June 29th, 2007; July 31st 2007; October 31st, 2007; November 29th, 2007; January 30th, 2008, and February 28th, 2008.

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1 KHAITAN ELECTRICALS LIMITED CORPORATE GOVERNANCE REPORT. Company s Philosophy on Code of Governance: Your Company believes that good corporate governance entails the balancing of corporate actions with the interests of all stakeholders and satisfying the tests of accountability, transparency and fair play.. Board of Directors: The strength of your Company s Board is ten directors comprising five non-executive directors, out of whom four are independent directors, viz., Sri O.Swaminatha Reddy, Sri M.G.Todi, Sri Ajay Kumar Kajaria, Sri Jyoti P. Tibrewala and Sri. S.K.Khaitan, nonexecutive Chairman of the Board. The Five Executive Directors include Sri Sunil K.Khaitan, Vice Chairman & Managing Director, Sri Sajjan Dabriwal, Dy.Managing Director, Sri R.A.Lohariwala, Executive Director, Sri G.R.Choudhary, Finance Director & Secretary and Sri P.S.Prabhakar, Executive Director. Six Board meetings were held during the period from st April, 007 to March 3, 008 on the following dates: June 9th, 007; July 3st 007; October 3st, 007; November 9th, 007; January 30th, 008, and February 8th, 008. The attendance at Board Meetings and at the Last Annual General Meeting and the No.of Other Directorships and Committee Memberships/Chairmanships of Directors is given below: Name of Directors Sri S.K.Khaitan Sri O.Swaminatha Reddy Sri M.G.Todi Sri A.K.Kajaria Sri Jyoti P.Tibrewala Sri Sunil K.Khaitan Sri Sajjan Dabriwal Sri R.A.Lohariwala Sri G.R.Choudhary Sri P.S.Prabhakar No. of Board Meetings Attended Attendance at Last AGM (Yes/No) Yes Yes No No Yes No Yes No No Yes Number of Directorships in other Public Limited Companies Committee Memberships in other Public Limited Companies (excluding Khaitan Electricals Ltd.) 5 6

2 KHAITAN ELECTRICALS LIMITED 3. Disclosure Regarding Appointment Or Reappointment Of Directors: Given below are the abbreviated resumes of the Directors of Khaitan Electricals Ltd. seeking re-appointment: Sri S.K. Khaitan (67years) is the Chairman and Promoter of the Company. He is a Commerce Graduate and having over three decades of experience in running industry and business. His other Directorships in other Public Limited Companies include Khaitan (India) Limited, Khaitan Lefin Ltd., Murlidhar Ratanlal Exports Ltd., Emami Paper Mills Ltd. and Rupa & Co. Ltd. His Shareholdings in the Company: 609 Nos. Sri Sunil K. Khaitan (48Years) is the Vice-Chairman and Managing Director of the Company. He is a Post Graduate in MBA having 9 Years experience in the Fan Industry. He is associated with the Company for over two and a half decades after joining the Board of the Company in January, 979. His other Directorships in other Public Limited Companies include Khaitan (India) Ltd. and Khaitan Lefin Ltd., His Shareholdings in the Company: Nos. * Sri R.A. Lohariwala (58 Years) is the Executive Director of the Company. He is a Commerce Graduate (Hons) and LLB. He has been associated with the group for about 5 Years and has got wide experience in fan industry, particularly in production, marketing and commercial areas. His other Director Ships in other Public Limited Companies include The Oriental Mercantile Co. Ltd. He holds no share in the Company. Sri G.R. Choudhary ( 50 Years ) is the Finance Director and Secretary of the Company. He is a Chartered Accountant and Company Secretary. He is associated with the group for about Years and has got varied experience in the fields of Finance, Secretarial, Accountancy and Taxation matters. His other Directorships in other Public Limited Companies include Khaitan Lefin Ltd. and Naturewealth Development Corporation Ltd. His Shareholdings in the Company: Nos.

3 4. Audit Committee: Your Company has an Audit Committee comprising four Non Executive and Independent Directors (viz.,sri O.Swaminatha Reddy, Sri Jyoti P. Tibrewala, Sri A.K.Kajaria and Sri M.G.Todi). Sri O.Swaminatha Reddy is the Chairman of the Committee. Sri P.S.Prabhakar, Executive Director is the Secretary of the Committee. The terms of reference of the Audit Committee cover the matters specified under Clause 49 of the Listing Agreement as well as in Section 9A of the Companies Act, 956. During the period under review, the Audit Committee held Three Meetings on June, 9 th, 007; October 3 st, 007; January 30, 008. The attendance at the Audit Committee Meetings is given below: Name of Director Sri O.Swaminatha Reddy Sri Jyoti P. Tibrewala Sri A.K.Kajaria Sri M.G.Todi No. of Meetings Attended 5(a). Directors Remuneration Committee Directors Remuneration Committee was formed on May 8th, 004. The Committee has been constituted to recommend/review the remuneration package of the Vice-Chairman / Whole-time Directors. During the year, the committee met once on June 9th, 007 in which all the members were present. Members Meeting Attended Sri M.G.Todi (Chairman of the Committee) Sri S.K.Khaitan Sri A.K.Kajaria ROLE OF COMMITTEE:- Determining and monitoring of the Company s policy and specific remuneration packages including pension rights and any compensation payment for Whole-time Directors.

4 5(b). Remuneration of Directors: The details of remuneration of the Directors during the period under review are as follows: Name of the Directors Sri S.K.Khaitan Sri O.Swaminatha Reddy Sri Jyoti P.Tibrewala Sri M.G.Todi Sri A.K.Kajaria Sri Sunil K.Khaitan Sri Sajjan Dabriwal Sri R.A.Lohariwala Sri G.R.Choudhary Sri P.S.Prabhakar Salary and Perquisites (Rs.) 3,509,378,,87,058,600,056,90 96,38 Commission (Rs.) Sitting fees (Rs.) 5,000 5,000 30,000 5,000 5,000 Total (Rs.) 5,000 5,000 30,000 5,000 5,000 6,509,378,9,87,458,600,456,90 3,6,38 Period of appointment & (Notice Period) to (Three Months) to (Three Months) to (Three Months) to (Three Months) to (Three Months) 6. Share Transfer Committee and Shareholders /Investors Grievances Committee: Your Company has a Share Transfer Committee comprising Sri S.K.Khaitan, Sri Sunil K.Khaitan, Sri Jyoti P. Tibrewala, Sri Sajjan Dabriwal, Sri G.R.Choudhary and Sri P.S.Prabhakar. The Committee met 4 times during the period under review. All shares received for transfer were registered and dispatched within 30 days of receipt, if the documents were correct and valid in all respects. Your Company received 39 Nos. of Transfers/Transmission applications during the year and the above applications were duly transferred and dispatched subsequently within the stipulated period and no transfers are pending as on date. Your Company received 69 Nos. of D mat applications during the year and the said D mat applications were duly confirmed within the stipulated period and no D mat cases are pending as on date. Your Company also has a Shareholders /Investors Grievance Committee to review the Shareholders and Investors Grievances. The Committee met Twice on October 8, 007 and March 3st, 008 during the period under review. The Committee is Chaired by Sri Jyoti P.Tibrewala, a Non-executive Independent Director. The other members of the Committee are Sri Sajjan Dabriwal, Deputy Managing Director and Sri P.S.Prabhakar, Executive Director. Sri P.S.Prabhakar, Executive Director is the Secretary of the Committee. Sri P.S.Prabhakar is presently the Compliance Officer and the Secretary of the Share Transfer Committee as well as the Shareholders /Investors Grievance Committee. Your Company received 9 Nos. of Complaints from Shareholders relating to the non receipt of dividend, Exchange of Certificates, Bonus Shares, Annual Report, Shares sent for transfers, and D mat credit etc., The complaints were duly attended to and there were no complaints pending for more than 30 days as on March 3, 008.

5 7. General Body Meeting: AGM FINANCIAL LOCATION DATE TIME YEAR 3ST Federation of A.P. Chambers 5 th September,.00 A.M and Commerce of Industry, Hyderabad th Federation of A.P. Chambers and Commerce of Industry, Hyderabad th September, A.M 9th Federation of A.P. Chambers and Commerce of Industry, Hyderabad th September, 005 Special Resolution transacted at the Last Three Annual General Meetings held on: SEPTEMBER 5th, A.M No Special Resolution was passed at the 3st Annual General Meeting held on September 5 th, 007 SEPTEMBER 6th, 006 No Special Resolution was passed at the 30th Annual General Meeting held on September 6 th, 006. SEPTEMBER 5th, 005 No Special Resolution was passed at the 9 th September, 5 th, 005. Annual General Meeting held on All resolutions as set out in respective notices were duly passed by the shareholders. No. Resolution requiring postal ballot has been placed for shareholders approval at the ensuing Annual General Meeting. 8. Disclosures: There were no transactions of material nature between the Company and its directors or Management and their relatives or promoters that may have a potential conflict with the interest of the Company. The Register of Contracts, containing transactions in which directors are interested is placed before the Board regularly. There have been no instances of non-compliance by the Company on any matters related to capital markets and hence the question of penalties or strictures being imposed on the Company by the Stock Exchange or SEBI or Statutory authority does not arise.

6 9. Means of communications: The annual, half-yearly and quarterly results are regularly submitted to Stock Exchanges in accordance with the Listing Agreement and normally published in the Business Standard and Andhra Bhoomi. During the year the Company has not made any presentation to institutional investors or analysts. The Management Discussion and Analysis Report form a part of Directors Report. 0. General Shareholders Information: a. Annual General Meeting: Date and time Venue 6 th September, 008 at.00 A.M.. The Federation of A.P.Chambers of Commerce and Industry (FAPCCI) Premises Surana Udyog Hall Federation House,-6-84,Red Hills HYDERABAD b. Financial Calendar (tentative) - st quarter 4 th week of July, nd quarter/half-yearly 4 th week of Oct, rd quarter 4 th week of Jan Audited results 4 th week of June,009. c. Dates of Book closure 0 st September, 008 to 6 th September, 008 d. Dividend payment in October, 008 e. Stock Exchanges where listed and. The Stock Exchange, Mumbai Stock Code Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai (Stock Code : 50469). National Stock Exchange of India Ltd. Exchange Plaza, 5 th Floor, Plot No.C/. G Block, Bandra Kurla Complex, Bandra (East), Mumbai (Stock code : Khaitan Ele. EQ Note:- Delisting Application Still Pending with CSE from December, 004. The listing fee for the year has been paid to BSE & NSE. f. ISIN allotted to Equity Shares INE 76A009

7 KEL PRICES(Rs.) BSE SENSEX g. Market Price Data: BSE APR. MAY JUN. JUL. AUG. SEP. OCT. NOV. DEC. JAN. FEB. MAR. HIGH LOW CLOSE MONTHLY VULUME (RS.INLACS) h. Stock Performance Index Comparision Chart : APR'07 MAY'07 JUN'07 JUL'07 AUG'07 SEP'07 OCT'07 NOV'07 DEC'07 JAN'08 FEB'08 MAR'08...KEL -SENSEX i. Depository Registrar & Share Transfer Agents: M/s. CIL Securities Ltd., 4 Raghava Ratna Towers Chirag Ali Lane Abids, HYDERABAD Phone Nos /30355 Fax No

8 j. Distribution of Shareholdings as on 3 st March, 008 Shares held Upto To To To To To To and above Physical mode Electronic Mode No of Shareholders % of Shareholders No of Shares Held % of Shares Holding k. Shareholding Pattern as on 3 st March, 008 Categories No. of Shares % Promoters Holdings Mutual Funds Banks, Financial Institutions & Others Private Corporate Bodies Indian Public NRI/OCBS TOTAL

9 l. Outstanding Equity Share Warrants,00,000 Nos Equity Share Warrants Outstanding as on ( 0,00,000 Equity Share Warrants allotted to Promoters on 4 th December, 006, out of the above 8,00,000 Nos Warrants Converted into Equity Rs.0/-each at a premium of Rs./- per Share on th March, 008 ). These Warrants having not been converted within 8 Months(i.e up to 3 th June, 008) as per SEBI DIP Guidelines, stand lapsed. m. Plant Location : Plot No.9, S.V.Co-op.Industrial Estate, IDA, Bollaram, Medak Dist. P-0 Transport Depot Road Kolkata Plot No.4, Sector 6 Faridabad 006 (Haryana) Unit : Shree Shyam Industries -Gondpur Industrial Area Dist Sirmor, Paonta Sahib (Himachal Pradesh) n. Address for Correspondence : Shareholders correspondence should be addressed to Company s Share Transfer Agents at the address given in (i) above. In case of any difficulty, Shareholders may contact Sri A.V.S.G.Krishna Murthy, Senior Officer, Secretarial at the Company s Secretarial Department at A-3, Co-operative Industrial Estate, Balanagar, Hyderabad , Telephone Nos : /0/0/03 or by at hydfactory@khaitan.com / hydcommercial@khaitan.com or by fax : o. CEO Declaration on Code of Conduct Reproduced is the text of the declaration made by the Vice Chairman and Managing Director confirming compliance of Code of Conduct by all Directors and Senior Management Personnel: This is to confirm that the Company has adopted a code of conduct for its employees and all Board Members. This code is available on the Company s Website. I Confirm that the Company has in respect of the financial year ended March 3, 008 received from the Senior Management Personnel and the Board Members, a declaration of compliance with the Code of Conduct. Kolkata June 30, 008 Sunil K. Khaitan Vice Chairman & M.D

10 KHAITAN ELECTRICALS LIMITED AUDITORS CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCE UNDER CLAUSE 49 OF THE LISTING AGREEMENTS To the Members of Khaitan Electricals Limited. We have reviewed the implementation of Corporate Governance procedures by Khaitan Electricals Limited during the period ended 3 st March, 008, with the relevant records and documents maintained by the Company, furnished to us for our review and the report on Corporate Governance as approved by the Board of Directors.. The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. 3. On the basis of our review and according to the information and explanations given to us, the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreements with the Stock Exchanges have been complied with in all material respect by the Company. 4. As required by the Guidance Note issued by the Institute of Chartered Accountants of India, we have to state that there are no investors grievances unattended for a period exceeding one month against the Company as per the records maintained by the Company. For V.S.RAO & CO. Chartered Accountants For G.P.AGRAWAL & CO. Chartered Accountants Kolkata V S RAO SUNITA KEDIA 30th June, 008 Partner Partner Membership No.4748 Membership No.606

11 To The Board of Directors Khaitan Electricals Ltd. Hyderabad. Sirs, C E R T I F I C A T E (Under clause 49 of Listing Agreement for Corporate Governance) a) We have reviewed financial statements and the cash flow statement for the year and that to the best of our knowledge and belief : i. These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; ii. These statements together present a true and fair view of the company s affairs and are in compliance with existing accounting standards, applicable laws and regulations. b) There are, to the best of our knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violative of the company s code of conduct. c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of internal control systems of the company pertaining to financial reporting and we have disclosed to the auditors and Audit Committee. There are no deficiencies in the design or operation of such internal controls. d) We have indicated to the auditors and the Audit committee i. There are no significant changes in internal control over financial reporting during the year; ii. There are no significant changes in accounting policies during the year. iii. There are no instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company s internal control system over financial reporting. Sunil K Khaitan V.C & M.D KOLKATA 30th June, 008 G R Choudhary Finance Director