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Cover 1

Videocon Industries Cover-I.pmd

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3/2/2008, 6:08 PM

VIDEOCON INDUSTRIES LIMITED BOARD OF DIRECTORS Venugopal N. Dhoot Pradipkumar N. Dhoot Kuldeep Drabu S. Padmanabhan Karun Chandra Srivastava Maj. Gen. S.C.N. Jatar Arun Laxman Bongirwar Satya Pal Talwar Didier Trutt Johan Fant Ajay Saraf B. Ravindranath

Chairman & Managing Director Wholetime Director

REGISTERED OFFICE 14 KM Stone, Aurangabad-Paithan Road, Village Chittegaon, Tal. Paithan, Dist. Aurangabad - 431 105 (Maharashtra) MANUFACTURING FACILITIES 14 Km. Stone, Aurangabad – Paithan Road, Village Chittegaon, Taluka Paithan, Dist. Aurangabad (Maharashtra) Village Chavaj, Via Society Area, Taluka & Dist. Bharuch (Gujarat)

Nominee - Thomson S.A. Nominee - AB Electrolux (Publ) Nominee - ICICI Bank Ltd.

Village Majara, Taluka Warora, District, Chandrapur (Maharashtra)

Nominee - IDBI Ltd.

COMPANY SECRETARY Vinod Kumar Bohra AUDITORS KHANDELWAL JAIN & CO. Chartered Accountants 12 - B, Baldota Bhavan 117, Maharshi Karve Road, Opp. Churchgate Railway Station, Mumbai - 400 020 KADAM & CO. Chartered Accountants Ahmednagar College Road, Kothi, Near Badve Petrol Pump, Ahmednagar - 414 001 BANKERS State Bank of India State Bank of Hyderabad Allahabad Bank State Bank of Indore Bank of India State Bank of Mysore Bank of Maharashtra State Bank of Patiala Central Bank of India The Federal Bank Ltd. ICICI Bank Ltd. Union Bank of India Indian Bank Vijaya Bank Indian Overseas Bank Punjab National Bank

Plot No. 1D, Udyog Vihar Industrial Area, Gautam Budh Nagar, Greater Noida, (U.P.) Plot No. 28, Khasra No. 293, Industrial Area, Selakul, Vikasnagar, Dehradun, (Uttranchal) Vigyan Nagar, RICO Industrial Area, Shahjanpur, District Alwar, (Rajasthan) A-32, Butibori Industrial Area, Village Ruikhiri, Nagpur (Maharashtra) Contents

Page No.

Notice ................................................................... Directors’ Report ................................................. Corporate Governance ......................................... Auditors’ Report ................................................... Balance Sheet ...................................................... Profit and Loss Account ...................................... Cash Flow Statement ........................................... Schedules............................................................. Notes to Accounts ................................................ Balance Sheet Abstract & Company’s General Business Profile ................... Statement Pursuant to Section 212 of the Companies Act 1956 ................................. Consolidated Financial Statement ........................

1 3 6 14 16 17 18 19 25 31 32 34

ANNUAL REPORT 2006-07 NOTICE 5.

Members are requested to bring their attendance slip along with their copy of Annual Report to the meeting. 6. In case of joint holders attending the meeting, only such joint holder who is higher in the order of names will be entitled to vote. 7. All documents referred to in the accompanying notice are open for inspection at the Registered Office of the Company on all working days, except Friday, between 12 Noon to 2.00 PM upto the date of the Annual General Meeting. 8. The Register of Members and Share Transfer Books shall be closed from Tuesday, March 18, 2008 to Monday, March 31, 2008 (“both days inclusive”) for determining the names of members eligible for dividend on Equity Shares, if declared at the meeting. The dividend on Equity Shares, if declared at the Meeting will be paid on or around April 10, 2008 to those Members holding shares in physical form, whose name appears on the Register of Members of the Company, at the close of business hours on Monday, March 31, 2008 after giving effect to all valid transfers in physical form lodged with the Company and/or its Registrar and Share Transfer Agent on or before Monday, March 17, 2008. In respect of shares held in dematerialized form, the dividend will be paid on the basis of particulars of beneficial ownership furnished by depositories as at the end of business hours on Monday, March 17, 2008. 9. The Company has not declared any dividend during financial year(s)1997 to 2004. The unclaimed and unpaid dividend in respect of financial year 19951996 has been transferred, earlier when due, to the Investor Education and Protection Fund (IEPF) established by the Central Government, pursuant to provisions of Section 205A of the Companies Act, 1956. The unclaimed dividends, for the financial year 1999-2000, in respect of erstwhile Videocon International Limited (amalgamated with the Company) has been transferred to the IEPF. Dividends for the financial year 2000-2001 and thereafter, which remain unclaimed/unpaid for a period of seven years will be transferred by the Company to IEPF, as and when due. Members who have not encashed dividend warrant(s) for the aforesaid years are requested to obtain duplicate warrant(s) by writing to the Company’s Registrar and Transfer Agents, M/s. MCS Limited. Members are requested to note that no claims shall lie against the Company or IEPF in respect of any amounts which were unclaimed and unpaid for a period of seven years from the dates they first became due for payment and no payment shall be made in respect of any such claims. 10. Members who hold shares in physical form in multiple folios in identical names or joint accounts in the same order or names are requested to send the share certificates to the Company’s Registrar and Transfer Agents, M/s. MCS Limited, for consolidation into a single folio. 11. The shares of the Company are tradeable compulsorily in electronic form and your company has established connectivity with both the depositories i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the enormous advantages offered by the Depository system, Members are requested to avail the facility of dematerialization of the Company’s shares on either of the depositories as aforesaid.

NOTICE is hereby given that the Nineteenth Annual General Meeting of VIDEOCON INDUSTRIES LIMITED (“the Company”) will be held on Monday, March 31, 2008 at the registered office of the Company at 14 KM Stone, Aurangabad-Paithan Road, Village Chittegaon, Taluka Paithan, Dist. Aurangabad 431 105 (Maharashtra) at 9.30 A.M. to transact the following business: ORDINARY BUSINESS: 1. To receive, consider and adopt the Audited Profit and Loss Account for the year ended September 30, 2007, the Balance Sheet as at that date and the Reports of the Board of Directors and Auditors thereon. 2. To declare a dividend on Equity Shares. 3. To appoint a director in place of Mr. Didier Trutt, who retires by rotation and, being eligible, offers himself for re-appointment. 4. To appoint a director in place of Mr. Satya Pal Talwar, who retires by rotation and, being eligible, offers himself for re-appointment. 5. To appoint a director in place of Mr. Arun Laxman Bongirwar, who retires by rotation and, being eligible, offers himself for re-appointment. 6. To appoint Auditors and to fix their remuneration and in this regard to consider and if thought fit, to pass, with or without modification(s), the following resolution as an Ordinary Resolution: “RESOLVED THAT M/s. Khandelwal Jain & Co., Chartered Accountants and M/s. Kadam & Co., Chartered Accountants, be and are hereby appointed as Joint Auditors of the Company, to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting of the Company, on such remuneration as shall be fixed by the Board of Directors.” SPECIAL BUSINESS: 7. To consider and if thought fit, to pass, with or without modification(s), the following resolution as an Ordinary Resolution: “RESOLVED THAT in accordance with the provisions of Section 255, 256, 257 and all other applicable provisions, if any, of the Companies Act, 1956 or any statutory modification(s) or re-enactment thereof, Mr. Karun Chandra Srivastava, who was appointed as an additional director pursuant to the provisions of Section 260 of the Companies Act, 1956 be and is hereby appointed as a director of the Company, liable to retire by rotation, under the provisions of the Articles of Association of the Company.” By order of the Board of Directors of Videocon Industries Limited Vinod Kumar Bohra Company Secretary

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956

Place: Mumbai Date : February 25, 2008 Registered Office: 14 KM Stone, Aurangabad- Paithan Road, Village Chittegaon, Taluka Paithan, Dist. Aurangabad 431 105 (Maharashtra) NOTES 1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING (“MEETING”) IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON A POLL INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY. THE INSTRUMENT APPOINTING PROXY SHOULD, HOWEVER, BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN FORTY-EIGHT HOURS BEFORE COMMENCEMENT OF THE MEETING. 2. Corporate Members intending to send their authorised representatives to attend the Annual General Meeting are requested to send a certified copy of the Board Resolution authorizing their representative to attend and vote on their behalf at the Annual General Meeting. 3. In terms of the provisions of Articles of Association of the Company, Mr. Didier Trutt, Mr. Satyapal Talwar and Mr. Arun Laxman Bongirwar retire by rotation and, being eligible, offer themselves for re-appointment. Further, the Company has received a notice in writing from a member alongwith a deposit of Rs. 500/proposing the candidature of Mr. Karun Chandra Srivastava for the office of the Board of Directors of the Company under the provisions of Section 257 of the Companies Act, 1956. Brief resume of each of these director(s), nature of their expertise in specific functional areas and names of companies in which they hold directorship and membership/chairmanship of Board Committees, as required in terms of Clause 49 of Listing Agreement entered with the Stock Exchanges, in India, is appended to the notice. The Board of Directors of the Company has recommended the re-appointments/ appointments of the aforesaid directors. 4. An Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956, relating to the Special Business to be transacted at the Annual General Meeting is annexed hereto.

ITEM NO. 7: The Board of Directors of the Company (“the Board”) has, pursuant to the provisions of Section 260 of the Companies Act, 1956 (the Act) and Articles of Association of the Company appointed Mr. Karun Chandra Srivastava as an additional director of the Company. In terms of the provisions of Section 260 of the Act, Mr. Karun Chandra Srivastava holds office upto the date of ensuing Annual General Meeting. The Company has received a notice in writing from a member alongwith a deposit of Rs. 500/- (Rupees Five Hundred) proposing the candidature of Mr. Karun Chandra Srivastava for the office of the Board of Directors of the Company under the provisions of Section 257 of the Act. Keeping in view his rich expertise, it will be in the interest of the Company that Mr. Karun Chandra Srivastava is appointed as a director, liable to retire by rotation, in accordance with the provisions of the Articles of Association of the Company. Save and except Mr. Karun Chandra Srivastava none of the other directors of the Company is, in any way, concerned or interested in the Resolution set out at Item No.7 of the notice. The Board recommends the Resolution set out at Item No.7 of the notice for your approval. By order of the Board of Directors of Videocon Industries Limited Vinod Kumar Bohra Company Secretary Place: Mumbai Date : February 25, 2008 Registered Office: 14 KM Stone, Aurangabad- Paithan Road, Village Chittegaon, Taluka Paithan, Dist. Aurangabad 431 105 (Maharashtra)

1

VIDEOCON INDUSTRIES LIMITED BRIEF RESUME OF DIRECTORS BEING APPOINTED/RE-APPOINTED, NATURE OF THEIR EXPERTISE IN SPECIFIC FUNCTIONAL AREAS AND NAMES OF COMPANIES IN WHICH THEY HOLD DIRECTORSHIP AND MEMBERSHIP/CHAIRMANSHIP OF BOARD COMMITTEES. MR. DIDIER TRUTT: 9

Names of the other Committees in which Member

1. 2. 3. 4. 5. 6.

Reliance Life Insurance Company Limited (Audit) Reliance General Insurance Company Limited (Audit) Reliance Capital Trustee Company Limited (Audit) Reliance Communications Limited (Audit) Reliance Communications Limited (Shareholders) Reliance Communications Infrastructures Ltd. (Audit)

SNo Particulars

Profile

1

Name of the director

Mr. Didier Trutt

2

Date of Birth

February 20, 1960

3

Educational Qualification

Graduate from l’Ecole Nationale d’Ingénieurs of Saint Etienne ( ENISE )

4

Date of appointment on the Board

October 29, 2005

10 Number of Shares Held

5

Category of director

Non Executive- Non Independent (Nominee, Thomson S.A)

MR. ARUN LAXMAN BONGIRWAR:

6

Area of Expertise/Senior Position Held/Work Experience

Joined Thomson in 1984. From 1987 to 1994, based in Asia, he was responsible for Thomson Television Thailand, and General Manager of Television and Video activities for all industrial sites in South East Asia. Between 1994 and 1999, he was in charge of all European operations for Television and Video activities. Appointed in 1999 Vice President, Tubes Operations he was in charge of the whole industrial and sales activities for Europe and Asia first, then for the worldwide activities. He was appointed “Executive Vice President” in July 2003, in charge of Tubes and Components activities. Since October 2005, he is Senior Executive Vice President and Chief Operating Officer, Thomson. Since 1992, Didier Trutt has been Foreign Trade Advisor of France

SNo Particulars

Profile

1

Name of the Director

Mr. Arun Laxman Bongirwar

2

Date of Birth

May 18, 1943

3


I.A.S., M.Sc

4


December 8, 2005

5


Independent

6


Mr. Arun Laxman Bongirwar is a Senior Retired Government Servant having vast experience in diversified fields. He has held important positions with the Government, some of which are as under: Chairman, Tariff Authority for Major Ports.

7

Names of other directorships in Public Limited Companies

Nil

8

Names of other Committees in which Chairman

Nil

9

Names of other Committees in which Member

Nil


SNo Particulars

Profile

1


Mr. Satya Pal Talwar

2

Date of Birth

June 14, 1939

3


Certified Associate of the Indian Institute of Bankers; Member - Indian Council of Arbitration

4


December 8, 2005

5


Independent

6


He Carries with him forty years of operational and policy formulation experience in Commercial and Central Banking. In the past, he has served on following positions: Deputy Governor, Reserve Bank of India. Chairman, RBI Services Board, Reserve Bank of India, Mumbai. Chairman, Advisory Board for Banking, Commercial & Financial Frauds (appointed by Central Vigilance Commissioner of Government of India). Chairman & Managing Director, Bank of Baroda. Chairman & Managing Director, Union Bank of India. Chairman & Managing Director, Oriental Bank of Commerce. Other Positions Held: Chairman, Indian Banks Association (IBA). Director, Securities and Exchange Board of India. Director, Industrial Development Bank of India. Director, Small Industries Development Bank of India. Director, Oriental Insurance Company. Director, Agricultural Finance Corporation Limited. Director, IDBU International Finance Limited, Hongkong. Director, Master Card International, Asia Pacific Regional Board, Singapore. He is presently Senior Advisor, YES Bank Limited

8

Names of other directorships in Public Limited Company

Names of the other Committees in which Chairman

Chairman, Jawaharlal Nehru Port Trust (Ministry of Shipping, Govt. of India), Mumbai.

Chief Secretary, Govt. of Maharashtra.

Addl Chief Secretary (Revenue), Govt. of Maharashtra.

Principal Secretary (and later Addl Chief Secretary) to Chief Minister, Govt. of Maharashtra.

Principal Secretary (Industries), Govt. of Maharashtra.

Development Commissioner, Santacruz Electronic Export Processing Zone (SEEPZ), Mumbai.

Secretary to Chief Minister of Maharashtra, Govt. of Maharashtra. Maharashtra Airport Development Co. Wanbury India Limited JSW Infrastructure & Logistics Limited

Nil

MR. SATYA PAL TALWAR

7

Nil

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

7


1. 2. 3.

8


Nil

9


Wanbury India Limited (Audit Committee)


Nil

MR. KARUN CHANDRA SRIVASTAVA SNo Particulars

Profile

1


Mr. Karun Chandra Srivastava

2

Date of Birth

February 10, 1944

3

Education Qualification

B.A, M.A, Diploma in System Mgmt, Diploma in Development Administration, I.A.S.

4


April 09, 2007

5


Independent

6


Mr. Karun Chandra Srivastava is a Senior Retired Civil Servant having 38 years of experience in diversified fields of governance and administration. He has held important positions with the Government, some of which are as under:

Reliance Life Insurance Company Limited Reliance Capital Trustee Company Limited Reliance General Insurance Company Limited Crompton Greaves Limited Reliance Communications Limited Housing Development Infrastructure Limited Reliance Asset Reconstruction Company Limited Reliance Communications Infrastructures Limited Reliance Telecom Infrastructures Limited Ambience Project & Infrastructure Limited

1. Crompton Greaves Limited (Audit) 2. Housing Development Infrastructures Limited (Audit)

7


Grauer & Weil (India) Limited

8


Nil

9


Nil


2

Municipal Commisioner, Municipal Corporation of Greater Mumbai. Chairman, 2nd Maharashtra Finance Commission, Government of Maharashtra, Administrative Staff College Campus, Mumbai. Additional Chief Secretary (Home Department), Government of Maharashtra, Mantralaya, Mumbai Metropolitan Commissioner, Mumbai Metropolitan Regional Development Authority, Mumbai Joint Development Commissioner, Small Scale Industries, Ministry of Industries, Government of India, New Delhi.

Nil

ANNUAL REPORT 2006-07 DIRECTORS’ REPORT The Shareholders, of Videocon Industries Limited (the Company)

1.

The Board of Directors of your Company are delighted to present the Nineteenth Annual Report together with the Audited Accounts, Auditors’ Report and the Audited Consolidated Financial Statements for the year ended September 30, 2007.

Conversion of FCCBs of US$1,000 each, due on March 07, 2011, at a conversion price of Rs. 448.59 per equity share: S.No. Date of Allotment

Number of Amount of Number of Bonds Converted Bonds Converted Equity Shares (US$) allotted pursuant to conversion

FINANCIAL RESULTS The performance of the Company, on standalone basis, for the financial year ended September 30, is as summarized below: Rs. Millions Particulars

Year ended 30.09.2007

Year ended 30.09.2006

Net Sales

82,854.24

72,188.17

2.

1

May 29, 2007

500

500,000

49,204

2

June 23, 2007

500

500,000

49,204

Conversion of FCCBs of US$1,000 each, due on July 25, 2011, at a conversion price of Rs.507.00 per equity share: S.No. Date of Allotment


Other Income

1,663.62

1,654.44

Total Income

84,517.86

73,842.61

Profit before Interest, Depreciation and Tax

18,119.35

14,750.93

Interest & Finance charges

3,106.51

2,258.80

Allotment of Securities after Balance Sheet Date:

Depreciation

4,183.88

3,355.47

10,828.96

9,136.66

Subsequent to the Balance Sheet Date, in accordance with the terms and conditions of Issue of Foreign Currency Convertible Bonds, the Company allotted 8,339,350 equity shares, pursuant to the Conversion of Foreign Currency Convertible Bonds, as under:

Profit before Tax Provision for Taxation

2,276.77

951.64

Profit after Tax

8,552.19

8,185.02

1

1.

June 23, 2007

99

99,000

9,044

Conversion of FCCBs of US$1,000 each, due on March 07, 2011, at a conversion price of Rs. 448.59 per equity share S.No. Date of Allotment


The Topline of the Company increased from Rs. 72,188.17 Million as on September 30, 2006 to Rs. 82,854.24 Million representing an increase of 14.78% over the previous financial year. Similarly, Profit after Tax increased from Rs. 8,185.02 Million as on September 30, 2006 to Rs.8,552.19 Million for the year under review, representing an increase of 4.49% over the previous financial year.

1

December 17, 2007

10,350

10,350,000

1,018,523

OPERATIONS

2

January 10, 2008

26,150

26,150,000

2,573,371

Highlights on the performance of the Company, during the year under review i.e., upto Balance Sheet Date and material developments after the year under review, i.e., after Balance Sheet Date are summarized hereunder:

3

January 30, 2008

10,500

10,500,000

1,033,286

2.

During the year, with a view to diversify its activities in order to derisk the business model, the Company identified power generation; trading and dealing in various minerals including coal required for electricity/power generation; and telecommunication, as emerging business for expansion(s) and diversification(s), while retaining the focus on its prime business segments viz., Consumer Electronics Goods and Home Appliances and Exploration of Oil and Natural Gas. The Shareholders of the Company accorded their consent for altering the Memorandum of Association by passing special resolution by Postal Ballot so as to enable the Company to undertake diverse activities, as aforesaid.

Conversion of FCCBs of US$1,000 each, due on July 25, 2011, at a conversion price of Rs.477.00 per equity share: S.No. Date of Allotment

During the year, the Company continued its growth path in the Consumer Electronics & Home Appliances Business. The business acquired from Electrolux pursuant to the amalgamation of EKL Appliances Limited with the Company started yielding its result by improving the Company’s market share in the Household segment.


1

December 17, 2007

13,900

13,900,000

1,349,726

2

January 10,2008

22,500

22,500,000

2,184,805

3

January 30, 2008

1,850

1,850,000

179,639

APPROPRIATIONS DIVIDEND:

As the members are aware, the Company has participating interests in Oil & Gas exploration activities in Australia, Timor Sea and Oman. You are also aware that your Company, jointly with Bharat Petroleum Corporation Limited, has signed an agreement with Encana, Canada for buying Encana’s participating interest in Brazil exploration activities.

In accordance with the Company’s policy of balancing dividend pay-out with the requirement of deployment of internal accruals for its growth plans, your directors have pleasure in recommending a dividend of 35% (Rs. 3.50 per share) on equity shares for the financial year ended on September 30, 2007, subject to approval by shareholders at the Nineteenth Annual General Meeting. The dividend on equity capital, including dividend on shares issued pursuant to conversion of FCCBs, amounting to Rs. 803.02 Million, if approved by the members at the ensuing Annual General Meeting, would be paid out of the profits for the year. The dividend is free of tax in the hands of the shareholders.

Exploration activities are on as per the agreed exploration programmes at the respective oil fields and the results are expected in the coming year or so. With a view to enable the Company to tap the global equity market, as and when, the first exploration exercise gets converted into a proven field, it is decided to compile all the global exploration activities into an Offshore Company. This Offshore Company is proposed to be listed on London Stock Exchange at AIMs.

TRANSFER TO RESERVES Your Board proposes to transfer Rs. 2,000 Million to the General Reserve. After appropriations, the balance amount of Rs. 14,516.42 Million (Previous year 8,380.87 Million) is proposed to be carried to Balance Sheet.

The Company, through one of its subsidiaries, has been granted a Letter of Intent for providing mobile phone services on Pan India basis. The subsidiary has made requisite payments of Rs.1650 crores and provided requisite guarantee of Rs.850 crores to Government of India as the licence fees. The license agreement and the spectrum allotment are expected to be completed in due course of time. The Company is now engaged in drawing up business plans for launch of mobile phone services on Pan India basis as and when the spectrum release in various circles takes place.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND The Company has transferred a sum of Rs. 52,12,108 /- in respect of unclaimed/unpaid dividend for 1999-2000 and Rs. 31,19,526/- in respect of unclaimed/unpaid debenture redemption amount, to Investor Education & Protection Fund, since the amount was due & payable and remained unclaimed and upaid for a period of seven years, in terms of Section 205A(5) of the Companies Act, 1956.

Issue/Allotment of Securities: During the year, under review, the Company allotted 416 equity shares to the shareholders of erstwhile EKL Appliances Limited, pursuant to scheme of amalgamation of EKL Appliances Limited with the Company.

FIXED DEPOSITS

During the year, under review, in accordance with the terms and conditions of Issue of Foreign Currency Convertible Bonds, the Company allotted 107,452 equity shares, pursuant to the Conversion of Foreign Currency Convertible Bonds, as under:

The Company has not accepted any deposit within the meaning of Section 58A of the Companies Act, 1956.

3

VIDEOCON INDUSTRIES LIMITED CONSERVATION OF ENERGY

HEALTH, SAFETY AND ENVIRONMENT

The Company continues to emphases on conservation of energy, power and other energy sources. As a part of continuous efforts, your Company has taken the following steps:

Your Company recognizes its role in health and safety, as well as its responsibility towards environment and society. The health and medical services are accessible to all employees through well-equipped occupational health centers at all manufacturing facilities. Safety and security of the personnel, assets and environmental protection are also on top of the agenda of the Company at its manufacturing facilities.

All the new manufacturing facilities of the Company are equipped with hi-tech energy monitoring and conservation systems to monitor usage, minimize wastage and increase overall efficiency at every stage of power consumption. Use of energy saving lighting arrangement in shop floor and on roads inside manufacturing facilities. Utilization of unconventional energy source such as Solar Energy. Timely maintenance & up-gradation of machinery & equipments to ensure that the energy consumption is as minimal as possible. The Company has formed a team of the expert engineers engaged in the production activity for taking up detailed study under guidance of management, by attending seminars, obtaining expert opinion, research, on the possibilities of use of various methods of optimum use of energy without affecting the productivity and educating the production team members as well as whole of the staff to conserve energy.

Clean environment and sustainable development integrated with the business objective is the focus of operations of the Company. The projects and activities are planned and designed with environment protection as an integral part to ensure a safe and clean environment for sustainable development. APPOINTMENT/RE-APPOINTMENT OF DIRECTORS During the year under review, Mr. Sanjiv Krishnaji Shelgikar and Mr. Claes John Bygge resigned from the office of the Board of Directors of the Company. The Board places on record its sincere appreciation for the valuable guidance received from them during their tenure as members of the Board of Directors of the Company. During the year under review, Mr. Karun Chandra Srivastava was appointed as an additional director. In terms of the provisions of Section 260 of the Companies Act, 1956, Mr. Karun Chandra Srivastava holds office upto the date of ensuing Annual General Meeting.

The Company takes environment conservation seriously. It is working to equip its facilities with methods that help recycle CRT glass, curb carbon emissions and other pollutants. The Company at Bharuch glass plant has supported plantation of over 2,00,000 teak trees.

The Company has received a notice in writing from a member alongwith a deposit of Rs. 500/- proposing the candidature of Mr. Karun Chandra Srivastava for the office of the Board of Directors of the Company under the provisions of Section 257 of the Companies Act, 1956. The Board recommends appointment of Mr. Karun Chandra Srivastava.

RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION The Company is committed to introduce new products and improve existing products to meet the ever-increasing demands of the consumers by fully exploring technological options and advancements. The Company gives utmost importance to the Research & Development activities. The R&D activities are carried out at in-house R&D Centre of the Company located in Aurangabad.

In terms of the provisions of Section 255, 256 of the Companies Act, 1956, the Articles of Association of the Company, Mr. Didier Trutt, Mr. Satyapal Talwar and Mr. Arun Laxman Bongirwar are liable to retire by rotation at the ensuing Annual General Meeting and, being eligible, they have offered themselves for re-appointment. The Board recommends their re-appointment(s).

The focus is on developing new products in line with market demand, improving production efficiency and lowering the cost of production. 1.

The brief profiles of directors being appointed/re-appointed at the ensuing Annual General Meeting forms part of notice of the ensuing Annual General Meeting.

Specific areas in which R&D carried out by the Company: The Company has carried out Research and Development in the following areas: Development of new products; application and innovative equipments. Improvement in operating efficiencies. Reduction in manufacturing cost. Improvement in the quality of products.

2.

PARTICULARS OF EMPLOYEES The details of employees drawing remuneration in excess of the monetary ceiling prescribed under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, during the financial year 2006-2007 is annexed to this report.

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

LISTING

The Company has derived the following benefits as a result of Research and Development: Superior range of components viz., panels and funnels to meet the demand for large-size flat and slim CRT display products. Innovation of CRT Glass that intercepts harmful x-rays and conforms to health regulation world wide. Reduction in cost i.e., cost savings. Highest Value to the Customers. Quality, reliability, durability, improvement and performance of the products have increased thereby resulting in more acceptance of the products. Launch of new models with latest technology. 3.

The Equity Shares of the Company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Global Depository Receipts are listed on The Luxembourg Stock Exchange. The Foreign Currency Convertible Bonds are listed on Singapore Exchange Trading Securities Limited. SUBSIDIARY COMPANIES During the year under review, Sky Billion Trading Limited, Global Energy Inc., and Videocon Display Research Company Limited became subsidiaries of the Company. Further, Mars Overseas Limited and Gajanan Electronics and Supply Private Limited ceased to be subsidiaries of the Company. As such, as on 30th September 2007, the Company had 12 subsidiaries viz., Paramount Global Limited, Middle East Appliances LLC, Videocon Global Limited, Powerking Corporation Limited, Godavari Consumer Electronics Appliances Private Limited, Mayur Household Electronics Appliances Private Limited, Videocon (Mauritius) Infrastructure Ventures Limited, Eagle Corporation Limited, Venus Corporation Limited, Sky Billion Trading Limited, Global Energy Inc., and Videocon Display Research Company Limited.

Future plan of action: In the coming days, the Company is aiming to achieve development in the following areas through Research and Development:

Continuous up-gradation of R&D centre facilities to world class levels. Launching of New Brands under Videocon umbrella. Reducing the electricity consumption for consumer electronics and home appliances. To bring in features of various products together. Development of latest technologies like Super True Flat CPT, Extra Slim CPT; HD 16:9 format CPT.

The Company has received an exemption from the Central Government u/s 212(8) of the Companies Act, 1956 with regard to attaching of the balance sheet, profit and loss account and other documents of the subsidiaries for the year 2006-2007. The Company undertakes that: 1. The Annual Accounts of the subsidiary companies and the related detailed information will be made available to any member seeking such information, on free of cost basis, at any point of time upon receipt of request for the same. 2. The Annual Accounts of the subsidiary companies will also be kept for inspection by any investor at the Registered Office of the Company and at the Registered Office of the Subsidiary Company also.

During the year under review, Company has incurred revenue expenditure of Rs. 0.95 million (0.001% of the turnover) on Research & Development. Your Company is using the latest advances in technology for production. Taking into consideration the advancements in technology, the Company continues to upgrade its technical base to meet the needs of the consumers.

A summary of the key financials of the Company’s subsidiaries is included in this report.

FOREIGN EXCHANGE EARNINGS AND OUTGO

CONSOLIDATED FINANCIAL STATEMENTS

During the year under review, the earnings in Foreign Exchange amounted to Rs. 4,381.24 Million (previous year Rs. 4,578.32 Million) and outgo in Foreign Exchange was Rs. 10,136.77 Million (previous year 12,119.92 Million).

The Directors present the consolidated financial statements, duly incorporating the Company’s 100% ownership interest in Paramount Global Limited, Middle East Appliances LLC, Mars Overseas Limited (Upto 26th September 2007), Videocon Global Limited, Powerking Corporation Limited, Gajanan Electronics Supply Private Limited (Upto 26th September 2007 ), Mayur Household Electronics Private Limited, Godavari Consumer Electronics Appliances Private Limited, Eagle Corporation Limited, Venus Corporation Limited, Videocon (Mauritius) Infrastructures Ventures Limited, Sky Billion Trading Limited (w.e.f., 21st November 2006), Global Energy Inc (W.e.f., 10th October 2006) and Videocon Display Research Company Limited (w.e.f., 09th March 2007).

INFORMATION TECHNOLOGY Your Company believes that Information Technology is the backbone of any industry in today’s environment. The Company has taken it as a tool to improve productivity, efficiency and reliability. As such, mySAP, a Customized ERP Module, has already been substantially implemented at manufacturing facilities and branches of the Company, in India and foreign operations.

4

ANNUAL REPORT 2006-07 The Consolidated financial results also includes interest through Eagle Corporation Limited (subsidiary) in Technologies Display Americas LLC, Technologies Displays Mexicana S.A. de. CV, TTD International S.A, TDP Spzoo, TTD International Limited, TGDC Guangdong Displays Company Limited, Thomson Display Technology Research & Company Limited, VDC Technologies S.P.A, VDC Technologies Deutschland Gmbh (w.e.f. 14th September 2007).

DIRECTORS’ RESPONSIBILITY STATEMENT In terms of Section 217(2AA) read with Section 292A of the Companies Act, 1956, we, the directors of VIDEOCON INDUSTRIES LIMITED, state in respect of Financial Year 2006-07 that:

The Company holds 41.67% equity interest in Evans Fraser & Co (India) Ltd. The same has been accounted in the consolidation.

a)

The Financial statements also includes the effects of Company’s interest in various Joint Ventures. The details on Joint ventures and Companies interest are given in the Note No. 10 of Schedule 15(B) to the Accounts.

b)

The Consolidated financial results have been prepared in line with the requirements of Accounting Standard 21 “Consolidated Financial Statements”, Accounting Standard 27 – “Financial Reporting of Interests in Joint Ventures” and Accounting Standard 23 – “Accounting for Investments in Associates in Consolidated Financial Statements”.

c)

d) e)

CASH FLOW STATEMENT As required under Clause 32 of the Listing Agreement with the Stock Exchanges, in India, a Cash Flow Statement, as prepared in accordance with the Accounting Standard on Cash Flow Statement (AS 3) issued by the Institute of Chartered Accountants of India, is given along with Balance Sheet and Profit and Loss Account.

f)

g)

AUDITORS’ REPORT The Auditors’ Report is unqualified. The notes to the Accounts referred to in the Auditors Report are self explanatory and therefore do not call for any further clarifications under Section 217(3) of the Companies Act, 1956.

h)

in the preparation of annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures; the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; the directors have prepared the annual accounts on a going concern basis; the Board has constituted an Audit Committee comprising of 3 (three) independent directors; The Audit Committee has also been delegated with authority for investigation and access for full information and external professional advice for discharge of the functions delegated to it by the Board; the Board agrees that the recommendations of the Audit Committee on any matter relating to finance and management including the audit report would be binding on the Board; and based on the above and the Internal Audit System, the Audit Committee, the Board opines that the Company has internal control system commensurate with the size of the Company and the nature of its business.

AUDITORS

ACKNOWLEDGEMENT

M/s. Khandelwal Jain & Co., Chartered Accountants, Mumbai and M/s. Kadam & Co., Chartered Accountants, Ahmednagar, Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting. The Company has received certificates from these Statutory Auditors to the effect that their re-appointment, if made, would be within the prescribed limit under Section 224(1-B) of the Companies Act, 1956.

The directors would like to express their grateful appreciation for the assistance and cooperation received from the Financial Institutions, Banks and Government Authorities. The directors are happy to place on record their gratitude to the employees at all levels for their commitment and dedicated efforts. The directors are also thankful to the shareholders for their continued support to the Company.

The Board recommends their re-appointment. CORPORATE GOVERNANCE

For and on Behalf of the Board of Directors

As required under clause 49 of the Listing Agreement with the Stock Exchanges, Corporate Governance and Management Discussion and Analysis Report form part of this Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. A certificate from the Statutory Auditors of the Company confirming compliance of the Corporate Governance is appended to the Report on Corporate Governance.

V.N.DHOOT Chairman & Managing Director Place: Mumbai Date: February 25, 2008

ANNEXURE TO DIRECTORS’ REPORT STATEMENT OF PARTICULARS OF EMPLOYEES PURSUANT TO THE PROVISIONS OF SECTION 217(2A) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 30TH SEPTEMBER, 2007 Details of employees drawing remuneration above Rs.2 lacs p.m. Name of employee

Designation

Anil Kumar Modani

Vice President

Arvind Bali

Vice President

Rahul Sethi Subhash Nabar Arun Kumar Dashora Nitin Shewale Ajay Bajaj Ashok V.Patil Sunil Tandon Pawan Kalra Sunil Mehta Shekhar Jyoti

Age Experience

Date of Commencement of Employment

2,584,008 B.Com,CA & CS

44 24 Years

16.11.1989

47 25 Years

01.02.1994

Vice President Joint President Vice President General Manager Vice President Vice President Group Head Joint President Joint President Vice President

2,584,008 B.Sc.Engg. (Mech.) & M.B.A. 4,894,441 B. Com. 3,653,140 BE (Mechanical) 2,796,426 BE (Electronics) 2,650,052 BE ( Electronics) 5,000,000 B SC. 2,811,978 M.A.,BBA 3,556,284 M.Sc.,D.B.M,I.C.S.E,I.SC 4,978,200 B. Com. 5,804,208 M.A.,PGDBM 3,480,000 B. Com., M.B.A.

56 60 54 43 44 55 47 39 57 45

33 Years 36 Years 28 Years 20 Years 20 Years 25 Years 22 Years 21 Years 27 Years 22 Years

01.02.1987 01.07.1997 16.05.1990 14.01.1989 16.06.2007 21.08.2006 01.10.1999 12.12.2001 20.02.2001 22.01.1986

Anuj Jain

Associate Vice President

3,100,092 B. Com., M.B.A.

39 18 Years

07.09.2005

Shree Digvijay Cement Co.Ltd. M/S Greaves Cotton & Co.Ltd. Gedor Ltd. Orson Electronics Ltd. Riico Ltd. Nil Lg Electronics India Ltd. EKL Appliances Ltd. DHL Worldwide Express Baron Int. Ltd. Bpl Ltd. Macotax Consultants Pvt.Ltd. Mirc Electronics Ltd.

N.S. Satish

Associate Vice President

3,900,108 M.B.A.-MARKETING

39 14 Years

17.12.2007

Mirc Electronics Ltd.

a) b) c)

Remuneration

Qualification

Name of the Last Employer

Position Held

Finance Executive Area Sales Manager Commercial Manager Senior Manager Manager Nil Dy.General Manager Associate Vice Precident Regional Manager General Manager Project Regional Head General Manager Regional Buisness Manager National Head

Remuneration includes Basic Salary, Ex-Gratia, H.R.A., Mktg. Allowance, Special Allowance, C.A., L.T.A., Leave Encashment, Medical Reimbursement, Contribution to Provident Fund. The Employees are in whole time employment of the Company and the employment is contractual in nature. None of the employees listed above is a relative of any Director of the Company.

Place : Mumbai Date : February 25, 2008

5

VIDEOCON INDUSTRIES LIMITED CORPORATE GOVERNANCE The Board comprises of eminent persons having versatile experiences in the field of marketing, finance, technical and administration. Board/Committee Meetings and Procedures: The Company is in substantial compliance with the secretarial standards governing board meetings and also general meetings as set out in Secretarial Standards 1 and 2 issued by the Institute of Company Secretaries of India. The information furnished to Board Members and Procedure is as set out hereunder: a. The Company has defined guidelines for the meetings of the Board of Directors and Committees thereof. These guidelines seek to systematize the decision making process at the meetings of Board/Committees, in an informed and efficient manner. b. All Board/Committee Members are given notice of the meetings in advance. The meetings are governed by structured agenda. The agenda alongwith the explanatory notes are distributed well in advance. c. The Members have unqualified access to all information available with the Company. The information generally provided to the Members inter-alia include(s): Annual operating plans and budgets; Quarterly and financial results; Minutes of the meeting of Audit and other Committees to the Board; Notice of Interest; Material important litigations, show cause, demand, prosecution and penalty notices, if any; Sale of material nature of investments, subsidiaries and assets, which are not in the normal course of business; Establishment, operations and Set up of Joint Venture, Subsidiary or collaboration etc., Divestment of Joint Ventures, Subsidiaries; Acquisitions/Amalgamation etc.,; Minutes of the Board Meeting, Annual General Meetings of Subsidiary Companies and significant transactions if any; and Related Party Transactions d. Minutes of the proceedings of each Board/Committee meetings are recorded. Draft minutes are circulated amongst all members for their comments. The minutes of the proceedings of the meetings are entered in the minutes book. e. The guidelines for the Board/Committee meetings facilitate an effective post meeting follow-up, review and reporting process for the actions taken on decisions of the Board and Committees. f. The Board periodically reviews the compliance reports to ensure adherence to all applicable provisions of law, rules and guidelines. g. The Company has laid down code of conduct which binds all the Board members and senior management of the Company. A declaration by the Chairman and Managing Director to this effect is appended to this report. Board Meetings and Attendance: 16 Board Meetings were held during the year 2006 –07 on the following dates: 19th October 2006, 31st October 2006, 21st November 2006, 28th December 2006, 31st January 2007, 27th April 2007, 04th May 2007, 29th May 2007, 23rd June 2007, 06th July 2007, 11th July 2007, 20th July 2007, 31st July 2007, 11th August 2007, 29th August 2007 and 17th September 2007.

COMPANY’S PHILOSPHY ON CORPORATE GOVERNANCE Corporate Governance is all about commitment to values and ethical business conduct. It is all about how an organization is managed. The Company believes that sound Corporate Governance is critical to enhance and retain investor’s trust. The Company’s philosophy on Corporate Governance is based on: 1. Transparency & maintaining high disclosure levels: To maintain the highest standards of transparency in all aspects of our interactions and dealings and to ensure timely dissemination of all price sensitive information and matters of interest to our stakeholders. 2. Accountability: To demonstrate highest levels of personal responsibility and continually affirm that employees of the Company are responsible to themselves for the pursuit of excellence. 3. Ethical conduct: To conduct the affairs of the Company in an ethical manner. 4. Compliance with the laws in all the Countries in which the Company operate: To comply with all the laws and regulations as applicable to the Company. 5. Stakeholders’ Interest: To promote the interests of all the stakeholders including customers, shareholders, employees, lenders, vendors and the community. The Company relentlessly endeavors to enhance the shareholder wealth while sparing no effort to deliver long term value to all the stakeholders. The objective is to institutionalize Corporate Governance practices that go beyond adherence to the extant regulatory framework. The Company is in compliance with all the requirements of the code of Corporate Governance, enshrined in Clause 49 of the Listing Agreement. 1.

2.

The composition of the Board of Directors as on September 30, 2007 was as under: Category

Directors

No. of Directors

Promoter - Executive Director

Mr. Venugopal N. Dhoot (Chairman & Managing Director) Mr. Pradipkumar N. Dhoot (Whole Time Director)

2

Non Executive Non Independent Director

Mr. Kuldeep Drabu Mr. Didier Trutt Mr. Johan Fant

3

Independent

Mr. S. Padmanabhan Mr. Satya Pal Talwar Mr. Arun Laxman Bongirwar Maj. Gen. S. C. N. Jatar Mr. Karun Chandra Srivastava Mr. Ajay Saraf (Nominee of ICICI Bank Ltd) Mr. B. Ravindranath (Nominee of IDBI Limited)

7

3.

Details of number of Board meetings held during the year, number of meeting(s) attended by each director, attendance of directors at last Annual General Meeting, number of other directorship/committee membership held by each of them are as hereunder: Sl. No. Name of Director

1 2. 3 4 5 6 7 8. 9 10 11 12 13 14

Mr. Venugopal N. Dhoot Mr. Pradipkumar N. Dhoot Mr. Sanjiv K. Shelgikar+ Mr. Kuldeep Drabu Mr. S. Padmanabhan Maj. Gen. S. C. N. Jatar Mr. Satya Pal Talwar Mr. Arun Laxman Bongirwar Mr. Ajay Saraf Mr. Didier Trutt Mr. Johan Fant# Mr. B. Ravindranath Mr. Claes Johan Bygge# Mr. Karun Chandra Srivastava@

Whether attended AGM held on 30.03. 2007

Attendance in Board Meetings held during the year/tenure

No Yes No No No No Yes No No No No No N.A N.A

6

Other Board

Total

Attended

Directorship**

Committee Chairmanship***

Committee Membership***

16 16 5 16 16 16 16 16 16 16 11 16 5 11

15 12* 4 3 11 5 11 8* 3 4* 2 4 1 1

14 14 1 3 14 1 10 3 3 Nil Nil 1 Nil 1

1 Nil Nil 1 Nil Nil 2 Nil Nil Nil Nil Nil Nil Nil

1 2 Nil 1 8 1 6 1 3 Nil Nil Nil Nil Nil

ANNUAL REPORT 2006-07 #

Mr. Johan Fant was nominated by AB Electrolux (Publ) in substitution of Mr. Claes Johan Bygge. On January 31, 2007 the Board took on record the withdrawal of nomination of Mr. Claes Johan Bygge and nomination of Mr. Johan Fant. + Mr. Sanjiv Krishnaji Shelgikar resigned from the Office of the Board of Directors of the Company. His resignation was accepted on April 9, 2007. @ Mr. Karun Chandra Srivastava was appointed as an additional director on April 9, 2007. * Includes meeting(s) participated through audio conferencing. ** Directorship held by directors as above, do not include any alternate directorships if held, directorships in Foreign Companies, Section 25 Companies and Private Limited Companies. *** As per Clause 49 of the Listing Agreement, Membership/Chairmanships of only the Audit Committee and Shareholder/Investors’ Grievance Committee of Public Limited Companies have been considered. i. Discussion with external auditors before the audit commences on nature and scope 4. Brief Details of Directors seeking appointment/re-appointment: of audit as well as have post-audit discussion to ascertain any area of concern. The brief details of directors retiring by rotation and seeking re-appointment and persons seeking appointment u/s. 257 of the Companies Act, 1956, is appended to the Notice convening the Nineteenth Annual General Meeting.

j.

Reviewing the company’s financial and risk management policies.

k.

To look into the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.

l.

Financial Statements and Investments made by Subsidiaries.

m.

To review the functioning of Whistle Blower Mechanism, if any.

BOARD COMMITTEES The Board has constituted three committees: a.

Audit Committee.

b.

Shareholders/Investors’ Grievance Committee.

c.

Remuneration Committee.

The Audit Committee also reviews:

1.

AUDIT COMMITTEE:

1.1

The Composition of Audit Committee as on September 30, 2007 was as under:

Management discussion and analysis of financial conditions and results of operations.

Statement of significant related party transactions, if any.

Management Letters/Letters of internal control weaknesses issued by the Statutory Auditors.

Name of the Member

Category

Mr. Satya Pal Talwar - Chairman

Independent


Independent

Internal Audit Reports relating to internal control weaknesses, and

Independent

The appointment, removal and terms of remuneration of the Chief Internal Auditor.

Maj. Gen. S. C. N. Jatar

The Audit Committee comprises of independent directors and financial literate persons having vast experience in the area of finance and accounts. The Chairman of the Audit Committee is a person with financial expertise. 1.2

1.3

During the financial year under consideration, four meetings of the Committee were held on: October 31, 2006, January 31, 2007, April 27, 2007 and July 31, 2007.

Scope of Audit Committee: The terms of reference are broadly as under: a.

Overall assessment of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

b.

Recommending the appointment of external auditor, fixation of audit fee and also approval for payment for any other services rendered by the Auditors.

c.

Reviewing with management the annual financial statements before submission to the board, focusing primarily on;

Meetings and Attendance:

Name of the Member

Category

Meetings Meetings held during attended the year


Independent

4

4


Independent

4

4*


Independent

4

4

*One meeting participated through audio conferencing. The Statutory Auditors, Cost Auditors and the Head of Internal Audit attended and participated in the meetings, on invitation. The Company Secretary is the de-facto Secretary of the Committee.

Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of Clause (2AA) of section 217 of the Companies Act, 1956.

Changes, if any, in accounting policies and practices.

2.

REMUNERATION COMMITTEE:

Major accounting entries based on exercise of judgment by management.

2.1

Observations if any, in draft audit report.

The Composition of Remuneration Committee as on 30th September 2007 was as under:

Significant changes/amendments, if any, arising out of audit.

The going concern assumption.

Compliance with accounting standards.

Qualification in the draft audit report, if any

Compliance with stock exchange and legal requirements concerning financial statements.

Any related party transactions i.e., transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives etc., that may have potential conflict with the interests of Company at large.

d.

Review of quarterly unaudited financial results before submission to the Auditors and the Board.

e.

Reviewing with the management, external and internal auditors the adequacy of internal control systems.

f.

Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

g.

Discussion with internal auditors any significant findings and follow up there on.

h.

Reviewing the findings, if any, of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board.

2.2

Name of the Member

Category

Major Gen. S. C. N. Jatar - Chairman

Independent


Independent


Independent

Scope of Remuneration Committee: The following matters are referred to the Remuneration Committee:

2.3

7

Fixing the remuneration payable to the Directors;

Determining the remuneration policy of the Company; and

Reviewing the performance of employees and their compensation.

Directors’ Remuneration: (a)

The Promoter Directors, Executive Directors, Non Executive Non Independent Directors, Nominees of AB Electrolux (publ) and Thomson S.A are not paid any sitting fees. Mr. V. N. Dhoot and Mr. P. N. Dhoot appointed as Chairman & Managing Director and Whole Time Director respectively are entitled for remuneration as per their terms of appointment, however, they are not drawing any remuneration.

(b)

The independent directors are paid only sitting fees for attending Board/ Committee meetings. The details of payment of sitting fee during the year under review are as follows:

VIDEOCON INDUSTRIES LIMITED Name of Director

Sitting fee (Rs)

Major Gen. S. C. N. Jatar

2,10,000

Details of Shares Dematerialised/ Rematerialised during the year under review is given below:


2,90,000

a

Number of Demat Transfers approved

2,30,000

b

Number of Sub-committee Meetings held

Mr. Ajay Saraf (favouring:ICICI Limited)

60,000

c

Number of Shares Dematerialised

Mr. B. Ravindranath (favouring: IDBI Limited)

80,000

d

Percentage of Shares Dematerialised


50,000

e

Number of Rematerialisation requests approved

f

Number of Shares Rematerialised

Meetings and Attendance, in Remuneration Committee: 3.6

During the year under review, three meeting of remuneration committee were held on November 6, 2006, April 3, 2007 and August 3, 2007. Name of the Member

Meetings held

Meetings attended


3

3


3

3


3

3

2.5

Stock Options:

3.

SHAREHOLDERS/INVESTORS’ GRIEVANCE COMMITTEE:

3.1

The Composition of Shareholders/Investors’ Grievance Committee as on September 30, 2007 was as under:

The Company has not issued any stock options.

Independent

Mr. S. Padmanabhan

Independent


Independent

1)

Sl. No.

Particulars

a

Non receipt of refund orders

b

Non receipt of div/int/red warrants

c

Non receipt of share certificates

d

Others

15 530

Received Redressed

Pending as on 30.09.2007

-

-

-

510

510

-

2,014

2,014

-

86

86

-

2,610

2,610

-

Details of location, time and date of last three AGMs: AGM

AGM Date

Location

Time

No of Special Resolutions Passed

16th AGM 31.03.2005 Auto Cars Compound, Adalat Road, Aurangabad

9.30 A.M

Nil


9.30 A.M

3


9.30 A.M

Nil

Meetings held

Meetings attended


4

4

Mr. S. Padmanabhan

4

4


2

1

During the year under review and after the year, following special resolution(s) were transacted through Postal Ballot:

Mr. Sanjiv Krishnaji Shelgikar

2

2

1.

To shift the Registered Office of the Company from Auto Cars Compound, Adalat Road, Aurangabad – 431005 to 14 K.M. Stone, Aurangabad – Paithan Road, Village Chittegaon, Taluka-Paithan, Aurangabad – 431105.Maharashtra.

2.

To alter the Main Object Clause of Memorandum of Association of the Company by inserting additional clause(s) relating to:

2)

Postal Ballot:

Scope of Shareholders/Investors’ grievance Committee: The Committee administers the following activities:

Transfer of Shares. Transmission of shares. Issue of Duplicate Share Certificates. Change of Status. Change of Name. Transposition of Shares. Sub-division of Shares. Consolidation of Folios. Shareholders requests for Dematerialisation / Rematerialisation of shares, and Allotment of Equity Shares.

3.

Compliance Officer: Share Transfer Details: The number of Shares transferred during the year under review is given below:

Average Number of Transfers per month

c

Number of Shares Transferred

To alter the Main Object Clause of Memorandum of Association of the Company by inserting additional clause(s) relating to Telecommunications.

The results of the Postal Ballot for S.No.1 & 2 were announced by the Company Secretary of the Company at Auto Cars Compound, Adalat Road, Aurangabad – 431005 on Saturday, August 11, 2007 and for S.No.3 was announced on December 26, 2007 and the said dates of declaration of result of Postal Ballot has been taken as date of passing of the Resolution.

Equity Number of transfers

carrying on business of minerals and fuels and source of minerals and fuel, including mining block or mining rights for mining of minerals, including coal or other substance.

The Postal Ballot Forms received upto close of Working hours on Friday, August 10, 2007, considered for determining the votes for S.No.1 and 2, as aforesaid, and the Postal Ballot Forms received upto close of Working hours on Wednesday, December 19, 2007, were considered for determining the Votes for S.No.3, hereinabove.

Mr. Vinod Kumar Bohra, Company Secretary is the Compliance Officer.

a

carrying on business of generation and supply of Power; and

b.

Notice of the Postal Ballot along with Explanatory Statement, Postal Ballot Form and Self Addressed (postage to be paid by addressee) Envelope were sent to all the Shareholders of the Company and all other persons who were entitled to receive the same by under certificate of posting.

In addition to the aforesaid, the committee closely monitors violations of the code of conduct for prevention of insider trading.

b

a.

In terms of the provisions of Rule 5(b) of The Companies (Passing of the Resolution by Postal Ballot) Rules 2001, Mr. Sheetal Kumar Dak, Practicing Company Secretary, was appointed as Scrutinizer for conducting the Postal Ballot.

The Board has delegated the power of Share Transfer to Registrar & Share Transfer Agents, who process the transfers. The Committee also looks after Redressal of Investors’ Grievances and performance of the Registrar and Transfer Agents of the Company.

3.4

0.08

GENERAL MEETING(S)

Category

Maj. Gen. S. C. N. Jatar - Chairman

The committee met on November 6, 2006, January 30, 2007, April 30, 2007 and August 3, 2007. Details of attendance is as under:

3.3

34 180,626

Details of complaints received and redressed during the year 2006 – 07:

Total

Name of the Member

Name of the Member

12,933

Note: Representatives of the company are in constant touch with MCS Limited, Share Transfer Agents of the Company, and review periodically the outstanding complaints.

Mr. Sanjiv Krishnaji Shelgikar ceased to be member of shareholders/investors’ grievance committee with effect from April 9, 2007 and Mr. Karun Chandra Srivastava was appointed as a member of the Committee on the same date.

3.2

Demat/Remat of Shares:

2,60,000


2.4

3.5

Mr. S. Padmanabhan

5,110 426 55,409

8

ANNUAL REPORT 2006-07 VOTING PATTERN OF POSTAL BALLOTS IS AS HEREUNDER: Sr. No.

Particulars

Resolution declared as Passed on 11th August 2007

Resolution declared as Passed on 11th August 2007

Special Resolution in terms of the provisions of Section 146 of the Companies Act, 1956 for shifting of the Registered Office of the Company from Auto Cars Compound, Adalat Road, Aurangabad - 431005 to 14 K.M. Stone, Aurangabad - Paithan Road, Village Chittegaon, Taluka Paithan, Dist. Aurangabad - 431105. Maharashtra.

Special Resolution in terms of the provisions of Section 17 of the Companies Act, 1956 for alteration of Main Object Clause No ‘III A’ titled THE MAIN OBJECTS OF THE COMPANY TO BE PURSUED BY THE COMPANY ON ITS INCORPORATION’ of Memorandum of Association of the Company by inserting new Clause(s) No. 3 & 4 after existing Clause 2 to enable Company to:

Resolution declared as Passed on 26th December 2007

Special Resolution in terms of the provisions of Section 16, 17 of the Companies Act, 1956 for alteration of Main Object Clause No ‘III A’ titled ‘THE MAIN OBJECTS OF THE COMPANY TO BE PURSUED BY THE COMPANY ON ITS INCORPORATION’ of Memorandum of Association of the Company by inserting new Clause 5 after existing Clause 4 to enable Company to carry on business a. carry on business of generation and of Telecommunication. supply of Power; and b. carry on business of minerals and fuels including coal and source of minerals and fuel, including mining block or mining rights for mining of minerals, including coal or other substance.

* **

1

Total No. of PBF Received

2

No of Shares

3

% to total equity shares

4

No. of Invalid/Rejected PBF

5

No of Shares

2,726

2,726

3,005

145,251,255

145,251,255

101,095,458

65.6967

65.6967

45.2406

425

425

1,189

344

344

92,806 00.0918

6

% to Total PBF Received

0.0002

0.0002

7

Total No. of Valid PBF Received

2,301*

2,301**

1,816

8

Total No. of Shares

145,250,911*

145,250,911**

101,002,652

65.6965*

65.6965**

99.9082

2,250

2,208

1,799

145,250,088

145,249,495

101,002,246

99.9995

99.9991

99.9996

46

79

17

753

1,342

406

0.0005

0.0009

0.0004

9

% to Total PBF Received

10

Total No. of PBF in Favour

11

Total No. of Votes Casted in Favour

12

% of Shares to Receipt

13

Total No. of PBF Against

14

Total No. of Votes Cased Against

15

% of Shares to Receipt

5 Shareholders holding 70 Equity Shares have not exercised any voting option. 14 Shareholders holding 74 Equity Shares have not exercised any voting option.

At present, the Company is not proposing to conduct any resolution through postal ballot. DISCLOSURES 1.

OTHER DISCLOSURES

Materially significant related party transactions i.e. transactions of the company of material nature, with its promoters, the directors or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interests of the company at large:

The Company is in Compliance with the provisions of Clause 40A of the Listing Agreement.

There are no transactions, which may have potential conflicts with the interests of company at large. Transactions with related parties are disclosed in Note No. B-22 of Schedule 15 to the Accounts in the Annual Report.

(i)

The Company regularly intimates its un-audited as well as audited financial results to the Stock Exchanges, as soon as these are taken on record/approved. These financial results are published in either of Free Press Journal (English) / Economic Times / Times of India and Navshakti (Marathi) dailies having wide circulation. The results are also displayed on the website of the Company www.videoconindustries.com. The official news releases and the presentations, if any, made from time to time to investors and financial analysts at investors’ meets are also displayed on the Company’s website. The results are not sent individually to the shareholders.

(ii)

Management Discussion and Analysis Report forms part of Directors’ Report.

1.

Annual General Meeting:

2.

Non-compliance by the company, penalties, strictures imposed on the Company by Stock Exchange or SEBI or any statutory authority, on any matter related to capital markets, during the last three years: NIL

3.

Whistle Blower Policy and affirmation that no personnel have been denied access to the audit committee:

MEANS OF COMMUNICATION

GENERAL SHAREHOLDER INFORMATION

The Company has implemented Whistle Blower Policy and no personnel have been denied access to the Audit Committee. 4.

Details of Compliance with mandatory requirements and adoption of the non mandatory requirements of this clause:

The 19th Annual General Meeting will be held on: Day

Monday

The Company has complied with mandatory requirements and adopted the following non mandatory requirements:

Date

March 31, 2008

Time

09.30 A.M.

Venue

Registered Office of the Company at 14 KM Stone, Aurangabad-Paithan Road, Village Chittegaon, Taluka Paithan, Dist. Aurangabad. 431 105 (Maharashtra)

i)

The Company has constituted a remuneration committee.

ii)

Whistle Blower Policy.

9

VIDEOCON INDUSTRIES LIMITED 2.

Financial Calendar for 2007-2008:

3.

Financial Year

October 01, 2007 to September 30, 2008

First Quarterly Result

On or before January 31, 2008

Second Quarterly Result

On or before April 30, 2008

Third Quarterly Result

On or before July 31, 2008

Fourth Quarterly Result

On or before October 31, 2008

Annual General Meeting for Financial year to be ended on September 30, 2008

On or before March 31, 2009

Date of Book Closure:

Registrar and Transfer Agent

MCS Limited Harmony, 1st Floor, Sector 1, Khanda, New Panvel (West) 410 206 Dist: Raigad (Maharashtra) Tel : 022 – 27492003 Fax : 022- 27492005

8.

Share Transfer System

Applications for transfer of shares held in physical form are received at the office of the Registrar and Share Transfer Agent of the Company. All valid transfers are processed within 15 days from the date of receipt.

9.

Tuesday, March 18, 2008 to Monday, March 31, 2008 (both days inclusive) 4.

7.

a)

Category code

Dividend Payment Date:

Shareholding Pattern as on 30.09.2007 was as under: Category of Shareholder

Number of Share holder

Dividend, if declared at Annual General Meeting, is proposed to be paid on or around April 10, 2008. 5.

Total Number of Shares

Number of Shares in Demat Form

As a percentage of (A+B)

As a percentage of (A+B+C)

1,292,950

0.87

0.73

44 153,823,583 152,711,452

Listing on Stock Exchanges The equity shares of your Company are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Company has paid Listing Fees upto March 31, 2008.

(A)

and Promoter Group 1

Indian

Sl. No. Name and Address of the Stock Exchange

(a)

Individuals / Hindu Undivided

(b)

Central Govt./ State Govt.(s)

Stock Code

Bombay Stock Exchange Limited (BSE) Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai – 400 001. Web: www.bseindia.com

2

family

511389

National Stock Exchange of India Ltd (NSE) Exchange Plaza, Bandra Kurla Complex, Bandra East,Mumbai – 400 051 Web: www.nseindia.com

VIDEOIND

13

1,619,838

(c)

Bodies Corporate

82.60

69.57

(d)

Financial Institutions/ Banks

-

-

-

-

-

(e)

Any Other

-

-

-

-

-

57 155,443,421 154,004,402

83.47

70.31

-

-

(specify) Sub - Total (A) (1)

Global Depository Receipt of the Company are listed on:

(2)

Foreign

(a)

Individuals (Non-Resident Individuals/

-

-

-

Foreign Individuals)

Luxembourg Stock Exchange 11, Avenue, de la, Porte Neuve L-2227, Luxembourg

6.

Share holding of Promoter

The names and addresses of the respective stock exchanges are given below: 1

Total shareholding as a Percentage of total Number of Shares

(b)

Bodies Corporate

-

-

-

-

-

Foreign Currency Convertible Bonds of the Company are listed on:

(c)

Institutions

-

-

-

-

-

The Stock Exchange of Singapore 2, Shanton Way, # 19-00, SGX Centre 1, Singapore 068804

(d)

Any Other (specify)

-

-

-

-

-

Sub - Total (A) (2)

-

-

-

-

-

57 155,443,421 154,004,402

83.47

70.31

Total Share holding of Promoter

Market Price Data

and Promoter Group

Average monthly High and Low prices at BSE and NSE are given below: Month

BSE

October 2006

(A) = (A)(1)+(A)(2) (B)

NSE

High

Low

High

Low

509.10

412.00

509.40

410.10

Public Share holding

(1)

Institutions

(a)

Mutual Funds / UTI

21

36,571

35,228

0.02

0.02

(b)

Financial Institutions/Banks

36

304,403

291,166

0.16

0.14

(c)

Central Govt./ State Govt.(s)

-

-

-

November 2006

460.00

417.00

459.25

401.05

December 2006

462.85

410.05

462.90

401.30

(d)

Venture Capital Funds

-

-

-

January 2007

478.00

433.30

474.70

435.00

(e)

Insurance Companies

5

5,600,352

5,599,752

3.01

2.53

February 2007

462.00

420.10

462.25

412.20

(f)

Foreign Institutional Investors

95

13,467,563

12,706,367

7.23

6.09

March 2007

459.75

416.00

460.00

415.30

(g)

Foreign Venture Capital Investors

-

-

-

(h)

Any Other( specify)

-

-

-

Sub - Total (B) (1)

157

10.42

8.78

2.96

2.50

April 2007

472.00

392.00

499.00

393.30

May 2007

503.00

402.10

505.00

405.00

June 2007

500.00

414.00

500.00

414.65

July 2007

427.00

369.10

428.00

(2)

Non- Institutions

350.55

(a)

Bodies Corporate

(b)

Individuals i. Indvidual Shareholders holding nominal share capital up to Rs. 1 Lakh

August 2007

384.00

336.25

425.00

335.00

September 2007

396.00

352.30

394.90

337.70

VINL HIGH Vs SENSEX HIGH

VINL STOCK PRICES

400 300 200 100 0 Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

(c)

SENSEX

20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0

500

Oct

(C)

Sep

MONTHS BSE VINL

1,927

5,516,620

4,962,476

342,862

4,685,290

2,998,613

2.52

2.12

19

1,171,618

1,171,618

0.63

0.53

Sub - Total (B) (2)

344,808

11,373,528

9,132,707

6.11

5.14

Total Public Share holding B= (B)(1)+(B)(2) TOTAL (A) + (B)

344,965 30,782,417 27,765,220 345,022 186,225,838 181,769,622

16.53 100.00

13.92 84.23

ii. Above Rs 1 Lakh

600

SENSEX

Any Other( specify)

Shares held by Custodians and against which Depository Receipt have been issued GRAND TOTAL (A)+(B)+(C)

10

19,408,889 18,632,513

34,862,403

***

15.77

345,024 221,093,701 216,632,025

2

34,867,863

***

100.00

ANNUAL REPORT 2006-07 b)

Distribution of Shareholding as on 30.09.2007 is given below: Share Holding of Nominal Value of Rs. Up to 5,000

No. of Shares

Amount in Rs.

% to Total

344,002

99.7

4,096,711

40,967,110

1.85

472

0.14

353,958

3,539,580

0.16

10,001 to 20,000

181

0.05

264,970

2,649,700

0.12

20,001 to 30,000

82

0.02

207,239

2,072,390

0.09

30,001 to 40,000

39

0.01

132,825

1,328,250

0.06

40,001 to 50,000

22

0.01

102,604

1,026,040

0.05

50,001 to 1,00,000

49

0.01

353,812

3,538,120

0.16

177

0.05

215,581,582

2,155,815,820

97.51

345,024

100

221,093,701

2,210,937,010

100

Total

11.

COMPLIANCE CERTIFICATE OF THE AUDITORS

% to Total

5,001 to 10,000

1,00,001 and above

10.

Number of Shareholders

A certificate from the auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached to this report.

DECLARATION The Board has laid down a code of conduct for all Board Members and Senior Management of the Company, which is posted on the Website of the Company. The Board Members and Senior Management have affirmed compliance with the code of conduct.

Dematerialization of Shares and liquidity:

For VIDEOCON INDUSTRIES LIMITED

The Securities and Exchange Board of India (SEBI), through a notification has made it mandatory that any delivery in the Company’s shares against stock exchange trades shall be in demat form. As on 30.09.2007, 216,632,025 equity shares (97.98% of the total number of shares) have been dematerialized.

CHAIRMAN & MANAGING DIRECTOR

Outstanding GDRs/ ADRs/ Warrants or Conversion Instruments, Conversion date and like impact on equity (30.09.2007): As on 30th September 2007, 34,867,863 GDRs were outstanding. Each GDR represents one equity share of the Company.

CMD/CFO CERTIFICATION

During the financial year ended on 30th September 2006, the Company issued Foreign Currency Convertible Bonds in two tranches i.e., of US$ 90,000,000 Million and US$ 105,000,000. The details of Conversions and likely impact on the equity is tabulated hereunder:

12.

13.

1

Principal Value of FCCBs Issued

2

Principal Value of FCCBs converted into equity (from 01st October 2006 to 30th September 2007)

3

Principal Value of Bonds outstanding as at 30th September 2007

4

Underlying Equity Shares issued pursuant to conversion of FCCBs as referred in S.No. 2, hereinabove

5

Underlying Equity Shares which may be issued upon conversion of FCCBs as referred in S.No.3 hereinabove

US$90,000,000

US$105,000,000

US$1,000,000

US$99,000

US$89,000,000

US$104,901,000

98,408

9,044

8,758,342

10,186,173

We, Chairman and Managing Director appointed in terms of the Companies Act, 1956 and the Chief Financial Officer, certify to the Board that: a)

The Financial Statements and the Cash Flow Statements for the year have been reviewed and to the best of our knowledge and belief are true and present a true and fair view of the affairs of the Company.

b)

To the best of our knowledge and belief, no transactions entered are fraudulent, illegal or violate the Company’s Code of Conduct.

c)

We accept the responsibility for establishing and maintaining internal controls, evaluate the effectiveness, disclosing the deficiencies to the Auditors & the Audit Committee and take steps or propose to take steps to rectify these deficiencies.

d)

We have indicated to the Auditors and the Audit Committee: i) Significant changes in Internal Control processes during the year, ii) Significant changes in Accounting Policies; and iii) Instances of significant fraud of which we have become aware.

Chief Financial Officer

Plant locations: 1 14 Km. Stone, Village Chittegaon, Taluka Paithan, Dist. Aurangabad. 431 105 Maharashtra 2 Village Chavaj, Via Society Area, Taluka & Dist. Bharuch – 392 002.Gujarat 3 Plot No.10, Udyog Vihar Industrial Area, Gautam Budh Nagar, Greater Noida, Uttar Pradesh 4 Plot No. 28, Khasra No.293, Industrial Area,Selakul, Vikasnagar, Dehradun, Uttaranchal 5 Village Majara, Taluka Warora, District, Chandrapur, Maharashtra 6 Vigyan Nagar, RICO Industrial Area, Shahjanpur, District Alwar, Rajasthan 7 A-32, Butibori Industrial Area, Village Ruikhiri, Nagpur

Chairman and Managing Director

COMPLIANCE CERTIFICATE ON CORPORATE GOVERNANCE To, The Members of VIDEOCON INDUSTRIES LIMITED We have examined the compliance of conditions of Corporate Governance by Videocon Industries Limited, for the year ended on 30th September, 2007, as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges. The Compliance of Conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to a review of the procedures and implementations thereof adopted by the Company for ensuring the compliance of the condition of the corporate governance as stipulated in the said clause. It is neither an audit nor an expression of opinion on the financial statements of the Company.

Address for Correspondence:

In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and the management, we certify that the Company has complied with the condition of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement.

14 Km. Stone, Village Chittegaon, Taluka Paithan, Dist. Aurangabad. 431 105 Maharashtra Tel : 02431 – 251501 Fax : 02431 – 251551 Email : [email protected] The correspondence address for shareholders in respect of their queries is:

We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

MCS Limited Harmony, 1st Floor, Sector 1, Khanda, New Panvel (West) 410 206 Dist: Raigad (Maharashtra) Tel : 022 – 27492003 Fax : 022- 27492005

For KHANDELWAL JAIN & CO. Chartered Accountants

For KADAM & CO. Chartered Accountants

SHIVRATAN AGARWAL Partner Membership No.104180

U. S. KADAM Partner Membership No.31055

Place: Mumbai Date : February 25, 2008

11

VIDEOCON INDUSTRIES LIMITED MANAGEMENT DISCUSSION AND ANALYSIS REPORT The management discussion and analysis report has been included in adherence to the spirit enunciated in the code of Corporate Governance approved by the Securities and Exchange Board of India. The Management presents herein the Industry Overview, Opportunities and Threats, Initiatives by the Company and overall strategy of the Company and its outlook for the future. This outlook is based on assessment of the current business environment it may vary due to future economic and other developments both in India and abroad.

The Company has identified the air conditioner market as a high growth market. As consumers become more affluent, they are likely to increase the number of air conditioners in their homes. The Company expects a further shift in demand towards higher value split air conditioners. At present, the penetration level in the domestic market for air conditioners in India is extremely low. Increasing affordability, acceptance of air conditioners as a utility product rather than a luxury item, easy availability of finance schemes, and historic low penetration. The institutional sale is also contributing to the growth of this category. In air conditioners, per Capita consumption is higher for this category as it is used by the same individual in different parts of his home and workplace.

Statement in this Management Discussion and Analysis of Financial Condition and Results of Operation of the Company describing the Company’s objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward Looking statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operation include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors. Further, the discussion following herein reflects the perceptions on major issues as on date and the opinions expressed here are subject to change without notice. The Company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this report, consequent to new information, future events, or otherwise.

Washing Machines Washing machine sales accounted for the year ended March 2007 are estimated at Rs. 16.4 billion representing growth of 12.5% over the previous year. The leading brands in the washing machine market are Videocon, LG, Whirlpool, Electrolux, Samsung and Onida. The semi automatic segment has been key contributor with 70% share to this category. The fully automatic segment has grown at a rate of 34%. Repeat buyers upgrading to Fully Automatic. Also, the shift is from semi automatic to fully automatic due to diminishing price differential. Although demand for washing machines has exhibited very low price elasticity, intense competition between players has motivated moderate price cuts in recent years. Price cuts in other market segments have also led to reduction in prices in this segment. Stiff competition has resulted in technologically superior products at competitive prices. The industry is also moving beyond the concept of clean wash to the concept of pure, bacteria free, odour free wash.

INDUSTRY, STRUCTURE AND DEVELOPMENTS Consumer Electronics & Home Appliances: The Consumer electronics products and household appliances industry can be broadly categorized into two segments: 1.

Consumer Electronics Products; and

2.

House Hold Appliances.

Growth in the demand for washing machines in India continues to be limited by a public perception that they are of low utility because of (i) the availability of cheap manual labour and (ii) intermittent water and power supply in many parts of the country.

The consumer electronic products segment includes products such as Televisions, video products and home entertainment products and the household appliances segment includes products such as refrigerators, washing machines, air conditioners, microwave ovens, vacuum cleaners, dishwashers and small appliances such as irons, heaters, vacuum cleaners, fans, mixers and water purifiers.

Microwave oven

Colour Televisions

The grill and convection segment contributed 41% and 31% respectively. With the solo category growing at a rate of 22 per cent, grill growing at 36 per cent and convection model growing at 71 per cent over the last year. Microwave oven segment is becoming aesthetic driven. Players are differentiating themselves on sleek design which can be placed in small countertops. The companies are using health as a diffentiator to sell their product range and this has found great acceptance among Indian consumers.

Microwave oven sales for year ended March 2007 are estimated at Rs. 5.9 billion resulting the growth of 48.5% over the previous year. The leading brands in the Microwave Oven market are LG, Samsung, Videocon, Kenstar, Electrolux, IFB, and Kelvinator.

Colour Televisions is the dominant product in the consumer electronics and house hold segment, both by volume and by value. As per the Company’s estimates for year ended March 2007, colour television sales accounted for an estimated Rs.110 billion with a growth of 12.7%, representing approximately 53% of the total turnover of the consumer electronics products and household appliances market. Market demand for colour televisions have increased by around 12.7% in the year ending March, 2007. With the upgradation in technology, there has been a shift from conventional TVs to Flat TVs and from Flat TVs to Slim and Ultra Slim TVs. The Flat TV segment constituted 55% of the overall CTV market. It has grown from 5 million units to 6.6 million units in the year ended March 2007, an increase of 30%. The conventional segment has de-grown by 5% over the previous year. The growth in demand in Flat TVs has been driven by a reduction in the price differential between conventional color television and flat color television, and increasing consumer preference for flat color televisions.

Low penetration level, changing life style is creating a set of opportunity for the market which will lead to high growth in this category.

With the technology changing day by day, the new trends in television industry is Flat Panel Display (FPD). Undergoing metamorphosis, FPD market is turning from low volume, high pricing and low consumer awareness to affordable pricing and desire for enhanced technology and cinematic viewing experience. It comprises of liquid Crystal Display (LCD) TV and Plasma TV. The market for FPD in 2006-07 has grown at an exponential rate of 430%. LCD TVs currently constitute the bulk of high-end TV sales.

One of the significant developments in the industry has been the enforcement of energy efficiency regulation laid by Bureau of Energy Efficiency, Ministry of Power.

Lack of time, coupled with changing eating habits is creating another set of opportunity. Glass shells Glass Shells (glass panels and funnels), account for nearly 60% of CRT costs. The manufacturing process for glass shells is capital-intensive. Videocon is one of the major players in the glass shell business in India.

INDIAN OIL AND GAS INDUSTRY Per capita consumption of primary energy and hydrocarbons of India is among the lowest in the world. Demand for crude oil is derived from the demand for petroleum products, which is largely determined by the growth in the economy. High speed diesel oil, motorspirit, liquefied petroleum gas, naphtha and fuel oil account for the bulk of the consumption of petroleum products in India. While domestic production of crude oil and natural gas has increased over the past decade, it has not kept pace with growth in domestic consumption over the same period. As the gap between demand and production continues to widen, India has increasingly become a significant net importer of crude oil. It is against this background that the Government of India has stressed the importance of exploration of hydrocarbons in India.

Sales of FPD are no loner solely restricted to the metros, consumers in tier-2 cities seem to be as evolved in lifestyle needs. Higher disposable incomes, greater aspirations, and a younger demographic consumer, have increased demands for the latest technology high-end television market. Plasma TV is finding more popularity among corporate buyers, shopping malls and airports, where there is public viewing. The leading players in CTV market are Videocon, Sansui, LG, Samsung, Akai and Onida. The key growth drivers of CTV business in India are likely to be:

Electrification in rural India and increasing aspirations of people in rural India.

Low penetration levels- The penetration level of CRT TVs in India is more lower when compared to other countries, worldwide.

Multiple TV demand from Middle and high income categories.

Price erosion and easy and inexpensive finance availability.

Sports events/festivals.

Product innovations.

The Government of India, under the National Common Minimum Programme, has placed greater emphasis on increasing indigenous production. The government is planning to increase indigenous production through the accelerated domestic exploration of oil and gas, through improved oil recovery from existing fields and diversification of the fuel base with an increased reliance on gas. Natural gas has gained tremendous importance, both as a fuel and a feedstock over the past 20 years. Natural gas is used as a feedstock in fertilizer and petrochemical units. It is also used as a fuel in power plants using combined cycle technology, and in other industries such as glass, ceramics, sponge iron and tea estates.

Refrigerators

India today remains one of the lesser explored regions in the world with well density per thousand sq. km. being among the lowest.

It is expected that for the year ended March 2007, refrigerator sales accounted for an estimated Rs. 30 billion on sales with a growth of approximately 5.4%. The leading brands in the refrigerator market are Videocon, LG, Whirlpool, Electrolux, Samsung, Kelvinator, and Godrej.

STRENGTHS

OPPORTUNITIES AND THREATS

Sales of Frost Free Refrigerators grew by approximately 13% for period ended March 2007 where as the direct cool segment grew by approximately 3.7 % in the same period. In direct cool refrigerator, 165 – 200 litres segment is the major contributor where as in frost free refrigerator, 201 – 250 liter segment is the major contributor. The Frost Free segment accounts for more than 30% of the total refrigerator market. Air Conditioners For the year ended March 2007, air conditioners sales are estimated at Rs. 25 Billion, representing growth of 24% over the previous year. The leading brands in the AC market are LG, Samsung, Videocon, Onida, Voltas, Electrolux and Godrej. According to industry sources, the demand for split air conditioners has increased considerably in the year ended March 2007, due to a reduction in the price differential between split and window air conditioners, increased affordability and because split air conditioners require less space, have low noise levels and is better looking than window air conditioners. With the growing number of three-four rooms apartment in Tier I, II and III cities, a new trend has started emerging whereby customers, instead of one AC, have religiously started buying two to three ACs.

12

There are opportunities to further expand manufacturing bases, both internationally and domestically.

There are opportunities to expand the range of Components so as to reduce cost of products.

There are opportunities to increase brand portfolio by introducing new brands and/or by acquiring the existing premium brands from the market.

There are opportunities to increase the sales of different range of products manufactured by Company by way of association/tie-up with retail outlets; Super Market; Hyper Marts etc.,

There are opportunities to increase penetration in the Indian consumer electronic products and household appliances market. This can be achieved through growth of customer base and enlargement of the Company’s product portfolio.

There are opportunities to improve level of service to network of dealers and distributors for example by providing more frequent deliveries in order to reduce the dealers inventory levels and therefore costs. The Large scale operations can improve the margins of the Company.

ANNUAL REPORT 2006-07

There are opportunities to outperform in Domestic Market with Innovative Products such as Slim Televisions. LCDs & PDPs etc.,

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

There is scope to identify additional oil and glass blocks that are suitable for exploration and have potential for production. The Company plans to bid for the rights to exploit the hydrocarbons blocks, which shall be open for bidding in future.

Fixed Assets

Comparative Performance of Company on Stand alone Basis

The Gross Block of Company as on 30th September, 2007 was Rs. 86,310.84 million which includes revaluation of assets to the extent of Rs. 9,244.75 million. The Net Block as on that date was Rs. 53,194.72 million. During the year, there were additions to gross block of fixed assets to the extent of Rs. 8,948.74 million.

THREATS:

The Cost of marketing, advertising and after sale services are increasing tremendously.

Due to stiff competition, prices are continuously reducing. If the costs are not controlled then it may prove to be a threat and margins will be under pressure.

The Cost and interest rates continue to be the key issues that are likely to shape the growth rates of the Industry. Any increase in the interest will have impact on the profitability of the Company.

Sales During the year under consideration, the Company achieved a turnover of Rs. 87,102.58 million as against Rs. 75,803.32 million during the previous year ended on 30th September 2006, thereby recording an increase of 14.91% in turnover as compared to previous year. Turnover comprised of sales from the ‘Consumer Electronics and Home Appliances’ segment to the extent of Rs. 73,000.67 million as against Rs. 61,409.18 million for the previous year, Oil & Gas segment to the extent of Rs. 14,101.91 million as against Rs. 14,394.14 million for the previous year ended on 30th September, 2006.

SEGMENT -WISE PERFORMANCE The Company has prepared the consolidated Financial Statements as per Accounting Standard 21 “Consolidated Financial Statements”, Accounting Standard 27 “Financial Reporting of Interests in Joint Venture”, Accounting Standard 23 “Accounting for investments in Associates in Consolidated Financial Statements” and accordingly the segment information as per Accounting Stantdard-17 “Segment Reporting” has been presented in consolidated financial statements and accordingly the segment wise turnover are as under:

Other Income Other income for the year was Rs. 1,663.62 million as against Rs. 1,654.44 million during the previous year ended on 30th September, 2006, representing an increase of 0.55% as compared to previous year. Other income comprises of Income from Investment & Securities Division, Exchange Rate Fluctuation, Insurance claim received, Interest and Miscellaneous Income.

(Rs. Millions) Segment

Current year ended 30.09.2007

Previous year ended 30.09.2006

14,101.91

14,394.14

Consumer Electronics and Home Appliances

Expenditure Cost of Goods Consumed Cost of Goods Consumed stood at Rs. 48,981.34 million as against Rs. 41,627.44 million during the previous year ended on 30th September 2006.

Crude Oil and Natural Gas

111,869.39

115,239.57

Production & Exploration Expenses for Oil & Gas

Total

125,971.30

129,633.71

During the year under review the production and exploration expenses for oil and gas were Rs. 9,549.81 million as against Rs. 9,583.21 million during the previous year ended on 30th September, 2006 representing a marginal decrease of 0.35% as compared to previous year.

OUTLOOK

The consumer electronics sector is undergoing a major transformation. The analog technologies are giving way to digital technologies. Digitalization in turn is leading to convergence of consumer, computer, communication, broadcast cable technologies and the contents. A digital signal can be far more easily processed than an analog one. The Company is planning to tap this.

Salaries, Wages and Employees Benefits

The Company has adopted the best and the most sophisticated technology to suit Indian needs. The Company as a part of global diversification has been planning international forays in the same industry and has successfully forayed into international market either directly or indirectly.

Manufacturing and Other Expenses

During the year under review the Salary and Wages stood at Rs. 1,053.48 million as against Rs. 946.96 million for the previous year ended on 30th September, 2006 representing an increase of 11.25% as compared to previous year.

During the year under review the manufacturing and other expenses were Rs. 6,813.88 million as against Rs. 6,934.07 million for the previous year ended on 30th September, 2006 representing decrease of 1.73% as compared to previous year.

The Company as a part of reducing manufacturing cost of products has explored the possibility of manufacturing various components at the in-house facility by setting up standalone facilities.

Interest & Finance Charges For the year ended 30th September 2007, Interest and Finance charges amounted to Rs. 3,106.51 million as against Rs. 2,258.80 million for the previous year ended on 30th September, 2006 thereby recording an increase of 37.53% compared to previous year. The increase is mainly on account of increase in interest rate and increase in total Borrowings.

RISKS AND CONCERNS Risks associated with Consumer Electronics & Home Appliances Business

There is risk of non adjustment of product mix in line with market demand or keep pace with technological changes.

There is risk of drop in CRT prices due to International Competition.

There is risk of non adoption / availability of Technology.

There is risk of inability to keep pace with the changes in product design and features.

There is risk of slowdown in the overall Indian and Global economy thereby effecting demand for the Company’s products.

Depreciation Net Depreciation (excluding depreciation on revalued assets) amounted to Rs. 4,183.88 million as against Rs. 3,355.47 million for the previous year ended on 30th September, 2006 thereby recording an increase of 24.69% as compared to previous year. The increase in depreciation is on account of additions of fixed assets. Profit Before Tax As a result of the foregoing, the profit before tax was Rs. 10,828.96 million for the year ended 30th September 2007 as against Rs. 9,136.66 million for the previous year ended on 30th September, 2006 there by recording an increase of 18.52% in profit before tax.

Risks associated with the Oil and Gas Business

There is risk of variation in the prices of oil and gas.

There is risk of exploration blocks not yielding the expected results.

There is risk on account of natural disasters or which are beyond control such as labor unrests, earthquakes, flooding and extended interruptions due to hazardous weather conditions, explosions and other accidents.

Provision for Taxation Provision for Taxation includes Provision for Current Tax, Deferred Tax and Fringe Benefit Tax. During the year under review, the Company has provided Rs. 1,232.70 million for Current Tax, Rs. 1,020.18 million for Deferred Tax and Rs. 23.89 million for Fringe Benefit Tax as against Rs. 819.00 million for Current Tax, Rs. 117.23 million for deferred tax and Rs. 15.41 million for Fringe Benefit Tax for the previous year ended on 30th September, 2006.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Net Profit

The Company has an internal control system commensurate with its size and nature of business, which provides for:

Transactions being accurately recorded, cross verified and promptly reported.

Adherence to applicable accounting standards and policies.

Information technology system which include controls for facilitating the above.

Efficient use and safeguarding of resources.

Accurate recording and custody of assets.

Compliance with applicable statutes, policies procedures, listing requirements, management guidelines and circulars in all the Countries where the Company operates.

Net Profit of the Company increased to Rs. 8,552.19 million from Rs. 8,185.02 million for the previous year ended 30th September, 2006 representing an increase of 4.49% in Net profit. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED The Company continues to improve daily living and to create a workplace where every person can reach his or her full potential. The work environment gives employees the freedom to make the most of them. Learning and relevance are key principles at the Company. The Company believes in talent acquisition and retention, to augment its plan of making its presence more prominent to global markets. The Company has developed a HRD Plan with the parameters to achieve Excellent Results. The steps have been taken to create a sense of belongingness in the minds of the employees, which in turn gives maximum contribution per employee while gearing them to face the challenges in the competitive business environment and achieve the desired goals.

Internal checks and controls are exercised by strictly adhering to the various procedures laid at the time of delegation of authorities and other Procedures. The delegation clearly indicates the powers along with the monetary limits, wherever necessary, that can be exercised by various levels of the Managers in the Company.

The Company is poised to take on the challenges with its work force of around 8,500 employees/workers in the business environment and march towards achieving its mission with success.

13

VIDEOCON INDUSTRIES LIMITED AUDITORS’ REPORT To The Members of VIDEOCON INDUSTRIES LIMITED 1. We have audited the attached Balance Sheet of VIDEOCON INDUSTRIES LIMITED, as at 30th September 2007, Profit and Loss Account and also the Cash Flow Statement of the Company for the year ended on that date annexed thereto. 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. 2. 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 misstatement. 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. 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, on the basis of such checks as considered appropriate and according to the information and explanations given to us during the course of the audit, we give in the Annexure hereto a statement on the matters specified in Paragraphs 4 and 5 of the said Order. 4. Attention is invited to Note No. B-10 of Schedule 15 regarding incorporation of the Company’s share, in the operations of the joint venture based on the statements received from the Operator. The Company has received from the Operator the audited financial statements for the period upto 31 st March 2007 and un-audited financial statements for the period 1st April 2007 to 30th September 2007, on which we have placed reliance. We have also placed reliance on technical / commercial evaluation by the management in respect of allocation of development cost to producing properties depletion of producing properties, on the basis of proved remaining reserves and liability for abandonment costs. 5. Further to our comments in the Annexure referred to in paragraph 3 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 purpose of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books. Proper returns adequate for the purpose of our audit have been received from branches not visited by us. The branch Auditor’s Reports have been forwarded to us and have been appropriately dealt with. 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 and with the audited returns from the foreign branches. d) In our opinion, the Balance Sheet, Profit and Loss Account, and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956. e) According to the information and explanations given to us and on the basis of written representations received from the directors as on 30th September 2007 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th September 2007 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956. f) In our opinion and to the best of our information and according to explanations given to us, the said financial statements, read together with the significant accounting policies, paragraph 4 above and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) In the case of the Balance Sheet, of the state of affairs of the Company as at 30th September 2007; (ii) In the case of the Profit and Loss Account, of the profit for the year ended on that date, and (iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date. For KHANDELWAL JAIN & CO. Chartered Accountants


SHIVRATAN AGARWAL Partner Membership No.: 104180

U.S.KADAM Partner Membership No.: 31055

Place : Mumbai Date : 25th February, 2008

ANNEXURE REFERRED TO THE AUDITORS’ REPORT Statement referred to in paragraph 3 of the Auditors’ Report of even date to the Members of VIDEOCON INDUSTRIES LIMITED on the financial statements for the year ended 30th September 2007. (i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) As per the information and explanations given to us, physical verification of fixed assets, other than those under joint venture, has been carried out in terms of the phased programme of verification adopted by the Company and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification is reasonable, having regard to the size of the Company and nature of its business. (c) In our opinion, during the year the Company has not disposed off a substantial part of fixed assets. (ii) (a) As per the information furnished, the inventories (excluding stock of crude oil lying at extraction site with the Operator) have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable. (b) In our opinion and according to the information and explanations given to us, procedures of physical verification of inventory followed by the management, are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory. As per the information and explanations given to us the discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account. (iii) (a) As per the information and explanations given to us, the Company has not granted or taken any loans, secured or unsecured, to/from Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. (b) As the Company has neither granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956, sub-clauses (b), (c), (d), (f) and (g) of Clause (iii) of paragraph 4 of the Order are not applicable. (iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and for the sales of goods. During the course of our audit, we have not observed any continuing failure to correct the major weakness in the internal controls systems. (v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act 1956 and exceeding the value of Rupees Five lakh, in respect of any party during the year, have been made at prices which are reasonable having regard to prevailing market price at the relevant time.

14

ANNUAL REPORT 2006-07 (vi)

The Company has not accepted any deposits from the public within the meaning of the provisions of Section 58A and 58AA or any other relevant provision of the Companies Act, 1956 and rules made there under. (vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. (viii) The Central Government has prescribed maintenance of the cost records under section 209(1)(d) of the Companies Act, 1956 in respect of the Company’s products. As per the information and explanations provided to us, we are of the opinion that prima facie, the prescribed 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 or complete. (ix) (a) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and other material statutory dues wherever applicable. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as on 30th September 2007 for a period of more than six months from the date they became payable. (b) According to the records of the Company examined by us and information and explanations given to us, the particulars of dues of Sales tax, Income tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess which have not been deposited on account of disputes, are given below: S.No. Name of the Statute

Nature of the Dues

1.

Customs Penalty

Customs Act, 1962

Amount Rs. in million

Customs Duty

2.

Central Excise Act, 1944

Excise Penalty Service Tax Demand

Excise Duty Demand

3.

Central Sales Tax Act, 1956 and Sales Tax Acts of various states

Sales Tax Demands

4. 5. 6.

Income Tax Act, 1961 Industrial Dispute Act Foreign Exchange Management Act

Income Tax Demand Labour Cases & Other Other

(x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) (xviii) (xix) (xx) (xxi)

Forum where dispute is pending

0.85 11.00 55.14 17.18 0.72 5.48 13.53 3.51 0.01 2.70 1.78 0.14 4.02

Commissioner Supreme Court Asst. Commissioner Deputy Commissioner Commissioner Commissioner (Appeals) CESTAT Supreme Court Tribunal Commissioner (Appeals) Joint Commissioner (P&V) Asst. Commissioner CEGAT

2.81 0.57 16.46 91.43 31.75 8.61 4.18 8.15 97.22 11.90 28.69 14.21 18.97 5.57 4.72 46.70

Asst. Commissioner Addl. Commissioner Dy. Commissioner Commissioner Commissioner (Appeals) Tribunal CESTAT High Court Asst. Commissioner Deputy Commissioner Deputy Commissioner (Appeals) Tribunal High Court Income Tax Appellate Tribunal Labour Court Supreme Court

There are no accumulated losses as at 30th September 2007. The Company has not incurred any cash losses during the year covered by our audit and the immediately preceding financial year. Based on our audit procedures and the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or to debenture holders during the year. Based on our examination of the records and the information and explanations given to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion, the Company is not a Chit fund Company or nidhi/mutual benefit fund/society. Therefore the Clause (xiii) of paragraph 4 of the Order is not applicable to the Company. The Company has maintained proper records of transactions and contracts in respect of dealing and trading in shares, securities, debentures and other investments and those timely entries have generally been made therein. All shares, debentures and other securities have been held by the Company in its own name except to the extent of the exemption granted under Section 49 of the Companies Act, 1956. According to the information and explanations given to us, the terms and conditions of guarantees given by the Company for loans taken by others from banks or financial institutions are, prima facie, not prejudicial to the interest of the Company. According to the information and explanations given to us, the term loans raised during the year were applied, on an overall basis, for the purposes for which the loans were obtained. According to the information and explanations given to us and on our overall examination of the balance sheet of the Company, we report that the Company has not used funds raised on short term basis for long term investments. The Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under section 301 of the Companies Act. 1956. The Company has not issued any secured debentures during the year. The Company has created security in respect of debentures issued in earlier years. During the year, the Company has not raised any money by way of public issue. The Company has however issued 107,452 Equity Shares on conversion of 1,099 Foreign Currency Convertible Bonds (FCCBs) of US$ 1,000 each (inclusive of premium). According to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.






15

VIDEOCON INDUSTRIES LIMITED BALANCE SHEET AS AT 30TH SEPTEMBER, 2007 Particulars

I.

Schedule No.

As at 30th Sept., 2006 ( Rupees in Million)

2,669.54

2,668.46

SOURCES OF FUNDS 1.

Share Holders’ Funds a.

II.

As at 30th Sept., 2007 ( Rupees in Million)

Share Capital

1

b.

Share Capital Suspense

1A

c.

Reserves & Surplus

2

2.

Deferred Tax Liability ( Net )

3.

Loan Funds

–

0.004

54,114.27

47,722.06

2,579.00

1,596.86

a.

Secured Loans

3

33,435.01

36,083.89

b.

Unsecured Loans

4

19,161.35

13,528.05

TOTAL

111,959.17

101,599.32

APPLICATION OF FUNDS 1.

Fixed Assets

5

a.

Gross Block

86,310.84

77,362.11

b.

Less : Depreciation

33,766.67

28,470.91

c.

Net Block

52,544.17

48,891.20

d.

Producing Properties (Net)

650.54

505.17

2.

Investments

6

3.

Current Assets, Loans & Advances

7

53,194.71

49,396.37

20,924.97

17,811.68

a.

Inventories

13,936.44

12,998.62

b.

Sundry Debtors

13,142.54

11,172.85

c.

Cash and Bank Balances

8,891.08

11,362.55

d.

Other Current Assets

227.06

551.05

e.

Loans and Advances

12,514.13

7,664.39

48,711.25

43,749.46

Less : Current Liabilities & Provisions

8

a.

Current Liabilities

7,939.54

7,670.15

b.

Provisions

2,932.22

1,688.04

10,871.76

9,358.19

Net Current Assets Significant Accounting Policies and Notes to Accounts

37,839.49

34,391.27

111,959.17

101,599.32

15 TOTAL

As per our report of even date



For and on behalf of the board


U. S. KADAM Partner Membership No. 31055

V. N. DHOOT Managing Director

S. PADMANABHAN Director

VINOD KUMAR BOHRA Company Secretary


16

ANNUAL REPORT 2006-07 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH SEPTEMBER, 2007 Particulars

I.

Year ended on 30th Sept., 2007 (Rupees in Million)


87,102.58 4,248.34

75,803.32 3,615.15

9

82,854.24 1,663.62

72,188.17 1,654.44

TOTAL

84,517.86

73,842.61

10 11 12 13 14 5

48,981.34 9,549.81 1,053.48 6,813.88 3,106.51

41,627.44 9,583.21 946.96 6,934.07 2,258.80 4,839.99 1,484.52 –

4,183.88

3,355.47

73,688.90

64,705.95

Profit before Tax Provision for Taxation Current Tax Deferred Tax Fringe Benefit Tax Profit for the Year Excess provision for Income Tax for earlier years written back Balance brought forward Add : Transferred from Debenture/Bonds Redemption Reserve Addition/Adjustment on amalgamation

10,828.96

9,136.66

1,232.70 1,020.18 23.89 8,552.19 35.37 8,380.87 530.55 –

819.00 117.23 15.41 8,185.02 3.02 4,389.14 – (1,763.16)

Balance available for appropriation APPROPRIATIONS Debenture Redemption Reserve Proposed Dividend - Equity Proposed Dividend - Preference Corporate Tax on Proposed Dividend Transfer to General Reserve Balance Carried to Balance Sheet

17,498.98

10,814.02

– 803.02 36.81 142.73 2,000.00 14,516.42

12.60 773.45 33.87 113.23 1,500.00 8,380.87

17,498.98

10,814.02

Basic Earnings per Share (Nominal Value Rs.10/- per share)

Rs. 38.66

Rs. 36.88

Diluted Earnings per Share (Nominal Value Rs.10/- per share) (Refer Note No.B-13 of Schedule No. 15)

Rs. 35.70

Rs. 36.88

INCOME Sales / Income from Operations Less : Excise Duty Net Sales Other Income

II.

Schedule No.

EXPENDITURE Cost of Goods Consumed/Sold Production & Exploration Expenses Salaries, Wages & Employees’ Benefits Manufacturing & Other Expenses Interest & Finance Charges Depreciation / Amortisation Less : Transferred from General Reserve Less : Transferred from Revaluation Reserve

5,354.59 – 1,170.71

(Refer Note No B-4 of Schedule No.15) TOTAL III.

IV.

V. VI.

TOTAL

Significant Accounting Policies and Notes to Accounts

15











17

VIDEOCON INDUSTRIES LIMITED CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH SEPT., 2007 Year ended on 30th Sept., 2007 (Rupees in Million)

Particulars A.

CASH FLOW FROM OPERATING ACTIVITIES Net Profit before Tax Add: a) Depreciation / Amortisation b) Interest and Finance Charges c) Producing Properties written off d) Provision for Leave Encashment e) Provision for Warranty and Maintenance Expenses f) Provision for Gratuity g) Provision for Exchange Rate Fluctuation h) Diminution in value of Investment i) Loss on Sale of Fixed Asset

10,828.96

9,136.67

(A)

4,183.88 3,106.51 833.95 6.83 20.09 6.58 1,023.92 40.30 1.45 20,052.47

3,355.47 2,258.80 177.36 4.28 266.54 28.48 12.34 17.39 15,257.33

(B)

211.84 246.06 457.90

276.87 467.08 743.95

Less: a) Interest Received b) Income from Investments and Securities Division

B.

Cash flow from Operating Activities before Working Capital changes (A-B) Adjustments (including on amalgamation) : a) Inventories b) Sundry Debtors c) Other Current Assets d) Loans & Advances e) Current Liabilities Cash flow from Operating Activities Less: Income Tax Paid Less: Fringe Benefit Tax Paid Net Cash flow from Operating Activities CASH FLOW FROM INVESTING ACTIVITIES Sale of Fixed Assets (Net) Interest Received Income from Investments and Securities Division

19,594.57

14,513.38

(D)

(937.82) (1,969.68) 323.99 (4,849.72) 271.98 12,433.32 1,072.57 23.91 11,336.84

(4,268.41) (1,201.66) (360.69) 4,111.43 1,191.22 13,985.27 450.67 17.43 13,517.17

(E)

48.95 211.84 246.06 506.85

86.80 276.87 467.08 830.75

9,058.96

14,776.86

(F) (G)

979.32 3,153.59 13,191.87 (12,685.02)

103.50 14,389.80 29,270.16 (28,439.41)

(H)

1.08 47.66 5,633.31 951.48 6,633.53

603.20 0.004 1.50 93.42 10,134.75 8,793.37 66.93 19,693.17

0.004 1,971.42 1,628.94 -

556.83 1,763.17 1,878.79 95.59

126.80 809.92 113.23 3,106.51 7,756.82 (1,123.29) (2,471.47) 11,362.55 8,891.08

145.22 587.75 82.35 2,258.80 7,368.50 12,324.67 (2,597.57) 13,960.12 11,362.55

(C)

Less: Increase in Fixed Assets including Captial Work-in-progress (including net additions on amalgamation) Increase in Producing Properties Increase in Investments (Net) Net Cash flow from Investing Activities C.

(E-F)

CASH FLOW FROM FINANCING ACTIVITIES Increase in Share Capital including on account of amalgamation Increase in Share Capital Suspense on amalgamation Increase in Reserves on amalgamation Securities Premium Received and addition on amalgamation Increase in Secured Term Loans from Banks Increase in Unsecured Loans Increase in Working Capital Loans from Banks Less: Decrease in Share Capital Suspense including on account of amalgamation Amalgamation Adjustment Account Decrease in Secured Term Loans from Banks Redemption of Secured Non Convertible Debentures Decrease in Share Application Money Decrease in Securities Premium on account of Share issue expenses and premium on convertible bonds Payment of Dividend Corporate Tax on Dividend Interest and Finance Charges Paid (I) (J) (D+G+J)

Net Cash flow from Financing Activities (H-I) Net Change in Cash and Cash Equivalents Opening Balance of Cash and Cash Equivalents Closing Balance of Cash and Cash Equivalent












18

ANNUAL REPORT 2006-07 SCHEDULES TO BALANCE SHEET As at As at 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million) SCHEDULE - 1 : SHARE CAPITAL Authorised : 500,000,000 (Previous year 500,000,000) Equity Shares of Rs. 10/- each 10,000,000(Previous year 10,000,000) Redeemable Preference Shares of Rs. 100/- each

As at As at 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million) Capital Subsidy

5,000.00

As per last Balance Sheet

5,000.00

(B)

Issued, Subscribed and Paid-up: Equity Shares: 221,093,701 (Previous year 220,985,833) Equity Shares of Rs. 10/- each fully paid up Of the above: a) 95,078 (Previous year 95,078) Equity Shares of Rs.10/- each have been issued on conversion of Unsecured Optionally Convertible Debentures. b) 156,438,326 (Previous year 156,437,910) Equity Shares of Rs.10/- each were allotted pursuant to amalgamations without payments being received in cash. c) 45,777,345 (Previous year 45,777,345) Equity Shares of Rs.10/- each were issued by way of Euro issues represented by Global Depository Receipts (GDR) at a price of US$ 10.00 per share (inclusive of premium). d) 107,452 (Previous year NIL) Equity Shares of Rs.10/each have been issued on conversion of 1,099 Foreign Currency Convertible Bonds of US$ 1000 each (inclusive of premium ) Less : Calls in Arrears - by others (A)

1,000.00

1,000.00

6,000.00

6,000.00

As per last Balance Sheet Add : Adjusted during the year

2,210.94

2,209.86

of Convertible Bonds

Less : Call and / or allotment money in arrears - by others

93.42

-

4.90

88.76

98.23

25,523.96

25,565.06 16.90

25,507.06

25,548.16

537.50

537.50

537.50

537.50


2,343.05

2,330.45

Add/(Less) : Transferred from/(to) Profit & Loss Account

(530.55)

12.60

1,812.50

2,343.05

Capital Redemption Reserve As per last Balance Sheet (D) Debenture/Bonds Redemption Reserve

(E) Capital Reserve 1.49 2,209.45


1.49

Add : Additions on Amalgamation

2,208.37

452.40

7.69

7.69

-

0.004

1.50

1.53

1.53

1,385.16

As per Last Balance Sheet

1,659.72 7,538.89

259.08

Add : Transferred from Profit & Loss Account.

2,000.00

1,500.00

-

1,484.52

11,198.61

1,659.72

14,516.42

8,380.87

(G) 460.09

0.03

-

Add : Transferred from Revaluation Reserve

Less : Transferred to Profit & Loss Account

2,668.46

1.53

General Reserve

452.40

460.09

Profit & Loss Account As per Account annexed (H)

14,516.42

8,380.87

Total (A to H)

54,114.27

47,722.06

2,356.24

3,985.18

24,117.33

28,035.06

SCHEDULE - 3 : SECURED LOANS A. Non-Convertible Debentures -

B. Term Loans

0.004

i.

Rupee Loans from Banks & Financial Institutions

ii. 9,245.73

9,518.45

0.98 7,538.89 1,170.71

13.64 259.08 -

535.15

9,245.73

FCNR-B Loan from Banks

374.92

428.24

3,803.80

1,662.12

D. Corporate Loan from Banks

82.23

215.01

E. Vehicle Loans from Banks

12.24

21.51

2,688.25

1,736.77

33,435.01

36,083.89

C. External Commercial Borrowings

F.

Working Capital Loans From Banks Total

(A)

25,574.77

47.66

16.90

(C)

2,669.54

SCHEDULE - 2 : RESERVES & SURPLUS Revaluation Reserve As per last Balance Sheet Less : Deduction on account of Disposal/ Sale of Revalued Assets Less : Transferred to General Reserve Less : Transferred to Profit & Loss Account (Refer Note No.B-4 of Schedule No. 15)

25,565.06

Less : Premium payable on Redemption

(B)

Total

5.50

Less : Share Issue Expenses

Total (A+B) SCHEDULE - 1A : SHARE CAPITAL SUSPENSE Equity Shares NIL (Previous year 416) Equity Shares of Rs.10/- each to be allotted to the shareholders of erstwhile EKL Appliances Limited pursuant to its amalgamation with the Company.

5.50

5.50

Securities Premium Account

(F) Preference Shares: 4,523,990 (Previous year 4,523,990) 8% Redeemable Preference Shares of Rs.100/- each fully paid up, redeemable at par in 3 equal installments on 1st October 2011, 1st October 2012 and 1st October 2013. 76,870 (Previous year 76,870) 8% Redeemable Preference Shares of Rs.100/- each fully paid up, redeemable at par in 3 equal installments on 1st February 2012, 1st February 2013 and 1st February 2014.

5.50

19

VIDEOCON INDUSTRIES LIMITED A.

B.

Non Convertible Debentures: Out of the Non Convertible Debentures, those to the extent of : i. Rs. 613.73 million (Previous year Rs.920.18 million) are secured by Assignment of / fixed and floating charge on all moneys received/to be received by the Company in relation to and from the Ravva Joint Venture, including all receivables of the Company, subject to the charge in favour of the Joint Ventures in terms of the Production Sharing Contract/Joint Operating Agreement in respect of Ravva Joint Venture, to the extent necessary. ii. Rs.640.81 million (Previous year Rs.933.10 million) are secured by first charge on immovable and movable properties, both present and future, subject to prior charge on specified movables created/to be created in favour of Company’s Bankers for securing borrowings for working capital requirements, and ranking pari passu with the charge created/to be created in favour of Financial Institutions/Banks in respect of their existing and future financial assistance. Also guaranteed by Mr. V. N. Dhoot and Mr. P. N. Dhoot. iii. Rs.211.70 million (Previous year Rs.361.90 million) are secured by way of a first charge on the entire immovable and movable properties of the Company ranking pari passu with existing charge holders except prior charge on specified movables created in favour of Company’s bankers for borrowings of working capital and exclusive charge created on specific machinery financed/to be financed by the banker/s and/or financial institution/s and the personal guarantee of Mr. V.N.Dhoot. iv. Rs.890.00 million (Previous year Rs.1,350.00 million) are secured by unconditional and irrevocable guarantee given by IDBI (for principle and interest). The said guarantee assistance, provided by IDBI, is secured by a first charge in favour of the guarantor, of all the immovable properties, both present & future, and a first charge by way of hypothecation of all the movables, present & future ranking pari-passu with existing charge holders, subject to charges created / to be created in favour of the Bankers on the specified current assets for securing borrowings for working capital loans. These debentures are also guaranteed by Mr. V. N. Dhoot. v. Rs.NIL (Previous year Rs.420.00 million) were secured by third charge on the properties of the Company. This charge was subject to and subservient to the mortgages and charges created/to be created in favour of Financial Institutions/ Debentures Trustees/Banks. The Debenture referred to in (i) to (iv) above are redeemable at par, in one or more installments on various dates with the earliest redemption being on 15th October, 2007 and last date being 1st January, 2012. These debentures are redeemable as follows , Rs.1,107.96 million in financial year 2007-08, Rs.732.15 million in financial year 2008-09, Rs.386.56 million in financial year 2009-10, Rs.86.38 million in financial year 2010-11, Rs.43.19 million in financial year 2011-12. Term Loans : The Term Loans are secured by mortgage of existing and future assets of the Company and a floating charge on all movables assets, present and future (except book debts), subject to prior charge of the Bankers on stock of raw materials, finished, semi finished goods and other movables, for securing working capital loans in the ordinary course of business, and exclusive charge created on specific items of machinery financed by the respective lenders. The above charges rank pari passu inter-se for all intents and purposes. The above loans are guaranteed by Mr. V. N. Dhoot and Mr. P. N. Dhoot. In addition to the above, a part of term loan from State Bank of India is further secured by way of pledge of shares of Kitchen Appliances India Ltd. and Applicomp (India) Ltd. belonging to and held by the Company. A part of loans from banks are secured by the assignment of fixed and floating charge on all moneys received/to be received by the Company in relation to and from the Ravva Joint Venture, including all receivables of the

C.

D.

E. F.

Company, subject to the extent necessary, to the charge in favour of the Joint Venture in terms of the Production Sharing Contract / Joint Operating Agreement in respect of Ravva Joint Venture; and the assignment / fixed and floating charge of all the right, title and interest into and under all project documents, including but not limited to all contracts, agreements or arrangements which the Company is a part to, and all leases, licenses, consents, approvals related to the Ravva Joint Venture, insurance policies in the name of the Company, in a form and manner satisfactory to Trustee. External Commercial Borrowings :External Commercial Borrowings are secured by a first charge ranking pari-passu over all the present and future movable and immovable fixed assets. The loan is further secured by personal guarantee of Mr. V. N. Dhoot and Mr. P. N. Dhoot in favour of security trustee. Corporate Loan from Banks : Corporate Loan from Banks are partially secured by first charge, partially by second charge, ranking pari-passu, and the balance by second subservient charge, on the immovable and movable assets, both present and furture, of the Company. These are further secured by personal guarantee of Mr. V. N. Dhoot. Vehicle Loans from Banks : Vehicle Loans from Banks are secured by way of hypothecation of Vehicles acquired out of the said loan. The loans are also guaranteed by personal guarantee of Mr. V. N. Dhoot. Working Capital Loans From Banks : Working Capital Loans from Banks are secured by hypothecation of the Company’s stock of raw materials, packing materials, stock-in-process, finished goods, stores and spares, book debts of Glass Shell Division only and all other current assets of the Company and personal guarantee of Mr. V. N. Dhoot and Mr. P. N. Dhoot. Installments of loans from banks and financial institutions falling due within one year Rs. 4,470.61 million (Previous Year Rs. 3,871.81 million) As at As at 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million)

SCHEDULE - 4 : UNSECURED LOANS A. From Banks and Financial Institutions i. Rupee Loan ii. Foreign Currency Loan B. Foreign Currency Convertible Bonds C. Premium Payable on Redemption on Foreign Currency Convertible Bonds D. From Others E. Sales Tax Deferral

10,819.99 208.59 7,763.80

3,070.50 1,220.91 9,003.15

267.13 101.84

140.33 0.10 93.06

TOTAL 19,161.35 13,528.05 Notes :1. Refer Note no. B-7 of Schedule 15. 2. The Company has availed interest free Sales Tax Deferral under Special Incentive to Prestigious Unit (modified) Scheme. The Rs.93.06 million is repayable in six equal annual installments commencing from 30th May, 2008. and the balance in two quarterly installments commencing from 31st December, 2009.

SCHEDULE - 5 : FIXED ASSETS PARTICULARS

TANGIBLE ASSETS Freehold Land Leasehold Land Building Leasehold Improvements Plant & Machinery* Furnace Electrical Installation Office Equipments Computer Systems Furniture & Fixtures Vehicles LEASED ASSETS Computer Systems INTANGIBLE ASSETS Goodwill (on amalgamation) Computer Software TOTAL Capital Work-in-Progress

(Rupees in Million) GROSS BLOCK As at Addition on Additions Deduction 30.09.2006 Amalgamation During During the Year the Year

As at 30.09.2007

Upto 30.09.2006

DEPRECIATION / AMORTISATION Addition on For the Deduction/ Amalgamation Year Adjustment

Upto 30.09.2007

NET BLOCK As at As at 30.09.2007 30.09.2006

120.49 47.82 6,896.43 38.91 60,510.05 1,992.46 138.06 235.09 378.51 156.03 457.62

-

0.23 278.44 0.41 9,136.66 2.81 11.73 13.22 34.33 6.43 78.25

104.04 1.44 1.89 0.85 2.00

120.49 48.05 7,174.87 39.32 69,542.67 1,995.27 149.79 246.87 410.95 161.61 533.87

6.70 1,420.84 37.43 24,823.61 1,113.25 64.57 146.86 245.62 89.88 265.38

-

0.97 218.00 0.95 4,638.68 351.98 7.90 15.30 41.57 8.37 37.27

54.44 0.80 1.57 0.52 1.50

7.67 1,638.84 38.38 29,407.85 1,465.23 72.47 161.36 285.62 97.73 301.15

120.49 40.38 5,536.03 0.94 40,134.82 530.04 77.32 85.51 125.33 63.88 232.72

120.49 41.12 5,475.59 1.48 35,686.44 879.21 73.49 88.23 132.89 66.15 192.24

6.27

-

-

-

6.27

4.96

-

1.11

-

6.07

0.20

1.31

235.98 65.62

-

100.00

-

235.98 165.62

235.98 15.83

-

32.49

-

235.98 48.32

117.30

49.79

71,279.34

-

9,662.51

110.22

80,831.63

28,470.91

-

5,354.59

58.83

33,766.67

47,064.96

42,808.43

6,082.77

5,479.21

5,479.21

6,082.77 48,891.20

TOTAL

77,362.11

-

9,662.51

110.22

86,310.84

28,470.91

-

5,354.59

58.83

33,766.67

52,544.17

As at 30th September, 2006

55,786.19

2,432.14

13,687.43

626.42

71,279.34

22,867.70

1,271.80

4,839.99

508.58

28,470.91

42,808.43

-

6,082.77

-

48,891.20

-

Capital Work-in-Progress Total as at 30th September, 2006

6,153.68 61,939.87

6,082.77 2,432.14

13,687.43

626.42

77,362.11

22,867.70

1,271.80

4,839.99

508.58

28,470.91

*Gross Block of Plant and Machinery includes Rs. 9244.75 million (Previous Year Rs.9,245.73 million) on account of the amount added on revaluation on 01.04.1998 and 01.10.2002.

20

ANNUAL REPORT 2006-07 SCHEDULE - 6 INVESTMENTS Face Value

As at 30th September, 2007 Nos

LONG TERM INVESTMENTS IN GOVERNMENT & TRUST SECURITIES Master Gain


(Rupees in Million)

Nos

(Rupees in Million)

32,200

0.41 0.41

32,200

0.41 0.41

QUOTED IN EQUITY SHARES (Fully Paid up) - TRADE Trend Electronics Ltd. (Formerly Videocon Communications Ltd) Videocon Appliances Ltd. Samtel Electronics Devices Ltd

10

1,408,800

25.41

1,608,800

29.02

10 10

1,811,748 82,000

51.00 1.95 78.36

1,811,748 82,000

66.67 3.14 98.83

IN EQUITY SHARES (Fully Paid up) - OTHERS Allahabad Bank Alok industries Ltd. Aptech Ltd. Arvind Mills Ltd. Ashapura Minechem Ltd. Crompton Greaves Limited Dena Bank Indusind Bank Limited Punjab National Bank Limited Geekay Exim India Ltd. Deccan Cement Ltd. Good Value Marketing Ltd. Indian Overseas Bank Industrial Finance Corpn. Of India Ltd. Jayaswal Neco Ltd. Siris Infotech Ltd. Siemens Ltd. ICICI Bank Ltd. Axis Bank Ltd (UTI Bank Ltd.) Adlabs Films Ltd. Anantraj Industries Ltd. Asian Electronics Ltd. Asian Electronics Ltd. Asian Granito India Ltd. Bajaj Hindustan Ltd. Balrampur Chini Mills Ltd. BF Utilities Ltd. Bharat Earth Movers Ltd. Cairn India Ltd. Central Bank of India Century Textiles & Industries Ltd. GAIL India Ltd. Gemini Communication Ltd. Gesco Corporation Gujrat Ambuja Cement Ltd. Gujrat Ambuja Exports Ltd. Gujarat Heavy Chemicals Ltd. Hindalco Ltd. Hindustan Construction Company Ltd. Hindustan Zinc Ltd India Cements Ltd. India Infoline Ltd. IOL Broadband Ltd Infrastructure Development Finance Corp. Ltd. ITC Limited IVR PRIME Urban Developers Ltd. J.M.Financial Services Ltd. Karnataka Bank Ltd. Kotak Mahindra Bank Ltd. KPIT Cummins Infosystems Ltd. Lanco Infratech Ltd. Laxmi Vilas Bank Ltd. Lok Housing & Construction Ltd. Lumax Industries Ltd. Mahindra Gesco Ltd. Matrix Labs Ltd Mindtree Consulting Ltd. N.T.P.C. Ltd. NIIT Technologies Ltd. ONGC Ltd. Parsvnath Developers Ltd. Polaris Software Lab Ltd. Prithvi Information Solutions Ltd.

10 10 10 10 2 2 10 10 10 10 10 10 10 10 10 10 2 10 10 5 10 10 5 10 1 1 5 10 10 10 10 10 5 10 2 2 10 1 1 10 10 10 10 10 1 2 10 10 10 10 10 10 10 10 10 2 10 10 10 10 10 5 10

643,343 16,750 14,300 98,900 9,050 125,000 7,200 80,000 189,400 25,000 41,800 210,000 13,200 3,130 104,293 5,000 20,000 100,000 30,000 9,600 36,985 6,372,976 120,284 2,975 6,000 10,000 25,000 255,494 100,000 1,400 2,000 5,800 4,000 12,500 100,000 20,000 27,500 8,250 45,000 15,300 15,100 5,000 22,990 7,000 174,057 2,000 100,000 10,800 7,500 20,000 2,800 5,000

27.46 1.19 4.93 4.89 3.34 6.55 3.81 0.08 17.99 0.03 2.80 6.18 0.01 0.13 98.39 1.63 10.98 10.58 5.13 0.72 88.91 1,019.68 12.27 2.39 2.22 2.22 0.86 38.48 17.22 0.19 1.34 1.46 3.23 5.61 18.98 8.92 5.53 7.37 5.40 4.69 1.37 0.72 10.46 4.33 40.59 1.02 13.53 3.83 5.33 6.77 0.34 1.40

1,178,409 10,000 129,889 75,000 23,538 80,000 189,400 25,000 180,400 41,800 210,000 13,200 3,130 50,381 166,200 82,500 5,000 53,000 10,000 20,500 4,000 19,000 100,000 200,000 100,000 7,000 395,000 100,000 5,000 -

50.31 2.46 3.51 3.79 9.17 0.08 17.99 0.03 1.80 0.41 2.96 0.01 0.13 8.06 3.49 28.29 1.63 28.17 3.05 19.15 3.23 2.12 17.13 13.54 18.77 5.49 104.42 13.02 5.33 -

21

VIDEOCON INDUSTRIES LIMITED SCHEDULE - 6 INVESTMENTS (Contd.) Face Value Provogue (India) Ltd. Rallis India Ltd. Reliance Energy Ltd. Reliance Industries Ltd. Reliance Petroleum Ltd. Reliance Natural Resources Ltd. Sasken Communication Technologies Ltd. Satyam Computer Services Ltd. Sriram Urban Infrastructure Ltd. S.Kumars Nationwide Ltd. SRF Limited Shree Renuka Sugars Ltd State Bank of India Steel Authority of India Ltd. Tata Iron and Steel Ltd. Voltas Co. Ltd. Welspun Gujarat Stahi Rohren Ltd. Wire & Wireless (India) Ltd. Yes Bank Ltd. Maharashtra Seamless Ltd. Madras Alluminium Ltd. Nirlon Ltd. Sterlite Industries Ltd. IN MUTUAL FUNDS UNITS BOI Units UNQUOTED 1. IN EQUITY SHARES (Fully Paid up) - TRADE Applicomp (India) Ltd. Indian Refrigeration Co. Ltd. Kitchen Appliances (India) Ltd. Millennium Appliances India Ltd. Akai Consumer Electronics India Ltd. Next Retail India Ltd. (Formerly E-Mart India Ltd.) Plug-In Sales Ltd. TekCare India Pvt.Ltd. (Formerly Macotax Consultants Pvt.Ltd ) Kentosh Electronics India Pvt. Ltd. Hyundai Electronics India Ltd. 2.

3.

IN EQUITY SHARES (Fully Paid up) - OTHERS Ease Finance Limited Evans Fraser & Co. (India) Limited Holzmann Videocon Engineers Limited Kay Kay Construction Limited Bolton Properties Limited Worli Infrastructures & Developers Private Limited Videocon SEZ Infrastructures Limited Videocon SEZ Infrastructures (Aurangabad) Limited Videocon SEZ Infrastructures (West Bengal) Limited Videocon SEZ Infrastructures (Pune) Limited Videocon Realty Limited Kores India Ltd. Gayatri Projects Ltd. Goa Energy Pvt. Ltd. The Banaras State Bank Ltd. Digital Display Devices S.p.a. Deve Sugars Ltd. IN EQUITY SHARES OF SUBSIDIARIES (Fully Paid up) Videocon (Mauritius) Infrastructure Ventures Ltd. Paramount Global Ltd. Videocon Global Ltd. Mars Overseas Ltd. Sky Billon Trading Ltd. Eagle Corporation Ltd. Powerking Corporation Ltd. Global Energy Inc. Venus Corporation Ltd. Middle East Appliances LLC. Videocon Display Research Co. Ltd.

As at 30th September, 2007 Nos


(Rupees in Million)

Nos

(Rupees in Million)

10 10 10 10 10 5 10 2 10 10 10 10 10 10 10 1 5 1 10 5 10 10 2

238,550 5,000 2,850 230,079 78,650 5,000 9,000 50,000 51,000 4,000 32,400 15,200 10,000 27,500 -

147.42 5.85 6.48 13.80 6.14 1.67 4.02 16.20 7.41 6.53 5.39 3.69 0.45 5.26 1,779.79

10,000 5,000 50,000 560,079 50,000 10,000 8,000 100,000 40,000 5,000 10,000 87,500 20,000

3.15 1.48 24.18 33.60 3.78 2.37 5.18 53.57 4.12 1.89 3.69 1.76 8.32 514.63

10

1,000,000

10.00 10.00

1,000,000

10.00 10.00

10 10 10 10 10 10

17,023,500 1,990,000 1,156,000 4,750,000 35,000 10,036,000

170.23 19.90 18.27 95.00 0.35 100.36

17,023,500 1,990,000 1,156,000 4,750,000 35,000 36,000

170.23 19.90 18.27 95.00 0.35 0.36

100 10

1,900 1,900

0.19 0.02

1,900

0.02

10 10

1,720 9,500

0.02 0.09 404.43

1,720 9,500

0.02 0.09 304.24

10 100 10 10 10 10 10 10 10 10 10 10 10 10 100 Euro 1 10

4,800 6,250 990,600 4,500 112,500 45,000 2,500 2,500 2,500 2,500 2,500 1,170,000 1,000 25,000 36,000 125,000

0.96 40.63 0.90 13.66 0.45 0.03 0.03 0.02 0.02 0.02 1.17 0.01 0.02 1.96 0.12 60.00

4,800 6,250 990,600 4,500 112,500 45,000 950,000 1,000 25,000 36,000 125,000

0.96 40.63 0.99 0.90 13.66 0.45 0.01 0.02 1.96 0.12 59.70

US$ 1 US$ 1 US$ 1 US$ 1 US$ 1 US$ 1 US$ 1 US$ 1 US$ 1 RO 1 JPY 50000

530,000 12,800,000 2,500 1,072,000 1,000 2,711 1,000 2,982 2,251,800 1,200

22.58 562.12 0.12 49.61 0.05 0.12 0.04 0.14 270.14 22.98

530,000 12,800,000 2,500 1,000,000 1,000 2,711 2,982 2,251,800 -

22.58 562.12 0.12 46.33 0.05 0.12 0.14 270.14 -

22

ANNUAL REPORT 2006-07 SCHEDULE - 6 INVESTMENTS (Contd.) Face Value

4.



Nos

(Rupees in Million)

Nos

(Rupees in Million)

Gajanan Electronics & Home Appliances Pvt. Ltd. Godavari Consumer Electronics Appliances Pvt. Ltd. Mayur Household Electronics Pvt. Ltd.

10 10 10

10,000 10,000

0.10 0.10 928.10

10,000 10,000 10,000

0.10 0.10 0.10 901.90

IN PREFERENCE SHARES (Fully Paid up) Plug-In Sales Ltd.

100

3,800

0.38 0.38

-

-

100000

100

10.00

100

10.00

1000000

50

50.00

-

-

IN DEBENTURES 7.75% Non Convertible Debentures of Oriental Bank of Commerce Redeemable Non Convertible Debentures of Citi Corp Finance (India) Ltd.

60.00 OTHER INVESTMENTS In Shares of Co-operative Bank A. Bombay Mercantile Co-Op. Bank Ltd. The Saraswat Co-Operative Bank Ltd. A’nagar Dist. Urban Central Co-Op Bank Ltd. Janta Sahakari Bank Ltd. Bharati Sahakari Bank Ltd. B.

4,166 1,000 10 857 7,670

In Shares of Co-operative Society

31

SHARE APPLICATION MONEY PENDING ALLOTMENT A. SUBSIDIARIES Global Energy Inc. Eagle Corporation Ltd. B.

OTHERS Techno Electronics Ltd. Next Retail India Ltd. (Formerly E-Mart India Ltd.) Kitchen Appliances (India) Ltd. Sky Appliances Ltd. Videocon Realty and Infrastructures Ltd. Goa Energy Pvt. Ltd.

APPLICATION MONEY (UNITS) LICMF Systematic Asset Allocation Fund Prudential ICICI Asia Equity Fund CURRENT INVESTMENTS UNQUOTED IN BONDS 8.90% Citi Financial 2009 Bonds IN UNITS OF MUTUAL FUNDS Prudential ICICI Fusion Fund-Growth Standard Chartered Enterprises Equity Fund-Growth Canmulticap Growth Plan J M Contra Fund-Dividend Plan (243) LICMF India Vision Fund L.I.C.Mutual Fund ( Liquid ) L.I.C.Mutual Fund ( Growth ) Principal Cash Management Fund Liquid Option Insti.Premium Plan - Growth Principal Floating Rate Fund Fmp Instl.Option Growth Plan Principal PNB Long Term Equity Fund 3 year Plan Series I Principal PNB Long Term Equity Fund 3 year Plan Siries II FUIG ICICI Prudential Fusion Fund-Growth Reliance Long Term Equity Fund-Growth UTI Wealth Builder Fund-Growth Optimix Dynamic Multi-Manager FoF Scheme-Growth Kotak Mahindra Lifestyle-Growth

1000000

0.04 0.01 0.001 0.09 0.38 0.52 0.002 0.52

10.00

4,166 1,000 10 857 7,670 31

0.04 0.01 0.001 0.09 0.38 0.52 0.002 0.52

13.04 13,575.65 13,588.69

13,575.65 13,575.65

201.18 1,000.00

449.64

650.00 150.00 1,000.00 300.00 3,301.18

449.64

50.00 50.00 100.00

-

-

-

1,000

1,000.98 1,000.98

10 10 10 10 10 10 10

5,000,000 5,000,000 10,000,000 -

50.00 50.00 100.00 -

100,000 50,000,000 19,105,846.389 5,617,409.475

1.00 500.00 250.00 50.00

10 10 10 10 10 10 10 10 10

17,404,438 2,527,030 200,000 500,000 5,000,000 10,000,000 100,000 2,000,000 -

210.83 30.28 2.00 5.00 50.00 100.00 1.00 20.00 619.11

7,491,346.46 150,000

82.69 1.49 885.18

TOTAL INVESTMENTS Aggregate Book Value of quoted Investments Aggregate market value of quoted Investments Aggregate Book Value of unquoted Investments / Application Money

23

20,924.97

17,811.68

1,862.56 2,303.83

623.87 941.30

19,062.41

17,187.81

VIDEOCON INDUSTRIES LIMITED SCHEDULE - 6 INVESTMENTS (Contd.) Details of Investments acquired and sold/redeemed during the year: Particulars Qty. LICMF Liquid Fund-Growth Principal Cash Management Fund Liquid Option Instl. Plan - Growth ING Vysya Liquid Fund Super Inst.-Growth SBI Mutual Fund Principal Income Fund Short Term-Inst. Plan-Growth Lotus India Liquid Fund-Inst Plus Growth Reliance Liquid Fund Cash Plan-Growth Kotak Liquid (Institutional Premium)-Growth Dbs Chola Short Term Floating Rate-Cumulative SBI Magnum Insta Cash Fund HSBC Cash Fund Instl Plus-Growth Reliance Floating Rate Fund-Growth Plan Srei Insfrastructure Finance Ltd.12% Principal PNB Maturity Plan (FMP-38) Principal Floating Rate Fund-SMP HSBC Unique Opportunities Fund J M Contra Fund UTI Liquid Cash Plan Inst.-Growth 3i Infotech Ltd. Aarvee Denims & Exports Ltd. Aban Offshore Ltd. Adani Enterprises Ltd. Aditya Birla Nuvo Ltd. Adlabs Films Ltd. Ai Champdany Industries Ltd. Allsec Technologies Ltd. Alok Industries Ltd. Alstom Projects India Ltd. Ansal Prop & Infrastructure Ltd. Apollo Hospitals Enterprise Ltd. Arvind Mills Ltd. Ashapura Minechem Ltd. Asian Electronics Ltd. Balaji Telefilms Ltd . BF Utilities Ltd. Bharat Forge Ltd. Biocon Ltd. Blue Star Ltd. Bombay Dyeing Ltd. Century Textiles Ltd. Champagne Indage Ltd. Cmc Ltd. Dish TV India Ltd. Elecon Engineering Co. Ltd. Esab India Ltd. Ess Dee Alum Ltd. Everest Kant Ltd. Gateway Distriparks Ltd. Gayatri Projects Ltd. Gemini Communications Ltd. Gitanjali Gems Ltd. Great Offshore Ltd. Gujarat Apollo Industries Ltd. Gujarat Heavy Chemicals Ltd. Hindustan Construction Company Ltd. Hindustan Zinc Ltd. Housing Development & Infrastructure Ltd. ICICI Bank Ltd. Ind Bank Merchant Banking Services Indiabulls Real Estate Ltd. Indian Bank IOL Broadband Ltd. Industrial Finance Corporation of India Ltd. Infrastructure Development Finance Company Ltd. Inox Leisure Ltd. IT People India Ltd. J M Financial Services Ltd. Jai Corp Ltd. Jaiprakash Associates Ltd. Jyoti Structures Ltd. Jyoti Structures Ltd. Kalyani Steels Ltd. Kilburn Engineering Ltd. Kirloskar Electric Co. Ltd. KLG Systel Ltd. Kotak Mahindra Bank KPIT Cummins Infosystems Ltd. Lanco Infratech Ltd. Laxmi Vilas Bank Lok Housing & Construction Ltd. Lumax Industries Ltd. Madras Alluminium Ltd. Mahindra & Mahindra Ltd. Maruti Udyog Ltd. Maxwell Industires Ltd. McNally Bharat Engineering Co. Ltd. Mercator Lines Ltd. Mindtree Consulting Ltd. Nahar Spinning Mills Ltd. Nirlon Ltd.

396,090,118

Cost (Rupees in Million) 5,350.00

724,350,733 27,812,801 8,125,700 6,944,207 19,918,175 46,187,222 5,774,057 27,079,112 1,793,443 5,505,861 20,928,739 1 3,027,963 13,406,510 500,000 5,000,000 314,077.165 16,000 110,673 79,189 18,700 7,000 273 1,619 5,000 30,150 10,000 9,000 2,000 8,600 16,000 70,459 5,000 7,590 19,000 5,000 13,917 20,500 10,000 562 1,000 10,000 21,000 1,000 5,000 25,000 10,000 952 15,000 10,000 5,000 5,000 359,506 5,000 18,500 5,000 239,394 47,000 20,000 15,400 64,490 131,450 30,000 16,000 50,000 35 5,819 5,000 5,000 25,000 2,560 10,000 15,000 25,000 1,749 20,000 2,000 5,000 9,000 6,692 1,000 1,248 2,800 313,208 2,755 30,000 2,000 5,000 1,411,750

8,435.70 300.00 95.00 84.42 200.00 550.00 86.50 302.00 30.00 65.00 250.00 0.91 30.28 160.00 5.00 50.00 400.00 4.12 10.61 93.83 5.51 7.76 0.12 0.15 1.33 2.13 4.52 8.50 1.01 0.43 5.38 35.05 0.77 22.11 5.20 2.35 2.38 13.92 5.91 0.38 1.25 1.18 6.34 0.42 1.39 16.72 1.80 0.37 6.31 2.47 3.98 0.97 64.48 0.68 14.51 2.93 223.56 0.98 8.63 2.35 17.89 8.81 3.03 2.67 1.45 0.03 15.01 3.14 0.65 3.23 1.12 0.88 1.37 8.09 1.56 3.19 0.52 0.58 3.07 2.85 0.56 0.89 2.48 16.45 0.40 1.29 1.65 1.41 104.86

Particulars OPTO Circuites India Ltd. Orchid Chemicals Ltd. Provogue India Ltd. R. Systems International Ltd. Raban Sun Optics India Ltd. Reliance Capital Ltd. Reliance Communication Ltd. Reliance Energy Ltd. Reliance Industries Ltd. S Kumar Synfab S Kumars Nationwide Ltd. SAK Soft Ltd. Sandesh Ltd. Sasken Communication Technologies Ltd. Shree Renuka Sugars Ltd. Spicejet Ltd. SRF Ltd. Tata Sponge Iron Ltd. Tata Steel Ltd. Tech Mahindra Ltd. Texmaco Ltd. Thermax Ltd. Union Bank of India United Spirits Ltd.(Mcdowell & Co.) Unity Infraprojects Ltd. Vimal Oil & Foods Ltd. Visualsoft Technologies Ltd. Voltamp Transformers Ltd. Voltas India Ltd. Welspun Gujarat Stahi Rohren Ltd. Zee Entertainment Enterprises Ltd.

Qty.

Cost (Rupees in Million)

30,000 1,050 357,553 6,000 5,000 10,000 5,000 5,000 3,000 16,000 10,000 40,000 37,743 11,343 17,000 20,000 6,000 10,000 153,775 4,000 3,200 5,000 14,700 5,000 11,126 65,327 50,000 26,104 36,079 24,000 3,500

9.17 0.22 216.49 1.22 0.47 6.29 2.06 5.85 6.96 1.29 0.76 5.78 8.14 5.23 10.23 1.14 1.26 1.16 72.69 7.10 2.79 1.57 2.13 3.13 6.18 3.03 4.38 17.81 3.77 3.39 1.09

As at As at 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million)

SCHEDULE - 7 : CURRENT ASSETS, LOANS & ADVANCES A. Inventories (As taken, valued and certified by the Management) Raw Materials including Consumables, Stores & Spares Work in Process Finished Goods Material in Transit and in Bonded warehouse Drilling and Production Materials Crude Oil (A) B. Sundry Debtors (Unsecured) Outstanding for a period exceeding six months Considered Good Considered Doubtful Less : Provision for doubtful debts Others - Considered Good (B) C. Cash & Bank Balances Cash on hand 13.64 Cheque/Drafts on hand /in Transit Balance With Scheduled Bank In Current Accounts In Fixed Deposits In Dividend/Interest Warrant Account (Per Contra) Balances with Non-Scheduled Bank in Current Accounts Agricultural Bank of China (Maximum Balance Outstanding during the year Rs. 0.51 million, Previous year Rs.3.18 million) China Merchants Bank (Maximum Balance Outstanding during the year Rs.4.99 million, Previous year Rs. NIL) (C) D. Other Current Assets Interest Accrued Insurance Claim Receivable Other Receivable Duty Drawback Receivable (D) E. Loans & Advances (Unsecured, considered good) Advances to Subsidiary Companies Advances recoverable in Cash or in kind or for value to be received Balance with Central Excise / Customs Department Advance Fringe Benefit Tax (Net of Provision) Other Deposits (E) TOTAL( A to E)

24

8,119.11 988.43 3,172.89 1,361.29 206.29 88.43 13,936.44

7,359.11 831.47 3,015.01 1,481.67 226.83 84.53 12,998.62

93.65 410.96 504.61 410.96 93.65 13,048.89 13,142.54

104.05 384.94 488.99 384.94 104.05 11,068.80 11,172.85

10.49 410.38

161.58

1,243.76 7,184.74 38.10

733.02 10,416.26 40.69

-

0.51

0.46

-

8,891.08

11,362.55

59.67 36.08 131.31 227.06

58.48 31.54 459.12 1.91 551.05

2,298.16

1,272.48

9,786.09 150.50 0.02 279.36 12,514.13

5,683.50 531.76 176.65 7,664.39

48,711.25

43,749.46

ANNUAL REPORT 2006-07 As at As at 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million) SCHEDULE - 8 : CURRENT LIABILITIES & PROVISIONS A. Current Liabilities Sundry Creditors * Bank Overdraft as per books Interest Accrued but not due Other Liabilities Unclaimed Dividend/Interest (Per Contra) * Including Acceptance of Rs.2,845.28 million (Previous year Rs. 3,288.49 million) (A) B. Provisions Provision for Income Tax (Net of Advance Tax) Proposed Dividend - Equity Proposed Dividend - Preference Provision for Corporate Tax on Proposed Dividend Provision for Warranty and Maintenance Expenses Provision for Exchange Rate Fluctuation Provision for Leave Encashment Provision for Gratuity (B) TOTAL (A + B)

5,953.76 15.12 293.82 1,638.74 38.10

5,059.50 55.25 246.71 2,268.00 40.69

7,939.54

7,670.15

472.39 803.02 36.81 142.73 380.64 1,023.91 37.66 35.06 2,932.22

347.63 773.45 33.87 113.23 360.55 30.83 28.48 1,688.04

10,871.76

9,358.19

Year ended on Year ended on 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million) SCHEDULE - 13 : MANUFACTURING & OTHER EXPENSES Power, Fuel & Water Freight & Forwarding Rent Rates & Taxes Repairs to Building Repairs to Plant & Machinery Repairs & Maintenance-others Insurance Expenses Advertisement & Publicity Sales Promotion Expenses Discount & Incentive Schemes Bank Charges Auditiors’ Remuneration Donation (Includes Amount Paid to Rashtriya Janata Dal Rs. 5.00 million (Previous year Rs.5.00 million to Nationalist Congress Party, Rs.5.00 million to Rashtriya Janata Dal and Rs.20.00 million to All India Congress Committee ) Directors’ Sitting Fees Legal & Professional Charges Royalty Printing & Stationery Warranty and Maintenance Expenses Loss on Sale of Fixed Assets Bad Debts Written off Technical Know-How Fees Miscellaneous Expenses TOTAL SCHEDULE - 14 : INTEREST & FINANCE CHARGES On Fixed Period Borrowings On Others TOTAL

SCHEDULES TO PROFIT AND LOSS ACCOUNT Year ended on Year ended on 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million) SCHEDULE - 9 : OTHER INCOME Interest Income (TDS Rs.3.88 million Previous year Rs.8.59 million) Income From Investments & Securities Division (TDS Rs.43.24 million, Previous year Rs.56.04 million) (Refer Note No.B-12 of Schedule No. 15) Insurance Claim Received Exchange Rate Fluctuation Miscellaneous Income (TDS Rs.0.02 million Previous year Rs.NIL) TOTAL

211.64

276.87

205.76

454.73

64.93 883.23 297.86

49.97 175.00 697.87

1,663.62

1,654.44

7,359.11 50,060.08 57,419.19 8,119.11 49,300.08

4,862.94 262.73 44,894.18 50,019.85 7,359.11 42,660.74

3,261.32 988.43 4,249.75

3,099.54 831.47 3,931.01

(B)

3,099.54 3,099.54 831.47 831.47 3,931.01 (318.74)

2,059.37 208.72 2,268.09 624.03 5.59 629.62 2,897.71 (1,033.30)

TOTAL (A+B)

48,981.34

41,627.44

SCHEDULE - 11 : PRODUCTION & EXPLORATION EXPENSES - OIL & GAS Production Expenses Royalty Cess Production Bonus Government Share in Profit Petroleum Abandonment Costs Producing Properties Written Off Exploration Expenses TOTAL

358.41 384.83 566.53 107.80 6,763.18 47.64 833.95 487.47 9,549.81

241.92 393.96 543.25 191.87 7,861.84 61.24 177.36 111.77 9,583.21

882.85 72.80 97.83 1,053.48

799.69 57.58 89.69 946.96

SCHEDULE - 10 : COST OF GOODS CONSUMED/SOLD A. Material and Components Consumed Opening Stock Add : Addition on Amalgamation Add : Purchases Less : Closing Stock (A) B.

(Increase)/Decrease in Stock Closing Stock : Finished Goods Work in Process Opening Stock : Finished Goods Add : Addition on Amalgamation Work in Process Add : Addition on Amalgamation

SCHEDULE - 12 : SALARY, WAGES & EMPLOYEES’ BENEFITS Salary, Wages & Other Benefits Contribution to Provident and other Funds Staff Welfare TOTAL

731.61 958.76 135.23 129.74 31.74 95.24 54.37 107.90 965.46 190.11 1,990.38 265.21 8.33 71.58

668.12 758.52 45.54 138.63 27.23 66.06 47.60 147.37 1,064.58 167.09 2,131.02 288.72 7.76 71.40

1.18 128.09 72.14 21.96 581.48 1.45 27.73 244.19 6,813.88

0.73 245.46 80.00 33.29 540.67 17.39 32.24 8.71 345.94 6,934.07

2,709.99 396.52 3,106.51

1,745.22 513.58 2,258.80

SCHEDULE - 15 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS A] SIGNIFICANT ACCOUNTING POLICIES :1. Basis of Accounting: a) The financial statements are prepared under historical cost convention, except for certain Fixed Assets which are revalued, using the accrual system of accounting in accordance with the accounting Principles Generally Accepted in India (Indian GAAP) and the requirements of the Companies Act, 1956, including the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India, as referred to in Section 211 (3C) of the Companies Act, 1956. b) Use of Estimates The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the year. Example of such estimates include provisions for doubtful debts, employee retirement benefits plans, provision for income tax, accounting for contract costs expected to be incurred to complete software development and the useful lives of fixed assets. 2. Fixed Assets: a) Fixed Assets are stated at actual cost, except for certain fixed assets which have been stated at revalued amounts, less accumulated depreciation / amortisation and impairment loss, if any. The actual cost is inclusive of freight, installation cost, duties, taxes, financing cost and other incidental expenses but net of Modvat/Cenvat/Value added tax. Exchange difference, if any, in respect of liabilities incurred to acquire fixed assets is adjusted to the carrying amount of respective fixed assets. b) Capital Work in Progress is carried at cost, comprising of direct cost, attributable interest and related incidental expenditure. The advances given for acquiring fixed assets are shown under Capital Work in Progress. 3. Joint Ventures for Oil and Gas Fields: In respect of joint ventures in the nature of Production Sharing Contracts (PSC) entered into by the Company for oil and gas exploration and production activities, the Company’s share in the assets and liabilities as well as income and expenditure of Joint Venture Operations are accounted for according to the Participating Interest of the Company as per the PSC and the Joint Operating Agreements on a line-by-line basis in the Company’s Financial Statements. 4. Exploration, Development and Production Costs: The Company follows the “Successful Efforts Method” of accounting for oil and gas exploration, development and production activities as explained below: a) Exploration and production cost are expensed in the year/period in which these are incurred. b) Development costs are capitalised and reflected as “Producing Properties”. Costs include recharges to the Joint Venture by the Operator/Affiliate in respect of the actual cost incurred and as set out in the Production Sharing Contract (PSC). Producing Properties are depleted using the “Unit of Production Method”. 5. Abandonment Costs: Abandonment Costs relating to dismantling, abandoning and restoring offshore well sites and allied facilities are provided for on the basis of “Unit of Production Method”. Aggregate

25


7.

8.

9.

10.

11.

12.

13.

14.

15.

16.

abandonment costs to be incurred are estimated based on technical evaluation by experts. Depreciation and Amortisation: The Company provides depreciation on fixed assets held in India on written down value method in the manner and at the rates specified in the Schedule XIV to the Companies Act, 1956 except a) on Fixed Assets of Consumer Electronics Divisions other than Glass Shell Division and; b) on office buildings acquired after 01.04.2000, on which depreciation is provided on straight line method at the rates specified in the said Schedule. Depreciation on fixed assets held outside India is calculated on straight line method at the rates prescribed in the aforesaid Schedule or based on useful life of assets whichever is higher. Producing Properties are depleted using the “Unit of Production Method”. Leasehold Land is amortised over the period of lease. The depreciation on revised carrying amount of fixed assets arising on account of translation of Foreign Currency Loans availed in respect of the Fixed Assets and on revaluation of assets is provided as aforesaid over the residual useful life of the respective assets. Intangibles: Intangible assets are amortised over a period of five years. Impairment of Assets : The Fixed Assets or a group of assets (Cash generating unit) and Producing Properties are reviewed for impairment at each Balance Sheet date. In case of any such indication, the recoverable amount of these assets or group of assets is determined, and if such recoverable amount of the asset or cash generating unit to which the asset belongs is less than its carrying amount, the impairment loss is recognised by writing down such assets to their recoverable amount. An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased. Investments: a) Current Investments : Current Investments are carried at lower of cost or quoted/fair value. b) Long Term Investments : Quoted Investments are valued at cost or market value whichever is lower. Unquoted Investments are stated at cost. The decline in the value of the unquoted investment, other than temporary, is provided for. Cost is inclusive of brokerage, fees and duties but excludes Securities Transaction Tax. Inventories: Inventories including crude oil stocks are valued at cost or net realisable value whichever is lower. Cost of inventories comprises all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on Weighted Average basis. Borrowing Costs: Borrowing costs that are directly attributable to the acquisition, construction or production of an qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred. Excise and Customs Duty: Excise Duty in respect of finished goods lying in factory premises and Customs Duty on goods lying in customs bonded warehouse are provided for and included in the valuation of inventory. MODVAT/ CENVAT/Value Added Tax: Modvat/Cenvat/Value Added Tax Benefit is accounted for by reducing the purchase cost of the materials/fixed assets. Revenue Recognition: a) Revenue is recognised on transfer of significant risk and reward in respect of ownership. b) Sale of Crude Oil and Natural Gas are exclusive of Sales Tax. Other Sales/turnover includes sales value of goods, services, excise duty, duty drawback and other recoveries such as insurance, transportation and packing charges but excludes sales tax and recovery of financial and discounting charges. c) Insurance, duty drawback and other claims are accounted for as and when admitted by the appropriate authorities. Foreign Currency Transactions: a) Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transactions. Current Assets and Current Liabilities are translated at the year end rate. The difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of Current Assets and Current Liabilities at the end of the year is recognised, as the case may be, as income or expense for the year. b) Foreign Currency liabilities in respect of loans availed for fixed assets and outstanding on the last day of the financial year are translated at the exchange rate prevailing on that day and any loss or gain arising out of such translation is adjusted to the cost of the fixed assets and depreciation is also charged/adjusted on such differences. Translation of the financial statements of foreign branch: a) Revenue items are translated at average rates. b) Opening and closing inventories are translated at the rate prevalent at the commencement and close, respectively, of the accounting year. c) Fixed assets are translated at the exchange rate as on the date of the transaction. Depreciation on fixed assets is translated at the rates used for translation of the value of the assets to which it relates. d) Other current assets and current liabilities are translated at the closing rate. Retirement Benefits: a) Contributions to Provident Fund and Family Pension Scheme are accounted for on accrual basis and charged to Profit & Loss Account. b) The Company’s employees, except for employees of units at Shahjahanpur, Dist. Alwar, Rajasthan and at Butibori Dist. Nagpur, Maharashtra, are covered under the Employees Group Gratuity Cum Life Assurance Scheme of Life Insurance Corporation of India. The Company accounts for gratuity liability equivalent to the premium amount payable to Life Insurance Corporation of India every year, which is based on actuarial valuation. The liability with respect to the gratuity for the employees of units at Shahjahanpur, Dist: Alwar, Rajasthan and at Butibori Dist: Nagpur, Maharashtra are accounted/ provided for on the basis of actuarial valuation at year end. c) Liability on account of leave encashment in respect of employees of Glass Shell unit at village Chhavaj, Dist.Bharuch, Gujrat, unit at Shahjahanpur Dist. Alwar, Rajasthan,

B]

1.

2.

26

and unit at Butibori Dist. Nagpur, Maharashtra, is provided for on actuarial valuation basis and in respect of other employees to the extent encashable as at the end of the financial year as per rules of the Company. 17. Taxation: Income tax comprises of current tax, deferred tax and Fringe Benefit tax. Provision for current income tax and fringe benefit tax is made on the assessable income/benefits at the rate applicable to relevant assessment year. Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences, subject to the consideration of prudence. Deferred tax assets and liabilities are measured using the tax rates enacted or substantively enacted by the balance sheet date. The carrying amount of deferred tax asset/ liability are reviewed at each Balance Sheet date and recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future. 18. Share Issue Expenses: Share issue expenses are written off to Securities Premium Account. 19. Premium on Redemption of Bonds / Debentures: Premium on Redemption of Bonds / Debentures are written off to Securities Premium Account. 20. Research and Development: Revenue expenditure pertaining to Research and Development is charged to revenue under the respective heads of account in the period in which it is incurred. Capital expenditure, if any, on Research and Development is shown as an addition to Fixed Assets under the respective heads. 21. Accounting for Leases: Where the company is lessee a) Operating Leases : Rentals in respect of all operating leases are charged to Profit & Loss Account. b) Finance Leases : (i) Rentals in respect of all finance leases entered before 1st April, 2001 are charged to Profit & Loss Account. (ii) In accordance with Accounting Standard - 19 on “Accounting for Leases” issued by the Institute of Chartered Accountants of India, assets acquired under finance lease on or after 1st April, 2001, are capitalised at the lower of their fair value and present value of the minimum lease payments and are disclosed as “Leased Assets”. 22. Warranty: Provision for the estimated liability in respect of warranty on sale of consumer electronics and home appliances products is made in the year in which the revenues are recognised, based on technical evaluation and past experience. 23. Prior Period Items: Prior period items are included in the respective heads of accounts and material items are disclosed by way of notes to accounts. 24. Provision, Contingent Liabilities and Contingent Assets: Provisions comprise liabilities of uncertain timing or amount. Provisions are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are disclosed by way of Notes to Accounts. Disputed demands in respect of Central Excise, Customs, Income tax and Sales Tax are disclosed as contingent liabilities. Payment in respect of such demands, if any, is shown as an advance, till the final outcome of the matter. Contingent assets are not recognised in the financial statements. 25. Other Accounting Policies: These are consistent with the generally accepted accounting practices. NOTES TO ACCOUNTS :As at As at 30th Sept., 2007 30th Sept., 2006 (Rs. In Million) (Rs. In Million) Contingent Liabilities not provided for: a) Letters of Guarantees 30,905.62 25,189.10 Includes Bank Guarantees given to Sales Tax Department Rs. 8.21 million (Previous year Rs. 12.55 million) against demand stated in ‘g’ below b) Letters of Credit opened 3,593.37 1,288.86 c) Customs Penalty - Stayed by High Court 11.85 11.85 d) Customs Duty demands under dispute 95.96 94.42 [Amount paid under protest Rs. 0.40 million (Previous year Rs. 3.94 million)] e) Income Tax demands under dispute 102.16 100.25 [Amount paid under protest Rs.102.16 million (Previous year Rs.100.25 million)] f) Excise Duty and Service Tax demand under dispute 221.81 387.17 [Amount paid under protest Rs.49.21 million (Previous year Rs. 2.43 million)] g) Sales Tax demands under dispute 213.41 243.74 [Amount paid under protest Rs. 42.42 million (Previous year Rs. 34.20 million)] h) Others 51.42 47.91 i) Disputed Income Tax demand amounting to Rs. 22.29 million in respect of certain payment made by Ravva Oil & Gas Field Joint Venture is currently pending before the Income Tax Appellate Tribunal. The ultimate outcome of the matter cannot presently be determined and no provision for any liability that may result has been made in the accounts as the same is subject to agreement by the members of the Joint Venture. Should it ultimately become payable, the Company’s share as per the participating interest would be upto Rs. 5.57 million. a) There was a dispute regarding (i) deductibility of Oil and Natural Gas Corporation Ltd. (ONGC) Carry while computing the Post Tax Rate of Return (PTRR) under the Ravva Production Sharing Contract (PSC); (ii) deductibility of provision of Site Restoration Costs


3. 4.

Consequent to this change in policy the cumulative amount transferred from General Reserve on account of additional depreciation relating to revaluation of fixed assets upto 30th September 2006 amounting to Rs.7,538.89 million has been transferred from Revaluation Reserve Account to General Reserve Account. This change in Accounting Policy has no impact on the Profit for the Year. 5. During the year certain revalued assets have been disposed off. As required by Accounting Standard - 10 “Accounting for Fixed Asset”, loss on disposal of such assets to the extent of Rs.0.98 million (Previous year Rs.13.64 million) is directly charged to Revaluation Reserve relating to the increase which was previously recorded as a credit to Revaluation Reserve. 6. Capital Work in Progress includes advances for capital assets Rs.646.40 million (Previous year Rs. 145.58 million), Interest and other finance charges capitalised during the year Rs.582.23 million (Previous year Rs. 408.81 million) and is net of decrease in rupee liability due to Fluctuation in Exchange Rate Rs 678.89 million (Previous year Rs. 69.64 million). 7. A) The Company had, during the year 2006, issued a) 90,000 Foreign Currency Convertible Bonds of US$ 1000 each (Bonds) due on 7th March, 2011 [outstanding Bonds 89,000 (Previous year 90,000)]. i The bonds are convertible at the option of the bondholders at any time on and after 20th March 2006 upto the close of business on 28th February, 2011 at a fixed exchange rate of Rs.44.145 per 1 US$ and at initial conversion price of Rs.545.24 per share being at premium of 15% over the reference share price. The conversion price shall be adjusted downwards in the event that the average closing price of shares for 15 consecutive trading days immediately prior to the reset date is less than conversion price, subject to a floor price of Rs. 410/- as adjusted in accordance with the anti-dilution provisions. ii The Bonds are redeemable in whole but not in part at the option of the company on or after 7th February, 2009 but prior to 28th February, 2011 if aggregate value on each of 30 consecutive trading days ending not earlier than 14 days prior to the date upon which notice of such redemption is given was at least 130% of the accreted principal amount. iii The Bonds are redeemable at maturity date on 7th March, 2011 at 116.738% of its principal amount, if not redeemed or converted earlier. b) 105,000 Foreign Currency Convertible Bonds of US$ 1000 each (Bonds) due on 25th July 2011.[outstanding Bonds 104,901 (Previous year 105,000).] i The bonds are convertible at the option of the bondholders at any time on or after 2nd September 2006 until 18th July 2011 except for certain closed periods, at a fixed exchange rate of Rs.46.318 per 1 US$ and at initial conversion price of Rs.511.18 per share being at premium of 22% over reference share price. The conversion price shall be adjusted downwards in the event that the average closing price of shares for 15 consecutive trading days immediately prior to the reset date is less than conversion price, subject to a floor price of Rs. 410/- as adjusted in accordance with the antidilution provisions. ii Redeemable in whole but not in part at the option of the Company on or after 24th August 2009, if aggregate value on each of 30 consecutive trading days ending not earlier than 14 days prior to the date upon which notice of such redemption is given was at least 130% of the accreted principal amount. iii Redeemable at maturity date on 25th July, 2011 at 127.65% of its principle amount, if not redeemed or converted earlier. B) During the year, the holders of 1099 Bonds have exercised their option and have converted the Bonds into Equity Shares at the fixed rate of exchange. In view of the above and considering the uncertainty of the number of bond holders exercising the option of conversion at the fixed exchange rate and uncertainity of foreign exchange rate prevailing on the dates of redemption, a provision of Rs 1,023.91 million being the amount of foreign exchange fluctuation gain on FCCB during the year, has been made in the accounts in accordance with the requirement of Accounting Standard 29-Provisions, Contingent Liabilities and Contingent Assets. C) Subsequent to the year end, 85,250 Bonds have been converted into 8,339,350 equity shares of Rs.10/- each on exercise of the option by the bond holders. 8. The Company has made a provision of Rs.1,231.70 million (Previous year Rs.818.00 million) towards Current Income Tax, after taking into consideration, the benefits admissible under the provisions of the Income Tax Act,1961 and the same is, in the opinion of the Management, adequate. The Company has also made a provision of Rs. 1.00 million (Previous year Rs.1.00 million) towards Wealth Tax. As at As at 30th Sept., 2007 30th Sept., 2006 (Rs. In Million) (Rs. In Million) 9. The major components of deferred tax liabilities/ assets are as under: A. Deferred Tax Liabilities Related to Depreciation on Fixed Assets & amortisation 5,292.65 2,798.13 5,292.65 2,798.13 B. Deferred Tax Assets i) Related to Unabsorbed Depreciation and Business Loss 651.73 1,139.23 ii) Expenses charged in the financial statements but allowable as deduction in future years under the Income Tax Act, 1961 19.63 21.30 iii) Diminution in value of investments charged in Profit & Loss Account 54.84 40.74 iv) Tax credit available u/s 115JAA 1,011.88 v) Other 975.57 -

for computation of Cost Petroleum and PTRR; (iii) deductibility of inventory purchased for computation of Cost Petroleum and PTRR; (iv) deductibility of Notional Dividend Distribution Tax under the Income-tax Act, 1961 for computation of PTRR; and (v) deductibility of Deposits, Advances and Pre-payments made for the purpose of Petroleum Operations in the business of Ravva Oil & Gas Field for computation of Cost Petroleum and PTRR. The Dispute was referred to an International Arbitration in accordance with the provisions of the Ravva PSC. Vide the interim award dated 31st March 2005, the Tribunal has upheld the Company’s claims stated in (i) and (v) above whereas the claim of the Company stated in (ii), (iii) and (iv) above were rejected by the Tribunal. While accepting the Interim Award, the Company computed and submitted the calculation on 31st May 2005 to Government of India (GOI) indicating the amount payable by the Company after applying the said Arbitration Award at US$ 27.02 million equivalent to Rs. 1,081.88 million, which was not accepted by GOI and it claimed that the Company needs to pay US$ 43.72 million equivalent to Rs. 1,750.55 million and interest thereon applying the same Arbitration Award. The Company filed a supplementary application on 7th July 2005 followed by an amendment application on 8th August 2005 with the Arbitration Tribunal with a prayer to determine the correct amount payable to GOI as well as to determine the interest, if any, payable on the same to GOI. Pending the final decision of the Hon’ble Arbitral Tribunal, the Company has accounted for and paid the sum of US$ 43.72 million equivalent to Rs. 1,750.55 million to GOI on ad hoc basis. The GOI has further filed an affidavit on 10th May 2005 before the Kuala Lumpur High Court in Malaysia challenging the Arbitration Award and praying for setting aside the Partial Award dated 31st March 2005 only in respect of ONGC Carry Issue whereas the Company has challenged the jurisdiction of the Kuala Lumpur High Court and therefore the maintainability of such an appeal at that Court. b) There is a dispute between the Company and GOI with regard to the computation of interest on delayed payment of profit petroleum to the extent of US$ 67,636 equivalent to Rs. 2.71 million. The Company has filed an Interim Application on 7th July 2005 before the Hon’ble Arbitral Tribunal for final determination of such amount, pending which no provision has been made by the Company. c) There is a dispute regarding the rate of conversion from US$ into Indian rupees applicable to the Nominees of the GOI for the purpose of payment of amount of the invoices for sale of the Crude Oil by the Company under the Ravva PSC. The dispute was referred to an International Arbitration in accordance with the provisions of the Ravva PSC. Vide the interim award dated 31st March 2005, the Tribunal has partly upheld the Company’s claim. While accepting the Award, the Company has worked out and submitted a computation on 30th June 2005 to GOI indicating the amount receivable at Rs.121.43 million being the amount short paid by GOI nominees up to June 19, 2005 and interest thereon also calculated up to 19th June 2005.The Company further vide its letter dated 22nd August 2005 updated its claim indicating the total amount receivable from GOI Nominees at Rs.124.42 million being the amount short paid by GOI nominees up to 31st July 2005 and interest thereon also calculated up to 31st July 2005. However, GOI and the nominees of GOI have rejected the computation and claim made by the Company. The Company has filed a supplementary application on 7th July 2005 and an amendment application on 8th August 2005 with the Arbitration Tribunal with a prayer to determine the correct amount payable by GOI/its Nominees as well as to determine the interest, if any, payable on the same. The GOI has filed an Original Miscellaneous Petition (OMP) 329 of 2006 dated 20th July 2006 before Hon’ble Delhi High Court challenging the award in respect of this Dispute. Another OMP 223 of 2006 dated 9th May 2006 has been filed by GOI’s nominees HPCL and BRPL in the Hon’ble Delhi High Court challenging the Partial Award dated 31st March 2005 in respect of Conversion/Exchange Rate Matter. Both OMP 223 of 2006 are presently sub-judice before the Hon’ble Delhi High Court. The GOI nominees continue to make payments at the exchange rate without considering directive from the Hon’ble Arbitral Tribunal in this regard. d) GOI has filed OMP 255 of 2006 dated 30th May 2006 before the Hon’ble Delhi High Court under section 9 of the Arbitration and Conciliation Act for change of situs of arbitration from London (U.K.) to Kuala-Lumpur (Malaysia). GOI has challenged London as the permanent seat of arbitration for resolution of disputes under the Ravva PSC and has claimed for declaration of Kuala-Lumpur as the permanent seat of arbitration whereas the Company honours the award dated 15th November 2003 of the Hon’ble Arbitral Tribunal, passed with mutual consent of both the GOI and the Company, permanently fixing the seat of Arbitration at London in respect of disputes stated in (a),(b), and (c) above. The Hon’ble Arbitral Tribunal vide its letter dated 28th March 2007 has indicated that it shall contiune with the arbitration proceedings, in respect of the disputes referred above, after receiving the judgement of the Hon’ble Delhi Court in OMP 255 of 2006. e) In respect of the Disputes stated in (i) and (ii) of (a) above, the GOI has vide its letter dated 3rd November 2006 now raised a collective demand of Rs. 334.13 Million on account of additional profit petroleum payable and interest on delayed payments of profit petroleum calculated up to 30th September 2006 pursuant to the Partial Arbitral Award dated 31st March 2005 in the Dispute stated above at (a) and Interim Award dated 12th February 2004 and Partial Award dated 23rd December 2004 in the Dispute stated above at (b). The Company has disputed such demand and is instead seeking refund of USD 16.70 Million equivalent to Rs. 668.67 million excess paid by the Company to the GOI with interest thereon. Any further sum required to be paid or returnable in respect of dispute above at (a) to (e) in accordance with the determination of the amount by Hon’ble Arbitral Tribunal/High Courts in this behalf shall be accounted for on the final outcome in this regard. Estimated amount of contracts remaining to be executed on Capital account and not provided for (net of advances) Rs.623.50 million (Previous year Rs. 37.80 million). The gross block of fixed assets includes Rs.9,244.75 million (Previous year Rs. 9,245.73 million) on account of revaluation of fixed assets carried out in the past on 1st April 1998 and 1st October 2002. The additional depreciation consequent upon revaluation of fixed assets is being charged to Profit and Loss account. Hitherto, an amount equivalent to the said additional depreciation was being withdrawn from General Reserve and credited to Profit and Loss Account. From this year, the Company has changed this accounting policy and the amount equivalent to the such additional depreciation is being withdrawn from Revaluation Reserve and credited to the Profit and Loss Account.

Net Deferred Tax Liability

27

2,713.65

1,201.27

2,579.00

1,596.86


11.

Joint Venture Disclosure: Unincorporated Joint Venture a) Ravva Oil & Gas Field: The Production Sharing Contract (PSC) in respect of Ravva Oil and Gas Field was entered into on 28th October 1994 (Effective Date) between the President of India on behalf of the Government of India and contractor parties viz. Oil and Natural Gas Corporation Ltd, erstwhile Petrocon India Limited (now amalgamated with the Company), Cairn Energy India Pty Limited and Ravva Oil (Singapore) Pte. Ltd. The contractor parties have pursuant to the PSC, entered into a Joint Operating Agreement on the Effective Date. Cairn Energy India Pty Ltd. is the Operator. The participating interest of the Company in the said PSC is 25%. b) The Consortium comprising the Company, Oilex NL Australia, GAIL India Ltd., Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd. has been awarded the Block #56, on the Eastern Plank of the Central Salt Producing Oil Field in Oman. The Exploration Production Sharing Agreement and Joint Operating Agreement has been executed on 28th June, 2006. The exploration drilling would be commenced after the acquisition of additional seismic data. The Participating interest of the Company in the said venture is 25%. The Capital Commitments of the Company based on estimated minimum work programme for first exploration period of three years in relation to its participating interest is Rs. 251.04 million (Previous year Rs.344.43 million). c) Great Artesian Oil and Gas Ltd (GOG) holds 100% of EPP 27 offshore Otway Basin, South Australia which is in year 6 of the permit term. The Company, Oilex NL, Gujarat State Petroleum Corporation Ltd. and GOG have entered into Farm-in agreement and Joint Operating Agreement in February, 2006.The acquisition of 2D Seismic Data and drilling of one exploration well is in progress. The participating interest of the Company is 20%. The minimum work programme proposed in the bid application for seismic survey, data processing and drilling of one exploration well involves capital commitment in relation to its participating interest of Rs. 171.64 million (Previous year Rs.194.53 million). d) The Consortium comprising the Company, Oilex NL, Australia, Gujarat State Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd. has been awarded a Block WA-388-P for a term of 6 years from Government of Western Australia. Joint Operating Agreement has been signed by all of Joint venture parties in March 2007. The acquisition of Seismic Data is in progress. The participating interest of the Company is 20%. The Capital Committments of the Company based on six year work program in relation to its participating interest is Rs.163.30 million (Previous year Rs. NIL). e) The Consortium comprising the Company and Bharat Petro Resources Limited (BPRL), a wholly owned subsidiary of Bharat Petroleum Limited, have entered into an agreement with EnCana Corporation and 749739 Alberta Limited (“Vendors”) for purchase from Vendors, 100% equity of EnCana Brasil Petróleo Limitada, (EBPL) for a consideration of approximately US$ 165 million. The effective date of the agreement has been agreed to be January 01, 2007. Closing of the transaction is subject to normal closing conditions and regulatory approvals. EBPL has interests in four concessions with ten deep water offshore exploration blocks in Brazil. The Company and BPRL are equal partners in the consortium. At present the regulatory authorities in Brasil are reviewing the application of EBPL for granting its approval for change of control of EBPL.” The Financial Statements reflect the share of the Company in the assets and the liabilities as well as the income and the expenditure of Joint Venture Operations on a line by line basis. The Company incorporates its share in the operations of the Joint Venture based on statements of account received from the Operator. The Company has, in terms of Accounting Policy No. A-7 above, recognised abondonment costs based on the latest technical assessment of current costs available with the Company as cost of producing properties and has been providing Depletion thereon under ‘Unit of Production’ method as part of Producing Properties in line with Guidance Note on Accounting of Oil and Gas Producing Activities issued by the Institute of Chartered Accountants of India. The company has kept the investment activities separate and distinct from the normal business. Consequently, all the income and expenditure pertaining to investment activities have been allocated to the Investments & Securities Division and the income/loss after netting off the related expenditure has been shown as “Income/(Loss) from Investments & Securities Division” under “Other Income”.

12. The Income from Investments and Securities Division includes: i. Dividends: on Long Term Investments on Current Investments ii. Debenture/Bond - Interest/Premium: on Long Term Investments (TDS Rs.0.17 million (Previous year Rs.3.19 million)) iii. Gain / (Loss) on Sale of Investment: Long Term Current 13. Earnings Per Share: i. Net Profit attributable to Equity Shareholders Net Profit as per Profit & Loss Account Add: Excess provision of Income Tax for earlier year written back Less : Dividend on Preference Shares including Tax on the same Net Profit attributable to Equity Shareholders including exceptional Items Less : Exceptional Items

For the year ended 30th Sept., 2007 (Rs. In Million)

For the year ended 30th Sept., 2006 (Rs. In Million)

15.71 1.28

15.35 -

8.03

14.20

492.11 254.78

172.12 (14.77)

8,552.19

8,185.02

35.37 8,587.56

3.02 8,188.04

43.06

38.62

8,544.50

8,149.42

-

-

Net Profit attributable to Equity Shareholders excluding exceptional Items Add : Changes (net) Related to FCCBs Adjusted Net Profit for Diluted EPS ii. Weighted Average number of equity shares for Basic EPS Weighted Average number of equity shares for Diluted EPS iii. Basic Earnings per Share before & after exceptional items Diluted Earnings per Share before & aftter exceptional items iv. Reconciliation of weighted average Numbers of Equity Shares outstanding during the period For Basic Earning Per Share Add : Adjustment on account of FCCBS For Diluted Earning Per Share

For the year ended 30th Sep, 2007 (Rs. In Million)

For the year ended 30th Sep, 2006 (Rs. In Million)

8,544.50

8,149.42

22.30

-

8,566.80

8,149.42

221,019,058

220,986,249

239,963,551

220,986,249

Rs. 38.66

Rs. 36.88

Rs. 35.70

Rs. 36.88

221,019,058 18,944,493 239,963,551

220,986,249 220,986,249

14. The Company has invested an amount of Rs. 719.11 million in units of mutual funds out of which investments to the extent of Rs. 550.20 million have been earmarked against provision for abandonment cost included under the head ‘Other Liabilities’ in Schedule 8. 15. a) The Financial Institutions have a right to convert, at their option, the whole outstanding amount of term loans or a part not exceeding 20% of defaulted amount of loan, whichever is lower, into fully paid up equity shares of the Company at par on default in payments / repayments of three consecutive installments of principal and / or interest thereon or on mismanagement of the affairs of the Company. b) The Financial Institutions have a right to convert at their option the whole or a part of outstanding amount of Preference Shares, into fully paid up equity shares of the Company as per SEBI guidelines, on default in payment of dividend or a default in redemption of Preference Shares or any combination thereof. 16. The Balances of some of the Debtors, Creditors, Deposits, Advances and Other Current Assets are subject to confirmation. 17. Funds mobilised by issue of Foreign Currency Convertible Bonds have been utilised for the object of the issue i.e. for expansion of glass shell manufacturing facilities, expansion of consumer electronics and household appliances business and global CPT business. 18. In the opinion of the Board, the value of realisation of Current Assets, Loans and Advances in the ordinary course of the business would not be less than the amount at which they are stated in the Balance Sheet and the provision for all known and determined liabilities is adequate and not in excess of the amount reasonably required. For the For the year ended year ended 30th Sept., 2007 30th Sept., 2006 (Rs. In Million) (Rs. In Million) 19. Auditors’ Remuneration: (Including Service Tax) a) Audit Fees b) Tax Audit Fees c) Out of Pocket Expenses d) Other Services

20. a)

5.06 1.24 0.18 1.85 8.33

4.77 1.12 0.18 1.68 7.75

Sundry Creditors include Rs. 62.51 million (previous year Rs.76.88 million) due to Small Scale Industrial undertakings to the extent such parties have been identified from available information. The names of small scale industrial undertakings to whom amounts payable are outstanding for more than 30 days are Able Moulders, Abs Electroplaters Pvt. Ltd, Acropolis Industries, Aditya Air Products, Advance Marks & Labels Pvt. Ltd, Akanksha Packs, Akshay Flexi Hoses, Akshay Industries, Akshay Udyog, Amitron, Amtex Industries, Annpurna Electronics &Services Ltd, Any Graphics Pvt. Ltd, Arasana Industries, Arihant Industries, Atul Fasteners Ltd, Aurangabad Plastics Pvt Ltd, Auto Strap India, Belting Enterprises Pvt Ltd, Blue Star Engineers, Box Boarad Packaging, Chirag Plast, Clad Metal India Pvt Ltd, Combined Engineers, Crystal India, Dhiraj Industries, Dolsun Containers Pvt. Ltd, Ellora Rubber, Essdee Industries, Gujarat Engineering Works, Gujarat Industries, Gurudatta Industries, H V Equipments Pvt Ltd, Harsh Packaging, Hemant Mechanical Industries, Heritage Rubbers, Ideal Sealtape Pvt. Ltd, Indira Damper Industries, Kaithi Plastic, Komal Enterprises, Labddhi Polyplast Engineers, Machhar Packging Services Pvt. Ltd., Merrygold Enterprises, Metronics India, Minerva Engg.Tools Company, Mittal Pigments Pvt. Ltd.,, Multicolor Steels (India) Pvt Ltd, Noida Electronics, Novel Packaging Industrie, Nutech Sintered Products, Om Sai Decoplast Pvt. Ltd, P.R.Packing Service, P.Yesh Industries, Packprint Carton Industries, Paper Combines, Patkar Extrusions Ltd, Patrikar & Sons Auto, Plasto Pack (India), Popular Engineering Works, Positronics Control Systems Pvt Ltd, Precision Metal Plast, Premier Seals(India) Pvt., Progressive Polymers, R.P. Engineers, Raiyani Technofab, Rajeshwari Enterprises, Rajmudra Offset, Royal Pack Industries,, S. V. S. Wire Pvt. Ltd., Saikrupa Enterprises, Sapna Packaging, Saptagiri Industries, Sara Industries, Savera Press Comps Pvt Ltd (Jw), Selwel Enterprises P. Ltd., Servilink Engineers Pvt Ltd, Shardul Fasteners., Shital Tyre Retraders, Shree Ashapuri Saw Mill, Shree Udyog, Silverline Metal Engg. Pvt Ltd-A, Sjs Plastiblends Pvt.Ltd., Sudarshan Plast, Sun Graphics, Sun Polymers, Supreme Enterprises, Surya Springs Private Ltd, Svs Wires Private Limited,Unit-Ii, Swaroop Decore, Swaroop Techno Components Pvt. Ltd, Technoseal Rubber , Technova Tapes (I) P, Ultima Plastic Industries, Vabros (I) Pvt. Ltd., Vinod Engineers, Vishwas Moulders,, Vrc Plastomould(I) P, Wendt (India) Limited, Yash Industries, Yashoda Industries. b) The Company is in the process of compiling the additional information required to be disclosed under the Micro, Small Enterprises Development Act 2006. The management does not envisage any material impact on the financial statement in this regard which has been relied upon by the auditors. 21. There are no amounts due to be credited to Investor Education & Protection Fund.

28

ANNUAL REPORT 2006-07 22. Related Party Disclosures:

23.

As required under Accounting Standard 18 on “Related Party Disclosure”, the disclosure of transaction with related parties as defined in the Accounting Standard are given below: a)

(AS) 21 and accordingly the segment information as per AS-17 “Segment Reporting” has been presented in the Consolidated Financial Statements.

List of Related Parties: i)

The Company has prepared the Consolidated Financial Statements as per Accounting Standard

24.

Subsidiary Companies: - Paramount Global Limited

Loans and Advances in the nature of Loans given to Subsidiaries and Associate etc. A.

Loans and Advances in the nature of Loans :

Sr.

Name of the

(Rs. in Million)

- Videocon Global Limited - Mars Overseas Limited (up to 26th September 2007) - Sky Billion Trading Limited (w.e.f.21st November 2006)

30.09.2007

30.09.2006 Maximum Balance

No. Company

During the year

- Videocon (Mauritius) Infrastructure Ventures Limited - Middle East Appliances LLC

1

Paramount Global Ltd.

Subsidiary

1,467.61

828.61

- Powerking Corporation Limited

2

Eagle Corporation

Subsidiary

830.55

-

850.55

- Gajanan Electronics & Home Appliances Private Limited (up to 26th September 2007)

3

Videocon Global Ltd.

Subsidiary

-

443.87

443.87

2,298.16

1,272.48

- Mayur Household Electronics Private Limited

Total

- Godavari Consumer Electronics Appliances Private Limited

2,157.85

Notes :-

- Venus Corporation Limited

1.

- Eagle Corporation Limited

Loans and Advances shown above, to subsidiaries fall under the category of ‘Loans & Advances in nature of Loans where there is no repayment schedule’.

- Global Energy Inc (w.e.f.10th October 2006) 2.

- Videocon Display Research Co.Ltd. (w.e.f.9th March 2007)

No interest is chargeable on Loans and Advances to above Subsidiaries, except Videocon Global Ltd.

- Technologies Display Americas LLC * B.

- Technologies Displays Mexicana S.A. de.CV * ( Formerly Thomson Display Mexicana S.A. de.CV)

Investment by the loanee in the shares of the Company. None of the loanees have made investments in the shares of the Company.

- VDC Technologies S.P.A. *

25.

- TTD International S. A. (Formerly Thomson Tubes & Displays S.A.) *

Reserves: Share of the Company in Ravva Oil & Gas field (Unincorporated) Joint Venture remaining reserves

- TDP S.P.z.o.o (Formerly Thomson Displays Polska S.P.z.o.o.) *

on proved and probable basis (as per Operator’s estimates)

- TTD International Ltd ( w.e.f.30th January 2007 ) * - TGDC Guandong Displays Co. Ltd.* (Formerly Thomson Guandong Displays Co. Ltd.) - Thomson Display Technology Research & Development Co. Ltd.*

Particulars Unit of measurement

- VDC Technologies Deutschland GmbH ** (w.e.f. 14th September 2007) *

Subsidiaries of Eagle Corporation Ltd. Crude Oil

** Subsidiary of VDC Technologies SPA ii)

Associate and Joint Venture:

Million Metric Tonnes

Natural Gas Million Cubic Metres

As on

As on

30.09.2007

30.09.2006

2.19

2.77

490.81

678.36

- Ravva Oil & Gas Field (unincorporated) Joint Venture - Participating Interest 25% 26.

-WA-388-P Joint Venture - Participating Interest 20%

As required by Accounting Standard 29 “Provisions, Contingent Liabilities and Contingent Assets”

-Block 56 Venture Oman - Participating Interest 25%

issued by Institute of Chartared Accountants of India, the disclosure with respect to provisions

-EPP27 Joint Venture - Participating Interest 20%

are as follows:

-Evans Fraser & Co. (India) Limited - Associate

As on 30.09.2007

iii) Key Management Personnel: - Mr. Venugopal N. Dhoot - Chairman & Managing Director - Mr. Pradeepkumar N. Dhoot - Whole Time Director b)

Exchange Rate

Warranty &

Fluctuation Expenses

Maintenance

(Rs. in Million)

(Rs. in Million)

-

360.55

Expenses

Transactions/outstanding balances with Related Parties:

The company has entered into transactions with certain related parties as listed below. The Board considers such transactions to be in normal course of business: (Rs. In Million) Subsidiary Associates/ Key Management Nature of Transaction Companies Joint Venture Personnel Sale of Goods 27,085.95 (18,844.06) Purchase of Goods 702.24 (608.39) Interest Received 15.70 (-) Investments /Share Application Money During the year 85.66 (13,575.75) Advances/Loans given 2,039.45 (421.44) Advances/Loans paid (1,582.36) Transaction with Joint Venture - Contribution towards share of expenditure 1,735.31 (470.21) Outstanding as at 30.09.2007 Trade Receivables Trade Payables Advances/Loans given / (returned) (Net) Investments/Share Application Money Receivable from unincorporated Joint Venture Payable to unincorporated Joint Venture

7,490.12 (2,769.79) 583.39 (345.86) 2,298.16 (1,272.48) 14,516.78 (14,477.55)

a)

27.

Amount at the beginning of the year

b)

Additional provision made during the year

1,023.91

371.23

c)

Amount used

-

351.14

d)

Unused amount reversed during the year

-

-

1,023.91

380.64

e)

Amount at the end of the year

i)

Future obligation of the Company for assets taken on all leases entered into before 1st April 2001 is Rs. Nil

ii)

Subsequent to 1st April, 2001 the Company has entered into operating lease agreements for “Cars” to be used by employees for a period of 4 years. The lease rentals charged during the year are Rs. 1.70 million.

iii)

The maximum obligation on long-term non-cancellable operating leases entered on or after April 1 , 2001 payable as per the rentals stated in respective agreements are as follows: ( Rs. in Million) Minimum Lease Payments

52.55 (74.59) 40.63 (40.63) 35.11 (2.18) 2.14 (0.29)

1.02

Later than 1 year and not later than 5 years

0.03

More than 5 year Total

29

As at 30.09.07

Not later than 1 year

NIL 1.05

VIDEOCON INDUSTRIES LIMITED 30th Sept., 2007 Unit

Quantity

Rs. In Million

30th Sept., 2006 Quantity

Rs. In Million

28. Additional Information pursuant to the provisions of paragraphs 3,4C,4D of part II of Schedule VI to the Companies Act,1956. QUANTITATIVE INFORMATION: I. Production: (Including Goods Manufactured through third parties and excluding goods manufactured for others on job basis) a) Crude Oil MT 602,649 610,942 b) Natural Gas Cu.Mtr 199,822,632 214,142,431 c) TV Sets including Assemblies and sub assemblies thereof and Glass Shells Nos 31,011,900 27,919,267 d) Audio, Video and other Electricals and Electronic Appliances, including Assemblies and Sub-Assemblies thereof Nos 4,803,885 4,022,326 e) Air Conditioners Nos 359,375 304,370 II. Stocks of Finished Goods at Close: a) Crude Oil MT 19,342 88.43 29,569 84.53 b) Natural Gas Cu.Mtr c) TV Sets including Asemblies and sub assemblies thereof and Glass Shells Nos 985,691 1,483.76 1,346,583 1,985.83 d) Audio, Video and other Electricals and Electronic Appliances, including Assemblies and Sub-Assemblies thereof Nos 238,247 1,173.25 226,214 748.33 e) Air Conditioners Nos 39,072 515.88 23,221 280.85 TOTAL 3,261.32 3,099.54 III. Stocks of Finished Goods at Beginning: (including addition on Amalgamation) a) Crude Oil MT 29,569 84.53 10,411 27.57 b) Natural Gas Cu.Mtr. c) TV Sets including Asemblies and sub assemblies thereof and Glass Shells Nos 1,346,583 1,985.83 958,394 1,378.25 d) Audio, Video and other Electricals and Electronic Appliances, including Assemblies and Sub-Assemblies thereof Nos. 226,214 748.33 266,301 804.48 e) Air Conditioners Nos 23,221 280.85 4,506 57.79 TOTAL 3,099.54 2,268.09 IV. Sales/Services Rendered (Including Duty Drawback and Cash Compensatory support ) a) Crude Oil MT 612,876 13,056.67 591,784 13,299.91 b) Natural Gas Cu.Mtr. 181,991,600 1,045.24 196,648,932 1,094.23 c) TV Sets including Asemblies and sub assemblies thereof and Glass Shells Nos 31,372,792 45,608.49 27,531,078 39,472.36 d) Audio, Video and other Electricals and Electronic Appliances, including Assemblies and Sub-Assemblies thereof Nos 4,791,852 21,275.12 4,062,413 17,561.73 e) Air Conditioners Nos 343,524 5,560.21 285,655 4,324.78 f) Other Sales & Service Income 556.85 50.31 TOTAL 87,102.58 75,803.32 V. Flared/Consumed/Normal Loss a) Natural Gas Cu.Mtr. 17,831,032 17,493,499 VI. Raw Material Components and Spares Consumption including for products manufactured through third parties a) Printed Circuit Board (All types) Nos 7,540,602 5,823.81 7,103,567 5,039.51 b) Active & Passive Components */** 14,910.42 12,902.40 c) Plastic and Wooden Parts Nos 9,341,424 20,121.92 9,159,303 17,412.05 d) Other Raw Materials ** 8,443.92 7,306.78 TOTAL 49,300.08 42,660.74 * Inclusive of job charges paid ** It is not practicable to furnish quantitative information of components consumed in view of considerable number of items, of diverse in size & number Note: The industrial licensing has been abolished in respect of the products of the Company. 30th Sept., 2007 30th Sept., 2006 Percentage Rs. In Million Percentage Rs. In Million VII. Value of Imported and Indigenous Raw Materials, Components and Spares Consumed * a) Imported 19.26 9,495.19 16.47 7,027.05 b) Indigenous 80.74 39,804.89 83.53 35,633.69 TOTAL 49,300.08 42,660.74 *

Includes job charges paid

30th Sept., 2007 Rs. In Million VIII. CIF Value of Imports, Expenditure and Earning in Foreign Exchange: a) C.I.F. Value of Imports Raw Materials 7,152.70 Capital Goods (including advances) 590.20 b) Expenditure incurred in Foreign Currency: (on payment basis) for Cash Call paid to the Operator for the project 1,340.57 Technical Know How Fees Interest & Bank Charges 743.42 Royalty 63.25 Travelling 32.72 Dividend- 631 shareholders holding 49,346,401 Shares (Previous year – 760 shareholders holding 49,206,206 shares) 172.71 Others 41.20 c) Other Earning/Receipts in Foreign Currency: F.O.B. Value of exports (on receipt basis) 4,364.32 Interest 16.92 Others 29. Figures in respect of previous year have been regrouped and recasted wherever necessary to make them comparable with those of current year.

30

30th Sept., 2006 Rs. In Million 9,231.95 1,535.75 280.90 6.74 391.40 103.64 43.49 123.02 403.03 4,292.02 234.51 51.79

ANNUAL REPORT 2006-07 32. Balance Sheet Abstract and Company’s General Business Profile: I.

Registration Details Registration No. Balance Sheet Date

Application of Funds 103624 30.09.2007

State Code II.

11

Capital Raised During the year (Amounts Rs. in Thousand)

Net Fixed Assets

53,194,718

Investments

20,924,970

Net Current Assets

37,839,486

IV. Performance of Company (Amounts Rs. in Thousand)

Public Issue

-

Turnover

84,517,865

Rights Issue

-

Total Expenditure

73,688,908

Bonus Issue

-

Profit Before Tax

10,828,956

Private Placement

46,371

Profit After Tax

8,552,193 Rs. 38.66

Amalgamation

4

Earnings Per Share in Rs.

Share Application Money

-

Dividend Rate %

III. Position of Mobilisation & Deployment of Funds

V.

(Amounts Rs. in Thousand) 111,959,174

Total Assets

111,959,174

a)

Reserves & Surplus Deferred Tax Liability (Net)

b) 2,669,538 c)

54,114,272

Unsecured Loans

19,161,354

Crude Oil and Natural Gas

Item Code No. (ITC Code)

8528.00 Television

Item Code No. (ITC Code)

8520.00

Product Description

2,578,996 33,435,014

2709.00

Product Description

-

Secured Loans

Item Code No. (ITC Code) Product Description

Sources of Funds


Generic Names of Three Principal Products of the Company (As per monetary terms)

Total Liabilities

Paid-up Capital

35%

d)

Tape Recorder

Item Code No. (ITC Code) Product Description

85281008 Glass Shell Panels & Funnels for C.P.T.











31

The financial year of the Subsidiary Companies ended on

Holding Company’s Interest

2

3

b

32

For the previous financial years of the Subsidiary Companies since they became the Holding Company’s subsidiaries

For the current financial period ended

For the previous financial years of the Subsidiary Companies since they became the Holding Company’s subsidiaries

i

ii

Dealt with in Holding Company’s accounts :

ii

For the current financial period ended

Not dealt with in the Holding Company’s accounts :

a

i

The net aggregate amount of the Subsidiary Companies Profit/(Loss) so far as it concerns the members of the Holding Company

4

Extent of the interest of Holding Company at the end of financial year of the Subsidary Companies

No. of Shares held by Videocon Industries Ltd. with its nominees in the subsidiaries at the end of the financial year of the Subsidiary Companies

Name of Subisdiary

1

Nil

Nil

Rs. 235,561/-

Rs. 277,157/-

Nil

10,000 Equity Shares of the face value of Rs.10/- each fully paid.

30th Sept., 2007

Gajanan Electronics & Supply Pvt. Ltd. (Up to 26th Sept., 2007) 30th Sept., 2007

Godavari Consumer Electronics Appliances Pvt.Ltd.

Rs. 1,634,574/-

100%

Nil

Nil Nil

Nil

Rs.2,621,704/- Rs.1,180,597/-

Rs. 3,425,625/-

100%

10,000 Equity 10,000 Equity Shares of Shares of the face the face value of value of Rs.10/- each Rs.10/- each fully paid. fully paid.

30th Sept., 2007

Mayur Household Electronics Appliances Pvt.Ltd.

100%

2,251,800 Shares of the face value of Oman Riyal 1.00 each fully paid

30th Sept., 2007

Middle East Appliances LLc

100%

1,000 Shares of the face value of US$1.00 each fully paid

30th Sept. 2007

Global Energy Research Inc (w.e.f. 10th Oct. 06)

100%

1,200 Shares of the face value of JPY 50000 each fully paid

30th Sept., 2007

Videocon Display Co. Ltd. (w.e.f 9th March 07)

Nil

Nil

US$795,310/in Rs. 36,719,463/-

Nil

Nil

933/in Rs. 112,184/-

Nil

Nil

Nil

Nil

Nil

Nil

US$ (US$1,036,376) US$12,583/- (US$749,838) 426,146/- in (In Rs. In Rs. (In Rs. Rs.18,116,199/- 44,058,110/-) 534,788/3,911,091/-)

100%

12,800,000 Shares of the face value of US$1.00 each fully paid

30th Sept., 2007


Nil

Nil

Nil

US$56,442/In Rs. 2,284,859/-

100%


30th Sept., 2007

Sky Billion Trading Ltd. (w.e.f 21st Nov., 06

100%


US$ US$74,196/15,852,344/In Rs. in Rs. 3,154,201/673,910,084/-

100%


30th Sept., 30th Sept., 2007 2007

Videocon Venus Global Corporation Ltd. Ltd.

US$5,541,654/In Rs. 235,585,115/-

100%


30th Sept., 2007

Powerking Corporation Ltd.

Nil Nil

Nil Nil

Nil Nil

Nil Nil

100%


30th Sept., 2007

Eagle Corporation Ltd. (on Consolidated Basis)

Nil Nil

Nil

Nil

(US$11, 568,535/-) (in Rs. 534,119,261/-)

(US$ 7476/-) (US$61,212,032/-) (in Rs. (In Rs. 317,817/-) 2,602,227,532/-)

100%


30th Sept., 2007

Videocon (Mauritius) Infrastructure Ventures Ltd.

(US$ US$ (US$3, (US$9,406,093/-) (US$ 6,678/-) 46375/-) 9,631,748/189,080/-) (in Rs. (in Rs. (in Rs. in Rs. (in Rs. 434,279,314/-) 308,323/-) 2,141,134/-) 444,697,805/- 147,239,824/-)

US$10,106 In Rs. 429,613/-

Nil


30th Sept., 2007

Mars Overseas Ltd. (up to 26th Sept., 07)

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956, RELATIING TO COMPANY’S INTEREST IN SUBSIDIARY COMPANIES Statement of Subsidiaries of Videocon Industries Ltd.

VIDEOCON INDUSTRIES LIMITED

Gajanan Electronics & Supply Pvt.Ltd. (Up to 26th Sept.2007)

Mayur Household Electronics Appliances Pvt.Ltd.

Godavari Consumer Electronics Appliances Pvt.Ltd.



Global Energy Inc (w.e.f.10th Oct. 2006)

Videocon Display Research Co.Ltd. (w.e.f. 9th March 2007)

Sky Billion Trading Ltd. (w.e.f. 21st Nov.2006)

Mars Overseas Ltd. (up to 26th Sept. 2007)


Venus Corporation Ltd.



Eagle Corporation Ltd. ( On Consolidated Basis)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

Sr.No. Name of the Subsidiary Company

33 USD

USD

USD

USD

USD

USD

USD

100 JYP

USD

RO

USD

INR

INR

INR

40.04

40.04

40.04

40.04

40.04

40.04

40.04

34.80

40.04

104.79

40.04

1.00

1.00

1.00

Reporting Exchange Currency Rate

0.04

21.22

0.11

0.12

0.10

-

42.92

20.90

0.04

235.96

512.51

0.10

0.10

0.10

Capital

13,957.71

-

-

-

-

-

-

-

11.97

-

-

1.55

-

-

Share Application Money

17,611.13

(1.69)

(255.42)

(124.72)

1,030.13

-

(13.36)

(3.81)

(5.58)

(45.12)

(150.88)

4.43

9.76

1.29

Reserves

49,259.71

89.61

3,054.93

1,903.50

5,789.55

-

3,085.39

168.38

21.23

692.61

9,451.83

4,070.37

5,900.86

468.65

Total Assets

17,713.35

70.15

3,310.24

2,028.10

4,759.32

-

3,055.82

151.29

14.80

501.76

9,090.20

4,064.30

5,890.99

467.27

Total Liabilities

2705.42

Total Income

10.32

180.17

156.00

20.78

528.68

67.03

-

644.39

204.23

(0.32)

235.59

3.15

673.91

0.43

2.38

(2.05)

0.53

(44.06)

18.12

2.37

4.99

0.40

Profit Before Taxation

22.52 31,362.72 (2,491.15)

0.07

-

-

- 1,574.06

-

-

-

-

-

- 13,445.50

- 19,143.48

-

Investment Other than Investment in Subsidiary

(0.32)

235.59

3.15

673.91

0.43

2.38

(3.91)

0.53

(44.06)

18.12

1.63

3.43

0.28

111.08 (2,602.23)

-

-

-

-

-

-

1.86

-

-

-

0.73

1.56

0.12

- CAYMAN ISLANDS

- MAURITIUS

- CAYMAN ISLANDS

- CAYMAN ISLANDS

- BRITISH VIRGIN ISLANDS

- CAYMAN ISLANDS

- HONGKONG

- JAPAN

- CAYMAN ISLANDS

- SULTANATE OF OMAN

- HONGKONG

- INDIA

- INDIA

- INDIA

Provision Profit After Proposed Country For Taxation Dividend Taxation

(Rs.in Million)

Statement pursuant to exemption received from Ministry of Company Affairs,under Section 212(8) of the Companies Act,1956 relating to Subsidiary Companies


VIDEOCON INDUSTRIES LIMITED AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS To The Board of Directors VIDEOCON INDUSTRIES LIMITED We have audited the attached consolidated Balance Sheet of Videocon Industries Limited (the Company) and its subsidiaries as at 30th September, 2007 and the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These consolidated financial statements are the responsibility of the Company’s management and have been prepared by them on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting frame work and are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. We did not jointly audit the financial statements of the Subsidiaries, whose financial statements reflect total assets of Rs. 46,243.83 million as at 30th September 2007 and total revenues of Rs. 69,886.79 million and cash flows amounting Rs. 1,712.98 million for the year ended on that date. These financial statements have been audited by either of us singly or by other auditors whose reports have been furnished to us and our opinion, in so far as it relates to the amounts included in respect of these entities, is based solely on the reports of those respective auditors. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of the Accounting Standard (AS) 21 on “Consolidated Financial Statements”, Accounting Standard (AS) 23 on “Accounting for Investments in Associates” and Accounting Standard (AS) 27 “Financial Reporting of Interest in Joint Ventures” issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of the Company, and its subsidiaries included in Consolidated Financial Statements. On the basis of the information and explanations given to us and on the consideration of the separate audit report on individual audited financial statements of the Company and its subsidiaries, we are of the opinion that the attached consolidated financial statements, read with the notes and the significant accounting policies thereon, give a true and fair view in conformity with the accounting principles generally accepted in India: a.

in the case of the Consolidated Balance Sheet, of the state of affairs of the Company and its subsidiaries as at 30th September 2007;

b.

in the case of the Consolidated Profit and Loss Account, of the consolidated results of operations of the Company and its subsidiaries for the year ended on that date; and

c.

in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the company and its subsidiaries for the year ended on that date.





Place: Mumbai Date : 25th February, 2008

34

ANNUAL REPORT 2006-07 CONSOLIDATED BALANCE SHEET AS AT 30TH SEPTEMBER, 2007 Particulars

I.

As at 30th Sept., 2007 (Rupees in Million)

As at 30th Sept., 2006 (Rupees in Million)

2,668.46

SOURCES OF FUNDS 1.

II.

Schedule No.

Share Holders’ Funds a.

Share Capital

1

2,669.54

b.


1A

–

0.004

c.

Reserves & Surplus

2

51,187.97

47,293.91

d.

Capital Reserve on Consolidation

15,486.57

15,578.90

296.73

443.02

2.

Minority Interest

3.

Share Application Money Pending Allotment

2,081.46

1.55

4.

Deferred Tax Liability ( Net )

2,579.13

1,531.46

5.

Loan Funds a.

Secured Loans

3

45,090.45

46,294.35

b.

Unsecured Loans

4

24,437.05

15,721.76

TOTAL

143,828.90

129,533.41

APPLICATION OF FUNDS 1.

Fixed Assets

5

a.

Gross Block

130,315.08

137,175.28

b.

Less : Depreciation

55,823.92

67,459.08

c.

Net Block

74,491.16

69,716.20

d.

Producing Properties (Net)

650.55

2.

Investments

6

3.

Current Assets, Loans & Advances

7

70,221.37

6,525.13

3,398.82

a.

Inventories

21,362.59

20,456.79

b.

Sundry Debtors

26,095.37

33,748.08

c.

Cash and Bank Balances

19,212.16

19,970.65

d.

Other Current Assets

227.06

555.75

e.

Loans and Advances

21,883.66

14,671.81

88,780.84

89,403.08

22,395.35

29,898.37

Less : Current Liabilities & Provisions a.

Current Liabilities

b.

Provisions

8

Net Current Assets 4.

505.17 75,141.71

Miscellaneous Expenditure (To the extent not written off or adjusted)

Significant Accounting Policies and Notes to Accounts

4,223.43

3,591.54

26,618.78

33,489.91 62,162.06

55,913.17

–

0.05

143,828.90

129,533.41

9 16 TOTAL











35

VIDEOCON INDUSTRIES LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30TH SEPTEMBER, 2007 Particulars

I.



125,971.29 4,249.40

129,633.71 3,617.97

10

121,721.89 4,887.85

126,015.74 4,829.64

TOTAL

126,609.74

130,845.38

11 12 13 14 15

77,065.08 9,569.75 6,083.13 14,341.87 4,565.37

81,657.38 9,583.21 7,344.90 15,914.96 3,414.46 5,965.04 1,484.52 –

INCOME Sales / Income from Operations Less : Excise Duty Net Sales Other Income

II.

Schedule No.

EXPENDITURE Cost of Goods Consumed/Sold Production & Exploration Expenses Salaries, Wages & Employees’ Benefits Manufacturing & Other Expenses Interest & Finance Charges Depreciation / Amortisation Less : Transferred from General Reserve Less : Transferred from Revaluation Reserve

6,921.99 – 1,170.71

(Refer Note No B-3 of Schedule No.16)

5,751.28

4,480.52

117,376.48

122,395.43

Profit before Exceptional Items and Taxation Add/(Less): Exceptional Items Add : Adjustment on disposal of Subsidiaries Provision for Taxation Current Tax Deferred Tax Fringe Benefit Tax

9,233.26 – 18.01

8,449.95 131.35 147.09

1,282.77 1,085.70 23.89

916.72 51.02 15.41

IV.

Profit before Minority Interest and Share of Profit in Associate Share of Profit in associate company Minority Interest Excess provision for Income Tax for earlier years written back Add: Prior Period Adjustments

6,858.91 31.18 100.77 68.08 –

7,745.24 23.43 (156.67) 3.95 307.43

V.

Profit for the year Balance brought forward Add: Transferred from Debenture/Bonds Redemption Reserve Addition/Adjustment on amalgamation

7,058.94 7,615.16 530.55 –

7,923.38 3,888.10 (1,763.16)

V.

Balance available for appropriation

15,204.65

10,048.32

VI.

APPROPRIATIONS Debenture Redemption Reserve Proposed Dividend - Equity Proposed Dividend - Preference Corporate Tax on Proposed Dividend Transfer to General Reserve Transfer to Legal Reserve Balance Carried to Balance Sheet

– 803.02 36.81 142.73 2,000.00 – 12,222.09

12.60 773.45 33.87 113.23 1,500.00 0.01 7,615.16

15,204.65

10,048.32

Rs. 31.75 Rs. 29.33

Rs. 35.68 Rs. 35.68

TOTAL III.

TOTAL Basic Earnings per Share (Nominal Value Rs.10/- per share) Diluted Earnings per Share (Nominal Value Rs.10/- per share) (Refer Note No.B-10 of Schedule No. 16) Significant Accounting Policies and Notes to Accounts

16











36

ANNUAL REPORT 2006-07 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH SEPTEMBER, 2007 Particulars


A. CASH FLOW FROM OPERATING ACTIVITIES Net Profit before Tax Add: a) Depreciation / Amortisation b) Interest and Finance Charges c) Producing Properties written off d) Provision for Leave Encashment e) Provision for Warranty and Maintenance Expenses f) Provision for Retirement Benefits g) Provision for Restructuring Cost h) Provision for Contingencies i) Provision for Exchange Rate Fluctuation j) Miscellaneous Expenditure written off k) Prior Period Adjustment l) Diminution in value of Investment m) Share of Profit in Associate company n) Minority Interest for the year (A) Less: a) Interest Received b) Write back of Diminution in value of Investment c) Income from Investment and Securities Division d) Exceptional Items e) Profit on Sale of Fixed Asset

9,233.26

8,449.95

5,751.28 4,565.37 833.95 13.51

4,480.52 3,414.46 177.36 78.86

15.39 (550.96) 17.63 (60.19) 1,023.91 0.05 40.30 31.18 100.77

296.09 1,612.03 62.26 132.64 0.02 307.44 12.34 23.43 (156.67)

21,015.45

18,890.73

551.24

599.32

-

234.55

246.06 1,294.54

467.08 (131.35) 2,248.65

(B) Cash flow from Operating Activities before Working Capital changes (A-B)

2,091.84

3,418.25

18,923.61

15,472.48

Adjustments (including on amalgamation) : a) Inventories b) Sundry Debtors c) Other Current Assets d) Loans & Advances e) Current Liabilities

(905.80) 7,652.71 328.69 (7,211.82) (7,500.43)

(11,609.46) (8,516.99) (362.67) 3,535.35 8,645.09

(C)

11,286.96 1,104.10 23.92

7,163.80 531.74 17.43

Net Cash flow from Operating Activities (D) B. CASH FLOW FROM INVESTING ACTIVITIES Sale of Fixed Assets (Net) Interest Received Adjustment on Disposal of Subsidiaries Income from Investment and Securities Division

10,158.94

6,614.63

3,204.60 551.24 18.01 246.06

3,025.68 599.32 147.09 467.08

(E)

4,019.91

4,239.17

Cash flow from Operating Activities Less : Income Tax Paid Less : Fringe Benefit Tax Paid

Particulars


Less: Increase in Fixed Assets including Captial Work-in-progress (including net additions on amalgamation) Increase in Producing Properties Increase in Investments (Net) (F) Net Cash flow from Investing Activities

G=(E-F)

C. CASH FLOW FROM FINANCING ACTIVITIES Increase in Share Capital including on account of amalgamation Increase in Share Capital Suspense on amalgamation Increase in Share Application Money Increase in Reserves on amalgamation Securities Premium Received and addition on amalgamation Increase in Capital Reserve on Consolidation Increase in Goodwill on Consolidation Transfer of Deferred Tax Liabilities on amalgamation Increase in Secured Term Loans from Banks Increase in Unsecured Loans Increase in Working Capital Loans from Banks Increase in Revaluation Reserve - Associate Equity Increase in Revaluation Reserve (H) Less: Decrease in Share Capital Suspense including on account of amalgamation Decrease In Minority Interest Decrease In Foreign Currency Translation Reserve on Consolidation Earlier period Loss of Subsidiary Amalgamation Adjustment Account Redemption of Secured Non Convertible Debentures Decrease in Securities Premium on account of Share issue expenses and premium on convertible bonds Payment of Dividend Corporate Tax on Dividend Interest and Finance Charges Paid (I) Net Cash flow from Financing Activities (J=H-I) Net Change in Cash and Cash Equivalents (D+G+J) Opening Balance of Cash and Cash Equivalents Closing Balance of Cash and Cash Equivalents

13,607.99

37,046.25

979.33 3,166.61

103.50 771.61

17,753.93

37,921.36

(13,734.02)

(33,682.19)

1.08 2,079.91 -

603.20 0.004 (94.04) 1.50

47.66 (92.33) (287.75) 8,715.29 712.79 118.75

93.42 15,578.90 79.90 0.50 8,647.23 12,757.87 305.63 39.78 -

11,295.40

38,013.89

0.004 146.29

556.83 (443.02)

1,088.28 1,628.94

(201.68) 1.24 1,763.17 1,878.79

126.79 809.91 113.23 4,565.37

145.23 587.75 82.35 3,414.46

8,478.81

7,785.12

2,816.59

30,228.77

(758.49)

3,161.21

19,970.65 19,212.16

16,809.44 19,970.65











37

VIDEOCON INDUSTRIES LIMITED SCHEDULES TO BALANCE SHEET As at As at 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million)

As at As at 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million) SCHEDULE - 1 : SHARE CAPITAL Authorised : 500,000,000 (Previous year 500,000,000) Equity Shares of Rs. 10/- each 10,000,000 (Previous year 10,000,000) Redeemable Preference Shares of Rs. 100/- each

Capital Subsidy 5,000.00


5,000.00

(B)

Issued, Subscribed and Paid-up: Equity Shares: 221,093,701 (Previous year 220,985,833) Equity Shares of Rs. 10/- each fully paid up Of the above: a) 95,078 (Previous year 95,078) Equity Shares of Rs.10/- each have been issued on conversion of Unsecured Optionally Convertible Debentures. b) 156,438,326 (Previous year 156,437,910) Equity Shares of Rs.10/- each were allotted pursuant to amalgamations without payments being received in cash. c) 45,777,345 (Previous year 45,777,345) Equity Shares of Rs.10/- each were issued by way of Euro issues represented by Global Depository Receipts (GDR) at a price of US$ 10.00 per share (inclusive of premium). d) 107,452 (Previous year NIL) Equity Shares of Rs.10/- each have been issued on conversion of 1,099 Foreign Currency Convertible Bonds of US$ 1000 each (inclusive of premium) Less : Calls in Arrears - by others (A)

1,000.00

1,000.00

6,000.00

6,000.00

TOTAL

As per last Balance Sheet Add : Adjusted during the year Less : Share Issue Expenses

2,210.94

2,209.86

of Convertible Bonds

Less : Call and/or allotment money in arrears - by others

25,565.06

25,574.77

47.66

93.42

-

4.90

88.76

98.23

25,523.96

25,565.06

16.90

16.90

25,507.06

25,548.16

537.50

537.50

537.50

537.50


2,343.05

2,330.45

Add/(Less) : Transferred from/(to) Profit & Loss Account

(530.55)

12.60

(E)

1,812.50

2,343.05

(C) Capital Redemption Reserve As per last Balance Sheet (D) Debenture/Bonds Redemption Reserve

Legal Reserve 1.49 2,209.45


1.49

Add : Transferred from Profit and Loss Account

2,208.37

0.01

-

-

0.01

0.01

0.01

Capital Reserve As per last Balance Sheet 452.40

Add : Additions on Amalgamation

452.40

(G)

1.52

0.02

-

1.50

1.52

1.52

Foreign Currency Translation Reserve 7.69


7.69

(B)

460.09

460.09

2,669.54

2,668.46

TOTAL

5.50

Less : Premium payable on Redemption

(A+B)

SCHEDULE - 1A : SHARE CAPITAL SUSPENSE Equity Shares NIL (Previous year 416) Equity Shares of Rs.10/- each to be allotted to the shareholders of erstwhile EKL Appliances Limited pursuant to its amalgamation with the Company.

5.50

5.50

Securities Premium Account

(F) Preference Shares: 4,523,990 (Previous year 4,523,990) 8% Redeemable Preference Shares of Rs.100/- each fully paid up, redeemable at par in 3 equal installments on 1st October 2011, 1st October 2012 and 1st October 2013. 76,870 (Previous year 76,870) 8% Redeemable Preference Shares of Rs.100/- each fully paid up, redeemable at par in 3 equal installments on 1st February 2012, 1st February 2013 and 1st February 2014.

5.50

297.77

96.10

(1,088.28)

201.67

(790.51)

297.77

As per Last Balance Sheet

1,659.72

1,385.16

Add : Transferred from Revaluation Reserve

7,538.89

259.08

Add : Transferred from Profit & Loss Account

2,000.00

1,500.00

Add/(Less) during the year (H) General Reserve

-

0.004

Less : Transferred to Profit & Loss Account -

0.004

(I)

-

1,484.52

11,198.61

1,659.72

Profit & Loss Account

SCHEDULE - 2 : RESERVES & SURPLUS Revaluation Reserve As per last Balance Sheet Add : Addition during the year Add : Adjustment for change in associate’s equity Less : Deduction on account of Disposal/ Sale of Revalued Assets. Less : Transferred to General Reserve Less : Transferred to Profit & Loss Account

As per Account annexed 9,285.52 118.75 -

9,518.45 39.79

0.98 7,538.89 1,170.71

13.64 259.08 -

693.69

9,285.52

(Refer Note No.B-4 of Schedule No. 16) (A)

38

12,222.09

7,615.16

(J)

12,222.09

7,615.16

TOTAL (A to J)

51,187.97

47,293.91

ANNUAL REPORT 2006-07 As at As at 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million)

SCHEDULE - 3 : SECURED LOANS A. Non-Convertible Debentures B. Term Loans from Banks & Financial Institutions C. External Commercial Borrowings D. Corporate Loan from Banks E. Vehicle Loans from Banks F. Finance Lease G. Working Capital Loans From Banks

2,356.24 36,100.02 3,803.80 82.23 12.24 47.66 2,688.26

3,985.18 38,434.98 1,662.12 215.02 21.58 1,975.47

TOTAL

45,090.45

46,294.35

A.

B.

Non Convertible Debentures:Out of the Non Convertible Debentures, those to the extent of : i. Rs. 613.73 million (Previous year Rs.920.18 million) are secured by assignment of / fixed and floating charge on all moneys received/to be received by the Company in relation to and from the Ravva Joint Venture, including all receivables of the Company, subject to the charge in favour of the Joint Ventures in terms of the Production Sharing Contract/Joint Operating Agreement in respect of Ravva Joint Venture, to the extent necessary. ii. Rs.640.81 million (Previous year Rs.933.10 million) are secured by first charge on immovable and movable properties, both present and future, subject to prior charge on specified movables created/to be created in favour of Company’s Bankers for securing borrowings for working capital requirements, and ranking pari passu with the charge created/to be created in favour of Financial Institutions/Banks in respect of their existing and future financial assistance. Also guaranteed by Mr. V. N. Dhoot and Mr. P. N. Dhoot. iii. Rs.211.70 million (Previous year Rs.361.90 million) are secured by way of a first charge on the entire immovable and movable properties of the Company ranking pari passu with existing charge holders except prior charge on specified movables created in favour of Company’s bankers for borrowings of working capital and exclusive charge created on specific machinery financed/to be financed by the banker/s and/or financial institution/s and the personal guarantee of Mr. V.N.Dhoot. iv. Rs.890.00 million (Previous year Rs.1,350.00 million) are secured by unconditional and irrevocable guarantee given by IDBI (for principle and interest). The said guarantee assistance, provided by IDBI, is secured by a first charge in favour of the guarantor, of all the immovable properties, both present & future, and a first charge by way of hypothecation of all the movables, present & future, ranking pari passu with existing charge holders, subject to charges created/to be created in favour of the Bankers on the specified current assets for securing borrowings for working capital loans. These debentures are also guaranteed by Mr. V. N. Dhoot. v. Rs.NIL (Previous year Rs.420.00 million) were secured by third charge on the properties of the Company. This charge was subject to and subservient to the mortgages and charges created/to be created in favour of Financial Institutions/ Debentures Trustees/Banks. The Debenture referred to in (i) to (iv) above are redeemable at par, in one or more installments on various dates with the earliest redemption being on 15th October, 2007 and last date being 1st January, 2012. These debentures are redeemable as follows , Rs.1,107.96 million in financial year 2007-08, Rs.732.15 million in financial year 2008-09, Rs.386.56 million in financial year 2009-10, Rs.86.38 million in financial year 2010-11 and Rs.43.19 million in financial year 2011-12. Term Loans :The Term Loans are secured by mortgage of existing and future assets of the Company and a floating charge on all movables assets, present and future (except book debts), subject to prior charge of the Bankers on stock of raw materials, finished, semi finished goods and other movables, for securing working capital loans in the ordinary course of business, and exclusive charge created on specific items of machinery financed by the respective lenders. The above charges rank pari passu inter-se for all

C.

D.

E.

G.

intents and purposes. The above loans are guaranteed by Mr. V. N. Dhoot and Mr. P. N. Dhoot. In addition to the above, a part of term loan from State Bank of India is further secured by way of pledge of shares of Kitchen Appliances India Ltd. and Applicomp (India) Ltd. belonging to and held by the Company. A part of loans from banks are secured by the assignment of fixed and floating charge on all moneys received/to be received by the Company in relation to and from the Ravva Joint Venture, including all receivables of the Company, subject to the extent necessary, to the charge in favour of the Joint Ventures in terms of the Production Sharing Contract/Joint Operating Agreement in respect of Ravva Joint Venture; and the assignment/fixed and floating charge of all the right, title and interest into and under all project documents, including but not limited to all contracts, agreements or arrangements which the Company is a part to, and all leases, licenses, consents, approvals related to the Ravva Joint Venture, insurance policies in the name of the Company, in a form and manner satisfactory to Trustee. The term loans aggregating to Rs. 13,504.96 million availed by foreign subsidiaries are secured by way of charge on present and future assets of the respective companies, Corporate Guarantee from the Parent Company and by way of charge/hypothecation of receivables of fellow subsidiaries/group companies. The Term Loan includes short term loan aggregating to Rs.726.07 million availed by foreign subsidiaries, of which Rs.215.71 million are secured by spare letter of credit given as surety and Rs.510.36 million are secured by charge on property held by subsidiary and guaranteed by parent company. External Commercial Borrowings :External Commercial Borrowings are secured by a first charge ranking parri-passu over all the present and future movable and immovable fixed assets. The loan is further secured by personal guarantee of Mr. V. N. Dhoot and Mr. P. N. Dhoot. Corporate Loan from Banks : Corporate Loan from Banks are partially secured by first charge, partially by second charge, ranking parri-passu, and the balance by second subservient charge, on the immovable and movable assets, both present and furture, of the Company. These are further secured by personal guarantee of Mr. V. N. Dhoot. Vehicle Loans from Banks : Vehicle Loans from Banks are secured by way of hypothecation of Vehicles acquired out of the said loan. The loans are also secured by personal guarantee of Mr. V. N. Dhoot. Working Capital Loans From Banks : Working Capital Loans from Banks are secured by hypothecation of the Company’s stock of raw materials, packing materials, stock-in-process, finished goods, stores and spares, book debts of Glass Shell Division only and all other current assets of the Company and personal guarantee of Mr. V. N. Dhoot and Mr. P. N. Dhoot. Installments of loans from banks and financial institutions falling due within one year Rs. 5246.60 million (Previous Year Rs. 4,805.69 million) As at As at 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million)

SCHEDULE - 4 : UNSECURED LOANS A. From Banks and Financial Institutions B. Foreign Currency Convertible Bonds C. Premium Payable on Redemption on Foreign Currency Convertible Bonds (Refer Note no. B-5 of Schedule 16.) D. From Others E. Sales Tax Deferral Total

15,623.08 7,763.79

5,788.79 9,003.15

267.13 681.21 101.84

140.34 696.42 93.06

24,437.05

15,721.76

Note :The Company has availed interest free Sales Tax Deferral under Special Incentive to Prestigious Unit (modified) Scheme. Out of total outstanding, Rs.93.06 million is repayable in six equal annual installments commencing from 30th May, 2008 and the balance in two quarterly installments commencing from 31st December, 2009.

39

40 62,300.65

6,490.85

55,809.80

137,175.28

58,040.53

3,647.14

54,393.39

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Addition on Amalgamation/ Acquisition

16,853.25

-

16,853.25

14,718.84

14,718.84

242.04

188.75

-

-

294.02

91.96

70.68

34.33

26.46

256.58

2.81

12,087.01

0.41

1,302.90

15.62

105.27

Additions During the Year

1,908.81

-

1,908.81

17,635.65

17,635.65

239.85

2.32

-

-

278.54

2.70

2.34

1.89

1.66

2.18

-

17,096.99

-

7.18

-

-

Deduction During the Year

GROSS BLOCK

1.11

-

1.11

(3,729.50)

(3,729.50)

(170.88)

(19.51)

-

-

(4.59)

(2.01)

(4.07)

-

(21.56)

(76.65)

-

(3,142.53)

-

(266.46)

-

(21.24)

Currency Translation Adjustment

137,175.28

12,026.54

125,148.74

130,315.08

11,812.65

118,502.43

2,223.45

585.78

235.98

6.27

381.75

588.03

394.94

411.54

486.86

2,699.52

1,995.27

94,856.60

39.32

11,774.08

63.44

1,759.60

As at 30.09.2007

22,875.01

22,875.01

67,459.08

67,459.08

1,237.24

308.52

235.98

4.96

2.86

290.24

145.39

245.79

252.71

2,098.20

1,113.26

58,290.41

37.43

3,175.88

6.70

13.51

Upto 30.09.2006

39,703.07

39,703.07

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Addition on Amalgamation/ Acquisition

-

5,920.59

5,920.59

6,906.58

6,906.58

237.97

64.57

-

1.11

5.24

42.74

35.92

41.66

35.63

82.94

351.98

5,673.72

0.95

329.68

2.47

For the Year

1,118.15

1,118.15

15,724.61

15,724.61

-

0.49

-

-

3.48

1.60

0.80

1.57

0.85

2.18

-

15,699.96

-

1.96

-

11.72

Deduction/ Adjustment

44.45

44.45

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Impairment

DEPRECIATION / AMORTISATION

34.11

34.11

(2,817.13)

(2,817.13)

(50.69)

(15.61)

-

-

(0.25)

(1.26)

16.52

-

(9.18)

(65.39)

-

(2,598.13)

-

(91.35)

-

(1.79)

Currency Translation Adjustment

67,459.08

67,459.08

55,823.92

55,823.92

1,424.52

356.99

235.98

6.07

4.37

330.12

197.03

285.88

278.31

2,113.57

1,465.24

45,666.04

38.38

3,412.25

9.17

-

Upto 30.09.2007

(Rupees in Million)

69,716.20

12,026.54

57,689.66

74,491.16

11,812.65

62,678.51

798.93

228.79

-

0.20

377.38

257.91

197.91

125.66

208.55

585.95

530.03

49,190.56

0.94

8,361.83

54.27

1,759.60

As at 30.09.2007

-

-

-

69,716.20

12,026.54

57,689.66

1,154.90

110.34

-

1.31

368.00

210.54

185.28

133.31

230.91

423.57

879.20

44,718.70

1.48

7,568.94

41.12

1,662.06

As at 30.09.2006

NET BLOCK

*Gross Block of Plant and Machinery includes Rs. 9,245.73 million (Previous year Rs.9,518.45 million) being the amount added on revaluation on 01.08.1998 and 01.10.2002 by erstwhile Videocon International Ltd., amalgamated with the company. **Gross Block of Building includes Rs. 118.75 million (Previous year Rs.NIL) being the amount added on revaluation on 30.09.2007 by subsidiary Technologies Displays Mexicana S.A. de.CV.

Total As at 30th September, 2006

Capital Work-in-Progress



12,026.54

125,148.74

TOTAL

Capital Work-in-Progress

2,392.14

Other

235.98 418.86

Goodwill (on amalgamation)

Computer Software

INTANGIBLE ASSETS

Computer Systems

6.27

370.86

Other

LEASED ASSETS

330.67 500.78

Furniture & Fixtures

Vehicles

483.62 379.10

Computer Systems

2,521.77

Office Equipments

1,992.46

Electrical Installation

103,009.11

38.91

10,744.82

47.82

1,675.57

As at 30.09.2006

Furnace

Plant & Machinery *

Leasehold Improvement

Building **

Leasehold Land

Freehold Land

TANGIBLE ASSETS

PARTICULARS

SCHEDULE - 5 : FIXED ASSETS

VIDEOCON INDUSTRIES LIMITED

ANNUAL REPORT 2006-07 As at As at 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million) SCHEDULE - 6 : INVESTMENTS LONG TERM INVESTMENTS IN GOVERNMENT & TRUST SECURITIES QUOTED IN EQUITY SHARES (Fully Paid up) - TRADE IN EQUITY SHARES (Fully Paid up) - OTHERS IN MUTUAL FUNDS UNITS UNQUOTED IN EQUITY SHARES (Fully Paid up)-TRADE IN EQUITY SHARES (Fully Paid up)-OTHERS IN PREFERENCE SHARES (Fully Paid up) IN DEBENTURES OTHER INVESTMENTS


0.41

0.41

78.36 1,773.79 10.00

98.83 514.63 10.00

404.43 176.95 0.38

304.24 124.39 -

SCHEDULE - 8 : CURRENT LIABILITIES & PROVISIONS A. Current Liabilities Sundry Creditors * Advance from Customers Bank Overdraft as per books Income Received in Advance Interest Accrued but not due Other Liabilities Unclaimed Dividend/Interest (Per Contra) * Including Acceptance of Rs.4,077.12 million (Previous year Rs. 3,085.77 million)

60.00

10.00

(A)

0.52

0.52

3,301.18

449.64

100.00

-

-

1,000.98

B. Provisions Provision for Income Tax (Net of Advance Tax) Proposed Dividend - Equity Proposed Dividend - Preference Provision for Corporate Tax on Proposed Dividend Provision for Warranty and Maintenance Expenses Provision for Leave Encashment Provision for Retirement Benefits Provision for Restructuring cost Provision for Contingencies / other provisions Provision for Exchange Rate Fluctuation

SHARE APPLICATION MONEY PENDING ALLOTMENT (OTHERS) APPLICATION MONEY (UNITS) CURRENT INVESTMENTS UNQUOTED IN BONDS IN UNITS OF MUTUAL FUNDS TOTAL INVESTMENTS Aggregate Book Value of quoted Investments Aggregate Market Value of quoted Investments Aggregate Book Value of unquoted Investments/ Application Money SCHEDULE - 7 : CURRENT ASSETS, LOANS & ADVANCES A. Inventories (As taken, valued and certified by the Management) Raw Materials including Consumables, Stores & Spares Work in Process Finished Goods Material in Transit and in Bonded warehouse Drilling and Production Materials Crude Oil (A) B. Sundry Debtors (Unsecured) Outstanding for a period exceeding six months Considered Good Considered Doubtful Less : Provision for doubtful debts Others - Considered Good (B)

619.11

885.18

6,525.13

3,398.82

1,862.56 2,303.83

623.87 941.30

4,662.57

2,774.95

12,830.07 1,769.55 4,908.78 1,559.47 206.29 88.43

9,877.19 1,515.40 6,401.00 2,351.84 226.83 84.53

21,362.59

20,456.79

806.00 865.27

1,428.79 808.69

1,671.27 846.88

2,237.48 789.70

824.39 25,270.98

1,447.78 32,300.30

26,095.37

33,748.08

15,858.23 100.51 1,177.63 1.64 464.70 4,754.54 38.10

21,610.66 355.93 78.96 441.96 7,370.17 40.69

22,395.35

29,898.37

479.12 803.02 36.81 142.73 405.49 118.93 1,061.08 79.89 72.45 1,023.91

368.53 773.45 33.87 113.23 390.10 105.42 1,612.04 62.26 132.64 -

(B)

4,223.43

3,591.54

TOTAL (A + B)

26,618.78

33,489.91

0.05 0.05

0.07 0.02

-

0.05

SCHEDULE - 9 : MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) Preliminary Expenses As per Last Balance Sheet Less : Written off during the year TOTAL

SCHEDULES TO PROFIT AND LOSS ACCOUNT Year ended on Year ended on 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million) SCHEDULE - 10 : OTHER INCOME Service Charges Received Interest Income (TDS Rs.3.88 million Previous year Rs.8.59 million) Income From Investments & Securities Division (TDS Rs.43.24 million, Previous year Rs.56.04 million) (Refer Note No.B-8 and 9 of Schedule No. 16) Insurance Claim Received Exchange Rate Fluctuation Profit on Sale of Fixed Assets Write back against dimunition in Value of Quoted Investments Miscellaneous Income (TDS Rs. 0.02 million Previous year Rs.NIL)

101.55

-

551.24 205.76

599.32 454.74

64.93 1,054.83 1,294.54

49.97 53.17 2,248.65

1,615.00

234.55 1,189.24

C. Cash & Bank Balances Cash on hand Cheque/Drafts on hand /in Transit Balances With Bank In Current Accounts In Fixed Deposits In Margin Money In Dividend/Interest Warrant Account (Per Contra)

16.14 466.55

16.05 161.58

4,552.75 14,135.02 3.60 38.10

3,530.18 16,222.15 40.69

(C)

19,212.16

19,970.65

TOTAL

4,887.85

4,829.64

59.67 36.08 131.31

58.48 31.54 1.91 463.82

SCHEDULE - 11 : COST OF GOODS CONSUMED/SOLD A. Material and Components Consumed Opening Stock Add : Addition on Amalgamation Add : Purchases

9,558.40 79,313.10

7,344.36 262.73 85,253.10

227.06

555.75

88,871.50 12,830.07

92,860.19 9,558.40

76,041.43

83,301.79

D. Other Current Assets Interest Accrued Insurance Claim Receivable Duty Drawback Receivable Other Receivable (D) E. Loans & Advances (Unsecured, considered good) Advances recoverable in Cash or in kind or for value to be received Balance with Central Excise / Customs Department Advance Fringe Benefit Tax ( Net of Provision) Other Deposits

Less : Closing Stock 21,434.06 150.50 0.03 299.07

13,958.24 531.75 181.82

(E)

21,883.66

14,671.81

TOTAL( A to E )

88,780.84

89,403.08

(A)

41

VIDEOCON INDUSTRIES LIMITED Year ended on Year ended on 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million)

Year ended on Year ended on 30th Sept., 2007 30th Sept., 2006 (Rupees in Million) (Rupees in Million) B. (Increase)/Decrease in Stock Closing Stock : Finished Goods Work in Process

4,997.21 1,769.55

6,302.96 1,487.45

6,766.76

7,790.41

Opening Stock : Finished Goods Add : Addition on Amalgamation

6,302.96 -

4,221.91 208.72

Work in Process Add : Addition on Amalgamation

6,302.96 1,487.45 -

4,430.63 1,709.78 5.59

1,487.45

1,715.37

7,790.41

6,146.00

(B)

1,023.65

(1,644.41)

TOTAL (A+B)

77,065.08

81,657.38

358.41 384.83 566.53 107.80 6,763.18 47.64 833.95 507.41

241.93 393.96 543.25 191.87 7,861.84 61.24 177.36 111.76

9,569.75

9,583.21

4,741.26 1,074.14 267.73

6,429.35 667.31 248.24

6,083.13

7,344.90

SCHEDULE - 12 :PRODUCTION & EXPLORATION EXPENSES - OIL & GAS Production Expenses Royalty Cess Production Bonus Government Share in Profit - Petroleum Abandonment Costs Producing Properties Written Off Exploration Expenses TOTAL SCHEDULE - 13 :SALARY, WAGES & EMPLOYEES’ BENEFITS Salary, Wages & Other Benefits Contribution to Provident and other Funds Staff Welfare

SCHEDULE - 14 :MANUFACTURING & OTHER EXPENSES Rent,Rates & Taxes Power, Fuel & Water Repairs to Building Repairs to Plant & Machinery Repairs & Maintenance-others Bank Charges Directors’ Sitting Fees Royalty Printing & Stationery Freight & Forwarding Advertisement & Publicity Sales Promotion expenses Discount & Incentive Schemes Legal & Professional Charges Donation Insurance Expenses Auditiors’ Remuneration Bad Debts Written off Warranty and Maintenance Expenses Miscellaneous Expenditure written off Technical Know-How Fees Restructuring Cost Product Development Diminution in Value of Investments Miscellaneous Expenses TOTAL

TOTAL

SCHEDULE - 15 : INTEREST & FINANCE CHARGES On Fixed Period Borrowings On Others TOTAL

891.04 2,918.86 38.41 95.68 397.81 379.33 1.22 108.96 22.47 1,988.66 974.20 330.37 2,346.57 479.18 71.86 485.07 49.81 56.23 585.23 0.05 483.13 0.59 1,637.14

810.44 3,395.34 35.94 66.06 546.84 320.83 0.78 212.17 36.04 2,192.41 1,068.13 544.37 2,802.97 422.84 71.59 565.59 60.42 41.73 540.67 0.02 8.71 2,171.07

14,341.87

15,914.96

3,723.30 842.07

2,662.36 752.10

4,565.37

3,414.46

SCHEDULE - 16 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS A)

SIGNIFICANT ACCOUNTING POLICIES:

1.

Basis of Consolidation a)

The Consolidated financial statements (CFS) relate to Videocon Industries Limited (“the Company” or “the Parent Company”) and its subsidiary companies “collectively referred to as “the Group”.

b)

The financial statements of the subsidiary companies used in the preparation of the Consolidated Financial Statement are drawn upto the same reporting date as that of the Company i.e. 30th September, 2007.

c)

The CFS have been prepared in accordance with the Accounting Standard 21 “Consolidated Financial Statements”, Accounting Standard 27 “Financial Reporting of Interests in Joint Venture” and Accounting Standard 23 “Accounting for investments in Associates in Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India.

d)

Principles of Consolidation: The CFS have been prepared on the following basis: i)

The financial statements of the Company, its subsidiary companies and jointly controlled entities have been consolidated on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances /transactions and unrealised profits or losses.

ii)

All separate financial statements of subsidiaries, originally presented in currencies different from the Group’s presentation currency, have been converted into Indian Rupees (INR) which is the functional currency of the parent company. In case of foreign subsidiaries, revenue items have been consolidated at the average of the rates prevailing during the year. All assets and liabilities are translated at rates prevailing at the balance sheet date. The exchange difference arising on the translation is debited or credited to Foreign Currency Translation Reserve.

iii)

The CFS have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented in the same manner as the Company’s separate financial statements except in respect of depreciation and retirement benefits,where it was not practicable to use uniform accounting policies in case of certain foreign subsidiaries. However, the amount of impact of these differences is not material.

iv)

The excess of the cost to the company of its investment in subsidiary over the Company’s share of equity of the subsidiary as at the date on which investment in subsidiary is made, is recognised in the financial statement as Goodwill. The excess of Company’s share of equity and reserve of the subsidiary Company over the cost of acquisition is treated as Capital Reserve.

v)

The difference between the proceeds from disposal of investment in a Subsidiary and the carrying amount of its assets less liabilities as of the date of disposal is recognised in the Consolidated Statement of Profit and Loss Account as the profit or loss on disposal of Investment in Subsidiary.

vi)

Minority interest in the net assets of Consolidated Subsidiary consists of (a) The amount of equity attributable to minorities at the date on which investment in a subsidiary is made and (b) The minorities share of movements in equity since the date the Parent subsidiary relationship came into existence.

vii)

Investments in entities in which the company or any of its subsidiaries has significant influence but not a controlling interest, are reported according to the equity method. The carrying amount of the investment is adjusted for the post acquisition change in the investor’s share of net assets of the investee. The consolidated profit and loss account includes the company’s share of the results of the operations of the investee.

42

ANNUAL REPORT 2006-07 e)

The companies which are included in the consolidation with their respective countries of incorporation and the percentage of ownership interest therein of the Company as on 30th September, 2007 are as under: Name of the subsidiary

Country of incorporation

Percentage of Holding As at 30th Sept., 2007

30th Sept.,2006


Hong Kong

100%

100%


Sultanate of Oman

100%

100%

Global Energy Inc (w.e.f 10th October 2006))

Cayman Islands

100%

NIL

Videocon Display Research Co. Ltd. (w.e.f. 9th March 2007)

Japan

100%

NIL

Sky Billion Trading Ltd. (w.e.f 21st November 2006)

Hong Kong

100%

NIL

Mars Overseas Ltd. (up to 26th September 2007)

Cayman Islands

NIL

100%


British Virgin Islands

100%

100%

Venus Corporation Ltd.

Cayman Islands

100%

100%


Cayman Islands

100%

100%


Mauritius

100%

100%

Gajanan Electronics and Home Appliances Pvt. Ltd. (Up to 26th September 2007)

India

NIL

100%

Mayur Household Electronics Appliances Pvt. Ltd.

India

100%

100%

Godavari Consumer Electronics Appliances Pvt. Ltd.

India

100%

100%

Eagle Corporation Ltd.

Cayman Islands

100%

100%

Technologies Displays Americas LLC * (Formerly Thomson Displays Americas LLC)

State of Delaware

100%

100%

Technologies Displays Mexicana S.A. de.CV * (Formerly Thomson Display Mexicana S.A. de.CV )

Mexico

100%

100%

VDC Technologies S.P.A. *

Italy

100%

100%

TTD International S.A. * (Formerly Thomson Tubes & Displays S.A. )

France

100%

100%

TDP S.P.z.o.o.* (Formerly Thomson Displays Polska S.P.z.o.o. )

Poland

100%

100%

TTD International Ltd.* (w.e.f. 30th January 2007)

Hongkong

100%

NIL

TGDC Guandong Displays Co. Ltd.* ( Formerly Thomson Guandong Displays Co. Ltd. )

China

91.3%

91.3%

Thomson Display Technology Research & Development Co. Ltd.*

China

100%

100%

VDC Technologies Deutschland GmbH ** (w.e.f. 14th September 2007)

Germany

100%

NIL

* Subsidiaries of Eagle Corporation Ltd. ** Subsidiary of VDC Technologies S.P.A.

2.

Name of the Associate

Country of incorporation

Evans Fraser & Co. (India) Ltd.

India

b)

added tax. Exchange difference, if any, in respect of liabilities incurred to acquire fixed assets is adjusted to the carrying amount of respective fixed assets.

The financial statements are prepared under historical cost convention, except for certain Fixed Assets which are revalued, using the accrual system of accounting in accordance with the accounting principles generally accepted in India (Indian GAAP) and the requirements of the Companies Act, 1956, including the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India, as referred to in Section 211 (3C) of the Companies Act, 1956.

b)

4.

5.

Joint Ventures for Oil and Gas Fields:

Exploration, Development and Production Costs: The Company follows the “Successful Efforts Method” of accounting for oil and gas exploration, development and production activities as explained below:

Fixed Assets: a)

Capital Work in Progress is carried at cost, comprising of direct cost, attributable interest and related incidental expenditure. The advances given for acquiring fixed assets are shown under Capital Work in Progress.

In respect of joint ventures in the nature of Production Sharing Contracts (PSC) entered into by the Company for oil and gas exploration and production activities, the Company’s share in the assets and liabilities as well as income and expenditure of Joint Venture Operations are accounted for according to the Participating Interest of the Company as per the PSC and the Joint Operating Agreements on a line-by-line basis in the Company’s Financial Statements.

Use of Estimates The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the year. Example of such estimates include provisions for doubtful debts, employee retirement benefits plans, provision for income tax, accounting for contract costs expected to be incurred to complete software development and the useful lives of fixed assets.

3.

41.67%

Basis of Accounting: a)

Percentage of Holding As at 30th Sept., 2007

Fixed Assets are stated at actual cost, except for certain fixed assets which have been stated at revalued amounts, less accumulated depreciation / amortisation and impairment loss, if any. The actual cost is inclusive of freight, installation cost, duties, taxes, financing cost and other incidental expenses but net of Modvat/Cenvat/Value

43

a)

Exploration and production cost are expensed in the year/period in which these are incurred.

b)

Development costs are capitalised and reflected as “Producing Properties”. Costs include recharges to the Joint Venture by the Operator/Affiliate in respect of the actual cost incurred and as set out in the Production Sharing Contract (PSC). Producing Properties are depleted using the “Unit of Production Method”.


Abandonment Costs:

b)

Abandonment Costs relating to dismantling, abandoning and restoring offshore well sites and allied facilities are provided for on the basis of “Unit of Production Method”. Aggregate abandonment costs to be incurred are estimated based on technical evaluation by experts. 7.

16.

Depreciation and Amortisation: i)

The Parent Company and Indian Subsidiary Companies provide depreciation on fixed assets held in India on written down value method in the manner and at the rates specified in the Schedule XIV to the Companies Act, 1956 except a) on Fixed Assets of Consumer Electronics Division except Glass Shell Division and; b) on office buildings acquired after 01.04.2000, on which depreciation is provided on straight line method at the rates specified in the said Schedule. Depreciation on fixed assets held outside India is calculated on straight line method at the rates prescribed in the aforesaid Schedule or based on useful life of assets whichever is higher. Producing Properties are depleted using the “Unit of Production Method”. Leasehold Land is amortised over the period of lease.

17.

The depreciation on revised carrying amount of fixed assets arising on account of translation of Foreign Currency Loans availed in respect of the Fixed Assets and on revaluation of assets is provided as aforesaid over the residual useful life of the respective assets.

Translation of the financial statements of foreign branch which are integral foreign operations: a)

Revenue items are translated at average rates.

b)

Opening and closing inventories are translated at the rate prevalent at the commencement and close, respectively, of the accounting year.

c)

Fixed assets are translated at the exchange rate as on the date of the transaction. Depreciation on fixed assets is translated at the rates used for translation of the value of the assets to which it relates.

d)

Other current assets and current liabilities are translated at the closing rate.

Retirement Benefits: a)

Contributions to Provident Fund and Family Pension Scheme are accounted for on accrual basis and charged to Profit & Loss Account.

b)

The Company’s employees, except for employees of units at Shahjahanpur, Dist. Alwar, Rajasthan and at Butibori Dist. Nagpur, Maharashtra, are covered under the Employees Group Gratuity Cum Life Assurance Scheme of Life Insurance Corporation of India. The Company accounts for gratuity liability equivalent to the premium amount payable to Life Insurance Corporation of India every year, which is based on actuarial valuation. The liability with respect to the gratuity for the employees of units at Shahjahanpur, Dist: Alwar, Rajasthan and at Butibori Dist: Nagpur, Maharashtra are accounted/ provided for on the basis of acturial valuation at year end.

c)

Liability on account of leave encashment in respect of employees of Glass Shell unit at village Chhavaj, Dist.Bharuch, Gujrat, unit at Shahjahanpur Dist. Alwar, Rajasthan, and unit at Butibori Dist. Nagpur, Maharashtra, is provided for on actuarial valuation basis and in respect of other employees to the extent encashable as at the end of the financial year as per rules of the Company.

d)

In case of foreign subsidiaries retirement benefits are recognised as per the respective local laws.

Intangibles: Intangible assets are amortised over a period of five years. ii)

8.

In case of foreign subsidiaries, depreciation is charged to the income statement on a straight line basis over the estimated remaining useful life of the Assets. Leasehold land is amortised on straight line method over the period of lease.

Impairment of Assets: The Fixed Assets or a group of assets (Cash generating unit) and Producing Properties are reviewed for impairment at each Balance Sheet date. In case of any such indication, the recoverable amount of these assets or group of assets is determined, and if such recoverable amount of the asset or cash generating unit to which the asset belongs is less than it’s carrying amount, the impairment loss is recognised by writing down such assets to their recoverable amount. An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

9.

Investments: a)

Current Investments : Current Investments are carried at lower of cost and quoted/ fair value.

b)

Long Term Investments : Quoted Investments are valued at cost or market value whichever is lower. Unquoted Investments are stated at cost. The decline in the value of the unquoted investment, other than temporary, is provided for.

18.

Current Tax : Provision for Current Tax and Fringe Benefit Tax is calculated on the basis of the provisions of local laws of respective entity. Deferred Tax : Deferred tax assets and liabilities are recognised for the future tax consequences of timing differences, subject to the consideration of prudence. Deferred tax assets and liabilities are measured using the tax rates enacted or substantively enacted by the balance sheet date. The carrying amount of deferred tax asset/liability are reviewed at each Balance Sheet date.

Inventories: Inventories including crude oil stocks are valued at cost or net realisable value whichever is lower. Cost of inventories comprises all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on Weighted Average Basis.

11.

19.

Share Issue Expenses:

20.

Premium on Redemption of Bonds / Debentures:

Share issue expenses are written off to Securities Premium Account.

Borrowing Costs: Borrowing costs that are directly attributable to the acquisition, construction or production of an qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

12.

Premium on Redemption of Bonds / Debentures are written off to Securities Premium Account. 21.

Excise and Customs Duty:

MODVAT/ CENVAT/ Value Added Tax:

22.

MODVAT/ CENVAT / Value Added Tax Benefit is accounted for by reducing the purchase cost of the materials/fixed assets. 14.

Revenue is recognised on transfer of significant risk and reward in repect of ownership.

b)

Sale of Crude Oil and Natural Gas are exclusive of Sales Tax. Other sales/turnover includes sales value of goods, services, excise duty, duty drawback and other recoveries such as insurance, transportation and packing charges but excludes sale tax and recovery of financial and discounting charges.

c) 15.

a)

Operating Leases: Rentals in respect of all operating leases are charged to Profit & Loss Account.

b)

Finance Leases: (i)

Rentals in respect of all finance leases entered before 1st April, 2001 are charged to Profit & Loss Account.

(ii)

In accordance with Accounting Standard - 19 on “Accounting for Leases” issued by the Institute of Chartered Accountants of India, assets acquired under finance lease on or after 1st April, 2001, are capitalised at the lower of their fair value and present value of the minimum lease payments and are disclosed as “Leased Assets”.

Insurance, duty drawback and other claims are accounted for as and when admitted by the appropriate authorities.

Foreign Currency Transactions: a)

Accounting for Leases: Where the company is lessee

Revenue Recognition: a)

Research and Development: Revenue expenditure pertaining to Research and Development is charged to revenue under the respective heads of account in the period in which it is incurred. Capital expenditure, if any, on Research and Development is shown as an addition to Fixed Assets under the respective heads.

Excise Duty in respect of finished goods lying in factory premises and Customs Duty on goods lying in customs bonded warehouse are provided for and included in the valuation of inventory. 13.

Taxation: Income tax comprises of Current Tax, Deferred Tax and Fringe Benefit Tax.

Cost is inclusive of brokerage, fees and duties but excludes Securities Transaction Tax. 10.

Foreign Currency liabilities in respect of loans availed for fixed assets and outstanding on the last day of the financial year are translated at the exchange rate prevailing on that day and any loss or gain arising out of such translation is adjusted to the cost of the fixed assets and depreciation is also charged/adjusted on such differences.

23.

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transactions. Current Assets and Current Liabilities are translated at the year end rate. The difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of Current Assets and Current Liabilities at the end of the year is recognised, as the case may be, as income or expense for the year.

Warranty: Provision for the estimated liability in respect of warranty on sale of consumer elecrtonics and Home Appliances product is made in the year in which the revenues are recognised, based on technical evaluation and past experience.

44

ANNUAL REPORT 2006-07 24.

While accepting the Interim Award, the Company computed and submitted the calculation on 31st May 2005 to Government of India (GOI) indicating the amount payable by the Company after applying the said Arbitration Award at US$ 27.02 million equivalent to Rs. 1,081.88 million, which was not accepted by GOI and it claimed that the Company needs to pay US$ 43.72 million equivalent to Rs. 1,750.55 million and interest thereon applying the same Arbitration Award. The Company filed a supplementary application on 7th July 2005 followed by an amendment application on 8th August 2005 with the Arbitration Tribunal with a prayer to determine the correct amount payable to GOI as well as to determine the interest, if any, payable on the same to GOI. Pending the final decision of the Hon’ble Arbitral Tribunal, the Company has accounted for and paid the sum of US$ 43.72 million equivalent to Rs. 1,750.55 million to GOI on ad hoc basis.

Prior Period Items: Prior period items are included in the respective heads of accounts and material items are disclosed by way of notes to accounts.

25.

Provision, Contingent Liabilities and Contingent Assets: Provisions comprise liabilities of uncertain timing or amount. Provisions are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are disclosed by way of Notes to Accounts. Disputed demands in respect of Central Excise, Customs, Income tax and Sales Tax are disclosed as contingent liabilities. Payment in respect of such demands, if any, is shown as an advance, till the final outcome of the matter.

The GOI has further filed an affidavit on 10th May 2005 before the Kuala Lumpur High Court in Malaysia challenging the Arbitration Award and praying for setting aside the Partial Award dated 31st March 2005 only in respect of ONGC Carry Issue whereas the Company has challenged the jurisdiction of the Kuala Lumpur High Court and therefore the maintainability of such an appeal at that Court.

Contingent assets are not recognised in the financial statements. 26.

Other Accounting Policies: These are consistent with the generally accepted accounting practices.

B]

NOTES TO ACCOUNTS:

As at

As at

b)

There is a dispute between the Company and GOI with regard to the computation of interest on delayed payment of profit petroleum to the extent of US$ 67,636 equivalent to Rs. 2.71 million. The Company has filed an Interim Application on 7th July 2005 before the Hon’ble Arbitral Tribunal for final determination of such amount, pending which no provision has been made by the Company.

c)

There is a dispute regarding the rate of conversion from US$ into Indian rupees applicable to the Nominees of the GOI for the purpose of payment of amount of the invoices for sale of the Crude Oil by the Company under the Ravva PSC. The dispute was referred to an International Arbitration in accordance with the provisions of the Ravva PSC. Vide the interim award dated 31st March 2005, the Tribunal has partly upheld the Company’s claim. While accepting the Award, the Company has worked out and submitted a computation on 30th June 2005 to GOI indicating the amount receivable at Rs.121.43 million being the amount short paid by GOI nominees up to 19th June, 2005 and interest thereon also calculated up to 19th June 2005.The Company further vide its letter dated 22nd August 2005 updated its claim indicating the total amount receivable from GOI Nominees at Rs.124.42 million being the amount short paid by GOI nominees up to 31st July 2005 and interest thereon also calculated up to 31st July 2005. However, GOI and the nominee of the GOI have rejected the computation and claim made by the Company.

30th Sept., 2007 30th Sept., 2006 1.

(Rs. In Million)

(Rs. In Million)

13,064.44

13,924.04

5,552.55

4,216.09

Contingent Liabilities not provided for: a) Letters of Guarantees Includes Bank Guarantees given to Sales Tax Department Rs.8.21 million (Previous year Rs. 869.12 million) against demand stated in ‘g’ below b) Letters of Credit opened c) Customs Penalty - Stayed by High Court

11.85

11.85

d) Customs Duty demands under dispute

95.96

94.42

102.16

100.25

221.81

387.17

213.41

243.74

51.42

47.91

[Amount paid under protest Rs. 0.40 million (Previous year Rs. 3.94 million)] e) Income Tax demands under dispute

The Company has filed a supplementary application on 7th July 2005 and an amendment application on 8th August 2005 with the Arbitration Tribunal with a prayer to determine the correct amount payable by GOI/its Nominees as well as to determine the interest, if any, payable on the same. The GOI has filed an Original Miscellaneous Petition (OMP) 329 of 2006 dated 20th July 2006 before Hon’ble Delhi High Court challenging the award in respect of this Dispute. Another OMP 223 of 2006 dated 9th May 2006 has been filed by GOI’s nominees HPCL and BRPL in the Hon’ble Delhi High Court challenging the Partial Award dated 31st March 2005 in respect of Conversion/Exchange Rate Matter. Both OMP 223 of 2006 are presently sub-judice before the Hon’ble Delhi High Court. The GOI nominees continue to make payments at the exchange rate without considering directive from the Hon’ble Arbitral Tribunal in this regard.

[Amount paid under protest Rs. 102.16 million (Previous year Rs. 100.25 million)] f) Excise Duty and Service Tax demand under dispute [Amount paid under protest Rs. 49.21 million (Previous year Rs. 2.43 million)] g) Sales Tax demands under dispute [Amount paid under protest

d)

GOI has filed OMP 255 of 2006 dated 30th May 2006 before the Hon’ble Delhi High Court under section 9 of the Arbitration and Conciliation Act for change of situs of arbitration from London (U.K.) to Kuala-Lumpur (Malaysia). GOI has challenged London as the permanent seat of arbitration for resolution of disputes under the Ravva PSC and has claimed for declaration of Kuala-Lumpur as the permanent seat of arbitration whereas the Company honours the award dated 15th November 2003 of the Hon’ble Arbitral Tribunal, passed with mutual consent of both the GOI and the Company, permanently fixing the seat of Arbitration at London in respect of disputes stated in (a),(b), and (c) above. The Hon’ble Arbitral Tribunal vide its letter dated 28th March 2007 has indicated that it shall contiune with the arbitration proceedings, in respect of the disputes referred above, after receiving the judgement of the Hon’ble Delhi Court in OMP 255 of 2006.

e)

In respect of the Disputes stated in (i) and (ii) of (a) above, the GOI has vide its letter dated 3rd November 2006 now raised a collective demand of Rs. 334.13 Million on account of additional profit petroleum payable and interest on delayed payments of profit petroleum calculated up to 30th September 2006 pursuant to the Partial Arbitral Award dated 31st March 2005 in the Dispute stated above at (a) and Interim Award dated 12th February 2004 and Partial Award dated 23rd December 2004 in the Dispute stated above at (b). The Company has disputed such demand and is instead seeking refund of US$ 16.70 Million equivalent to Rs. 668.67 million excess paid by the Company to the GOI with interest thereon.

Rs. 42.42 million (Previous year Rs. 34.20 million)] h) Others i)

2.

a)

Disputed Income Tax demand amounting to Rs. 22.29 million in respect of certain payment made by Ravva Oil & Gas Field Joint Venture is currently pending before the Income Tax Appellate Tribunal. The ultimate outcome of the matter cannot presently be determined and no provision for any liability that may result has been made in the accounts as the same is subject to agreement by the members of the Joint Venture. Should it ultimately become payable, the Company’s share as per the participating interest would be upto Rs. 5.57 million.

There was a dispute regarding (i) deductibility of Oil and Natural Gas Corporation Ltd. (ONGC) Carry while computing the Post Tax Rate of Return (PTRR) under the Ravva Production Sharing Contract (PSC); (ii) deductibility of provision of Site Restoration Costs for computation of Cost Petroleum and PTRR; (iii) deductibility of inventory purchased for computation of Cost Petroleum and PTRR; (iv) deductibility of Notional Dividend Distribution Tax under the Income-tax Act, 1961 for computation of PTRR; and (v) deductibility of Deposits, Advances and Pre-payments made for the purpose of Petroleum Operations in the business of Ravva Oil & Gas Field for computation of Cost Petroleum and PTRR. The Dispute was referred to an International Arbitration in accordance with the provisions of the Ravva PSC. Vide the interim award dated 31st March 2005, the Tribunal has upheld the Company’s claims stated in (i) and (v) above whereas the claim of the Company stated in (ii), (iii) and (iv) above were rejected by the Tribunal.

Any further sum required to be paid or returnable in respect of dispute above at (a) to (e) in accordance with the determination of the amount by Hon’ble Arbitral Tribunal/ High Courts in this behalf shall be accounted for on the final outcome in this regard. 3.

45

In case of parent company, the gross block of fixed assets includes Rs.9,244.75 million (Previous year Rs. 9,245.73 million ) on account of revaluation of fixed assets carried out in the past on 1st April 1998 and 1st October 2002. The additional depreciation consequent

VIDEOCON INDUSTRIES LIMITED upon revaluation of fixed assets is being charged to Profit and Loss account. Hitherto, an amount equivalent to the said additional depreciation was being withdrawn from General Reserve and credited to Profit and Loss Account. From this year, the Company has changed this accounting policy and the amount equivalent to the such additional depreciation is being withdrawn from Revaluation Reserve and credited to the Profit and Loss Account. Consequent to this change in policy the cumulative amount transferred from General Reserve on account of additional depreciation relating to revaluation of fixed assets upto 30th September 2006 amounting to Rs.7,538.89 million has been transferred from Revaluation Reserve Account to General Reserve Account. This change in Accounting Policy has no impact on the Profit for the Year. 4.

During the year certain revalued assets have been disposed off. As required by Accounting Standard - 10 “Accounting for Fixed Asset”, loss on disposal of such assets to the extent of Rs.0.98 million (Previous year Rs.13.64 million) is directly charged to Revaluation Reserve relating to the increase which was previously recorded as a credit to Revaluation Reserve.

7.

b)

The Bonds are redeemable in whole but not in part at the option of the company on or after 7th February, 2009 but prior to 28th February, 2011 if aggregate value on each of 30 consecutive trading days ending not earlier than 14 days prior to the date upon which notice of such redemption is given was at least 130% of the accreted principal amount.

iii

The Bonds are redeemable at maturity date on 7th March, 2011 at 116.738% of its principal amount, if not redeemed or converted earlier.

The bonds are convertible at the option of the bondholders at any time on or after 2nd September 2006 until 18th July 2011 except for certain closed periods, at a fixed exchange rate of Rs.46.318 per 1 US$ and at initial conversion price of Rs.511.18 per share being at premium of 22% over reference share price. The conversion price shall be adjusted downwards in the event that the average closing price of shares for 15 consecutive trading days immediately prior to the reset date is less than conversion price, subject to a floor price of Rs. 410/- as adjusted in accordance with the anti-dilution provisions.

ii

Redeemable in whole but not in part at the option of the Company on or after 24th August 2009, if aggregate value on each of 30 consecutive trading days ending not earlier than 14 days prior to the date upon which notice of such redemption is given was at least 130% of the accreted principal amount.

iii

Redeemable at maturity date on 25th July, 2011 at 127.65% of its principle amount, if not redeemed or converted earlier.

B)

During the year, the holders of 1099 Bonds have exercised their option and have converted the Bonds into Equity Shares at the fixed rate of exchange. In view of the above and considering the uncertainity of the number of bond holders exercising the option of conversion at the fixed exchange rate and uncertainty of foreign exchange rate prevailing on the dates of redemption, a provision of Rs 1,023.91 million being the amount of foreign exchange fluctuation gain on FCCB during the year, has been made in the accounts in accordance with the requirement of Accounting Standard 29-Provisions, Contingent Liabilities and Contingent Assets.

C)

Subsequent to the year end, 85,250 Bonds have been converted into 8,339,350 equity shares of Rs.10/- each on exercise of the option by the bond holders. As at

30th Sept., 2007 30th Sept., 2006 (Rs. In Million)

(Rs. In Million)

5,292.78

2,798.24

5,292.78

2,798.24

The major components of deferred tax liabilities/ assets are as under: a)

Deferred Tax Liabilities Related to Depreciation on Fixed Assets & amortisation

Expenses charged in the financial statements but allowable as deduction in future years under the Income Tax Act, 1961

iii)

Diminution in value of investments charged in Profit & Loss Account

iv)

Tax Credit available U/S 115 JAA

v)

Other

651.73

1,139.23

19.63

21.30

54.84

40.74

1,011.88

-

975.57

65.51

2,713.65

1,266.78

2,579.13

1,531.46

Joint Venture Disclosure: Ravva Oil & Gas Field: The Production Sharing Contract (PSC) in respect of Ravva Oil and Gas Field was entered into on 28th October 1994 (Effective Date) between the President of India on behalf of the Government of India and contractor parties viz. Oil and Natural Gas Corporation Ltd, erstwhile Petrocon India Limited (now amalgamated with the Company), Cairn Energy India Pty Limited and Ravva Oil (Singapore) Pte. Ltd. The contractor parties have persuant to the PSC, entered into a Joint Operating Agreement on the Effective Date. Cairn Energy India Pty Ltd. is the Operator. The participating interest of the Company in the said PSC is 25%.

105,000 Foreign Currency Convertible Bonds of US$ 1000 each (Bonds) due on 25th July 2011.[outstanding Bonds 104,901 (Previous year 105,000).]

As at

6.

ii)

a)

The bonds are convertible at the option of the bondholders at any time on and after 20th March 2006 upto the close of business on 28th February, 2011 at a fixed exchange rate of Rs.44.145 per 1 US$ and at initial conversion price of Rs.545.24 per share being at premium of 15% over the reference share price. The conversion price shall be adjusted downwards in the event that the average closing price of shares for 15 consecutive trading days immediately prior to the reset date is less than conversion price, subject to a floor price of Rs. 410/- as adjusted in accordance with the anti-dilution provisions.

ii

i

Related to Unabsorbed Depreciation and Business Loss

Unincorporated Joint Venture

90,000 Foreign Currency Convertible Bonds of US$ 1000 each (Bonds) due on 7th March, 2011 [outstanding Bonds 89,000 (Previous year 90,000)]. i

Deferred Tax Assets

i)

Net Deferred Tax Liability

5. A) The Company had, during the year 2006, issued a)

b)

b)

The Consortium comprising the Company, Oilex NL Australia, GAIL India Ltd., Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd. has been awarded the Block #56, on the Eastern Plank of the Central Salt Producing Oil Field in Oman. The Exploration Production Sharing Agreement and Joint Operating Agreement has been executed on 28th June, 2006. The exploration drilling would be commenced after the aquisition of additional seismic data. The Participating interest of the Company in the said venture is 25%. The Capital Commitments of the Company based on estimated minimum work programme for first exploration period of three years in relation to its participating interest is Rs. 251.04 (Previous year Rs.344.43) million.

c)

Great Artesian Oil and Gas Ltd (GOG) holds 100% of EPP 27 offshore Otway Basin, South Australia which is in year 6 of the permit term. The Company, Oilex NL, Gujarat State Petroleum Corporation Ltd. and GOG have entered into Farm-in agreement and Joint Operating Agreement in February, 2006.The acquisition of 2D Seismic Data and drilling of one exploration well is in progress. The participating interest of the Company is 20%. The minimum work programme proposed in the bid application for seismic survey, data processing and drilling of one exploration well involves capital commitment in relation to its participating interest of Rs. 171.64 (Previous year Rs.194.53) million.

d)

The Consortium comprising the Company, Oilex NL, Australia, Gujarat State Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd. has been awarded a Block WA-388-P for a term of 6 years from Government of Western Australia. Joint operating Agreement has been signed by all of Joint venture parties in March 2007. The acquisition of Seismic Data is in progress. The participating interest of the Company is 20%. The Capital Committments of the Company based on six year work program in relation to its participating interest is Rs.163.30 million (Previous year Rs. NIL).

e)

The consortium comprising the Company and Bharat PetroResources Limited (BPRL), a wholly owned subsidiary of Bharat Petroleum Limited, have entered into an agreement with EnCana Corporation and 749739 Alberta Limited (“Vendors”) for purchase from Vendors, 100% equity of EnCana Brasil Petróleo Limitada, (EBPL) for a consideration of approximately US$ 165 million. The effective date of the agreement has been agreed to be January 01, 2007. Closing of the transaction is subject to normal closing conditions and regulatory approvals. EBPL has interests in four concessions with ten deep water offshore exploration blocks in Brazil. The Company and BPRL are equal partners in the consortium. At present the regulatory authorities in Brasil are reviewing the application of EBPL for granting its approval for change of control of EBPL.

f)

The consortium, comprising the subsidiary (Special Purpose Vehicle) of the Company, Global Energy Inc. Oilex (JPDA 06-103) Limited, GSPC (JPDA) Limited and Bharat Petro Resources JPDA Limited, has been awarded block JPDA 06-103 situated within the Bonaparte Basin, East Timor. The PSC has been signed on 15th November, 2006 and Joint Operating Agreement has been signed on 5th January, 2007. The participating interest of Global Energy Inc. is 25%. Contract for 3D Seicmic Data has been awarded. The capital commitments based on committed minimum work programme for five years period in relation to participating interest of Global Energy Inc is Rs.716.72 million. (Previous Year Rs.NIL). The Financial Statements reflect the share of the Company in the assets and the liabilities as well as the income and the expenditure of Joint Venture Operations on a line by line basis. The Company incorporates its share in the operations of the Joint Venture based on statements of account received from the Operator. The Company

46

ANNUAL REPORT 2006-07 has, in terms of Accounting Policy No. A-7 above, recognised abondonment costs based on the latest technical assessment of current costs available with the Company as cost of producing properties and has been providing Depletion thereon under ‘Unit of Production’ method as part of Producing Properties in line with Guidance Note on Accounting of Oil and Gas Producing Activities issued by the Institute of Chartered Accountants of India. 8.

b)

The company has entered into transactions with certain related parties as listed below. The Board considers such transactions to be in normal course of business. (Rs. Million) Nature of Transaction

The company has kept the investment activities separate and distinct from the normal business. Consequently, all the income and expenditure pertaining to investment activities have been allocated to the Investments & Securities Division and the income/loss after netting off the related expenditure has been shown as “Income/(Loss) from Investments & Securities Division” under “Other Income”.

ii. Debenture/Bond - Interest/Premium: on Long Term Investments (TDS Rs. 0.17 million (Previous year Rs.3.19 million)) iii. Gain / (Loss) on Sale of Investment: Long Term Current 10.

8.03

14.20

492.11 254.78

172.12 (14.77)

7,058.95

7,923.37

41.97

38.62

Net Profit attributable to Equity Shareholders including exceptional Items Add/(Less): Exceptional Items (net of taxes)

7,016.98 -

7,884.75 (131.35)

Net Profit attributable to Equity Shareholders excluding exceptional Items Add : Changes (net) related to FCCBs

7,016.98 22.30

7,753.41 -

Adjusted Net Profit for Diluted EPS

7,039.28

7,753.41

221,019,058

220,986,249

239,963,551

220,986,249

Rs. 31.75 Rs. 29.33 Rs. 31.75 Rs. 29.33

Rs. 35.68 Rs. 35.68 Rs. 35.09 Rs. 35.09

221,019,058 18,944,493 239,963,551

220,986,249 220,986,249

ii. Weighted Average number of equity shares for Basic EPS Weighted Average number of equity shares for Diluted EPS iii. Basic Earnings per Share including exceptional items Diluted Earnings per Share including exceptional items Basic Earnings per Share excluding exceptional items Diluted Earnings per Share excluding exceptional items iv. Reconciliation of weighted average numbers of Equity Shares outstanding during the year For Basic Earning Per Share Add : Adjustment on account of FCCBS For Diluted Earning Per Share

12.

15.35 -

53.52 (64.27)

Receivable from unincorporated Joint Venture Payable to unincorporated Joint Venture

35.11 (2.18) 2.14 (0.29)

13.

Funds mobilised by issue of Foreign Currency Convertible Bonds have been utilised for the object of the issue i.e. for expansion of glass shell manufacturing facilities, expansion of consumer electronics and household appliances business and global CPT business.

14.

Reserves: Share of the Company in Ravva Oil & Gas field (Unincorporated) Joint Venture remaining reserves on proved and probable basis (as per Operator’s estimates) Particulars

15.

Unit of measurement

Crude Oil

Million Metric Tonnes

Natural Gas

Million Cubic Metres

As on 30.09.2007

16.

2.19

2.77 678.36

As required by Accounting Standard 29 “Provisions, Contingent Liabilities and Contingent Assets” issued by Institute of Chartared Accountants of India the disclosure with respect to provisions are as follows: As on 30.09.2007

(Rs. in Million)

Warranty & Maintenance Expenses (Rs. in Million)

1,023.91 1,023.91

390.10 393.83 378.44 405.48

a) b) c) d) e)

Amount at the beginning of the year Additional provision made during the year Amount used Unused amount reversed during the year Amount at the end of the year

A. i)

Operating Lease Future obligation of the Company for assets taken on all leases entered into before 1st April 2001 is Rs. Nil. Subsequent to 1st April, 2001 the Company has entered into operating lease agreements for Cars, Buildings and equipments. The lease rentals charged during the year are Rs. 174.50 million. The maximum obligation on long-term non-cancellable operating leases entered on or after 1st April , 2001 payable as per the rentals stated in respective agreements are as follows:

ii)

iii)

Minimum Lease Payments

B.

As at 30.09.07 (Rs. in Million)

Not later than 1 year Later than 1 year and not later than 5 years More than 5 year

227.98 949.64 1,864.47

TOTAL

3,042.09

Finance Lease i.

List of Related Parties i) Associate and Joint Venture - Ravva Oil & Gas Field (unincorporated) Joint Venture - Participating Interest 25% - Evans Fraser & Co. (India) Ltd.- Associate - WA - 388-P Joint Venture - participating interest 20% - Block 56 Joint Venture - Oman - participating interest 25% - EPP 27 Joint Venture - participating interest 25% ii) Key Management Personnel - Mr. Venugopal N. Dhoot - Chairman & Managing Director - Mr. Pradipkumar N. Dhoot - Whole time Director - Mr. Henke Dieter - Mr. Pradzynski Michal - Mr. Albino Bessa - Mr. Neeraj Kumar - Mr. Marco Padela - Mr. Sanjay Karwa - Mr. Toshihiro Ueki

ii.

Reconciliation between minimum lease payment at Balance Sheet date and its Present Value. (Rs. In Million) a. Total of minimum Lease Payment at the Balance Sheet date 48.69 b. Less : Finance Charge 3.34 Total present value of minimum lease payments 45.35 (Rs. Million) Total of minimum Lease Payment at the Balance Sheet date Minimum lease payment a. b.

47

As on 30.09.2006

490.81

Exchange Rate Fluctuation

The Company has invested an amount of Rs. 719.11 million (Net of diminution) in units of mutual funds out of which investments to the extent of Rs. 550.20 million have been earmarked against provision for abandonment cost included under the head ‘Other Liabilities’ in Schedule 8. Related Party Disclosures As required under Accounting Standard 18 on “Related Party Disclosure”, the disclosure of transaction with related parties as defined in the Accounting Standard are given below. a)

1735.31 (470.21)

Outstanding as at 30th September 2007

Earnings Per Share: i. Net Profit attributable to Equity Shareholders Net Profit as per Profit & Loss Account Less : Dividend on Preference Shares including Tax on the same

11.

15.71 1.28

Key Management Personnel

Remuneration

The Income from Investments and Securities Division includes: i. Dividends: on Long Term Investments on Current Investments

Associates/ Joint Venture

Contribution towards share of expenditure

For the year For the year ended ended 30th Sept., 2007 30th Sept., 2006 (Rs. In Million) (Rs. In Million) 9.

Transactions/outstanding Balances with Related Parties :

Payable not later than one year Payable later than 1 year and not later than 5 years

Present value of minimum lease payment

15.00

13.29

33.69

32.06


Segment Information i)

The Company and its subsidiaries have identified two reportable segments viz. Crude Oil & Natural Gas and Consumer Electronics & Home Appliances. Segments have been identified and reported taking into account nature of products and services, the differing risks and return. a)

Segment revenue and expenses include the respective amounts identifiable to each of the segments on the basis of relationship to operating activities of the segment as also amounts allocated on a reasonable basis. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as “Unallocable”

b)

Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other corporate assets and liabilities that cannot be allocated between the segment are disclosed as “Unallocable”.

c)

Primary Segment Information - Business segment: (Rs. In Million) Crude Oil & Natural Gas

Consumer Electronics & Home Appliances

Particulars

Others

Total

30th Sept., 2007

30th Sept., 2006

30th Sept., 2007

30th Sept., 2006

30th Sept., 2007

30th Sept., 2006

30th Sept., 2007

30th Sept., 2006

14,101.91

14,394.14

111,869.39

115,239.57

-

-

125,971.30

129,633.71

-

-

-

-

-

-

-

14,101.91

14,394.14

111,869.39

115,239.57

-

-

125,971.30

4,427.70

4,824.34

6,415.19

4,999.65

-

-

10,842.89

9,823.99

Less: Interest Expenses

-

-

-

-

-

-

4,565.37

3,414.46

Add/(Less) Other Unallocable

-

-

-

-

-

-

2,955.74

2,040.42 8,449.95

1. Segment Revenue - External - Inter Segment Total Segment 2. Segment Result before Interest

129,633.71

Profit before Exceptional Items, Minority Interest, Share of Profit of Associate and Taxation

-

-

-

-

-

-

9,233.26

Add/(Less) : Exceptional Items

-

-

-

-

-

-

-

131.35

Add: Adjustment on Disposal of Subsidiaries

-

-

-

-

-

-

18.01

147.09

Less : Provision for Current Tax

-

-

-

-

-

-

1,282.77

916.72

Less : Provision for Deferred Tax

-

-

-

-

-

-

1,085.70

51.02

Less : Provision for Fringe Benefit Tax

-

-

-

-

-

-

23.89

15.41

Profit for the year before Minority Interest and Share of Profit of Associate

-

-

-

-

-

-

6,858.91

7,745.24

Share of Profit in Associate Company

-

-

-

-

-

-

31.18

23.43

Minority Interest

-

-

-

-

-

-

100.77

(156.67)

Excess provision for Income Tax for earlier years written back

-

-

-

-

-

-

68.08

3.95

Prior Period Adjustments

-

-

-

-

-

-

-

307.43

Net Profit for the year

-

-

-

-

-

-

7,058.94

7,923.38

Crude Oil & Natural Gas Particulars 30th Sept., 2007

Consumer Electronics & Home Appliances

Unallocable

30th Sept., 2006

30th Sept., 2007

30th Sept., 2006

Total

30th Sept., 2007

30th Sept., 2006

30th Sept., 2007

30th Sept., 2006

3. Other Information Segment Assets

3,630.22

3,502.87

147,959.68

147,726.32

18,857.77

11,794.13

170,447.68

163,023.32

Segment Liabilities

1,655.69

1,809.15

86,440.28

92,567.18

13,007.63

3,105.73

101,103.60

97,482.06

Capital Expenditure

4.75

22.26

14,638.42

16,804.89

75.67

26.10

14,718.84

16,853.25

80.02

106.08

5,604.97

4,288.33

66.29

86.12

5,751.28

4,480.53

833.95

177.36

-

-

0.05

0.02

833.99

177.38

Depreciation Non Cash Expenses other than depreciation ii)

Secondary Segment Information (Rs. In Million) Particulars

Within India

Outside India

99,418.69

26,552.61

125,971.30

Total

a.

Segment Revenue - External Turnover

b.

Segment Assets

127,002.19

43,445.49

170,447.68

c.

Segment Liabilties

70,116.47

30,987.13

101,103.60

d.

Capital Expenditure

9,662.44

5,056.40

14,718.84

As per Accounting Standard 17 on segment reporting (AS-17) issued by the Institute of Chartered Accountants of India, the Company has reported segement information on consolidated basis including the business conducted through it’s subsidiaries. 18.

Capital Reserve on consolidation is net of Goodwill on consolidation of Rs. 93.27 million.

19.

Figures in respect of previous year have been regrouped and recasted wherever necessary to make them comparable with those of current year.

48

Corrigendum The following are the typesetting errors in the printed Annual Report of the year 2006-2007: Page. No of Annual Report 13

22

32

40

Nature of typesetting error The segment wise turnover of the Consumer Electronics & Home Appliances segment wrongly printed under the segment "Crude Oil & Natural Gas" and vice-versa.

Schedule 6 i.e., Investment Schedule (In Equity Shares (Fully Paid up)) – Others, printed wrongly as 1,779.79 Million Under serial no. 4(a) Sky Billion Trading Limited. Amount wrongly printed as Rs. 2,284,859/-. In the note with * the amount wrongly printed as Rs. 9,245.73 million (Previous year Rs. 9,518.45 million)

To be read as (Rs. Millions) Segment

Current Year ended 30.09.2007 111,869.39

Consumer Electronics and Home Appliances Crude Oil 14,101.91 and Natural Gas

Previous year ended 30.09.2006 115,239.57

14,394.14

Rs. 1,773 .79 Million

Rs. 2,384,859/-

Gross Block of Plant and Machinery includes Rs. 9,244.75 Million (Previous Year Rs. 9,245.73 Million) being the amount added on revaluation on 01.08.1998 and 01.10.2002.

This Corrigendum is being attached to the Annual Report of the Company for the year 2006-07 and is an integral part of the same.

PROXY FORM

VIDEOCON INDUSTRIES LIMITED Regd. Office : 14 KM Stone, Aurangabad-Paithan Road, Village Chittegaon, Taluka Paithan, Dist. Aurangabad - 431 105, (Maharashtra)

Regd. Folio No./Client ID No. .................................................................. I/We .............................................................................................................................................................................................. of ............................................................................................................................................................................... in the district of ........................................................................................................................................ being a Member / Members of the above named Company hereby appoint .................................................................................................................................................. of ..................................................................... in the district of .............................................................................. or falling him/her .......................................................................................... of ................................................................................................ in the district of ................................................................................................................... as my/our proxy to vote for me/our behalf at the 19th ANNUAL GENERAL MEETING of the Company to be held on Monday, 31st day of March, 2008 at 9.30 A.M. at Registered Office of the Company at 14 KM Stone, Aurangabad-Paithan Road, Taluka Paithan, Dist. Aurangabad - 431 105, (Maharashtra) and at any adjournment thereof. Affix Rupee 1/Revenue Stamp

Signed ..............................................this day of ..........................................2008.

NOTE: This form duly completed and signed should be desposited at the Registered Office of the Company not less than 48 hours before the time of commencement of the Meeting.

ATTENDANCE SLIP

VIDEOCON INDUSTRIES LIMITED Regd. Office : 14 KM Stone, Aurangabad-Paithan Road, Village Chittegaon, Taluka Paithan, Dist. Aurangabad - 431 105, (Maharashtra)

Regd. Folio No./Client ID No.: ........................................... No. of Shares held ............................................................................. I certify that I am a registered Shareholder/Proxy for the registered Shareholder of the Company. I hereby record my presence at the 19th ANNUAL GENERAL MEETING of the Company held on Monday, 31st day of March, 2008 at 9.30 A.M. at the Registered Office of the Company at 14 KM Stone, Aurangabad-Paithan Road, Taluka Paithan, Dist. Aurangabad - 431 105, (Maharashtra)

................................................................................................... Member’s / Proxy’s Name in Block Letters

........................................................................... Member’s / Proxy’s Signature

NOTE : Please fill in this attendance slip and hand it over at the ENTRANCE OF THE MEETING HALL. Please read errata for type setting matter.

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If undelivered, please return to : MCS LIMITED Unit : VIDEOCON INDUSTRIES LIMITED Harmony, 1st Floor, Sector 1, Khanda, New Panvel (West) - 410 206, District - Raigad (Maharashtra)