Videocon Industries Ltd

Dear Shareholders,

Your Directors take pleasure in presenting the Twenty Second Annual Report togetherwith the Audited Accounts and Auditors’ Report of your Company for the period ended31st December, 2010.

PERFORMANCE REVIEW

A snapshot of the performance of the Company, on standalone basis, for the period endedon 31st December, 2010, is summarized below:

( Rs. Million)

The Financial Year of the Company was extended by a period of three months. TheFinancial Year under review accordingly comprises of a period of 15 months commencing from1st October, 2009 and ended on 31st December, 2010. Subsequent Financial Years shall befrom 1st January to 31st December.

CONSUMER ELECTRONICS & HOME APPLIANCES [CE&HA]:

The global economic recovery and improved markets were the welcome signs in the secondhalf of the period under review. Your Company continued its growth in CE&HA Businessbacked by ongoing in-house technological advancement; aggressive marketing, distributionand advertising strategies with focused penetration in the key markets.

OIL & GAS:

Your Company intensified its exploratory efforts both in domestic and overseas basinsto identify new oil and gas assets. These efforts paid good dividends in terms of newdiscoveries and reserve accretion.

February 2010: Anadarko Mozambique announced a discovery in the exploration well,Windjammer. The drilling was completed in the first quarter of 2010 and reached anintermediate casing point encountering more than 480 net feet of natural gas pay inhigh-quality reservoir sands with a gross column of more than 1,200 feet.

March 2010: Anadarko Mozambique announced that it had encountered an additional 75net feet of natural gas pay. The additional pay intersected in the deeper objective bringsthe total net feet of natural gas pay in Windjammar to more than 555 feet.

October 2010: Anadarko Mozambique announced a further discovery in the Barquentineexploration well, encountering a total of more than 416 net feet of natural gas inmultiple high-quality sands.

November 2010: Anadarko Mozambique announced a discovery of natural gas of morethan 550 net pay feet in multiple high quality sands in Lagosta exploration well,approximately 16 miles to the south of the Barquentine discovery. After this discovery,Anadarko Mozambique estimates that there is adequate gas which has been discovered in theRovuma Block to support a viable LNG facility.

November 2009: Anadarko, the Operator of block BM-C-30 offshore Brazil in theCampos Basin has announced the Wahoo #2 (also called Wahoo North) exploration well in theCampos Basin, offshore Brazil, has encountered more than 90 feet of high quality net oilpay in the same pre-salt interval, as the original Wahoo discovery. The Wahoo #2 islocated in block BM-C-30, five miles to the north and down-dip from the original WahooDiscovery well, which encountered more than 195 feet of net pay.

April 2010: Anadarko, the Operator of block BM-C-30 offshore Brazil in the CamposBasin, has announced the results of the Wahoo-1 drillstem test in the Wahoo field, locatedin block BM-C-30, in the deepwater Campos Basin offshore Brazil. The Wahoo-1 well flowedat a test rate of approximately 7500 barrels per day of 31-degree API gravity crude oiland approximately 4 million cubic feet per day of associated natural gas.

October 2010: PETROBRAS, the Operator of the BM-SEAL-11 Concession Block in theSergipe-Alagos Basin of the Brazilian Offshore, announced that the drilling of first ultradeep water (2321m) well, designated as 1-SES-158, on "Barra" structure, located58 km off the Coast of Brazil and 90 km from city Aracaju, in Atlantic Ocean, discoveredhydrocarbon in Cretaceous turbidite fan system.

November 2010: Anadarko, the Operator, announced the Badik Discovery located in theTarakan Basin of Indonesia. The well encountered approximately 133 net feet of oil and gaspay.

These world-class finds have positioned your Company as one of the most successfulprivate Indian explorer globally.

TELECOM

Videocon Telecommunications Limited ("VTL"), a subisidiary of the Company,has been awarded licences to provide Unified Access Services in 21 circles in India witheffect from January 25, 2008 which is valid for 20 years. VTL has been allotted spectrumin 20 circles and has launched its services in 16 circles as on the Balance Sheet Date.

POWER

Pipavav Energy Private Limited ("PEPL") and Chhattisgarh Power VenturesPrivate Limited ("CPVPL"), subsidiaries of the Company are assigned to implementPower Projects in the State of Gujarat and Chhattisgarh respectively. Status brief ofthese projects:

Pipavav Energy Private Limited: The Power Project in Gujarat is a thermalpower project with a capacity of 1,200 MW comprising of two units of 600 MW each based onsub-critical technology. PEPL has signed the necessary Memorandum of Understanding withthe Government of Gujarat and has also obtained necessary approvals to commenceconstruction including the environmental clearances from Gujarat Pollution Control Boardand the Ministry of Environment and Forests. Notice to Proceed has already been issued toBHEL, the BTG Contractor.

Chhattisgarh Power Ventures Private Limited: The Chhattisgarh Power Project is alsoa thermal power project with a capacity of 1,200 MW and is located in District Champa-Janjgir in Chhattisgarh. It will consist of two units of 600 MW each . The Company hassigned an Implementation Agreement with the Government of Chhattisgarh with respect to thesaid project. The Government of Chhattisgarh has agreed to facilitate the process ofobtaining statutory clearances as well as help in acquisition of land for setting up theChhattisgarh Power Project and provide the incentives available under the industrialpolicy of Chhattisgarh for similar projects. The Company has already obtained coal linkagefrom the Ministry of Coal for 600 MW whereas an application seeking coal linkagefor the balance quantity has already been filed.

Further, your Company has also undertaken few solar power projects in the other partsof the country through step-down subsidiaries.

9th December, 2009: The Company issued and allotted 1,858,275 Equity Shares, onpreferential basis, at a price of Rs. 242.16 per Equity Share inclusive of a premium ofRs. 232.16 per Equity Share to Infotel Telecom Infrastructure Private Limited.

22nd April, 2010: The Company allotted 51,392,243 partly paid Equity Shares of Rs.10/- each at Rs. 225/- consisting of premium of Rs. 215/- per Equity Share, aggregating toRs. 1,156.33 Crores, on rights basis, to the successful applicants. As per the terms ofthe rights issue, an amount of Rs. 112.50 per Equity Share was payable on application; andthe balance on the first and the final call. The first and the final call was made; andwas payable by 15th June, 2010. Subsequently, the Company sent the reminders to theshareholders who failed to make payment by the due date. As on 31st December, 2010, theCompany received the first and the final call money in respect of 51,361,328 Equity Shareswhich were confirmed as fully paid whereas 30,915 partly paid Equity Shares remainedoutstanding as on the same date.

7th July, 2010: The Company issued and allotted 7,541,300 Equity Shares, onpreferential basis, at a price of Rs. 211.96 per Equity Share inclusive of a premium ofRs. 201.96 per Equity Share to IDBI Bank Limited, ING Vysya Bank Limited, Oriental Bank ofCommerce Limited, State Bank of Patiala and Life Insurance Corporation of India.

7th December, 2010: The Company allotted 11,765,000 equity shares, at a price ofRs. 170/- per Equity Share, to Bennett, Coleman & Company Ltd. ("BCCL")pursuant to option exercised by BCCL to subscribe to 1 (One) Equity Share of the Companyper warrant. These warrants were allotted on preferential basis on 1st June, 2009.

15th December, 2010: The Company issued Foreign Currency Convertible Bonds (the"FCCBs") amounting to USD 200 Million. These FCCBs are convertible, by theexercise of option by Bondholders, into fully paid equity shares of the Company at anytime between 25th January, 2011 to 7 days before maturity date i.e. 16th December, 2015.The initial conversion price is Rs. 239.5265 per Equity Share.

DIVIDEND

Your Company follows a policy to pay sustainable dividend considering its projectedgrowth plans; internal accruals, the potential requirements of funds for capex and workingcapital and the existing financial arrangements.

Your directors are pleased to recommend a Dividend of Re. 1/- (Rupee One only) perequity share for the period ended on 31st December, 2010.

The dividend, if approved by the shareholders in the Annual General Meeting shallentail a payout of Rs. 352.13 million including dividend distribution tax of Rs. 50.16million. The dividend is free of tax in the hands of the shareholders.

TRANSFER TO GENERAL RESERVE

Your directors propose to transfer Rs. 1,000.00 million to the General Reserve. Anamount of Rs. 28,680.29 million is proposed to be retained in the Profit and Loss Accountaccordingly.

TRANSFER TO INVESTOR EDUCATION AND PROVIDENT FUND

The Company has transferred a sum of Rs. 3.58 Million in respect of unpaid/ unclaimeddividend for the Financial Year 2002-03 to Investor Education Protection Fund.

FIXED DEPOSITS

Your Company has not accepted any Fixed Deposit within the meaning of Section 58A ofthe Companies Act, 1956; and as such, no amount of principal or interest was outstandingas on the Balance Sheet date.

PERSONNEL

A Statement of the Particulars of Employees as required under Section 217(2A) of theCompanies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 asamended is annexed and forms part of this Report.

Effective development of Human Resources is key to several learning processes andinitiatives have been designed and delivered in this area keeping in view the need tocultivate a workforce that offers true competitive advantage.

CONSERVATION OF ENERGY

Your Company believes in sustainable consumption of natural resources. Conservation ofEnergy is a focus area. Some of the energy conservation initiatives adopted by the Companyare as under:

1. Process improvement to eliminate/minimize the aging process of CTV Line leading toreduction in power consumption during aging.

2. Energy checks performed at all manufacturing units ensuring efficient energymanagement.

3. Replacement of electrical tools by pneumatic tools and conversion of continuouspower to intermittent power consumption.

4. Automation to stop freewheeling of machines during no production / less productionhours. Servo controlled mechanisms and parts are being used and replaced in older machinesto get better energy efficiencies.

5. Improvement of per hour production to reduce power burning hours for the sameproduction quantity.

6. Improve process to reduce freewheeling of machines due to waiting time at workstations.

7. Awareness programs of energy savings; and utilization of natural resources.

8. Implementation of advance technology; and continuous innovations at manufacturingprocesses /plants in the form of energy efficient equipments.

9. Improved awareness amongst employees by effective communications and trainings.

10. Increased usage of energy saving lighting arrangement in shop floor and on roadsinside the facilities by using Electronics Ballets and CFL lamps.

11. Plantation of trees at all the manufacturing plants.

Further, the Company has formed "Quality Circles" and "Team ofExperts" comprising of selected employees engaged in manufacturing activities toperform time and motion study of the overall manufacturing process and recommend ways andmeans for conservation of energy and power.

The noted initiatives leading to optimal consumption of resources have resulted in anoverall improvement in efficiency.

RESEARCH & DEVELOPMENT [R & D]

The Company aims to inspire consumers around the world with innovation and fun throughits unique combination of technology and entertainment based on its consumer electronicsand home appliances businesses. The Company continues to give utmost importance to R &D. Our focus on developing existing technologies and product engineering innovation, aimedat improving production efficiency leading to lowering cost of production.

The Company has R & D centres located at Aurangabad, Gurgaon; and in China withskilled engineers/experts working continuously on new products development. With the R& D centres working non-stop, your Company launched several products in CTVs, FPDs,refrigerators and fully automatic washing machines.

R & D activities include:

• Market Trend analysis;

• Study/Analyse Customer’s demands and changing needs; and

• Design/Develop products suitable for Indian climatic conditions as well as samefor Export market.

Benefits derived from the R & D Activities:

• Development of high end products;

• Introduction of Integrated Digital TV ( iDTV) with a built in DTH facility withMPEG 4 DVB-S2 Digital signal;

• Introduction of LED TV with "Nano Pixels" for immense pictureperformance and razor slim design; and

• Introduction of unique "SMART TV" with a platform for "InternetTV" to enjoy Live Chatting, Browsing , Video Conferencing , Email Access , Blue ToothConnectivity and many more applications to make LCD TV a real "SMART TV".

To align the Global needs and Company’s Vision of being committed to "EcoLogic": Technology for Sustainable Life, R&D has developed:

• Star Rated Products in Consumer Electronics and Home Appliances: This technologyoffers energy savings of 15 % of power consumption approximately to the benefit ofconsumers; and leading to effective utilization of power resources.

• Introduction of further paint less product with a unique Hot and Cold Technologyfor moulding of part: This helps to reduce pollution generated due to hazardous chemicalsused in plastic paints and its process. Customer can enjoy the high glossy finish withultimate scratch resistance.

• State of art technology LED illumination in Refrigerators: This gives betterillumination with lowest energy consumption.

• New concept for PCM (Pre-Coated Material) finish with floral design forRefrigerators.

• Introduction of State of Art technology Ioniser in Refrigerators: It is a firsttime introduction in Indian market to kill the bacteria and offer hygienic fruits andvegetables.

• "Centre Water Fall Technology" for Dolphin washing machine: Thistechnology saves water when directed to spin side.

• "UV cleaning" technique eliminates any bacteria contents in clo thes.

R & D activities carried out in various consumer electronic products and benefitsderived from these activities:

Televisions:

• Introduced new "Titanium LED" Series with NANOPIX Engine with 120Hzrefresh rate and FULL HD 1080P resolution.

• Introduced "3D LED TV" which enhances the viewing experience.

• Introduced "Titanium", "Hurricane" and "Tornado"Series of LCD TV with FULL HD 1080p resolution: It has a unique feature of DCRe (DigitalCinema Reality Engine). With this unique picture quality improvement algorithm, itreproduces 1 Billion display colour for more natural, vivid and true to life colours."Titanium" series of LCD TV has a DVBS (Digital Video Boosting Station) with1,00,000: 1 Super Contrast Ratio to give crisper image and dramatic picture quality. Ithas an advance function of "Energy Meter" for efficient energy utilization whileviewing. Its 10 Bit advanced Scalar Video Data processing gives the flicker free images& optimal video fidelity to provide most natural and Cinema Quality Video Images. Withboot capture logo function user can view his family photo every time when TV is switchedon. With the multimedia port user can watch photos/movies/ songs stored in USB device.With Multi Function Monitor concept in LCD TV and USB / Multi Media connectivity theviewer can enjoy maximum connectivity to the Digital World. Its Natural Easy View Panelprovides ultra wide viewing angle with enhanced picture quality and antireflective coatingto make black more darker with low reflection for very clear images. PIP (Picture inPicture) feature enables the user to watch TV programme and movie simultaneously.

• Introduction of Blue Tooth Function in TV enables a user to transferphotos/songs stored on his mobile to TV sets wirelessly.

• Introduced unique RF remote control technology in its product where customer canoperate TV from any angle (360 degree). Conventional remote operates only when it is keepin line with TV sets (+/- 30 Degree).

• Introduced touch control function in CRT TV segment.

• Introduced "Hot and Cold" moulding technology in TV.

• Introduced SRS technology in LED Series to improve the acoustic performance ofsets.

• Introduced "MAGNNUM" LCD Series with unique metallic finish glassfront.

• Introduced "Titanium iye" LCD series with brush finish.

• Introduced new segment of 14" Ultra Slim TV in market.

• Introduced new range of products viz : Universal Media player, Solar MobileCharger, High End Home Theatre and new range of LCD TV’s.

Refrigerators:

• Developed new range of Direct Cool as well as Frost Free refrigerators likeEcocool, Ecocool Plus, Ecofresh, Deofresh, Nutricool, Nutricool Plus, Powercool.

• Developed 4 & 5 Star Rated refrigerators with new exterior finish i.e. PCM.

• Introduction of new base stand with smart VEGI TRAY which is unique and giveconvenience to customer in day to day usage.

• Introduction of new looks of refrigerators, which strengthen our market positionin Direct Cool range.

• Introduction of new economic series of Direct Cool Refrigerator as "BharatSeries", which has given cutting edge solution for the competitors on the pricefactor.

• Introduction of the products on health platform with Deodorizer which gives thesolution to remove the odour created by rotten vegetables and fruits.

• Enhanced Frost Free refrigerator series with introduction of LED & LEDitechnology.

• Introduction of 3 & 4 Star Rated Refrigerators, with high energy efficientcompressors.

To enhance the brand image, the Company re-engineered number of models with new packingdesign such as:

• 50 Powder coated models with catchy & smooth colours; and Introduction ofBlack colour refrigerators.

Washing Machines:

• Developed higher capacity Washing Machines to be offered to Indian market withHand Wash and UV light technology.

• Digi-Aqua and Digi-Pacific series of 5.5 kg Fully Automatic (FA) WashingMachines with 8 Wash Programs, 8 Water levels, Child lock feature resulting in less waterconsumption.

• Introduced Digi-Wave and Digi-Atlantic series of 6.0kg FA Machines with 8 WashPrograms, 8 Water levels, Child lock feature and Special Air Dry features.

• Introduced India’s first UV light technology Washing Machine, Digi-Marineand Digi-Ocean. This has other features like Hand Wash, LCD Display, Delay Time settingetc. for user convenience.

• Developed 6kg Semi Automatic (SA) Washing Machine "Aqua and Pacific".

• Developed Dolphin, Atlantic, Marine series of 7.0kg SA Washing Machines withGear Drive for improved wash ability and efficiency.

• Introduced SA 7.0kg Spring with Decorative Transparent Panels, Roller CosterPulsator, centre water fall & Chrome Knobs. Delight to watch and efficient in use.

• Centre Water Fall Technology for Dolphin which saves water when directed to spinside.

• Features like Magic Filter for Dolphin and Atlantic series, which are betterlint collectors and user friendly.

• Introduction of designer Floral patterns with blazing top colours which willgive attractive look to Washing Machine in the 6kg & above FA category.

• Focusing on Environmental friendly technologies: R&D is working on series ofFA & SA machines which are energy efficient,use lesser water and detergents.

• Introduced Digi Dolphin Dlx with Direct Drive technology along with enhancedfeatures like "Do It Yourself" program. This has multi spin speed, 8 Waterlevels and dynamic soak features.

• Developed 6.5Kg FA TILT Drum Careen Plus with Direct Drive Motor:

This has advanced features like Sterilization program, Aero Wash technology and selfcleaning of Tub.

Air Conditioners:

• Introduced highly technological AC DC inverter AC: This has efficiency betterthan even current 5 star as stated and set by Bureau of Energy Efficiency(BEE). Itmoderates the compressor performance as per need and adjusts compressor rotation tooperate with minimum power input, hereby saving more than 40% power saving than theconventional AC.

• Introduced Vitamin C filter: This Filter dispenses Vitamin C charged ions withthe cool air. Thereby boosts immunity, keeps skin glowing with its antioxidant propertyhence keeps the user fresh and vibrant.

• Added the Gold Fin Evaporator for enhanced reliability and durability of AirConditioner. The indoor unit cooling coil is coated with Gold anti corrosive agent whichkeeps the cooling coil in excellent and efficient working condition for a long time.

• Developed multi utility Universal Remote: This remote can operate AC (Videoconbrand) and CE products like LCD/LED TV, Set top box, DVD player etc(LG/SS/Philips/Videocon/Akai etc) thereby providing multiple solutions with a singleremote.

Microwave Ovens:

• Introduction of Auto Cook Recipe Function with categorization like Sweets,Beverages, Snacks, Meals, etc. For the ease of cooking, preprogrammed menu enablesmicrowave to do all the functions with a single touch.

• Developed Sensi Grill Function which senses the cooking cycle in between ofcycle to turn over and give a home cooking taste. This function gives an alarm aftercompletion of half cycle to turn your food in Grill Model.

• Added Deodorizer feature which helps in removing post cooking odour frommicrowave. This way the odour does not mix with next recipe and makes it healthy andtasty.

• Introduced Lemon Clean feature to remove all odour after cooking. With this allthe oil and food particles can be cleaned easily.

• Developed an Anti Bacterial Cavity to retard the growth of bacteria and makeyour food healthy to eat. Even if some food particle is left over in Microwave Oven nomicrobial growth sustains due to anti bacterial cavity.

• Developed a range of touch screen microwaves which cooks better keeping foodnutrients intact with multi stage & express cooking.

Future Plan of Action:

In near future, the Company shall continue to focus on all the areas mentioned earlierand also aims to offer new technologies and processes to provide better products ataffordable prices to the customers. The Company proposes the following R & Dactivities in near future:

• To bring in features of various products together;

• Continuous upgradation of technologies for better features, better quality andimproved reliability for reduced/low prices; and

• Reducing the electricity consumption for consumer electronics and homeappliances.

R & D Expenditure:

During the period, your Company has incurred an expenditure of Rs. 120.50 Millionrepresenting 0.08% of the turnover towards R & D, to enhance the competitiveness ofour core business and develop tomorrow’s technologies.

Recognitions:

• Integrated Digital TV (iDTV) product with a built in DTH facility having MPEG 4DVB-S2 Digital Signal has been awarded as "Product of the Year 2011" by NelsonSurvey. Your Company being the first company to launch this patented product in Indianmarket.

• 6kg SA Washing Machine "Aqua and Pacific" is judged as the best dryingmachine in its category by Consumer’s Voice.

• The Company has received 5-star BEE rating for its top loading model DigiDolphin Dlx Washing Machine.

• The Company has received 4-star BEE rating for Careen Plus washing machine whichcomes with tilt drum.

FOREIGN EXCHANGE INFLOW & OUTGO

The particulars of Foreign Exchange Earnings and Outgo during the period are set out asunder:

( Rs. Million)

The Company has undertaken various initiatives for exports and development of exportmarkets for Consumer Electronics and Home Appliances to increase its Foreign ExchangeEarnings.

INFORMATION TECHNOLOGY

Information technology and Business are becoming inextricably interwoven. The growinginfluence of information technology as an enabler of business in today’s time hasmade use of information technology indispensible.

Information technology, having made inroads into major industries, has left no aspectof our business and life untouched. Your Company firmly believes that an organizationneeds to have a "Digital Nervous System" for sustaining the cut-throatcompetition for the "Numero Uno" position in any sector of economy. In duerecognition of the key role played by information technology in revolutionizing the world,your company has re-engineered its processes by leveraging information technology with aneye building, sustaining and expanding its competitive edge.

Your Company has designed and implemented web based CRM application using ASP.Net 3.5and SQL server 2005. The robust and stable CRM application with comprehensive supportenables handling of larger call volumes resulting into speedy response and promptresolution of customers’ queries. Company has established facilities for customerslike call center, connect through SMS, Web-sites so on to have best and speedy customerinteraction.

SAP Solutions have enabled your Company to leverage the benefits of integration inbusiness operations, optimization of enterprise resources, standardized business processesand standard operating practices with well-established controls. This has enabled theCompany to adopt best and standardized business processes across the functions. It hasalso benefited the management at all levels with on-line reliable business information tocontrol the business operations in a well-informed manner. Your Company has scale-up datacenter infrastructure to cater to the business requirements.

There is secured as well as point to point VPN connectivity in most of its branches andwarehouses.

HEALTH AND SAFETY

The Company is committed towards health and safety of the employees at all levels.Healthy atmosphere and safe working conditions increases employee’s motivation andsatisfaction thereby contributing significantly to productivity.

Key initiatives taken by your Company in this area are summarized as under:

• Conducting regular safety checks;

• Regular on the job and off-line training programs for all emplo yees;

• Conducting mock drill as per calendar in the campus and training given to firemarshals;

• Fire tender modified from water monitor to multipurpose use (Water & Foam),to handle the situation in case of emergency;

• Providing emergency exit door and display of evacuation plans at variouslocations to reach the assembly point, in case of emergency;

• Organising different events in the campus to increase the awareness among theemployees;

• Display of signs, cautionary boards, emergency telephone numbers etc., atvarious locations for information and awareness of the employees;

• MSDS (Material Safety Data Sheet) display at chemical storage places;

• Implementation of night manager concept;

• Conducting "HIRA"(Hazard Identification Risk Assessments) of thecritical activity, to eliminate the risk;

• Accessibility health and medical services to all the employees at all levelsthrough well- equipped health centers located at all manufacturing plants;

• Placement of First-Aid boxes at several places for employees;

• Regular medical check-up to ensure fitness of its employees;

• Implementation of Human Injury Reporting System to report all types of humaninjury and to find out the root cause; and

• Cleanliness and timely disposal of waste and scrap is ensured at the entirepremises.

ENVIRONMENTAL PROTECTION

Your Company being a good corporate citizen assumes its responsibility towardsconservation of environment. A clean environment at the workplace and in its surroundingsis our main focus and objective for sustainable development and business growth.

In order to comply with Indian laws and regulations in respect of environmentalprotection, the Company has taken internal environmental protection control and monitoringmeasures.

The Company extracts maximum value from available resources, making the best use ofrenewable resources and minimizing waste produced. This concept is called "ResourceProductivity". The Company aims at drive-down of costs by reducing waste andpollution; and by creating opportunities for growth through process and productinnovations.

The eco friendly initiatives adopted by the Company include:

• Efficient use of natural resources by Implementing the 3R system Reduce, Reuse& Recycle;

• Tree plantation campaigns;

• Following National Ambient Air Quality Standards (NAAQS) 2010, for checking ofstack emission & ambient air monitoring;

• Up gradation of effluent treatment & sewage treatment plants from manual toautomation;

• Regular internal environmental audit;

• Arrangement of Pollution Under Control (PUC) camps;

• Certification of ISO 14001, for environment management system;

• Effective Storage and Disposal of Hazardous Waste as per statutory requirements;and

• Celebration of World Environment Day to increase the awareness among theemployees.

APPOINTMENT / RE-APOINTMENT OF DIRECTORS

During the period under review, Mr. Sushil Muhnot was appointed as a Nominee of IDBIBank Limited in place of Dr. Birendra Narain Singh. The Board places on record its sincereappreciation for the valuable guidance received from Dr. Birendra Narain Singh, during histenure as Director of the Company.

At the Twenty First Annual General Meeting held on 30th March, 2010. Mr.Venugopal N. Dhoot was re-appointed to the office of Managing Director for a period of 5years with effect from 1st September, 2010 to 31st August, 2015.

Further, at the Extra-Ordinary General Meeting held on 22nd June, 2010, Mr. PradipkumarN Dhoot was re-appointed to the office of Whole Time Director for a period of 5 years witheffect from 20th November, 2010 to 19th November, 2015.

Pursuant to the provisions of the Companies Act, 1956 and in terms of the Articles ofAssociation of the Company, Mr. Satya Pal Talwar, Mr. Radhey Shyam Agarwal and Ms. GunillaNordstrom are liable to retire by rotation at the ensuing Annual General Meeting and beingeligible, Mr. Satya Pal Talwar and Mr. Radhey Shyam Agarwal have offered themselves forre-appointment. Ms. Gunilla Nordstrom has not offered herself for re-appointment andaccordingly shall retire at the ensuing Annual General Meeting.

The Board of Directors have recommended appointment of Mr. Anil G. Joshi in place ofMs. Gunilla Nordstrom. The Company has received due notice under Section 257 of theCompanies Act, 1956.

The Board recommends re-appointment of Mr. Satya Pal Talwar and Mr. Radhey ShyamAgarwal; and recommends appointment of Mr. Anil G. Joshi as Directors of the Company.Brief profiles of each of these directors, specifying their expertise in specificfunctional areas, public companies in which they hold Directorships and Committeepositions, are annexed to the Notice and forms part thereof.

Changes after the Balance Sheet Date:

Government of India has appointed Mr. Sushil Muhnot as Chairman & Managing Directorof Small Industries Development Bank of India (SIDBI). Consequent to the said appointment,he has resigned from IDBI Bank Limited and also from the Board of Directors of theCompany. Accordingly, Mr. Muhnot ceased to be the Director of the Company.

ICICI Bank Limited substituted its nominee on the Board. Mr. Girish Nayak was nominatedin place of Mr. Ajay Saraf. Accordingly, Mr. Ajay Saraf ceased to be a director and Mr.Girish Nayak was co opted as a Nominee on the Board of Directors of the Company. The Boardplaces on record its sincere appreciation for the valuable guidance received from Mr.Sushil Muhnot and Mr. Ajay Saraf during their tenure as Directors of the Company.

LISTING

The Equity Shares of your Company are listed on the Bombay Stock Exchange Limited andThe National Stock Exchange of India Limited.

The Global Depository Receipts (GDRs) and Foreign Currency Convertible Bonds (FCCBs)issued by your Company are listed on the Bourse de Luxembourg and Singapore ExchangeSecurities Trading Limited respectively.

SUBSIDIARY COMPANIES

During the period under review, Chhattisgarh Power Ventures Private Limited, TriumphEnergy Private Limited, Videocon Energy Limited, Videocon Hydrocarbon Holdings Limited andSenator Energy Private Limited became the wholly-owned subsidiaries of the Company.

Videocon Oil Ventures Limited, Videocon Power Ventures Limited, Marvel Energy PrivateLimited, Aim Energy Private Limited, Viable Energy Private Limited, Vital Power PrivateLimited, Proficient Energy Private Limited, Orchid Energy Private Limited, Applied EnergyPrivate Limited, Instant Energy Private Limited, Comet Power Private Limited, Unity PowerPrivate Limited, Percept Energy Private Limited, Galaxy Power Private Limited, VideoconAustralia WA-388-P Limited, Oil Services International S.A.S, Videocon Energy BrazilLimited, Videocon Indonesia Nunukan Inc, Videocon Mozambique Rovuma 1 Limited (Formerly:Videocon Energy Resources Limited) and Videocon JPDA 06-103 Limited (Formerly: GlobalEnergy Inc) became the step down subsidiaries of the Company.

During the period under review, Godavari Consumer Electronics Appliances PrivateLimited, Mayur Household Electronics Appliances Private Limited, Sky Billion TradingLimited, Paramount Global Limited, Powerking Corporation Limited and Venus CorporationLimited ceased to be the subsidiaries of the Company and Videocon Display Research CompanyLimited got voluntarily liquidated.

As such as on 31st December, 2010, your Company had 37 subsidiaries (includingstep-down subsidiaries) viz. Pipavav Energy Private Limited, Videocon InternationalElectronics Limited, Chhattisgarh Power Ventures Private Limited, Triumph Energy PrivateLimited, Videocon Energy Limited, Senator Energy Private Limited, DatacomTelecommunications Private Limited, Videocon Telecommunications Limited, Jumbo TechnoServices Private Limited, Senior Consulting Private Limited, Videocon Oil VenturesLimited, Videocon Power Ventures Limited, Marvel Energy Private Limited, Aim EnergyPrivate Limited, Viable Energy Private Limited, Vital Power Private Limited, ProficientEnergy Private Limited, Orchid Energy Private Limited, Applied Energy Private Limited,Instant Energy Private Limited, Comet Power Private Limited, Unity Power Private Limited,Percept Energy Private Limited, Galaxy Power Private Limited, Middle East Appliances LLC,Videocon Global Limited, Videocon Electronic (Shenzhen) Limited, Eagle ECorp Limited,Videocon Energy Ventures Limited, Videocon Hydrocarbon Holdings Limited, Videocon Oman 56Limited (Formerly: Videocon Hydrocarbon Holdings Limited), Videocon JPDA 06-103 Limited(Formerly: Global Energy Inc), Videocon Mozambique Rovuma 1 Limited (Formerly: VideoconEnergy Resources Limited), Videocon Energy Brazil Limited (Formerly: Videocon GlobalEnergy Holdings Limited), Videocon Indonesia Nunukan Inc (Formerly: Spectrum OverseasInc), Videocon Australia WA-388-P Limited and Oil Services International S.A.S.

Ministry of Corporate Affairs, Government of India has granted its approval underSection 212(8) of the Companies Act, 1956 and accordingly the provisions contained insub-section (1) of Section 212 of the Companies Act, 1956 shall not be applicable inrespect of the Balance Sheet etc. of the aforesaid 37 subsidiaries which are required tobe attached to the Company’s accounts for the financial period ended on 31stDecember, 2010. Accordingly, the and other documents of the Balance Sheet, Profitsubsidiary companies as specified in sub-section (1) of Section 212 of the Companies Act,1956 are not being attached with the Balance Sheet of the Company.

Financial information of the subsidiary companies, as required by the said approval, isdisclosed in the Annual Report. The Consolidated Financial Statements presented by theCompany include financial results of its subsidiary companies, joint ventures andassociates, in accordance with relevant Accounting Standards issued by the InstituteChartered Accountants of India.

The Company undertakes that the annual accounts of the subsidiary companies and therelated detailed information, including hard copy of the accounts of the subsidiaries,will be made available to the investors/ shareholders of holding and subsidiary companiesseeking such information at any point of time and the annual accounts of the subsidiarycompanies will also be kept available for inspection by any investor at the RegisteredOffice of the Company as well as the respective Registered Offices of SubsidiaryCompanies.

Further, the summarized financial information of the subsidiary companies is alsoavailable on the website of the Company viz., www.videoconworld.com

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements, basis the Financial Statements receivedfrom the subsidiaries, associates and joint ventures, as approved by their respectiveBoard of Directors, have been prepared in accordance with the requirements of AccountingStandard 21 on "Consolidated Financial Statements", Accounting Standard 27 of"Financial Reporting of Interests in Joint Ventures" and Accounting Standard 23on "Accounting for Investments in Associates in Consolidated FinancialStatements."

CASH FLOW STATEMENT

The Cash flow Statement for the period ended 31st December, 2010, inconformity with theprovisions of Clause 32 of the Listing Agreement with the Stock Exchanges in India, isannexed hereto.

AUDITORS’ REPORT

The Auditors’ Report is unqualified. The observations made in the Auditors’Report, read together with the relevant notes thereon, are self-explanatory and hence, donot call for any comments under Section 217 of the Companies Act, 1956.

AUDITORS

M/s. Khandelwal Jain & Co., Chartered Accountants, Mumbai and M/s. Kadam & Co.,Chartered Accountants, Ahmednagar, Statutory Auditors of the Company, retire at theensuing Annual General Meeting and have confirmed their eligibility and willingness toaccept office, if re-appointed. The Company has received certificates from the saidAuditors to the effect that their re-appointment, if made, would be within the limitsprescribed under Section 224(1B) of the Companies Act, 1956. The Board recommends theirre-appointment.

AUDIT COMMITTEE

The Company has constituted the Audit Committee, pursuant to the provisions of Section292A of the Companies Act, 1956 and provisions of the Listing Agreement. The composition,scope and powers of Audit Committee together with details of meetings held during theperiod under review forms part of Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report, highlighting the performance and prospectsof the Company’s business, forms part of the Annual Report.

CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement with the Stock Exchanges, theCorporate Governance Report forms part of the Annual Report. Your Company is in fullcompliance with the requirements and disclosures as statedtherein.Acertificatefrom theStatutory Auditors of the Company confirming compliance of the Corporate Governance isappended to the Report on Corporate Governance.

DIRECTORS’ RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, with respect toDirectors’ Responsibility Statement, it is hereby confirmed that:

a) In the preparation of the annual accounts for the period ended 31st December, 2010,the applicable accounting standards read with requirements set out under Schedule VI tothe Companies Act, 1956, have been followed and there are no material departures from thesame;

b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st December, 2010 and of theprofit of the Company for the period ended on that date;

c) The Directors have taken proper and sufficientcare for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956, forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; and

d) The Directors have prepared the annual accounts of the Company on a ‘goingconcern’ basis.

ACKNOWLEDGEMENT

The Board would like to express their heartfelt gratitude for the assistance andco-operation received from the Financial Institutions, Government Authorities and Banks.

The Board would also like to place on record its sincere thanks and appreciation forthe continuing support of the dealers, vendors, business associates and employees.

The Board is also grateful to you for your support and look forward for your continuedsupport in future as well.

STATEMENT OF PARTICULARS OF EMPLOYEES PURSUANT TO PROVISIONS OF SECTION 217(2A) OF THECOMPANIES ACT,1956, READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES,1975 ASAMENDED AND FORMING PART TO THE DIRECTORS’ REPORT FOR THE PERIOD ENDED 31ST DECEMBER,2010

(a) Remuneration includes Basic Salary, Ex- Gratia, H. R. A., Marketing Allowance,Special Allowance, C.A., L.T.A., Leave Encashment, Medical Reimbursement and Contributionto Provident Fund.

(b) The Employees are in whole-time employment of the Company and the employment iscontractual in nature.

(c) None of the Employees listed above is a relative of any of the Directors of theCompany.

* Part of the Period.

Place : Mumbai

Date : 26th May, 2011