28.08 % Y-O-Y to Rs. 19,557.15 lacs in FY 2009 from Rs. 15,269.52 lacs in FY 2008. This was proportionate to the growth in income which increased by 28.96 % on a Y-O-Y basis. The increase in expenditure was mainly attributable to increase in Rent on account of increase in godown space, Freight and forwarding charges from Rs 2,551.20 lacs in FY 2008 to Rs 3,359.66 lacs in FY 2009 attributed to increase in sales volume and loss on account of Foreign exchange fluctuation amounting to Rs 573.47 lacs in FY 2009 as against a Foreign exchange fluctuation gain of Rs 127.36 lacs in FY 2008 due to depreciation of rupee. The increase in Miscellaneous expenses to the tune of Rs 850.09 lacs Y-O-Y pertains to consultancy and other charges involved in the implementation of ERP during the period under consideration.

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Interest

Interest expenses increased by 26.01% to Rs. 3,697.19 lacs in FY 2009 from Rs. 2,934.15 lacs in FY 2008. This was on account of increase in interest rates and an increase in working capital loans during the execution period. Interest as a percentage of total expenditure however declined marginally from 2.32 % in the year FY 2008 to 2.26% in FY 2009.

Depreciation

During the year ended March 31, 2009, the amount of depreciation increased by 14.69% from Rs 745.24 lacs in FY 2008 to Rs 854.72 lacs in FY 2009. This increase can be mainly attributed to additions to plant & machinery and Furniture, fixtures and equipments towards hardware for the ERP implementation undertaken by us during the year.

Profitability

In FY 2009, company achieved a profit after taxation of Rs 8,934.49 lacs which was an increase of 22.18% Y-O-Y from Rs 7,312.67 lacs . The net profit after taxation as a percentage of total income declined marginally from 5.31% in FY 2008 to 5.03% in FY 2009 due to increase in cost of goods sold.

Comparison of the Financial Year ended March 31, 2008 and 2007

Income

Net sales increased by 27.46% on a year on year basis from Rs 107,729.55 lacs for the year ended March 31, 2007 to Rs 137,316.52 lacs for the year ended March 31, 2008. The increase in the Net sales was mainly on account of increase in revenues from Consumer durables Business unit which increased by 35.42% Y-O-Y which contributed 43.88% of the Net Sales / Income from Operations and Lighting Business unit that grew by 24.67% Y-O-Y mainly contributed by the growth in sale of Compact Fluorescent Lights (CFL).

Segment Revenue

Segment Revenue FY 2008

(Rs. In Lacs)

As a % of revenues

FY 2007

(Rs. In Lacs)

As a % of revenues

a) Lighting 40,729.19 29.63 32,670.64 30.28

b) Consumer Durables 60,316.04 43.88 44,539.56 41.28

c) Engineering & Projects 36,271.29 26.39 30,519.35 28.29

d) Others 131.09 0.10 156.61 0.15

Net Sales / Income from Operations

1,37,447.61 100.00 1,07,886.16 100.00

The Lighting Business unit contributed 29.63% of the net sales / income from operations while the income from Engineering & projects Business unit contributed 26.39% in FY 2008.

Other Income

Other Income declined by 31.84 % to Rs.293.34 lacs in FY 2008 from Rs 430.38 lacs in FY 2007. This

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decrease was primarily due to Foreign exchange fluctuation gain in FY 2007 amounting to Rs 78.58 lacs. However the Foreign exchange fluctuation gain of Rs 127.36 lacs in FY 2008 is forming part of Other Expenditure. Further in the year ended March 31, 2007, there was a profit on sale of Asset

Expenditure


Cost of Goods traded and Materials consumed increased 22.94% Y-O-Y to Rs.100,810.18 lacs in FY 2008 from Rs. 82,002.28 lacs in FY 2007. This constituted 73.19% of the total income in FY 2008 compared with 75.71 % of total income in FY 2007. The decrease in cost of goods traded and material consumed is attributable to better realisations and favorable sales mix within each Business unit.

Personnel Cost

Personnel Costs increased by 43.77 % to Rs. 6,363.40 lacs in FY 2008 from Rs 4,426.14 lacs in FY 2007 . Personnel cost as a percentage of Total income increased from 4.09% in FY 2007 to 4.62% in FY 2008. The increase in personnel costs can be attributable to increase in salaries, wages and bonus which was on account of revision in salaries and ESOPs

Other Expenditure

Other Expenditure increased by 21.34% to Rs. 15,269.52 lacs in FY 2008 from Rs 12, 584.11 lacs in FY 2007 . This was a less than proportionate increase as compared to the growth in income which increased by 27.17 % on a Y-O-Y basis thus reflecting operational efficiencies. The increase in expenditure was mainly attributable to increase in Freight and forwarding charges to Rs 2,551.20 lacs in FY 2008 from Rs 2,145.22 lacs in FY 2007 due to increase in sales volume, increase in advertising and publicity expenses by 17.08% Y-O-Y due to launch of our new logo, increase in Rent by 71.68% Y-O-Y due to increase in godown space rented in anticipation of increase in sales, increase in rent and increase in the provision for doubtful debts and advances which increased by 421.20% Y-O-Y. The Product promotion and Service charges increased by 17.41% Y-O-Y from Rs 1,991.09 in FY 2007 to Rs 2,337.68 lacs in FY 2008 due to increase in the provision for warranties & claims with increase in turnover of consumer durable business.

Interest

Interest expenses increased by 27.17% to Rs. 2,934.15 lacs in FY 2008 from Rs 2,307.33 lacs in FY 2007. This was primarily on account of increase in _working capital loans. Interest as a percentage of total expenditure increased marginally to 2.31 % in the year FY 2008 from 2.26% in FY 2007.

Depreciation

During the year ended March 31, 2008, the amount of depreciation increased by 2.29% to Rs 745.24 lacs in FY 2008 from Rs 728.59 lacs in FY 2007. This increase can be mainly attributed purchase of office premises and related expenditure on Furniture, fixtures and equipments

Profitability

In FY 2008, company achieved a profit after tax of Rs 7,312.67 lacs, an increase of 89.37% on a Y-O-Y basis as against Rs 3,861.49 lacs in FY 2007. The net profit after taxation as a percentage of total income substantially improved from 3.57% to 5.31% in FY 2008.The increase is attributable to improvement in overall operating margins across segments due to better sales mix, better realisation and better absorption of fixed costs on account of increase in volumes.

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Liquidity and Capital Resources

Cash Flows

We need cash primarily to fund our working capital needs as our Engineering and Projects Business unit is highly working capital intensive. We fund these working capital requirements through a variety of sources, including cash from operations, and various short- and long-term lines of credit. These sources of funding, and our ability to fund our capital expenditure needs, could be adversely affected by reduced liquidity in the credit markets or other macroeconomic factors beyond our control.

Rs in lacs Details FY 2009 FY 2008 FY 2007 Net Cash flow from Operating Activities 14,473.29 5,924.22 2,929.17 Net Cash flow from Investing Activities after extraordinary items

(4,198.05) (2,254.68) (2,427.60)

Net Cash flow from Financing Activities (8,089.44) (3,410.61) 524.88 Net Increase/(decrease) in Cash and Cash Equivalents

2,185.80 258.93 1026.45

We had combined cash and cash equivalents of Rs 5,381.35 lacs, Rs 3,195.55 lacs and Rs 2936.62 lacs for the years ended March 31, 2009, March 31, 2008 and March 31, 2007 respectively. Net cash from operating activities Net cash from operating activities in FY 2009 was Rs. 14,473.29 lacs and our operating cash flow before working capital changes for that period was Rs 19,355.44 lacs. The difference was attributable to a Rs. 14,324.20 lacs increase in trade receivables, Rs.1,552.98 lacs increase in inventories, Rs. 16,440.56 lacs increase in trade payables and direct taxes paid amounting to Rs 5,424.12 lacs Net cash used in operating activities in FY 2008 was Rs. 5,924.22 lacs and our operating cash flow before working capital changes for that period was Rs. 15,741.61 lacs. The difference was attributable to a Rs. 9,011.33 lacs increase in trade receivables, Rs. 4,228.70 lacs increase in inventories, Rs 7,202.16 lacs increase in trade payables and direct taxes paid amounting to Rs. 3,776.79 lacs. Net cash used in operating activities in FY 2007 was Rs. 2,929.17 lacs and our operating cash flow before working capital changes for that period was Rs. 9,505.55 lacs. The difference was attributable to a Rs. 8,979.45 lacs increase in trade receivables, Rs. 1,673.97 lacs increase in inventories, Rs 6,562.97 lacs increase in trade payables and direct taxes paid amounting to Rs. 2,477.18 lacs. Net cash Flow from Investing activities In FY 2009, our net cash outflow from investing activities after extraordinary items was Rs. 4,198.05 lacs This mainly reflected the payments of Rs. 1,474.83 lacs towards purchase of fixed assets which primarily consists of plant & machinery and hardware on account of ERP implementation undertaken by us during the year ,investments made to the tune of Rs 923.09 lacs in our associate company Starlite Lighting limited to fund the capacity expansion plans of its CFL manufacturing facility and loans to associates to the tune of Rs 1,542.00 lacs. In FY 2008, our net cash outflow from investing activities was Rs. 2,254.68 lacs. This mainly reflected the capital advances made amounting to Rs 1,693.34 lacs for purchase of office premises at Mumbai, Rs. 911.07 lacs expended towards purchase of fixed assets which primarily consists of plant & machinery and furniture & fittings for the said office and renovation of the Chennai office and net recovery of loans given to associate companies to the tune of Rs 265.00 lacs. In FY 2007, our net cash outflow from investing activities after extraordinary items was Rs. 2,427.60 lacs. This mainly reflected the payments of Rs. 685.68 lacs towards purchase of fixed assets which primarily consists of plant & machinery and furniture & fittings undertaken for renovation of branch office at Mumbai, investments made to the tune of Rs 750 lacs in Starlite Lighting Limited to acquire interest in

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their CFL manufacturing facility and loans to associate companies to the tune of Rs 1,150.00 lacs and amount received from sale of investment in shares of Utkal Electricals Limited amounting to Rs. 14.40 lacs Net cash from/used in financing activities In FY 2009, our net cash outflow from financing activities was Rs. 8,089.44 lacs. This reflected Rs. 4,191.51 lacs paid as interest and repayment of loans net of borrowings amounting to Rs 2,284.73 lacs and dividend paid amounting to Rs.1,613.20 lacs. In FY 2008, our net cash outflow from financing activities was Rs. 3,410.61 lacs. This reflected Rs. 3,369.26 lacs paid as interest and repayment of loans net of borrowings amounting to Rs 47.14 lacs and share issue expenses amounting to Rs 1.95 lacs on account of bonus issue in the ratio of 1:1 during the year. In FY 2007, our net cash flow from financing activities was Rs. 524.88 lacs. This reflected Rs. 2,530.53 lacs paid as interest and proceeds from loans net of borrowings amounting to Rs 4,434.81 lacs, Rs 1,219.40 lacs on account of dividend paid and Rs 160 lacs on account of redemption of Preference shares. Statement of Borrowings and Contingent Liabilities Borrowings Secured Loans As of March 31, 2009, we had outstanding secured loans of Rs 14,803.10 lacs which amongst others included Rupee Term loan from banks and Financial Institutions, secured against first pari passu charge over certain present and future Fixed assets of the Company and second pari passu charge on the current assets of the company (excluding project specific assets on which IDBI Bank Limited has an exclusive charge). Our working capital loans is a mix of foreign currency and Rupee loans and are secured by first pari passu charge by way of hypothecation of inventories and book debts, (excluding project specific assets on which IDBI Bank Limited has an exclusive charge), first pari passu charge on some of the immovable properties and second pari passu charge on over certain present and future fixed assets of the company. Company’s short term loans are secured by subservient charge on the company’s entire movable assets including stocks and book debts. Unsecured loans As of March 31, 2009, we had outstanding unsecured loans of Rs 6,582.09 lacs which constituted loans from banks, inter-corporate deposits of Rs. 350.00 lacs and loan on account of Sales tax deferral under 1993 package scheme of incentives by SICOM. Financial Indebtedness The following table sets forth the Company’s secured and unsecured debt position as at March 31, 2009.

Rs in Lacs

FY 2009 FY 2008 Secured Loans Long Term Loans 3,180.10 4,417.33 Working Capital Loans 9,084.57 11,120.12 Short Term Loans 2,500.00 --

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FY 2009 FY 2008 Car Loans 38.43 55.13 Total (A) 14,803.10 15,592.58 Unsecured Loan Fixed deposits -- 968.02 Sales Tax Deferral loan 3,732.09 3,609.32 Short Term Loans 2,850.00 3,500.00 Total (B) 6,582.09 8,077.34 Total (A) + (B) 21,385.19 23,669.92

(i) Our loan agreements with certain banks and financial institutions for term loans and working capital loans, contain restrictive covenants, which requires the prior written consent of lenders which include, but are not limited to, 1. to declare and/ or pay dividend to any of its shareholders whether equity or preference, during any

financial year unless our Company has paid to the lender the dues payable by our Company in that year;

2. to undertake or permit any merger, amalgamation or compromise with its shareholders, creditors or

effect any scheme of amalgamation or reconstruction; 3. to create or permit any charges or lien on any mortgaged properties; 4. to amend its MOA and AOA or alter its capital structure; 5. to incorporate and/or acquire any subsidiary; 6. to change the capital structure of our Company; 7. to enter any new lines of business; and 8. to make any major investments by way of deposits, loans, share capital, etc. in any manner. Contingent Liabilities As on March 31, 2009, we had the following contingent liabilities: (Rs in lacs) FY 2009 FY 2008 (i) Contingent liabilities not provided for (a) Disputed Income tax matters 119.40 55.41 (b) Disputed Excise matters – Gross

- Net of Tax 68.02 44.90

68.02 44.89

(c) Disputed Sales Tax matters – Gross - Net of Tax

752.02 496.41

819.34 540.84

(d) Claims against the Company not acknowledged as debts – Gross - Net of Tax

1,534.18 1,012.71

319.42 210.85

(e) Guarantees/ Letter of Comfort given on behalf of other companies

2,750.00 2,750.00

(f) Penalty/damages/interest, if any due to non-fulfilment of any of the terms of works contracts

Amounts not ascertainable


(ii) Uncalled liability in respect of partly paid shares held as investments

7.20 7.20

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Off-Balance Sheet Arrangements We have entered into forward contract purchases aggregating to USD 8.73 lacs as at March 31, 2009. Save as disclosed hereinbefore, we do not have any other off-balance sheet arrangements, derivative instruments, swap transactions or relationships with any entities or financial partnerships that would have been established for the purpose of facilitating off-balance sheet transactions. Quantitative and Qualitative Disclosures about Market Risk Market risk is the risk of loss related to adverse changes in market prices, including interest rates and foreign exchange rates, of financial instruments. We are exposed to various types of market risk, including changes in interest rates, foreign exchange rates and commodity prices, in the ordinary course of business.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to our long-term borrowings which are linked to PLR rates.

Exchange Rate Risk

We are exposed to exchange rate fluctuations on the prices of products that we import for our consumer durables and Lightings business units. Further, we are also exposed to foreign exchange fluctuations on our overseas borrowings. As a policy, we enter into forward contracts to mitigate the impact of such foreign exchange fluctuations on our business.

Commodity Price Risk

We are exposed to commodity price risk with respect to the raw material and components used in our projects, consumer durable and lighting business. Our Key raw materials include Zinc and steel used in the manufacturing of products of the Engineering & Projects business unit and aluminium and copper which are used in products of Consumer durables and lighting segment. In the Engineering and Projects business unit typical business cycle range anywhere between 4-6 months for the highmast & poles business, 12-18 months for special projects business and upto 24-30 months for the transmission line towers business. Highmast, & poles contracts and special projects contracts are generally fixed price contracts, which exposes us to the risk in fluctuations in the raw material prices. However this risk is mitigated on account of shorter business cycle as well as back to back procurement arrangements done by us. Contracts for transmission line towers contains price variation clause which protect us from fluctuation in prices of raw material.

Litigation

We are involved in a number of legal proceedings including labour and tax related disputes. In the opinion of the management, no material liability is likely to arise on account of such legal proceedings. However, the outcome of litigation cannot always be predicted and some or all of these cases may be ruled against us, which could have a material adverse effect on our business, results of operations and financial condition. For details, please see section titled “Legal Proceedings”.

Effect of New Accounting Pronouncements

There are no recent accounting pronouncements that were not yet effective as at March 31, 2009 that will result in a change in our Company’s significant accounting policies.

However, The Institute of Chartered Accountants of India, the accounting body that regulates the accounting profession in India, has announced its intentions to converge with the IFRS, pursuant to which all public companies in India or such other companies as may be prescribed, will be required to prepare their annual and interim financial statements under IFRS. Our Company may also be required to prepare our annual and interim financial statements under IFRS.

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INDUSTRY OVERVIEW

Unless otherwise indicated, the information in this section is derived from a combination of various official and unofficial publicly available materials and sources of information. It has not been independently verified by our Company, the Sole Global Co-ordinator and Book Running Lead Manager or its legal or financial advisors, and no representations is made as to the accuracy of this information, which may be inconsistent with information available or compiled from other sources. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but their accuracy, completeness, underlying assumptions and reliability cannot be assured. Accordingly, investment decisions should not be based on such information. The information in this section is derived from various government publications and other industry sources. Such information, data and statistics may be approximations or may use rounded numbers. Certain data has been reclassified for the purpose of presentation and much of the available information is based on best estimates and should therefore be regarded as indicative only and treated with appropriate caution Neither we, nor any other person connected with the issue has verified this information. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Accordingly, investment decisions should not be based on such information. Indian Economy The Indian economy is one of the largest economies in the world with a gross domestic product (“GDP”) at current prices of Rs. 49.3 trillion (approximately US$1 trillion) with a real GDP growth rate of 6.7% for the fiscal year ending March 31, 2009. In recent years, India has become a popular destination for foreign direct investment (“FDI”), owing to its well-developed private corporate sector, large consumer market potential, large, well-educated and English speaking work force, and a well established legal system. India attracted FDI of approximately US$73.2 billion during Fiscal 2006 and Fiscal 2009. In 2008, China and India sustained real GDP growth rates of 9.0% and 7.3%, respectively, among the highest by any economy in the world. The following table shows India’s economic growth in comparison to other developing countries: Growth /Real GDP* 2001-2010 (Average) 2006 2007 2008 2009E 2010E World.........................................3.21 5.1 5.2 3.2 (1.3) 1.9 Advanced Economies ...............1.33 3.0 2.7 0.9 (3.8) 0.0 China .........................................9.55 11.6 13.0 9.0 6.5 7.5 India ..........................................6.90 9.8 9.3 7.3 4.5 5.6 Russia ....................................... 4.66 7.7 8.1 5.6 (6.0) 0.5 Mexico........................................1.65 5.1 3.3 1.3 (3.7) 1.0 Brazil .........................................3.23 4.0 5.7 5.1 1.3 2.2 __________ * Annual percentage change in GDP at constant prices Source: International Monetary Fund, World Economic Outlook Database, April 2009 Per capita GDP (at constant prices) in India has grown from approximately Rs. 12,900 for the fiscal year ended March 1991 at the time of liberalization to approximately Rs. 27,400 for the fiscal year ended March 2008. This increase in per capita income has created increasing wealth and has had a significant investment multiplier effect on the economy, leading to increasing consumerism and positively impacting savings.

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Additionally, India has a large and rapidly growing young middle class with increasing levels of discretionary income available for consumption and investment purposes. The last five years have seen not only a great expansion of the Indian economy but also of consumer credit. The Consumer Durables Industry in India The consumer durables industry consists of durable goods and appliances for domestic use such as televisions, refrigerators, air conditioners and washing machines. The sector has been witnessing significant growth in recent years, helped by several drivers such as the emerging retail boom, real estate and housing demand, greater disposable income and an overall increase in the level of affluence of a significant section of the population. The consumer durables industry can be broadly classified into two segments: • Consumer Electronics; and • Consumer Appliances. Consumer Appliances can be further categorised into Brown Goods and White Goods. The key product lines under each segment are as follows.

Source: IBEF – Consumer Durables, Market & Opportunities India’s Consumer Market India officially classifies its population in five groups, based on annual household income (based on year 1995-96 indices). These groups are: Lower Income; three subgroups of Middle Income; and Higher Income. However, the rupee income classifications by themselves do not present a realistic picture of market potential for a foreign business enterprise, because of significant differences in purchase power parities of various currencies. However, the National Council for Applied Economic Research (NCAER) has released an alternative classification system based on consumption indicators, which is more relevant for ascertaining consumption patterns of various classes of goods. There are five classes of consumer households, ranging from the destitute to the highly affluent, which differ considerably in their consumption behavior and ownership patterns across various categories of goods. These classes exist in urban as well as rural households both, and consumption trends may differ significantly between similar income households in urban and rural areas. Overview of India’s Consumer Durables Market Most of the segments in the consumer goods sector are characterized by intense competition, emergence of new companies and introduction of state-of-the-art models, price discounts and exchange schemes. Multi national companies continue to dominate the Indian consumer durable segment. In consonance with the global trend, over the years, demand for consumer durables has increased with rising income levels, double-income families, changing lifestyles, availability of credit, increasing consumer awareness and introduction of new models.

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The consumer durables market in India was estimated to be around US$ 4.5 billion in 2006-07. More than 70 lakh units of consumer durable appliances have been sold in the year 2006-07 with colour televisions (CTV) forming the bulk of the sales with 30 per cent share of volumes. CTV, refrigerators and Air-conditioners together constitute more than 60 per cent of the sales in terms of the number of units sold. (Source: IBEF– Consumer Durables, Market & Opportunities) Branded goods account for 10 per cent of the total consumer goods market in India, while organised retailing is around 2 per cent of the total industry. (Source: IBEF– Consumer Durables, Market & Opportunities) Though branded products are perceived to be costlier than non-branded products, the penetration of branded products is increasing. The relative shares of branded products and organised retail indicate that a significant share of branded products is being sold through unorganised channels. This highlights the need for a strong distribution network to penetrate deeper into the potential market. Domestic Electrical Appliances Brown goods or domestic kitchen appliances are indicators of the changing consumer scenario in post-liberalisation economic environment. The major products constituting the brown goods market are mixers, grinders, irons, microwave-ovens, rice cookers, water heaters or geysers, electric fans and exhausts. The branded brown goods market has expanded at a significant pace and is expected to retain the momentum into the future as well. The market has been transformed by the entry of over a dozen new brands, moreover competition has intensified. While focus on price competency remains a key priority, players have also started focusing on other product features such as safety and total cost of ownership of the device. Goods, like the rice cooker have been continuously growing in a slow and steady manner over a significant period of time, while microwave ovens have grown exponentially after the initial period of customisation to local requirements. The electrical iron market can be divided into two segments: heavy and light-weight. The market is also segmented into two sub-segments: steam and non-steam irons. India being a tropical country, electric fans are an essential utility for more than six months of the year in most parts of the country. The present market size is estimated at around 116 lakh pieces. The market is divided among ceiling, pedestal, wall and table fans. Industrial and exhaust fans are another important segment. (Source: IBEF– Consumer Durables, Market & Opportunities) The electrical appliances industry, which had been focused on the urban market, is now reaching out to semi-urban and rural markets as well, because of the shift in living style of the population, increasing electrification of villages and relatively higher purchasing power of consumers. As the market penetrates into the core middle class segment in both urban and rural areas, it is expected to expand phenomenally, offering large volumes to the industry.

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Trends Favoring the Growth of the Consumer Durables Industry The key trends that impact the Indian Consumer Durables Industry today are as follows:

Further, Energy Efficiency Ratio (EER) of products has become a key determent in the saleability and marketability of consumer durables, due consumer concerns about inflation and soaring energy bills, leading them to prefer appliances which offer energy-efficiency. Although currently it is not mandatory by law to state the EER of a product, this is likely to become compulsory over the forecast period, especially for air conditioners, refrigerators, fans and later on other domestic appliances. The Indian domestic electrical appliances market faced considerable challenges in the year 2008. Rising raw material prices for steel, copper and plastics, as well as soaring global petroleum prices, impacted the market throughout 2008. Rising inflation, sliding stock markets and the virtual absence of consumer finance schemes also collectively led to low consumer confidence and dampened sales of domestic electrical appliances in the first half of 2008, lowering volume growth to single-digit growth. Problems were more severe in certain categories, such as air conditioners, due to a more severe winter and milder summer in 2008. Price rises were seen in many large appliances categories, meaning that consumers postponed purchases, or cut down on what they perceived to be luxury purchases. (Source: IBEF– Consumer Durables, Market & Oppurtunities) Policy Framework (Source: IBEF– Consumer Durables, Market & Oppurtunities) Opportunities and Challenges The Challenges Rural Markets difficult to penetrate The majority of the Indian population that lives in its villages still remains relevant for some consumer durables companies. Also, foraying into these rural markets has a considerable cost component attached to it. Companies not only have to set up the basic infrastructure in terms of office space, manpower, but also spend on transportation for moving inventory. Poor Infrastructure Poor infrastructure is another reason that seems to have held back the industry. Regular power supply is imperative for any consumer electronics product. But that remains a major hiccup in India.

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The Opportunities Economic growth The rising rate of growth of GDP, rising purchasing power of people with higher propensity to consume with preference for sophisticated brands would provide constant impetus to growth of white goods industry segment. Consumer Loans Penetration of consumer durables would be deeper in rural India if banks and financial institutions come out with liberal incentive schemes for the white goods industry segment, growth in disposable income, improving lifestyles, power availability, low running cost, and rise in temperatures. The increasing popularity of easily available consumer loans and the expansion of hire purchase schemes will give a moral boost to the price-sensitive consumers. The attractive schemes of financial institutions and commercial banks are increasingly becoming suitable for the consumer. Consumer goods companies are themselves coming out with attractive financing schemes to consumers through their extensive dealer network. This has a direct bearing on future demand. Consumer awareness Currently, rural consumers purchase their durables from the nearest towns, leading to increased expenses due to transportation. Purchase necessarily done only during the harvest, festive and wedding seasons — April to June and October to November in North India and October to February in the South, believed to be months `good for buying’, should be converted to routine regular feature from the seasonal character. Growth of media and advertising The other factor for surging demand for consumer goods is the phenomenal growth of media in India. The flurry of television channels and the rising penetration of cinemas will continue to spread awareness of products in the remotest of markets. The vigorous marketing efforts being made by the domestic majors will help the industry. The internet being now used by the market functionaries that will lead to intelligence sales of the products. It will help to sustain the demand boom witnessed recently in this sector. The ability of imports to compete is set to rise. However, the effective duty protection is still quite high at about 35-40 per cent. So, a flood of imports is unlikely and would be rather need based.

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BUSINESS

The following summary is qualified in its entirety by, and should be read in conjunction with more detailed information of our financial statements appearing elsewhere in this Preliminary Placement Document along with the risks discussed under the section titled “Risk Factors”. In this section “our Company”, “we”, “us” and “our” refers to Bajaj Electricals Limited. OVERVIEW Our Company is a part of the Bajaj conglomerate of businesses and industries, (“Bajaj Group”), one of the oldest businesses groups in India. The Bajaj Group has a diversified business line, having interests in a range of businesses which amongst others, include manufacturing of two wheeler and three wheeler automobiles, life and general insurance products, financial services, steel, consumer durables, lighting, luminaires, electric fans, electrical appliances, engineering and projects, power transmission line towers, rural electrification and manufacture of high masts, galvanized poles and power tools.

Our Company is currently engaged in the businesses of marketing and distribution of appliances, fans, lighting products, luminaries, manufacture of fans, high masts, towers and poles, and undertakes projects for stadium lighting, road lighting, transmission towers, high masts and rural electrification, among other projects. Our businesses can be broadly categorized in five major strategic business units, (“SBUs”), namely, appliances, fans, lighting, luminaires and engineering and projects. Brief history of our Company Our Company was incorporated as Radio Lamp Works Limited under the Indian Companies Act, 1913 as a public company limited by shares, pursuant to a certificate of incorporation dated July 14, 1938. Subsequently the name of our Company was changed to Bajaj Electricals Limited, pursuant to a fresh certificate of incorporation dated October 1, 1960. In 1964, Matchwell Electricals (India) Limited, (“Matchwell”), a manufacturer of electric fans became a subsidiary of our Company, and subsequently with effect from July 1, 1984, the business and undertaking of Matchwell was amalgamated with our Company. In the financial year 1993-1994, our Company entered into a joint venture with Black & Decker Corporation, United States, for the manufacture and marketing of power tools, household appliances, and related accessories, through a separate company named Black & Decker Bajaj Private Limited, (“Black & Decker Bajaj”). During the financial year 1999-2000 Black & Decker Bajaj became a 100% subsidiary of our Company upon our Company acquiring a further 50% of the shareholding thereof from Black & Decker Corporation, pursuant to which Black & Decker Bajaj was renamed as Bajaj Ventures Limited. However, in the financial year 2002-2003, our Company divested 50% of its shareholding in Bajaj Ventures Limited and Bajaj Ventures Limited ceased to be a subsidiary of our Company. In January 1998, our Company established a new manufacturing unit at Chakan near Pune and commenced operations of manufacturing of fans and die-cast components. The production of fans at our manufacturing activities of the Matchwell unit also was gradually shifted to our Chakan unit. In September 1999, our Company established and commissioned a wind energy generation unit with an installed capacity of 2.8 mega watts at Village Vankusawade, Tal. Patan, District Satara, Maharashtra. In the year 2000-2001, our Company set-up our manufacturing facilities including a fabrication unit and a galvanizing plant at Ranjangaon, near Pune for the manufacture of high masts, lattice towers, and related products, and the said manufacturing facilities commenced commercial production with effect from April 1, 2001.

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In November 2002, our Company entered into a technical collaboration and brand licensing agreement with Morphy Richards, United Kingdom, for the sales and marketing of electrical appliances under the brand name of “Morphy Richards” in India. In the financial year 2002-2003 our Company discontinued manufacturing die-cast components. In the year 2005 our Company entered into a Distribution agreement with Trilux- Lenze of Germany for high end technical lighting. In the year 2007, we acquired 32% of the share capital of Starlite Lighting Limited, a company engaged in the business of manufacturing Compact Fluorescent Lamps (“CFLs”). In 2009 our Company entered into an agreement with Ruud Lighting of USA for LED based Lighting products. Awards and Certifications We have received the following awards and recognitions in the recent past:

Year Award/Recognition 2009-10 Cannes 2009 Bronze Award for Bajaj domestic Exhaust Fans 2008-09 Readers Digest Gold Award for "The Most Trusted Brand in the Kitchen Appliances

Category" 2008-09 Best Stall Award at India International Trade Fair - 2008 at Pragati Maidan, New Delhi

bagged by Morphy Richards 2008-09 Adfest – Pattaya, Bajaj Exhaust Fans advertisement won 6 silver, 2 bronze medals 2008-09 Adfest – Goa, Bajaj Exhaust Fans advertisement won 1 gold, 1 silver, 1 bronze medals 2007-08 "Mera Brand" trophy awarded to Bajaj Water Heaters and Fans in Consumer World Awards

2008 held by FMCG Federation of India 2007-08 Silver Abby at Goa Fest 2008 for Morphy Richards Irons and Blenders print ads 2005-06 AMGF Consumer World Award as "Mera Brand - 2006" at Delhi for Bajaj Water Heaters 2005-06 ITM Business Leadership Award - December 2005 to our director, Shri R.Ramakrishnan Strategic Business Units We offer a diverse range of products and services including sales, distribution and marketing of electrical appliances, manufacture of fans and high masts, poles and towers and products relating to industrial, commercial, and domestic lighting, undertaking turnkey, commercial and rural lighting projects, design, manufacture, erection and commissioning of high masts, poles and towers. • Appliances: We market various household ranges of products in our appliances division. We are

one of the leading players for products such as irons, OTGs, water heaters, toasters and sandwich makers and air coolers under our own brand name and under the brand name of “Morphy Richards” (which is one of the largest players in the home appliances market in the United Kingdom). We market irons, toasters, OTGs, electric kettles, coolers, room heaters, storage water heaters, instant water heaters, immersion heaters, microwave ovens, mixers, food processor, emergency light, coffee makers, DVD players, gas stoves, gas hobs, cooker hoods, rice cookers, water filters and vacuum cleaners under the “Bajaj” brand. We market mixer grinders, juicer mixer grinders, juicers, toasters, steam irons, dry irons, electric cookers, coffee makers, electric kettles, hand blenders, OTGs, hair dryers and portable heaters under the “Morphy Richards” brand.

• Fans: In the fans business, our products include ceiling, table, pedestal and wall mounted fans,

industrial and domestic exhaust fans, air circulators, personal fans, children’s fans, cooler kits and pumps. We manufacture fans and related components at our Chakan unit, and also procure fans and related components from our vendors located at Hyderabad, Himachal Pradesh and

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Uttarakhand and imports from China. We have also executed an agreement with Midea , to sell and market table, pedestal and wall mounted fans under the joint brand name of “Bajaj-Midea”, and have also entered into an agreement with Walt Disney for the sale and marketing of children’s fans using Disney characters and designs.

• Lighting: Under this division we market various products ranging from GLS lamps, FTLs, CFLs,

and LED torches, among other products. A major portion of the electrical lamps and tubes marketed by us are manufactured by Hind Lamps Limited, a Bajaj Group company, from their manufacturing facilities located at Shikohabad and Kosi in Uttar Pradesh. Majority of our CFL lamps are manufactured by Starlite Lighting Limited from their manufacturing facility at Nashik, Maharashtra. With respect to lamps, tube lights, and torches, we are viewed as one of the leading brands in terms of price and image in India.

• Luminaires: Our luminaires division is engaged in industrial, commercial, decorative and street

lighting, commissioning and marketing of flood lights, light emitting diodes, lighting electronics, lighting controls, mercury and sodium vapour lamps, metal halide lamps and compact florescent lamps. We are one of the leading players in the market for street lights, flood lights and industrial lighting applications. Under this SBU we market various luminaire products, which include decorative luminaires in various sizes and designed with different types of louvers, diffusers, mirror optic reflectors suitable for surface, recess and suspension mounting, luminaires for information technology parks, offices, banks and shopping mall applications, CFL down lighter luminaires with dimming solutions, luminaires for auditorium, conference room and art gallery lighting, industrial lighting applications, sports lighting applications, roadway lighting applications, hazardous area lighting, street lighting products, energy conservation concepts and allied accessories. Our luminaires products are sourced from dedicated vendors at Daman, Himachal Pradesh and through imports from China. We have recently forayed into a distribution relationship with Delta Controls of Canada for Building management systems and HVAC products and with Securiton of Switzerland for Fire alarms and Security systems.

• Engineering and Projects: Our engineering and projects business can be broadly categorised into

three divisions, namely, (a) special projects, where we undertake turnkey lighting assignments, fibre optic lighting, factory lighting, air-port lighting, sports lighting and rural electrification projects, among others, (b) high masts and street lighting, where we undertake design, supply, erection and commissioning of high masts, signages and poles, and (c) towers, where we undertake design, supply, erection and commissioning of transmission lines, telecommunication towers and monopoles, and other related products and services. Our Company carries out galvanizing, fabrication and manufacture of high masts, lattice towers at our Ranjangaon unit, which has a state of the art galvanizing plant.

Our SBU wise Sales Break-up For the financial year ended March 31, 2009, our Company recorded net sales of Rs. 1,77,054.01 lacs of which our luminaires unit recorded sales of Rs. 27,934.02 lacs (16% approximately), our fans unit recorded sales of Rs. 29,376.98 lacs (17% approximately), our lighting unit recorded sales of Rs. 20,897.18 lacs (12% approximately), our appliances unit recorded sales of Rs. 46,419.23 lacs (26% approximately), and our engineering and projects SBU recorded sales of Rs. 52,261.77 (30% approximately) and other operating revenue of Rs. 164.81 lacs (0.09% approximately). Strategic alliances and tie ups Our Company has entered into various strategic alliances, technical collaborations and sourcing arrangements with leading global corporates to augment the position of our brand, enhance our sales and marketing capabilities and offer new and diversified range of products. Our major strategic alliances, technical collaborations and sourcing arrangements are as follows:

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• Second Registered User Agreement dated September 10, 2009 entered into between Morphy Richards Limited (“Morphy”) and our Company, (“Registered User Agreement”):

Pursuant to the registered user agreement, dated April 25, 2002, Morphy had granted the license to our Company to use the Trade Mark “Morphy Richards” owned by the Morphy in relation to the products that our Company may procure/import for marketing of the same in India and elsewhere, as per the terms and conditions mentioned therein. Pursuant to the Registered User Agreement our Company and Morphy have decided to continue with the existing arrangements between the parties for a further period of eight (8) years effective from April 25, 2009.

• Distributorship Agreement dated December 1, 2005 entered into between Trilux- Lenze

GmbH + Co KG (“Trilux”) and our Company, (“Trilux Agreement”):

Pursuant to the Trilux Agreement, Trilux has appointed our Company as its distributor for the import and distribution by way of resale of the products (i.e. any product at the time of the date of the Trilux Agreement is in range of the products manufactured by or for Trilux, and such other products as may from time to time be agreed in writing by the parties) in India and other SAARC countries which are Bangladesh, Bhutan, Nepal, Pakistan, Sri Lanka and the Maldives. The Trilux Agreement is effective for a period of five (5) years with effect from December 1, 2005.

• Manufacturing Distributorship Agreement dated October 06, 2009 entered into between

Ruud Lighting Inc. (“Ruud”) and our Company; (“Rudd Agreement”)

Pursuant to the Agreement, Ruud has granted our Company an exclusive license to manufacture, assemble and distribute designated Ruud products i.e. LED products of Ruud’s Ruud, Beta and Kramer divisions in the following product categories: street and roadway lighting; flood and area lighting; industrial and warehouse lighting; parking-facility lighting; security lighting; canopy lighting; pathway lighting; and such additional product categories as are agreed to by the parties from time to time in the designated territory (i.e. India, Nepal, Bangladesh, Pakistan, Bhutan, Maldives and Afghanistan).The Rudd Agreement is effective for a period of fifteen (15) years with effect from October 06, 2009.

• Agreement for technical cooperation dated October 25, 2005 entered into between Abacus

Lighting Limited (“Abacus”) and our Company; (“Abacus Agreement”)

Pursuant to the Abacus Agreement, Abacus and our Company have decided in cooperating to establish a more stable framework in the technical and design area and also in the commercial and marketing area. The Abacus Agreement is effective for a period of five (5) years with effect from October 25, 2005.

• Memorandum of Understanding dated May 25, 2007 entered into between M/s Nardi

Elettrodomestici S.p.A (“Nardi”) and our Company, (“Nardi MOU”)

Pursuant to Nardi MOU, Nardi has agreed to sell kitchen/home appliances in India through the distribution channel of our Company, under the brand Nardi or Bajaj-Nardi. Promotion and selling arrangement and the license to use the brand by our Company is valid for a period of 7 years from the date of signing of the Nardi MOU.

• Distributorship Agreement dated October 8, 2007 entered into between Securiton AG

(“Securiton”) and our Company; (“Securiton Agreement”)

Pursuant to the Securiton Agreement, our Company has agreed to purchase, and be the exclusive distributor, and Securiton has agreed to sell and to appoint our Company as the exclusive distributor of the products which include current specific device and/or accessory identified by Securiton’s brand name including all future or next generation versions of the specified products

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developed by Securiton. The Securiton Agreement came into effect from October 1, 2007 and will continue to be effective till December 31, 2012.

• Distributorship Agreement dated July 15, 2008 entered into between Delta Controls Inc

(“Delta”) and our Company; (“Delta Agreement”)

Pursuant to the Delta Agreement, Delta has granted to our Company the right to purchase from Delta for resale within the territory (i.e. India, Nepal, Pakistan Maldives, Bhutan and Burma) the products manufactured by Delta. The Delta Agreement shall remain in full force for a period of five (5) years with effect from July 15, 2008.

• License Agreement dated February 20, 2007 entered into between The Walt Disney Company (India) Private Limited (“Disney”) and our Company; (“Agreement”).

Pursuant to the Agreement, Disney has granted a non-exclusive license to our Company to use the licensed material and sell the products which are designated, created and manufactured by our Company to authorized customers in India, Nepal, Bangladesh, Bhutan and Maldives. The material licensed under the Agreement comprises of creative works and trademarks of Disney including the name “Disney”. The Agreement is effective from February 01, 2007 and will continue to be in effect till March 31, 2010

• Agreement dated September 10, 2001 entered into between G. D. Midea Holding Company

Limited (“Midea”) and our Company; (“Agreement”)

Pursuant to the Agreement, Midea has decided to supply to our Company electrical fans for the purpose of resale of such electrical fans by our Company under the brand name “Bajaj Midea”. The agreement shall be valid from April 01, 2001 for a period of three years and will continue to remain in effect thereafter unless terminated by either of the parties

OUR COMPETITIVE STRENGTHS • Established track record and brand name

We have been present in the electrical products industry for several years, which, has helped us in understanding the changing needs and demands of our customers in India. With constant improvement in performance of our products, augmented with quality and recognition of our brand, we believe that we enjoy considerable brand equity and reliability in the market.

• Diversified business with wide range of products and services

Our revenue stream comes from diverse domains and caters to the requirements of both our domestic consumers and our customers in the industrial/infrastructure sectors, which in turn reduces our Company's dependence on a particular product or division. This ability to have a diversified revenue streams differentiates us from most of our competitors. We offer products and services ranging from marketing and distribution of appliances, manufacture of fans, high masts, poles and towers, services and products relating to industrial, commercial, and domestic lighting, undertaking turnkey, commercial and rural lighting projects, design, manufacture, erection and commissioning of high masts, poles and towers.

• Extensive manufacturing facilities and sourcing arrangements Our Company has two manufacturing facilities located at Chakan and Ranjangaon in District Pune, Maharashtra. Our Chakan unit, which primarily manufactures fans and related components, is also equipped with a TLT fabrication facility. Our Ranjangaon unit hosts a state of the art galvanizing plant. Majority of our electrical lamps and tubes are manufactured by Hind Lamps

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Limited, a Bajaj Group company, from their manufacturing facilities located at Shikohabad and Kosi in Uttar Pradesh. Majority of our CFL lamps are manufactured by Starlite Lighting Limited from their manufacturing facility at Nashik, Maharashtra. Our products are also sourced from various manufacturers and vendors situated across the country, and imports from China. Our Company capitalizes on its diversified competencies by maintaining good and cordial relations with our suppliers. We are equipped with latest machines, equipment, technology and facilities to monitor quality and other specification related requirements.

• Research and development capabilities We have established a state-of-the-art research and development facility at Mumbai which has been approved by the Government of India as a recognized Test House for lighting testing and luminaires. We also have a consumer durables technical services centre for our appliances business in Mumbai. Further we have an in-house fan designing and development centre at Pune and also have in-house capabilities of design and development of lighting, civil and structural engineering and electrical systems. Our research and development capablities coupled with our technology and our stringent quality and testing standards allow us to offer a wide range of products which are abreast with the latest tecnological advancements, and help us meet the expectations and demands of our consumers and customers.

• Technical, marketing and other strategic collaborations

Our Company has entered into various strategic alliances, technical collaborations and sourcing arrangements with leading global corporates such as Morphy Richards Limited, United Kingdom and Nardi, Italy for our appliances business, Midea and Walt Disney for our fans business, Trilux Lenze, Germany, Disano, Italy, Ruud Lighting, USA, Delta Controls, Canada and Securiton, Switzerland for our luminaires business and Abacus, United Kingdom for sports lighting components and equipment. These alliances and collaborations have enabled our Company to augment the position of our brands, enhance our sales and marketing capabilities and offer new and diversified range of products to our customers and consumers.

• Sales and marketing capabilities and strong dealer network

Our senior management has an understanding of the trade segment of the market. Through this understanding, we have been able to establish a strong dealer network countrywide, enabling our products to reach our consumers and customers easily. Presently we have a chain of approximately 1,000 distributors, 3,000 dealers, and over 240 service franchises spread across India. This network of retailers and dealers provides our customers with a first point of contact for us in each of our markets and our marketing efforts are further complimented by the direct involvement of our marketing team for each inquiry and order.

• Experienced management

Our management team consists of individuals with academic backgrounds related to business management, engineering and commerce. They hold qualifications in engineering, designing, business management and accounting. In addition, our management team has considerable experience of the electrical, consumer durables, lighting, engineering and projects industries with some members of this team having worked in the industry for over 30 years. The members of our senior management have other diverse skills which have helped us to grow and develop us further. Our management team's skills include marketing, sales mangement, strategic sourcing, supply chain management, domestic capital raising and implementing expansion projects.

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OUR STRATEGY • Product Diversification

We propose to continue to regularly improve our product portfolio by upgrading and introducing new models / product range under our various business verticals so as to cater to the growing demands of our consumers and to diversify our revenue streams and cater to the requirements of both our domestic consumers and our customers in the industrial/infrastructure sectors. Under appliances, we propose to introduce new models in mixers, water heaters, iron, coolers and gas appliances, and introduce new products such as inverters and induction cooker. Our focus would be on our newly introduced "PLATINI" range of appliances which cater to the premium segment. Under fans, we propose to introduce new models in premium and decorative fans, remote controlled fans. We also propose to enter new business segments such as pumps and motors. Under our luminaires SBU, too we intend to enter new segments such as integrated building management systems and HVAC, fire alarm and security systems.

• Market Penetration

We are continuously focusing on network expansion and market penetration through various ways under each of our SBUs. In order to further strengthen our markets and increase our geographical presence. We propose to appoint super distributors for rural lighting, appliances and fans. We also propose to consolidate our marketing in the “Kirana” segment for distribution of our lighting products. We also propose to improve our presence in retail for appliances and fans.

• Develop products for new industrial sectors and enter into new lines of business With a view of further diversifying our revenue streams, we propose to market our products and provide our services for new industrial sectors such as the information technology, business process outsourcing, healthcare and pharmaceuticals, and promote our luminaire products to builders and/or architects. We also intend to increase our manufacturing capabilities by establishing a factory for production of monopoles. We also propose to enter into the business of developing lighting products which use non renewal energy like solar energy. We also intend to enter into design and erection of power substations, and undertake projects under APDRP.

• Mix of Organic and Inorganic Models of Growth

Our strategy so far had been organic growth. At this stage of our business, we believe that a combination of organic and inorganic models will help us continue to grow. Strategic acquisitions would help us in leveraging complementary skills to capture market opportunities as well as reduce time-to-market and accelerate growth.

• Continue to Focus on Training and Motivating Our Work Force Our Company will strongly continue its policy of training its work force with adequate product knowledge, market knowledge and above all the application of knowledge to the industry. Our Company shall always focus on narrowing the hierarchy for free and transparent two-way communication between management and employees for better exchange of ideas, views and opinions for maintaining good competitive work atmosphere at all levels.

• Focus on energy efficient product applications

In light of the growing demand from consumers we propose to introduce on developing and marketing more energy efficient products, so as to enhance the saleability and marketability of our products and to cater to the requirements of our consumers. For this purpose we want to focus on the marketing of our CFL products and market star rated products to appeal to our consumers.

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OUR MANUFACTURING FACILITIES

Our production facilities are located in the state of Maharashtra at Chakan, District Pune from where we manufacture our fans and related components, and at Ranjangaon, District Pune, Maharashtra where we manufacture, high masts, towers and related products and also undertake galvanizing activities.

Our Chakan unit, primarily manufactures fans and related components and is also equipped with a TLT fabrication facility.

Our Ranjangaon unit from where we manufacture high masts, lattice towers, and related products also hosts a state of the art galvanizing plant. In September 1999, our Company established and commissioned a wind energy generation unit with an installed capacity of 2.8 mega watts at Village Vankusawade, Taluka Patan, District Satara, Maharashtra. Product/facility wise Plant Capacities (as on March 31, 2009): Particulars Unit Licensed Capacity Installed Capacity FY 2008-09 FY 2007-08 FY 2008-09 FY 2007-08 Per annum Per annum Per annum Per annum Fans Nos. 10,00,000 10,00,000 8,00,000 8,00,000 Parts and Accessories of Fans

Nos. 50,000 50,000 - -

Magneto Assemblies

Nos. 5,00,000 5,00,000 3,00,000 3,00,000

Parts & Accessories for Magneto

Nos. 25,000 25,000 25,000 25,000

Electric Motors Nos. 25,000 25,000 - - Parts and Accessories for Electric Motors

Nos. 5,000 5,000 - -

Dies made of steel

Nos. 90 90 24 24

Power Generated

- - 2.8 MW 2.8 MW

Highmast Shafts Nos. - - 4,000 2,275 Swage/octagonal poles

Nos. - - 56,000 19,700

Lattice Mast / Transmission Line Towers/ Others (Galvanizing Job Work etc)

MT - - 24,000 24,000

KEY PROJECTS EXECUTED AND UNDER EXECUTION BY OUR COMPANY Details of certain key projects executed by our Company: The projects executed by our Company can be summarized as follows:

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Street Lighting Some of the key street lighting projects executed by our Company include: Sr. No.

Name of the Client Value ( Rs. in Lacs)

1. Municipal Corporation, Rajahmundry 95.1 2. UE Development India Private Limited 710.0 3. City and Industrial Development Corporation of

Maharashtra Limited 752.0

4. State Infrastructure and Industrial Development Corporation of Uttarakhand Limited

320.0

5. Reliance Infrastructure Limited 816.8 Special Projects Certain key contracts executed by the special projects division of our engineering and projects division include: Sr. No.

Name of the Client Value in Rs. (in lacs)

1. Rajasthan Rajya Vidhyut Utpadan Nigam Limited

118.0

2. Sports Development Authority of Tamil Nadu 202.9 3. National Games Secretariat - Government of

Assam 820.1

4. Public Works Department, Jaipur 569.0 5. The Hyderabad Cricket Association 666.1 6. Madhya Pradesh Cricket Association 457.0 7. Association of Sports and Youth Services, Pune 579.9 8. Assam Tourism Development Corporation

Limited 66.3

9. India Tourism Development Corporation Limited

578.5

High Mast Contracts Some key contracts executed by our Company for the supply and erection of high masts include: Sr. No.

Name of Client Value in Rs. Lacs

1. Damodar Valley Corporation 110.4 2. KMC Constructions Limited 130.3 3. Essar Steel (Hazira) Limited 58.5 4. Jindal Steel and Power Limited 127.0 TLT Projects Some key contracts executed by our Company for the supply and erection of transmission line towers include: Sr. No.

Name of the Client Value in Rs. Lacs

1. Transmission Corporation of Andhra Pradesh 4,467.6 2. Tata Projects Limited 2,368.4

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Sr. No.


3. Tamil Nadu Electricity Board 4,715.0 4. Rajasthan Rajya Vidyut Prasaran Nigam Limited 1,977.9 5. SPIC SMO 2,695.4 6. Maharashtra State Electricity Board 1,568.4 7. Power Grid Corporation of India Limited 3,192.7 Details of Projects under execution by our Company:

Supply and Erection Some of the key orders for supply and erection of towers, poles, high masts and lighting systems procured by us are as follows: Sr. No.


1. Maharashtra Airport Development Company 2,953.9 2. Public Works Department 5,118.9 3. KMC Constructions Limited 596.0 4. JMC Projects (India) Limited 76.0 5. Delhi Development Authority 588.7 Supply Contracts Some of the key orders for supply of towers, poles, high masts and lighting systems procured by us are as follows: Sr. No. Name of Client Value Rs.

(in Lacs) 1. D.D. Construction Private Limited 403.1 2. Antelec Limited 235.7 3. Hi tech Construction Group 73.7 4. Cube Construction Engineering Limited 92.4 5. ARSS Infrastructure Projects Limited 78.7 6. Royal Electricals 50.6 7. Structure Projects Limited 78.7 High Mast Contracts Some of the key orders secured by our Company for supply and erection of high masts which are under execution are as follows: Sr. No. Name of Client Value Rs.

(in lacs) 1. Electrical Manufacturing Company Limited 134.8 2. Consortium of Sudhir Power Projects Private limited & Sudhir Gensets Limited 68.2 3. Central Public Works Department, New Delhi 484.0 4. Larsen & Toubro 313.6 5. Mundra Port and Special Economic Zone 224.3 6. Kolkata Port Trust 313.1 7. PBA Infrastructue Limited 57.5 8. Amber Electrotech Limited 79.7 9. Steel Authority of India Limited 243.8

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Sr. No. Name of Client Value Rs. (in lacs)

10. Hi Tech Construction Group 73.7 11. Antelec Limited 236.8 12. Indian Oil Petronas Private Limited 51.5 13. Lanco Infratech Limited 88.07 14. M/s Kanti Prasad Mittal 62.8 Special Projects Certain key contracts which are being executed by the special projects division of our engineering and projects division include:

Sr. No. Name of the Client Value Rs. (in Lacs)

Purpose

1. NTPC Electric Supply Company Limited 29,158.1 3,840.1

Supply Erection

2. NHPC Limited 7468.5 803.5

Supply Erection

3. Bharat Heavy Electricals Limited 2837.1 1351

Supply Erection

4. Maharashtra State Power Generation Company Limited

331.2 Supply and Erection

5. Reliance Energy Limited 690.2 - 6. Utility Energytech and Engineers Private Limited 190.0

66.4 Supply

Erection 7. Coastal Gujarat Power Limited 833.9

252.6 Supply

Erection 8. Hindustan Construction Company Limited 886.4 - 9. Directorate of Art, Culture, Sports & Youth Affairs

Government of Jharkhand 964.0 241.0

Supply Erection

10. Era Infra Engineering Limited 345.0 - 11. Central Public Works Department, New Delhi 278.5 - 12. Mumbai Cricket Association 624.0 - 13. Saurashtra Cricket Association 515.0 - 14. Rites Limited 201.5 - TLT Projects Under Execution Some of the key contracts for supply and erection of transmission line towers which are being executed are as follows: Sr. No.

Name of the Client Value Rs. In (in Lacs)

Purpose

1. Maharashtra State Electricity Transmission Company Limited

15,709.9 2,932.4

Supply Erection

2. Bharat Sanchar Nigam Limited 1,241.9 Erection 3. India Telecom Infra Limited 2,129.9

249.6 Supply

Erection 4. Transmission Corporation of Andhra Pradesh

Limited 602.7 Erection

5. Damodar Valley Corporation 5,302.2 1,101.6

Supply Erection

6. Gujarat Energy Transmission Corporation Limited

3,096.4 280.8

Supply Erection

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Sr. No.

Name of the Client Value Rs. In (in Lacs)

Purpose

7. Power Grid Corporation of India Limited

12,940.5 2,785.4

Supply Erection

8. Tamil Nadu Electricity Board 724.8 - 9. Deepak Cables India Limited 1,898.7 - MARKETING AND BRAND BUILDING Over a course of years our brands “Bajaj” and “Morphy Richards” (for electrical appliances) in India has gained recognition and brand equity. We believe our alliances with Morphy Richards Limited, United Kingdom and Nardi, Italy for our appliances business, Midea and Walt Disney for our fans business, Trilux Lenze, Germany, Disano, Italy and Securiton, Switzerland for our lighting and luminaires business and Abacus, United Kingdom for sports lighting components and equipment have enabled us in strengthening our brand equity and introducing global brands in India, which in turn has augmented the marketability of our products.

This network of marketing agents provide our customers with a first point of contact for us in each of our markets and our marketing efforts are further complimented by the direct involvement of our marketing team for each inquiry and order.

We participate in a variety of international trade shows including trade shows on design, development and techonology related to electrical equipment, heavy engineering and infrastructure specific trade shows. In addition to attracting potential customers, we believe the trade shows provide us a platform to increase our stature and credibility. COMPETITION Much of the market in which we operate in is unorganized and fragmented with many small and medium-sized companies. We face substantial competition for each of our products from other manufacturers in domestic or divisions of large multinational corporations, as well as domestic competitors. We compete with other manufacturers on the basis of product range, product quality, product price, after sales service including factors, based on reputation, regional needs, and customer convenience. In order to compete effectively, we continue to focus on enhancing revenue growth through introduction of new products, expansion of the dealer and retailer network, along with good brand building efforts in addition to the taking measures for effective cost control, value engineering, competitive sourcing and improving credit discipline. We also strive to continuously improve the technology and quality in order to gain a competitive advantage. However, certain of our competitors may be larger than us in terms of production capacity and/or a more extensive global operation, and may benefit from greater economies of scale and operating efficiencies. Our failure to compete effectively with such manufacturers may have an adverse effect on our business, financial condition and results of operations. Our competition varies for each of our products and regions. We have to compete with different players in different products in different regions, from both the organized and unorganized sectors. Overall, our Company’s major competitors include Philips, Kenstar, Usha and Maharaja for electrical appliances, Crompton, Usha, Orient, Havells, Polar and Khaitan for fans, Philips, Crompton, Surya and Wipro for our lighting products and Luminaire products, and Philips, Crompton, Kalpataru Power, KEC and Jyoti for our engineering and projects business. RESEARCH AND DEVELOPMENT

We have a strong focus on the research and development of products, processes and technology to endeavor to achieve a leading position in our market. In order to achieve this, we:

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• endeavor to maintain highly trained and experienced employees • use the latest technology available worldwide, to create high quality products; • strive to build our strength with respect to a technological edge; • continue to develop new manufacturing and testing facilities to eliminate defects in our products;

and • provide training to our employees to upgrade their competencies and skills.

Our management is committed to providing all necessary resources for research and development in order to achieve the above stated objectives. We have established a state-of-the-art research and development facility at Mumbai which has been approved by the Government of India as a recognized Test House for lighting and luminaires. Further we have an in-house fan designing and development centre at Pune and also have in-house capabilities of design and development of lighting, civil and structural engineering and electrical systems. QUALITY ASSURANCE We have implemented quality assurance management systems and procedures that are aimed to ensure consistency in the standard of our products and services across various areas of our business operations. Our facilities operate in strict accordance with ISO 9001 and ISO 14001 certifications. Furthermore, we have successfully implemented an ERP package sourced by Oracle which has helped us to streamline the manufacturing process at our facilities and to maintain a synergy between all levels in the organization. We have established a product development and quality assurance center at Mumbai for our small appliances. Our products are generally inspected, tested and certified for quality, in-house as well as by third-party agencies. We continue to strive to upgrade and meet our customers' special requirements, to have edge on competitors and to deliver quality products which give customer satisfaction. We invest in upgrading our equipment and technology and add new equipment from time to time. HEALTH AND SAFETY

We are committed to training and safety of our employees. Our goal is to provide an injury and accident free work environment by applying our safety management systems. Our policies, procedures and training programs have all been developed in line with recognised industry standards, supplemented by input from management and employees. Our quality and safety management systems are subject to regular client audits, as well as management audits. Our Company has received an ISO 14001 certification for our environment management systems at Ranjangaon plant. EMPLOYEES Our employees contribute significantly to our business operations. As of December 2, 2009, we had 2,604 employees across all of our manufacturing facilities and offices. The break-up of employees of our Company can be summarised as follows:

Top Management Middle Management

Junior staff Temporary Total

Head office 11 33 365 409 Other Offices 1 5 802 250 1058 Manufacturing facilities at Chakan 1 9 40 50 Manufacturing facilities at 1 394 692 1,087

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Top Management Middle Management

Junior staff Temporary Total

Ranjangaon TOTAL 12 40 1,570 982 2,604

We had hired Accenture, a reknowned consulting organisation to bring about a change in the management, strategy, structure and operations of our Company along with inputs from our Company’s senior management. We have moved from a matrix structure to a strategic business unit based organisation, and have improved our performance appriasal systems and training mechanisms over the years, which aims at better rewards and career growth avenues on performance based incentives. There has been no disputes, resistance or other occurrences in connection with the employees of our company which would have a material adverse effect on our operations or profitability over the past three fiscal years. INTELLECTUAL PROPERTY Our Company has registered and/or applied for registration of various trademarks/service marks, including its logo, “Bajaj Electricals”, the words “inspiring trust”, the “Bajaj” composite label, “Bajaj Appliances” with the logo, “Bajaj Engineering and Projects” with the logo, “Bajaj Lighting” with the logo, “Bajaj Luminaires” with the logo, and “Bajaj Fans” with the logo, under various classes to protect our intellectual property rights. ENVIRONMENT We are committed to protecting the environment in the course of our operations. We strive to reduce emissions and discharges of waste which are known to have a negative effect on the environment. We have put in place procedures to ensure that our operations comply with relevant environmental regulations. We have a Health, Safety and Environment policy which reaffirms our commitment to provide a safe work place and clean environment to our employees and other stakeholders. Our offices and operational facilities are also materially compliant with applicable local environmental regulations. TRANSPORTATION Transportation is an important cost element in our operations. In order to manage this, we strive to secure contracts with various transportation and shipping agencies, which helps us assure our services at a pre-determined price. These pre-determined prices are typically valid from 6 months to a one year period depending upon the terms agreed in each agreement and prevailing market conditions. This also helps us determine what the cost of transportaion will be for each order. We hire local vendors for our on road transportation services on a regular basis. SOCIAL CORPORATE RESPONSIBILITY The Bajaj Group is involved in various corporate social responsibility activities encompassing education and social upliftment. As a part of social corporate responsibility programme, our Company is associated with and patronises a non-governmental organisation named “Paryavaran Mitra” which is dedicated to the cause of environment protection. Prayavaran Mitra was established on September 24, 2004, with its registered office at Shikohabad, Uttar Pradesh and its head office at Mumbai. PROPERTY We have acquired 46 properties pursuant to various lease agreements, of which 2 properties are being used for our manufacturing facilities at Ranjangaon (each on 95 year leases), 3 properties are currently being used for residential purposes, 3 properties are being used for office use, 22 properties are being used for

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warehousing purposes, and 16 properties are being used for other business and/or commercial purposes such as go-downs. We have acquired 50 properties pursuant to various leave and license agreements of which 5 properties are being used for residential purposes, 1 property is being used for office use and the remaining 44 properties are being used for warehousing purposes. We own 6 properties of which 1 property is being used for our manufacturing facilities at Chakan and the remaining 5 properties are being used for office purposes. INSURANCE Our Company has procured various insurance policies, including policies for burglary and house braking for our manufacturing facilities at Chakan, standard fire and special peril policy (including earthquake) for our manufacturing facilities at Chakan, machinery breakdown policy for our manufacturing facilities at Chakan, group personal accident policy with respect to certain employees of our Company at our manufacturing facilities at Chakan, fire and special perils policy for our manufacturing facility at Ranjangaon, fire and special perils policy for our head office at Mumbai, group personal accident policy with respect to certain employees of our Company at our manufacturing facilities at Ranjangaon, and a group mediclaim insurance policy for the families of certain of our employees.

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BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Board of Directors As per the Articles of Association of our Company, our Company shall not have less than 5 (five) Directors and not more than 12 (twelve) Directors. Currently, our Company has 10 (ten) Directors, of which we have 3 (three) executive directors and 7 (seven) non executive directors. Out of the 7 (seven) non executive directors, 6 (six) directors are independent. Mr. Shekhar Bajaj is the executive chairman of our Board and the managing director of our Company.

The following table sets forth details regarding the Board of Directors as at the date of this Preliminary Placement Document:

Name Age (years)

Designation Address Other Directorships

Mr. Shekhar Bajaj

61 Chairman and Managing Director

Flat No.201 Maker Tower "A" Cuffe Parade Mumbai 400 005

1. Bajaj Auto Limited 2. Bajaj Ventures Limited 3. Hercules Hoists Limited 4. Hind Lamps Limited 5. Hind Musafir Agency

Limited 6. Starlite Lighting Limited 7. Bajaj Sevashram Private

Limited 8. Bachhraj Factories Private

Limited 9. Bajaj International Private

Limited 10. Shekhar Holdings Private

Limited 11. Rudi Multi Trading

Company Limited Mr. Anant Bajaj

32 Executive Director

Flat No.211 Maker Tower "A" Cuffe Parade Mumbai 400 005

1. Hind Lamps Limited 2. Hind Musafir Agency

Limited 3. Starlite Lighting Limited 4. Bajaj Ventures Limited 5. Bajaj International Private

Limited 6. Bachhraj Factories Private

Limited Mr. R. Ramakrishnan

48 Executive Director

Flat No.A-44, Kalpataru Residency Plot No.107 Kamani Road, Sion (East) Mumbai 400 022

1. Hind Lamps Limited 2. Bajaj Ventures Limited 3. Starlite Lighting Limited

Mr. Madhur Bajaj

57 Non-Executive Non Independent Director

03, Bungalow, Bajaj Vihar, Akurdi, Pune 411 035

1. Bajaj Auto Limited 2. Bajaj Auto Holdings

Limited 3. Bajaj Auto Finance Limited 4. Maharashtra Scooters

Limited 5. Sidya Investments Limited 6. Emerald Acres Private

Limited

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Name Age (years)


7. Madhur Securities Private Limited

Mr. Harsh Vardhan Goenka

51 Non-Executive Independent Director

14/15 IL Palazzo B.G. Kher Marg Mumbai 400 026

1. Ceat Limited 2. Zensar Technologies Inc 3. Zensar Technologies

Limited 4. KEC International Limited 5. RPG Enterprises Limited 6. Raychem RPG Limited 7. RPG Life Sciences Limited 8. The State Industrial &

Investment Corporation of Maharashtra Limited (SICOM)

9. Spencer International Hotels Limited

Mr. Ashok Kumar Jalan


Hari Bhavan, 4th Floor 64, Peddar Road Mumbai - 400 026

1. Asiatic Textiles Company Limited

2. Dupont Sportswear Limited 3. The Elphinstone Spinning &

Weaving Mills Company Limited

4. Webrands .Com Limited 5. Dupont Exports Private

Limited Mr. Ajit Gulabchand


94, NCPA Apartment 1, Sir Dorabji Tata Road Nariman Point Mumbai 400 021

1. Hindustan Construction Company Limited

2. Hincon Finance Limited 3. HCC Real Estate Limited 4. Hincon Technoconsult

Limited 5. Hincon Holdings Limited 6. The Indian Hume Pipe

Company Limited 7. Western Securities Limited 8. Lavasa Corporation Limited 9. Charosa Wineries Limited 10. HCC Infrastructure Limited 11. RPG Life Sciences Limited 12. Motorsports Association of

India 13. HCC Construction Limited 14. Sarama Petcare Private

Limited 15. HCC Singapore Enterprises

Pte. Limited 16. Shalaka Investment Private

Limited 17. Gulabchand Foundation 18. Champali Garden Private

Limited 19. HCC Mauritius Enterprises

Limited 20. Highbar Technologies

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Name Age (years)


Limited Mr. Vishnubhai Bhagwandas Haribhakti


51, Maker Tower "B" Cuffe Parade Mumbai - 400 005

1. Citadel Realty and Developers Limited

2. The Simplex Realty Limited 3. The Anglo-French Drug

Company (Eastern) Limited 4. Ester Industries Limited 5. Tilaknagar Industries

Limited 6. Lakshmi Automatic Loom

Works Limited 7. Hindustan Composites

Limited 8. BDO Haribhakti Consulting

Private Limited 9. Mirae Asset Trustee

Company Private Limited Dr.(Mrs.) Indu Shahani


Flat No.56, Hill Park A.G.Bell Road Malabar Hill Mumbai 400 006

1. Indian Oil Corporation Limited

2. Eureka Forbes Limited

Dr. R.P. Singh 61 Non-Executive Independent Director

A-1 Power Grid Residential Complex Sector-43, Gurgaon Haryana 122 002

1. Jindal Power Limited

All the Directors of our Company are Indian Nationals. Brief Profiles Mr. Shekhar Bajaj, aged 61 years, is the Chairman of our Board and the Managing Director of our Company. Mr. Shekhar Bajaj holds a bachelors degree in science and has completed his MBA from New York University. He started his career as resident director of Bajaj Sevashram Limited in Udaipur in 1968. During 1969-72, he was joint managing director of Bachhraj Factories Limited. In 1975 he was appointed as part-time managing director of the Mumbai-based Bajaj International Private Limited and later its whole-time managing director. In 1980, he became the chief executive of our Company and four years later, the managing director of our Company. Since 1994, he has been the Chairman and Managing Director of our Company. He was also the President of the Associated Chambers of Commerce and Industry of India. He is also the President and member of the managing committee of the Indian Merchants Chamber, President of the Council for Fair Business Practices, President of the Electric Lamp & Component Manufactures Association of India, (ELCOMA), and President of the Fan Makers Association of India, (IFMA). He is also on the board of directors of many other companies, including Bajaj Auto Limited. Mr. Anant Bajaj, aged 32 years is an executive director in our Company. Mr. Anant Bajaj holds a bachelors degeree in commerce and has completed his PGDFBM from S.P. Jain Institute of Management, Mumbai. Mr. Anant Bajaj has been a director in our Company since February 2006 and is also currently a director on the board of directors of Bachhraj Factories Private Limited, Bajaj International Private Limited, Bajaj Ventures Limited, Hind Lamps Limited, Hind Musafir Agency Limited and Starlite Lighting Limited. Mr. R. Ramakrishnan, aged 49 years, is an executive director in our Company. Mr. R.Ramakrishnan holds a bachelors degree in science and a post graduate in business management from XLRI, Jamshedpur. He has been associated with our Company since the last 10 years and is responsible for our Company's

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strategic business units (SBUs), namely lighting, luminaries, appliances and fans, apart from certain corporate functions such as information technology, advertising, customer care, and branch sale support. He is a member of the Executive Council of the Indian Society of Advertisers and also serves on the Consumer Complaints Council of the Advertising Standards Council of India. Before joining our Company, he worked with M/s.Asian Paints (India) Limited for over 17 years in various capacities. Mr. Madhur Bajaj, aged 57 years, is a non-executive non-independent director of our Company. Mr. Madhur Bajaj holds a bachelors degree in commerce and has completed his MBA from International Institute of Management Development, Lausanne, Switzerland. He was the Chairman of the Confederation of Indian Industries (Western Region) and is presentlly its National Council Member . He is Chairman of the Confederation of Indian Industries’s National Committee on Latin America. He was also the President of Society of Indian Automobile Manufacturers. He is also the President of Mahratta Chamber of Commerce, Industries and Agriculture. He is a member of the ‘Advisory Council’ of Department of Management Studies of the University of Pune. He is currently the Vice Chairman of Bajaj Auto Limited. Mr. Harsh Vardhan Goenka, aged 51 years is an non-executive independent director in our Company. Mr. Harsh Vardhan Goenka, is the chairman of RPG Enterprises Limited. Mr.Harsh Vardhan Goenka holds a bachelors degree in economics and also holds an MBA from the International Institute of Management Development, Switzerland. Mr.Goenka, a past President of the Indian Merchants' Chamber is also a member of the Executive Committee of Federation of Indian Chambers of Commerce and Industry. He is a member of the Board of Governors of National Institute of Industrial Engineering (NITIE), member of Foundation Board of IMD, Laussane, Switzerland and has had a vast experience in the field of management. Mr. Ashok Kumar Jalan, aged 66 years, is an non-executive independent director in our Company. Mr. Ashok Kumar Jalan holds a bachelors degree in arts and was the Managing Director of The Elphinstone Spinning & Weaving Mills Company Limited, which was an export-oriented unit manufacturing various types of fabric and PVC coated upholstery material. He has been extensively involved in export business, and had introduced the Wrangler brand jeans in India under license from VF Coproration of USA, a Fortune-500 company. He has been associated with various Chambers of Commerce and has served on the Comittees of the Federation of Indian Chambers of Commerce, New Delhi; Indian Cotton Mills Federation; Millowners' Association; and Textile Export Promotion Council. He is also a patron member of Indo-American Chamber of Commerce, Bombay. He has also made presentations abroad on the Indian economy to leading multinationals in USA. Mr. Ajit Gulabchand, aged 61 years, is an non-executive independent director in our Company. Mr. Ajit Gulabchand holds a bachelors degree in commerce. He is the Chairman and Managing Director of Hindustan Construction Company Limited. He is a member of CII National Council and Chairman of CII National Committee on Construction and Projects. He is also the founder president of the Construction Federation of India, founder member of the Board of Governors of Construction Industry Development Council of India, the chairman of the Board of Governors and Member of the Board of Trustees of National Institute of Construction Management and Research, the chairman of Administrative Council of Walchand College of Engineering; Governor of the World Economic & Construction Forum (Geneva). He has also been the Chairman of Projects Exports Promotion Council and President and member of the Governing Coucil of Builders Association of India. Mr. Vishnubhai Bhagwandas Haribhakti, aged 80 years is an non-executive independent director in our Company. He is a chartered accountant. Dr. (Mrs.) Indu Sahani, aged 58 years, is an non-executive independent director in our Company. She is a Ph.D in Commerce and is the principal of H.R. College of Commerce & Economics, Mumbai since the year 2000. She is a distinguished acamedician having over 31 years of experience in teaching. She is currently continuing as Sheriff of Mumbai for the second year. Dr. R.P. Singh, aged 61 years, is an non-executive independent director in our Company. He is a post graduate in mechanical engineering from Banaras Hindu University, He has served as the chairman and

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managing director of Powergrid Corporation of India Limited. In his career spanning more than 37 years, he has served the Tata Iron and Steel Company Limited (now Tata Steel Limited), the National Thermal Power Corporation, and Powergrid Corporation of India Limited. He has been conferred with many awards notably “SCOPE” for Excellence and Outstanding contribution to the Public Sector Management, Degree of Doctor of Science (Honoris Causa) by Banaras Hindu University, Power Delivery Product Champion Award by Electric Power Research Institute, United States and the Green Award by the World Bank. Dr. R.P. Singh is associated with bodies like CIGRE - Paris, CIGRE - India, World Energy Council, USA, Indian National Acedemy of Engineering (INAE). Borrowing Powers of the Directors of our Company Pursuant to resolution passed by the shareholders of our Company at their AGM convened and held on July 24, 2008 and in accordance with provisions of Section 293 (1)(d) of the Companies Act, the Board has been authorised to borrow sums of money as they may deem necessary for the purpose of the business of our Company upon such terms and conditions and with or without security as the Board of Directors may think fit, provided that money or monies to be borrowed together with the monies already borrowed by our Company (apart from temporary loans (including working capital facilities) obtained from our Company’s bankers in the ordinary course of business) shall not exceed, at any time, the paid up share capital and free reserves of our Company plus a sum of Rs. 500 crore. Shareholding of Directors As on November 27, 2009 the details of the Equity Shares held by our Directors is as follows:

Sr. No.

Particulars No. of Equity Shares

1. Mr.Shekhar Bajaj* 9,08,017 2. Mr.Madhur Bajaj** 6,89,567 3. Mr.Anant Bajaj 3,57,632 4. Mr.R.Ramakrishnan 19,005

*Includes 128,880 shares held by Mr. Shekhar Bajaj as trustee on behalf of Bajaj Electricals Limited Employees’ Welfare Fund, Mumbai. **Includes 80,000 shares held by Mr. Madhur Bajaj as trustee on behalf of Bajaj Auto Limited Employees’ Welfare Fund, Pune. Remuneration and benefits to our Directors Remuneration to executive directors 1. Mr Shekhar Bajaj, Managing Director:

Pursuant to a resolution dated October 12, 2009 passed by the Board of Directors of our Company, Mr Shekhar Bajaj, Executive Director of our Company has been reappointed as the Managing Director of our Company and terms of his reappointment as set out below have been approved and recommended by the Remuneration and Compensation Committee vide the resolution passed at their committee meeting held on October 12, 2009.

Details of the remuneration of Mr Shekhar Bajaj:

(a.) Salary: Rs.5,00,000/- (Rupees Five lacs only) per month in the Scale of Rs.5,00,000/- - 50,000/-

- 10,00,000/-. Accelerated increments may be given by the Board of Directors at their absolute discretion.

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(b.) Commission: Commission at the rate of 2% (two per cent) of the net profits of our Company for each financial year, payable after adoption of the annual accounts for that financial year by shareholders.

(c.) Perquisites: Perquisites are allowed in addition to Salary and Commission. The perquisites are

classified into following three Categories:

Category À' Housing I The expenditure by our Company on hiring accommodation and providing furniture for the Managing Director will be subject to the following ceiling:- 60% of the salary, over and above 10% payable by the Managing Director. Housing II In case the accommodation is owned by our Company, then, 10% of the Salary of the Managing Director shall be deducted by our Company. Housing III In case no accommodation is provided by our Company, the Managing Director shall be entitled to house rent allowance subject to the ceiling laid down in Housing I. The expenditure incurred by our Company on gas, electricity, water and furnishings shall be valued as per the Income-tax Rules, 1962. This, however, shall be subject to a ceiling of 10% of the Salary of the Managing Director. Medical Reimbursement: Reimbursement of expenses actually incurred for self and family subject to a ceiling of one month's salary in a year or three months' salary over a period of three years. Leave Travel Concession: Leave travel concession for self and family once in a year incurred in accordance with the rules specified by our Company. Personal Accident Insurance: Personal Accident Insurance policy in accordance with the scheme applicable to senior employees of our Company.

Category ‘B’ Provident Fund and Superannuation Fund: The contribution towards Provident Fund and Pension / Superannuation Fund as per the rules of our Company, will not be included in the computation of the ceiling on perquisites to the extent these either singly or put together are not taxable under the Income-tax Act, 1961 (at present, this is limited to 27% of the salary under the Income-tax Act). Gratuity: Gratuity as per the rules of our Company.

Category `C' Car and Telephone: Provision of car(s) for use for Company's business and telephone at residence will not be considered as perquisites. Personal long distance calls on telephone and use of car for private purpose shall be billed by our Company to the Managing Director.

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Other Terms: Entertainment Expenses: The Managing Director will be entitled to reimbursement of entertainment expenses incurred in the course of business of our Company. Leave: The Managing Director shall also be entitled to leave on full pay and allowances as per the rules of our Company.

2. Mr Anant Bajaj, Executive Director:

Pursuant to a resolution passed by the shareholders of our Company at their AGM held on July 27, 2006, Mr. Anant Bajaj was appointed as the executive director, in the wholetime employment of our Company, for a period of five years with effect from February 1, 2006 on an aggregate remuneration up to a limit of Rs. 7,20,000/- (Rupees seven lac and twenty thousand only), exclusive of all perquisites, bonuses and allowances, and irrespective of the adequacy of profits. However, vide a resolution dated July 24, 2008 passed by the Board of Directors of our Company there has been increase in remuneration of Shri Anant Bajaj, Executive Director of our Company, as approved and recommended by the Remuneration and Compensation Committee vide the resolution passed at their committee meeting held on July 24, 2008 .

Details of the increase in Remuneration of Mr Anant Bajaj:

(a.) Salary: Rs.1,30,000/- per month in the scale of Rs.1,00,000/-, Rs.15,000/- or Rs.2,50,000/-. The

Board may at its discretion give accelerated increments / increases from time to time. (b.) House Rent Allowance : Rs.25,000/- per month; (c.) Additional Allowance : Rs.60,000/- per month; (d.) Leave Travel Allowance : Rs.1,00,000/- per annum;

All other terms and conditions of his appointment and remuneration including perquisites and benefits, existing and applicable, which remain unchanged, are as under:

a. Commission: Payable at 1% of the net profits of our Company. The Commission shall be

payable on adoption of annual accounts by the shareholders; b. Medical Expenses : For self and family upto a limit of Rs.50,000/- per annum; c. Telephone: Expenses on usage of telephone at residence at actuals; d. Mobile Phone : Reimbursement at actuals; e. Car: Provision of Company’s car for use of Company’s business with reimbursement of

maintenance and driver salary as per the rules of our Company; f. Contribution to Provident Fund and Superannuation Fund, Gratuity, Leave and

encashment of leave and other perquisites and emoluments: As per the rules of our Company; g. Entertainment Expenses: Reimbursement of entertainment expenses incurred in the course of

business of our Company. 3. Mr R Ramakrishnan, Executive Director: Pursuant to a resolution passed by the shareholders

of our Company at their AGM held on July 26, 2007, Mr R Ramakrishnan was appointed as the executive director, in the wholetime employment of our Company, for a period of five years with effect from October 26, 2006 on an aggregate remuneration of Rs 18,00,000/- (Rupees 18 lakh

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only), exclusive of all perquisites, bonuses and allowances, and irrespective of the adequacy of profits. However, vide a resolution dated May 28, 2009 passed by the Board of Directors of our Company there has been increase in remuneration of Mr R Ramakrishnan, Executive Director of our Company, with effect from July 01, 2009 as approved by the shareholders of our Company at their AGM held on July 30, 2009.

Details of increase in remuneration of Mr R Ramakrishnan:

(a.) Remuneration:

Basic pay per month: Rs.3,00,000/- per month in the scale of Rs.3,00,000/-, 25,000/-, or 5,00,000/-. The annual increments shall be given effective July, every year. Accelerated increments / increases may be given by the Board of Directors from time to time at their absolute discretion. Additional allowance per month: In the range of Rs.1,65,000/- per month to Rs.3,00,000/- per month.; as will be determined by the Remuneration and Compensation Committee and the Board from time to time;

(b.) Perquisites and other benefits:

i. Housing / House Rent Allowance (HRA):

Housing I - The expenditure by our Company on hiring furnished accommodation for the Executive Director will be subject to the following ceiling:- 60% of the salary, over and above 10% payable by the executive director. Housing II - In case the accommodation is owned by our Company, then, ten percent of the Salary of the Executive Director shall be deducted by our Company. Housing III - In case no accommodation is provided by our Company, the Executive Director shall be entitled to house rent allowance as per our Company’s policy, subject to the ceiling laid down in Housing I. At present, the HRA applicable is Rs.50,000/- per month. The expenditure incurred by our Company on gas, electricity, water and furnishings shall be valued as per the Income-tax Rules, 1962. This, however, shall be subject to a ceiling of 10% of the Salary of the Executive Director.

ii. Medical Reimbursement: For the Executive Director and his family in the range of

Rs.1,20,000/- per annum to Rs.2,00,000/- per annum; as will be determined by the Remuneration and Compensation Committee and the Board from time to time

iii. Leave Travel Concession: For the Executive Director and his family once in a year, in the range of Rs.3,00,000/- per annum to Rs.4,00,000/- per annum; as will be determined by the Remuneration and Compensation Committee and the Board from time to time

iv. Performance Incentive: As per our Company’s Rules and Policies and based on the evaluation of performance on an annual basis, in the range of Rs.40,00,000/- per annum to Rs.60,00,000/- per annum.; as will be determined by the Remuneration and Compensation Committee and the Board from time to time;

v. Club Fees: Fees of Clubs subject to a maximum of two clubs. This will not include admission and life membership fees.

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vi. Telephone and Mobile: Expenses towards usage of telephones installed at residence and mobile expenses will be reimbursed by our Company at actuals.

vii. Car: Provision of Company’s car for use of Company’s business with reimbursement of maintenance and driver salary as per the rules of our Company.

viii. Contribution to Funds: Contributions to Provident Fund, Superannuation Fund, and Gratuity Fund as per our Company’s Rules.

ix. Leave and Encashment of Leave: Leave and Encashment of leave not availed of by the Executive Director as per our Company's Rules.

x. Group Personal Accident Insurance: Premium as per our Company’s Rules.

xi. Entertainment Expenses: Executive Director will be entitled to reimbursement of entertainment expenses incurred in the course of business of our Company

xii. Other amenities and benefits: As per our Company’s Rules. Remuneration of non-executive directors The shareholders of our Company, at their meeting held on July 27, 2006, approved the payment of commission to Non-Executive Directors on net profits, subject to a ceiling of 1% of the net profits of our Company, computed in the manner provided in Section 309(5) of the Companies Act, 1956 for a period of five financial years commencing from 1st April, 2006. In terms of this approval, the actual amount of commission payable to Non-Executive Directors is decided by the Board of Directors based on the attendance at Board Meetings. The Non-Executive Directors are paid sitting fees at the rate of Rs.20,000, per meeting attended of the Board, Remuneration & Compensation Committee or the Audit Committee. They are also paid commission at the rate of Rs.40,000 per meeting of Board of Directors attended. Interest of Directors of our Company All the Directors of our Company, including our independent directors, may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them under our Articles of Association. All the non-executive Directors of our Company are entitled to sitting fees for every meeting of the Board or a committee thereof. The managing director and executive directors of our Company are interested to the extent of remuneration paid for services rendered as an officer or employee of our Company. All the Directors of our Company, including independent directors, may also be deemed to be interested to the extent of Equity Shares, if any, held by them or by companies, firms and trusts in which they are interested as directors, partners, members or trustees and also to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. All our Directors may be deemed to be interested in the contracts, agreements/arrangements entered into or to be entered into by our Company with any company in which they hold directorships or any partnership firm in which they are partners as declared in their respective declarations. Except as otherwise stated in this Preliminary Placement Document, our Company has not entered into any contract, agreements or arrangements during the preceding two years from the date of this Preliminary Placement Document in which the Directors are interested directly or indirectly and no payments have been made to them in respect of the contracts, agreements or arrangements which are proposed to be made with them. Our Company’s Directors have not taken any loan from our Company.

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Corporate Governance Overview Our Company is committed to observing recommended corporate governance practices and continuously reviews various investor relationship measures with a view to enhancing stakeholders' value and regularly provides detailed information on various issues concerning its business and financial performance. Our Company is in compliance with the corporate governance regime in accordance with the guidelines imposed by the SEBI, the BSE, the NSE , the DSE and other regulatory authorities in India. We have complied with the requirements relating to corporate governance detailed in Clause 49 of the Equity Listing Agreement, particularly those relating to composition of the board of directors, constitution of committees. Our Company has adopted three tier corporate governance structure i.e i) strategic supervision by the Board of Directors comprising the Executive and Non-Executive Directors, (ii) executive management by the corporate management comprising of the Executive Directors, (iii) operational management by the strategic business unit heads. Committees of our Board A brief description of each of our committees is set forth below: Audit Committee Our Board of Directors has constituted an Audit Committee consisting of Mr. Vishnubhai Haribhakti, Mr. Ajit Gulabchand, Mr Ashok Kumar Jalan and Dr.(Mrs.) Indu Shahani. Mr. Vishnubhai Haribhakti is the Chairman of the Audit Committee. The Audit Committee complies with Clause 49 of the Listing Agreement with the Stock Exchanges as read with section 292A of the Companies Act. The role of the Audit Committee includes advising the management on the areas where internal audit can be improved. Our Company normally holds four to five Audit Committee meetings in each financial year to which our Auditors are invited to be present. Mr Mangesh Patil, the Company Secretary of our Company acts as the secretary of the Audit Committee. Remuneration & Compensation Committee Our Board of Directors has constituted a Remuneration Committee in compliance with the Clause 49 of the Listing Agreement. Its members comprise Mr. Vishnubhai Haribhakti, Mr. Ajit Gulabchand, Mr Ashok Kumar Jalan and Dr.(Mrs.) Indu Shahani. Mr. Vishnubhai Haribhakti is the Chairman of the Remuneration Committee. Mr Mangesh Patil, the Company Secretary of our Company is the secretary of the Remuneration Committee. The Remuneration & Compensation Committee is vested with all the necessary powers and authority to deal with all the elements of remuneration package of the whole-time-Directors within the limits approved by the members of our Company. This includes details of fixed components and commission based on performance of our Company. The Remuneration & Compensation Committee also administers the stock option plan of our Company.

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Shareholders’ / Investors Grievances Committee Our Board of Directors has constituted a Shareholders’ / Investors Grievances Committee comprising of Mr. Vishnubhai Haribhakti and Dr. (Mrs.) Indu Shahani. Mr. Vishnubhai Haribhakti is the chairman of the Shareholder’s Grievance Committee. Mr Mangesh Patil, the Company Secretary and the Compliance Officer of our Company in compliance with the Clause 49 of the Listing Agreement entered into with the Stock Exchange, acts as the secretary of the Shareholders’ / Investors Grievances Committee. This Shareholders’ / Investors Grievances Committee's mandate requires it to look into investors' grievances relating to matters such as the transfer of Equity Shares, non-receipt of annual reports and non-receipt of dividends, and also reviews any cases filed by aggrieved investors before the courts or other forums. During the period from April 1, 2009 to November 27, 2009, our Company received 13 complaints from the shareholders. As on November 27, 2009 there are no unresolved shareholders’ complaints. The secretarial department endeavours to resolve the shareholders’ complaints within 2/3 working days’ time. Finance Committee Our Board of Directors has constituted a Finance Committee comprising of Mr. Shekhar Bajaj, Mr. Anant Bajaj and Mr. R. Ramakrishnan. Mr. Shekhar Bajaj is the chairman of the Finance Committee. The Finance Committee considers and approves the proposals relating to (i) borrowings- secured and/or unsecured for short term or long term; (ii) availing of any bill discounting and/or any other financial facilities from any other bank(s) / financial institution(s), etc. (iii) opening of bank accounts; and (iv) delegating authority to the officers of our Company for operation of the various bank accounts with the power to borrow a sum not exceeding Rs.200 crore Secured / Unsecured between any two Board Meetings of the Board of Directors and is empowered (a) to offer such securities as it may consider necessary in respect of the secured borrowings; and (b) to negotiate, finalise and execute under the Common Seal of our Company the document(s) necessary for availing any loan / facility granted by any Bank(s) / financial institution(s) and do all such things that may be necessary for the purposes of giving effect to the matters delegated. Code for prevention of insider trading Our Company has adopted a code of conduct, Bajaj Electricals Limited - Share Dealing Code (“Insider Trading Code”) for the prevention of insider trading in its Equity Shares, in compliance with the guidelines imposed by the SEBI in this regard. The Insider Trading Code, inter alia, prohibits the purchase and sale of Equity Shares of our Company by the Directors and designated employees while in possession of unpublished price sensitive information in relation to our Company. Additionally, our Company makes disclosures of transactions covered by the Insider Trading Code to the Stock Exchanges on which its Equity Shares are listed. Code of business conduct and ethics Our Company has also adopted the “Bajaj Electricals Limited Code of Business Conduct and Ethics”, which serves a guide to the senior management personnel and the Directors, on the standards of values, ethics and business principles. The adoption of such corporate practices ensures accountability of the person’s in-charge of our Company on one hand and brings benefits to investors, customers, suppliers, creditors, employees and the society at large on the other.

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Organisational Structure

KEY MANAGEMENT Profiles of Key Managerial Personnel (other than Directors of our Company) Mr. Lalit K. Mehta, aged 60 years is the Executive President- Engineering & Project Business Unit. Mr. Lalit K. Mehta holds a bachelors degree in electrical engineering from Birla Institute of Technology and Science, Pilani, Rajasthan in 1972. Mr. Lalit K. Mehta has over 37 years of experience and has been associated with our Company for the last 35 years. Mr. Lalit K. Mehta is responsible for planning, organization, co-ordination and control of the engineering and project business of our Company, including the complete management of Ranjangaon factory. Mr. P. S. Tandon, aged 54 years is the Executive President- Appliances Business Unit. Mr. P. S. Tandon holds a bachelors degree in economics from the Mumbai University. Mr. P. S. Tandon has over 30 years of experience and has been associated with our Company for the last 26 years. Mr. P. S. Tandon is responsible for planning, organization, co-ordination and control of the appliances business of our Company. Mr. C. G. S. Mani, aged 53 years is the President- Lighting Business Unit. Mr. C. G. S. Mani has over 32 years of experience and has been associated with our Company for the last 16 years. Mr. C. G. S. Mani is responsible for planning, organization, co-ordination and control of the lighting business of our Company. Mr. Radhakrishna Adhyanthaya S., aged 56 years is the President and Head - Fans Business Unit. Mr. Mr. Radhakrishna Adhyanthaya S. holds a masters degree in arts along with a post graduate diploma in business management. He has over 29 years of experience and has been associated with our Company for around 20 years. Mr. Radhakrishna, as a strategic business unit head, is responsible for planning, organization, co-ordination and control of the fans and pumps business of our Company. He is also responsible for the canteen stores department, (CSD), businesses of our Company.

Mr. Shekhar Bajaj Chairman & Managing Director

Mr. R. Ramakrishnan Executive Director

Mr. C.G.S. Mani

President Lighting

SBU

Mr. P.S. Tandon

Executive President Appliances

SBU

Mr. Gulshan Aghi

Executive Vice President

Luminaires SBU

Mr. A.S. Radhakrishna President and

Head Fans SBU

Mr. Lalit K Mehta

Executive President

E & P SBU

Mr. Pravin P. Jathar Executive

Vice President and Chief Financial Officer

Mr. R. Ramesh Vice PresidentHuman Resource

Mr. Anant Bajaj Executive Director

Mr. Vivek Sharma

Executive Vice President

Morphy Richards

Mr. Pratap Gharge

Vice President and CIO

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Mr. Pravin P Jathar, aged 50 years, is the Executive Vice President and Chief Financial Officer. Mr. Pravin P. Jathar holds a bachelors degree in commerce and is a qualified chartered accountant. Mr. Pravin P. Jathar has over 25 years of experience and has been associated with our Company for the last 7 year. Mr. Pravin P. Jathar is responsible for planning, organization, co-ordination and control of all financial and accounting matters of our Company. Mr. Gulshan Aghi, aged 49 years, is the Executive Vice President & Head – Luminaries. Mr. Gulshan Aghi is a B.Tech (Electrical) and also holds DBM (Marketing). Mr. Gulshan Aghi has been associated with our Company for the last 17 years and is responsible for planning, organization, co-ordination and control of the Luminaires business of our Company. Mr. Vivek Sharma, aged 48 years, is the Executive Vice President & Head (Morphy Richards). Mr. Vivek Sharma is a honours graduate in physics and an MBA (Marketing). Mr. Vivek Sharma has been associated with our Company for more than 6 years and is responsible for planning, organization, co-ordination and control of the Morphy Richards Appliances business of our Company. Mr. Pratap Gharge, aged 49 years, is the Vice President & Chief Information Officer. Mr. Pratap Gharge is a bachelors in Chemistry and DCM (Computer). Mr. Pratap Gharge has been associated with our Company for the last 24 years and is responsible for planning, organization, co-ordination and control of the Information Technology related work of our Company. Mr. R. Ramesh, is the Vice President – Human Resources & Administration. Mr. R. Ramesh is a Chemistry graduate withMLW and LLB. Mr. R. Ramesh has over 20 years of experience in various functions of human resources. Mr. R. Ramesh has been associated with our Company for the last 1 ½ years and is responsible for planning, organization, co-ordination and control of the Human Resources & Administration related work of our Company. Mr. Mangesh Patil, aged 44 years, is the Company Secretary and Head Legal of our Company. Mr. Mangesh Patil holds a Masters degree in commerce, a Diploma in financial management and a Masters degree in financial management. He also has completed his LL.B. from Government Law College, Mumbai and his LL.M. from the University of Mumbai. He is also a fellow member of the Institute of Company Secretary of India. Mr. Mangesh Patil has over 20 years of experience in handling legal and secretarial matters and has been associated with our Company since October 2003. He is responsible for handling our Company’s secretarial and legal functions. Shareholding Pattern of Key Managerial Personnel As on November 27, 2009, the details of the equity shares held by the aforementioned Key Managerial Personnel are as follows: Sr. No. Name of the Key Managerial Personal No. of Equity Shares 1. Gulshan Aghi 169 2. Lalit K. Mehta 4,500 3. C. G. S. Mani 3,500 4. P.S. Tandon 3,850 5. Pratap Gharge 2,400 6. Pravin P. Jathar 657 7. Mr. Radhakrishna Adhyanthaya S. 4,000 8. Vivek Sharma 2,400 9. Mr. Mangesh Patil 573

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PRINCIPAL SHAREHOLDERS

Capital structure As of the date of this Offering, our Company’s capital structure is as indicated in the following table: Particulars Amount

(Rs.) Authorised Share Capital 2,00,00,000 equity shares of Rs. 10/- each 2,00,000,000

Issued, Subscribed and Paid-up Share Capital before this Offering 1,74,40,810 equity shares of Rs. 10/- each 174,408,100 Shareholding Pattern The shareholding pattern of our Company as on November 27, 2009 is as follows:

Total shareholding as a percentage of

total no. of shares

Shares pledged or otherwise

encumbered

Category of shareholder No. of shareho

lders

Total No. of shares

No. of shares held in de

materialized form

As a percentage of (A+B)

As a percentage of (A+B+

C)

Number of

shares

As a percenta

ge of (A+B+C)

(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX)=(VIII)/(IV)*

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(A) Shareholding of Promoter and Promoter Group

(1) Indian

(a) Individuals/ Hindu Undivided Family 39 52,00,771 41,94,687 29.82 29.82 0

(b) Central Government/ State Government(s) 0 0 0 0.00 0.00

(c) Bodies Corporate 10 76,14,334 74,94,334 43.66 43.66 2,50,000 3.28 (d) Financial Institutions/Banks 0 0 0 0.00 0.00 (e) Any Other (specify) 0 0 0 0.00 0.00 Sub-Total (A) (1) 49 1,28,15,105 1,16,89,021 73.48 73.48 2,50,000 1.95

(2) Foreign

(a) Individuals (Non-Resident Individuals/Foreign individuals) 0 0 0 0.00 0.00

(b) Bodies Corporate 0 0 0 0.00 0.00 (c) Institutions 0 0 0 0.00 0.00 (d) Any Other (specify) 0 0 0 0.00 0.00 Sub-Total (A) (2) 0 0 0 0.00 0.00 0 0

Total Shareholding of Promoter and Promoter Group (A) = (A)(1)+(A)(2)

49 1,28,15,105 1,16,89,021 73.48 73.48 2,50,000 1.95

(B) Public Shareholding N.A. N.A. (1) Institutions N.A. N.A. (a) Mutual Funds /UTI 11 15,15,414 15,14,114 8.69 8.69

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Total shareholding as a percentage of

total no. of shares

Shares pledged or otherwise

encumbered

Category of shareholder No. of shareho

lders

Total No. of shares

No. of shares held in de

materialized form

As a percentage of (A+B)

As a percentage of (A+B+

C)

Number of

shares

As a percenta

ge of (A+B+C)

(I) (II) (III) (IV) (V) (VI) (VII) (VIII) (IX)=(VIII)/(IV)*

100 (b) Financial Institutions/Banks 29 3,22,976 3,17,383 1.85 1.85

(c) Central Government/ State Government(s) 0 0 0 0.00 0.00

(d) Venture Capital Funds 0 0 0 0.00 0.00 (e) Insurance Companies 1 5 5 0.00 0.00 (f) Foreign Institutional Investors 6 1,58,681 1,27,481 0.91 0.91

(g) Foreign Venture Capital Investors 0 0 0 0.00 0.00

(h) Any Other (specify) 0 0 0 0.00 0.00 Sub-Total (B) (1) 47 19,97,076 19,58,983 11.45 11.45

(2) Non-Institutions N.A. N.A. (a) Bodies Corporate 282 2,59,603 2,56,009 1.49 1.49 (b) Individuals

i. Individual shareholders holding nominal share capital up to Rs. 1 lakh 9,896 17,24,213 8,34,205 9.89 9.89

ii. Individual shareholders holding nominal share capital in excess of Rs. 1 lakh 21 4,82,229 2,01,369 2.76 2.76

(c) Any Other (specify) i. Clearing Members 112 19,436 19,436 0.11 0.11 ii. Non Resident Indians 119 35,843 34,643 0.21 0.21

iii. Non Resident (Non Repatriables) 45 39,521 30,701 0.23 0.23

iv.Trusts 5 67,784 67,784 0.39 0.39 Sub-Total (B) (2) 10,480 26,28,629 14,44,147 15.07 15.07 Total Public Shareholding (B)

= (B)(1)+(B)(2) 10,527 46,25,705 34,03,130 26.52 26.52

0 0 Total (A) + (B) 10,576 1,74,40,810 1,50,92,151 100.00 100.00

(C) Shares held by Custodians and against which Depository Receipts have been issued

0 0 0 0.00 0.00

0 0 GRAND TOTAL (A)+(B)+(C) 10,576 1,74,40,810 1,50,92,151 100.00 100.00 2,50,000 1.43 Persons and Entities owing more than 1% (one percent) of our Equity Shares: Each person or entity known to our Company to beneficially own more than 1% (one percent) of our outstanding Equity Shares is listed below. Each shareholder listed below is both the holder on record and the beneficial owner with the sole power to vote and invest in our Equity Shares listed next to his name below. The following table sets out the persons and entities who beneficially own more than 1% (one percent) of our Equity Shares as at November 27, 2009:

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S. No. Name Number of

Shares Percentage (%)

Promoter & Promoter Group 1. Jamnalal Sons Private Limited 41,65,566 23.88 2. Bajaj Holdings & Investment Limited 25,06,768 14.37 3. Mr.Rahul Kumar Bajaj 15,25,036 8.744. Mr.Shekhar Bajaj 9,08,017 5.215. Mr.Madhur Bajaj 6,89,567 3.956. Mr.Niraj Bajaj 6,82,047 3.917. Hind Musafir Agency Limited 4,00,000 2.29 8. Mr.Anant Bajaj 3,57,632 2.059. Bachhraj & Co. Private Limited 2,28,000 1.31 10. Bajaj International Private Limited 2,00,000 1.15 11. Mrs.Kumud Bajaj 1,96,640 1.13 12. Ms. Sunaina Kejriwal 1,93,065 1.11 13. . Mr.Kevin D’sa 1,92,380 1.10

Non Promoter & Promoter Group 1. Reliance Capital Trustee Co. Limited A/c. Reliance

Diversified Power Sector Fund 9,04,630 5.19

2. Life Insurance Corporation of India 2,51,413 1.443. DSP Blackrock India T.I.G.E.R. Fund 1,78,132 1.02

Employee Stock Option Scheme

Pursuant to a resolution passed by the Board of Directors dated May 29, 2007, our Company has proposed to issue stock options to the employees of our Company, subject to the approval from the shareholders in the AGM. Our shareholders vide a resolution dated July 26, 2007 have approved the draft of the Employee Stock Option Scheme (“ESOP Scheme”) at their AGM, empowering the Issuer’s Remuneration and Compensation Committee and Board of Directors to create, offer, issue and allot at any time to or to the benefit of such person(s) who are in permanent employment of the Company, including any Director of the Company, whether whole time or otherwise, options exercisable into not more than 5% of the Company’s then paid up share capital that is 4,32,144 equity shares under one or more ESOP Scheme. The objective of ESOP Scheme is to reward and motivate employees, attract and retain the best talent, to encourage employee commitment and performance, to create a sense of ownership of and belonging to the organisation and to reward human resources for its meritorious service and achievement.

Under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,1999, the Remuneration & Compensation Committee of our Company grants Stock Options, basically under two plans namely Growth and Loyalty.

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Details of the ESOP Scheme are as follows:

* 6,20,000 Growth Options granted at various market prices in three tranches were cancelled and in their place 4,66,385 Growth Options have been granted at Rs.215.55 per option. ** Loyalty Options have been granted as one time options at Rs.150 per option being 50% of the market price at which original Growth Options were granted.

Sr. No.

Particulars Growth Options * Loyalty Options **

1. Total number of options granted originally

4,66,385 2,14,900

2. Total number of options lapsed from above

5,797 28,600

3. Total number of options in force from above 4,60,588 1,86,300 4. Total number of equity shares allotted as a

result of exercise of options

Nil 1,55,050

5. Exercise Price

Rs. 215.55 Rs.150.00

6. Pricing formula Prevailing market price in the date prior to the date of the Compensation committee

50% discount to the exercise price of the growth options

7. Total number of options vested

Nil 1,93,600

8. Total number of options exercised

Nil 1,55,050

9. Variation in the terms of options

N.A. N.A.

10. Total number of options outstanding 4,60,588 31,250 11. Vesting Schedule 30% as on May 01,

2010; 30% as on October 25, 2010; 40% as on October 25, 2011

100% as on October 25, 2008

12. Lock in Shares arising on excercise of options are not subject to any lock in period after excercise

Shares arising on exercise are not subject to any lock in period after exercise.

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REGULATIONS AND POLICIES

The following description is a summary of specific laws and regulations in India, which are applicable to our Company. The information detailed in this chapter has been obtained from publications available in the public domain. The regulations set out below may not be exhaustive, and are only intended to provide general information to the investors and are neither designed nor intended to substitute for professional legal advice. A. LABOUR RELATED STATUTES 1. The Factories Act, 1948

The Factories Act, 1948 (“Factories Act”) seeks to regulate labour employed in factories and makes provisions for the safety, health and welfare of the workers. The Factories Act defines a ‘factory’ to cover any premises, which employs ten or more workers and in which manufacturing processes are carried on with the aid of power, and to cover any premises, where there are at least 20 workers who may or may not be engaged in an electrically aided manufacturing process. Each State Government has set out rules in respect of the prior submission of plans and its approval for the establishment of factories and registration and licensing of factories.

2. Employees State Insurance Act, 1948

The Employees State Insurance Act, 1948 (the “ESI Act”) provides for certain benefits to employees in case of sickness, maternity and employment injury. All employees in establishments covered by the ESI Act are required to be insured, with an obligation imposed on the employer to make certain monetary contributions in relation to employee welfare, and are also required to register themselves under the ESI Act and maintain prescribed records and registers.

3. Employees Provident Fund and Miscellaneous Provisions Act, 1952

The Employees Provident Fund and Miscellaneous Provisions Act, 1952 provides for the institution of compulsory provident funds, pension funds and deposit linked insurance funds for the benefit of employees in factories and other establishments. A liability is placed both on the employer and the employee to make certain contributions to the funds mentioned above.

4. The Maternity Benefit Act, 1961

The purpose of the Maternity Benefit Act, 1961, is to regulate the employment of pregnant women and to ensure that they get paid leave for a specified period during and after their pregnancy. It provides, inter-alia, for payment of maternity benefits, medical bonus and enacts prohibitions on dismissal and reduction of wages paid to pregnant women.

5. The Payment of Bonus Act, 1965

Under the Payment of Bonus Act, 1965, a minimum prescribed bonus has to be paid to eligible employees. The minimum bonus to be paid to each employee must be paid irrespective of the existence of any allocable surplus. If the allocable surplus exceeds minimum bonus payable, then the employer must pay bonus proportionate to the salary or wage earned during that period, subject to a maximum of twenty percent of such salary or wage. ‘Allocable surplus’ is defined as a specified percentage of the available surplus in the financial year, before making arrangements for the payment of dividend out of profit of our Company.

6. Payment of Gratuity Act, 1972

Under the Payment of Gratuity Act, 1972, as amended (the “Gratuity Act”), an eligible employee

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who has been in continuous service for a prescribed period is eligible for gratuity upon his retirement or resignation, superannuation or death or disablement due to accident or disease, subject to a prescribed maximum amount. The entitlement to gratuity in the event of death or disablement will not be contingent upon an employee having completed the prescribed years of continuous service.

7. Contract Labour (Regulation and Abolition) Act, 1970:

Pursuant to the Contract Labour (Regulation and Abolition) Act, 1970, contractors and principal employers as defined therein, are subject to certain licensing and registration requirenments.

8. Workmen’s Compensation Act, 1923

The Workmen’s Compensation Act, 1923 makes it obligatory to an employer to grant certain reliefs to an injured workman and/or the dependents of a deceased workman in relation to any injury suffered out of and during the course of employment.

B. ENVIRONMENTAL RELATED STATUTES

Manufacturing units must ensure compliance with environmental legislation, such as the Water (Prevention and Control of Pollution) Act 1974, (“Water Act”), the Air (Prevention and Control of Pollution) Act, 1981, (“Air Act”), and the Environment Protection Act, 1986, (“EPA”). The basic purpose of these statutes is to control, abate and prevent pollution. In order to achieve these objectives, Pollution Control Boards (“PCBs”), which are vested with diverse powers to deal with water and air pollution, have been set up in each state. The PCBs are responsible for setting the standards for maintenance of clean air and water, directing the installation of pollution controlling devices in industries and undertaking inspections to ensure that industries are functioning in compliance with prescribed standards. These authorities also have the power of search, seizure and investigation. All industries are required to obtain and regularly renew consent orders from the PCBs, which are indicative of the fact that the industry in question is functioning in compliance with applicable pollution control norms.

The Hazardous Wastes (Management and Handling) Rules, 1989

The Hazardous Wastes (Management and Handling) Rules, 1989 stipulates the manner in which the occupier and the operator of a facility that treats hazardous wastes, properly collects, treats, stores or disposes of hazardous wastes. When an accident occurs in a hazardous site or during transportation of hazardous wastes, then the relevant State PCB has to be immediately alerted. If, due to improper handling of hazardous waste, any damage is caused to the environment, the occupier or the operator of the facility and are liable to pay certain remedial expenses and/or penalties.

C. FOREIGN INVESTMENT REGULATIONS

The Foreign Exchange Management Act, 1999 and regulations, notifications and circulars issued thereunder.

Foreign investment in India is governed primarily by the provisions of the Foreign Exchange Management Act, 1999 (“FEMA”), which relates to regulation primarily by the RBI and the rules, regulations, circulars and notifications issued thereunder, and the policy prescribed by the Department of Industrial Policy and Promotion (“DIPP”), Government of India which is regulated by the Foreign Investment Promotion Board (“FIPB”). The RBI, in exercise of its power under the FEMA, has notified the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (“FEMA Regulations”) to prohibit, restrict or regulate, transfer by or issue security to a person

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resident outside India. As laid down by the FEMA Regulations, no prior consent and approval is required from the RBI, for Foreign Direct Investment (“FDI”) under the “automatic route” within the specified sectoral caps. In respect of investment in excess of the specified sectoral limits under the automatic route, approval may be required from the FIPB and/or the RBI.

D. FOREIGN TRADE

The Foreign Trade (Development & Regulation) Act, 1992

The Foreign Trade (Development & Regulation) Act, 1992, provides for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from, India.

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ISSUE PROCEDURE Below is a summary of the procedure relating to the application, payment, Allocation and Allotment of Equity Shares. The procedure followed in the Issue may differ from the one mentioned below and the investors are assumed to have appraised themselves of the same from our Company or the Sole Global Co-ordinator and Book Running Lead Manager. The investors are advised to inform themselves of any restrictions or limitations that may be applicable to them and are required to consult their respective advisers in this regard. Investors that apply in this Issue will be required to confirm and will be deemed to have represented to our Company, the Sole Global Co-ordinator and Book Running Lead Manager and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of our Company. Our Company and the Sole Global Co-ordinator and Book Running Lead Manager and their respective directors, officers, agents, affiliates and representatives accept no responsibility or liability for advising any investor on whether such investor is eligible to acquire Equity Shares of our Company. Also see “Selling Restrictions” and “Plan of Distribution” respectively of this Preliminary Placement Document. Qualified Institutions Placements The Issue is being made in India in reliance upon Chapter VIII of the SEBI Regulations through the mechanism of Qualified Institutions Placements (“QIP”) wherein a listed company may issue and allot equity shares, non-convertible debt instruments along with warrants and convertible securities other than warrants to Qualified Institutional Buyers (“QIBs”) as defined in Regulation 2 (1)(zd) of the SEBI Regulations on a private placement basis, provided that: • A special resolution approving the QIP has been passed by its shareholders • Equity shares of the same class of such company are listed on a stock exchange in India that has

nationwide trading terminals for a period of at least one year prior to the date of issuance of notice to its shareholders for convening the meeting to pass the special resolution; and

Provided that where an issuer, being a transferee company in a scheme of merger, de-merger, amalgamation or arrangement sanctioned by a High Court under sections 391 to 394 of the Companies Act, 1956, makes qualified institutions placement, the period for which the equity shares of the same class of the transferor company were listed on a stock exchange having nation wide trading terminals shall also be considered for the purpose of computation of the period of one year;

• Such company complies with the minimum public shareholding requirements set out in the listing

agreement with the stock exchanges referred to above. Additionally, there is a minimum pricing requirement under the SEBI Regulations. The issue price of the equity shares shall not be less than the average of the weekly high and low of the closing prices of the related shares quoted on the stock exchange during the two weeks preceding the relevant date. The “relevant date” referred to above means the date of the meeting in which the Board or the committee of directors duly authorized by the Board of our Company decides to open the Issue, and “stock exchange” means any of the recognized stock exchanges in India in which the Equity Shares of the issuer of the same class are listed and on which the highest trading volume in such shares has been recorded during the two weeks immediately preceding the relevant date. Equity shares must be allotted within 12 months from the date of the shareholders resolution approving the QIP. The equity shares issued pursuant to the QIP must be issued on the basis of a placement document that shall contain all material information including the information specified in Schedule XVIII of the SEBI Regulations. The placement document is a private document provided to not more than 49 investors through serially numbered copies and is required to be placed on the website of the concerned stock

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exchange and of the issuer with a disclaimer to the effect that it is in connection with an issue to QIBs and no offer is being made to the public or to any other category of investors. A copy of the placement document is required to be filed with the SEBI for record purposes within 30 days of the allotment of the securities. The aggregate of the proposed QIP and all previous QIPs made in the same financial year shall not exceed five times the net worth of the issuer as per the audited balance sheet of the previous financial year. The issuer shall furnish a copy of the placement document to each stock exchange on which its equity shares are listed. Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date of allotment except on a recognized stock exchange in India. Our Company has applied for the in-principle approval of the Stock Exchanges under Clause 24 (a) of their respective Listing Agreements for listing of the Equity Shares on the Stock Exchanges. Our Company has also filed a copy of the Preliminary Placement Document with the Stock Exchanges. Issue Procedure 1. Our Company and the Sole Global Co-ordinator and Book Running Lead Manager shall identify

Eligible Investors and circulate serially numbered copies of the Preliminary Placement Document and the Application Form, either in electronic form or physical form, to not more than 49 QIBs.

2. The list of 49 QIBs to whom the Application Form is delivered shall be determined by the Sole

Global Co-ordinator and Book Running Lead Manager and our Company. Unless a serially numbered Preliminary Placement Document along with the Application Form is addressed to a particular QIB, no invitation to subscribe shall be deemed to have been made to such QIB. Even if such documentation were to come into the possession of any person other than the intended recipient, no offer or invitation to offer shall be deemed to have been made to such person.

3. Our Company shall intimate the Issue Opening Date to the Stock Exchanges.

4. QIBs may submit the Application Form (including revisions, if any) during the Issue Period to the

Sole Global Co-ordinator and Book Running Lead Manager. 5. QIBs will be required to indicate the following in the Application Form:

a. Name of the QIB to whom Equity Shares are to be Allotted; b. Number of Equity Shares applied for; c. Price at which they are agreeable to apply for the Equity Shares, provided that such price

will be at or above the minimum price calculated in accordance with Regulation 85(1) of the SEBI Regulations which shall be the Floor Price; and

d. The details of the Depositary Participant account(s) to which the Equity Shares should be credited.

Note: Each sub-account of an FII other than a sub-account which is a foreign corporate or foreign individual will be considered as an individual QIB and separate application forms would be required from each such sub-account for submitting Application Form(s). Each scheme/fund of a mutual fund will be required to submit a separate Application Form.

6. FIIs or sub-account of FII are required to indicate the SEBI and FII / Sub account registration number in the application form.

7. Once the duly filled Application Form is submitted by the QIB, such Application Form shall

constitute an irrevocable offer and cannot be withdrawn after the Issue Closing Date. The Issue

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Closing Date shall be notified to Stock Exchanges and QIBs will be deemed to have been given notice of the same.

8. Upon the receipt of the Application Form, our Company shall decide the Issue Price and the

number of Equity Shares to be issued which shall be done in consultation with the Sole Global Co-ordinator and Book Running Lead Manager. The Issue Price shall be at or above the Floor Price. On determination of the Issue Price, the Book Running Lead Manager will send the CAN to the QIBs who have been Allocated Equity Shares. The dispatch of CAN shall be deemed a valid, binding and irrevocable contract for the QIBs to pay the entire Issue Price for all the Equity Shares Allocated to such QIB. The CAN shall contain details like the number of Equity Shares Allocated to the QIB and payment instructions including the details of the amounts payable by the QIB for Allotment of the Equity Shares in its name and the Pay-In Date as applicable to the respective QIB.

9. Pursuant to receiving the CAN, the QIBs would have to make the payment of the entire

application monies for the Equity Shares indicated in the CAN at the Issue Price, through electronic transfer of the application monies to the Escrow Bank Account of our Company by the Pay- In Date as specified in the CAN sent to the respective QIBs.

10. Upon receipt of the application monies from the QIBs, the Issuer shall issue and allot Equity

Shares as per the details in the CAN to the QIBs. Our Company shall not issue Equity Shares to more than 49 QIBs. Our Company will intimate to the Stock Exchanges the details of the Allotment.

11. After passing the Allotment resolution and prior to crediting the Equity Shares into the beneficial

accounts of the Eligible QIBs with the depository participants, our Company shall apply to the Stock Exchanges for in-principle approval for listing and trading of the Equity Shares.

12. After receipt of the in-principle listing approval from the Stock Exchanges, the Issuer shall credit

the Equity Shares into the beneficial accounts of the Eligible QIBs with the depository participants of the respective QIBs.

13. Our Company shall then apply for the final listing and trading permissions from the Stock

Exchanges. 14. The Equity Shares that have been credited to the Depository Participant accounts of the QIBs, as

mentioned above shall be eligible for trading on the Stock Exchanges only upon the receipt of final listing and trading approvals from the Stock Exchanges.

15. As per the applicable laws, the Stock Exchanges notify the final listing and trading permissions,

which are ordinarily available on their websites. Upon intimation of such approval our Company shall communicate the receipt of the final listing and trading permissions from the Stock Exchanges to the QIBs who have been Allotted Equity Shares.

16. Our Company and the Sole Global Co-ordinator and Book Running Lead Manager shall not be

responsible for any delay or non-receipt of the communication of the final listing and trading permissions from the Stock Exchanges or any loss arising from such delay or non-receipt. QIBs are advised to appraise themselves of the status of the receipt of the permissions from the Stock Exchanges or the Issuer.

Qualified Institutional Buyers Only QIBs as defined in Regulation 2 (1) (zd) of the SEBI Regulations and not otherwise excluded pursuant to Regulation 86 (1) (b) of the SEBI Regulations are eligible to invest. Currently the definition of QIB includes:

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• Public financial institutions as defined in Section 4A of the Companies Act; • Scheduled commercial banks; • Mutual funds registered with SEBI; • Foreign institutional investors registered with SEBI; • Sub-accounts of FIIs registered with SEBI, other than sub-accounts which are foreign

corporate or foreign individuals; • Multilateral and bilateral development financial institutions; • Venture capital funds registered with SEBI; • Foreign venture capital investors registered with SEBI; • State industrial development corporations; • Insurance companies registered with Insurance Regulatory and Development Authority; • Provident Funds with minimum corpus of Rs. 2,500 lakh; • Pension Funds with minimum corpus of Rs. 2,500 lakh; and • National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23,

2005 of Government of India published in the Gazette of India. • Insurance Funds set up by Armed forces such as Army group insurance fund.

FIIs are permitted to participate in this Offering through the portfolio investment scheme subject to compliance with all applicable laws and such that the shareholding of the FIIs does not exceed specified limits as prescribed under applicable laws in this regard. The issue of Equity Shares to a single FII should not exceed 10 percent of the post issue capital of our Company. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10 percent of the total issued capital of our Company. No Allotment shall be made pursuant to the Offering, either directly or indirectly, to any QIB being a Promoter or any person related to the Promoter(s). QIBs which have all or any of the following rights shall be deemed to be persons related to Promoter(s):

a) rights under a shareholders agreement or voting agreement entered into with the Promoters or

persons related to the Promoters; b) veto rights; or c) right to appoint any nominee director on the Board. Provided that a QIB who does not hold any Equity Shares in the Issuer and who has acquired the aforesaid rights in the capacity of a lender shall not be deemed to be a person related to Promoters. Our Company and the Sole Global Co-ordinator and Book Running Lead Manager are not liable for any amendments or modification or changes in applicable laws or regulations, which may occur after the date of this Preliminary Placement Document. QIBs are advised to make their independent investigations and satisfy themselves that they are eligible to apply. QIBs are advised to ensure that any single Application from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law or regulation or as specified in this Preliminary Placement Document. Further, QIBs are required to satisfy themselves that their Applications would not eventually result in triggering a tender offer under the Takeover Code and the QIB shall be solely responsible for compliance with tender offer and disclosure obligations under the Takeover Code, SEBI (Prohibition of Insider Trading) Regulations, 1992 and other applicable laws, rules, regulations, guidelines and circulars. A minimum of 10.00% of the Equity Shares in this Issue shall be Allotted to Mutual Funds. If no Mutual Fund is agreeable to take up the minimum portion as specified above, such minimum portion or part thereof may be Allotted to other QIBs. Note: Affiliates or associates of the Sole Global Co-ordinator and Book Running Lead Manager who are

QIBs may participate in the Issue in compliance with applicable laws.

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APPLICATION PROCESS Application Form QIBs are permitted to only use the serially numbered Application Forms supplied by the Sole Global Co-ordinator and Book Running Lead Manager in either electronic form or by physical delivery for the purpose of submitting an application (including revisions, if any) in terms of the Preliminary Placement Document and the Placement Document. By submitting an application (including revisions, if any) for Equity Shares through an Application Form, the QIB will be deemed to have made the following representations and warranties and the representations, warranties and agreements made under the chapter titled “Transfer Restrictions” of this Preliminary Placement Document:

1. The QIB confirms that it is a QIB in terms of Regulation 2 (1) (zd) of the SEBI Regulations and is eligible to participate in this Issue;

2. The QIB confirms that it is not a Promoter and is not a person related to the Promoters, either

directly or indirectly and its Application Form does not directly or indirectly represent the Promoter or promoter group of our Company

3. The QIB confirms that it has no rights under the shareholder agreement or voting agreement with

the Promoters or persons related to the Promoters, no veto rights or right to appoint any nominee director on the Board of the Issuer other than such rights acquired in the capacity of a lender (not holding any Equity Shares);

4. The QIB has no right to and shall not withdraw its application after the Issue Closing Date;

5. The QIB confirms that if Equity Shares are Allotted through this Issue, it shall not, for a period of

one (1) year from Allotment, sell such Equity Shares otherwise than on the floor of the Stock Exchanges;

6. The QIB confirms that the QIB is eligible to apply and hold Equity Shares so allotted and together

with any Equity Shares held by the QIB prior to the Issue. The QIB further confirms that the holding of the QIB, does not and shall not, exceed the level permissible as per any applicable regulations applicable to the QIB;

7. The QIB confirms that the Application Form would not eventually result in triggering a tender

offer under the Takeover Code;

8. The QIB confirms that to the best of its knowledge and belief together with other QIBs in the Issue that belong to the same group or are under common control, the Allotment to the QIB shall not exceed 50.00% of the Issue Size. For the purposes of this statement:

a. The expression “belongs to the same group” shall derive meaning from the concept of

“companies under the same group” as provided in sub-section (11) of Section 372 of the Companies Act; and

b. “Control” shall have the same meaning as is assigned to it by clause (c) of Regulation 2 of the Takeover Code.

9. The QIBs shall not undertake any trade in the Equity Shares credited to its Depository Participant account until such time that the final listing and trading approvals for the Equity Shares are issued by the Stock Exchanges.

The QIBs would also be sent a serially numbered Preliminary Placement Document either in electronic form or by physical delivery.

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QIBS WOULD NEED TO PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. QIBS MUST ENSURE THAT THE NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, SUB-ACCOUNTS OF A FII WOULD BE CONSIDERED AS AN INDEPENDENT QIB. IF SO REQUIRED BY THE SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING LEAD MANAGER, THE QIB APPLYING, ALONG WITH THE APPLICATION FORM, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO EVIDENCE THEIR STATUS AS A “QIB” AS DEFINED HEREINABOVE. IF SO REQUIRED BY THE SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING LEAD MANAGER, COLLECTION BANK(S) OR ANY STATUTORY OR REGULATORY AUTHORITY IN THIS REGARD, INCLUDING AFTER ISSUE CLOSURE, THE QIB SUBMITTING A BID AND/OR BEING ALLOTTED EQUITY SHARES IN THE ISSUE, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO FULFILL THE KNOW YOUR CUSTOMER (KYC) NORMS. Demographic details like address, bank account etc. will be obtained from the Depositories as per the Depository Participant account details given above. The submission of Application Form by the QIBs shall be deemed a valid, binding and irrevocable offer for the QIB to pay the entire Issue Price for its share of Allotment (as indicated by the CAN) and becomes a binding contract on the QIB, upon issuance of the CAN by our Company in favour of the QIB. By submitting the Application Form, the Eligible QIB will be deemed to have made the representations and warranties as specified in the section titled “Issue Procedure”, mentioned above and further that such Eligible QIB shall not undertake any trade in the Equity Shares credited to its depository participant account until such time that the final listing and trading approval for the Equity Shares is issued by the Stock Exchanges. Eligible QIBs are advised to instruct their Depository Participant to accept the Equity Shares that may be allotted to them pursuant to this Issue. Applications by MFs The Applications made by the asset management companies or custodian of MFs shall specifically state the names of the concerned schemes for which the Applications are made. Each scheme/fund of a mutual fund will have to submit separate Application Form. Each mutual fund will have to submit separate Application Forms for each of its participating schemes. Such applications will not be treated as multiple Applications provided that the Applications clearly indicate the scheme for which the Application has been made. However, for the purpose of calculating the number of allotters/applicants, various schemes of the same mutual fund will be considered as a single allotted/applicant. Demographic details like address, bank account etc. will be obtained from the Depositories as per the demat account details given above. As per the current regulations, the following restrictions are applicable for investments by MFs: No mutual fund scheme shall invest more than 10.00% of its net asset value in Equity Shares or equity related instruments of any company provided that the limit of 10.00% shall not be applicable for investments in index funds or sector or industry specific funds. No MF under all its schemes should own

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more than 10.00% of any company's paid-up capital carrying voting rights. The above information is given for the benefit of the Applicants. Our Company and the Sole Global Co-ordinator and Book Running Lead Manager, are not liable for any amendments or modification or changes in applicable laws or regulations, which may happen after the date of the Preliminary Placement Document. Application are advised to make their independent investigations and ensure that the number of Equity Shares Application for do not exceed the applicable limits under the applicable laws and regulations. Submission of Application Form All Application Forms shall be required to be duly completed with information including the name of the QIB, the price and the number of Equity Shares applied. The Application Form shall be submitted to the Sole Global Co-ordinator and Book Running Lead Manager either through electronic form or through physical delivery at either of the following address: Name: Edelweiss Capital Limited* Address: 14th Floor, Express Towers, Nariman Point, Mumbai 400 021, India Contact Person: Mr. Sumeet Lath / Mr. Viral Shah Email: [email protected] Tel: + 91 22 40863535 Fax: + 91 22 40863610 * SEBI registration of Edelweiss Capital Limited has expired and the application for renewal of certificate of registration was made by Edelweiss Capital Limited to SEBI on July 14, 2009 as required under Regulation 9(1) of SEBI (Merchant Bankers) Regulations, 1992. The approval of SEBI in this regard is awaited. The Sole Global Co-ordinator and Book Running Lead Manager shall not be required to provide any written acknowledgement of the same. PRICING AND ALLOCATION Build up of the book The QIBs shall submit their applications (including revisions, if any) through the Application Form within the Issue Period to the Sole Global Co-ordinator and Book Running Lead Manager. Price discovery and allocation Our Company, in consultation with the Sole Global Co-ordinator and Book Running Lead Manager, shall finalize the Issue Price for the Equity Shares which shall be at or above the Floor Price. After finalization of the Issue Price, our Company shall update this Preliminary Placement Document with the Issue Price details and file the same with the Stock Exchanges as the Placement Document. Method of Allocation Our Company shall determine the Allocation in consultation with the Sole Global Co-ordinator and Book Running Lead Manager on a discretionary basis and in compliance with Chapter VIII of the SEBI Regulations. Application Forms received from the QIBs at or above the Issue Price shall be grouped together to determine the total demand. The Allocation to all such QIBs will be made at the Issue Price. Allocation to Mutual Funds for up to a minimum of 10.00% of the Issue Size shall be undertaken subject to valid Applications being received at or above the Issue Price.

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THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING LEAD MANAGER IN RESPECT OF ALLOCATION SHALL BE FINAL AND BINDING ON ALL QIBs. QIBs MAY NOTE THAT ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE DISCRETION OF THE ISSUER IN CONSULTATION WITH THE SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING LEAD MANAGER GER AND QIBS MAY NOT RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID APPLICATION FORMS AT OR ABOVE THE ISSUE PRICE. NEITHER OUR COMPANY NOR THE SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING LEAD MANAGER ARE OBLIGED TO ASSIGN ANY REASONS FOR SUCH NON-ALLOCATION. All Application Forms duly completed along with payment and a copy of the PAN card or PAN allotment letter shall be submitted to the Sole Global Co-ordinator and Book Running Lead Manager. Number of Allottees The minimum number of allottees in the Issue shall not be less than:

(a) two, where the issue size is less than or equal to Rs. 25,000 lakh; and (b) five, where the issue size is greater than Rs. 25,000 lakh.

Provided that no single allottee shall be Allotted more than 50.00% of the aggregate amount of the Issue Size. Provided further that QIBs belonging to the same group or those who are under common control shall be deemed to be a single Allottee for the purpose of this clause. For details of what constitutes “same group” or “common control”, see “Application Process—Application Form” of this Preliminary Placement Document. The maximum number of Allottees of Equity Shares is not permitted to be greater than 49 Allottees. Further the Equity Shares will be allotted within 12 months from the date of the shareholders’ resolution approving the Issue. Confirmation of Allocation Note (CAN) Based on the Application Forms received, our Company and the Sole Global Co-ordinator and Book Running Lead Manager will, in their sole and absolute discretion, decide the list of QIBs to whom the serially numbered CAN shall be sent, pursuant to which the details of the Equity Shares allocated to them and the details of the amounts payable for Allotment of the same in their respective names shall be notified to such QIBs. Additionally, the CAN would include details of the bank account(s) for transfer of funds if done electronically, address where the application money needs to be sent, Pay-In Date as well as the probable designated date (“Designated Date”), being the date of credit of the Equity Shares to the QIB’s account, as applicable to the respective QIBs. The QIBs would also be sent a serially numbered Placement Document either in electronic form or by physical delivery along with the serially numbered CAN. The dispatch of the serially numbered Placement Document and the CAN to the QIB shall be deemed a valid, binding and irrevocable contract for the QIB to furnish all details that may be required by the Sole Global Co-ordinator and Book Running Lead Manager and to pay the entire Issue Price for all the Equity Shares allocated to such QIB. Account for Payment of Application Money Our Company has opened a special bank account, (the “Escrow Bank Account”) with YES BANK Limited in terms of the arrangement between our Company, the Sole Global Co-ordinator and the Book

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Running Lead Manager and YES BANK Limited (acting as an escrow bank). The QIB will be required to deposit the entire amount payable for the Shares allocated to it by the Pay-In Date as mentioned in the respective CAN. If the payment is not made favouring the abovementioned Escrow Bank Account within the time stipulated in the CAN, the Application Form and the CAN of the QIB are liable to be cancelled. In case of cancellations or default by the QIBs, the Issuer and the Sole Global Co-ordinator and Book Running Lead Manager have the right to reallocate the Equity Shares at the Issue Price among existing or new QIBs at their sole and absolute discretion, subject to the compliance with the requirement of ensuring that the Application Forms are sent to not more than 49 QIBs. Payment Instructions The payment of application money shall be made by the QIBs in the name of Bajaj Electricals - QIP Escrow Bank Account as per the payment instructions provided in the CAN. QIBs should make payment only through electronic fund transfer. Note: Payment of the amounts through high value cheques are liable to be rejected. Designated Date and Allotment of Equity Shares

1. The Equity Shares will not be Allotted unless the QIBs pay the Issue Price to the Escrow Bank Account as stated above.

2. In accordance with the SEBI Regulations, Equity Shares will be issued and Allotment shall be made

only in the dematerialized form to the Allottees. Allottees will have the option to re-materialize the Equity Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act.

3. Our Company reserves the right to cancel the Issue at any time up to Allotment without assigning any

reasons whatsoever.

4. Post Allotment and credit of Equity Shares into the QIBs Depository Participant account, the Issuer would apply for final listing and trading approvals from the Stock Exchanges.

5. In the unlikely event of the any delay in the Allotment or credit of Equity Shares, or receipt of final

listing and trading approvals or cancellation of the Issue, no interest or penalty would be payable by the Issuer.

6. The monies lying to the credit of the Escrow Bank Account shall not be released till such time as the

approval of the Stock Exchanges, for the listing and trading of the Equity Shares issued pursuant to the Issue is delivered to our Company.

7. After finalization of the Issue Price, the Issuer shall update the Preliminary Placement Document with

the Issue details and file the same with the Stock Exchanges as the Placement Document. Submission to SEBI Our Company shall submit the Placement Document to SEBI within 30 days of the date of Allotment for record purposes.

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Other Instructions Permanent Account Number or PAN Each QIB should mention its Permanent Account Number (PAN) allotted under the IT Act. The copy of the PAN card or PAN allotment letter is required to be submitted with the Application Form. Applications without this information will be considered incomplete and are liable to be rejected. It is to be specifically noted that applicant should not submit the GIR number instead of the PAN as the Application Form is liable to be rejected on this ground. Our Right to Reject Applications Our Company, in consultation with the Sole Global Co-ordinator and Book Running Lead Manager, may reject Applications, in part or in full, without assigning any reasons whatsoever. The decision of the Issuer and Sole Global Co-ordinator and Book Running Lead Manager in relation to the rejection of Applications shall be final and binding. Equity Shares in dematerialised form with NSDL or CDSL As per the provisions of section 68B of the Companies Act, the Allotment of the Equity Shares in this Issue shall be only in de-materialized form, (i.e., not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode). 1. A QIB applying for Equity Shares must have at least one beneficiary account with a Depository

Participant of either NSDL or CDSL prior to making the application. 2. Allotment to a successful QIB will be credited in electronic form directly to the beneficiary

account (with the Depository Participant) of the QIB. 3. Equity Shares in electronic form can be traded only on the stock exchanges having electronic

connectivity with NSDL and CDSL. The Stock Exchanges have electronic connectivity with CDSL and NSDL.

4. The trading of the Equity Shares would be in dematerialized form only for all QIBs in the demat

segment of the respective stock exchanges. 5. Our Company will not be responsible or liable for the delay in the credit of Equity Shares due to

errors in the Application Form or otherwise on part of the QIBs.

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PLAN OF DISTRIBUTION

Memorandum of Understanding The Sole Global Co-ordinator and Book Running Lead Manager have entered into a Memorandum of Understanding with our Company (the “Placement Agreement”), pursuant to which the Sole Global Co-ordinator and Book Running Lead Manager have agreed to place, on a reasonable effort basis, up to such number of our Company’s Equity Shares, the aggregate subscription amount of which shall be up to Rs. [●] lacs, to Qualified Institutional Buyers, pursuant to Chapter VIII of the SEBI Regulations. The Placement Agreement contains customary representations and warranties, as well as indemnities from our Company and is subject to termination in accordance with the terms contained therein. Applications shall be made to list the Equity Shares issued pursuant to the Offering and admit them to trading on the Stock Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for such Equity Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which holders of the Equity Shares will be able to sell their Equity Shares. This Preliminary Placement Document has not been, and will not be, registered as a prospectus with the RoC and, no Equity Shares will be offered in India or overseas to the public or any members of the public in India or any other class of investors, other than QIBs. Lock-up Our Company along with our Promoters and our Promoter Group have agreed that it will not, for a period of up to 120 (one hundred and twenty) days from the Closing Date (as defined in the Placement Agreement entered into by our Company with the Sole Global Co-ordinator and Book Running Lead Manager for the purposes of this Offering), without the prior written consent of the Sole Global Co-ordinator and Book Running Lead Manager, directly or indirectly: (a) issue, offer, lend, pledge, sell, contract to sell or issue, sell any option, or contract to sell or issue, grant any option, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares, or any securities convertible into or exercisable or exchangeable for Equity Shares or publicly announce an intention with respect to any of the foregoing, (b) enter into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic consequences of ownership of Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares, (c) publicly announce any intention to enter into any transaction whether any such transaction described in (a) or (b) above is to be settled by delivery of Equity Shares, or such other securities, in cash or otherwise, or (d) deposit Equity Shares or any securities convertible into or exercisable or exchangeable for Equity or which carry the right to subscribe for or purchase Equity Shares in depository receipt facilities or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale of Equity Shares or deposit of Equity Shares in any depositary receipt facility, or publicly announce any intention to enter into any such transaction. Provided however, that he foregoing restrictions shall not be applicable to: (a) any issue by the Company, or sale, transfer or disposition of Equity Shares, by the Promoters or the Promoter Group to the extent such issue, sale, transfer or disposition, as the case may be, is mandatory pursuant to any Indian statutory and/or regulatory provision, (b) inter-se transfer, sale or other disposition of any Equity Shares, amongst the Promoters, and/or the Promoters and the Promoter Group, provided that such transferee agrees to comply with and be bound by the terms and conditions of this letter, to the same extent as applicable to transferring Promoter/ Promoter Group entity or person/s as the case may be, (c) any pledge with respect to Equity Shares of the Company which currently are held, or in the future may be held by the Promoters and/or the Promoter Group, in connection with any credit facilities availed by the Company, (d) any purchase of Equity Shares in the secondary market by the Promoters and/or the Promoter Group, and (e) the issue and allotment of Equity Shares which are issued and allotted pursuant to any employee stock option plan, stock purchase plan or stock ownership plan of the Company as in effect on the date hereof.

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SELLING RESTRICTIONS

The distribution of this Preliminary Placement Document and the offer, sale or delivery of the Equity Shares is restricted by law in certain jurisdictions. Persons who come into possession of this Preliminary Placement Document are advised to take legal advice with regard to any restrictions that may be applicable to them and to observe such restrictions. This Preliminary Placement Document may not be used for the purpose of an offer or sale in any circumstances in which such offer or sale is not authorized or permitted. General No action has been or will be taken in any jurisdiction that would permit a public offering of the Equity Shares or the possession, circulation or distribution of this Preliminary Placement Document or any other material relating to us or the Equity Shares in any jurisdiction where action for the purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly and neither this Preliminary Placement Document nor any other offering material or advertisements in connection with the Equity Shares may be distributed or published, in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction. The Issue will be made in compliance with the applicable SEBI Guidelines. Each subscriber of the Equity Shares in the Issue will be required to make, or to be deemed to have made, as applicable, the acknowledgments and agreements as described under “Transfer Restrictions”. European Economic Area In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), an offer of the Equity Shares to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to the Equity Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that an offer of Equity Shares to the public in that Relevant Member State at any time may be made: (a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so

authorized or regulated, whose corporate purpose is solely to invest in securities; (b) to any legal entity which has two or more of (1) an average of at least 250 employees during the

last financial year; (2) a total balance sheet of more than Euro 43,000,000 and (3) an annual net turnover of more than Euro 50,000,000, as shown in its last annual or consolidated accounts; or

(c) in any other circumstances which do not require the publication by us of a prospectus pursuant to

Article 3 of the Prospectus Directive. Provided that no such offer of Equity Shares shall result in the requirement for the publication by our Company or any of the Sole Global Co-ordinator and Book Running Lead Manager of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an “offer of Equity Shares to the public” in relation to any Equity Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe the Equity Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

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Hong Kong The Equity Shares may only be offered or sold in Hong Kong (i) to 'professional investors' as defined in the SFO and any rules made under the SFO, or (ii) in other circumstances which do not result in the document being a 'prospectus' as defined in the Companies Ordinance (Cap. 32) or which do not constitute an offer to the public within the meaning of that Ordinance; and The Sole Global Co-ordinator and Book Running Lead Manager has not issued, or had in their possession for the purposes of issue, and will not issue, or have in their possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Equity Shares, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong(except if permitted to do so under the securities laws of Hong Kong) other than with respect to Equity Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to 'professional investors' as defined in the SFO and any rules made under the SFO. Singapore This Preliminary Placement Document has not been registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act”). The Equity Shares may not be offered or sold or made the subject of an invitation for subscription or purchase nor may this Preliminary Placement Document or any other document or material in connection with the offer or sale or invitation for subscription or purchase of any Equity Shares be circulated or distributed, whether directly or indirectly, to the public or any member of the public in Singapore other than (a) to an institutional investor or other person falling within Section 274 of the Securities and Futures Act, (b) to a relevant person, or any person pursuant to Section 275(1A) of the Securities and Futures Act, and in accordance with the conditions specified in Section 275 of the Securities and Futures Act, or (c) otherwise than pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act. Each of the following relevant persons specified in Section 275 of the Securities and Futures Act which has subscribed or purchased Equity Shares, namely a person who is: (a) a corporate (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, should note that shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the Equity Shares under Section 275 of the Securities and Futures Act except: (1) to an institutional investor under Section 274 of the Securities and Futures Act or to a relevant person, or any person pursuant to Section 275(1A) of the Securities and Futures Act, and in accordance with the conditions, specified in Section 275 of the Securities and Futures Act; (2) where no consideration is given for the transfer; or (3) by operation of law. United Kingdom The Sole Global Co-ordinator and Book Running Lead Manager: (a) has not offered or sold, and prior to the expiry of a period of six months from the issue date of any

Equity Shares, will not offer or sell any securities of our Company to persons in the United Kingdom except to 'qualified investors' as defined in section 86(7) of the FSMA or otherwise in circumstances which have not resulted in an offer to the public in the United Kingdom;

(b) has complied and will comply with all applicable provisions of FSMA with respect to anything

done by it in relation to the Equity Shares in, from or otherwise involving the United Kingdom; and

(c) in the United Kingdom, will only communicate or cause to be communicated an invitation or

inducement to engage in investment activity (within the meaning of section 21 of the FSMA) to

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persons that are 'qualified investors' and who are (a) 'investment professionals' falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (b) high net worth entities and/or other persons to whom it may lawfully be communicated falling within Article 49(2)(a) to (d) of the Order in circumstances in which section 21(1) of the FSMA does not apply to our Company.

United States The Equity Shares have not been and will not be registered under the Securities Act, and may not be offered or sold within the United States except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S. The Equity Shares are being offered and sold outside of the United States in reliance on Regulation S under the Securities Act. Each purchaser of the Equity Shares offered by this Preliminary Placement Document will be deemed to have made the representations, agreements and acknowledgements as described under “Transfer Restrictions”.

India

The Preliminary Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies in India and the Equity Shares will not be offered or sold directly or indirectly, to the public or any members of the public in India or any other class of investors other than QIBs.

United Arab Emirates

This Preliminary Placement Document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. By receiving this Preliminary Placement Document, the person or entity to whom it has been issued understands, acknowledges and agrees that this Preliminary Placement Document has not been approved by the U.A.E. Central Bank, the U.A.E. Ministry of Economy and Planning or any other authorities in the U.A.E., nor has the placement agent, if any, received authorization or licensing from the U.A.E. Central Bank, the U.A.E. Ministry of Economy and Planning or any other authorities in the United Arab Emirates to market or sell securities within the United Arab Emirates. No marketing of any financial products or services has been or will be made from within the United Arab Emirates and no subscription to any securities, products or financial services may or will be consummated within the United Arab Emirates. It should not be assumed that the placement agent, if any, is a licensed broker, dealer or investment advisor under the laws applicable in the United Arab Emirates, or that it advises individuals resident in the United Arab Emirates as to the appropriateness of investing in or purchasing or selling securities or other financial products. The interests in the Equity Shares may not be offered or sold directly or indirectly to the public in the United Arab Emirates. This does not constitute a public offer of securities in the United Arab Emirates in accordance with the Commercial Companies Law, Federal Law No. 8 of 1984 (as amended) or otherwise.

By receiving this Preliminary Placement Document, the person or entity to whom it has been issued understands, acknowledges and agrees that the Equity Shares have not been and will not be offered, sold or publicly promoted or advertised in the Dubai International Financial Centre other than in compliance with laws applicable in the Dubai International Financial Centre, governing the issue, offering or sale of securities. The Dubai Financial Services Authority has not approved this Preliminary Placement Document nor taken steps to verify the information set out in it, and has no responsibility for it.

Nothing contained in this Preliminary Placement Document is intended to constitute investment, legal, tax, accounting or other professional advice. This Preliminary Placement Document is for your information only and nothing in this Preliminary Placement Document is intended to endorse or recommend a particular course of action. You should consult with an appropriate professional for specific advice rendered on the basis of your situation.

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TRANSFER RESTRICTIONS

Purchasers of the Equity Shares in this Issue are not permitted to sell the Equity Shares for a period of one year from the date of allotment except through the Stock Exchanges. Subject to the foregoing: Each purchaser of the Equity Shares outside the United States pursuant to Regulation S will be deemed to have represented and agreed as follows: • It is authorized to consummate the purchase of the Equity Shares in compliance with all applicable

laws and regulations. • It acknowledges (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed

to it that such customer acknowledges) that such Equity Shares have not been and will not be registered under the Securities Act.

• It certifies that either (A) it is, or at the time the Equity Shares are purchased will be, the beneficial

owner of the Equity Shares and is located outside the United States (within the meaning of Regulation S) or (B) it is a broker-dealer acting on behalf of its customer and its customer has confirmed to it that (i) such customer is, or at the time the Equity Shares are purchased will be, the beneficial owner of the Equity Shares, and (ii) such customer is located outside the United States (within the meaning of Regulation S).

• It agrees that it will not offer, sell, pledge or otherwise transfer such Equity Shares except in an

offshore transaction complying with Rule 903 or Rule 904 of Regulation S or pursuant to any other available exemption from registration under the Securities Act and in accordance with all applicable securities laws of the States of the United States and any other jurisdiction, including India.

• It acknowledges that our Company, the Sole Global Co-ordinator and Book Running Lead Manager,

their respective affiliates, and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations or agreements deemed to have been made by virtue of its purchase of the Equity Shares are no longer accurate, it will promptly notify us.

Any resale or other transfer or attempted resale or other transfer, made other than in compliance with the above-stated restrictions will not be recognized by our Company.

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THE SECURITIES MARKET OF INDIA

The information in this section has been extracted from publicly available documents from various sources, including officially prepared materials from the SEBI, the BSE, the DSE and the NSE, and has not been prepared or independently verified by our Company or the Sole Global Co-ordinator and Book Running Lead Manager or any of their respective affiliates or advisors. The Indian Securities Market India has a long history of organised securities trading. In 1875, the first stock exchange was established in Mumbai. Stock Exchange Regulations Indian stock exchanges are regulated primarily by SEBI, as well as by the Government of India acting through the Ministry of Finance, Capital Markets Division, under the Securities Contracts (Regulation) Act 1956, as amended (‘‘SCRA and the Securities Contracts (Regulation) Rules, 1957, as amended (‘‘SCRR, which, along with the rules, bye-laws and regulations of the respective stock exchanges, regulate the recognition of stock exchanges, the qualifications for membership thereof and the manner in which contracts are entered into and enforced between members of the stock exchanges. The Securities and Exchange Board of India Act, 1992 granted powers to SEBI to regulate the Indian securities markets, including stock exchanges and other intermediaries in the capital markets, to promote and monitor self-regulatory organisations, to prohibit fraudulent and unfair trade practices and insider trading and to regulate substantial acquisitions of shares and takeovers of companies. SEBI has also issued guidelines and regulations concerning minimum disclosure requirements by public companies, rules and regulations concerning investor protection, insider trading, substantial acquisitions of shares and takeovers of companies, buy-backs of securities, delisting of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, mutual funds, foreign institutional investors, credit rating agencies and other capital markets participants. The Companies (Amendment) Act, 2000, amended the Companies Act and incorporated significant provisions relating to securities, options in securities and equity shares with differential rights. Further, the Companies Act, as amended, has empowered SEBI to administer certain provisions of the Companies Act in so far as they relate to the issue and transfer of securities and non payment of dividends by listed public companies as well as companies intending to list their securities on any recognized stock exchange in India, and to conduct inspection of a company’s records in respect of matters relating to the issue and transfer of securities. The power to prosecute defaulting companies in compliance with the said matter has also been vested with SEBI. SEBI has also set up a committee for the review of Indian securities laws, which has proposed a draft Securities Bill. The draft Securities Bill, if enacted in its present form may result in a substantial revision in the laws relating to securities transactions in India. The Companies Bill has been introduced in the Lok Sabha on October 23, 2008. Listing The listing of securities on recognised Stock Exchanges is regulated by the Companies Act, the SCRA, the SCRR, the SEBI Act and the listing agreement of the respective stock exchanges. Further, under the SCRR, the governing body of each stock exchange is empowered to suspend trading of or dealing in a listed security for breach of the Company’s obligations under such agreement, subject to the Company receiving prior notice of the intent of the stock exchange. In the event that a suspension of a company’s securities continues for a period in excess of three months, the company may appeal to the Securities Appellate Tribunal (“SAT”) established under the SEBI Act to set aside the suspension. SEBI has the power to veto

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stock exchange decisions in this regard. SEBI also has the power to amend such Listing Agreements and the bye-laws of the stock exchanges in India. Clause 49 of the Listing Agreement introduced by SEBI encompasses the framework of Corporate Governance for all listed companies. Every company that wants to list its shares on the stock exchanges in India must enter into a listing agreement with the concerned stock exchange. Clause 49 interalia provides that: • The Board of directors of the company shall have an optimum combination of executive and non-

executive directors with not less than fifty per cent of the board of directors comprising of non-executive directors.

• Where the Chairman of the Board is a non-executive director, at least one-third of the Board should

comprise of independent directors and in case he is an executive director, at least half of the Board should comprise of independent directors. However where the non-executive Chairman is a promoter of the company or is related to any promoter or person occupying management positions at the Board level or at one level below the Board, at least one-half of the Board of the company shall consist of independent directors.

We have entered into Listing Agreements with the Stock Exchanges for the continuous listing of our Equity Shares. Each of these agreements and/ or the Takeover Code requires that: • we adhere to certain corporate governance requirements including ensuring the minimum number

of independent directors on the board, and composition of various committees such as audit committees and remuneration committees;

• we adhere to continuing disclosure requirements and must publish unaudited financial statements on a quarterly basis and immediately inform the stock exchanges of any unpublished price sensitive information;

• we maintain a minimum level of shares held by the public as required under these agreements; • if any person acquires more than five per cent of our Equity Shares or voting rights we and the

acquirer shall comply with the provisions of the Takeover Code; • no person shall acquire, or agree to acquire, 15.00% or more of our Equity Shares or voting rights,

unless the provisions of the Takeover Code are complied with; and • if any takeover offer is made or if there is any change in management control, then we and the

persons securing management control of us need to comply with the Takeover Code. Any non-compliance with the terms and conditions of the Listing Agreements with the Stock Exchanges may entail the delisting of our Equity Shares from such stock exchanges, which will affect future trading of those Equity Shares. Minimum Level of Public Shareholding In order to ensure availability of floating stock of listed companies, SEBI has recently notified amendments to the listing agreement. All listed companies are required to ensure that their minimum level of public shareholding remains at or above 25%. This requirement does not apply to those companies who at the time of their initial listing had offered at least 10% of the issue size to the public pursuant to Rule 19(2)(b) of the SCRR, nor to companies that have reached a size of 20,000,000 or more in terms of the number of listed shares and Rs. 10,000 million or more in terms of market capitalisation. However such listed companies are required to maintain the minimum level of public shareholding at 10% of the total number of issued ordinary shares of a class or kind for the purposes of listing. Failure to comply with this Clause in the Listing Agreement requires the listed company to delist its shares pursuant to the terms of the SEBI Delisting Regulations and may result in penal action being taken against the listed company pursuant to the Securities and Exchange Board of India Act, 1992.

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Delisting The provisions of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, as amended (“Delisting Regulations”) and the SCRR govern voluntary and compulsory delisting of equity shares of listed Indian companies from any of the recognised stock exchanges. No company can apply for permission to delist: (i) pursuant to a buy back of equity shares or preferential allotment made by a company or (ii) unless a period of three years has elapsed since the listing of that class of equity shares on any recognized stock exchange. Furthermore, if any instruments issued by the company which are convertible into the same class of equity shares that are sought to be delisted are outstanding, delisting is disallowed. A company may voluntarily delist from a stock exchange provided that (a) the securities of the company have been listed for a minimum period of three years on any recognised stock exchange, (b) the delisting has been approved by two-thirds of the public shareholders, and (c) the company, the promoter and/or the director of the company provide an exit opportunity and purchase the outstanding securities from those holders who wish to sell them at a price determined in accordance with the Delisting Regulations, provided further that the condition in (c) above may be dispensed with by SEBI if the securities remain listed on the NSE or the BSE. In the event a company seeks to voluntarily delist from a stock exchange, it is required to provide an exit opportunity to the other shareholders (“Delisting Offer”) and seek the in-principle approval of the stock exchange. This exit opportunity involves a price discovery process known as the “book building process”. A Delisting Offer can be launched by any promoter seeking to delist the securities of the company. The Delisting Offer needs to be supported by a resolution approved by the board of directors and a resolution approved by three-fourths of the shareholders of the listed company through a postal ballot. In addition, the special resolution of the shareholders can be acted upon if, and only if, the votes cast by public shareholders in favour of the proposal amount are at least two times the number of votes cast by public shareholders against it (non-promoters and holders of depository receipts are considered non-public shareholders). Following the approval of the shareholders, the promoter would issue a public announcement (i.e. a public notice) in relation to the Delisting Offer. The offer price shall have a floor price which shall be determined in the manner provided in the Delisting Regulations. The floor price for delisting must, therefore be determined by calculating the average of the weekly high and low of the closing prices during the last 26 weeks or two weeks preceding the date on which the recognized stock exchange were notified. The offer must fulfill the criteria prescribed in the Delisting Regulations to be successful. Upon closure of open offer process, all shareholders whose equity shares are verified will be paid the final price stated in the public announcement within 10 working days. The Delisting Regulations and the SCRR also provide the stock exchanges the power to delist the securities of companies on certain grounds, including if a company is incurring losses during the preceding three consecutive years and has negative net worth; the trading in the securities of the company has remained suspended for a minimum period of six months; the securities of a company have remained infrequently traded during the preceding three years; the company or any of its promoters or directors have been convicted for failure to comply with any provisions of the SEBI Act or the Depositories Act or rules and regulations made thereunder and awarded a penalty of not less than three years; or there has been failure to raise the public shareholdings within a specified time to the minimum level applicable to the company under its listing agreement. Any order for compulsory delisting can be made only after considering representations received from aggrieved persons. Delisting Regulations also provide that in the event that the securities of a company are delisted by a stock exchange, the fair value of securities shall be determined by an independent valuer appointed by the stock exchange from a panel of experts selected by the stock exchange. The Delisting Regulations do not permit the listing of equity shares once delisted for a period of 5 years (in a voluntary delisting) and 10 years (if the stock exchanges initiate the delisting). The Ministry of Finance has, on June 10, 2009, proposed certain amendments to the Securities Contracts (Regulation) Rules, 1957 and notified delisting rules under Rule 21 of the Securities Contract (Regulation) Rules, 1957 on June 15, 2009 (“MoF Notification”) in relation to voluntary and compulsory delisting, to bring them in line with the Delisting Regulations.Due to their recent issuance, the applicability of the Delisting Regulations and MoF Notification have not been tested in any manner and hence it is possible

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that some of the clauses may be amended to make either the Delisting Regulations or the MoF Notification more effective or clarify any ambiguities contained therein. Investors are requested to consult their advisors before taking any steps under the Delisting Guidelines. Disclosures under the Companies Act and Securities Regulations Under the Companies Act, a public issue of securities in India must be made by means of a prospectus, which must contain information specified in the Companies Act and the SEBI Regulations, as amended. The prospectus must be filed with the Registrar of Companies having jurisdiction over the place where a company’s registered office is situated, which in the case of the Company is the Registrar of Companies located at Mumbai, Maharashtra. A company’s directors are subject to civil and criminal liability for misstatements/misrepresentations in a prospectus. The Companies Act also sets forth procedures for the acceptance of subscriptions and the allotment of securities among subscribers and establishes maximum commission rates for the sale of securities. SEBI has issued detailed guidelines through the SEBI Regulations concerning disclosures by public companies and investor protection. Public limited companies are required under the Companies Act and SEBI Regulations to prepare, file with the Registrar of Companies and circulate to their shareholders audited annual accounts which comply with the Companies Act’s disclosure requirements and regulations governing their manner of presentation and which include sections pertaining to corporate governance, related party transactions and the management’s discussion and analysis as required under the respective listing agreement. In addition, a listed company is subject to continuing disclosure requirements pursuant to the terms of its listing agreement with the relevant stock exchange. Accordingly, listed companies are now required to publish unaudited financial statements (subject to a limited review by the Company’s auditors) on a quarterly basis and are required to inform stock exchanges immediately regarding any stock price-sensitive information. Indian Stock Exchanges There are now currently 19 recognised stock exchanges in India. Most of the stock exchanges have their own governing board for self-regulation. A number of these exchanges have been directed by SEBI to file schemes for demutualisation as a measure of moving towards greater investor protection. The BSE and the NSE together hold a dominant position among the stock exchanges in terms of the number of listed companies, market capitalisation and trading activity. In order to contain the risk arising out of the transactions entered into by the members of various stock exchanges either on their own account or on behalf of their clients, the stock exchanges have designed risk management procedures, which include compulsory prescribed margins on the individual broker members, based on their outstanding exposure in the market, as well as stock-specific margins from the members. With effect from April 1, 2003, the stock exchanges in India operate on a trading day plus two, or T+2, rolling settlement system. At the end of the T+2 period, obligations are settled with buyers of securities paying for and receiving securities, while sellers transfer and receive payment for securities. For example, trades executed on a Monday would typically be settled on a Wednesday. In order to contain the risk arising out of the transactions entered into by the members of various stock exchanges either on their own account or on behalf of their clients, the stock exchanges have designed risk management procedures, which include compulsory prescribed margins on the individual broker members, based on their outstanding exposure in the market, as well as stock-specific margins from the members. To restrict abnormal price volatility, SEBI has instructed stock exchanges to apply the fol1owing price bands calculated at the previous day’s closing price (there are no restrictions on price movements of index stocks): Market Wide Circuit Breakers. In order to restrict abnormal price volatility in any particular stock, SEBI has instructed the stock exchanges to apply daily circuit breakers, which do not allow transactions beyond

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certain price volatility. An index based market-wide (equity and equity derivatives) circuit breaker system has been implemented and the circuit breakers are applied to the market for movement by 10%, 15% and 20% for two prescribed market indices: the BSE Sensex for the BSE and the Nifty for the NSE (“NSE Nifty”), whichever is breached earlier. If any of these circuit breaker thresholds are reached, trading in al1 equity and equity derivatives markets nationwide is halted. Price Bands. In addition to the market-wide index based circuit breakers, there are currently in place varying individual scrip wise bands (except for scrips on which derivative products are available or scrips included in indices on which derivative products are available) of 20% either ways for all other scrips. BSE The BSE, established in 1875, is the oldest stock exchange in India. It is the first stock exchange in India to have obtained permanent recognition in 1956 from the Government of India under the SCRA. It has evolved over the years into its present status as a premier stock exchange of India. Pursuant to the BSE (Corporatisation and Demutualization) Scheme 2005 of SEBI, with effect from August 20, 2005, the BSE has been corporatised and demutualised and is now a company under the Companies Act. The BSE switched over from an open outcry trading system to an online trading network in May 1995 and has today expanded this network to over 349 cities in India. Only a member of the BSE has the right to trade in the stocks listed on the BSE. Derivatives trading commenced on the BSE in 2000. The BSE also has wholesale and retail debt trading segments. The retail trading in Government securities commenced in June 2003. As of October, 2009, the BSE had 1,004 members, comprising 173 individual members, 808 Indian companies and 23 FIIs. Only a member of the BSE has the right to trade in the stocks listed on the BSE. As of September 2009, there were 4,946 companies trading on the BSE. As of October 2009, the total number of scrips traded are 2844 and the estimated market capitalisation of stocks trading on the BSE was Rs. 53,745.59 billion. In October 2009, the average daily turnover on the BSE was Rs. 57.00 billion. (Source: BSE) NSE The NSE was established by financial institutions and banks to provide nationwide on-line satellite-linked, screen-based trading facilities for market makers with an electronic order based trading system, and electronic clearing and settlement for securities including government securities, debentures, public sector notes and units.The principal aim of the NSE is to enable investors to buy or sell securities from anywhere in India, serving as a national market for securities Deliveries for trades executed “on-market” are exchanged through the National Securities Clearing Corporation Limited. The NSE does not categorise shares into groups as in the case of the BSE, except in respect of the trade-to-trade category. On its recognition as a stock exchange under the SCRA in April 1993, the NSE commenced operations in the wholesale debt market segment in June 1994. The capital market (equities) segment commenced operations in November 1994 and operations in the derivatives segment commenced in June 2000. It has evolved over the years into its present status as a premier stock exchange of India. The NSE launched the NSE 50 Index, now known as S&P CNX NIFTY, on April 22, 1996 and the Mid-cap Index on January 1, 1996. The securities in the NSE 50 Index are highly liquid. NSE has a wide network in major metropolitan cities for screen-based trading, has a central monitoring system and provides greater transparency. As of October, 2009, there were 1,291 companies available for trading on the NSE and the estimated market capitalisation of stocks trading on the NSE was Rs. 50,248.30 billion. The average daily turnover on the NSE as of October, 2009 was Rs. 181.48 billion. As of October, 2009, the NSE had 1,257 trading members and over 108 registered sub-brokers on the capital market segment and the wholesale debt market segment. (Source: NSE)

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DSE Delhi Stock Exchange Limited was incorporated as a limited company under the Indian Companies Act, 1913 on 25th June, 1947. The main function of the company is to run a Stock Exchange in Delhi and to acquire and take over as a going concern the activities, functions and business of the then existing two stock exchanges, i.e., The Delhi Stock & Share Exchange Ltd and the Delhi Stock & Share Brokers Association Ltd. It also took over all the assets and liabilities, rights and duties of the two aforementioned companies. The Securities contracts (Regulation) Act was made applicable to the Union territory of Delhi with effect from 9th December 1957 and simultaneous recognition was granted to the Delhi Stock Exchange under Section 4 of the securities Contracts (Regulation) Act. The Central Government vide its Notification dated the 1st March 1982 granted permanent recognition to the exchange. Delhi Stock Exchange Limited has made steady progress in its activities and has emerged as one of the leading and major stock exchanges in the country. This has been achieved on account of continuous upgradation of processes and technology, innovative approach, responsive management and integrity and transparency of operations. Trading Hours Trading on both the BSE and the NSE normally occurs Monday through Friday, between 9:55 a.m. and 3:30 p.m. The BSE and the NSE are closed on public holidays. Stock Market Indices S&P CNX Nifty is a diversified 50 stock index accounting for 21 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds. S&P CNX Nifty is owned and managed by India Index Services and Products Limited (IISL), which is a joint venture between the NSE and CRISIL. The two indices which are generally used in tracking the aggregate price movements on the BSE are SENSEX and BSE 100 Index. The BSE Sensitive Index, or the Sensex, consists of listed shares of 30 large market capitalisation companies. The companies are selected on the basis of market capitalisation, liquidity and industry representation. Sensex was first compiled in 1986 with the fiscal year ended March 31, 1979. The BSE 100 Index (formerly the BSE National Index) contains listed shares of 100 companies including the 30 in Sensex with 1983-1984 as the base year. Trading Procedure In order to facilitate smooth transactions, in 1995, BSE replaced its open outcry system with BSE On-line Trading (“BOLT”) facility in 1995. This totally automated screen based trading in securities was put into practice nation-wide. This has enhanced transparency in dealings and has assisted considerably in smoothening settlement cycles and improving efficiency in back-office work. Internet-Based Securities Trading and Services

SEBI approved internet trading in January 2000. Internet trading takes place through order routing systems, which route client orders to exchange trading systems for execution. This permits clients to trade using brokers’ Internet trading systems. Stock brokers interested in providing this service are required to apply for permission to the relevant stock exchange and also have to comply with certain minimum conditions stipulated by SEBI.

Takeover Code Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the Takeover Code, which prescribes certain thresholds or trigger points that give rise to these obligations, as

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applicable. The Takeover Code is under constant review by SEBI and was last amended in November 6, 2009. Once the Equity Shares are listed, the provisions of the Takeover Code will apply to any acquisition of the Company’s shares/ voting rights/ control. The principal features of the Takeover Code are set forth below: Any acquirer (meaning a person who, directly or indirectly, acquires or agrees to acquire equity shares

or voting rights in a company, either by himself or with any person acting in concert) who acquires equity shares or voting rights that would entitle him to more than 5%, 10%, 14%, 54% or 74% of the equity shares or voting rights in a company (together with the company’s equity shares or voting rights, if any, already held by such acquirer) is required to disclose the aggregate of his equity shareholding or voting rights in that company to the company (which in turn is required to disclose such shareholding to each of the stock exchanges on which the company’s equity shares are listed) and to each of the stock exchanges on which the company’s equity shares are listed within two days of (a) the receipt of allotment information; or (b) the acquisition of equity shares or voting rights, as the case may be. The term “shares” has been defined under the Takeover Code to shares in the share capital of a company carrying voting rights and includes any other security which entitles a person to acquire shares with voting rights but does not include preference shares.

A person who, together with persons acting in concert with him, holds 15% or more but less than 55%

of the equity shares or voting rights in any company, or who holds 55% or more but less than 75% of the equity shares or voting rights in any company and acquires shares or voting rights under the second proviso to Regulation 11(2) of the Takeover Code, is required to disclose any purchase or sale representing 2% or more of the equity shares or voting rights of that company (together with the aggregate shareholding after such acquisition or sale) to that company and the stock exchanges on which the company’s equity shares are listed within two days of the purchase or sale and is also required to make annual disclosure of his holdings to that company (which in turn is required to disclose such shareholding to each of the stock exchanges on which the company’s equity shares are listed).

Promoters or persons in control of a company are also required to make annual disclosure of their

holding in a specified manner. The company is also required to make annual disclosure of holdings of its promoters or persons in control as on March 31 of the respective year to each of the stock exchanges on which its equity shares are listed. SEBI has recently amended the Takeover Code to make it mandatory for the promoters and promoter group of listed companies to disclose the creation and enforcement of a pledge on the equity shares held by such persons.

An acquirer cannot acquire equity shares or voting rights which (taken together with the existing equity

shares or voting rights, if any, held by him or by persons acting in concert with him) would entitle such acquirer to exercise 15% or more of the voting rights in a company, unless such acquirer makes a public announcement offering to acquire a further minimum of 20% of the equity shares of the company at a price not lower than the price determined in accordance with the Takeover Code. Such offer has to be made to all public shareholders of the company (defined as holders of shareholdings held by persons other than the promoter (as defined under the Takeover Code)). A copy of the public announcement is required to be delivered, on the date on which such announcement is published, to SEBI, the company and the stock exchanges on which the company’s equity shares are listed.

No acquirer who, together with persons acting in concert with him, has acquired, in accordance with

law, 15% or more but less than 55% of the shares or voting rights in a company, shall acquire, either by himself or through or with persons acting in concert with him, additional shares or voting rights that would entitle him to exercise more than 5% of the voting rights with post acquisition shareholding or voting rights not exceeding 55% in any financial year ending March 31, unless such acquirer makes a public announcement offering to acquire a further minimum of 20% of the equity shares of the target company at a price not lower than the price determined in accordance with the Takeover Code.

An acquirer who, together with persons acting in concert with him, has acquired, in accordance with

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law, 55% or more but less than 75% of the equity shares or voting rights in a company (or, where the company concerned had obtained the initial listing of its shares by making an offer of at least 10% of the issue size to the public pursuant to Rule 1 9(2)(b) of the SCRR, less than 90% of the shares or voting rights in the company) may not, either by itself or through persons acting in concert with it, acquire any additional equity shares or voting rights in the company, unless such acquirer makes an open offer to acquire a minimum of 20% of the shares or voting rights which it does not already own in the company, provided that an acquirer together with persons acting in concert may acquire additional shares or voting rights entitling him to up to 5% voting rights in a company without making a public announcement if (i) the acquisition is made through open market purchase on the stock exchanges or the increase in the shares or voting rights is pursuant to a buy-back of shares by the target company and (ii) the post acquisition shareholding of the acquirer and persons acting in concert does not exceed 75%.

Where an acquirer who (together with persons acting in concert) holds 55% or more, but less than 75%

of the shares or voting rights in a target company (or, where the concerned company had obtained the initial listing of its shares by making an offer of at least 10% of the issue size to the public pursuant to Rule 19(2)(b) of the SCRR, less than 90% of the shares or voting rights in the company), intends to consolidate its holdings while ensuring that the public shareholding in the target company does not fall below the minimum level permitted by the listing agreement with the stock exchanges, the acquirer may do so by making an open offer in accordance with the Takeover Code. Such open offer would be required to be made for the lesser of (i) 20% of the voting capital of the company, or (ii) such other lesser percentage of the voting capital of the company as would, assuming full subscription to the open offer, enable the acquirer (together with persons acting in concert), to increase the holding to the maximum level possible, which is consistent with the target company meeting the requirements of minimum public shareholding specified in the listing agreement with the stock exchanges.

In addition, regardless of whether there has been any acquisition of equity shares or voting rights in a

company, an acquirer cannot directly or indirectly acquire control over a company (for example, by way of acquiring the right to appoint a majority of the directors or to control the management or the policy decisions of the company) unless such acquirer makes a public announcement offering to acquire a minimum of 20% of the voting equity shares of the company. In addition, the Takeover Code introduces the “chain principle” by which the acquisition of a holding company will obligate the acquirer to make a public offer to the shareholders of each subsidiary company which is listed.

Further, if an acquisition made pursuant to an open offer results in the public shareholding in the target

company being reduced below the minimum level required under the listing agreement with the stock exchanges, the acquirer would be required to take steps to facilitate compliance by the target company with the relevant provisions of the listing agreement with the stock exchanges, within the time period prescribed therein.

The Takeover Code sets out the contents of the required public announcements as well as the minimum

offer price. The minimum offer price depends on whether the shares of the company are “frequently” or “infrequently” traded (as defined in the Takeover Code). In case the shares of the company are frequently traded, the offer price shall be the higher of: • the negotiated price under the agreement for the acquisition of shares in the company; • the highest price paid by the acquirer or persons acting in concert with him for any acquisitions,

including through an allotment in a public, preferential or rights issue, during the 26-week period prior to the date of public announcement; and

• the average of the weekly high and low of the closing prices of the shares of the company quoted on the stock exchange where the shares of the company are most frequently traded during the 26-week period prior to the date of public announcement, or the average of the daily high and low of the prices of the shares as quoted on the stock exchange where the shares of the company are most frequently traded during the two weeks preceding the date of public announcement, whichever is higher.

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The Takeover Code permits conditional offers as well as an acquisition and consequent delisting of the shares of a company and provides specific guidelines for the gradual acquisition of shares or voting rights. Specific obligations of the acquirer and the board of directors of the target company in the offer process have also been specified. Acquirers making a public offer are also required to deposit in an escrow account a percentage of the total consideration which amount will be forfeited in the event that the acquirer does not fulfil his obligations.

The general requirements to make such a public announcement do not, however, apply entirely to

bailout takeovers when a promoter (i.e. a person or persons in control of the company, persons named in any offer document as promoters and certain specified corporate bodies and individuals) is taking over a financially weak company but not a “sick industrial company” pursuant to a rehabilitation scheme approved by a public financial institution or a scheduled bank. A “financially weak company” is a company which has at the end of the previous financial year accumulated losses which have resulted in the erosion of more than 50% but less than 100% of the total sum of its paid up capital and free reserves as at the beginning of the previous financial year. A “sick industrial company” is a company registered for more than five years which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth.

The Takeover Code, subject to certain conditions specified in the Takeover Code, exempts certain

specified acquisitions from the requirement of making a public offer, including, among others, the acquisition of shares (1) by allotment in a public issue or a rights issue, (2) pursuant to an underwriting agreement, (3) by registered stockbrokers in the ordinary course of business on behalf of clients, (4) in unlisted companies, (5) pursuant to a scheme of reconstruction or amalgamation, (6) pursuant to a scheme under Section 18 of the SICA, (7) resulting from transfers between companies belonging to the same group of companies or between promoters of a publicly listed company and relatives, (8) by way of transmission through inheritance or succession, (9) resulting from transfers by Indian venture capital funds or foreign venture capital investors registered with SEBI, to promoters of a venture capital undertaking or venture capital undertaking pursuant to an agreement between such venture capital funds or foreign venture capital investors with such promoters or venture capital undertaking, (10) by the Government of India controlled companies, unless such acquisition is made pursuant to a disinvestment process undertaken by the Government of India or a State Government, (11) change in control by takeover/restoration of the management of the borrower company by the secured creditor in terms of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (12) acquisition of shares by a person in exchange of equity shares received under a public offer made under the Takeover Code and (13) in terms of guidelines and regulations relating to delisting of securities as specified by SEBI. The Takeover Code does not apply to acquisitions in the ordinary course of business by public financial institutions either on their own account or as a pledgee. An application may also be filed with the takeover panel seeking exemption from the open offer requirements of the Takeover Code. Pursuant to a recent amendment, a listed company can apply to SEBI to waive requirements under the Takeover Code in relation to an acquisition of a listed company in circumstances where the board of the listed company has been taken over by the Government of India and there is a plan for a transparent and competitive process for the operations of the listed company.

Recent amendments to the Takeover Code provide that where American depository receipts and global

depositary receipts holders are entitled to exercise voting rights on the shares underlying such American depository receipts and global depositary receipts, open offer obligations as aforesaid shall be triggered upon crossing the same threshold limits.

SEBI is further empowered to relax, upon application by a target company, the provisions of Chapter

III of the regulations, which pertain to the disclosure and the open offer requirements, in the event the directors of such company have been removed and replaced by the regulatory authorities for the orderly conduct of the affairs of the company and the replaced board has, amongst others, devised a plan for a transparent, open and competitive process for the continued operation of the company in the interests of all stakeholders of the company without furthering the interests of any particular acquirer. In the event the SEBI has granted such relaxation, no competitive bidding is allowed after a bid has been publicly

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announced by an acquirer. Recent amendments to the Takeover Code also obligate every promoter and person forming part of the

promoter group of a listed company to disclose to the company details of pledge of shares of that company held by such person and the revocation of pledge within seven working days from the date of creation of the pledge or the revocation, as the case maybe. A listed company is further required to disclose such information to all the stock exchanges on which its shares are listed within seven working days of its receipt thereof if, during any quarter ending March, June, September and December of any year, the aggregate number of pledged shares of a promoter or every person forming part of the promoter group (taken together with shares already pledged during that quarter by such promoter or persons) exceeds 25,000 or 1 percent of the total shareholding or voting rights of the company, whichever is lower.

Insider Trading Regulations The SEBI (Prohibition of Insider Trading) Regulations, 1992 (“Insider Trading Regulations”) have been notified by SEBI to prevent insider trading in India by prohibiting and penalising insider trading in India. The Insider Trader Regulations prohibit an “insider” from dealing, either on his own behalf or on behalf of any other person, in the securities of a company listed on any stock exchange when in possession of unpublished price sensitive information. The terms “unpublished” and “price-sensitive information” are defined in the Insider Trading Regulations. The Insider Trading Regulations define an “insider” to mean any person who (i) is or was connected with the company or is deemed to have been connected with the company and who is reasonably expected to have access to unpublished price sensitive information in respect of securities of a company or (ii) has received or has had access to such unpublished price sensitive information. The insider is prohibited from communicating, counseling or procuring, directly or indirectly, any unpublished price sensitive information to any other person while in possession of such information. The prohibition under Regulation 3A of the Insider Trading Regulations also extends to a company dealing, while in the possession of unpublished price sensitive information, in securities of another company or its associate listed on any stock exchange and is not restricted to insiders alone. It is to be noted that recently SEBI has amended the Insider Trading Regulations to provide certain defenses to the prohibition on companies in possession of unpublished price sensitive information dealing in securities. Unpublished means information which is not published by the Company or its agents and is not specific in nature. The Insider Trading Regulations clarify that speculative reports in print or electronic media shall not be considered as published information. Price sensitive information means any information which relates directly or indirectly to a company and which if published is likely to materially affect the price of securities of the company, such as the periodical financial results of the company, intended declaration of dividends (both interim and final), issue of securities or buy-back of securities. Under the Insider Trading Regulations, no insider shall communicate or counsel or procure, directly or indirectly, any unpublished price-sensitive information to any other person who while in possession of such unpublished price-sensitive information shall not deal in securities. The Insider Trading Regulations make it compulsory for listed companies and certain other entities associated with the securities market to establish an internal code of conduct to prevent insider trading deals and also to regulate disclosure of unpublished price sensitive information within such entities so as to minimise misuse thereof. To this end, the Insider Trading Regulations provide a model code of conduct. Further, the Insider Trading Regulations specify a model code of corporate disclosure practices to prevent insider trading, which is to be implemented by all listed companies and other such entities. The model code of conduct has also been amended to prohibit all directors/ officers/ designated employees who buy or sell any number of shares of the company from entering into opposite transactions during the next six months following the prior transaction. All directors and designated employees have also been prohibited from taking positions in derivative transactions in shares of the company at any time. Further, certain provisions pertaining to, inter alia, reporting requirements have also been extended to dependants of directors and designated employees of the company.

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The Insider Trading Regulations require any person who holds more than 5% of the outstanding shares or voting rights in any listed company to disclose to the company the number of shares or voting rights held by such person on becoming such holder within two working days of: (i) the receipt of intimation of allotment of shares; or (ii) the acquisition of the shares or voting rights, as the case may be. On a continuing basis, under the Insider Trading Regulations, any person who holds more than 5% of the shares or of the voting rights in any listed company is required to disclose to the company the number of shares or voting rights held by him and any change in shareholding or voting rights (even if such change results in the shareholding falling below 5%) if there has been change in such holdings from the last disclosure made, provided such change exceeds 2% of the total shareholding or voting rights in the company. Such disclosure is required to be made within two working days of: (i) the receipt of intimation of allotment of the shares; or (ii) the acquisition or the sale of the shares or voting rights. Further, all directors and officers of a listed company are required to disclose to the company the number of shares or voting rights held and positions taken derivatives by such person in such company within two working days of becoming a director or officer of such company. All directors and officers of a listed company are also required to make periodic disclosures of their shareholding in the company as specified in the Insider Trading Regulations. Depositories In August 1996, the Indian Parliament enacted the Depositories Act, 1996 which provides a legal framework for the establishment of depositaries to record ownership details and effect transfers in electronic book-entry form. SEBI framed the SEBI (Depositories and Participants) Rules and Regulations, 1996 which provide for the formation of such depositaries and the registration of participants as well as the formation of the rights and obligations of the depositaries, participants, beneficial owners and issuers. The depositary system has significantly improved the operation of the Indian securities markets. The Depositories Act requires that every person subscribing to securities offered by an issuer has the option either to receive the security certificate or hold the securities with a depository. The National Securities Depository Limited and the Central Depository Services Limited are two depositories that provide electronic depository facilities for the trading of equity and debt securities in India. Trading of securities in book-entry form commenced in December 1996. In order to encourage “dematerialisation” of securities, SEBI has set up a working group on dematerialisation of securities comprising foreign institutional investors, custodians, stock exchanges, mutual funds and the National Securities Depository Limited to review the progress of securities and trading in dematerialised form and to recommend scrips for compulsory, dematerialised trading in a phased manner. In January 1998, SEBI notified of various companies for compulsory dematerialised trading by certain categories of investors such as foreign institutional investors (“FIIs”) and other institutional investors and also notified compulsory dematerialised trading in specified scrips for all retail investors. Subsequently, SEBI has significantly increased the number of scrips in which dematerialised trading is compulsory for all investors. Under the Depositories Act and guidelines issued by SEBI, the Company shall give the option to subscribers/shareholders to receive the security certificates and hold securities in dematerialised form with a depositary. However, even in the case of scrips notified for compulsory dematerialised trading, investors, other than institutional investors, are permitted to trade in physical shares on transactions outside the stock exchange where there are no requirements of reporting such transactions to the stock exchange and on transactions on

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the stock exchange involving lots of less than 500 securities. Transfers of shares in book-entry form require both the seller and the purchaser of the equity shares to establish accounts with depositary participants registered with the depositaries established under the Depositories Act, 1996. Charges for opening an account with a depository participant, transaction charges for each trade and custodian charges for securities held in each account vary depending upon the practice of each depository participant and have to be borne by the accountholder. Upon delivery, the shares shall be registered in the name of the relevant depositary on the company’s books and this depositary shall enter the name of the investor in its records as the beneficial owner, thus effecting the transfer of beneficial ownership. The beneficial owner shall be entitled to all rights and benefits and be subject to all liabilities in respect of his/her securities held by a depositary. Every person holding equity share capital of the company and whose name is entered as a beneficial owner in the records of the depository is deemed to be a member of the concerned company. The Companies Act requires that Indian companies making any initial public issue of securities for or in excess of Rs.100 million should issue such securities in dematerialised form. Derivatives Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in February 2000 and derivative contracts were included within the term “securities,” as defined by the SCRA. Trading in derivatives in India takes place either on separate and independent derivatives exchanges or on a separate segment of an existing stock exchange. The derivative exchange or derivative segment of a stock exchange functions as a self regulatory organisation under the supervision of SEBI. Derivatives products have been introduced in a phased manner in India starting with future contracts in June 2000 and index options, stock options and stock futures in June 2000, July 2001 and November 2001, respectively.

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DESCRIPTION OF THE EQUITY SHARES

Set forth below is certain information relating to our Company’s share capital, including brief summaries of certain provisions of our Memorandum and Articles of Association, the Companies Act, the Securities Contracts (Regulation) Act, 1956 and certain related legislations of India, all as currently in effect relating to the rights attached to the Equity Shares. General As on the date of this Preliminary Placement Document, the authorised share capital of our Company is Rs 200,000,000, comprising of 20,000,000 Equity Shares of Rs. 10 each. Our Equity Shares are listed on the BSE , NSE and DSE. The security identification codes for our Equity Shares are as follows: ISIN : INE193E01017 BSE Code : 500031 NSE Code : BAJAJELEC DSE Code : 02031 Equity Share Capital History Articles of Association Our Company is governed by our Articles of Association. Dividends Under the Companies Act, an Indian company pays dividend upon a recommendation by its board of directors and subject to approval by a majority of the members, who have the right to decrease but not to increase the amount of the dividend recommended by our board of directors. However, the board of directors is not obligated to recommend a dividend. The decision of the Board of Directors and shareholders of our Company may depend on a number of factors, including but not limited to our Company’s profits, capital requirements and overall financial condition. According to the Articles of Association of our Company, no Dividend shall be declared or paid by our Company for any financial year except out of the profits of our Company for that year arrived at after providing for depreciation in accordance with the provisions of the Companies Act or out of the profits of our Company for any previous financial year or years arrived at after providing for depreciation in accordance with those provisions and remaining undistributed or out of both or out of money provided by the Central Government or State Government for the payment of dividend in pursuance of a Guarantee given by the Government and except after the transfer to the reserves of our Company of such percentage out of the profits for that year not exceeding ten percent as may be prescribed or voluntarily such higher percentage in accordance with the rules as may be made by the Central Government in that behalf. However, whether owing to inadequacy or absence of profits in any year, if our Company proposes to declare out of the accumulated profits by our Company in previous years and transferred by it to the reserve, such declaration of dividend shall not be made except in accordance with such rules as may be made by the Central Government in this behalf, and whether any such declaration is not accordance with such rules, such declaration shall not be made except with the previous approval of the Central Government. Under the equity listing agreement listed companies are mandated to declare dividend on per share basis only. The directors may without the sanction of a general meeting pay interim dividend to one or more classes of shares to the exclusion of others, at rates

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which may be differing from class to class, if in their opinion the position of our Company justifies the same. While declaring such a dividend the directors should satisfy themselves that the preference shares, which have a prior claim in respect of payment of dividend, should have their entire rated dividend at the time of final preparation of accounts for that period. Under the Companies Act, dividends can only be paid in cash to shareholders listed on the register of shareholders or those persons whose names are entered as beneficial owners in the record of the depository on the date specified as the “record date” or “book closure date.” No unpaid or unclaimed dividend shall be forfeited unless the claim thereto becomes barred by law. Our Company shall comply with the provisions of sections 205A of the Companies Act in respect of unpaid or unclaimed dividend. Where our Company had declared a dividend which has not been paid or claimed by the shareholders entitled to the payment of such dividend, our Company shall within seven days from the expiry of 30 days from declaration of such dividend open a special account in any scheduled bank called “Unpaid Dividend of Bajaj Electricals Limited” and transfer to the same the amount that remains unpaid. Any dividend payments unclaimed by the shareholders for over seven years from the date of disbursement is required to be deposited by our Company with the Investor Education and Protection Fund constituted by the Central Government, from where the amounts deposited can neither be claimed by the shareholders nor by our Company. At our Annual General Meeting on March 31, 2009, our shareholders approved a dividend of 100 per cent. in relation to our Shares which was paid on August 4, 2009 to all eligible shareholders. Under the Companies Act, dividends may be paid out of profits of a company in the year in which the dividend is declared or out of the undistributed profits or reserves of the previous fiscal years or out of both in compliance with the provisions of Companies (Declaration of Dividend out of Reserves) Rules, 1975. Under the Companies Act, a company may pay a dividend in excess of 10 percent of paid-up capital in respect of any year out of the profits of that year only after it has transferred to the reserves of the company a percentage of its profits for that year, ranging between 2.5 percent to 10 percent depending on the rate of dividend proposed to be declared in that year. The Companies Act further provides that if the profit for a year is insufficient, the dividend for that year may be declared out of the accumulated profits earned in previous years and transferred to reserves, subject to the following conditions: (i) the rate of dividend to be declared may not exceed the lesser of the average of the rates at which dividends were declared in the five years immediately preceding the year, or 10 percent of paid-up capital; (ii) the total amount to be drawn from the accumulated profits from previous years may not exceed an amount equivalent to 10 percent of paid-up capital and reserves and the amount so drawn is first to be used to set off the losses incurred in the financial year before any dividends in respect of preference shares or shares; and (iii) the balance of reserves after withdrawals must not be below 15 percent of paid-up capital. Capitalisation of Profits Our Company may capitalise the whole or part of the amount for the time being standing in credit of any of our Company’s reserve account or to the profit or loss account or available for distribution, upon recommendation of our Board of Directors. The Articles of Association of our Company provide that any general meeting may resolve that any amount standing to the credit of the share premium account or the capital redemption reserve account or any moneys, investment or other assets forming part of the undivided profits (including profits or surplus moneys arising from the realization and where permitted by law, form the appreciation in value of any capital assets of our Company) standing to the credit of the general reserve, reserve or any reserve fund or any other fund of our Company or in the hands of our Company and available for dividend may be capitalised. Any such amount (excepting the amount standing to the credit of the share premium account and/or the capital redemption reserve account) may be capitalised (i) by the issue and distribution as fully paid shares, debentures, debenture-stock, bonds or obligation of our Company, or (ii) by crediting the shares of our Company to the credit of the share premium account may be applied in, (1) paying up unissued shares of our Company to be issued to members of our Company as fully paid bonus shares, (2) in writing off the preliminary expenses of our Company, (3) in writing off the expenses of, or the commission paid or discount allowed on any issue of shares or debentures of our Company, or (4) in providing for the premium payable on the redemption of any redeemable preference share or of any debentures of our Company provided further that any amount standing to the credit of the

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capital redemption reserve account shall be applied only in paying up unissued shares of our Company to be issued to the members of our Company as fully paid bonus shares. Further, subject to the provisions of the Companies Act and our Company’s Articles of Association, in cases where some of the shares of our Company are fully paid and others are partly paid only, such capitalisation may be effected by the distribution of further shares in respect of the fully paid shares, and in respect of the partly paid shares the sums so applied in the extinguishments or diminution of the liability on the partly paid shares shall be so applied prorata in proportion to the amount then already paid or credited as paid on the existing fully paid and partly paid shares respectively. In addition to permitting dividends to be paid out of current or retained earnings, the Companies Act permits the company to distribute an amount transferred from the general reserve or surplus in its profit and loss account to its shareholders in the form of bonus shares, which are similar to a stock dividend. The Companies Act also permits the issue of bonus shares from a share premium account. Bonus shares are distributed to shareholders in the proportion of the number of shares owned by them as recommended by the board of directors. The shareholders on a fixed record date are entitled to receive such bonus shares. Any issue of bonus shares is subject to guidelines/regulations/circulars issued by SEBI. Bonus Shares Any general meeting of the Company on the recommendation of the board of directors may resolve that any amounts standing to the credit of the share premium account, the capital redemption reserve account, or any money investments or other assets forming part of the undivided profits, (including profits or surplus money arising from the appreciation in value of any capital asset of the Company standing to the credit of its general reserve or any other reserve, reserve fund or other fund of the Company or in the hand of the Company and available for dividend to be capitalized: (a) by the issue and distribution of shares of the Company as fully paid up and to the extent permitted

by the Companies Act, debentures, debenture-stock, bond or other obligations of the Company; or

(b) by crediting shares of the Company which may have been issued to and are not fully paid up, with the whole or part of the sum remaining unpaid thereon.

Provided that any amounts standing to the credit of the share premium account or the capital redemption reserve accounts shall be applied only in crediting payment of the capital or share of the Company to be issued to members (as herein provided) as fully paid bonus shares. Regulation 93 of the SEBI Regulations provides that no listed company shall, make a bonus issue of equity shares if it has outstanding fully or partly convertible debt instruments at the time of making the bonus issue, unless it has made reservation of equity shares of the same class in favour of the holders of such outstanding convertible debt instruments in proportion to the convertible part thereof. Further, the equity shares reserved for the holders of fully or partly convertible debt instruments shall be issued at the time of conversion of such convertible debt instruments on the same terms or same proportion on which the bonus shares were issued. Pre-Emptive Rights and Alteration of Share Capital Our Company in a general meeting may upon the recommendation of the board of directors resolve to capitalise whole or any part of the amount for the time being standing to the credit of any of our Company’s reserve account, or to the credit of the profit and loss account or otherwise available for distribution. The Companies Act and the Articles of our Company gives the shareholders the pre-emptive right to subscribe for new shares in proportion to their respective existing shareholdings unless the shareholders elect otherwise by a special resolution. The offer must include: (a) the right, exercisable by the shareholders on record, to renounce the shares offered in favour of any person; and (b) the number of shares offered and the period of the offer, which may not be less than 30 days from the date of offer. If the offer is not accepted it is deemed to have been declined. Our Board of Directors is authorised to distribute

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any new shares not purchased by the pre-emptive rights holders in the manner that it deems most beneficial to the company. The Articles of our Company provide that our Company from time to time, by ordinary resolution: • consolidate and divide all or any of its share capital into shares of larger amount than its existing

shares; • sub-divide its shares or any of them into shares of smaller amount than originally fixed by the

Memorandum subject nevertheless to the provisions of the Companies Act in that behalf and so however that in the sub-division the proportion between the amount paid and the amount, if any unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; and so that as between the holders of the shares resulting from such sub-division one or more of such shares may, subject to the provisions of the sub-division one or more of such shares may, subject to the provisions of the Act, be given any preference or advantage over the others or any other such shares;

• convert, all or any of its fully paid up shares into stock, and re-convert that stock into fully paid up

shares of any denomination; or • cancel, shares which at the date of such general meeting have not been taken or agreed to be taken by

any person and diminish the amount of its share capital by the amount of the shares so cancelled. General Meetings of Shareholders In accordance with section 166 of the Companies Act, a company must hold its annual general meeting each year within 15 months of the previous annual general meeting or within six months after the end of each accounting year, whichever is earlier, unless extended by the Registrar of Companies at the request of the company for any special reason. The Articles of Association of our Company provide that the board of directors may, whenever it thinks fit, call an extraordinary general meeting. If at any time there are not within India directors capable of acting who are sufficient in number to form a quorum, the directors present in India may call an extraordinary general meeting, in the same manner and as nearly as possible as that in which such a meeting may be called by our Board of Directors. Written notices convening a meeting setting out the date, place and agenda of the meeting must be given to the members at least 21 days prior to the date of the proposed meeting in accordance with section 171 of the Companies Act. A general meeting may be called after giving shorter notice if consent is received from all shareholders at an Annual General Meeting or from shareholders holding not less than 95 percent of the paid-up capital of our Company, at any other general meeting. The accidental omission to give notice of any meeting to or the non-receipt of any notice by the member or other person to whom it should be given shall not invalidate the proceedings at the meetings. The Articles of our Company provide that no business shall be transacted at any general meeting unless a quorum of members is present throughout the meeting. Five members present in person shall constitute the quorum. If the quorum is not present within half an hour of the time appointed for a meeting, the meeting, if convened upon such requisition as aforesaid, shall be dissolved; but in any other case it shall stand adjourned in accordance with provisions of sub-sections (3), (4) and (5) of Section 174 of the Companies Act. Voting Rights Every member present in person shall have one vote and on poll, the voting rights shall be as laid down in section 87 of the Companies Act, subject to any rights or restrictions for the time being attached to any class or classes of shares. The Articles of our Company provide that except as conferred by section 87 of the Companies Act the holders of preference shares shall have no voting rights and where the holder of preference shares has voting rights, it shall be subject to section 89 and section 92(2) of the Companies Act

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and be in same proportion as the capital paid in respect of the preference shares bears to the total paid up equity capital of our Company. The instrument appointing a proxy is required to be lodged with the company at least 48 hours before the time of the meeting. A vote given in accordance with the terms of an instrument appointing a proxy shall be valid notwithstanding the prior death or insanity of the principal, or revocation of the instrument, or transfer of the share in respect of which the vote is given, provided no intimation in writing of the death, insanity, revocation or transfer of the share shall have been received by the company at the office before the vote is given. Further no member shall be entitled to exercise any voting right personally or by proxy at any meeting of our Company in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid in regard to which our Company has exercised any right of lien. Registration of Transfers and Register of Members Our Company is required to maintain a register of members wherein the particulars of the members of our Company are entered. For the purpose of determining the shareholders the register may be closed for such period not exceeding 45 days in any one year or 30 days at any one time at such times, as the board of directors may deem expedient in accordance with the provisions of the Companies Act. Under the listing agreements of the stock exchanges on which our Company’s outstanding Equity Shares are listed, our Company may, upon at least seven days’ advance notice to such stock exchanges, set a record date and/or close the register of shareholders in order to ascertain the identity of shareholders. The trading of Equity Shares and the delivery of certificates in respect thereof may continue while the register of shareholders is closed. Directors The Articles of our Company provide that the number of directors of our Company shall not be less than 5 (five) and not be more than 12 (twelve). The directors shall be appointed by our Company in the general meeting subject to the provisions of the Companies Act and the Articles of Association. Not less than two-thirds of the directors of our Company shall be persons whose period of office is liable to determination by retirement of directors by rotation. Our Company may by a special resolution in a general meeting increase or reduce the number of its directors subject to the provisions of section 259 of the Companies Act. The directors have the power to appoint any other persons as an addition to the board of directors but any director so appointed shall hold office only up to the date of the next following annual general meeting of our Company but shall be eligible for reelection at such meeting. Subject to the provisions of section 313 of the Companies Act the board of directors shall also have the power to appoint any person to act as an alternate director for a director during the latter’s absence for a period of not less than three months from the state in which the meeting of the directors is ordinarily held. A director is not required to hold any qualification shares. Pursuant to the Companies Act not less than two-thirds of the total numbers of directors shall be persons whose period of office is subject to retirement by rotation and one third of such directors, or if their number is not three or a multiple of three, then the number nearest to one-third, shall retire from office at every annual general meeting. The directors to retire are those who have been the longest in the office since their last appointment. The directors are not required to hold any Equity Shares by way of qualification shares. Annual Report and Financial Results The annual report must be laid before the annual general meeting of the shareholders of a company. This includes financial information about the company such as the audited financial statements as of the date of closing of the financial year, directors’ report, management’s discussion and analysis and a corporate governance section, and is sent to the shareholders of the company. Under the Companies Act, a company must file the annual report with the Registrar of Companies within 30 days from the date of the annual general meeting. As required under the listing agreements with the stock exchanges, copies are required to be simultaneously sent to the stock exchanges. Our Company must also publish its financial results in at

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least one English language daily newspaper circulating in the whole or substantially the whole of India and also in a newspaper published in the language of the region where the registered office of our Company is situate. Our Company files certain information on-line, including its Annual Report, financial statements and the shareholding pattern statement, in accordance with the requirements of the listing agreements and as may be specified by SEBI from time to time. Transfer of shares Shares held through depositories are transferred in the form of book entries or in electronic form in accordance with the regulations laid down by SEBI. These regulations provide the regime for the functioning of the depositories and the participants and set out the manner in which the records are to be kept and maintained and the safeguards to be followed in this system. Transfers of beneficial ownership of shares held through a depository are exempt from stamp duty. Our Company has entered into an agreement for such depository services with the National Securities Depository Limited and the Central Depository Services India Limited. SEBI requires that our Company’s shares for trading and settlement purposes be in book-entry form for all investors, except for transactions that are not made on a stock exchange and transactions that are not required to be reported to the stock exchange. Our Company shall keep a book in which every transfer or transmission of shares will be entered. If a company without sufficient cause refuses to register a transfer of shares within two months from the date on which the instrument of transfer is delivered to the company, the transferee may appeal to the Indian Company Law Board seeking to register the transfer of shares. The Company Law Board may, in its discretion, issue an interim order suspending the voting rights attached to the relevant shares before completing its investigation of the alleged contravention. Under the Companies (Second Amendment) Act, 2002, the Indian Company Law Board will be replaced with the National Company Law Tribunal. Further, under the Sick Industrial Companies (Special Provisions) Repeal Act, 2003, which is expected to come into force shortly, the SICA is sought to be repealed and the Board of Industrial and Financial Reconstruction, as constituted under the SICA, is to be replaced with the National Company Law Tribunal. Pursuant to the listing agreements, in the event our Company has not effected the transfer of shares within one month or where our Company has failed to communicate to the transferee any valid objection to the transfer within the stipulated time period of one month, our Company is required to compensate the aggrieved party for the opportunity loss caused during the period of the delay. The Companies Act provides that the shares or debentures of a publicly listed company shall be freely transferable. However, the board of directors may, subject to Section 111A of the Companies Act, at any time in their discretion by giving reasons, decline to register shares on grounds mentioned under the Companies Act. Notice of such refusal must be sent to the transferee within one month of the date on which the transfer was lodged with the company. According to our Company’s Articles, any person who becomes entitled to shares by reason of death, lunacy, bankruptcy or insolvency of a member shall be entitled to the same dividend and other advantages to which he would be entitled if he was a registered member. Acquisition by the Company of its own Shares The Articles of our Company authorise the purchase of its own security subject to the compliance of sections 77A, 77AA and section 77B. Sections 77A, 77AA and 77B of the Companies Act empower a company to purchase its own shares or other specified securities out of its free reserves, or the securities premium account or the proceeds of the issue of any shares or other specified securities (other than from the proceeds of an earlier issue of the same kind of shares or other specified securities proposed to be bought back) subject to certain conditions, including: • the buy-back should be authorised by the Articles of Association of the company;

• a special resolution has been passed in the general meeting of the company authorizing the buy-

back;

• the buy-back is limited to 25 percent of the total paid-up capital and free reserves;

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• all the shares or other specified securities for buy-back are fully paid-up;

• the debt owed by the company is not more than twice the capital and free reserves after such buy-

back; and

• the buy-back is in accordance with the SEBI (Buy-Back of Securities) Regulation, 1998. The requirement of special resolution mentioned above would not be applicable if the buy-back is for less than 10 percent of the total paid-up equity capital and free reserves of the company and provided that such buy-back has been authorised by the board of directors of the company. A company buying back its securities is required to extinguish and physically destroy the securities so bought back within seven days of the last date of completion of the buy-back. Further, a company buying back its securities is not permitted to buy back any securities for a period of one year from the buy-back and to issue securities for six months. Every buy-back must be completed within a period of one year from the date of passing of the special resolution or resolution of the board of directors, as the case may be. A company is also prohibited from purchasing its own shares or specified securities through any subsidiary company, including its own subsidiary companies, or through any investment company (other than a purchase of shares in accordance with a scheme for the purchase of shares by trustees of or for shares to be held by or for the benefit of employees of the company) or if the company is defaulting on the repayment of deposit or interest, redemption of debentures or preference shares or payment of dividend to a shareholder or repayment of any term loan or interest payable thereon to any financial institution or bank, or in the event of non-compliance with certain other provisions of the Companies Act. Liquidation Rights The Articles of Association of our Company provide that on winding up, preference shares rank as regards capital in priority to shares to the extent of the paid up value of the said shares but to no other rights or participating in its assets. Subject to the rights of creditors, of employees and of the holders of any other shares entitled by their terms of issue to preferential repayment over the shares, in the event of a winding-up of our Company, the shareholders are entitled to be repaid the amounts of capital paid up or credited as paid up on such shares. All surplus assets after payments due to employees, the holders of any preference shares and other creditors belong to the holders of the Shares in proportion to the amount paid up or ought to have been paid up on such shares, respectively, at the commencement of the winding-up.

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TAXATION

To, The Board of Directors, Bajaj Electricals Limited 45/ 47, Veer Nariman Road, Fort Mumbai- 400001 Dear Sirs, Statement of Possible Tax Benefits available to the Company and its potential shareholders ie Qualified Institutional Buyers (‘QIB’) We hereby report that the enclosed statement states the possible tax benefits available to the Company and QIB under the Income-tax Act, 19611 presently in force in India, Wealth Tax Act, 1957 and the Gift Tax Act, 1958, presently in force in India. Several of these benefits are dependent on the Company and the QIB fulfilling the conditions prescribed under the relevant provisions of the statute. Hence, the ability of the Company and QIB to derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill. The benefits discussed in the enclosed statement are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult their own tax consultant with respect to the specific tax implications arising out of their participation in the issue. We do not express any opinion or provide any assurance as to whether:

i. the Company or QIB will continue to obtain these benefits in future; or

ii. the Act 2009 conditions prescribed for availing the benefits have been / would be met with. The contents of the enclosed statement are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company. For S R Batliboi & Company Chartered Accountants Ravi Bansal Partner Membership No.: 049365 Place:Mumbai Date: December 2, 2009

1 Amended by Finance No 2

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ANNEXURE TO STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO BAJAJ ELECTRICALS LIMITED AND QUALIFIED INSTITUTIONAL BUYERS I. Benefits available to the Company under the Income-tax Act, 1961 (‘Act’): (A) Special tax benefits

1. The Company has installed Wind Farm at Vankusawde, Satara which qualifies as power generating

unit as per the provisions of section 80-IA. The Wind Farm was commissioned in September, 1999. As per the provisions of section 80-IA of the Act the profits and gains from the business of generation of power will be eligible for deduction of 100% for a period of 10 consecutive years in a block 15 years starting from the year in which the company starts generating power, subject to compliance with conditions specified in section 80-IA of the Act. The Company has started claiming deduction under section 80-IA of the Act from the financial year 2004-05.

(B) General tax benefits

1. The Company will be entitled to claim depreciation allowance at the prescribed rates on assets under section 32 of the Act. Further, subject to fulfilment of conditions prescribed in section 32(1)(iia) of the Act, the Company will be entitled to claim accelerated depreciation of 20 per cent of the actual cost of certain new machinery or plant which has been acquired and installed after 31st March, 2005 . If, however, the assets are put to use for less than 180 days in the year in which they are acquired, the rate of accelerated depreciation will be 10 per cent. Unabsorbed depreciation, if any, for any assessment year can be carried forward and set off against any source of income in subsequent assessment years as per section 32 of the Act.

2. Subject to fulfilment of conditions, the Company will be eligible, inter alia, for deduction under sections 35(1)(i) and (iv) of the Act, in respect of any revenue or capital expenditure incurred on scientific research related to the business of the Company, other than expenditure on the acquisition of any land.

3. As per section 10(34) of the Act, any income by way of dividend received from domestic companies

referred to in section 115-O of the Act (i.e. dividend declared, distributed or paid on or after 1st April, 2003 by domestic companies) on the shares held by the Company will be exempt from tax.

4. As per section 10(35) of the Act, income received in respect of the units of a Mutual Fund specified

under clause (23D) of Section 10 or income received in respect of units from the Administrator of the specified undertaking or income received in respect of units from the specified company will be exempt in the hands of the Company. However, this exemption does not apply to any income arising from transfer of units of the Administrator of the specified undertaking or of the specified company or of a mutual fund, as the case may be. For this purpose (i) “Administrator” means the Administrator as referred to in Section 2(a) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 and (ii) “Specified Company” means a Company as referred to in section 2(h) of the Act.

5. As per section 14A of the Act expenses incurred in relation to income which does not form part of the total income under the Act will not be allowed as a deduction.

6. Income arising on transfer of equity shares or units of an equity oriented fund held by the Company

will be exempt under section 10(38) of the Act if the said asset is a long-term capital asset and securities transaction tax has been charged on the said transaction. However, the said exemption will

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not be available to the Company while computing the book profit and income tax payable under section 115JB.

7. The long-term capital gains arising to the Company from the transfer of listed securities or units, not covered under point 6 above will be chargeable to tax at the rate of 20% (plus applicable surcharge and education cess) of the capital gains computed after indexing the cost of acquisition or at the rate of 10% (plus applicable surcharge and education cess) of the capital gains computed before indexing the cost of acquisition, whichever is lower.

8. The long-term capital gains not covered under points 6 and 7 above will be chargeable to tax at the

rate of 20% (plus applicable surcharge and education cess) of the capital gains computed after indexing the cost of acquisition / improvement.

9. Short-term capital gains arising on transfer of equity shares or units of an equity oriented fund held by

the Company will be chargeable to tax at the rate of 15% (plus applicable surcharge and education cess) as per the provisions of section 111A of the Act if the securities transaction tax has been charged on the said transaction.

10. Short-term capital gains arising from the transfer of shares held in the company not covered under

point (9) above will be chargeable to tax at the rate of 30% (plus applicable surcharge and education cess).

11. In accordance with and subject to the conditions, including the limit of investment of Rs 50 lacs, and to the extent specified in section 54EC of the Act, capital gains arising on transfer of long-term capital assets of the Company shall be exempt from capital gains tax if the gains are invested within six months from the date of transfer in the purchase of long-term specified assets.

12. Under section 50B of the Act, the Company will be entitled to claim the benefit of special provision

for computation of capital gain arising in case of the transfer of an undertaking/business on slump sale basis.

13. The Company will be entitled to a deduction under section 80G of the Act in respect of amounts contributed as donations to various charitable institutions and funds covered under that section, subject to fulfilment of conditions prescribed therein.

14. As per section 74 of the Act, short-term capital loss suffered by the Company during the financial year

will be allowed to be set-off against short-term as well as long-term capital gains of the same year. Balance loss, if any, which cannot be set-off will be allowed to be carried forward for eight years for claiming set-off against subsequent years’ short-term as well as long-term capital gains. Long-term capital loss suffered during the year will be allowed to be set-off against long-term capital gains only. Balance loss, if any, which cannot be set-off will be allowed to be carried forward for eight years for claiming set-off against subsequent years long-term capital gains.

II. Benefits available to QIB shareholders of Bajaj Electricals Limited (“the Company”) a) Shareholders being Foreign Institutional Investors (‘FIIs’)

1. As per section 10(34) of the Act, any income by way of dividend received from domestic companies

referred to in section 115-O of the Act (i.e. dividends declared, distributed or paid on or after 1st April, 2003 by domestic companies) will be exempt from tax in the hands of shareholders.

2. Income arising on transfer of the shares of the company will be exempt under section 10(38) of the

Act if the said shares are long-term capital assets and securities transaction tax has been charged on the said transaction.

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3. Under section 115AD(1)(b)(iii) of the Act, income by way of long-term capital gains arising from the transfer of shares held in the company not covered under point (2) above will be chargeable to tax at the rate of 10% (plus applicable surcharge and education cess).

4. Under section 115AD(1)(b)(ii) of the Act, income by way of short-term capital gains arising on transfer of the shares of the company will be chargeable to tax at the rate of 15% (plus applicable surcharge and education cess) as per the provisions of section 111A of the Act if securities transaction tax has been charged on the said transaction.

5. Under section 115AD(1)(b)(ii) of the Act, income by way of short-term capital gains arising from the transfer of shares held in the company not covered under point (4) above will be chargeable to tax at the rate of 30% (plus applicable surcharge and education cess).

6. The benefit of indexation and foreign currency fluctuation protection as provided by section 48 of the

Income-tax Act is not applicable to FIIs while computing capital gains. Further, if gross total income of FII’s includes any short-term capital gains referred to above, deduction under chapter VI-A of the Income-tax Act shall be allowed from the gross total income as reduced by such short-term capital gains.

7. Under the provisions of section 90(2) of the Act, a FII will be governed by the provisions of the

Agreement for Avoidance of Double Taxation (AADT) between India and the country of residence of the FII if the said provisions are more beneficial than the provisions under the Act.

8. Where the business income of shareholder includes profits and gains arising from transactions on

which securities transaction tax has been charged, such securities transaction tax shall be a deductible expense from business income as per the provisions of section 36(1)(xv) of the Act.

b) Shareholders being Mutual Funds

1. Under section 10(23D) of the Act, any income earned by a Mutual Fund registered under the Securities and Exchange Board of India Act, 1992, or a Mutual Fund set up by a public sector bank or a public financial institution, or a Mutual Fund authorised by the Reserve Bank of India would be exempt from income-tax, subject to such conditions as the Central Government may by notification in the Official Gazette specify in this behalf.

c) Shareholders being Provident funds

1. Under section 10(25) of the Act any income received by the trustees on behalf of a recognised provident fund or on behalf of an approved superannuation fund or on behalf of an approved gratuity fund will be exempt from income tax. Further, the interest earned on securities by provident fund to which the Provident Funds Act, 1925 applies, and any capital gains of the fund arising from the sale, exchange or transfer of securities will also be exempt from tax.

d) Benefits available to QIB resident shareholders other than those discussed above

1. As per section 10(34) of the Act, any income by way of dividend received from domestic companies referred to in section 115-O of the Act (i.e. dividend declared, distributed or paid on or after 1st April, 2003 by domestic companies) will be exempt from tax in the hands of shareholders.

2. As per section 14A of the Act expenses incurred in relation to income which does not form part of the total income under the Act will not be allowed as a deduction.

3. Income arising on transfer of the shares of the company will be exempt under section 10(38) of the

Act if the said shares are long-term capital assets and securities transaction tax has been charged on the said transaction.

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4. The long-term capital gains accruing to the shareholders of the company from the transfer of the

shares of the company otherwise than as mentioned in point (3) above shall be chargeable to tax at the rate of 20% (plus applicable surcharge and education cess) of the capital gains computed after indexing the cost of acquisition or at the rate of 10% (plus applicable surcharge and education cess) of the capital gains computed before indexing the cost of acquisition, whichever is lower.

5. Short-term capital gains arising on transfer of the shares of the company will be chargeable to tax at the rate of 15% (plus applicable surcharge and education cess) as per the provisions of section 111A of the Act if securities transaction tax has been charged on the said transaction.

6. Short-term capital gains arising from the transfer of shares held in the company not covered under

point (4) above will be chargeable to tax at the rate of 30% (plus applicable surcharge and education cess).

7. In accordance with, and subject to the conditions, including the limit of investment of Rs. 50 lacs, and to the extent specified in section 54EC of the Act, long-term capital gains arising on transfer of the shares of the company not covered under point (3) above will be exempt from capital gains tax if the gains are invested within six months from the date of transfer in the purchase of long-term specified assets.

8. Where the business income of shareholder includes profits and gains from transactions on which securities transaction tax has been charged, such securities transaction tax shall be a deductible expense from business income as per the provisions of section 36(1)(xv) of the Act.

e) Benefits available to QIB resident shareholders being Insurance Company.

1. As per section 10(34) of the Act, any income by way of dividend received from domestic companies referred to in section 115-O of the Act (i.e. dividend declared, distributed or paid on or after 1st April, 2003 by domestic companies) will be exempt from tax in the hands of shareholders.

2. As per provisions of section 44 of the Act, notwithstanding anything to the contrary contained in the

provisions of the Act, while computing total income of Insurance Company, Capital Gains arising shall be computed in accordance with the rules contained in the First Schedule of the Act.

III. Benefits available under the Wealth tax Act,1957 and Gift tax Act, 1958:

1. ‘Asset’ as defined under Section 2(ea) of the Wealth-tax Act, 1957 does not include shares in companies and hence, the shares of the Company held by a shareholder are not liable to wealth-tax.

2. Gift made after 1st October, 1998 is not liable for any gift tax, and hence, gift of shares of the company would not be liable for any gift tax.

Notes:

(i) All the above benefits are as per the current tax law and will be available only to the sole/ first named holder in case the shares are held by joint holders.

(ii) In view of the individual nature of tax consequences, each investor is advised to consult their own tax advisor with respect to specific tax consequences of his/her participation in the scheme.

(iii) The above statement of possible direct tax benefits set out the provisions of law in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of equity shares.

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LEGAL PROCEEDINGS

Save as stated hereinbelow, our Directors and/or our Company are not involved in any legal proceedings which may adversely affect our operations, financial position and profitability. Save as stated herein, there are no material defaults, non payments or over dues of statutory dues, institutional or bank dues or dues towards holders of debentures, bonds and fixed deposits and arrears of preference shares. Summaries of all legal proceedings, which in our opinion, materially affect our operations, financial position and/or profitability, are as follows: A. PROCEEDINGS INITIATED AGAINST OUR COMPANY

Civil and Arbitral Proceedings

1. Asaka Equipment Private Limited and others have filed a writ petition (Writ Petition No.2254 of 1999), against our Company and the Nuclear Power Corporation before the Hon’ble High Court at Bombay, seeking an order to set aside an award passed by Nuclear Power Corporation in favour of our Company, in connection with the alleged installation of a high mast by our Company. The amount involved in the aforementioned proceedings is approximately Rs. 35 lacs. The aforementioned petition is pending adjudication and final disposal.

2. One Mr.R.N. Pant, a former employee of our Company has filed a suit, (No. 224 of 1976), against

our Company, for recovery of an alleged amount of Rs.162,779.12 allegedly recoverable from our Company by way of salary, profit sharing and other alleged dues. He has also instituted separate proceedings against provident fund trust for alleged recoveries in connection with provident fund. The aforementioned proceedings are pending adjudication and final disposal.

3. One Mr. Anil Moti, proprietor of Anil Allied Products, Srinagar has filed a suit bearing No. 23 of

1991 before the Hon’ble District Court, Jammu against our Company along with other defendants for the recovery of an alleged amount of approximately Rs. 23 lacs which was allegedly due from our Company and other defendants towards the actual cost of poles which were supplied through our Company. Our Company has filed the Written Statement denying all the allegations and has also disputed the jurisdiction of the aforesaid court. The Hon’ble District Court vide an order dated July 17, 1997 had dismissed the said suit for non-appearance by the plaintiff. The suit was restored upon application by the plaintiff and was again dismissed for default in October 2005. Our Company had received a summons on Aug 8, 2009 to appear before the District Court on Sept 25, 2009 as the Plaintiff had filed a restoration application. Our Company has opposed the Plantiff’s restoration application.

4. Som Engineering Corporation (“Som Engineering”) had filed a suit bearing No. 294 of 1976

before the Hon’ble Court of First Civil Judge, Kanpur for the recovery of Rs.46,029.67 against our Company, which is allegedly due on account of hundies accepted by our Company. Our Company filed an application under Section 34 of the Indian Arbitration and Conciliation Act, 1996 seeking stay of the proceedings in the aforesaid civil suit, which was rejected by court against which our Company filed an appeal in the Hon’ble High Court of Allahabad. The said appeal was allowed, which was challenged before the Hon’ble Supreme Court of India. The Hon’ble Supreme Court of India dismissed the appeal filed before it pursuant to an order dated December 2, 1991 which resulted in the Som Engineering and our Company resorting to arbitration proceedings before Shri S.K.Nigam and Shri A.K.Shende who were the appointed as arbitrators. Subsequently our Company initiated civil proceedings challenging the appointment of Mr. S.K.Nigam as an arbitrator. The Hon’ble court was pleased to allow our Company to appoint its own arbitrator and accordingly, Mr. Rafique Dada was appointed as the arbitrator. The first hearing before the arbitrators was held on August 25, 1992 when Som Engineering filed their statement of claim of

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Rs.32,96,561 which was denied by our Company. An additional claim of Rs.90,24,433.57 was filed in 1994 as per the provisions of Interest on Delayed Payments to Small Scale & Ancillary Industrial Undertaking Act, 1993. Our Company has also filed an additional written statement denying the above claims of Som Engineering. In 1999, Som Engineering filed an application for revision of claim in respect of interest on principal amount under the amended Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (Amended vide Act of 23 of 1998). As per the application, the interest claim is for an alleged amount of Rs.1,80,00,338.49. The matter was reserved for award by the arbitrators. On November 2, 2001, our Company refused to extend the time for the arbitrators for giving award, which was challenged before the Hon’ble High Court of Bombay. The Hon’ble High Court of Bombay passed an Order granting time for passing an award till March 18, 2002. The arbitral proceedings as well as the proceedings initiated before the High Court of Bombay are pending final adjudication and disposal.

5. In addition to the aforementioned civil suits filed against our Company, various persons/entities

have initiated 8 other civil proceedings against our Company which aggregate to approximately Rs. 5,80,298.

All the aforesaid civil proceedings initiated against our Company are all pending final adjudication and disposal.

Tax Related Proceedings

• Excise related proceedings

Various excise authorities have issued 23 show cause notices and initiated 14 other proceedings against our Company aggregating collectively to approximately Rs. 44.80 lacs.

B. PROCEEDINGS INITIATED BY OUR COMPANY

Criminal Proceedings 1. Our Company has filed a criminal complaint bearing No. 1442/M/2001 under section 138 of the

Negotiable Instruments Act, 1881, (“Negotiable Instruments Act”), before the Hon’ble Additional Chief Metropolitan Magistrate, Mumbai for the recovery of an alleged amount of Rs.9,13, 863 against one Shefali Electricals in connection with alleged supply of certain goods by our Company. The accused had filed an application u/s.145(2) of the Negotiable Instruments Act for summoning the witness for oral examination-in-chief, which has been rejected by the court. Our Company has also filed a summary suit against aforenamed accused in the Hon’ble High Court of Judicature at Bombay.

2. Our Company has filed a criminal complaint under section 138 of the Negotiable Instruments Act

against one Mrs. Suraj Kaur of Puneet Sales Agency, Haryana before the Hon’ble Metropolitan Magistrate Court, Esplanade, Mumbai in connection with the recovery of an alleged amount Rs.10,75,724 allegedly payable in relation to supply of goods by our Company.


before the Hon’ble Metropolitan Magistrate, Mumbai, against one Mr. Sandeep Gawli of Vinay Electronics in relation to a cheque of an alleged amount of Rs.17,72,160 payable to our Company for alleged supply and erection of highmast lighting systems at SEEPZ MIDC, Mumbai and for alleged purchase of certain goods. The aforenamed accused is absconding and has been proclaimed as wanted by obtaining process of proclamation from the Court. Our Company has also filed a summary suit bearing No.132 of 2005 against the aforenamed accused in the Hon’ble High Court of Judicature at Bombay which has appointed Court Receiver to take possession of the suit material.

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before the Hon’ble Metropolitan Magistrate, Mumbai, against one Mr. Krishna Mohan of M/s. Gold Diggers Private Limited, Pune in relation to a cheque issued to our Company allegedly amounting to Rs.9,56,600 in relation to the supply of goods by our Company.

5. In addition to the aforementioned criminal proceedings, our Company has filed various criminal

complaints before various courts under Section 138 of the Negotiable Instruments Act for the alleged dishonour of cheques issued by various persons and/or entities, which collectively aggregate to approximately Rs.23,45,144.

All the aforesaid criminal proceedings initiated by our Company are all pending final adjudication and disposal.

Civil and Arbitral Proceedings

1. Our Company has filed a writ petition bearing No.1480 of 2004 in the High Court of Bombay

against the Inspector, Legal Metrology Department (“Department”) interalia challenging the seizure & detention of Company’s products worth Rs. 2.02 Crores on December 9, 2003 without giving any prior notice. It is the case of the Department that the names and address of the manufacturer in the country of origin and the name of the importer was not mentioned on the package of our Company’s products which allegedly was violative of the Standards of Weights and Measures Legislation. The Department had also obtained an undertaking from our Company’s warehouse supervisor that the seized goods shall not be sold or disposed off until receipt of further orders. Our Company had filed the Writ Petition against the Controller of Legal Metrology, which was admitted on February 13, 2004 and the Hon’ble High Court was pleased to grant an interim relief in favour of our Company restraining the Department from taking any action / coercive steps against our Company pending hearing and final disposal of the Writ Petition. The goods which were seized by the Department were directed to be released. The Department has filed its reply and the matter will come up in due course.

2. Our Company has filed a suit bearing Summary Suit No. 283 of 1992 for the recovery of

outstanding of Rs. 14,65,939.10 (inclusive of sales tax liability & interest ) for the supply of fittings made by our Company to Anil Allied Products. The summons issued to the defendants were undelivered. Our Company later attempted to serve the Writ of summons by way of substituted service by advertising the same in the newspaper "Daily Excelsior", dated February 24, 2000 and got the same published in 2000.

3. Our Company has filed a suit bearing No. 1700 of 1992 before the High Court of Bombay, for

recovery of an alleged amount of Rs. 9,10,486.86 (including principal amount of Rs. 6,66,941.91 and interest at the rate of 21% p.a. amounting to Rs. 2,43,433.95 as on 1992) for supply of defective storage water heaters and non performance of guarantee obligation by Hi-Speed Appliances Private Limited, Pune. The defendants have filed their written statement in 2001.

4. Our Company has filed a Suit bearing no. 132 of 2005 before the High Court of Bombay against

Sandeep Gawli and others, for orders and decree to pay to our Company a sum of Rs. 17,72,160 with interest thereon at the rate of 21% per annum from the date of filing of the suit till payment or realization; for appointment of court receiver for recovery of material supplied and injunction against the defendants restraining from using the material supplied by our Company. A court receiver was appointed to take possession of the suit material and the defendant was given 2 weeks time to co-operate with the Receiver for return of goods. A writ of summons were sent through Sheriff of Mumbai to both the defendants, However, the same were returned with the remarks “Intimation Posted”. The Ld. Prothonotary & Sr.Master of the Court was pleased to hold the same as good service and therefore the matter has been transferred to uncontested cause.

119

5. Our Company has filed a suit bearing No. 3265 of 2004 before the High Court of Bombay against Bajaj Consumer Care Limited for orders and decree to pay to our Company an alleged sum of Rs.14,42,608.64 due to our Company towards the cost of electrical installations at the factory of the defendant at Hyderabad. A written statement has been filed by the defendant.

6. Our Company has filed various suits before the Court of Small Causes, Bombay and the High

Court of Bombay for the recovery of various amounts aggregating to Rs. 12,53,158 from various persons and/or entities.

All the aforesaid civil proceedings initiated by our Company are all pending final adjudication and disposal.

Tax Related Proceedings

• Income Tax related proceedings initiated by our Company

Our Company has filed 63 appeal, and 9 reference applications against various orders passed by income tax authorities and/or sub-ordinate appellate/revisional forums, in connection with alleged income tax and wealth tax related liabilities. The aggregate amount involved in the aforementioned proceedings is approximately Rs. 55.4 lacs.

• Sales Tax related proceedings initiated by our Company

Our Company has initiated 73 sales tax related proceedings against various orders passed by various sales tax related authorities and/or appellate/revisional forums, aggregating collectively to approximately Rs. 540 lacs. Trademark Related Proceedings

1. The Deputy Registrar of Trade Marks, vide Order dated June 26, 1995 dismissed our Company's

Opposition to the Application bearing No.471994 filed by Bajaj Engineering Works for registration of Trade Mark "Bajaj" in respect of certain goods falling in Class-7 of the Schedule-4 to the Trade & Merchandise Marks Act, 1958. The said order was challenged before the Hon’ble High Court of Delhi. Our Company has also made an application for Stay of the said Order. The matter was transferred to the Dy. Registrar of Trade Mark, New Delhi, who heard the objections of our Company on March 12, 2001 and passed an Order against our Company. Our Company has now filed a Suit bearing No.561 of 2001 in the High Court at Delhi against the said Order and obtained an interim relief that the subject trademark under dispute shall be subject to the decision of the High Court in the Suit. The Court has called upon the Respondent for filing their reply. In view of the new enforcement under the new Trade Marks Act, 1999, High Courts are under statutory obligation to transfer all pending appeals and rectification proceedings to the Trade Marks Appellate Board constituted under the new Act. Presently, the Trade Marks Appellate Board has been constituted having Head Office at Chennai. The case was renumbered as Transfer Appeal No.TA/331/2204/TM/DEL and the matter was kept for hearing on February 11, 2009 by the Intellectual Property Appellate Board at Delhi. The Respondent made a request for adjournment of hearing and in response to their request, the Hon’ble Board adjourned the hearing on 20.4.2009.

2. Our Company has filed a Suit bearing No. 1061 of 2001 along with the Notice of Motion for

interim relief before the High Court of Bombay alleging infringement of the Registered Designs Nos.175417 in Class-1 and 175418 in Class-3 in respect of Instant Water Heaters by K.K.Electricals and V.D.Applicances. On March 29, 2001, the Hon’ble High Court was pleased to grant an interim injunction in favour of our Company. The High Court was later pleased to confirm its ad-interim order on October 28, 2002.

120

3. Our Company had filed a Suit against Sri Ram and Sons & Ors, bearing No.3305 of 95 on in 1995

before the High Court at Bombay for perpetual Order and injunction against the Respondents from using any design similar to our Company 's design No.163381 (REGAL FANS). Our Company's prayer for the said relief was declined in 1997 on the grounds that if both the designs under dispute are registered design, the remedy is available U/s.51A of the Design Act, 1911 for cancellation of Design. Our Company filed an Appeal No.355 of 1998 before the Division Bench, High Court at Bombay, where the interim relief was declined. Against certain observations of the Division Bench of High Court while declining the interim injunction in 1998, Our Company filed an SLP in the Supreme Court in August 1998, which was dismissed.

Our Company has filed a Misc. Application bearing No.69 of 1995 in the High Court at Bombay for cancellation of Design No.167584 registered by Siri Ram & Sons, which also filed a Misc. Petition No.8 of 1996 in 1996 for seeking an Order U/s.51A of the Designs Act, 1911 for cancellation of our Company 's Design bearing No.163381, dated 5.7.1991. Our Company made an application to The Controller of Patents and Design with a request to provide information in respect of Defendants’ design registered under registration No.167584. By an order dated June 24, 2005, his lordship justice S.U. Kamdar made the Petition No.8 of 1996 absolute for removal and cancellation of our Design. Against the said order, our Company had preferred an Appeal on February 20, 2006, which has also been dismissed. Against the said dismissal our Company has filed a Revision petition.

4. Our Company has filed a Suit on April 3, 1998 against M/s.Khajanchi Electricals Private Limited

for "passing off" under the Trade Marks & Merchandise Act using the Trade Mark "REGAL". The Company's application for grant of an ad-interim relief was declined on 2.7.1998. On 16.1.2001, the Company's application for grant of interim relief was also declined. Against the said Order, the Company has, on or around 24.2.2001, preferred an Appeal bearing No.216/2001 before the Division Bench of Bombay High Court. The Appeal was admitted on November 27, 2001 after submissions. The said Appeal has not come up for hearing as yet. The Company has filed an application for early hearing of the matter by the Division Bench. Notice of Motion dated August 1, 2007 was taken out in terms of Order 41 Rule 27 for adducing the additional and further evidence and documents. Also, an affidavit in support of the same was filed with the court. A new Notice of Motion and an affidavit in support of the same dated 8.8.2007 filed. The Court set aside the order of the Trial Court and allowed the draft amendments and ordered the same to be carried out. The Hon’ble Court also granted liberty to move the Trial Court for immediate relief after the amendments. The Plaint has been reaffirmed and re-declared with the amendments.

5. The Company has filed a Suit bearing No. 3433 of 1999 against Indo Appliances, Sunrise

International and KK Electricals before the High Court of Bombay alleging infringement of the Registered Design No.163381 in respect of 4 blades of Ceiling Fan (Regal). The Suit is filed on 4.5.1999 and the Notice of Motion for ad-interim reliefs is served upon the defendants. The Court has on 28.1.2000 granted interim reliefs being an interim injunction against the defendants from infringing the Company's Registered Design and/or passing off their fans as the Company's fans, as per prayer (a) & (b) of the Notice of Motion. On April 16, 2001, the High Court has confirmed the interim injunction against the Defendants and made it absolute to remain operative till disposal of suit.

C. PROCEEDINGS INITIATED AGAINST OUR DIRECTORS There are no material legal proceedings initiated against any of our Directors.

121

MATERIAL DEVELOPMENTS

Save as disclosed hereinafter, there have been no developments since March 31, 2009 which effect the operations, or financial condition of our Company: 1. Pursuant to a resolution passed by the shareholders of our Company on July 30, 2009, Dr. R. P.

Singh has been appointed as a director of our Company; 2. Pursuant to a resolution passed by the shareholders of our Company on July 30, 2009, Mr. Madhur

Bajaj has been re-appointed as a director of our Company; 3. Pursuant to a resolution passed by the shareholders of our Company on July 30, 2009, Dr. (Mrs.)

Indu Sahani has been appointed as a director of our Company; 4. Our Company allotted 96,400 Equity Shares (under the “Loyalty” plan) under our ESOP Scheme,

pursuant to a resolution dated August 11, 2009 passed by the committee of our Board; 5. Our Company executed a registered user agreement dated September 10, 2009 with Morphy

Richards Limited pursuant to which Morphy Richards Limited had granted a license to our Company to use the trade mark “Morphy Richards” in relation to the products that our Company may procure/import for marketing of the same in India and elsewhere, as per the terms and conditions mentioned therein.

6. Our Company allotted 58,650 Equity Shares under our ESOP Scheme, pursuant to a resolution

dated September 22, 2009 passed by the committee of our Board; 7. Our Company executed a manufacturing distributorship agreement dated October 6, 2009 with

Ruud Lighting Inc. pursuant to which Ruud has granted our Company an exclusive license to manufacture, assemble and distribute designated Ruud products i.e. LED products of Ruud’s Ruud, Beta and Kramer divisions.

122

GENERAL INFORMATION

1. Our Company was incorporated as Radio Lamp Works Limited under the Indian Companies Act,

1913 as a public company limited by shares, pursuant to a certificate of incorporation dated July 14, 1938. Subsequently the name of our Company was changed to Bajaj Electricals Limited, pursuant to a fresh certificate of incorporation dated October 1, 1960. Our Company’s registered office is located at 45-47, Veer NarimanRoad, Mumbai - 400001, India.

2. Our Company shall apply for in principle approvals to list the Equity Shares on the NSE, DSE and

BSE. 3. The Offering was authorised and approved by the Board of Directors on October 12, 2009 and

approved by the shareholders in their EGM held on November 18, 2009. 4. Copies of Memorandum and Articles of Association of our Company will be available for

inspection during usual business hours on any weekday (except Saturdays and public holidays) at our Company’s registered office.

5. Our Company has obtained all consents, approvals and authorizations required in connection with

this Offering. 6. There has been no material change in our Company’s financial or trading position since September

30, 2009, the date of the latest financial statements. 7. Except as disclosed in this Preliminary Placement Document, there are no material litigation or

arbitration proceedings against or affecting our Company or its assets or revenues, nor is our Company aware of any pending or threatened litigation or arbitration proceedings, which are or might be material in the context of this Offering of Equity Shares.

8. Our Company’s statutory auditors are M/s Dalal & Shah, Chartered Accountants, who have

audited the financial statements of our Company as of and for the years ended March 31, 2007, March 31, 2008, and March 31, 2009.

9. Our Company confirms that it is in compliance with the minimum public shareholding

requirements as required under the terms of the listing agreements with the Stock Exchanges. 10. The Floor Price for the Offering is Rs. 782.44, calculated in accordance with Regulation 85 of the

SEBI Regulations, as certified by M/s Dalal & Shah, Chartered Accountants.

123

FINANCIAL STATEMENTS

Sl No. Particulars Page No. 1. Audited Financial Statements for the financial years ended March 31, 2007,

2008 and 2009 F -1 – F -141

2. Limited Review Report on the Unaudited Financial Statements for the six-months ended September 30, 2009

F-142 – F -146

F-1

FINANCIAL STATEMENTS

AUDITORS’ REPORT

We have audited the attached Balance Sheet of BAJAJ ELECTRICALS LIMITED, as at 31st March 2007 and also the annexed Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our Audit. (1) We conducted our audit in accordance with auditing standards generally accepted in India. Those

Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An Audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

(2) As required by the Companies (Auditor’s Report) Order, 2003 (CARO, 2003), issued by the

Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we annex hereto a Statement on the matters specified in paragraphs 4 of the said Order;

(3) Further to our comments in Annexure referred to in paragraph 2 above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the

Company so far as appears from our examination of the Books of the Company; (c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by

the report are in agreement with the Books of Account of the Company; (d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow

Statement dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, to the extent applicable.

(e) On the basis of the written representations received from the Directors as at 31st. March,

2007, and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st. March, 2007 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given

to us, the said Financial Statements, read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and present a true and fair view in conformity with the accounting principles generally accepted in India: (i) In the case of the Balance Sheet, of the state of the affairs of the Company as at

31st March, 2007, (ii) In the case of the Profit and Loss Account, of the Profit for the year ended on

that date, and

F-2

(iii) In the case of the Cash Flow statement, of the cash flows of the Company for the year ended on that date.

For and on behalf of

Dalal & Shah Chartered Accountants

Anish Amin

Partner

Membership No: 40451 MUMBAI: 29th May, 2007

F-3

ANNEXURE TO THE AUDITORS’ REPORT: Statement referred to in Paragraph 2 of the Auditors’ Report of even date to the Members of BAJAJ ELECTRICALS LIMITED on the Accounts for the year ended 31st March, 2007. On the basis of the records produced to us for our verification/perusal, such checks as we considered appropriate, and in terms of information and explanations given to us on our enquiries, we state that: i. (a) The Company has maintained proper records showing full particulars including

quantitative details and situation of fixed assets. (b) As explained to us, considering the nature of the Fixed Assets, the same have been

physically verified by the management at reasonable intervals during the year as per the verification schedule adopted by the Company, whereby all the assets are verified, in a phased manner, once in a block of three years. According to the information and explanations given to us and the records produced to us for our verification, discrepancies noticed on such physical verification were not, in our opinion, material and the same have been properly dealt with in the books of account.

(c) As per the information and explanation given to us on our enquiries, the disposal of assets

during the year was not substantial, and hence would neither have an adverse impact on the operations of the Company nor affect its going concern;

ii) (a) The inventories have been physically verified by the management at reasonable intervals

during the year in a phased manner and at the close of the year; (b) The procedures of physical verification of inventories followed by the management as

explained to us are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business;

(c) According to the records produced to us for our verification and the information and explanations given to us upon our inquiries, proper records of inventory have been maintained by the Company and the discrepancies noticed on physical verification of inventories referred to above, as compared to book records, though not material, have been properly dealt with in the books of account;

iii) (a) As per the information and explanation given to us and the records produced to us for our verification, the Company has granted unsecured loans to two companies covered in the register maintained under section 301 of the Companies Act, 1956, aggregating Rs.1450 lakhs of which no amounts have been received during the year. The Company has not granted any other loans to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act,1956;

(b) As per the explanations given to us, the rate of interest at which loans referred to in (a) above are, in our opinion, not prima facie prejudicial to the interest of the Company having regards to the market yields and the business relationships with the Company to whom loans have been granted;

(c) The companies to whom loans have been granted, as referred to in (a) above, have been regular in the payment of interest, wherever stipulated. However, no repayments as to principal have been stipulated in respect of the abovementioned loan outstanding during the year;

(d) The Company has not taken any loans during the year, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act,1956;

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchase of inventory and fixed assets and for the sale of goods and services. As per the information given to us, no major weaknesses in the internal controls have

F-4

been identified by the management or the internal audit department of the Company during the year.

v) (a) On the basis of the audit procedures performed by us and according to the information and explanations given to us on our enquiries on this behalf and the records produced to us for our verification, the particulars of contracts and arrangements required to be entered into the register in pursuance of section 301 of the Companies Act, 1956 have been so entered.

(b) The transactions so entered, aggregating in excess of Rs.500,000/- in respect of each party during the year, have been, in our opinion, as per the information and explanation given to us, made at prices which are reasonable having regard to prevailing market prices as available with the Company for such transactions or prices at which transactions, if any, for similar goods have been made with other parties at the relevant time;

vi) In our opinion, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A of the Companies Act,1956, other relevant provisions of the said Act including the Companies (Acceptance of Deposits) Rules, 1975, where applicable, with regard to the deposits accepted by it from the public. Since the Company has not defaulted in repayments of deposits, compliance of Section 58AA or obtaining any order from the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any other Court or Tribunal, does not arise;

vii) On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that, the Company has an internal audit system, commensurate with the size of its business, however, in view of the scale up of the business operations, the internal audit systems needs to be strengthened;

viii) We have broadly reviewed the Books of Account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of Cost Records under Section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate;

ix) (a) According to the records of the Company, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities;

(b) According to the records of the Company and the information and explanations given to us upon our enquiries in this regards, disputed dues in respect of Sales Tax, Income-tax, Wealth-tax, Service Tax, Customs Duty, Excise Duty and Cess unpaid as at the last day of the financial year, are as follows:

F-5

(Amount in Rs.)

Sr Statutes FORUMS BEFORE WHOM PENDING

Commissioner

Appeals Tribunal Sub Court High Court Supreme

Court Total

1 Sales Tax

39,228,467

8,909,646 526,515 -

- 48,664,628

2 Income Tax -

6,989,859 -

1,764,631

- 8,754,490

3 Wealth Tax -

- - -

- -

4 Customs Duty -

- - -

- -

5 Service Tax -

- - -

- -

6 Excise Duty 3,765,824

652,116 - -

- 4,417,940

x) As per the information and explanations given to us, and keeping in the mind the restructuring proposals sanctioned by the lenders in the past, the Company has not defaulted in repayment of dues to banks or financial institutions during the year. The Company has not borrowed any sums through debentures;

xi) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other investments;

xii) The terms and conditions at which guarantees have been given by the Company for loans taken from financial institutions and/or banks by others, are, in our opinion, not prejudicial to the interest of the Company;

xiii) We were unable to establish any audit trail of fund flows, which can correlate end use with corresponding funds raised. However, as per the information and explanations given to us and on the basis of the total expenditure incurred on the various assets till date, the term loans obtained by the Company, in our opinion, have been applied for the purpose for which they were obtained;

xiv) As we were not able to establish any audit trail of fund flows which can correlate end use with corresponding funds raised, we have examined the Balance Sheet of the Company as at 31st March, 2007 upon which we found that the Company as on that date had short term sources of funds amounting to Rs.14,370.06 lakhs, which were entirely utilized towards short term applications;

xv) As per the information and explanations given to us, on our inquiries on this behalf, there were no frauds on or by the Company, which have been noticed or reported during the year.

In view of the nature of business carried on by the Company clause no (xiii) of CARO, 2003 is not applicable to the Company. Further in view of the absence of conditions prerequisite to the reporting requirement of clauses (iii) (e), (f), (g), (x), (xiv), (xviii), (xix) and (xx) the said clauses are, at present, not applicable.


DALAL & SHAH

Chartered Accountants

Anish Amin

Partner

Membership No: 40451

MUMBAI: 29th May, 2007.

F-6


As at

31st March, 2007 As at

31st March, 2006 Schedule (Rs. Lacs) (Rs. Lacs) I. SOURCES OF FUNDS : (1) Shareholders’ Funds

(a) Share Capital 1

864.29 1,024.29 (b) Reserves and Surplus 2 10,818.15 8,053.44 11,682.44 9,077.73 (2) Loans :

(a) Secured Loans 3

16,903.09 11,740.28 (b) Unsecured Loans 4 6,813.97 7,541.97 23,717.06 19,282.25 (3) Deferred Tax Adjustment (See Note 3) (a) Liability 1,192.03 1,209.18

(b) Assets

(465.58) (342.90)

726.45 866.28 TOTAL 36,125.95 29,226.26 II. APPLICATION OF FUNDS : (1) Fixed Assets 5

(a) Gross Block

13,635.80 13,241.70

(b) Less: Depreciation

4,290.83 3,633.57

(c) Net Block

9,344.97 9,608.13 Less : Impairment of Assets of

Discontinued Operations 258.83 205.85

9,086.14 9,402.28 (d) Capital Work-in-Progress 56.62 3.67 9,142.76 9,405.95 (2) Investments 6 2,229.53 1,493.94 (3) Current Assets, Loans & Advances 7

(a) Inventories

11,988.80 10,314.83

(b) Sundry Debtors

35,793.15 27,784.01

(c) Cash & Bank Balances

2,936.62 1,910.17 (d) Other Current Assets 2.67 2.88 (e) Loans & Advances 5,841.71 3,836.46 56,562.95 43,848.35

F-7

As at

31st March, 2007 As at

31st March, 2006 Schedule (Rs. Lacs) (Rs. Lacs) Less : Current Liabilities & Provisions 8

(a) Liabilities

30,087.46 23,538.74

(b) Provisions

1,724.70 2,046.46 31,812.16 25,585.20 Net Current Assets 24,750.79 18,263.15

(4) Miscellaneous Expenditure 9

2.87 63.22 (to the extent not written-off or adjusted) TOTAL 36,125.95 29,226.26 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON FINANCIAL STATEMENTS 16

As per our report attached For and on behalf of Dalal & Shah Chartered Accountants

Anish Amin Partner Membership No. 40451 Mumbai: May 29, 2007

Mangesh Patil Company Secretary

Shekhar Bajaj Chairman & Managing Director

A.K. Jalan V.B. Haribhakti

Anant Bajaj R. Ramkrishnan

Mumbai: May 29, 2007

Directors

F-8

Profit and Loss Account for the year ended 31st March, 2007

Year Ended

31.03.2007

Year Ended

31.03.2006

Schedule (Rs. Lacs)

(Rs. Lacs)

INCOME

Sales 10 - (a)

111,300.50 87,786.73

Less: Discount 732.75 635.26 Less: Excise duty 2,838.20 2,782.33 Net Sales 107,729.55 84,369.14 Operating Income 10 - (b) 156.61 220.09 Other Income 10 - (c) 430.38 195.71 108,316.54 84,784.94 EXPENSES

Cost of Goods Traded & Materials Consumed 11 82,002.28 63,147.50 Personnel Cost 12 4,426.14 3,698.81 Other Expenditure 13 12,584.11 10,343.59 Interest 14 2,307.33 1,795.66 Amounts Written Off 15 230.16 484.94 Depreciation

5

756.28 666.09 Less: Transferred from Revaluation Reserve 27.69 728.59 27.92 638.17 Contract Work-in-Progress c/f (48.67) - 102,229.94 80,108.67 Operating Profit before Extra Ordinary Items and Tax 6,086.60 4,676.27 Add/(Less):Impact of Discontinued Operations (See Note No. 5) (57.53) 316.98 Less : Damage of Material due to floods (Net of Insurance Claim) - (294.67) Profit before Tax 6,029.07 4,698.58 Taxation - Current (including Wealth Tax See Note No.15) 2,075.00 1,385.00 Taxation - Deferred (32.42) 140.17 Taxation - Fringe Benefit Tax 125.00 190.00 Profit for the year after Tax 3,861.49 2,983.41 Prior Period Expenses (2.43) (26.71) Tax in respect of earlier years - Income Tax (6.32) (2.76) Deferred Tax - (132.96)

F-9

Year Ended

31.03.2007

Year Ended

31.03.2006

Schedule (Rs. Lacs)

(Rs. Lacs)

3,852.74 2,820.98 Add : Balance b/f from previous year 700.00 506.00 Balance available for Appropriation : 4,552.74 3,326.98 APPROPRIATIONS: Capital Redemption Reserve 160.00 840.00 Interim Dividend on Preference shares 12.36 87.04 Interim Dividend on Equity Shares (Refer Directors' Report) 691.43 - Proposed Dividend (Refer Directors' Report) - 518.57 Tax on Preference Share Dividend 1.74 12.21 Tax on Equity Share Dividend 96.97 72.73 Tax on Corporate Dividend 98.71 84.94 Transferred to General Reserve 2,500.00 1096.43 Balance carried to Balance Sheet 1090.24 700.00 4,552.74 3,326.98 Significant Accounting Policies and Notes on Financial Statements 16 EPS - Numerator (See Note 30 ) 3,838.64 2,721.73 Nominal value per Share Rs. 10/- 10/- Basic & diluted (Rs.) 44.41 31.49








Directors

F-10

Schedule Nos. 1-16 annexed to and forming part of the Financial Statements for the year ended 31st March, 2007 Schedule 1 - Share Capital

As at 31.03. 2007 As at 31.03. 2006 (Rs. Lacs) (Rs. Lacs) Authorised:

10,000,000 Equity Shares of Rs.10/- each 1,000.00 1,000.00 10,000,000 Preference Shares of Rs.10/- each 1,000.00 1,000.00

2,000.00 2,000.00 Issued, Subscribed & Paid up:

8,642,880 Equity Shares of Rs.10/- each fully paid up (See Note 1 below) 864.29 864.29

( 2,000,000) 10% Cum. Redeemable Preference Shares of Rs.10/- each - 160.00

(See Note 2 below) 864.29 1,024.29

Notes: 1. Of the above equity shares (a) 2,800 Equity Shares of Rs.10/- each are allotted as fully paid pursuant to a contract without

payment being received in cash, (b) 172,780 Equity Shares of Rs.10/- each are issued to the Deferred Shareholders pursuant to the

Scheme of Conversion of Deferred Shares into Equity Shares, (c) 37,540 Equity Shares of Rs.10/- each are issued as fully paid to the Shareholders of the erstwhile

Matchwel Electricals (India) Limited in terms of the Scheme of Amalgamation, (d) 2,400,800 Equity Shares of Rs.10/- each are allotted as fully paid Bonus Shares by capitalising

Reserves. 2. 10,000,000, 11 % Cumulative Redeemable Preference Shares of Rs.10/- each fully paid issued

during 1998-99 on private placement basis were redeemable at par after 5 years with put / call option after 3 years from the date of allotment, i.e., 7th January, 1999 w.r.t. 7,000,000 shares and 21st January, 1999 w.r.t. the balance 3,000,000 shares. The tenure of the said Preference Shares was extended and the same were redeemable in four installments ,commencing January 2006, with put and call option after 3 years from previous redemption due date. On and after 1st April, 2004, Preference Shares carry dividend at the rate of 10%.

Of this, 8,000,000, 10% cumulative Preference Shares of Rs. 10/- each were fully redeemed and balance 2,000,000 Perference Shares were partly redeemed by Rs.2/- per share during the year 2005-06. During the year 2006-07, the Company exercised 'Call Option' and fully redeemed balance amount of Rs.8/- per share of 2,000,000 Preference Shares.

F-11

Schedule 2 - Reserves and Surplus

As at 31.03. 2007

As at 31.03. 2006

(Rs. Lacs) (Rs. Lacs) Securities Premium Account As per Last Account 2,289.83 2,289.83 Capital Subsidy (From Maharashtra Energy Development Agency ) As per last Account 20.00 20.00 Capital Redemption Reserve As per last Account 840.00 - Appropriated from P & L Loss A/c.on account of redemption of Preference Shares during the year 160.00 840.00 1,000.00 840.00 Revaluation Reserve: (See Note 8) As per last Account 1,090.39 1,135.15 Less: Transferred to Profit & Loss Account 27.69 27.92 Less: Adjusted on Sale of Fixed Assets 49.24 16.84

1,013.46 1,090.39 General Reserve: As per last Account 3,113.22 2,376.04 Add: Transferred from Profit and Loss Account 2,500.00 1,096.43 5,613.22 3,472.47 Less : Transitional adjustment in respect of Leave encashment Liability, net of deferred tax asset (See Note 26 )

208.60 -

Less : Transitional adjustment in respect of Gratuity Liability, net of deferred tax asset - 359.25 5,404.62 3,113.22 Profit and Loss Account 1,090.24 700.00 10,818.15 8,053.44

F-12

Schedule 3 - Secured Loans

As at 31.03. 2007

As at 31.03.2006

(Rs. Lacs) (Rs. Lacs) A) Long Term Loans : From Banks State Bank of Bikaner & Jaipur 522.00 682.00 Bank of India 651.97 851.97

Centurion Bank of Punjab Ltd (erstwhile Bank of Punjab Ltd)

297.48 389.56

UTI Bank Limited 1,645.97 1,957.76 From Institutions Housing Development Finance Corp. Ltd. 270.89 394.22 Industrial Development Bank of India Ltd. 1,545.45 909.09 Above Loans are secured by : i) First pari passu charge over present and future Fixed Assets of the Company, situated at:

a) Ranjangaon Units : Village Dhoksanghvi, Taluka Shirur, Ranjangaon, Dist. Pune - 412 210;

b) Chakan Unit : Village Mahalunge, Chakan Talegaon Road, Khed, Pune - 410 501;

c) Wind Farm : Village Vankusawade, Tal. Patan, Dist. Satara, Maharashtra 415 206;

d) Residential and Commercial properties situated at Mumbai, Ahmedabad, Raipur, Hyderabad and Bangalore; and

ii) Second pari passu charge on the Current Assets of the Company.

B) Working Capital Loans : From consortium banks Cash Credit 11,920.06 6,512.42 Above Loans are secured by : i. First pari passu charge by way of hypothecation

of inventories and Book Debts;

ii. First pari passu charge by way of Equitable Mortgage of the Company's immovable properties at Wardha and Mumbai (Reay Road);

iii. Second pari passu charge over present and future Fixed Assets of the company, situated at;

a) Ranjangaon Units : Village Dhoksanghvi, Taluka Shirur, Ranjangaon, Dist. Pune - 412 210;


F-13

As at 31.03. 2007

As at 31.03.2006

(Rs. Lacs) (Rs. Lacs) c) Wind Farm : Village Vankusawade, Tal. Patan,

Dist. Satara, Maharashtra 415 206;

d) Residential and Commercial properties situated at Mumbai, Ahmedabad, Raipur, Hyderabad and Bangalore.

These securities also extend to the various credit facilities including Guarantees and Letters of Credit of Rs. 17813.99 lacs (Previous Year Rs. 9759.23 lacs) executed on behalf of the Company established in the normal course of business.

Interest Accrued and Due on above Loans 16.87 9.95 C) Car Loans : HDFC Bank Ltd. 16.14 24.10 ICICI Bank 9.68 - Kotak Mahindra Primus Ltd. 6.58 9.21 (Secured by way of hypothecation of vehicles acquired out of the said loans)

16,903.09 11,740.28

F-14

Schedule 4 - Unsecured Loans

As at 31.03. 2007

As at 31.03.2006

(Rs. Lacs) (Rs. Lacs) Fixed Deposits 1,186.54 1,435.58 Sales Tax Deferral Loan 3,177.43 2,606.39 (an incentive under 1993 Package Scheme of Incentives of SICOM)

Short Term Loans: From Banks : Arab Bangladesh Bank Ltd. 350.00

650.00 Industrial Development Bank of India Ltd 1,000.00 - Dena Bank 1,000.00 - The Ratnakar Bank Ltd. - 600.00 Allahabad Bank - 1,500.00 From Others : Inter-corporate Deposits 100.00 750.00 6,813.97 7,541.97

F-15

Schedule 5 – Fixed Assets (Rs. In Lacs)

GROSS BLOCK DEPRECIATION NET BLOCK

Des

crip

tion

of

Ass

ets

As a

t 31

/03/

2006

Add

ition

s/

Adj

ustm

ents

Ded

uctio

ns

As a

t 31

/03/

2007

As a

t 31

/03/

2006

For

the

Yea

r

Rec

oupm

ent

on D

educ

tions

Upt

o 31

/03/

2007

As a

t 31

/03/

2007

Adj

ustm

ent o

n Im

pair

men

ts o

f D

isco

ntin

ued

Ope

ratio

ns

Adj

uste

d N

et

bloc

k 31

/03/

2007

As a

t 31

/03/

2006

Goodwill 0.38

-

-

0.38

0.38

-

-

0.38

-

-

-

-

*Land (Freehold)

231.72

-

51.54

180.18

-

-

-

-

180.18

-

180.18 231.72

*Land (Leasehold) # (See Note 8 )

376.86

-

3.97

372.89

-

-

-

-

372.89

-

372.89

376.86

Roads and Culverts

198.41

-

-

198.41

14.83

3.23

-

18.06

180.35

-

180.35 183.58

*Buildings (See Note 8 )

2,871.67

59.76

-

2,931.43

526.60

86.62

-

613.22

2,318.21

-

2,318.21 2345.07

*Ownership Premises (See Note 7 & 8)

1,317.24

6.72

74.41

1,249.55

234.57

22.54

21.87

235.24

1,014.31

-

1,014.31

1,082.67

** Plant & Machinery

5,763.81

99.31

34.10

5,829.02

1,689.81

342.67

21.04

2011.44

3,817.58

258.83

3,558.75 3,868.15

Dies, Jigs & Patterns 538.11 114.44

- 652.55 236.04 77.01

- 313.05 339.50

- 339.50 302.07

Furniture & Fixtures and Equipments

1,729.74

268.47

44.84

1,953.37

811.71

177.12

33.90

954.93

998.44

-

998.44

918.03

F-16


Des

crip

tion

of

Ass

ets

As a

t 31

/03/

2006

Add

ition

s/

Adj

ustm

ents

Ded

uctio

ns

As a

t 31

/03/

2007

As a

t 31

/03/

2006

For

the

Yea

r

Rec

oupm

ent

on D

educ

tions

Upt

o 31

/03/

2007

As a

t 31

/03/

2007

Adj

ustm

ent o

n Im

pair

men

ts o

f D

isco

ntin

ued

Ope

ratio

ns

Adj

uste

d N

et

bloc

k 31

/03/

2007

As a

t 31

/03/

2006

Trade Marks

0.40

-

-

0.40

0.40

-

-

0.40

-

-

- -

Vehicles

172.97

28.51

24.18

177.30

78.84

15.89

16.62

78.11

99.19

-

99.19 94.13

Temporary Structures

40.39

28.50

5.59

63.30

40.39

28.50

5.59

63.30

-

-

- -

Leasehold Improvements

-

27.02

-

27.02

-

2.70

-

2.70

24.32

-

24.32 -

TOTAL 13,241.70 632.73 238.63 13,635.80 3,633.57 756.28 99.02 4290.83 9,344.97 258.83 9,086.14 9,402.28 Previous Year 12,260.92 1,604.66 623.88 13,241.70 3,409.93 666.09 442.45 3633.57 9,608.13 205.85 9,402.28 Note: 1. Gross Block at cost except items marked ‘*’ which are at book value (See Note 8). ** Includes in net block, assets not in use and held for disposal of Rs.15.22 Lacs (Previous Year Rs. 113.54 Lacs) # Represents Rs 3.97 Lacs (Previous Year Rs. 3.26 Lacs) which has been amortised over the lease period.

F-17

Schedule 6 – Investments at Cost

No. and Class of Shares / Units

Face Value

As at 31.03.2007

As at 31.03.2006

Rupees (Rs. Lacs) (Rs. Lacs) Long Term : Quoted 6.75% Tax free Bonds of Unit Trust of India

77,385 Bonds (77,385 Bonds)

100 77.39 77.39

Unquoted: Government Securities: 6-Year National Savings Certificates

76300 0.76 0.77

6-Year Indira Vikas Patra* 27800 0.28 0.28 Others: In Equity Shares M.P. Lamps Limited (Partly paid Shares – Rs.2.50 per share paid up, called up Rs.5.00 per share) (See Note.9)

48,000 Equity (48,000 Equity)

10 1.20 1.20

M.P. Lamps Limited ( Partly paid shares – Rs.1.25 per share paid up, Called Up Rs.5.00 per share) (See Note 9)

95,997 Equity (95,997 Equity )

10 1.20 1.20

Trade Investments (Fully Paid):

The Kalyan Janata Sahakari Bank Ltd.

4,000 Equity (4,000 Equity) 25 1.00 1.00

Hind Lamps Limited (Associate Company)

2,00,000 À’Class Equity

(2,00,000 A Class Equity)

25 25.00 25.00

Utkal Electricals Ltd. NIL (14,400 Equity) 100 - 14.40 Mayank Electro Ltd. 100 Equity (100 Equity) 100 0.10 0.10 Bajaj Ventures Ltd. (Associate Company)

75,00,000 Equity (75,00,000 Equity)

10 375.00 375.00

Starlite Lighting Ltd. (Associate Company)

40,00,000 Equity - 10 750.00 -

In Preference Shares

Bajaj Ventures Ltd. (Associate Company)

1,00,00,000 2% Non-conv Cumu. Redeemable Pref. Shares

(1,00,00,000 Preference Shares)

10 1,000.00 1,000.00

2,154.54 1,418.95 Less : Provision for Diminution in the Value of Investment in M.P.Lamps Limited (See Note.9)

2.40 2.40

2,229.53 1,493.94

F-18


Face Value

As at 31.03.2007

As at 31.03.2006

Rupees (Rs. Lacs) (Rs. Lacs)

As at 31.03. 2007 As at 31.03.2006

Particulars Book Value Market Value

Book Value

Market Value

Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs Total Quoted

77.39 77.08 77.39 79.71

Total Unquoted 2,152.14

1,416.55

2,229.53

1,493.94

* 6-Year Indira Vikas Patra of the Face Value of Rs.27,500 (Previous Year Rs. 27,500 ) which are matured but not encashed are lying with Government department. See notes 1(V) Figures and words in brackets, in this schedule, indicate previous year’s No. and Class of Shares / Units.

F-19

Schedule 7 – Current Assets, Loans and Advances

As at 31.03.2007

As at 31.03.2006

(Rs. Lacs) (Rs. Lacs) (a) Inventories: (As valued & certified by the Management)

Stores, Spares and Packing Materials: At cost*

116.48 76.23

Raw Materials and Components: At cost* 2,894.18 1,830.16 Work-In-Progress : At cost 708.84 563.68 Finished Goods in Transit (Cost to date) 29.64 182.61 Finished Goods: At cost or net realisable value whichever is lower

8,239.66 7,662.15

11,988.80 10,314.83 *Except slow and non-moving inventory which is valued at net realisable value

(b) Sundry Debtors: Unsecured Over six months: Good 9,832.05 4,027.70 Doubtful 405.37 393.88 10,237.42 4,421.58 Less: Provision 405.37 393.88 9,832.05 4,027.70 Others : Good 25,961.10 23,756.31 35,793.15 27,784.01 (c) Cash & Bank Balances: Cash in hand 1,973.63 1,193.34 including cheques on hand Rs. 1951.05 Lacs, (Previous Year Rs.1,173.90 Lacs. )

Balance with Scheduled Banks: In Cash Credit Accounts 164.23 - In Current Accounts 525.96 500.69 In Fixed Deposits [Deposit receipts of the value of Rs. 0.80 Lacs (Previous Year Rs.0.06 Lacs) are deposited with Government Departments]

269.70 212.04

Margin Money - 1.94 Interest accrued but not due on above 2.84 272.54 2.02 216.00 Balance with Co-operative Bank: In

F-20

As at 31.03.2007

As at 31.03.2006

(Rs. Lacs) (Rs. Lacs) 0.26 0.14 Current Account The Kalyan Janta

Sahakari Bank Ltd. Maximum balance outstanding during the year Rs 0.31 Lacs (Previous Year Rs. 0.35 Lacs)

2,936.62 1,910.17 (d) Other Current Assets: Interest accrued on Investments, Loans etc.

2.67 2.88

(e) Loans & Advances: (Unsecured, considered good, unless otherwise stated):

Loans given to Companies 450.00 300.00 Hind Lamps Ltd., an associate company.

Maximum balance outstanding during the year Rs. 655.42 Lacs (Previous Year Rs.300.00 Lacs)*

Starlite Lighting Ltd., an associate company. Maximum balance outstanding during the year Rs. 1000.00 Lacs (Previous Year Rs.Nil)*

1,000.00 -

1,450.00 300.00 Housing Loans to Employees 28.58 44.83 Advances recoverable in cash or in kind or for value to be received

Good 3,957.57 3,390.28 Doubtful 155.07 122.05 4,112.64 3,512.33 Less: Provision 155.07 122.05 3,957.57 3,390.28 Contract work-in-progress 48.67 - Advance Tax (Net of Provisions) 177.53 71.79 Balances with Central Excise & Customs Department

179.36 29.56

5,841.71 3,836.46 56,562.95 43,848.35

*No repayment schedules have been stipulated.

F-21

Schedule 8 – Current Liabilities and Provisions

As at 31.03.2007

As at 31.03.2006

(Rs. Lacs) (Rs. Lacs) (a) Current Liabilities: Acceptances (See Note 14) 8,708.47 8,424.87 Sundry Creditors: Dues of Small Scale Industrial Undertakings (See Note 11(c) )

227.40 11.63

Other than Small Scale Industrial Undertakings

18,606.86 13,886.31

Overdrawn in Current Account (Temporary overdraft, as per books of account only)

366.98 52.75

Advances Received from Customers 1,728.41 698.20 Trade Deposits 366.65 387.54 Unclaimed Dividends 12.47 9.51 Interest accrued but not due on Loans 70.22 67.93 30,087.46 23,538.74 (b) Provisions: Provision for Leave Entitlement Liability (See. Note 26)

811.77 476.98

Provision for Warranties & Claims (See Note 6)

594.46 413.18

Provision for Gratuity (See Note 25) 318.47 565.00 Proposed Dividend - 518.57 Provision for Tax on Proposed Corporate Dividend

- 72.73

1,724.70 2,046.46 31,812.16 25,585.20

Schedule 9 – Miscellaneous Expenditure (to the extent not written-off or adjusted)

As at 31.03.2007

As at 31.03.2006

(Rs. Lacs) (Rs. Lacs) Compensation on Voluntary Retirement (See Note 1(XI) )

Amount un-amortised at the beginning of the year

63.22 123.57

Less : Amount amortised during the year 60.35 60.35 Amount un-amortised at the end of the year 2.87 63.22

F-22

Schedule 10 (a) Sales

Year Ended

31.03.2007


(Rs. Lacs) (Rs. Lacs) Sales (net of returns, rebates, etc.) 110,678.46 87,331.70 Job Work Receipts 2.63 76.25 Sale of Manufacturing Scrap 619.41 378.78 111,300.50 87,786.73

Schedule 10 – (b) Operating Income

Year Ended

31.03.2007


(Rs. Lacs) (Rs. Lacs) Compensation for transfer of Sales Tax Incentive entitlement

- 167.73

Income From Power Generated 156.61 49.41 Export Incentive - 2.95 156.61 220.09

Schedule 10 – (c) Other Income

Year Ended

31.03.2007


(Rs. Lacs) (Rs. Lacs) Profit/ (Loss) on Sale of Assets (Net) 61.72 (24.93) Profit/ (Loss) on Sale of Investment 3.60 - Dividend from Trade Investment 0.15 0.15 Rent Income 8.02 1.21 Foreign Exchange Fluctuation Gain / (Loss) 78.58 (50.93) Miscellaneous Income (See Note 24) 278.31 270.21 430.38 195.71

F-23

Schedule 11 – Cost of Goods Traded and Materials Consumed

Year ended 31st March 2007


(Rs. Lacs) (Rs. Lacs) a) Raw Materials & Components Consumed:

Stocks at Commencement 1,830.16 1,560.57

Purchases 14808.10 11,656.65

16,638.26 13,217.22

Less: Sales - 16.39

Less: Stocks at Close 2,894.18 1,830.16

13,744.08 11,370.67

b) Excise Duty on Increase/ (Decrease) in Stocks of Finished Goods

103.00 158.04

c) Components Processing Charges 308.32 420.10

d) Purchases Finished Goods & Material of Works Contracts

65,665.25 49,876.74

Payments to Sub-Contractors 975.60 1,000.85

66,640.85 50,877.59

e) Freight, Octroi, Entry Tax, etc. 1,928.70 1,481.78

f) (Increase) / Decrease in Stock: Stock at Commencement: Work-in-Process 563.68 651.91 Finished Goods 7,662.15 6,413.24 8,225.83 7,065.15 Stock at Close: Work-in-Process 708.84 563.68 Finished Goods 8,239.66 7,662.15 8,948.50 8,225.83 (722.67) (1,160.68) 82,002.28 63,147.50

F-24

Schedule 12 – Personnel Cost

Year ended 31st

March 2007


(Rs. Lacs) (Rs. Lacs) Salaries, Wages, Bonus, etc. 3,763.31 3,008.99 Amortisation of compensation under Voluntary Retirement Scheme

60.35 60.35

Contribution to Provident & Other Funds & Schemes

488.18 526.13

Welfare Expenses 114.30 103.34 4,426.14 3,698.81

Schedule 13 – Other Expenditure



(Rs. Lacs) (Rs. Lacs) Stores and Spares consumed 911.63

687.34 Packing Materials Consumed 300.82

291.38 Power, Fuel and Water 157.67

127.97 Rent 403.62 292.94 Rates & Taxes[Including Leasehold Land Rent Rs.0.01 Lacs, (previous year Rs.0.01 Lacs)]

31.52 21.46

Lease Rent 99.71 84.52 Insurance 71.81 91.39 Travelling, Conveyance and Vehicle Expenses 1,340.51 1,145.84 Postage, Telegrams, Telephone and Telex 289.76 256.72 Printing and Stationery 104.44 106.23 Repairs: Buildings and Roads 33.04 29.01 Machinery 73.46 54.89 Others 115.91 112.08 222.41 195.98 Directors’ Fees and Travelling Expenses 16.52 16.90 Commission to Non Executive Director 7.60 - Advertisement and Publicity 1,793.91 1,584.85 Freight and Forwarding (Net) 2,145.22 1,607.59 Product Promotion & Service Charges (Net) 1,991.09 1,390.98 Commission on sales 976.14 723.95 Donations 10.00 7.00 Provision for Doubtful Debts and Advances (Net)

44.81 15.75

Provision for Diminution in Value of Investment - 2.40 Miscellaneous Expenses 1,664.92 1,692.40

12,584.11 10,343.59

F-25

Schedule 14 Interest



(Rs. Lacs) (Rs. Lacs) Interest: Fixed Loans 757.83 741.06 Other Loans 1,774.99 1,248.21 2,532.82 1,989.27 * Less: Received /Receivable(Gross) 225.49 193.61 2,307.33 1,795.66 *Tax deducted under Section 194A Rs.27.62 Lacs (Previous Year Rs.10.14 Lacs).

Schedule 15 Amounts Written Off



(Rs. Lacs) (Rs. Lacs) Fixed Assets 5.39 17.60 Lease hold land Amortised 3.97 3.26 Bad Debts 191.02 267.16 Irrecoverable Advances, Claims, etc. 29.78 196.92 230.16 484.94

F-26

Schedule annexed to and forming part of the Financial Statements for the year ended 31st March, 2007 Schedule 16 – Notes Forming Part of the Financial Statements 1. SIGNIFICANT ACCOUNTING POLICIES

I. System of Accounting:

i. The Company generally follows the accrual basis of accounting both as to income and expenditure except those with significant uncertainties.

ii. Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of the changing value in the purchasing power of money.

iii. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the financial statements.

II. Revenue Recognition: Income:

The Company recognizes income on accrual basis. However where the ultimate collection of the same lacks reasonable certainty, revenue recognition is postponed to the extent of uncertainty. (1) Interest is accrued over the period of the loan/Investment. (2) Dividend is accrued in the year in which it is declared whereby a right to receive is

established.

(3) Profit/Loss on sale of investment is recognized on the contract date.

(4) Benefit on account of entitlement to import goods free of duty under the “Duty Entitlement

Pass Book Scheme” is accounted in the year of Export.

(5) Revenue from erection contracts is recognized based on the stage of completion determined

with reference to the costs incurred on contracts and their estimated total costs. Provision for foreseeable losses/ construction contingencies on erection contracts is made on the basis of technical assessments of costs to be incurred and revenue to be accounted for.

III. A) Fixed Assets: i) Freehold Land, Leasehold Land, Buildings (including Leasehold Land appurtenant thereto)

and Premises on Ownership basis have been revalued as on 30th September, 1994 and are accordingly carried thereafter at revalued figures less accumulated depreciation / amortisation thereon, except freehold land which are carried at their revalued figures. Additions thereafter are carried at their cost of acquisition less accumulated depreciation.

ii) Capital goods manufactured by the Company for its own use are carried at their cost of

production (including duties and other levies, if any) less accumulated depreciation and other Fixed Assets are carried at cost of acquisition (including cost of specific borrowings) less accumulated depreciation.

F-27

B) Depreciation:

i) a) Depreciation on all Fixed Assets (other than leasehold land which is amortized over the

period of lease and those mentioned in (ii) and (iii) below) is being provided on “Straight Line Method” and at the SLM rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

b) Pursuant to the revision in the rates prescribed in Schedule XIV to the Companies Act, 1956

vide notification No. GSR 756(E) dt.16.12.93 issued by the Ministry of Law, Justice and Company Affairs, depreciation has been calculated at new rates only on additions to assets made after the said date.

ii) The depreciation on increased value due to revaluation of buildings and the premises on

ownership basis, is being provided on Straight Line Method at the rates specified considering the balance period of life of the assets. The additional charge of depreciation on increased value due to revaluation of buildings and the premises on ownership basis, has been transferred from Revaluation Reserve to the Profit and Loss Account.

iii) The Company has provided 100% depreciation on items of Plant & Machinery costing

Rs.5,000/- or less upto 15.12.93. Consequent to the amendment in the schedules as indicated in Note (i) (b) above from 16.12.93, on all additions to fixed assets costing Rs.5,000/- or less, 100% depreciation is provided.

C) Impairment of Assets: The Company, at each balance sheet date, assesses individual fixed assets and groups of assets constituting “Cash Generating Units” (CGU) for impairments, if circumstances indicate a possibility or warrant such assessment. Provision is made for impairment to state the assets or CGUs at their realizable value or economic value, as the case may be.

IV Foreign Currencies Transactions:

The export sales are accounted with reference to the Mate’s Receipt at the exchange rates prevailing on the transaction date. Foreign exchange gains or losses on realisation are dealt with, as such, in the Profit and Loss account. At the close of the year, all foreign currency loans, liabilities and current assets are stated at the relevant exchange rate prevailing at the close of the year. The exchange difference arising from foreign currency transactions are dealt with, as such, in the Profit & Loss Account.

Foreign Exchange Contracts: i) Premium/Discounts are recognized over the life of the contract ii) Profits and losses arising from either cancellation or utilization of the contract and

revalorizing the contract at the close of the year, are recognized in the profit and loss account as detailed in Note No. 16 (e) in Schedule 16 to the accounts.

V Investments: Investments are valued at cost of acquisition less provisions made for diminution in the value of investments which, in the judgment of the management are necessary.

F-28

VI. Inventory Valuation:

Costs of Inventories have been computed to include all costs of purchases, cost of conversion and other cost incurred in bringing the inventories to their present location and condition. A. Finished Goods and Work-in-Process a) Finished Goods

(i) Traded finished goods and spares are valued at cost, determined on “First In First Out”

basis or Net Realisable Value whichever is lower. (ii) Finished goods manufactured by the Company are valued at lower of cost, determined on

“First In First Out” basis or Net Realizable Value. Galvanized structures / products manufactured by the company are valued at cost, determined on Specific Identification method or net realizable value, whichever is lower.

b) Work-in-Process is valued at cost. B. Raw Materials:

Raw materials are valued at weighted average cost.

C. Stores, Spares and Packing Materials :

Stores, spares and packing material are valued at monthly weighted average cost.

D. However, obsolete and non-moving inventory of raw material, stores and spares is carried at

cost or market value, whichever is lower.

VII. Employee Benefits:

A. Gratuity

The Company is making contributions on an actuarial basis as determined by the Life Insurance Corporation of India (LIC), through Bajaj Electricals Limited Employees’ Group Gratuity Trust, to the “Group Gratuity-cum-Life Assurance Scheme” under the Cash Accumulation Policy, which also covers employees who are entitled to gratuity after attainment of retirement age. However, any deficits in plan assets managed by LIC as compared to the acturial liability, is recognized as a liability immediately.

B. Superannuation


C. Provident Fund

Employees own and Employer’s contribution (after paying Family Pension Scheme portion to Provident Fund Authority) are paid to the Trustees “Bajaj Electricals Limited Employees’ Provident Fund Trust” / Concerned Authorities. Deficits in the assets, as compared to the obligations outstanding, are contributed by the Company, as and when they arise.

D. Employees’ Pension Scheme

Defined contributions to Employees’ Pension Scheme 1995 is made to the Government

F-29

Provident Fund Authority.

E. Leave Entitlement


VIII. Export Incentives:

Export incentives are accounted for on export of goods; if entitlement can be estimated with reasonable accuracy and conditions precedent to claim are fulfilled.

IX. Borrowing Costs:

Borrowing costs are recognized in the Financial Statements except in respect of specific borrowing raised for acquisition of capital asset until such time the asset is ready to be put to use for its intended purpose, which are added to carrying cost of such asset.

X. Taxation:

i) Deferred Tax Assets and Liabilities are recognized for the future tax liability arising on account of timing difference between the taxable income and the profits as per the Financial Statements.

ii) Deferred Tax Assets representing carried forward business losses and unabsorbed depreciation

are recognized to the extent the management is virtually certain that they are going to be realised in future.

iii) Deferred Tax Assets and Liabilities have been recognized by considering the tax rate, which

has been enacted or substantively enacted by the Balance Sheet date.

iv) Deferred tax assets and liabilities, as the case may be, arising on adjustments to Reserves are

netted off against the respective adjustments.

XI. Voluntary Retirement Benefits:

In order to achieve ‘Business Restructuring’ through employee strength realignment, the Company, with a long-term view, retires employees by offering a Voluntary Retirement Scheme. Aggregate liability on account of the retirement package prior to 1st April 2004 and connected statutory and other payments are, together, deferred over five financial years, being the estimated period of benefit. Similar subsequent payments are expensed to the Profit and Loss account, as and when incurred.

XII. Discontinued Operations:

Assets and Liabilities of Discontinued Operations are assessed at each Balance Sheet date. Impacts of any impairments and write backs are dealt with in the Profit and Loss Account.

Impacts of Discontinued Operations are distinguished from the Ongoing Operations of the Company, so that their impact on the Profit and Loss Account for the year can be perceived.

XIII. Provisions:

F-30

Provisions are recognized for current obligations, which are likely to entail outflow of economic resources in the future periods consequent to obligating events prior to the close of the year.

However, such obligations, not likely to entail outflows in future periods and contingent on the future outcome of events, are disclosed as a matter of information as “Contingent Liabilities”.

2. (Rs. in Lacs)

2006-07 2005-06 (i) Contingent Liabilities not provided for:

(a) Disputed Income-tax Matters 87.54 45.70(b) Disputed Excise Matters – Gross 68.02 76.93

-Net of tax 45.12 51.04(c) Disputed Sales Tax Matters – Gross 601.57 586.26

- Net of tax 399.08 388.93(d) Claims against the Company not acknowledged as debts – Gross 412.66 458.18

- Net of tax 273.76 303.96(e) Guarantees/Letter of comfort given on behalf of other companies 650.00 650.00(f) Penalty/damages/interest, if any due to non-fulfillment of any of the terms of works contracts


(ii) Uncalled liability in respect of partly paid Shares held as investments 7.20 7.20 3. The Company has recognized Deferred Taxes which result from the timing difference between the

Book Profits and Taxable Income for the Financial Year 2006-07, the details of which are as under:

(Rs. In Lacs) Particulars Balance as

at 31.03.2006

For the year recognized in

the “Profit and Loss account”

For the year on adjustments to

“General Reserve”

Balance as at

31.03.2007

Deferred Tax Liabilities: On Account of timing difference in Depreciation

1,209.18 (17.15) NIL 1192.03

Total (A) 1,209.18 (17.15) NIL 1192.03 Deferred Tax Assets: On Account of timing difference in (a) Section 43B Disallowances 23.56 7.03 NIL 30.59 (b) Leave Entitlement Liability 160.55 7.96 107.41 275.92 (c) Gratuity liability 135.36 (27.11) NIL 108.25 (d) Provision for Doubtful Debts 23.43 27.39 NIL 50.82 Total (B) 342.90 15.27 107.41 465.58 Net Deferred Tax (A-B) 866.28 (32.42) (107.41) 726.45 4. During the year and previous year, company had no specific borrowings for acquisition of capital

asset which was not put to use. 5. Impact of Discontinued Operations:

The Company had in the previous years discontinued the operations of the Matchwel Unit and the Die Casting activity at Chakan Unit. The impact of the realizations on assets disposed off in the

F-31

previous year and impairment of assets held for disposal is detailed below:

(Rs. In Lacs) Particulars 2006-07 2005-06

Profit on Sale of Development Rights of Factory Land (Matchwel Unit) NIL 316.98 Less: Impairment in the value of assets of die-casting activity 57.53 NIL Impact of impairment of Discontinued Operations (57.53) 316.98 6. As required by Accounting Standard 29 – “Provisions, Contingent Liabilities and Contingent

Assets” mandatory in its application with effect from 1st April, 2004, the Company recognized a liability aggregating to Rs. 594.46 Lacs (Previous Year Rs. 413.18 Lacs) for expected warranty claims that are estimated to be incurred in future periods arising out of sales made upto the closure of the year.

7. Ownership premises include the sum of Rs. 700/- (Previous Year Rs. 950/-) being the Face Value

of Shares in co-operative societies required to be held under their respective bye-laws. 8. The buildings (including leasehold land appurtenant thereto) and ownership premises had been

revalued as on 1st January, 1985 then resulting in the net increase in the book value by Rs. 321.01 Lacs which had been transferred to Revaluation Reserve. All the freehold land, leasehold land, buildings (including leasehold land appurtenant thereto) and premises on ownership basis had been revalued as on 30th September, 1994 resulting in a further net increase in the book value of the said assets as on 1st October, 1994 by Rs. 2,305.87 Lacs which also had been transferred to the Revaluation Reserve. As a result of the above, the total net increase in the book value of the said assets aggregates to Rs. 2,626.88 Lacs (Rs. 62.51 Lacs on freehold land and Rs. 13.69 Lacs on leasehold land, Rs. 816.49 Lacs on building and Rs. 1,734.19 Lacs on ownership premises).

The depreciation on the increased value has resulted in an additional charge for the year of Rs.27.69 Lacs (Previous Year Rs. 27.92 Lacs). An amount equivalent to the additional charge has been transferred from Revaluation Reserve to Profit & Loss Account. Such transfer, according to an authoritative professional view, is an acceptable practice for the purpose of true and fair presentation of the Company’s Financial Statements. The balance depreciation charged on original cost of assets is in accordance with the SLM rates specified in Schedule XIV to the Companies Act, 1956.

9. In respect of Investments made in M. P. Lamps Ltd., a call of Rs. 2.50 per share on 48,000 equity

shares and Rs. 3.75 per share on 95,997 equity shares aggregating to Rs. 4.80 Lacs has not been paid by the Company. On principles of prudence the entire investment in M. P. Lamps is considered as diminished and accordingly valued at Rs. NIL.

10. Estimated amount of contracts remaining to be executed on capital account Rs. 31.72 Lacs

(Previous Year Rs. NIL) net of advances. 11.(a) To the extent of information available with the Company, no amount is overdue and outstanding

at the close of the year (Previous Year Rs. NIL) payable to Small Scale and Ancillary Industrial Undertakings as defined by the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. Consequently, no provision (Previous Year Rs. NIL) in respect of Interest Payable on Delayed Payments as required by the said Act is necessary.

(b) As per the records maintained and to the extent of information available with the Company, the

outstanding dues to Small Scale Industrial Undertaking at the close of the year has been shown in Schedule 8 separately under the head “Sundry Creditors”. A Small Scale Industrial Undertaking has the same meaning as assigned to it under clause (j) of section 3 of the Industries (Development and Regulation) Act, 1951.

(c) Names of Small Scale Industrial Undertakings to whom an amount was payable and outstanding

F-32

for more than 30 days are as under:

1. HCPL Electricals Pvt. Ltd. 2. Indian Tools 3. Jain Industries 4. Jayshree Industries 5. Kriya Fasteners 6. Sankhya Shafts & Spindels Pvt. Ltd. 7. Thermolite Packaging (I) Pvt. Ltd. 8. Tulika Appliances Pvt. Ltd.

12. In absence of any information from the vendors with regards to their registration (filling of

Memorandum) under “The Micro, Small and medium Enterprises Development Act, 2006. (27 of 2006)”, the company is unable to compile the information required to be disclosed herein under section 22 of the said Act.

13. Disclosure under the Accounting Standard – 7 (Revised) “Construction Contracts”

(Rs. In Lacs) Particulars 2006-07 2005-06 (a) (i)Contract Revenue recognized during the year 257.18 1182.47 (ii)Method used to determine the contract revenue recognized and

the stage of completion (Refer note 1(II)(5) - -

(b) Disclosure in respect of contracts in progress as at the year end (i)Aggregate amount of costs incurred and recognized profits

(less recognized losses) 68.89 999.13

(ii)Advances received NIL NIL (iii)Retentions receivable NIL 3.87 (iv)Amount due from customers (included under schedule 7 –

Sundry Debtors) 539.70 1304.61

(v) Amount due to customers (included in Sundry Creditors under schedule – Current Liabilities and Provisions)

NIL 101.72

14. Acceptances include Rs. 1,377.83 Lacs (Previous Year Rs. 1,731.15 Lacs) for bills accepted by the

Company and discounted by the suppliers with Small Industries Development Bank of India under a line of credit extended to the Company, which are secured by a second charge on raw materials, goods in process, semi-finished goods, finished goods and book debts and also on the collateral security created by way of equitable mortgage on the Company’s properties at Mumbai and Wardha.

15. Provision for taxation includes Rs. 2.50 Lacs (Previous Year Rs. 5.00 Lacs), provided in respect

of wealth tax liability for the year. 16. C.I.F. value of imports, expenditure and earnings in foreign currencies and foreign exchange

exposures:

(Rs. In Lacs) 2006-07 2005-06

(a) C.I.F. value of imports: (i) Raw Materials 87.57 300.37 (ii) Capital Goods 53.87 391.83 (iii) Finished Goods 4,051.97 3,712.74 (iv) Machinery Spares 18.36 14.29

Total 4,211.77 4,419.23

F-33

(b) Expenditure in foreign currency, Gross (i) Other Expenses 262.60 326.34 (ii) Royalties 43.35 39.55

Total 305.95 365.89 (c) Earnings in foreign exchange:

(i) F.O.B. value of exports 28.09 205.63 (ii) Freight & Insurance on exports - 9.85

Total 28.09 215.48

Amount in US $ (in

Lacs)

Amount in US $ (in

Lacs) (d) Disclosure of Derivative Instruments and Foreign Currency

Exposures outstanding at the close of the year.

i) Derivative Instruments: Forward Contract 31.07 0.16 ii) Open Foreign Exchange Exposures: - Receivables and Bank Balances 0.09 0.27 - Payables 4.92 15.15 - Loans 15.12 ---- i. Purpose Hedging Hedging

(e) Exchange differences on account of fluctuations in foreign currency rates

(i)Exchange difference gains/(loss) recognized in the Profit and Loss account

78.58 (50.93)

(1) relating to Exports during the year as a part of “Sales” (0.19) 0.37 (2) on settlement of other transactions including

cancellation of forward contracts as a part of “Other income/(Other Expenses)”

78.77 (51.30)

(3) on realignment of open forward contracts against exports of the year

NIL NIL

(ii)amount of premium/discount on open forward contracts 5.86 NIL (1) Recognized for the year in the profit and loss account 0.62 NIL (2) to be recognized in the subsequent accounting period 5.24 NIL

17. Remuneration to Auditors (Including Service Tax):

(Rs in Lacs)

Particulars 2006-07 2005-06 Statutory Audit Fees 13.47 10.10 Tax Audit Fees 5.61 4.04 Certification Fees 4.72 4.35 Other Matters 6.73 NIL Out of Pocket expenses 0.47 1.91

Total 31.00 20.40

18. Commission Payable to the Managing Director and Executive Director as per Section 309(5) of the Companies Act, 1956:

(Rs in Lacs) Particulars 2006-07 2005-06

Profit Before Provisions 6,165.30 4,702.11Add: (i) Depreciation 728.59 638.17 (ii) Managerial Remuneration 77.96 43.33 (iii) Non Executive Directors’ Commission 7.60 -

F-34

(iv) Compensation under VRS 60.35 60.35 (v) Directors’ Sitting Fees 6.80 4.50

Sub Total 881.30 746.35

Total 7,046.60 5,448.46Less: (i) Depreciation as per Section 350 728.59 638.17 (ii) Profit /( Loss) on Sale of Fixed Assets 65.31 (24.93)

(iii) Gratuity, Leave encashment under VRS included in (iv) above

11.16 805.06 11.16 624.40

Net Profit computed in accordance with Section 349

6,241.54 4,824.06

Commission to Managing Director Shri Shekhar Bajaj, (Maximum commission payable as determined by the Board of Directors to be limited to an amount equal to the salary for the year).

28.25 25.25

Commission to Executive Director Shri Anant Bajaj (Maximum commission payable as determined by the Board of Directors to be limited to an amount equal to 50% of the salary for the year).

3.70

0.60

Commission to Executive Director Shri R. Ramakrishnan (On Pro-rata basis w.e.f 26.10.2006) (Maximum commission payable as determined by the Board of Directors to be limited to an amount equal to 25% of the salary for the year).

1.95

NIL

Non Executive Directors Commission * 7.60 NIL * (Includes commission of Rs.3.80 lacs paid for FY 2005-06) 18 (A) Managing Director’s Emoluments, included under ‘Salaries, Wages, Bonus, etc.’ in Schedule 12 –

Personnel Cost (Rs in Lacs)

Particulars 2006-07 2005-06 Salary 28.25 25.25Contribution to Provident Fund, Gratuity Fund & Superannuation Scheme, etc.

7.63 6.82

Perquisites 5.06 8.16

Commission 28.25 25.25Total 69.19 65.48

(B) Mr. Anant S. Bajaj, Executive Director – Emoluments included under Salaries, Wages, Bonus, etc. in

Schedule 12- Personnel Cost (Rs in Lacs)

Particulars 2006-07 2005-06 Salary 7.40 1.20 Allowances 6.84 1.14 Contribution to Provident Fund, Gratuity Fund & Superannuation Scheme, etc.

2.00 0.42

Perquisites 1.41 0.34

F-35

Commission 3.70 0.60 Total 21.35 3.70

(C) Mr. R. Ramakrishnan, Executive Director (Appointed w.e.f. 26-10-2006, subject to the approval of

members at the ensuing Annual General Meeting) – Emoluments for the period 26-10-2006 to 31-03-2007, included under Salaries, Wages, Bonus, etc. in Schedule 12- Personnel Cost.


Salary 7.79 NIL Allowances 8.82 NIL Contribution to Provident Fund, Gratuity Fund & Superannuation Scheme, etc.

2.10 NIL

Perquisites 0.65 NIL Commission 1.95 NIL

Total 21.31 NIL (D) Non – Executive Directors Commission included in Schedule 13- Other Expenditure.


Mr. H.V.Goenka 0.60 NIL Mr. A.K.Jalan 2.00 NIL Mr. Ajit Gulabchand 1.00 NIL Mr. V.B.Haribhakti 1.80 NIL Mr. Madhur Bajaj 1.20 NIL Dr. (Mrs.) Indu Shahani 0.80 NIL Late Mr. D.B. Dhruv 0.20 NIL

Total 7.60 NIL (Includes commission of Rs.3.80 lacs paid for FY 2005-06)

19. Information about Business Segments:

Company has identified its Business Segments as its Primary reportable segments which comprise of i) Lighting, ii) Consumer Durables, iii) Engineering & Projects and iv) Others. ‘Lighting’ includes Lamps, Tubes, Luminaries, ‘Consumer Durables’ includes Appliances & Fans, ‘Engineering & Projects’ includes transmission line towers, telecommunications towers, highmast, poles and special projects and ‘Others’ includes Die-casting and Wind Energy.

Primary Segment Information 1) Segment Revenue

(Rs. In Lacs) 2006-07 2005-06 a) Lighting 32,670.64 26,373.13 b) Consumer Durables 44,539.56 33,541.73 c) Engineering & Projects 30,519.35 24,457.24 d) Others 156.61 217.13

Sub-total 1,07,886.16 84,589.23 Less: Inter segment Revenue - - Net Sales / Income from Operations 1,07,886.16 84,589.23

F-36

2) Segment Results [Profit / (Loss)] before Tax and Interest from each segment (Rs. In Lacs)

2006-07 2005-06 a) Lighting 1,642.48 1,456.03 b) Consumer Durables 3,120.42 2,258.74 c) Engineering & Projects 3,608.16 3202.42 d) Others (53.54) 22.22

Sub-total 8,317.52 6,939.41 Less: I) Interest (Net) 2,307.33 1,795.66 II) Other un-allocable expenditure net of un-allocable income (76.40) 467.48 Operating Profit / (Loss) 6,086.59 4,676.27 Extra ordinary item of income / (Expenses) - - Add: Impact of Discontinued Operations (57.53) 316.98 Less: Damage of Material due to floods (Net of Insurance Claim) NIL (294.67) Profit / (Loss) before Tax 6029.06 4,698.58 Provision for Tax – Charge / (Release) 2075.00 1,385.00 Provision for Deferred Tax – Charge / (Release) (32.43) 140.17 Provision for Fringe Benefit Tax 125.00 190.00 Prior Period Expenses 8.75 162.43 Profit / (Loss) after Tax 3852.74 2,820.98

3) Capital Employed (Segment Assets less Segment Liabilities)

(Rs. In Lacs) 2006-07 2005-06

Assets Liabilities Net Assets Liabilities Net a) Lighting 7,994.24 6,400.95 1,593.29 7,373.93 5,904.83 1,469.10 b) Consumer

Durables 12,460.98 7,520.42 4,940.56 10,876.58 5,998.81 4,877.77

c) Engineering & Projects

34,884.16 9,904.31 24,979.85 25,500.41 6,323.54 19,176.87

d) Others 1,370.92 - 1,370.92 1,642.21 - 1,642.21 e)Other

Unallocable 11,224.94 7,986.48 3,238.46 9,355.12 7,358.02 1,997.10

Total 67,935.24 31,812.16 36,123.08 54,748.25 25,585.20 29,163.05

4) Total cost incurred during the year to acquire segment assets that are expected to be used during more than one period.

(Rs. In Lacs) 2006-07 2005-06 a) Lighting - - b) Consumer Durables 114.44 42.15 c) Engineering & Projects 255.08 1,357.87 d) Others - - e) Other Unallocable 263.21 204.64

Total 632.73 1,604.66

5) Depreciation and Amortisation (Rs. In Lacs)

2006-07 2005-06 a) Lighting 4.39 5.18 b) Consumer Durables 90.52 79.76 c) Engineering & Projects 364.94 298.99

F-37

d) Others 108.03 104.81 e) Other Unallocable 164.68 152.69

Total 732.56 641.43 The Company caters mainly to the needs of the Indian Markets and the export turnover being 0.03% (Previous year 0.24%) of the total turnover of the Company; there are no reportable geographical segments. All assets are located in India.

20. Related Party Transactions:

Details of Transactions with Related Parties during the year as required by Accounting Standard – 18 on ‘Related Party Transactions’ have been disclosed on the basis of parties identified by the key managerial personnel to be within the definition of Related Parties as per the Standard and noted by the Board of Directors. Accordingly, the information is disclosed hereunder.

(Rs. In Lacs) Names of Related

Parties Nature of Transactions

Transaction Value Current

Year

Outstanding

Amounts as on

31/3/2007

Transaction Value Previous

Year

Outstanding Amounts

as on 31/3/2006

(A) Associates : Hind Lamps Ltd. Purchases 5269.65 653.49 5,022.27 722.66

Sales 0.54 0.01 NIL NIL Contribution to

Equity NIL 25.00 NIL 25.00

Trade Advance Given 470.00 450.00 NIL 300.00

Interest Received 41.41 NIL 22.20 NIL Commission

Received 9.57 NIL NIL NIL

Services Rendered NIL NIL 6.44 NIL

Bajaj Ventures Ltd. Purchases 0.68 (20.88) 9.74 (16.33) Sales 0.54 0.09 0.33 NIL Contribution to

Equity NIL 375.00 NIL 375.00

Contribution to 2% Non-Cumulative Redeemable Preference Shares

NIL 1000.00 NIL 1,000.00

Interest received NIL NIL NIL NIL Trade Advances

given NIL NIL NIL NIL

Services Received NIL NIL 1.61 NIL

Starlite Lighting Ltd Purchases 2.45 (12.97) NIL NIL

Contribution to Equity 750.00 750.00 NIL NIL

Interest received 9.65 NIL NIL NIL

Trade Advances given

1000.00 1000.00 NIL NIL

F-38

Names of Related Parties Nature of

Transactions


Year

Outstanding

Amounts as on

31/3/2007


Year

Outstanding Amounts

as on 31/3/2006

(B) Directors & Relatives: Mr. Shekhar Bajaj Remuneration 69.19 28.25 65.48 25.34 Mr. Madhur Bajaj Sitting Fees 0.40 NIL 0.60 NIL Commission 1.20 0.38 NIL NIL Mrs. Kiran Bajaj Rent Paid 6.50 NIL 6.00 NIL

Rent Deposit Advanced 50.00 300.00 NIL 250.00

Mrs. Minal Bajaj Sales 0.14 NIL NIL NIL Mr. Anant Bajaj Remuneration 22.98 3.70 5.43 0.60 Mrs. Swarnalatha Ramakrishnan Rent Paid 2.64 NIL NIL NIL

Rent Deposit Advance 20.00 90.00 NIL NIL

Mr. R. Ramakrishnan Remuneration 21.31 1.95 NIL NIL Ms. Kumud Bajaj NIL NIL NIL NIL NIL Mr. Niraj Bajaj NIL NIL NIL NIL NIL Mr. Niravnayan Bajaj NIL NIL NIL NIL NIL Ms. Deepa Bajaj NIL NIL NIL NIL NIL Mr. Rahul Bajaj NIL NIL NIL NIL NIL Mr. Rajivnayan Bajaj NIL NIL NIL NIL NIL Ms. Ruparani Bajaj NIL NIL NIL NIL NIL Mr. Sanjivnayan Bajaj

NIL NIL NIL NIL NIL

Ms. Minakshi Bajaj NIL NIL NIL NIL NIL Mr. Kushagra Bajaj NIL NIL NIL NIL NIL Mr. Shishir Bajaj NIL NIL NIL NIL NIL

(C) Enterprises over which any person described in (B) above is able to exercise significant influence

Hind Musafir Agency Ltd.

Services Received 11.21 (2.35) 1.24 0.60

Reimbursement of expenses 45.98 NIL 3.25 NIL

Incentives Received 2.54 NIL NIL NIL

Bajaj Auto Limited Sales NIL 0.19 0.40 0.49

Redemption of Preference Shares

NIL NIL 300.00 NIL

Dividend on Preference Shares

NIL NIL 25.59 NIL

Prepayment charges NIL NIL 2.40 NIL

Rent Received 0.96 NIL NIL NIL

Reimbursement of Expenses 10.08 NIL NIL NIL

Purchase of DEPB Licenses NIL NIL 131.71 NIL

F-39


Transactions


Year

Outstanding

Amounts as on

31/3/2007


Year

Outstanding Amounts

as on 31/3/2006

Bajaj Hindustan Ltd. Sales 2.65 1.09 3.77 (0.28) Bajaj Shevashram Pvt. Ltd.

NIL NIL NIL NIL NIL

Jamnalal Bajaj Seva Trust Sales NIL NIL 3.56 0.08

Hall Hire Charges Paid

0.26

NIL

0.18

NIL

Maharashtra Scooters Ltd. Sales NIL NIL NIL NIL

Mukand Engineers Ltd Sales 59.69 18.47 NIL NIL Mukand Ltd. Sale 31.24 NIL (0.68) NIL

Purchases 16.25 NIL NIL NIL Reimbursement

of Expenses 0.19 (0.03) NIL NIL

Bajaj International Pvt. Ltd

Commission paid on Imports 33.55 NIL 40.00 5.43

Purchases 71.45 NIL NIL NIL

Service Rendered 0.79 NIL 3.09 NIL

Royalty Received 10.56 (9.97) 10.78 NIL

Purchase of DEPB License NIL NIL 1.23 NIL

Commission paid on Exports NIL NIL 3.54 NIL

Sale of Assets 0.52 NIL NIL NIL Sales 23.34 4.90 0.07 NIL

Reimbursement of Exp 0.03 NIL NIL NIL

Hindustan Housing Co.Ltd.

Services Received 7.08 NIL 6.67 NIL

Jamnalal Sons Pvt. Ltd. Rent Paid 19.03 NIL 19.35 NIL Rent Deposit Advanced NIL 50.00 NIL 50.00

Hercules Hoist Ltd. Corporate loan received 500.00 NIL NIL NIL

Interest paid on loan 9.41 NIL NIL NIL

Purchases 0.43 0.48 NIL NIL Reimbursement of Exp 0.45 NIL NIL NIL

Capital Goods Purchased 12.43 12.43 NIL NIL

Bajaj Allianz General Insurance Co. Ltd.

Insurance Premium paid 103.52 0.01 89.14 NIL

Claim received 162.13 NIL 498.51 NIL Sales 0.13 NIL NIL NIL Hindustan Sales 20.74 34.72 NIL NIL

F-40


Transactions


Year

Outstanding

Amounts as on

31/3/2007


Year

Outstanding Amounts

as on 31/3/2006

Construction Co. Ltd Bajaj Auto Finance Ltd. Sales NIL NIL NIL NIL

Anant Trading Co. NIL NIL NIL NIL NIL Bajaj Allianz Life Insurance Co. Ltd.

NIL NIL NIL NIL NIL

Bajaj Consumer Care Ltd.

Sales NIL 14.43 NIL NIL

Reimbursement of Exp 2.37 0.90 NIL NIL

Bajaj Auto Holdings Ltd.

NIL NIL NIL NIL NIL

Bachhraj Trading Co. NIL NIL NIL NIL NIL Bachhraj & Co Pvt. Ltd.

NIL NIL NIL NIL NIL

Baroda Industries Pvt. Ltd.

NIL NIL NIL NIL NIL

Bachhraj Factories Pvt. Ltd

NIL NIL NIL NIL NIL

Kamalnayan Investments & Trading Pvt. Ltd.

NIL NIL NIL NIL NIL

Kushagra Trading Co.

NIL NIL NIL NIL NIL

Madhur Securities Pvt. Ltd.

NIL NIL NIL NIL NIL

Rahul Securities Pvt. Ltd.

NIL NIL NIL NIL NIL

Sikkim Janseva Pratisthan Pvt. Ltd

NIL NIL NIL NIL NIL

Hind Rectifiers Ltd. NIL NIL NIL NIL NIL Hospet Steel Ltd. NIL NIL NIL NIL NIL Jeewan Ltd. NIL NIL NIL NIL NIL Kalyani Mukund Ltd. NIL NIL NIL NIL NIL Mukand International Ltd.

NIL NIL NIL NIL NIL

Mukand Global Finance Ltd.

NIL NIL NIL NIL NIL

Shishir Holdings Pvt. Ltd.

NIL NIL NIL NIL NIL

Vidyavihar Containers Ltd.

NIL NIL NIL NIL NIL

Stainless India Ltd. NIL NIL NIL NIL NIL Niraj Holdings Pvt. Ltd.

NIL NIL NIL NIL NIL

Shekar Holdings Pvt. Ltd.

NIL NIL NIL NIL NIL

Bombay Forging Ltd. NIL NIL NIL NIL NIL PT. Bajaj Auto, Indonesia

NIL NIL NIL NIL NIL

F-41


Transactions


Year

Outstanding

Amounts as on

31/3/2007


Year

Outstanding Amounts

as on 31/3/2006

Bajaj Allianz Financial Distributors Ltd.

NIL NIL NIL NIL NIL

(D) Key Management Personnel Mr. Shekhar Bajaj – Chairman & Managing Director Remuneration

69.19 28.25 65.48 25.34

Mr. Anant Bajaj – Executive Director Remuneration 22.98 3.70 3.70 0.60

Mr. R. Ramakrishnan – Executive Director Remuneration 21.31 1.95 NIL NIL

21. Details of materials consumption: (a) Raw materials and components consumed

(Rs. In Lacs) 2006-07 2005-06

Particulars Units Quantity Value Quantity Value Ferrous Metal & Components Kg. 53,233.02 65,517 Nos. 35,80,868 43,23,636 M. Tons 33,263.35

9611.79 28,247.84

8,276.07

Non-Ferrous Metal & Components

Kgs. 5,43,779.30 7,90,358.10

Nos. 14,20,832 86,50,686 M. Tons 1,454.83

3642.97

1,310.36

2,483.05

Electrical Stampings Kgs. NIL NIL Nos. 7,50,695 355.50 11,04,993 447.82

Components Others Kg. NIL NIL Nos. 7,74,634 42.97 10,72,937 54.52

Paints Ltrs. 12,233.69 16,267 Kgs. 32,646.34 67.02 39,251 77.33

Hardware & Others 23.83 31.88

Total 13744.08 11,370.67

(b) Imported & Indigenous Raw Materials, Components & Spares consumed (Rs. In Lacs)

Particulars 2006-07 2005-06 Imported and indigenous Raw Materials Consumed:

% Value % Value

Imported 0.57 77.64 2.97 337.30 Indigenous 99.43 13,666.44 97.03 11,033.37

100.00 13,744.08 100.00 11,370.67

(Rs. In Lacs) Particulars 2006-07 2005-06

Imported and indigenous stores, spare Parts and tools consumed:

% Value % Value

Imported NIL NIL NIL NIL Indigenous 100.00 911.63 100.00 687.34

100.00 911.63 100.00 687.34

F-42

22. Licensed and installed capacity and production:

Particulars Unit Licensed capacity *Installed capacity Production

2006-07 2005-06 2006-07 2005-06 2006-07 2005-06 p.a. p.a. p.a. p.a. p.a. p.a.

Fans Nos. 8,00,000 8,00,000 10,00,000 10,00,000 3,78,822 5,37,446 Parts & Accessories of Fans

Nos. 50,000 50,000 - - - -

Magneto Assemblies

Nos. 5,00,000 5,00,000 3,00,000 3,00,000 - -

Parts & Accessories for Magneto

Nos. 25,000 25,000 25,000 25,000 - -

Electric Motors Nos. 25,000 25,000 - - - - Parts & Accessories for Electric Motors

Nos. 5,000 5,000 - - - -

Dies made of Steel Nos. 90 90 24 24 - - Power Generated - - 2.8 MW 2.8 MW 40,93,311

KWH 41,93,064

KWH Highmast Shafts **

Nos. - - 2,275 2,275 2,970 1,760

Swaged/Octagonal Poles **

Nos. - - 19,700 19,700 17,181 14,951

Lattice Mast/Transmission Line Towers / Others (Galvanising Job work etc.) **

M.Tons

- - 24,000 24,000 25,223 22,822

* The installed capacity as certified by the Management, being a technical matter accepted by the Auditors as correct.

** The installed capacity is interchangeable based on business prospects.

23. Quantitative information regarding Opening and Closing Stock, Production excluding job work for outside parties, Purchases and Sales:

(Rs. In Lacs) (Quantity in ‘000 Pcs)

Opening Stock Production

Purchases for Resale Closing Stock Sales

Products Qty. Value Qty. * Qty. Value Qty. Value Qty. Value Lighting 3,132 546.39 - 71,865 11,077.41 3,092 514.12 71,905 13,524.72 (2,987) (479.30) - (66,169) (9,032.74) (3,132) (546.39) (66,024) (10,969.00)Luminaires 452 1484.36 - 3,560 15,161.58 477 1,664.30 3,535 19,436.31 (401) (1,265.62) - (3,314) (12,138.82) (452) (1,484.36) (3,263) (15,646.78)Engineering & Projects

2,075 1445.23 30,657 - 9,857.64** 1804 1,575.71 30,928 32,999.55

(1,374) (1121.24) (26,662) (8,076.45)** (2,075) (1,445.23) (25,961) (26,527.23)Appliances 339 2200.86 - 2,898 18,977.67 386 2,372.37 2,851 26,039.95

F-43



Products Qty. Value Qty. * Qty. Value Qty. Value Qty. Value (292) (1,986.84) - (2,516) (14,031.52) (339) (2,200.86) (2,468) (19,578.62)Fans 275 1,985.30 379 1830 11,566.55 306 2,113.16 2,178 19,299.96 (222) (1,560.24) (537) (1,299) (7,598.06) (275) (1,985.30) (1,783) (15,065.10) 7,662.15 66,640.85 8,239.66 1,11,300.50 (6,413.24) (50,877.59) (7,662.15) (87,786.73)

* After adjusting breakages, excess / shortage, samples etc. ** Including works contracts materials and payments to Sub-Contractors. *** Figures are in Metric tones. Notes: Figures include value of spares but not quantity.

Figures in brackets pertain to previous year. 24. Miscellaneous Income includes Rs. 65.97 Lacs (Previous Year Rs. 94.77 Lacs ) being the

liabilities no longer payable. 25. Liability for Gratuity has been determined by an actuary, appointed for the purpose, in conformity

with the principles set out in the accounting standard 15(Revised), the details of which are as hereunder.

(Rs. In Lacs) Amount to be recognized in Balance Sheet As at

31.03.2007 Gratuity Present Value of Funded Obligations Fair Value of Plan Assets Net Liability Amounts in Balance Sheet Liability Assets Net Liability

843.56 (525.09)

318.47

318.47 -

318.47 Expense to be recognized in the statement of Profit & Loss Current Service Cost Interest on Defined Benefit Obligation Expected Return on Plan Assets Net Actuarial Losses / (Gains) recognized in Year Total Included in “Employee Benefit Expense”

60.80 55.76

(25.31) (19.74)

71.51 Actual Return on Plan Assets 34.48 Reconciliation of Benefit Obligations & Plan Assets for the period Change in Defined Benefit Obligation Opening Defined Benefit Obligation Current Service Cost Interest Cost Actuarial Losses / (Gain) Benefits Paid Closing Defined Benefit Obligation Change in Fair Value of Assets Opening Fair Value of Plan Assets Expected Return on Plan Assets Actuarial Gain / (Losses)

841.35 60.80 55.76

(10.57) (103.79)

843.56

276.35 25.31 9.17

F-44

Amount to be recognized in Balance Sheet As at 31.03.2007

Contributions by Employer Benefits Paid Closing Fair Value of Plan Assets

318.04 (103.79)

525.09

Summary of the Actuarial Assumptions Discount Rate Expected Rate of Return on Assets Salary Escalation Rate

8.20% p.a

7.50% p.a. 5.00% p.a.

26. Leave Encashments:

Encashable Leave Entitlements were recognized as a Liability, in the calendar year of rendering of services, as per the rules of the Company, irrespective of encashment or availment at the actual accumulated obligations. On early implementation of Accounting Standard-15 “Employee Benefits”, which is mandatory in application w.e.f. 1st April 2007, the transitional liability as at 31st March 2007 (adoption date) has been determined with reference to the present value of the future obligation aggregating to Rs. 316.01 Lacs and has been adjusted against the balance in the General Reserve net of deffered tax asset amounting to Rs. 208.60 Lacs

27. Premises & Vehicles Taken on Operating Lease: (Rs. In Lacs)

Particulars 2006-07 2005-06 Rent and Lease rent recognized in the Profit & Loss Account 503.33 377.46

The Total Future minimum lease rentals payable at the date of Financial Statements is as under:

(Rs. In Lacs) Particular 2006-07 2005-06

Rent Lease Rent

Total Rent Lease Rent

Total

For a period not later than one year 315.42 101.88 417.30 269.65 93.97 363.62

For a period later than one year but not later than five years

793.06

131.28 924.34 1,114.70 199.77 1,314.47

later than five years 258.44 Nil 258.44 206.72 Nil 206.72

28. Previous year’s figures have been regrouped wherever necessary to make them comparable with those of the current year.

29. Statement of Abstract of Financial Statements and Company’s General Business Profile, as

compiled by the Company, is attached hereto.

30. Determination of Profits & Capital for computation of EPS: (Rs. In Lacs)

Sl. No.

Particulars 2006-07 2005-06

A. Profit for the year after Tax, before Extra Ordinary Items 3,910.27 2,798.68 Less: Preference Dividend inclusive Tax 14.10 99.25 B. Profit available to Equity Shareholder before Extra

Ordinary Items 3,896.17 2,699.43

Adjustment of Extra Ordinary Items (57.53) 22.31 C. Profit available to Equity Shareholder after Extra Ordinary

Items 3,838.64 2,721.73

F-45

Sl. No.


D. No. of Equity Shares of Rs. 10/- each 86,42,880 86,42,880 E. E P S in Rs. :- i) Before Extra Ordinary Items = B / D 45.08 31.23 ii) After Extra Ordinary Items = C / D 44.41 31.49








Directors

F-46

Cash Flow Statement for the year ended 31st March, 2007

Year ended

31.03.2007

Year ended

31.03.2006 (Rs. Lacs) (Rs.Lacs)

A. CASH FLOW FROM OPERATING ACTIVITIES :

Profit/(Loss) before Tax 6,029.07 4,698.58

Less : Liability written back (65.97)

(94.77)

Add : Amounts written off 230.16

484.94

Add : Loss / (Profit) on sale of assets (61.72)

24.93

Less: Impact of Discontinued Operations 57.53

(316.98)

Add : Damage of Material due to flood (Net of Insurance Claim) -

294.67

160.00 392.79

Net Profit/(Loss) before tax provisions & extraordinary items

6,189.07

5,091.37

Adjustments for :

Amortisation of Deffered Revenue Expenditure 60.35

60.35

Depreciation 728.59 638.17 Interest on Loans 2,532.82 1,989.27 Interest Received (225.49) (193.61) Dividend Received (0.15) 3,096.12 (0.15) 2,494.03

Interest Received 220.36

200.09

Operating Profit before Working Capital changes 9,505.55 7,785.49

Adjustments for (Increase) / Decrease in :

Trade & Other Receivables (Gross before w/o & making provision for doubtful recoveries) (8,979.45) (10,677.27)

Inventories (1,673.97) (1,574.39)

Increase / (Decrease) in Trade Payables before write back 6,562.97 (4,090.45) 8,465.27 (3,786.39)

Cash Generated from Operations 5,415.10 3,999.10 Direct Taxes paid (2,477.18) (1,461.79) Prior Period Items (8.75) (29.47) Net Cash From Operating Activities 2,929.17 2,507.84 Less : Extraordinary Item

Damage of Material due to flood (Net of Insurance Claim) - (294.67)

Net Cash From Operating Activities after Extraordinary Item (A) 2,929.17 2,213.17

F-47

Year ended

31.03.2007

Year ended

31.03.2006 (Rs. Lacs) (Rs.Lacs)

B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Assets (685.68) (1,478.16) Sale of Fixed Assets 152.09 139.66 Assets Written-off (9.36) (20.86)

Redemption/ Dimunition / (Purchase) of Investments (735.59) 2.68

Loan given to Company / (Associates) (1,150.00) - Interest Received 5.34 5.33 Dividend Received 0.15 (2,423.05) 0.15 (1,351.20)

Net Cash Flow from Investing Activities (2,423.05) (1,351.20)

Add : Extraordinary Item Impact of Discontinued Operations (4.55) 101.41

Net Cash Flow from Investing Activities after Extraordinary Item (B) (2,427.60) (1,249.79)

C. CASH FLOW FROM FINANCING ACTIVITIES :

Redemption of Preference Share Capital (160.00) (840.00)

Interest Paid (2,530.53) (2,001.76)

Proceeds from / (Repayment of) borrowings

4,434.81 2,464.11

Dividends paid (1,219.40) 524.88 (346.35) (724.00)

Net Cash Flow from Financing Activities (C) 524.88 (724.00)

Net Increase / (Decrease) in cash and cash equivalents (A+B+C) 1,026.45 239.38

Cash and cash equivalents as at 1.4.2006 1,910.17 1,670.79

Cash and cash equivalents as at 31.3.2007 2,936.62 1,910.17

Note: An Amount of Rs.27.69 Lacs has been transferred from Revaluation Reserve to Profit and Loss Account in respect of Depreciation of Revalued Assets.








Directors

F-48

FY 2007-08

REPORT OF THE AUDITORS’ TO THE MEMBERS

We have audited the attached Balance Sheet of BAJAJ ELECTRICALS LIMITED, as at 31st March 2008 and also the annexed Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our Audit. (1) We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An Audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

(2) As required by the Companies (Auditor’s Report) Order, 2003 (CARO, 2003), issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we annex hereto a Statement on the matters specified in paragraphs 4 of the said Order; (3) Further to our comments in Annexure referred to in paragraph 2 above, we report that:


(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the Books of the Company;

(c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by the report are in agreement with the Books of Account of the Company;

(d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, to the extent applicable.

(e) On the basis of the written representations received from the Directors as at 31st. March, 2008, and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements, read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and present a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of the affairs of the Company as at

31st March, 2008; (ii) in the case of the Profit and Loss Account, of the Profit for the year ended on that

date; and (iii) in the case of the Cash Flow statement, of the cash flows of the Company for the

year ended on that date. For and on behalf of

DALAL & SHAH Chartered Accountants

Anish Amin Partner

Membership No: 40451 MUMBAI: 27th May, 2008.

F-49

ANNEXURE TO THE AUDITORS’ REPORT: Statement referred to in Paragraph 2 of the Auditors’ Report of even date to the Members of BAJAJ ELECTRICALS LIMITED on the Accounts for the year ended 31st March, 2008. On the basis of the records produced to us for our verification/perusal, such checks as we considered appropriate, and in terms of information and explanations given to us on our enquiries, we state that: (i)(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, considering the nature of the Fixed Assets, the same have been physically verified by the management at reasonable intervals during the year as per the verification schedule adopted by the Company, whereby all the assets are verified, in a phased manner, once in a block of three years. According to the information and explanations given to us and the records produced to us for our verification, discrepancies noticed on such physical verification were not, in our opinion, material and the same have been properly dealt with in the books of account. (c) As per the information and explanation given to us on our enquiries, the disposal of assets during the year was not substantial, and hence would neither have an adverse impact on the operations of the Company nor affect its going concern;

(ii)(a) The inventories have been physically verified by the management at reasonable intervals during

the year in a phased manner and at the close of the year; (b) The procedures of physical verification of inventories followed by the management as explained to

us are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business;

(c) According to the records produced to us for our verification and the information and explanations given to us upon our inquiries, proper records of inventory have been maintained by the Company and the discrepancies noticed on physical verification of inventories referred to above, as compared to book records, though not material, have been properly dealt with in the books of account;

(iii)(a) As per the information and explanation given to us and the records produced to us for our

verification, the Company has granted unsecured loans to two companies covered in the register maintained under section 301 of the Companies Act, 1956, aggregating Rs.1450 lakhs at the beginning of the year, fresh loans granted during the year Rs.1065 lakhs, repaid by one of the companies Rs.1320 lakhs and balance at the end of the year aggregating to Rs.1185 lakhs.

The Company has not granted any other loans to companies, firms or other parties covered in the

register maintained under section 301 of the Companies Act,1956; (b) As per the explanations given to us, the rate of interest at which loans referred to in (a) above are,

in our opinion, not prima facie prejudicial to the interest of the Company having regards to the market yields and the business relationships with the Company to whom loans have been granted;

(c) The companies to whom loans have been granted, as referred to in (a) above, have been regular in the payment of interest, wherever stipulated. However, no repayments as to principal have been stipulated in respect of the abovementioned loans outstanding during the year;


(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchase of inventory and fixed assets and for the sale of goods and services. As per the information given to us, no major weaknesses in the internal controls have been identified by the management or the internal audit department of the Company during the year.

F-50

(v)(a) On the basis of the audit procedures performed by us and according to the information and explanations given to us on our enquiries on this behalf and the records produced to us for our verification, the particulars of contracts and arrangements required to be entered into the register in pursuance of section 301 of the Companies Act, 1956 have been so entered.


(vi) In our opinion, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A of the Companies Act,1956, other relevant provisions of the said Act including the Companies (Acceptance of Deposits) Rules, 1975, where applicable, with regard to the deposits accepted by it from the public. Since the Company has not defaulted in repayments of deposits, compliance of Section 58AA or obtaining any order from the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any other Court or Tribunal, does not arise;

(vii) On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that, the Company has an internal audit system commensurate with the size of its business. However, in view of the scale up of the business operations, the internal audit system needs to be strengthened;

(viii) We have broadly reviewed the Books of Account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of Cost Records under Section 209(1)(d) of the Companies Act,1956, and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate;

(ix)(a) According to the records of the Company, the Company has been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities;

(b) According to the records of the Company and the information and explanations given to us upon our enquiries in this regards, disputed dues in respect of Sales Tax, Income-tax, Wealth-tax, Service Tax, Customs Duty, Excise Duty and Cess unpaid as at the last day of the financial year, are as follows;

(Amount in Rs.)


Commissioner


Court Total

1 Sales Tax

60,126,366 8,865,646

1,349,109 - - 70,341,121

2 Income Tax -

4,117,555 -

1,764,631

-

5,882,186

3 Wealth Tax -

- -

-

- -

F-51


Commissioner


Court Total

4 Customs Duty - - - - - -

5 Service Tax -

- -

-

- -

6 Excise Duty 3,765,824

652,116 -

-

-

4,417,940

(x) As per the information and explanations given to us, and keeping in the mind the restructuring proposals sanctioned by the lenders in the past, the Company has not defaulted in repayment of dues to banks or financial institutions during the year. The Company has not borrowed any sums through debentures;

(xi) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other investments;

(xii) The terms and conditions at which guarantees have been given by the Company for loans taken from financial institutions and/or banks by others, are, in our opinion, not prejudicial to the interest of the Company;

(xiii) We were unable to establish any audit trail of fund flows, which can correlate end use with corresponding funds raised. However, as per the information and explanations given to us and on the basis of the total expenditure incurred on the various assets till date, the term loans obtained by the Company, in our opinion, have been applied for the purpose for which they were obtained;

(xiv) As we were not able to establish any audit trail of fund flows which can correlate end use with corresponding funds raised, we have examined the Balance Sheet of the Company as at 31st March, 2008 upon which we found that the Company as on that date had short term sources of funds amounting to Rs.14,437.06 lakhs, which were entirely utilized towards short term applications;

(xv) As per the information and explanations given to us, on our inquiries on this behalf, there were no frauds on or by the Company, which have been noticed or reported during the year.

In view of the nature of business carried on by the Company clause no (xiii) of CARO, 2003 is not applicable to the Company. Further, in view of the absence of conditions pre-requisite to the reporting requirement of clauses (iii) (e), (f), (g), (x), (xiv), (xviii), (xix) and (xx), the said clauses are, at present, not applicable.


DALAL & SHAH


Anish Amin

Partner


MUMBAI: 27th May, 2008.

F-52


As at

31.03.2008 As at

31.03.2007 Schedule (Rs. Lacs) (Rs. Lacs) I. SOURCES OF FUNDS : (1) SHAREHOLDERS’ FUNDS (a) Share Capital 1 1,728.58 864.29 (b) Stock options Outstanding (See Note 1vii (c)) 131.51 - (c) Reserves and Surplus 2 15,617.72 10,818.15 17,477.81 11,682.44 (2) LOANS : (a) Secured Loans 3 15,592.58 16,903.09 (b) Unsecured Loans 4 8,077.34 6,813.97 23,669.92 23,717.06 (3) DEFERRED TAX ADJUSTMENT (See Note 3) (a) Liability 1,177.49 1,192.03 (b) Assets (764.95) (465.58) 412.54 726.45 TOTAL 41,560.27 36,125.95 II.APPLICATION OF FUNDS : (1) FIXED ASSETS 5 (a) Gross Block 14,400.19 13,635.80 (b) Less: Depreciation 4,979.40 4,290.83 (c) Net Block 9,420.79 9,344.97 Less : Impairment of Assets of Discontinued Operations 258.83 258.83 9,161.96 9,086.14 (d) Capital Work-in-Progress 30.03 56.62 9,191.99 9,142.76 (2) INVESTMENTS 6 2,232.76 2,229.53 (3) CURRENT ASSETS, LOANS & ADVANCES 7 (a) Inventories 16,217.50 11,988.80 (b) Sundry Debtors 42,534.71 35,793.15 (c) Cash & Bank Balances 3,195.55 2,936.62 (d) Other Current Assets 2.18 2.67 (e) Loans & Advances 8,895.35 5,841.71

70,845.29

56,562.95 Less: CURRENT LIABILITIES & PROVISIONS 8 (a) Liabilities 36,452.64 30,087.46 (b) Provisions 4,257.13 1,724.70 40,709.77 31,812.16 NET CURRENT ASSETS 30,135.52 24,750.79

F-53

As at

31.03.2008 As at

31.03.2007 Schedule (Rs. Lacs) (Rs. Lacs) (4) MISCELLANEOUS EXPENDITURE 9 - 2.87 (to the extent not written-off or adjusted) TOTAL 41,560.27 36,125.95 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON FINANCIAL STATEMENTS 16


For and on behalf of the Board of Directors



R. Ramakrishnan Exective Director

Anant Bajaj Executive Director

Shekhar Bajaj Chairman &

Managing Director


F-54

Profit and Loss Account for the year ended 31st March, 2008

Year Ended

31.03.2008

Year Ended

31.03.2007

Schedule (Rs. Lacs) (Rs. Lacs)

INCOME Sales 10- (a) 140,328.66 111,300.50 Less: Discount 711.30 732.75 Less: Excise duty 2,300.84 2,838.20 Net Sales 137,316.52 107,729.55 Operating Income 10 – (b) 131.09 156.61 Other Income 10 – (c) 501.39 430.38 137,949.00 108,316.54

EXPENSES Cost of Goods Traded and Materials Consumed 11 100,810.18 82,002.28 Personnel Cost 12 6,363.40 4,426.14 Other Expenditure 13 15,477.57 12,584.11 Interest 14 2,934.15 2,307.33 Amounts Written Off 15 474.70 230.16 Depreciation 5 771.50 756.28 Less: Transferred from Revaluation Reserve (See Note No. 8) (26.26)

745.24 (27.69)

728.59

Less: Contract WIP C/F - (48.67)

126,805.24 102,229.94 Operating Profit before Extra Ordinary Items & Tax

11,143.76

6,086.60

Add/(Less): Impact of Discontinued Operations (See Note No. 5)

-

(57.53)

Profit before Tax 11,143.76

6,029.07 Taxation Current (including Wealth Tax see Note No.14) 4,000.00 2,075.00 Deferred (313.91) (32.42) Fringe Benefit Tax 145.00 125.00

Profit for the year after Tax

7,312.67

3,861.49

Prior Period Expenses

(2.73)

(2.43)

Tax in respect of earlier years-Income Tax -

(6.32) 7,309.94 3,852.74

Add : Balance b/f from previous year

1,090.24 700.00

F-55

Year Ended

31.03.2008

Year Ended

31.03.2007

Schedule (Rs. Lacs) (Rs. Lacs)

Balance available for Appropriation : 8,400.18 4,552.74 APPROPRIATIONS:

Capital Redemption Reserve

-

160.00 Interim Dividend on Preference shares - 12.36 Interim Dividend on Equity Shares (Ref. Directors’ Report)

- 691.43

Proposed Dividend (Ref. Directors’ Report) 1,382.86 - Tax on Preference Share Dividend - 1.74 Tax on Equity Share Dividend 235.01 96.97 Tax on Corporate Dividend 235.01 98.71 Transferred to General Reserve 5,000.00 2,500.00 Balance carried to Balance Sheet 1,782.31 1,090.24 8,400.18 4,552.74 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON FINANCIAL STATEMENTS 16

EPS – Numerator (See Note 29)

7,309.94

3,838.64 Nominal value per Share (Rs.) 10/- 10/-

Basic (Rs.)

42.29

22.54

Diluted (Rs.)

41.96

22.54 As per our report attached For and on behalf of Dalal & Shah Chartered Accountants







Managing Director


F-56

Schedule Nos. 1-16 annexed to and forming part of the Financial Statements for the year ended 31st March, 2008 Schedule 1 – Share Capital

As at 31.03.2008

(Rs. Lacs) As at 31.03.2007

(Rs. Lacs) Authorised:

20,000,000 Equity Shares of Rs.10/- each 2,000.00 1,000.00 (10,000,000)

- Preference Shares of Rs.10/- each - 1,000.00 (10,000,000)

2,000.00 2,000.00 Issued, Subscribed & Paid up:

17,285,760 Equity Shares of Rs.10/- each fully paid up 1,728.58 864.29 (8,642,880) (See Note 1 below)

1,728.58 864.29 Notes: 1. Of the above equity shares

a. 2,800 Equity Shares of Rs.10/- each are allotted as fully paid pursuant to a contract without payment being received in cash,

b. 172,780 Equity Shares of Rs.10/- each are issued to the Deferred Shareholders pursuant to the Scheme of Conversion of Deferred Shares into Equity Shares,

c. 37,540 Equity Shares of Rs.10/- each are issued as fully paid to the Shareholders of the erstwhile Matchwel Electricals (India) Limited in terms of the Scheme of Amalgamation,

d. 2,400,800 Equity Shares of Rs.10/- each are allotted as fully paid Bonus Shares by capitalising Reserves.

e. 8,642,880 Equity Shares of Rs.10/- each are allotted as fully paid Bonus Shares by capitalising Reserves during the year.

2. 10,000,000, 11 % Cumulative Redeemable Preference Shares of Rs.10/- each fully paid issued

during 1998-99 on private placement basis were redeemable at par after 5 years with put / call option after 3 years from the date of allotment, i.e., 7th January, 1999 w.r.t. 7,000,000 shares and 21st January, 1999 w.r.t. the balance 3,000,000 shares. The tenure of the said Preference Shares was extended and the same were redeemable in four installments ,commencing January 2006, with put and call option after 3 years from previous redemption due date. On and after 1st April, 2004, Preference Shares carry dividend at the rate of 10%. Of this, 8,000,000, 10% cumulative Preference Shares of Rs. 10/- each were fully redeemed and balance 2,000,000 Preference Shares were partly redeemed by Rs.2/- per share during the year 2005-06. During the year 2006-07, the Company exercised ‘Call Option’ and fully redeemed balance amount of Rs.8/- per share of 2,000,000 Preference Shares.

F-57

Schedule Nos. 1-16 annexed to and forming part of the Financial Statements for the year ended 31st March, 2008 Schedule 2 – Reserves and Surplus

As at 31.03.2008 As at 31.03.2007 (Rs. Lacs) (Rs. Lacs) Securities Premium Account

As per Last Account

2,289.83 2,289.83 Less : Utilised for Share Issue Expenses

1.95 -

2,287.88 2,289.83 Capital Subsidy (From Maharashtra Energy Development Agency ) As per last Account 20.00 20.00 Capital Redemption Reserve As per last Account 1,000.00 840.00 Less: Utilised for issue of Bonus Shares 864.29 - Add: Appropriated from Profit & Loss Account on account of redemption of Pref. Shares during the year - 160.00 135.71 1,000.00 Revaluation Reserve: (See Note 8) As per last Account 1,013.46 1,090.39 Less: Transferred to Profit & Loss Account 26.26 27.69 Less: Adjusted on Sale of Fixed Assets - 49.24 987.20 1,013.46 General Reserve: As per last Account 5,404.62 3,113.22 Add: Transferred from Profit and Loss Account 5,000.00 2,500.00 10,404.62 5,613.22 Less : Transitional adjustment in respect of Leave encashment Liability, net of deferred tax asset (See Note 24(b)(viii) )

-

208.60

10,404.62 5,404.62 Profit and Loss Account 1,782.31 1090.24 15617.72 10818.15

F-58

Schedule 3 – Secured Loans

As at 31.03.2008 As at 31.03.2007 (Rs. Lacs) (Rs. Lacs) A) Long Term Loans : From Banks Foreign Currency Loans 438.18 - Rupee Loans 3,831.60 4,662.87 From Institutions Foreign Currency Loans - - Rupee Loans 147.55 270.89 Above Loans are secured by : i) First pari passu charge over present and future Fixed Assets of the Company, situated at:

a) Ranjangaon Units : Village Dhoksanghvi, Taluka Shirur, Ranjangaon, Dist. Pune – 412 210;

b) Chakan Unit : Village Mahalunge, Chakan Talegaon Road, Khed, Pune – 410 501;


d) Residential and Commercial properties situated at Mumbai, Ahmedabad, Raipur, Hyderabad and Bangalore; and

ii) Second pari passu charge on the Current Assets of the Company. B) Working Capital Loans : Cash Credit from consortium banks Foreign Currency Loans 1,332.35 - Rupee Loans 9,783.77 11,920.06

Above Loans are secured by : i. First pari passu charge by way of hypothecation of inventories and Book Debts;

ii. First pari passu charge by way of Equitable Mortgage of the Company’s immovable properties at Wardha and Mumbai (Reay Road);

iii. Second pari passu charge over present and future Fixed Assets of the company, situated at;

F-59

As at 31.03.2008 As at 31.03.2007 (Rs. Lacs) (Rs. Lacs)

a) Ranjangaon Units : Village Dhoksanghvi, Taluka Shirur, Ranjangaon, Dist. Pune – 412 210;

b) Chakan Unit : Village Mahalunge, Chakan Talegaon Road, Khed, Pune – 410 501;


d) Residential and Commercial properties situated at Mumbai, Ahmedabad, Raipur, Hyderabad and Bangalore.

These securities also extend to the various credit facilities including Guarantees and Letters of Credit of Rs18541.04 lacs (Previous Year Rs. 17813.99 lacs) executed on behalf of the Company established in the normal course of business. Interest Accrued and Due on above Loans 4.00 16.87 C) Car Loans : HDFC Bank Ltd. 9.86 16.14 ICICI Bank 41.57 9.68 Kotak Mahindra Primus Ltd. 3.70 6.58

(Secured by way of hypothecation of vehicles acquired out of the said loans)

15,592.58 16,903.09 Schedule 4 - Unsecured Loans

As at 31.03.2008 As at 31.03.2007 (Rs. Lacs) (Rs. Lacs) Fixed Deposits 968.02 1,186.54 Sales Tax Deferral Loan 3,609.32 3,177.43 (an incentive under 1993 Package Scheme of Incentives of SICOM) Short Term Loans: From Banks : Arab Bangladesh Bank Ltd. 500.00 350.00

Industrial Development Bank of - 1,000.00

F-60

As at 31.03.2008 As at 31.03.2007 (Rs. Lacs) (Rs. Lacs)

India Ltd

Dena Bank - 1,000.00 Barclays Bank PLC 3,000.00 - From Others : Inter-corporate Deposits - 100.00 8,077.34 6,813.97

F-61

Schedule 5 - Fixed Assets (Rs. In Lacs)


Des

crip

tion

of

Ass

ets

As a

t 01

.04.

2007

Add

ition

s/

Adj

ustm

ents

Ded

uctio

ns

As a

t 31

/03/

2008

As a

t 01

/04/

2007

For

the

year

Rec

oupm

ent

on D

educ

tions

Upt

o 31

.03.

2008

As a

t 31

.03.

2008

Adj

ustm

ent o

n Im

pair

men

t of

Dis

cont

inue

d O

pera

tions

Adj

uste

d N

et

Blo

ck

31.0

3.20

08

As a

t 31

.03.

2007

Goodwill 0.38

-

- 0.38 0.38

-

- 0.38

-

-

-

- *Land (Freehold) 180.18

-

- 180.18

-

-

-

- 180.18

- 180.18 180.18

*Land (Leasehold) # (See Note 8 ) 372.89

- 3.97 368.92

-

-

-

- 368.92

- 368.92 372.89

Roads and Culverts 198.41

-

- 198.41 18.06 3.24

- 21.30 177.11

- 177.11 180.35

*Buildings (See Note 8 ) 2,931.43

-

- 2,931.43 613.22 87.24

- 700.46 2230.97

- 2230.97 2318.21

*Ownership Premises (See Note 7 & 8) 1,249.55 401.64 72.35 1,578.84 235.24 20.50 8.63 247.11 1331.73

- 1331.73 1014.31

** Plant & Machinery 5,829.02 110.03

- 5,939.05 2,011.44 333.94

- 2345.38 3593.67 258.83 3334.84 3558.75


- 681.60 313.05 75.37 0.10 388.32 293.28

- 293.28 339.50

Furniture & Fixtures and Equipments 1,953.37 215.95 40.13 2,129.19 954.93 168.33 29.29 1093.97 1035.22

- 1035.22 998.44

Trade Marks 0.40

-

- 0.40 0.40

-

- 0.40

-

-

-

-

Vehicles 177.30 86.28 56.82 206.76 78.11 18.33 44.91 51.53 155.23

- 155.23 99.19

F-62


Des

crip

tion

of

Ass

ets

As a

t 01

.04.

2007

Add

ition

s/

Adj

ustm

ents

Ded

uctio

ns

As a

t 31

/03/

2008

As a

t 01

/04/

2007

For

the

year

Rec

oupm

ent

on D

educ

tions

Upt

o 31

.03.

2008

As a

t 31

.03.

2008

Adj

ustm

ent o

n Im

pair

men

t of

Dis

cont

inue

d O

pera

tions

Adj

uste

d N

et

Blo

ck

31.0

3.20

08

As a

t 31

.03.

2007

Temporary Structures 63.30 42.14

- 105.44 63.30 42.14

- 105.44

-

-

-

-

Leasehold Improvements 27.02 52.57

- 79.59 2.70 22.41

- 25.11 54.48

- 54.48 24.32

TOTAL 13,635.80 937.66 173.27 14,400.19 4,290.83 771.50 82.93 4979.40 9420.79 258.83 9161.96 9086.14 Previous Year 13,241.70 632.73 238.63 13,635.80 3,633.57 756.28 99.02 4290.83 9344.97 258.83 9086.14

Note : 1. Gross Block at cost except items marked into ‘*’ which are at book value. (See Note 8) ** includes in net block, assets not in used and held for disposal of Rs.14.50 lacs (Previous Year Rs.15.22 lacs) # Represents Rs.3.97 lacs (Previous Year Rs.3.97 lacs) which has been amortised over the lease period.

F-63

Schedule 6 - Investments at Cost


Face Value

As at 31.03.2008

As at 31.03.2007

Rupees (Rs. Lacs) (Rs. Lacs) Long Term : Quoted 6.75% Tax free Bonds of Unit Trust of India

77,385 Bonds

(77,385 Bonds)

100 77.38 77.39


- - - - 0.76

6-Year Indira Vikas Patra* 27500 0.28 0.28 Others: In Equity Shares M.P. Lamps Limited (Partly paid Shares – Rs.2.50 per share paid up, called up Rs.5.00 per share) See Note.9

48,000 Equity

(48,000 Equity)

10 1.20 1.20

M.P. Lamps Limited (Partly paid shares – Rs.1.25 per share paid up, Called Up Rs.5.00 per share) See Note 9

95,997 Equity

(95,997 Equity )

10 1.20 1.20



20,000 Equity

(4,000 Equity)

25 5.00 1.00


2,00,000 À'Class Equity


25 25.00 25.00

Mayank Electro Ltd. 100 Equity (100 Equity)

100 0.10 0.10


75,00,000 Equity

(75,00,000 Equity)

10 375.00 375.00


40,00,000 Equity

(40,00,000 Equity)

10 750.00 750.00

In Preference Shares


1,00,00,000 2 % Non-conv.Cumu. Redeemable Pref. Shares


10 1,000.00 1,000.00

2,157.78 2,154.54 Less : Provision for Diminution in the Value of Investment in M.P.Lamps Limited (See Note.9)

2.40

2.40

F-64


Face Value

As at 31.03.2008

As at 31.03.2007

Rupees (Rs. Lacs) (Rs. Lacs) 2,232.76 2,229.53

As at 31.03. 2008 As at 31.03.2007


Book Value

Market Value

Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs Total Quoted

77.38 101.45 77.39 77.08

Total Unquoted 2,155.38

2,152.14

2,232.76

2,229.53

* 6-Year Indira Vikas Patra of the Face Value of Rs.27,500 (Previous Year Rs. 27,500 ) which are matured but not encashed are lying with Government department. See notes 1(V) Figures and words in brackets, in this schedule, indicate previous year's No. and Class of Shares / Units

F-65

Schedule 7 - Current Assets, Loans and Advances

As at

31.03.2008 As at

31.03.2007 (Rs. Lacs) (Rs. Lacs) (a) Inventories: (As valued & certified by the Management)

Stores, Spares and Packing Materials: At cost* 158.42 116.48 Raw Materials and Components: At cost* 2,693.06 2,894.18 Work-In-Progress : At cost 1,056.48 708.84 Finished Goods in Transit: (Cost to date) 253.82 29.64

Finished Goods: At cost or net realisable value whichever is lower 12,055.72

8,239.66 16,217.50 11,988.80

* Except slow and non-moving inventory which is valued at net realisable value

(b) Sundry Debtors: Unsecured (See Note 27) Over six months: Good 11,020.02 9,832.05 Doubtful 591.28 405.37 11,611.30 10,237.42 Less: Provision 591.28 405.37 11,020.02 9,832.05 Others : Good 31,514.69 25,961.10

42,534.71 35,793.15 (c) Cash & Bank Balances:

Cash in hand 1,564.93

1,973.63 (Including cheques on hand Rs. 1539.60 Lacs, Previous Year Rs.1951.05 Lacs.)

Balance with Scheduled Banks:

In Cash Credit Accounts 429.53

164.23 In Current Accounts 996.63 525.96 In Fixed Deposits [Deposit receipts of the value of Rs. Nil (Previous Year Rs. 0.80 Lacs) are deposited with Government Departments]

198.89

269.70

Interest accrued but not due on above 1.11 2.84 Margin Money 4.11 204.11 - 272.54

Balance with Co-operative Bank: In Current Account The Kalyan Janta Sahakari Bank Ltd. Maximum balance outstanding during the year Rs. 0.35 Lacs (Previous Year Rs. 0.31Lacs)

0.35

0.26

F-66

As at

31.03.2008 As at

31.03.2007 (Rs. Lacs) (Rs. Lacs)

3,195.55 2,936.62 (d) Other Current Assets: Interest accrued on Investments, Loans etc. 2.18 2.67 (e) Loans & Advances: (Unsecured, considered good, unless otherwise stated):

Loans given to Companies 1,070.00 450.00 Hind Lamps Ltd., an associate company. Maximum

balance outstanding during the year Rs. 1075.75 Lacs (Previous Year Rs. 655.42 Lacs)* (See Note 26)

115.00 1,000.00 Starlite Lighting Ltd., an Associate Company. Maximum Balance outstanding during the year Rs. 1435.00 Lacs (Previous Year Rs. 1000.00 lacs)*

1,185.00 1,450.00 Housing Loans to Employees 21.05 28.58

Advances recoverable in cash or in kind or for value to be received

Good (Includes Rs. 400 Lacs given as Trade Advance to Hind Lamps Ltd an associated company. Maximum balance outstanding during the year Rs. 400 Lacs) 5,458.96

3,957.57 Doubtful 158.63 155.07 5,617.59 4,112.64 Less: Provision 158.63 155.07

5,458.96 3,957.57 Advances of Capital nature 1,693.34 - Contract work-in-progress - 48.67 Advance Tax (Net of Provisions) - 177.53 Balances with Central Excise and Customs Department 537.00

179.36

8,895.35 5,841.71

70,845.29 56,562.95 *No repayment schedules have been stipulated.

Schedule 8 – Current Liabilities and Provisions

As at

31.03.2008 As at

31.03.2007 (Rs. Lacs) (Rs. Lacs)

(a) Current Liabilities:

Acceptances (See Note 13) 11,354.55 8,708.47 Sundry Creditors: Dues of Micro, Small & Medium Enterprises (See Note 11) 2.50

3,795.25

Other than Micro, Small & Medium Enterprises 14,589.81

8,743.53

F-67

As at

31.03.2008 As at

31.03.2007 (Rs. Lacs) (Rs. Lacs)

Other Liabilities 6,081.98 4,735.38 Taxes Payable 2,156.90 1,560.10

Overdrawn in Current Account (Temporary overdraft, as per books of account only) 27.88 366.98 Advance Received from Customers 1,775.20 1,728.41 Trade Deposits 366.97 366.65 Unclaimed Dividends 20.21 12.47 Interest accrued but not due on Loans 76.64 70.22

36,452.64 30,087.46 (b) Provisions:

Provision for Leave Entitlement Liability (See Note 24(b)(viii))

834.49 811.77

Provision for Warranties & Claims (See Note 6) 889.32 594.46 Provision for Gratuity (See Note 24(b)) 600.67 318.47 Provision for forseeable loss on Construction Contracts 124.09 - Provision for Taxation 190.68 - Proposed Dividend 1,382.86 - Provision for Tax on Proposed Corporate Dividend 235.02 -

4,257.13 1,724.70 40,709.77 31,812.16

Schedule 9 - Miscellaneous Expenditure

As at

31.03.2008 As at

31.03.2007 (Rs. Lacs) (Rs. Lacs)

(to the extent not written-off or adjusted) Compensation on Voluntary Retirement (See Note 1(XI)) Amount un-amortised at the beginning of the year 2.87 63.22 Less : Amount amortised during the year 2.87 60.35 Amount un-amortised at the end of the year - 2.87

Schedule 10 (a) Sales




Sales (net of returns, rebates, etc.) 139,709.15 110,678.46 Job Work Receipts 2.32 2.63

F-68

Sales Export 19.80 - Sale of Manufacturing Scrap 597.39 619.41 140,328.66 111,300.50

Schedule 10 - (b) Operating Income




Income From Power Generated 131.09 156.61 131.09 156.61

Schedule 10 - (c) Other Income




Profit/ (Loss) on Sale of Assets (Net) 80.69 61.72 Profit/ (Loss) on Sale of Investment - 3.60 Dividend from Trade Investment 0.15 0.15 Rent Income 7.63 8.02 Foreign Exchange Fluctuation Gain / (Loss) 127.36 78.58 Miscellaneous Income (See Note 23) 285.56 278.31 501.39 430.38

Schedule 11 - Cost of Goods Traded and Materials Consumed




a) Raw Materials & Components Consumed: Stocks at Commencement 2,894.18 1,830.16 Purchases 13,284.90 14,808.10 16,179.08 16,638.26 Less: Stocks at Close 2,693.06 2,894.18 13,486.02 13,744.08 b) Excise Duty on Increase/ (Decrease) in Stocks of Finished Goods 248.10 103.00 c) Components Processing Charges 263.63 308.32 d) Purchases Finished Goods & Material of Works Contracts 87,004.68 65,665.25

Payments to Sub-Contractors 1,695.51 975.60 88,700.19 66,640.85 e) Freight, Octroi, Entry Tax, etc. 2,275.94 1,928.70 f) (Increase) / Decrease in Stock:

F-69

Stock at Commencement: Work-in-Process 708.84 563.68 Finished Goods 8,239.66 7,662.15 8,948.50 8,225.83 Stock at Close: Work-in-Process 1,056.48 708.84 Finished Goods 12,055.72 8,239.66 13,112.20 8,948.50 (4,163.70) (722.67) 100,810.18 82,002.28

Schedule 12 - Personnel Cost




Salaries, Wages, Bonus, etc. 5,126.83 3,763.31 Amortisation of compensation under voluntary retirement scheme

2.87 60.35

Contribution to Provident & Other Funds and Schemes 1,025.11 488.18


Schedule 13 - Other Expenditure




Stores and Spares consumed 928.79 911.63 Packing Materials Consumed 292.45 300.82 Power, Fuel and Water 158.37 157.67 Rent 692.94 403.62

Rates & Taxes(Including Leasehold Land Rent Rs.0.01 Lacs, previous year Rs 0.01Lacs)

24.55 31.52

Lease Rent 103.35 99.71 Insurance 114.51 71.81 Travelling, Conveyance and Vehicle Expenses 1,783.47 1,340.51

Postage, Telegrams, Telephone and Telex 338.76 289.76 Printing and Stationery 124.30 104.44 Repairs: Buildings and Roads 47.91 33.04 Machinery 108.83 73.46 Others 223.92 115.91 380.66 222.41 Directors' Fees and Travelling Expenses 19.99 16.52

F-70

Commission to Non Executive Director 7.20 7.60 Advertisement and Publicity 2,100.36 1,793.91 Freight and Forwarding (Net) 2,551.20 2,145.22 Product Promotion & Service Charges (Net) 2,337.68 1,991.09 Commission on sales 1,137.21 976.14 Donations 2.51 10.00 Provision for Doubtful Debts and Advances (Net) 233.55 44.81 Provision for forseeable loss on Construction Contracts 124.09 - Miscellaneous Expenses 2,021.63 1,664.92 15,477.57 12,584.11

Schedule 14 Interest




Interest: Fixed Loans 621.36 757.83 Other Loans 2,754.32 1,774.99 3,375.68 2,532.82 * Less: Received /Receivable(Gross) 441.53 225.49 2,934.15 2,307.33

*Tax deducted under Section 194A Rs. 69.68 Lacs (Previous Year Rs. 27.62 Lacs).

Schedule 15 - Amounts Written Off




Fixed Assets 3.79 5.39 Lease hold land Amortised 3.97 3.97 Bad Debts 450.66 191.02 Irrecoverable Advances, Claims, etc. 16.28 29.78 474.70 230.16

F-71

Schedule annexed to and forming part of the Financial Statements for the year ended 31st March, 2008 Schedule 16 - Notes Forming Part of the Financial Statements (Rupees in Lakhs, unless otherwise stated) 1. SIGNIFICANT ACCOUNTING POLICIES I. System of Accounting: i) The Company generally follows the accrual basis of accounting both as to income and

expenditure except those with significant uncertainties. ii) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact

of the changing value in the purchasing power of money. iii) The preparation of financial statements in conformity with generally accepted accounting principles

requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the financial statements.

II. Revenue Recognition:

Income: The Company recognizes income on accrual basis. However, where the ultimate collection of the

same lacks reasonable certainty, revenue recognition is postponed to the extent of uncertainty.

(1) Sales : (a) Domestic Sales are accounted for on dispatch from the point of sale. (b) Export sales are recognized on the basis of the dates of the Mate’s Receipt and initially

recorded at the relevant exchange rates prevailing on the date of transaction. (2) Interest is accrued over the period of the loan/investment. (3) Dividend is accrued in the year in which it is declared whereby a right to receive is

established. (4) Profit/Loss on sale of investment is recognized on the contract date. (5) Benefit on account of entitlement to import goods free of duty under the “Duty Entitlement

Pass Book Scheme” is accounted in the year of export. (6) Revenue from erection contracts is recognised based on the stage of completion determined

with reference to the costs incurred on contracts and their estimated total costs. Provision for foreseeable losses/ construction contingencies on erection contracts is made on the basis of technical assessments of costs to be incurred and revenue to be accounted for.

III. A) Fixed Assets:

i) Freehold Land, Leasehold Land, Buildings (including Leasehold Land appurtenant thereto)


F-72

ii) Capital goods manufactured by the Company for its own use are carried at their cost of production (including duties and other levies, if any) less accumulated depreciation and other fixed assets are carried at cost of acquisition (including cost of specific borrowings) less accumulated depreciation.

B) Depreciation:

i) a) Depreciation on all Fixed Assets (other than Leasehold Land which is amortized over the

period of lease and those mentioned in (ii) and (iii) below) is being provided on "Straight Line Method" at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

b) Pursuant to the revision in the rates prescribed in Schedule XIV to the Companies Act, 1956 vide notification No. GSR 756(E) dt.16.12.93 issued by the Ministry of Law, Justice and Company Affairs, depreciation has been calculated at new rates only on additions to assets made after the said date.


ownership basis, is being provided on Straight Line Method at the rates specified considering the balance period of life of the assets. The additional charge of depreciation on increased value due to revaluation of buildings and the premises on ownership basis, has been transferred from Revaluation Reserve to the Profit and Loss Account.



C) Impairment of Assets:

The Company, at each balance sheet date, assesses individual fixed assets and groups of assets constituting “Cash Generating Units” (CGU) for impairments, if circumstances indicate a possibility or warrant such assessment. Provision is made for impairment to state the assets or CGUs at their realizable value or economic value, as the case may be.

IV. Foreign Currencies Transactions:

The export sales are accounted with reference to the Mate's Receipt at the exchange rates prevailing on the transaction date. Foreign exchange gains or losses on realisation are dealt with, as such, in the Profit and Loss account. At the close of the year, all foreign currency loans, liabilities and current assets are stated at the relevant exchange rate prevailing at the close of the year. The exchange difference arising from foreign currency transactions are dealt with, as such, in the Profit & Loss Account.

Foreign Exchange Contracts: i) Premium/Discounts are recognized over the life of the contract. ii) Profits and losses arising from either cancellation or utilization of the contract and revalorizing

the contract at the close of the year are recognized in the profit and loss account as detailed in Note No. 15 (e) in Schedule 16 to the accounts.

V. Investments:

Investments are valued at cost of acquisition less provisions made for diminution in the value of investments which, in the judgment of the management are necessary.


F-73

Costs of inventories have been computed to include all costs of purchases, cost of conversion and other cost incurred in bringing the inventories to their present location and condition.

A. Finished Goods and Work-in-Process :

a) Finished Goods (i) Traded finished goods and spares are valued at cost, determined on “First In First

Out" basis or net realisable value whichever is lower. (ii) Finished goods manufactured by the Company are valued at lower of cost, determined

on “First In First Out” basis or net realizable value. Galvanized structures / products manufactured by the Company are valued at cost, determined on Specific Identification method or net realizable value, whichever is lower.

b) Work-in-Process is valued at cost.

B. Raw Materials:

Raw materials are valued at weighted average cost.

C. Stores, Spares and Packing Materials :

Stores, spares and packing material are valued at monthly weighted average cost.

D. Obsolete and non-moving inventory of raw material, stores and spares is carried at cost or market value, whichever is lower. Obsolete and non-moving inventory of galvanized structures are valued at scrap rate.


Short term employee benefits: All employee benefits payable within twelve months of rendering the service are classified as short term benefits. Such benefits which include salaries, wages, bonus, short term compensated absences, awards, exgratia etc. are recognised in the period in which the employee renders the related service.

A. Gratuity: The Company is making contributions on an actuarial basis as determined by the Life Insurance Corporation of India (LIC), through Bajaj Electricals Limited Employees' Group Gratuity Trust, to the "Group Gratuity-cum-Life Assurance Scheme" under the Cash Accumulation Policy, which also covers employees who are entitled to gratuity after attainment of retirement age. However, any deficits in plan assets managed by LIC as compared to the acturial liability, is recognized as a liability immediately.

B. Superannuation:


C. Employee Stock Option Scheme :

F-74

During the year, the Company has introduced Employee Stock Option Scheme to eligible employees including one Executive Director of the Company. The Scheme involves grant of Equity Settled Options that vest within one year from the date of the grant and are exercisable on specified dates in 4 tranches within a period of 5 years from the date of vesting. The eligible Employee must exercise Options vested; and the Options in respect of each tranche may be exercised on the date of vesting or at the end of each year from the date of vesting, provided that at the end of five (5) years from the date of vesting (or such extended period as may be decided by the Remuneration & Compensation Committee), the eligible Employee may exercise all options vested but not exercised by him/her failing which all the unexercised Options shall lapse. The Company has granted Stock Options to its employees under the Growth Option as well as Loyalty Option. In respect of Options granted under the Employees Stock Options Plan, in accordance with guidelines issued by the SEBI and in compliance with the Guidance Note on Accounting for Employee Share-based Payments issued by the Institute of Chartered Accounts of India in the year 2005 and applicable for the period on or after 1st April 2005, the cost of stock options granted to employees are accounted by the Company using the fair value method and the cost based on excess of fair value over the exercise price is recognized in Profit & Loss Account, over vesting period on time proportion basis and included in the ‘Salaries, wages, bonus etc.’ in Schedule 12 of the Financial Statements.

D. Provident Fund : Employees own and Employer's contribution (after paying Family Pension Scheme portion to Provident Fund Authority) are paid to the Trustees "Bajaj Electricals Limited Employees' Provident Fund Trust" / Concerned Authorities. Deficits in the assets, as compared to the obligations outstanding, are contributed by the Company, as and when they arise.

E. Employees’ Pension Scheme :

Defined contributions to Employees’ Pension Scheme 1995 is made to the Government Provident Fund Authority.

F. Leave Entitlement :


VIII. Export Incentives :


IX. Borrowing Costs :

Borrowing costs are recognised in the financial statements except in respect of specific borrowing raised for acquisition of capital asset until such time the asset is ready to be put to use for its intended purpose, which are added to carrying cost of such asset.

X. Taxation :

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i) Deferred tax assets and Liabilities are recognised for the future tax liability arising on account

of timing difference between the taxable income and the profits as per the financial statements.

ii) Deferred tax assets representing carried forward business losses and unabsorbed depreciation are recognised to the extent the management is virtually certain that they are going to be realised in future.

iii) Deferred tax assets and Liabilities have been recognised by considering the tax rate, which has been enacted or substantively enacted by the Balance Sheet date.

iv) Deferred tax assets and liabilities, as the case may be, arising on adjustments to Reserves are netted off against the respective adjustments.

XI. Voluntary Retirement Benefits : In order to achieve ‘Business Restructuring’ through employee strength realignment, the Company, with a long-term view, retires employees by offering a Voluntary Retirement Scheme. Aggregate liability on account of the retirement package prior to 1st April 2004 and connected statutory and other payments are, together, deferred over five financial years, being the estimated period of benefit. Similar subsequent payments are expensed to the Profit and Loss account, as and when incurred.

XII. Discontinued Operations :

Assets and Liabilities of discontinued operations are assessed at each Balance Sheet date. Impacts

of any impairments and write backs are dealt with in the Profit and Loss Account. Impacts of discontinued operations are distinguished from the ongoing operations of the Company, so that their impact on the Profit and Loss Account for the year can be perceived.

XIII. Provisions : Provisions are recognised for current obligations, which are likely to entail outflow of economic resources in the future periods consequent to obligating events prior to the close of the year. However, such obligations, not likely to entail outflows in future periods and contingent on the future outcome of events, are disclosed as a matter of information as “Contingent Liabilities”.

2. (i) Contingent Liabilities not provided for: 2007-08 2006-07 (a) Disputed Income-tax Matters 55.41 87.54 (b) Disputed Excise Matters – Gross 68.02 68.02 - Net of tax 44.89 45.12 (c) Disputed Sales Tax Matters – Gross 819.34 601.57 - Net of tax 540.84 399.08

(d) Claims against the Company not acknowledged as debts – Gross

319.42 412.66

- Net of tax 210.85 273.76

(e) Guarantees/Letter of comfort given on behalf of other companies 2,750.00 650.00

(f) Penalty/damages/interest, if any due to non- fulfillment of any of the terms of works contracts


(ii) Uncalled liability in respect of partly paid Shares held as investments 7.20 7.20

F-76

3. The Company has recognised Deferred Taxes which result from the timing difference between the Book Profits and Taxable Income for the Financial Year 2007-08, the details of which are as under:

Particulars Balance

as at 31st March,

2007

For the year recognised in

the “Profit and Loss account”

Balance as at31st March,

2008

Deferred Tax Liabilities: On Account of timing difference in Depreciation 1192.03 (14.54) 1177.49 Total (A) 1192.03 (14.54) 1177.49 Deferred Tax Assets: On Account of timing difference in (a) Section 43B Disallowances 30.59 3.40 33.99 (b) Leave Entitlement Liability 275.92 7.72 283.64 (c) Gratuity liability 108.25 95.92 204.17 (d) Provision for Doubtful Debts 50.82 150.15 200.97 (e) Provision for foreseeable loss on Erection Contracts

- 42.18 42.18

Total (B) 465.58 299.37 764.95 Net Deferred Tax (A-B) 726.45 (313.91) 412.54

4. During the year and previous year, Company had no specific borrowings for acquisition of capital

asset which was not put to use.

5. Impact of Discontinued Operations: The Company had in the previous years discontinued the operations of the Die Casting activity at Chakan Unit. The impact of impairment in the value of assets held for disposal is Rs. Nil (Previous Year Rs. 57.53)

6. As required by Accounting Standard 29 – “Provisions, Contingent Liabilities and Contingent Assets” mandatory in its application with effect from 1st April, 2004, the Company recognised a liability aggregating to Rs. 889.32 (Previous Year Rs. 594.46) for expected warranty claims that are estimated to be incurred in future periods arising out of sales made upto the closure of the year.

7. Ownership premises include the sum of Rs. 0.01(Previous Year Rs. 0.01) being the Face Value of Shares in co-operative societies required to be held under their respective bye-laws.

8. The buildings (including leasehold land appurtenant thereto) and ownership premises had been revalued as on 1st January, 1985 then resulting in the net increase in the book value by Rs. 321.01 which had been transferred to Revaluation Reserve. All the freehold land, leasehold land, buildings (including leasehold land appurtenant thereto) and premises on ownership basis had been revalued as on 30th September, 1994 resulting in a further net increase in the book value of the said assets as on 1st October, 1994 by Rs. 2,305.87 which also had been transferred to the Revaluation Reserve. As a result of the above, the total net increase in the book value of the said assets aggregates to Rs. 2,626.88 (Rs. 62.51 on freehold land and Rs. 13.69 on leasehold land, Rs. 816.49 on building and Rs. 1,734.19 on ownership premises).

The depreciation on the increased value has resulted in an additional charge for the year of Rs. 26.26 (Previous Year Rs. 27.69). An amount equivalent to the additional charge has been transferred from Revaluation Reserve to Profit & Loss Account. Such transfer, according to an authoritative professional view, is an acceptable practice for the purpose of true and fair presentation of the Company's financial statements. The balance depreciation charged on original cost of assets is in accordance with the SLM rates specified in Schedule XIV to the Companies Act, 1956.

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10. Estimated amount of contracts remaining to be executed on capital account Rs. 787.73 (Previous

Year Rs. 31.72) net of advances.

11. Based on the information received from some of the vendors with regards to their registration (filling of Memorandum) under “The Micro Small & Medium Enterprises Development Act, (27 of 2006)” , the details required under Section 22 are as under : Sr. No. Name of Party Principal

Amount Outstandi

ng

Interest Accrued

Thereon*

Delayed Principal

amt Payment

during the year

Interest on delayed payment

during the year*

1. Arora Refractories Pvt. Ltd. 0.12 - 0.11 -

2. SNT Controls Ltd. 0.15 - - -

3. Micro Cut Engineering 0.38 - 1.95 0.01

4. Safe Lifters 0.22 - 0.44 -

5. Vishal Paints - - 0.14 -

6. Usaka Electricals 1.00 0.01 2.31 0.04

7. Superlite 0.63 0.01 1.74 0.05

Total 2.50 0.02 6.69 0.10* Due and Payable

12. Disclosure under the Accounting Standard - 7 (Revised) “Construction Contracts”


(a) (i)Contract Revenue recognized during the year 567.39 257.18

(ii)Method used to determine the contract revenue recognized and the stage of completion (Refer note 1(II)(5)

- -

(b) Disclosure in respect of contracts in progress as at the year end

(i) Aggregate amount of costs incurred and recognized profits (less recognized losses)

723.00 68.89

(ii) Advances received NIL NIL

(iii) Retentions receivable NIL NIL

(iv)Amount due from customers (included under Schedule 7 – Sundry Debtors)

329.36 539.70

(v) Amount due to customers (included in Sundry Creditors under schedule – Current Liabilities and Provisions)

NIL NIL

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13. Acceptances include Rs.1463.66 (Previous Year Rs. 1,377.83 ) for bills accepted by the Company and discounted by the suppliers with Small Industries Development Bank of India under a line of credit extended to the Company, which are secured by a second charge on raw materials, goods in process, semi-finished goods, finished goods and book debts and also on the collateral security created by way of equitable mortgage on the Company’s properties at Mumbai and Wardha.

14. Provision for taxation includes Rs. 2.50 (Previous Year Rs. 2.50), provided in respect of wealth

tax liability for the year.

15. C.I.F. value of imports, expenditure and earnings in foreign currencies and foreign exchange exposures:

2007-08 2006-07 (a) C.I.F. value of imports: (i) Raw Materials 33.50 87.57 (ii) Capital Goods 43.52 53.87 (iii) Finished Goods 6,545.95 4,051.97 (iv) Machinery Spares 38.32 18.36 Total 6661.29 4211.77 (b) Expenditure in foreign currency-Gross (i) Other Expenses 391.09 262.60 (ii) Royalties 45.17 43.35 Total 436.26 305.95 (c) Earnings in foreign exchange: (i) F.O.B. value of exports 263.47 28.09 (ii) Freight & Insurance on exports NIL NIL Total 263.47 28.09

Amount in US $ (in Lacs)

Amount in US $ (in Lacs)

(d) Disclosure of Derivative Instruments and Foreign Currency Exposures outstanding at the close of the year.

i) Derivative Instruments: Forward ContractPurchase

22.78 31.07

ii) Open Foreign Exchange Exposures: - Receivables and Bank Balances 0.00 0.09 - Payables 15.94 4.92 - Loans 20.47 15.12

i) Purpose Hedging Hedging


(Rs. In Lacs) (Rs. In Lacs)

F-79

2007-08 2006-07 (i) Exchange difference gains/(loss)

recognised in the Profit and Loss account 127.36 78.58

(1) relating to Exports during the year as

a part of "Sales" 0.50

(0.19)

(2)on settlement of other transactions

including cancellation of forward contracts as a part of "Other income/(Other Expenses)"

126.86 78.77


NIL NIL

(ii) amount of premium/discount on open

forward contracts 8.50 5.86

(1) recognised for the year in the profit and loss account

4.67 0.62

(2)to be recognised in the subsequent accounting period

3.83 5.24



Statutory Audit Fees 13.48 13.47 Tax Audit Fees 5.62 5.61 Certification Fees 1.38 4.72 Other Matters 3.37 6.73 Out of Pocket expenses 1.79 0.47 Total 25.64 31.00

17. Commission Payable to the Managing Director and Executive Director as per Section 309(5) of

the Companies Act, 1956:

Particulars 2007-08 2006-07 Profit Before Provisions 11,377.32 6,165.30Add: (i) Depreciation 745.24 728.59 (ii) Managerial Remuneration 499.63 77.96 (iii) Non Executive Director’s Commission 7.20 7.60 (iv) Compensation under VRS 2.87 60.35

(v) Directors' Sitting Fees 6.80 6.80

Sub Total 1261.74 881.30Total 12,639.06 7,046.60Less: (i) Depreciation as per Section 350 745.24 728.59 (ii) Profit /(Loss) on Sale of Fixed Assets 80.69 65.31 (iii) Gratuity, Leave Encashment under 0.53 826.46 11.16 805.06

F-80

Particulars 2007-08 2006-07 VRS included in (iv) above


11812.60 6,241.54

Commission to Managing Director Shri Shekhar Bajaj, (maximum commission payable as determined by the Board of Directors to be limited to 2% of the net profits of the Company. Previous year restricted to total basic salary).

229.37 28.25

Commission to Executive Director Shri Anant Bajaj (maximum commission payable as determined by the Board of Directors to be limited to 1% of the net profits of the Company. Previous year restricted to 50% of total basic salary).

114.69

3.70

Commission to Executive Director Shri R. Ramakrishnan (maximum commission payable as determined by the Board of Directors to be limited to an amount equal to 25% of the Basic salary and additional allowance for the year. Previous year restricted to 25% of total basic salary).

10.35

1.95

Non Executive Directors’ Commission 7.20 7.60

17. (A) Managing Director’s emoluments, included under ‘Salaries, Wages, Bonus, etc.’ in Schedule 12 – Personnel Cost.


Salary 32.50 28.25 Contribution to Provident Fund, Gratuity Fund & Superannuation Scheme, etc.

8.78 7.63

Perquisites 3.22 5.06 Commission 229.37 28.25 Total 273.87 69.19

(B) Mr. Anant Bajaj, Executive Director – emoluments included under ‘Salaries, Wages,

Bonus, etc.’ in Schedule 12- Personnel Cost. Particulars 2007-08 2006-07 Salary 12.06 7.40 Allowances 6.90 6.84 Contribution to Provident Fund, GratuityFund & Superannuation Scheme, etc.

3.26 2.00


F-81

(C) Mr. R. Ramakrishnan, Executive Director – emoluments included under ‘Salaries, Wages, Bonus, etc.’ in Schedule 12- Personnel Cost.

Particulars 2007-08 2006-07 Salary 23.40 7.79 Allowances 42.00 8.82 Contribution to Provident Fund, GratuityFund & Superannuation Scheme, etc.

6.32 2.10

Perquisites 5.60 0.65 Commission 10.35 1.95 Total 87.67 21.31 (D) Non-Executive Directors’ Commission included in Schedule 13- Other Expenditure.


Mr. H.V.Goenka 0.80 0.60 Mr. A.K.Jalan 2.00 2.00 Mr. Ajit Gulabchand 0.40 1.00 Mr. V.B.Haribhakti 2.00 1.80 Mr. Madhur Bajaj 0.80 1.20 Dr. (Mrs.) Indu Shahani 1.20 0.80 Late Mr. D.B. Dhruv - 0.20 Total 7.20 7.60


Company has identified its Business Segments as its Primary reportable segments which comprise of i) Lighting, ii) Consumer Durables, iii) Engineering & Projects and iv) Others. ‘Lighting’ includes Lamps, Tubes, Luminaries, ‘Consumer Durables’ includes Appliances & Fans, ‘Engineering & Projects’ includes Transmission Line Towers, Telecommunications Towers, Highmast, Poles and Special Projects and 'Others' includes Die-casting and Wind Energy.

Primary Segment Information : 1) Segment Revenue 2007-08 2006-07 a) Lighting 40,729.19 32,670.64 b) Consumer Durables 60,316.04 44,539.56 c) Engineering & Projects 36,271.29 30,519.35 d) Others 131.09 156.61 Sub-total 1,37,447.61 1,07,886.16 Less: Inter segment Revenue - - Net Sales / Income from Operations 1,37,447.61 1,07,886.16

2) Segment Results [Profit / (Loss)] before Tax and Interest from each segment 2007-08 2006-07 a) Lighting 3,052.92 1,642.48

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2007-08 2006-07 b) Consumer Durables 6,272.27 3,120.42 c) Engineering & Projects 4,677.13 3,608.16 d) Others 35.68 (53.54) Sub-total 14,038.00 8,317.52 Less: I) Interest (Net) 2,934.15 2,307.33 II) Other un-allocable expenditure net of un-allocable income

(39.91) (76.40)

Operating Profit / (Loss) 11,143.76 6,086.59 Extra ordinary item of income / (Expenses) Add: Impact of Discontinued Operations NIL (57.53) Profit / (Loss) before Tax 11,143.76 6,029.06 Provision for Tax – Charge / (Release) 4,000.00 2,075.00 Provision for Deferred Tax – Charge / (Release)

(313.91) (32.43)

Provision for Fringe Benefit Tax 145.00 125.00 Prior Period Expenses 2.73 8.75 Profit / (Loss) after Tax 7,309.94 3,852.74


2007-08 2006-07 Assets Liabilities Net Assets Liabilities Net a) Lighting 11,622.83 9,010.97 2,611.86 7,994.24 6,400.95 1,593.29b) Consumer Durables 15,901.46 10,322.70 5,578.76 12,460.98 7,520.42 4,940.56c) Engineering & Projects 39,748.15 9,648.93 30,099.22 34,884.16 9,904.31 24,979.85d) Others 956.10 - 956.10 1,370.92 - 1,370.92e) Other Unallocable 14,041.50 11,727.17 2,314.33 11,224.94 7,986.48 3,238.46Total 82,270.04 40,709.77 41,560.27 67,935.24 31,812.16 36,123.08 4) Total cost incurred during the year to acquire segment assets that are expected to be used during more than one period.

2007-08 2006-07 a) Lighting - - b) Consumer Durables 30.21 114.44 c) Engineering & Projects 189.56 255.08 d) Others - - e) Other Unallocable 717.89 263.21 Total 937.66 632.73

5) Depreciation and Amortisation

2007-08 2006-07 a) Lighting 4.39 4.39 b) Consumer Durables 80.85 90.52 c) Engineering & Projects 384.42 364.94 d) Others 97.84 108.03

F-83

e) Other Unallocable 181.72 164.68 Total 749.22 732.56

The Company caters mainly to the needs of the Indian Markets and the export turnover being 0.19% (Previous year 0.03%) of the total turnover of the Company; there are no reportable geographical segments. All assets are located in India.


Details of Transactions with Related Parties during the year as required by Accounting Standard - 18 on ‘Related Party Transactions’ have been disclosed on the basis of parties identified by the key managerial personnel to be within the definition of Related Parties as per the Standard and noted by the Board of Directors. Accordingly, the information is disclosed hereunder : (Rs. In Lacs)

Names of Related Parties

Nature of Transactions

Transaction Value

Current Year

Out standing

Amounts as on 31/3/2008

Transaction Value

Previous Year

Out standing


(A) Associates : Purchases 5,636.50 308.76 5,269.65 653.49

Sales NIL NIL 0.54 0.01

Contribution to Equity NIL 25.00 NIL 25.00

Trade Advance Given 400.00 400.00 NIL NIL

Loans 620.00 1,070.00 470.00 450.00

Interest Received 87.08 11.16 41.41 NIL

Hind Lamps Ltd.

Commission Received NIL NIL 9.57 NIL

Purchases 0.94 (20.88) 0.68 (20.88)

Sales 1.10 1.01 0.54 0.09

Contribution to Equity NIL 375.00 NIL 375.00

Bajaj Ventures Ltd.

Contribution to 2% Non-Cumulative Redeemable Preference Shares

NIL 1,000.00 NIL 1000.00

Purchases 2,714.18 211.15 2.45 (12.97)

Contribution to Equity 750.00 750.00 750.00 750.00

Interest received 97.99 NIL 9.65 NIL

Starlite Lighting Ltd

Trade Advances given 115.00 115.00 1,000.00 1,000.00 (B) Directors & Relatives :

Mr. Shekhar Bajaj Remuneration 273.87 229.37 69.19 28.25

Sitting Fees 0.40 NIL 0.40 NIL Mr. Madhur Bajaj

Commission 0.80 0.80 1.20 0.38

Rent Paid 7.20 NIL 6.50 NIL Mrs. Kiran Bajaj

Rent Deposit Advanced NIL 300.00 50.00 300.00

Mrs. Minal Bajaj Sales NIL NIL 0.14 NIL

Mr. Anant Bajaj Remuneration 138.11 114.69 22.98 3.70 Mrs. Pooja Bajaj NIL NIL NIL NIL NIL Mrs. Swarnalatha Rent Paid 2.64 NIL 2.64 NIL

F-84



Transaction Value

Current Year

Out standing


Transaction Value

Previous Year

Out standing


Ramakrishnan Rent Deposit Advanced 20.00 110.00 20.00 90.00

Mr. R. Ramakrishnan Remuneration 87.67 10.35 21.31 1.95

Ms. Kumud Bajaj NIL NIL NIL NIL NIL

Mr. Niraj Bajaj NIL NIL NIL NIL NIL

Mr. Niravnayan Bajaj NIL NIL NIL NIL NIL

Ms. Deepa Bajaj NIL NIL NIL NIL NIL

Mr. Rahul Bajaj NIL NIL NIL NIL NIL

Mr. Rajivnayan Bajaj NIL NIL NIL NIL NIL

Ms. Ruparani Bajaj NIL NIL NIL NIL NIL

Mr. Sanjivnayan Bajaj NIL NIL NIL NIL NIL

Ms. Minakshi Bajaj NIL NIL NIL NIL NIL

Mr. Kushagra Bajaj NIL NIL NIL NIL NIL

Mr. Shishir Bajaj NIL NIL NIL NIL NIL

(C) Enterprises over which any person described in (B) above is able to exercise Significant influence Services Received 3.70 (9.06) 11.21 (2.35) Reimbursement of expenses

196.32 NIL 45.98 NIL Hind Musafir Agency Ltd.

Incentives Received 0.86 NIL 2.54 NIL

Sales 26.35 25.47 NIL 0.19

Rent Received 0.88 0.08 0.96 NIL Bajaj Auto Limited

Reimbursement of Expenses

6.20 NIL 10.08 NIL

Bajaj Hindustan Ltd. Sales 12.57 1.06 2.65 1.09 Bajaj Shevashram Pvt. Ltd.

NIL NIL NIL NIL NIL

Hall Hire Charges Paid 0.62 NIL 0.26 NIL

Jamnalal Bajaj Seva Trust Sales 0.04 0.05 NIL NIL Maharashtra Scooters Ltd. Sales

4.44 0.59 NIL NIL

Mukand Engineers Ltd Sales 11.25 (0.14) 59.69 18.47

Mukand Ltd. Sale NIL NIL 31.24 NIL Purchases NIL NIL 16.25 NIL Reimbursement of

Expenses 0.04 NIL 0.19 (0.03)

Bajaj International Pvt. Ltd

Commission paid on Imports /Exports

54.53 3.72 33.55 NIL

Purchases NIL NIL 71.45 NIL

Service Rendered NIL NIL 0.79 NIL

Royalty Received 13.91 NIL 10.56 (9.97)

Sale of Assets NIL NIL 0.52 NIL

Sales 258.89 86.01 23.34 4.90

Reimbursement of Exp 0.02 NIL 0.03 NIL

Hindustan Housing Services Received 9.22 NIL 7.08 NIL

F-85



Transaction Value

Current Year

Out standing


Transaction Value

Previous Year

Out standing


Co.Ltd.

Jamnalal Sons Pvt. Ltd. Rent Paid 21.90 NIL 19.03 NIL

Rent Deposit Advanced NIL 50.00 NIL 50.00 Jamnalal Bajaj Foundation Reimbursement of Exp

NIL NIL NIL NIL

Hercules Hoist Ltd. Corporate loan received NIL NIL 500.00 NIL

Interest paid on loan NIL NIL 9.41 NIL

Purchases NIL NIL 0.43 0.48

Reimbursement of Exp 0.01 NIL 0.45 NIL

Capital Goods Purchased NIL NIL 12.43 12.43

Bajaj Allianz General Insurance Co. Ltd. Insurance Premium paid

143.30 NIL 103.52 0.01

Claim received 45.17 NIL 162.13 NIL

Sales NIL NIL 0.13 NIL

Bajaj Auto Finance Ltd. NIL NIL NIL NIL NIL

Anant Trading Co. NIL NIL NIL NIL NIL Bajaj Allianz Life Insurance Co. Ltd.

NIL NIL NIL NIL NIL

Bajaj Consumer Care Ltd. Sales NIL 14.43 NIL 14.43

Reimbursement of Exp NIL NIL 2.37 0.90

Bajaj Auto Holdings Ltd. NIL NIL NIL NIL NIL

Bachhraj Trading Co. NIL NIL NIL NIL NIL

Bachhraj & Co Pvt. Ltd. NIL NIL NIL NIL NIL Baroda Industries Pvt. Ltd.

NIL NIL NIL NIL NIL

Bachhraj Factories Pvt. Ltd

NIL NIL NIL NIL NIL

Kamalnayan Investments & Trading Pvt. Ltd.

NIL NIL NIL NIL NIL

Kushagra Trading Co. NIL NIL NIL NIL NIL Madhur Securities Pvt. Ltd.

NIL NIL NIL NIL NIL

Rahul Securities Pvt. Ltd. NIL NIL NIL NIL NIL Sikkim Janseva Pratisthan Pvt. Ltd

NIL NIL NIL NIL NIL

Hind Rectifiers Ltd. NIL NIL NIL NIL NIL

Hospet Steel Ltd. NIL NIL NIL NIL NIL

Jeewan Ltd. NIL NIL NIL NIL NIL

Kalyani Mukund Ltd. NIL NIL NIL NIL NIL

Mukand International Ltd. NIL NIL NIL NIL NIL Mukand Global Finance Ltd.

NIL NIL NIL NIL NIL

F-86



Transaction Value

Current Year

Out standing


Transaction Value

Previous Year

Out standing


Shishir Holdings Pvt. Ltd. NIL NIL NIL NIL NIL

Vidyavihar Containers Ltd.

NIL NIL NIL NIL NIL

Stainless India Ltd. NIL NIL NIL NIL NIL

Niraj Holdings Pvt. Ltd. NIL NIL NIL NIL NIL

Shekar Holdings Pvt. Ltd. NIL NIL NIL NIL NIL

Bombay Forging Ltd. NIL NIL NIL NIL NIL

PT. Bajaj Auto, Indonesia NIL NIL NIL NIL NIL

Bajaj Allianz Financial Distributors Ltd.

NIL NIL NIL NIL NIL

(D) Key Management Personnel Mr. Shekhar Bajaj –Chairman & ManagingDirector Remuneration

273.87 229.37 69.19 28.25

Mr. Anant Bajaj –Executive Director Remuneration

138.11 114.69 22.98 3.70

Mr. R. Ramakrishnan –Executive Director Remuneration

87.67 10.35 21.31 1.95

20. Details of materials consumption:

(a) Raw materials and components consumed

2007-08 2006-07 Particulars Units Quantity Value Quantity Value Ferrous Metal & Components Kg. 36,357.93 53,233.02

Nos. 28,08,388 35,80,868 M. Tons 31,392.30

10,135.97 33,263.35

9,611.79

Non-Ferrous Metal & Components Kgs. 3,96,339.30 5,43,779.30 Nos. 12,64,573 14,20,832 Sets 2,97,414.3 M. Tons 1,377.36

2,794.66

1,454.83

3,642.97

Electrical Stampings Kgs. NIL NIL Nos. 5,80,904

259.46 7,50,695

355.50

Components Others Kg. NIL Nos. 5,86,360

32.14 7,74,634

42.97

Paints Ltrs. 13,061.51 62.03 12,233.69 67.02 Kgs. 32,165.56 32,646.34 Hardware & Others 201.76 23.83 Total 13,486.02 13744.08

b) Imported & Indigenous Raw Materials, Components & Spares consumed

(i) Raw Material


F-87

Imported and indigenous Raw Materials Consumed:

Value % Value %

Imported 54.83 0.41 77.64 0.57

Indigenous 13,431.19 99.59 13,666.44 99.43

Total 13,486.02 100.00 13,744.08 100.00

(ii) Components & Spare Parts


Imported and indigenous stores, spare parts and tools consumed:

Value % Value %

Imported NIL NIL NIL NIL

Indigenous 928.79 100 911.63 100

Total 928.79 100 911.63 100

21. Licensed and installed capacity and production:


2007-08 2006-07 2007-08 2006-07 2007-08 2006-07 p.a. p.a. p.a. p.a. p.a. p.a. Fans Nos. 10,00,000 10,00,000 8,00,000 8,00,000 2,87,474 3,78,822

Parts & Accessories of Fans Nos. 50,000 50,000 - - - -Magneto Assemblies Nos. 5,00,000 5,00,000 3,00,000 3,00,000 - -Parts & Accessories for Magneto

Nos. 25,000 25,000 25,000 25,000 - -

Electric Motors Nos. 25,000 25,000 - - - -Parts & Accessories for Electric Motors

Nos. 5,000 5,000 - - - -

Dies made of Steel Nos. 90 90 24 24 - -Power Generated - - 2.8 MW 2.8 MW 27,02,563

KWH40,93,311

KWHHighmast Shafts ** Nos. - - 2,275 2,275 3,169 2,970Swaged/Octagonal Poles ** Nos. - - 19,700 19,700 29,518 17,181

Lattice Mast / Transmission Line Towers / Others (Galvanising Job work etc.) **

M. Tons

- - 24,000 24,000 21,604 25,223

* The installed capacity as certified by the Management, being a technical matter accepted by the

Auditors as correct. ** The installed capacity is interchangeable based on business prospects.

F-88

22. Quantitative information regarding Opening and Closing Stock, Production excluding job work for outside

parties, Purchases and Sales: (Quantity in 000 Pcs)


Purchases for Resale

Closing Stock Sales

Products Qty. Value Qty. * Qty. Value Qty. Value Qty. Value 1. Lighting 3,092 514.12 - 86,233 15,022.45 8,463 1,187.93 80,863 17,822.92 (3,132) (546.39) - (71,865) (11,077.41) (3,092) (514.12) (71,905) (13,524.72)2. Luminaires 477 1,664.30 - 4,573 18,425.45 740 2,647.93 4,310 23,197.78 (452) (1,484.36) - (3,560) (15,161.58) (477) (1,664.30) (3,535) (19,436.31)3. Engineering & Projects

1804 1,575.71 29,080 - 13,964.95**

3656 2,765.18 27,228 38,170.19

(2,075) (1,445.23)(30,657) - (9,857.64)**

(1,804) (1,575.71) (30,928) (32,999.55)

4. Appliances 386 2,372.37 - 4,029 25,460.53 419 3,034.88 3,997 36,385.89 (339) (2,200.86) - (2,898) (18,977.67) (386) (2,372.37) (2,851) (26,039.95)5. Fans 306 2,113.16 287 2,438 15,826.81 325 2,419.804 2,707 24,751.88 (275) (1,985.30) (379) (1830) (11,566.55) (306) (2,113.16) (2,178) (19,299.96) Total 8,239.66 88,700.19 12,055.72 140,328.66 (7,662.15) (66,640.85) (8,239.66) (1,11,300.50)

* After adjusting breakages, excess / shortage, samples, etc. ** Including works contracts materials and payments to Sub-Contractors. *** Figures are in Metric tones.

Note: Figures include value of spares but not quantity. Figures in brackets pertain to previous year.

23. Miscellaneous Income includes Rs. 127.26 (Previous Year Rs. 65.97 ) being the liabilities no longer payable.

24. Disclosures pursuant to Accounting Standard - 15 ( Revised ) " Employee Benefits" :

a. Defined Contribution Plans: Amount of Rs. 166.64 (Previous Year Rs. 166.24) (superannuation) is recognised as expense and included in "Employee Emoluments" - Schedule 12 in the Profit and Loss Account.

b. Defined Benefit Plans: i) General Descriptions of significant Defined plan:

a. Gratuity Plan b. Leave Plan

ii) Reconciliation of opening and closing balances of the Present Value of the Defined Benefit Obligation :

Sr. No. Particulars Gratuity Gratuity 2007-08 2006-07

a. Present value of Defined Benefit Obligation at the beginning of the year 843.56 841.35

b. Interest cost 61.15 55.76

F-89


c. Current service cost 66.59 60.80 d. Actuarial Losses / ( Gains) 414.68 (10.57) e. Benefits paid (79.45) (103.79) f. Present value of Defined Benefit 1,306.53 843.55

Obligation at the close of the year

iii) Changes in the fair value of Plan Assets and the reconciliation thereof:


a. Fair value of Plan Assets at the beginning 525.09 276.35 of the year

b. Add :Expected return on Plan Assets 35.80 25.31 c. Add / (Less) : Actuarial Losses / ( Gains) 9.11 9.18 d. Add : Contributions 215.30 318.04 e. Less: Benefits Paid (79.44) (103.79) f. Fair value of Plan Assets at the close 705.86 525.09

of the year Actual Return on Plan Assets

iv) Amount Recognised in the Balance Sheet including a reconciliation of the present value of the

defined obligation in (i) and the fair value of the plan assets in (ii) to the assets and liabilities recognised in the Balance Sheet:

Sr. No. Particulars Gratuity Gratuity

2007-08 2006-07 a. Present value of Defined Benefit obligation 1,306.53 843.56 b. Less: Fair value of Plan Assets (705.86) (525.09) c. Present value of funded obligation 600.67 318.47 d. Net Liability/( Asset) recognised in Balance Sheet 600.67 318.47

v) Amount recognised in the Profit and Loss Account are as follows :


2007-08 2006-07 a. Current Service Cost 66.59 60.80b. Interest Cost 61.15 55.76c. Expected return on Plan Assets (35.80) (25.31)d. Actuarial Losses / ( Gains) 405.55 (19.74)e. Past service costs NIL NIL f. Effect of curtailment / settlement NIL NIL g. Adjustments for earlier years NIL NIL Recognised in the Profit and Loss Account 497.49 71.51 vi) Broad Categories of plan assets as a percentage of total assets as at 31.03.08

F-90

Sr. No. Particulars 2007-08 2006-07 a. Government of India Securities - - b. State Government Securities - - c. Corporate Bonds - - d. Fixed Deposit under Special Deposit Scheme - - e. Public Sector Bonds - - f. Insurer Managed Funds 100% 100%

vii) Actuarial Assumptions as at the Balance Sheet date:


2007-08 2006-07 a. Discount Rate 7.65% 8.20% b. Expected rate of return on Plan Assets 7.50% 7.50% c. Salary Escalation rate -- Management Staff 7.00% 5.00% d. Salary Escalation rate -- Non -Management Staff 7.00% 5.00% e. Annual increase in Healthcare costs - - f. Attrition rate - - 21-44 yrs 15% 15% 45- 57 yrs 1% 1%

The estimates of future salary increases considered in actuarial valuation takes into account of inflation, seniority, promotion and other relevant factors.

viii) Leave encashment is not funded. On early implementation of Accounting Standard-15 “Employee

Benefits”, which is mandatory in application w.e.f. 1st April 2007, the transitional liability as at 31st March 2007 (adoption date) has been determined with reference to the present value of the future obligation aggregating to Rs. 316.01 and has been adjusted against the balance in the General Reserve net of deffered tax asset amounting to Rs. 208.60.

Amount recognized in the Balance sheet is as follows:


Present Value of Unfunded Obligation 834.49 811.77

Fair Value of Plan assets Nil Nil

Net Liability 834.49 811.77

Amount in Balance Sheet

Liability 834.49 811.77

Assets Nil Nil

Net Liability 834.49 811.77

Amount recognized in the Profit & Loss Account is as follows:


Total amount included in Personnel cost as Leave Encashment paid

91.56

95.48

F-91

Actuarial Assumptions as at the Balance Sheet date:

Sr. No. Particulars 2007-08 2006-07

a. Discount rate 7.65% 8.20%

b. Salary Escalation rate 7.00% 5.00%

c. Attrition rate

21-44 yrs. 15% 15%

44-57 yrs. 1% 1%

ix) In accordance with the Guidance note issued by Institute of Chartered Accountants of India, under

the ESOP scheme of the Company, the summary of Stock Option as on 31st March 2008 is as follows

Summary of stock option No. of stock options Weighted average

exercise price *

Options outstanding on 1st April, 2007 - -

Options granted during the year 7,46,900 -

Options forfeited/lapsed during the year 37,800 -

Options exercised during the year - -

Options outstanding on 31st March, 2008 7,09,100 -

Options vested but not exercised on 31st March, 2008 - -

*not applicable as no options were exercise during the year. Information in respect of options outstanding as at 31st March, 2008:

Nature of Scheme

Exercise Price No. of Options Weighted average remaining life

Growth 300 5,06,000 - Loyalty 150 2,03,100 -

The fair value of options granted during the year on 25th October, 2007 is Rs. 300/- per share, which is the closing market price of the shares on the Bombay Stock Exchange on the previous date.

Based on the Accounting Policy of the Company after adjusting for reversals on account of Options lapsed a sum of Rs. 131.51 has been included in ‘salaries, wages, bonus, etc.’ under Schedule 12 of Financial Statements.

25. Premises & Vehicles Taken on Operating Lease:


Rent and Lease rent recognized in the Profit & Loss Account 796.29 503.33

F-92


Particulars 2007-08 2006-07 Rent Lease

Rent Total Rent Lease

Rent Total

For a period not later than one year 341.13 86.93 428.06 315.42 101.88 417.30 For a period later than one year but not later than five years

960.79 58.10 1,018.89 793.06 131.28 924.34

Later than five years 118.75 NIL 118.75 258.44 NIL 258.44 26. Hind Lamps Ltd. being one of the major suppliers of Lamps and Tubes of the Company, the Company has

made investments in Hind Lamps Ltd. as its Promoter and also advanced a loan of Rs. 1070 as on 31st March 2008 as part of its obligations under Scheme of Rehabilitation sanctioned by B.I.F.R.

As the management of Hind Lamps Ltd. together with the Company are in process of implementation of the

Rehabilitation Scheme. The management reasonably expects that Hind Lamps Ltd. will generate adequate cash profits to repay its debts and reinstate its net worth in the coming years.

27. Debtors relating to Engineering & Projects Business Unit are as per books of accounts only. No balance

confirmations have been called for by the company. 28. Statement of Abstract of Financial Statements and Company’s General Business Profile, as compiled by the

Company, is attached hereto. 29. Determination of Profits & Capital for computation of EPS:


Profit for the year after Tax, before Extra Ordinary Items 7,309.94 3,910.27

Less: Preference Dividend inclusive Tax NIL 14.10

Profit available to Equity Shareholder before Extra Ordinary Items

7,309.94 3,896.17

Adjustment of Extra Ordinary Items NIL (57.53)

Profit available to Equity Shareholder after Extra Ordinary Items

7,309.94 3,838.64

No. of Equity Shares of Rs. 10/- each Basic 1,72,85,760 1,72,85,760 Add: Effect of Dilutive issue of Employees Stock Options (ReferNote No. 24 (ix) above

1,35,145 NIL

Diluted 1,74,20,905 1,72,85,760

Earnings Per Share in Rs. :-

(a) Basic

i) Before Extra Ordinary Items 42.29 22.54

ii) After Extra Ordinary Items 41.96 22.21

(b) Diluted



F-93

The Shareholders of the Company approved the issue of Bonus Shares in the proportion of one new equity share for every one existing equity share at the Annual General Meeting held on 26th July 2007. On 10th September, 2007 the Company allotted 86,42,880 equity shares of face value of Rs. 10/- each as fully paid-up, by capitalizing Capital Redemption Reserve. Accordingly, as per Accounting Standard 20 (AS 20) on ‘Earnings Per Share’ previous year’s earning per share (basic & diluted) have been recomputed consequent upon issue of Bonus shares.

30. Previous year's figures have been regrouped wherever necessary to make them comparable with those of the

current year. As per our report attached For and on behalf of Dalal & Shah Chartered Accountants







Managing Director


F-94

CASH FLOW STATEMENT for the year ended 31st March, 2008

As at

31.03.2008 As at

31.03.2007 A. CASH FLOW FROM OPERATING ACTIVITIES : (Rs. Lacs) (Rs. Lacs)

Profit/(Loss) before Tax 11,143.76 6,029.07 Less : Liability written back (127.26) (65.97) Add : Amounts written off 474.70 230.16 Add : Loss / (Profit) on sale of assets (80.69) (61.72)

Add : Stock Options Outstanding

131.51

- Less: Impact of Discontinued Operations - 57.53

398.26

160.00 Net Profit/(Loss) before tax provisions & extraordinary items

11,542.02

6,189.07

Adjustments for : Amortisation of Deffered Revenue Expenditure

2.87

60.35

Depreciation

745.24

728.59

Interest on Loans

3,375.68

2,532.82 Interest Received (441.53) (225.49) Dividend Received (0.15) 3,682.11 (0.15) 3,096.12 Interest Received (Considered as operating)

436.79

220.36

Operating Profit before Working Capital changes

15,660.92

9,505.55

Adjustments for (Increase) / Decrease in : Trade & Other Receivables (Gross before write-offs & making

(9,011.33)

(8,979.45)

provision for doubtful recoveries) Inventories (4,228.70) (1,673.97) Increase / (Decrease) in Trade Payables before write-back

7,202.16

(6,037.87)

6,562.97 (4,090.45)

Cash Generated from Operations 9,623.05

5,415.10

Direct Taxes paid

(3,776.79)

(2,477.18)

Prior Period Items

(2.73)

(8.75)

Net Cash From Operating Activities (A)

5,843.53

2,929.17 B. CASH FLOW FROM INVESTING ACTIVITIES :

Purchase of Fixed Assets (911.07) (685.68) Sale of Fixed Assets 163.27 142.73

Advances of Capital nature

(1,693.34)

-

F-95

As at

31.03.2008 As at

31.03.2007 Redemption/ Dimunition / (Purchase) of Investments

(3.23)

(735.59)

Loan given to Companies (Associates)

265.00

(1,150.00)

Interest Received

5.23

5.34

Dividend Received

0.15 (2,173.99)

0.15 (2,423.05)

Net Cash Flow from Investing Activities

(2,173.99)

(2,423.05) Add : Extraordinary Item

Impact of Discontinued Operations

-

(4.55) Net Cash Flow from Investing Activities after Extraordinary Item (B)

(2,173.99)

(2,427.60)

C. CASH FLOW FROM FINANCING ACTIVITIES :

Redemption of Preference share capital - (160.00) Bonus Share issue expenses (1.95) - Interest Paid (3,369.26) (2,530.53) Proceeds from / (Repayment of) borrowings

(47.14)

4,434.81

Dividends paid 7.74 (3,410.61) (1,219.40) 524.88

Net Cash Flow from Financing Activities (C)

(3,410.61)

524.88 Net Increase / (decrease) in cash and cash equivalents (A+B+C)

258.93

1,026.45

Cash and cash equivalents as at 1.4.2007

2,936.62

1,910.17

Cash and cash equivalents as at 31.3.2008

3,195.55

2,936.62 Note: An Amount of Rs. 26.26 Lacs (Previous Year Rs.27.69 Lacs) has been transferred from Revaluation Reserve to Profit and Loss Account in respect of Depriciation of Revalued Assets.








Managing Director


F-96

FY 2008-09

BAJAJ ELECTRICALS LIMITED

REPORT OF THE AUDITORS TO THE MEMBERS We have audited the attached Balance Sheet of BAJAJ ELECTRICALS LIMITED, as at 31st March, 2009 and also the annexed Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our Audit. (1) We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An Audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

(2) As required by the Companies (Auditor’s Report) Order, 2003 (CARO, 2003), issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we annex hereto a Statement on the matters specified in paragraphs 4 of the said Order; (3) Further to our comments in Annexure referred to in paragraph 2 above, we report that:


(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the Books of the Company;

(c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by the report are in agreement with the Books of Account of the Company;

(d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, to the extent applicable.

(e) On the basis of the written representations received from the Directors as at 31st March, 2009, and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st. March, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said Financial Statements, read together with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and present a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In the case of the Balance Sheet, of the state of the affairs of the Company as at 31st March, 2009;

(ii) In the case of the Profit and Loss Account, of the Profit for the year ended on that date, and ;

(iii) In the case of the Cash Flow statement, of the cash flows of the company for the year ended on that date.


DALAL & SHAH Chartered Accountants

Anish Amin Partner

Membership No: 40451 MUMBAI: 28th May, 2009

F-97

ANNEXURE TO THE AUDITORS’ REPORT: Statement referred to in Paragraph 2 of the Auditors’ Report of even date to the Members of BAJAJ ELECTRICALS LIMITED on the Accounts for the year ended 31st March, 2009. On the basis of the records produced to us for our verification/perusal, such checks as we considered appropriate, and in terms of information and explanations given to us on our enquiries, we state that: (i)(a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, considering the nature of the Fixed Assets, the same have been physically verified by the management at reasonable intervals during the year as per the verification schedule adopted by the Company, whereby all the assets are verified, in a phased manner, once in a block of three years. According to the information and explanations given to us and the records produced to us for our verification, discrepancies noticed on such physical verification were not, in our opinion, material and the same have been properly dealt with in the books of account. (c) As per the information and explanation given to us on our enquiries, the disposal of assets during the year was not substantial, and hence would neither have an adverse impact on the operations of the company nor affect its going concern;

(ii)(a) The inventories have been physically verified by the management at reasonable intervals during the year in a phased manner and at the close of the year;

(b) The procedures of physical verification of inventories followed by the management as explained to us are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business; (c) According to the records produced to us for our verification and the information and explanations given to us upon our inquiries, proper records of inventory have been maintained by the Company and the discrepancies noticed on physical verification of inventories referred to above, as compared to book records, though not material, have been properly dealt with in the books of account;

(iii)(a) As per the information and explanations given to us and the records produced to us for our verification, the company has granted unsecured loans to two companies covered in the register maintained under section 301 of the Companies Act, 1956, aggregating Rs.1185 lakhs at the beginning of the year, fresh loans granted during the year Rs. 1542 lakhs and balance at the end of the year aggregating to Rs. 2727 lakhs.

The Company has not granted any other loans to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act,1956;

(b) As per the explanations given to us, the rate of interest at which loans referred to in (a) above are, in our opinion, not prima facie prejudicial to the interest of the Company having regards to the market yields and the business relationships with the Company to whom loans have been granted;

(c) The companies to whom loans have been granted, as referred to in (a) above, have been regular in the payment of interest, wherever stipulated. However, no repayments as to principal have been stipulated in respect of the abovementioned loan outstanding during the year;


F-98

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchase of inventory and fixed assets and for the sale of goods and services. As per the information given to us, no major weaknesses in the internal controls have been identified by the management or the internal audit department of the company during the year.

(v)(a) On the basis of the audit procedures performed by us and according to the information and explanations given to us on our enquiries on this behalf and the records produced to us for our verification, the particulars of contracts and arrangements required to be entered into the register in pursuance of section 301 of the Companies Act, 1956 have been so entered.


(vi) In our opinion, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Section 58A of the Companies Act,1956, other relevant provisions of the said Act including the Companies (Acceptance of Deposits) Rules, 1975, where applicable, with regard to the deposits accepted by it from the public. Since the Company has not defaulted in repayments of deposits, compliance of Section 58AA or obtaining any order from the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any other Court or Tribunal, does not arise;

(vii) On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that, the Company has during the year taken steps to strengthen the internal audit functions to make the internal audit system, commensurate with the size and nature of its business.;

(viii) We have broadly reviewed the Books of Account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of Cost Records under Section 209(1)(d) of the Companies Act,1956, and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate;

(ix)(a) According to the records of the Company, the company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise duty, Cess and other Statutory dues with the appropriate authorities;

(b) According to the records of the Company and the information and explanations given to us upon our enquiries in this regards, disputed dues in respect of Sales Tax, Income-tax, Wealth-tax, Service Tax, Customs Duty, Excise Duty and Cess unpaid as at the last day of the financial year, are as follows;

F-99

(Rs in Lakhs)

FORUMS BEFORE WHOM PENDING Sr. Statutes Commissioner

Appeals Tribunal Sub

Court High Court Supreme

Court

Total

1 Sales Tax 526.56 91.61 13.49 -

- 631.66

2 Income Tax 73.71 28.04 - 17.64

- 119.39

3 Wealth Tax - - - -

- -

4 Customs Duty - - - -

- -

5 Service Tax - - - -

- -

6 Excise Duty 37.66 6.52 - -

- 44.18

(x) As per the information and explanations given to us, and keeping in the mind the restructuring proposals sanctioned by the lenders in the past, the Company has not defaulted in repayment of dues to banks or financial institutions during the year. The Company has not borrowed any sums through debentures;

(xi) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other investments;

(xii) The terms and conditions at which guarantees have been given by the company for loans taken from financial institutions and/or banks by others, are, in our opinion, not prejudicial to the interest of the company;

(xiii) We were unable to establish any audit trail of fund flows, which can correlate end use with corresponding funds raised. However, as per the information and explanations given to us and on the basis of the total expenditure incurred on the various assets till date, the term loans obtained by the Company, in our opinion, have been applied for the purpose for which they were obtained;

xvi) As we were not able to establish any audit trail of fund flows which can correlate end use with corresponding funds raised, we have examined the Balance Sheet of the Company as at 31st March, 2009 upon which we found that the Company as on that date had short term sources of funds amounting to Rs. 12862 lakhs, which were entirely utilized towards short term applications;

xv) As per the information and explanations given to us, on our inquiries on this behalf, there were no frauds on or by the Company, which have been noticed or reported during the year.

In view of the nature of business carried on by the company clause no (xiii) of CARO, 2003 is not applicable to the company. Further in view of the absence of conditions prerequisite to the reporting requirement of clauses (iii) (e), (f), (g), (x), (xiv), (xviii), (xix) and (xx) the said clauses are, at present, not applicable.


DALAL & SHAH


Anish Amin

Partner


MUMBAI: 28th May, 2009

F-100


As at

31.03.2009 As at

31.03.2008 Schedule (Rs. Lacs) (Rs. Lacs) I. SOURCES OF FUNDS : (1) SHAREHOLDERS' FUNDS (a) Share Capital 1A 1,728.58 1,728.58

(b) Stock options Outstanding [(See Note 1.VII.(iii)] 1B 284.43 131.51

(c) Reserves and Surplus 2 22,488.34 15,617.72 24,501.35 17,477.81 (2) LOANS : (a) Secured Loans 3 14,803.10 15,592.58 (b) Unsecured Loans 4 6,582.09 8,077.34 21,385.19 23,669.92 (3) DEFERRED TAX ADJUSTMENT (See Note 3) (a) Liability 1,168.39 1,177.49 (b) Assets (853.67) (764.95) 314.72 412.54 TOTAL 46,201.26 41,560.27 II.APPLICATION OF FUNDS : (1) FIXED ASSETS 5 (a) Gross Block 15,447.28 14,400.19 (b) Less: Depreciation 5,728.42 4,979.40 (c) Net Block 9,718.86 9,420.79 Less : Impairment of Assets of Discontinued Operations 258.86 258.83 9,460.00 9,161.96 (d) Capital Work-in-Progress 247.70 30.03 9,707.70 9,191.99 (2) INVESTMENTS 6 3,155.85 2,232.76 (3) CURRENT ASSETS, LOANS &

ADVANCES 7 (a) Inventories 17,770.48 16,217.50 (b) Sundry Debtors 55,915.82 42,534.71 (c) Cash & Bank Balances 5,381.35 3,195.55 (d) Other Current Assets 0.43 2.18 (e) Loans & Advances 11,304.30 8,895.35 90,372.38 70,845.29 Less : CURRENT LIABILITIES &

PROVISIONS 8 (a) Liabilities 51,908.82 36,452.64

F-101

As at

31.03.2009 As at

31.03.2008 Schedule (Rs. Lacs) (Rs. Lacs) (b) Provisions 5,125.85 4,257.13 57,034.67 40,709.77 NET CURRENT ASSETS 33,337.71 30,135.52 (4) MISCELLANEOUS EXPENDITURE 9 - - (to the extent not written-off or adjusted) TOTAL 46,201.26 41,560.27 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON FINANCIAL STATEMENTS 16








F-102


Year Ended

31.03.2009

Year Ended

31.03.2008

Schedule (Rs. Lacs)

(Rs. Lacs)

INCOME Sales 10- (a) 179,904.08 140,328.66 Less: Discount 743.33 711.30 Less: Excise duty 2,271.55 2,300.84 Net Sales 176,889.20 137,316.52 Operating Income 10 - (b) 164.81 131.09 Other Income 10 - (c) 570.10 293.34 177,624.11 137,740.95

EXPENSES Cost of Goods Traded and Materials Consumed 11 131,492.79 100,810.18 Personnel Cost 12 7,711.33 6,363.40 Other Expenditure 13 19,557.15 15,269.52 Interest 14 3,697.19 2,934.15 Amounts Written Off 15 482.16 474.70 Depreciation 5 880.98 771.50 Less: Transferred from Revaluation

Reserve (See Note 6) (26.26) 854.72 (26.26) 745.24 Contract Work-in-Progress carried forward (172.90) - 163,622.44 126,597.19 Profit before Tax 14,001.67 11,143.76 Taxation Current Tax (including wealth tax (see note 12) 5,000.00 4,000.00 Deferred (97.82) (313.91) Fringe Benefit Tax 165.00 145.00 Profit after Tax 8,934.49 7,312.67 Prior Period Expenses (21.41) (2.73)

8,913.08

7,309.94 Add : B/f from previous year 1,782.31 1,090.24 Balance available for Appropriation : 10,695.39 8,400.18 APPROPRIATIONS: Proposed Dividend 1,728.58 1382.86 Tax on Equity Share Dividend 293.77 235.01 Transferred to General Reserve 6,500.00 5,000.00

F-103

Year Ended

31.03.2009

Year Ended

31.03.2008

Schedule (Rs. Lacs)

(Rs. Lacs)

Balance carried to Balance Sheet 2,173.04 1,782.31 10,695.39 8,400.18 SIGNIFICANT ACCOUNTING POLICIES AND NOTES OF FINANCIAL STATEMENTS 16 EPS - Numerator (See Note 28) 8,913.08 7,309.94 Nominal value per Share Rs. 10/- 10/- Basic (Rs.) 51.56 42.29 Diluted (Rs.) 49.77 41.56








Directors

F-104

Schedule Nos. 1-16 annexed to and forming part of the Financial Statements for the year ended 31st March 2009 Schedule 1A - Share Capital

As at

31.03.2009 As at

31.03.2008 (Rs. Lacs) (Rs. Lacs) Authorised:

20,000,000 Equity Shares of Rs.10/- each 2,000.00 2,000.00 2,000.00 2,000.00 Issued, Subscribed & Paid up:

17,285,760 Equity Shares of Rs.10/- each fully paid up

1,728.58 1,728.58

(See Note 1 below) 1,728.58 1,728.58

Notes: 1. Of the above equity shares (a) 2,800 Equity Shares of Rs.10/- each are allotted as fully paid pursuant to a contract without

payment being received in cash,

(b) 172,780 Equity Shares of Rs.10/- each are issued to the Deferred Shareholders pursuant to the Scheme of Conversion of Deferred Shares into Equity Shares,

(c) 37,540 Equity Shares of Rs.10/- each are issued as fully paid to the Shareholders of the erstwhile

Matchwel Electricals (India) Limited in terms of the Scheme of Amalgamation,

(d) 11,043,680 Equity Shares of Rs.10/- each are allotted as fully paid Bonus Shares by capitalising Reserves.

Schedule 1B - Stock Options Outstanding

As per last Account 131.51 - Add : Additions during the year 159.07 131.51 Less: Transferred to General Reserve 6.15 - (See Note 23(B)) 284.43 131.51

F-105

Schedule 2 - Reserves and Surplus

As at

31.03.2009 As at

31.03.2008 (Rs. Lacs) (Rs. Lacs) Securities Premium Account As per Last Account 2,287.88 2,289.83 Less : Utilised for Share Issue Expenses - 1.95 2,287.88 2,287.88 Capital Subsidy (From Maharashtra Energy Development Agency ) As per last Account 20.00 20.00 Capital Redemption Reserve As per last Account 135.71 1,000.00 Less: Utilised for issue of Bonus Shares - 864.29 135.71 135.71 Revaluation Reserve: (See Note 6) As per last Account 987.20 1,013.46 Less: Transferred to Profit & Loss Account 26.26 26.26 960.94 987.20 General Reserve: As per last Account 10,404.62 5,404.62 Add: Transferred from Stock Options (Note 23(B)) 6.15 - Add: Transferred from Profit and Loss Account 6,500.00 5,000.00 16,910.77 10,404.62 Balance in Profit and Loss Account 2,173.04 1,782.31 22,488.34 15,617.72 Schedule 3 - Secured Loans

As at

31.03.2009 As at

31.03.2008 (Rs. Lacs) (Rs. Lacs) A) Long Term Loans : From Banks Foreign Currency Loans - 438.18 Rupee Loans 3,155.88 3,831.60 From Institutions Rupee Loans 24.22 147.55

F-106

Above Loans are secured by : i) First pari passu charge over present and future Fixed Assets of the Company, situated at: a) Ranjangaon Units : Village Dhoksanghvi, Taluka Shirur, Ranjangaon, Dist. Pune - 412210 b) Chakan Unit : Village Mahalunge, Chakan Talegaon Road, Khed, Pune - 410501 c) Wind Farm : Village Vankusawade, Tal. Patan, Dist. Satara, Maharashtra - 415206 d) Residential and Commercial properties situated at Mumbai, Ahmedabad, Raipur, Hyderabad & Bangalore, and ii) Second pari passu charge on the Current Assets of the Company, excluding Project Specific assets exclusively Charged to IDBI Bank Ltd. B) Working Capital Loans: Cash Credit from consortium banks

As at

31.03.2009 As at

31.0 3.2008 (Rs. Lacs) (Rs. Lacs)

Foreign Currency Loans

1,008.20

1,332.35

Rupee Loans 8,073.53

9,783.77 Above Loans are secured by : i. First pari passu charge by way of hypothecation of inventories and

book debts, excluding Project Specific assets exclusively charged to IDBI Bank Ltd.

ii. First pari passu charge by way of Equitable Mortgage of the Company’s immovable properties at Wardha and Mumbai (Reay Road)

iii. Second pari passu charge over present and future Fixed Assets of the Company, situated at;

a) Ranjangaon Units : Village Dhoksanghvi, Taluka Shirur, Ranjangaon, Dist.Pune - 412210


c) Wind Farm : Village Vankusawade, Taluka Patan, District Satara, Maharashtra 415 206;

d) Residential and Commercial properties situated at Mumbai, Ahmedabad, Raipur, Hyderabad & Bangalore.

These securities also extend to the various credit facilities including Guarantees and Letters of Credit of Rs. 26397.12 lacs (previous year Rs. 18541.04 lacs) executed on behalf of the Company established in the normal course of business. Further Company has availed facilities for Bank Guarantees and Letters of Credit of Rs. 12252.95 Lacs (Previous Year Rs. NIL) from IDBI Bank Ltd. which are secured by exclusive first charge on Company's movable properties and entire current assets pertaining to specific projects and subservient charge on the Company's entire movable assets including

F-107

As at

31.03.2009 As at

31.0 3.2008 (Rs. Lacs) (Rs. Lacs) Stocks and Book Debts etc

Interest Accrued and Due on above Loans, since paid

2.84

4.00 As at As at

31.03.2009 31.03.2008 (Rs. Lacs) (Rs. Lacs) C) Short Term Loans :

IDBI Bank Ltd.

2,500.00

- (Secured by subservient charge on the Company's entire movable assets including Stocks & Book Debts etc.) D) Car Loans : HDFC Bank Ltd. 4.41 9.86 ICICI Bank 33.47 41.57 Kotak Mahindra Primus Ltd. 0.55 3.70 (Secured by way of hypothecation of vehicles acquired out of the said loans) 14,803.10 15,592.58 Schedule 4 - Unsecured Loans As at As at

31.03.2009 31.03.2008 (Rs. Lacs) (Rs. Lacs)

Fixed Deposits -

968.02 Sales Tax Deferral Loan 3,732.09 3,609.32 (an incentive under 1993 Package Scheme of Incentives of SICOM) Short Term Loans: From Banks : Arab Bangladesh Bank Ltd. 500.00 500.00 State Bank of Bikaner and Jaipur 2,000.00 3,000.00 From Others : Inter-corporate Deposits 350.00 - 6,582.09 8,077.34 Schedule 5 – Fixed Assets

F-108

GROSS BLOCK (RS. IN LACS) DEPRECIATION (RS. IN LACS) NET BLOCK (RS. IN LACS) Description of

Assets

As a

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.04.

2008

Add

ition

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ents

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.03.

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As a

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.03.

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.03.

2008

Goodwill 0.38 - - 0.38 0.38 - - 0.38 - - - - *Land (Freehold) 180.18 - - 180.18 - - - - 180.18 - 180.18 180.18 *Land (Leasehold) # (See Note 6 ) 368.92

- 3.97 364.95

-

-

-

- 364.95

- 364.95 368.92

Roads and Culverts 198.41

-

- 198.41 21.30 3.24

- 24.54 173.87

- 173.87 177.11

*Buildings (See Note 6 ) 2,931.43

4.52

- 2,935.95 700.46 87.28

- 787.74 2148.21

- 2148.21 2230.97

*Ownership Premises (See Notes 5 & 6) 1,578.84 - - 1,578.84 247.11 26.42 - 273.53 1305.31

- 1305.31 1331.73

** Plant & Machinery 5,939.05 630.79

- 6,569.84 2345.38 363.66

- 2709.04 3860.80 258.86 3601.94 3334.84


- 768.30 388.32 67.68 - 456.00 312.30

- 312.30 293.28

Furniture & Fixtures and Equipments 2,129.19 404.10 169.47 2,363.82 1093.97 223.53 96.70 1220.80 1143.02

- 1143.02 1035.22

Trade Marks 0.40 - - 0.40 0.40 - - 0.40 - - - -

Vehicles 206.76 67.02 7.53 266.25 51.53 22.73 6.17 68.09 198.16

- 198.16 155.23 Temporary Structures 105.44 64.03

29.10 140.37 105.44 64.02

29.09 140.37 0.00

- 0.00

-

Leasehold Improvements 79.59 -

- 79.59 25.11 22.42

- 47.53 32.06

- 32.06 54.48

TOTAL 14,400.19 1,257.16 210.07 15447.28 4979.40 880.98 131.96 5728.42 9718.86 258.86 9460.00 9161.96 Previous Year 13,635.80 937.66 173.27 14400.19 4290.83 771.50 82.91 4979.40 9420.79 258.83 9161.96

F-109

Notes : 1. Gross Block at cost, except items marked. * which are at book value (See Note 6) ** includes in net block, assets not in use and held for disposal of Rs.13.11 lacs (Previous Year Rs.14.50 lacs) # represents Rs.3.97 lacs (Previous Year Rs.3.97 lacs) which has been amortised over the lease period. 2. Capital WIP includes amount of Rs.175.01 lacs for software purchases 3. Furniture & Fixtures and Equipments includes Computers.

F-110

Schedule 6 - Investments at Cost


Face Value

As at 31.03.2009

As at 31.03.2008

Rs. (Rs. Lacs) (Rs. Lacs) Long Term: Quoted 6.75% Tax free Bonds of Unit Trust of India

(77,385 Bonds)

100 77.38


46,500 0.47 -

6-Year Indira Vikas Patra* 27500 0.28 0.28 Others: In Equity Shares M.P. Lamps Limited (Partly paid Shares – Rs.2.50 per share paid up, called up Rs.5.00 per share) See Note. 7

48,000 Equity

(48,000 Equity)

10 1.20 1.20

M.P. Lamps Limited ( Partly paid shares – Rs.1.25 per share paid up, Called Up Rs.5.00 per share) See Note. 7

95,997 Equity

(95,997 Equity )

10 1.20 1.20



20,000 Equity

(20,000 Equity)

25 5.00 5.00


2,00,000 À'Class Equity


25 25.00 25.00

Mayank Electro Ltd. 100 Equity (100 Equity)

100 0.10 0.10


75,00,000 Equity

(75,00,000 Equity)

10 375.00 375.00


40,00,000 Equity

(40,00,000 Equity)

10 750.00 750.00

In Preference Shares Starlite Lighting Ltd. (Associate Company)

1,00,00,000 9% Non-convertible Cumulative Redeemable Preference Shares

- 10 1,000.00 -


1,00,00,000 2% Non-convertible Cumulative Redeemable Preference Shares


10 1,000.00 1,000.00

F-111


Face Value

As at 31.03.2009

As at 31.03.2008

Rs. (Rs. Lacs) (Rs. Lacs)

3,158.25 2,157.78

Less : Provision for Diminution in the Value of Investment in M.P.Lamps Limited (See Note.7)

2.40 2.40

3155.85 2,232.76

As at 31.03. 2009 As at 31.03.2008


Book Value

Market Value

Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs Total Quoted - - 77.38 101.45 Total Unquoted 3,155.85 2,155.38 3,155.85 2,232.76

* 6-Year Indira Vikas Patra of the Face Value of Rs.27,500 which are matured but not encashed are lying with Government department. See note 1(V) Figures and words in brackets, in this schedule, indicate previous year's No. and Class of Shares / Units

F-112

Schedule 7 - Current Assets, Loans and Advances

As at 31.03.2009 (Rs. Lacs)

As at 31.03.2008 (Rs. Lacs)

(a) Inventories: (As valued & certified by the Management) Stores, Spares and Packing Materials: At cost* 138.67 158.42 Raw Materials and Components: At cost* 3,218.39 2,693.06 Work-In-Progress : At cost 1,931.05 1,056.48 Finished Goods in Transit: (Cost to date) 273.76 253.82

Finished Goods: At cost or net realisable value whichever is lower 12,208.61 12,055.72 17,770.48 16,217.50

*Except slow and non-moving inventory which is valued at net realizable value (b) Sundry Debtors: Unsecured (See note 26) Over six months: Good 11,884.21 11,020.02 Doubtful 535.12 591.28 12,419.33 11,611.30 Less: Provision 535.12 591.28 11,884.21 11,020.02 Others : Good 44,031.61 31,514.69 55,915.82 42,534.71 (c) Cash & Bank Balances: Cash in hand 2,223.12 1,564.93 (Including cheques on hand Rs.2150.08 Lacs, Previous Year Rs. 1539.60 Lacs.) Balance with Scheduled Banks: In Cash Credit Accounts 1,396.86 429.53 In Current Accounts 857.03 996.63 In Fixed Deposits 290.94 198.89 Interest accrued but not due on above 13.50 1.11 Margin Money 599.10 903.54 4.11 204.11 Balance with Co-operative Bank: In Current Account The Kalyan Janta Sahakari Bank Ltd. Maximum balance outstanding during the year Rs.0.80 Lacs (Previous Year Rs.0.35 Lacs)

0.80 0.35

5,381.35 3,195.55 (d) Other Current Assets: Interest accrued on Investments, Loans etc. 0.43 2.18

F-113

As at 31.03.2009 (Rs. Lacs)

As at 31.03.2008 (Rs. Lacs)

(e) Loans & Advances: (Unsecured, considered good, unless otherwise stated): Loans given to Companies

Hind Lamps Ltd., an Associate Company. Maximum balance outstanding during the year Rs. 2462.00 Lacs (Previous Year Rs. 1075.75 Lacs)* (See Note 25) 1,947.00 1,070.00

Starlite Lighting Ltd., an Associate Company. Maximum balance outstanding during the year Rs. 780.00 Lacs (Previous Year Rs. 1435.00 lacs)* 780.00 115.00 2,727.00 1,185.00

Housing Loans to Employees 40.81

21.05 Advances recoverable in cash or in kind or for value to be received Good 5,801.80 5,458.96 Doubtful 155.23 158.63 5,957.03 5,617.59 Less: Provision 155.23 158.63

5,801.80 5,458.96

Advances of Capital nature 1,975.86

1,693.34 Contract work-in-progress 172.90 -

Advance Income Tax (Net of Provisions) (see note12) 68.44

-

Balances with Central Excise and Customs Department 517.49

537.00

11,304.30

8,895.35

*No repayment schedules have been stipulated. 90,372.38

70,845.29

F-114

Schedule 8 - Current Liabilities and Provisions

As at

31.03.2009 As at

31.03.2008 (Rs.Lacs) (Rs. Lacs) (a) Current Liabilities: Acceptances (See note 11) 15,068.14 11,354.55 Sundry Creditors: Dues of Micro, Small & Medium Enterprises (See Note 9) 1.50 2.50 Other than Micro, Small & Medium Enterprises 20,908.99 14,589.81 Other Liabilities 6,438.68 6,081.98 VAT / CST Payable 1,677.05 1,511.42 Other Statutory Liabilities Payable 258.49 645.48

Overdrawn in Current Account (Temporary overdraft, as per books of account only) 230.40 27.88 Advance Received from Customers 6,999.82 1,775.20 Trade Deposits 289.32 366.97 Unclaimed Dividends 24.88 20.21 Interest accrued but not due on Loans 11.55 76.64 51,908.82 36,452.64 (b) Provisions: Provision for Employee Benefits (See Note 23(A) i) Leave Entitlement Liability 986.25 834.49 ii) Gratuity 710.79 600.67 1,697.04 1,435.16 Provision for Warranties & Claims (See note 4) 1,227.07 889.32 Provision for forseeable loss on Construction Contracts 179.39 124.09 Provision for Taxation (Net of Advance Tax) - 190.68 Proposed Dividend 1,728.58 1,382.86 Provision for Tax on Proposed Corporate Dividend 293.77 235.02 5,125.85 4,257.13 57,034.67 40,709.77

F-115

Schedule 9 - Miscellaneous Expenditure (to the extent not written-off or adjusted)

As at

31.03.2009 As at

31.03.2008 (Rs.Lacs) (Rs.Lacs) Compensation on Voluntary Retirement Amount un-amortised at the beginning of the year - 2.87 Add : Amount transferred during the year - - Less : Amount amortised during the year - 2.87 Amount un-amortised at the end of the year - - Schedule 10 (a) Sales



(Rs.Lacs) (Rs.Lacs) Sales (net of returns, rebates, etc.) 178,139.87 139,709.15 Job Work Receipts 13.85 2.32 Sales Export 812.39 19.80 Sale of Manufacturing Scrap 937.97 597.39 179,904.08 140,328.66

Schedule 10 – (b) Operating Income



(Rs.Lacs) (Rs.Lacs) Income From Power Generated 164.81 131.09 164.81 131.09

Schedule 10 – (c) Other Income



(Rs.Lacs) (Rs.Lacs) Dividend from Trade Investment 0.45 0.15 Rent Income 7.73 7.63 Miscellaneous Income (See Note 22) 561.92 285.56 570.10 293.34

F-116

Schedule 11 - Cost of Goods Traded and Materials Consumed



(Rs.Lacs) (Rs.Lacs) a) Raw Materials & Components Consumed: Stocks at Commencement 2,693.06 2,894.18 Purchases 17,086.66 13,284.90 19,779.72 16,179.08 Less: Stocks at Close 3,218.39 2,693.06 16,561.33 13,486.02 b) Excise Duty on Increase/ (Decrease) in Stocks of Finished Goods 291.00 248.10 c) Components Processing Charges 293.00 263.63 d) Purchases Finished Goods & Material of Works Contracts 109,346.99 87,004.68

Payments to Sub-Contractors 3,262.27 1,695.51 112,609.26 88,700.19 e) Freight, Octroi, Entry Tax, etc. 2,765.66 2,275.94 f) (Increase) / Decrease in Stock: Stock at Commencement: Work-in-Process 1,056.48 708.84 Finished Goods 12,055.72 8,239.66 13,112.20 8,948.50 Stock at Close: Work-in-Process 1,931.05 1,056.48 Finished Goods 12,208.61 12,055.72 14,139.66 13,112.20 (1,027.46) (4,163.70) 131,492.79 100,810.18

Schedule 12 - Personnel Cost



(Rs.Lacs) (Rs.Lacs) Salaries, Wages, Bonus, etc. 6,598.88 5,126.83 Amortisation of compensation under voluntary retirement scheme

- 2.87

Contribution to Provident & Other Funds and Schemes 833.49 1,025.11


F-117

Schedule 13 - Other Expenditure



(Rs.Lacs) (Rs.Lacs) Stores and Spares consumed 1,094.18 928.79 Packing Materials Consumed 289.37 292.45 Power, Fuel and Water 167.45 158.37 Rent 977.43 692.94

Rates & Taxes(Including Leasehold Land Rent Rs.0.01 Lacs, previous year Rs 0.01Lacs)

27.08 24.55

Lease Rent 93.63 103.35 Insurance 117.80 114.51 Travelling, Conveyance and Vehicle Expenses 2,064.05 1,783.47

Postage, Telegrams, Telephone and Telex 469.09 338.76 Printing and Stationery 133.61 124.30 Repairs: Buildings and Roads 27.71 47.91 Machinery 108.63 108.83 Others 233.44 223.92 369.78 380.66 Directors' Fees and Travelling Expenses 25.06 19.99 Commission to Non Executive Director 7.60 7.20 Advertisement and Publicity 2,335.13 2,100.36 Freight and Forwarding (Net) 3,359.66 2,551.20 Product Promotion & Service Charges (Net) 2,809.91 2,337.68 Commission on sales 1,706.11 1,137.21 Foreign Exchange Fluctuation Loss 573.47 (127.36) Loss on Sale of Assets 12.35 (80.69) Donations 6.93 2.51 Provision for Doubtful Debts and Advances (Net) (9.56) 233.55 Provision for forseeable loss on Construction Contracts 55.30 124.09 Miscellaneous Expenses 2,871.72 2,021.63 19,557.15 15,269.52

Schedule 14 Interest**



(Rs.Lacs) (Rs.Lacs) Interest: Fixed Loans 545.04 621.36 Other Loans 3,581.38 2,754.32 4,126.42 3,375.68 * Less: Received /Receivable(Gross) 429.23 441.53 3,697.19 2,934.15

F-118



(Rs.Lacs) (Rs.Lacs)

*Tax deducted under Section 194A Rs. 75.88 Lacs (Previous Year Rs. 69.68 Lacs). ** Includes Bill Discounting charges

Schedule 15 Amounts Written Off



(Rs.Lacs) (Rs.Lacs) Fixed Assets 51.10 3.79 Lease hold land Amortised 3.97 3.97 Bad Debts 414.29 450.66 Irrecoverable Advances, Claims, etc. 12.80 16.28 482.16 474.70

F-119

Schedule annexed to and forming part of the Financial Statements for the year ended 31st March, 2009 Schedule 16 - Notes Forming Part of the Financial Statements (Rupees in Lacs, unless otherwise stated) 1. SIGNIFICANT ACCOUNTING POLICIES I. System of Accounting:

i) The Company generally follows the accrual basis of accounting both as to income and expenditure except those with significant uncertainties.

ii) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of the changing value in the purchasing power of money.

iii) The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of relevant facts and circumstances as of the date of the financial statements.

II. Revenue Recognition:

Income: The Company recognizes income on accrual basis. However, where the ultimate collection of the

same lacks reasonable certainty, revenue recognition is postponed to the extent of uncertainty.

(1)Sales: (a) Domestic Sales are accounted for on dispatch from the point of sale. (b) Export sales are recognized on the basis of the dates of the Mate’s Receipt and initially

recorded at the relevant exchange rates prevailing on the date of transaction. (2) Interest is accrued over the period of the loan/investment. (3) Dividend is accrued in the year in which it is declared whereby a right to receive is established. (4) Profit/Loss on sale of investment is recognized on the contract date. (5) Benefit on account of entitlement to import goods free of duty under the “Duty Entitlement Pass

Book Scheme” is accounted in the year of export. (6) Revenue from erection contracts is recognised based on the stage of completion determined with

reference to the costs incurred on contracts and their estimated total costs. Provision for foreseeable losses/ construction contingencies on erection contracts is made on the basis of technical assessments of costs to be incurred and revenue to be accounted for.

III. A) Fixed Assets:

i) Freehold Land, Leasehold Land, Buildings (including Leasehold Land appurtenant thereto)


F-120

ii) Capital goods manufactured by the Company for its own use are carried at their cost of production (including duties and other levies, if any) less accumulated depreciation and other fixed assets are carried at cost of acquisition (including cost of specific borrowings) less accumulated depreciation.

B) Depreciation:

i) a) Depreciation on all Fixed Assets (other than Leasehold Land which is amortized over the

period of lease and those mentioned in (ii) and (iii) below) is being provided on "Straight Line Method" at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

b) Pursuant to the revision in the rates prescribed in Schedule XIV to the Companies Act,

1956 vide notification No. GSR 756(E) dt.16.12.93 issued by the Ministry of Law, Justice and Company Affairs, depreciation has been calculated at new rates only on additions to assets made after the said date.


ownership basis, is being provided on Straight Line Method at the rates specified considering the balance period of life of the assets.

The additional charge of depreciation on increased value due to revaluation of buildings and the premises on ownership basis, has been transferred from Revaluation Reserve to the Profit and Loss Account.



C) Impairment of Assets:

The Company, at each balance sheet date, assesses individual fixed assets and groups of assets constituting “Cash Generating Units” (CGU) for impairments, if circumstances indicate a possibility or warrant such assessment. Provision is made for impairment to state the assets or CGUs at their realizable value or economic value, as the case may be.

IV. Foreign Currencies Transactions:

The export sales are accounted with reference to the Mate's Receipt at the exchange rates prevailing on the transaction date. Foreign exchange gains or losses on realisation are dealt with, as such, in the Profit and Loss account. At the close of the year, all foreign currency loans, liabilities and current assets are stated at the relevant exchange rate prevailing at the close of the year. The exchange difference arising from foreign currency transactions are dealt with, as such, in the Profit & Loss Account.

Foreign Exchange Contracts:

i) Premium/Discounts are recognized over the life of the contract. ii) Profits and losses arising from either cancellation or utilization of the contract and

revalorizing the contract at the close of the year are recognized in the profit and loss account as detailed in Note No. 13 (e) in Schedule 16 to the accounts.

V. Investments:

Investments are valued at cost of acquisition less provisions made for diminution in the value of investments which, in the judgment of the management are necessary.

F-121


Costs of inventories have been computed to include all costs of purchases, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

A. Finished Goods and Work-in-Process :

a) Finished Goods

(i) Traded finished goods and spares are valued at cost, determined on “First In First Out"

basis or net realisable value whichever is lower. (ii) Finished goods manufactured by the Company are valued at lower of cost, determined

on “First In First Out” basis or net realizable value. Galvanized structures / products manufactured by the Company are valued at cost, determined on Specific Identification method or net realizable value, whichever is lower.

b) Work-in-Process is valued at cost unless circumstances require the cost to be written down

to realizable value.

B. Raw Materials:

Raw materials are valued at weighted average cost unless circumstances require the cost to be written down to realizable value.

C. Stores, Spares and Packing Material :

Stores, spares and packing material are valued at monthly weighted average cost unless circumstances require the cost to be written down to realizable value.

D. Obsolete and non-moving inventory of raw material, stores and spares is carried at cost or market value, whichever is lower. Obsolete and non-moving inventory of galvanized structures are valued at scrap rate.


i. Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering the service are classified as short term benefits. Such benefits include salaries, wages, bonus, short term compensated absences, awards, exgratia etc. are recognised in the period in which the employee renders the related service.

ii. Post Employment Benefits:

A. Gratuity:

The Company is making contributions on an actuarial basis as determined by the Life Insurance Corporation of India (LIC), through Bajaj Electricals Limited Employees' Group Gratuity Trust, to the "Group Gratuity-cum-Life Assurance Scheme" under the Cash Accumulation Policy, which also covers employees who are entitled to gratuity after attainment of retirement age. However, any deficits in plan assets managed by LIC as compared to the acturial liability, is recognized as a liability immediately.

B. Superannuation:


F-122

C. Provident Fund :

Employees own and Employer's contribution (after paying Family Pension Scheme portion to Provident Fund Authority) are paid to the Trustees "Bajaj Electricals Limited Employees' Provident Fund Trust" / Concerned Authorities. Deficits in the assets, as compared to the obligations outstanding, are contributed by the Company, as and when they arise.

D. Employees’ Pension Scheme :

Defined contributions to Employees’ Pension Scheme 1995 is made to the Government Provident Fund Authority.

E. Leave Entitlement :


iii. Employee Stock Option Scheme : The Company has granted Stock Options to its employees under the Growth Option as well as Loyalty Option. In respect Options granted under the Employees Stock Options Plan, in accordance with guidelines issued by the SEBI and in compliance with the Guidance Note on Accounting for Employee Share-based Payments issued by the Institute of Chartered Accounts of India in the year 2005 and applicable for the period on or after 1st April 2005, the cost of stock options granted to employees are accounted by the Company using the intrinsic value method and the cost based on excess of market value over the exercise price is recognized in Profit & loss Account, over vesting period on time proportion basis and included in the ‘Salaries, wages, bonus etc.’ in Schedule 12 of the Financial Statements. Should any employee leave in the subsequent year, before exercise of the Option, the value of Option accrued in their favour is written back to the General Reserve.

VIII. Export Incentives :


IX. Borrowing Costs :

Borrowing costs are recognised in the financial statements except in respect of specific borrowing raised for acquisition of capital asset until such time the asset is ready to be put to use for its intended purpose, which are added to carrying cost of such asset.

X. Taxation :

i) Deferred tax assets and Liabilities are recognised for the future tax liability arising on account of timing difference between the taxable income and the profits as per the financial statements.

ii) Deferred tax assets representing carried forward business losses and unabsorbed depreciation are recognised to the extent the management is virtually certain that they are going to be realised in future.

iii) Deferred tax assets and Liabilities have been recognised by considering the tax rate, which has been enacted or substantively enacted by the Balance Sheet date.

iv) Deferred tax assets and liabilities, as the case may be, arising on adjustments to Reserves are netted off against the respective adjustments.

XI. Discontinued Operations :

Assets and Liabilities of discontinued operations are assessed at each Balance Sheet date. Impacts of any impairments and write backs are dealt with in the Profit and Loss Account.

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Impacts of discontinued operations are distinguished from the ongoing operations of the Company, so that their impact on the Profit and Loss Account for the year can be perceived.

XII. Provisions :

Provisions are recognised for current obligations, which are likely to entail outflow of economic resources in the future periods consequent to obligating events prior to the close of the year.

However, such obligations, not likely to entail outflows in future periods and contingent on the future outcome of events, are disclosed as a matter of information as “Contingent Liabilities”.

2. (i) Contingent Liabilities not provided for: 2008-09 2007-08 (a) Disputed Income-tax Matters 119.40 55.41 (b) Disputed Excise Matters – Gross 68.02 68.02 - Net of tax 44.90 44.89 (c) Disputed Sales Tax Matters – Gross 752.02 819.34 - Net of tax 496.41 540.84

(d) Claims against the Company not acknowledged as debts – Gross

1534.18

319.42

- Net of tax 1012.71 210.85

(e) Guarantees/Letter of comfort given on behalf of other Companies 2,750.00 2,750.00

(f) Penalty/damages/interest, if any due to non- fulfillment of any of the terms of works contracts


(ii) Uncalled liability in respect of partly paid Shares held as investments 7.20 7.20

3. The Company has recognised Deferred Taxes which result from the timing difference between the

Book Profits and Taxable Income for the Financial Year 2008-09, the details of which are as under:

Particulars Balance as at

31st March, 2008

For the year recognised in the “Profit and Loss

account”

Balance as at31st March,

2009

Deferred Tax Liabilities: On Account of timing difference in Depreciation 1,177.49 (9.10) 1168.39 Total (A) 1,177.49 (9.10) 1168.39 Deferred Tax Assets: On Account of timing difference in (a) Section 43B Disallowances 33.99 NIL 33.99 (b) Leave Entitlement Liability 283.64 51.58 335.22 (c) Gratuity liability 204.17 37.43 241.60 (d) Provision for Doubtful Debts 200.97 (19.08) 181.89 (e) Provision for foreseeable loss on Erection Contracts

42.18 18.79 60.97

Total (B) 764.95 88.72 853.67 Net Deferred Tax (A-B) 412.54 (97.82) 314.72

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4. As required by Accounting Standard 29 – “Provisions, Contingent Liabilities and Contingent Assets”, the Company recognised a liability aggregating to Rs. 1,227.07 (Previous Year Rs. 889.32) for expected warranty claims that are estimated to be incurred in future periods arising out of sales made upto the closure of the year.

5. Ownership premises include the sum of Rs. 0.01 (Previous Year Rs. 0.01) being the Face Value of

Shares in co-operative societies required to be held under their respective bye-laws.

6. The buildings (including leasehold land appurtenant thereto) and ownership premises had been revalued as on 1st January, 1985 then resulting in the net increase in the book value by Rs. 321.01 which had been transferred to Revaluation Reserve. All the freehold land, leasehold land, buildings (including leasehold land appurtenant thereto) and premises on ownership basis had been revalued as on 30th September, 1994 resulting in a further net increase in the book value of the said assets as on 1st October, 1994 by Rs. 2,305.87 which also had been transferred to the Revaluation Reserve. As a result of the above, the total net increase in the book value of the said assets aggregates to Rs. 2,626.88 (Rs. 62.51 on freehold land and Rs. 13.69 on leasehold land, Rs. 816.49 on building and Rs. 1,734.19 on ownership premises). The depreciation on the increased value has resulted in an additional charge for the year of Rs. 26.26 (Previous Year Rs. 26.26). An amount equivalent to the additional charge has been transferred from Revaluation Reserve to Profit & Loss Account. Such transfer, according to an authoritative professional view, is an acceptable practice for the purpose of true and fair presentation of the Company's financial statements. The balance depreciation charged on original cost of assets is in accordance with the SLM rates specified in Schedule XIV to the Companies Act, 1956.



8. Estimated amount of contracts remaining to be executed on capital account Rs. 475.12(Previous

Year Rs. 787.73) net of advances.

9. Based on the information received from some of the vendors with regards to their registration (filling of Memorandum) under “The Micro Small & Medium Enterprises Development Act, (27 of 2006)” the details and provisions required there under are as follows : Sr. No. Name of Party Principal

Amount Outstanding

Interest Accrued

Thereon*

Delayed Principal amt

Payment during the

year

Interest on delayed payment during the year*

1. Pamba Electronic Systems - - 0.58 0.01

2. Superlite - - 1.07 0.03

3. Micro Cut Engineering 0.30 - 0.73 0.01

4. Safe Lifters 0.61 - 0.61 0.01

5. Vishal Paints - - 0.27 0.01

6. SNT Controls Ltd. 0.58 - - -

Total 1.49 - 3.26 0.07 * Due and Payable

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10. Disclosure under the Accounting Standard - 7 (Revised) “Construction Contracts”


(a) (i)Contract Revenue recognized during the year 277.69 567.39

(ii)Method used to determine the contract revenue recognized and the stage of completion (Refer note 1(II)(6)

- -

(b) Disclosure in respect of contracts in progress as at the year end

(i) Aggregate amount of costs incurred and recognized profits

(less recognized losses)

874.35 723.00

(ii)Advances received , outstanding NIL NIL

(iii)Retentions receivable NIL NIL

(iv) Amount due from customers (included under Schedule 7 – Sundry Debtors)

405.46 329.36

(v) Amount due to customers (included in Sundry Creditors under schedule 8 – Current Liabilities and Provisions)

NIL NIL

11. Acceptances include Rs. 2205.50 (Previous Year Rs. 1,463.66 ) for bills accepted by the

Company and discounted by the suppliers with Small Industries Development Bank of India under a line of credit extended to the Company, which are secured by a second charge on raw materials, goods in process, semi-finished goods, finished goods and book debts and also on the collateral security created by way of equitable mortgage on the Company’s properties at Mumbai and Wardha.

12. Provision for taxation includes Rs. 2.50 (Previous Year Rs. 2.50), provided in respect of wealth

tax liability for the year.

13. C.I.F. value of imports, expenditure and earnings in foreign currencies and foreign exchange exposures:

2008-09 2007-08 (a) C.I.F. value of imports: (i) Raw Materials 18.76 33.50 (ii) Capital Goods 229.42 43.52 (iii) Finished Goods 10480.01 6,545.95 (iv) Machinery Spares 26.47 38.32 Total 10754.66 6661.29 (b) Expenditure in foreign currency-Gross (i) Other Expenses 408.62 391.09 (ii) Royalties 41.19 45.17 Total 449.81 436.26 (c) Earnings in foreign exchange: (i) F.O.B. value of exports 812.39 263.47 (ii) Freight & Insurance on exports NIL NIL

Total 812.39 263.47

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2008-09 2007-08 Amount in US

$ (in Lacs) Amount in US $

(in Lacs) (d) Disclosure of Derivative Instruments and Foreign

Currency Exposures outstanding at the close of the year.

i) Derivative Instruments: Forward ContractPurchase

8.73 22.78

ii) Open Foreign Exchange Exposures: - Receivables and Bank Balances 0.00 0.00 - Payables 3.33 15.94 - Loans 12.12 20.47

i) Purpose Hedging Hedging


(Rs. In Lacs) (Rs. In Lacs)

(i) Exchange difference gains/(loss) recognised in the Profit and Loss account

(573.47) 127.36

(1) relating to Exports sales during the year as a part of "Other income/ (Other Expenses)"

32.25 0.50

(2) on settlement of other transactions including cancellation of forward contracts as a part of "Other income/(Other Expenses)"

(605.72) 126.86


NIL NIL

(ii) amount of premium/discount on open forward contracts

6.17 8.50

(1) recognised for the year in the profit and loss account 3.12

4.67

(2) to be recognised in the subsequent accounting period 3.05

3.83



Statutory Audit Fees 16.82 13.48 Tax Audit Fees 6.73 5.62 Certification Fees 1.73 1.38 Other Matters 1.74 3.37 Out of Pocket expenses 1.06 1.79 Total 28.08 25.64

15. Commission Payable to the Managing Director and Executive Director as per Section 309(5) of

the Companies Act, 1956:

Particulars 2008-09 2007-08 Profit Before Provisions 13,992.11 11,377.32Add:

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Particulars 2008-09 2007-08 (i) Depreciation 854.72 745.24 (ii) Managerial Remuneration 626.64 499.63 (iii)Non Executive Director’s Commission 7.60 7.20 (iv) Compensation under VRS - 2.87

(v) Loss on sale of Fixed Assets 14.49 -

(vi) Directors' Sitting Fees 8.00 6.80

Sub Total 1,511.45 1,261.74 Total 15,503.56 12,639.06Less: (i) Depreciation as per Section 350 854.72 745.24 (ii) Profit on Sale of Fixed Assets 2.14 80.69 (iii) Gratuity, Leave Encashment under VRS

included in (iv) above - 856.86 0.53 826.46


14,646.70 11812.60

1. Commission to Managing Director Shri Shekhar Bajaj – Commission payable as determined by the Board of Directors to be limited to 2% of the net profit of the Company.

283.95 229.37

2. Commission to Executive Director Shri Anant Bajaj - Commission payable as determined by the Board of Directors to be limited to 1% of the net profit of the Company.

141.98

114.69

3. Commission to Executive Director Shri R. Ramakrishnan - Commission payable as determined by the Board of Directors to be limited to an amount equal to 50% of the Basic salary and additional allowance for the year. (Previous year restricted to 25% of basic salary and additional allowance for the year).

22.95

10.35

4. Commission to Non Executive Directors - Maximum Commission restricted to Rs. 40,000/- per Board Meeting attended, per person.

7.60

7.20

16. (A) Managing Director’s emoluments, included under ‘Salaries, Wages, Bonus, etc.’ in Schedule

12 – Personnel Cost.

Particulars 2008-09 2007-08 Salary 36.00 32.50 Contribution to Provident Fund, Gratuity Fund & Superannuation Scheme, etc.

12.72 8.78


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(B) Mr. Anant Bajaj, Executive Director – emoluments included under ‘Salaries, Wages, Bonus, etc.’ in Schedule 12- Personnel Cost.


5.19 3.26

Perquisites 1.80 1.20 Commission

141.98 114.69

Total

173.36 138.11

(C) Mr. R. Ramakrishnan, Executive Director – emoluments included under ‘Salaries, Wages,

Bonus, etc.’ in Schedule 12- Personnel Cost.


9.86 6.32

Perquisites 3.60 5.60 Commission 22.95 10.35 Total 112.31 87.67 (D) Non-Executive Directors’ Commission included in Schedule 13- Other Expenditure.


Mr. H.V.Goenka 1.20 0.80 Mr. A.K.Jalan 1.60 2.00 Mr. Ajit Gulabchand 0.80 0.40 Mr. V.B.Haribhakti 1.60 2.00 Mr. Madhur Bajaj 1.20 0.80 Dr. (Mrs.) Indu Shahani 1.20 1.20 Total 7.60 7.20


Company has identified its Primary Reportable Business Segments comprising of i) Lighting, ii) Consumer Durables, iii) Engineering & Projects and iv) Others. ‘Lighting’ includes Lamps, Tubes, Luminaries, ‘Consumer Durables’ includes Appliances & Fans, ‘Engineering & Projects’ includes Transmission Line Towers, Telecommunications Towers, Highmast, Poles and Special Projects and 'Others' includes Die-casting and Wind Energy.

F-129

Primary Segment Information : 1) Segment Revenue 2008-09 2007-08 a) Lighting 48,831.20 40,729.19 b) Consumer Durables 75,796.21 60,316.04 c) Engineering & Projects 52,261.79 36,271.29 d) Others 164.81 131.09 Sub-total 1,77,054.01 1,37,447.61 Less: Inter segment Revenue - - Net Sales / Income from Operations 1,77,054.01 1,37,447.61

2) Segment Results [Profit / (Loss)] before Tax and Interest from each segment 2008-09 2007-08 a) Lighting 3,920.56 3,052.92 b) Consumer Durables 7,673.06 6,272.27 c) Engineering & Projects 6,721.77 4,677.13 d) Others 35.12 35.68 Sub-total 18,350.51 14,038.00 Less: I) Interest (Net) 3,697.18 2,934.15 II) Other un-allocable expenditure net of un-allocable income

651.66 (39.91)

Operating Profit / (Loss) before Tax 14,001.67 11,143.76 Provision for Tax – Charge / (Release) 5,000.00 4,000.00 Provision for Deferred Tax – Charge / (Release) (97.82) (313.91) Provision for Fringe Benefit Tax 165.00 145.00 Prior Period Expenses 21.41 2.73 Profit / (Loss) after Tax 8,913.08 7,309.94


2008-09 2007-08 Assets Liabilities Net Assets Liabilities Net a) Lighting 12,206.95 8,842.26 3,364.69 11,622.83 9,010.97 2,611.86b) Consumer Durables 20,940.20 12,689.81 8,250.39 15,901.46 10,322.70 5,578.76c) Engineering & Projects 52,557.77 24,337.99 28,219.78 39,748.15 9,648.93 30,099.22d) Others 885.22 - 885.22 956.10 - 956.10e) Other Unallocable 16,645.79 11,164.61 5,481.18 14,041.50 11,727.17 2,314.33 Total1,03,235.93 57,034.67 46,201.26 82,270.04 40,709.77 41,560.27

F-130

4) Total cost incurred during the year to acquire segment assets that are expected to be used during more than one period.

2008-09 2007-08 a) Lighting 72.15 - b) Consumer Durables 135.09 30.21 c) Engineering & Projects 659.97 189.56 d) Others - - e) Other Unallocable 389.95 717.89 Total 1,257.16 937.66

5) Depreciation and Amortisation

2008-09 2007-08 a) Lighting 7.06 4.39 b) Consumer Durables 72.83 80.85 c) Engineering & Projects 431.09 384.42 d) Others 106.98 97.84 e) Other Unallocable 240.73 181.72 Total 858.69 749.22

The Company caters mainly to the needs of the Indian Markets and the export turnover being 0.45% (Previous year 0.19%) of the total turnover of the Company; there are no reportable geographical segments. All assets are located in India.


Details of Transactions with Related Parties during the year as required by Accounting Standard - 18 on ‘Related Party Transactions’ have been disclosed on the basis of parties identified by the key managerial personnel to be within the definition of Related Parties as per the Standard and noted by the Board of Directors. Accordingly, the information is disclosed hereunder : 1. Relationships

(a) Other related parties where control exists : Hind Lamps Limited Bajaj Ventures Limited Starlite Lighting Limited

(b) Key Management Personnel : Mr. Shekhar Bajaj – Chairman & Managing Director Mr. Anant Bajaj – Executive Director MR. R. Ramakrishnan – Executive Director

(c) Relatives of ley management personnel and their enterprises where transactions have taken place Mr. Madhur Bajaj

Mrs. Kiran Bajaj Mrs. Pooja Bajaj Mrs. Swarnalatha Ramakrishnan

Hind Musafir Agency Limited Bajaj Auto Limited Bajaj Hindustan Limited

F-131

Jamnanalal Bajaj Seva Trust Maharashtra Scooters Limited Mukand Engineers Ltd. Mukand Ltd. Bajaj International Pvt. Ltd. Hindustan Housing Co.Ltd. Hindustan Construction Co. Ltd. Jamnalal Sons Pvt. Ltd. Hercules Hoist Ltd. Bajaj Allianz General Insurance Co. Ltd. Bajaj Consumer Care Ltd.

Note : Related party relationship is as identified by the Company and relied upon by the Auditors.

2. Transactions carried out with related parties referred above, in ordinary course of business :

Related Parties Nature of transactions Referred

in 1(a) above Referred

in 1(b) above Referred

in 1(c) above Purchases Capital Goods Purchase - - 79.65 (-) (-) (-) Purchases 8877.10 - 36.51 (8351.62) (-) (-) Purchase of DEPB Licenses - - 568.35 (-) (-) (-) Sales Sale - - 60.32 (1.10) (-) (313.54) Sale of Street Lighting items 2.03 - 723.72 (-) (-) (-) Expenses Director sitting fees - - 0.60 (-) (-) (0.40) Commission - - 1.20 (-) (-) (0.80) Commission paid on Imports - - 69.41 (-) (-) (54.53) Hall hire charges paid - - 0.34 (-) (-) (0.62) Insurance Premium Paid - - 144.39 (-) (-) (143.30) Reimbursement of Expenses - - 213.37 (-) (-) (202.58) Remuneration - 626.65 - (-) (499.63) (-) Rent Paid - - 33.09 (-) (-) (31.74) Income Claims Received - - 60.41 (-) (-) (45.17)

F-132

Related Parties Nature of transactions Referred

in 1(a) above Referred

in 1(b) above Referred

in 1(c) above Incentives - - 3.79 (-) (-) (0.86) Interest Received 157.44 - - (185.07) (-) (-) Rent Received - - 0.96 (-) (-) (0.88) Royalty Received - - 14.91 (-) (-) (13.91) Services Received - - 14.98 (-) (-) (12.92) Finance 9% redeemable Preference shares 1,000.00 - - (-) (-) (-) Contribution to Equity - - - (750.00) (-) (-) Loans given 1,542.00 - - (-) (-) (-) Rent Deposit Advanced - - - (-) (-) (20.00) Trade Advance given 1,390.00 - - (1305.75) (-) (-) Outstandings Payable 269.97 450.67 42.77 (76.73) (354.41) (4.52) Receivable 45.12 - 536.27 (12.17) (-) (118.47) Loans and Advances 2,727.00 - - (1,585.00) (-) (-) Investments 3,150.00 - - (2,150.00) (-) (-) Property Deposit paid - - 460.00 (-) (-) (460.00)

19. Details of materials consumption :

(a) Raw materials and components consumed

2008-09 2007-08 Particulars Units Quantity Value Quantity Value Ferrous Metal & Components Kg. 51724.08 36,357.93

Nos. 2949281 28,08,388 M. Tons 33157.79

13717.34

31,392.30

10,135.97

Non-Ferrous Metal & Components Kgs. 376773.97 3,96,339.30 Nos. 1661165 12,64,573 Sets 333828.74 297414.30 M. Tons 1467.26

2195.10

1,377.36

2794.66

Electrical Stampings Kgs. NIL 344.56 - 259.46

F-133

2008-09 2007-08 Particulars Units Quantity Value Quantity Value Nos. 631809 5,80,904 Components Others Nos. 723465 88.79 5,86,360 32.14Paints Ltrs. 10298.37 56.64 13,061.51 62.03 Kgs. 32228.24 32,165.56 Hardware & Others 158.90 201.76

Total 16,561.33 13,486.02

b) Imported & Indigenous Raw Materials, Components & Spares consumed (i) Raw Material


Imported and indigenous Raw Materials Consumed:

Value % Value %

Imported 158.55 0.96 54.83 0.41

Indigenous 16402.78 99.04 13,431.19 99.59

Total 16,561.33 100.00 13,486.02 100.00

(ii) Components & Spare Parts


Imported and indigenous stores, spare parts and tools consumed:

Value % Value %

Imported NIL NIL NIL NIL

Indigenous 1094.18 100 928.79 100

Total 1094.18 100 928.79 100

20. Licensed and installed capacity and production :


2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 p.a. p.a. p.a. p.a. p.a. p.a. Fans Nos. 10,00,000 10,00,000 8,00,000 8,00,000 3,12,035 2,87,474

Parts & Accessories of Fans Nos. 50,000 50,000 - - - -Magneto Assemblies Nos. 5,00,000 5,00,000 3,00,000 3,00,000 - -Parts & Accessories for Magneto

Nos. 25,000 25,000 25,000 25,000 - -

Electric Motors Nos. 25,000 25,000 - - - -Parts & Accessories for Electric Motors

Nos. 5,000 5,000 - - - -

Dies made of Steel Nos. 90 90 24 24 - -Power Generated - - 2.8 MW 2.8 MW 47,84,467

KWH27,02,563

KWHHighmast Shafts ** Nos. - - 4,000 2,275 3,682

3,169Swaged/Octagonal Poles ** Nos. - - 56,000 19,700 38,078 29,518

F-134


2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 p.a. p.a. p.a. p.a. p.a. p.a. Lattice Mast / Transmission Line Towers / Others (Galvanising Job work etc.) **

M. Tons

- - 24,000 24,000 20,106 21,604

* The installed capacity as certified by the Management, being a technical matter accepted by the

Auditors as correct. ** The installed capacity is interchangeable based on business prospects.

21. Quantitative information regarding Opening and Closing Stock, Production excluding job work for outside

parties, Purchases and Sales: (Quantity in 000 Pcs)



Products Qty. Value Qty. * Qty. Value Qty. Value Qty. Value 1. Lighting 8,463 1,187.93 90,870 16,212.19 5,759 573.33 93,574 21,041.84 (3,092) (514.12) (86,233) (15022.45) (8,463) (1,187.93) (80863) (17,822.92) 2. Luminaires 740 2,647.93 4,751 20,357.99 435 1,735.99 5056 28,087.52 (477) (1,664.30) (4,573) (18,425.45) (740) (2,647.93) (4,310) (23,197.78) 3. Engineering & Projects

3,656 2,765.18 36,190 24,526.83 7,669 4,284.05 32,177 54,263.54

(1804) (1,575.71) (29,080) (13,964.95)** (3656) (2,765.18) (27,228) (38,170.19) 4. Appliances 419 3,034.88 5,154 31,840.32 429 3,190.34 5,144 46,646.57 (386) (2,372.37) (4,029) (25,460.53) (419) (3,034.88) (3,997) (36,385.89) 5. Fans 325 2,419.80 312 2,825 19,671.92 297 2,424.90 3,165 29,864.61 (306) (2,113.16) (287) (2,438) (15,826.81) (325) (2,419.80) (2,707) (24,751.88) Total 12,055.72 112,609.25 12,208.61 179,904.08 (8,239.66) (88,700.19) (12,055.72) (140,328.66)

* After adjusting breakages, excess / shortage, samples, etc. ** Including works contracts materials and payments to Sub-Contractors. *** Figures are in Metric tones.

Note: Figures include value of spares but not quantity. Figures in brackets pertain to previous year.

22. Miscellaneous Income includes Rs. 269.03(Previous Year Rs. 127.26 ) being the liabilities no longer payable.

23. Employee Benefits and Employee Stock Options.

F-135

A) Disclosures pursuant to Accounting Standard - 15 ( Revised ) " Employee Benefits" :

a) Defined Contribution Plans: Amount of Rs. 479.25(Previous Year Rs. 421.29) (Provident Fund, Pension Fund, superannuation) is recognised as expense and included in "Employee Emoluments" - Schedule 12 in the Profit and Loss Account.

b) Defined Benefit Plans:

i) General Descriptions of significant Defined plans: a. Gratuity Plan

b. Leave Plan

ii) Reconciliation of opening and closing balances of the Present Value of the Defined Benefit Obligation :


2008-09 2007-08 a. Present value of Defined Benefit Obligation at the beginning of the year 1306.53 843.56

b. Interest cost 96.02 61.15 c. Current service cost 95.21 66.59 d. Actuarial Losses / ( Gains) 112.43 414.68 e. Benefits paid (102.98) (79.45)

f. Present value of Defined Benefit Obligation at the close of the year 1507.21 1,306.53

iii) Changes in the fair value of Plan Assets and the reconciliation thereof:


2008-09 2007-08 a. Fair value of Plan Assets at the beginning of the year 705.86 525.09 b. Add :Expected return on Plan Assets 47.57 35.80 c. Add / (Less) : Actuarial Losses / ( Gains) 13.32 9.11 d. Add : Contributions 132.66 215.30 e. Less: Benefits Paid (102.98) (79.44) f. Fair value of Plan Assets at the close of the year 796.43 705.86

Actual Return on Plan Assets 60.89 44.93

iv) Amount Recognised in the Balance Sheet including a reconciliation of the present value of the defined obligation in (i) and the fair value of the plan assets in (ii) to the assets and liabilities recognised in the Balance Sheet:


2008-09 2007-08 a. Present value of Defined Benefit obligation 1507.21 1,306.53 b. Less: Fair value of Plan Assets (796.42) (705.86) c. Present value of funded obligation 710.79 600.67 d. Net Liability / ( Asset) recognised in the Balance she 710.79 600.67

F-136

v) Amount recognised in the Profit and Loss Account are as follows:


2008-09 2007-08 a. Current Service Cost 95.21 66.59 b. Interest Cost 96.02 61.15 c. Expected return on Plan Assets (47.57) (35.80) d. Actuarial Losses / ( Gains) 99.12 405.55 e. Past service costs NIL NIL f. Effect of curtailment / settlement NIL NIL g. Adjustments for earlier years NIL NIL Recognised in the Profit and Loss Account 242.78 497.49 vi) Broad Categories of plan assets as a percentage of total assets as at 31.03.09


a. Government of India Securities - -b. State Government Securities - - c. Corporate Bonds - - d. Fixed Deposit under Special Deposit Scheme - - e. Public Sector Bonds - - f. Insurer Managed Funds 100% 100%

vii) Actuarial Assumptions as at the Balance Sheet date:


2008-09 2007-08 a. Discount Rate 7.35% 7.65% b. Expected rate of return on Plan Assets 7.50% 7.50% c. Salary Escalation rate -- Management Staff 7.00% 7.00% d. Salary Escalation rate -- Non -Management Staff 7.00% 7.00% e. Annual increase in Healthcare costs - - f. Attrition rate - - 21-44 yrs 15.00% 15.00% 45- 57 yrs 1.00% 1.00%

The estimates of future salary increases considered in actuarial valuation takes into account of inflation, seniority, promotion and other relevant factors.

viii) Leave encashment is not funded.

Amount recognized in the Balance sheet is as follows:

Particulars 2008-09

2007-08

Present Value of Unfunded Obligation 986.25 834.49

F-137

Amount recognized in the Profit & Loss Account is as follows:

Particulars 2008-09

2007-08

Total amount included in Personnel cost as Leave Encashment paid 225.50 91.56

Actuarial Assumptions as at the Balance Sheet date:


a. Discount rate 7.35% 7.65%

b. Salary Escalation rate 7.00% 7.00%

c. Attrition rate

21-44 yrs. 15% 15%

44-57 yrs. 1% 1%

B) Employee Stock Options Scheme:

The Company had granted Growth and Loyalty Options during the year ended 31st March, 2009 and 31st March, 2008 respectively to eligible employees including one Executive Director of the Company. Out of the above Options granted, 48,500 Options have lapsed during the year. The Equity settled Options granted under Loyalty Plan vest one year from the date of the grant and those granted under Growth plan vest in 4 tranches. The eligible employee must exercise the options within a period of 3 years from the date of vesting (or such extended period as may be decided by the Remuneration & Compensation Committee), failing which all the unexercised Options shall lapse. The Compensation cost of stock Options granted to employees are accounted by the Company using the intrinsic value method.

Summary of stock option Loyalty Growth Total No. of

stock options

Weighted average exercise

price(Rs.)

Date of Grant 25-10-07 25-10-07 25-07-08 06-08-08

Exercise Price 150.00 300.00 443.25 436.35

Options outstanding on 1st April, 2008

2,03,100 5,06,000 - - 7,09,100 257.04

Options granted during the year - - 11,000 79,000 90,000 437.19

Options forfeited/lapsed during the year

13,500 33,000 - 2,000 48,500 263.87

Options exercised during the year

- - - - - -

Options outstanding on 31st March, 2009

1,89,600 4,73,000 11,000 77,000 7,50,600 278.20

Options vested but not exercised On 31st March, 2009

1,89,600 47,300 - - 2,36,900 179.95

Weighted Average remaining life of outstanding options

2 ½ yrs 4 ½ yrs 4 ½ yrs 4 ½ yrs

F-138

The fair value of options granted on 25th October, 2007 is Rs. 171.10 per share, for Loyalty option and Rs.152.67 for Growth option. The fair value of options granted during the year on 24th July, 2008 is Rs. 222.61 per share and on 6th August 2008 is Rs. 218.47 per share.

The fair Value has been calculated using the Black Scholes Options Pricing model and the significant

assumptions made in this regard are as follows:

Grant dated Grant dated Grant dated

25th October, 2007 24th July,2008 6th August,2008 Loyalty Growth

Risk free Interest rate 7.58% 7.58% - 7.70% 9.02% - 9.16% 8.97% - 9.19% Expected Life(Years) 2.5 2.5 – 5.5 2.5 – 5.5 2.5 – 5.5 Expected Volatility 44.34% 44.34% - 69.33% 50.83% - 64.69% 50.66% - 64.55% Expected dividend yield 1.62% 1.62% 1.65% 1.65% Exercise price (Rs.) 150.00 300.00 443.25 436.35 Stock Price (Rs.) 300.00 300.00 443.25 436.35

In respect of Options granted under the Employee Stock Options Plan, in accordance with guidelines issued by the SEBI, the accounting value of the options is accounted as deferred employee compensation, which is amortised on a straight line basis over a period between the date of grant of options and eligible dates for conversion into equity shares. Consequently salaries, wages bonus, etc. includes Rs. 1.59 Crores (2007-08 : Rs.1.32 Crores) being the amortization of deferred employees compensation, after adjusting for reversals on account of options lapsed. Had the Company adopted fair value method in respect of Options granted, the employee Compensation cost would have been higher by Rs.3.40 Crores (2007-08 : Rs.1.33 Crores), Profit after Tax lower by Rs.2.24 Crores (2007-08 : Rs.0.88 Crores) and the diluted earnings per share would have been lower by Rs. 1.50 (2007– 08 : Rs.0.50) The above disclosures have been made consequent to the issue of Guidance Note on Accounting for Employee Share-based Payments issued by the Institute of Chartered Accountants of India in the year 2005 and applicable for the period on or after 1st April 2005.

24. Premises & Vehicles Taken on Operating Lease:


Rent and Lease rent recognized in the Profit & Loss Account 1,071.06 796.29



Rent Lease Rent

Total Rent Lease Rent

Total

For a period not later than one year 814.97 35.81 850.78 341.13 86.93 428.06 For a period later than one year but not later than five years

2,430.12 54.85 2,484.97 960.79 58.10 1,018.89

Later than five years 407.15 103.37 510.52 118.75 - 118.75 25. Hind Lamps Ltd. being one of the major suppliers of Lamps and Tubes to the Company, the Company has

made investments in Hind Lamps Ltd. as its Promoter and also advanced loans of Rs. 1,947 as on 31st March 2009(Previous Year Rs.1,070). Hind Lamps Limited has filed revised scheme of rehabilitation to Board for Industrial and Financial Reconstruction. The Management reasonably expects that with the implementation of

F-139

action plan as envisaged in the revised scheme, Hind Lamps Limited will generate adequate cash profit to repay its debt and reinstate its net-worth in the coming years.

26. Debtors relating to Engineering & Projects Business Unit are as per books of accounts only. No balance

confirmations have been called for by the company. 27. Statement of Abstract of Financial Statements and Company’s General Business Profile, as compiled by the

Company, is attached hereto. 28. Determination of Profits & Capital for computation of EPS:


Profit for the year after Tax, before Extra Ordinary Items 8,913.08 7,309.94

Less: Preference Dividend inclusive Tax NIL NIL

Profit available to Equity Shareholder before Extra Ordinary Items 8,913.08 7,309.94

Adjustment of Extra Ordinary Items NIL NIL

Profit available to Equity Shareholder after Extra Ordinary Items 8,913.08 7,309.94

No. of Equity Shares of Rs. 10/- each

Basic 1,72,85,760 1,72,85,760 Add: Effect of Dilutive issue of Employees Stock Options (Refer Note No. 23(B) above

6,24,514 2,01,758

Diluted 1,79,10,274 1,74,87,518

Earnings Per Share in Rs. :-

(a) Basic



(b) Diluted



29. Previous year's figures have been regrouped wherever necessary to make them comparable with those of the

current year.








Directors

F-140

CASH FLOW STATEMENT for the year ended 31st Mar, 2009

As at As at

31.03. 2009 (Rs. Lacs)

31.03. 2008 (Rs. Lacs)

A. CASH FLOW FROM OPERATING ACTIVITIES :

Profit/(Loss) before Tax 14,001.67

11,143.76 Less : Liability written back (269.03) (127.26) Add : Amounts written off 482.16 474.70 Add : Stock Options added during the year 159.07 131.51 372.20 478.95 Net Profit/(Loss) before tax provisions & extraordinary items 14,373.87

11,622.71

Adjustments for : Amortisation of Deferred Revenue Expenditure

0.00 2.87

Depreciation

854.72 745.24 Interest on Loans 4,126.42 3,375.68 Interest Received (429.23) (441.53) Dividend Received (0.45) 4,551.46 (0.15) 3,682.11 Interest Received (Considered as operating) 430.11 436.79 Operating Profit before Working Capital changes 19,355.44 15,741.61 Adjustments for (Increase) / Decrease in : Trade & Other Receivables (Gross before write-offs & making (14,324.20) (9,011.33) provision for doubtful recoveries) Inventories (1,552.98) (4,228.70) Increase / (Decrease) in Trade Payables before write-back 16,440.56 563.38

7,202.16 (6,037.87)

Cash Generated from Operations 19,918.82 9,703.74 Direct Taxes paid (5,424.12) (3,776.79) Prior Period Items (21.41) (2.73) Net Cash From Operating Activities (A) 14,473.29 5,924.22 B. CASH FLOW FROM INVESTING ACTIVITIES : Purchase of Fixed Assets (1,474.83) (911.07) Sale of Fixed Assets 23.04 82.58 Advances of Capital nature (282.52) (1,693.34) Redemption/ Diminution / (Purchase) of Investments (923.09) (3.23) Loan given to Companies (Associates) (1,542.00) 265.00 Interest Received 0.87 5.23 Dividend Received 0.45 0.15 (4,198.08) (2,254.68) Net Cash Flow from Investing Activities (4,198.08) (2,254.68) Add : Extraordinary Item - Impact of Discontinued Operations

0.03 -

F-141

As at As at

31.03. 2009 (Rs. Lacs)

31.03. 2008 (Rs. Lacs)

Net Cash Flow from Investing Activities after Extraordinary Item (B) (4,198.05) (2,254.68) C. CASH FLOW FROM FINANCING ACTIVITIES : Redemption of Preference share capital - -

Bonus Share issue expenses

(0.00)

(1.95)

Interest Paid

(4,191.51)

(3,369.26)

Proceeds from / (Repayment of) borrowings

(2,284.73)

(47.14)

Dividends paid

(1,613.20)

(8,089.44)

7.74

(3,410.61)

Net Cash Flow from Financing Activities (C)

(8,089.44)

(3,410.61) Net Increase / (decrease) in cash and cash equivalents (A+B+C) 2,185.80 258.93

Cash and cash equivalents as at 1.4.2008 3,195.55

2,936.62

Cash and cash equivalents as at 31.3.2009 5,381.35

3,195.55

Note : An Amount of Rs. 26.26 Lacs (Previous Year Rs.26.26 Lacs) has been transferred from Revaluation Reserve to Profit and Loss Account in respect of Depriciation of Revalued Assets.








Directors

F-142

LIMITED REVIEW REPORT

The Board of Directors Bajaj Electricals Limited 45/47, Veer Nariman Road, Mumbai-400001.

1. We have reviewed the accompanying statement of ‘Un-audited financial results for the quarter and half year ended 30th September 2009 (the ‘Statement’) in which are incorporated the results for the quarter and half year ended 30th September 2009 (‘interim financial information’) of Bajaj Electricals Limited prepared by the Company pursuant to Clause 41 of the Listing Agreement with the Stock Exchanges in India, which has been initialled by us for identification purposes. This Statement is the responsibility of the Company’s management and has been approved by the Board of Directors/Committee of Board of Directors. Our responsibility is to issue a report on the Statement based on our review.

2. We conducted our review in accordance with the Standard on Review Engagement (SRE)

2400, “Engagements to Review Financial Statements” issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement.

3. A review is limited primarily to inquiries of company personnel and analytical procedures applied

to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

4. Based on our review conducted as above, nothing has come to our attention that causes us to

believe that the Statement prepared, fairly in all material respects, in accordance with the Accounting Standards notified pursuant to the Companies (Accounting Standards) Rules, 2006 as per Section 211(3C) of the Companies Act, 1956 and other recognised accounting practices and policies, has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it contains any material misstatement.

5. Further, we also report that we have traced the number of shares as well as the percentage of

shareholdings in respect of the aggregate amount of public shareholdings, as well as that of the promoters and promoter group (both pledged/encumbered and non-encumbered), as disclosed in aforesaid Statement, from the representations & other records and information & explanations given to us by the company’s management, and found the same to be in accordance therewith.

For and on behalf of DALAL & SHAH Chartered Accountants

Place: Mumbai ANISH AMIN Date: 29th October, 2009 Partner

Membership No. 40451

F-143

UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND HALF YEAR ENDED 30TH SEPTEMBER, 2009

Rs. in Lacs

Quarter Ended Six Months Ended Year Ended

Sl. No.

Particulars

30th Sep, 2009

(Unaudited)

30th Sep, 2008

(Unaudited)

30th Sep, 2009

(Unaudited)

30th Sep, 2008

(Unaudited)

31st March,

2009 (Audited)

1. Net Sales/Income from Operations

51,214

37,932

87,752

69,690

177,054

2 Expenditure a) (Increase)/decrease in stock

in trade and work in progress

(4,493)

(3,374)

(7,319)

(5,838)

(1,027) b) Consumption of raw

materials

3,636

4,637

6,885

8,283

17,145 c) Purchase of traded goods 37,372 27,332 63,013 49,043 115,375 d) Employees cost 3,058 2,341 5,051 4,007 7,711 e) Depreciation 237 199 455 388 855 f ) Other expenditure 6,176 3,989 11,088 8,677 19,866 g) Total 45,986 35,124 79,173 64,560 159,925

3 Profit from Operations before Interest and Exceptional Items (1-2)

5,228 2,808 8,579 5,130 17,129

4 Other Income 67 82 86 134 570 5 Profit before Interest and

Exceptional Items (3+4) 5,295 2,890 8,665 5,264 17,699

6 Interest 851

981

1,707

1,782

3,697

7 Profit after Interest but before Exceptional Items (5-6)

4,444

1,909

6,958

3,482

14,002

8 Exceptional Items -

-

-

-

-

9 Profit from Ordinary Activities before Tax (7-8)

4,444

1,909

6,958

3,482

14,002

10 Tax Expense - Current 1,651

711

2,552

1,353

5,000

Deferred (125) (81) (153) (186) (98) Fringe Benefit

Tax - 50 - 75 165

11 Net Profit from Ordinary Activities after tax (9-10)

2,918 1,229 4,559 2,240 8,935

12 Prior Period Adjustments 0 9 5 18 22 13 Net Profit for the

period before extraordinary items (11-12)

2,918 1,220 4,554 2,222 8,913

14 Extra-Ordinary Items(net of tax expense Rs. NIL)

-

-

-

-

-

F-144

Quarter Ended Six Months Ended Year Ended

Sl. No.

Particulars

30th Sep, 2009

(Unaudited)

30th Sep, 2008

(Unaudited)

30th Sep, 2009

(Unaudited)

30th Sep, 2008

(Unaudited)

31st March,

2009 (Audited)

15 Net Profit for the period after extraordinary items (13-14)

2,918 1,220 4,554 2,222 8,913

16 Paid-up equity share capital (Face value of Rs. 10/- )

1,744 1,729 1,744 1,729 1,729

17 Reserves excluding Revaluation Reserves as per balance sheet of previous accounting year

- - - 21,527

18 Earnings per Share before extra Ordinary Items for the period (Rs.) (Not to be Annualised)

Basic 16.65 7.07 26.11 12.86 51.56 Diluted 16.49 6.90 25.89 12.59 49.77

19 Earnings per Share after extra Ordinary Items for the period (Rs.) (Not to be Annualised)

Basic 16.65 7.07 26.11 12.86 51.56 Diluted 16.49 6.90 25.89 12.59 49.77

20 Public Shareholding - Number of Shares 4,625,705 5,634,070 4,625,705 5,634,070 4,396,983 - Percentage of Shareholding 26.52 32.59 26.52 32.59 25.43

Promoters & Promoters Group Shareholding

a Pledged/Encumbered

No. of shares 250,000 - 250,000 - 250000

Percentage of share (as a % of the total shareholding of Promoters & Promoter Group)

1.95 - 1.95 - 1.94

Percentage of share (as a % of the total share capital of the Company)

1.43 - 1.43 - 1.45

b Non-Encumbered

No. of shares 12,565,105 - 12,565,105 - 12638777

Percentage of share (as a % of the total shareholding of Promoters & Promoter Group)

98.05 - 98.05 - 98.06

Percentage of share (as a % of the total share capital of the Company)

72.05 - 72.05 - 73.12

F-145

SEGMENTWISE REVENUE, RESULTS AND CAPITAL EMPLOYED FOR THE QUARTER

AND HALF YEAR ENDED 30TH SEPTEMBER, 2009 (Rs. In Lacs)

Quarter Ended Six Months Ended Sl. No. Particulars 30th Sep,

2009 (Unaudited)

30th Sep, 2008

(Unaudited)

30th Sep, 2009

(Unaudited)

30th Sep, 2008

(Unaudited)

31st March,2009

(Audited)

PRIMARY SEGMENT INFORMATION

1 SEGMENT REVENUE A) Lighting 13963 12148 21328 20853 48831 B) Consumer Durables 21612 16854 40472 34240 75796 C) Engineering & Projects 15565 8855 25857 14498 52262 D) Others 74 75 95 99 165 Sub-Total (A+B+C+D) 51214 37932 87752 69690 177054

Less :-Inter segment Revenue

-

-

-

- -

Net Sales / Income from Operations 51214 37932 87752 69690 177054

2 SEGMENT RESULTS (PROFIT(+) / LOSS (-)) A) Lighting 1009 973 1054 1251 3921 B) Consumer Durables 2498 1294 4818 3007 7673 C) Engineering & Projects 1743 760 2745 1350 6722 D) Others 66 42 54 32 35 Sub-Total (A+B+C+D) 5316 3069 8671 5640 18351 Less A) Interest 851 981 1707 1782 3697

B) Other un-allocable expenditure net of unallocable income 21 179 6 376 652

Profit before Tax 4444 1909 6958 3482 14002 3 CAPITAL EMPLOYED

A) Lighting 8690 4626 8690 4626 3365 B) Consumer Durables 11148 10405 11148 10405 8250 C) Engineering & Projects 38506 31019 38506 31019 28220 D) Others 618 997 618 997 885 E) Other Unallocable 2451 5929 2451 5929 5481 Total (A+B+C+D+E) 61413 52976 61413 52976 46201

Notes: 1. The Company has granted stock options to the eligible employees under Loyalty Plan and Growth Plan

of ‘Employees Stock Option Plan, 2007’ for subscribing to equivalent number of fully paid-up equity shares of the Company. On 30th April, 2009, 5,55,000 stock options originally granted under Growth Plan at various prices and remaining below grant price, were cancelled and against them 4,66,385

F-146

stock options were re-granted at a lower price. Stock options outstanding as on 30th September, 2009 have been considered as potentially dilutive in computing the Diluted Earning Per Share as required by Accounting Standard 20 Earning Per Share (EPS).

The Committee of the Board of Directors of the Company at its meetings held on 11th August, 2009 and 22nd September, 2009 has allotted 96,400 and 58,650 equity shares of Rs.10/- each, respectively, to the Stock Option Grantees of Loyalty Options on exercise of their options under the Company’s ‘Employees Stock Option Plan, 2007’. Stock options outstanding as on 30th September, 2009, consisting of 4,60,588 Growth Options and 31,250 Loyalty Options have been considered as potentially dilutive in computing the Diluted Earning Per Share as required by Accounting Standard 20 Earning Per Share (EPS).

2. The Board of Directors of the Company in its meeting held on 12th October, 2009 has approved

proposal for sub-division of Company’s equity share of Rs.10 each into 5 equity shares of Rs.2 each and issue of securities, not exceeding US$ 37.63 mn or INR 175 crore, if higher, through QIP. These shall be subject to the approval of the shareholders through Postal Ballot and in the Extra Ordinary Meeting convened on 18th November, 2009, respectively.

3. The Company has identified its Business Segments as its Primary reportable segments, which comprise

of Lighting, Consumer Durables, Engineering & Projects and Others. 'Lighting' includes Lamps, Tubes, Luminaires, 'Consumer Durables' includes Appliances & Fans, ‘Engineering & Projects’ includes transmission line towers, telecommunications towers, highmasts, poles and special projects including rural electrification projects and 'Others' includes Die-casting and Wind Energy.

4. The figures of the previous year / period have been regrouped wherever necessary.

5. Status on Investors complaints for the quarter: Opening Balance - Nil, New - 5, Disposals- 5,

Unresolved – Nil. 6. The above results have been reviewed by the Audit Committee and approved by the Board of Directors

of the Company at their meeting held on 29th October, 2009, & have been subject to a “limited review” by the statutory auditors.

For BAJAJ ELECTRICALS LIMITED

Shekhar Bajaj Mumbai, 29th October, 2009 Chairman & Managing Director

124

DECLARATION

The Company certifies that all relevant provisions of Chapter VIII read with schedule XVIII of the SEBI Regulations have been complied with and no statement made in this Preliminary Placement Document is contrary to the provisions of Chapter VIII and Schedule XVIII of the SEBI Regulations and that all approvals and permissions required to carry on our business have been obtained, are currently valid and have been complied with. The Company further certifies that all the statements in this Preliminary Placement Document are true and correct.

Signed by: _______________________________ MR. SHEKHAR BAJAJ Chairman and Managing Director Signed by: _____________________________ MR. R. RAMAKRISHNAN Executive Director Signed by: ______________________________ MR. MANGESH PATIL Company Secretary and Compliance Officer Date: December 7, 2009 Place: Mumbai

125

REGISTERED OFFICE OF OUR COMPANY

45-47, Veer NarimanRoad, Mumbai-400001, India

SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING LEAD MANAGER

EDELWEISS CAPITAL LIMITED

14th Floor, Express Towers Nariman Point

Mumbai – 400 021, India Telephone: +91 22 4086 3535 Facsimile: +91 22 4086 3610

SEBI registration number: INM000010650

DOMESTIC LEGAL ADVISOR TO THE OFFERING

J Sagar Associates

Vakils House, 18, Sprott Road, Ballard Estate

Mumbai- 400 001 Telephone: +91 22 6656 1500

Fax: +91 22 6656 1515

AUDITORS

AUDITORS TO OUR COMPANY

M/s. Dalal & Shah Chartered Accountants

252, Veer Savarkar Marg, Shivaji Park, Dadar, Mumbai - 400 028

Telephone: +91 22-6669 1000 Facsimile +91 22-6654 7800

Documents

Bajaj Inroduction