directors - godrej industries ltd · 2009-11-19 · 4 notice to shareholders notice is hereby given...

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DIRECTORS

A.B. Godrej Chairman

J.N. Godrej

N.B. Godrej Managing Director

S.A. Ahmadullah

V.M. Crishna

K.K. Dastur

V.N. Gogate

K.N. Petigara

F.P. Sarkari

V.F. Banaji Executive Director & President (Group Corporate Affairs)

T.A. Dubash Executive Director & President (Marketing)

M.Eipe Executive Director & President (Chemicals)

M.P. Pusalkar Executive Director & President (Corporate Projects)

COMPANY SECRETARY

S.K.Bhatt

AUDITORS

Kalyaniwalla&Mistry,Chartered Accountants

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REGISTERED OFFICE : Pirojshanagar,EasternExpressHighway, Vikhroli(East),Mumbai400079. Phone :0��-�5�880�0,�5�880�0,�5�88030 Fax :0��-�5�88074,�5�88066 website:http:www.godrejinds.com

FACTORIES : Vikhroli Pirojshanagar,EasternExpressHighway, Vikhroli(East),Mumbai400079. Phone :0��-�5�880�0,�5�880�0,�5�88030 Fax :0��-�5�88068/�5�88074 Valia Burjorjinagar, PlotNo.3,VillageKanerao, Taluka-Valia,DistrictBharuch, Gujarat393�35. Phone :0�643-�70756to�70760 Fax :0�643-�700�8 Wadala L.M.NadkarniMarg, NearM.P.T.Hospital, Wadala(East),Mumbai 400037. Phone :0��-�4�548�6/�4�48770 Fax :0��-�4�46�04BRANCHES : Delhi 4thFloor,DeliteTheatreBuilding, 4/�,AsafAliRoad,NewDelhi��000� Phone :0��-�3�6�066 Fax :0��-�3�6�088 Kolkata BlockGN,Sector-V, SaltLakeCity,Kolkata70009�. Phone :033-�3573555 Fax :033-�3573945 Chennai NewNo.�5,(OldNo.�7-A), �ndStreet,JeevarathnamNagar, Adyar, Chennai6000�0. Phone :044-4�666605 Fax :044-4�666609 London �84A,ChaseRoad,Southgate, LondonN�4-6HF.,UK Phone :(0044�0)-88860�45 Fax :(0044�0)-888694�4

BANKERS : CentralBankofIndia StateBankofIndia BankofIndia HDFCBankLtd. CitibankN.A. HongKongandShanghaiBanking CorporationLimited KotakMahindraBankLimited BarclaysBankPlc.

REGISTRARS : ComputechSharecapLtd.& TRANSFER AGENT �47,MahatmaGandhiRoad, Opp.JehangirArtGallery,Fort, Mumbai40000�. Phone :0��-��635000-0�-0� Fax :0��-��635003 E-Mail :[email protected]

CONTENTS PageNos.

FinancialHighlights..................................... 03

Notice..................................................... 04

Directors’ReportalongwithManagementDiscussionandAnalysisReport....................... �0

ReportonCorporateGovernance.................... ��

Shareholders'Information............................. �9

Auditors’Report......................................... 3�

Accounts.................................................. 34

ConsolidatedAccounts................................. 6�

StatementPursuanttoSection��.................. 8�

SUBSIDIARIES

GodrejAgrovetLimited................................ 84

GodrejOilPlantationsLimited(formerlyGodrejAquafeedLtd.)................... �00

GoldenFeedProductsLimited....................... �06

GoldmohurFoods&FeedsLimited.................. ��

CauveryPalmOilLimited............................. ��9

GodrejPropertiesLimited............................. ��5

GirikandraHolidayHomes&ResortsLimited...... �35

GodrejRealtyPrivateLimited........................ �38

GodrejWatersidePropertiesPrivateLimited...... �4�

GodrejDevelopersPrivateLimited.................. �46

GodrejRealEstatePrivateLimited.................. �50

GodrejSeaviewPropertiesPrivateLimited....... �54

HappyHighrisesLimited............................... �57

EnsembleHoldings&FinanceLimited.............. �6�

GodrejInternationalLimited......................... �66

GodrejHicareLimited................................. �69

GodrejGlobalSolutionsLimited..................... �75

GodrejGlobalSolutions(Cyprus)Limited.......... �8�

GodrejGlobalSolutions,Inc.......................... �85

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Break-upofTotalIncomeRs.Lac

Break-upofTotalExpenditureRs.Lac

Total Expenditure 2007-2008Total Income 2007-2008

GODREJ INDUSTRIES LIMITED – FINANCIAL HIGHLIGHTS(Rs.Lac)

2007-08 2006-07 2005-06 2004-05 2003-04

BALANCE SHEET

SOURCES OF FUNDS :

Shareholders’Funds ShareCapital 3198 �9�9 �9�9 �9�9 �9�9 Reserves&Surplus 102644 38�43 34��6 306�8 �6�97 LoanFunds SecuredLoans 24948 33093 �49�� 075 �68�4 UnsecuredLoans 18619 �3677 7803 3557 4�35 DeferredTaxLiability 3619 3980 38�8 �50� �97� 153028 91811 73667 61671 53137APPLICATION OF FUNDS :

FixedAssets 27142 �8704 �8594 �5�00 �5656Investments 77548 48567 37�35 33577 �6533NetWorkingCapital 47270 ��937 57�9 �868 739MiscellaneousExpenditure 1068 �60� ��9 ��6 �09

153028 91811 73667 61671 53137

INCOME AND PROFIT

TotalIncome 83882 78�9� 80�70 8�353 73355ExpenditureotherthanInterestandDepreciation 67119 64078 6966� 70��7 64�43Profit before Interest, Depreciation and Tax 16762 �4��3 �0609 ��36 9��Interest(net) 3444 383� �837 �58� 580

Profit before Depreciation and Tax 13319 �038� 777� 9654 853�Depreciation 2547 �4�6 ��59 ��48 ��50

Profit before Tax and exceptional items 10772 7956 55�3 7506 638�Exceptionalitems-expense/(income) (310) (95) (3�06) — —ProvisionforCurrentTax 562 83 545 40� 365

Net Profit after Tax 10520 7968 8479 7�05 60�7ProvisionforDeferredTax (361) �6� �3�6 (470) (494)

Adjustmentinrespectofprioryears-expense/(income) - - 50 (�) (57)

Net Profit after taxes and adjustments 10,881 7806 7113 7577 6568

Chemicals 69�38

Estate �946Finance&Investment 980�MedicalDiagnostics 8��

Vegoils 65�

Materials 40007StaffCosts 7958Depreciation �547Interest 3444

OtherOperating �9�54Expenses

73��0

Others 433

8388�

4

NOTICE TO SHAREHOLDERS

NOTICEisherebygiventhattheTWENTIETHANNUALGENERALMEETINGofthemembersofGODREJINDUSTRIESLIMITEDwillbeheldonTuesday,July�9,�008at4.30p.m.atY.B.ChavanCentre,NarimanPoint,Mumbai–4000��,totransactthefollowingbusiness:-ORDINARY BUSINESS:1. To consider and adopt the Audited Profit & Loss Account and Cash Flow Statement for the year ended March 31, 2008 the Balance

Sheetasatthatdate,theAuditors’ReportthereonandtheDirectors’ReportalongwithManagementDiscussionandAnalysisReportandtheStatementofCorporateGovernance.

2. To declare dividend for the financial year ended March 31, 2008.3. ToappointaDirectorinplaceofMr.K.K.Dastur,whoretiresbyrotationandbeingeligibleoffershimselfforre-appointment.4. ToappointaDirectorinplaceofMr.V.M.Crishna,whoretiresbyrotationandbeingeligible,offershimselfforre-appointment.5. ToappointaDirectorinplaceofMr.K.N.Petigara,whoretiresbyrotationandbeingeligibleoffershimselfforre-appointment.6. ToappointaDirectorinplaceofMr.M.P.Pusalkar,whoretiresbyrotationandbeingeligibleoffershimselfforre-appointment.7. To appoint Auditors to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General

Meeting, and to authorise the Board of Directors of the Company to fix their remuneration. M/s. Kalyaniwalla & Mistry, Chartered Accountants,theretiringAuditorsareeligibleforre-appointment.

SPECIAL BUSINESS:8. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: Further investment in Godrej Properties Ltd. under Section 372A of the Companies Act, 1956 "RESOLVED THATpursuanttoSection37�Aandallotherapplicableprovisions,ifany,oftheCompaniesAct,�956(includingany

statutory modification or re-enactment thereof for the time being in force and as may be enacted from time to time) (hereinafter referredtoas‘theAct’),and/oranyotherapprovals,asmayberequired,theCompanybeandisherebyauthorisedtofurtherinvestinsecuritiesofGodrejPropertiesLtd.(GPL)bysubscription/purchaseorotherwiseand/orplaceintercorporatedepositswithand/ormakeloansoranyotherformofdebttoand/orinvestmentinGPL,inadditiontothelimitsalreadysanctionedforinvestments/intercorporatedeposits/loans,uptoasumofRs.�5crore(RupeesTwentyFiveCroreOnly),notwithstandingthattheaggregateoftheloansandinvestmentssofarmadeinortobemadein,exceedsthelimitslaiddownbytheAct.

RESOLVED FURTHER THATtheBoardofDirectorsoftheCompanybeandisherebyauthorisedtotakefromtimetotimealldecisionsandstepsnecessaryorexpedientorproperinrespectoftheaboveinvestment/debtincludingthetiming,theamountandothertermsandconditionsofsuchtransactionsandalsototakeallotherdecisionsincludingvaryinganyofthemthroughrecall,renewal,transfer,sale,disinvestmentorotherwise,eitherinpartorinfull,asitmay,initsabsolutediscretion,deemappropriate, subject to the limits specified above.

RESOLVED FURTHER THATthisresolutionbevalidforaperiodfromthedateofapprovaloftheShareholderstoMarch3�,�0��andthatduringthisperiod,thelimitsindicatedhereinaboveincaseofdivestmentberestoredtotheoriginalsanctionedlimitofRs.�5crore."

9. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: Further investment in Godrej Agrovet Ltd. under Section 372A of the Companies Act, 1956 "RESOLVED THATpursuanttoSection37�Aandallotherapplicableprovisions,ifany,oftheCompaniesAct,�956(includingany

statutory modification or re-enactment thereof for the time being in force and as may be enacted from time to time) (hereinafter referredtoas‘theAct’),and/oranyotherapprovals,asmayberequired,theCompanybeandisherebyauthorisedtofurtherinvestinsecuritiesofGodrejAgrovetLtd.(GAVL)bysubscription/purchaseorotherwiseand/orplaceintercorpopratedepositswithand/ormakeloansoranyotherformofdebttoand/orinvestmentinGAVL,inadditiontothelimitsalreadysanctionedforinvestments/intercorporatedeposits/loans,uptoasumofRs.�0crore(RupeesTwentyCroreOnly),notwithstandingthattheaggregateoftheloansandinvestmentssofarmadeinortobemadein,exceedsthelimitslaiddownbytheAct.



�0. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: Further investment in Ensemble Holdings & Finance Ltd. under Section 372A of the Companies Act, 1956 "RESOLVED THATpursuanttoSection37�Aandallotherapplicableprovisions,ifany,oftheCompaniesAct,�956(includingany

statutory modification or re-enactment thereof for the time being in force and as may be enacted from time to time) (hereinafter referredtoas‘theAct’),and/oranyotherapprovals,asmayberequired,theCompanybeandisherebyauthorisedtofurtherinvestinsecuritiesofEnsembleHoldings&FinanceLtd.(EHFL)bysubscription/purchaseorotherwiseand/orplaceintercorporatedepositswithand/ormakeloansoranyotherformofdebttoand/orinvestmentinEHFL,inadditiontothelimitsalreadysanctionedfor

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investments/intercorporatedeposits/loans,uptoasumofRs.�0crore(RupeesTenCroreOnly),notwithstandingthattheaggregateoftheloansandinvestmentssofarmadeinortobemadein,exceedsthelimitslaiddownbytheAct.



��. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: Further investment in Boston Analytics Inc. under Section 372A of the Companies Act, 1956 "RESOLVED THATpursuanttoSection37�Aandallotherapplicableprovisions,ifany,oftheCompaniesAct,�956(includingany

statutory modification or re-enactment thereof for the time being in force and as may be enacted from time to time) (hereinafter referredtoas‘theAct’),and/oranyotherapprovals,asmayberequiredandsubjecttotheapprovaloftheShareholders,theCompanybeandisherebyauthorisedtofurtherinvestinsecuritiesofBostonAnalyticsInc.(BAI)bysubscription/purchaseorotherwiseand/orplaceintercorporatedepositswithand/ormakeloansoranyotherformofdebttoand/orinvestmentinBAI,inadditiontothelimitsalreadysanctionedforinvestments/intercorporatedeposits/loans,uptoasumofRs.�5crore(RupeesFifteenCroreOnly),notwithstandingthattheaggregateoftheloansandinvestmentssofarmadeinortobemadein,exceedsthelimitslaiddownbytheAct.



��. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: To revise the terms of appointment and remuneration of Ms. Nisa A. Godrej. "RESOLVED THATsubjecttotheprovisionsofSection3�4(�B)andotherapplicableprovisions,ifanyoftheCompaniesAct,�956,

(including any statutory modification, amendment or re-enactment thereof for the time being in force and as may be enacted fromtimetotime)(hereinafterreferredtoas‘theAct’),approvaloftheCompanybeandisherebyaccordedtotherevisioninthetermsofremunerationpayabletoMs.NisaA.Godrej(daughterofMr.A.B.Godrej,ChairmanoftheCompanyandsisterofMs.T.A.Dubash, Executive Director & President (Marketing) of the Company) currently holding an office or place of profit in the Company asExecutiveVicePresident(BusinessDevelopment)witheffectfromApril�,�008onthetermsandconditionsasdetailedintheExplanatoryStatementhereto.

RESOLVED FURTHER THAT the Board of Directors of the Company and the Company Secretary be and are hereby severallyauthorisedtomakeandsubmitapplicationstotheCentralGovernmentoranyotherstatutoryauthorityasmayberequired,settleany question, difficulty or doubt, that may arise in giving effect to this resolution, do all such acts, deeds, matters and things andsignandexecutealldocumentsorwritingsasmaybenecessary,properorexpedientforthepurposeofgivingeffecttothisresolutionandformattersconcernedtherewithorincidentalthereto.”

�3. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: To alter the Articles of Association of the Company. "RESOLVED THATthefollowingClausebeinsertedasClause�4AafterClause�4oftheexistingArticlesofAssociationofthe

Company: SubjecttotheapplicableprovisionsoftheCompaniesAct,�956and/oranyotherActandinaccordancewiththeguidelinesprescribed

bySEBIand/oranyotherregulatoryauthority,theCompanymaybuybackitssharesoranyothersecuritiesissuedbyit."

ByOrderoftheBoardofDirectors

S.K. BHATTExecutiveVice-President

(CorporateServices)&CompanySecretary

Mumbai,May�8,�008

Registered Office:Pirojshanagar,EasternExpressHighway,Vikhroli(East),Mumbai400079.

6

NOTES:�. TherelativeExplanatoryStatementinrespectofbusinessunderItemNo.8to�3assetoutintheNoticeisannexedhereto.

�. AMEMBERENTITLEDTOATTENDANDVOTEISENTITLEDTOAPPOINTAPROXYTOATTENDANDONPOLL,TOVOTEINSTEADOFHIMSELF.SUCHAPROXYNEEDNOTBEAMEMBEROFTHECOMPANY.PROXIESINORDERTOBEEFFECTIVEMUSTBERECEIVEDBYTHECOMPANYNOTLESSTHAN48HOURSBEFORETHEMEETING.APROXYSOAPPOINTEDSHALLNOTHAVEANYRIGHTTOSPEAKATTHEMEETING.

3. TheRegisterofMembersandShareTransferBooksoftheCompanywillbeclosedfromJuly��,�008toJuly�9,�008(bothdaysinclusive)forascertainingthenamesoftheshareholderstowhomthedividendwhichifdeclaredattheAnnualGeneralMeetingis payable. In respect of shares held in electronic form, the dividend will be payable on the basis of beneficial ownership as per detailsfurnishedbyNationalSecuritiesDepositoryLtd.andCentralDepositoryServices(India)Ltd.,forthispurpose.

4. Those Members who have so far not encashed their dividend warrants for the below mentioned financial years, may claim or approachtheCompanyforthepaymentthereofasthesamewillbetransferredtothe‘InvestorEducationandProtectionFund’oftheCentralGovernment,pursuanttoSection�05CoftheCompaniesAct,�956ontherespectivedatesmentionedthereagainst.PleasenotethatasperSection�05CoftheCompaniesAct,�956,noclaimshalllieagainsttheCompanyortheaforesaidFundinrespectofindividualamountswhichremainunclaimedorunpaidforaperiodofsevenyearsfromthedatethedividendbecamedueforpaymentandnopaymentshallbemadeinrespectofsuchclaims.

Dividend for the Financial Year ended Due date for transfer3�.03.�00�

3�.03.�00�

3�.03.�003

3�.03.�004

3�.03.�005

3�.03.�006

3�.03.�007

�8.07.�008

�4.08.�009

�5.08.�0�0

�6.07.�0��

�6.07.�0��

�4.07.�0�3

�7.07.�0�4

5. MembersarerequestedtobringtheircopyoftheAnnualReporttotheAnnualGeneralMeeting.

6. Members are requested to send in their queries at least a week in advance to the Company Secretary at the Registered Office of the Company to facilitate clarifications during the meeting.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.Item No. 8 to 11ParticularsoftheCompanywhereinvestment/placementofintercorporatedeposits/lendingisproposed:

Item No.

Name & Regd. Office of the Company

Investment as on date in Rs. Crore and % of existing holding

Amount of proposed investment

(Rs. Crore)

Principal business of the Company

Purpose of investment

Source of funds

Nature of concern/ interest of directors

8 GodrejPropertiesLtd.,GodrejBhavan,Mumbai40000�.

�87.9�(8�.4�%)

�5 RealEstateDevelopment

Agoodinvestmentopportunity

InternalSources/borrowing

Mr.A.B.Godrej,

Mr.J.N.Godrej,

Mr.N.B.Godrej,

Ms.T.A.Dubash

Mr.F.P.Sarkari,

Mr.V.N.Gogate,

Mr.V.F.Banaji,Mr.M.EipeandMr.M.P.PusalkarbeingDirectorsand/orshareholdersmaybedeemedtobeinterestedintheresolution.NoneoftheotherDirectorsareinterestedintheresolution.

7

Item No.

Name & Regd. Office of the Company

Investment as on date in Rs. Crore and % of existing holding

Amount of proposed investment

(Rs. Crore)

Principal business of the Company

Purpose of investment

Source of funds

Nature of concern/ interest of directors

9 GodrejAgrovetLimitedPirojshanagar,EasternExpressHighway,Vikhroli(East),Mumbai-400079

�63.�8(75.�0%)

�0 Animalfeeds,Integratedpoultrybusiness,Agriinputs,Oilpalmplantations,PlantbiotechandRuralandUrbanretailing

TosupportGAVL’sgrowthplans.


Mr.A.B.Godrej,

Mr.J.N.Godrej,

Mr.N.B.Godrej,

Mr.V.M.Crishna,

Mr.K.N.Petigaraand

Ms.T.A.Dubash,beingDirectorsand/orshareholdersmaybedeemedtobeinterestedintheresolution.NoneoftheotherDirectorsareinterestedintheresolution.

�0 EnsembleHoldings&FinanceLimitedPirojshanagar,EasternExpressHighway,Vikhroli(East),Mumbai-400079.

�3.�9(�00%)

�0 InvestmentCompany

AgoodInvestmentOpportunity


Ms.T.A.DubashandMr.M.EipebeingDirectorsand/orshareholdersmaybedeemedtobeinterestedintheresolution.NoneoftheotherDirectorsareinterestedintheresolution.

�� BostonAnalyticsInc.�75,FederalStreet,�4thFloor,Boston,Massachusetts–0��0

9.88(�7.�0%)

�5 BusinessResearchandAnalysis(KnowledgeProcessOutsourcing)

AgoodInvestmentOpportunity


Mr.N.B.GodrejbeingaDirectormaybedeemedtobeinterestedintheresolution.NoneoftheotherDirectorsareconcernedorinterestedintheresolution.

TheBoardrecommendstheaboveresolutionsforapprovaloftheMembers.

Item No.12Ms.NisaA.GodrejwasappointedasanemployeeoftheCompanywitheffectfromOctober�,�00�.TheshareholdersoftheCompany,throughPostalBallot,theresultsofwhichwereannouncedbytheChairmanonOctober5,�006,hadapprovedpaymentofrevisedfixed compensation in the scale of Rs.1,00,000 – 2,00,000 per month and perquisites and allowances as per the scheme of the Company asadmissibletosimilarlyplacedemployeeswhichwassubsequentlyapprovedbytheGovernmentofIndia,MinistryofFinanceandCompanyAffairs,DepartmentofCompanyAffairsvideitsletterdatedMarch�5,�007.

Ms.NisaA.GodrejisaBachelorofScienceinEconomicsfromtheWhartonSchool,UniversityofPennsylvania,USAandaMasterofBusinessAdministrationfromHarvardBusinessSchool,HarvardUniversity,Boston,M.A.Ms.NisaA.Godrejhasmorethan7yearsofindustrial and business experience. Considering the educational qualifications, experience and other relevant factors it is proposed to revisetheremunerationpayabletoMs.NisaA.Godrejw.e.f.April�,�008andthesameislikelytoexceedthelimitsalreadyapprovedbytheCentralGovernmentasmentionedabove.

TheproposedrevisedtermsofappointmentandremunerationpayabletoMs.NisaA.Godrejw.e.f.April�,�008areasfollows:

Appointment in the grade of Executive Vice-President1. Fixed Compensation: FixedCompensationshallincludeBasicSalaryandtheCompany’scontributiontoProvidentFundandGratuityFund.TheBasic

SalaryshallbeintherangeofRs.�,78,750–�,98,750permonth,payablemonthly.TheAnnualBasicSalaryandincrementswillbe decided by the Compensation Committee/Board of Directors depending on her performance, the profitability of the Company andother relevant factors.TheBasic Salaryapprovedby theCompensationCommittee for theperiod fromApril �,�008 toMarch3�,�008isRs.�,78,750/-permonthplusCompany'scontributiontoProvidentFundplusGratuityFund.

8

2. Performance Linked Variable Remuneration (PLVR): Performance Linked Variable Remuneration according to the Scheme of the Company for each of the financial years as may be

decidedbytheCompensationCommittee/BoardofDirectorsoftheCompanybasedonEconomicValueAddedinthebusinessandother relevant factors and having regard to her performance for each year. For the financial year ended 31.03.2008, she was paidPLVRofRs.�6,04,0��/-.DependingontheperformanceoftheCompanyandhercontribution,thePLVRpayablecanbeuptoRs.38,30,338/- this financial year.

3. Flexible Compensation: InadditiontotheFixedCompensationandPLVR,Ms.NisaA.Godrejwillbeentitledtothefollowingallowances,perquisites,

benefits, facilities and amenities as per rules of the Company and subject to the relevant provisions of the Companies Act, 1956 (collectivelycalled“perquisitesandallowances”).TheseperquisitesandallowancesmaybegrantedtoMs.NisaA.GodrejinthemannerastheCompensationCommittee/BoardofDirectorsoftheCompanymaydecideaspertheRulesoftheCompany.

l Housing(i.e.unfurnishedresidentialaccommodationORHouseRentAllowanceat80%ofBasicSalary); l Furnishingatresidence; l SupplementaryAllowance; l LeaveTravelAssistance; l Payment/reimbursementofdomiciliarymedicalexpensesforselfandfamily; l Payment/reimbursementofFoodVouchers,petrolreimbursement; l Company cars with driver for official use, provision of telephone(s) at residence; l Payment/reimbursementoftelephoneexpenses; l HousingLoan,ContingencyLoanasperrulesoftheCompany.TheseloansshallbesubjecttoCentralGovernmentapproval,

ifany; l Earned/privilege leave, on full pay and allowance, not exceeding 30 days in a financial year. Encashment/accumulation of

leave will be permissible in accordance with the Rules specified by the Company. Casual/Sick leave as per the rules of the Company;

l Suchotherperquisitesandallowancesasperthepolicy/rulesoftheCompanyinforceand/orasmaybeapprovedbytheBoardfromtimetotime.

ThemaximumcosttotheCompanyperannumfortheaggregateoftheallowanceslistedaboveforMs.NisaA.GodrejshallbeintherangeofRs.�,46,�00–4,��,300.

For the period April 1, 2008 to March 31, 2008 the maximum cost of the Company for all the heads of flexible compensation payable toMs.NisaA.GodrejisRs.�,46,�00.

Inadditiontotheabove,Ms.NisaA.Godrejshallbeeligibletoencashmentofleave,clubfacilities,groupinsurancecover,grouphospitalisationcover,and/oranyotherallowances,perquisitesandfacilitiesaspertheRulesoftheCompany.

Explanation:i) FortheLeaveTravelAssistanceandreimbursementofmedicalandhospitalisationexpenses,‘family’meansthespouse,dependent

childrenanddependentparents.ii) PerquisitesshallbeevaluatedatactualcostorifthecostisnotascertainablethesameshallbevaluedasperIncomeTaxRules.Notes:I. Unlessotherwisestipulated,forthepurposeoftheabove,theperquisitesshallbeevaluatedasperIncomeTaxRuleswherever

actualcostcannotbedetermined.II. The limits specified above are the maximum limits and the Compensation Committee/Board may in its absolute discretion pay to

Ms.NisaA.Godrejlowerremunerationandrevisethesamefromtimetotimewithinthemaximumlimitsstipulatedabove.III. In the event of any re-enactment or re-codification of the Companies Act, 1956 or the Income Tax Act, 1961 or amendments thereto,

theforegoingshallcontinuetoremaininforceandthereferencetovariousprovisionsoftheCompaniesAct,�956ortheIncomeTaxAct,�96�shallbedeemedtobesubstitutedbythecorrespondingprovisionsofthenewActortheamendmentstheretoortheRules and notifications issued thereunder.

Mr.A.B.GodrejandMs.T.A.Dubashbeingrelativesmaybedeemedtobeinterestedintheresolution.NoneoftheotherDirectorsoftheCompanyareconcernedorinterestedintheresolution.TheBoardofDirectorsoftheCompanyrecommendsthepassingoftheresolutionassetoutatItemNo.��oftheNotice.

Item No13Article�4AoftheArticlesofAssociationoftheCompanyneedstobeinsertedintheArticlesofAssociationoftheCompany.ThisArticlegovernstheclauserelatingtoBuybackofsharesintheCompany.ItisproposedtoaltertheexistingArticlesofAssociationoftheCompanyinordertobringitinlinewiththecurrentprovisionsoftheCompaniesAct,�956andtheguidelinesofSecuritiesandExchangeBoardofIndia,whichpermitsBuyback.TheDirectorsrecommendthepassingofthisresolution.NoneoftheDirectorsoftheCompanyareconcernedorinterestedintheresolution.

9

Brief Resume of Directors seeking appointment/re-appointment at this Annual General Meeting (in pursuance of Clause 49 of the Listing Agreement)

Name of the Director Mr. K. K. Dastur Mr. V. M. Crishna Mr. K. N. Petigara Mr. M. P. Pusalkar

Age 66 63 59 57

Nationality Indian Indian Indian Indian

DateofappointmentontheBoard

May�,�00� January3,�995 January30,�00� January30,�00�

ShareholdingintheCompany

�,�06 NIL NIL NIL

Qualification/s B.Com.,A.C.A. B.A.(Eco.) B.S.,M.S.,Ch.E.,MIT–USA

B.Tech.(Elec.)–IIT(Kanpur)&MMS–JBIMS

Expertise in specific functionalarea

Finance&Accounts Economics Chemicals Projects&GeneralManagement

Directorshipsheldinothercompanies

GodrejInfotechLtd.OilFieldInstrumentation(India)Ltd.CartiniIndiaLtd.WadalaCommoditiesLtd.Netel(India)Ltd.

Godrej&BoyceMfg.Co.Ltd.LawkimLtd.GodrejAgrovetLtd.GodrejHicareLtd.PrecisionWiresIndiaLtd.StatomatSpecialMachines(India)P.Ltd.

Godrej&BoyceMfg.Co.Ltd.GodrejAgrovetLtd.SwadeshiDetergentsLtd.VoraSoapsLtd.GodrejGlobalSolutionsLtd.(resignedw.e.f.30/06/�008)

WadalaCommoditiesLtd.

Chairmanships/Membershipsofcommitteesinothercompanies

Audit CommitteeWadalaCommoditiesLtd.–ChairmanOilFieldInstrumentation(India)Ltd.-Chairman,Netel(India)Ltd.-Chairman

Compensation CommitteeWadalaCommoditiesLtd.–Chairman

NIL Audit CommitteeGodrej&BoyceMfg.Co.Ltd.GodrejGlobalSolutionsLtd.(resignedw.e.f.30/06/�008)GodrejAgrovetLtd.–Chairman

Compensation CommitteeGodrej&BoyceMfg.Co.Ltd.GodrejGlobalSolutionsLtd.–Chairman(resignedw.e.f.30/06/�008)GodrejAgrovetLtd.

Audit CommitteeWadalaCommoditiesLtd.

Remuneration CommitteeWadalaCommoditiesLtd.

Shareholders CommitteeWadalaCommoditiesLtd.-Chairman

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DIRECTORS’ REPORT

TotheShareholders,

YourDirectorshavepleasureinsubmittingtheAnnualReportalongwiththeAuditedAccountsfortheyearendedMarch3�,�008.

REVIEW OF OPERATIONS

YourCompany’sperformanceduringtheyearascomparedwiththatduringthepreviousyearissummarisedbelow.

Rs.Lac

Year ended March 31,2008 �007

Salesofproductsandservices 73,531 65,477OtherIncome 10,351 ��,8�4TotalIncome 83,882 78,�9�TotalExpenditureotherthanInterestandDepreciation

67,119 64,078

Profit before Interest, Depreciation andTax

16,763 �4,��3

Depreciation 2,547 �,4�6Profit before Interest and Tax 14,216 ��,787InterestandFinancialCharges(net) 3,444 3,83�Profit before Tax �0,77� 7,956ProvisionforCurrentTax 492 83Profit after Current Tax 10,280 7,873ProvisionforDeferredTax (369) �6�Profit after Current and DeferredTaxation

10,649 7,7��

Profit on sale of undertaking,extraordinaryitem(Netoftax)

232 95

Net Profit 10,881 7,806Adjustments in respect of prioryears

– –

Surplusbroughtforward 27,321 �3,7�0Profit after Tax available forappropriation 38,202 3�,5�6AppropriationYourDirectorsrecommendappropriationasunder:DividendonEquityShares 3,997 �,9�9Tax on distributed profits 679 496TransfertoGeneralReserve 1,089 78�SurplusCarriedForward 32,437 �7,3�0Total Appropriation 38,202 31,516

The total income increased by 7.�4% from Rs.78,�9� lac toRs.83,882 lac. The Net Profit for the year was Rs.10,881 lac as compared to Rs.7,806 lac in the previous year, an increase of39.39%.

DIVIDEND

The Board of Directors of your Company recommends a final dividendofRs.�.�5perequityshareofRe.�/-each,aggregatingtoRs.3,996.98lac,onenlargedbaseof3�,97,58,60�equityshares

(last year 29,18,51,652 equity shares) as against a final dividend ofRe.�/-perequityshareofRe.�/-eachaggregatingtoRs.�,9�9lacinthepreviousyear.

MANAGEMENT DISCUSSION AND ANALYSIS

ThereisaseparatesectiononManagementDiscussionandAnalysisappendedasAnnexureA inthisAnnualReport,which, includesthefollowing:

• IndustryStructureandDevelopments

• Discussion on financial performance with respect to operational performance

• Segment-wiseperformance

• HumanResourcesandIndustrialRelations

• OpportunitiesandThreats

• InternalControlSystemsandtheiradequacy

• RisksandConcerns

• Outlook

SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES

YourCompanyhasinterestsinseveralindustriesincludinganimalfeeds, poultry and agro-products, oil plantation, propertydevelopment,householdinsecticides,pesticides,beveragesandconfectionery,personalcare,etc.throughitssubsidiary/associate/jointventurecompanies.

Godrej Agrovet Limited (GAVL):GAVLrecordedarevenuegrowthof30%overthepreviousyear,withtheturnoverincreasingfromRs.71,285 lac to Rs.92,617 lac. The profit after tax increased from Rs.�75lactoRs.3,8��lac.

DuringtheyeartheCompanyrestructureditsbusinessintofourverticalsviz.AnimalFeeds,OilPlantation,PoultryandRetail.

TheOilPalmPlantationbusinesswasdemergedandtwoseparatecompanies were incorporated under the names of Godrej OilPlantationsLtd.(GOPL),whichwilloperateinthestatesofAndhraPradesh,Gujarat,OrissaandMizoram,andGodrejGokarnaOilPalmLtd.(GGOPL),whichwilloperateinthestatesofGoaandKarnataka.InGOPL,BlessedResourcesPte.Ltd.istheJVpartnerwitha�0%stakewhileinGGOPLtheJVpartnerisIJMPlantations,Berhadwitha5�%stake.

Theruralretailingbusiness,whichoperatedunderthenameofAadhaar,wastransferredtoAadhaarRetailingLtd.whichisnowoperatingasaJVinwhichFutureGrouphastakena70%stake.

TheCompany is in theprocessofmerging its�00%Subsidiary–GoldmohurFoodsandFeedsLtd.intoitself.Thisstepisexpectedtobenefit the company in streamlining its animal feeds business.

Goldmohur Foods and Feeds Limited (GFFL):

ThePoultryIndustrywasonceagainadverselyimpactedbytheAvian Influenza which this time was detected in Eastern India in January�008.Thisresultedinde-growthoftheIndustryduringthe year under review. Significant increases in commodity prices further impacted the profitability of GFFL’s business. By focusing onR&Dinitiativesandcostcuttingtheseverticalmeasures,theCompanytriedtominimizetheimpactoftheabovefactorsonthe profitability of the business. Despiterecordinganincreaseof21.50% in turnover, profitability could only be maintained at similar levelsasinthepreviousyear.

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Godrej Properties Limited(GPL): GPL had a good financial year withthetotalincomerisingfromRs.7,046lacfortheyearended31.3.07 to Rs.22,750 lac for the year ended 31.3.08. The profit aftertaxrecordedanimpressivegrowthof83%fromRs.4,�45lacin the financial year ended 31.3.07 to Rs.7,589 lac for the financial yearended3�.3.08.

DuringtheyearGPLstartedoperationsincitieslikeChandigarh,Mangalore,ChennaiandKochi.GPLalsosignedalargetownshipdevelopmentprojectinAhmedabad.ItalsoagreedtosellapartofPhaseIIintheGodrejWoodsmanEstateProjectinBangaloreona“BuilttoSuit”basis.

GPL is actively pursuing its IPO plans during the current financial year.

YourCompanyhasenteredintoaMoUwithGPLtodevelopandcommerciallyexploitthelandsleasedtoitbyGodrejandBoyceMfg.Co.Ltd.

Godrej International Limited (GINL):As a worldwide traderofvegetableoils,GINLpostedturnoverofUS$�0,��,07,6��ascomparedtoUS$6,�5,73,658inthepreviousyear-riseof64%.The net profit increased by 136% from US$ 6,07,280 in the previous yeartoUS$�4,35,899inthecurrentyear.Duringtheyear,GINLundertook a buyback of 2,50,000 ordinary shares of ₤1 at a price ofUS$�0pershare.Thesharesboughtbackwerecancelled.

Godrej Hicare Limited (GHL): GHL operates in the householdinsecticidesector.TotalincomeofGHLhasgoneupfromRs.�,996lacinthepreviousyeartoRs.3,008lacinthecurrentyear.Duringtheyear,GHLcloseditsbulkchemicalsbusinesstoconcentrateonitsservicesbusiness.Therevenuefromservicesbusiness,duringtheyearhasgoneupfromRs.�,377lactoRs.�,79�lac,anincreaseof�7%.GHL’sPATduringthesameperiodwentupfromRs.�8�lactoRs.�65lac,anincreaseof46%.

Withaviewtoimproveitsservices,GHLstarteditsownservicecentresandexpectstoserviceabout50%ofitsbusinessthroughits own centres in �008-09. This has resulted in substantialinvestmentinmanpower,whichisacriticalfactorforsuccessinthisindustry.

Godrej Global Solutions Ltd. (GGSL): GGSL provides back-office transactionprocessingservicestooverseascustomersintheU.S.A.andU.K.DuringtheyeartheCompanyearnedatotalincomeofRs.�,369.�9lacasagainstRs.�,405.�6lacinthepreviousyear.TheBPO/ITESindustryfacedchallengeslastyearduetothedollardepreciationandGGSLwasnoexception.Asaresponse,GGSLhadto rationalize its operations at Mumbai and Navi Mumbai tomeet the challenges and strove to achievehigher operationalefficiencies. GGSL continued to focus on business segments like Healthcareclaimformprocessing,medicaltranscription,medicalbillinganddocumentconversionservices.

AsthisisnotafocusareaforyourCompany,inMay�008,yourCompanyenteredintoaSharePurchaseAgreementwithTricomIndiaLimited forsaleof theentire shareholdingofGGSLforapurchaseconsiderationofRs.�,963lac.ThetransactionisexpectedtobecompletedbytheendofJune,�008.

Godrej Hershey Ltd. (formerly Godrej Beverages and Foods Ltd.) (GHL): GHL isaJVbetweentheHersheyNetherlandsBVandyourCompany.Duringtheyearunderreview,GHLearnedatotalincomeofRs.�9,785lacascomparedtoRs.�7,795lac,anincrease

of��%.However,duringthesameperiodGHLrecordedalossofRs.�,988lacascomparedtoalossofRs.�,879lacinthepreviousyear.Thislosshasbeenmainlyonaccountofmajorrestructuringinitiativesundertakenduringtheyear,theresultsofwhichareexpectedinthefuture.

During theyear,GHL revamped itsdistributionnetwork. IthasalsosetupamanufacturingunitatNalagarhinHimachalPradesh,whichislikelytocommenceoperationsbyendofJune,�008.Inadditiontoitsexistingrangeofproducts,HersheysMilkMixwaslaunchedinselectmarketsinthesouthofthecountry.

Nutrine Confectionery Company Ltd. (NCCL): NCCL, a �00%subsidiaryofGHL,isamajorplayerinconfectionerybusinessinIndiawhichincludesinitsproductportfoliostrongbrandssuchasMahaLacto,MahaMahaLacto,KokoNaka,MilkEclairs,HoneyFab,AamRas,Aasay,SuperStarandGulkand.NCCLrecordedaturnoverofRs.�5,768lacduringtheyearunderreviewascomparedtoRs.�6,9��lacduringthepreviousyear-adecreaseof7%.Thenet profit however increased from Rs.825 lac in the previous year toRs.864lac.NCCLhasalsorevampeditsdistributionnetworkduringtheyearforbroaderreach,moreeffectiveexecutionandimprovedadministrativecontrol.

Godrej Sara Lee Limited (GSLL): The consolidated businessrecordedsalesgrowthof�5%duringtheyear�007-08overthepreviousyear.Theconsolidatedbusinesscontinuedtomaintainits profitability focus and achieved profit growth of 32% during theyearunderreview.

GSLLcontinueddrivingbusinesswiththeconsumeratthecentreof all its initiatives.All new innovations and product launcheswere built on a deeper understanding of consumer needs andaspirations.

ThenewidentityoftheGoodKnightbrandwasexecutedontheentirerangetobuildasuperiorconnectwithconsumers.GoodKnightsequentiallygainedmarketsharefrom�9%inQuarter�to�4%inQuarter4of�007-08.

TheHITbrandmaintained its leadership inthefastestgrowingsegment (viz.: aerosols) of household insecticides which wasfurtheraidedbynewlaunchesataccessiblepricepoints.

SaraLee’sHouseholdandBodyCarebusinessinIndiaandSriLankawasacquiredeffectiveJuly�,�007.Thisaddednewcategoriestothebusinessviz.,hairstyling(Brylcreem),shoecare(Kiwi),surfacecare (KiwiKleen).Brylcreem isapioneer in themen’shairgroominginthecountryandcontinuestoleadthecategory.Kiwiisagloballeaderinshoecare.Aninnovationinaircare,theOdoureliminatorrangewaslaunchedunderAmbipur.

Growthoforganizedretailisleadingtochangeinchanneldynamics.GSLLstrengtheneditsrelationshipswiththeemergingorganizedretail partners.This helped GSLL in driving growth in the newemergingretailformats.TheCompanycontinuedtoprovidebetterservicinganddevelopstrongerrelationshipsinthetraditionaltradeaswell.BuildingastrongdistributioninfrastructureforKiwiandBrylcreembrandsbecameapriorityforGSLLandseveralinitiativesweretakeninthisdirection.

Godrej Consumer Products Limited(GCPL): Onaconsolidatedbasis, GCPL registered a net income of Rs.�,�0,�57 lac ascompared to Rs.95,152 lac in the previous year. GCPL’s profit after tax increased by �9% from Rs.�3,4�6 lac in the previous

��

yeartoRs.�5,9�4lacinthecurrentyear.GCPLdeclareddividendsaggregatingto400%inthecurrentyearascomparedto375%inthepreviousyear.

InMarch�008,GCPLlaunchedthenewimprovedandexpandedCintholrangeofsoap,talcanddeodorant.GCPLalsore-launcheditsPowderHairDyeas“GodrejExpertPowderHairDye”.

DuringOctober�007,theCompanyacquiredGodrejGlobalMideastFZE,a�00%subsidiaryofGodrejInternational,whichwillenableGCPLtoconsolidateitspresenceintheGCCcountriesandintheMiddleEast.OnApril�,�008,GCPLcompletedtheacquisitionof�00%stakeintheKinkyGroup(Proprietary)Ltd.inSouthAfrica.

GCPL’s joint venture company, Godrej SCA Hygiene Limitedlaunched“Libresse”brandofsanitarynapkins,“Libero”brandofbabydiapers,“Tena”adultincontinentdiapersandre-launchofSnuggybrandas“SnuggyDry”.

GCPLwasranked6thinthe“BestEmployersStudy”conductedbyHewittAssociatesandtheEconomicTimes.IntheBusinessWeek–Asia’sHotGrowthCompanies:�007,GCPLwasranked�3rdmakingitthehighestrankedFMCGcompany.TheMalanpurfactorywonthePlatinumAwardintheIndiaManufacturingExcellenceAwards(IMEA)byFrost&Suillivan,intheChemicalscategory.

FINANCIAL POSITION

The financial position of your Company continues to be sound.

InNovember,�007,yourCompanysuccessfullyplaceditsequityissueof�,79,06,950equitysharesofRe.�/-eachatapremiumofRs.214/- with Qualified Institutional Buyers, raising Rs.600 crore. The issue was priced at a premium of 9% over the floor price calculated in accordance with the SEBI guidelines.The moneyraisedhasbeenutilisedtoretiredebtasalsoforinvestmentsinsubsidiarycompaniesandinsomeshort-termliquidassets.

TheloanfundsattheendoftheyearstandatRs.43,567lacascomparedtoRs.46,770lacattheendofthepreviousyear.Thedebtequityratiois0.4�ascomparedto�.08lastyear.

YourCompanycontinuestoholdthetopmostratingofA�+fromICRA for itscommercialpaperprogram(Rs.60crore). ICRAhasalsoassignedanA�+ratingfor itsshorttermdebt instruments(Rs.630crore).ICRAalsoassignedLAAratingforlong-termdebt(Rs.�70crore).Thisratingrepresentshighcreditqualitycarryinglowcreditrisk.

RECOGNITION FOR CREATING SHAREHOLDER VALUE

Duringtheyear,yourCompanywasrankedthe9thFastestWealthCreatorwithaCAGRof��7%andthe65thBiggestWealthCreatorforhavingaddedoverRs.4600croretoitsmarketcapitalizationfortheperiod�00�-�007inthe��thAnnualWealthCreationStudyReportbyMotilalOswalSecurities.YourCompanywasalsoranked4thindeliveringthegreatestTotalShareholderReturns(TSR)of�46%p.a.fortheperiod�00�-�007inthelargecapsegmentinasurveypublishedbyBusinessworldinJune�007.

MANUFACTURING FACILITIES

The Chemicals Division of your Company has manufacturingfacilitiesatVikhroliandValia.

Valia:

IntheEOUplant,fractionationcapacityhasbeenenhancedbyreplacing one fractionation column with a new, high efficiency column which has resulted in improvement in its ability toproduce high purity finished products. This change enables better pricenegotiation.TheCoolerinthefractionationplanthasbeenreplacedwithawasteheatrecoveryboilerwhich,hasresultedincostreductionandenergyconservation.Commercialproductionoffattyalcoholderivativeshasalsobeenstreamlined.

Vikhroli:

The Vikhroli factory, after implementation of the IntegratedManagementSystem(ISO900�-�000,ISO�400�andOHSAS�800�),has successfully completed two surveillance audits by BUREAUVERITAS.

Vegoils Division:

TheVegoilsDivisioncontinuedasacontractprocessorofedibleoilsandvanaspati.

RESEARCH AND DEVELOPMENT

During the year under review, the R&D department developedprocessesforthemanufacturingofpremiumqualityfattyacidsfrom economy grade raw materials, high value fractionatedfatty acids for the polymer, oilfield and lubricant industries, specialtysurfactantsfor oralcareandpersonalcareproductsandvalueaddedderivativesofglycerinsoastoentercertainnichemarkets.

INFORMATION SYSTEMS

Your Company continued to leverage Information Technology(IT) across the Chemical business in the year �007-08. SAPimplementationhasstabilizedacrossallbusinessareasandtheCompany has started enjoying the benefits of a centralized ERP.ABusiness Intelligence(BI) initiativebuiltonSAP isunderimplementationandexpectedtoprovidefasterandmoreaccurateinformationtokeydecisionmakers.

EMPLOYEE STOCK OPTION PLAN (ESOP):

TheshareholdersattheirExtraordinaryGeneralMeetingheldonDecember�,�005hadapproved theGodrej Industries LimitedEmployee Stock Option Plan (GIL ESOP) for grant of �5,00,000(Fifteen Lac) Options convertible into �5,00,000 (Fifteen Lac)equitysharesofthenominalvalueofRs.6/-eachtotheemployees/directorsoftheCompanyand/oritssubsidiaries.ConsequenttothesubdivisionofeachequityshareofRs.6/-into6equitysharesofRe.�/-each,thenumberofoptionsthatcanbegrantedstandsincreasedfrom�5,00,000to90,00,000convertibleinto90,00,000equity shares of Re.1/- each. During the financial year 2007-08, 220 employeesoftheCompanyand/oritssubsidiariesweregrantedESOP’sbasedontheirleadershipresponsibilityandpotential.

Date of Grant of ESOP No. of ESOP No. of EmployeesApril5,�007 �3,�0,000 3�April��,�007 3,05,000 �4October3,�007 50,000 �January�3,�008 4,35,000 5March3�,�008 ��,59,500 �67TOTAL 53,69,500 220

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Disclosure in compliance with Clause �� of the Securities andExchange Board of India (Employee Stock Purchase Scheme)Guidelines,�999isgiveninAnnexureBattachedandformsapartofthisReport.

GROUP FOR INTERSE TRANSFER OF SHARES

AsrequiredunderClause3(�)(e)oftheSecuritiesandExchangeBoardofIndia(SubstantialAcquisitionofSharesandTakeovers)Regulations,�997,personsconstitutingGroup(withinthemeaningas defined in the Monopolies and Restrictive Trade Practices Act, �969) for thepurposeof availingexemption fromapplicabilityof the provisions of Regulation �0 to �� of the aforesaid SEBIRegulationsaregiveninAnnexureCattachedandformsapartofthisReport.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS

Your Company continues to take various initiatives for thedevelopmentofitshumanresourcesandhasmaintainedhealthyandharmoniousindustrialrelationsatalllocations.

Your Company lays great emphasis on optimizing peopleperformance through various people processes. It begins withbestpractices inrecruitingpeopleandmovesthrough learninganddevelopment,engagement,employeefeedbackandrewardsandrecognition.

TheACE (Accelerated Career for Employees) program recruitsprofessionals from premium institutes like Indian Institute ofTechnology, National Institute ofTechnology, Birla Institute ofTechnologyandScienceandSriRamCollegeofCommerce,Delhiandalsothroughadvertisements.YourCompanyprovidesthenewrecruitswithnecessarymanagerialskillswhichinturndevelopsthemintosuccessfulmanagers.YourCompanyalsoprovidessummertrainingprogramtoB-Schoolgraduates;‘Gurukool’,providesaliveprojectwithastructuredgoal,workshopbyseniorleadersandaninformalinteractionwithseniorsandtheChairman.

FortheaboverecruitsandexistingemployeesyourCompanyofferson the job learning initiatives likee-MBA incollaborationwithrenownedmanagementinstitutionslikeIITSchoolofManagement(Mumbai),SymbiosisInstituteofBusinessManagement(Pune)andIIM(Indore).

Fostering people development and harnessing their creativepotentialtothemaximum,identifyingandgroomingmanagementtalentandleadershipdevelopmentatalllevelsremainsapriority.The“TotalTalentManagement”programhasbeensuccessfulinidentifyingandgroomingLeadershipTalent.

EmployeefeedbackisobtainedthroughaVoiceoftheEmployee(VOTE)process,informalsessionswiththeExecutiveDirectorsandEmployeeCommitmentSurvey.

In order to manage your Company’s human resources moreeffectivelyagloballyacclaimedstate-of-the-artHumanResourceManagementSystemhasbeenimplemented.Ithelpsincollatingworkforcedataandusingitfordrivingperformance,developingtalentandmanagingcompetitiveness.

Inclusiveness

Your Company believes in inclusiveness and hence is nurturingemployment of SC/ST categories.As on March 3�, �008 yourCompanyemployed37�employeesfromtheSC/STcategories.

Industrial Relations

The industrial relations at all our Plant locations remainedharmonious.

ENVIRONMENT AND SOCIAL CONCERN

Your Company continues its efforts for the betterment of theenvironmentandconservationofscarcenaturalresources.

Your Company continued “Rain water harvesting” initiativesundertakenduringthepreviousyearatitsVikhroliFactoryandinthestaffquartersatVikhroli.Sofar8,500Sq.Meterofroofareahasbeencoveredundertherainwaterharvestinginitiativeand��,500M3ofwaterhasbeencollectedatthefactoryandstaffquartersinVikhroli.Thisprocesshasresultedinsavingwaterandconsequently, the costs thereof. Recharging of two bore wellswith rain water has also been undertaken, which resulted inimprovementofyieldandquality.

The Effluent Drainage System for carrying effluents from the chemicalplantswasupgraded.Topreventpollutiontoenvironment,wastefromthefactoriesisconvertedintoanenvironment-friendlyproductandthendisposedoffsafely.

MoreAreasofwastelandhavebeenconvertedintogardensusingwater from the Effluent Treatment Plant. The Vikhroli factory continuestoconvertthebiodegradablewasteintobiocompostwiththehelpofanNGO.Theprocessofbiocompostinghasbeenenhancedwiththeuseofenzymestoreducethefrequencyofdecomposition.

TheConfederationofIndianIndustry(CII)-SohrabjiGodrejGreenBusinessCentrehasevolvedaCodeforEcologicallySustainableBusiness Growth.The Code comprises of “Ten Natural CapitalCommandments”, which include, commitments to reduce specific consumptionofEnergyandWater,reduceGreenHouseGas(GHG)emissionsandallkindsofwaste.YourCompanyhasbeenanearlyandenthusiasticadopterofthisCode.

ElectricityproducedbyyourCompany’swindmillshaveresultedin reduction in emission of CO� for which your Company wasgranted CERs (Certified Emission Reduction). Unfortunately in the current year, the windmills have produced less electricitythanexpected.

YourCompanyhas startedaconceptof“TableForTwo”underwhichtheCompanywillsponsormid-daymealstostudentscomingfromtheunderprivilegedsectionofthesociety.YourCompanyisalsointheprocessofsigninganagreementwithalogisticsserviceproviderfordistributionofmid-daymealstoanumberofschoolsinMumbai.

FIXED DEPOSITS

YourCompanyhasstoppedacceptingFixedDepositsfromthepublic.DepositsofanaggregateamountofRs.�.38lacunclaimedearlierhavebeenpaidduringtheyearonreceiptofvalidclaims.

DEPOSITORY SYSTEM

YourCompany’sequitysharesareavailablefordematerialisationthrough National Securities Depository Limited and CentralDepositoryServices(India)Limited.AsofMarch3�,�008,99.63% oftheequitysharesofyourCompanywereheldindematform.

DIRECTORS

InaccordancewithArticle��7oftheArticlesofAssociationoftheCompany,Mr.K.K.Dastur,Mr.V.M.Crishna,Mr.K.N.Petigara

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andMr.M.P.Pusalkar retirebyrotationattheensuingAnnualGeneral Meeting. They are eligible and offer themselves forre-appointment.

The Shareholders vide Postal Ballot the results of which weredeclaredonNovember7,�007,hadappointedMr.C.K.VaidyaasExecutiveDirectorandPresident(BusinessExcellence)foratenureofthreeyearsfromSeptember�8,�007toSeptember�7,�0�0.Mr.C.K.VaidyahoweverhasexpressedhisdesiretostepdownfromtheBoardwitheffectfromMay�8,�008duetopersonalreasonsandhasceasedtobeaDirectoreffectivethatdate.TheDirectorsplaceonrecordtheirappreciationforthecontributionmadebyMr.C.K.VaidyaduringhistenureasDirectoroftheCompany.

UndertheamendedClause49ofthelistingagreementwiththeStockExchanges,wheretheNon-ExecutiveChairmanisapromoteroftheCompanyorisrelatedtoanypromoterorpersonoccupyingmanagementpositionsattheBoardleveloratonelevelbelowtheBoard,atleastone-halfoftheBoardoftheCompanyshallconsistofIndependentDirectors.Mr.A.B.GodrejisapromoterandaNon-ExecutiveChairmanoftheCompany.ThecurrentstrengthoftheBoardis�3membersoutofwhich5areIndependent.Basedon the amended Clause 49 of the listing agreement, at leastone-halfoftheBoardshouldcompriseofIndependentDirectors.ThecurrentArticlesofAssociationof theCompanyprovideforamaximumof�5directors.HenceapprovaloftheshareholdersoftheCompanyisbeingsoughtthroughpostalballot(resultsofwhichshallbedeclaredonJune�5,�008)toincreasethesizeoftheBoardto�8DirectorstoenabletheCompanytoappointsuchnumberofIndependentDirectorsaswouldmeettherequirementsof continued listing. Based on the shareholders approval, theCompanywillhavetoapplytotheCentralGovernmentforincreasein the number of directors from the existing maximum of �5Directorstoamaximumof�8Directors.

AUDITORS

YouarerequestedtoappointAuditorsforthecurrentyearandto authorize the Board to fix their remuneration. The retiring auditors, Kalyaniwalla and Mistry, CharteredAccountants, areeligible for re-appointment. A certificate from the Auditors has beenreceivedtotheeffectthattheirre-appointment,ifmade,wouldbewithinthelimitsprescribedunderSection��4(�B)oftheCompaniesAct,�956.

AUDIT COMMITTEE

TheAudit Committee which was constituted pursuant to theprovisions of Section �9�A of the CompaniesAct, �956 andthe listing agreement has reviewed theAccounts for the yearendedMarch3�,�008.ThemembersoftheAuditCommitteeareMr. F. P. Sarkari (Chairman), Mr. V. N. Gogate and Mr. S.A.Ahmadullah,allIndependentDirectors.

DIRECTORS’ RESPONSIBILITY STATEMENT

PursuanttotheprovisionscontainedinSection��7(�AA)oftheCompanies Act, 1956, the Directors of your Company confirm:

a) thatinthepreparationoftheannualaccounts,theapplicableaccounting standards have been followed and no materialdepartureshavebeenmadefromthesame;

b) thatsuchaccountingpolicieshavebeenselectedandappliedconsistently,andsuchjudgementsandestimateshavebeenmadethatarereasonableandprudentsoastogiveatrueand

fairviewofthestateofaffairsoftheCompanyattheendofthe financial year and of the profit or loss of the Company for thatperiod.

c) that proper and sufficient care has been taken for themaintenanceofadequateaccountingrecordsinaccordancewiththeprovisionsofthisActforsafeguardingtheassetsoftheCompany,forpreventinganddetectingfraudandotherirregularities;

d) that the annual accounts have been prepared on a goingconcernbasis.

CORPORATE GOVERNANCE

Asrequiredbytheexistingclause49oftheListingAgreementswiththeStockExchanges,adetailedreportonCorporateGovernanceis included in the Annual Report. The Auditors have certified the Company’s compliance of the requirements of CorporateGovernanceintermsofClause49oftheListingAgreementandthesameisannexedtotheReportonCorporateGovernance.

ADDITIONAL INFORMATION

Annexure D to this Report gives information in respect ofConservation of Energy, TechnologyAbsorption and ForeignExchangeEarningsandOutgo,requiredunderSection��7(�)(e)oftheCompaniesAct,�956,readwiththeCompanies(DisclosureofParticularsintheReportoftheBoardofDirectors)Rules,�988andformsapartoftheDirectors’Report.

InformationasperSection��7(�A)oftheCompaniesAct,�956,readwiththeCompanies(DisclosureofParticularsintheReportoftheBoardofDirectors)Rules,�988formsapartoftheDirectors’Report.As per the provisions of Section ��9(�)(b)(iv) of theCompaniesAct, �956, the Report andAccounts are being senttotheShareholdersoftheCompany,excludingthestatementofparticularsofemployeesunderSection��7(�A)oftheCompaniesAct,�956.Anyshareholderinterestedinobtainingacopyofthesame may write to the Company Secretary at the registered office oftheCompany.

TheNotestotheAccountsreferredtointheAuditors’Reportisself-explanatory. However in respect of the qualifications in the AuditReport,westateasfollows:

- Thesharesreferredtowerepledgedwithusassecurityforloansgivenandsincetheloanswerenotbeingrepaid,yourCompanyenforced the securitiesby lodging the shares fortransfer.OntherefusaloftheCompanytotransfertheshares,yourCompanyhasmovedtheCompanyLawBoard,WesternBenchandweexpectafavourabledecisionshortly.

ACKNOWLEDGEMENT

YourDirectorsthanktheUnionGovernment,theGovernmentsofMaharashtra and Gujarat as also all the Government agencies,banks, financial institutions, shareholders, customers, employees, vendors and other related organizations, who, through theircontinuedsupportandco-operation,havehelpedaspartnersinyourCompany’sprogress.

ForandonbehalfoftheBoardofDirectors

A.B. GodrejChairman

Mumbai,May�8,�008

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ANNEXURE “A” FORMING PART OF THE DIRECTORS’ REPORTMANAGEMENT DISCUSSIONS AND ANALYSIS

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian economy continued to maintain a good growthmomentumin�007-08withGDPgrowthof9%.However,therisinginflation rate which is now tracking over 8%, is an area of concern. Theindexofindustrialproductionat9%for�007-08indicatesthecontinuedoverallbuoyancyinthemanufacturingsectorthoughintherecentmonthstheindexhasshownadeclinetrackingthedeterioration in the global macro economic environment andinflation. The per capita income growth of 7.50% for 2007-08 also indicates the improving condition of the economy. The fiscal stimulusprovidedbytherecentbudgetaryproposalsthatwouldspurdemandandtheunderlyingstronggrowthstoryofIndiaaugurswellfortheoverallinvestmentclimategoingforward.

TheoverallperformanceofyourCompanyhasbeengood.Allthemajordivisionshaveimprovedtheirperformancecomparedtothepreviousyear.Thedivision-wiseperformanceandoutlookhavebeencoveredseparatelyinthisreport.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL

PERFORMANCE

Thehighlightsofoverallperformanceareasfollows:

Rs.Lac

Particulars 2007-08 �006-07 Sales 73,530.54 65,477.60TotalIncome 83,881.74 78,�9�.��Profit Before Taxation 10,771.56 7,956.�0Profit After Current Taxation 10,280.00 7,873.33Profit After Current and Deferred Taxation 10,649.36 7,7��.33EarningsperEquityShare(Rupees) 3.45 �.64Profitability ratios are as follows: PBDIT/Totalincome 19.98% �8.�5%PBT/Totalincome 12.84% �0.�6%PAT/Totalincome 12.70% 9.97%ReturnonCapitalEmployed 11.74% �4.58%ReturnonNetWorth 14.03% �8.8�%BasicEPS(Rs.) 3.53 �.64The Financial risk ratios are as follows: Debt/Equity 0.41 �.08Interestcoverage 4.13 3.08

Rs.inLac

Segment Performance 2007-08 �006-07 1. Segment Revenue Chemicals 69,238.46 57,�87.4� Vegoils 650.93 4,990.94 Estate 2,946.11 �,56�.87 FinanceandInvestments 9,802.34 ��,�45.53 Others 1,243.90 �,405.46 Total 83,881.74 78,�9�.��

Segment Performance 2007-08 �006-072. Segment Results (PBIT) Chemicals 8,223.61 64�.8� Vegoils (515.83) (4�7.08) Estate 1,845.94 �,756.7� FinanceandInvestments 8,213.41 ��,�45.53 Others 289.91 477.76 Total 18,057.04 �4,605.74 Less:Interest(Net) (3,443.75) (3,830.78) Less:Unallocatedexpenses(Net) (3,841.73) (�,8�8.85) Profit Before Tax 10,771.56 7,956.��3. Segment Capital Employed Chemicals 36,457.27 35,335.�� Vegoils 362.42 39�.00 Estate 1,531.21 ��6.00 FinanceandInvestments 116,603.03 56,�58.00 Others 2,750.59 3,0�5.00 Total 157,704.52 95,��5.��

*All figures above excludes profit on sale of undertaking

CHEMICALS DIVISION

The Chemicals division operates in the oleo-chemical andsurfactant industries.Thedivisionhasablendofdomesticandinternational operations and continued its leadership positionintheIndianmarket.TheChemicalsbusinesswasrecognizedas“Exporter of the Year” inthechemicalscategoryofInternationalTradeAwards�007-08awardedbyCNBC–TV�8andDHLforthesecond time in succession.Theexport turnoverof thedivisioncrossed the landmark of Rs.300 crore in this fiscal, accounting for about43%ofdivision’sturnover.

Theproductcategory-wisereviewfollows:

Fatty Alcohol

Fatty alcohols accounted for 43% of the sales revenue of theChemicalsdivision.Revenuegrewby��%andvolumeby��%overprevious year.Despiteaggressive competition, thedivisionhasachievedagoodincreaseinsalesvolumeoverpreviousyear.

Througheffectivecustomerrelationshipmanagementandsupplychaininitiatives,thedivisioncouldmaintainitsmajorsharewithsomeglobalcompanies.ThesaleofFattyAlcoholsinEuropewasimprovedbyprovidingJustInTime(JIT)supplieswithimprovedlogisticsmanagement.Withtheexpansionofitscustomerbase,yourCompanyhasreachedover60countriesintheworldthroughitsexports.

With focused manufacturing and marketing strategies, it isexpectedthatrevenuesfromthissegmentwillimprovefurtherinthecomingyear.

Fatty Acids

The FattyAcids portfolio, comprising stearic acid, oleic acid,aswellasspecialtyfattyacids,accountedforabout38%oftheturnoverofthedivision.Continuouscostreductionandmarketdevelopment initiatives have helped grow this category by

�6

about�6%invalueterms.ThenewfractionationcolumnatValiacapableofproducingpremiumandspecialtyfattyacids,isworkingtoitscapacityandturningoutgoodqualityoutput.

Surfactants

Surfactantscontributed9%totheturnoverofthedivision.Salesdeclined�%invalueonthebackofhigherproportionofprocessingand limited availability of the major raw material – Alpha Olefin (AO).

Your Company is the pioneer, as well as market leader in theproduction and sales of Alpha Olefin Sulphonate (AOS) in India, asurfactantusedinseveralwellknownshampoosanddetergentbrandsinthecountry.CostshaveincreasedduetoasteepriseinAOprices,whichistherawmaterialforAOS,affectingmarginsaswellasoff-take.

Asaforwardintegrationandderiskingstrategy,thedivisionhasstartedtheproductionofvalueaddedsulphonatedproductssuchasSodiumLaurylEthoxySulphate(SLES)andSodiumLaurylSulphate(SLS). The necessary balancing equipment and infrastructurehavebeencreatedforthispurpose.Thedivisionisalsofocusingonimprovingthepresenceinthiscategoryintheinternationalmarket.

Glycerin

Glycerin accounted for 7.5% of the turnover of this division.Revenuesincreased by�3% over last year.The division wassuccessfulinconvertingdemandforotherpolyolstoGlycerinandgrowtothevolume.

Other initiatives

The operational efficiency initiative undertaken at the Valia factory isyieldinggoodresults.

YourCompanyhasalsoembarkedonaninitiativetoimproveitsspendmanagement.Thisinitiativeisexpectedtogivestrategicbuyingadvantageandcostsavinginthecomingyears.

Your Company could realize the benefits of Certified Emission Reductions(CERs)popularlyknownasCarbonCredits,accruedonaccountofitsoperationofwindmillsundertheCleanDevelopmentMechanism (CDM) approved by United Nations FrameworkConventiononClimateChange.

Outlook

Theoutlookforthecomingyear�008-09ismixedatthispointintime.Ifthenewcapacitiesforoleo-chemicalsthatwereannouncedearliergoonstream,therecouldbeanoversupplyinthemarket.Thepricesofvegetableoils, themainrawmaterial,havealsomoved up significantly on account of the increasing demand and attractivealternateuses.

Most of the new plants are set up to produce mid chainalcohols.YourCompanyhasacompetitiveadvantageduetoitsunique strategyofofferinghigherchainalcohols.Producersofpetroleumbasedalcoholscontinuetofacesoaringcrudeoilpricesconsequentlyitisexpectedthatvegetableoilbasedalcoholswillsubstitutepetro-alcoholsinsomeapplications.

Initiatives to strengthen international distribution, improvelogisticsandsupplychaincapabilitiesasalsocustomerrelationshipmanagement,coupledwithtightcostcontrolareexpectedtohelpgrow revenue, as well as, profits of the business.

ESTATE MANAGEMENT

Theproposed infrastructureplanoftheStateGovernmentandthe Municipal Corporation to support vertical growth augurswell forMumbaito continueasapreferreddestination for thecommercialandITsectors.TherepealoftheUrbanLandCeilingActisexpectedtofreeuplandinthecitywhich,inturn,willgiveabigboosttotheconstructionactivityofresidentialandcommercialnature. The suburbs in and around the registered office of your CompanyatVikhrolihavebecomeavailablefordevelopment.TheMMRDAproposal todevelopKanjurmarg,aclosesuburb,intoabusinessdistrictandtheplanforaMetroterminalinthevicinityofyourCompany’spremiseshave spurredconstructionactivityinthearea.

YourCompanycontinuestoeffectivelyutilizeavailablespacebyleasingareatoreputedcorporatesfortheirbusinessoperations.Thegreenenvironmentandexcellent infrastructurewithcloseproximitytotheCBD,airportandsuburbsaremajoradvantagesmakingVikhroliapreferredlocation.YourCompanyhasalsosignedaMoUwithGodrejPropertiesLimitedtodevelopVikhrolipropertytakenonleasefromGodrejandBoyceMfg.Co.Ltd..

The total income from this businessfor the year was aboutRs.�,876lacascomparedtoRs.�,575lacinthepreviousyear,anincreaseofabout��%.

MEDICAL DIAGONISTICS

YourCompanysolditsMedicalDiagnosticdivisiononslumpsalebasis to RFCL Limited, a leading life sciences and laboratorysolutions company, effective close of business hours onDecember3�,�007.YourCompanybelievesthatthistransferwouldunlock significant potential for both the merging entities and will enablethecombinedbusinesstogrowmuchfaster,andisthus,inthebestinterestsofallthestakeholders.

FINANCE AND INVESTMENTS

Duringtheyear,yourCompanycontinuedtoearnreturnfromitsinvestmentsintheformofdividendincome(Rs.�3.93crore)andrealizedcapitalappreciation(Rs.67.��crore).

YourCompanyenteredintoajointventurewithHersheyCo.USA,amarketleaderinChocolatesintheUSA.Thejointventurewassubsequentlyrenamed–GodrejHersheyLimited.YourCompanyfurtherinvestedRs.5�.6croreinGodrejHersheyLimitedtosupportthegrowthplansofthejointventure.OthermajorinvestmentsmadebyyourCompanyduringtheyearincludeRs.�50croreintherightsissueofGodrejPropertiesLimitedandRs.�00croreintherightsissueofGodrejAgrovetLimitedtosupporttheirgrowthplans.

HUMAN RESOURCES, INDUSTRIAL RELATIONS

IndustrialRelationsatalllocationswerecordial.Thetotalnumberof persons employed in your Company as on March 3�, �008was�,5�3.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has a proper and adequate system of InternalControls,toensurethatallassetsaresafeguardedandprotectedagainstlossfromunauthoriseduseordisposalandthattransactionsareauthorized,recordedandreportedcorrectly.YourCompany’sCorporateAudit andAssurance Department which issues welldocumentedoperatingproceduresandauthoritieswithadequate

�7

built-in controls at thebeginningof anyactivity andany timethereisanymajorchange.Theinternalcontrolissupplementedby an extensive programme of internal, external audits andperiodicreviewbythemanagement.Thesystemisdesignedtoadequately ensure that financial and other records are reliable for preparing financial information and other data and for maintaining accountabilityofassets.

DuringtheyeartheCorporateAuditandAssuranceDepartmentwasinvolvedinfacilitatingSAPimplementationsoastoensurethat existing processes are adequately captured with in-builtcontrolmechanisms.

INFORMATION SECURITY

Your Company accords great importance to the security of itsinformation assets.To ensure that this gets desired focus andattention, a Chief Information Security Officer, who is attached totheCorporateAuditandAssuranceDepartment,isentrustedwith the taskofensuring thatyourCompanyhas the requisitesecurityposture.

YourCompanyhasinplace,alltheproceduresandpracticesthatareinlinewiththeISOSecurityStandards.Itisintheprocessofgetting ISO 27001 Security Certification.

OPPORTUNITIES AND THREATS

Increasedglobaldemandfuelledbygrowthinend-userindustriescoupledwithyourCompany’sstandingforconsistentqualityandproductdeliverycustomizedtotheneedsoftheclients,providesgoodopportunityforgrowthfortheChemicalsdivision.Atthesame time, new capacity addition in the industry and steepincreasesinrawmaterialpricesarelikelytoincreasecompetitionandputpressureonmargins.

TheEstateManagement business has thepotential to increaserevenuesbygivingspaceonleaveandlicensebyoptimumre-sizingof theexistingoperational areasasalsodevelopingnewareasoverthenextfewyears.Thefactorsthatcanaidfurtherrevenuegrowth include assured power supply, upcoming infrastructuralfacilities like metro rail and better connectivity that reducestraveltime.

RISKS AND CONCERNS

YourCompanyhadundertakenacomprehensivereviewofitsriskmanagementprocess last yearandhasputa riskmanagementframework in place. The review involved understanding theexisting risk management initiatives, zero-based identification and assessment of risks in the various businesses as also therelative control measures and arriving at the desired countermeasureskeepinginmindtheriskappetiteoftheorganization.The Risk Committee has periodically reviewed the risks in thevariousbusinessesandrecommendedappropriateriskmitigatingactions.

Commoditybasedbusinessesarelikelytobeaffectedbyvagariesoftheweather,demandforedibleoil,oilseedproduction,etc.Theincrease in bio-diesel manufacturing capacity is expected toimpactvegetableoilprices.ThebusinessisexposedtocommoditypricerisksrelatingtorawmaterialswhichaccountforthelargestportionofthecostsofboththeChemicalsandVegoilsbusinesses.TheChemicalsbusinessgrowthwillalsodependonthegrowthof end user industries like polymer, detergent, cosmetics andpersonalcare.

As a significant employer and chemicals producer, to ensure occupationalsafety,employmentstandards,productionsafety,andenvironmentalprotection,yourCompanymaintainsstrictsafety,health,environmentprotectionandqualitycontrolprogramstomonitorandcontroltheseoperationalrisks.

Macro economic factors including economic and politicaldevelopments, natural calamities which affect the industrialsectorgenerallywouldalsoaffectthebusinessesofyourCompany.Legislativechangesresultinginachangeinthetaxes,dutiesandlevies,whetherlocalorcentral,alsoimpactbusinessperformanceandrelativecompetitivenessofthebusinesses.

CAUTIONARY STATEMENT

Someofthestatementsinthismanagementdiscussionandanalysisdescribing the Company’s objectives, projections, estimatesand expectations may be ‘forward looking statements’ withinthe meaning of applicable laws and regulations.Actual resultsmightdiffersubstantiallyormateriallyfromthoseexpressedorimplied.ImportantdevelopmentsthatcouldaffecttheCompany’soperations include a downtrend in industry, significant changes inpoliticalandeconomicenvironmentinIndia,taxlaws,importduties,litigationandlabourrelations.

�8

ANNEXURE “B” FORMING PART OF THE DIRECTORS’ REPORTAspertheSecuritiesandExchangeBoardofIndia(EmployeeStockOptionSchemeandEmployeeStockPurchaseScheme)Guidelines,�999followinginformationisdisclosedinrespectofGodrejIndustriesLimitedEmployeeStockOptionPlan:

Sr. No.

Heading Particulars

a Optionsgranted 53,69,500b Thepricingformula MarketPriceplusInterestatsucharatenotbeinglessthanthe

BankRatethenprevailingcompoundableonanannualbasisfortheperiodcommencingfromthedateofGrantoftheOptionandendingonthedateofintimatingExerciseoftheOptiontotheCompany

c Optionsvested NILd Optionsexercised NILe Thetotalnumberofsharesarisingasaresultofexerciseof

optionNIL

f Optionslapsed/revoked �,60,000g Variationoftermsofoptions NILh Moneyrealizedbyexerciseofoptions NILi Totalnumberofoptionsinforce 73,09,500equitysharesofnominalvalueofRe.�/-eachj Employeewisedetailsofoptionsgrantedto:

i) seniormanagerialpersonnel;ii) any other employee who receives a grant in any one

year of option amounting to 5% or more of optiongrantedduringthatyear;

iii) identified employees who were granted option, during anyoneyear,equal toorexceeding�%of the issuedcapital(excludingoutstandingwarrantsandconversions)oftheCompanyatthetimeofgrant.

Annexure�

NIL

NIL

k DilutedEarningsPerShare(EPS)pursuanttoissueofsharesonexerciseofoptioncalculatedinaccordancewithAccounting Standard (AS) 20 ‘Earnings Per Share’.

Thereisnofreshissueofshareshence,notapplicable.

l WheretheCompanyhascalculatedtheemployeecompensationcostusingtheintrinsicvalueofthestockoptions,thedifferencebetweentheemployeecompensationcostsocomputedandtheemployeecompensationcostthatshallhavebeenrecognizedifithadusedthefairvalueoftheoptions,shallbedisclosed.The impact of this difference on profits and on EPS of the companyshallalsobedisclosed.

The company has calculated the employee compensationcost using the intrinsic value of stock options. Had the fairvaluemethodbeenused, inrespectofstockoptionsgrantedtheemployeecompensationcostwouldhavebeenhigherbyRs.9.67 crore, Profit after tax lower by Rs.9.67 crore and basic EPSwouldhavebeenlowerbyRs.0.33

m Weighted-averageexercisepricesandweighted-averagefairvaluesofoptionsshallbedisclosedseparatelyforoptionswhoseexercisepriceeitherequalsorexceedsorislessthanthemarketpriceofthestock.

WeightedaverageexercisepriceRs.��0.06plusinterest

WeightedAveragefairvalueofoptionRs.��6.�3

n A description of the method and significant assumptions usedduringtheyeartoestimatethefairvaluesofoptions,includingthefollowingweighted-averageinformation:

The fair value of the options granted has been calculatedusing Black–Scholes Options pricing formula and the significant assumptionsmadeinthisregardareasfollows:

i) risk-freeinterestrate, 7.��%ii) expectedlife, 4yearsiii) expectedvolatility, 85%iv) expecteddividends,and 0.45%

Re.�persharev) thepriceoftheunderlyingshareinmarketatthetime

ofoptiongrantWeightedaveragemarketpriceatthetimeofgrantofoptionRs.��0.06peroption.

�9

Annexure 1: Senior Managerial Personnel

Name of senior managerial person Options grantedC.D.Wakankar ��0,000A.A.Rege �00,000B.S.Mehta �00,000N.S.Nabar �00,000R.V.Jog �00,000S.K.Bhatt �00,000V.Srinivasan �00,000ManiB.Mulki �00,000D.E.Mistry �00,000PrafulBhat �5,000ArvinderSingh 50,000A.D.Padhye 50,000V.Swaminathan 50,000R.H.Khajotia 50,000K.K.Lalan 50,000B.K.Gupta 50,000

Name of senior managerial person Options grantedK.T.Jitendran �00,000K.P.Sudheer 50,000NishikantShimpi 50,000S.Anand �00,000R.S.Vijan ��0,000A.R.Subbarao �00,000AshutoshTiwari �00,000B.S.Yadav 3,00,000S.K.Gupta �,00,000D.S.Bhullar 50,000B.N.Vyas 50,000R.R.Govindan 50,000S.Varadaraj 50,000S.S.Sindhu 50,000P.N.Narkhede 50,000TOTAL 2,145,004

ANNEXURE “C” FORMING PART OF THE DIRECTORS’ REPORTThe following is the list of persons constituting Group (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act,�969)forthepurposeofavailingexemptionfromapplicabilityoftheprovisionsofregulation�0to��ofSecuritiesandExchangeBoardofIndia(SubstantialAcquisitionofSharesandTakeovers)Regulation,�997(“thesaidRegulations”),providedClause3(�)(e)ofthesaidRegulations:

�. BaharAgrochemandFeedsPvt.Ltd.�. CauveryPalmOilLtd.3. CartiniIndiaLtd.4. EnsembleHoldingsandFinanceLtd.5. GirikandraHolidayHomesandResortsLtd.6. Godrej(Malaysia)SdnBhd7. Godrej(Singapore)PteLtd.8. Godrej(Vietnam)Co.Ltd.9. GodrejAgrovetLtd.�0. GodrejandBoyceMfg.CompanyLtd.��. GodrejFoodsLtd.��. GodrejOilPlantationsLtd.�3. GodrejConsumerProductsLtd.�4. GodrejConsumerProducts(U.K.)Ltd.�5. GodrejConsumerProductsMauritiusLtd.�6. GodrejDevelopersPvt.Ltd.�7. GodrejEfacecAutomationandRoboticsLtd.�8. GodrejGlobalMidEastFZE�9. GodrejGokarnaOilPalmLtd.�0. GodrejHicareLtd.��. GodrejHoldingsPvt.Ltd.��. GodrejInfotechLtd.�3. GodrejInternationalLtd.�4. GodrejInvestmentsPvt.Ltd.�5. GodrejNetherlandsBV�6. GodrejPropertiesLtd.�7. GodrejRealEstatePvt.Ltd.�8. GodrejRealtyPrivateLtd.�9. GodrejSeaViewPropertiesPvt.Ltd.30. GodrejWatersidePropertiesPvt.Ltd.

3�. GoldenFeedProductsLtd.3�. GoldmohurFoodsandFeedsLtd.33. HappyHighrisesLtd.34. LawkimLtd.35. MercuryMfg.Co.Ltd.36. NutrineConfectionaryCo.Ltd.37. PrashantMetalFormingIndustriesPvt.Ltd.38. SwadeshiDetergentsLtd.39. VoraSoapsLtd.40. WadalaCommoditiesLtd.4�. Mr.A.B.Godrej4�. Mrs.ParmeshwarA.Godrej43. Ms.NisaA.Godrej44. Mr.PirojshaA.Godrej45. Mrs.TanyaA.Dubash46. Mr.J.N.Godrej47. Mrs.PherozaJ.Godrej48. Ms.RaikaJ.Godrej49. Mr.NavrozeJ.Godrej50. Mr.NadirB.Godrej5�. Mrs.RatiN.Godrej5�. Mst.BurjisN.Godrej53. Mst.SohrabN.Godrej54. Mst.HormuzdN.Godrej55. Mr.VijayM.Crishna56. Mrs.SmitaV.Crishna57. Ms.FreyanV.Crishna58. Ms.NyrikaV.Crishna59. Mr.RishadK.Naoroji

�0

ANNEXURE “D” FORMING PART OF THE DIRECTORS’ REPORT

INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

A. Conservation of EnergyI. (A) Energy Conservation measures undertaken: �. Regular Monitoring of Stacks to improve boiler

efficiency.

2. Installation of Energy Efficient Metal Halide fittings in streetlighting.

3. Installation of Energy Efficient Motors in plants.

4. Installationofpowerfactorcontrollertoimprovepowerfactor.

(B) Proposed energy conservation measures 1. Installation of Energy Efficient Metal Halide fittings in

otherareas.

2. Installation of Energy Efficient Motors in Boiler House.

3. InstallationofHighPressureBoilerfromThermax

II. Impact of measures on reduction of energy consumption and consequent impact on the cost of production of goods:-

Saving in energy costs during the period underconsideration.

III. Details of energy consumption Thedetails of energy consumption are given below.These

detailscovertheoperationsofyourCompany’sfactoriesatVikhroli,ValiaandWadala.

a) Power and Fuel consumption Electricity

This Year PreviousYear

i) Purchased

Units(KWHinlac) 284.22 350.9�

TotalAmount(Rs.inlac) 1,697.41 �,9�8.0�

RateperUnit(Rs.) 5.97 5.49

ii) Own generated throughD.G.Sets

Units(KWHinlac) 6.21 �.73

Cost(Rs.inlac) 69.09 3�.7�

Rateperunit(Rs.) 11.12 �8.9�

iii) Own generated throughSteamTurbineGenerator-Co-generation

Units(KWHinlac) 263.88 3�4.06

Cost(Rs.inlac) 788.11 �,33�.58

RateperUnit(Rs.) 2.99 3.95

This Year PreviousYear

Fuel Oil (LSHS, FO and LDO)TotalQuantity(KL) 4,617.82 3,�9�.44TotalAmount(Rs.inlac) 807.86 50�.�6Rate per unit (Rs. perlitre)

17.49 �5.7�

Natural GasTotalQuantity(SM3lac) 166.70 �75.30TotalAmount(Rs.inlac) 1,817.00 �,6�8.00Rate per unit (Rs. perSM3)

10.90 9.�3

PitchesTotalQuantity(MT) 1,633.00 677.00TotalCost(Rs.inlac) 214.33 85.35Rateperunit(Rs.perMT) 13,124.92 ��,607.4�

b) Consumptionperunitofproduction

NaturalGas(NM3/MT)

Electricity(kWh/MT)

FurnaceOil(Litre/MT)

Pitches

2007-08 �006-07 2007-08 �006-07 2007-08 �006-07 2007-08 �006-07FattyAcid 52.07 58.73 84.55 �05.58 15.76 �3.�8 24.61 9.34FattyAlcohol 72.35 79.�� 400.78 530.34 2.17 �.78 - -Alpha Olefin Sulphonate

18.42 �4.96 140.97 ��6.40 5.02 3.05 2.84 �.03

Glycerin 338.35 �57.57 708.03 7�4.33 98.49 58.�4 78.61 �4.46Oils/Vanaspati - - 174.31 �8�.74 61.12 56.08 - -

B. Technology Absorption, Adaptation and Innovation 1. Specific areas in which R&D carried out by the Company

-Duringtheyearunderreview,ResearchandDevelopmenteffortsinthefollowingareasstrengthenedtheCompany’soperationsthroughtechnologyabsorption,adaptationandinnovation:

a) OilsandFattyAcids b) FattyAlcohols c) Surfactants d) Glycerin e) ProductApplicationsandFormulations 2. Benefits derived as a result of the above R&D - a) Premiumqualityfattyacidsfromeconomygraderaw

materials. b) Manufacture of high value pure cut fatty acids,

specifically for the polymer, oilfield and lubricant industries.

c) Manufactureofspecialtysurfactantsfororalcareandpersonalcareproducts.

d) Value added derivatives of glycerin so as to entercertainnichemarkets.

e) Four new process patent applications filed. 3. Future Plan of Action - a) SpecialtyChemicalsfromGlycerin,soastoenterniche

markets in the field of Pharmaceuticals, Personal Care andIndustrialLubricants.

b) Understanding the toxicity profile of Jatropha Oil.

��

c) Specialty chemicals used in the personal careformulations – foam boosters, conditioning agentsandco-surfactants.

Notechnologyhasbeenimportedduringtheyear.

4. Expenditure on R & D

This Year Rs. lac

PreviousYearRs.lac

(a) Capital 13.55 Nil

(b) Recurring 172.75 �39.39

(c) Total 186.30 �39.39

(d) TotalR&Dexpenditureasapercentageoftotalsalesturnover

0.25% 0.�9%

C. Foreign Exchange Earnings and Outgo TheChemicalsDivision’sexportswereRs.3�,85� lac inthe

currentyear(includingdeemedexportsofRs.�,654 lac)ascompared to Rs.��,043 lac in the previous year (includingdeemed exports Rs.3,0�� lac).The Company continues toexport refined glycerin, fatty alcohol and other chemicals to over50countriesincludingU.S.A.,U.A.E.,Japan,SouthAfrica,Germany,U.K.,France,Malaysia,China,Australia,Mexico,SingaporeandSrilanka.

This Year

Rs. lac

PreviousYear

Rs.lac

Foreignexchangeused 34,618 �8,�39

Foreignexchangeearned 30,227 ��,�97

��

REPORT ON CORPORATE GOVERNANCE

Clause49ofthelistingagreementwiththeIndianStockExchangesstipulates the norms and disclosure standards that have to befollowed on the corporate governance front by listed Indiancompanies.

1. THE COMPANY’S PHILOSOPHY

The Company is a part of the Godrej Group which hasestablished a reputation for honesty and integrity. TheCompany’sphilosophyofcorporategovernanceistoachievebusinessexcellencebyenhancingthelongtermwelfareofall its stakeholders.The Company believes that corporategovernanceisaboutcreatingoutperformingorganisations,i.e.organizationsthatconsistently succeed inthemarketplaceagainstcompetitionandtherebyenhancethevalueofallitsstakeholders.

THE GOVERNANCE STRUCTURE2. BOARD OF DIRECTORS a) Board Structure The Board of Directors of the Company comprises of

thirteenDirectors,whichincludesoneManagingDirectorandfourWhole-timeExecutiveDirectors.Theremainingnine are Non-Executive Directors, with five of them being IndependentDirectors.ThedetailsaregiveninTable�:

b) Board meetings held & Directors’ attendance record TheBoardmeetsatleastonce inaquartertoconsider

among other businesses, quarterly performance of theCompany and financial results. To enable the Board to dischargeitsresponsibilitieseffectivelyandtakeinformeddecisions,necessaryinformationismadeavailabletotheBoard.DuringtheyearsixBoardmeetingswereheldonMay�5,�007,July�7,�007,September�8,�007,October�6,�007,December5,�007andJanuary�9,�008.ThedetailsaregiveninTable�:

Table 1: Details about GIL’s Board of Directors & meetings attended by the Directors during the year

Name of Director

Category Board meetings

held during the

year

Board meetings attended

duringthe year

Whether attendedlast AGM

Directorshipsheld in public

companies incorporatedin India as at

year–end$

Number of Chairmanship/ membership in other Board Committees as

at the year-end.

Chairmanship Membership

A.B.Godrej Chairman–Non-Executive

6 6 Yes �3(3) 3 �

J.N.Godrej Non-Executive 6 � No ��(6) 3 6N.B.Godrej Managing

Director6 6 Yes �3(4) � �

S.A.Ahmadullah Non-Executive-Independent

6 5 Yes 3(�) � �

V.M.Crishna Non-Executive 6 � No 7(�) — �K.K.Dastur Non-Executive-

Independent6 5 Yes 6(�) 4 —

V.N.Gogate Non-Executive-Independent

6 6 Yes �(�) — �

K.N.Petigara Non-Executive-Independent

6 6 Yes 6(�) � 5

F.P.Sarkari Non-Executive-Independent

6 5 Yes 3(�) 3 �

V.F.Banaji Whole-time 6 6 Yes �(�) — �T.A.Dubash Whole-time 6 6 Yes ��(�) — �M.Eipe Whole-time 6 6 Yes 3(�) — �M.P.Pusalkar Whole-time 6 5 Yes �(�) � 3

C.K.Vaidya* Whole-time 6 4 No 6(�) — —

Notes:

(i) $Alternatedirectorshipsanddirectorshipsinprivatecompanies,foreigncompanies,andassociationsareexcluded.

(ii) Figuresin()denotelistedcompanies.

(iii) *Mr.C.K.VaidyawasappointedonSeptember�8,�007andhasresignedw.e.f.May�8,�008.

�3

NoneoftheDirectorsisamemberofmorethan�0Board-levelcommittees, or a Chairman of more than five such committees, asrequiredunderClause49ofthelistingagreement.

c) Information supplied to the Board

Amongothers,thisincludes:

l Annualoperatingplansandbudgets,capitalbudgets,andanyupdatesthereon,

l QuarterlyresultsoftheCompany,

l Minutes of meetings of audit committee and othercommittees,

l Informationonrecruitmentandremunerationofseniorofficers just below the Board level,

l Materially importantshowcause,demand,prosecutionandpenaltynotices,

l Fatalorseriousaccidentsordangerousoccurrences,

l Any materially significant effluent or pollutionproblems,

l Any materially relevant default in financial obligations to andbytheCompanyorsubstantialnon-paymentforgoodssoldbytheCompany,

l Anyissuewhichinvolvespossiblepublicorproductliabilityclaimsofasubstantialnature,

l Detailsofanyjointventureorcollaborationagreement,

l Transactions that involve substantial payment towardsgoodwill,brandequityorintellectualproperty,

l Significant labour problems and their proposedsolutions,

l Significant development in the human resources and industrialrelationsfront,

l Sale of material nature of investments, subsidiaries,assets,whichisnotinthenormalcourseofbusiness,

l Quarterlydetailsofforeignexchangeexposureandthestepstakenbymanagementtolimittherisksofadverseexchangeratemovement,ifmaterial.

l Non-compliance of any regulatory, statutory nature orlistingrequirementsaswellasshareholderservicessuchasnon-paymentofdividendanddelaysinsharetransfer.

TheBoardoftheCompanyispresentedwithallinformationunder the above heads, whenever applicable. These aresubmittedeitheraspartoftheagendapaperswellinadvanceoftheBoardmeetingsoraretabledinthecourseoftheBoardmeetings.

d) Directors with materially significant related party transactions, pecuniary or business relationship with the Company

Exceptfordrawingremuneration,noneoftheDirectorshaveany other materially significant related party transactions, pecuniaryorbusinessrelationshipwiththeCompany.AttentionofmembersisdrawntothedisclosuresoftransactionswithrelatedpartiessetoutinNotestoAccounts-Schedule��,NoteNo.��,formingpartoftheAnnualReport.

e) Remuneration of Directors: sitting fees, salary, perquisites and commissions and Number of Shares held by Non-Executive Directors

ThedetailsofremunerationpackageofDirectorsandtheirrelationshipswitheachotheraregiveninTable�.ThenumberofsharesheldanddividendpaidaregiveninTable3.

Table 2: Remuneration paid or payable to Directors for the year ended March 31, 2008Amt.inRs.

Name of Director Relationship with Directors

Sitting fees

Commission on profits

Salary Perquisites Provident Fund

Total

A.B.Godrej BrotherofN.B.GodrejFatherofT.A.Dubash

�,�0,000 Nil Nil Nil Nil �,�0,000

J.N.Godrej None Nil Nil Nil Nil NilN.B.Godrej BrotherofA.B.Godrej Nil Nil 54,00,000 �,��,98,04� 6,48,000 �,8�,46,04�

S.A.Ahmadullah None �,60,000 Nil Nil Nil Nil �,60,000V.M.Crishna None 40,000 Nil Nil Nil Nil 40,000K.K.Dastur None �,00,000 Nil Nil Nil Nil �,00,000V.N.Gogate None �,85,000 Nil Nil Nil Nil �,85,000K.N.Petigara None �,65,000 Nil Nil Nil Nil �,65,000F.P.Sarkari None �,�0,000 Nil Nil Nil Nil �,�0,000V.F.Banaji None Nil Nil 45,00,000 80,�8,�64 5,40,000 �,30,68,�64T.A.Dubash DaughterofA.B.Godrej Nil Nil 35,40,000 66,08,636 4�4,800 �,05,73,436M.Eipe None Nil Nil 38,40,000 63,6�,7�9 4,64,640 �,06,66,369M.P.Pusalkar None Nil Nil �5,44,000 58,60,�65 3,06,976 87,��,�4�C.K.Vaidya None Nil Nil �6,96,000 30,99,85� �,�4,�8� 50,�0,03�

Notes: SalarytoMr.N.B.Godrej,Mr.V.F.Banaji,Ms.T.A.Dubash,Mr.M.Eipe,Mr.M.P.PusalkarandMr.C.K.Vaidyaincludesaperformance

linkedvariableremunerationofRs.�,5�7,48�/-,Rs.�,759,798/-,Rs.�,667,48�/-,Rs.�,667,48�/-,Rs.�,�48,645/-,Rs.350,000/-respectivelyfortheyearendedMarch3�,�008payablein�008-09.

�4

TheservicecontractsoftheWhole-timeDirectorsareforaperiodofthreeyearswithanoticeperiodofthreemonths.

Table 3: Number of shares held by Non-Executive Directors and dividend paid

Name of Non-Executive Director

Shares held as on March 31, 2008

Dividend paid during the year (Rupees)

A.B.Godrej# ��,��,��6 NilJ.N.Godrej* 3�,��,47� NilS.A.Ahmadullah 6,000 6,000V.M.Crishna Nil NilK.K.Dastur �,�06 �,�06V.N.Gogate �,878 �,878K.N.Petigara Nil NilF.P.Sarkari �0,000 �9,590

# Of the above 1,85,000 equity shares were acquired post dividend and 9,36,226 equity shares are held as second holder.* Shares held as second holder

Committees of the Board

3. AUDIT COMMITTEE The Company's audit committee comprises of three

Independent & Non-Executive Directors. They are Mr. F.P.Sarkari(Chairman),Mr.S.A.AhmadullahandMr.V.N.Gogate.Mr.F.P.SarkariistheChairmanoftheCommittee.Mr.Sarkariis a qualified Chartered Accountant and is knowledgeable in finance, accounts and Company Law. All the members of the committee are eminent professionals and draw upon theirexperienceandexpertiseacrossawidespectrumoffunctionalareas such as finance and corporate strategy. Minutes of each oftheauditcommitteemeetingsareplacedbeforetheBoardmeetings.Mr.S.K.Bhatt,ExecutiveVice-President(CorporateServices)&CompanySecretaryactsasthesecretarytotheauditcommittee.Theauditcommitteemetfourtimesduringtheyeari.e.onMay�5,�007,July�7,�007,October�6,�007andJanuary�9,�008.Table4givestheattendancerecord.

Table 4: Attendance record of audit committee members

Name of Director No. of meetings held

Meetings attended

Mr.F.P.Sarkari 4 4

Mr.S.A.Ahmadullah 4 4

Mr.V.N.Gogate 4 4

The AuditCommitteeoftheCompanyperformsthefollowingfunctions:

l Overview 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.

l Recommending the appointment/removal of externalauditor, fixation of audit fees and approval for payment foranyotherservices.

l Reviewing with management the annual financialstatementsbeforesubmissiontotheboardforapprovalwithparticularreferenceto:

Ø MattersthatneedstobeincludedintheDirector’sResponsibilityStatementtobeincludedintheBoard’s

ReportintermsofClause(�AA)ofSection��7oftheCompaniesAct,�956.

Ø Changes,ifany,inaccountingpoliciesandpracticesandreasonsforthesame.

Ø Majoraccountingentriesinvolvingestimatesbasedonexerciseofjudgementbythemanagement.

Ø Significant adjustments made in the financialstatements arising out of audit findings.

Ø Compliance with listing and other requirementsrelating to financial statements.

Ø Disclosureofanyrelatedpartytransactions.

Ø Any qualification in the draft audit report.

l Reviewing with the management, the quarterly financial statementbeforesubmissiontotheBoardforapproval.

l Reviewing with the management, performance of thestatutory and internal auditors, and adequacy of theinternalcontrolsystem.

l Reviewingtheadequacyofinternalauditfunction,ifany,including the structure of internal audit department,staffing and seniority of the official heading thedepartment,reportingstructurecoverageandfrequencyofinternalaudit.

l Discussion with internal auditors any significant findings andfollowupthereon.

l Reviewing the findings of any internal investigation by the internalauditorsintomatterswherethereissuspectedfraudorirregularityorfailureofinternalcontrolsystemsof a material nature and reporting the matter to theBoard.

l Discussion with statutory auditors before the auditcommences,aboutthenatureandscopeofauditaswellaspost-auditdiscussionstoascertainanyareaofconcern.

l Lookingintothereasonsforsubstantialdefaultsinpaymenttothedepositors,debentureholders,shareholders(incaseofnonpaymentofdeclareddividend)andcreditors.

l Reviewing the functioning of Whistle Blowermechanism.

4. COMPENSATION COMMITTEE SettingupofaCompensationCommitteefordetermininga

Company’s policy on remuneration packages for ExecutiveDirectors constitutes a non-mandatory provision of Clause49.TheCompanyhadsetupitsRemunerationCommitteeonFebruary��,�00�toreviewthehumanresourcespoliciesandpracticesoftheCompanyandinparticular,policiesregardingremuneration of Whole-time Directors. The committeediscusseshumanresourcespoliciessuchascompensationandperformanceofmanagement.TheRemunerationCommitteewas renamedasCompensationCommitteebytheBoardofDirectorsatitsmeetingheldonOctober�4,�005.

The Company's compensation committee consists of thefollowing directors: Mr. S.A.Ahmadullah (Chairman andIndependentDirector);Mr.N.B.Godrej(ManagingDirector);Mr.V.N.Gogate(IndependentDirector)andMr.K.N.Petigara(IndependentDirector).DuringtheyearendedMarch3�,�008,thecommitteemetonApril5,�007,April��,�007,May��,

�5

�007,June�8,�007,September�8,�007,October3,�007,October�6,�007,January�3,�008,andMarch3�,�008.TheattendancedetailsaregiveninTable5.

Table 5: Attendance record of Compensation Committee members

Name of Director No. of meetings held

Meetings attended

Mr.S.A.Ahmadullah 9 8Mr.V.N.Gogate 9 9Mr.K.N.Petigara 9 9Mr.N.B.Godrej 9 8

Mr.S.K.Bhatt,ExecutiveVice-President(CorporateServices)&CompanySecretaryactsasthesecretarytotheCommittee.

TheCompanyhasadoptedEVAasatoolfordrivingperformance,andhaslinkedimprovements inEVAtoperformancelinkedvariableremuneration(PLVR)ofManagingDirector,Whole-timeDirectors, Managers and Officers of the Company.

5. SHAREHOLDERS COMMITTEE Amongotherfunctions,thiscommitteelooksintoredressal

of shareholder complaints regarding transfer of shares,non-receipt of Balance Sheet and non-receipt of declareddividends,asrequiredinClause49oftheListingAgreement.Thecommitteeconsistsofthefollowingmembers:Mr.A.B.Godrej(Chairman),Mr.V.F.Banaji,Ms.T.A.Dubash,Mr.M.EipeandMr.M.P.Pusalkar.Duringtheyear,��meetingsoftheCommitteewereheld.

Mr.S.K.Bhatt,ExecutiveVice-President(CorporateServices)&CompanySecretaryactsasthesecretarytotheCommittee.

Name and designation of Compliance Officer: Mr.S.K.Bhatt,ExecutiveVice-President(CorporateServices)

&CompanySecretary.

Number of complaints regarding shares for the year ended March 31, 2008.

ComplaintsoutstandingasonApril�,�007 NilComplaintsreceivedduringtheyearendedMarch3�,�008 46ComplaintsresolvedduringtheyearendedMarch3�,�008

46

ComplaintsoutstandingasonMarch3�,�008 Nil TherearenopendingsharetransfersasonMarch3�,�008.

6. MANAGEMENT a) Management discussion and analysis Thisannualreporthasadetailedchapteronmanagement

discussionandanalysis.

b) Disclosures by management to the Board All details relating to financial and commercial

transactionswhereDirectorsmayhaveapotentialinterestareprovidedtotheBoard,andtheinterestedDirectorsneitherparticipateinthediscussion,nordotheyvoteonsuchmatters.

7. DISCLOSURES a) Materially significant related party transaction that

may have potential conflict of interests of Company at large.

During the year �007-08, there were no materiallysignificant related party transactions, i.e. transactions oftheCompanyofmaterialnature,withitspromoters,theDirectorsorthemanagement, their subsidiariesorrelatives, etc. that may have potential conflict with the interestsoftheCompanyatlarge.AttentionofmemberisdrawntothedisclosuresoftransactionswithrelatedpartiessetoutinNotestoAccounts-Schedule��,NoteNo.��,formingpartoftheAnnualReport.

b) Whistle Blower Policy Withaviewtoestablishamechanismforprotectingthe

employeesreportingunethicalbehavior,fraud,violationofCompany’sCodeofConduct, theBoardofDirectorshas adopted a Whistle Blower Policy. During the year�007-08, no personnel has been denied access to theAuditCommittee.

c) Policy to Prevent Sexual Harassment at the work place TheCompanyiscommittedtocreatingandmaintaining

anatmosphere inwhichemployeescanworktogether,without fear of sexual harassment, exploitation orintimidation. Every employee is made aware that theCompanyisstronglyopposedtosexualharassmentandthatsuchbehaviourisprohibitedbothbylawandbytheGodrejgroup.Toredresscomplaintsofsexualharassment,aComplaintsCommitteehasbeenformedwhichisheadedby Ms. T.A. Dubash, Executive Director & President(Marketing).MembersoftheCommitteeinclude,amongothers,arepresentativefromanNGOfamiliarwiththeissueofsexualharassment.

d) Details of compliance with mandatory requirement

Particulars Clause of Listing

Agreement

Compliance StatusYes/No

I. BoardofDirectors 49I Yes (A) CompositionofBoard 49(IA) Yes (B) Non-executiveDirectors’ compensation&disclosures

49(IB) Yes

(C) Otherprovisionsasto BoardandCommittees

49(IC) Yes

(D) CodeofConduct 49(ID) YesII.AuditCommittee 49(II) (A) Qualified & Independent AuditCommittee

49(IIA) Yes

(B) MeetingofAuditCommittee 49(IIB) Yes (C) PowersofAuditCommittee 49(IIC) Yes (D) RoleofAuditCommittee 49(IID) Yes (E) ReviewofInformationby AuditCommittee

49(IIE) Yes

III.Subsidiary Companies 49 (III) YesIV.Disclosures 49 (IV) (A) Basisofrelatedparty transactions

49(IVA) Yes

(B) Boarddisclosures 49(IVB) Yes (C) Proceedsfrompublicissues, rightsissues,preferential issuesetc.

49(IVC)49(IVD)

Yes

(D) RemunerationofDirectors 49(IVE) Yes (E) Management 49(IVF) Yes (F) Shareholders 49(IVG) Yes

�6

Particulars Clause of Listing

Agreement

Compliance StatusYes/No

V.CEO/CFO Certification 49 (V) YesVI. Report on Corporate Governance

49(VI) Yes

VII. Compliance 49 (VII) Yes e) Details of Non-compliance Therehasnotbeenanynon-compliancebytheCompany

and no penalties or strictures were imposed on theCompanybytheStockExchangesorSEBIoranystatutoryauthority,onanymatterrelatedtocapitalmarkets.

f) Declaration by Chairman & Managing Director ThedeclarationbytheChairmanandManagingDirector

statingthatalltheBoardMembersandseniormanagementpersonnel have affirmed their compliance with the said codeofconductfortheyearendedMarch3�,�008,isannexedtotheCorporateGovernanceReport.

8. GENERAL BODY MEETINGS a) Details of last three AGMs

Year Venue Date Time�004-05 Y.B.ChavanCentre,

NarimanPoint,Mumbai4000��.

July�6,�005 4.00P.M.

�005-06 -do- July�4,�006 4.30P.M.�006-07 -do- July�7,�007 4.30P.M.

b) Details of Special Resolution(s) Passed in previous three Annual General Meetings.

Date of

AGM

Number of Special

Resolution(s) passed

Details of Special Resolution(s) Passed

July�6,�005

3 �) Authorised to further invest uptoRs.�0crore inaddition toamountalready invested, in securities ofGodrejConsumerProductsLtd.

�) Authorised to further invest uptoRs. 5 crore in addition to amountalready invested, in securities ofAvestha Gengraine TechnologiesPvt.Ltd.

3) Authorised to further invest uptoRs.�0crore inaddition toamountalready invested, in securities ofCBaySystemsLtd.

July�4,

�006

6 �) Approval for re-appointment andremuneration payable to Ms. T.A.Dubash as Whole-time Director oftheCompany.

�) Approval for re-appointment andremuneration payable to Mr. V.F.BanajiasWhole-timeDirectoroftheCompany.

3) Approval for re-appointment andremuneration payable to Mr. M.EipeasWhole-timeDirectorof theCompany.

Date of

AGM

Number of Special



4) Approval for reappointment andremuneration payable to Mr. M.P.PusalkarasWhole-timeDirectoroftheCompany.

5) ApprovalforrevisioninremunerationpayabletoMr.PirojshaA.Godrej.

6) Amendment to the Articles ofAssociationoftheCompanypursuantto increase in Authorized ShareCapital.

July�7,

�007

� �)Approval for reappointment andremuneration payable to Mr. N.B.GodrejasManagingDirectoroftheCompany.

c) Details of Special Resolution(s) Passed in the Extraordinary General Meetings held in the last three years.

Date of EGM

Number of Special



December�,�005

5 �) Approval given for extendingEmployeesStockOptiontoEligibleEmployeesoftheCompany.

�) Approval given for extendingEmployeesStockOptiontoEligibleEmployees of the SubsidiaryCompanies.

3) ApprovalgivenforinvestmentinGodrej Comsumer Products Ltd.u/s.37�A of the CompaniesAct,�956.

4) ApprovalgivenforinvestmentinBostonAnalyticsLLCu/s.37�AoftheCompaniesAct,�956.

5) ApprovalgivenforinvestmentinVerseonLLC,USAu/s.37�AoftheCompaniesAct,�956.

d) Postal Ballot Duringtheyear,pursuanttotheprovisionsofSection�9�Aof

theCompaniesAct,�956readwiththeCompanies(PassingoftheResolutionbyPostalBallot)Rules�00�,certainresolutionswere passed by shareholders by postal ballot. The Noticeofpostalballotweremailedtoallshareholdersalongwithpostageprepaidenvelopes.Mr.BharatShemlani,CharteredAccountant,hadbeenappointedasscrutinizerforthepostalballots,whosubmittedhisreporttotheChairman,Mr.A.B.Godrej.However,forthepostalballotdeclarationonNovember7,�007,Mr.V.F.BanajiwastheChairmanintheabsenceofMr.A.B.Godrej,theregularChairmanofthemeeting.Thedetailsofthepostalballotsaregivenbelow:-

�7

Sr. No.

Date of announcement

of results

Nature of resolution

Item Total no. of votes

polled

No. of votes in

favour %

No. of votes

against%

No. of invalid

votes%

�. September�0,�007

Special

Special

Special

Special

Special

�.FurtherissueofcapitalunderSection8�oftheCompaniesAct,�956,uptoasumofUS$�50millionifraisedinUS$orRs.600CroreifraisedinIndianRupeeorinacombinationthereof.

�. To invest in securities of and/or place intercorporatedepositswithand/orinvestindebenturesofand/orgiveguarantee(s)toand/ormakeloansoranyotherformofdebttoand/orinvestmentinVerseonLLC,underSection37�AoftheCompaniesAct,�956,uptoasumofRs.5Crore.

3. To invest in securities of and/or place intercorporatedepositswithand/orinvestindebenturesofand/orgiveguarantee(s)toand/ormakeloansoranyotherformofdebttoand/orinvestmentinEnsembleHoldings&FinanceLimited,underSection37�AoftheCompaniesAct,�956,uptoasumofRs.5Crore.

4. To invest in securities of and/or place intercorporatedepositswithand/orinvestindebenturesofand/orgiveguarantee(s)toand/ormakeloansoranyotherformofdebttoand/or investment inAvesthaGengraineTechnologiesPrivateLimited,underSection37�AoftheCompaniesAct,�956,uptoasumofRs.5Crore.

5.Changeinplaceofkeepingregistersandrecords.

�,450

�,450

�,450

�,450

�,450

99.93

99.97

99.97

99.97

99.88

0.05

0.0�

0.0�

0.0�

0.0�

0.0�

0.0�

0.0�

0.0�

0.�0

�. November7,�007

SpecialSpecial

Special

Special

Special

Special

Special

�.AppointmentofMr.C.K.VaidyaasaDirector.�.AppointmentofMr.C.K.VaidyaasaWhole-timeDirector

and to fix his remuneration.3. Revision in terms of remuneration of Ms.T.A. Dubash,

Whole-timeDirector4. Revision in terms of remuneration of Mr. V. F. Banaji,

Whole-timeDirector.5. Revision in terms of remuneration of Mr. M. Eipe,

Whole-timeDirector.6.Revision in termsof remunerationofMr.M.P.Pusalkar,

Whole-timeDirector7.Tofurtherinvestinsecuritiesofand/orplaceintercorporate

depositswithand/orinvestindebenturesofand/orgiveguarantee(s)toand/ormakeloansoranyotherformofdebttoand/orinvestmentinGodrejHersheyFoods&BeveragesLtd.(formerlyGodrejBeverages&FoodsLimited),underSection37�AoftheCompaniesAct,�956,uptoasumofRs.5�Crore.

�,065�,065

�,065

�,065

�,065

�,065

�,065

99.7�99.7�

99.7�

99.7�

99.7�

99.7�

99.7�

0.�60.�7

0.�7

0.�7

0.�7

0.�7

0.�7

0.0�0.0�

0.0�

0.0�

0.0�

0.0�

0.0�

3. December�4,�007

Special

Special

�.Tofurtherinvestinsecuritiesofand/orplaceintercorporatedepositswithand/orinvestindebenturesofand/orgiveguarantee(s)toand/ormakeloansoranyotherformofdebttoand/orinvestmentinGodrejConsumerProductsLimited,underSection37�AoftheCompaniesAct,�956,uptoasumofRs.�00Crore.

�. Revision in terms of remuneration of Mr. N.B. Godrej,ManagingDirector.

�,�84

�,�84

99.9�

99.94

0.08

0.0�

0.0�

0.04

4. March�7,�008

Special Tofurtherinvestinsecuritiesofand/orplaceintercorporatedepositswithand/orinvestindebenturesofand/orgiveguarantee(s)toand/ormakeloansoranyotherformofdebttoand/orinvestmentinGodrejConsumerProductsLimited,underSection37�AoftheCompaniesAct,�956,uptoasumofRs.360Crore.

�,998 99.98 0.0� 0.0�

�8

b) Procedure adopted for Postal Ballot (i) TheBoardatitsmeetingapprovestheitemstobe

passedthroughpostalballotandauthorizesoneofthefunctionalDirectorsandtheCompanySecretarytoberesponsiblefortheentireprocessofpostalballot.

(ii) A professional such as a CharteredAccountant/CompanySecretary,whoisnotinemploymentoftheCompany,isappointedastheScrutinizerforthepollprocess.

(iii)Noticeofpostalballotalongwiththeballotpapersaresenttotheshareholdersalongwithaself-addressedenvelopeaddressedtotheScrutinizer.

(iv)Anadvertisement isgiveninaNationalnewspaperabout the dispatch of ballot papers and notice ofpostalballot.

(v) ThedulycompletedpostalballotpapersarereceivedbytheScrutinizer.

(vi)ScrutinizergiveshisreporttotheChairman. (vii)The Chairman announces the results of the postal

ballotinameetingconvenedforthesame. (viii)ResultsareintimatedtotheStockExchangeandare

putupontheNoticeBoardoftheCompanyaswellasontheCompany’sWebsite.

SHAREHOLDERS AND MEANS OF COMMUNICAITONa) Disclosures regarding appointment or re-appointment of

Directors AccordingtotheArticlesofAssociationofGIL,ateveryAnnual

GeneralMeetingoftheCompanyone-thirdoftheDirectorsare

liabletoretirebyrotation.Thus,Mr.K.K.Dastur,Mr.V.M.Crishna,Mr.K.N.PetigaraandMr.M.P.Pusalkarshallretireat thisAnnual General Meeting of the Company and beingeligible,offerthemselvesforre-election.

InformationabouttheDirectorswhoarebeingappointed/re-appointedisgivenasanannexuretotheNoticeoftheAGM.

b) Communication to shareholders All vital information relating to the Company and its

performance, including quarterly results, official press releases arepostedontheweb-siteoftheCompany.TheCompany’sweb-siteaddressiswww.godrejinds.com.ThequarterlyandannualresultsoftheCompany’sperformancearepublishedinleadingEnglishdailieslikeEconomicTimes,BusinessStandard,BusinessLine,etc.TheCompanyhasalsopostedinformationrelating to its financial results and shareholdings pattern on electronic data information filing and retrival sustem (EDIFAR) atwww.sebiedifar.nic.in

c) Investor grievances As mentioned before, the Company has constituted a

ShareholdersCommitteetolookintoandredressShareholdersand investor complaints. Mr. S.K. Bhatt, Executive Vice-President (CorporateServices)&CompanySecretary is thecompliance officer.

d) Share transfer GIL has outsourced its share transfer function to

M/s.ComputechSharecapLtd.,whichisregisteredwiththeSEBIasaCategory�RegistrarandTransferAgent.

e) Details of non-compliance TherehasbeennoinstanceoftheCompanynotcomplying

withanymatterrelatedtocapitalmarkets.

Declaration by Managing DirectorI, N.B. Godrej, Managing Director of Godrej Industries Limited (GIL), hereby confirm pursuant to clause 49(1)(D) of the listing agreement that:

TheBoardofDirectorsofGILhaslaiddownacodeofconductforallBoardmembersandseniormanagementoftheCompany.ThesaidcodeofconducthasalsobeenpostedontheCompany’swebsiteviz.www.godrejinds.com.AlltheBoardmembersandseniormanagement personnel have affirmed their compliance with the said code of conduct for the year ended March 31, 2008.

N. B. GodrejMumbai,May�8,�008 ManagingDirector

Auditors’ Certificate on Corporate GovernanceTotheMembersof,GodrejIndustriesLimitedWehaveexaminedthecomplianceofconditionsofCorporateGovernancebyGodrejIndustriesLimitedfortheyearendedonMarch3�,�008,asstipulated inClause49of theListingAgreementof thesaidCompanywiththestockexchanges.ThecomplianceofconditionsofCorporateGovernanceistheresponsibilityofthemanagement.Ourexaminationwaslimitedtoareviewofproceduresandimplementationthereof,adoptedbytheCompanyforensuringthecomplianceoftheconditionsofCorporateGovernance.Itis neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our informationandaccordingtotheexplanationsgiventous,wecertifythattheCompanyhascompliedwiththeconditionsofCorporateGovernancestipulatedinClause49oftheabovementionedListingAgreement.Westatethatsuchcomplianceisneitheranassuranceas to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs oftheCompany.

ForandonbehalfofKALYANIWALLA & MISTRY

CharteredAccountantsV.R. Mehta

PartnerMumbai,May�8,�008 MembershipNo.3�083

29

i) Annual General Meeting Date : July 29, 2008 Time : 4.30 P.M. Venue : Y.B. Chavan Centre, Gen. Jagannathrao Bhonsle Marg, Nariman Point, Mumbai- 400 021.

ii) Financial Calendar Financial year: April 1 to March 31 For the year ended March 31, 2008, results were announced on: � July 27, 2007 : First quarter � October 26, 2007 : Half year � January 29, 2008 : Third quarter � May 28, 2008 : Fourth quarter and annualiii) Record Date/Book Closure A dividend of Rs.1.25 per share of Re. 1/- each has been

recommended by the Board of Directors of the Company. For payment of dividend, the book closure is from July 22, 2008 to July 29, 2008 (both days inclusive).

iv) Listing information The Company’s equity shares are listed on Bombay Stock

Exchange Limited and National Stock Exchange of India Limited.

Name of the Stock Exchange Stock code

The Bombay Stock Exchange Ltd. (BSE) 500164

National Stock Exchange of India Ltd. (NSE) GODREJIND

The ISIN Number of GIL on both NSDL and CDSL is INE233A01035.

v) Stock Data Tables 1 and 2 respectively give the monthly high and low

prices and volumes of equity shares of the Company at BSE and NSE for the year ended March 31, 2008. Chart A compares the Company’s share price at the BSE versus the sensex.

Table 1: Monthly high and low prices and trading volumes of equity shares of the Company at BSE for the year ended March 31, 2008.

Date High (Rs.)

Low (Rs.)

Volume (No. of Shares)

April 07 198.20 145.70 22208May 07 196.00 147.60 22472June 07 219.00 167.50 30390July 07 224.90 182.60 18585August 07 212.00 158.10 10672September 07 193.50 169.00 16138October 07 223.55 159.00 25660November 07 281.90 200.00 23832December 07 504.50 295.95 53367January 08 499.00 258.00 74196February 08 330.00 235.00 30596March 08 319.30 215.30 84362

Note: High and low are in Rupees per traded share. Volume is the total monthly volume of trade (in numbers) in equity shares of the Company on BSE.

Shareholders’ Information

Table 2: Monthly high and low prices and trading volumes of equity shares of GIL at NSE for the year ended March 31, 2008

Date High (Rs.)

Low (Rs.)

Volume (No. of Shares)

April - 07 198.85 145.45 1937784May - 07 194.00 147.00 2066125June - 07 219.00 167.25 3657531July - 07 224.90 185.00 1724300August - 07 208.00 158.00 935384September – 07 194.95 168.00 1281671October - 07 223.00 157.00 2417628November - 07 283.20 197.75 3900268December – 07 503.00 297.40 5657767January – 08 489.00 260.00 7805389February – 08 334.85 235.05 3297819March - 08 317.90 215.10 5574848

Note: High and low are in rupees per traded share. Volume is the total monthly volume of trade (in numbers) in equity shares of the Company on NSE.

Chart A – The Company share performance compared to BSE Sensex for F.Y. 2007-2008

vi) Distribution of shareholding Tables 3 and 4 gives the distribution pattern of shareholding

of the Company by size, class and ownership respectively as on March 31, 2008.

Table 3: Distribution of shareholding by size class as on March 31, 2008

Number of shares

Number of shareholders

Shareholders%

Number of shares held

Share-holding %

1 – 500 30522 85.34 3446127 1.08501 – 1000 2760 7.72 2134437 0.67

1001 – 2000 1215 3.40 1810664 0.572001 – 3000 415 1.16 1079575 0.34

11400

13400

15400

17400

19400

21400

23400

100

200

300

400

500

600

GIL Share Price

GIL Share Price

BSE Sensex

BSE Sensex

GIL Share Performance compared to the BSE Sensex for F.Y. 2007-08

BSE

Sens

ex

GIL

Sha

re P

rice

(Rs

.)

Apr May Jun Jul Sep Oct Nov Dec Jan Feb MarAug

30

Number of shares

Number of shareholders

Shareholders %

Number of shares held

Share- holding %

300�–4000 �54 0.43 55�347 0.�7400�–5000 �36 0.38 635005 0.�0

500�–�0000 �4� 0.67 �75�68� 0.55�000�

&above3�� 0.90 308349766 96.43

Total 35764 100.00 319758602 100.00

Table 4: Distribution of shareholding by ownership as on March 31, 2008

Category(as being reported to stock exchanges)

Shares held (Nos.)

% of holding

Promoter’s holdingPromoters �5��34�74 78.57PersonsdeemedtoactinconcertwithpromotersInstitutional investorsMutualfunds&UTI ��066 0.69Banks, financial institutions & insurancecompanies

�4375759 4.49

Foreigninstitutionalinvestors �67747�� 5.�5OthersPrivatecorporatebodies 876397� �.74Indianpublic �530665� 7.9�NRI/OCBs �09��68 0.34Total 319758602 100.00

vii) Shares held in physical and dematerialised form AsonMarch3�,�008,99.63percentoftheCompany’sshares

wereheldindematerialisedformandtheremaining0.37percentinphysicalform.Thebreakupislistedbelow:

No. of Foliosin Physical

Mode

No.of Foliosin Demat

Mode

No. of Shares in Physical

Mode

No. of Sharesin Demat Mode

TotalFolios

TotalShares

3�7� 3�593 ��94�74 3�85643�8 35764 3�975860�

viii) Outstanding GDRs/ADRs/Warrants/Convertible instruments and their impact on equity

The Company does not have any outstanding GDRs/ADRs/warrants/convertibleinstruments.

ix) Share Transfer Share transfers and related operations for the Company

are conducted by Computech Sharecap Limited, which isregisteredwithSEBIasaCategory�Registrar.Sharetransferisnormallyeffectedwithinthemaximumperiodof30daysfromthedateofreceipt,ifalltherequireddocumentationissubmitted.

x) Investor correspondence should be addressed to:

ComputechSharecapLimited �47,M.G.Road,Opp.JehangirArtGallery, Mumbai40000� Tel:0��-��635000/��63500� Email:[email protected] Fax:0��-��635003

31

RepoRt of the AuditoRs' to the MeMbeRs of GodRej industRies LiMited

1. We have audited the attached Balance Sheet of Godrej Industries Limited as at March 31, 2008 and also the Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date, both 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 the 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 the 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, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. 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 such books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us. The Branch Auditor’s Report has been forwarded to us and has been appropriately dealt with.

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited returns from the 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 sub-section (3C) of section 211 of the Companies Act, 1956.

e) Reference is invited to note 10 (b) of Schedule 21- Notes to Accounts, regarding the recoverability of advances given to certain individuals amounting to Rs. 1033 lac being contingent upon the transfer and/or disposal of the shares pledged against the loan. The said shares were lodged for transfer which application was rejected and the Company has preferred an appeal to the Company Law Board. The investee company had in the mean while moved the High Court but the matter was referred back to the Company Law Board, where the matter is awaiting hearing. The impact thereof on the profit for the year and the reserves as at March 31, 2008 could not be ascertained.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to paragraph (e) above, and read with the 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 March 31, 2008;

ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

5. On the basis of the written representations received from the directors of the Company as on March 31, 2008 and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as on March 31, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For and on behalf of

Kalyaniwalla & Mistry Chartered Accountants

V. R. Mehtapartner

M. No: 32083

Mumbai, May 28, 2008

32

AnnexuRe to the AuditoRs' RepoRt

Referred to in Paragraph (3) of our report of even date on the accounts of Godrej industries Limited for the year ended 31st March, 2008.

1) (a) The Company is generally maintaining proper records showing full particulars, including quantitative details and situation of fixed assets, except in case of certain continuous process plants where item-wise values are not available and in case of furniture, fittings and equipment at Vikhroli where the records maintained show quantitative details with their situation and values based on valuation by an approved valuer.

(b) The Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and physical inventory were reported for the assets verified during the year.

(c) In our opinion and according to the information and explanations given to us, a substantial part of the fixed assets has not been disposed off by the Company during the year.

2) (a) The management has conducted physical verification of inventory at reasonable intervals.

(b) In our opinion, the 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. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3) (a) The Company had granted unsecured loans to three companies listed in the register maintained under section 301 of the Companies Act, 1956, of which one loan of Rs. 35 lakhs was outstanding at the year end. The maximum amount of loans granted to the said companies during the year was Rs. 1,647 lakhs.

(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of loans given are prima facie not prejudicial to the interest of the Company.

(c) The loans outstanding at the year end are at call and have not been recalled during the year. The companies are generally regular in payment of interest.

(d) There are no overdue amounts exceeding Rs. one lakh.

(e) The Company has taken unsecured loans from two companies listed in the register maintained under section 301 of the Companies Act, 1956, of which one loan of Rs. 100 lakhs was outstanding at the year end. The maximum amount of loans taken from the said companies during the year was Rs. 3,100 lakhs.

(f) In our opinion and according to the information and explanations given to us, the rate of interest and other

terms and conditions of loans taken are prima facie not prejudicial to the interest of the Company.

(g) The loans outstanding at the year end are at call and have not been recalled during the year. The Company is generally regular in payment of interest.

(h) There are no overdue amounts exceeding Rs. one lakh.

4) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit no major weakness has been noticed in the internal controls.

5) (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 Act 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, having regard to the explanation that many of the items are of a special nature and their prices cannot be compared with alternative quotations, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under in respect of the deposits accepted from the public.

7) The Company has an internal audit system, which in our opinion, is commensurate with the size of the Company and the nature of its business.

8) In our opinion and to the best of our knowledge and according to the information given to us, the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for any of the products of the Company.

9) (a) According to the records examined by us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities.

(b) According to the information and explanations given to us and the records examined by us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty or cess which have not been deposited on account of any dispute, other than those stated hereunder:

33

name of statute Rs in Lac. period to which amount relates forum where dispute is pendingCentral excise 18.72 2002-03,2006-07 Assistant Commissioner 12.09 1996-97,2002-03,2004-05 Commissioner 42.27 1982-83,1999-00 CESTAT 695.04 1978-79,1976-85,1995-96 High Court 724.54 1982-95,1993-97,2002-03 The Supreme Court

Custom duty 30.05 1978-83,2003-04 Assistant Commissioner

112.08 1987-93 Commissioner 25.44 1978-79,1978-84,2003-04 CESTAT 679.98 1978-93,1991-92 High Court

sales tax 159.32 1997-98,2002-06,2004-05 Sales Tax Officer

50.15 1996-00,2001-02,2003-05 Assistant Commissioner 320.39 2000-02,2002-03 Commissioner 97.56 1990-92,1994-96,1997-98,2003-05 Tribunal 1,063.29 2003-04 High Court

income tax 35.92 2004-05 Commissioner (Appeals)

othersstamp duty 182.23 2000 Controlling Revenue AuthorityMunicipal taxes 1,002.79 1984-2002 The Bombay High Courtentry tax 4.26 1997-99 Dy. Commissioner 23.56 1997-2003 Tribunal 1.03 2000-01 The Supreme Court

total 5,280.71

10) The Company has no accumulated losses as at the end of the financial year and it has not incurred any cash losses in the current and immediately preceding financial years.

11) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders as at the balance sheet date.

12) The Company has maintained adequate documents and records in respect of loans and advances granted on the basis of security by way of pledge of shares and other securities, except for the shares referred to in note 10(b)which have not been transferred in the name of the Company.

13) In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies.

14) In our opinion, the Company has maintained proper records of the transactions and contracts in respect of investments purchased and sold during the year and timely entries have been made therein. The investments made by the Company are held in its own name except for the shares referred to in note (a) of Schedule 6.

15) According to the information and explanations given to us and the records examined by us, it is our opinion that the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company.

16) According to the information and explanations given to us and the records examined by us, on an overall basis, the term

loans have been applied for the purpose for which the loans were obtained.

17) On the basis on an overall examination of the balance sheet and cash flows of the Company and the information and explanations given to us, we report that the Company has not utilized the funds raised on short-term basis for long term investment.

18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

19) The Company did not issue any debentures during the year.

20) During the year, the Company issued 2,79,06,950 equity shares of Re 1 each, at a premium of Rs. 214 per share, to Qualified Institutional Buyers (QIB) on a preferential basis as approved by the shareholders vide circular resolution dated 10th September 2007. The management has disclosed in the annual accounts, the end use of money raised by the public issue and the same has been verified by us.

21) Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.


Kalyaniwalla and Mistry Chartered Accountants

V. R. Mehta

Mumbai partnerDated: May 28, 2008. M. No. 32083

34

bALAnCe sheet As At MARCh 31, 2008

souRCes of funds1. Shareholders' Funds (a) Share capital 1 3,197.59 2,918.52 (b) Reserves & surplus 2 102,644.47 38,142.56

105,842.06 41,061.08 2. Loan Funds (a) Secured loans 3 24,948.07 33,092.48 (b) Unsecured loans 4 18,618.92 13,677.13

43,566.99 46,769.61 3. Deferred Tax Liability 3,619.20 3,980.00

totAL 153,028.25 91,810.69

AppLiCAtion of funds4. Fixed Assets 5 (a) Gross block 55,822.44 54,257.93 (b) Less: Depreciation/Impairment 29,173.75 27,302.62

(c) Net block 26,648.69 26,955.31 (d) Capital work-in-progress 493.68 1,749.02

27,142.37 28,704.33 5. Investments 6 77,548.43 48,566.78 6. Current Assets, Loans and Advances (a) Inventories 7 19,771.19 15,515.17 (b) Sundry debtors 8 15,640.35 9,253.24 (c) Cash and bank balances 9 29,428.85 2,536.34 (d) Loans and advances 10 13,938.77 9,389.99

78,779.16 36,694.74 Less: Current Liabilities and Provisions (a) Liabilities 11 24,554.26 18,053.15 (b) Provisions 12 6,955.34 5,704.12

31,509.60 23,757.27

Net Current Assets 47,269.56 12,937.47 7. Miscellaneous Expenditure 13 1,067.89 1,602.11 (To the extent not written off or adjusted)

totAL 153,028.25 91,810.69

Significant Accounting Policies 20 Notes to Accounts 21

this Year Previous Year Schedule Rs. lac Rs. lac Rs. lac

The Schedules referred to above form an integral part of the Balance Sheet.

As per our Report attached Signatures to Balance Sheet and Schedules 1 to 13, 20 and 21

For and on behalf of A.b. Godrej n.b. Godrej M. eipe M.p. pusalkarKalyaniwalla & Mistry Chairman Managing Director Executive Director Executive DirectorChartered Accountants & President (Chemicals) & President (Corporate Projects) V. R. Mehta s.K. bhatt V. srinivasan Partner Executive Vice President Executive Vice PresidentMumbai, May 28, 2008 (Corporate Services) & Company Secretary (Finance & Estate)

35

pRofit And Loss ACCount foR the YeAR ended MARCh 31, 2008

this Year Previous Year Schedule Rs. lac Rs. lac Rs. lac

The Schedules referred to above form an integral part of the Profit and Loss Account

As per our Report attached Signatures to Profit & Loss Account and Schedules 14 to 21

For and on behalf of A.b. Godrej n.b. Godrej M. eipe M.p. pusalkarKalyaniwalla & Mistry Chairman Managing Director Executive Director Executive DirectorChartered Accountants & President (Chemicals) & President (Corporate Projects) V. R. Mehta s.K. bhatt V. srinivasan Partner Executive Vice President Executive Vice PresidentMumbai, May 28, 2008 (Corporate Services) & Company Secretary (Finance & Estate)

inCoMe Turnover (gross) (refer note 17) 79,602.36 71,426.21 Less: Excise duty 6,071.82 5,948.61 Turnover (net) 73,530.54 65,477.60 Other Income 14 10,351.20 12,813.62 83,881.74 78,291.22 expendituRe Materials consumed and purchase of goods 15 39,466.72 46,272.06 Expenses 16 27,112.30 20,683.52 Inventory change 17 540.42 (2,877.60)Interest and financial charges (net) 18 3,443.74 3,830.78 Depreciation 2,547.00 2,426.36 (Net of transfer from Revaluation Reserve Rs. 148.93 lac, Previous Year Rs. 160.45 lac) 73,110.18 70,335.12 Profit before Taxation and Extraordinary Items 10,771.56 7,956.10 Profit from continuing operations before tax 10,693.55 7,849.40 Provision for Income tax - - current tax (1,020.00) (206.21) - MAT credit entitlement 500.00 206.21 - deferred tax 369.36 (162.00) - fringe benefit tax (60.32) (57.08) - adjustment for previous years (net) 100.28 (22.07)Profit from continuing operations after tax 10,582.87 7,608.25 Profit from discontinuing operations before tax 78.01 106.70 Provision for Income tax - current tax (8.84) (12.79) - MAT credit entitlement - 12.79 - fringe benefit tax (2.68) (3.62)Profit from discontinuing operations after tax 66.49 103.08 Profit after Taxation and before Extraordinary Items 10,649.36 7,711.33 Extraordinary Items (Net of Tax) 19 231.61 94.75 Net Profit 10,880.97 7,806.08 Surplus brought forward 27,320.54 23,709.59 Amount Available for Appropriation 38,201.51 31,515.67 Appropriations Proposed Dividend - Final 3,996.99 2,918.52 Tax on distributed profits 679.29 496.00 Transfer to General Reserve 1,088.10 780.61 Surplus carried forward 32,437.14 27,320.54 totAL 38,201.52 31,515.67 Basic & Diluted Earnings per share before Extraordinary Items 3.53 2.64 Basic & Diluted Earnings per share after Extraordinary Items 3.60 2.67 (refer note 19) Significant Accounting Policies 20 Notes to Accounts 21

36

CAsh fLow stAteMent foR the YeAR ended MARCh 31, 2008 This Year Previous Year Rs. lac Rs. lac A. Cash flow from operating activities : Profit before tax 10,771.56 7,956.10 Adjustments for: Depreciation 2,547.00 2,426.36 Foreign exchange 233.70 (26.57) Profit on sale of investments (6,765.31) (4,491.86) (Profit)/Loss on sale of fixed assets (46.46) (595.31) Dividend income (1,393.16) (5,781.12) Interest income (1,635.01) (429.79) Interest expense 3,827.70 3,901.55 Voluntary retirement compensation paid (65.07) (38.65) Deferred expenditure written off 599.29 655.90 Provision for diminution in value of investments/(write back) 1,588.93 (300.00) Provision for doubtful debts & sundry balances written back (net) (19.35) (410.64) Others (12.58) 1.71 Operating profit before working capital changes 9,631.24 2,867.68 Adjustments for: Inventories (4,441.59) (3,622.79) Trade and other receivables (5,297.71) (1,796.22) Trade payables 6,709.50 2,346.98 Cash generated from operations 6,601.44 (204.35) Direct taxes paid (1,755.48) (1,145.93) Direct taxes refund/received 183.88 451.03 net Cash from/(used in) operating activities 5,029.84 (899.25)b. Cash flow from investing activities: Purchase of fixed assets (1,451.51) (4,516.06) Proceeds from sale of fixed assets 159.52 2,271.03 Purchase of investments (100,654.96) (66,287.82) Proceeds from sale of investments 76,849.70 59,645.59 Intercorporate deposits/Loans (net) (4,594.25) (2,264.70) Interest received 1,436.93 218.70 Dividend received 1,393.16 5,781.12 Net Cash used in investing activities before extraordinary item (26,861.41) (5,152.14) Proceeds from sale of Medical Diagnostics Division 600.00 - net Cash used in investing activities after extraordinary item (26,261.41) (5,152.14)C. Cash Flow from financing activities: Proceeds from borrowings 74,800.00 45,416.61 Repayments of borrowings (79,981.11) (35,435.94) Proceeds from issue of equity share capital 58,786.24 - Bank overdrafts (net) 1,646.88 4,091.27 Interest paid (3,700.04) (3,972.09) Dividend paid (2,931.89) (2,430.65) Tax on distributed profits (496.00) (341.10) Net Cash from financing activities 48,124.08 7,328.10

net increase in cash and cash equivalents 26,892.51 1276.71 Cash and cash equivalents (Opening Balance) 2,536.34 1,259.63 Cash and cash equivalents (Closing Balance) 29,428.85 2,536.34 notes:1. Cash and Cash equivalents. Cash on hand and balances with banks 29,429.74 2,536.45 Effect of exchange rate changes (0.89) (0.11) Cash and cash equivalents 29,428.85 2,536.34

2. Cash on hand and balances with banks includes Rs. 29,000 lac, temporarily invested in bank fixed deposit, out of proceeds of Qualified Institutional Placement (QIP) done by the Company during the year.

3. To finance working capital requirements, the Company’s Bankers have sanctioned a total fund-based limit of Rs. 7,500 lac. Of this, limits utilised as on March 31, 2008 is Rs. 7,256.59 lac.

4. During the year, Medical Diagnostics Division was sold at a consideration of Rs. 600 lac on the close of working hours of December 31, 2007.5. The figures of previous year have been regrouped wherever necessary.

As per our Report attached Signatures to Cash Flow Statement

For and on behalf of A.b. Godrej n.b. Godrej M. eipe M.p. pusalkarKalyaniwalla & Mistry Chairman Managing Director Executive Director Executive DirectorChartered Accountants & President (Chemicals) & President (Corporate Projects)

V. R. Mehta s.K. bhatt V. srinivasan Partner Executive Vice President Executive Vice PresidentMumbai, May 28, 2008 (Corporate Services) & Company Secretary (Finance & Estate)

37

sCheduLes foRMinG pARt of the ACCounts foR the YeAR ended MARCh 31, 2008 this Year Previous Year Rs. lac Rs. lac

sCheduLe 1 : shARe CApitAL

Authorised:

800,000,000 Equity shares of Re. 1 each 8,000.00 8,000.00 10,00,00,000 Unclassified Shares of Rs.10 each 10,000.00 10,000.00

18,000.00 18,000.00 Issued, Subscribed and Paid Up:

319,758,602 (Previous Year 291,851,652) Equity shares of Re.1 each fully paid 3,197.59 2,918.52 3,197.59 2,918.52

Of the above, (i) 187,202,388 (Previous Year 187,202,388) shares are held by Godrej & Boyce Mfg. Co. Limited, the holding company

(ii) 155,547,816 (Previous Year 155,547,816) shares are alloted for consideration other than cash pursuant to schemes of amalgamation/arrangement

(iii) 95,705,718 (Previous Year 95,705,718) shares are alloted as fully paid bonus shares by way of capitalisation of Securities premium account.

this Year Previous Year sCheduLe 2: ReseRVes And suRpLus Rs. lac Rs. lac Rs. lac securities premium Account As per last balance sheet 8.51 8.51 Add: Premium received on issue of shares 59,720.87 —Less: Share issue expenses adjusted (1,213.70) —

58,515.68 8.51 Capital Investment Subsidy Reserve As per last balance sheet 25.00 25.00 Capital Redemption Reserve As per last balance sheet 3,125.00 3,125.00 Revaluation Reserve As per last balance sheet 1,825.71 2,291.39 Less : Depreciation on revalued component and deduction due to sale/discard of fixed assets (154.50) (465.68)

1,671.21 1,825.71 General Reserve As per last balance sheet 5,837.80 5,057.19 Less: Transitional obligation for compensated absences & long service awards (55.46) — Add: Transferred from profit & loss account 1,088.10 780.61

6,870.44 5,837.80 Profit & Loss Account 32,437.14 27,320.54

102,644.47 38,142.56

sCheduLe 3: seCuRed LoAns

Term loans from banks 17,691.48 27,482.77 Bank overdrafts, packing credits, etc. 7,256.59 5,609.71

24,948.07 33,092.48 Particulars of securities (refer note 5)

sCheduLe 4: unseCuRed LoAns

Short term loans from banks 16,518.92 11,677.13 Other loans from banks/commercial paper 2,000.00 1,000.00 Inter corporate borrowing 100.00 1,000.00

18,618.92 13,677.13 Amount repayable within one year 18,618.92 13,677.13

38

Rs. Lac ASSETS GROSS BLOCK DEPRECIATION/IMPAIRMENT NET BLOCK

As on 01.04.2007

Additions Deductions/ Adjustments

As on 31.3.2008

Upto 31.03.2007

Deductions/ Adjustments

For the Year

upto 31.3.2008

As on 31.3.2008

As on 31.03.2007

Tangible Assets Land — Freehold 121.58 — — 121.58 — — — — 121.58 121.58 — Leasehold 147.97 — — 147.97 22.78 — 1.54 24.32 123.65 125.19 Buildings 6,772.55 77.38 99.09 6,750.84 2,300.51 117.43 184.75 2,367.83 4,383.01 4,472.04 Plant & Machinery 42,601.32 1,861.79 453.02 44,010.09 22,273.33 501.29 2,174.71 23,946.75 20,063.34 20,327.99 Research Centre 113.51 13.55 - 127.06 50.01 - 3.75 53.76 73.30 63.50 Furniture & Fixtures 1,152.65 10.93 110.70 1,052.88 684.26 75.48 44.63 653.41 399.47 468.39 Office & Other Equipments

1,114.22 33.27 23.50 1,123.99 509.48 11.25 53.57 551.80 572.19 604.74

Vehicles 606.08 247.12 75.92 777.28 323.07 53.99 67.07 336.15 441.13 283.01 Intangible Assets: Trademarks 463.00 — — 463.00 285.52 — 46.30 331.82 131.18 177.48 Software 916.02 20.56 — 936.58 691.82 — 60.96 752.78 183.80 224.20 Assets acquired under finance lease:

Vehicles 249.03 88.47 26.33 311.17 161.84 65.36 58.65 155.13 156.04 87.19 totAL – this Year 54,257.93 2,353.07 788.56 55,822.44 27,302.62 824.80 2,695.93 29,173.75 26,648.69 26,955.31 – Previous Year 53,640.20 3,702.56 3,084.83 54,257.93 25,568.23 852.42 2,586.81 27,302.62 Capital Work-in Progress 493.68 1,749.02 totAL 27,142.37 28,704.33

1. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on June 30, 1992 on the basis of a Valuation Report submitted by professional valuers.

2. Depreciation for the year includes Rs. 148.93 Lac (Previous Year Rs.160.45 Lac) being depreciation on revalued component of the fixed assets. 3. Gross block deductions includes Rs. 6.02 lac (Previous Year Rs.305.23 lac) being the revalued component of assets sold/discarded during the year. 4. Accumulated depreciation includes impairment loss of Rs. 510.36 lac (Previous Year Rs 510.36 lac) on certain plant & machinery. 5. Capital work-in-progress is net of impairment loss of Rs.204.10 lac (Previous Year Rs. 204.10 lac )provided on an infructuous asset under construction.

sCheduLe 5 : fixed Assets

investee Company/institutions Face value (Rs.)

Number Amount

Qty. as on 01.04.07

Acquired during the

year

Sold/Adjusted

during the year

Qty. as on 31.03.08

Notes As on 31.03.08

Rs. lac

As on 31.3.07 Rs. lac

LonG teRM inVestMents : At CostA. tRAde inVestMents

equity shares: fully paidBharuch Eco-Aqua Infrastructure Ltd. 10 440,000 — — 440,000 44.00 44.00 preference shares: partly paid Godrej Commodities Ltd. (Formerly Godrej Foods Limited) 10 5,000,000 — — 5,000,000 (b) 450.00 450.00 (8% Redeemable Cumulative Preference Shares, 2012)

b. otheR inVestMentsequity shares: fully paidQuoted:Godrej Consumer Products Ltd. 1 23,136,108 — — 23,136,108 9,216.28 9,216.28 unquoted :Avesthagen Limited (Formerly Avestha Gengraine Technologies Pvt. Ltd.) 10 154,744 40,833 — 195,577 (c) 1,142.83 743.45 Compass BPO Ltd. (Formerly Compass Connections Ltd.) £0.25 13,692 — — 13,692 124.55 124.55 Cbay Infotech Ventures Pvt. Ltd. 10 — 32,258 — 32,258 100.00 — Gharda Chemicals Ltd. 100 114 — — 114 (a) 11.57 11.57 Godrej Sara Lee Ltd. 4 5,107,125 — — 5,107,125 4,729.79 4,729.79 Godrej Hershey Ltd. (Formerly Godrej Beverages & Foods Ltd.) 10 16,499,996 13,895,321 2,463,564 27,931,753 (d) 14,300.43 3,963.22 Godrej Upstream Ltd. 10 9,000,000 — 9,000,000 — — 902.25 HyCa Technologies Pvt. Ltd. (Partly paid up) 10 — 12,222 — 12,222 60.00 — Swadeshi Detergents Ltd. 10 209,370 — — 209,370 191.33 191.33 Tahir Properties Ltd. (Partly paid) 100 25 — — 25 (b) 0.01 0.01

sCheduLe 6 : inVestMents

39

investee Company/institutions Face value (Rs.)

Number Amount

Qty. as on 01.04.07

Acquired during the

year

Sold/Adjusted

during the year

Qty. as on 31.03.08

Notes As on 31.03.08

Rs. lac

As on 31.3.07 Rs. lac

Common Stock/Membership Units:unquoted:CBay Systems Ltd., USA $0.01 4,091,073 — — 4,091,073 (e) 253.52 4,062.82 Boston Analytics LLC $1 1,067,754 286,375 298,500 1,055,629 688.09 650.48 Verseon Corporation — Class A Units (Formerly Verseon LLC) $1.90 1,315,789 — — 1,315,789 (f) 1,142.34 1,142.34 Quoted:CBaySystems Holdings Ltd., UK $0.10 — 8,182,148 — 8,182,148 (e) 3,809.30 — preference shares:unquoted:Tahir Properties Ltd. (Class — A) (partly paid) 100 25 — — 25 (b) 0.02 0.02 Godrej Hershey Ltd.(Formerly Godrej Beverages & Foods Ltd.)(Zero Coupon Compulsory Convertible Preferance Shares) 10 7,150,223 — 7,150,223 — (d) — 6,240.00 Optionally convertible Loan notes:unquoted:Compass BPO Ltd. (Formerly Compass Connections Ltd.) $1,000 97 — — 97 83.19 83.19 Verseon Corporation (Formerly Verseon LLC) $1,000,000 — — — — (f) 397.60 — (13% Convertible promissory note)Non—Convertible Debentures:Godrej Oil Plantations Limited (Formerly Godrej Aquafeed Limited) 10 — 175,737 — 175,737 17.57 — shares in Co—operative society : fully paidunquoted:The Saraswat Co-op. Bank Ltd. 10 1,000 — — 1,000 0.10 0.10 investment in the capital of partnership firm:View Group LP — — — — 0.01 0.01

C. inVestMent in subsidiARY CoMpAniesequity shares: fully paid unless stated otherwiseunquoted:Ensemble Holdings & Finance Ltd. 10 3,770,160 4,000 — 3,774,160 1,318.94 1,318.14 Godrej Agrovet Ltd. 10 7,112,956 2,000,000 — 9,112,956 16,317.91 6,377.34 Godrej Global Solutions Ltd. 10 13,602,260 — — 13,602,260 (b) 3,549.29 3,549.29 Godrej Gokarna Oil Palm Limited (Formerly Godrej Oil Palm Limited) 10 — 2,584 — 2,584 41.86 — Godrej International Ltd. £1 2,605,000 — 250,000 2,355,000 1,651.61 1,826.94 Godrej Hicare Ltd. 10 6,647,100 — 580,000 6,067,100 (b) 325.74 364.83 Godrej Properties Ltd. (including 42,117,160 Bonus shares received)

10 5,264,645 44,536,514 615,950 49,185,209 18,792.25 4,027.61

CuRRent inVestMentsunits of Mutual fund:unquotedSubscribed during the year:LIC MF Liquid — — 108,019,581 103,941,943 4,077,638 600.00 — UTI Liquid cash plan — Inst. — — 1,264,034 1,219,351 44,683 595.00 — Birla Cash plus — Inst. Premium — — 135,376,611 130,459,315 4,917,296 635.00 —

80,590.13 50,019.56

Less: provision for diminution in value of investments (3,041.70) (1,452.78)

77,548.43 48,566.78

Aggregate book value of InvestmentsQuoted 13,025.58 9,216.28 Unquoted 64,522.85 39,350.50

77,548.43 48,566.78

Market Value of Quoted Investments 33,365.50 34,021.65

notes:(a) The said shares have been refused for registration by the investee company.(b) Uncalled Liability on partly paid shares — Tahir Properties Ltd. - Equity - Rs. 80 per share. — Godrej Commodities Limited - Preference - Re. 1 per share. — Tahir Properties Ltd. - Preference - Rs. 30 per share. — Godrej Global Solutions Ltd — Equity - Rs. 3 per share on 49,71,429 shares. — Godrej Hicare Ltd. - Equity - Rs. 6 per share on 30,40,000 shares. — HyCa Technologies Pvt. Ltd. — Equity — agreegating to Rs. 65 lac on 12,222 shares.(c) Additional consideration payable for the acquisition of 9,833 shares on the occurence of certain contingent events on or before August 31, 2009 — Rs. 104.13 lac.(d) The compulsory convertible preference shares were converted into 71,50,223 equity shares on May 7, 2007.(e) Additional shares received pursuant to reorganisation of the group.(f) Optionally Convertible Notes are convertible as under: — Compass BPO Limited: Between April 1, 2008 and April 1, 2010 @ £ 53.75 per share. — Verseon Corporation — After December 1, 2008 until the due date but not later than Sepember 15, 2012.

40

sCheduLe 7: inVentoRies(at lower of cost and net realisable value)Stores and spares 1,618.25 1,381.64

Raw materials 10,380.37 5,820.54

Work-in-progress 4,324.91 4,919.84

Finished goods 3,447.66 3,393.15

19,771.19 15,515.17

sCheduLe 8: sundRY debtoRs(Unsecured) Debts outstanding over six months

Considered doubtful 219.58 201.20

Other debts

Considered good 15,640.35 9,253.24

15,859.93 9,454.44

Less: Provision for doubtful debts 219.58 201.20

15,640.35 9,253.24

sCheduLe 9: CAsh And bAnK bALAnCes

Cash and cheques on hand 19.66 64.29

Balances with scheduled banks

– on current account 290.85 464.39

- on deposit account (refer note 9) 29,118.34 2,007.66

29,428.85 2,536.34

sCheduLe 10: LoAns And AdVAnCes(Unsecured and considered good unless otherwise stated) Loans and Advances (refer note 10) 2,183.65 2,772.28

Loan to GIL ESOP Trust 6,434.25 2,784.00

Advances recoverable in cash or in kind or for value to be received (net of provision for doubtful advances Rs. 337.32 lac, previous year Rs.377.07 lac) 2,645.77 1,265.01 Intercorporate deposits 35.00 35.00

Deposits and balances with

- Customs & excise authorities 1,109.87 1,319.90

- Others 563.18 642.42

Advance payment of taxes 967.05 571.38

[Net of Provision for tax Rs.1597.40 (previous year Rs.940 Lac)]

13,938.77 9,389.99

this Year Previous Year Rs. lac Rs. lac

41

sCheduLe 11: CuRRent LiAbiLities (refer note 11)Sundry creditors

- Outstanding dues of micro enterprises and small enterprises 18.95 75.79

- Others 21,532.19 15,724.93

Advances from customers 599.55 689.40

Sundry deposits 1,271.61 877.93

Investor Education & Protection Fund *

- Unclaimed dividend 34.37 47.74

- Unclaimed Matured Deposits 12.63 15.69

Other liabilities 870.00 534.38

Interest accrued but not due on loans 214.96 87.29

24,554.26 18,053.15 * There is no amount due and outstanding to be credited to the Investor Education and Protection Fund.

sCheduLe 12: pRoVisions

Proposed dividend 3,996.99 2,918.52

Provision for tax on distributed profits 679.29 496.00

Provision for retirement benefits 2,279.06 2,289.60

6,955.34 5,704.12 sCheduLe 13: MisCeLLAneous expendituRe (To the extent not written off or adjusted) Deferred revenue expenditure

Voluntary retirement compensation

Balance at the beginning of the year 1,602.11 2,219.36

Add: Expenditure incurred during the year 65.07 38.65

Less: Amortised during the year (599.29) (655.90)

1,067.89 1,602.11

sCheduLe 14: otheR inCoMe Interest

- Debentures 31.97 32.98

- Income tax refund 65.69 114.78

- Deposits 1,486.01 232.14

Dividend

– from subsidiary companies 94.35 3,592.11

- from long-term investments 1,298.81 2,189.01

Profit on sale of fixed assets (Net) 46.46 595.31

Profit on sale of long-term investments (refer note 18) 6,672.90 4,382.56

Profit on sale of current investments 92.41 109.30

Provision for diminution in investment written back (refer note 18) — 300.00

Bad debt recovered (refer note 18) 42.64 650.00

Miscellaneous income 519.96 615.43 10,351.20 12,813.62


42

sCheduLe 15: MAteRiALs ConsuMed And puRChAse of Goods

Raw materials consumed:

Stocks at the commencement of the year 5,820.54 5,300.52

Add: Purchases (net) 43,254.25 40,987.86

49,074.79 46,288.38

Less: Stocks as at the close of the year 10,380.37 5,820.54

Raw Materials consumed during the year 38,694.42 40,467.84

Purchase of goods for resale 772.30 5,804.22

39,466.72 46,272.06

sCheduLe 16 : expenses

Salaries, wages and allowances 7,045.47 5,421.36

Contribution to provident fund and other funds 357.57 324.20

Employee welfare expenses 555.40 520.11

Stores and spares consumed 928.17 930.87

Power and fuel 5,868.57 4,963.01

Processing charges 154.27 98.50

Rent 402.68 247.18

Rates and taxes 516.82 496.78

Repairs and maintenence

- Machinery 604.22 644.50

- Buildings 365.73 614.23

- Other assets 453.26 334.47

Insurance 145.95 156.18

Freight 3,393.75 2,371.50

Commission 315.16 250.70

Discount 281.53 453.22

Advertisement and publicity 242.37 86.91

Sales promotion 2.38 3.96

Selling and distribution expenses 673.87 822.40

Bad debts written off — 32.38

Provision for doubtful debts and advances (19.35) 5.78

Provision for depletion in value of investments 1,588.93 —

Excise duty 1,065.51 (61.38)

(Including Rs. 329.09 lac, previous Year Rs. (61.38) lac on inventory change)

Foreign exchange loss 159.26 243.58

Miscellaneous expenses 2,759.55 2,395.62

Less: Expenses recovered under cost sharing agreement for use of common facilities (748.77) (672.54)

27,112.30 20,683.52


43

this Year Previous Year Rs. lac Rs. lac Rs. lac

sCheduLe 17: inVentoRY ChAnGe Stocks at the commencement of the year - Finished goods 3,393.15 3,474.37 - Work-in-progress 4,919.84 1,961.02

8,312.99 5,435.39

Less: Stocks at the close of the year: - Finished goods (3,447.66) (3,393.15) - Work-in-progress (4,324.91) (4,919.84)

(7,772.57) (8,312.99)

(Increase)/Decrease in Inventory 540.42 (2,877.60)

sCheduLe 18: inteRest And finAnCiAL ChARGes (net) Interest paid - on fixed loans 2,697.01 2,807.07 - on bank overdrafts 18.26 11.30 - other interest 651.69 610.94 3,366.96 3,429.31 Less: Interest received - on loans & deposits 42.96 40.59 - on Customer balances, etc. 8.38 9.30 51.34 49.89 Net Interest 3,315.62 3,379.42 Other financial charges 460.74 472.24 Foreign exchange (gain)/loss (332.62) (20.88)

3,443.74 3,830.78

sCheduLe 19 : extRAoRdinARY iteMs Profit on sale of Medical Diagonisitics business 310.28 94.75 Less: Taxation on above - current tax (70.31) - - deferred tax (8.36) -

231.61 94.75

44

1. Accounting Convention The financial statements are prepared under the historical

cost convention, on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

2. use of estimates The preparation of financial statements in conformity with

generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities as of the date of the financial statements and reported amounts of income and expenses during the period. Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Actual results could differ from the estimates.

3. fixed Assets Fixed Assets are stated at cost or as revalued as the case may

be, less accumulated depreciation. Cost includes expenses related to acquisition and installation of the concerned assets.

Fixed Assets acquired under finance lease are capitalised at the lower of their face value and present value of the minimum lease payments.

4. Intangible Assets Intangible assets are stated at cost of acquisition less

accumulated amortisation. The cost of acquisition of trade marks is amortised equally over a period of ten years. Computer software is amortised over a period of six years on the straight line method.

5. impairment of Assets The Company reviews the carrying values of tangible and

intangible assets for any possible impairment at each balance sheet date. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. Impairment loss, if any, is recognised in the year in which impairment takes place.

6. borrowing Costs Borrowing costs that are directly attributable to the

acquisition/construction of the underlying fixed assets are capitalised as a part of the respective asset, upto the date of acquisition/completion of construction.

7. investments Investments are classified into long-term and current

investments. Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognise a decline, other than of a temporary nature. The fair value of a long-term investment is ascertained with reference to its market value, the investee’s assets and results and the expected cash flows from the investment.

Current investments are stated at lower of cost and fair value.

8. inventories Inventories are valued at lower of cost and net realisable

value. Cost is computed on weighted average basis and is net of modvat. Finished goods and work in progress include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Provision is made for the cost of obsolescence and other anticipated losses, wherever considered necessary.

9. Provisions and Contingent Liabilities Provisions are recognised in the accounts in respect of present

probable obligations, the amount of which can be reliably estimated.

Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.

10. foreign exchange transactions i. Transactions in foreign currency are recorded at exchange

rates prevailing on the day of the transaction. Monetary assets and liabilities denominated in foreign currency, remaining unsettled at the period end are translated at closing rates. The difference in translation of monetary assets and liabilities and realised gains and losses on foreign currency transactions are recognised in the Profit and Loss Account.

ii. Forward exchange contracts other than those entered into to hedge foreign currency risk of firm commitments or highly probable forecast transactions are translated at period end exchange rates. Premium or discount on such forward exchange contracts is amortised as income or expense over the life of the contract.

iii. Realised gain or losses on cancellation of forward exchange contracts are recognised in the Profit and Loss Account of the period in which they are cancelled.

iv. Exchange differences in respect of other foreign currency derivative contracts, which have been entered into to hedge foreign currency, risks are marked to market and losses, if any, are recognised in the Profit and Loss Account.

11. Revenue Recognition Sales are recognised when goods are supplied and are recorded

net of returns, trade discounts, rebates, sales taxes and excise duties.

Income from processing operations is recognised on completion of production/dispatch of the goods, as per the terms of contract.

Export incentives receivable under the Duty Entitlement Pass Book Scheme and Duty Drawback Scheme are accounted on accrual basis.

Dividend income is recognised when the right to receive the same is established.

Interest income is recognised on a time proportion basis.

Income on assets given on operating lease is recognised on a straight line basis over the lease term.

sCheduLe 20: siGnifiCAnt ACCountinG poLiCies

45

12. Research and development expenditure Revenue expenditure on Research and Development is charged

to the Profit and Loss Account of the year in which it is incurred. Capital expenditure incurred during the year on Research and Development is included under additions to fixed assets.

13. depreciation Leasehold land is amortised equally over the lease period.

Leasehold improvements are amortised over five years.

Depreciation is provided on the straight line method at the rates specified in Schedule XIV to the Companies Act, 1956, except for computer hardware which is depreciated over its estimated useful life of 4 years.

Depreciation on assets acquired during the year is provided for the full accounting year and no depreciation is charged on the assets sold/discarded during the year, except in case of major additions and deductions exceeding rupees one crore in which case, proportionate depreciation is provided.

Depreciation on the revalued component is provided on the straight line method based on the balance useful life of the assets as certified by the valuers. Such depreciation is withdrawn from Revaluation Reserve and credited to Profit and Loss Account.

14. Employee Benefits The Company has adopted the revised Accounting Standard

(AS-15) Employee Benefits with effect from April 1, 2007. In accordance with the transitional provisions contained in the said standard, the transitional obligation of the Company towards Sick leave and Long service benefit is withdrawn from General Reserve.

Liability is provided for the retirement benefits of provident fund, gratuity, leave encashment and pension benefit in respect of all eligible employees of the Company.

i. Defined Contribution Plan

Employee benefits in the form of Provident Fund and family pension are considered as defined contribution plan and the contributions are charged to the Profit and Loss of the year when the contributions to the respective funds are due.

ii. Defined Benefit Plan

Retirement benefits in the form of Gratuity and Pension plan for eligible employees considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

iii. Other long-term benefits

Long-term compensated absences and Long Service awards are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.

Actuarial gain/losses, if any, are immediately recognised in the Profit and Loss Account.

15. incentive plans The Company has a scheme of Performance Linked Variable

Remuneration (PLVR) which rewards its employees based on Economic Value Addition (EVA). The PLVR amount is related to

actual improvement made in EVA over the previous year when compared with expected improvements. The EVA awards flow through a notional bank whereby only the prescribed portion of the bank is distributed each year and the balance is carried forward. The amount distributed out of the notional bank is charged to profit and loss account. The notional bank is held at risk and charged to EVA of future years and is payable at that time, if future performance so warrants.

16. hedging The Company uses commodity futures contracts to hedge the

exposure to oil price risks. Gains or losses on settled contracts is recognised in the profit and loss account and is included in the cost of materials consumed. Futures contracts not settled as on the Balance Sheet date are marked to market and losses, if any, are recognised in the profit and loss account, whereas, the unrealised profit is ignored.

17. deferred Revenue expenditure The compensation payable under the Voluntary Retirement

Schemes, the benefit of which is expected to accrue in future is deferred over its payback period. The compensation is generally amortised over three to five years depending on the pay back period, however, the pay back period is restricted to March 31, 2010.

18. taxes on income Tax expense comprises both current and deferred tax. Current

tax is the amount of tax payable on the assessable income for the year determined in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognised on timing differences, being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets on unabsorbed tax losses and tax depreciation are recognised only when there is virtual certainty of their realisation and on other items when there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year end based on the tax rate and laws enacted or substantially enacted on the balance sheet date.

19. segment Reporting The Accounting Policies adopted for segment reporting are

in line with the Accounting Policies of the Company. Segment assets include all operating assets used by the business segments and consist principally of fixed assets, debtors and inventories. Segment liabilities include the operating liabilities that result from the operating activities of the business. Segment assets and liabilities that cannot be allocated between the segments are shown as part of unallocated corporate assets and liabilities respectively. Income/Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income/expenses.

46

1. background The Company was incorporated under the Companies Act,

1956 on March 7, 1988 under the name of Gujarat – Godrej Innovative Chemicals Limited. The business and undertaking of the erstwhile Godrej Soaps Limited was transferred to the Company under a scheme of amalgamation with effect from April 1, 1994 and the Company’s name was changed to Godrej Soaps Ltd. Subsequently, under a scheme of arrangement the Consumer Products division of the Company was demerged with effect from April 1, 2001 into a separate company, Godrej Consumer Products Limited (GCPL) and the vegetable oils and processed foods manufacturing business of Godrej Foods Ltd. was transferred to the Company with effect from June 30, 2001. The Foods division (except Wadala factory) was then sold to Godrej Hershey Ltd., on March 31, 2006 The Company’s name was changed to Godrej Industries Limited on April 2, 2001.

The Company is engaged in the businesses of manufacture and marketing of oleo-chemicals, their precursors and derivatives, bulk edible oils, estate management and investment activities.

2. Contingent Liabilities

this YearRs. Lac

Previous YearRs. Lac

a) Claims against the Company not acknowledged as debts:

i) Excise duty demands relating to disputed classification, post manufacturing expenses, assessable values, etc. which the Company has contested and is in appeal at various levels. 1,553.45 1,544.09

ii) Customs Duty demands relating to lower charge, differential duty, classification, etc. 856.94 856.94

iii) Sales Tax demands relating to purchase tax on Branch Transfer/Non availability of C Forms, etc. at various levels 1,726.08 1,716.58

iv) Octroi demand relating to classification issue on import of Palm Stearine and interest thereon 1,031.64 938.05

v) Stamp duties claimed on certain properties which are under appeal by the Company 182.23 182.23

vi) Income Tax demands against which the Company has preferred appeals 1,773.60 1,707.97

vii) Industrial relations matters under appeal 146.99 595.11

viii) Others 445.18 118.76

sCheduLe 21: notes to ACCounts

this YearRs. Lac


b) Guarantees issued by banks, excluding guarantees issued in respect of matters reported in (a) above 567.46 647.62

c) Guarantees given by the Company in respect of credit/guarantee limits sanctioned by banks to subsidiary and other companies. 1,729.00 3,086.00

d) Uncalled liability on partly paid shares/debentures 446.57 381.57

e) Additional consideration payable for acquisition of certain shares on the occurrence of certain contingent events 104.13 -

3. Capital Commitments

this YearRs. Lac


Estimated value of contracts remaining to be executed on capital account, to the extent not provided 3,009.24 356.81

4. share Capital During the year, the Company issued 2,79,06,950 equity

shares of Re. 1 each, at a premium of Rs. 214 per share, to Qualified Institutional Buyers (QIB) on a preferential basis as approved by the shareholders vide circular resolution dated September 10, 2007. The pricing was at a premium to the SEBI determined floor price of Rs. 197 per share. The share issue expenses amounting to Rs. 1213.70 lac have been adjusted against Securities Premium account. The money raised has been utilised to retire debt of Rs. 4800 lac, investment in subsidiary companies of Rs. 25000 lac and the unutilised amount is invested in short–term liquid assets.

5. Loans a) Term loans from banks are secured by first charge by

way of equitable mortgage of the immovable properties including land, building and plant & machinery at Vikhroli and Valia factories.

b) Working capital facilities sanctioned by banks are secured by hypothecation of stocks and book debts.

c) The Company had during the year raised Rs. 10000 lac (Previous year Rs. 9000 lac) against the issue of commercial paper. The amount outstanding there against as on March 31, 2008 is Rs. 2000 lac.

6. investments a) CBay Systems Limited, USA (CBay USA) had carried out

an organisational restructuring in Oct 2005, consequent to which, all businesses of CBay group were consolidated under CBay Systems Limited, India (CBay India), a wholly owned subsidiary. Under the scheme, the stockholders of CBay USA were entitled to receive one additional share of CBay India for every two stocks in CBay USA. The shares of CBay India, pending distribution to Indian shareholders, were held in trust by CBay USA. In April 2007, CBay group decided on a further organisational restructuring, wherein CBay Systems Holdings Limited (“CBay BVI”), a company

47

incorporated in the British Virgin Islands, was made the holding company of the CBay Group. As per the scheme, the Company has been allotted four additional shares in CBay BVI for every share it was entitled to in CBay India.

b) Godrej Agrovet Limited (GAVL), a subsidiary company has under a Scheme of Arrangement under Sections 391 to 394 of Companies Act, 1956, demerged/transferred its Oil Palm business and Jatropha plantation carried on in the states of Andhra Pradesh, Orissa, Mizoram and Gujarat to Godrej Oil Plantations Limited (formerly known as Godrej Aquafeed Limited) with effect from April 1, 2007, as per the order of High Court, Mumbai dated January 11, 2008. As per the terms of the scheme, the Company has been allotted 175,737 non–convertible debentures of Rs. 10 each.

GAVL has, under another Scheme of Arrangement, also demerged/transferred its Oil Palm business carried on in the states of Goa and Karnataka to Godrej Gokarna Oil Palm Limited (formerly known as Godrej Oil Palm Limited) with effect from April 1, 2007 as per the order of High Court, Mumbai dated September 28, 2007. As per the terms of the scheme, the Company has been allotted 2,584 equity shares of Rs. 10 each in Godrej Gokarna Oil Palm Limited.

c) The Company has acquired and sold the following investments during the year:

Mutual Funds - Liquid Schemes - Growth Plan

this Year Previous Year

no. of units

AmountRs. Lac

No. of Units AmountRs. Lac

Birla Cash Plus Liquid 13,04,59,315 16,178.00 8,38,75,918 9,572.00

Prudential ICICI Liquid 11,48,72,447 12,940.00 6,66,88,100 7,117.00

KMMF Liquid 97,96,004 1,500.00 4,32,90,891 6,200.00Standard Chartered Liquidity manager fund - - 200,052 2,100.00

LIC MF Liquid Fund 10,39,41,943 14,844.00 7,73,93,645 10,355.00

UTI Liquid fund 12,19,351 15,885.00 5,24,962 6,272.00

ING Vysya Liquid - - 2,71,67,811 3,005.00

SBI Magnum Liquid 2,71,85,735 4,738.00 4,92,01,576 5,705.00Deutsche Insta Cash Plus Fund - - 1,55,39,028 1,724.00

JMMF Liquid - - 1,42,78,700 1,590.00Templeton Mutual Fund 117,232 1,390.00 - -

7. Events occurring after the balance sheet date In May 2008, the Company has, subject to the approval of the

shareholders, agreed to sell its entire holding in its subsidiary company, Godrej Global Solutions Limited for a consideration of Rs. 1,963 lac. The consideration is receivable partly in cash and partly by way of 8% Unsecured Optionally Convertible Debentures (OCD) on a preferential basis. The anticipated loss on the transaction amounting to Rs. 1,588.93 lac has been provided for, during the year.

sCheduLe 21: notes to ACCounts (Contd.)

8. Sundry Debtors

this YearRs. Lac


Sundry Debtors include the following amounts due from companies under the same management: Godrej Consumer Products Ltd. 201.35 226.49 Godrej Agrovet Ltd. 21.58 21.63 Godrej Hershey Ltd. 46.44 29.01 Godrej Global Solutions Ltd. 2.51 0.61 Godrej Properties Ltd. 3.18 1.76 Godrej Saralee Ltd. 22.69 19.88 Godrej Hi care Ltd. 10.54 - Godrej SCA Hygiene Ltd. 0.43 - Wadala Commodities Limited. 0.12 - Godrej & Boyce Mfg. Co. Ltd. 2.83 -

9. Cash and bank balances

Balances with Scheduled Banks in Deposit Accounts include:- deposits held by bank as security against guarantees issued

18.50 19.34

- Unutilised money out of the issue of shares to Qualified Institutional Buyers

29000.00 -

10. Loans and Advances a) Loans and Advances include an amount of Rs. nil (Previous

Year Rs. 1.76 lac) due from a director. Maximum balance during the year Rs. 1.76 lac (Previous Year Rs. 2.37 lac).

b) Loans and Advances include Rs. 1,033 lac (Previous year Rs. 1,033 lac) advanced by the Company to certain individuals against pledge by way of deposit of equity shares of Gharda Chemicals Ltd. The Company has enforced its security and lodged the shares for transfer in its name, however, the transfer application has been rejected by Gharda Chemicals Ltd. and the Company has filed an appeal before the Company Law Board against the rejection. Interest on the aforesaid loan amounting to Rs. 315 lac was accrued upto March 31, 2000 and has been fully provided for, no interest is being accrued thereafter. The recoverability of the advance is contingent upon the transfer and/or disposal of the said shares. It is the opinion of the management that the underlying value of the said shares is substantially greater than the amount of the loan.

c) Loans and Advances include a loan of Rs. 1,100 lac to an individual secured by pledge of 38,97,454 shares of Godrej Hershey Ltd.

Maximum balance This Previous during the year year Year Rs. Lac Rs. Lac Rs. Lac

d) Loans and Advances to subsidiary companies i) Ensemble Holdings & Finance Ltd. 12.00 - - ii) Godrej Agrovet Ltd. 1600.00 - - e) Loans and Advances to associate companies Swadeshi Detergents Ltd. 35.00 35.00 35.00

48

f) Loans and Advances where there is no repayment schedule or repayment is beyond seven years: D. Kavasmanek and Others 1,033.00 1,033.00 1,033.00 (refer (b) above).

11. Disclosure of sundry creditors under current liabilities is based on the information available with the Company regarding the status of the suppliers as defined under the “Micro, Small and Medium Enterprises Development Act, 2006”. Amount overdue as on March 31, 2008 to Micro, Small and Medium Enterprises on account of principal amount together with interest, aggregate to Rs. Nil (Previous Year – Rs. Nil).

12. employee stock option plans In December 2005, the Company had instituted an Employee

Stock Option Plan (GIL ESOP) approved by the Board of Directors and the Shareholders, which provides for the allotment of 15,00,000 options convertible into 15,00,000 equity shares of Rs. 6 each to eligible employees of participating companies. In view of the sub-division of equity shares into face value of Re. 1 each, the total number of options stands automatically increased to 90,00,000 options convertible into 90,00,000 equity shares of Re. 1 each.

The scheme is administered by an independent ESOP Trust which purchases from the market shares equivalent to the number of options granted by the participating companies.

The Company decided to extend the benefits of the ESOP scheme to other levels of management as approved by the Compensation Committee. During the year, in preparation to extend the scheme to other levels of management, the participating companies provided finance to the ESOP Trust and the ESOP Trust purchased 33,71,040 additional shares during the year.

this Year this Year Previous Year

Previous Year

no. of options

wt. average exercise

price

No. of options

Wt. average exercise

priceOptions outstanding at the beginning of the year

21,00,000 65.39 (plus interest)

21,00,000 65.39 (plus interest)

Add: Options granted on 05/04/07

23,20,000 152.55 (plus interest)

- -Add: Options granted on 11/04/07

3,05,000 155.05 (plus interest)


50,000 175.80 (plus interest)


4,35,000 290.40 (plus interest)


22,59,500 285.60 (plus interest)

- -Less: Exercised - - - -

Less: Forfeited/expired 1,60,000 152.55 (plus interest)

- -

Options outstanding at the year end

73,09,500 177.1 (plus interest)

21,00,000 65.39 (plus interest)

Option exercisable at year end

- - -

The weighted average balance life of options outstanding as on March 31, 2008 is 3.98 years.

The options granted shall vest after three years from the date of grant of option, provided the employee continues to be in employment and the option is exercisable within two years after vesting.

The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognised since the market price of the underlying share at the grant date is the same/less than the exercise price of the option, the intrinsic value therefore being Nil.

The fair value of the share options has been determined using the Black-Scholes Option Pricing Model. Had the fair value method of accounting been used, the net profit and earnings per share would have been as per the pro forma amounts indicated below.

this YearRs. Lac


Net Profit (as reported) 10,880.97 7,806.08Less: Stock based compensation expense determined under fair value based method (Pro Forma) 967.00 204.00Net Profit (Pro Forma) 9,913.97 7,602.08

(Rs.) (Rs.)Basic & Diluted Earnings per share before Extraordinary Items (as reported) 3.53 2.64Basic & Diluted Earnings per share before Extraordinary Items (Pro Forma) 3.20 2.57Basic & Diluted Earnings per share after Extraordinary Items (as reported) 3.60 2.67Basic & Diluted Earnings per share after Extraordinary Items (Pro Forma) 3.27 2.60

13. incentive plans The amount carried forward in notional bank under

Performance Link Variable Remuneration scheme as on March 31, 2008, after distribution of PLVR for the year ended March 31, 2008 is Rs. 1254.59 lac (Previous Year Rs. Nil lac). The said amount is not provided in books of account as the same is held at risk and changed to EVA of future years and is payable if the future performance so warrants.

14. Leases a) The Company has entered into leave and licence

agreements in respect of its commercial and residential premises. These are not non-cancellable and range between 12 months to 36 months and are renewable by mutual consent on mutually acceptable terms. Leave and licence arrangements being similar in substance to operating leases, the particulars of the premises under leave and licence arrangement are as under:

this YearRs. Lac


Gross carrying amount of premises 1,782.60 1,784.70Accumulated depreciation 949.72 892.97Depreciation for the period 59.53 58.30


Maximum balance This Previous during the year year Year Rs. Lac Rs. Lac Rs. Lac

49

b) finance Leases: The Company has acquired vehicles under Finance

Lease. Liability for minimum lease payment is secured by hypothecation of the vehicles acquired under the lease. The minimum lease payments outstanding as on March 31, 2008, in respect of vehicles acquired under lease are as under:

period total minimum lease payments

outstanding as on March 31, 2008

Rs. Lac

un-matured interest

Rs. Lac

present value of minimum

lease paymentsRs. Lac

Within one year 85.22 24.10 77.57Later than one year and not later than five years 134.65 27.68 105.79

219.87 51.78 183.36

15. deferred tax Major components of deferred tax arising on account of timing

differences as at the year end are:

this YearRs. Lac


AssetsProvision for retirement benefits 417.00 351.00Provision for doubtful debts/advances 196.00 204.00VRS Expenses 229.00 156.00Others 357.00 82.00

1,199.00 793.00LiabilitiesDepreciation 4,818.20 4,773.00Net Deferred Tax Liability 3,619.20 3,980.00

16. hedging Contracts The Company uses forward exchange contracts to hedge

its foreign exchange exposure relating to the underlying transactions and firm commitments. The use of the foreign exchange forward contracts reduces the risk on cost to the company. The Company also uses commodity futures contracts to hedge it’s exposure to vegetable oil price risk. The Company does not use the foreign exchange forward contracts or the commodity future contracts for trading or speculation purposes.

i. Derivative instruments outstanding:

a) Commodity futures contracts

this Year Previous Yeardetails purchase sale Purchase Sale

Futures contracts outstanding 10 - - -Number of units under above contracts in mt. 2,600 - - -


b) Forward Exchange contracts


Total number of contracts outstanding 27 16 34 16Foreign currency value US Dollar (million)

Euro (million)14.69

-6.702.06

19.33-

2.004.12

ii. Un-hedged foreign currency exposures


Uncovered Foreign exchange exposure as at the year end

US Dollar (million) 33.67 7.49 15.09 5.54

17. turnover

this YearRs. Lac


Turnover includes:i) Processing charges 1,291.24 1,124.99ii) Export Incentives 1,101.93 345.20iii) Licence fees and

service charges2,807.00 2,308.97

5,200.17 3,779.16

18. exceptional items

this YearRs. Lac


i) Profit on sale of long-term investments 6,672.90 4,382.56

ii) Provision for diminution in investment (1,588.93) 300.00

iii) Bad debt recovered - 650.00

19. Profit & Loss Account a) The Company has adopted Accounting Standard (AS-11)

(Revised 2003) as issued by the Ministry of Corporate Affairs vide Notification dated December 7, 2006. Consequently, the effects of changes in foreign exchange rates on foreign currency loans relating to Fixed assets acquired from a country outside India amounting to Rs. 0.81 Lac have been charged off to profit and loss account as against the earlier practice of adjusting against the carrying cost of the Fixed assets.

b) The exchange difference included in the Profit and Loss Account is a gain of Rs. 173.36 lac (Previous Year loss of Rs. 114.50 lac). The exchange difference in respect of forward exchange contracts to be recognised in subsequent accounting periods is Rs. 16.57 lac (Previous Year Rs. 27.02 lac).

c) Research and Development Expenditure of revenue nature charged to the Profit & Loss Account amounts to Rs. 172.75 lac (Previous Year Rs. 139.38 lac).

50

20. earnings per share: this Year Previous Year a. Calculation of weighted average number of equity shares Number of shares at the beginning of the year Nos. 291,851,652 291,851,652 Number of equity shares outstanding at the end of the year Nos. 319,758,602 291,851,652 Weighted average number of equity shares outstanding during the year Nos. 301,992,702 291,851,652

b. Net profit after tax excluding extraordinary items Rs. lac 10,649.36 7,711.34

c. Net profit after tax available for equity shareholders Rs. lac 10,880.97 7,806.09 (including extraordinary items)

d. Basic and diluted earnings per share of Re. 1 each Rupees 3.53 2.64 excluding extraordinary items

e. Basic and diluted earnings per share of Re. 1 each Rupees 3.60 2.67 including extraordinary items

Note: There is no impact on basic as well as diluted earnings per share on account of the ESOP implemented during the year, as the scheme does not envisage any fresh issue of share capital.


21. segment information Information about primary business segments Rs. lac

Chemicals Veg oils Estate Finance & Investments Others Total

this Year Previous Year this Year Previous Year this Year Previous Year this Year Previous Year this Year Previous Year this Year Previous Year

Revenue External Sales 69238.46 57187.42 650.93 4990.94 2946.11 2561.87 9802.34 12145.53 1243.90 1405.46 83881.74 78291.22

Inter segment sale – – – – – – – – – – – –

total income 69238.46 57187.42 650.93 4990.94 2946.11 2561.87 9802.34 12145.53 1243.90 1405.46 83881.74 78291.22

Results segment result before interest and tax 8223.61 642.81 (515.83) (417.08) 1845.94 1756.72 8213.41 12145.53 289.91 477.76 18057.04 14605.74

Unallocated expenses (3841.73) (2818.85)

Interest Expense (net) (3443.76) (3830.78)

Profit before tax 10771.56 7956.11

Taxes (122.20) (244.77)

Profit after taxes and before extraordinary items 10649.36 7711.34

Add: Extraordinary Items (Net of taxes) 231.61 94.75

Net Profit 10880.97 7806.09

Segment Assets 61352.33 54217.96 788.70 730.00 2775.29 1173.00 116870.93 56258.00 2750.59 3189.00 184537.84 115567.96

Unallocated Assets - -

Total Assets 184537.84 115567.96

Segment Liabilities 24895.06 18882.75 426.28 339.00 1244.08 947.00 267.90 – – 174.00 26833.32 20342.75

Unallocated Liabilities 51862.47 54164.13

Total Liabilities 78695.79 74506.88

Total Cost incurred during the year to acquire segment assets 2338.93 3681.76 32.61 8.07 13.96 12.72 – – – - 2385.50 3702.55

Segment depreciation 2254.79 2123.73 52.82 53.68 75.61 84.02 – - 163.78 164.93 2547.00 2426.36

51


Information about Secondary Business Segments Revenue by Geographical markets India 53655.03 55994.08

Outside India 30226.71 22297.14

total 83881.74 78291.22

Carrying Amount of Segment Assets

India 184537.84 115567.96

Outside India – –

total 184537.84 115567.96

Chemicals Veg oils Estate Finance & Investments Others Total

this Year Previous Year this Year Previous Year this Year Previous Year this Year Previous Year this Year Previous Year this Year Previous Year

notes:

1. The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products, the different risks and returns, the organisational structure and the internal reporting system.

2. Chemicals segment includes Oleo Chemicals such as Fatty Alcohols, Fatty Acids, Alfa Olefin Sulphonates and Refined Glycerin. Veg oils segment includes refined vegetable oils and vanaspati, fruit and vegetable puree, pulp juices and fruit beverages. Estate segment comprises the business of giving premises on leave and license basis. Finance & Investments segment comprises of investment in subsidiaries, associate companies & other investments.

3. The geographical segments are as follows;

– Sales in India represent sales to customers located in India

– Sales outside India represent sales to customers located outside India.

52

22. Related party disclosures a) names of related parties and description of

relationship parties where control exists Godrej & Boyce Mfg. Co. Ltd., the holding company

Subsidiary companies Godrej Agrovet Ltd.

Goldmohur Foods & Feeds Ltd.

Aadhar Retailing Ltd.

Godrej Oil Plantations Ltd.

Golden Feeds Products Ltd.

Cauvery Palm Oil Ltd.

Godrej Gokarna Oil Palm Ltd.

Godrej Properties Ltd.

Girikandra Holiday Homes & Resorts Ltd.

Godrej Developers P. Ltd.

Godrej Real Estate P. Ltd.

Godrej Reality P. Ltd.

Godrej Sea View Properties P. Ltd.

Godrej Waterside Properties P. Ltd.

Happy Highrises Ltd.

Godrej Hicare Ltd.

Godrej International Ltd.

Godrej Global Solutions Ltd.

Godrej Global Solutions Inc.

Godrej Global Solutions (Cyprus) Ltd.

Ensemble Holdings & Finance Ltd.

Fellow Subsidiaries Wadala Commodities Ltd. (Formerly Godrej

Commodities Ltd.)

Godrej (Malaysia) Sdn Bhd

Godrej (Singapore) Pte Ltd.

Godrej Infotech Ltd.

Mercury Mfg. Co. Ltd.

J. T. Dragon Pte Ltd.

Godrej (Vietnam) Co. Ltd.

other related parties with whom the Company had transactions during the year Associate/joint Venture Companies Godrej Sara Lee Ltd.

Godrej Hershey Ltd.

Nutrine Confectionary Co. Ltd.

Key Management personnel Mr. A.B. Godrej Chairman & Managing Director

Mr. N.B. Godrej Managing Director

Ms. T.A. Dubash Executive Director

& President (Marketing)

Mr. Mathew Eipe Executive Director

& President (Chemicals)

Mr. V. Banaji Executive Director & President

(Group Corporate Affairs)

Mr. M.P. Pusalkar Executive Director & President

Mr. C.K. Vaidya Executive Director & President

(Business Excellence)

Relatives Key Management personnel Ms. P.A. Godrej Wife of Mr. A.B. Godrej

Ms. N.A. Godrej Daughter of Mr. A.B. Godrej

Mr. P.A. Godrej Son of Mr. A.B. Godrej

Ms. R.N. Godrej Wife of Mr. N.B. Godrej

enterprises over which key management personnel exercise significant influence Godrej Consumer Products Ltd.

Godrej SCA Hygiene Ltd.

Godrej Investments Pvt. Ltd.

Bahar Agrochem & Feeds Pvt. Ltd.

Godrej Holdings P. Ltd.

Swadeshi Detergents Ltd.

Vora Soap Ltd.

Godrej Upstream Ltd.

Lawkim Ltd.


53

nature of transaction holding Company

Subsidiary Companies

fellow Subsidiaries

Associate/ joint Venture

Companies

Key Management

personnel

Relative of Key

Management personnel

enterprises over which Key

Mangement personnel exercise

significant influence total

Sale of Goods - 5.03 - 45.23 - - 841.69 891.95 Previous Year - 3.16 - 19.07 - - 982.10 1,004.33 Sale of Fixed Assets - 6.22 - 20.73 - - - 26.95 Previous Year - - - - - 1,091.00 21.64 1,112.64 Purchase of goods & equipment 139.96 1.81 675.62 209.34 - - 712.78 1,739.51 Previous Year 112.76 - 914.14 198.46 - - 719.88 1,945.24 Purchase of flats 63.37 168.70 - - - - - 232.07 Previous Year - - - - - - - - Processing charges received - - - 209.68 - - 40.03 249.71 Previous Year - - - 193.68 - - - 193.68 Commission received - 5.00 2.50 87.47 - - 31.59 126.56 Previous Year - 7.90 2.50 73.22 - - 15.98 99.60 Recovery of establishment & other Expenses 5.02 370.31 0.45 488.42 - - 1,237.72 2,101.92 Previous Year 5.88 274.50 0.47 354.24 - - 936.66 1,571.75 Rent, establishment & other exps paid 228.47 60.90 19.17 14.23 0.40 82.31 101.31 506.79 Previous Year 197.04 12.32 16.39 1.88 - 13.72 87.26 328.61 Interest received - 30.56 - - - - 3.50 34.06 Previous Year - 20.45 - - - - 3.91 24.36 Interest paid - - 4.60 - - - 207.66 212.26 Previous Year - - - - - - - Dividend income - 94.35 48.15 383.03 - - 867.60 1,393.13 Previous Year - 3,592.11 33.74 1,174.64 - - 980.60 5,781.09 Dividend paid 1,872.02 - - - 54.89 585.42 - 2,512.33 Previous Year 1,560.02 - - - 135.61 869.84 - 2,565.47 Remuneration - - - - 662.67 43.19 - 705.86 Previous Year - - - - 320.65 25.64 - 346.29 Purchase of investments - 25,305.04 - 5,160.00 - - 299.90 30,764.94 Previous Year - 3,128.63 - 10,142.25 - - - 13,270.88 Sale of investments - 1,019.83 - - - - - 1,019.83 Previous Year - - - - - - - - Intercorporate deposits - accepted - - 100.00 - - - 2,000.00 2,100.00 Previous Year - - - - - - 1,000.00 1,000.00 Intercorporate deposits repaid during the year - - - - - - 3,000.00 3,000.00 Previous Year - - - - - - - - Intercorporate deposits - advanced - 1,612.00 - - - - - 1,612.00 Previous Year - 3,955.00 - - - - - 3,955.00 Intercorporate deposits repayment received during the year - 1,612.00 - - - - - 1,612.00 Previous Year - 3,955.60 - - - - - 3,955.60 Capital reduction under Sections 101 to 105 - - - - - - - - Previous Year - 2,042.34 - - - - - 2,042.34 Directors Fees - - - - 1.65 - - 1.65 Previous Year - - - - - - - - Balance Outstanding as on March 31, 2008Receivables 2.83 37.81 0.13 69.14 - - 211.42 321.33 Previous Year 75.73 24.49 617.89 48.89 - - 226.58 993.58 Payables 5.44 13.56 3.26 49.99 - - 89.03 161.28 Previous Year 38.80 2.48 - 3.04 - - 70.97 115.29 Guarantees Outstanding - 500.00 1,000.00 - - - 161.00 1,661.00 Previous Year - 668.00 1,000.00 1,350.00 - - - 3,018.00

sCheduLe 21 : notes to ACCounts (Contd.)

b) Transactions with Related Parties Rs. lac

54

nature of transaction this Year Previous Year Rs. lac Rs. lac

Interest paid - Godrej Investments Ltd. 207.66 - Inter Corporate Deposits - Accepted - Goderj Investments Ltd. 2000.00 1000.00 - Wadala Commodities Ltd. 100.00 - Inter Corporate Deposits - Repaid - Goderj Investments Ltd. 3000.00 - Inter Corporate Deposits - Advanced - Godrej Agrovet Ltd. 1600.00 3950.00 - Ensemble Holdings & Finance Ltd. 12.00 5.00 Inter Corporate Deposits - Repayment Received - Godrej Agrovet Ltd. 1600.00 3950.00 - Ensemble Holdings & Finance Ltd. 12.00 5.00 Dividend income - Godrej Consumer Products Ltd. 867.60 980.60 - Godrej Saralee Ltd. 383.03 1174.64 - Ensemble Holdings & Finance Ltd. 94.35 - - Wadala Commodities Ltd. 48.15 - - Godrej Properties Ltd. - 2712.16 - Godrej Agrovet Ltd. - 727.99 Dividend paid - Godrej & Boyce Mfg. Co. Ltd. 1,872.02 1560.02 Remuneration to Key Management Personnel - Mr. N.B. Godrej 182.06 85.66 - Mr. V.F. Banaji 130.85 69.55 - Mr. Mathew Eipe 106.26 64.00 - Ms. T.A. Dubash 105.33 54.20 - Mr. M.P. Pusalkar 87.34 47.24 - Mr. C.K. Vaidya 50.83 - Remuneration to Relatives of Key Management Personnel - Ms. Nisaba A. Godrej 43.19 19.92 - Mr. Pirojsha Godrej - 5.73 Sale of Investments - Godrej International Ltd. 1019.83 - Purchase of Investments - Godrej Properties Ltd. 15000.00 - - Godrej Agrovet Ltd. 10000.80 3000.00 - Godrej Hershey Ltd. 5160.00 9240.08 - Ensemble Holdings & Finance Ltd. 302.25 - - Godrej Investments Ltd. 299.00 - - Godrej Global Solutions Ltd. 1.99 - - Lawkim Ltd. 0.90 - - Godrej Upstream Ltd. - 902.25 Capital Reduction under Sections 101 to 105 - Godrej Global Solutions Ltd. - 2042.34


c) The Significant Related Party transactions are as under

nature of transaction this Year Previous Year Rs. lac Rs. lac

Sale of goods - Godrej Consumer Products Ltd. 841.63 981.49 - Godrej Saralee Ltd. 45.17 - Sale of fixed assets - Godrej Hershey Ltd. 20.73 - - Godrej Agrovet Ltd. 6.22 - - Ms. R.N. Godrej - 1091.00 - Godrej Consumer Products Ltd. - 21.64 Purchase of goods & equipment - Godrej Consumer Products Ltd. 712.78 719.88 - Wadala Commodities Ltd 670.47 909.67 - Godrej Hershey Ltd. 203.78 217.04 - Godrej & Boyce Mfg. Co. Ltd. 139.96 - - Godrej Saralee Ltd. 5.56 - - Godrej Infotech Ltd. 5.15 - Purchase of flats - Godrej Properties Ltd. 168.70 - - Godrej & Boyce Mfg. Co. Ltd. 63.37 - Processing Charges received - Godrej Hershey Ltd. 209.68 193.68 - Godrej Consumer Products Ltd. 40.03 - Commission received - Godrej Hershey Ltd. 87.47 47.26 - Godrej Upstream Ltd. 16.39 25.96 - Godrej Consumer Products Ltd. 13.59 15.98 - Godrej Global Solutions Ltd. 5.00 - Recovery of Establishment & other expenses - Godrej Consumer Products Ltd. 1228.70 936.66 - Godrej Saralee Ltd. 292.73 211.65 - Godrej Agrovet Ltd. 259.63 191.08 - Godrej Hershey Ltd. 195.69 142.59 - Godrej Hicare Ltd. 46.96 - - Godrej Global Solutions Ltd. 33.78 - - Godrej Properties Ltd. 28.35 - - Godrej SCA Hygiene Ltd. 9.03 - - Godrej & Boyce Mfg. Co. Ltd. 5.02 - Rent, Establishment & other exps paid - Godrej & Boyce Mfg. Co. Ltd. 228.47 197.04 - Godrej Consumer Products Ltd. 101.31 87.14 - Ms. R.N. Godrej 82.31 13.72 - Godrej Properties Ltd. 25.00 - - Godrej Global Solutions Ltd. 14.04 - - Godrej Agrovet Ltd. 13.50 - - Godrej Saralee Ltd. 12.44 - - Wadala Commodities Ltd 10.11 - - Godrej Infotech Ltd. 9.06 - - Godrej Hicare Ltd. 8.35 - Interest received - Godrej Agrovet Ltd. 30.55 20.29 - Swadeshi Detergents Ltd. 3.50 3.91

55

this Year Previous Year Rs. lac Rs. lac Rs. lac

23. Computation of Profits under Section 349 of the Companies Act, 1956

Profit for the year after tax as per Profit & Loss Account 10,880.97 7,806.09 Add: Depreciation as per accounts 2,547.00 2,426.36 Managerial Remuneration 662.75 320.64 Profit/(loss) on sale of assets under Section 349 - - 222.09 Provision for doubtful debts/advances and depletion in value of investments 1,569.58 5.78 Provision for Tax (including tax on extraordinary items) 626.57 222.70

5,405.90 3,197.57

16,286.87 11,003.66 Less: Depreciation under Section 350 of the Companies Act, 1956 2,520.38 2,401.80 Profit/(loss) on sale of assets as per books 46.46 595.31 Profit on sale of investments 6,672.90 4,382.56 Profit on sale of M.D. division 310.28 - Provision for diminution in investment written back - - 300.00

9,550.02 7,679.67

Net Profit for the purpose of Directors’ Remuneration 6,736.85 3,323.99 Managerial remuneration to Managing and Executive Directors @ 10% of the net profits 673.69 332.40

Managerial remuneration paid/payable 662.75 320.64

24. Managerial Remuneration Salaries and allowances 546.04 281.44 Contribution to Provident Fund 25.99 20.19 Estimated Monetary value of perquisites 90.72 19.01

totAL 662.75 320.64 25. Auditors’ Remuneration Audit fees (including Rs. 1.18 lac to branch auditors, previous year Rs.1.04 lac) 30.57 26.30 Tax audit fees 4.80 4.00 Certification and other services 33.55 7.02 Tax Consultation and representation 10.40 11.93 Consultation and management services 4.00 4.40 Out of pocket expenses 0.77 1.15

totAL 84.09 54.80


56

Item Unit this Year Previous Year

Quantity Value Quantity Value

Rs. lac Rs. lac

Fatty Acids MT 49964 23966.77 58448 20428.32

Glycerin MT 10115 5017.34 11965 4066.74

Alpha Olefin and its precursors MT 58753 32707.10 51433 26197.14

Synthetic Detergent MT 18649 4960.13 37322 4721.11

Oils & Vanaspati MT - - 17835 4607.60

Medical Diagnostic Products 780.05 833.23

Others 6099.15 4623.46

totAL 73530.54 65477.60

26. turnover (net)

Item Unit MARCh 31, 2008 MARCH 31, 2007 MARCH 31, 2006

Quantity Value Rs. lac



Fatty Acids MT 1437 667.62 1581 676.69 2278 817.98

Glycerin MT 282 197.69 397 128.59 638 236.59

Alpha Olefin and its precursors MT 3627 2171.95 4383 2233.20 3649 1928.84

Synthetic Detergent MT 1185 408.36 696 201.03 2061 371.78

Oils & Vanaspati MT - - 3 2.04 – –

Medical Diagnostic Products - 150.55 119.18

Others 2.04 1.05 -

totAL 3447.66 3393.15 3474.37

27. inventories - finished Goods

Unit this Year Previous YearQuantity Value

Rs. lac Quantity Value

Rs. lac Oils & Fats MT 159531 28853.80 161362 32253.73 Chemicals and Catalysts MT 17945 6213.78 19289 4910.44 Packing Materials, etc. 3626.84 3303.66 totAL 38694.42 40467.83 Raw Materials consumption includes consumption for production of captively consumed items.

29. purchase of Goods

Unit this Year Previous YearQuantity Value

Rs. lac Quantity Value

Rs. lacFatty Acids MT 30 11.48 1435 612.00 Oils & Vanaspati MT - - 17825 4584.32 Medical Diagnostic Products 540.16 512.12 Others 220.66 95.78 totAL 772.30 5804.22

28. Raw Materials Consumed


57

Item Unit LicensedCapacity

Installed Capacity

Actual Production

thisYear

Previous Year

thisYear

Previous Year

SCHEDULEDFatty Acids MT } 73300 55800 49820 59700 Glycerin MT } 8280 8280 9433 11041 Alpha Olefin and its precursors MT } 65000 65000 57997 58094 Soaps MT } - 26381 - 7645 Refined Oils & Vanaspati MT } 38700 38700 10123 10110 Synthetic Detergents MT } 29250 11250 19138 38638 Hydrogen (Captive }consumption) NM 3 } 20424000 1224000 388299 687033 Oxygen (By-Product) NM 3 } 612000 612000 194150 343517

30. Licensed, installed and utilised Capacity

notes1. The Licensed Capacities are not applicable in view of the exemption from licensing granted under Notification SO 477 (E) dated

July 25, 1991, issued under the Industries (Development & Regulation Act,1951).2. Production of Fatty Acid includes 821 MT produced under process contracts for third parties.3. Installed capacity excludes the installed capacity for manufacture of intermediates which are intended to be used for internal

consumption to manufacture A.O. and its precursors and derivatives.4. Production of Synthetic Detergent includes 16389 MT produced under process contracts for third parties.5. Production of Refined Oil and Vanaspati is under process contract.


31. Value of imports on Cif basis (includes only imports directly made) Raw materials 32,388.28 25,313.10 Goods for resale 637.67 390.48 Stores & spares 305.86 509.60 Capital goods 9.09 432.86

totAL 33,340.90 26,646.04

32. expenditure in foreign Currency Interest 194.49 587.04 Travelling expenditure 168.82 104.07 Other expenditure 744.14 740.73 Expenses for Foreign Branch: - Salaries and allowance 125.69 126.98 - Rent 23.11 15.98 - Others 21.30 18.42

totAL 1,277.55 1,593.22


33 Value of Consumption of Raw Materials & spares % % Raw Materials Imported (including duty content) 27,941.59 72 19,366.53 48 Indigenous 10,752.83 28 21,101.30 52 38,694.42 100 40,467.83 100 Spares Imported (including duty content) 176.22 19 620.27 68 Indigenous 751.95 81 310.60 32

928.17 100 930.87 100

34 dividends Remitted in foreign Currency (subject to deduction of tax, as applicable) Final Dividend for Financial Year 2006-07 to 4 shareholders on 1188 shares 0.06 0.05

totAL 0.06 0.05

35 earnings in foreign exchange Export of goods (F.O.B.: this year Rs. 28407.82 lac 30,197.45 22,223.63 previous year Rs.17881.90 lac) Dividend - 71.82 Others 29.26 1.69

totAL 30,226.71 22,297.14


58

36. Employee Benefits The amounts recognised in the Company’s financial statements as at the year end are as under:

this Year this Year Rs. lac Rs. lac Gratuity pension

a) Change in Present Value of Obligation Present value of the obligation at the beginning of the year 1,986.25 89.14 Current Service Cost 151.11 - Interest Cost 158.90 - Contribution by Plan Participants - - Actuarial (Gain)/Loss on Obligation (56.44) (10.09) Foreign Currency exchange rate changes - - Benefits Paid (24.86) (5.77) Past Service Cost - - Amalgamations - - Curtailments - - Settlements - - Present value of the obligation at the end of the year 2,214.97 73.28

b) Change in Plan Assets Fair value of Plan Assets at the beginning of the year 1,302.53 - Expected return on Plan Assets 104.20 - Actuarial (Gain)/Loss on Plan Assets 52.08 - Foreign Currency exchange rate changes - - Contributions by the Employer - - Contributions by Plan Participants - - Benefits Paid - - Amalgamations - - Settlements - - Fair value of Plan Assets at the end of the year 1,458.81 -

c) Amounts Recognised in the balance sheet Present value of Obligation at the end of the year 2,214.97 - Unrecognised Past Service Cost - - Fair value of Plan Assets at the end of the year 1,458.81 - Net Obligation at the end of the year 756.16 -

d) Amounts Recognised in the statement of Profit and Loss Current Service Cost 151.11 - Interest cost on Obligation 158.90 - Expected return on Plan Assets (104.20) - Expected return on Reimbursement Right recognised as an asset - - Net Actuarial (Gain)/Loss recognised in the year (41.54) - Past Service Cost - - Effect of Curtailment or Settlement - - Net Cost Included in Personnel Expenses 164.27 -

e) Actual return on plan Assets 62.39 - f) Actuarial Assumptions i) Discount Rate 8% p.A. 8% p.A. ii) Expected Rate of Return on Plan Assets 8% p.A. 8% p.A. iii) Salary Escalation Rate 5% p.A. 5% p.A. iv) Employee Turnover - - v) Mortality L.i.C 1994-96 L.i.C 1994-96 uLtiMAte uLtiMAte The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and

other relevant factors, such as supply and demand in the employment market. * This being the first year of implementation of AS-15 Employee Benefits (Revised 2005) previous year figures have not been

furnished.


59

37. interest in joint Ventures The Company’s interests, as a venturer, in jointly controlled entities are:

name Countries of principal percentage of percentage of incorporation activities ownership ownership interest as at interest as at 31st March, 2008 31st March, 2007

Godrej SaraLee Ltd. India Household Insectisides 20.00% 20.00%

Godrej Hershey Ltd India Beverages & Foods 43.00% 48.00%

The Company’s interests in Joint Venture are reported as Long Term Investments (Schedule “6”) and stated at cost less provision, if any, for permanent diminution in value of such investments. The Company’s share of each of the assets, liabilities, income and expenses, etc. related to its interests in these joint ventures are:

this Year Previous Year

Rs. lac Rs. lac

i. Assets 1. fixed Assets 5,346.42 4,233.86 2. investments 16,198.00 10,444.32 3. Current Assets, Loans and Advances a) Inventories 3,138.05 2,644.75 b) Sundry Debtors 1,734.46 1,516.68 c) Cash and Bank Balances 1,582.10 2,260.41 d) Other Current Assets - 5.16 e) Loans and Advances 2,816.73 1,280.09

ii. LiAbiLities 1. Loan funds a) Secured Loans 6,556.13 8,274.24 b) Unsecured Loans 142.27 410.41 2. Current Liabilities and Provisions a) Liabilities 5,549.35 4,730.65 b) Provisions 381.43 327.67 3. deferred tax- net 96.41 85.86

iii. inCoMe 1. Turnover (net of excise) 27,420.58 23,924.55 2. Other Income 194.32 314.69

iV. expenses 1. Material consumed and purchase of goods 16,326.74 14,736.03 2. Expenses 9,297.17 7,425.11 3. Inventory change (500.17) 52.51 4. Depreciation 359.12 401.00 5. Interest 751.82 776.17 6. Provision for Taxation 342.12 200.39

V. otheR MAtteRs 1. Contingent Liabilities 1,062.73 328.13 2. Capital Commitments 241.52 132.46


60

38. Figures for the previous year have been regrouped wherever necessary.39. Additional information as Required under part iV of schedule Vi to the Companies Act, 1956

1. Registration details Registration No. : 97781 State Code : 11 Balance Sheet Date : 31/3/2008

2. Capital raised during the year (Amount in Rs. lac) Public Issue : Nil Rights Issue : Nil Bonus Issue : Nil Private Placement : 59,999.94

3. Position of mobilisation and deployment of funds (Amount in Rs. lac) Total Liabilities : 153,028.25 Total Assets : 153,028.25 sources of funds Paid-up Capital : 3,197.59 Reserves & Surplus : 102,644.47 Secured Loans : 24,948.07 Unsecured Loans : 18,618.92 Defered Tax Liability : 3,619.20 Application of funds Net Fixed Assets : 27,142.37 Investments : 77,548.43 Net Current Assets : 47,269.59 Misc. Expenditure : 1,067.89 Accumulated Losses : -

4. performance of Company (Amount in Rs. lac) Turnover (Total Income) : 83,881.74 Total Expenditure : 73,110.18 Profit/(Loss) before tax (Including extra ordinary income) : 11,081.84 Profit/(Loss) after tax : 10,880.97 Earning per Share in Rs. (on an annualised basis) : 3.53 Dividend rate % : 125.00% Generic names of three principal products/services of Company Item Code No. : 38.23 * Product description : Fatty Acids/Fatty Alcohols Item Code No. : 15.16 * Product description : Vanaspati/Refined Oils (*represents Heading No. of the Harmonized Commodity Description and Coding System)


61

RepoRt of the AuditoRs to the boARd of diRectoRs of the godRej industRies limited on consolidAted finAnciAl stAtements

1. Wehaveaudited theattachedConsolidatedBalanceSheetofGodrejIndustriesLimitedanditssubsidiariesasatMarch31, 2008, and also the Consolidated Profit and Loss Account and Consolidated Cash Flow Statement for the year thenended, both annexed thereto. These consolidated financial statementsaretheresponsibilityofGodrejIndustriesLimited’smanagement.Ourresponsibilityistoexpressanopiniononthese financial statements based on our audit.

2. We conducted our audit in accordance with the auditingstandardsgenerallyacceptedinIndia.Thosestandardsrequirethat we plan and perform the audit to obtain reasonableassurance whether the financial statements are free ofmaterial misstatements. An audit includes, examining on a testbasis,evidencesupportingtheamountsanddisclosuresin the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statementpresentation.Webelievethatourauditprovidesareasonablebasisforouropinion.

3. (a) We did not audit the financial statements of certain subsidiaries and joint ventures, whose financial statements reflect the group’s share of total assets of Rs. 30,479 lakhs as at March 31, 2008, and the group’s share oftotal revenues of Rs. 72,221 lakhs and net cash inflows amounting to Rs. 179 lakhs for the year ended on that date as considered in the consolidated financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us andouropinion,insofarasitrelatestotheamountsincludedinrespectofthesubsidiariesandjointventuresisbasedsolelyonthereportoftheotherauditors.

(b) As stated in Note 2 of Schedule 21, the financial statements of a Jointly controlled entity, whose financial statements reflect the Group’s share of total assets of Rs. 171 lakhs as atMarch31,2008andtheGroup’sshareoftotalrevenueof Rs. 1,548 lakhs and net cash inflows amounting to Rs. 281lakhsfortheyearendedonthatdatearenotauditedasofthedateofthisreportandhavebeenincludedinthe consolidated financial statements on the basis of unauditedmanagementaccounts.

(c) As stated in Note 2 of Schedule 21, the financial statements of certain associates whose financial statements reflect the Group’s share of associates’ profit upto March 31, 2008 of Rs. 548 lakhs and the share of profit for the year of Rs. 138 lakhs has been included in the consolidated financial statements on the basis of unaudited managementaccounts.

4. We report that the consolidated financial statements have been preparedbythemanagementofGodrejIndustriesLimitedinaccordance with the requirements of Accounting Standard (AS) 21 - Consolidated Financial Statements, Accounting Standard (AS) 23 – Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard (AS) 27 – Financial Reporting of Interests in Joint Ventures issued by the Institute of Chartered Accountants of India.

5. Reference is invited to note 9 (b) of Schedule 21- Notes to Accounts, regarding the recoverability of advances given to certain individuals amounting to Rs. 1033 lac being contingent upon the transfer and/or disposal of the shares pledged against the loan. The said shares were lodged for transfer which application was rejected and the Company has preferred an appeal to the Company Law Board. The investee company had in the mean while moved the High Court but the matter was referred back to the Company Law Board, where the matter is awaiting hearing. The impact thereof on the profit for the year and the reserves as at March 31, 2008 could not be ascertained.

6. Based on our audit and on consideration of the reports ofother auditors on separate financial statements and the management’s certification of the unaudited financialstatements, in our opinion, the consolidated financialstatements,subjecttotheobservationsinparagraphs3and5 above, give a true and fair view in conformity with the accountingprinciplesgenerallyacceptedinIndia:

a) in case of the Consolidated Balance Sheet, of theconsolidated state of affairs of the Godrej IndustriesLimitedGroupasMarch31,2008;

b) in case of the Consolidated Profit and Loss Account, of the consolidatedresultsofoperationsfortheyearendedonthatdate;and

c) in case of the Consolidated Cash Flow Statement, ofthe consolidated cash flows for the year ended on that date.

Forandonbehalfof

Kalyaniwalla & mistryChartered Accountants

V. R. mehtaPartner

Mumbai, May 28, 2008 Membership No: 32083

62

bAlAnce sheet As At mARch 31, 2008

souRces of funds

1. Shareholders’Funds (a) Share capital 1 3,197.59 2,918.52 (b) Reserves & surplus 2 133,444.44 44,353.00

136,642.03 47,271.522. MinorityInterest 9,942.37 3,139.533. LoanFunds (a) Secured loans 3 51,170.50 50,710.32 (b) Unsecured loans 4 53,798.32 40,652.56

104,968.82 91,362.884. Deferred Tax Liability 5,197.79 5,117.64

TOTAL 256,751.01 146,891.57

ApplicAtion of funds5. Fixed Assets 5 (a) Gross block 91,262.05 87,729.75 (b) Less: Depreciation/Impairment 41,543.07 39,023.23 (c) Net block 49,718.98 48,706.52 (d) Capital work-in-progress 1,838.97 2,604.42

51,557.96 51,310.936. Goodwill(onconsolidation) 53,957.18 27,631.097. Investments 6 21,774.40 19,372.518. Current Assets, Loans and Advances (a) Inventories 7 64,360.74 46,362.41 (b) Sundry debtors 8 67,096.45 45,640.04 (c) Cash and bank balances 9 36,491.60 8,881.57 (d) Other Current Assets 149.19 9.56 (e) Loans and advances 10 65,987.63 27,307.58

234,085.61 128,201.16 Less:CurrentLiabilitiesandProvisions (a) Liabilities 11 97,410.44 74,849.87 (b) Provisions 12 8,347.06 6,436.45

105,757.50 81,286.32

Net Current Assets 128,328.09 46,914.83

9. Miscellaneous Expenditure 13 1,133.37 1,662.20 (Totheextentnotwrittenofforadjusted)

TOTAL 256,751.01 146,891.57

Significant Accounting Policies 20

Notes to Accounts 21

this Year PreviousYear Schedule Rs. lac Rs. lac Rs. lac

TheSchedulesreferredtoaboveformanintegralpartoftheBalanceSheet.

As per our Report attached Signatures to Balance Sheet and Schedules 1 to 13, 20 and 21

Forandonbehalfof A.b. godrej n.b. godrej m. eipe m.p. pusalkarKalyaniwalla & mistry Chairman Managing Director Executive Director Executive DirectorChartered Accountants & President (Chemicals) & President (Corporate Projects) V. R. mehta s.K. bhatt V. srinivasanPartner Executive Vice President Executive Vice PresidentMumbai,May28,2008 (Corporate Services) & Company Secretary (Finance & Estate)

63

pRofit And loss Account foR the YeAR ended mARch 31, 2008 this Year PreviousYear Schedule Rs. lac Rs. lac Rs. lacincomeTurnover(gross) 302,498.91 243,864.79 Less: Excise duty 7,727.05 5,967.69 Turnover(net) 294,771.86 237,897.10 Other Income 14 13,492.30 8,672.62 308,264.16 246,569.71 eXpendituReMaterials consumed 15 198,125.68 170,203.48 Cost of sales - property development 15 8,678.57 7,583.96 Expenses 16 69,468.31 54,980.24 Inventory change 17 (1,264.28) (4,581.11)Interest and financial charges (net) 18 7,116.75 6,500.66 Depreciation 5,141.13 4,280.34 (including share in jointly controlled entities Rs. 359.12 lac,Previous Year Rs. 137.11 lac)(Net of transfer from Revaluation ReserveRs. 148.93 lac, Previous Year Rs. 160.45 lac) 287,266.16 238,967.56 Profit Before Tax & Extraordinary Items 20,998.00 7,602.15 Profit from continuing operations before tax 24,064.09 8,118.16 Incometax - current tax (5,287.63) (867.16) - fringe benefit tax (129.27) - - deferred tax (162.68) (230.64) - adjustment of previous years (net) (1,337.64) 65.09 Profit from continuing operations after tax 17,146.87 7,085.44 Loss from discontinuing operations before tax (3,066.09) (516.01)Incometax - current tax (8.84) - - fringe benefit tax (2.68) - - deferred tax - 26.00 Lossfromdiscontinuingoperationsaftertax (3,077.61) (490.01)Profit for the year after taxation and before Extraordinary Items 14,069.26 6,267.87 Extraordinary Items (Net of Tax) 19 3,824.74 - 17,894.00 6,267.87 Share of profit in Associates 115.34 24.56 Profit before Minority Interest 18,009.34 6,292.43 ShareofMinorityInterest (1,226.83) (404.37)Profit after Minority Interest 16,782.51 5,888.06 Surplusbroughtforward 26,391.27 18,220.27 Profit Available for Appropriation 43,173.78 24,108.33 AppRopRiAtions:Dividend on Equity Shares - Interim – 873.69 - Final 3,996.97 2,918.52 Tax on distributed profits 1,233.71 1,154.78 Transfer to General Reserve 2,026.80 1,507.89 Surpluscarriedforward 35,916.32 17,653.45 TOTAL 43,173.78 24,108.33 Basic & Diluted Earnings per share before extra ordinary items 4.66 2.02Basic & Diluted Earnings per share after extra ordinary items 5.56 2.02Significant Accounting Policies 20Notes to Accounts 21The Schedules referred to above form an integral part of the Profit and Loss Account.As per our Report attached Signatures to Profit & Loss Account and Schedules 14 to 21Forandonbehalfof A.b. godrej n.b. godrej m. eipe m.p. pusalkarKalyaniwalla & mistry Chairman Managing Director Executive Director Executive DirectorChartered Accountants & President (Chemicals) & President (Corporate Projects) V. R. mehta s.K. bhatt V. srinivasanPartner Executive Vice President Executive Vice PresidentMumbai,May28,2008 (Corporate Services) & Company Secretary (Finance & Estate)

64

consolidAted cAsh floW stAtement foR the YeAR ended mARch 31, 2008 this Year PreviousYear Rs. lac Rs. lacA. Cash Flow from operating activities: Profit before tax 20,998.00 7,602.15 Adjustments for: Depreciation 5,141.13 4,190.59 Foreignexchange 88.65 10.16 Profit on sale of investments (9,275.18) (4,509.98) Profit on sale of fixed assets (62.07) (570.15) Dividend income (916.42) (1,018.61) Interestincome (4,639.11) (1,415.34) Interestexpense 9,248.52 6,668.46 Voluntary retirement compensation paid (65.07) (38.65) Deferred expenditure written off 628.16 596.46 Provision in diminution on value of investments/(written back) 1,588.78 (300.00) Provisionfordoubtfuldebtsandsundrybalanceswrittenoff(net) 78.27 (418.93) Others (0.90) 42.72 Operating profit before working capital changes 22,812.76 10,838.87 Adjustments for: Inventories (20,428.15) (18,987.18) Tradeandotherreceivables (60,204.98) (26,674.99) Tradepayables 29,063.16 24,663.54 Cashgeneratedfromoperations (28,757.21) (10,159.76) Direct taxes paid (6,912.92) (2,579.66) Direct taxes refund received 220.07 451.03 Net Cash used in operating activities (35,450.06) (12,288.39)B. Cash Flow from investing activities : Purchase of fixed assets (10,424.15) (9,640.47) Proceeds from sale of fixed assets 381.95 2,916.07 Proceedsfromtransferofbusiness 2,654.04 - Purchaseofinvestments (73,119.99) (71,094.70) Proceedsfromsaleofinvestments 83,209.20 61,956.37 Intercorporate deposits/Loans (net) (5,615.92) (2,366.49) Interestreceived 4,137.77 1,109.78 Dividend received 916.42 1,018.61 Net Cash from/(used in) investing activities 2,139.32 (16,100.83) Proceeds from sale of Medical Diagnostics Division 600.00 - Net Cash from/(used in) investing activities after extraordinary item 2,739.32 (16,100.83)C. Cash Flow from financing activities: Proceedsfromissueofsharecapital 58,786.24 1,322.99 Proceedsfromissueofdebentures 1,421.00 171.50 Proceedsfromborrowings 86,965.66 55,163.74 Repayments of borrowings (81,377.54) (37,965.15) Bankoverdrafts(net) 7,092.21 20,606.42 Interestpaid (8,973.93) (6,736.77) Dividend paid (2,931.91) (3,390.20) Tax on distributed profits (565.76) (1,201.99) Net Cash from financing activities 60,415.97 27,970.54

Net increase in cash and cash equivalents 27,705.23 (418.68)

Cashandcashequivalents(OpeningBalance) 8,881.57 9,106.59 Add: cash and cash equivalents taken over pursuant to Business Acquisition 80.07 159.46 Less: cash and cash equivalents on Demerger/Transfer/Dilution (175.27) 34.20 Adjusted Cash and cash equivalents 8,786.37 9,300.25 Cashandcashequivalents(ClosingBalance) 36,491.60 8,881.57 (including share in jointly controlled entities - Rs. 1876.39 lac)Notes:1. CashandCashequivalents. Cashonhandandbalanceswithbanks 36,492.49 8,881.68 Effect of exchange rate changes (0.89) (0.11) Cashandcashequivalents 36,491.60 8,881.572. The above cash flow statement includes share of cash flows from jointly controlled entities as under: a Net cash from operating activities 1,045.13 b Net cash used in investing activities (2,598.54) c Net cash used in financing activities 1,247.65As per our Report attached Signatures to Cash Flow StatementForandonbehalfof A.b. godrej n.b. godrej m. eipe m.p. pusalkarKalyaniwalla & mistry Chairman Managing Director Executive Director Executive DirectorChartered Accountants & President (Chemicals) & President (Corporate Projects)

V. R. mehta s.K. bhatt V. srinivasanPartner Executive Vice President Executive Vice PresidentMumbai,May28,2008 (Corporate Services) & Company Secretary (Finance & Estate)

65

schedules foRming pARt of the Accounts foR the YeAR ended mARch 31, 2008 this Year Previous Year Rs. lac Rs. lac

schedule 1 : shARe cApitAlAuthorised:800,000,000 Equity shares of Re.1 each 8,000.00 8,000.0010,00,00,000 Unclassified Shares of Rs.10 each 10,000.00 10,000.00

18,000.00 18,000.00Issued, Subscribed and Paid Up:319,758,602 (Previous year 291,851,652) Equity shares of Re.1 each fully paid 3,197.59 2,918.52

3,197.59 2,918.52Oftheabove,(i) 187,202,388 (Previous Year 187,202,388) shares are held by Godrej & Boyce Mfg. Co. Limited, the holding company(ii) 155,547,816 (Previous Year 155,547,816) shares are alloted for consideration other than cash pursuant to schemes of amalgamation/arrangement(iii) 95,705,718 (Previous Year 95,705,718) shares are alloted as fully paid bonus shares by way of capitalisation of Securities premium account.

schedule 2 : ReseRVes And suRplus As at Additions Deductions Adjustments on As at 1.4.2007 acquisition/dilution 31.03.2008

Securities Premium Account 2,657.02 87,879.26 8,731.57 81,804.71 1,099.18 1,557.84 2,657.02

Capital Investment Subsidy Reserve 80.39 - 28.12 52.27 80.39 - - 80.39

Revaluation Reserve 1,825.71 - 154.50 1,671.21 2,291.39 - 465.68 1,825.71

Special Reserve u/s. 451C of RBI Act, 1934 132.31 34.67 - 166.98 117.39 14.92 - 132.31 Capital Redemption Reserve 3,301.34 - - 3,301.34 3,301.34 - - 3,301.34 General Reserve 9,936.18 2,026.80 1,325.47 (321.37) 10,316.14 9,097.05 1,507.89 668.76 9,936.18 Foreign Exchange Fluctuation Reserve 28.79 22.36 227.94 (176.79) 35.58 - 6.79 28.79

Profit and Loss Account 26,391.27 35,916.32 26,391.27 392.27 36,308.59 18,220.27 17,653.45 18,220.27 8,737.81 26,391.26

total - this Year 44,353.00 125,879.40 36,858.87 70.90 133,444.44 Total - Previous Year 34,242.59 20,734.10 19,361.50 8,737.81 44,353.00

schedule 3 : secuRed loAnsTerm loans from financial institutions 2,156.00 735.00Termloansfrombanks 32,480.53 30,662.20Bankoverdrafts 9,977.84 11,038.88Shareinjointlycontrolledentities 6,556.13 8,274.24

51,170.50 50,710.32

schedule 4 : unsecuRed loAnsFixeddeposits 190.98 168.98Intercorporateborrowings 150.00 2,443.07CommercialPaper 2,000.00 1,000.00Shorttermloansfrombanks 49,590.48 35,532.13Otherloansfrombanks 1,257.85 470.04Salestaxdefermentfacility 466.74 627.93Shareinjointlycontrolledentities 142.27 410.41

53,798.32 40,652.56

66

schedule 5 : fiXed Assets Rs. Lac

ASSETS GROSS BLOCK DEPRECIATION/IMPAIRMENT NET BLOCK As on

01.04.2007 Additions Deductions/

Adjustments As on

31.03.2008 Upto

01.04.2007 Deductions/ Adjustments

FortheYear

upto 31.03.2008

As on 31.03.2008

As on 31.03.2007

Tangible Assets Land - Freehold 1,601.16 191.88 730.45 1,062.59 2.92 - 1.21 4.13 1,058.46 1,598.24 - Leasehold 241.26 241.26 30.81 - 1.54 32.35 208.91 210.45 Buildings 11,295.03 1,731.39 2,004.96 11,021.46 3,204.01 391.95 566.01 3,378.07 7,643.39 8,091.02 Plant & Machinery 53,219.07 4,341.29 1,919.43 55,640.93 25,864.09 997.32 3,015.58 27,882.35 27,758.58 27,354.98 Research Centre 150.39 13.74 - 164.13 69.35 - 5.62 74.97 89.16 81.04 Furniture & Fixtures 1,866.62 531.11 708.97 1,688.76 896.86 144.29 143.40 895.97 792.79 969.76 Office & Other Equipments 1,873.08 1,076.25 920.37 2,028.96 717.41 176.77 332.95 873.59 1,155.37 1,155.67 Vehicles 1,363.67 373.42 259.82 1,477.27 565.26 110.16 142.15 597.25 880.02 798.41 Trees Development Cost 454.69 184.82 522.48 117.03 269.88 280.23 30.33 19.98 97.05 184.81 Intangible Assets Goodwill 1,603.55 - - 1,603.55 355.59 (28.69) 207.12 591.40 1,012.15 1,247.96 Trademarks 2,920.89 4,251.18 3,533.71 3,638.36 1,300.84 21.06 270.09 1,549.87 2,088.49 1,620.05 Technical Knowhow Fees 200.00 - - 200.00 199.98 - - 199.98 0.02 0.02Software 971.85 21.46 993.31 700.60 - 64.41 765.01 228.30 271.25 Assets AcQuiRed undeR finAnce leAse Plant & Machinery 1,082.69 759.62 1.83 1,840.48 137.87 (9.27) 79.65 226.79 1,613.69 944.82 Vehicles 249.03 88.47 26.33 311.17 161.84 65.36 58.65 155.13 156.04 87.19 Shareinjointlycontrolledentities

8,636.77 1,898.05 1,302.03 9,232.79 4,545.92 665.14 415.45 4,296.23 4,936.56 4,090.85

totAl - this Year 87,729.75 15,462.68 11,930.38 91,262.05 39,023.23 2,814.32 5,334.16 41,543.07 49,718.98 48,706.52 - previous Year 77,659.89 14,864.16 4,794.19 87,729.86 32,997.46 (1,585.09) 4,440.79 39,023.35 Capital Work in-Progress - - - - - 1,838.97 2,604.42 totAl 51,557.96 51,310.93

1. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on June 30, 1992 on the basis of a Valuation Report submitted byprofessionalvaluers.

2. Depreciation for the year includes Rs.148.93 lac (Previous Year Rs.160.45 lac) being depreciation on revalued component of the fixed assets. 3. Accumulated depreciation includes impairment loss of Rs. 707.90 lac on plant & machinery in an earlier year. 4. Capital work-in-progress is net of impairment loss of Rs. 204.10 lac provided on an infructuous asset under construction.

schedules foRming pARt of the consolidAted Accounts (contd.)

67

Investee Company/Institutions

Facevalue(Rs.)

Number

Notes

AmountQty.ason01.04.07

Acquired duringthe

year

Sold/adjusted duringthe

year

Qty. as on 31.03.08

As on 31.03.08

As on 31.3.07

long teRm inVestments: At costA. tRAde inVestments

Equity Shares: Fully PaidBharuch Eco-Aqua Infrastructure Ltd. 10 440,000 - - 440,000 44.00 44.00 PreferenceShares:PartlypaidGodrejCommoditiesLtd.(FormerlyGodrejFoodsLimited) 10 5,000,000 - - 5,000,000 (b) 450.00 450.00 (8% Redeemable Cumulative Preference Shares, 2012)

B. OTHER INVESTMENTS: Fully paid unless stated otherwise Equity Shares Quoted:GodrejConsumerProductsLtd. 1 26,936,108 - 3,800,000 23,136,108 (d) 9,216.28 9,216.28 Others - - - - - 0.92 unquoted:Associate CompaniesGodrejUpstreamLtd. 10 9,000,000 - 9,000,000 - - 241.06 Swadeshi Detergents Ltd. 10 209,370 - - 209,370 - - Creamline Diary Products Ltd. 10 2,390,911 281,082 - 2,671,993 1,378.50 1,162.26Creamline Nutrients Ltd. 10 351,352 - 351,352 - - 120.95 PolychemHygineLaboratoriesPrivateLimited 10 455,000 - - 455,000 199.30 174.91 Aadhar Retailing Limited 10 - 3,000,000 - 3,000,000 144.64 - Personalitree Academy Ltd. 10 389,269 - - 389,269 - - CompassBPOLtd.(FormerlyCompassConnectionsLtd.) £0.25 13,692 - - 13,692 64.17 159.17 Other CompaniesAvestha Gengraine Technologies Pvt. Ltd. 10 175,744 34,500 - 210,244 (c) 980.43 883.30Cbay Infotech Ventures Pvt. Ltd. 10 - 32,258 32,258 100.00 - GhardaChemicalsLtd. 100 114 - - 114 (a) 11.57 11.57 TahirPropertiesLtd.(Partlypaid) 100 25 - - 25 0.01 0.01KaROX Technologies Ltd. 10 250,000 - - 250,000 (b) 100.50 100.50 HyCaTechnologiesPvt.Ltd.(partlypaidup) 10 12,222 12,222 60.00 - Common Stock/Membership Units:unquoted:CBay Systems Ltd., USA $0.01 4,091,073 - - 4,091,073 (e) 595.83 4,497.62 Boston Analytics LLC $1.00 781,250 286,504 - 1,067,754 688.09 650.48 Verseon LLC - Class A Units $1.90 1,315,789 - 1,315,789 (f) 1,142.34 1,142.34 Newmarket Limited 100 - - 100 883.36 883.36QuotedCBaySystems Holdings Ltd., UK $0.10 - 8,182,148 - 8,182,148 (e) 3,809.30 - Preference Shares:unquoted:Tahir Properties Ltd. (Class - A) (partly paid) 100 25 - - 25 (b) 0.02 0.02Optionally convertible Loan Notes:unquoted:CompassBPOLtd.(FormerlyCompassConnectionsLtd.) $1,000 97 - - 97 83.19 83.19 Verseon Corporation (Formerly Verseon LLC) $1,000,000 - - - - (f) 397.60 - (13%convertiblepromissorynote)shares in co-operative society: fully paidunquoted:The Saraswat Co-op Bank Ltd. 10 1,000 - - 1,000 0.10 0.10InvestmentinthecapitalofPartnershipFirm:View Group LP - - - - - 0.01 0.01

cuRRent inVestmentsUnits of Mutual Fund:unquotedLIC Mutual Fund - Growth plan 108,019,581 103,941,943 4,077,638 600.00 2.73 UTI Liquid cash plan - Inst. - - 1,264,034 1,219,351 44,683 595.00 - Birla Cash plus - Inst Premium - - 135,376,611 130,459,315 4,917,296 635.00 -

22,179.24 19,824.79 Less:ProvisionfordiminutioninvalueofInvestments (404.84) (452.28)

21,774.40 19,372.51 Aggregate book value of InvestmentsQuoted 13,025.58 9,216.28 unquoted 8,748.82 10,156.22

21,774.40 19,372.51 Market Value of Quoted Investments 33,365.50 34,021.65

notes: (a) Thesaidshareshavebeenrefusedforregistrationbytheinvesteecompany. (b) UncalledLiabilityonpartlypaidshares - Tahir Properties Ltd. - Equity - Rs. 80 per share. - Godrej Commodities Limited - Preference - Re. 1 per share. - Tahir Properties Ltd. - Preference - Rs. 30 per share. - HyCa Technologies Pvt. Ltd. - Equity - agreegating to Rs. 65 lac on 12,222 shares. (c ) Additional consideration payable for the acquisition of 9,833 shares on the occurence of certain contingent events on or before August 31, 2009 - Rs. 104.13 lac. (d) The compulsory convertible preference shares were converted into 71,50,223 equity shares on May 7, 2007. (e) Additional shares received pursuant to reorganisation of the group. (f) Optionally Convertible Notes are convertible as under: - Compass BPO Limited: Between April 1, 2008 and April 1, 2010 @ £ 53.75 per share. - Verseon Corporation - After December 1, 2008 until the due date but not later than Sepember 15, 2012.

schedules foRming pARt of the consolidAted Accounts (contd.)schedule 6 : inVestments

68

this YearPrevious Year Rs. lac Rs. lacschedule 7: inVentoRies(atlowerofcostandnetrealisablevalue)Storesandspares 2,670.39 1,533.89Raw materials 17,340.21 15,567.90Construction work-in-progress 28,479.19 11,705.95Work-in-progress 6,777.01 6,893.70FinishedGoods 5,955.89 7,444.42Shareinjointlycontrolledentities 3,138.05 3,216.55

64,360.74 46,362.41

schedule 8: sundRY debtoRs(Unsecured)Debts outstanding over six monthsConsideredgood 3,181.93 3,809.74Considereddoubtful 605.64 559.73

3,787.57 4,369.47OtherdebtsConsideredgood 62,180.06 40,313.62

65,967.63 44,683.09Less:Provisionfordoubtfuldebts (605.64) (559.73)

65,361.99 44,123.36Shareinjointlycontrolledentities 1,734.46 1,516.68

67,096.45 45,640.04

schedule 9: cAsh And bAnK bAlAncesCashandchequesonhand 570.72 525.58Balanceswithscheduledbanks- on current accounts 3,880.84 3,391.39- on deposit accounts 30,457.95 2,704.19Shareinjointlycontrolledentities 1,582.10 2,260.41

36,491.60 8,881.57

schedule 10: loAns And AdVAnces(Unsecuredandconsideredgoodunlessotherwisestated)Loans and Advances (refer note 12a) 6,881.04 8,572.37Loan to GIL ESOP Trust 10,162.76 2,972.00Advances recoverable in cash or in kindorforvaluetobereceived(netofprovisionfordoubtfuladvances) 35,761.27 10,075.63Intercorporatedeposits- Associate companies 1,142.00 35.00- Others – 100.00Deposits and balances with- Customs & excise authorities 1,182.30 1,637.30- Others 7,719.55 1,736.23Advance payment of taxes 321.98 893.79(Net of provision for tax)Shareinjointlycontrolledentities 2,816.73 1,285.25

65,987.63 27,307.58


this YearPrevious Year Rs. lac Rs. lac

schedule 11: cuRRent liAbilitiesAcceptances 3,896.38 4,755.26

Sundrycreditors 37,231.03 32,875.55

Advances from customers 36,971.51 22,997.39

Sundrydeposits 2,039.31 2,256.61

Investor Education & Protection Fund

- Unclaimed Dividend 34.37 47.74

- Unpaid Matured Deposits 25.70 15.69

Otherliabilities 11,248.11 6,985.54

Interestaccruedbutnotdueonloans 414.68 185.45

Shareinjointlycontrolledentities 5,549.35 4,730.65

97,410.44 74,849.87

schedule 12: pRoVisionsProposeddividend 3,996.99 2,918.52

Provision for tax on distributed profits 1,118.17 496.00

Provision for retirement benefits 2,850.47 2,694.26

Shareinjointlycontrolledentities 381.43 327.67

8,347.06 6,436.45

schedule 13: miscellAneous eXpendituRe(Totheextentnotwrittenoff

oradjusted)

Deferred revenue expenditure

- Voluntary retirement compensation 1,068.44 1,602.68


1,133.37 1,662.20

schedule 14: otheR incomeInterest:

- Debentures 31.97 32.98

- Income tax refund 72.67 114.78

- Deposits 1,839.96 367.17

Dividend 916.42 1,018.62

Profit on sale of fixed assets (Net) 62.07 570.15

Profit on sale of long term investments

(refer note 17) 9,275.18 4,509.98

Baddebtsrecovered 0.14 650.00

Miscellaneousincome 1,099.57 1,094.24


13,492.30 8,672.62

69


this YearPrevious Year Rs. lac Rs. lacschedule 15mAteRiAl consumedRaw materials consumed :Stocksatthecommencementoftheyear 15,567.90 12,829.30Less:Stockadjustmentforsubsidiaries diluted – (1,085.55)Add: Purchases (net) 163,772.73 139,523.53 179,340.62 151,267.28Less:Stocksasatthecloseoftheyear 17,340.21 15,567.90Raw Materials consumed during the year 162,000.41 135,699.38Purchaseofgoodsforresale 19,798.53 19,775.61Shareinjointlycontrolledentities 16,326.74 14,728.49 198,125.68 170,203.48Cost of Sales-Property DevelopmentStocksatthecommencementoftheyear 11,705.89 2,316.09Add: Construction Expenditure duringtheyear 25,451.87 16,973.76 37,157.76 19,289.85Less:Stocksasatthecloseoftheyear 28,479.19 11,705.89 8,678.57 7,583.96schedule 16: eXpensesSalaries,wagesandallowances 15,154.63 11,586.17Contributiontoprovidentfundandotherfunds 821.53 704.40Employee welfare expenses 972.89 912.27Storesandsparesconsumed 1,669.83 1,596.79Powerandfuel 8,269.77 7,050.16Processing charges 5,222.57 4,196.49Rent 1,614.28 782.75Rates and taxes 665.79 639.38Repairs and maintenence- Machinery 923.48 850.61- Buildings 461.90 654.99- Other assets 544.81 440.79Insurance 261.44 265.29Freight 5,459.31 4,298.57Commission 3,509.55 2,993.68Discount 281.70 497.50Advertisement and publicity 1,261.00 766.83Salespromotion 2.38 586.61Sellinganddistributionexpenses 673.87 1,471.37Baddebtswrittenoff 535.31 358.65Provisionfordoubtfuldebtsandadvances 100.58 186.12Provisionfordepletioninthevalueoflongterminvestments 1,588.93 -Loss on Sale of Fixed Assets 70.48 -Excise duty on inventory change 1,065.51 (61.38)Foreign Exchange loss 175.37 274.60Miscellaneousexpenses 8,864.23 6,706.90Shareinjointlycontrolledentities 9,297.17 7,220.70 69,468.31 54,980.24schedule 17: inVentoRY chAngeStocksatthecommencementoftheyear Finishedgoods 7,229.25 7,134.83 Work-in-progress 6,893.70 3,607.67 Shareinjointlycontrolledentities 1,498.11 638.35 15,621.06 11,380.85

Less:Stockadjustmentforsubsidiariesdeleted 2,117.70 340.90Less:Stocksatthecloseoftheyear: Finishedgoods 5,955.89 7,229.25 Work-in-progress 6,777.02 6,893.70 Shareinjointlycontrolledentities 2,034.73 1,498.11 14,767.64 15,621.06(Increase)/Decrease in Inventory (1,264.28) (4,581.11)

schedule 18: inteRest And finAnciAl chARges (net)Interestpaid- on debentures and fixed loans 4,847.07 2,841.09- on bank overdrafts 2,193.77 1,643.42- on Inter corporate deposits 228.53 210.24- other interest 1,276.52 1,323.44 8,545.89 6,018.19Less:Interestreceived- on loans & deposits 101.42 25.17- on Customer balances, etc. 1,954.71 0.01- projects and landlords 418.51 736.43- others 76.33 138.80 2,550.97 900.41Net Interest 5,994.92 5,117.78Other financial charges 702.63 650.27Foreign exchange (gain)/loss (332.62) (20.89)Shareinjointlycontrolledentities 751.82 753.49 7,116.75 6,500.66

schedule 19: eXtRA oRdinARY itemsProfit on Sale of business 3,935.51 –Less:Taxationonabove- Current Tax (102.41) –- Deferred Tax (8.36) – 3,824.74 –

this YearPrevious Year Rs. lac Rs. lac

schedule 20: significAnt Accouting policies:

a) Accounting Convention

The financial statements are prepared under the historical cost convention, on the accrual basis of accounting, inaccordancewiththegenerallyacceptedaccountingprinciplesin India and the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

b) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires themanagementtomakeestimatesandassumptionsthataffectthereportedbalancesofassetsandliabilitiesasofthedateof the financial statements and reported amounts of income andexpensesduringtheperiod.Managementbelievesthatthe estimates used in the preparation of financial statements are prudent and reasonable. Actual results could differ from theestimates.

70


c) Fixed Assets

Fixed Assets are stated at cost or as revalued as the case may be,lessaccumulateddepreciation.Costincludesallexpensesrelated to acquisition and installation of the concernedassets.

Fixed Assets acquired under finance lease are capitalised at the loweroftheirfacevalueandpresentvalueoftheminimumleasepayments.

d) Intangible Assets

The group has evaluated the useful lives of the IntangibleAssets – Goodwill, Trademarks, Non compete fees, Acquisition value of contracts, etc. based on the nature of business,growth rates and estimated discounted cash flows. Theintangibleassetsareamortisedovertheestimatedusefullivesasfollows.

particulars Estimated useful livesGoodwill 8 – 10 yearsTrademarks 8 – 15 yearsNon compete fees 7 – 8 yearsTrees Development cost 15 yearsComputersoftware 6years

e) Impairment of Assets

The Group reviews the carrying values of tangible andintangibleassetsforanypossibleimpairmentateachBalanceSheet date. An impairment loss is recognised when the carrying amountofanassetexceeditsrecoverableamount.Impairmentloss,ifany,isrecognisedintheyearinwhichimpairmenttakesplace.

f) Borrowing Costs

Borrowing costs that are directly attributable to theacquisition/construction of the underlying fixed assets arecapitalisedasapartof the respectiveasset,upto thedate of acquisition/completion of construction. Borrowing costs incurred for the development of long-term projects are included under construction WIP/Management Project Receivables at weighted average of the borrowing cost/rates asperagreementrespectively.

g) Investments

Investments are classified into long-term and current investments. Long term investments are carried at cost.Provisionfordiminution,ifany,inthevalueofeachlongterminvestmentismadetorecogniseadecline,otherthanofatemporarynature.Thefairvalueofalongterminvestmentisascertainedwithreferencetoitsmarketvalue,theinvestee’sassets and results and the expected cash flows from the investment.

Current investments are carried at lower of cost and fairvalue.

h) inventories

Inventories are valued at lower of cost and net realisablevalue. Cost is computed on weighted average basis and isnet of modvat. Finished goods and work-in-progress include

costofconversionandothercosts incurred inbringingtheinventoriestotheirpresentlocationandcondition.Provisionismadeforthecostofobsolescenceandotheranticipatedlosses,whereverconsiderednecessary.

Construction Work-in-progress is valued at cost. Construction work-in-progress includes cost of land, premium for development rights, construction costs, allocated interest and expensesincidentaltotheprojectsundertakenbytheGroup.

i) Provisions and Contingent Liabilities

Provisionsarerecognisedintheaccountsinrespectofpresentprobable obligations, the amount of which can be reliablyestimated.

Contingent Liabilities are disclosed in respect of possibleobligations thatarise frompasteventsbut theirexistenceis confirmed by the occurrence or non occurrence of one or moreuncertainfutureeventsnotwhollywithinthecontroloftheGroup.

j) Foreign Exchange Transactions

i. Transactionsinforeigncurrencyarerecordedatexchangeratesprevailingonthedayofthetransaction.Monetaryassets and liabilities denominated in foreign currency,remainingunsettledattheperiodendaretranslatedatclosingrates.Thedifferenceintranslationofmonetaryassets and liabilities and realised gains and losses onforeign currency transactions are recognised in the Profit and Loss Account.

ii. Forward exchange contracts other than those enteredinto to hedge foreign currency risk of firm commitments orhighlyprobable forecast transactionsare translatedatperiodendexchangerates.Premiumordiscountonsuchforwardexchangecontractsisamortisedasincomeorexpenseoverthelifeofthecontract.

iii. Realised gain or losses on cancellation of forward exchange contracts are recognised in the Profit and Loss Account of theperiodinwhichtheyarecancelled.

iv. Exchange differences in respect of other foreign currency derivative contracts, which have been entered intotohedge foreigncurrency, risksaremarked tomarketand losses, if any, are recognised in the Profit and Loss Account.

k) Revenue Recognition

Sales are recognised where goods are supplied and arerecordednetofreturns,tradediscounts,rebates,salestaxesandexciseduty.

Incomefromprocessingoperationsisrecognisedoncompletionof production/dispatch of the goods, as per the terms of contract.

Export incentives receivable under the Duty Entitlement Pass Book Scheme and the Duty Drawback Scheme are accounted onaccrualbasis.

Revenue from construction activity is recognised on “Percentage of Completion Method” of accounting. As per this method,revenueisrecognisedinproportiontotheactualcost

71

incurredfortheworkcompletedasagainstthetotalestimatedcostofprojectunderexecutionwiththeCompany.

Determination of revenues under the percentage of completion methodnecessarilyinvolvesmakingestimates,someofwhichareofatechnicalnature,concerning,whererelevant,thepercentagesofcompletion,coststocompletion,theexpectedrevenues from the project/activity and the foreseeable losses tocompletion.Suchestimateshavebeenrelieduponbytheauditors.

Dividend income is recognised when the right to receive the sameisestablished.

Interestincomeisrecognisedonatimeproportionbasis.

Incomeonassetsgivenonoperatingleaseisrecognisedonastraightlinebasisovertheleaseterm.

l) Research and Development Expenditure

Revenue expenditure on Research and Development is charged to the Profit and Loss Account of the year in which it isincurred.CapitalexpenditureincurredduringtheyearonResearch & Development is included under additions to fixed assets.

m) Depreciation

Leasehold land isamortisedequallyover the leaseperiod.Leasehold improvements are amortised over five years.

Depreciation is provided on the straight line method at the rates specified in Schedule XIV to the Companies Act, 1956, except insomesubsidiarycompanies,wheredepreciationhasbeenprovidedonthewrittendownvaluemethod.Theimpactofthedifferingmethodofdepreciationhasnotbeenascertainedbutisnotlikelytobematerial.Computerhardwareisdepreciatedover its estimated useful life of 4 years.

Depreciation on assets acquired during the year is provided forthefullaccountingyearandnodepreciationischargedonthe assets sold/discarded during the year, except in case of majoradditionsanddeductionsexceedingrupeesonecroreinwhichcase,proportionatedepreciationisprovided.

Depreciation on the revalued component is provided on the straight line method based on the balance useful life ofthe assets as certified by the valuers. Such depreciation is withdrawn from Revaluation Reserve and credited to Profit and Loss Account.

n) Employee Benefits

The Company has adopted the revised Accounting Standard AS 15 - Employee Benefits with effect from April 1, 2007. Inaccordancewith the transitionalprovisionscontained inthe said standard, the transitional obligation towards Sickleave and Long service benefit is withdrawn from General Reserve.

Liability is provided for the retirement benefits of provident fund, gratuity, leave encashment and pension benefit in respectofalleligibleemployeesoftheGroup.

i. Defined Contribution Plan

Employee benefits in the form of Provident Fund and family

pension are considered as defined contribution plan and the contributions are charged to the Profit and Loss of the yearwhenthecontributionstotherespectivefundsaredue.

ii. Defined Benefit Plan

Retirement benefits in the form of Gratuity and Pension plan for eligible employees considered as definedbenefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit creditmethod,asatthedateoftheBalanceSheet.

iii. Other long-term benefits

Long-term compensated absences and Long Service awards areprovidedforonthebasisofanactuarialvaluation,usingtheprojectedunitcreditmethod,asatthedateoftheBalanceSheet.

Actuarial gain/losses, if any, are immediately recognised in the Profit and Loss Account.

o) incentive plans

The Group has a scheme of Performance Linked Variable Remuneration (PLVR) which rewards its employees based on Economic Value Addition (EVA). The PLVR amount is related to actual improvement made in EVA over the previous year when compared with expected improvements. The EVA awards flow throughanotionalbankwherebyonlytheprescribedportionofthebankisdistributedeachyearandthebalanceiscarriedforward.Theamountdistributedoutofthenotionalbankischarged to Profit and Loss Account. The notional bank is held at risk and charged to EVA of future years and is payable at thattime,iffutureperformancesowarrants.

p) Hedging

TheGroupusescommodity futurescontracts tohedge theexposuretooilpricerisks.Gainsorlossesonsettledcontractsis recognised in the Profit and Loss Account and is included in thecostofmaterialsconsumed.FuturescontractsnotsettledasontheBalanceSheetdatearemarkedtomarketandlosses,if any, are recognised in the Profit and Loss Account, whereas, the unrealised profit is ignored.

q) Deferred Revenue Expenditure The compensation payable under the Voluntary Retirement

Schemes, the benefit of which is expected to accrue in future is deferred over its payback period. The compensation isgenerally amortised over three to five years depending on the paybackperiod,howeverthepaybackperiodisrestrictedtoMarch31,2010.

r) Taxes on Income Taxexpensecomprisesbothcurrentanddeferredtax.Current

taxistheamountoftaxpayableontheassessableincomefortheyeardeterminedinaccordancewiththeprovisionsoftheIncome Tax Act, 1961.

Deferred tax is recognised on timing differences, being the differences between the taxable income and accountingincomethatoriginateinoneperiodandarecapableofreversal


72

in one or more subsequent periods. Deferred tax assets on unabsorbedtaxlossesandtaxdepreciationarerecognisedonlywhenthereisvirtualcertaintyoftheirrealisationandonotheritems when there is reasonable certainty that sufficient future taxableincomewillbeavailableagainstwhichsuchdeferredtaxassetscanberealised.ThetaxeffectiscalculatedontheaccumulatedtimingdifferencesattheyearendandbasedonthetaxrateandlawsenactedorsubstantiallyenactedontheBalanceSheetdate.

s) Segment Reporting

The Accounting Policies adopted for segment reporting are in line with the Accounting Policies of the Company. Segment assets include all operating assets used by the businesssegments and consist principally of fixed assets, debtors and inventories.Segmentliabilitiesincludetheoperatingliabilitiesthat result from the operating activities of the business.Segment assets and liabilities that cannot be allocatedbetween the segments are shown as part of unallocatedcorporate assets and liabilities respectively. Income/Expenses relating to theenterpriseasawholeandnotallocableona reasonable basis to business segments are reflected as unallocated corporate income/expenses.

schedule 21: notes to Accounts:-

1. Principles of Consolidation: The consolidated financial statements relate to Godrej

IndustriesLimited,theholdingcompany,itsmajorityownedsubsidiaries, Joint ventures and Associates (collectively referredtoasGroup).TheconsolidationofaccountsoftheCompanywithitssubsidiarieshasbeenpreparedinaccordancewith Accounting Standard (AS) 21 ‘Consolidated Financial Statements’. The financial statements of the parent and its subsidiariesarecombinedona lineby linebasisand intragroup balances, intra group transactions and unrealised profits orlossesarefullyeliminated.

In the consolidated financial statements, ‘Goodwill’ represents theexcessofthecosttotheCompanyofitsinvestmentinthe subsidiaries and/or joint ventures over its share of equity, attherespectivedatesonwhichtheinvestmentsaremade.Alternatively, where the share of equity as on the date of investmentisinexcessofcostofinvestment,itisrecognisedas‘Capital Reserve’ in the consolidated financial statements.

Minorityinterestinthenetassetsofconsolidatedsubsidiariesconsistsoftheamountofequityattributabletotheminorityshareholdersat therespectivedatesonwhich investmentsaremadebytheCompanyinthesubsidiarycompaniesandfurthermovementsintheirshareintheequity,subsequenttothedatesofinvestmentasstatedabove.

Investments in Joint Ventures are dealt with in accordance with Accounting Standard (AS) 27 ‘Financial Reporting of Interests in Joint Ventures’. The Company’s interest in jointly controlled entities are reported using proportionate consolidation,wherebytheCompany’sshareofjointlycontrolledassetsandliabilitiesandtheshareofincomeandexpensesofthejointlycontrolledentitiesarereportedasseparatelineitems.

Investments in Associates are dealt with in accordance with Accounting Standard (AS) 23 ‘Accounting for Investments in Associates in Consolidated Financial Statements’ issued by the Institute of Chartered Accountants of India. Effect has been given to the carrying amount of investments in associatesusing the ‘Equity method’. The Company’s share of the post acquisition profits or losses is included in the carrying cost of investments.

2. The financial statements of the subsidiaries, joint ventures andassociatesusedintheconsolidationaredrawnuptothesamereportingdateasoftheCompanyi.e.yearendedMarch31, 2008, except in respect of Personalitree Academy Ltd., an associate company whose accounts for the year endedMarch 31, 2008 have not been received till date. Theinvestment not being significant and fully provided for, there is no impact on the Profit and Loss Account.

The accounts of Al Rahba International Trading Ltd. a joint venture company with Godrej Agrovet Ltd., Creamline Dairy ProductsLtd.,andPolychemHygieneLaboratoriesPvt.Ltd.,associate companies have not been audited for the yearendedMarch31,2008asofBalanceSheetdateandhavebeenconsolidated on the basis of the accounts as certified by their respectivemanagement.

3. Information on subsidiaries, joint ventures and associates: (a) The subsidiary companies considered in the consolidated

financial statements are:

S.No.

Name of the Company

CountryofIncorporation

PercentageofHolding

ThisYear

Previous Year

1 Godrej Agrovet Ltd. India 75.20% 70.30%

2 Goldmohur Foods & FeedsLtd.(100%subsidiaryofGodrej Agrovet Ltd.)

India 75.20% 70.30%

3 GoldenFeedProductsLtd.(100%subsidiaryofGodrej Agrovet Ltd.)

India 75.20% 70.30%

4 GodrejOilPlantationLimited(formerlyknownasGodrej Aquafeed Limited)(100%subsidiaryofGodrej Agrovet Ltd.)

India 60.16% 70.30%

5 CauveryPalmOilLimited(100%subsidiaryofGodrej Agrovet Ltd.)

India 38.35% –

6 Aadhar Retailing Ltd. (up to 27.03.2008)

India 75.20% 70.30%


73

S.No.

Name of the Company


PercentageofHolding

ThisYear

Previous Year

7 GodrejGokarnaOilPalmLtd.(formerlyknownasGodrejOilPalmLtd.)(up to 25.02.2008)

India 34.81% -

8 GodrejPropertiesLtd. India 81.41% 82.88%9 GirikandraHoliday

Homes & Resorts Ltd.(100%subsidiaryofGodrejPropertiesLtd.)

India 81.41% 82.88%

10 Godrej Realty Pvt. Ltd. (51% subsidiary of GodrejPropertiesLtd.)

India 41.51% 42.27%

11 GodrejWatersidePropertiesPvt.Ltd.(51% Previous year 100%subsidiaryofGodrejPropertiesLtd.)

India 41.51% 82.88%

12 Godrej Developers Pvt Ltd.(100%subsidiaryofGodrejPropertiesLtd.)

India 81.41% 82.88%

13 Godrej Real Estate PrivateLimited(100%subsidiaryofGodrejPropertiesLtd.)

India 81.41% 82.88%

14 GodrejSeaviewPrivateLimited(100%subsidiaryofGodrejPropertiesLtd.)

India 81.41% 82.88%

15 HappyHighrisesLtd.(100%subsidiaryofGodrejPropertiesLtd.)

India 81.41% 82.88%

16 GodrejHicareLtd. India 76.86% 85.91%17 Ensemble Holdings &

FinanceLtd.India 100.00% 99.95%

18 GodrejInternationalLtd., UK

UK 100.00% 100.00%

19 Godrej Global Mid-East FZE, UAE(100%subsidiaryofGodrejInternationalLtd.) (up to 30.09.2007)

UAE – 100.00%

20 GodrejGlobalSolutionsLtd.

India 100.00% 100.00%

21 GodrejGlobalSolutions(Cyprus)Ltd.(100%subsidiaryofGodrejGlobalSolutionsLtd.)

Greece 100.00% 100.00%

22 GodrejGlobalSolutionsInc.(100%subsidiaryofGodrejGlobalSolutionsLtd.)

USA 100.00% 100.00%

(b) Interests in Joint Ventures:

s. no.

Name of the Company

Country of incorporation

Percentage of ownership

interest this Year

Previous Year

i) GodrejSaraLeeLtd. India 20.00% 20.00%ii) GodrejSaraLee

BangladeshPvt.Ltd.(100%subsidiaryofGodrejSaraLeeLtd.)

Bangladesh 20.00% 20.00%

iii) GodrejSaraLeeLankaPvt.Ltd.(100%subsidiaryofGodrejSaraLeeLtd.)

SriLanka 20.00% 20.00%

iv) SaraLeeHouseholdandBodyCareIndiaPvt.Ltd.(100%subsidiaryofGodrejSaraLeeLtd.)

India 20.00% 20.00%

v) SaraLeeHouseholdandBodyCareLankaPvt.Ltd.(100%subsidiaryofGodrejSaraLeeLtd.)

SriLanka 20.00% 20.00%

vi) Al Rahba International TradingLimited(jointventurepartnerof Godrej Agrovet Ltd.)

U.A.E. 45.00% 45.00%

vii) ACI Godrej Agrovet Pvt. Ltd.(jointventurepartnerof Godrej Agrovet Ltd.)

Bangladesh 50.00% 50.00%

viii) GodrejGoldCoinAcqafeed Ltd. (jointventurepartnerof Godrej Agrovet Ltd.)

India 49.00% 49.00%

ix) GodrejGokarnaOilPalmLtd.(formerlyGodrejOilPalmLtd.)(jointventurepartnerof Godrej Agrovet Ltd.) (from26.02.2008)

India 46.29% 49.00%

x) GodrejHersheyLimited(formerlyGodrejBeverages & Foods Ltd.)

India 43.00% 48.00%

xi) Nutrine Confectionery Ltd.(100%subsidiaryofGodrejHersheyLtd.)

India 43.00% 48.00%

(c) Investments in Associates:

S.No.

Name of the Company


PercentageofHoldingThisYear

Previous Year

i) Swadeshi Detergents Ltd. India 41.08% 41.08%


74

S.No.

Name of the Company


PercentageofHoldingThisYear

Previous Year

ii) GodrejUpstreamLtd.(associateofGodrejGlobalSolutionsLtd.)

India – 40.43%

iii) Personalitree Academy Ltd.(associate of Ensemble Holdings & Finance Ltd.)

India 26.00% 26.00%

iv) Creamline Dairy ProductsLtd.(associateofGodrejAgrovet Ltd.)

India 26.00% 26.00%

v) Aadhaar Retailing Limited(associateofGodrejAgrovet Ltd. from 28.03.2008)

India 30.00% –

vi) PolychemHygieneLaboratoriesPvt.Ltd.(associateofGodrejAgrovet Ltd.)

India 26.00% 26.00%

vii) CompassConnectionsLimited

U.K. 20.71% –

4. The accounting policies of certain subsidiaries, joint ventures and associates especially regarding the methodof depreciation, amortisation of technical know how andaccounting for retirement benefits are not in consonance with the group accounting policies. No effect has been given in the consolidated financial statements on account of such differing accountingpolicies,wheretheimpactisnotexpectedtobematerial.

5. The break-up of Investment in Associates is as under: Rs. in lac

CostofAcquisition

Goodwillincluded

incostofacquisition

Shareinprofits / (loss)of

associatespost

acquisition

Provisionfor

diminutioninthe

valueofinvestments

Carryingcostof

Investments

(i) SwadeshiDetergents Ltd.

191.32191.34

91.4691.48

(136.06)(136.04)

55.2655.30

––

(ii) GodrejUpstreamLtd

–902.25

–95.27

–(661.19)

––

–241.06

(iiI) PersonalitreeAcademy Ltd.

110.28110.28

42.8442.84

(42.04)(42.04)

68.2468.24

––

(iv) CompassConnectionLtd

124.54–

80.56–

45.10–

105.47–

64.17–

(v) CreamlineDairy ProductsLtd.

1038.00950.16

398.41364.53

505.17212.44

––

1378.501162.60

(vi) CreamlineNutrients Ltd.

–87.84

–33.89

–33.11

––

–120.95

6. Contingent Liabilities this year Previous Year Rs. lac Rs. lac a) Claims against the Company not acknowledged as debts: i) Excise duty demands relating to disputed classification, post manufacturing expenses, assessablevalues,etc.whichtheCompany hascontestedandisinappealatvariouslevels. 1,909.20 1,544.09 ii) Customs Duty demands relating to less charge, differential duty, classification, etc. 856.94 856.94 iii) SalesTaxdemandrelatingtopurchase tax on Branch Transfer/Non availability of CForms,etc.atvariouslevels. 2,142.59 2,154.74 iv) Octroi demand relating to classification issueonimportofPalmStearineand interestthereon. 1,031.64 938.05 v) Stampdutiesclaimedoncertain propertieswhichareunderappeal bytheCompany 182.23 182.23 vi) IncomeTaxdemandsagainstwhichthe Companyhaspreferredappeals 1,991.11 1,777.17 vii) Industrialrelationsmattersunderappeal 146.99 595.11 viii)Others 1,097.16 886.11 b) Guaranteesissuedbybanks,excludingguarantees issuedinrespectofmattersreportedin(a)above 8,113.18 660.03 c) GuaranteesgivenbytheCompanyinrespectof credit/guarantee limits sanctioned by banks to subsidiaryandothercompanies. 1,729.00 14,121.10 d) Uncalled liability on partly paid shares/debentures 446.65 381.64 e) Additional consideration against acquisitionofshares 104.13 – e) Share in Jointly Controlled Entities 1,062.73 329.11

7. Capital Commitments this year Previous Year Rs. lac Rs. lac Estimated value of contracts remaining to be executed oncapitalaccount,totheextentnotprovided 3,383.09 435.92 Share in Jointly Controlled Entities 241.52 53.09

8. Investments a) Cbay Systems Limited, USA (Cbay USA) had carried out an

organisational restructuring in October 2005, consequent towhich,allbusinessesofCbaygroupwereconsolidatedunderCbaySystemsLimited,India(CbayIndia),awhollyownedsubsidiary.Underthescheme,thestockholdersofCbay USA were entitled to receive one additional share of Cbay India for every two stocks in Cbay USA. The shares ofCbayIndia,pendingdistributiontoIndianshareholders,were held in trust by Cbay USA. In April 2007, Cbay group decidedonafurtherorganizationalrestructuring,whereinCbay Systems Holdings Limited (“Cbay BVI”), a company incorporated in the British Virgin Islands, was made the

CostofAcquisition

Goodwillincluded

incostofacquisition

Shareinprofits / (loss)of

associatespost

acquisition

Provisionfor

diminutioninthe

valueofinvestments

Carryingcostof

Investments

(vii) PolychemHygieneLabPvt.Ltd.

162.75162.75

88.9988.99

44.7412.16

––

199.30174.91

(viiii) Aadhaar Retailing Ltd.

191.39–

––

(46.76)–

––

144.64–

Totalthisyear

1,818.28 702.26 329.15 228.97 1,786.61

Totalpreviousyear

2404.62 717.00 (581.56) 123.54 1699.52


75


holding company of the Cbay Group. As per the scheme, theCompanyhasbeenallottedfouradditionalsharesinCbay BVI for every share it was entitled to in Cbay India.

b) Godrej Agrovet Limited (GAVL), a subsidiary company has under a Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956, demerged/transferred its Oil PalmbusinessandJatrophaplantationcarriedoninthestates of Andhra Pradesh, Orissa, Mizoram, and Gujarat to Godrej Oil Plantations Limited (formerly known asGodrej Aquafeed Limited) with effect from April 1, 2007, aspertheorderofHighCourt,MumbaidatedJanuary11,2008. As per the terms of the scheme, the Company has been allotted 175,737 non–convertible debentures of Rs. 10 each.

GAVL has, under another Scheme of Arrangement, also demerged/transferred its Oil Palm business carried on in the states of Goa and Karnataka to Godrej Gokarna Oil Palm Limited (formerly known as Godrej Oil PalmLimited) with effect from April 1, 2007 as per the order of High Court, Mumbai dated September 28, 2007. As per thetermsofthescheme,theCompanyhasbeenallotted2,584 equity shares of Rs. 10 each in Godrej Gokarna Oil PalmLimited.

9. cash and bank balances a) Balanceswithscheduledbanksondepositaccountsinclude

Rs.39,384,677/- (Previous Year Rs.36,617,677/-) received from flat buyers and held in trust on their behalf in a corpusfund.

b) The auditors of a jointly controlled enterprise havereported that,Bank reconciliation statements includescredits in Bank statements not accounted Rs.96 lac, cheques deposited not cleared Rs. 72 lac and debit in bank statement not accounted by Rs. 45 lac. The Management of the Enterprise has assured that reconciliation would becompletedshortly.

10. inventories The Group has been entering into Development Agreements

with landlords. Development Manager Fees amounting to Rs. 170,243,559/- (Previous Year Rs. 170,299,063/-) accrued as per terms of the Agreement are receivable by the Group based upon progress milestones specified in the respective Agreements and have been disclosed as Development Manager FeesaccruedbutnotdueinSchedule10.

11. Deferred Tax: Major components of Deferred Tax arising on account of timing

differencesasatMarch31,2008are:

this YearRs. lac

Previous YearRs. lac

AssetsProvisionforretirementbenefits

417.00 351.00

Provisionfordoubtfuldebts/advances

279.75 327.44

VRS Expenses 229.00 156.00Others 632.23 549.26

1,557.98 1,383.70

this YearRs. lac


LiabilitiesDepreciation 6,557.93 6,312.18ShareinJointlyControlledEntities

197.84 189.16

6,755.77 6,501.34Net Deferred Tax Liability 5,197.79 5,117.64

12. loans & Advances: a) Loans and Advances include Rs. 1,033 lac (Previous Year

Rs. 1,033 lac) advanced by the Company to certain individuals against pledge by way of deposit of equityshares of Gharda Chemicals Ltd. The Company hasenforceditssecurityandlodgedthesharesfortransferinitsname,however,thetransferapplicationhasbeenrejectedbyGhardaChemicalsLtd.andtheCompanyhasfiled an appeal before the Company Law Board against therejection.InterestontheaforesaidloanamountingtoRs. 315 lac was accrued upto March 31, 2000 and has been fullyprovidedfor,nointerestisbeingaccruedthereafter.The recoverability of the advance is contingent uponthe transfer and/or disposal of the said shares. It is the opinionofthemanagementthattheunderlyingvalueofthesaidsharesissubstantiallygreaterthantheamountoftheloan.

b) Due on Management Projects include a sum of Rs. 20,872,941/- (Previous Year Rs. 20,309,477/-) on account of a project, where the matter is sub-judice witharbitrators.

13. Employee Stock Option Plans

In December 2005, the Company had instituted an Employee Stock Option Plan (GIL ESOP) approved by the Board of Directors and the Shareholders,whichprovides for theallotmentof15,00,000 options convertible into 15,00,000 equity shares of Rs. 6 each to eligible employees of participating companies. In view of the sub-division of equity shares into face value of Re. 1 each, the total number of options stands automatically increased to 90,00,000 options convertible into 90,00,000 equity shares of Re. 1 each.

The scheme is administered by an independent ESOP Trust whichpurchases fromthemarket sharesequivalent to thenumberofoptionsgrantedbytheparticipatingcompanies.

The Company decided to extend the benefits of the ESOP schemetootherlevelsofmanagementasapprovedbytheCompensation Committee. During the year, in preparation toextend the schemetoother levelsofmanagement, theparticipating companies provided finance to the ESOP Trust and the ESOP Trust purchased 33,71,040 additional shares duringtheyear.

76

Thisyear Thisyear PreviousYear

PreviousYear

No. of options

Wt.averageexercise

price

No. of options

Wt.averageexercise

priceOptionsoutstandingatthebeginningoftheyear

21,00,000 65.39 (plus interest)

21,00,000 65.39 (plus

interest)Add: Options grantedon05/04/07

23,20,000 152.55 (plus

interest)– –

Add: Options grantedon11/04/07

3,05,000 155.05 (plus

interest)– –


50,000 175.80 (plus

interest)– –


4,35,000 290.40 (plus

interest)– –


22,59,500 285.60 (plus

interest)– –

Less: Exercised – – – –Less: Forfeited / expired

1,60,000 152.55 (plus

interest)

– –

Optionsoutstandingattheyearend

73,09,500 177.1 (plus interest)

21,00,000 65.39 (plus

interest)Optionexercisableatyearend

– –

Theweightedaveragebalancelifeofoptionsoutstandingason 31st March 2008 is 3.98 years.

Theoptionsgrantedshallvestafterthreeyearsfromthedateofgrantofoption,providedtheemployeecontinuestobeinemploymentandtheoptionisexercisablewithintwoyearsaftervesting.

Theemployeesharebasedpaymentplanshavebeenaccountedbased on the intrinsic value method and no compensationexpensehasbeenrecognizedsincethemarketpriceoftheunderlying share at the grant date is the same/less than the exercisepriceoftheoption,theintrinsicvaluethereforebeingNil.

Thefairvalueoftheshareoptionshasbeendeterminedusingthe Black-Scholes Option Pricing Model. Had the fair value method of accounting been used, the net profit and earnings per share would have been as per the pro forma amountsindicatedbelow.

this YearRs. lac


Net Profit (as reported) 16,782.51 5,888.06Less: Stock based compensationexpense determined under fairvaluebasedmethod(ProForma)

967.00 204.00

Net Profit (Pro Forma) 15,815.51 5,684.06Basic & Diluted Earnings per share before Extraordinary Items (asreported)

4.66 2.02

this YearRs. lac


Basic & Diluted Earnings per share before Extraordinary Items (ProForma)

4.33 2.57

Basic & Diluted Earnings per share after Extraordinary Items (asreported)

5.56 1.95

Basic & Diluted Earnings per share after Extraordinary Items (ProForma)

5.23 1.95

14. leases: a) Thegrouphasenteredintoleaveandlicenceagreements

in respect of its commercial and residential premises.These are not non-cancellable and range between 12 months to 36 months and are renewable by mutualconsentonmutuallyacceptableterms.Leaveandlicencearrangements being similar in substance to operatingleases,theparticularsofthepremisesunderleaveandlicencearrangementareasunder:

this YearRs. lac


Grosscarryingamountofpremises 1782.60 1784.70

Accumulated depreciation 949.72 892.97

Depreciation for the period 59.53 58.30

b) The total of future minimum lease payments under noncancellableoperatingleasesforeachofthefollowingperiods:

Period Minimumfutureleaserentals

Jointlycontrolledentities

Rs. lac Rs. lac Withinoneyear 334.13 62.61

Laterthanoneyearand not later than five years 736.03 68.63 Later than five years – – total 1070.16 131.24

c) finance leases: ThegrouphasacquiredvehiclesunderFinanceLease.Liability

forminimumleasepaymentissecuredbyhypothecationofthevehiclesacquiredunderthe lease.Theminimumleasepayments outstanding as on March 31, 2008, in respect ofvehiclesacquiredunderleaseareasunder:

PeriodTotalminimumleasepayments

outstandingasonMarch31,2008

Un-matured Interest

Presentvalueof

minimumlease

paymentsRs. lac Rs. lac Rs. lac

Withinoneyear 85.22 24.10 77.57Later than oneyearandnotlaterthan five years

134.65 27.68 105.79

219.87 51.78 183.36


77

15. Hedging

The Company uses forward exchange contracts to hedgeits foreign exchange exposure relating to the underlyingtransactions and firm commitments. The use of the foreign exchangeforwardcontractsreducestheriskoncosttotheCompany.TheCompanyalsousescommodityfuturescontractstohedgeit’sexposuretovegetableoilpricerisk.TheCompanydoes not use the foreign exchange forward contracts orthe commodity future contracts for trading or speculationpurposes.

i. Derivative instruments outstanding:

a. Commodityfuturescontracts

detailsthis Year PreviousYear

purchase sale Purchase Sale

Futurescontractsout-standing 10 – – –

Number of units under abovecontractsinmt. 2,600 – – –

b. Forward Exchange contracts



Totalnumberofcontractsoutstanding 27 16 34 16

ForeigncurrencyvalueUS Dollar (million)Euro (million)

14.69–

6.702.06

19.33–

2.004.12

ii. Un-hedged foreign currency exposures



UncoveredForeignexchangeexposureasattheyearendUS Dollar (million)

33.67 7.49 15.09 5.54

16. turnover

Turnoverincludes: this YearRs. lac


i) Processingcharges 1,201.08 1,124.99

ii) Export Incentives 1,101.93 345.20

iii) Licencefeesandservicecharges 5,094.29 3,910.14

iv) Project/Development Management Fees 3,095.28 3,121.31

v) Claims 49.62 –

vi) Shareinjointlycontrolledentities 775.41 23,818.59

11,317.61 32,320.23

17. Exceptional Itemsthis Year

Rs. lacPrevious Year

Rs. lac

i) IncludedunderOtherIncome

- Profit on sale of long-term investments 9,275.18 4,382.56

Baddebtrecovered - 650.00

ii) Provisionfordiminutionininvestment (1,588.93) –

iii) Shareinjointlycontrolledentities - (86.40)

18. Profit and Loss Account a) The company has adopted Accounting Standard AS-11

(Revised 2003) as issued by the Ministry of Corporate Affairs vide Notification dated December 07, 2006. Consequently,theeffectsofchangesinforeignexchangerates on foreign currency loans relating to fixed assets acquired from a country outside India amounting to Rs. 0.81 lac have been charged off to Profit & Loss Account asagainst theearlierpracticeofadjustingagainst thecarrying cost of the fixed assets.

b) The exchange difference included in the Profit and Loss Account is a gain of Rs. 173.36 lac (Previous Year loss of Rs. 114.50 lac). The exchange difference in respect of forward exchange contracts to be recognised insubsequent accounting periods is Rs. 16.57 lac (Previous Year Rs. 27.02 lac).

19 Earnings per share:

this Year

Previous Year

a. Calculationofweightedaveragenumberofequityshares

Number of shares at the beginningoftheyear

Nos. 291,851,652 291,851,652

Number of equity shares outstandingattheendoftheyear

Nos. 319,758,602 291,851,652

Weightedaveragenumberofequitysharesoutstandingduringtheyear

Nos. 301,992,702 291,851,652

b. Net profit after tax excludingextraordinaryitems

Rs ‘lac 14,069.26 5,888.06

c. Net profit after tax availableforequityshareholders(includingextraordinaryitems)

Rs ‘lac 16,782.51 5,888.06

d. Basicanddilutedearningsper share of Re 1 each excludingextraordinaryItems

Rupees 4.66 2.02

e. Basicanddilutedearningsper share of Re 1 each includingextraordinaryItems

Rupees 5.56 2.02


78

20. Related party disclosuresa) Names of related parties and description of relationship

Parties where control exists

Godrej & Boyce Mfg. Co. Ltd., the holding company

Fellow Subsidiaries:

WadalaCommoditiesLtd.(FormerlyGodrejCommoditiesLtd.)

Godrej(Malaysia)SdnBhd

Godrej(Singapore)PteLtd.

GodrejInfotechLtd.

MercuryMFG.Co.Ltd.

J. T. Dragon Pte Ltd.

Godrej (Vietnam) Co. Ltd.

Other related parties with whom the Company had

transactions during the year

Associate/Joint Venture Companies

GodrejSaraLeeLtd.

GodrejHersheyLtd.

Nutrine Confectionary Co. Ltd.

Godrej Gold Coin Aquafeed Ltd.

Key Management Personnel

Mr. A. B. Godrej Chairman & Managing Director

Mr. N. B. Godrej Managing Director

Ms. T. A. Dubash Executive Director & President (Marketing)

Mr. Mathew Eipe Executive Director & President (Chemicals)

Mr. V. Banaji Executive Director & President (Group Corporate Affairs)

Mr. M. P. Pusalkar Executive Director & President

Mr. C. K. Vaidya Executive Director & President (Business Excellence)

Mr. A. Mahendran Managing Director (GodrejSaraLeeLtd.)

Mr. Ravi Venkateshwar Director Finance & Chief Financial Officer (GodrejSaraLeeLtd.)

Mr. M. S. Korde Managing Director (GodrejPropertiesLtd.)

Mr. B. S. Yadav Executive Director & President (Godrej Agrovet Ltd.)

Mr. S. Tipnis Director (GodrejGlobalSolutionsLtd.)

Relatives Key Management Personnel

Ms P. A. Godrej Wife of Mr. A. B. Godrej

Ms. N. A. Godrej Daughter of Mr. A. B. Godrej

Mr. P. A. Godrej Son of Mr. A. B. Godrej

Ms. R. N. Godrej Wife of Mr. N. B. Godrej

Mst. B. N. Godrej Son of Mr. N. B. Godrej

Mst. S. N. Godrej Son of Mr. N. B. Godrej

Mst. H. N. Godrej Son of Mr. N. B. Godrej

Ms. M. Mahendran Wife of Mr. A. Mahendran

Enterprises over which key management personnel exercise significant influence

GodrejConsumerProductsLtd.

Godrej SCA Hygiene Ltd.

Godrej Global Mideast FZE

GodrejInvestmentsPvt.Ltd.

Bahar Agrochem & Feeds Pvt. Ltd.

GodrejHoldingsP.Ltd.

Swadeshi Detergents Ltd.

Vora Soap Ltd.

GodrejUpstreamLtd.

LawkimLtd.

79

b) Transactions with Related Parties Rs. Lac Nature of Transaction Holding

Company fellow

Subsidiaries Associate/

joint Venture

Companies

Key Management

personnel

Relative of Key

Management personnel

enterprises over

which Key Mangement

personnel exercise

significant influence

total

SaleofGoods 10.22 – 85.51 – – 842.71 938.44 Previous Year 110.67 – 22.97 – – 982.10 1,115.74 Sale of Fixed Assets – – 20.73 3.10 – – 23.83Previous Year – – – – 1,091.00 21.64 1,112.64 Advance given 6.50 – – – – – 6.50 Previous Year – – – – – – – Loangiven – – – 1,103.83 – – 1,103.83Previous Year – – – – – – – Loanrepaid – – – 0.49 – – 0.49 Previous Year – – – – – – – Purchase of goods & equipment 178.87 675.62 224.47 – – 2,828.32 3,907.28 Previous Year 153.27 914.14 198.46 – – 719.98 1,985.85 Purchase of flats 63.37 – – – – – 63.37 Previous Year – – – – – – – Processingchargesreceived – – 209.68 – – 40.03 249.71 Previous Year – – 193.68 – – – 193.68 Commissionreceived – 2.50 87.47 – – 31.59 121.56 Previous Year – 2.50 73.22 – – 15.98 91.70

Recovery of establishment & otherexpenses 13.77 0.45 504.88 – – 1,238.37 1,757.47 Previous Year 20.60 0.47 360.22 – – 937.72 1,319.01 Rent, Establishment & other expenses paid 1,305.99 21.43 48.76 0.40 88.31 105.30 1,570.19 Previous Year 1,030.67 16.39 12.27 – 19.72 139.87 1,218.92 Interestreceived – – – – – 54.00 54.00 Previous Year – – – – – 3.91 3.91 Interestpaid – 4.60 – – – 207.66 212.26Previous Year – – – – – – Dividend income – 48.15 383.03 – – 867.60 1,298.78 Previous Year – 33.74 1,174.64 – – 980.60 2,188.98 Dividend paid 2,779.29 – – 54.89 585.42 – 3,419.60 Previous Year 2,485.80 – – 135.61 869.84 – 3,491.25 Remuneration – – – 1095.23 43.19 – 1138.42 Previous Year – – – 563.72 25.64 – 589.36 PurchaseofInvestments – – 5,160.00 – – 299.90 5,459.90 Previous Year – – 10,142.25 – – – 10,142.25 SaleofInvestments – – – – 0.06 – 0.06Previous Year – – – – – – – Intercorporate Deposits – Accepted – 100.00 – – – 2,000.00 2,100.00Previous Year – – – – – 1,000.00 1,000.00 Intercorporate Deposits Repaid duringtheyear – – – – – 3,000.00 3,000.00Previous Year – – – – – 12.80 12.80 Intercorporate Deposits – Advanced – – – – – 1,500.00 1,500.00 Previous Year – – – – – – – Intercorporate Deposits Repayment receivedduringtheyear – – – – – 1,500.00 1,500.00 Previous Year – – – – – – – Directors Fees – – – 1.65 – – 1.65 Previous Year – – – – – – – BalanceOutstandingasonMarch31,2008Receivables 22.55 0.13 116.45 – 40.00 241.18 420.31 Previous Year 78.71 617.89 54.68 – – 226.67 977.95 Payables 175.38 3.26 49.99 – – 89.03 317.66 Previous Year 94.85 – 3.04 – – 70.97 168.86 GuaranteesOutstanding – 1,000.00 – – – 161.00 1,161.00Previous Year – 1,000.00 1,350.00 – – – 2,350.00

80

c ) The significant Related Party transactions are as under:

Nature of Transaction This Year PreviousYear Rs. lac Rs. lac Saleofgoods - Godrej Consumer Products Ltd. 842.71 982.10 - Godrej Saralee Ltd. 78.95 - Sale of fixed assets - Godrej Hershey Ltd. 20.73 - - Mr. A. Mahendran 3.10 - Ms. R. N. Godrej - 1,091.00 - Godrej Consumer Products Ltd. - 21.64 Purchase of goods & equipment - Bahar Agrochem & Feeds P. Ltd. 2,000.65 - - Godrej Consumer Products Ltd. 827.67 720.96 - Wadala Commodities Ltd. 670.47 909.67 - Godrej Hershey Ltd. 203.98 112.76 - Godrej & Boyce Mfg. Co. Ltd. 178.86 40.51 - Godrej Saralee Ltd. 20.49 - - Godrej Infotech Ltd. 5.15 - Purchase of flats - Godrej & Boyce Mfg. Co. Ltd. 63.37 - ProcessingChargesreceived - Godrej Hershey Ltd. 209.68 193.68 - Godrej Consumer Products Ltd. 40.03 - Commissionreceived - Godrej Hershey Ltd. 87.47 47.26 - Godrej Upstream Ltd. 16.39 25.96 - Godrej Consumer Products Ltd. 13.59 15.98 Recovery of Establishment & other expenses - Godrej Consumer Products Ltd. 1,228.98 936.66 - Godrej Saralee Ltd. 303.96 211.65 - Godrej Hershey Ltd. 200.92 142.59 - Godrej & Boyce Mfg. Co. Ltd. 13.77 - - Godrej SCA Hygiene Ltd. 9.03 - Rent, Establishment & other expenses paid - Godrej & Boyce Mfg. Co. Ltd. 1,305.99 1,017.21 - Godrej Consumer Products Ltd. 105.30 87.14 - Ms. R. N. Godrej 82.31 13.72 - Godrej Hershey Ltd. 12.56 - Godrej Saralee Ltd. 34.41 - - Wadala Commodities Ltd 10.56 - - Godrej Infotech Ltd. 10.87 - - Ms. M. Mahendran 6.00 6.00 Advance given - Godrej & Boyce Mfg. Co. Ltd. 6.50 - Loangiven - Mr. A. Mahendran 1,103.83 - Loanrepaid - Mr. A. Mahendran 0.49 -

Nature of Transaction This Year Previous Year Rs. lac Rs. lac

Interestreceived - Lawkim Ltd. 50.50 - - Swadeshi Detergents Ltd. 3.50 3.91 Interestpaid - Godrej Investments Ltd. 207.66 - Inter Corporate Deposits - Repaid - Godrej Investments Ltd 3,000.00 - Inter Corporate Deposits - Accepted - Goderj Investments Ltd. 2,000.00 1,000.00 - Wadala Commodities Ltd. 100.00 - Inter Corporate Deposits - Advanced - Lawkim Ltd. 1,500.00 - Inter Corporate Deposits - Repayment Received - Lawkim Ltd. 1,500.00 - Dividend income - Godrej Consumer Products Ltd. 867.60 980.60 - Godrej Saralee Ltd. 383.03 1,174.64 - Wadala Commodities Ltd. 48.15 33.74 Dividend paid - Godrej & Boyce Mfg. Co. Ltd. 2,779.29 2,485.80 Remuneration to Key Management Personnel - Mr. M.S. Korde 189.79 136.58 - Mr. N. B. Godrej 182.06 85.66 - Mr. V. F. Banaji 130.85 69.55 - Mr. Mathew Eipe 106.26 64.00 - Ms. T. A. Dubash 105.33 54.20 - Mr. C. K. Vaidya 90.13 67.14 - Mr. M. P. Pusalkar 87.34 47.24 - Mr. S. Tipnis 72.81 15.05 - Mr. A. Mahendran 56.82 39.36 - Mr. B.S. Yadav 51.54 - - Mr. Ravi Venkateshwar 22.30 15.05

Remuneration to Relatives of Key Management Personnel - Ms. Nisaba A. Godrej 43.19 19.92 - Mr. Pirojsha Godrej - 5.73 SaleofInvestments - Mr. A. Mahendran 0.06 - PurchaseofInvestments - Godrej Hershey Ltd. 5,160.00 9,240.00 - Godrej Investments Ltd. 299.00 - - Lawkim Ltd. 0.90 - - Godrej Upstream Ltd. - 902.25

81

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Rt o

f th

e co

nso

lid

Ated

Acc

ou

nts

(co

ntd.

)

82

1. Name of the Subsidiary Company GodrejAgrovetLimited

GodrejProperties

Limited

EnsembleHoldings &

FinanceLimited

GodrejInter–

nationalLimited

GodrejGlobal

SolutionsLimited

GodrejHicare

Limited

GodrejOilPlantations

Ltd.

GoldenFeed

ProductsLimited

GoldMohurFoods &

FeedsLtd.

CauveryPalm

OilLimited

GirikandraHolidayHomes

& ResortsPvtLtd.

GodrejDevelopers

Pvt.Ltd.

GodrejReal Estate

Pvt.Ltd.

GodrejRealty

Pvt.Ltd.

GodrejSeaview

PropertisLimited

GodrejWatersideProperties

Pvt.Ltd.

HappyHighrises

Limited

GodrejGlobal

Solutions(Cyprus)

Ltd.

GodrejGlobal

SolutionsInc.

2. TheCompany’sinterestinthe

subsidiariesasonMarch31,2008

a. Number of Equity Shares 9112956 49185209 3774160 2355000 13602260 6067100 (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote

Total Number of Shares 12118752 60420259 3774160 2355000 13610606 7900000 5 below) 6below) 7 below) 8below) 9 below) 10below) 11below) 12below) 13below) 14 below) 15 below) 16below) 17 below)

b. Face Value 10 10 10 £1 10 10

c. Extent of Holding 75.20% 81.41% 100.00% 100% 99.94% 76.80%

3. Net aggregate profit/(Loss) of thesubsidiarycompanysofaritconcernsthemembersoftheCompany

Rs.lac Rs.lac Rs.lac Rs.lac Rs.lac Rs.lac

A. For the financial year ended on March31,2008i. Not dealt with in the books of accountoftheCompany 244 5133.79 78.7 1011.81 (346.10) 203.99 – – – – – – – – – – – – – ii. Dealt with in the books of accountoftheCompany

– – 94.35 – – – – – – – – – – – – – – – –

B. Forthesubsidiarycompany’s previous financial years since it becameasubsidiaryi. Not dealt with in the books of 809.29 2095.19 (488.25) 24864.97 (351.67) 143.67 – – – – – – – – – – – – – accountoftheCompanyii. Dealt with in the books of accountoftheCompany

3112.07 4432.11 387.19 11348.28 – – – – – – – – – – – – – – –

Statement regarding Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956

notes:

1 TheFinancialYearofthesubsidiarycompanieshaveendedonMarch31,2008.

2 691,155 Equity Shares of Rs.10 each in Godrej Properties Ltd. are held by Ensemble Holdings & Finance Ltd.

3 8,340 Equity Shares of Rs.10 each in Godrej Global Solutions Ltd. are held by Ensemble Holdings & Finance Ltd.

4 4,800 Equity Shares of Rs.10 each in Godrej Hicare Ltd. are held by Ensemble Holdings & Finance Ltd.

5 70500 Equity Shares of Rs.10 each in Godrej Oil Plantations Ltd. (representing 100% of the share capital) are held by Godrej Agrovet Ltd.

6 50,000 Equity Shares of Rs.10 each in Golden Feed Products Ltd. (representing 100% of the share capital) are held by Godrej Agrovet Ltd.

7 1,838,170 Equity Shares of Rs.10 each in Goldmohur Foods & Feeds Ltd. (representing 100% of the share capital) are held by Godrej Agrovet Ltd.

8 1938310 Equity Shares of Rs. 10/- each in Cauvery Palm Oil Ltd. (representing 51% of the share capital) are held by Godrej Agrovet Ltd.

9 494 Equity Shares of Rs.10 each in Girikandra Holiday Homes & Resorts Ltd. (representing 98.80% of the share capital) are held by GodrejPropertiesLtd.

10 49,999 Equity Shares of Rs.10 each in Godrej Developers Ltd. (representing 100% of the share capital) are held by Godrej Properties Ltd.

11 49,999 Equity Shares of Rs.10 each in Godrej Real Estate Ltd. (representing 100% of the share capital) are held by Godrej Properties Ltd.

12 509,999 Equity Shares of Rs.10 each in Godrej Realty Pvt. Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd.

83

1. Name of the Subsidiary Company GodrejAgrovetLimited

GodrejProperties

Limited

EnsembleHoldings &

FinanceLimited

GodrejInter–

nationalLimited

GodrejGlobal

SolutionsLimited

GodrejHicare

Limited

GodrejOilPlantations

Ltd.

GoldenFeed

ProductsLimited

GoldMohurFoods &

FeedsLtd.

CauveryPalm

OilLimited

GirikandraHolidayHomes

& ResortsPvtLtd.

GodrejDevelopers

Pvt.Ltd.

GodrejReal Estate

Pvt.Ltd.

GodrejRealty

Pvt.Ltd.

GodrejSeaview

PropertisLimited

GodrejWatersideProperties

Pvt.Ltd.

HappyHighrises

Limited

GodrejGlobal

Solutions(Cyprus)

Ltd.

GodrejGlobal

SolutionsInc.

2. TheCompany’sinterestinthe

subsidiariesasonMarch31,2008

a. Number of Equity Shares 9112956 49185209 3774160 2355000 13602260 6067100 (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote (Seenote

Total Number of Shares 12118752 60420259 3774160 2355000 13610606 7900000 5 below) 6below) 7 below) 8below) 9 below) 10below) 11below) 12below) 13below) 14 below) 15 below) 16below) 17 below)

b. Face Value 10 10 10 £1 10 10

c. Extent of Holding 75.20% 81.41% 100.00% 100% 99.94% 76.80%

3. Net aggregate profit/(Loss) of thesubsidiarycompanysofaritconcernsthemembersoftheCompany

Rs.lac Rs.lac Rs.lac Rs.lac Rs.lac Rs.lac

A. For the financial year ended on March31,2008i. Not dealt with in the books of accountoftheCompany 244 5133.79 78.7 1011.81 (346.10) 203.99 – – – – – – – – – – – – – ii. Dealt with in the books of accountoftheCompany

– – 94.35 – – – – – – – – – – – – – – – –

B. Forthesubsidiarycompany’s previous financial years since it becameasubsidiaryi. Not dealt with in the books of 809.29 2095.19 (488.25) 24864.97 (351.67) 143.67 – – – – – – – – – – – – – accountoftheCompanyii. Dealt with in the books of accountoftheCompany

3112.07 4432.11 387.19 11348.28 – – – – – – – – – – – – – – –

13 49,999 Equity Shares of Rs.10 each in Godrej Sea View Properties Pvt.Ltd. (representing 100% of the share capital) are held by GodrejPropertiesLtd.

14 509,999 Equity Shares of Rs.10 each in Godrej Waterside Properties Pvt.Ltd. (representing 51% of the share capital) are held by GodrejPropertiesLtd.

15 49,999 Equity Shares of Rs.10 each in Happy Highrises Ltd. (representing 100% of the share capital) are held by Godrej Properties Ltd.

16 60,000 Equity Shares of face value USD 1 each in Godrej Global Solutions (Cyprus) Ltd. (representing 100% of the share capital) areheldbyGodrejGlobalSolutionsLtd.

17 150,000 Equity Shares of face value USD 1 each in Godrej Global Solutions (Inc) Ltd. (representing 100% of the share capital) are heldbyGodrejGlobalSolutionsLtd.

A.b. godrej n.b. godrej m. eipe m. p. pusalkar Chairman Managing Director Executive Director & Executive Director & President (Chemicals) President (Corporate Projects)

s.K. bhatt V. srinivasan Executive Vice-President Executive Vice-President (Corporate Services) & (Finance & Estate)Mumbai,May28,2008 Company Secretary

FOR YOUR USE

84

To The Shareholders

Your Directors have pleasure in submitting their Report along with the audited Accounts for the financial year ended on March 31, 2008.

Financial Results

Your Company’s performance during the year as compared with that during the previous year is summarised below:

For the year ended 31/3/2008

Rs.lac


Rs. lacTotal Income 84781.09 68980.42Profit Before Taxation (PBT) (3922.34) (1932.09)Less : Provision for Taxation 44.17 97.64Profit After Taxation (PAT) (3966.51) 2029.73Net Total Extraodinary Income 7788.44 2304.75Total Profit after Tax 3821.93 275.02Balance Bought Forward from previous year 2119.05 2984.58Total 5940.98 3259.60Appropriations:Interim Dividend - 975.27Final Dividend 121.18 -Tax on Dividend 20.60 136.78Transfer to General Reserve - 28.50Balance Carried Forward to Balance Sheet 5799.20 2119.05Total 5940.98 3259.60

Review of Operations

During the year under review, the businesses of your company were restructured. The various businesses were classified into four verticals viz. : Animal Feed, Plant Group, Poultry and Retail. The Oil Palm Plantation activities were demerged through a court approved scheme of arrangement under Sections 391 and 394 of the Companies Act,1956. The oil palm business was demerged effective 1st April, 2007 into two companies viz. Godrej Oil Plantations Limited (covering oil palm activities in the States of Andhra Pradesh, Gujarat, Orissa and Mizoram) and Godrej Gokarna Oil Palm Limited (covering oil palm activities in the States of Goa and Karnataka). Your company, invited Blessed Resources Pte Limited and IJM Plantations Berhad to participate and acquire part of the shares of Godrej Oil Plantations Limited and Godrej Gokarna Oil Plantations Limited respectively. Post this acquisition, your company continues to hold 80% of the shares in Godrej Oil Plantations Limtied and 46% of the shares in Godrej Gokarana Oil Palm Limited respectively. Your Company also transferred the rural retailing business carried under the trade name of “Aadhaar” to Aadhaar Retailing Limited. Your Company invited Future group to participate and acquire 70% of the shares in Aadhaar Retailing Limited post the business transfer. Your company has also applied to the court for merger of Goldmohur Foods and Feeds Limited (100% subsidiary of your company) into your company. This merger is expected to bring in significant advantages on account of synergies in the animal feeds business. Your company also acquired 51% shareholding in Cauvery Palm Oil Limited, which operates in the palm oil business in the state of Tamil Nadu.

Your Company continued to face the challenges of poor output prices and high raw material prices in the Animal Feed business and Poultry business. This impacted the profitability of your Company adversely. The margins of the retail businesses continued to be under stress resulting in a significant impact on the profitability of your Company. Your Company was able to realize significant value through the various restructuring initiatives concluded during the year under review, this greatly helped in improving the profitability of your Company.

The above-mentioned factors in combination resulted in the profitability growing from Rs.275.02 lacs to Rs. 3821.93 lacs. The business-wise performance is reviewed hereunder:

ANIMAL FEEDS:

Avian Influenza which was detected in Eastern India in Dec.'07 adversely impacted the Animal Feed Business. The industry witnessed a de-growth during the year under review. While your Company’s performance was impacted during the first half of the year under review, your Company did well to regain its volume and market share in the second half of the year under review. Commodities prices in India mirrored global trends and there was significant increase in prices. This adversely impacted the profitability of your Company. Your Company tried to mitigate this pressure on the bottom line by stepping up its R & D efforts and focusing on various cost saving opportunities/technology upgradation and quality focus to strive for customer satisfaction.

INTEGRATED POULTRY BUSINESS:

Low prices for poultry products on account of detection of Avian Influenza in Eastern India, was witnessed across the country. This adversely impacted the profitability of the poultry operations. The expansion of the Bangalore Plant in the previous year helped your company to increase the sales volume in the year under review. Similarly good response was received for the “Yummiez” range of products introduced in the previous year. All this helped your company to grow the sales by 53%.

AGRICULTURAL INPUTS:

The Agri Inputs Division continued to return an excellent performance with 32% growth in sales and 35% growth in profit. This growth has been achieved despite a challenging year for the agri-input industry.

AADHAAR:

The Aadhaar business of your company was transferred to Aadhaar Retailing Limited on 15th March,2008. Your company sold 70% of the shareholding in Aadhaar Retailing Limited to the Future group. During the year under review, your company opened 26 new outlets taking the total number of outlets to 65.

NATURE’S BASKET:

During the year under review your company launched the remodeled Nature's Basket store at Warden Road, Mumbai. The remodeled store offers a wide range of gourmet food. Your company received a good response for this remodeled store.

PLANTATIONS:

The Oil Palm business was de-merged effective 1st April,2007. During the year under review, your company received allotment of Tirunelveli district in Tamil Nadu. Your company expects to rapidly expand the oil palm business.

FINANCE AND INFORMATION SYSTEMS:

With efficient treasury operations, your Company was able to procure funds at very competitive pricing in spite of rising interest rate scenario. Your Company continues to enjoy the apex rating of A1+ from ICRA for it’s Commercial Paper Programme of Rs. 15 crore. Your company continues to leverage IT and implemented SAP in the retail businesses.

OTHER INITIATIVES:

Your Company’s Windmill Power Generation Project at Dhule, Maharashtra has been approved by United Nations Framework Convention on Climate Changes (UNFCCC) under the Clean Development Mechanism (CDM) program, enabling your company to obtain carbon credits for the units generated by the windmills.

DIVIDEND

Your Directors recommend a Final Dividend for 2007-08 amounting to Rs.1/- per share of face value of Rs. 10/- each i.e. 10% (previous year Interim Dividend 137%).

FIXED DEPOSITS

Your Company has not accepted any public deposits during the financial year under review.

ADDITIONAL CAPITAL AND HOLDING COMPANY

Your Company issued 1,00,00,000 additional shares to Godrej Industries Limited (GIL) raising GIL’s holding to 70.20%. Your Company continues to be a subsidiary of GIL as defined under Section 4(1)(b) of the Companies Act, 1956.

SUBSIDIARY COMPANIES

Your Company continues to be the holding Company of Goldmohur Foods and Feeds Limited (GFFL), Golden Feed Products Limited (GFPL) and Godrej Aquafeed Limited (GAL), the name of which has been changed to Godrej Oil Plantations Limited (GOPL). During the year under review, your company sold 70% of the shares in Aadhaar Retailing Limited to Future Group and sold 51% of the total shares in Godrej Oil Palm Limited (GOPL), the name of which has been changed to Godrej Gokarna Oil Palm Limited, to IJM Plantations Berhad. Consequent to this sale, the aforesaid companies cease to be subsidiaries of your company.

During the year, your Company has promoted Godrej Foods Limited (GFL), a wholly owned subsidiary.

During the year under review, your company acquired 51% of the shares of Cauvery Palm Oil Limited (CPOL) and consequently the said company becomes a subsidiary of your company.

The audited Balance Sheets of GFFL, GFPL, GOPL and CPOL as at 31st March, 2008 together with their audited Profit & Loss Accounts, Directors’ Reports and Auditors’ Reports are attached to the Balance Sheet and Profit & Loss Account of your Company.

JOINT VENTURES

Your company continues to have Joint Venture arrangement in ACI Godrej Agrovet Private Limited (Bangladesh), Al-Rahba International Trading LLC (UAE) and Godrej Gold Coin Aquafeed Limited.

As mentioned elsewhere in the report, your company has entered into a joint venture arrangement with IJM Plantations Berhad in Godrej Gokarna Oil Palm Limited.

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

The information in respect of these matters, required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of this Report, is annexed hereto (Annexure - A).

DIRECTORS

Mr. B.S.Yadav was appointed as an Additional Director of the company by the Board of Directors in its meeting held on July 20,2007. In terms of Section 260 of the Companies Act, 1956, he will hold office only till conclusion of ensuing Annual General Meeting. He is eligible for appointment as director and a notice in this respect under section 267 of the Companies Act, 1956 has been received from a member along with deposit of Rs.500/- signifying its intention to propose its candidature of Mr. B.S. Yadav for the office of the Director.

Mr. J.N. Godrej, Mr. V.M. Crishna and Mr. K.N. Petigara, Directors retire by rotation at the ensuing Annual General Meeting in accordance with Article 124 of the Articles of Association of the Company and the provisions of the Companies Act, 1956 and being eligible offer themselves for reappointment.

AUDITORS

You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment.

ADDITIONAL INFORMATION

The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.

AUDIT COMMITTEE

Pursuant to the provisions of Section 292-A of the Companies Act, 1956, your Company has constituted the Audit Committee of the Board of Directors.

The following Directors are the Members of the Audit Committee: -(1) Mr. K.N. Petigara – Chairman(2) Dr. S.L. Anaokar – Member(3) Mr. B.S. Yadav - Member

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2008

85

The Audit Committee, pursuant to the terms of reference specified by the Board from time to time has made recommendations to the Board in respect of internal control systems, half-yearly & annual financial statements, standard accounting principles, Risk Management polices, etc. The Board of Directors has since accepted the recommendations of the Audit Committee.

REMUNERATION COMMITTEE

Pursuant to the provisions of schedule XIII to the Companies Act, 1956, your Company has constituted Remuneration Committee of the Board of Directors to approve the payment of remuneration to the Managerial Personnel.

The following Directors are the Members of the Remuneration Committee: -(1) Mr. K.N. Petigara – Chairman(2) Dr. S.L. Anaokar – Member(3) Mr. Amit Choudhury - Member

RESPONSIBILITY STATEMENT

Pursuant to the provisions contained in section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm :-a) that in the preparation of the annual accounts, the applicable accounting standards have

been followed and no material departures have been made from the same ;b) that they 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 or loss of the Company for that period ;

c) that they 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 for preventing and detecting fraud and other irregularities ;

d) that they have prepared the annual accounts on a going concern basis.

HUMAN RESOURCES

Your company continues to take various initiatives for the development of its human resources. The industrial relations at all units continued to be cordial. The Board would like to place on record its sincere appreciation for the unstinted support it continues to receive from all associates.

PARTICULARS OF EMPLOYEES

Details of the employees covered under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) (Amendment) Rules, 2002, are attached (ANNEXURE B).

For and on behalf of the Board of Directors

B.S. Yadav N.B. Godrej

Executive Director ChairmanMumbai, May 21, 2008. & President

1. We have audited the attached Balance Sheet of Godrej Agrovet Limited, as at 31st March 2008 and also the Profit and Loss Account and 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 the 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, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. 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 purposes of our audit.

b) As referred to in Note 20 of Schedule 15, notes to accounts, the managerial remuneration paid to the managing director is in excess of the limits laid down under section 198 read with Schedule XIII of the Companies Act, 1956, by Rs. 4,884 thousands. The amount is pending approval from the Central Government.

c) As referred to in Note 7 of Schedule 15, notes to accounts, investments in joint ventures aggregating to Rs. 56,455 thousands, exceeds the book value of the shares of those companies. The Company has also advanced Rs. 41,903 thousands to those companies. However, in view of the benefits of future profitability of the joint ventures being non-quantifiable at this stage, we are unable to determine the quantum of the possible diminution in the value of these investments / advances.

ANNEXURE `A’ANNEXURE FORMING PART OF THE DIRECTORS’ REPORTINFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO :A) Conservation of Energy The Company continued its endeavours successfully the policy of energy conservation measures

and undertook a regular review of energy consumption levels and the systems installed for effective control over the utilization of energy. Some of the measures adopted by your Company towards conservation of energy were as follows:-

1. Use of CNG in Genset, Boiler, etc. as an alternative to HSD 2. Use of DG set as an alternative source of energy 3. Use of bio-mass pellets as fuel 4. Identification of idle running of motors and machinery and introduction of ‘switch off’

provision when not in use 5. Replacement of Bore well jet pump 7.5 HP by 2 HP motor 6. Strict control over Power Factor LevelsB) Technology absorption, Adaptation and Innovation I. Your Company continues its constant endeavour for technological upgradation and

undertakes in-house Research & Development for enhancing the quality of products manufactured at an optimum cost.

II. The benefits derived as a result of various measures undertaken are as follows :- 1) Improvement in quality of products manufactured 2) Enhancement in the life of machinery 3) Reduction in storage and volatile losses 4) Clean and low cost fuel

5) Reduction in the level of energy consumption 6) Installation of Auto Bagging machine resulting in improvement in the rate of

bagging, reduction in the dependence on skilled labour, higher accuracy, less spillages and data logging

7) Better adherence to pollution control norms due to installation of bag filter for solid fuel boiler

III. The Company’s expenditure on R&D is given below :- Expenditure on R & D 2007-2008 2006-2007 Rs. lac Rs. lac. (a) Capital - - (b) Recurring 208.43 100.78 (c) Total 208.43 100.78 (d) Total R & D expenditure as 0.25% 0.15% a percentage of total turnoverC) Foreign Exchange earnings and outgo I. Your Company’s efforts to export agricultural inputs (Vipul – liquid, Achook, Nimin)

to South Asian countries continued during the year. The efforts to export agricultural inputs to other countries are continuing.

2007-2008 2006-2007 Rs. lac Rs. lac II. Foreign exchange used 1279.66 1460.28 III. Foreign exchange earned 82.23 114.93

For and on behalf of the Board of Directors B.S. Yadav N.B. Godrej Executive Director ChairmanMumbai, May 21, 2008. & President

d) 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 these books.

e) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

f) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

e) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read with the notes thereon, subject to (b) and (c) above, 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 31st March, 2008; and

ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date.


5. On the basis of the written representations received from the Directors as on 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2008 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.


KALYANIWALLA & MISTRYChartered Accountants

E. K. IraniPartnerMembership No. 35646


REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ AGROVET LIMITED

86

ANNEXURE TO THE AUDITORS’ REPORTReferred to in paragraph (3) of our report of even date.

1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been reported on such verification.

(c) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

2) (a) The Management has conducted physical verification of inventory at reasonable intervals.


(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3) (a) The Company has granted unsecured loans amounting to Rs. 559,094 thousands to five companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 559,094 thousands and the year end balance of loan granted to such parties was Rs. 558,356 thousands.

(b) The Company has not charged interest on unsecured loans amounting to Rs. 68,231 thousands given to three companies which is prima facie prejudicial to the interest of the Company. The rate of interest of other unsecured loans and the other terms and conditions of the all the loans is not prima facie prejudicial to the interests of the Company.

(c) As informed to us the receipt of principal and interest, to the extent due, has been regular.

(d) As informed to us, there are no overdue amounts exceeding rupees one lakh and hence the question of commenting on reasonable steps taken for recovery of principal and interest does not arise.

(e) The Company has taken unsecured loans of Rs. 190,000 thousands from two companies covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 90,000 thousands and year-end balance of loan taken from such party was Rs. Nil.

(f) The rate of interest and the other terms and conditions of the unsecured loan taken is not prima facie prejudicial to the interest of the Company.

(g) The payment of principal amounts and interest was also regular.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed a continuing failure to correct major weakness in internal controls.

5) (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 and arrangements referred to in section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.

(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, except for certain transactions for which, there are no similar services rendered to other parties or have been entered into on an reciprocal basis and hence the prices are not comparable.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public and hence the provisions of section 58A, 58AA or any other provision of the Companies Act, 1956, read with the rules framed thereunder are not applicable.

7) In our opinion and according to the information and explanations given to us, the internal

audit system is commensurate with the size of the Company and nature of its business.

8) According to the information and explanation given to us, the maintenance of cost records has not been prescribed by the Central Government, under section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.

9) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues payable in respect of above as at 31st March 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues outstanding of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty or cess on account of any dispute, other than the following:

Name of Statute Amount (Rs.’000) Forum where dispute is pending

Sales Tax Act 20,851 Commissioner Appellate Tribunal and High Court

Income Tax Act 21,751 Commissioner of Income Tax (Appeals)

10) The Company does not have accumulated losses at the end of the financial year and it has not incurred any cash loss es in the current and immediately preceding financial year.

11) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to banks. There are no dues to financial institutions or debenture holders.

12) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.


14) The Company does not deal in shares, securities, debentures and other investments.

15) According to the information and explanations given to us, the Company has given a corporate guarantee for loans taken by its subsidiary/joint venture from banks. The terms and conditions are not prima facie prejudicial to the interest of the Company.

16) According to the information and explanations given to us, term loans were applied for the purpose for which the loans were obtained.

17) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long term investment.



20) The Company has not raised any money through a public issue during the year.




E. K. IraniPartner

Membership No. 35646


87

THIS YEAR PREVIOUS YEAR

Schedule Rs. '000 Rs. '000 Rs.’000

SOURCES OF FUNDS

SHAREHOLDERS’ FUNDS

Share Capital 1 121,18 8 101,188

Reserves & Surplus 2 2,089,132 741,117

2,210,320 842,305

LOAN FUNDS

Secured Loans 3 559,567 494,469

Unsecured Loans 4 1,152,999 1,216,637

1,712,566 1,711,107

DEFERRED TAX LIABILITY 43,056 49,139

TOTAL 3,965,942 2,602,551

APPLICATION OF FUNDS

FIXED ASSETS 5

Gross Block 1,390,861 1,530,802

Less:Depreciation 437,542 433,802

Less:Provision for Impairment - 19,890

Net Block 953,319 1,077,110

Capital work-in-progress / Advances 24,809 50,176

978,128 1,127,286

INVESTMENTS 6 1,275,515 524,060

CURRENT ASSETS,LOANS AND ADVANCES 7

Inventories 805,618 1,179,630

Sundry Debtors 723,804 587,791

Cash and Bank Balances 267,308 92,271

Other Current Assets 9,319 92

Loans and Advances 1,767,678 605,799

3,573,727 2,465,583

LESS : CURRENT LIABILITIES AND PROVISIONS

Liabilities 8 1,822,313 1,497,124

Provisions 9 39,115 17,254

1,861,428 1,514,378

NET CURRENT ASSETS 1,712,299 951,205

TOTAL 3,965,942 2,602,551

NOTES TO ACCOUNTS 15

1 1

BALANCE SHEET AS AT MARCH 31, 2008 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008

The Schedules referred to above form an integral part of the Balance Sheet.Signatures to Balance Sheet and

As per our Report attached Schedules 1 to 9 and 15For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTS N.B. GODREJ Chairman

E.K.IRANI V.V.CHAUBAL B.S. YADAV Executive DirectorPartner Company Secretary & President Membership no. 35646Mumbai, May 21, 2008

THIS YEAR PREVIOUS YEARSchedule Rs.’000 Rs.’000 Rs.’000 Rs.’000

INCOME From Operations 10 8,173,793 6,895,038Other Income 11 304,316 3,004

8,478,109 6,898,042

EXPENDITURE

Materials 12 6,424,634 5,173,711Expenses 13 2,106,833 1,735,090Interest and financial charges 14 225,935 124,227Depreciation 112,941 58,223

8,870,343 7,091,251

LOSS BEFORE TAX AND EXTRAORDINARY INCOME (392,234) (193,209)

Profit/(Loss) on Continuing Operations (77,824) (160,667)Provision for Tax

Current Tax including Mat Credit Entitlement - -

Fringe Benefit Tax 7,841 8,684

Deferred (6,083) (1,417) Prior year Tax adjustment - 2,181 1,758 9,448

(79,582) (170,115)Profit/(Loss) on Discontinuing Operations for Oil Palm Business - 126,717 Provision for Tax


Fringe Benefit Tax - 316 316

- 126,401 Profit/(Loss) on Discontinuing Operations for Retail Business (Aadhaar) (314,410) (159,259)Provision for Tax


Fringe Benefit Tax 2,659 1,827 2,659 1,827.00

(317,069) (159,259)LOSS BEFORE EXTRAORDINARY INCOME (396,651) (202,973)Extraordinary Income (on transfer of Business /Demerger) of Oil Palm Business 417,441 - Provision for Current Tax including Mat Credit Entitlement (4,800) -

412,641 - Extraordinary Income (on transfer of Business /Demerger) of Retail Business (Aadhaar) 366,203 - Provision for Current Tax including Mat Credit Entitlement - -

366,203 - Extraordinary Income (on transfer of Business /Demerger) of Aquafeed Business - 230,475 Provision for Current Tax including Mat Credit Entitlement - -

- 230,475 PROFIT AFTER TAXATION 382,193 27,502Surplus Brought Forward 211,905 298,458AMOUNT AVAILABLE FOR APPROPRIATION 594,098 325,960

APPROPRIATION:Dividend Interim - 97,527 Final (Proposed) 12,118 - 12,118 97,527Tax on Dividend 2,060 13,678Transfer to General Reserve - 2,850Surplus carried forward 579,920 211,905 TOTAL 594,098 325,960Earnings per share before extraordinary items (Basic/Diluted) in Rs. (Refer Note 30) (36.89) (26.64)Earnings per share after extraordinary items (Basic/Diluted) in Rs. (Refer Note 30) 35.54 3.61 NOTES TO ACCOUNTS 15The Schedules referred to above form an integral part of the Profit and Loss Account

Signatures to Profit & Loss AccountAs per our Report attached Schedules 10 to 15For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTS N.B. GODREJ Chairman

E.K.IRANI V.V.CHAUBAL B.S. YADAV Executive DirectorPartner Company Secretary & President Membership no. 35646Mumbai, May 21, 2008

88


Rs.’000 Rs.’000 Rs.’000

SCHEDULE 1 : SHARE CAPITAL

AUTHORISED

150,00,000 Equity Shares of Rs 10 each

ISSUED, SUBSCRIBED AND PAID UP

1,21,18,752 (Previous Year 1,01,18,752) Equity Shares of Rs. 10/- each fully paid

Of the above shares

(a) 91,12,956 (Previous year 71,12,956) Equity shares of Rs. 10/- each are held by Godrej Industries Limited the Holding Company.

(b) 52,47,600 Equity Shares of Rs.10/- each have been issued as fully paid bonus shares by capitalising Securities Premium Account

SCHEDULE 2 : RESERVES & SURPLUS

SECURITIES PREMIUM ACCOUNT

As per last Balance Sheet

Add : Received during the year

CAPITAL INVESTMENT SUBSIDY

As per last Balance Sheet

Less : Transferred to General Reserve

150,000 150,000

121,188 101,188

459,290 189,290

980,000 270,000

1,439,290 459,290

9,602 9,602

4,000 -

5,602 9,602

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARcH 31, 2008


Rs. '000 Rs. '000 Rs. '000

SHEDULE 2 : RESERVE & SURPLUS (Contd.)

GENERAL RESERVE

As per last Balance Sheet 60,320 57,470

Add : Transfer from Capital Investment Subsidy 4,000 -

64,320 57,470

Add : Transferred from Profit & Loss Account - 2,850

64,320 60,320

PROFIT AND LOSS ACCOUNT 579,920 211,905

TOTAL 2,089,132 741,117

SCHEDULE 3 : SECURED LOANS

From Banks

Term Loans 458,400 150,000

(amount due within a year Rs. 183,200 thousand, Previous year Rs. 25,000 thousand )

Cash Credit/Working Capital Demand Loans 101,167 344,469

TOTAL 559,567 494,469

Note : Refer Note 5

SCHEDULE 4 : UNSECURED LOANS

From Banks

Term Loans 1,152,999 1,169,633

(amount due within a year Rs. 1,136,334 thousand, Previous year Rs. 1,029,634 thousand)

Sales Tax Deferment facility - 47,004

TOTAL 1,152,999 1,216,637

(Rs.’000)GROSS BLOCK DEPRECIATION IMPAIRMENT NET BLOCK

ASSETS As at Additions Deductions As at Upto For the On Upto Upto As at As at1.4.2007 31.3.2008 1.4.2007 Year Deductions 31.3.2008 31.3.2008 31.3.2008 31.3.2007

Goodwill - - - - - - - - - - - - - - - -

Tangible AssetsFreehold Land 93,270 5,006 13,375 84,901 - - - - - 84,901 93,270 Leasehold Land 9,329 - 9,329 1,095 121 1,216 - 8,113 8,234 Buildings 340,878 27,845 42,550 326,173 72,237 10,556 8,149 74,644 - 251,529 268,641 Staff Quarters 171 - 171 42 3 - 45 - 126 129 Plant & Machinery 807,011 91,155 132,236 765,930 259,790 47,231 32,159 274,862 - 491,068 527,330 Furniture & Fixtures 52,047 44,008 56,416 39,639 12,826 7,304 6,242 13,888 - 25,751 39,221 Leasehold Improvements 40,455 73,070 86,149 27,376 5,231 17,826 15,240 7,817 19,559 35,224 Office & Other Equipments 55,250 34,490 35,748 53,992 14,745 5,474 4,194 16,025 - 37,967 40,505 Vehicles 62,839 2,848 14,040 51,647 18,902 5,629 4,571 19,960 - 31,687 43,936 Research Centre 3,688 19 3,707 1,935 187 - 2,122 - 1,585 1,754 Trees, Development Costs 45,469 - 45,469 - 26,987 - 26,987 - - - 18,482 Intangible AssetsComputer Software 394 58,674 51,072 7,996 14 18,610 11,660 6,964 - 1,032 380 Technical Know-How Fees 20,000 20,000 19,999 19,999 - 1 1 TOTAL 1,530,802 337,115 477,055 1,390,861 433,802 112,941 109,202 437,542 - 953,319 Previous Year 1,194,189 425,892 89,279 1,530,802 418,931 58,223 43,352 433,802 19,890 1,077,109 Capital Work-In-Progress / Advances 24,809 50,176

978,128 1,127,285

SCHEDULE 5 : FIXED ASSETS


Rs.’000 Rs.’000 Rs.’000SCHEDULE 6 : INVESTMENTS

LONG TERM

NON TRADE UNQUOTED

IN GOVERNMENT SECURITIES

(All the Securities have been deposited withvarious Government Authorities)

(a) National Savings Certificates (Face value Rs. 228 thousand; Previous year Rs. 110 thousand) 228 110

(b) Indira Vikas Patra (Face value Rs.1 thousand) 1 1

229 117


Rs.’000 Rs.’000 Rs.’000

SCHEDULE 6 : INVESTMENTS (Cond.)

TRADE UNQUOTED

IN SUBSIDIARY COMPANIES

(a) In Gold Mohur Foods and Feeds Limited 18,38,170 equity shares of Rs. 10 each 183,398 183,398

(b) In Golden Feeds Products Limited 50,000 equity shares of Rs.10/- each 500 500

89


Rs.’000 Rs.’000 Rs.’000

SCHEDULE 6 : INVESTMENTS (Cond.)

(c) In Godrej Oil Plantations Ltd (formely known as Godrej Aquafeed Ltd)

56,400 (previous year 50,000 shares) equity shares of Rs. 10/ each

( Aquired during the year 20,500 shares, sold during the year 14,100 shares)

(d) In Cauvery Oil Plantations Ltd 19,38,000 equity shares of Rs.10/ each ( Aquired during the year)

IN COMPANIES

(a) Nil (Previous year 4,000) Fully-paid Equity Shares of Rs.10/- each in Ensemble Holdings & Finance Limited (a company under the same management)

(b) 8,00,000 (previous year 5,00,000) Fully-paid Equity share of Tk. 100/- each in ACI Godrej Agrovet Private Limited (Aquired 1,00,000 shares during the year)

(c) 45 Fully-paid Equity share of AED. 1500/- each in Al Rahba International Trading Limited Liability Company

(d) 26,71,993 fully paid Equity shares of Rs.10/- each in Creamline Dairy Products Limited

(Creamline Nutrients Limited has been merged with Creamline Dairy Products Limited pursuant to a Court Order)

(e) 4,55,000 fully paid Equity shares of Rs.10/- each in Polchem Hygiene Laboratories Private Limited

(f) 49,00,000 fully paid Equity shares of Rs. 10/- each in Godrej Goldcoin Aquafeed Limited

(Aquired during the year)

398,395 500

142,830 –

– 80

55,645 37,558

810 810

103,800 103,800

16,275 16,275

181,089 180,528

(g) 62,867 fully paid Equity shares of Rs. 10/- each in Godrej Gokarna Oil Palm Limited (acquired during the year 132,125 shares, sold during the year 69,258 shares)

(h) 30,00,000 (previous year 50,000) fully paid Equity share of Rs 10 each in Aadhar Retailing Limited (Aquired during the year 99,50,000 shares sold during the year 70,00,000 shares) (The Company was a subsidiary during the previous year)

IN CO-OPERATIVE SOCIETY

3 Shares of Rs.500/- each in Sachin Industrial Co-operative Society Limited.

AGGREGATE COST OF UNQUOTED INVESTMENTS

TOTAL

63,542 –

129,000 500

550,161 339,050

2 2

1,275,515 524,060


SCHEDULE 7 : CURRENT ASSETS, LOANS & ADVANCES

(A) INVENTORIES : Raw Materials Finished Products Poultry stock Stores and Spares Stock under Cultivation

(B) SUNDRY DEBTORS (Unsecured and considered good unless otherwise

stated) Debts outstanding for a period exceeding six

months Considered Good Considered Doubtful Other Debts TOTAL

Less : Provision for doubtful debts

402,315 648,684

195,508 318,852

191,753 156,262

16,042 14,708

805,618 1,179,630

- 41,124

123,491 188,007

32,979 28,490

156,470 216,498

600,313 399,784

756,783 616,281

32,979 28,490

723,804 587,791

[Debts amounting to Rs. 12,263 thousand (previous year Rs. 12,263/- thousand) are secured by equitable mortgage / hypothecation of assets / deposit of title deeds, Rs. 38,391/- thousand (previous year Rs. 10,891/-thousand) against Security Deposits and Rs. 26,470/- thousand (previous year Rs. 39,100/-) against Bank Guarantees]


Rs. '000 Rs. '000 Rs. '000

SCHEDULE 7 : CURRENT ASSETS,

LOANS & ADVANCES (Contd.)

(C) CASH AND BANK BALANCES :

Cash and Cheques on hand 48,079 23,535

Balances with Scheduled Banks

i) In Current Accounts 177,904 62,316

ii) In Fixed Deposit Accounts

[(Rs. 68 thousand (Previous year Rs. 75 thousand) pledged with government authorities)] 41,325 6,420

267,308 92,271

(D) OTHER CURRENT ASSETS : 9,319 92

(E) LOANS AND ADVANCES :

(Unsecured and considered good unless otherwise stated)

Loans and Advances recoverable in cash or in kind or for value to be received. (Refer Note - 9(b))

considered Good 1,532,948 508,583

Considered Doubtful 9,623 7,561

1,542,571 516,144

Less: Provision for doubtful advances 9,623 7,561

1,532,948 508,583

(Of the above Rs. 5,45,626 thousand is receivable on account of sale of business / investments)

Share application money pending allotment - 4,425

Inter Corporate Deposits 115,700 -

Other Deposits

i) Government Authorities 6,239 4,877

ii) Others 48,456 52,615

Advance payment of Taxes [including MAT Credit Entitlement Rs. 41,010 thousand (previous year Rs. 3,410 thousands)

(Net of provision for taxation Rs.108910 thousand; Previous Year Rs. 93,575 thousand)] 64,335 35,299

1,767,678 605,799

TOTAL 3,573,727 2,465,582

SCHEDULE 8 : LIABILITIES

Acceptances 338,678 315,875

Investor Education and Protection FundSundry Creditors Dues to Micro, Small and Medium enterprises (Refer Note - 11)

- -

- 3,591

Others 1,332,964 982,539

1,332,964 986,130

Advances from Customers 85,574 78,441

Sundry Deposits 65,097 116,677

TOTAL 1,822,313 1,497,124

SCHEDULE 9 : PROVISIONS

Dividend 12,118 -

Tax on Dividend 2,060 -

Gratuity 6,946 -

Leave Encashment 17,991 17,254

TOTAL 39,115 17,254

SCHEDULE 10 : INCOME FROM OPERATIONS

Net Sales 8,128,846 6,823,658

claims and compensations 4,958 19,012

Financial Operations

Dividend on Investments (Gross) 6,680 40,041

Interest (Gross) (Tax at Source Rs. 5,996 thousand;

Previous year Rs. 414 thousand) 33,309 12,327

39,989 52,368

TOTAL 8,173,793 6,895,038

90


THIS YEAR PREVIOUS YEARRs. '000 Rs. '000 Rs. '000

SCHEDULE 11 : OTHER INCOMEProfit on sale of Investments 282,563 - Miscellaneous Income 21,753 3,004

TOTAL 304,316 3,004


Rs.’000 Rs.’000 Rs.’000

SCHEDULE 12 : MATERIALS

a) RAW MATERIALS CONSUMED

Opening stock 648,684 351,305

Add : Purchases during the year 4,918,032 4,648,244

5,566,716 4,999,549

Less :Transferred on sale / demerger of businesses 609 27,177

Less : Sales during the year 210,626 52,774

5,355,481 4,919,598

Less : Closing Stocks 402,315 648,684

4,953,166 4,270,914

b) PURCHASE FOR RESALE 1,605,197 1,086,306

c) INVENTORY CHANGE

Opening Stock

Finished Goods 318,852 201,993

Stock under cultivation 41,124 24,454

Poultry Stock 156,262 106,282

516,238 332,729

Less : Transferred on sale / demerger of business 262,706 -

Less : Closing Stock

Finished Goods 195,508 318,852

Stock under cultivation - 41,124

Poultry Stock 191,753 156,262

387,261 516,238

(133,729) (183,509)

TOTAL 6,424,634 5,173,711

SCHEDULE 13 : EXPENSES

1 Salaries, Wages, Bonus,Gratuity and Allowances 474,069 341,576

2 Contribution to Provident Fund and

Other Funds and Administration Charges 23,891 18,909

3 Employee Welfare Expenses 33,361 34,813

4 Processing charges 396,173 313,159

5 Consumable Stores 69,420 66,439

6 Power and Fuel 181,533 165,740

7 Rent 100,439 49,809

8 Rates and Taxes 11,146 8,405

9 Repairs & Maintenance

Building 2,079 3,873

Plant & Machinery 13,394 11,495

Other assets 4,927 3,688

20,400 19,056

10 Insurance 8,252 8,016

11 Postage, telephony and stationery 41,251 35,153

12 Auditor’s Remuneration 2,985 2,130

13 Legal & Professional Fees 41,076 50,111

14 Freight, Coolie and Cartage 144,106 120,892

15 Discount, Commission and Selling Expenses 316,705 268,925

16 Advertisement and Publicity 50,193 52,016

17 Travelling Expenses 93,183 99,653

18 Bad Debts/Advances written off 34,701 18,731

19 Provision for Doubtful Debts and Advances 6,962 11,190

20 Loss on sale of Fixed Assets (Net) 5,484 2,336

21 General Expenses 77,903 74,431

2,133,233 1,761,490

22 Less: Shared Expenses recovered (26,400) (26,400)

TOTAL 2,106,833 1,735,090


Rs.’000 Rs.’000 Rs.’000

SCHEDULE 14 : INTEREST AND FINANCIAL CHARGES

(a) Interest paid on fixed loans

i ) Banks 187,934 113,119

ii ) Inter Corporate Deposits 16,639 5,361

204,573 118,480

Less: Interest capitalised - 6,373

204,573 112,107

(b) Interest paid on other loans

i ) Banks 4,886 2,096

ii ) Others 2,281 1,605

7,167 3,701

(c) Other Financial Charges 14,195 8,419

225,935 124,227

SCHEDULE 15 : NOTES TO ACCOUNTS

1 SIGNIFICANT ACCOUNTING POLICIES:

a) The financial statements are prepared under the historical cost convention, on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India and the Accounting Standards issued by the Institute of Chartered Accountants of India.

b) Fixed assets have been stated at cost and include incidental and / or installation/development expenses incurred in putting the asset to use and interest on borrowing incurred during construction period. Pre-operative expenses for major projects are also capitalized, where appropriate.

c) Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.

d) Depreciation /Amortisation has been provided for as under :

(a) The Company has grouped additions and disposals in appropriate time periods of a month / quarter for the purpose of charging pro rata depreciation in respect of additions and disposals of its assets keeping in view the materiality of the items involved.

(b) 1) Depreciation is provided on the straight line method at the rates specified in schedule XIV to the companies Act, 1956, except for computer hardware which is depreciated over its estimated useful life of four years.

2) Amortizations

Asset type Period

(i) Leasehold Land Primary lease period

(ii) Leasehold improvements and equipments

Primary lease period or 16 years whichever is less

(iii) Trees Development cost 15 years

(iv) Nursery / Greenhouse building 10 years

(v) Poultry Equipments / Signage 3 years

(vi) Technical Know-how of a capital nature

6 years

(vii) Computer software 6.17 years

(viii) Moulds 2 years

e) Grants / Subsidies :

(i) Investment Subsidy under the Central / State investment incentive scheme is credited to Capital Investment Subsidy Reserve and treated as a part of the shareholders’ funds.

(ii) Grants / Subsidies related to specific fixed assets are shown as a deduction from the gross value of the asset concerned in arriving at its book value.

(iii) Grants / Subsidies related to revenue are presented as a credit to the profit and loss statement or are deducted in reporting the related expense.

f) Long Term investments are carried at cost. Provision for diminution, if any, in the value of each long term investment is made to recognise a decline, other than of a temporary nature. Current investments are stated at lower of cost and net realizable value.

g) Raw materials and Poultry Stock are valued at weighted average cost. Finished goods and work-in-progress are valued at lower of cost and net realisable value. These costs include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Stores and spares are valued at cost using the First-In-First-Out method.

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h) Employee Benefits:

i) Short-term employee benefits (payable wholly within twelve months of rendering the service):

Short-term benefits such as salaries, wages, short-term compensation absences, etc., are determined on an undiscounted basis and recognised in the period in which the employee renders the related service.

ii) Post-employment benefits:

Defined Contribution Plans: The Company’s contributions paid/payable to provident Fund, Employees State Insurance Scheme, Employees Pension Schmes, 1995 and other funds, are determined under the relevant approved schemes and/or statutes and are recognised as expense in the Profit and Loss Account during the period in which the employee renders the related service. There are no further obligations other than the contributions payable to the approved trusts/appropriate authorities. However, the rules of Company’s Provident Fund Scheme, 1952, for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Company. The Company’s PF does not have any existing Deficit or Interest shortfall. In view of the track record of the Company’s PF Trust - its assets, return on investments and accmulated reserves - the Company does not anticipate any deficiency in the forcseeabel future. In any case making reasonable acturial assumptions for determining and measuring any probable future obligations arising due to interest shortfall, would pose a formidable challenge.

Defined Benefit Plans: The Company’s gratuity and leave encashment/long-term compensated absences schemes are defined benefit plans. The Company’s liability for the defined benefit schemes is actuarially determined based on the projected unit credit method. The Compny’s net obligations in respect of such plans is calculated by estimating the amount of future benefit that the employees have earned in return for theitr services n the current and prior periods that benefit is discounted to determine its preaesnt value and the fair value of the plan asset is deducted. Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

Terminal Benefits: All terminal benefits including voluntary retirement compensation are fully written off to the Profit.

i) Miscellaneous expenditure :

i) Non-Compete fee is amortised over a period of five years or the period of the agreement ( wherever applicable).

ii) Front-end fee paid on loans raised from financial institutions is amortised over the period of the loan.

j) Revenue is recognised when goods are despatched to external customers.Sales are inclusive of realised exchange fluctuations on export receivables but net of returns, sales tax, rebates,etc.

k) Revenue expenditure on Research and Development is charged to Profit and Loss Account of the year in which it is incurred. Capital Expenditure incurred during the year on Research and Development is shown as an addition to Fixed Assets under the head “Research Centre”.

l) Interest and commitment charges incurred in connection with borrowing of funds, which are directly attributable to the acquisition, construction or production of an asset that necessarily takes substantial period of time to get ready for its intended use, upto the time the said asset is put to use are capitalised, as a part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

m) Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profit and Loss Account.

n) Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year- end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date.

o) The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.

p) Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

THIS YEARRs.’000

PREVIOUS YEARRs.’000

2 CONTINGENT LIABILITY:

In respect of :

(a) Income Tax Matters 21,751 6,920

The Income Tax Department has filed an appeal against the order of CIT (A), for A.Y.1998-99, 1999-00 & 2000-01and has also raised a demand for the A.Y 05-06.

(b) Sales Tax Matters 35,951 43,816The Company has filed Appeal with the Sales Tax tribunal in Tamilnadu for F.Y. 1993-94 to 1995-96, for classifying branch transfer as sales. [Against the above the Company has paid advance of Rs. 800 thousand (Previous year Rs. 800 thousand)]The Company has filed an appeal in Mumbai High Court in connection with Agricultural Produce Market Committee(APMC) in respect of poultry business. The Company has preferred an appeal before the Hon. High Court Kerala in the matter of classification of sale of Day-old-chicks.(Against the above the company has paid advance of Rs. 14,300 thousand (previous year Rs. 14,300 thousand))

(c) Excise Matter 35,575 –The Company has preferred an appeal with the Excise Dept in the matter of classification of Agri Products and presently the case is pending with the Commissioner of Central Excise.

(d) Guarantee issued to Banks on behalf of the subsidiary companies 600,000 600,000

(e) Guarantee issued to Banks on behalf of the Joint venture companies 109,838 88,875

(f) Guarantees issued by the Banks and counter guaranteed by the company (other than those mentioned in (d) & (e) above)Rs.3,036 thousand (Previous year Rs.3,182 thousand) have been secured by deposit with bank.

40,827 54,635

(g) Case / Claim filed by Processors for claiming various expenses 39,697 39,468

3 CAPITAL COMMITMENTS:The estimated value of contracts remaining to be executed on Capital Account to the extent not provided for. 6,851 4,702

4 AMALGAMATION OF SUBSIDIARY

Pursuant to the decision taken by the Board of Directors of Godrej Agrovet Limited (GAVL) and Goldmohur Foods & Feeds Ltd (GFFL) at their respective meetings held on October 19, 2007, the scheme of arrangement for amalgamation of GFFL with GAVL was filed with Bombay High Court on December 31, 2007.

By order dated January 11, 2008, the Company Judge dispensed with the holding of meeting of equity shareholders, secured and unsecured creditors of GFFL and GAVL with a direction to send individual notices to secured creditors having value of more than Rs. 5,00,000/- in case of GAVL and to all the secured creditors in case of GFFL.

The merger petitions filed by GAVL and GFFL have been admitted by the Bombay High Court who have given direction to the Official Liquidator to submit its report on the affairs of GFFL. The petitions will be heard for order in due course once the Official Liquidator submits its report.

Subject to the final order granting approval to the amalgamation by the Bombay High Court, seperate accounts of GAVL and GFFL have been prepared for the year ended March 31, 2008. Merged accounts for the same will be prepared for the financial year after the final order is received.

5 SECURED LOANS:

a) Term Loans from Banks are secured by an equitable mortgage of specified immovable properties and hypothecation of specified movable assets of the Company.

b) Cash Credit and other facilities from banks are secured by hypothecation of stocks and book debts of the Company (both present and future).

6 FIXED ASSETS:

Legal formalities relating to the transfer of title of immovable assets situated at Chennai (acquired as a part of the take over of Agrovet business from Godrej Industries Limited and Hyderabad (as part of the merger of Godrej Plant Biotech Limited) are being complied with. Stamp duty payable thereon is not presently determinable.

7 INVESTMENTS IN JOINT VENTURES:

The Company has equity investment of Rs. 55,645 thousand (Previous year Rs. 37,558 thousands) in ACI Godrej Agrovet Private Limited and Rs. 810 thousand (Previous year Rs. 810 thousand) in AlRahaba International Trading LLC. The Company’s investments in Joint ventures are carried at costs, which are higher than their respective book values. The diminution in the value of these investments is considered to be of a temporary nature, in view of the Company’s long-term financial involvement in, and the future profitability projected by the two companies. No provision for diminution in the value of investments is therefore considered necessary in the accounts. Accordingly, no provision for Debtors / Loans and advance of Rs. 4,328 thousand (Previous year Rs.3,381 thousands) in ACI Godrej Agrovet Private Limited and Rs. 37,575 thousand (previous year Rs. 37,424 thousand) in Al Rahaba International Trading LLC is also considered necessary in the accounts.


92

8 INFORMATION IN RESPECT OF JOINT VENTURES (JOINTLY CONTROLLED ENTITY):

Name Country of Incorporation Percentage Holding


(a) AcI Godrej Agrovet Private Limited Bangladesh 50% 50%

ACI Godrej Agrovet Private Limited has its operations in the fields of Animal Feed, Poultry businesses etc.

Interest in Assets, Liablities, Income and Expense with respect of jointly controlled entity

Rs. Rs.

Assets 32,134 2,135 Liablities 32,134 2,135 Income 281,303 81,500 Expense 557,315 107,830

(b) Al Rahaba Trading International LLc Abu Dhabi 70% 70%

The company has a 45% share in the Equity capital of Al Rahaba International LLC but a 70% share in the profits and in future investments.

Al Rahaba Trading International LLC is in the Poultry business


Rs. Rs. Assets 30,428 33,134 Liablities 30,428 33,134 Income 111,657 121,585 Expense 127,821 139,187 (c) Godrej Gold Coin Aquafeed Limited India 49% 49%

The Company is in the Aqua Feed business.


Rs. Rs. Assets 268,238 210,712 Liablities 268,238 210,712 Income 156,136 40,958 Expense 191,962 54,894

(d) Godrej Gokarna Oil Palm Limited India 46% -

The Company is in the Oil Palm business.


Rs. Rs. Assets 65,029 500 Liablities 65,029 500 Income 20,467 - Expense 19,958 32

THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000

9 CURRENT ASSETS, LOANS AND ADVANCES:

(a) Sundry Debtors include due from Companies under the same management (i) Godrej & Boyce Mfg Co. Ltd. 3 96 (ii) Godrej Industries Limited 284 659 (iii) Godrej Hi Care Limited 13 - (iv) Goldmohur Foods and Feeds Limited - 9,100 (v) Godrej Consumer Products Limited 28 - (vi) ACI Godrej Agrovet Private Limited - 3,381 (vii) Al Rahba International Trading LLC - 947 (viii) Godrej Gold Coin Aqua feed Limited - 40,332 (ix) Godrej Properties Limited 42 - (x) Godrej Hershey Limited 43 - (xi) Godrej Sara Lee Limited 5 - (b) Loans and Advances include due from Companies under the same management (i) Golden Feed Products Limited 24,460 23,939 Maximum balance during the year 24,460 40,393 (ii) Krithika Agro Farm Chemicals and Engineering Industries Private Limited 4,171 4,909 Maximum balance during the year 4,909 4,909 (iii) Al Rahba International Trading Limited Liablity Company 37,575 36,477 Maximum balance during the year 37,575 36,477 (iv) ACI Godrej Agrovet Limited 4,328 - Maximum balance during the year 4,328 - (v) Godrej Gold Coin Aquafeed Limited 47,882 - Maximum balance during the year 47,882 - (vi) Aadhaar Retailing Limited 502,752 83,134 Maximum balance during the year 502,752 83,134 (vii) Cauvery Palm Oil Limited 5,000 - Maximum balance during the year 5,000 -

10 TRANSFER OF BUSINESSES:

(a) Effective 1st April 2007, the Company, with the approval of its share holders under Sec 391 & 394 of the Company’s Act 1956, and subsequently sanctioned by the Hon. High Court of Mumbai on 28-09-2007, has de-merged its Oil Palm Business in the states of Andhra Pradesh, Gujarat, Mizoram & Orissa into the resultant Company, namely Godrej Oil Plantations Limited (GOPL), for a consideration of Rs.497,494 thousands.

Pursuant to the same the following assets & liabilties were transferred to GOPL.

Rs. '000 Fixed Assets 113,494 Capital Work in progress 5,319 Inventories 34,261 Investments 17 Sundry Debtors 34,069 Other Current Assets 3,940 Total Liabilities (43,759) Total 147,341

(b) Effective 1st April 2007, the Company, with the approval of its share holders under Sec 391 & 394 of the Company’s Act 1956, and subsequently sanctioned by the Hon. High Court of Mumbai on 28-09-2007, has de-merged its Oil Palm Business in the states / Territories of Karnataka & Goa into the resultant Company, namely Godrej Gokarna Oil Palm Limited (GGOPL), for a consideration of Rs.113,116 thousands.

Pursuant to the same the following assets & liabilties were transferred to GGOPL.

Rs. '000 Fixed Assets 34,646 Inventories 7,629 Sundry Debtors 3,967 Other Current Assets 535 Total Liabilities (979) Total 45,798

(c) Effective 15th March 2008, the Company, has transferred its retail (Aadhar) business to Aadhar Retailing Limited (ARL) for a total consideration of Rs.800,000 thousands.

Pursuant to the same the following assets & liabilties were transferred to ARL.

Rs. '000 Fixed Assets 189,202 Capital Work in Progress 4,529 Inventories 223,148 Other Current Assets 16,918 Total 433,797

11 CURRENT LIABILITIES:

Under the Micro, Small & Medium Enterprises Development Act 2006, which came into force from 2nd October 2006, certain disclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

12 DEFERRED TAX:

The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities are :

THIS YEAR PREVIOUS YEAR Rs.'000 Rs.'000 Depreciation on Fixed Assets (67,154) (104,837) Provision for Impairment of Fixed Assets - 7,310 Provision for Doubtful Debts 6,115 10,585 Carry Forward unabsorbed depreciation - 29,130 Others 17,983 8,674

Deferred Tax Liability (43,056) (49,139)

13 GRANTS / SUBSIDIES FROM GOVERNMENT:

Grants / Subsidies amounitng to Rs. 55,177 thousand (Previous year Rs. 50,297 thousand) related to revenue are credited to the profit and loss statement or are deducted in reporting the related expense.

THIS YEAR PREVIOUS YEAR Unit Quantity Value Quantity Value Rs. '000 Rs. '00014 SALES TURNOVER:

Animal Feeds MT 467,179 4,366,514 452,873 3,897,585

Agro Inputs - 812,415 - 630,282

Integrated Poultry Business - 1,901,277 - 1,169,952

Oil Palm Plantation - - - 462,256

Retail Segment - 874,197 - 485,306

Others - 174,443 - 178,277 TOTAL 8,128,846 6,823,658

Note: Sales Turnover includes sale of items processed by third parties, and items purchased by the Company for resale.


93

THIS YEAR PREVIOUS YEAR Unit Quantity Value Quantity Value Rs. ‘000 Rs. ‘00015 FINISHED GOODS INVENTORIES: Animal Feeds MT 6,667 53,312 8,291 68,170 (8,291) (68,170) (7,258) (62,699) Agri Inputs Synthetic pesticides KL 77 18,595 184 24,178 (184) (24,178) (168) (35,848) Natural pesticides MT 5 692 3 458 (3) (458) (4) (480) Processed Chicken 37,559 18,707 (18,707) (40,360) Retail Segment 17,822 158,998 (158,998) NA Others 67,528 48,341 (48,341) (62,606)

TOTAL 195,508 318,852

(318,852) (201,993)

Note : Figures in bracket pertain to the Previous Year

16 PURCHASES FOR RESALE:

Animal Feeds MT 18,865 165,487 3,256 70,290 Agri Inputs Plant Growth Promoter Spray KL 418 43,231 467 37,183 Granules MT 5,609 94,221 5,376 80,994 Synthetic pesticides KL 1,325 166,839 1,114 129,848 Retail Segment 859,459 614,753 Others 275,960 153,238

TOTAL 1,605,197 1,086,306

17 RAW MATERIALS CONSUMED:

Cakes & Brans MT 168,805 1,218,156 135,397 842,107

Extractions MT 245,095 1,833,548 243,991 1,469,241

Others 1,901,462 1,959,566

TOTAL 4,953,166 4,270,914

18 DISCLOSURE IN RESPECT OF LEASES:

The Company’s leasing arrangements are in respect of operating leases for premises occupied by the Company. These leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually acceptable terms.

a. The total of future minimum lease payments under non - cancelable operating leases for each of the following periods :

THIS YEAR PREVIOUS YEAR Rs. '000 Rs. '000

i. Not later than one year 2,405 53,328

ii. Later than one year and not later than five years 5,498 196,165

iii. Later than five years - 280,632

b. Lease payments recognised in the statement of Profit & Loss for the period :

Minimum lease payments 100,439 41,728

19 LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION:

Item For the year Ended

MT

Capacity Per Annum Actual Production

MT

Third Party Production

MTRegistered

MTInstalled

MTa) Animal Feeds 31.3.2008 Not Applicable 268,600 145,356 386,720

31.3.2007 Not Applicable 294,600 154,777 362,157b) Processed Chicken 31.3.2008 Not Applicable 16,876 15,685 -

31.3.2007 Not Applicable 17,536 12,694 -c) Palm Oil 31.3.2008 Not Applicable - - -

31.3.2007 Not Applicable 14,850 8,806Million Plants Million Plants Million Plants

d) Tissue Culture Plants 31.3.2008 4.25 5 3 -31.3.2007 4.25 5 5 -

e) Agri Inputs

(i) Plant Growth Promoter Liquids 31.3.2008 500 KL 500 KL 497KL 51KL31.3.2007 500 KL 500 KL 465KL -

(ii) Plant Growth Regulator Granules 31.3.2008 5000 MT 5000 MT 4077MT31.3.2007 5000 MT 5000 MT 2729MT

20 (a) COMPUTATION OF PROFIT FOR THE PURPOSE OF MANAGERIAL REMUNERATION:


Profit after tax as per Profit and Loss account 382,193 27,502

Add : Depreciation as per accounts 112,941 58,223 Managerial Remuneration , including Directors sitting fees 9,185 6,714 Provision for Doubtful Debts / Advances 6,962 18,751 Provision for Tax (including Deffered tax) 0 9,764 (Loss) / Profit on sale of Fixed assets (net) 5,484 2,336

129,089 (137,024)

Less : Depreciation as per section 350 of the Companies Act, 1956 112,941 79,582 Less : Profit on transfer of business - 230,475 Less : Profit on sale of Investments 282,563 -

395,504 77,246

Net (Loss) / Profit for the purpose of Directors remuneration 115,777 (186,768)

5% thereof - -

MAXIMUM REMUNERATION PERMISSIBLE UNDER THE ACT 4,200 3,600 (computed on the basis of inadequacy of profits)

Amount pending approval by Central Government 7,244 7,244

(b) MANAGERIAL REMUNERATION

a) Salaries 8,418 6,144

b) Contribution to Provident fund 429 356

c) Estimated monetary value of perquisites 237 214

9,084 6,714

d) Directors’ Sitting Fees 101 144

9,185 6,858

Note: (a) All the above items have been included under respective heads under “Expenses” in Schedule 13

(b) Performance linked variable remuneration is on the basis of provision made in the books of accounts

(c) The remuneration paid to the Managing Director is in excess of the remuneration prescribed under Section 198 read with Schedule XIII to theCompanies Act, 1956 by Rs. 4,884 thousands (previous year Rs. 3,114 thousand). The company has made an application for the necessary approval from the Central Government for the remuneration in excess of the prescribed limits.

21 COMMON EXPENSES SHARED BY THE COMPANIES :

a) Expenses (Schedule 13) include Rs 20,570 thousand (Previous Year Rs 21,006 thousand) charged by Godrej Industries Limited, the Holding Company.

b) During the year, the Company shared the services of some of it’s employees and facilities with its subsidairy Company. Consequently the value of share of costs attributable to that Company calculated in accordance with the service agreement has been recovered, amounting to Rs 26,400 thousands (Previous year Rs 26,400 thousands).

22 AUDITORS’ REMUNERATION: Audit fees 1,292 1,122

Audit under Other Statutes 500 337

Tax representation before Authorities 475 411

Management Consultancy 335 73

Certification 140 93

Reimbursement of Expenses 243 93

TOTAL 2,985 2,130

23 VALUE OF IMPORTS ON CIF BASIS:

(INCLUDES DIRECT IMPORTS ONLY )

Raw Materials 61,142 86,002

Spares 1,927 2,802

Capital Goods 9,030 33,759

72,099 122,563

24 EXPENDITURE IN FOREIGN CURRENCY:

Travelling Expenses 4,030 5,887

Others 12,042 17,578

16,072 23,465


94


25 EARNINGS IN FOREIGN EXCHANGE: F.O.B value of goods exported 8,223 11,493

Others - 2,374

8,223 13,867

26 VALUE OF CONSUMPTION OF RAW MATERIALS, SPARES & TOOLS: (INCLUDING CAPITALIZED ITEMS )


Rs.’000 % Rs.’000 %

RAW MATERIALS :

Imported items (including duty content) 39,795 1 75,080 2

Indigenous 4,913,371 99 4,195,834 98

TOTAL 4,953,166 100 4,270,914 100

SPARES & TOOLS :

Imported items - 0 741 1

Indigenous 69,420 100 65,698 99

TOTAL 69,420 100 66,439 100

27 EMPLOYEE BENEFITS:

I. Defined Contribution Plans:

Contribution to Defined Contribution Plan, recognised as expense for the year are as under:

Rs. '000

Employers’ Contribution to Provident Fund 18,905

II. Defined Benefit Plans:

Contribution to Gratuity Fund

The Company makes annual contributions to the Employees’ Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on superannuation, death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company’s policy whichever is beneficial to the employees.

The following table sets out the funded status of the gratuity plan and the amounts recognised in the Company’s financial statements as at 31 March 2008:

Rs. '000

Change in present value of obligation

Present value of obligation as at 1st April 2007 34,568 Interest Cost 2,765 Service Cost 3,571 Benefits Paid (12,398) Actuarial (gain)/loss on obligation 8,661

Present value of obligation, as at 31st March 2008 37,167

change in plan assets Rs. '000

Fair value of plan assets as at 1st April 2007 40,876 Expected return on plan assets 3,270 Contributions - Benefits paid (12,398) Actuarial gain/(loss) on plan assets (3,208)

Fair value of plan assets as at 31st March 2008 28,539

Amount recognised in the Balance Sheet

Present value of obligation, as at 31st March 2008 35,486 Fair value of plan assets as at 31st March 2008 (28,539)

Net obligation as at 31st March 2008 6,946

Net gratuity cost for the year ended 31st March 2008

Current Service Cost 3,571 Interest Cost 2,765 Expected return on plan assets (3,270) Net Actuarial (gain)/loss to be recognised 11,869

Net gratuity cost 14,936

Assumptions used in accounting for the gratuity plan

%

Discount Rate 8 Salary escalation rate 5 Expected rate of return on plan assets 8

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets.

28 Research & Development Expenditure of revenue nature charged to the Profit and Loss Account amounts to Rs.13,067 thousand (previous year Rs.10,078 thousand).

29 The amount of exchange difference included in the Profit and Loss Account, under the related heads of expenses / income, is Rs. 1,735 thousand (Previous year expense Rs.1,735 thousand). The amount of exchange difference in respect of forward exchange contracts to be recognised in the profit and loss account of subsequent accounting periods Rs. Nil (previous year Rs. nil thousand).

30 EARNINGS PER SHARE: THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000

Profit/(Loss) after tax before extraordinary income (396,651) (202,973) Profit/(Loss) after tax and extraordinary income 382,193 27,502 Weighted average number of equity shares outstanding 10,752,632 7,618,752 EPS before extraordinary items Basic earnings per share (Rs.) (36.89) (26.64) Diluted earnings per share(Rs.) (36.89) (26.64) EPS after extraordinary items Basic earnings per share (Rs.) 35.54 3.61 Diluted earnings per share(Rs.) 35.54 3.61 Nominal value of shares (Rs.) 10.00 10.00


95

31 SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH 2008

(i) Information about Primary business Segments Rs. '000 For the year ended31st March, 2007

Animal Agri Aadhaar Nature’s Retail

Integrated Other Unal-

located Total Animal Agri Retail

Integrated Oil Other Unallo-

cated Total

Revenue Feeds Basket Poultry Business Feeds Poultry Palm Business

Business Business Plantations

(A) (B) (C) (D) (E = (C+D) (F) (H) (I) (I)+(A+B+E+F+G+H+I)

Total Sales 4,444,252 839,271 736,428 138,554 874,982 1,901,277 165,434 8,225,216 4,045,553 637,267 485,306 1,184,197 463,996 179,341 6,995,660

Less : Inter-segment (77,738) (18,633) (96,371) (147,968) (6,985) (14,246) (1,740) (1,063) (172,002)

External Sales 4,366,514 820,638 736,428 138,554 874,982 1,901,277 165,434 8,128,846 3,897,585 630,282 485,306 1,169,952 462,256 178,278 6,823,658

Result

Segment Result 48,666 96,217 (314,410) (87,773) (402,183) (111,283) 2,594 (365,989) 126,172 111,698 (207,198) (88,837) 126,717 11,216 79,768

Unallocated expenditure net of unallocated income (124,312) (124,312) (201,118) (201,118)

Interest expenses (224,486) (224,486) (124,227) (124,227)

Interest Income 33,309 33,309 12,327 12,327

Dividend Income and Profit on sale of Investments 289,243 289,243 40,041 40,041

Profit before taxation and exceptional items 48,666 96,217 (314,410) (87,773) (402,183) (111,283) 2,594 (26,245) (392,234) 356,647 111,698 (207,198) (88,837) 126,717 11,216 (272,977) 37,266

Provision for taxation 9,217 9,764 9,764

Profit after taxation and before exceptional items 48,666 96,217 (314,410) (87,773) (402,183) (111,283) 2,594 (26,245) (401,451) 356,647 111,698 (207,198) (88,837) 126,717 11,216 (282,741) 27,502

Exceptional Items 783,644 783,644 230,475 230,475

Prior years adjustments

Profit after taxation and exceptional items 48,666 96,217 (314,410) (87,773) (402,183) (111,283) 2,594 757,399 382,193 356,647 111,698 (207,198) (88,837) 126,717 11,216 (52,266) 257,977

Other Information

Segment assets 925,881 505,544 81,156 81,156 969,975 40,027 3,304,786 5,827,370 1,041,358 374,885 321,226 924,150 256,265 27,086 1,171,960 4,116,929

Segment liabilities 774,434 80,604 19,645 19,645 233,969 13,619 2,494,778 3,617,050 893,661 56,049 14,480 254,561 43,955 5,258 2,006,660 3,274,623

Capital expenditure 37,627 2,440 117,692 39,042 156,733 103,258 504 16,502 317,064 20,683 29,330 101,622 96,442 49,616 859 31,101 329,654

Depreciation 18,783 2,211 25,507 10,705 36,212 38,354 1,429 15,952 112,941 13,871 (10) 9,356 21,256 9,986 1,531 2,233 58,223

Non-cash expenses other than depreciation

(ii) Information about Secondary business Segments

Rs.’000 Rs.’000

Revenue by geographical segment India

Outside India Total India

Outside India Total

Total Sales

8,216,993 8,223 8,225,216

6,981,794 13,866 6,995,660

Less : Inter-segment (96,371) (96,371)

(172,002) (172,002)

External Sales 8,120,622 8,223 8,128,846

6,809,792 13,866 6,823,658

Carrying amount of segment assets 5,827,370 5,827,370 4,250,400 4,250,400

Additions to fixed assets 317,064 317,064 329,654 329,654


32. Information required under Schedule VI to the Companies Act, 1956 have been given to the extent applicable.

(iii) Notes (i) The company is organized into four main business segments,namely

(a) Animal Feeds - comprising of compound feed for cattle, poultry, aqua etc.

(b) Agri-business - comprising of plant growth promoters, pesticides etc.

(c) Retail - comprises of Nature’s Basket. Aadhaar Retailing has been sold off.

(d) Integrated Poultry business

(e) Oil Palm Plantation business- hived off under the scheme of demerger.

Segments have been identified and reported taking into account, the nature of products and services, the differing risks a

nd returns, the organisation structure, and the internal financing reporting systems.

(ii) The Segment revenue in each of the above business segments consists of sales (net of returns, sales tax, rebates etc.)

(iii) The Segment revenue in the geographical segments considered for disclosure are as follows :

(a) Revenue within India includes sales to customers located within India

(b) Revenue outside India includes sales to customers located outside India

(iv) Segment Revenue,Results,Assets and liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis

RELATED PARTY DISCLOSURES:

Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below “

1. Relationships : (i) Holding Companies:

Godrej Industries Limited (GIL) holds 70.29% ( Previous year 57.69%)in the Company. GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the ultimate Holding Company.

(ii) Subsidiary companies: Goldmohur Foods and Feeds Limited Golden Feed Products Limited Cauvery Palm Oil Ltd (From 1.02.08) Godrej Oil Plantations Ltd (formely Godrej Aquafeed Ltd) Aadhar Retailing Limited (Upto 27.03.08) Godrej Gokarna Oil Palm Ltd (Upto 25.02.08) (formely Godrej Oil Palm Ltd)

(iii) Fellow Subsidaries: Godrej Consumer Products Limited Godrej Infotech Limited Godrej Hershey Limited Godrej Sara Lee Limited Godrej Properties Limited Godrej Hicare Limited Ensemble Holdings & Finance Limited

(iv) Joint Ventures: ACI Godrej Agrovet Private Limited Al Rahaba Trading International LLC Godrej Goldcoin Aquafeed Limited Godrej Gokarna Oil Palm Ltd (from 26.02.08) (formely Godrej Oil Palm Ltd)

(v) Associates: Creamline Dairy Products Limited Polchem Hygiene Laboratories Private Limited Aadhar Retailing Limited (From 28.03.08)

(vi) Other related parties where persons mentioned in (viii) below exercise significant influence:

Bahar Agrochem & Feeds Private Limited

96

Avestha Gengraine Technologies Pvt Ltd Krithika Agro Farm Chemicals and Engineering Industries Private Limited

(vii) Key management personnel: Dr.S.L.Anaokar Mr.C.K.Vaidya Mr.B.S.Yadav

(viii) Individuals exercising control or significant influence (and their relatives): Mr. A.B. Godrej Mr. N.B. Godrej

2. The following transactions were carried out with the related parties in the ordinary course of business :

(i) Details relating to parties referred to in items 1(i), (ii), (iii), (iv),(v) and (vi) above

Rs. '000

Nature of Transactions Holding Companies

Subsidiaries Fellow Subsidiaries

Joint Ventures

Associates Other related Parties

(i) (ii) (iii) (iv) (v) (vi)1 Issue of share capital

(incl. Premium)1,000,000 -

300,000 -2 Share application money -

- 3,9253 Purchase / Transfer of

fixed assets561 - - - - -

1,582 5,696 - - - -4 Sales / Transfer of fixed

Assets- - - - - -

39,5765 Sale of Business /

Investments80 1,410,610 - - - -

- - - - - -6 Investment in share

capital- 1,056,111 - 18,648 - -

- - - 6,743 - -7 Advances given during

the year- 5,000 - 47,100 396,425 -

- 83,134 - 4,240 - 7058 Intercorporate deposits

placed during the year- - - - 110,700 -

- -9 Intercorporate deposits

taken during the year160,000 - 30,000 - -

345,000 - - - - -10 Sale of materials /

finished goods59 291,142 - - 1,771 -

Nature of Transactions Holding Companies

Subsidiaries Fellow Subsidiaries

Joint Ventures

Associates Other related Parties

(i) (ii) (iii) (iv) (v) (vi)- 238,144 - 19,697 - -

11 Sundry deposits placed -1,778

12 Purchase of materials / finished goods

- 336,335 2,193 48,540 16,575 200,065

213,889 - - 12,843 134,43213 Expenses charged to

other companies1,044 36,142 169 26,168 5 69

- 26,412 - 701 -14 Expenses charged by

other companies20,608 31,449 441 1,236

21,159 2,224 2,366 7,798 -15 Interest income on loan

given- - 50 10,300 230

- 1,846 - - -16 Interest expense on

intercorporate deposits taken

3,055 - 401 - -

- -16 Intercorporate deposits

written off- - - - - -

2,209 - -17 Dividend Income - - - - 6,680 -

- 34,006 3 - 6,031 -18 Dividend Paid 9,113 - 7 - -

72,799 - 27 - -19 Sunday Income - - - - -

- 230,475 - - -20 Outstanding receivables,

net of (payables)(1,057) (423,720) 131 89,043 397,624 6,978

755 (7,790) - 43,714 527 4,90921 Guarantees issued in

favour of3,000 20,963

- - - - - -22 Gurantees Outstanding - 603,000 - 109,839 - -

- 600,000 - 88,875 - -(ii) Details relating to

persons referred to in items 1 (vii) & (viii) above


1 Remuneration 9,084 6,7142 Dividend paid 586 10,3814 Outstanding loans

receivable3 Sale of investments - 76


2.(1) Contd.. Rs. '000

3. Significant Related Party Transactions :

Nature of Transactions Holding companies(i)

Amount Subsidiaries

(ii)

Amount Fellow Subsidiaries(iii)

Amount

1 Issue of share capital (incl. Premium) Godrej Industries Ltd 1,000,000

300,0002 Share application money Aadhaar Retailing Limited 3,925

3 Purchase / Transfer of fixed assets Godrej Industries Ltd 163 Goldmohur Foods & Feeds Ltd -- 5,696

Godrej & Boyce Mfg. Co. Ltd 398 Godrej Aquafeed Limited 39,576-

4 Sale of Business / Investment Godrej Industries Ltd 80 Godrej Oil Plantations Limited 497,494- -

Aadhar Retailing Ltd 800,000-

Godrej Gokarna Oil

Palm Limited

113,116

5 Investment in share capital -Godrej Gokarna Oil Palm

Limited133,042

-Godrej Oil Plantations Limited 497,494

-Aadhaar Retailing Limited 425,575

-6 Advances given during the year Cauvery Oil Palm Limited 5,000

-Aadhaar Retailing Limited 83,134

7 Intercorporate deposits taken during the year Godrej Industries Ltd 160,000 Ensemble Holdings & Finance Limited

30,000

345,000 -8 Sale of materials / finished goods / debtors Godrej Industries Ltd 59 Goldmohur Foods & Feeds Ltd 282,071

97


3. Significant Related Party Transactions (continued) :


Amount Subsidiaries

(ii)


Amount

- 162,653Godrej Oil Plantations Limited 9,071

72,9349 Purchase of materials / finished goods Godrej Industries Ltd 59 Goldmohur Foods & Feeds Ltd 336,307 Godrej consumer Products

Limited2,173

202,245Golden Feed Products Limited 28 Godrej Hershey Ltd 20

-10 Expenses charged to other companies Godrej & Boyce Mfg. Co. Ltd 760 Goldmohur Foods & Feeds Ltd 26,400 Godrej Consumer Products Ltd. 28

- 26,400 - Godrej Hershey Ltd 43

- Godrej Industries Ltd 284 Aadhar Retailing Ltd 9,088 Godrej Hi Care Ltd 51

- - - Golden Feed Products Limited 654 Godrej Properties Ltd 42

- - Godrej Sara Lee Ltd 5

- 11 Expenses charged by other companies Godrej Industries Ltd 20,570 Goldmohur Foods & Feeds Ltd 21,149 Godrej Consumer Products Ltd. 377

21,006 - 1,225 Godrej & Boyce Mfg. Co. Ltd 38 Aadhaar Retailing Ltd. 10,300 Godrej Hi Care Ltd 64

12 Interest expense on intercorporate deposits taken Godrej Industries Ltd 3,055 Ensemble Holdings & Finance Limited

401

13 Dividend Income Goldmohur Foods & Feeds Ltd 34,006 14 Dividend paid Godrej Industries Ltd 9,113 Ensemble Holdings & Finance

Limited 7

72,799 27 15 Outstanding receivables, net of (payables) Godrej Industries Ltd (1,060) Goldmohur Foods & Feeds Ltd (343,759) Godrej Hi Care Ltd 13

659 9,100 - Godrej & Boyce Mfg. Co. Ltd 3 Golden Feeds Products Limited 24,460 Godrej Properties Ltd 42

96 23,939 - Godrej Oil Plantations Limited (109,421) Godrej Sara Lee Ltd 5

(16,891) - Cauvery Palm Oil Ltd 5,000 Godrej Consumer Products Ltd. 28

- - Godrej Hershey Ltd 43

- 16 Sundry Income Godrej Oil Plantations Limited 230,475 17 Guarantees issued in favour of Godrej Oil Plantations Limited 3,000

- 18 Gurantees Outstanding Goldmohur Foods & Feeds Ltd 600,000

- Godrej Oil Plantations Limited 3,000

- 1 Investment in share capital ACI Godrej Agrovet Private

Limited18,087

6,743 Godrej Goldcoin Aquafeed

Limtited 561

- 2 Advances given during the year Al Rahaba Trading International

LLC4,240 Aadhar Retailing Ltd 396,425 Kritika Agro Farm Chemical

& Engineering Industries Pvt. Limited

705

3 Intercorporate deposits taken during the year Godrej Goldcoin Aquafeed Limtited

47,100

- 4 Intercorporate Deposit placed during the year Aadhar Retailing Ltd 110,700

- 5 Sale of materials / finished goods Godrej Goldcoin Aquafeed

Limtited- Polchem Hygiene Laboratories

Pvt. Limited 1,771

19,697 - 6 Purchase of materials / finished goods Godrej Goldcoin Aquafeed

Limtited48,540 Polchem Hygiene Laboratories

Pvt. Limited 16,575 Bahar Agrochem & Feeds Private

Limited200,065

- 12,843 134,432 7 Expenses charged to other companies Al Rahaba Trading International

LLC197 Polchem Hygiene Laboratories

Pvt. Limited 5 Bahar Agrochem & Feeds Private

Limited37

701 - - Godrej Goldcoin Aquafeed

Limtited 25,025 Kritika Agro Farm Chemical

& Engineering Industries Pvt. Limited

32

- - ACI Godrej Agrovet Private

Limited 946

- 8 Expenses charged by other companies Godrej Goldcoin Aquafeed

Limtited 1,217

6,725 ACI Godrej Agrovet Private

Limited 1,073

Al Rahaba Trading International LLC

19

98



Amount Subsidiaries

(ii)


Amount

9 Interest Income on Loans given Godrej Goldcoin Aquafeed Limtited

50 Aadhar Retailing Ltd 10,300 Kritika Agro Farm Chemical & Engineering Industries Pvt.

Limited

230

- - - 10 Dividend Income Creamline dairy Products Limited 6,680

4,782 Creamline Nutrients Limited -

703 Polchem Hygiene Laboratories

Pvt. Limited -

11 Outstanding receivable s, net of payables ACI Godrej Agrovet Private Limited

4,328 Polchem Hygiene Laboratories Pvt. Limited

(1,928) Kritika Agro Farm Chemical & Engineering Industries Pvt.

Limited

4,171

3,381 527 4,909 Al Rahaba Trading International

LLC 37,575 Aadhar Retailing Ltd 399,552 Bahar Agrochem & Feeds Private

Limited 2,807

37,424 83,134 - Godrej Goldcoin Aqufeed Limited 47,882

40,332 Godrej Gokarna Oil (742)

Palm Limited -

12 Guarantees issued in favour of Godrej Gokarna Oil Palm Limited 3,200 -

ACI Godrej Agrovet Private Limited

17,763

- 13 Gurantees Outstanding Al Rahaba Trading International

LLC59,582

- ACI Godrej Agrovet Private

Limited 47,057

- Godrej Gokarna Oil 3,200

Palm Limited -

33 Figures of the previous year have been regrouped & re-classified wherever necessary to conform to the current year’s classification.

34 INFORMATION REQUIRED TO BE FURNISHED UNDER PART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956:

3. Significant Related Party Transactions (continued) :

i) Registration Details Registration No. 16655 State Code 11 Balance Sheet Date 31/3/2008

ii) Capital raised during the year (Rupees ‘000) Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement 20,000

iii) Position of mobilisation and deployment of funds

(Rupees ‘000) Total Liabilities 5,827,370 Total Assets 5,827,370 Sources of Funds Paid-up Capital 121,188 Reserves & Surplus 2,089,132 Secured Loans 559,567 Unsecured Loans 1,152,999 Application of Funds Net Fixed Assets 978,128 Investments 1,275,515 Net Current Assets 1,712,299 Misc. Expenditure - Accumulated Losses Nil

iv) Performance of Company (Rupees ‘000) Turnover 8,128,846 Total Expenditure 8,870,343 Profit before tax before extraordinary income (392,234) Profit before tax after extraordinary income 382,193 Profit after tax 382,193 Earning Per Share before extraordinary (36.89) Earning Per Share after extraordinary 35.54 Dividend rate 10.00%

v) Generic Names of three principal products services of Company Item Code No. 23099010 Product Description Animal Feeds

STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956.

1. Name of the Subsidiary Goldmohur Golden Feed Cauvery Palm Godrej Oil Foods and Feeds Products Ltd. Oil Ltd. Plantations Ltd. Ltd .

2. Date on which it became a Subsidiary January 1, 2001 July 14,2003 March 1, 2008 August 18, 2006

3. Financial Year ending March 31, 2008 March 31, 2008 March 31, 2008 March 31, 2008

4. The Company’s interest in the Subsidiary as on 31.3.2007

a) Number of fully paid Equity Shares held 1,838,170 50,000 1,938,000 56,400

b) Face Value Rs. 10 Rs. 10 Rs. 73.18 Rs. 10

c) Extent of holding 100% 100% 80%

5. Net aggregate Profit/(Loss)of the subsidiary Company (Rs.’000) (Rs.’000) (Rs.’000) (Rs.’000)

so far as it concerns the members of the Company :-

A) For the Financial Year ended on March 31, 2008 :

i) Not dealt with in the Books of Account of the Company 18,519 -

ii) Dealt with in the Books of Account of the Company 47,500 -

B) For the subsidiary company’s previous Financial Years since it became a subsidiary

i) Not dealt with in the Books of 40,590 - Account of the Company ii) Dealt with in the Books of 81,801 - Account of the Company

V.V. CHAUBAL N.B. GODREJ B.S.YADAV Company Secretary Chairman Executive Director & President


99



Rs. ('000s) Rs. ('000s) Rs. ('000s) Rs. ('000s)

A. Cash Flow from Operating Activities :

Net Profit Before Taxes(after extraordinary income)

391,410 37,266

Adjustment for:

Depreciation 112,941 58,223

Loss on sale of fixed assets 5,484 2,336

Extraordinary Income:

Profit on transfer of business (366,203) (230,475)

Profit on Demerger (417,441) -

(783,645) (230,475)

Dividend income (6,680) (40,041)

Interest income (33,309) (12,327)

Interest expenses 225,935 124,227

Provision for Doubtful Debts and Advances 6,962 11,190

Profit on sales on investments (282,563) -

(754,875) (49,602)

Operating Profit Before Working Capital Changes (363,465) (60,792)

Adjustments for:

Inventories 108,975 (513,811)

Debtors and Other Receivables (1,198,743) (241,167)

Creditors and Other Payables 339,297 195,486

(750,470) (559,492)

Cash Generated from Operations (1,113,935) (609,095)

Direct Taxes paid (net of refund received) (52,850) (35,196)

Net Cash Flow from Operating Activities (1,166,785) (644,291)

B. Cash Flow from Investing Activities :

Acquisition of fixed assets (321,593) (329,653)

Proceeds from sale of fixed assets 5,912 4,015

Intercorporate Deposits Given (115,700) -

Purchase of Investments (185,946) (188,269)

Proceeds from sale of investments in Subsidiaries 753,163 180,076

Proceeds from sale of investments 80 -

Interest Received 18,030 12,294

Dividend Received 6,680 40,041

Net Cash used in Investing Activities before extraordinary item

160,625 (281,495)

Proceeds from Extraordinary Items;

Proceeds from transfer of business/demerger (note 3)

374,424 342,223

Net Cash used in Investing Activities after extraordinary item

535,049 60,728


Rs. ('000s) Rs. ('000s) Rs. ('000s) Rs. ('000s)

c. Cash Flow from Financing Activities :

Proceeds from issue of capital 1,000,000 300,000

Repayment of Borrowings (30,316) (116,889)

Proceeds from Borrowings 308,400 150,000

Increase/(Decrease) in Cash Credit/WCDL (243,302) 343,210

Interest Paid (225,935) (124,227)

Dividend Paid - (126,002)

Dividend Tax Paid - (17,672)

Net cash used in Financing Activities 808,847 408,422

Net increase in cash and cash equivalents 177,110 (175,141)

Cash and Cash equivalents (Opening balance) 92,271 267,412

Less : Transfer on Demerger / Sale of Business 2,074 90,197

Cash and Cash equivalents (Closing balance) 267,308 92,271

NOTES:

1 The Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting Standard (AS) 3 on “CashFlow Statements”, and presents cash flows by operating, investing and financing activities.

2 Figures in brackets are outflows/deductions.

3 Proceeds from transfer of business/ demerger is for a total consideration of Rs. 1,410,610 thousands for the three business.

Out of the total consideration Rs. 374,424 thousands has been received in cash and the balance by way of allotment of equity shares in demerged / transfer of business companies.

4 Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s classification.

For and on behalf of For and on behalf of the Board

KALYANIWALLA & MISTRYCHARTERED ACCOUNTANTS

E.K.IRANI N.B.GODREJ B S. YADAV V.V.ChaubalPartner Chairman Executive Director Company Secretary & President

Membership no. 35646 Mumbai, May 21, 2008

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008

100

BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008

1. We have audited the attached Balance Sheet of Godrej Oil Plantation Limited (formerly Godrej Aquafeed Limited), as at 31st March 2008 and also the Profit and Loss Account and 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.


3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. 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 purposes of our audit. b) As stated in Note 5 of Schedule 12, notes to accounts, the Company has amortised Licenses / Rights, an intangible asset for oil palm plantation business over a period of 20 years which exceeds the maximum limit of 10 years as prescribed by Accounting Standard 26 “Intangible Assets” issued by Institute of Chartered Accountants of India. The Company is of the view that the oil palm plantation business operates on a command area basis with the government allotting to various companies clearly demarcated area for the development of oil palm plantation. With this responsibility for the development for oil plantation comes the exclusive rights for the procurement of Fresh Fruit Bunches produced in the allotted area. Oil Palm Plantation has relatively long productive life of 30 years. Since the allotment right is expected to yield benefits over a long period, the amount paid towards the same

is amortised over a 20 year period. c) 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 these books.

d) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account. e) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read with the 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 31st March, 2008; and ii) in the case of the Profit and Loss Account, of the profit for the period ended on that date. iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the period ended on that

date.5. On the basis of the written representations received from the Directors as on 31st March, 2008, and taken on

record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2008 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTS

ERMIN K. IRANIPlace: Mumbai PARTNERDated : May 20, 2008 Membership No. 35646

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ OIL PLANTATION LIMITED (formerly Godrej Aquafeed Limited)

Annexure to the Auditors’ ReportReferred to in paragraph (3) of our report of even date.1) (a) The Company has maintained proper records showing full particulars, including quantitative details and

situation of fixed assets. (b) As explained to us, the Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the periodic verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been reported on such verification. (c) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

2) (a) The Management has conducted physical verification of inventory at reasonable intervals. (b) In our opinion, the 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 and no material discrepancies were noticed on physical verification.

3) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 (b) Consequently, the question of commenting on the rates of interest and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and the interest and reasonable steps for recovery of principal and interest does not arise. (c) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (d) Consequently, the question of commenting on the rates of interest and conditions of the loans being prejudicial to the interests of the Company and payment of principal and the interest does not arise.

4) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with size of the Company and the nature of its business, for the purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed a continuing failure to correct major weakness in internal controls.

5) (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 and arrangements referred to in section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.

(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.

7) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and the nature of its business.

8) We have broadly reviewed the books of accounts maintained by the Company pursuant to the order made by the Central Government for maintenance of cost records prescribed under section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima-facie, the prescribed accounts and records have been maintained.

We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

9) (a) According to the information and explanations given to us and on the basis of our examination of books of accounts, during the period, the Company has no statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues incurred during the period covered. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March 2008 for a period of more than six months from the date they became payable. (b) 2According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute.

10) As the Company has been registered for a period less than five years the question of commenting on its accumulated losses being less than fifty percent of its net worth does not arise. The Company has not incurred cash loss during the financial year but incurred cash loss in the immediately preceding financial year.

11) According to the information and explanations given to us and on the based on documents and records produced to us, there are no dues to banks, financial institutions or debenture holders.



14) The Company does not deal in shares, securities, debentures and other investments.15) According to the information and explanations given to us, the Company has not given any guarantee for loans

taken by others from banks or financial institutions.16) According to the information and explanations provided to us, there are no term loans, hence the question of

its application for the purposes for which they were obtained is not applicable.17) According to the information and explanations given to us and an overall examination of the Balance Sheet

and Cash Flows of the Company, we report that the Company has not raised funds on short term or long term basis.


19) The Company has not created any security in respect of debentures issued during the year.20) The Company has not raised any money through a public issue during the year.21) Based on the audit procedures performed and information and explanations given by the management, we

report that no fraud on or by the Company has been noticed or reported during the year.For and on behalf of


Place: Mumbai ERMIN K. IRANIDated : May 20, 2008 PARTNER Membership No. 35646

DIRECTORS’ REPORT FOR THE FINANCIAL YEARENDED ON MARCH 31, 2008TO THE SHAREHOLDERSYour Directors have pleasure in submitting their Report along with the audited Accounts for the financial year ended on 31st March, 2008.INCORPORATION AND SHARE CAPITALYour Company was incorporated on August 18, 2006 with an Authorized Capital of Rs.5,00,000. The Company obtained the Certificate of Commencement of Business on September 13, 2006. During the year the share capital was increased by Rs.2,05,000 pursuant to the scheme of demerger without payment being received in cash. After the restructuring Godrej Agrovet Limited (GAVL) and its nominees holds 80% of share capital and the balance 20% was transferred to Blessed Resources Pte. Limited of Singapore which is a strategic investor in the Company.CHANGE IN NAME AND BUSINESSYour Company Godrej Aquafeed Limited has been renamed as Godrej Oil Plantations Limited during the year and thereafter, the Oil Palm Business and Jatropha Plantation carried on by GAVL with all the assets and liabilities in the States of Andhra Pradesh, Orissa, Mizoram and Gujrat has been demereged from GAVL and has been transferred to Godrej Oil Plantations Limited The effective date of business transfer as per the court order was April 1, 2007.The principal activity of the Company henceforth will be to carry on the business of planters, agriculturists, agrobiologists, horticulturists, growers, cultivators, millers, crushers, expellers, solvent-extractors, seed researchers, manufacturer, refiners, processors, dealers, traders, sellers, buyers, exporters, importers, distributors, stockiest, agents, managers of plantations or estates or lands or nurseries and suppliers of seeds of all varieties including Medicinal and Aromatic Plants and all kinds of oil seeds such as but not limited to oil palm, coconuts, sunflower, rapeseeds, mustard, soybean, groundnut, safflower, cotton and all materials containing edible / non edible / industrial oils (including palm kernels) oil cakes of all varieties, rice bran and of all varieties of edible / non edible / industrial oils, their derivatives, substitutes and of all upstream products and of all down stream products including oleo chemicals, fatty acids, fatty chemicals, de-oiled meal for human consumption and to produce, process, extract, distil, purchase, import, export, sell, trade and deal in all types of oils, oil seeds and seedlings capable of usage in food, cosmetics, healthcare, bio fuel, other consumer and industrial industries.FINANCIAL RESULTSYour Company’s performance during the year as compared with that during the previous year is summarised below: -


Rs.lacFor the year ended 31/3/2007 Rs. lac

Total Income 5737.87 277.50Profit Before Taxation (PBT) 1547.35 (15.23)Less : Provision for Taxation 663.42 0.34Profit After Taxation (PAT) 883.93 (15.57)Balance brought forward from previous year (15.57) -Total 868.36 (15.57)Balance Carried Forward to Balance Sheet 868.36 (15.57)

DIVIDEND-The Directors do not recommend any dividend for the year 2007-08.FIXED DEPOSITS-The Company has not accepted any public deposits during the financial year under review.HOLDING COMPANY- The Company is a subsidiary of Godrej Agrovet Limited as defined under Section 4(1)(b) of the Companies Act, 1956.SUBSIDIARY COMPANIES-The Company has no subsidiary companies during the year under review.DIRECTORS- Mr. C. K. Vaidya, Mr. Subbarao A. R. and Mr. R. S. Vijan were the Directors of the Company as on the date of the last Annual General Meeting. During the year, Mr. C. K. Vaidya, Mr. Subbarao A. R. and Mr. R. S. Vijan have resigned w.e.f. 31st August 2007, 21st September 2007 and 8th May 2008 respectively. Mr. S. K. Gupta who was appointed as an Additional Director w.e.f. 21st September 2007 has also resigned w.e.f. 8th May 2008. Mr. B. S. Yadav has been appointed as an Additional Director w.e.f 31st August 2007 while Mr. N. B. Godrej (Chairman), Mr. R. R. Govindan and Mr. S.Varadaraj have been appointed as Additional Directors w.e.f. 8th May 2008. All these four Directors, namely, Mr. N. B. Godrej, Mr. B. S. Yadav, Mr. R. R. Govindan and Mr.S Varadaraj hold office upto the date

of the ensuing Annual General Meeting. They are eligible for appointment as the Directors of the Company. Notices in this respect under Section 257 of the Companies Act, 1956 have been received from one of the Members along with a deposit of Rs. 500/- (Rupees Five Hundred only) for each of them signifying the intention to propose their candidature for the office of Directors of the Company. Since all the present Directors of the Company are Additional Directors, none of them is liable to retire by rotation.AUDITORS - You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment and a certificate as required u/s 224 (1-B) of the Companies Act, 1956 has been received from them.ADDITIONAL INFORMATION -The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.STATUTORY INFORMATIONA) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo -The information in respect of these matters, required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report.B) Particulars of Employees - None of the employees is covered under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002.C) Directors’ Responsibility Statement -Pursuant to the provisions contained in section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm:- a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same ; b) that they have selected such Accounting Policies and applied them consistently and made judgements 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 or loss of the Company for that period ; c) that they 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 for preventing and detecting fraud and other irregularities ; d) that they have prepared the annual accounts on a going concern basis.HUMAN RESOURCESYour Company aims to focus on development of Human Resources. The industrial relations are cordial and the Board would like to place on record its sincere appreciation for the unstinted support from all the employees. For and on behalf of the Board of Directors B.S. Yadav N.B. GodrejMumbai, May 20, 2008. Director Chairman

ANNEXURE `A’ANNEXURE FORMING PART OF THE DIRECTORS’ REPORTINFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO :A. Conservation of Energy-The Company endeavors to encourage the use of energy conservation measures and

undertakes a regular review of the level of energy consumption and the energy-saving systems and devices. Some of the measures adopted by your Company towards conservation of energy were as follows:-

Provision of limit switches for tanks for automatic on and off switching of the motors. Installation of additional capacitors. Replacement of under loaded motors with optimum loaded motors. Installation of energy saving blowers to reduce the load. Switching off unwanted motive load when not in use. Replacement of 40W tubes with slim energy efficient 36W tubes.

B. Technology absorption, adaptation and innovation - Your Company constantly endeavors for technological upgradation and conducts in-house Research & Development for achieving improved quality at a lower cost. The benefits derived as a result of various measures undertaken are as follows :- Improvement in quality of products manufactured. Improvement in power factor levels and reduced load on cables. Reduction in process loss Enhancement in the life of equipment.

C. Foreign Exchange earnings and outgo 2007-2008 2006-2007 Rs. lac Rs. lac I. Foreign exchange used 158.56 Nil II. Foreign exchange earned Nil Nil. For and on behalf of the Board of Directors B.S. Yadav N.B. GodrejMumbai, May 20, 2008 Director Chairman.

101

BALANCE SHEET AS AT MARCH 31, 2008

Schedule Rs.'000

THIS YEARRs.'000

PREVIOUS YEARRs.'000

SOURCES OF FUNDSSHAREHOLDERS' FUNDS

Share Capital 1 705 500 Reserves & Surplus 2 584,125 -

584,830 500 LOAN FUNDS

Unsecured Loans 3 49,174 - 49,174 -

DEFERRED TAX LIABILITY 31,454 - TOTAL 665,458 500 APPLICATION OF FUNDS

FIXED ASSETS 4 Gross Block 476,549 - Less: Depreciation 26,943 - Net Block 449,606 - Capital work-in-progress / Advances 14,281 -

463,887 - INVESTMENTS 5 17 -

CURRENT ASSETS, LOANS AND ADVANCES 6 Inventories 47,240 - Sundry debtors 92,382 28,591 Cash and Bank Balances 1,770 3,115 Other current assets 61 - Loans and Advances 110,910 3

252,363 31,709 LESS : CURRENT LIABILITIES AND PROVISIONS

Liabilities 7 14,361 32,765 Provisions 8 36,448

50,809 32,765 NET CURRENT ASSETS 201,554 (1,057)

PROFIT AND LOSS ACCOUNT - 1,557 TOTAL 665,458 500 NOTES TO ACCOUNTS 12

The Schedules referred to above form an integral part of the Balance Sheet.

As per our Report attached

For and on behalf ofKALYANIWALLA & MISTRYChartered AccountantsE.K.IRANIPartner

Membership no. 35646Mumbai, May 20, 2008

Signatures to Balance Sheet andand Schedules 1 to 8 and 12

N.B.GODREJ B.S.YADAV Chairman Director


As per our Report attached

For and on behalf ofKALYANIWALLA & MISTRYChartered AccountantsE.K.IRANIPartner

Membership no. 35646Mumbai, May 20, 2008

Signatures to Profit and Loss Accountand Schedules 9 to 11 and 12

N.B.GODREJ B.S.YADAV Chairman Director

THIS YEAR

PREVIOUS YEAR

Schedule Rs.’000 Rs.’000 Rs.’000

INCOME

Sales 573,787 27,750

Other income 9 1,460 -

575,247 27,750

EXPENDITURE

Materials 10 351,037 23,626

Expenses 11 41,714 5,204

Depreciation 27,761 443

420,512 29,273

PROFIT/(LOSS) BEFORE TAXATION 154,735 (1,523)

Provision for Taxation

Current Tax 34,563 -

Fringe Benefit Tax 325 34

Deferred tax 31,454 -

66,342 34

PROFIT / (LOSS) AFTER TAXATION 88,393 (1,557)

(Deficit) Brought Forward (1,557) -

Surplus/(Deficit) carried forward to Balance Sheet 86,836 (1,557)

Earnings per share (Basic/Diluted) in Rs. (Refer Note 19) 1,253.80 (31.14)


PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,2008

Rs.’000 THIS YEARRs.’000


SCHEDULE 1 : SHARE CAPITALAUTHORISED1,00,00,000 Equity Shares of Rs 10 each 100,000 100,000 ISSUED70,500 (Previous year 50,000) Equity Shares of Rs 10 each fully paid. 705 500

ISSUED,SUBSCRIBED AND PAID UP70,500 (Previous year 50,000) Equity Shares of Rs 10 each fully paid. 705 500

Of the above : a) 56,400 (previous year 50,000) equity shares are held by

Godrej Agrovet Ltd. the holding Company.b) 20,500 equity shares have been issues pursuant to the scheme

of demerger without payment being received in cash.TOTAL 705 500

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31,2008SCHEDULE 2 : RESERVES & SURPLUSSECURITIES PREMIUM ACCOUNTReceived during the year 497,289 -

497,289 - PROFIT AND LOSS ACCOUNT 86,836 - TOTAL 584,125 -

SCHEDULE 3 : UNSECURED LOANS2,50,000, 10% Redemeable non- convertible Debentures of Rs 10 each (previous year nil)(amount due within a year Rs.2,500 thousand, previous year Rs. nil thousand).

2,500 -

Sales Tax Deferment facility - Taken over as per the scheme of demerger 33,322 Received during the year 13,352

46,674 TOTAL 49,174 -

SCHEDULE 4: FIXED ASSETS

ASSETS GROSS BLOCK DEPRECIATION NET BLOCKAs at

01.04.07Taken Over On

DemergerAdditions Deductions As at

31.03.08Upto

01.04.07For the Year On Deductions Upto

31.03.08As at

31.03.08As at

31.03.07Tangible AssetsFreehold Land - 2,980 - - 2,980 - - - - 2,980 - Leasehold Land - - - - - - - - - - - Buildings - 24,108 4,781 - 28,889 - 1,113 - 1,113 27,775 - Staff Quarters - - - - - - - - - - - Plant & Machinery - 71,443 6,807 832 77,418 - 6,581 248 6,333 71,085 - Furniture & Fixtures - 350 60 - 410 - 75 - 75 335 - Leasehold Improvements - - - - - - - - - - - Office & Other Equipments - 650 105 - 755 - 55 - 55 700 - Vehicles - 2,012 1,019 906 2,125 - 179 400 (221) 2,346 - Research Centre - - - - - - - - - - - Trees, Development Costs - 11,703 - - 11,703 - 1,997 - 1,997 9,706 - Intangible AssetsComputer Software - 248 347 171 424 - 170 171 (1) 425 - Grant of Licenses - - 351,845 - 351,845 - 17,592 - 17,592 334,253 - Technical Know-How Fees - - - - - - - - - - - Total - 113,494 364,964 1,909 476,549 - 27,762 819 26,943 449,606 - Previous Year - - - - - - - - - - -Capital Work-In-Progress/Advance 14,281

463,887 -

102

SCHEDULE 5 : INVESTMENTSLONG TERMNON TRADE UNQUOTED GOVEREMENT SECURITIES

(All the Securities have been deposited with various Government Authorities)National Savings Certificates (Face value Rs.17 thousand, Previous year Rs.nil thousand)

17 -

TOTAL 17 - SCHEDULE 6 : CURRENT ASSETS, LOANS & ADVANCES(A) INVENTORIES :

Raw Materials 1,224 - Finished Products 4,576 - Stores and Spares 1,509 - Stock under Cultivation 39,931 -

47,240 - (B) SUNDRY DEBTORS (Unsecured and considered good unless

otherwise stated)Debts outstanding for a period exceeding six monthsConsidered Good 78,984 - Considered Doubtful 131 -

79,115 - Other Debts (less than six months) 13,398 28,591 Total 92,513 28,591 Less: Provision for doubtful debts 131 -

92,382 28,591 (C) CASH AND BANK BALANCES :

Cash and Cheques on hand 21 - Balances with Scheduled Banks

- In Current Accounts 1,749 3,115 1,770 3,115

(D) OTHER CURRENT ASSETS : 61 - (E) LOANS AND ADVANCES :

(Unsecured and considered good unless otherwise stated)Loans and Advances recoverable in cash or in kind or for value to be received.

108,154

3

Other Deposits i) Government Authorities. 1,004 - ii) Others 1,752 -

110,910 3 TOTAL 252,363 31,709

SCHEDULE 7 : LIABILITIESSundry Creditors Dues to Micro, Small & Medium Enterprises (refer Note - 6) - - Others 12,298 32,543

12,298 - Investors Education and Protection Fund - - Advances from Customers 1,934 - Sundry Deposits 129 222 TOTAL 14,361 32,765

SCHEDULE 8 : PROVISIONSFor Taxes 34,888 - For Gratuity 1,028 - For Leave Encashment 532 - TOTAL 36,448 -

SCHEDULE 9 : OTHER INCOMEInterest Income 242 - Insurance claims received 4 - Sundry Balances written back 1,072 - Misc other income 142 - TOTAL 1,460 -

SCHEDULE 10 : MATERIALS

a) RAW MATERIALS CONSUMED

Opening stock - -

Add : Taken over as per scheme of demerger 537 -

Add : Purchases during the year 324,048 23,627

324,585 23,627

Less : Closing Stocks 1,224 -

323,361 23,627

b) PURCHASE FOR RESALE 39,547 -

c) INVENTORY CHANGE

Opening Stock - -

Add : Taken over as per scheme of demerger

Finished Goods 848 -

Stock under cultivation 31,788 -

32,636 -

Less : Closing Stock

Finished Goods 4,576 -

Stock under cultivation 39,931 -

44,507 -

(11,871) -

TOTAL 351,037 23,627

SCHEDULE 11 : EXPENSES

1 Salaries, Wages, Bonus,Gratuity and Allowances 11,295 1,515

2 Contribution to Provident Fund and Other Funds and Administration Charges

513 50

3 Employee Welfare Expenses 256 57

4 Processing charges 3,813 607

5 Consumable Stores 3,151 153

6 Power and Fuel 5,894 703

7 Rent 641 30

8 Rates and Taxes 297 8

9 Repairs & Maintenance -

Building 330 1

Plant & Machinery 2,015 8

Other assets 66 -

2,411 9

10 Insurance 408 120

11 Postage, telephony and stationery 685 76

12 Auditor’s Remuneration 157 84

13 Legal & Professional Fees 982 609

14 Bank Charges 766 -

15 Freight, Coolie and Cartage 1,671 -

16 Advertisement and publicity 175 171

17 Travelling expenses 789 810

18 Bad Debts/Advances written off 38 -

19 Provision for doubtful Debts and Advances 93 -

20 Loss on sale of Fixed Assets (Net) 64 -

21 Discounts, Commission & Brokerage 2,734

22 General Expenses 4,881 202

TOTAL 41,714 5,204

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31,2008

103

1. SIGNIFICANT ACCOUNTING POLICIES: a) The financial statements are prepared under the historical cost convention, on the accrual

basis of accounting, in accordance with the generally accepted accounting principles in India and the Accounting Standards issued by the Institute of Chartered Accountants of India.

b) Fixed assets have been stated at cost and include incidental and / or installation/development expenses incurred in putting the asset to use and interest on borrowing incurred during construction period.

c) Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.

d) Depreciation/Amortization has been provided for as under : (a) The Company has grouped additions and disposals in appropriate time periods of a

month/ quarter for the purpose of charging pro rata depreciation in respectof additions and disposals of its assets keeping in view the materiality of the items involved.

(b) (1) Depreciation is provided on the straight line method at the rates specified in schedule X IV to the Companies Act, 1956, except for computer hardware which is depreciated over its estimated useful life of four years.

(2) Amortizations Asset type Period (i) Leasehold Land Primary lease period (ii) Trees Development cost 15 years (iii) Grant of Licenses/Rights 20 years e) Inventories: Raw materials and stock under cultivation are valued at weighted average cost. Finished goods

are valued at lower of cost and net realisable value. These costs include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Stores and spares are valued at cost using the First-In-First-Out method.

f) Employee Benefits i) Short-term employee benefits (payable wholly within twelve months of rendering the

service): Short-term benefits such as salaries, wages, short-term compensation absences, etc.,

are determined on an undiscounted basis and recognised in the period in which the employee renders the related service.

ii) Post-employment benefits: Defined Contribution Plans: The Company’s contributions paid/payable to provident

Fund, Employees State Insurance Scheme, Employees Pension Schmes, 1995 and other funds, are determined under the relevant approved schemes and/or statutes and are recognised as expense in the Profit and Loss Account during the period in which the employee renders the related service. There are no further obligations other than the contributions payable to the approved trusts/appropriate authorities. However, the rules of Company’s Provident Fund Scheme, 1952, for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Company. The Company’s PF does not have any existing Deficit or Interest shortfall. In view of the track record of the Company’s PF Trust - its assets, return on investments and accmulated reserves - the Company does not anticipate any deficiency in the forcseeabel future. In any case making reasonable acturial assumptions for determining and measuring any probable future obligations arising due to interest shortfall, would pose a formidabel challenge.

Defined Benefit Plans: The Company’s gratuity and leave encashment/long-term compensated absences schemes are defined benefit plans. The Company’s liability for the defined benefit schemes is actuarially determined based on the projected unit credit method. The Company’s net obligations in respect of such plans is calculated by estimating the amount of future benefit that the employees have earned in return for their services in the current and prior periods that benefit is discounted to determine its present value and the fair value of the plan asset is deducted. Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

Terminal Benefits: All terminal benefits including voluntary retirement compensation are fully written off to the Profit and Loss Account.

g) Revenue is recognised when goods are despatched to external customers. Sales are inclusive of realised exchange fluctuations on export receivables but net of returns, sales tax, rebates, etc.

h) Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates. The premium payable on foreign exchange contracts is amortized over the period of the contract. Exchange gains/losses are recognised in the Profit and Loss Account.

i) Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year- end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date.

j) The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.

k) Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

2. (a) CONTINGENT LIABILITY: (b) CAPITAL COMMITMENTS: The estimated value of contracts remaining to be executed on Capital Account to the extent

not provided for3. UNSECURED LOANS: Sales Tax Deferment availed under the scheme floated by the Directorate of Industries , Government

of Andhra Pradesh is classified under Unsecured Loans.

4. ACQUISITION OF OIL PALM BUSINESS: (a) Pursuant to the scheme of arrangement with the Shareholders of Godrej Agrovet Limited (the

transferor) under section 391 & 394 of the Companies Act 1956, and subsequently sanctioned by the Honourable High Court of Mumbai on 28.09.2007, the Oil Palm business of the transferor in the states of Andhra Pradesh , Orissa , Gujarat & Mizoram is demerged, with effect from 01.04.2007, into the Company.

The scheme has accordingly, been given effect to in these accounts and following Assets and Liabilities were taken over at their fair values:

Rs ‘ 000 Rs ‘ 000Fixed Assets:Net Value 113,494 Capital Work in Progress 5,319 Rights/ Grants 351,845 470,658

Investments 17Current Assets, Loans & Advances:Inventories 1) Raw Material 537 2) Stock under cultivation 31,789 3) Finished Goods 848 4) Stores & Spares 1,087

34,261Sundry Debtors 34,069 Cash & Bank Balances 1,009 Other Current Assets 52 Loans & Advances 2,909

72,300Current Liabilities (9,659)Unsecured Loans (33,322)TOTAL 499,994

(b) In consideration for transfer of business following was issued: 1) 20,500 equity shares of Rs. 10/- each at a premiumof Rs. 24,258/- 497,494 2) 2,50,000, 10% Unsecured Redeemable Non-convertible Debentures of Rs. 10/- each. 2,500 499,994

5. AMORTIZING GRANT OF LICENSES /RIGHTS OVER 20 YEARS: The oil palm plantation business operates on a command area basis with the government allotting

to various companies clearly demarcated area for the development of oil palm plantation. With this responsibility for development for oil palm plantations, comes the exclusive rights for the procurement of Fresh Fruit Bunches produced in the allotted area. Oil Palm Plantation has a relatively long productive life of 30 years. Since the allotment right is expected to yield benefits over a long period, the amount paid towards the same is amortized over a 20 year period.

6. CURRENT LIABILITIES: Under the Micro, Small & Medium Enterprises Development Act 2006, which came into force from

2nd October, 2006, certain disclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available , no disclosures have been made in the accounts.

7. DEFERRED TAX : Major components of deferred tax arising on account of timing differences as on M

arch 31, 2008 are:

THIS YEARRs.’000


AssetProvision for Doubtful Debts 32 -

Others 530 -

562 -

LiabilitiesDepreciation on Fixed Assets 32,016 -

32,016 -

Net Deferred Tax Liability (31,454) -

8. SALES TURNOVER:


Unit Quantity ValueRs. ‘000

Quantity ValueRs. ‘000

Crude Palm Oil MT 8,675 366,333 - -

Palm Kernel Oil MT 1,778 95,484 - -

Palm Kernel Cake MT 2,781 9,071 - -

Seedlings Nos 807,180 59,892 - -

Agri Inputs - 38,389 - -

Others - 4,618 - 27,750

TOTAL 573,787 27,750

Note: Sales Turnover includes sale of items purchased by the Company for resale.

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31,2008

104

9. FINISHED GOODS INVENTORIES:

Crude Palm Oil MT 19.92 562 -

Palm Kernel Oil MT 19.38 673 -

Palm Kernel Cake MT 22.89 86 -

Agri Inputs 3,255 -

TOTAL 4,576 -

10. PURCHASES FOR RESALE:

Agri Inputs 39,547 -

TOTAL 39,547 - 11. RAW MATERIALS CONSUMED:

Fresh Fruit Bunches MT 46,801.14 240,561 -

Palm Nuts MT 7,465.57 16,063 -

Palm Kernel MT 1,146.14 21,609 -

Palm sprouts Nos 807,180 37,893 -

Others 7,235 23,626

TOTAL 323,361 23,626

12. LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION:

Item For the yearEnded

Capacity Per Annum ActualProduction

MTRegistered

MT Installed

MT

a) Crude Palm Oil 31.3.2008 Not Applicable 66,000 46,800

31.3.2007 Not Applicable

b) Palm Kernel Oil 31.3.2008 Not Applicable 12,000 8,612


Installed capacity and actual production is stated in quantity of Fresh Fruit Bunches, Palm Nuts and Palm Kernel crushed.

13. DISCLOSURE IN RESPECT OF LEASES: The Company’s leasing arrangements are in respect of operating leases for premises occupied by

the Company. These leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually acceptable terms.

a. The total of future minimum lease payments under non - cancelable operating leases for each of the following periods :

THIS YEARRs. '000

PREVIOUS YEARRs. '000

i. Not later than one year 415 -

ii. Later than one year and not later than five years - -

iii. Later than five years - -

b. Lease payments recognised in the statement of Profit & Loss for the period : 415 -

14. AUDITORS' REMUNERATION:


Rs.'000 Rs.'000

Audit fees 112 56

Audit under Other Statutes 45 28

TOTAL 157 84

15. VALUE OF IMPORTS ON CIF BASIS: (INCLUDES DIRECT IMPORTS ONLY)

Raw Materials 21,178 -

TOTAL 21,178 -

16. EXPENDITURE IN FOREIGN CURRENCY:

Travelling Expenses 99 -

TOTAL 99 -

17. VALUE OF CONSUMPTION OF RAW MATERIALS, SPARES & TOOLS:


Rs.'000 % Rs.'000 %

RAW MATERIALS :

Imported items 15,757 5 - -

(including duty content)

Indigenous 307,604 95 23,626 100

TOTAL 323,361 100 23,626 100

SPARES & TOOLS :

Imported items - - - -

Indigenous 3,151 100 153 100

TOTAL 3,151 100 153 100

18. EMPLOYEE BENEFITS: I. Defined Contribution Plans: Contribution to Defined Contribution Plan, recognised as expense for the year are as under: Rs.'000 Employers' Contribution to Provident Fund 495 II. Defined Benefit Plans: a. Contribution to Gratuity Fund The Company makes annual contributions to the Employees' Group Gratuity-cum-Life

Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on superannuation, death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company's policy whichever is beneficial to the employees.

The following table sets out the funded status of the gratuity plan and the amounts recognised in the Company's financial statements as at 31 March 2008:

Rs.'000 Change in present value of obligation Present value of obligation as at 1st April 2007 - Interest Cost - Service Cost - Benefits Paid - Actuarial (gain)/loss on obligation - Present value of obligation, as at 31st March 2008 - Change in plan assets Fair value of plan assets as at 1st April 2007 - Expected return on plan assets - Contributions - Benefits paid - Actuarial gain/(loss) on plan assets - Fair value of plan assets as at 31st March 2008 - Amount recognised in the Balance Sheet Present value of obligation, as at 31st March 2008 1,028 Fair value of plan assets as at 31st March 2008 - Net obligation as at 31st March 2008 - 1,028 Net gratuity cost for the year ended 31st March 2008 Current Service Cost - Interest Cost - Expected return on plan assets - Net Actuarial (gain)/loss to be recognised - Net gratuity cost -

Assumptions used in accounting for the gratuity plan % Discount Rate 8 Salary escalation rate 5 Expected rate of return on plan assets 8

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets.

19. EARNINGS PER SHARE:

THIS YEAR(Rs.'000)

PREVIOUS YEAR (Rs.'000)

Profit after tax and prior period expenses 88,393 (1,557)Weighted average number of equity shares outstanding 70,500 50,000Basic earnings per share (Rs.) 1,253.80 (31.14)Diluted earnings per share (Rs.) 1,253.80 (31.14)Nominal value of shares (Rs.) 10 10

20. SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH 2008 (i) Information about Primary business Segments Rs.'000

Revenue

Oil Palm

Plantations (A)

Agri Inputs

(B)

Unallocated

(C)

Total

(A)+(B)+(C) Total Sales 535,398 38,389 573,787 Less : Inter-segment - External Sales 535,398 38,389 573,787 Result Segment Result 151,177 2,097 153,274 Unallocated expenditure net of unallocated income 1,218 1,218 Interest expenses - Interest Income 242 242 Dividend Income and Profit on sale of Investments - Profit before taxation and exceptional items 151,177 2,097 154,735 Provision for taxation 66,342 66,342 Profit after taxation and before exceptional items 151,177 2,097 88,393 Exceptional Items - Prior years adjustments - Profit after taxation and exceptional items 151,177 2,097 88,393 Other Information - Segment assets 713,013 3,255 716,268 Segment liabilities 131,437 131,437 Capital expenditure 364,901 364,901 Depreciation 27,761 27,761 Non-cash expenses other than depreciation -

105



Rs (000’s) Rs (000’s) A. Cash Flow from Operating Activities:

Profit before Tax and Operational Items 154,735 (1,472)Adjustments for:Depreciation 27,761 442 Loss / (Profit) on sale of Fixed Assets 64 Provision for Doubtful Debts & Advances 93 Interest Income (242) 27,676 442Operating Profit before Working Capital Changes 182,411 (1,030)Adjustments For :Inventories (12,980) - Debtors and Other receivables (137,826) (28,593)Creditors and Other payables (26,488) 32,681

(177,295) 4,088Cash Generated from Operations 5,117 3,058 Direct taxes Paid - Net Cash Generated from Operating Activities 5,117 3,058

B. Cash from Investing Activities:Acquisition of Fixed Assets (22,083) (39,576)Proceeds from sales of Fixed Assets 1,026 39,133 Interest Income 233 - Net Cash used in Investing Activities (20,824) (443)

C. Cash from Financing Activities:Proceeds from Borrowings 13,352 - Increase in Share Capital - 500 Net Cash used in Financing Activities 13,352 500

Net Increase/(Decrease) in Cash and Cash Equivalents (2,355) 3,115 Cash and Cash equivalents (Opening Balance) 3,115 - Add: Cash & Bank Balances Taken over from Godrej Agrovet Limited 1,009 -

4,124 - Cash and Cash equivalents (Closing Balance) 1,769 3,115

As per our Report attachedFor and on behalf ofKALYANIWALLA & MISTRYChartered AccountantsE.K.IRANIPartnerMembership no. 35646Mumbai, May 20, 2008

For and on behalf of BoardN.B.GODREJ B.S.YADAVChairman Director

(ii) Information about Secondary business Segments

Revenue by geographical segment India Outside India Total Total Sales 573,787 573,787 Less : Inter-segment - - - External Sales 573,787 - 573,787 Carrying amount of segment assets 716,268 716,268 Additions to fixed assets 364,901 364,901

(iii) Notes (i) The company is organized into four main business segments,namely (a) Oil Palm Plantation business (b) Agri-business - comprising of plant growth promoters, pesticides etc. Segments have been identified and reported taking into account, the nature of products

and services, the differing risks and returns, the organisation structure, and the internal financing reporting systems.

(ii) The Segment revenue in each of the above business segments consists of sales (net of returns, sales tax, rebates etc.)

(iii) The Segment revenue in the geographical segments considered for disclosure are as follows :

(a) Revenue within India includes sales to customers located within India (b) Revenue outside India includes sales to customers located outside India (iv) Segment Revenue,Results,Assets and liabilities include the respective amounts

identifiable to each of the segments and amounts allocated on a reasonable basis.

21. RELATED PARTY DISCLOSURES:Related party disclosures as required by AS - 18, "Related Party Disclosures", are given below ":1. Relationships :

(i) Holding Companies : Godrej Agrovet Limited (GAVL) holds 80% in the Company. GAVL is the subsidiary of Godrej

Industries Limited (GIL) & GIL is the subsidiary of Godrej & Boyce Mfg Co Ltd, the ultimate Holding Company.

(ii) Fellow Subsidiaries Goldmohur Foods and Feeds Limited Golden Feed Products Limited Godrej Foods Limited Cauvery Palm Oil Limited.(iii) Associate Companies : Blessed Resources Pte Limited, the second partner in the Company has 20% stake in the

Company(iv) Other related parties where persons mentioned (v) below exercise significant influence Godrej Gokarna Oil Palm Limited Godrej Gold Coin Aquafeed Limited Aadhaar Retailing Limited(v) Key management person Mr. B S Yadav

2. The following transactions were carried out with the related parties in the ordinary course of business :

Rs.'000

Holding Fellow Other Related Nature of Transactions ompanies Subsidiaries Parties

(i) (ii) (iii) I Issue of share capital ( incl. Premium) 497,494 II Issue of Debentures 2,500 III Expenses charged by other companies 415 IV Sale of materials / finished goods 1,639 V Purchase of Material 9,071 1,960 VI Sale / Transfer of Fixed Asset 584 VII Transfer of Business 497,494 VIII Outstanding receivables 109,421 1,803 IX Outstanding Payables 415 625

3. Significant Related Party Transactions :

Nature of Transactions

Holding Companies

Amount FellowSubsidiaries

Amount Other Related Parties

Amount

(i) (ii) (iii)

1 Issue of share capital ( incl. Premium)

Godrej Agrovet Ltd

497,494

2 Issue of Debentures

Godrej Industries Ltd

2,500

3 Expenses Charged by other Companies


415

4 Purchase of Material

Godrej Agrovet Ltd

9,071 Godrej Gokarna Oil

Palm Limited 1,960

5 Sale of materials / finished goods

Gold Mohur Foods

& Feeds Ltd

1,639

6 Sale / Transfer of Fixed Asset

Godrej Gokarna Oil

Palm Limited 584

7 Outstanding Payables


415 Godrej Gokarna Oil

Palm Limited 625

8 Outstanding receivables

Godrej Agrovet Ltd

109,421 Gold Mohur Foods

& Feeds Ltd

1,803

9 Transfer of Business

Godrej Agrovet Ltd

497,494

22. Figures of the previous year have been regrouped & re-classified wherever necessary to conform to the current year's classification.

23. Information required to be furnished under Part IV of Schedule VI of the Companies Act, 1956

i) Registration Details Application of Funds Registration No. 0 Net Fixed Assets 463,887 State Code 0 Investments 17 Balance Sheet Date 31/3/2008 Net Current Assets 201,554 ii) Capital raised during the year Misc. Expenditure - (Rupees '000) Accumulated Losses Nil Public Issue Nil iv) Performance of Company Rights Issue Nil (Rupees '000) Bonus Issue Nil Turnover 573,787 Private Placement 0 Total Expenditure 420,512 iii) Position of mobilisation and deployment of funds Profit before tax 154,735 (Rupees '000) Profit after tax 88,393 Total Liabilities 716,267 Earning Per Share in Rs. 1,253.80 Total Assets 716,267 Dividend rate - Sources of Funds Paid-up Capital 705 v) Generic Names of three principal Reserves & Surplus 584,125 products services of Company Secured Loans - Item Code No. - Unsecured Loans 49,174 Product Description Crude Palm Oil and Palm Kernel Oil Mumbai, May 20, 2008 Company Secretary Director

106



Dr. S.S. Sindhu Dr. P.N. Narkhede Director DirectorMumbai, May 20, 2008.

INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO :A. Conservation of Energy The Company has not established any manufacturing facility this year.

B. Technology absorption, adaptation and innovation Not Applicable since the Company does not have any manufacturing facility at present.C. Foreign Exchange earnings and outgo Your Company had no foreign exchange earning as well as outgo.

ANNEXURE ‘A’ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT

REPORT OF THE AUDITORS TO THE MEMBERS OF GOLDEN FEED PRODUCTS LIMITED

To The ShareholdersYour Directors have pleasure in submitting their Report along with the audited Accounts for the financial year ended on 31st March, 2008.FINANCIAL RESULTSYour Company's performance during the year as compared with that during the previous year is summarised below: Rs. Lac For the year ended For the year ended 31/3/2008 31/3/2007Total Income – 940.83Loss before Taxation 3.04 14.12Add: Provision for Taxation – 01.45Loss after Taxation 3.0z4 15.57Balance Brought Forward from previous year 155.64 140.07Balance Carried Forward to Balance Sheet 158.68 155.64

REVIEW OF OPERATIONSDuring the year prior to review, your Company transferred the shrimp feed marketing business to Godrej Aquafeed Limited effective September 30, 2006. Consequently, the results reflected the operations for the six months period from April ’06 to September ’06. In the current year there is no business income.DIVIDENDYour Directors do not recommend any dividend for the year 2007-08.FIXED DEPOSITSYour Company has not accepted any public deposits during the financial year under review.HOLDING COMPANYYour Company continues to be a subsidiary of Godrej Agrovet Limited as defined under Section 4(1)(b) of the Companies Act, 1956.SUBSIDIARY COMPANIESThe Company has no subsidiary company during the year under review.DIRECTORSMr. B. S. YADAV and Dr. P.N. Narkhede are appointed as Directors, in accordance with the provisions of the Companies Act, 1956.AUDITORSYou are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment and a certificate as required under Section 224 (1-B) of the Companies Act, 1956 has been received from them.

QUALIFICATIONS BY AUDITORSThe auditors have qualified in the Auditors report that the accumulated losses as at March 31, 2008 exceeds its paid up capital, resulting in the erosion of its net worth. Your Company still remains a “Going Concern” as the finance will continue to be available to the Company for its working capital requirements from its holding company Godrej Agrovet Limited.ADDITIONAL INFORMATIONThe additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.STATUTORY INFORMATIONA. Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo The information in respect of these matters, required under Section 217 (1)(e) of the

Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report.

B. Particulars of Employees None of the employees is covered under the provisions of Section 217 (2A) of the Companies

Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002.C. Directors’ Responsibility Statement Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the

Directors of your Company confirm : a) that in the preparation of the annual accounts, the applicable Accounting Standards

have been followed and no material departures have been made from the same; b that they have selected such Accounting Policies and applied them consistently and

made judgements 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 or loss of the Company for that period;

c) that they 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 for preventing and detecting fraud and other irregularities;


HUMAN RESOURCESThere are no employees in the Company.


Dr. S.S. Sindhu Dr. P.N. Narkhede Director DirectorMumbai, May 20, 2008.

Golden Feed Products Limited

1. We have audited the attached Balance Sheet of Golden Feeds Products Limited, as at 31st March 2008 and also the Profit and Loss Account and 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.



4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: a) TheaccumulatedlossesoftheCompanyasatMarch31,2008exceeditspaidupcapital

resultingintheerosionofitsnetworth.Theaccountsfortheyearhavebeenpreparedon the ‘Going Concern’ basis on the understanding that finance will continue to be availabletotheCompanyforworkingcapitalrequirements.

b) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.

c) 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 these books.

d) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

e) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read with the notes thereon, subject to (a) above, 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:


ii) in the case of the Profit and Loss Account, of the loss for the year ended on that date.


5. On the basis of the written representations received from the Directors as on 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2008 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For and on behalf ofKALYANIWALLA & MISTRY

Chartered Accountants

E. K. IRANIPartner

Mumbai, May 20, 2008 Membership No. 35646

107

ANNEXURE TO THE AUDITORS’ REPORTAnnexure to the Auditors’ Report

Referred to in paragraph (3) of our report of even date.

1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.



2. The Company does not have any inventories.

3. (a) The Company has not granted any loans, secured or unsecured to companies, firms or parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) Consequently, the question of commenting whether the rates of interest and other terms and conditions are not prejudicial to the interest of the Company does not arise.

(c) The Company has taken unsecured loans of Rs. 24,460 thousands from a Company covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 24,460 thousands and year-end balance of loan taken from such party was Rs. 24,460 thousands.

(d) The rate of interest and the other terms and conditions of the unsecured loan taken is not prima facie prejudicial to the interest of the Company.

(e) The payment of principal amounts and interest was also regular.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed a continuing failure to correct major weakness in internal controls.

5. (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 and arrangements referred to in section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.

(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, except for certain transactions for which, there are no similar services rendered to other parties or have been entered into on an reciprocal basis and hence the prices are not comparable.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public and hence the provisions of section 58A, 58AA or any other provision of the Companies Act, 1956, read with the rules framed thereunder are not applicable.

7. In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business.

8. According to the information and explanation given to us, the maintenance of cost records has not been prescribed by the Central Government, under section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues payable in respect of above as at 31st March 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues outstanding of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty or cess on account of any dispute.

10. As the Company has been registered for a period less than five years the question of commenting on its accumulated losses being less than fifty percent of its net worth does not arise. The Company has incurred cash loss during the financial year but has incurred cash loss in immediately preceding financial year.

11. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to banks. There are no dues to financial institutions or debenture holders.

12. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies.

14. The Company does not deal in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the Company has given a corporate guarantee for loans taken by its subsidiary/joint venture from banks. The terms and conditions are not prima facie prejudicial to the interest of the Company.

16. According to the information and explanations given to us, term loans were applied for the purpose for which the loans were obtained.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long term investment.

18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The Company did not issue any debentures during the year.

20. The Company has not raised any money through a public issue during the year.

21. Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For and on behalf ofKALYANIWALLA & MISTRY

Chartered Accountants

E. K. IRANIPartner

Mumbai, May 20, 2008 Membership No. 35646

108

BALANCE SHEET AS AT MARCH 31, 2008 As at As at As at 31/03/2008 31/03/2008 31/03/2007 Schedule Rs.'000 Rs.'000 Rs.'000 SOURCES OF FUNDS SHAREHOLDERS’ FUNDS Share Capital 1 500 500 Reserves and Surplus – – 500 500 LOAN FUNDS Secured Loans – – Unsecured Loans 2 24,460 23,939 24,460 23,939 TOTAL 24,460 24,439APPLICATION OF FUNDS FIXED ASSETS 3 Gross Block – 47 Less: Depreciation – 12 Net Block 35INVESTMENTS 4 25 25CURRENT ASSETS,LOANSAND ADVANCES 5 Inventories Sundry Debtors 19,658 19,658 Cash and Bank Balances 45 248 Other Current Assets 43 43 Loans and Advances 18 –

19,764 19,949LESS : CURRENT LIABILITIES AND PROVISIONS 6 Liabilities 10,696 11,153 Provisions – –

10,696 11,153NET CURRENT ASSETS 9,067 8,797PROFIT & LOSS ACCOUNT 15,868 15,564

TOTAL 24,960 24,421NOTES TO ACCOUNTS 10

The Schedules referred to above form an integral part of the Balance SheetAs per our Report attached Signatures to Balance Sheet and Schedules 1 to 9 and 10For and on behalf ofKALYANIWALLA & MISTRYCharteredAccountants DR. S. S. SINDHU Director DR. P.N. NARKHEDE DirectorE. K. IRANI PartnerMembershipNo.35646 Mumbai, May 20, 2008

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH 31, 2008 As at As at As at 31/03/2008 31/03/2008 31/03/2007 Schedule Rs.'000 Rs.'000 Rs.'000

INCOME

Sales – 92,301

Other income 5 1,782

5 94,083

EXPENDITURE

Materials 7 64,580

Expenses 8 155 26,363

Interest and financial charges 9 150 2,290

Depreciation/Amortisation 3 2,261

309 95,494

PROFIT BEFORE TAXATION (304) (1,412)


Current – –

Fringe Benefit – 145

Deferred – 145

PROFIT AFTER TAXATION (304) (1,557)

Surplus/Deficit Brought Forward (15,564) (14,007)

AMOUNT AVAILABLE FOR APPROPRIATION (15,868) (15,564)

Earnings per share (Basic/Diluted) in Rs. (31.74) (31.13)


The Schedules referred to above form an integral part of the Profit and Loss AccountAs per our Report attached Signatures to Profit and Loss Account Schedules 7 to 9 and 10For and on behalf ofKALYANIWALLA & MISTRYCharteredAccountants DR. S. S. SINDHU Director DR. P.N. NARKHEDE DirectorE.K. IRANI PartnerMembershipNo.35646Mumbai, May 20, 2008

THIS YEAR THIS YEAR PREVIOUS YEAR Rs.'000 Rs.'000 Rs.'000

SCHEDULE 1 : SHARE CAPITALAuthorised1,00,000 Equity Shares of Rs.10 each 1,000 1,000

Issued, Subscribed and Paid up50,000 Equity Shares of Rs.10 each fully paid 500 500

All the above shares are held by Godrej AgrovetLtd. the (Holding Company) and its nominees

SCHEDULE 2 : UNSECURED LOANSFrom Holding Company 24,460 23,939(Amount due within a year Rs. 24,460 thousands;Previous year Rs. 23,939 thousands)

TOTAL 24,460 23,939

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008 THIS YEAR THIS YEAR PREVIOUS YEAR Rs.'000 Rs.'000 Rs.'000SCHEDULE 4 : INVESTMENTSLONG TERM TRADE QUOTED (AT COST)UNQUOTED GOVERNMENT SECURITIESNational Savings Certificates 25 25(All the Securities have been deposited withvarious Government Authorities) 25 25TOTAL 25 25

SCHEDULE 5 : CURRENT ASSETS, LOANS & ADVANCES(A) INVENTORIES : – –(B) SUNDRY DEBTORS: Debts outstanding for a period exceeding six months Considered Good 19,658 4,526 Considered Doubtful – 539 19,658 5,065 Other Debts – 15,132 TOTAL 19,658 20,197 Less: Provision for doubtful debts – 539 19,658 19,658

SCHEDULE 3 : FIXED ASSETS (Rs.)

ASSETS GROSS BLOCK DEPRECIATION NET BLOCK

As at 1-Apr-07 Additions Deductions As at 31 Mar-08 Up to 1-Apr-07 For the Year On Deductions UP to 31 Mar-08 As at 31-Mar-08 As at 31-Mar-07

Land - FreeholdLeasehold improvementsBuildingsPlant & Machinery 47 47 12 3 15 - - 35 Power Generating Wind MillFurniture, fittings & fixturesComputersMotor VehiclesTrade MarksTOTAL 47 - 47 12 3 15 - - 35 Previous Year 45,047 45,000 47 1,875 2,262 4,125 12 35

109

THIS YEAR THIS YEAR PREVIOUS YEAR Rs.'000 Rs.'000 Rs.'000SCHEDULE 5 : CURRENT ASSETS, LOANS & ADVANCES(C) CASH AND BANK BALANCES : Cash and Cheques on hand – – Balances with Scheduled Banks In current account 45 248 45 248(D) OTHER CURRENT ASSETS : 43 43(E) LOANS AND ADVANCES : (Unsecured and considered good) Loans and Advances recoverable in cash or in kind or for value to be received 18 – –

TOTAL 19,746 19,949

SCHEDULE 6 : CURRENT LIABILITIESAND PROVISIONS Sundry Creditors (Note 5) 5,462 5,462 Other Liabilities 2,411 2,868 Advances from Customers 2,823 2,823

TOTAL 10,696 11,153

SCHEDULE 7 : MATERIALSa) RAW MATERIALS CONSUMED Opening stock – 25,445 Add : Purchases during the year – 44,256 – 69,701 Less : Transferred to Godrej Aquafeed Limited – 7,973 Less : Sales during the year – 856 Less: Closing Stock – 60,872 60,872b) PURCHASE FOR RESALE – 1,321c) INVENTORY CHANGE Opening Stock Finished Goods – 2,388 Less : Closing Stock of Finished Goods – – – 2,388 TOTAL – 64,581

SCHEDULE 8 : EXPENSES1. Salaries, Wages, Bonus – 3,153 2. Provident and other funds - 343 3. Workmen and staff welfare expenses – 469 4. Processing charges - 10,573 5. Power, light, fuel and water - 11 6. Rent - 56 7. Rates and taxes 2 9 8. Repairs and maintenance Buildings - 6 Plant 1 - Other Assets - 15 1 21 10. Insurance - 118 11. Postage, telephone and stationery - 153 12. Auditors' Remuneration 118 115 13. Legal and Professional charges 45 357 14. Carriage and freight 2 3,353 15. Advertisement and Sales Promotion - 5,373 16. Travelling and motor car expenses (12) 1,633 17. Provision for Doubtful Debts & Advances(Written back) - 539 18. Miscellaneous Expenses - 87

155 26,363

SCHEDULE 9 : INTEREST AND FINANCIAL CHARGES(a) Interest paid on fixed loans - i ) Banks – 204 ii ) Others 14 1,870 (b) Other Financial Charges 136 216

TOTAL 150 2290


1. SIGNIFICANT ACCOUNTING POLICIES a) The accounts have been prepared on historical cost convention. The Company follows

mercantile system of accounting and recognises income and expenditure on accrual basis.

b) Fixed assets have been stated at cost and include incidental and/or installation/development expenses incurred in putting the asset to use and interest on borrowing incurred during construction period. Pre-operative expenses for major projects are also capitalised, where appropriate.

c) Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the

recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.

d) Depreciation/Amortisation has been provided for as under : (a) The Company has grouped additions and disposals in appropriate time periods of a

month/quarter for the purpose of charging prorata depreciation in respect of additions and disposals of its assets keeping in view the materiality of the items involved.

(b) 1) Depreciation is provided on the straight line method at the rates specified in Schedule IV to the Companies Act, 1956, except for computer hardware which is depreciated over its estimated useful life of four years.

2) Amortizations Asset type Period (i) Leasehold Land Primary lease period (ii) Leasehold improvements and equipments Primary lease period or whichever is less (iii) Signages 3 years (iv) Technical knowhow, technical knowhow fees of a capital nature 10 years (v) Computer software 6.17 years e) Raw materials are valued at weighted average cost. Finished goods and work-in-progress are valued at lower of cost and net realisable value. These costs include cost of conversion and other costs incurred in bringing the inventories

to their present location and condition. f) Retirement benefits to employees comprise payments under defined contribution plans

like provident fund and family pension. Payments under defined contribution plans are charged to the Profit and Loss Account. The liability in respect of defined benefit schemes like gratuity and leave encashment benefit on retirement is provided on the actual basis.

g) Revenue is recognised when goods are despatched to external customers. h) Deferred tax is recognised on timing differences, being the differences between

the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred tax liability is recognised, if material. Deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year-end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date.

i) The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.

j) Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

2. TRANSFER OF SHRIMP FEED BUSINESS

Effective 30th September, 2006, the Company has transferred its aqua feed business to Godrej Aquafeed Limited for a total consideration of Rs. 6,46,68,396. Pursuant to the same the following assets were transferred to Godrej Aquafeed Limited.

Rs. ‘000

Fixed Assets 40,875,000 Inventories : (a) Raw material 7,971,627 (b) Finished goods 1,207,980 9,179,607 Sundry Debtors 24,407,181 74,461,788 Less: Current liabilities 9,793,392 TOTAL 64,668,396

THIS YEAR PREVIOUS YEAR Unit Quantity Value Quantity Value Rs. Rs.

3. SALES TURNOVER Aqua Feed MT – – 2903 92,301,242Note: Sales Turnover includes sale of items processed by third parties, and items purchased by the Company for resale.4. FINISHED GOODS INVENTORIES Aqua Feed MT – – – –5. PURCHASE FOR RESALE Aqua Feed MT – – 40 1,320,8426. RAW MATERIALS CONSUMED Animal Proteins MT – – 601 15,759,194 Others - – - 45,112,993

TOTAL – – – 60,872,187

7. LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION

Item For the Year

ended

RegisteredProduction

(MT)

InstalledProduction

(MT)

Actual Production

(MT)

Third partyProduction

(MT)

Aqua Feed 31.03.200831.03.2007

– – – –

– – – 2,918.4

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008

110

THIS YEAR PREVIOUS YEAR Rs. '000s Rs. '000s8. AUDITORS' REMUNERATION Audit fees 89,532 86,520 Audit under other statutes 28,840 28,840 TOTAL 118,372 115,360

9. VALUE OF CONSUMPTION OF RAW MATERIALS THIS YEAR PREVIOUS YEAR SPARES AND TOOLS Rs. % Rs. % Raw Materials : Indigeneous – – 60,872,187 100

TOTAL – – 60,872,187 100

10. SEGMENT INFORMATION The Company is in the business of manufacturing and distribution of Aqua Feed, which is

its single primary business segment. All its operations are located in India & so no secondary segment disclosures arte required

under AS - 17 segment Reporting11. RELATED PARTY DISCLOSURES Related party disclosures as required by AS - 18, "Related Party Disclosures", are given

below " 1 Relationships : (i) Holding Companies : Godrej Agrovet Limited (GAVL) holds 100% in the Company. GAVL is the subsidiary

of Godrej Industries Limited(GIL). GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the ulti-

mate holding company. (ii) Fellow subsidiaries: GAVL also holds 100% stake in GoldMohur Foods & Feeds Limited (GFFL), Godrej

Aquafeed Limited(GAL) and Aadhaar Retailing Limted (ARL). 2. The following transactions were carried out with the related parties in the ordinary

course of business : (i) Details relating to parties referred to in 1 above Rs. '000s Rs. '000s Holding Follow

Company Subsidiary 1 Sale of materials / finished goods/ Debtors - - 4,524,000 33,586,788 2 Purchase of Fixed Assets - - - - 3 Sale of Fixed Assets - - - 40,875,000 4 Purchase of materials / finished goods - - 2,558,000 - 5 Loan taken 521,000 - - 5 Loan repaid - - - - 6 Interest expense on loan taken - - 1,846,000 - 7 Expenses charged to other companies - - 257,816 - 8 Transfer of current liabilities - - - 9,793,392 9 Outstanding payables, net of (receivables) - - 23,938,744 - 10 Guarantees issued by - - - - 11 Gurantees outstanding - - - - * All transaction are with Godrej Agrovet Limited. ** All transactions are with Godrej Aquafeed Limited THIS YEAR PREVIOUS YEAR12. EARNINGS PER SHARE Profit after tax as per Profit and Loss Account ( Rs.) (303,915) (1,557,155) Weighted average number of equity shares outstanding 50,000 50,000 Basic earnings per share (32) (31) Diluted earnings per share (32) (31) Nominal value of shares 10.00 10.00

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 200813. Information required to be furnished under Part IV of Schedule VI of the Companies

ACT, 1956

i) Registration Details Registration No 140599 State Code 11 Balance Sheet 31/3/2008 ii) Capital raised during the period (Rupees) Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement Nil iii) Position of mobilisation and deployment of funds (Rupees) Total Liabilities 35,156,186 Total Assets 35,156,186 Source of Funds Paid up Capital 500,000 Reserve & Surplus - Secured Loans - Unsecured Loans 24,459,936 Application of funds Net Fixed Assets 25,000 Investments 9,066,965 Net Current Assets – Misc. Expenditure Nil iv) Performance of the Company (Rupees) Turnover 0 Total Expenditure 308,920 Profit Before Tax -303,915 Profit After Tax -303,915 Earnings Per Share in Rs. -31.74 Dividend Rate – v) Generic Names of three Principal products services of the Company Item Code No. 23099010 Product Description Animal Feeds

Dr. S. S. Sindhu DR. P.N. NARKHEDEMumbai, May 20, 2008 Director Director

Rs. (000's)

CurrentYear

Rs. (000's)

Previous Year

Rs. (000's) A. Cash Flow from Operating Activities :

Profit before Tax and Operational Items (304) (1,410)Adjustments for :Depreciation 3 2,262 Finace Charges 136 Interest Expense 14 2,290

153 4,551 Operating Profit before Working Capital Changes (151) 3,141 Adjustments For :Inventories – 27,832 Debtors and Other receivables – 11,118 Creditors and Other payables (457) (36,432)

(457) 2,518 Cash Generated from Operations (608) 5,659 Direct Taxes paid - (145)Net Cash Generated from Operating Activities (608) 5,514

B. Cash from Investing Activities :Proceeds from Disposal of Fixed Assets 35 40,875 Net Cash used in Investing Activities 35 40,875

C. Cash from Financing Activities :Proceeds from Borrowings 521 – Repayment of Borrowings – (46,454)Interest Paid (14) (2,290)Other Financial Charges (136) – Net Cash used in Financing Activities 370 (48,744)Net Increase/(Decrease) in Cash and Cash equivalents (203) (2,355)Cash and Cash equivalents (Opening Balance) 248 2,604 Cash and Cash equivalents (Closing Balance) 45 249

CASH FLOW STATEMENT FOR THE YEAR ENDEDMARCH 31, 2008

As per our Report attached For and on behalf of Board

For and on behalf of Dr. S. S. Sindhu Director KALYANIWALLA & MISTRY DR. P.N. NARKHEDE Director

E. K. IRANIPartner


111

To The Shareholders

Your Directors have pleasure in submitting their Report along with the audited Accounts for the financial year ended on March 31, 2008.

Financial ReSulTS

Your Company’s performance during the year as compared with that during the previous year is summarised below:

Rs. Lac

For theyear ended31/3/2008

For theyear ended31/3/2007

Total Income 39458.27 32635.13

Profit before Taxation (PBT) 443.8 443.40

Less: Provision for Taxation 382.63 123.00Profit after Taxation 61.17 320.40Balance Brought Forward from previous year 127.44 226.82TOTAL 188.60 547.22appropriations:

Interim Dividend - 340.06

Final Dividend - -

Tax on Dividend - 47.69

General Reserve - 32.04

Balance Carried Forward to Balance Sheet 188.60 127.44

TOTAL 188.60 547.22

ReVieW OF OPeRaTiOnS

The Poultry Feed comprises a significant portion of your Company’s business. The Poultry Industry was adversely impacted by the Avian Influenza which was detected in Eastern India in January ’08. This resulted in a de-growth of the Industry during the year under review. Commodity prices in India followed the global trend and saw a significant increase in prices. This adversely impacted the profitability of your Business. Your Company tried to minimize the impact of these factors by focusing on R & D initiatives and other cost saving methods to contain the raw material cost increase. The year under review saw the turnover of your Company grow by 21.5% while the profitability being maintained at similar levels as the previous year.

DiViDenD

Your Directors have not paid any dividend for the year 2007-08 (for the previous year an interim dividend of Rs.18.50 per share on 18,38,170 shares). Your directors do not recommend any final dividend.

DiRecTORS

Mr. V. Srinivasan, Director, retires by rotation at the ensuing Annual General Meeting in accordance with the provisions of the Companies Act, 1956 and being eligible, offers himself for re-appointment.

auDiTORS

You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment and a certificate as required u/s 224 of the Companies Act, 1956 has been received from them.

aDDiTiOnal inFORMaTiOn

The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.

STaTuTORY inFORMaTiOn

A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo

The information in respect of these matters, required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report.

B) Particulars of Employees

None of the employees is covered under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002.

C) Directors’ Responsibility Statement

Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm :-

a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same ;

b) that they have selected such Accounting Policies and applied them consistently and made judgements 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 or loss of the Company for that period;

c) that they 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 for preventing and detecting fraud and other irregularities ;


HuMan ReSOuRceS

In a aggressive business environment, a competent and motivated team of employees is a key ingredient for the success of an organization. We are pleased to report that during the year under review industrial relations at all units continued to be cordial. The Management thanks all the employees and workers for their continued contribution and efforts towards the Company’s progress.


n.B. GODReJ B.S. Yadav Chairman Director Mumbai, May 21, 2008

anneXuRe `a’

anneXuRe FORMinG PaRT OF THe DiRecTORS’ RePORT

INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO :

a. conservation of energy

The Company continues to successfully operate its policy of encouraging energy conservation measures and undertakes a regular review of energy consumption levels and the systems installed for effective control over the utilization of energy. Some of the measures adopted by your Company towards conservation of energy were as follows:-

1. Control over unwanted lighting

2. Use of diesel generators and gensets as alternative sources of energy

3. Recycling of boiler waste water

4. Installation of furnace oil boiler

5. Bypass of molasses blender

6. Installation of capacitors

B. Technology absorption, adaptation and innovation

I. Your Company continues its constant endeavour for technological upgradation and undertakes in-house Research & Development for enhancing the quality of products manufactured at a reduced cost.

II. The benefits derived as a result of various measures undertaken are as follows :

a) Enhancement in the quality of products manufactured

b) Decline in per ton cost of production

c) Reduction in process loss

d) Decrease in the level of energy consumption and power cost

c. Foreign exchange earnings and outgo

Your Company did not have any foreign exchange earning Foreign Exchange expenditure during the year under consideration was Rs. 6305 lac (Previous year Rs. 2679 lac).



n.B. GODReJ B.S. Yadav Chairman Director Mumbai, May 21, 2008

112

RePORT THe auDiTORS TO THe MeMBeRS OF GOlDMOHuR FOODS & FeeDS liMiTeD

1. We have audited the attached Balance Sheet of Goldmohur Foods and Feeds Limited, as at 31st March 2008 and also the Profit and Loss Account and 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.





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 these books.

c) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

e) Without qualifying our opinion, we draw attention to Note 4 of Schedule 12 Notes to Accounts, in respect of amortization of Trademarks. The same are amortized over a period of 15 years as compared to the recommended period of 10 years mentioned in Accounting Standards 26 Intangible Assets since, in the opinion of the management the Trademarks will have a useful life matching the amortization period. Being a technical matter, we have relied upon the management’s estimates stated in Note 4, which forms the basis of this assumption.

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read with the 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:


ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date.


5. On the basis of the written representations received from the Directors as on 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2008 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.


KalYaniWalla & MiSTRYCharteredAccountants

eRMin K. iRaniPartnerMembership No. 35646


anneXuRe TO THe auDiTORS’ RePORT

Referred to in paragraph (3) of our report of even date. 1) (a) The Company is maintaining proper records showing full particulars, including

quantitative details and situation of fixed assets.






3) (a) The Company has granted loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b) The rates of interest and the other terms and conditions of the loans granted are not prejudicial to the interest of the company and receipt of principal and interest is regular.

(c) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act.

(d) Consequently, the question of commenting on the rates of interest and the other terms and conditions of the loans taken being prejudicial to the interests of the Company and payment of regular principal and interest does not arise.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls.

5) (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 and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.

(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, except for service transactions for which, there are no similar services received from other parties and hence the prices are not comparable.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public and hence the provisions of Section 58A, 58AA or any other provision of the Companies Act, 1956, read with the rules framed thereunder are not applicable.

7) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business.

8) According to the information and explanation given to us, the maintenance of cost records has not been prescribed by the Central Government, under section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.

9) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues payable in respect of above as at 31st March, 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty or cess on account of any dispute.

10) The Company does not have accumulated losses at the end of the financial year and it has not incurred any cash losses in the current and immediately preceding financial year.

11) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to banks. There are no dues to financial institutions or debenture holders.



14) The Company does not deal in shares, securities, debentures and other investments.

15) According to the information and explanations given to us, the Company has not given guarantee for loans taken by others from banks and financial institutions.

16) The company has not taken any term loan during the year.

17) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that no funds raised on short-term basis have been used for long-term investment.



20) The Company has not raised any money through a public issue during the year.




eRMin K. iRaniPartner



113

as at as at As at Schedule 31/03/2008 31/03/2008 31/03/2007

No. Rs.’000 Rs.’000 Rs.’000 SOuRceS OF FunDSSHaReHOlDeRS’ FunDSSHAREHOLDERS’ FUNDS 1 18,382 18,382 Share Capital 2 188,563 182,447 Reserves and Surplus 206,945 200,829 lOan FunDSSecured loans - - Unsecured loans 3 500,000 90,000

500,000 90,000 DeFFeReD TaX liaBiliTY 70,714 52,400

TOTAL 777,659 343,229 aPPlicaTiOn OF FunDSFiXeD aSSeTS 4Gross block 485,833 459,402 Less: Depreciation 182,200 153,062 Net Block 303,633 306,340 Capital work-in-progress 598 10,108 Fixed Assets Held for Disposal at Net Realisable Value - 7

304,231 316,455 inVeSTMenTS 5 642 - cuRRenT aSSeTS, lOanS anD aDVanceS 6Inventories 330,934 378,835

Sundry Debtors 190,874 238,502 Cash and Bank Balances 31,857 42,862 Loans and Advances 385,118 88,839

938,783 749,038 leSS : cuRRenT liaBiliTieS anD PROViSiOnS 7Liabilities 434,648 705,130 Provisions 31,349 17,134

465,997 722,264 neT cuRRenT aSSeTS 472,786 26,774

TOTal 777,659 343,229 Notes to Accounts 12

Balance SHeeT aS aT MaRcH 31, 2008

The Schedules referred to above from an intergral part of the Balance Sheet

As per our Report attached Signatures to Balance Sheet and Schedules 1 to 7 and 12



e. K. iRani MaKaRanD KaRnaTaKi n.B. GODReJ B.S. YaDaVPartner CompanySecretary Chairman DirectorMembership No. 35646Mumbai, May 21, 2008

PROFiT anD lOSS accOunT FOR THe YeaR enDeD MaRcH 31, 2008

For theyear ended

31/03/08

For the year ended

31/03/08

For the year ended

31/03/07

Schedule Rs. ‘000 Rs. ‘000 Rs. ‘000

incOMe

Sales 3,929,003 3,233,489

Other Income 8 16,824 30,025

3,945,827 3,263,514

eXPenDiTuRe

Materials 9 3,435,283 2,791,578

Expenses 10 429,667 391,066

Interest and Financial Charges 11 6,213 5,728

Depreciation/Amortisation 30,284 30,802

3,901,447 3,219,174

PROFiT BeFORe TaXaTiOn 44,380 44,340


Current 18,300 13,500

Fringe Benefit 1,650 1,300

Deferred 18,313 (2,500)

38,263 12,300

PROFiT aFTeR TaXaTiOn 6,117 32,040

Profit Brought Forward 12,743 22,682

aMOunT aVailaBle FOR aPPROPRiaTiOn 18,860 54,722

APPROPRIATION

Interim Dividend - 34,006

Tax on Dividend 4,769

Transfer to General Reserve - 3,204

Surplus Carried Forward 18,860 12,743

18,860 54,722

Earnings per share (Basic/Diluted ) in Rs. (Refer Note 22)

3.33 17.43

nOTeS TO accOunTS 12

The Schedules referred to above from an intergral part of the Profit and Loss Account

As per our Report attached Signatures to Profit & Loss Accounts and Schedules 8 to 11 and 12



e. K. iRani MaKaRanD KaRnaTaKi n.B. GODReJ B.S. YaDaVPartner CompanySecretary Chairman DirectorMembership No. 35646Mumbai, May 21, 2008

ScHeDuleS TO THe accOunTS FOR THe YeaR enDeD MaRcH 31, 2008

as at as at As at

March 31, 2008

March 31, 2008

March 31, 2007

Rs.’000 Rs.’000 Rs.’000

ScHeDule 1 : SHaRe caPiTal

auTHORiSeD

5,000,000 Equity Shares of Rs 10 each 50,000 50,000

iSSueD, SuBScRiBeD anD PaiD uP

1,838,170 Equity shares of Rs.10 each fully paid All the above shares are held by Godrej Agrovet Ltd (Holding Company) & its nominees 558,170 shares have been issued pursuant to a contract without payment being received in cash.

18,382 18,382

as at as at As atMarch 31,

2008March 31,

2008March 31,

2007Rs.’000 Rs.’000 Rs.’000

ScHeDule 2 : ReSeRVeS anD SuRPluSSecuRiTY PReMiuM accOunTAs per last Balance Sheet 136,233 136,233 GeneRal ReSeRVe accOunT As per last Balance Sheet 33,470 30,266 Add: Transfer from Profit & Loss Account - 3,204

33,470 33,470 PROFiT anD lOSS accOunT 18,860 12,744 TOTAL 188,563 182,447 ScHeDule 3 : unSecuReD lOanSShort Term Loans from Banks 500,000 90,000 TOTal 500,000 90,000 Repayable at call or within a year Rs.500,000 thosusands (Previous Year Rs.90,000 )

114


aSSeTS GROSS BlOcK DePReciaTiOn neT BlOcK

As at Additions Deductions as at Up to For the On uP to as at As at

1-Apr-07 31-Mar-08 1-Apr-07 Year Deductions 31-Mar-08 31-Mar-08 31-Mar-07

Land - Freehold 5,191 5,191 - - - - 5,191 5,191

Leasehold improvements 2,563 2,563 1,791 70 1,860 703 772

Buildings 6,105 6,105 1,585 162 1,747 4,358 4,520

Plant & Machinery 64,907 28,005 72 92,840 26,625 5,932 68 32,488 60,352 38,283

Power Generating Wind Mill 123,491 123,491 11,987 6,520 18,508 104,983 111,504

Furniture, fittings & fixtures 3,172 34 87 3,118 1,309 191 51 1,448 1,670 1,863

Computers 11,249 311 710 10,850 9,065 1,077 701 9,441 1,409 2,185

Motor Vehicles 5,935 49 1,098 4,886 2,038 546 325 2,260 2,626 3,897

Trade Marks 236,789 236,789 98,662 15,786 114,448 122,341 138,127

TOTal 459,402 28,399 1,967 485,833 153,062 30,284 1,145 182,200 303,633 306,341

Previous Year 460,281 2,269 3,148 459,402 123,968 30,802 1,708 153,061 306,341 -

Capital Work-In-Progress/Advances - - - - - - - - 598 10,108

Assets Held For Disposal at Net 7 7 - - 7

Realisable Value 304,231 316,456

as at as at As at March 31st,

2008 March

31st,2008 March 31st,

2007 Rs.’000 Rs.’000 Rs.’000

ScHeDule 5 : inVeSTMenTS

lOnG TeRM :TRaDe QuOTeD (aT cOST)IN COMPANIES(a) 1207 Fully-Paid Equity Shares of 10 each 316 - in Castrol India Limited

(b) 840 Fully -Paid Equity Shares of 10 each 326 - in Colgate Palmolive (India) Limited (Market value of Investments as at 31st March,2008

was Rs.613 thousands) 642 -

TOTAL 642 - ScHeDule 6 : cuRRenT aSSeTS , lOanS & aDVanceS(a) inVenTORieS : Raw Materials and Packing Material 264,640 281,859 Stores & Spares 520 517 Finished Goods 40,322 58,632 Raw Material in Transit 25,452 37,827

330,934 378,835 (B) SunDRY DeBTORS : Debts outstanding for a period exceeding six

months Considered Good 37,948 30,362 Considered Doubtful - 4,105

37,948 34,467 Other Debts 152,926 208,138 Total 190,874 242,605 Less: Provisions for doubtful debts - 4,105

190,874 238,500 [Debts amounting to Rs.98,659 thousands (Previous

Year Rs.1,37,857 thousands) are secured against Bank Guarantees. Debtors Rs.13,017 thousands

(Previous Year Rs.15,012 thousands) are secured against Collateral Land and shares

(c) caSH anD BanK BalanceS : Cash and cheques on hand 6,690 7,512 Balances with Scheduled Banks In Current Accounts 25,167 35,350

31,857 42,863 (D) lOanS & aDVanceS : (Unsecured and considered good unless otherwise

stated) Loans and Advances recoverable in cash or in kind or for value to be received : Considered good 376,161 56,435 Considered Doubtful 1,059 1,070

377,220 57,504 Less: Provision for doubtful advances 1,059 1,070

376,161 56,435

Deposits 8,957 32,404 385,118 88,839

TOTal 938,784 749,036

ScHeDule 4 : FiXeD aSSeTS

as at As at

March 31, 2008

March 31,2007

Rs.’000 Rs.’000

SCHEDULE 7 :CURRENT LIABILITIES AND PROVISIONSa) cuRRenT liaBiliTieS

Acceptances 50,960 159,651

Sundry Creditors (Note 5) 380,894 539,862 Deposits 2,794 5,617

434,648 705,129 B) PROViSiOnS For Taxation (Net of Advance Tax Rs.64,721 thousand;

Previous Year Rs.55,285 thousand) 18,447 5,828

For Gratuity 10,030 8,884 For Leave Encashment 2,872 2,422

12,902 11,306 31,349 17,134

TOTal 465,997 722,264

For the year ended March

31, 2008

For the year ended March

31, 2008

For the year ended March 31,

2007 Rs. ‘000 Rs. ‘000 Rs. ‘000

ScHeDule 8: OTHeR incOMeInterest Income 85 97 Income from wind mill 12,606 18,545 Insurance Claim Received 9 87 Miscellaneous Income (Tax Deducted at source Rs.nil thousand;

4,098 11,289

Previous year Rs.4 thousand)Dividend 26 6

16,824 30,024

ScHeDule 9 : MaTeRialSRaw Materials Consumed Opening Stock 281,859 247,215 Add: Purchases during the year 3,477,395 2,840,213

3,759,254 3,087,428 Less:Sales during the year 288,309 257,081

3,470,945 2,830,347 Less:Closing stocks 264,640 281,859

3,206,305 2,548,488 Purchase For Resale 210,668 236,646 Inventory Change Opening Stock of Finished Goods 58,632 65,076 Less: Closing Stock of Finished Goods 40,322 58,632

18,310 6,444 3,435,283 2,791,579

115


For the year ended

March 31, 2008

For the year ended

March 31, 2008

Rs. ‘000 Rs. ‘000 ScHeDule 10 : eXPenSeS1 Salaries, Wages, Bonus 89,583 95,662 2 Provident and other funds 3,390 3,369 3 Workmen and staff welfare expenses 2,870 2,751 4 Processing charges 103,740 79,117 5 Power, light, fuel and water 43,052 34,717 6 Rent 18,794 11,447 7 Rates and taxes 3,282 1,790 8 Repairs and maintenance - Buildings 816 196 - Plant 15,594 8,863 - Other Assets 114 191

16,525 9,250 9 Insurance 889 1,442 10 Postage, telephone and stationery 6,859 7,169 11 Auditors’ Remuneration 1,504 1,447 12 Legal and Professional charges 2,826 8,070 13 Carriage and freight 54,891 64,064 14 Advertisement and Sales Promotion 984 1,460 15 Travelling and motor car expenses 22,197 23,223 16 Provision for Doubtful Debts & Advances /

(Written back) (4,105) 4,505

17 Bad Debts Written Off 18,638 10,422 18 Loss on Sale of Fixed Assets (Net) 94 254 19 Miscellaneous Expenses 43,654 30,907

429,667 391,065 ScHeDule 11 : inTeReST anD Financial cHaRGeS(a) Interest paid on fixed loans i) Banks 4,564 2,921 (b) Interest on other Loans - Banks 629 628 (c) Other Financial Charges 1,020 2,179

6,213 5,728

wages, performance incentives, etc. are recognised at actual amounts due in the period in which the employee renders the related service.

b) Post-employment benefits: (i) Defined Contribution Plans: Payments made to defined contribution plans such as Provident Fund are

charged as an expense as they fall due. (ii) Defined Benefit Plans: The cost of providing benefits i.e. gratuity is determined using the Projected

Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial gains and losses are recognised immediately in the Profit & Loss Account.

The fair value of the plan assets is reduced from the gross obligation under the defined benefit plan, to recognise the obligation on net basis.

Past service cost is recognised as expense on a straight-line basis over the average period until the benefits become vested.

(iii) Other long-term employee benefits: Other long-term employee benefits viz., leave encashment is recognised

as an expense in the profit and loss account as and when they accrue. The Company determines the liability using the Projected Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial gains and losses in respect such benefits are charged to the profit and loss account.

h) Revenue is recognised on despatch of goods to external customers. Sales are net of returns, trade discounts, rebates and sales tax.

i) Revenue expenditure on Research and Development is charged to Profit and Loss Account of the year in which it is incurred. Capital Expenditure incurred during the year on Research and Development is shown as an addition to Fixed Assets.

j) Interest & Commitment Charges incurred in connection with borrowings of funds which are directly attributable to the acquisition, construction or production of an asset that necessarily takes substantial period of time to get ready for its intended use, upto the time the said asset is put to use are capitalised, as a part of the cost of that asset. Other borrowing cost are recognised as an expense in the period in which they are incurred.

k) Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction.Assets and liabilities related to foreign currency transactions, remaining unsettled at the year-end, are stated at the contracted rates, when covered under forward foreign exchange contracts and at year-end rates in other cases.The premium payable on forward foreign exchange contracts is amortised over the period of the contract.Exchange gains/losses are recognised in the Profit and Loss Account except in respect of liabilities incurred to acquire fixed assets in which case, they are adjusted to the carrying amount of such fixed assets.

l) Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred Tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainity that sufficent future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year end, based on the tax rates and laws enacted or substantially enacted on the Balance Sheet date.

m) The basic earnings per share is computed using the weighted average number of common share outstanding during the period. Diluted earning per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.

n) Miscellaneous Expenditure:

Front-end fee paid on loans raised is amortised over the period of loan.

o) Provisions and Contingent Liabilities

Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

2) caPiTal cOMMiTMenTS Gross value of Capital commitments made during the year is Rs Nil thousands of which the

company has incurred a sum of Rs.Nil thousands and Estimated value of contracts remaining to be executed to the extent not provided for is Rs. Nil thousands (Previous Year Rs. 13,119 thousands).

3) SecuReD lOanS\unSecuReD lOanS Cash Credit from Banks are secured by way of hypothecation of the entire Inventory, Book

Debts (both present & future) and also by Corporate Guarantee from the Holding Company, Godrej Agrovet Limited.

4) TRaDeMaRKS The Trade Marks of the Company have a huge market potential, strong market position

and Research & development set-up, which constantly refurbishes the products to avoid technological obsolescence. The management is of the opinion that the useful life of the brands is much beyond 15 years. On a conservative basis the management has decided to amortize the brand acquisition cost over a 15 year period.

ScHeDule 12 : nOTeS TO accOunTS

1 SiGniFicanT accOunTinG POlicieS a) The accounts have been prepared on historical cost convention. The Company follows

mercantile system of accounting and recognises income and expenditure on accrual basis

b) Fixed assets have been stated at cost and include incidental and/or installation/development expenses incurred in putting the asset to use and interest on borrowing incurred during construction period. Pre-operative expenses for major projects are also capitalised, where appropriate.

c) Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.

d) Depreciation/Amortisation has been provided for as under : (a) Depreciation has been provided on Straight Line Method at rates specified

in Schedule XIV of the Companies Act, 1956. Except Computers which are depreciated at the rate of 25% on straight line method. The Company has grouped additions and disposals in appropriate time periods of a month/quarter for the purpose of charging prorata depreciation in respect of additions and disposals of its assets keeping in view the materiality of the items involved.

(b) 1) Leasehold Improvements: At a rate which will reduce the principal value of each asset to “Nil” over the primary lease period.

2) Trademarks are amortised over the period of 15 years. e) Long Term investments are carried at cost. Provision for diminution, if any, in the

value of each long term investment is made to recognise a decline, other than of a temporary nature. Current investments are stated at lower of cost and net realizable value.

f) Raw materials are valued at moving weighted average cost. Finished goods are valued at lower of cost and net realisable value after providing for cost of obsolescence and other anticipated losses, wherever considered necessary. Cost is computed on weighted average basis. Finished goods include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Stores and spares are valued at cost using the First-In-First-Out method

g) Employee Benefits: a) Short-term employee benefits: All employee benefits payable wholly within twelve months of rendering the

service are classified as short term employee benefits. Benefits such as salaries,

116

For the Year

For the Year

31/03/08 31/03/07

Unit Quantity Value Quantity Value

Rs. '000 Rs. '000 Rs. '0007 FiniSHeD GOODS inVenTORieS MT

Aqua Feed 312 8,929 759 22,794 Cattle Feed 439 3,190 567 3,686 Poultry Feed 2,039 27,709 2,954 30,991 Lab Feeds 3 81 4 30 Others 15 413 29 1,131 TOTal 2,808 40,322 4,313 58,632

8 PuRcHaSe FOR ReSale MT

Aqua Feed 32 231 188 1,074 Cattle Feed 9,952 68,366 14,315 90,999 Poultry Feed 11,778 138,727 14,664 143,183 Others 258 3,344 168 1,389 TOTal 22,020 210,668 29,335 236,646

9 RaW MaTeRialS cOnSuMeD MT

DLM 405 68,994 333 58,896 Maize 88,544 701,732 84,945 714,376 Rice Bran Extraction 32,094 137,304 25,311 105,089 Rice Bran 7,256 58,713 7,377 55,009 Soya 64,877 895,315 64,022 666,352 Others - 1,344,248 - 948,766 TOTal 193,176 3,206,305 181,988 2,548,488

Item For the Year

Capacity Per Annum Actual Production*MT

Capacity Per Annum Registered MT Registered

MT Installed

MT Aqua, Cattle and Poultry Feed


232,000 263,339 Not Applicable

Aqua, Cattle and Poultry Feed


232,000 246,794 Not Applicable

10 licenSeD & inSTalleD caPaciTY anD acTual PRODucTiOn

For the Year

For the Year

11 cOMMOn eXPenSeS allOcaTeD BY THe HOlDinG cOMPanY: 31/03/08 31/03/07Rs. '000s Rs. '000s

Expenses (Schedule 12) include amounts charged by Godrej Agrovet Limited, the Holding Company 26,400 26400

12 auDiTORS’ ReMuneRaTiOnStatutory Audit 898Audit under other statutes 393Certification 44Taxation Representation Before Authorities 1,504 112TOTal 1,447 1,447

16 Value OF cOnSuMPTiOn OF RaW MaTeRialS For the Year For the Year 31/03/08 31/03/07 % Value % Value

Rs. '000 Rs. '000 Raw Materials :Imported Items (Including Duty Content) 7 2,15,388 6 1,58,912 Indigeneous 93 29,90,917 94 23,89,576 TOTAL 100 32,06,305 100 25,48,488

* Actual Production Includes Production at thiurd party processing locations

5) MicRO, SMall anD MeDiuM enTeRPRiSeS Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into

force on October 2, 2006, the company is required to make certain disclosures relating to Micro, Small and Medium Enterprises. The company is in the process to compiling and assimilating the relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosures have been made in the Accounts.


For the Year For the Year 31/03/08 31/03/07

Unit Quantity Value Quantity Value

Rs. '000 Rs. '000 6 SaleS TuRnOVeR MT

Aqua Feed 12,997 369,457 8,948 244,317 Cattle Feed 25,989 187,772 37,006 232,624 Poultry Feed 243,331 3,226,254 229,209 2,457,835 Lab Feeds 176 2,629 222 2,617 Others 4,372 142,891 1,596 296,097 TOTal 286,864 3,929,003 276,981 3,233,490

For the Year

For the Year

31/03/08 31/03/07Rs. '000s Rs. '000s

13 Revenue expenditure on scientific research debited to respective expense heads Rs.2529 thousands (Previous Year Rs.2,657 thousands)

14 ValueS OF iMPORTS On ciF BaSiSRaw Materials 338,054 152,837TOTal 338,054 152,837

15 eXPenDiTuRe in FOReiGn cuRRencYTravelling Expenses 29 312Bank Charges 6,276 2,367TOTal 6,305 2,679

17. The amount of exchange difference included in the profit and loss account under the related heads of income\expenses is Rs.15,980 thousands (net income) (Previous Year Rs 3,281 thousands, net expenses). The amount of exchange difference in respect of forward exchange contracts to be recognized in the Profit or Loss account of subsequent accounting periods is Rs Nil thousands (Previous Year Rs.140 thousands).

18. Disclosure under aS – 15 ( Revised 2005):

Effective from 1st April 2007, the company has adopted the revised accounting standard on Employee Benefits:

I. Defined Contribution Plans: Contribution to Defined Contribution Plan, recognised as expense for the year are as

under: Rs.’000 Employers’ Contribution to Provident Fund 2,095 II. Defined Benefit Plan a. Contribution to Gratuity Fund

The Company makes provision for gratuity in the books of accounts for qualifying employees. Gratuity is payable to all eligible employees on superannuation, death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company’s policy whichever is beneficial to the employees.

Reconciliation of the projected benefit obligations 2007-08 Rs.’000 Change in projected benefit obligation Obligations at period beginning 8,884 Service Cost 665 Interest Cost 655 Benefits Paid -1391 Actuarial (Gain)/ Loss 1217 Obligations at period end 10,030 Reconciliation of present value of obligation and fair value of plan assets. Fair Value of plan assets at the end of the year - Present Value of defined benefit obligation a the end of the year 10,030 Liability recognised at the balance sheet (10,030) Gratuity cost for the period Service cost 665 Interest cost 655 Expected return on plan assets - Actuarial Gain/ (Loss) 1217

Net Gratuity cost 2537

assumptions

Discount Rate 8.00%

Salary Escalation Rate 7.00%

note:

i. The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets.

ii. The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets.

117


For the Year For the Year 31/03/08 31/03/07

Rs. '000 Rs. '000Depreciation on Fixed Assets (75,459) (57,986)Carried forward loss - - Provision for Doubtful Debts - 1,759 Provision for Doubtful Advances 360 3,827 Others 4,385 3,827

(70,713) (52,385)

70,714 (52,400)

19. SeGMenT RePORTinG

The company is primarily engaged in the business of manufacturing and distribution of Animal Feeds like Aqua Feed, Poultry Feed, Cattle Feed, Lab Feed etc., Accordingly, in the opinion of the management, it has only one primary segment and no further disclosure is deemed necessary to pursuant to Accounting Standard 17 on Segment Reporting, issued by the Institute of Chartered Accountants of India.

20 DeFeRReD TaX

In accordance with the Accounting Standard 22 on Accounting for Taxes on Income, the Company has made adjustments in its accounts for deffered tax liabilities/assets.

The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities are :

21. RelaTeD PaRTY DiSclOuSeRe Related party disclosure as required by AS-18 “Related Party Disclosure” are given below 1. Relationships: i. Holding Company Godrej Agrovet Limited (GAVL) holds 100% in the Company. GAVL is the subsidiary

of Godrej Industries Limited (GIL). GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the ultimate Holding Company.

ii. Associate Company: Godrej Gold Coin Aqua Feed Private Limited. GAVL has acquired 49% stake in

company during the year. 2. The following transactions were carried out with the related parties in the ordinary

course of business: (i) Details relating to parties referred to in 1 above Rs.’000’s Rs.’000’s Holding Associate Company Company

1) Sale of Materials / Finished Goods 3,36,121 - 1,32,548 595 2) Sale of Services – – 180 – 3) Purchase of Materials/Finished Goods 1,78,170 – 1,98,469 2,820 4) Expenses charged to other companies 19,920 – (Inclusive of sale of services) 8,400 – 5) Expenses charged by other companies 38,655 – 39,152 – 6) Dividend Paid – – 34,006 – 7) Outstanding receivables, net of payables 8,88,756 – 5,497 (2,225) 8) Guarantees taken – – 5,900 – 9) Loans Given 3,40,000 – – – Note: Figures in italics pertains to the previous year 3. Significant Related Party Transactions All the transactions with holding company mentioned above are with Godrej Agrovet

Ltd. and all the transactions with Associate Company mentioned above are with Godrej Gold Coin Aqua Feed Pvt. Ltd.

22. eaRninGS PeR SHaRe:

For the Year For the Year 31.3.08 31.3.07 Profit after tax and prior period items (Rs.‘000) 6,117 32,040 Weighted average number of equity shares outstanding 18,38,200 18,38,200 Basic & Diluted earnings per share 3.33 17.43 Nominal value of shares 10.00 10.0023. DiSclOSuReS in ReSPecT OF leaSeS:

The Company’s leasing arrangements are in respect of operating leases for premises occupied by the Company. These leasing arrangements are cancelable, and are renewable on a periodic basis by mutual consent on mutually accepted terms.

The aggregate lease rental payable by the Company and charged to Profit and Loss Account (Schedule 10) is as follows:

Particulars For the Year For the Year 31.3.08 31.3.07 Rs. 000 Rs. 000 Lease rental paid during the year 13,153 10,640 Future Lease Obligations Due within one year of balance sheet date 7,504 6,061 Due after one year and within five years of balance sheet date 15,892 8,832 Due after five years of balance sheet date 9,360 -24. Information required under Schedule VI to the Companies Act, 1956 has been given to the

extent applicable.

25. Figures for the previous financial year have been regrouped wherever necessary.

26 information required to be furnished under the Part iV of Schedule Vi of the companies act , 1956

Balance Sheet Abstract and Company’s General Business Profile i) Registration Details Registration No 17887 State Code 11 Balance Sheet 31-Mar-2008 ii) capital raised during the period (Rupees '000) Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement Nil iii) Position of mobilisation and deployment of funds (Rupees ‘000) Total Liabilities 777,659 Total Assets 777,659 Source of Funds Paid up Capital 18,382 Reserve & Surplus 188,563 Secured Loans - Unsecured Loans 500,000 Deferred Tax Liability 70,714 application of Funds Net Fixed Assets 304,230 Investments - Net Current Assets 472,787 Misc. Expenditure - iv) Performance of the company (Rupees ‘000) Turnover 3,945,827 Total Expenditure 3,901,447 Profit Before Tax 44,380 Profit After Tax 6,117 Earnings Per Share in Rs. 3.33 Dividend Rate 0% v) Generic names of three Principal Products Services of the company Item Code No 23099001 Product Description Animal Feeds

118

caSH FlOW STaTeMenT FOR THe YeaR enDeD MaRcH 31, 2008 For the

Year ended For the

Year Ended 31/03/2008 31/03/2007

Rs. (000’s) Rs. (000’s) Rs. (000’s) a. cash Flow from Operating activities:

Profit before Tax and Operational Items 44,380 44,340 Adjustment for: - Depreciation 30,284 30,802 Loss/(Profit) on sale of Fixed Assets 94 254 Exchange Difference (15,980) 3,956 Dividend Income (26) (6)Finance Charges 1,020 Interest Income (85) (97)Interest Expense 5,193 3,549

20,500 38,457 Operating Profit before Working capital changes

64,880 82,797

Adjustments for :Inventories 47,901 (55,215)Debtors and Other receivables (248,654) (88,599)Creditors and Other payables (252,906) 174,084

(453,659) 30,270 cash Generated from Operations (388,779) 113,067 Direct taxes Paid (7,332) (6,681)net cash Generated from Operating activities (396,111) 106,386

B. cash from investing activities:Acquisition of Fixed Assets (18,885) (12,377)Proceeds from sales of Fixed Assets 735 1,200 Investments (642) –Dividend Income 26 6 Interest Income 85 97 net cash used in investing activities (18,681) (11,074)

c. cash from Financing activities:Proceeds from Borrowings 410,000 - Repayment of Borrowings - (10,000)(Decrease)/Increase in Cash Credit/WCDL from Banks (net)

- (8,453)

Interest Paid (5,193) (3,631)Dividend Paid - (34,006)Tax on distributed profits - (4,769)Other Financial Charges (1,020) - net cash used in Financing activities 403,787 (60,858)

net increase/(Decrease) in cash and cash equivalents

(11,005) 34,454

cash and cash equivalents (Opening Balance) 42,863 8,410 cash and cash equivalents (closing Balance) 31,857 42,864

As per our Report attachedFor and on behalf of For and on behalf of Board KalYaniWalla & MiSTRYCharteredAccountants

e. K. iRani MaKaRanD KaRnaTaKi n. B. GODReJ Chairman PartnerCompanySecretaryB.S.YaDaV Director


119

DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31, 2008To The ShareholdersYour Directors have pleasure in submitting their Report along with the audited Accounts for the financial year ended on March 31, 2008.CHANGE IN SHAREHOLDING AND CONTROL:The total paid-up share capital of the Company is Rs.3,80,00,000/- (i.e. 38,00,000 equity shares of Rs. 10/- each) out of which during the year under review 51% shareholding (i.e. 19,38,000 shares) was transferred to Godrej Agrovet Ltd. and the balance shall continued to be held by the promoter shareholder.FINANCIAL RESULTS:Your Company’s performance during the year as compared with that during the previous year is summarized below:-

Rs.lac



Total Income 130.49 105.41Profit Before Taxation (PBT) (27.97) (17.86)Less : Provision for Taxation (2.68) (1.95)Profit After Taxation (PAT) (30.64) (19.81)Balance brought forward from previous year (70.35) (50.54)Total (101) (70.35)Balance Carried Forward to Balance Sheet (101) (70.35)DIVIDENDThe Directors do not recommend any dividend for the year 2007-08.FIXED DEPOSITSThe Company has not accepted any public deposits during the financial year under review.HOLDING COMPANYThe Company is a subsidiary of Godrej Agrovet Limited as defined under Section 4(1)(b) of the Companies Act, 1956.SUBSIDIARY COMPANIESThe Company has no subsidiary companies during the year under review.DIRECTORS:Mr. Krishnamurthy Venkatraman (Chairman), Mr. Jayakar Krishnamurthy, Mr. Rangaguduru Rao, Mr. Vaidyanathan Venkatraman and Mr. Krishnaswami Ramamurthy were the Directors of the Company as on the date of the last Annual General Meeting.During the year under reveiw, Mr. Rangaguduru Rao, Mr. Vaidyanathan Venkatraman and Mr. Krishnaswami Ramamurthy have resigned from directorship while Mr. N. B. Godrej, Mr. B. S. Yadav and Mr. R. R. Govindan have been appointed as Additional Directors.Mr. Krishnamurthy Venkatraman (Chairman) and Mr. Jayakar Krishnamurthy are liable to retire by rotation at the ensuing Annual General Meeting of your Company.Mr. N. B. Godrej, Mr. B. S. Yadav and Mr. R. R. Govindan being Additional Directors hold office upto the date of the ensuing Annual General Meeting. They are eligible for appointment as the Directors of the Company. Notices in this respect under Section 257 of the Companies Act, 1956 have been received from one of the Members along with a deposit of Rs. 500/- (Rupees Five Hundred only) for each of them signifying the intention to propose their candidatures for the office of Directors of the Company.

AUDITORS:You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors M/s. R. Thiagarajan, Chartered Accountants, Chennai have expressed their unwillingness to be re-appointed and hence it is proposed to appoint M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai as the auditors of the Company. M/s. Kalyaniwalla & Mistry have confirmed that they are eligible for re-appointment and a certificate as required under Section 224 (1-B) of the Companies Act, 1956 has been received from them.

ADDITIONAL INFORMATIONThe additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.

STATUTORY INFORMATIONA) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo The information in respect of these matters, required under Section 217 (1)(e) of the

Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report.

B) Particulars of Employees None of the employees is covered under the provisions of Section 217 (2A) of the Companies

Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002.C) Directors’ Responsibility Statement Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the

Directors of your Company confirm : a) that in the preparation of the annual accounts, the applicable Accounting Standards

have been followed and no material departures have been made from the same; b) that they have selected such Accounting Policies and applied them consistently and

made judgements 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 or loss of the Company for that period;



HUMAN RESOURCESYour Company aims to focus on development of Human Resources. The industrial relations are cordial and the Board would like to place on record its sincere appreciation for the unstinted support from all the employees.


R. R. Govindan V. Krishnamurthy Director ChairmanChennai, May 20, 2008.

ANNEXURE `A’ANNEXURE FORMING PART OF THE DIRECTORS’ REPORTINFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:

A) Conservation of Energy

The Company had taken adequate measures to conserve energy. The mill was operated with generated power from the Diesel Generator unit during the entire year.

B) Technology absorption, adaptation and innovation

Your Company constantly endeavours for technological upgradation and conducts in-house Research and Development for achieving improved quality at a lower cost.

The benefits derived as a result of various measures undertaken are as follows :- 1. Improvement in quality of products manufactured 2. Improvement in power factor levels and reduced load on cables 3. Reduction in process loss 4. Enhancement in the life of equipmentC. Foreign Exchange earnings and outgo Earnings NIL Outflow Rs.13678/- For and on behalf of the Board of Directors

R.R. Govindan V. KrishnamurthyChennai, May 20, 2008. Director Chairman

AUDITOR’S REPORTToThe Members ofCauvery Palm Oil Limited1. I have audited the attached Balance Sheet of Cauvery Palm Oil Limited as at March 31, 2008

and the Profit and Loss Account for the year ended on that date annexed thereto. These Financial Statements are the responsibility of the Company’s Management. My responsibility is to express an opinion on these Financial Statements based on my audit.

2. I have conducted the audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that I plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free from material misstatement. An audit includes examining, on 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 Financial Statement presentation. I believe that my audit provides a reasonable basis for my opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies, (Auditor’s Report) (Amendment) Order 2004 issued by the Government of India in terms of

sub-section (4A) of Section 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) and on basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to me, I give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order to the extent applicable.

4. Further to my comments in the Annexure referred to in paragraph 3 above, and Note No. 1 (d) in Schedule 20 Notes to the Accounts with regard to inclusion of Certain items of Cost in the Valuation of Closing Stock, I report that :

a) I have obtained all the information and explanations, which to the best of my knowledge and belief, were necessary for the purposes of my audit.

b) In my opinion, proper books of account, as required by law, have been kept by the Company so far as appears from my examination of such books.

c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account.

d) In my opinion, the Balance Sheet and Profit and Loss Account dealt with by this report is in conformity with the Mandatory Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent it is applicable.

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e) On the basis of the written representations received from the Directors as on March 31, 2008 and taken on record by the Board of Directors, I report that none of the Directors is disqualified as on March 31, 2008 from being appointed as Director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f. In my opinion and to the best of my information and according to the explanations given to me, the said accounts read together with the Significant Accounting Policies and other notes thereon and attached thereto give in the prescribed manner the information required by the Companies Act, 1956 and also give a true and fair view, in conformity with the accounting principles generally accepted in India:

ANNEXURE TO THE AUDITORS’ REPORT REFERRED TO IN PARA 4 OF MY REPORT OF EVEN DATE

i. in case of the Balance Sheet, of the state of affairs of the C ompany as at March 31, 2008.

ii. in case of the Profit and Loss Account, of the Loss for the year ended on that date.

R. ThiagarajanCharteredAccountant

Chennai, May 20, 2008

i. a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

b) The Company has a phased programme of physical verification of Fixed Assets which in my opinion is reasonable having regard to the size of the Company and nature of its business. No material discrepancies were noticed on such verification.

c) The Company has not disposed of substantial part of its Fixed Assets, which will affect the going concern status of the Company.

ii. a) The Stocks of Seedlings at various age groups in the Nurseries of the Company and Stores and Spares have been physically verified at reasonable intervals during the year by the Management. In my opinion the frequency of such verification is adequate.

b) In my opinion and according to the information and explanations given to me, the procedures for physical verification of Seedlings at various age groups in the Nurseries of the Company and Stores and Spares followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) In my opinion, the Company has maintained proper records of Seedlings at various age groups in the Nurseries of the Company and Stores and Spares. The discrepancies between the physical stocks were not material and have been properly dealt with in the books of account.

iii. a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Accordingly, clauses 4 (iii) (b) (c) and (d) of the Order are not applicable to the Company.

b) The Company had taken unsecured loans from a Company covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 25 Lacs and the year-end balances of these loans taken from such companies are Rs. 25 Lacs.

c) In my opinion the rate of interest and other terms and conditions of such loan taken by the Company is not prima facie prejudicial to the interest of the Company.

d) The payment of principal amount and interest thereon were regular.iv. In my opinion and according to the information and explanations given to me, there are

adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of FFBs, Stock of Seedlings, Stores and Spares, Fixed Assets and for the sale of goods. During the course of my audit, I have not observed any continuing failure to correct the weaknesses in the internal control.

v. a) In my opinion and according to the information and explanations given to me, the transactions that need to be entered in the register maintained in pursuance of Section 301 of the Act have been so entered in the register, required to be maintained under that section.

b) In my opinion and according to the information and explanations given to me, there are no transactions made in pursuance or arrangements entered in the register in pursuance of Section 301 of the Act and exceeding the value of Rupees Five Lakhs in respect of any party during the year, which have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. The Company has not accepted deposits from the public and therefore the provisions of Sections 58A and 58AA and any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 does not apply and hence no order under

the aforesaid sections has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

vii. The Company has an internal audit system, commensurate with its size and nature of its business.

viii. To the best of my knowledge and belief, the Central Government has not prescribed under Section 209 (1) (d) of the Companies Act, the Accounts and Records required to be maintained.

ix. a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to the Company with the appropriate authorities.

b) According to the information and explanations given to me, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears, as at March 31, 2008 for a period of more than six months from the date they became payable.

c) According to the information and explanation given to me, there are no dues of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess, which have not been deposited on account of any dispute.

x. There company has the accumulated losses as on March 31, 2008, which is less than 50% of its net worth as on that date. The Company has not incurred cash losses during the financial year under audit and for the immediately preceding financial year.

xi. The Company has not defaulted in repayment of dues to the Bank. The Company has not issued any debentures and the Company has no borrowings from any Financial Institutions.

xii. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. The Company is not a Chit Fund or a Nidhi or a Mutual Benefit Fund or a Society.xiv. The Company is not dealing in or trading in shares, securities, debentures and other

investments. xv. The Company has not given any guarantee for loans taken by others from banks or financial

institutions.xvi. The term loans availed by the Company were utilised for the purpose for which the loans

were obtained. xvii. According to the information and explanations given to me and on overall examination of the

Balance Sheet of the company, I report that no funds raised on short-term basis have been used for long-term investments and no long-term funds have been used to finance short-term assets.

xviii. The Company has not allotted any shares to any party during the year under review. xix. The Company has not issued any debentures during the year under review.xx. The Company has not raised any money by Public issue during the year under review.xxi. No frauds on or by the Company has been noticed or reported during the year under

review.

R. ThiagarajanChennai, May 20, 2008 CharteredAccountant

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BALANCE SHEET AS AT MARCH 31, 2008 As at As at Sch No. March 31, 2008 March 31, 2007 Rs. Rs. Rs. Rs.SOURCES OF FUNDS Shareholders’ Funds Share Capital 1 38,000,000 38,000,000 Reserves & Surplus 2 32,000,018 95,000,018 Loan Funds Secured Loans 3 24,853,982 20,656,806 Unsecured Loans 4 7,500,000 1,000,000 TOTAL 102,354,000 154,656,824 APPLICATION OF FUNDS Fixed Assets Gross Block 5 48,080,249 48,301,209 Less : Depreciation 8,237,977 6,433,013 Net Block 39,842,272 41,868,196 Project Development Cost 6 16,100,000 86,000,000 Current Assets, Loans & Advances Sundry Debtors 7 7,330,260 7,346,000 Cash and Bank Balances 8 214,744 275,850 Inventories 9 13,956,022 10,549,208 Loans & Advances 10 733,447 835,091 22,234,473 19,006,149 Less: Current Liabilities Current Liabilities 11 1,975,713 2,979,119 Provisions 12 3,320,945 2,380,598 Net Current Assets 16,937,815 13,646,432 Miscellaneous Expenditure 13 19,373,765 6,106,918 (to the extent not written off or adjusted) ProfitandLossAccount 10,100,148 7,035,278 TOTAL 102,354,000 154,656,824 Notes to Accounts 20

The Schedules referred to above form an Signatures to Balance Sheet and integral part of the Balance Sheet Schedules 1 to 13 and 20As per our Report attachedFor and on behalf of

R.THIAGARAJAN V. Krishnamurthy R. R. GovindanMembershipNo.026558 Chairman DirectorCharteredAccountants

U.R.PathakCompanySecretaryChennai, May 20, 2008

Sch No. As at As at March 31, 2008 March 31, 2007 Rs. Rs.Sales 14 13,049,217 10,541,224Revenue from Nursery Operations 22,376,015 16,121,190Other Income 664 626Increase/(Decrease) in Stock 3,434,558 1,287,230TOTAL 38,860,454 27,950,270

Raw Material 5,818,875 5,478,034Manufacturing Expenses 15 2,794,352 2,574,428Expenses for Nursery Operations 16 11,734,504 7,557,121Salaries, Wages and Bonus 17 5,727,755 4,851,294Selling, General and Administration Expenses 18 4,196,274 5,189,382Interest & Finance Charges 19 2,011,511 1,706,297Pre-Operative Expenses Written Off 314,308 314,309Amortisation of Proj. Dev. Cost 1,150,000 –Depreciation 2,159,664 2,065,284TOTAL 35,907,243 29,736,149

ProfitbeforePriorPeriodItem 2,953,211 (1,785,879)Prior Period item 5,750,000 –(See Note No. 1 (n) (ii) in Notes to Accounts)Profit/(Loss)beforetax (2,796,789) (1,785,879)Provision for Taxation - Current – – - Defered – – - Fringe Benefit Tax 268,081 195,359Profit/(Loss)afterTax (3,064,870) (1,981,238)Balance brought forward from previous year (7,035,278) (5,054,040)Balance carried to Balance Sheet (10,100,148) (7,035,278)

Notes to Accounts 20Schedules 1 to 20 annexed are an integral part of this Balance Sheet.As per my report of even date attached

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008

The Schedules referred to above form an Signatures to Balance Sheet and integral part of the Balance Sheet Schedules 14 to 20As per our Report attachedFor and on behalf of

R.THIAGARAJAN V. Krishnamurthy R. R. GovindanMembershipNo.026558 Chairman DirectorCharteredAccountants

U.R.PathakCompanySecretaryChennai, May 20, 2008

SCHEDULES TO ACCOUNTS Year Ended Year Ended March 31, 2008 March 31, 2007 Rs. Rs.SCHEDULE 1: SHARE CAPITALAuthorised50,00,000 (Previous Year - 50,00,000) Equity Shares 50,000,000 50,000,000of Rs.10/- each.TOTAL 50,000,000 50,000,000Issued, Subscribed and Paid up 38,00,000(Previous Year - 38,00,000) Equity Shares of Rs.10/- each. 38,000,000 38,000,000(includes 23,00,000 Equity Shares of Rs.10/- eachIssued as Fully paid Bonus Shares by capitilising therevaluation reserve)TOTAL 38,000,000 38,000,000SCHEDULE 2 : RESERVES & SURPLUSAsset Revaluation Reserve 63,000,000 63,000,000Less: Adjustment against Project Development Cost 63,000,000 - - 63,000,000Capital Reserve 22,000,018 22,000,018Share Premium Account 10,000,000 10,000,000TOTAL 32,000,018 95,000,018

Year Ended Year Ended March 31, 2008 March 31, 2007 Rs. Rs.SCHEDULE 3 : SECURED LOANSTerm Loan including Interest Accured and DueFrom a Bank 3,899,531 5,288,937Repayable within One Year :(Rs.15,13,200/- Previous Year : Rs. 15,04,800)Overdraft FacilityFrom a Bank 20,954,451 15,367,869

TOTAL 24,853,982 20,656,806

SCHEDULE 4 : UNSECURED LOANSInter Corporate Deposit 7,500,000 1,000,000

TOTAL 7,500,000 1,000,000

SCHEDULE 5 : FIXED ASSETS (Rs.)

Particulars Gross Block Depreciation Net BlockAs at

01.04.2007Additions Deletions As at

31.03.2008As at

01.04.2007For the

YearDeductions As at

31.03.2008As at

31.03.2008As at

31.03.2007

Lands – Freehold 396,544 – – 396,544 – – – – 396,544 396,544 Lands – Leasehold 54,000 – – 54,000 – – – – 54,000 54,000 Buildings 14,475,707 – – 14,475,707 1,057,068 351,797 – 1,408,865 13,066,842 13,418,639 Plant and Machinery 28,905,711 289,069 – 29,194,780 4,101,238 1,386,985 – 5,488,223 23,706,557 24,804,473 Office Equipment 73,381 125 – 73,506 28,796 2,882 – 31,678 41,828 44,585 Furniture and Fixtures 83,922 2,813 – 86,735 38,830 6,780 – 45,610 41,125 45,092 Computers 432,215 14,800 – 447,015 205,443 64,369 – 269,812 177,203 226,772 Vehicles 3,879,729 – 527,767 3,351,962 1,001,638 346,851 354,700 993,789 2,358,173 2,878,091

TOTAL 48,301,209 306,807 527,767 48,080,249 6,433,013 2,159,664 354,700 8,237,977 39,842,272 41,868,196

Previous Year 47,068,343 1,240,581 7,715 48,301,209 4,369,928 2,065,284 2,199 6,433,013 41,868,196 42,698,415

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As at As at March 31, 2008 March 31, 2007 Rs. Rs.SCHEDULE 6 : PROJECT DEVELOPMENT COSTAs per the last Balance Sheet 86,000,000 86,000,000 Less : Adjusted against Revaluation Reserve 63,000,000 - Less : Written Off as Prior Period Item 5,750,000 - Less : Written Off for the year 1,150,000 - TOTAL 16,100,000 86,000,000

Current Assets, Loans & AdvancesCurrent Assets

SCHEDULE 7 : SUNDRY DEBTORS(Unsecured, Considered Good)Debts outstanding for more than six months 1,000 - Other Debts 7,329,260 7,346,000 TOTAL 7,330,260 7,346,000

SCHEDULE 8 : CASH AND BANK BALANCESCash on hand 9,376 82,467 Balance with Scheduled Banks in Current Accounts 200,368 188,383 Fixed Deposit with Bank 5,000 5,000 (FD Receiept lodged with Commercial Tax Dept.)TOTAL 214,744 275,850

SCHEDULE 9 : INVENTORIES(As Valued and Certified by the Management)Stock of Stores and Spares 193,036 220,780 Stock of Crude Palm Oil 236,213 302,379 Stock of Seedlings 13,526,773 10,026,049 TOTAL 13,956,022 10,549,208

SCHEDULE 10 : LOANS AND ADVANCES(Unsecured, but considered good-recoverable in cash or in kind for value to be received)Interest Accrued but not Due 1,145 833 Advances 181,338 406,820 Deposits 27,437 26,084 Prepaid Expenses 356,168 401,354 Fringe Benefit Tax Paid 167,359 - TOTAL 733,447 835,091

Current Liabilities and Provisions

SCHEDULE 11 : CURRENT LIABILITIESSundry CreditorsSmall Scale Industrial Undertakings - - Other than Small Scale Industrial Undertakings 1,286,443 2,289,102 Advance from Customers 115,685 17,517 TDS Payable 75,545 18,956 Other Liabilities 498,040 653,543 TOTAL 1,975,713 2,979,119

SCHEDULE 12 : PROVISIONS - For Gratuity 576,398 296,729 - For Super Annuation 1,030,582 913,582 - For Leave Encashment 1,445,884 966,158 - For Fringe Benefit Tax 268,081 204,129 TOTAL 3,320,945 2,380,598

SCHEDULE 13 : MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)Preliminary ExpensesAs per the Last Balance Sheet 12,138 18,209 Less : Written off during the year 6,071 6,071 TOTAL (A) 6,067 12,138

Pre-Operative Expenses - Nursery OperationsAs per the Last Balance Sheet 942,925 1,257,234 Less : Written off during the year 314,309 314,309 TOTAL (B) 628,616 942,925

“Area Development Expenses - Capitalised - Cuddalore and Villupuram Districts (Refer Note No. 4 in the Notes to Accounts)”As per the Last Balance Sheet 5,151,855 -Incurred during the year 13,587,227 5,151,855 TOTAL (C) 18,739,082 5,151,855

TOTAL (A), (B) and (C) 19,373,765 6,106,918

SCHEDULE 14 : INCOMESale of Crude Palmoil 11,528,851 9,455,300 Sale of Oil Palm Nuts 1,520,366 1,085,924 TOTAL 13,049,217 10,541,224

SCHEDULE 15 : MANUFACTURING EXPENSES - PALM OIL MILLRaw Materials Logistics Expenses 875,162 773,118 Factory Electricity Charges and Fuel 681,887 643,052 Stores and Spares Consumed 38,081 11,945 Factory Insurance 149,080 179,076 Factory Rates and Taxes 29,015 25,271 Repairs and Maintenance - Buildings 14,597 8,666 - Plant and Machinery 152,600 78,601 - Others 58,080 134,377 Factory Running Expenses 201,220 224,273 Factory Security Charges 236,051 200,398 Compost Development Expenses 65,683 9,468 Other Factory Administrative Expenses 292,896 286,183 TOTAL 2,794,352 2,574,428 SCHEDULE 16 : EXPENSES FOR NURSERY OPERATIONSSprouted Seed Material 4,734,000 1,806,000 Nursery Daily Expenses (Watering, Weeding Etc.,) 3,305,447 2,507,025 Nursery - Development/Maintenance 398,304 929,871 Fertilizers 273,105 182,901 Poly Bags 1,509,029 964,544 Pot Mixture 959,700 830,650 Lease Rentals for Nursery Lands 554,919 336,129 TOTAL 11,734,504 7,557,121

SCHEDULE 17 : SALARIES, WAGES AND BONUS - Palm Oil MillSalaries, Wages and Bonus 2,399,517 1,711,102 Contribution to Provident Funds etc. 317,145 232,363 Staff Welfare Expenses 58,365 12,447 TOTAL (A) 2,775,027 1,955,912 Salaries, Wages and Bonus - Nursery OperationsSalaries, Wages and Bonus 2,485,536 2,342,393 Contribution to Provident Funds etc. 411,498 440,670 Staff Welfare Expenses 55,694 112,319 TOTAL (B) 2,952,728 2,895,381 TOTAL (A+B) 5,727,755 4,851,294

SCHEDULE 18 : SELLING, GENERAL AND ADMINISTRATION EXPENSES - POMRent 37,370 29,180 Rates and Taxes 11,639 7,893 Repairs and Maintenance 53,833 42,678 Insurance 69,345 53,462 Electricity Charges 24,547 27,360 Travelling Expenses 158,605 96,662 Telephone Expenses 37,562 42,005 Vehicle Maintenance 531,698 564,710 Selling Expenses 106,176 94,206 Other Administrative Expenses 345,651 353,804 TOTAL (A) 1,376,426 1,311,960

Selling, General and Admn. Expenses - Nursery OperationsNursery Expenses 931,134 1,644,305 Seedlings Distribution Expenses 521,901 699,753 Thanjavur Zonal Office Expenses 132,666 106,453 Technical Consultancy Fees 506,256 190,724 Propaganda, Publicity, Training & Seminar 35,661 67,827 Other Expenses 692,230 1,168,360 TOTAL (B) 2,819,848 3,877,422 Total (A+B) 4,196,274 5,189,382

SCHEDULE 19 : INTEREST AND FINANCE CHARGES - Palm Oil MillBank Charges 58,270 27,903 Interest on ICD’s 72,707 27,485 Interest on Working Capital 1,008,375 646,516 Interest on Term Loans 302,481 372,680 TOTAL (A) 1,441,833 1,074,584 Interest and Finance Charges - Nursery OperationsBank Charges 29,135 25,113 Interest on ICD’s 36,354 24,736 Interest on Working Capital 452,611 526,087 Interest on Term Loans 51,578 55,777 TOTAL (B) 569,678 631,714 TOTAL (A+B) 2,011,511 1,706,297

As at As at March 31, 2008 March 31, 2007 Rs. Rs.

SCHEDULES TO ACCOUNTS

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BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE:

I. Registration Details: Registration No. 36551 State Code 18 Balance Sheet Date 31-03-08II. Capital Raised during the year: Rs. Public Issue – Rights Issue – Bonus Issue – Private Placement –III. Position of Mobilisation and Deployment of Funds: Total Liabilities 102,354,000 Total Assets 102,354,000 Source of Funds: Paid up Capital 38,000,000 Reserves & Surplus 32,000,018 Secured Loans 24,853,982 Unsecured Loans 7,500,000 Application of Funds: Net Fixed Assets 55,942,272 Investments - Net Current Assets 16,937,815 Miscellaneous Expenditure 19,373,765 Accumulated Losses 10,100,148IV. Performance of Company: Turnover 38,860,454 Total Expenditure 35,907,243 Profit/(Loss) Before Tax 2,953,211 Profit/(Loss) After Tax (3,064,870) Earnings Per Share (Rs.) – Dividend Rate –V. Generic names of three Principal Products/Services of Company (as per monetary terms) Item Code No. (ITC Code) – Product Description Crude Palm Oil Oil Palm Nuts

As per our Report attached For and on behalf of

R. Thiagarajan V. Krishnamurthy R.R. GovindanMembershipNo.026558 Chairman DirectorCharteredAccountants

U.R. PathakCompanySecretaryChennai, May 20, 2008

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008 As at As at March 31, 2008 March 31, 2007 Rs. Rs.A. Cash Flow from Operating Activities : ProfitbeforeTaxandOperationalItems (2,796,789) Adjustment for: Depreciation 2,159,664 Loss/(Profit) on sale of Fixed Assets 173,067 Pre-operative expenses 320,378 Prior period item 5,750,000 Finance Charges 2,011,509 Miscellaneous Expenditure - Amortisation of Project Development Cost 1,150,000 Interest Expense 11,564,619 OperatingProfitbeforeWorkingCapitalChanges 8,767,830 Adjustments for : Inventories (3,406,814) Debtors and Other receivables 284,743 Creditors and Other payables (127,011) (3,249,081) Cash Generated from Operations 5,518,749 Direct taxes Paid (371,488) Net Cash Generated from Operating Activities 5,147,261B. Cash from Investing Activities : Acquisition of Fixed Assets (306,807) Area Development expenses (13,587,227) Investments Dividend Income Interest Income Net Cash used in Investing Activities (13,894,034)C. Cash from Financing Activities : Proceeds from Borrowings 10,697,176 Others - (Decrease)/Increase in Cash Credit/WCDL from Banks (net) Interest Paid Dividend Paid Tax on distributed profits Other Financial Charges (2,011,509) Net Cash used in Financing Activities 8,685,667 Net Increase/(Decrease) in Cash and Cash Equivalents (61,106) Cash and Cash equivalents (Opening Balance) 275,850 Cash and Cash equivalents (Closing Balance) 214,744

SCHEDULE 20 : NOTES TO ACCOUNTS1. SignificantAccountingPolicies a. Cost Convention The Financial Statements have been prepared under the historical Cost Convention in

accordance with the generally accepted Accounting Principles and the provisions of the Companies Act, 1956, as adopted consistently by the company.

b. Revenue Recognition All receivables and expenditures are accounted on accrual basis except where stated

otherwise. c. Sales Sales are exclusive of Sales Tax/VAT. d. Valuation of Stock of Seedlings The Valuation of stock of seedlings is at actual cost. The Valuation of Stores, Tools and

Spares are valued at cost or net realizable value whichever is lower. There is a Change in the Method of Valuation of Stock of Seedlings by inclusion of certain items of Cost in the Valuation. Consequently, the valuation of Stock of Seedlings has increased by Rs. 12,35,431/- compared with the basis of the calculation for the previous year.

e. Investments There are no investments made by the company. f. Fixed Assets Fixed Assets are stated at cost, which include all direct expenses incurred to bring the

assets to the working condition for its intended use. g. Depreciation The Depreciation on Fixed Assets is calculated on Straight Line Method at rates specified

in the Schedule XIV of the Companies Act, 1956. Depreciation is charged on a proratabasis for assets purchased/sold during the year. Individual assets costing Rs.5,000/- or less are depreciated in full in the year of purchase.

h. EmployeeBenefits i. Leave Encashment The company allows Encashment of Leave only at the time of resignation/

retirement/death. Leave due to employees at each year-end has been treated as Encashable and a liability has been provided in the books of account.

ii. Gratuity The Company makes annual contributions to Group Gratuity Fund managed by the

Life Insurance Corporation of India in accordance with the scheme framed by the Corporation.

iii. Superannuation The Company has created a provision for contribution towards Superannuation

Fund equivalent to 15% of the salaries to only one employee. However, as the total number of such employees is less than the minimum required for the Constitution of a Superannuation Fund to be administered by Life Insurance Corporation of India/Other Approved Agency, the contribution is retained by the Company.

iv. OtherBenefits All other benefits are either paid or provision is created in the Accounts. i. Government Grants Grants in terms of Capital/Investment Subsidy are treated as Capital Reserve. j. Borrowing Cost The Company had availed Term Loan from a Bank and the funds were utilized for the

purchase of Assets in the regular course of the business of the Company. The Company also availed Working Capital facility from the said Bank. The interest cost on these loans are included in the finance charges. The interest cost of this Term Loan and the Working Capital facility is apportioned between Nursery Operations and Palm Oil Mill in the ratio of 60 : 40, which is the ratio of Income of these activities.

k. Income Tax. Prudently, no recognition is given in the accounts for the Deferred Tax Assets. l. Intangible Assets. The Company did not acquire any Intangible Asset during the year. m. Miscellaneous Expenditure i. The Miscellaneous Expenditure is amortized over a period of 5 years commencing

from the year 2004-05, as allowed under Section 35D of the Income-Tax Act. ii. Pre-operative Expenses of Rs.15,71,543/- representing the net of expenditure

over the income upto 31.03.2005, after considering stock of seedlings as on that date for the Nursery Operations, is being written off in 5 years commencing from the financial year 2005-2006.

n. Revaluation Reserve and Project Development Cost. i. The outstanding Revaluation Reserve of Rs.630 lacs is adjusted against Project

Development Cost in full. ii. The Company proposed to write off the balance Project Development Cost of

Rs. 230 lacs (after netting of the Revaluation Reserve of Rs. 630 lacs) over a period of twenty years commencing from the Financial Year, succeeding the Financial Year in which it was created. i.e. to write off from the Financial Year 2002-03, as the creation was done in the Financial Year 2001-02. Accordingly, one-twentieth of the amount i.e. Rs. 11.50 lacs is written off in the accounts of the year under Audit. The amounts for the year 2002-03 to 2006-07 i.e. for five years aggregating to Rs. 57.50 lacs is also written off during the year under Audit under the head ‘Prior Period Item’.

2. Contingent Liabilities a) There are no outstanding guarantees issued by or on behalf of the Company as at the

end of the year. (Previous year Rs. Nil).

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b) The estimated amount of contracts remaining to be executed on Capital Account and not provided for is Rs. Nil. (Previous year Rs. Nil).

3. The common expenses of Nursery Operations and Palm Oil Mill is apportioned in the ratio of 60 : 40, which is the ratio of income of these activities.

4. The Company commenced Area Development Activity in Cuddalore and Villupuram Districts during the Previous Year based on a Temporary Allotment Letter issued by Government of Tamil Nadu, for which districts the Company received the Permanent Allotment Letter during the year under audit. This is in addition to the existing districts viz. Tiruchirapalli, Karur, Perambalur, Thanjavur, Thiruvarur and Nagapattinam where the Company’s operations are presently carried on. In the new districts i.e. Cuddalore and Villupuram, the Company may have to incur substantial expenses in the initial years, the benefit of which shall accrue in the years to come. Consequently, the total expenses of Nursery Operations are apportioned in the ratio of 2:1 between the new districts i.e. Cuddalore and Villupuram and other districts, which the ratio of the area covered between these districts. Such apportioned expenses pertaining to new districts i.e. Cuddalore and Villupuram and expenses directly identifiable for development activities for these districts totally amounting to Rs.187.39 lacs are Capitalised and is added to the Capitalised amount of Rs. 51.52 lacs as on 31.03.2007. On reaching the optimum level of area expansion in these districts, such capitalised amounts shall be written off in the subsequent years.

5. The Term Loan and Bank Overdraft Facility from City Union Bank is secured by Equitable Mortgage of Palm Oil Mill Land, Buildings and Hypothecation of Plant and Machinery and other equipments, present and future, situated at the Palm Oil Mill and stock of oil palm seedlings at company’s Nurseries and the said loans are further guaranteed by personal guarantee of Shri. V. R. Jayamani, Chief Executive of the Company.

6. The Company has been granted Financial Assistance in the form of Grant-in-aid by the Government of India of Rs. 240 lacs for establishment of demonstration unit of oil palm processing mill of 2.5 tonnes per hour capacity at a total cost of Rs.400 lacs. Against this Financial Assistance, during the financial years 2002-03 and 2003-04, the Company received a total financial assistance of Rs. 2,20,00,018/-. This amount is credited to the ‘Capital Reserve’ and shown under the Head ‘Reserves and Surplus’.

7. During the financial year 2001-2002, based on the valuation carried out by a ‘Farm Expert and Consultant Agro Industrial Projects’, the Company has valued the then present status of the project at Rs.860 lacs. The Company has created an Asset Account called ‘Project Development Cost’ and correspondingly created a ‘Revaluation Reserve Account’ for the said sum of Rs. 860 lacs. Both the Revaluation Reserve and Project Development Cost have been dealt in the accounts as given in Note 1 ‘n’ above.

8. The Company has capitalised a sum of Rs. 230 lacs out of the Revaluation Reserve Account by Issue of Bonus Shares in the ratio of 23 : 5 and the Bonus Shares were allotted in the Board Meeting held on 27.02.2002.

9. Selling, General and Administration Expenses includes Audit Fee of Rs. 22,472/- (Previous year Rs. 22,448/-) and Tax Audit Fee of Rs. 5,618/- (Previous year Rs. 5,612/-).

10. The Company has no financial leases. Operating leases are in the nature of lease of Nursery Lands with no restrictions and renewable at mutual consent.

11. As per the information available with the Company, there is no overdue outstanding payable to Small Scale Industrial Units as at March 31, 2008.

12. As per the information available with the Company, there is no overdue outstanding payable to companies covered under by Micro, Small and Medium Enterprises Development Act, 2006. Hence, the question of payment of interest or provision there for towards belated payments does not arise.

13. The additional informations pursuant to the provisions of paragraphs 3 and 4 of Part II of Schedule VI of the Companies Act, 1956.

A. Description of Capacities, Production, Turnover, etc., Sl. Palm Oil Mill 2007 - 08 2006 - 07 No. (in MT) (in MT) a) Licensed Capacity (Fresh Fruit Bunches) 12,500 12,500 b) Installed Capacity (Fresh Fruit Bunches of Oil Palm) 12,500 12,500 c) Opening Stock 9.425 14.300 d) Production (Crude Palm Oil) 272.700 248.923 e) Sales 274.465 253.798 f) Closing Stock 7.660 9.425 B. Turnover Sl. Particulars 2007–08 2006-07 No. a) Crude Palm Oil MT 274.465 252.258 Rs. 1,13,41,864 94,55,300 b) Oil Palm Nuts MT 206.635 181.662 Rs. 15,20,366 10,85,924 C. Break-up of Raw Material Consumed Sl. Particulars 2007–08 2006-07 No. MT MT a) Fresh Fruit Bunches of Oil Palm (FFBs) 1734.407 1584.024 D. C.I.F. Value of Imports Sl. Particulars 2007–08 2006-07 No. MT MT a) Raw Materials NIL NIL b) Stores and Spares NIL NIL E. Expenditure in Foreign Currency Sl. Particulars 2007–08 2006-07 No. Rs. Rs. a) Travelling Expenses 13,678 NIL b) Others NIL NIL F. Value of Raw Material Consumed Sl. Particulars 2007-08 2006-07 No. Rs. Rs. a) Imports 0% NIL NIL b) Indigenous 100% 58,18,875 54,78,034 G. Earnings in Foreign Exchange Sl. Particulars 2007-08 2006-07 No. Rs. Rs. a) Exports NIL NIL b) Others NIL NIL14. Information as required under Part IV, Schedule VI of the Companies Act, 1956 is given in the

Annexure. 15. The previous year figures have been regrouped and reclassified wherever necessary.

On behalf of the Board

R. Thiagarajan V. Krishnamurthy R.R. GovindanMembershipNo.026558 Chairman DirectorCharteredAccountants

Chennai, May 20, 2008

125

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2008TO THE SHAREHOLDERSYour Directors have pleasure in submitting their Report alongwith the Audited Accounts for the year ended March 31, 2008.1. OPERATING RESULTS : Your Company’s performance during the year as compared to the previous period is summarized

below:

2007-2008(Rs. in lacs)

2006-2007(Rs. in lacs)

Profit before Taxation 11531.84 4609.76Provision for Taxation (3928.00) (517.42)Provision for Fringe Benefit Tax (12.45) (7.67)Provision for deferred tax (2.59) 14.71Provision for MAT credit entitlement - 45.84

Profit after taxation 7588.80 4145.22Add: Surplus brought forward 1914.91 1263.41

Less: Utilized for issue of Bonus Shares during the year (1864.63) -

Prior year tax adjustments (1344.17) (0.52)

AMOUNT AVAILABLE FOR APPROPRIATION 6294.91 5408.11Appropriations:Your Directors recommend appropriations as under:Interim Dividend - 2700.00 Proposed Dividend 2461.24 -Dividend Distribution Tax 418.28 378.67Transfer to General Reserve 760.00 414.53Surplus carried forward 2655.39 1914.91TOTAL APPROPRIATIONS 6294.91 5408.11

2. DIVIDEND : Your Directors recommend for approval of the members at the ensuing Annual General Meeting payment

of dividend of 100% (Rs.10/- per share) for the year ended 31st March, 2008. For the Right and Bonus Issue made during the year, the dividend will be payable on pro-rata basis to the shareholders from the date of allotment.

3. REVIEW OF OPERATIONS: Your company has had a good financial year, posting total income of Rs.22,749.99 lacs during the year

ended March 31, 2008. The highlights of the year have been that we have entered into new cities like Chandigarh, Mangalore,

Kochi and Chennai and signed up for large township development projects in Ahmedabad. During the year, your Company has also, signed an agreement to sell part of Phase –II in Godrej Woodsman Estate Project, at Bangalore on a built-to-suit basis for a total consideration of Rs.8,155 lacs. The total income of Rs.22,749.99 lacs, includes an amount of Rs.6,442.45 lacs, being the Company’s share of revenue from the said transaction.

4. FUTURE PROSPECTS AND OUTLOOK OF THE COMPANY: Your company has a well diversified portfolio spread across established Tier–I cities and emerging

Tier – II & III locations. Infrastructure improvements, increasing urbanization, expansion of organized retail, continued shortage of affordable and quality housing and demand from IT/ ITES and other commercial establishments like Banking and Insurance is expected to drive growth in the Industry. Large scale township development, mix of commercial and residential projects, along with continued focus on Joint Development with land owners for sourcing land provides the Company a de-risked pipeline of projects for development.

5. CHANGE IN CAPITAL Authorised Capital During the year the Company has increased its Authorised Capital from Rs.1,000 lacs to Rs. 10,000

lacs. Bonus Issue During the year your Company had issued Bonus Shares to the equity shareholders of the Company,

whose names appeared on the Register of Members of the Company on November 19, 2007 (Record date) by allotting 5,15,56,360 equity shares of Rs. 10/- each credited as fully paid in the proportion of 8 new equity shares for every 1 equity share held by them on the said record date.

Rights Issue During the year the Company had made a Rights Issue of 29,61,575 Equity Shares of Rs.10/- each

at a premium of Rs.610/- per share in the ratio of 1 equity share for every 19.58 (approx) equity shares held by equity shareholders on the record date. The Company received only one application along with the Subscription money from Godrej Industries Limited. Based on this, your Company has allotted 24,19,354 equity shares of Rs.10/- each fully paid at a premium of Rs.610/- per share to Godrej Industries Ltd. The unsubscribed portion of the Issued capital that is 5,42,221 was cancelled by the Board of Directors of the Company.

6. SUBSIDIARY COMPANIES : During the year your company has taken over a new Company – Happy Highrises Ltd. The project at

B.T. Road, Kolkata will be developed exclusively by this new Company. During the year, Godrej Waterside Properties Private Limited issued 1,42,10,000 10% Secured

Redeemable Optionally Convertible Debentures of Rs.10/- each to HDFC Venture Trustee Company Limited and 1,47,90,000 10% Secured Redeemable Optionally Convertible Debentures of Rs.10/- each to your Company.

Godrej Developers Pvt. Ltd., subsidiary of the Company, also issued 10,000 10% Non-Convertible Cumulative Redeemable Preference Shares of Rs.10/- each at par to the Company.

The audited Balance Sheet as at 31st March, 2008 and Profit & Loss account ended on that date together with the Reports of Directors and Auditors thereon of our Subsidiary Companies namely Girikandra Holiday Homes & Resorts Limited, Godrej Realty Private Limited, Godrej Waterside Properties Private Limited, Godrej Real Estate Private Limited, Godrej Developers Private Limited, Godrej Sea View Properties Private Limited and Happy Highrises Ltd. alongwith Statement as required under Section 212 of the Companies Act, 1956, is included in the Annual Report.

7. DIRECTORS : During the financial year Ms. Pheroza Jamshyd Godrej, Mr. Rishad K. Naoroji and Ms. Smita Vijay

Crishna resigned as Directors of the Company with effect from January 16, 2008. The Board desires to place on record its appreciation of the valuable services rendered by them during their tenure as Directors of the Company.

The Board of Directors at its meeting held on January 16, 2008 has appointed Mrs. Lalita D. Gupte, Mr. K. B. Dadiseth, Mr. Pranay Vakil and Dr. Pritam Singh as Additional Directors of the Company. They will hold office up to the date of the ensuing Annual General Meeting.

In accordance with the provision of the Articles of Association of the Company and the provisions

of the Companies Act, 1956, Mr. Adi B. Godrej, Mr. J. N. Godrej and Mr. Amit Choudhury, retire by rotation and being eligible, offer themselves for re-appointment.

The Board of Directors in their meeting held on January 16, 2008 recommended to the shareholders, commission amounting to Rs.5 lacs excluding out of pocket and travelling expenses, to be paid to each of the Non-Executive Directors of the Company, for the approval of the Shareholders.

8. APPOINTMENT OF AUDITORS: The statutory auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants will retire at the ensuing

Annual General Meeting and are eligible for re-appointment. You are requested to consider their re-appointment.

9. COMMITTEES OF DIRECTORS The Board of Directors in their meeting held on January 16, 2008 re-constituted the following

committees comprising of the following Directors for a) Audit Committee 1) Mr. K.B. Dadiseth - Chairman 2) Mrs. Lalita D. Gupte 3) Mr. Pranay Vakil 4) Dr. Pritam Singh 5) Mr. Amit Choudhury b) Remuneration Committee 1) Mrs. Lalita D. Gupte - Chairperson 2) Mr. K.B. Dadiseth 3) Mr. Pranay Vakil 4) Dr. Pritam Singh 5) Mr. Amit Choudhury The terms of reference of the Audit as well as the Remuneration Committee are as per Clause 49 of

Listing Agreement and the provisions of the Companies Act, 1956. The Board of Directors also constituted Investors’ Grievance Cum Share Transfer Committee in the said

meeting comprising of the following Directors for redressal of shareholders’ and investors’ complaints and for approval of transfer and transmission of shares

1. Mr. Adi B. Godrej – Chairman 2. Mr. Milind Korde The Company Secretary is the secretary for all the aforesaid committees.10. EMPLOYEE STOCK OPTION SCHEME The shareholders, vide a Special Resolution passed at the extra-ordinary meeting held on

December 24, 2007, had approved Godrej Properties Limited Employee Stock Option Plan (GPL ESOP) for grant of such number of Options convertible into 4,42,700 equity shares of the nominal value of Re.10/- each, to eligible employees/directors of the Company and of the Company’s subsidiaries. The GPL ESOP will be administered by a trust set up for this purpose viz. Godrej Properties Limited Employee Stock Option Plan Trust (GPL ESOP Trust).

Pursuant to the resolution passed by the Remuneration Committee on December 24, 2007, the trust has purchased 4,42,700 equity shares of the Company from Godrej Industries Limited by using the Loan funds given by the Company. The Remuneration Committee vide its meeting held on December 24, 2007, has granted 4,42,700 Options convertible into 4,42,700 equity shares of Rs.10/- each to the eligible employees with effect from December 28, 2007. The options will vest in the concerned employees at the end of three years from the date of granting of the options.

11. FIXED DEPOSITS:

The Company has accepted Fixed Deposits to the extent of Rs.35,00,000/- during the year.

12. CHANGE IN THE ARTICLES OF ASSOCIATION

Your Company has pursuant to a resolution passed in the Extra-ordinary General Meeting held on April 15, 2008, adopted a new set of articles in substitution for and to the exclusion of all the existing Articles of the Company.

13. ADDITIONAL INFORMATION :

(a) In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 and the rules framed thereunder, the names and other particulars of employees are required to be set out in the annexure to the Director’s Report. In terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors Report and Accounts are being sent to the all the shareholders of the Company excluding the statement of particulars of the employee under Section 217 (2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the annexure may write to the Company Secretary at the Registered Office of the Company.

(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:

(i) Conservation of Energy : Expenses on account of Energy are negligible.

(ii) Technology Absorption: It is an on going process.

(iii) Foreign Exchange Earnings & Outgo :

During 2006-07, expenditure in foreign currencies amounted to Rs. 2,06,42,240/- on account of travelling and other expenses incurred for business promotion.

The Company has not earned any Foreign Exchange during the year.

14. DIRECTORS’ RESPONSIBILITY STATEMENT:

Your Directors confirm:

(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) that 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 ended 31st March, 2008 and of the profit of the Company for that year;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.

15. ACKNOWLEDGEMENT:

Your Directors wish to place on record, sincere thanks to the Union Government, State Government and also to all the Government agencies, banks, financial institutions, customers, shareholders, employees, fixed deposit holders, vendors and other related organizations who through their continued support and co-operation, have helped, as partners, in your Company’s progress.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

A. B. GODREJMumbai, April 30, 2008 CHAIRMAN

126

1. We have audited the attached Balance Sheet of GODREJ PROPERTIES LIMITED, as at 31st March 2008, the Profit and Loss Account and 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 the financial statements. An audit also 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 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 sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.



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 such books.

c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(f) of Schedule 19-Notes to Accounts, in respect of projects under long term contracts undertaken and/or financed by the Company, we have relied upon the management’s estimates of the percentage of completion, costs to completion and on the projections of revenues expected from projects owing to the technical nature of such estimates, on the basis of which profits/losses have been accounted, interest income accrued and realizability of the construction work in progress and project advances determined.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the 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 31st March, 2008;

ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and


5. On the basis of the written representations received from the directors as on 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For and on behalf ofKALYANIWALLA & MISTRYChartered Accountants

ERMIN K. IRANIPartnerMembership No. 35646

Place: MumbaiDated: April 30, 2008

ANNEXURE TO THE AUDITORS REPORTReferred to in paragraph (3) of our report of even date.1) (a) The Company has maintained proper records showing full particulars, including

quantitative details and situation of fixed assets. (b) As explained to us, the Company has a program for physical verification of fixed assets

at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of its assets.





3) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ PROPERTIES LIMITED

(b) Consequently, the question of commenting on the rates of interest and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and the interest and reasonable steps for recovery of principal and interest does not arise.

(c) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956

(d) Consequently, the question of commenting on the rates of interest and other terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.

5) (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 and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.

(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist.

6) In our opinion and according to the information and explanations given to us, the Company has complied with directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Companies Act, 1956, and the rules framed there under.


8) The maintenance of cost records has not been prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company.

9) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March, 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues outstanding of Income Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty, Wealth Tax, Excise Duty or Cess on account of any dispute.

10) The Company does not have accumulated losses at the end of the financial year and has not incurred any cash losses in the current and immediately preceding financial year.

11) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to banks. The Company does not have dues to financial institutions or debenture holders.



14) In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments.

15) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and other financial institutions.

16) In our opinion and according to the information and explanations given to us, the Company has utilized the term loan for the purpose it was taken.

17) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investment.


19) The Company did not issue any debentures during the year.20) The Company has not raised any money through a public issue during the year.21) Based on the audit procedures performed and information and explanations given by the

Management, we report that no fraud on or by the Company has been noticed or reported during the year.



Place: Mumbai

Dated: April 30, 2008.

127

Schedule As at 31.03.2008

As at 31.03.2007

Rupees Rupees

SOURCES OF FUNDS

SHAREHOLDERS’ FUNDS

Share Capital 1 604,202,590 64,445,450

Reserves & Surplus 2 1,817,344,904 520,592,130

LOAN FUNDS

Secured Loans 3 985,755,408 173,899,130

Unsecured Loans 4 1,529,844,710 1,137,065,294

4,937,147,612 1,896,002,004


FIXED ASSETS 5

Gross Block 54,138,926 44,391,084

Less: Depreciation 27,357,996 20,339,609

Net Block 26,780,930 24,051,475

Capital Work-In-Progress / Advances 2,141,192 2,141,192

28,922,122 26,192,667

INVESTMENTS 6 556,949,053 83,614,447

DEFERRED TAX ASSET 3,798,000 4,057,000

CURRENT ASSETS, LOANS & ADVANCES

Inventories 7 115,552,452 787,897,598

Sundry Debtors 8 4,057,123,512 2,197,881,754

Cash & Bank Balances 9 63,954,075 133,678,881

Loans & Advances 10 4,911,652,525 1,035,145,413

9,148,282,564 4,154,603,646

LESS: CURRENT LIABILITIES & PROVISIONS

Current Liabilities 11 4,398,857,726 2,366,583,011

Provisions 12 401,946,401 5,882,745

4,800,804,127 2,372,465,756

NET CURRENT ASSETS 4,347,478,437 1,782,137,890

4,937,147,612 1,896,002,004

NOTES TO ACCOUNTS & ACCOUNTING POLICIES 19

BALANCE SHEET AS AT 31ST MARCH, 2008

The Schedules referred to above form an integral Signatures to the Balance Sheetpart of the Balance Sheet and Schedules 1 to 12 and 19

As per our Report of even date.For and on behalf ofKALYANIWALLA & MISTRY A. B. GODREJ MILIND S. KORDEChartered Accountants Chairman Managing Director

ERMIN K. IRANI SHODHAN KEMBHAVIPartner Company Secretary

Mumbai, Dated : April 30, 2008

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008 Schedule For the year

endedFor the year

ended

31.03.2008 31.03.2007

Rupees Rupees

INCOME

Sales 1,964,843,693 1,172,466,094

Operating Income 13 309,528,280 199,775,722

Other Income 14 627,561 375,370

TOTAL INCOME 2,274,999,534 1,372,617,186

EXPENDITURE

Cost of sales 15 867,857,303 758,398,853

Employee Remumeration & Benefits 16 97,955,758 69,482,325

Administration Expenses 17 109,332,227 35,359,665

Interest & Finance Charges (Net) 18 38,180,332 41,519,933

Depreciation 8,489,763 6,879,606

1,121,815,383 911,640,382

Profit for the year 1,153,184,151 460,976,804


for Current Tax (392,800,000) (51,742,000)

for Fringe Benefit Tax (1,245,000) (767,000)

for MAT Credit Entitlement - 4,584,000

for Deferred Tax (259,000) 1,471,000

Profit After Tax 758,880,151 414,522,804

Prior years tax adjustments (134,416,774) (51,571)

Surplus brought forward 191,491,250 126,340,517

Less : Utilised for issue of Bonus Shares during the year

(186,462,720) -

Amount Available for Appropriation 629,491,907 540,811,750

Less :

Interim Dividend - 270,000,000

Proposed Dividend 246,124,143 -

Dividend Distribution Tax 41,828,800 37,867,500

Transfer to General Reserve 76,000,000 41,453,000

Surplus carried forward to Balance Sheet 265,538,964 191,491,250

Earnings per share Basic/ Diluted in Rs. (Refer Note 9) 10.64 7.15


The Schedules referred to above form an integral Signatures to the Balance Sheetpart of the Balance Sheet and Schedules 1 to 12 and 19

As per our Report of even date.For and on behalf ofKALYANIWALLA & MISTRY A. B. GODREJ MILIND S. KORDEChartered Accountants Chairman Managing Director

ERMIN K. IRANI SHODHAN KEMBHAVIPartner Company Secretary

Mumbai, Dated : April 30, 2008

SCHEDULES FORMING PART OF THE ACCOUNTS

As at As at31.03.08 31.03.07

Rupees RupeesSCHEDULE 1SHARE CAPITALAUTHORISED100,000,000 Equity Shares of Rs. 10/- each 1,000,000,000 100,000,000

1,000,000,000 100,000,000

ISSUED, SUBSCRIBED & PAID UP60,420,259 Equity Shares of Rs. 10/- each fully paid up. 604,202,590 64,445,450

a) Of the above 49,358,459 (previous year 5,264,645) shares are held by Godrej Industries Ltd, the Holding Company

b) Of the above 54,203,845 (previous year 2,647,485) shares issued as Bonus shares by capitalising Share Premium, General Reserve & Profit & Loss Account

604,202,590 64,445,450

As at As at31.03.08 31.03.07

Rupees RupeesSCHEDULE 2RESERVES & SURPLUSShare Premium As per last Balance Sheet 245,172,265 245,172,265 Add : Received during the year 1,475,805,940 - Less : Utilised for issue of Bonus Shares during the year (245,172,265) -

1,475,805,940 245,172,265

General Reserve - As per last Balance Sheet 83,928,615 42,475,615

Less : Utilised for issue of Bonus Shares during the year (83,928,615) -Add : Transfer from Profit & Loss Account 76,000,000 41,453,000

76,000,000 83,928,615 Profit and Loss Account 265,538,964 191,491,250

1,817,344,904 520,592,130

128

As at As at31.03.08 31.03.07

Rupees RupeesSCHEDULE 3SECURED LOANS1) Cash Credit / Working Capital Demand Loan 985,755,408 173,899,130 (Secured by equitable mortgage of immovable propertyof the Company’s Project at Juhu, Mumbai)

985,75 5,408 173,899,130

SCHEDULES FORMING PART OF THE ACCOUNTSAs at As at

31.03.08 31.03.07Rupees Rupees

SCHEDULE 4UNSECURED LOANSBanks 1,510,746,710 1,110,167,294 Companies - 10,000,000 Fixed Deposits 19,098,000 16,898,000

1,529,844,710 1,137,065,294 Of the above, Repayable within a year 1,529,844,710 1,137,065,294

GROSS BLOCK DEPRECIATION NET BLOCKAs at Additions Deductions As at Upto For the Deductions Upto As at As at

ASSETS 1st April 31st March 1st April Year 31st March 31st March 31st March2007 2008 2007 2008 2008 2007

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.Tangible AssetsLeasehold Improvement 9,089,529 682,716 - 9,772,245 3,940,760 2,311,323 - 6,252,083 3,520,162 5,148,769 Office Equipment 5,781,014 1,408,787 46,480 7,143,321 1,802,182 656,083 1,955 2,456,310 4,687,011 3,978,832 Site Equipments 2,072,120 - - 2,072,120 1,425,959 89,881 - 1,515,840 556,280 646,161 Furniture & Fixtures 9,025,285 1,850,266 - 10,875,551 3,499,688 1,214,433 - 4,714,121 6,161,430 5,525,597 Computer 10,570,295 4,628,412 287,217 14,911,490 6,227,176 2,963,194 270,388 8,919,982 5,991,508 4,343,118 Motor Vehicle 4,724,392 - 1,630,538 3,093,854 3,095,633 376,522 1,199,039 2,273,116 820,738 1,628,759 Intangible AssetsLicenses & Software 3,128,449 3,141,896 - 6,270,345 348,217 878,327 - 1,226,544 5,043,801 2,780,232

Total 44,391,084 11,712,077 1,964,235 54,138,926 20,339,615 8,489,763 1,471,382 27,357,996 26,780,930 24,051,468

Previous Year 36,381,748 9,461,808 1,452,472 44,391,084 14,673,626 6,879,606 1,213,616 20,339,615 Capital Work-in-progress 2,141,192 2,141,192

TOTAL 28,922,122 26,192,660


As at As at31.03.08 31.03.07

Rupees RupeesSCHEDULE 6 : INVESTMENTSLong TermQuoted Investments100 Equity Shares of Rs.10/- each of 742 742 Alacrity Housing Limited100 Equity Shares of Rs.10/- each of 616 616 Alsa Construction & Housing Limited100 Equity Shares of Rs.10/- each of 1,066 1,066 Ansal Buildwell Limited100 Equity Shares of Rs.10/- each of 1,366 1,366 Ansal Housing & Construction Limited600 Equity Shares of Rs.5/- each of 3,081 3,081 Ansal Properties & Infrastructure Limited(300 shares received as bonus shares during the year)(Previous year 300 Equity shares of Rs. 5/- each)100 Equity Shares of Rs.10/- each of 1,241 1,241 Lok Housing & Construction Limited100 Equity Shares of Rs.10/- each of 1,641 1,641 Mantri Housing & Construction Limited100 Equity Shares of Rs.10/- each of 1,516 1,516 Premier Hsg & Industrial Ent Limited100 Equity Shares of Rs.10/- each of 891 891 D.S. Kulkarni Developers13,000 Equity Shares of Rs.2/- each of 6,366 6,366 Unitech Limited(6,500 shares received as bonus shares during the year)(Previous year 6,500 Equity shares of Rs. 2/- each)Total Carried Forward 18,526 18,526 Total brought forward 18,526 18,526 72 Equity Shares of Rs.10/- each of 2,485 2,485 The Great Eastern Shipping Company Limited18 Equity Shares of Rs.10/- each of 621 621 The Great Offshore Limited100 Equity Shares of Rs.10/- each of 266 266 Radhe Developers Limited23,700 Equity Shares of Rs.10/- each of 2,370 2,370 United Textiles Limited

24,268 24,268 Less : Provision for Dimunition in Value 7,765 22,321

16,503 1,947 Unquoted Investments 1,000 Equity Shares of Rs.10/- each of 10,000 10,000 Saraswat Co-operative Bank Limited

As at As at31.03.08 31.03.07

Rupees RupeesSCHEDULE 6 : INVESTMENTS (Contd.)

25,000 Equity Shares of Rs.10/- each of 2,500 2,500

Amitabh Bachchan Corporation Limited

Investments In Subsidiary Companies

510,000 Equity Shares of Rs.10/- each of

Godrej Realty Pvt. Ltd. 5,100,000 5,100,000

10% Secured redeemable optionally convertible debentures 76,500,000 76,500,000

Godrej Realty Pvt. Ltd.


Godrej Waterside Properties Pvt. Ltd. 5,100,000 500,000

(460,000 Equity Shares of Rs. 10/- each purchased during the year)

10% Secured redeemable optionally convertible debentures of

Godrej Waterside Properties Pvt. Ltd. 147,900,000 -

(Purchased during the year)

Total Carried Forward 234,629,003 82,114,447

Total brought forward 234,629,003 82,114,447


Godrej Seaview Properties Pvt. Ltd. 500,000 500,000


Godrej Real Estate Pvt. Ltd. 500,000 500,000


Godrej Developers Pvt. Ltd. 500,000 500,000

10,000 - 10% non convertible cumulative redeemable preference shares of Rs.10/- each of

Godrej Developers Pvt. Ltd. 100,000 -


203,120 Equity Shares of Rs. 10/- each of 320,720,050 -

Happy Highrises Limited


556,949,053 83,614,447

1. Cost of Quoted Investments 24,268 24,268

2. Market Value of Quoted Investments 3,906,889 2,677,624

129

As at As at31.03.08 31.03.07

Rupees RupeesSCHEDULE 7 : INVENTORIESStock in trade (Refer Note 3) 24,274,569 19,328,216 Construction Work in progress 91,277,883 768,569,382

115,552,452 787,897,598 SCHEDULE 8 : SUNDRY DEBTORS (UNSECURED, CONSIDERED GOOD)Due over Six months 11,914,947 14,209,863 Others 4,045,208,565 2,183,671,891

4,057,123,512 2,197,881,754 SCHEDULE 9 : CASH & BANK BALANCESCash & Cheques-in-Hand 175,568 10,826,454 Balance with Scheduled Banks - on Current Accounts 20,720,225 82,797,016 - on Fixed Deposit Accounts 43,058,282 40,055,411 (Refer Note 4) 63,954,075 133,678,881 SCHEDULE 10 : LOANS & ADVANCES (UNSECURED, CONSIDERED GOOD)Loans & Advances recoverable in cash or in kind or for value to be received (Refer Note 5(a)) 2,532,802,308 387,941,887 Loan to GIL ESOP Trust 77,425,000 62,800,000 Loan to GPL ESOP Trust 275,160,185 - Due on Management Projects (Refer Note 5(b)) 1,216,407,750 448,079,279 Less: Transfer to Cost of Sales - Development Projects (32,943,636) (88,368,864)

1,183,464,114 359,710,415 Development Manager Fees Accrued but not due (Refer Note 6 (b))

170,243,559 170,299,063

Interest Accrued 33,877,676 9,492,175 Deposits 638,679,683 31,740,447 Advance Tax & Tax deducted at source - 13,162,936 (Previous Year Including MAT credit entit lement of Rs. 4,584,000/- & Net of Provision for Tax of Rs. 153,155,245/-) 4,911,652,525 1,035,145,413 SCHEDULE 11 : CURRENT LIABILITIESSundry Creditors (Refer Note 10) 145,415,525 57,487,977 Investor Education and Protection Fund - - Advances received against sale of flats 3,375,118,599 1,880,540,792 Deposits 410,590 410,590 Unclaimed Fixed Deposits 1,199,000 1,689,000 Other liabilities 687,134,887 307,135,995 Due to Management Projects 189,579,125 119,318,657

4,398,857,726 2,366,583,011 SCHEDULE 12 : PROVISIONSGratuity 4,211,619 3,076,578 Leave Encashment 4,766,476 2,806,167 Proposed Dividend 246,124,143 - Tax on Dividend 41,828,800 - For Taxation 105,015,363 - (Net of Advance Tax & Tax of deducted at source ofRs. 571,998,138/-) 401,946,401 5,882,745 SCHEDULE 13 : OPERATING INCOME (GROSS)Income From Development Projects 289,039,919 71,065,851 Compensation Received from Project 10,000,000 120,000,000 Project Management fees 25,612 12,769 Other Income from Customers 10,436,349 3,512,026 Lease Rent 14,400 5,173,076 Licence Fees 12,000 12,000

309,528,280 199,775,722

Tax Deducted at source 33,100,597 995,854

SCHEDULE 14 : OTHER INCOMEDividends 32,102 4,529 Profit on sale of Fixed Assets (Net) - 43,908 Miscellaneous Income 595,459 326,933

627,561 375,370 SCHEDULE 15 : COST OF SALESOwn ProjectsOpening Stock: 787,897,597 204,751,392 Add : Expenditure/ Transfers from Advances during the yearDevelopment Rights - 6,612,000 Land - 570,000,000 Construction, Material & Labour 639,547,457 532,541,579 Infrastructure 466,940 3,501,892 Architect Fees 10,133,714 12,378,669 Advertisement Expenses 10,991,867 16,461,721 Overheads 98,303,279 68,852,935 Interest 44,802,837 42,827,398

804,246,094 1,253,176,194

SCHEDULES FORMING PART OF THE ACCOUNTSAs at As at

31.03.08 31.03.07Rupees Rupees

Less : Project transferred to Subsidiary Company (641,677,572) - Less : Closing Stock: (115,552,452) (787,897,597)

834,913,667 670,029,989 Development Projects Cost 32,943,636 88,368,864

867,857,303 758,398,853

SCHEDULE 16 : EMPLOYEE REMUNERATION & BENEFITS Salaries, Bonus, Gratuity & Allowances 92,856,235 65,887,735 Contribution to Provident & other funds 4,300,118 2,951,360 Other Employee Benefits 799,405 643,230

97,955,758 69,482,325 SCHEDULE 17 : ADMINISTRATION EXPENSESCost of Project Management 1,233,107 530,087 Consultancy Charges 67,205,659 11,163,268 Service Charges 130,110 111,734 Compensation Claims 750,000 - Loss on sale of Fixed Assets (Net) 289,087 - Power & Fuel 1,160,399 1,052,240 Rent 11,445,408 9,421,234 Insurance 878,708 841,480 Rates & Taxes 48,441 23,100 Repairs & Maintenance 126,908 474,780 Other Operating Expenses 26,078,956 11,741,742 Provision for diminution in value of investments written back (14,556) -

109,332,227 35,359,665 SCHEDULE 18 : INTEREST AND FINANCE CHARGES (NET)Interest Paid - Banks 211,828,551 48,569,967 - Inter Corporate Deposits 3,193,383 15,813,507 - Projects and landlords 44,473,685 53,165,598 - Others 3,446,006 590,762

Total Interest Paid 262,941,625 118,139,834

Add : Brokerage & other Financial charges 7,097,841 6,414,436

Total Interest/ Finance Charges Paid 270,039,466 124,554,270 Less: Interest Received (Gross) - Customers - 1,480 - Projects and landlords 191,699,669 73,643,137 - Others 40,159,465 9,389,720 Total Interest Received 231,859,134 83,034,337

NET INTEREST 38,180,332 41,519,933

Tax Deducted at source 41,114,503 6,943,577

SCHEDULE 19 : NOTES ACCOUNTS & ACCOUNTING POLICIES1) Accounting Policies

a) General

The financial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

b) Fixed Assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.

Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.

c) Depreciation / Amortization

Depreciation has been provided on Written Down Value basis, at the rates specified in Schedule XIV of the Companies Act, 1956.

Assets acquired on lease are depreciated over the period of the lease.

Leasehold improvements are amortized over a period of five years.

Intangible Assets are amortized over a period of six years.

d) Investments

Investments are classified into long term and current investments.

Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognize a decline, other than of a temporary nature.

Current investments are carried individually at lower of cost and fair value and the resultant decline, if any, is charged to revenue.

130

e) Inventories

Inventories are valued as under :a) Completed Flats

b) Construction Work-in-Progress

- At lower of Cost or Market value

- At cost

Construction Work-in-Progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.

f) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As

per this method, revenue in Profit & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.

Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project / activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.

Income from operation of commercial complexes is recognized over the tenure of the lease / service agreement.

Interest income is accounted on an accrual basis at contracted rates. Dividend income is recognized when the right to receive the same is established. g) Development Manager Fees The company has been entering into Development & Project Management agreements

with landlords. Accounting for income from such projects is done on accrual basis on percentage of completion or as per the terms of the agreement.

h) EmployeeBenefits a) Short-termemployeebenefits: All employee benefits payable wholly within twelve months of rendering the

service are classified as short term employee benefits. Benefits such as salaries, wages, performance incentives, etc. are recognized at actual amounts due in the period in which the employee renders the related service.

b) Post-employmentbenefits: (i) DefinedContributionPlans: Payments made to defined contribution plans such as Provident Fund are

charged as an expense as they fall due. (ii) DefinedBenefitPlans: The cost of providing benefits i.e. gratuity is determined using the Projected

Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Profit & Loss Account.

The fair value of the plan assets is reduced from the gross obligation under the defined benefit plan, to recognize the obligation on net basis.

Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested.

(iii) Otherlong-termemployeebenefits: Other long-term employee benefits viz., leave encashment is recognized

as an expense in the profit and loss account as and when they accrue. The Company determines the liability using the Projected Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial gains and losses in respect such benefits are charged to the profit and loss account.

i) Borrowing Cost Interest and finance charges incurred in connection with borrowing of funds, which are

incurred for the development of long term projects are transferred to Construction Work in Progress / Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost / rates as per Agreements respectively.

Other borrowing costs are recognized as an expense in the period in which they are incurred.

j) Earnings Per Share The basic earnings per share is computed using the weighted average number of

common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.

k) Provision For Taxation Tax expense comprises both current, deferred & fringe benefit tax. Current and fringe benefit tax is measured at the amount expected to be paid to the

tax authorities, using the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between

the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.

l) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the

date of the transaction. Assets and liabilities related to foreign currency transactions,

SCHEDULES FORMING PART OF THE ACCOUNTSremaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profit and Loss Account.

m) Allocation of Expenses

Corporate Employee Remuneration and Administration expenses are allocated to various projects on a reasonable basis as estimated by the management.

n) Provisions and Contingent Liabilities


Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

2) Contingent Liabilities:

Matters As at 31st March 2008

(Rs.)

As at 31st March 2007

(Rs.)

a) Uncalled amount of Rs. 80/- & Rs. 30/- on 70 & 75 partly paid shares respectively of Tahir Properties Limited

7,850/- 7,850/-

b) Consideration payable for acquisition of shares in Girikandra Holiday Homes & Resorts Limited (a subsidiary company) for purchase of land.

Nil 9,473,750/-

c) Claims against the company not acknowledged as debts represents cases filed by parties in the Consumer forum and High Court and disputed by the Company as advised by our advocates. In the opinion of the management the claims are not sustainable.

7,876,293 9,476,293/-

d) Claims against the Company under the Labour Laws for disputed cases

1,989,240/- 1,500,000/-

e) Guarantees given by Bank, counter guaranteed by the Company

6,000,000/- 101,000,000/-

f) Letters of credit issued by banks on behalf of the Company

1,912,746/- Nil

g) Guarantee given on behalf of project owner (The Simplex Mills Company Limited). The Company is entitled to create a corresponding mortgage against project assets as considered necessary.

Nil 360,000,000/-

h) Claim against the Company under Bombay Stamp Act,1958

14,850,000/- 14,850,000/-

i) Other claims against the Company not acknowledged as debts

3,925,000/- Nil

3) Inventories

Stock - in - Trade includes shares in the following Companies - at cost or market value (whichever is lower) :

Particulars Current Year Previous Year

(Rs.) (Rs.)

Tahir Properties Limited

a) Nil (Previous Year 400) Equity shares Nil 40,000

of Rs. 100/- each, fully paid up

b) 70 Equity shares of Rs. 100/- each, 1,400 1,400

Rs. 20/- paid up

c) 75 Redeemable Preference Class A shares of 5,250 5,250

Rs.100/- each, Rs.70/- paid

Girikandra Holiday Homes & Resorts Limited (a subsidiary company)

500 Equity shares of Rs.1,000/- each, fully paid up 22,580,200 17,880,000

4) Cash & Bank Balances

Balances with scheduled banks on deposit accounts include Rs.39,384,677/- (Previous year Rs.36,617,677/-) received from flat buyers and held in trust on their behalf in a corpus fund.

131

SCHEDULES FORMING PART OF THE ACCOUNTS5) Loans and Advances

a) Amounts due from companies under the same management.

Particulars

Balance ason March

31, 2008

MaximumDebit

Balanceduring the

period

Balance ason March 31,

2007

MaximumDebit

Balanceduring

previous year

Godrej Industries Limited- Advances- Deposits

24,1361,350,000

412,3031,350,000

19,7361,350,000

493,7061,350,000

Girikandra Holiday Homes & Resorts Limited- Advances 28,730,564 28,730,564 28,511,433 28,511,433

Godrej Realty Private Limited- Advances 22,655,305 22,655,305 4,824,156 16,639,964Godrej Waterside Properties Private Limited- Advances- Deposit 166,055,935

567,094,306280,091,794567,094,306

278,077,328Nil

342,031,262Nil

Godrej Sea View Properties Private Limited- Advances 21,230 21,230 18,420 18,420Godrej Real Estate Private Limited- Advances- Deposit 668,621,952

54,270,225668,621,95254,270,225

18,420Nil

18,420Nil

Godrej Developers Private Limited- Advances- Deposit 150,734,687

85,500,000150,734,68785,500,000

18,420Nil

18,420Nil

Happy Highrises Limited- Advances- Deposit 70,247,423

689,950,00070,247,423

689,950,000NilNil

NilNil

b) Due on Management Projects include a sum of Rs. 20,872,941/- (Previous Year Rs. 20,309,477/-) on account of a project, where the matter is sub-judice with arbitrators.

6) Inventories, Current Assets, Loans and Advances:

a) Construction Work in Progress and Due on Management projects represents materials at site and unbilled cost on the projects based on projections and estimates by the Company of the expected revenues and costs to completion. In the opinion of the management, the net realizable value of the construction work in progress will not be lower than the costs so included.

b) The company has been entering into Development Agreements with landlords. Development Manager Fees amounting to Rs. 170,243,559/- (Previous Year Rs. 170,299,063/- ) accrued as per terms of the Agreement are receivable by the Company based upon progress milestones specified in the respective Agreements and have been disclosed as Development Manager Fees accrued but not due in Schedule 10.

7) Leases

a) The Company’s significant leasing arrangements are in respect of operating leases for Residential premises. Lease income from operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises given under operating leases are as under:

Particulars Current YearRs.

Previous YearRs.

Future minimum lease receipts under non-cancelable operating leases

l Not later than 1 year 26,400 26,400

l Later than 1 year and not later than 5 years

105,600 105,600

b) The Company’s significant leasing arrangements are in respect of operating leases for Commercial premises. Lease expenditure for operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises taken on operating leases are as under:


Previous YearRs.

Future minimum lease payments under non-cancelable operating leases

l Not later than 1 year 9,686,988 12,311,988

l Later than 1 year and not later than 5 years

2,290,348 11,977,336

8) Employee Stock Option Plan :

In December 2007, the Company has instituted an employee Stock Option Plan (GPL ESOP) approved by the Board of Directors, shareholder and the Remuneration Committee , which provides for the allotment of 442,700 options convertible into 442,700 Equity Shares of Rs. 10/- each to eligible employee of Godrej Properties Limited and its subsidiary Companies (the participating companies)

The Scheme is administered by an Independent ESOP Trust which has purchased shares from Godrej Industries Limited (The holding Company), equivalent to the number of options granted to the participating companies. During the current year finance is provided by Godrej Properties Limited to the ESOP Trust and the trust has purchased 442,700 shares of Godrej Properties Limited.

Particulars No. of

Options

Weighted Average

Exercise PriceOptions Outstanding at the beginning of the year - -Options granted 442,700 620.00

(plus interest)Options exercised - -Less : Forfeited / Expired - -

Options Outstanding at the year end 442,700 620.00(plus interest)

The Option granted shall vest after three years from the date of grant of option, provided the employee continues to be in employment and the option is exercisable within two years after vesting.

The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognized since, the price of the underlying equity shares on the grant date is same /less than exercise price of the option, the intrinsic value of option, therefore being determined as nil.

9) Earnings Per Share

Particulars Current Year Previous Year

Profit after tax and prior years tax adjustments as per Profit & Loss Account

Rs. 624,463,377 Rs. 414,471,232

Weighted average no. of equity shares outstanding

58,714,813 58,000,905

Basic/Diluted earnings per share Rs. 10.64 Rs. 7.15Nominal value of shares Rs. 10 /- Rs. 10 /-

Previous years figures have been recomputed due to issue of bonus shares during the year.

10) Dues To Micro, Small And Medium Industries

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2nd October, 2006, certain disclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

11) The amount of exchange difference included in the Profit and Loss Account, under the related heads of expenses is Rs 129,169/-. (Previous Year Rs. Nil/-).

12) Expenditure in Foreign Currency :


Previous YearRs.

Traveling Expenses 1,924,257 681,041

Other Expenditure 18,717,983 38,816,571

Total 20,642,240 39,497,612

13) Deferred Tax

The tax effect of significant temporary differences that resulted in deferred tax assets are:


Previous YearRs.

Depreciation on Fixed Assets 746,000 2,058,000

Others 3,052,000 1,999,000

Deferred Tax Asset 3,798,000 4,057,000

14) ComputationofNetProfitunderSection349oftheCompaniesAct,1956.


Previous YearRs.

Profit before Tax as per Profit and Loss Account 1,153,184,151 460,976,804

Add :-

Managerial Remuneration 20,093,562 14,008,095

Add : -

Depreciation 8,489,763 6,879,606

Loss on sale of Fixed Asset 289,087

Less :- Profit on sale of asset as per accounts - 43,908

Depreciation 8,489,763 6,879,606

Net Profit for the purpose of Directors Remuneration 1,173,566,800 474,940,991

132

Managerial Remuneration:-

Particulars

Current YearRs.

Previous Year

Rs.A Salaries 8,286,772 4,910,678

B Contribution to Provident Fund 471,040 353,280

C Estimated Monetary Value of Perquisites 280,577 432,856

D Performance Linked Variable Remuneration 9,940,748 8,311,281

E Sitting Fees to Non-Executive Directors 180,000 -F Commission to Non-Executive Directors 934,425 -

Total 20,093,562 14,008,095

Notes:

In case of the Managing Director, Performance Linked Variable Remuneration of Rs. 9,940,748/- (Previous Year Rs. 8,311,281/-) is on the basis of provision made in the accounts.

15) Amounts paid to Auditors:


Previous YearRs.

Audit Fees 1,579,288 1,487,180

Audit & Other Statutes 623,598 589,260

Certification

Consultancy Charges

205,051

377,540

30,866

516,304Reimbursement of Expenses 5,002 601

16) Segment Information : As the company has only one business segment, disclosure under Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.

17) Related Party Disclosures.


2. The following transactions were carried out with the related parties in the ordinary course of business.

(i) Details relating to parties referred to in items 1 (i), (ii) and (iii) above

Sr.

No

Description Godrej & Boyce Mfg

Co Ltd

Godrej Industries

Ltd

Subsidiaries Other Related

Parties In Godrej Group

(i) (ii) (iii) (iv)1. Issue of equity share

capital-

-

1,499,999,480

-

-

-

-

-2. Investment in equity/

preference share capital-

-

-

-

325,420,0501,500,000

-

-

3. Investment in debentures -

-

-

-

147,900,000

17,850,000

-

-4. Purchase of fixed assets 690,391

2,892,016

-

-

-

-

-

84,000

5. Advances given 650,000

-

-

-

1,396,814,531

4,200,000

-

-6. Advance received against

sale of flats-

-

16,870,120

-

-

-

-

-7. Deposit given -

-

675,000

1,000,000

-

-

-

-

8. Deposit repaid -- 675,000- - --

9. Inter-Corporate Deposit given

-- -- -- 150,000,000

-10. Inter-Corporate Deposit

repaid-

-

-

-

-

-

150,000,000

-11. Interest received on Inter-

Corporate Deposit-

-

-

-

-

-

5,049,862

-

12. Construction & other expenses incurred on behalf of other companies

-

1,471,819

422,073

502,278

985,494,069

358,970,202

-

-

13. Expenses charged by other companies (net)

107,368,412

82,017,012

3,230,536

2,035,464

-

2,656,006

458,309

759,799

14. Dividend Paid - 220,567,029- -- 9,160,538-

15. Outstanding receivables, net of (payables)

(16,993,766)

(5,605,348)

24,136

3,565

2,512,226,169

311,468,178

-

(48,965)

16. Deposits Receivable -

-

1,350,000

1,350,000

-

-

-

-

Figures in italics are for previous year

(ii) Details relating to persons referred to in items 1 (iv) & (v) above (Amt in Rupees)

Key Management Personnel: Current YearRs.

Previous YearRs.

1.

2.

3.

Remuneration

Reimbursement of Travel Expenses

Individuals exercising significant Influence :

Dividend paid – Mr.N.B.Godrej

18,979,137

194,400

Nil

13,657,985

194,400

8,054,487

3. Significant Related Party Transactions.

Nature of Transactions Subsidiaries & Other Related Parties in the Godrej Group

Amount

Rs.Issue of equity share capital Godrej Industries Limited 1,499,999,480

Investment in equity share capital Happy Highrises Limited 320,720,050

Investment in debentures Godrej Waterside Properties PrivateLimited

147,900,000

Godrej Realty Private Limited -

17,850,000

Purchase of fixed assets Godrej & Boyce Mfg Co. Limited 690,391

2,892,016

1. Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below:

(i) Relationships: Shareholders (Holding Company) Godrej Industries Limited (GIL) holds 81.69% shares in the Company. GIL is the subsidiary

of Godrej & Boyce Mfg. Co. Limited, the Ultimate Holding Company. (ii) Subsidiaries : Girikandra Holiday Homes & Resorts Limited (100%) Godrej Realty Private Limited (51%) Godrej Waterside Properties Private Limited (51%) Godrej Real Estate Private Limited (100%) Godrej Developers Private Limited (100%) Godrej Sea View Properties Private Limited (100%) Happy Highrises Limited (100%) (iii) Other Related Parties in Godrej Group, where common control exists : Vora Soaps Limited Bahar Agrochem & Feeds Private Limited Ensemble Holdings & Finance Limited Godrej Appliances Limited Godrej Agrovet Limited Godrej Consumer Products Limited Godrej Hicare Limited Godrej Hershey Limited Godrej Infotech Limited Lawkim Limited (iv) Key Management Personnel : Mr. Milind Surendra Korde (v) IndividualsexercisingSignificantInfluence: Mr. A. B. Godrej Mr. N. B. Godrej

133

Advances given Godrej Waterside Properties Private Limited

567,094,306

Happy Highrises Limited 689,950,000

Advance received against sale of flats

Godrej Industries Limited 16,870,120

NILInter-Corporate Deposits given during the year

Lawkim Limited 150,000,000

-Inter-Corporate Deposits repaid during the year


-Construction & other expenses incurred on behalf of other companies

Godrej Real Estate Private Limited 675,246,973

18,420Godrej Developers Limited 152,029,966

18,420

Expense s cha rged by o the r companies. (net)

Godrej & Boyce Mfg. Co. Limite 107,368,412

82,017,012

Interest Income on Inter-Corporate Deposits given


-Outstanding receivables, net of (payables)

Godrej Waterside Properties Private Limited

741,494,783

278,077,329

Godrej Real Estate Private Limited 722,892,177

Happy Highrises Limited

18,420

760,197,423

18) EmployeeBenefits

(i) DefinedContributionPlans:

Contribution to Defined Contribution Plan, recognized as expense for the year are as

under:

Particulars Current year(Rs.)

Employers’ Contribution to Provident Fund 4,259,561

(ii) DefinedBenefitPlans:

a. Contribution to Gratuity Fund

Gratuity is payable to all eligible employees on death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company’s policy whichever is beneficial to the employees.

The following table sets out the funded status of the gratuity plan and the amounts recognized in the Company’s financial statements as at 31 March 2008:

Change in present value of obligation

Present value of obligation as at 1st April 2007 3,076,578

Interest Cost 246,126

Service Cost 621,752Benefits Paid -Actuarial (gain)/loss on obligation 267,163

Present value of obligation, as at 31st March 2008 4,211,619Amount recognized in the Balance Sheet

Present value of obligation, as at 31st March 2008 4,211,619Fair value of plan assets as at 31st March 2008 -Net obligation as at 31st March 2008 4,211,619

Net gratuity cost for the year ended 31st March 2008

Current Service Cost 621,752

Interest Cost 246,126Expected return on plan assets -

Net Actuarial (gain)/loss to be recognized 267,163Net gratuity cost 1,135,041

Assumptions used in accounting for the gratuity plan

(In %)Discount Rate 8

Salary escalation rate 5

Expected rate of return on plan assets 8

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market

Since, this is the first year of AS – 15 (Revised 2005) being applicable, previous year’s figures have not been provided.


19) Information in respect of Joint Ventures

Jointly Controlled Operations - Development of the following Residential/Commercial Projects:

Coliseum, Mumbai

Woodsman Estate, Bangalore

Gold County, Bangalore

Planet Godrej, Mumbai

La Vista, Mumbai

Glenelg, Mumbai

Edenwoods, Mumbai

Shivajinagar, Pune

NLM, Kalyan

GVD, Kalyan

MPM, Kalyan

RSM/HKB, Kalyan

Mangalore Project

Sanjay Khan, Bangalore

Grenville Park, Mumbai

Walkeshwar, Mumbai

Waldorf, Oshiwara

Castlemaine, Pune

Chandigarh Project

20) Prior period financial statements have been audited by a firm of Chartered Accountants other than Kalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts, which have been re-grouped & re-classified wherever necessary to conform to current year’s classification.

21) Previous year figures have been regrouped/rearranged where ever necessary to confirm to current year’s classification.

22) Additional information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.

23) Statement Pursuant to Part IV of Schedule VI of the Companies Act, 1956

Balance Sheet Abstract for the Year Ended 31st March 2008 And Company’s General BusinessProfile

a) Registration Details

Registration No. U74120MH1985PLC035308

State Code 11

Balance Sheet Date 31st March, 2008

b) Capital raised during the year (Amount in Rs. Thousands)

Public Issue Nil

Rights Issue (Including Premium) 1,499,999

Bonus Issue 515,564

Private Placement Nil c) Position of mobilisation and deployment of funds (Amount in Rs. Thousands)

Total Liabilities 97,37,952

Total Assets 97,37,952

Sources of Funds

Paid-up Capital 604,203

Reserves & Surplus 1,817,345

Secured Loans 985,755

Unsecured Loans 1,529,845

Application of Funds Net Fixed Assets 28,922

Investments 556,949

Net Current Assets 4,347,478

Misc. Expenditure Nil

Deferred Tax Asset 3,798

Accumulated Losses Nil d) Performance of Company (Amount in Rs. thousands) Turnover 2,274,999

Total Expenditure (Net of other income) 1,121,815

Profit before tax 1,153,184 Profit after tax 758,880

Earning per Share in Rs. (on an annualized basis) 10.64

Dividend rate % 100 e) Generic Name of three principal products/services of Company N.A.

134

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008

Current year Previous year

Rupees Rupees

Cash Flow from Operating Activities

Profit for the Year before Taxation 1,153,184,151 460,976,804

Adjustment for:

Depreciation 8,489,763 6,879,606

Interest Paid 270,039,466 124,554,270

(Profit) /Loss on sale of Fixed Asset (Net) 289,087 (43,908)

Provision for Dimunition in value of Investment written back

(14,556) -

Interest Income (231,859,134) (83,034,336)

Dividend Received (32,102) (4,529)

OperatingProfitbeforeworkingcapitalchanges 1,200,096,675 509,327,906

Adjustment for:

Change in Inventory 672,345,146 (583,146,207)

Change in Sundry Debtors (1,859,241,757) (1,369,774,201)

Change in Loans & Advances (3,865,284,547) (343,377,450)

Change in Current Liabilities / Provisions 2,035,370,065 1,060,980,303

(1,816,714,418) (725,989,649)

Taxes Paid (Net) 410,283,474 65,000,599

Net Cash Flow from Operating activities (2,226,997,892) (790,990,248)

Cash Flow from Investing Activities

Purchase of Fixed Assets (11,712,077) (11,603,000)

Sale of Fixed Assets 203,770 282,764

Purchase of Investments (473,320,050) (19,350,000)

Interest Received 207,473,633 74,036,734

Dividend Received 32,102 4,529

Net Cash Flow from Investing Activities (277,322,622) 43,371,027

Cash Flow from Financing Activities

Proceeds from Issue of Equity Share Capital 1,499,999,480 -

Change in Cash Credit 811,856,278 158,595,840

(Repayment)/ Proceeds from Term Loan - (250,000)

Proceeds from Borrowings 400,579,416 1,065,167,294

(Repayment)/ Proceeds from Inter Company Deposit (10,000,000) 10,000,000

Acceptance of Fixed Deposits 2,200,000 1,039,000

Interest Paid (270,039,466) (124,554,270)

Payment of Dividend - (332,000,000)

Tax on Distributed Profits - (46,563,000)

Net Cash Flow from Financing Activities 2,434,595,708 731,434,864

Net Increase/ (Decrease) in Cash & Cash Equivalent (69,724,806) (16,184,357)

Cash & Cash Equivalent -Opening Balance 133,678,881 149,863,239

Cash & Cash Equivalent -Closing Balance 63,954,075 133,678,881

Notes :

1. The cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash flows by operating, investing and financing activities.

2. Figures for the previous year have been regrouped / restated wherever necessary to conform to this year’s classification.


KALYANIWALLA & MISTRY A. B. GODREJ MILIND S. KORDEChartered Accountants Chairman Managing Director

ERMIN K. IRANIPartner SHODHAN KEMBHAVIMumbai, Dated : April 30, 2008 Company Secretary

SCHEDULE FORMING PAERT OF ACCOUNTSSTATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 19561. Name of the Company : Girikandra Holiday Homes & Resorts Limited2. Financial Year ending : 31st March, 20083. The Company’s interest in the : 500 Equity Shares of Rs. 1000/- each, fully paid-up subsidiary as on above date. (representing 100% of the share Capital)4. Net Profit / (Loss) of the subsidiary : (Rs. 2,500/-) company (Not dealt with in the accounts of the Company)

A. B. GODREJ MILIND S. KORDE SHODHAN KEMBHAVI CHAIRMAN MANAGING DIRECTOR COMPANY SECRETARYMumbai, Dated : April 30, 2008

STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 19561. Name of the Company : Godrej Realty Private Limited2. Financial Year ending : 31st March, 20083. The Company’s interest in the : 510,000 Equity Shares of Rs. 10/- each, fully paid- subsidiary as on above date. up (representing 51% of the share Capital)4. Net Profit / (Loss) of the subsidiary : Rs.610, 096/-) company (Not dealt with in the accounts of the Company)


STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 19561. Name of the Company : Godrej Waterside Properties Private Limited2. Financial Year ending : 31st March, 20083. The Company’s interest in the : 510,000 Equity Shares of Rs. 10/- each, fully paid- subsidiary as on above date. up (representing 51% of the share Capital)4. Net Profit / (Loss) of the subsidiary : (Rs.1,556,636/-) company (Not dealt with in the accounts of the Company)


STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 19561. Name of the Company : Godrej Real Estate Private Limited2. Financial Year ending : 31st March, 20083. The Company’s interest in the : 50,000 Equity Shares of Rs. 10/- each, fully paid- subsidiary as on above date. Up (representing 100% of the share Capital)4. Net Profit / (Loss) of the subsidiary : (Rs.15,626/-) company (Not dealt with in the accounts of the Company)


STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 19561. Name of the Company : Godrej Developers Private Limited2. Financial Year ending : 31st March, 20083. The Company’s interest in the : 50,000 Equity Shares of Rs. 10/- each, fully paid-subsidiary as on above date. up (representing 100% of the share Capital)4. Net Profit / (Loss) of the subsidiary : (Rs.1,842 /-) company (Not dealt with in the accounts of the Company)


STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 19561. Name of the Company : Godrej Sea View Properties Private Limited2. Financial Year ending : 31st March, 20083. The Company’s interest in the : 50,000 Equity Shares of Rs. 10/- each, fully paid- subsidiary as on above date. up (representing 100% of the share Capital)4. Net Profit / (Loss) of the subsidiary : (Rs.40,179/-) company (Not dealt with in the accounts of the Company)


STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 19561. Name of the Company : Happy Highrises Limited.2. Financial Year ending : 31st March, 20083. The Company’s interest in the : 203,120 Equity Shares of Rs. 1000/- each, fully subsidiary as on above date. paid-up (representing 100% of the share Capital)4. Net Profit / (Loss) of the subsidiary : Rs. 14,913 /- company (Not dealt with in the accounts of the Company)


135

BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008TO THE SHAREHOLDERSYour Directors have pleasure in submitting their Report alongwith the Audited Accounts for the year ended 31st March, 2008.1. FINANCIAL HIGHLIGHTS : Theaccountingresultsfortheyearended31stMarch,2008revealthatthereisadeficitattheend

of the year.2. REVIEW OF OPERATIONS : The Company has not commenced any activities during the year.3. DIVIDEND : Astherearenoprofits,theDirectorsregretthatnodividendcanberecommended.4. DIRECTORS : In accordance with the provision of the Articles of Association of the Company, Ms. Tanya A. Dubash

retires by rotation and being eligible offers herself for reappointment.5. APPOINTMENT OF AUDITORS : M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and

are eligible for re-appointment for which they have given their consent.6. DIRECTORS’ RESPONSIBILITY STATEMENT: YourDirectorsconfirm: (i) that in the preparation of the annual accounts, the applicable accounting standards have been

followed; (ii) that 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 viewofthestateofaffairsoftheCompanyattheendofthefinancialyearended31stMarch,2008 and of the loss of the Company for that year;

(iii) that theDirectorshad takenproperand sufficient care for themaintenanceofadequate

accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.7. ADDITIONAL INFORMATION : (a) Since the company has no employees, the particulars of the employees to be disclosed u/s

217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, are not given.

(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange EarningsandOutgo,requiredundersection217(1)(e)oftheCompaniesAct,1956readwiththe Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:

(i) Conservation of Energy : Expenses on account of Energy are negligible. (ii) Technology Absorption : It is an on going process. (iii) Foreign Exchange Earning & Outgo : The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange

Expenditure during the year.8. ACKNOWLEDGEMENT: Your Directors take this opportunity to thank all the associates for their co-operation.


TANYA A. DUBASH MILIND S. KORDE Mumbai, Dated : April 30, 2008 DIRECTORS

REPORT OF THE AUDITORSTO THE MEMBERS OFGIRIKANDRA HOLIDAY HOMES & RESORTS LIMITED1. We have audited the attached Balance Sheet of GIRIKANDRA HOLIDAY HOMES & RESORTS LIMITED, as

at31stMarch2008andalsotheProfitandLossAccountandtheCashFlowStatementoftheCompanyfortheyearendedonthatdateannexedthereto.ThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbased on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those StandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatementAnauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditprovidesa reasonable basis for our opinion.

3. AsrequiredbytheCompanies(Auditor’sReport)Order,2003,issuedbytheCentralGovernmentinterms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement onthemattersspecifiedinparagraphs4and5ofthesaidOrder.



b) Inouropinion,properbooksofaccountasrequiredbylawhavebeenkeptbytheCompanyso far as appears from our examination of such books.

c) TheBalanceSheet,ProfitandLossAccountandtheCashFlowStatementdealtwithbythisreport are in agreement with the books of account.

d) Inouropinion,theBalanceSheet,ProfitandLossAccountandtheCashFlowStatementdealtwith by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

e) In our opinion and to the best of our information and according to the explanations given tous,thesaidaccountsreadwiththenotesthereon,givetheinformationrequiredbytheCompaniesAct,1956,inthemannersorequiredandgiveatrueandfairviewinconformitywith the accounting principles generally accepted in India:

i) in the case of the Balance Sheet, the state of affairs of the Company as at 31st March, 2008;

ii) inthecaseoftheProfitandLossAccount,thelossoftheCompanyfortheyearendedon that date and

iii) inthecaseoftheCashFlowStatement,ofthecashflowsoftheCompanyfortheyearended on that date.

5. On the basis of the written representations received from the directors as on 31st March, 2008, and takenonrecordbytheBoardofDirectors,wereportthat,noneofthedirectorsisdisqualifiedason 31st March, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.


ERMIN K. IRANIPlace: Mumbai PARTNERDated : April 30, 2008 Membership No. 35646

ANNEXURE TO THE AUDITORS’ REPORTReferred to in paragraph (3) of our report of even date.1) TheCompanydoesnothaveanyfixedassets.2) The Company does not have any inventories.3) (a) TheCompanyhasnotgrantedanyloans,securedorunsecuredtocompanies,firmsorother

parties covered in the register maintained under Section 301 of the Companies Act, 1956 (b) Consequently, the question of commenting on the rates of interest and other terms and

conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and the interest and reasonable steps for recovery of principal and interest does not arise.

(c) TheCompanyhasnottakenanyloans,securedorunsecuredfromcompanies,firmsorotherparties covered in the register maintained under Section 301 of the Companies Act, 1956

(d) Consequently, the question of commenting on the rates of interest and other terms andconditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise.

4) As thereareno inventoriesandassets,norarethereanysalesduring theyear, thequestionofadequateinternalcontrolprocedurescommensuratewiththesizeoftheCompanyandthenatureofitsbusiness,forthepurchaseofinventory,fixedassetsandforthesaleofgoodsandservicesdoesnot arise. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.

5) 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 there are no transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.

7) In our opinion and according to the information and explanations given to us, the internal audit systemiscommensuratewiththesizeoftheCompanyandnatureofitsbusiness.

8) The maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.

9) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has no statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues incurred during the year. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues outstanding of

Sales Tax, Value Added Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty, cess on account of any dispute.

10) TheCompany’saccumulatedlossesattheendofthefinancialyeararelessthanfiftypercentofitsnet worth. The Company has not incurred any cash losses in the current year and in the immediately precedingfinancialyear.

11) According to the information and explanations given to us and on the based on documents and recordsproducedtous,theCompanydoesnothaveduestobanks,financialinstitutionsordebentureholders.


13) In our opinion and according to the information and explanations given to us, the nature of activities oftheCompanydoesnotattractanyspecialstatuteapplicabletochitfundandnidhi/mutualbenefitfund/ societies.


15) In our opinion and according to the information and explanations given to us, the Company has not givenanyguaranteeforloanstakenbyothersfrombanksorfinancialinstitutions.

16) Based on our examination and according to the information and explanations given to us, there were no term laons during the year.

17) According to the information and explanations given to us and an overall examination of the Balance SheetandCashFlowsoftheCompany,wereportthattheCompanyhasnotutilizedfundsraisedonshort term basis for long term investments.

18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19) The Company did not issue any debentures during the year.20) The Company has not raised any money through a public issue during the year.21) Based on the audit procedures performed and information and explanations given by the Management,

we report that no fraud on or by the Company has been noticed or reported during the year.


ERMIN K. IRANIPlace: Mumbai PARTNERDated : April 30, 2008 Membership No. 35646

136

BALANCE SHEET AS AT 31ST MARCH, 2008Schedule As at

31.03.08Rupees

As at31.03.07

RupeesSOURCES OF FUNDS

Shareholders' FundsShare Capital 1 500,000 500,000 Loan FundsUnsecured Loans 28,730,564 28,511,433

29,230,564 29,011,433

APPLICATION OF FUNDSFixed Assets - - Investments - - Current Assets, Loans & AdvancesProjects in Progress 2 29,288,622 29,028,243 Cash Balance 190 - Tax Deducted at Source - 4,239 (Net of provision for tax of Rs 4,239/- (Previous year Rs.Nil))

29,288,812 29,032,482 LESS : CURRENT LIABILITIES & PROVISIONS 3

Current Liabilities 82,561 41,123 82,561 41,123

NET CURRENT ASSETS 29,206,251 28,991,359 MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)

Preliminary Expenditure 5,000 7,500 Profit & Loss Account 19,313 12,574

29,230,564 29,011,433 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 5

The Schedules referred to above form an integral Signatures to the Balance Sheetpart of the Balance Sheet. and Schedules 1 to 3 and 5

As per our Report of even dateFor and on behalf ofKALYANIWALLA & MISTRYChartered Accountants

ERMIN K. IRANI TANYA A. DUBASH MILIND S. KORDEPartner Director DirectorMumbai, Dated : April 30, 2008

The Schedules referred to above form an integral Signatures to the Balance Sheetpart of the Balance Sheet. and Schedules 4 and 5As per our Report of even date



PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008

Schedule For the Year ended

31.03.08Rupees

For the Year ended

31.03.07Rupees

INCOME - -

- -

EXPENDITURE

Administration Expenses 4 260,379 231,391

Preliminary Expenses Written Off 2,500 2,500

262,879 233,891

Less : Amount Transferred to Project In Progress (260,379) (231,391)

Loss for the year (2,500) (2,500)

Prior years tax adjustments (4,239) -

Amount available for appropriation (6,739) (2,500)

(Deficit)broughtforward (12,574) (10,074)

(Deficit)carriedforwardtoBalanceSheet (19,313) (12,574)

Earning per share Basic/Diluted in Rs. (Refer Note 3) (13.48) (5.00)


SCHEDULE 5 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES

c) The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted averagenumberofcommonanddilutivecommonequivalentsharesoutstandingduringtheperiod, except where the results would be anti-dilutive.

2) Due to Micro, Small and Medium Enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from

2ndOctober,2006,certaindisclosuresarerequiredtobemaderelatingtoMicro,Small&MediumEnterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

3) Earnings per share


Previous Year Rs.

Profit/(Loss)afterasperProfit&LossAccount (6739) (2500)Weightedaverageno.ofEquitySharesoutstanding 500 500

Basic / Diluted Earnings Per Share (Rs.) (13.48) (5.00)Nominal value of shares (Rs.) 1,000 1,000

4) Related Party Disclosure RelatedpartydisclosuresasrequiredbyAS-18,”RelatedPartyDisclosures”,aregivenbelow: 1. Relationships: (i) Shareholders (the Godrej Group Shareholding) in the Company : Godrej Properties

Limited (GPL) holds 100% in the Company. (ii) Key Management Personnel : Mr. Milind Surendra Korde 2. The following transactions were carried out with the related parties in the ordinary course of

the business

Sr. No. Particulars GPL Amount Rs.

1. Advances given 2,19,1312,43,716

2. Outstanding payables

2,87,30,564 2,85,11,433

Figures initalics are for previous year

5) PriorperiodfinancialstatementshavebeenauditedbyafirmofCharteredAccountantsotherthanKalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts, which have beenre-grouped&re-classifiedwherevernecessarytoconformtocurrentyear’sclassification

6) Previousyearfigureshavebeenregrouped/rearrangedwhereevernecessarytoconfirmtocurrentyear’sclassification.

7) AdditionalInformationasrequiredunderPartIVofScheduleVIoftheCompaniesAct,1956totheextent not applicable has not been given.

SCHEDULES FORMING PART OF THE ACCOUNTSAs at

31.03.2008Rupees

As at31.03.2007

Rupees

SCHEDULE 1 : SHARE CAPITAL

AUTHORISED

1000EquitySharesofRs.1,000/-each 1,000,000 1,000,000

1,000,000 1,000,000

ISSUED, SUBSCRIBED & PAID UP

500EquitySharesofRs.1,000/-each 500,000 500,000

[The entire share capital is held by Godrej Properties Ltd.,

the Holding Company & its nominees] 500,000 500,000

SCHEDULE 2 : PROJECT IN PROGRESS

As per last Balance Sheet 29,028,243 28,796,852

Add:ExpensestransferredfromProfit&LossAccount 260,379 231,391

29,288,622 29,028,243

SCHEDULE 3 : CURRENT LIABILITIES

Sundry Creditors (Refer Note 2) 82,561 41,123

Investor Education & Protection Fund - -

82,561 41,123

SCHEDULE 4 : ADMINISTRATION EXPENSES

Rent,Rates & Taxes 32,600 46,000

Audit Fees 28,120 28,060

Other Operating Expenses 199,659 157,331

260,379 231,391

SCHEDULE 5 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES

1) ACCOUNTING POLICIES a) GENERAL Thefinancialstatementsarepreparedunderthehistoricalcostconventioninaccordancewith

Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

b) MISCELLANEOUS EXPENDITURE Miscellaneous expenditure is amortised over a period of 10 years.

137

1 Registration DetailsRegistration No. : U55101MH1995PLC091582State Code : 11Balance Sheet Date : 31st March, 2008

2 Capital raised during the year (Amount in Rs. thousands)Public Issue : NilRights Issue : NilBonus Issue : NilPrivate Placement - Capital : Nil - Premium : Nil

3 Position of mobilisation and deployment of funds (Amount in Rs. thousands)Total Liabilities : 29,313Total Assets : 29,313Sources of Funds

Paid-up capital : 500 Reserves & Surplus : - Secured Loans : - Unsecured Loans : 28,731

Application of FundsNet Fixed Assets : - Investments : - Net Current Assets : 29,206 Misc. Expenditure : 5 Accumulated Losses : 19

4 Performance of Company (Amount in Rs. thousands)Turnover : - Total Expenditure : 263Profit/(Loss)beforeTax : (3)Profit/(Loss)afterTax : (7)Earning per Share in Rs. : (13.48)Dividend Rate % : -

5 Generic Names of three principalproducts/services of Company : N.A.

8) ADDITIONAL INFORMATION AS REqUIRED UNDER PART IV OF THE SCHEDULE VI TO THE COMPANIES ACT, 1956.

BALANCE SHEET ABSTRACT FOR THE YEAR ENDED 31ST MARCH, 2008 AND COMPANY'S GENERAL BUSINESS PROFILE

Current YearRupees

Previous YearRupees

Cash from Operating Activities


Adjustment for:

Preliminary Expenses 2,500 2,500

Operating Loss before working capital changes - -

Adjustment for:

Change in Inventory (260,379) (231,391)

Change in Current Liabilities 41,438 (12,325)

Net Cash from Operating Activities (218,941) (243,716)

Net Cash from Investing Activities - –

Cash from Financing Activities – –

Increase in Unsecured Loan 219,131 243,716

Net Cash from Financing Activities 219,131 243,716

NetIncrease/(Decrease)inCash&CashEquivalent 190 -

Cash&CashEquivalent-OpeningBalance - -

Cash&CashEquivalent-ClosingBalance 190 -

NOTES:1) The Cash Flow Statement has been prepared under the "Indirect Method" as set out in the Accounting

Standard (AS)3on "CashFlowStatements", andpresentscashflowsbyoperating, investingandfinancingactivities.

2) Figures for the previous year have been regrouped/restated wherever necessary to conform to this year'sclassification.




138

BOARD OF DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON 31ST MARCH, 2008

1. WehaveauditedtheattachedBalanceSheetofGODREJ REALTY PRIVATE LIMITED,asat31st March, 2008 and also the Profit and Loss Account and 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.


3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. 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 purposes of our audit. b) In our opinion, proper books of account as required by law have been kept by the

Company so far as appears from our examination of such books. c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by

this report are in agreement with the books of account.

REPORT OF THE AuDITORSTO THE MEMBERS OF GODREJ REALTY PRIVATE LIMITED

d) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the 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 at31stMarch,2008;

ii) in the case of the Profit and Loss Account, of the loss of the Company for the year endedonthatdate;and


5. On the basis of the written representations received from the Directors as on 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For and on behalf ofKALYANIwALLA AND MISTRY

Chartered AccountantsERMIN K. IRANI

PartnerMumbai, April 30, 2008 Membership No. 35646

To The ShareholdersYour Directors have pleasure in submitting their Report alongwith the Audited Accounts for the year ended 31st March, 2008.1. FINANCIAL HIGHLIGHTS : The accounting results for the year ended 31st March, 2008 reveal that there is deficit at the

end of the year.2. REVIEw OF OPERATIONS : The Company has conceptualised the project and finalised the design and are awaiting further

approvals. 3. DIVIDEND : As there are no profits, the Directors regret that no dividend can be recommended.4. DIRECTORS : In accordance with the provisions of the Articles of Association, Mr. Pirojsha Adi Godrej, retire

by rotation and being eligible, offer himself for re-appointment. 5. APPOINTMENT OF AuDITORS : M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General

Meeting and are eligible for re-appointment for which they have given their consent.6. DIRECTORS’ RESPONSIBILITY STATEMENT : Your Directors confirm: (i) that in the preparation of the annual accounts, the applicable accounting standards

have been followed; (ii) that the Directors have selected such accounting policies and applied them consistently

and made judgements 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 ended 31st March, 2008 and of the loss of the Company for that year;


(iv) that the Directors have prepared the annual accounts on a going concern basis.7. ADDITIONAL INFORMATION : (a) Since the Company has no employees, the particulars of the employees to be disclosed

under Section 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.

(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder :

(i) Conservation of Energy : Expenses on account of Energy are negligible. (ii) Technology Absorption : It is an on going process. (iii) Foreign Exchange Earning and Outgo : The Company has not earned any Foreign Exchange nor incurred any Foreign

Exchange Expenditure during the year.8. ACKNOwLEDGEMENT : Your Directors take this opportunity to thank all the associates for their co-operation.

For and on behalf of the board of directors

MILIND S. KORDE NARESH NADKARNIMumbai, April 30, 2008 Director Director

ANNExuRE TO THE AuDITORS' REPORTReferred to in paragraph (3) of our report of even date.1. (a) The Company has maintained proper records showing full particulars, including quantitative details and

situation of fixed assets. (b) As explained to us, the Company has a program for physical verification of fixed assets at periodicals

intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company andthenatureofisassets.

(c) There is no disposal of fixed assets during the year.2. (a) The management has conducted physical verification of inventory at reasonable intervals. (b) In our opinion, the 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 and no material discrepancies were noticed on

physical verification.3. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties

covered in the register maintained under Section 301 of the Companies Act, 1956. (b) Consequently, the question of commenting on the rate of interest and terms and conditions of the loans

granted being prejudicial to the interest of the Company, receipt of regular principal and interest and reasonable steps for recovery of principal and interest does not arise.

(c) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(d) Consequently, the question of commenting on the rate of interest and other terms and conditions of the loans taken being prejudicial to the interest of the Company, payment of regular principal and interest doesnotarise.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. There is no sale of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.

5. (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 and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained underthatsection.


6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.


8. The maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has no statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess. According to the information and explanations given to us, there are no undisputed dues, payable in respect of the above as at 31st March, 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty, Cess on account of any dispute.

10. The Company’s accumulated losses at the end of the financial year are less than fifty percent of its net worth. During the year, the Company has not incurred cash losses. However, it has incurred cash losses in the immediately preceding financial year.

11. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in dues to debenture holders. There are no dues to banks and financial institutions.


13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fun/ societies.

14. In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. Based on our examination and according to the information and explanations given to us, there were no term loans during the year.

17. According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investments.

18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. The Company did not issue any debentures during the year.20. The Company has not raised any money through a public issue during the year.21. Based on the audit procedures performed and information and explanations given by the Management, we

report that no fraud on or by the Company has been noticed or reported during the year.For and on behalf of

KALYANIwALLA AND MISTRYChartered Accountants

ERMIN K. IRANIPartner

Mumbai, April 30, 2008 Membership No. 35646

139

BALANCE SHEET AS AT 31ST MARCH, 2008 Schedule As at As at 31.03.08 31.03.07 Rupees RupeesSOuRCES OF FuNDS Shareholders’ Funds Share Capital 1 10,000,000 10,000,000Loan Funds Secured Loans 2 150,000,000 115,000,000 160,000,000 160,000,000APPLICATION OF FuNDS Fixed Assets Gross Block 3 347,608 347,608Less : Depreciation 63,850 39,754 Net Block 283,758 307,854Investments – –Deferred Tax Assets 3,000 589,000Current Assets, Loans and Advances Inventory 4 88,563,479 61,819,484 Cash and Bank Balances 5 19,023,983 20,571,060 Loans and Advances 6 88,292,586 8,823,5917 195,880,048 170,626,462Less : Current Liabilities and Provisions Current Liabilities 7 38,267,045 12,665,849 38,267,045 12,665,849Net Current Assets 157,613,003 157,960,613Profit And Loss Account 2,100,239 1,142,533 160,000,000 160,000,000Notes to Accounts and Accounting Policies 11

The Schedules referred to above form an Signatures to the Balance Sheet and integral part of the Balance Sheet. Schedules 1 to 7 and 11As per our Report of even date.

For and on behalf of KALYANIwALLA & MISTRY Chartered Accountants ERMIN K. IRANI MILIND S. KORDE Director Partner NARESH NADKARNI Director Mumbai, April 30, 2008

PROFIT AND LOSS ACCOuNT FOR THE YEAR ENDED 31ST MARCH, 2008 Schedule For the period For the year ended 31.03.08 ended 31.03.07 Rupees Rupees

INCOME

Interest Income 1,525,091 1026852 (Tax deducted at Source Rs. 302,103/- (Previous Year Rs. 229,765/-)

ExPENDITuRE

Cost of Sales 8 – –

Administration Expenses 9 – 2,721,400

Interest and Finance Charges 10 1,525,091 –


Loss for the Year (24,096) (1,731,533)


For Deferred Tax (586,000) 589,000

Loss After Tax (610,096) (1,142,533)

Prior Year Tax Adjustment (347,610) –

Brought Forward Loss (1,142,533) –

Loss Carried Forward (2,100,239) (1,142,533)

Earning Per Share Basic/Diluted in Rs. (Refer Note 5) (0.96) (1.14)

Notes to Accounts and Accounting Policies 11

The Schedules referred to above form an Signatures to the Profit and Loss integral part of the Profit and Loss Account Schedules 8 to 11 As per our Report of even date. For and on behalf of KALYANIwALLA & MISTRY Chartered Accountants ERMIN K. IRANI MILIND S. KORDE Director Partner NARESH NADKARNI Director

Mumbai, April 30, 2008

As at As at 31.03.08 31.03.07 Rupees RupeesSCHEDuLE 1 : SHARE CAPITALAuthorised1,000,000 Equity Shares of Rs.10 each 10,000,000 10,000,000

10,000,000 10,000,000Issued, Subscribed and Paid up1,000,000 Equity Shares of Rs.10 each, 10,000,000 10,000,000fully paid-up (Out of the above 510,000 equity sharesare held by Godrej Properties Limited,the Holding Company and its nominee) 10,000,000 10,000,000SCHEDuLE 2 : SECuRED LOANS10% Secured Redeemable optionally Convertible Debentures 150,000,000 150,000,000(Refer Note 2)

150,000,000 150,000,000

SCHEDuLE 3 : FIxED ASSETS Gross Block Depreciation Net Block

As at As at As at As at As at As at 1st April Addition Deduction 31st 1st For the 31st 31st 31stMarch 2007 March April year March March 2007 2008 2007 2008 2008 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Land (Refer Note 1b) 222,175 – – 222,175 – – – 222,175 222,175

Computers 25,350 – – 25,350 11,790 5,424 17,214 8,136 13,560

Motor Vehicle 100,083 – – 100,083 27,964 18,672 46,636 53,447 72,119

Total 347,608 – – 347,608 39,754 24,096 63,850 283,758 307,854Previous Year 100,083 247,525 – 347,608 2,769 36,985 39,754 307,854 97,314

SCHEDuLES ATTACHED TO AND FORMING PART OF THE ACCOuNTS AS AT 31ST MARCH, 2008

As at As at 31.03.08 31.03.07 Rupees RupeesSCHEDuLE 4 : INVENTORYConstruction work in progress 88,563,479 61,819,484 88,563,479 61,819,484

SCHEDuLE 5 : CASH AND BANK BALANCECash & Cheques in Hand 667 2,657,347 Balance with Scheduled Bank - on Current Account 1,336,817 413,713 - on Fixed Deposit Account 17,686,499 17,500,000 19,023,983 20,571,060

SCHEDuLE 6 : LOANS AND ADVANCES (Unsecured and considered good unless otherwise stated)Advances recoverable in cash or kind or for value to be receivedSecured (Secured against Bank Guarantee) – 11,753,493Others 87,983,906 76,230,000Interest Accrued – 13,386Advance Tax and Tax Deducted at Source 308,680 239,038(Net of provision for Tax Rs. 3,47,610) 88,292,586 88,235,917

SCHEDuLE 7 : CuRRENT LIABILITIESSundry Creditors (Refer Note 3) 541,746 392,530Investor Education and Protection Fund – –Other Liabilities 15,324,156 2,758,758Interest Accrued but not due 22,401,143 9,514,561 38,267,045 12,665,849

140

SCHEDuLES ATTACHED TO AND FORMING PART OF THE ACCOuNTS FOR THE YEAR ENDED ON 31ST MARCH, 2008 Year ended Yearended 31.03.08 31.03.07 Rupees Rupees

SCHEDuLE 8 : COST OF SALESOpening Stock 61,819,484 15,941,553Add: Expenditure/Transfers from Advances during the year Construction Material & Labour – 17,960,338 Advertisement Expenses – 281,427 Overheads 13,267,624 15,597,553 Interest 13,476,371 12,038,615

88,563,479 61,819,486Less: Closing Stock 88,563,479 61,819,486

Cost of Sales – –

SCHEDuLE 9 : ADMINISTRATION ExPENSESProfessional Charges – 2,721,400

– 2,721,400

SCHEDuLE 10 : INTEREST AND FINANCE CHARGES (NET)Interest PaidOthers 15,001,462 12,038,466Total Interest paid 15,001,462 12,038,466Add : Brokerage and Other Financial Charges – 149GROSS INTEREST 15,001,462 12,038,615Less : Transferred to Cost of Sale 13,476,371 12,038,615NET INTEREST 1,525,091 –

SCHEDuLE 11 : NOTES TO ACCOuNTS AND ACCOuNTING POLICIES1. ACCOuNTING POLICIES a) General The financial statements are prepared under the historical cost convention in accordance

with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

b) Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated

depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.

Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.

c) Depreciation/Amortization Depreciation has been provided on Written Down Value basis, at the rates specified in

Schedule XIV of the Companies Act, 1956. d) Inventories Inventories are valued as under : a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At cost Construction Work in Progress includes cost of land, premium for development rights,

construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.

e) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As

per this method, revenue in Profit and Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.

Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.

Income from operation of commercial complexes is recognized over the tenure of the lease/service agreement.

Interest income is accounted on an accrual basis at contracted rates. f) Borrowing Cost Interest and finance charges incurred in connection with borrowing of funds, which are

incurred for the development of long-term projects are transferred to Construction Work in Progress/Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost/rates as per Agreements respectively.


g) Provision For Taxation Tax expense comprises both current, deferred and fringe benefit tax. Current and fringe benefit tax is measured at the amount expected to be paid to the


the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available

against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.

h) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the

date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortized over the period of the contract. Exchange gains/losses are recognized in the Profit and Loss Account.

i) Earnings Per Share The basic earnings per share is computed using the weighted average number of common

shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.

j) Provisions and Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations, the

amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from past

events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

2. Secured Loans 11,500,000 and 3,500,000 10% secured optionally convertible debentures of Rs. 10 each are

redeemable at the end of the 7 years from the deemed date of allotment 16th March, 2006 and 12th March, 2007 respectively and are secured to the extent of specific immovable assets of the Company disclosed under the head “Fixed Assets”.

The Company shall create a Debenture Redemption Reserve as required under Section 117 (C) of the Companies Act, 1956 from the year in which profits are available for creation.

3. Due to Micro, Small and Medium Enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force

from 2 October 2006, certain disclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

4. Deferred Tax The Tax effect of significant temporary difference that resulted in deferred tax assets are : Particulars Current Year (Rs.) Previous Year (Rs.) Loss Carried forward – 586,319 Depreciation on Fixed Assets 3,000 2,681 Deferred Tax Asset 3,000 589,0005. Earnings Per Share Particulars Current Year (Rs.) Previous Year (Rs.) Loss for the year as per Profit and Loss Account 957,706 1,142,533 Weighted average no. of equity shares outstanding 1,000,000 1,000,000 Basic/Diluted Earnings Per Share (Rs.) (0.96) (1.14) Nominal value of shares (Rs.) 10 106. Amounts paid to Auditors: Particulars Current Year (Rs.) Previous Year (Rs.) Audit Fees 89,984 89,792 Consultancy charges 28,060 – Total 118,044 89,7927. Segment Information : As the company has only one business segment, disclosure under Accounting Standard 17

on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.

8. Related Party Disclosures. 1. Relationships : (i) Shareholders (the Godrej Group Shareholding ) in the Company Godrej Properties Limited

(GPL) holds 51% in the Company. GPL is the subsidiary of Godrej Industries Limited (GIL).GIL is a subsidiary of Godrej & Boyce Manufacturing Company Limited (G & B), the Ultimate Holding Company.

(ii) Investing party in respect of which the reporting enterprise is an associate :HDFC Venture Trustee Company Limited.

2. The following transactions were carried out with the related parties in the ordinary course of business.

Sr.No.

Particular G & B GPL HDFC Venture Trustee Company

Limited1 Issue of debentures -

--

17,850,000-

17,150,0002 Expenses Charged to other

Companies --

-2,656,006

--

3 Expenses Charged by other Companies

-2,351,113

11,914,97110,677,156

--

4 Debenture Interest --

7,650,0005,962,808

7,350,000 5,728,973

5 Loans/Advances taken --

-4,200,000

--

6 Outstanding receivables, net of (payables)

(703)(703)

(22,655,305)(4,824,156)

(11,660,477) (4,690,405)

7 Debentures Outstanding --

76,500,000 76,500,000

73,500,000 73,500,000

figures in italics are for previous year

141

ADDITIONAL INFORMATION AS REquIRED uNDER PART IV OF THE SCHEDuLE VI TO THE COMPANIES ACT, 1956Balance Sheet Abstract for the year ended 31st March, 2008 and Company’s General Business Profile1. Registration Details Registration No. U70100MH2005PTC154268 State Code: 11 Balance Sheet Date 31st March, 2008

2. Capital raised during the year (Amount in Rs. thousands) Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement - Capital Nil - Premium Nil

3. Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities 198,267 Total Assets 198,267 Sources of Funds Paid-up capital 10,000 Reserves and Surplus Nil Secured Loans 150,000 Unsecured Loans – Application of Funds Net Fixed Assets 284 Investments – Net Current Assets 157,613 Deferred Tax Assets 39 Miscellaneous Expenditure – Accumulated Losses 2,100

4. Performance of Company (Amount in Rs. thousands) Turnover – Total Expenditure 1,549 Profit/(Loss) before Tax (24) Profit/(Loss) after Tax (958) Earning per Share in Rs. (0.96) Dividend Rate % –

5. Generic Names of three principal products/services of Company N.A.

CASH FLOw STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008Particulars Current Year Previous Year Rupees Rupees


Loss for the Year (24,096) (1,731,533)

Adjustment for :


Interest Paid 15,001,462 12,038,615

Interest Income (1,525,091) (1,026,852)

Operating Profit before working capital changes 13,476,371 9,317,214

Adjustment for :

Change in Inventory (26,743,995) (45,877,932)

Change in Loans and Advances (413) (11,734,760)

Change in Current Liabilities/Provisions 12,714,614 1,620,678

(553,423) (46,674,800)

Taxes Paid (Net) 417,252 239,038

Net Cash Flow from Operating activities (970,675) (46,913,838)


Purchase of Fixed Assets — (247,525)

Interest Received 1,538,477 1,013,466

Net Cash Flow from Investing Activities 1,538,477 765,941


Issue of Debentures — 35,000,000

Interest Paid (2,114,880) (2,970,471)

Cash Flow from Financing Activities (2,114,880) 32,029,529

Net Increase/(Decrease) in Cash and Cash Equivalent (1,547,077) (14,118,367)

Cash and Cash Equivalent - Opening Balance 20,571,060 34,689,427

Cash and Cash Equivalent - Closing Balance 19,023,983 20,571,060

Notes :1. The cash flow statement has been prepared under the ‘Indirect Method’ as set out in the

Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash flows by operating, investing and financing activities.

2. Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s classification.

For and on behalf ofKALYANIwALLA & MISTRYChartered Accountants

ERMIN K. IRANI MILIND S. KORDE DirectorPartner NARESH NADKARNI Director


9. Prior period financial statements have been audited by a firm of Chartered Accountants other than Kalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts, which have been re-grouped and re-classified wherever necessary to conform to current year’s classification

10. Previous year figures have been rearranged/regrouped wherever necessary to confirm to current year’s classification.

11. Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.

142

Board of directors' report for the year ended 31st march, 2008TO THE SHAREHOLDERSYour Directors have pleasure in submitting their Report along with the audited Accounts for the year ended 31st March, 2008.1. financiaL hiGhLiGhts : Theaccountingresultsfortheyearended31stMarch,2008revealthatthereisdeficitatthe

end of the year.2. reVieW of operations : This project will have a total Developable Area of 2.16 million sq. ft. spanning two towers

with parking facilities for approximately 1,400 cars. This project is expected to be completed by 2009.

3. diVidend : Astherearenoprofits,theDirectorsregretthatnodividendcanberecommended.4. chanGe of aUthorised capitaL : During the year the Company has increased its Authorised Capital from Rs.5 lac to Rs.1 crore.5. issUe of shares : During the year the Company has issued 4,60,000 Equity Shares to Godrej Properties Limited

and 4,90,000 Equity Shares to HDFC Venture Trustee Company Limited.6. issUe of deBentUre : During the year the Company issued 1,42,10,000 10% Secured, Optionally Convertible Debentures

of Rs.10/- each to HDFC Venture Trustee Company Limited and 1,47,90,000 10% Secured Redeemable Optionally Convertible Debentures of Rs.10/- each to Godrej Properties Limited.

7. directors : In accordance with the provisions of the Articles of Association, Mr. Pirojsha Adi Godrej and Mr.

K.T. Jithendran retire by rotation and being eligible, offer themselves for re-appointment. Mr. Naresh Nadkarni was appointed as an Additional Director of the Company with effect

fromJuly30,2007.HeholdsofficetilltheensuingAnnualGeneralMeeting.8. appointment of aUditors : M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General

Meeting and are eligible for re-appointment for which they have given their consent.9. directors’ responsiBiLity statement : YourDirectorsconfirm: (i) that in the preparation of the annual accounts, the applicable accounting standards

have been followed;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a trueandfairviewofthestateofaffairsoftheCompanyattheendofthefinancialyearended 31st March, 2008 and of the loss of the Company for that year;

(iii) thattheDirectorshadtakenproperandsufficientcareforthemaintenanceofadequateaccounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts on a going concern basis.10. additionaL information : (a) Since the Company has no employees, the particulars of the employees to be disclosed

u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.

(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors)Rules,1988isprovidedhereunder:

(i) conservation of energy : Expenses on account of Energy are negligible. (ii) technology absorption : It is an on going process. (iii) foreign exchange earning and outgo : The Company has not earned any Foreign Exchange nor incurred any Foreign

Exchange Expenditure during the year.11. acKnoWLedGement : Your Directors take this opportunity to thank all the associates for their co-operation.

For And On Behalf Of The Board Of Directors miLind s. Korde K.t. Jithendran DirectorsMumbai,Dated:April30,2008.

1. We have audited the attached Balance Sheet of GodreJ Waterside properties priVate Limited,asat31stMarch,2008andalsotheProfitandLossAccountandtheCashFlowStatementoftheCompanyfortheyearendedonthatdateannexedthereto.Thesefinancialstatementsarethe responsibility of the Company’s management. Our responsibility is to express an opinion on thesefinancialstatementsbasedonouraudit.

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 whetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatour 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 sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statementonthemattersspecifiedinparagraphs4and5ofthesaidOrder.

4. FurthertoourcommentsintheAnnexurereferredtoinparagraph(3)above,wereportthat: a) We have obtained all the information and explanations, which to the best of our


Company so far as appears from our examination of such books. c) TheBalanceSheet,ProfitandLossAccountandtheCashFlowStatementdealtwithby

this report are in agreement with the books of account. d) In our opinion, the Balance Sheet, the Profit and LossAccount and the Cash Flow

Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

report of the aUditors to the memBers of GodreJ Waterside properties priVate Limited

e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair viewinconformitywiththeaccountingprinciplesgenerallyacceptedinIndia:


ii) inthecaseoftheProfitandLossAccount,ofthelossoftheCompanyfortheyearended on that date and,

iii) inthecaseoftheCashFlowStatement,ofthecashflowsoftheCompanyfortheyear ended on that date.

5. On the basis of the written representations received from the directors as on March 31, 2008, and takenonrecordbytheBoardofDirectors,wereportthat,noneofthedirectorsisdisqualifiedason March 31, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For and on behalf ofKaLyaniWaLLa & mistry Chartered Accountants

ermin K. iraniPartnerMembership No. 35646Place:MumbaiDated:April30,2008.

143

Schedule as at As at 31.03.08 31.03.07 rupees RupeessoUrces of fUndsshareholders’ fundsShare Capital 1 10000000 500000 Loan fundsSecured Loans 2 290000000 - deferred tax Liability 19000 - 300019000 500000 application of fundsfixed assetsGross Block 3 3098290 622259 Less:Depreciation 758044 88408 Net Block 2340246 533851 investments - - deferred tax asset - 953000 current assets, Loans & advancesInventory 4 992961241 311178675 Cash & Bank Balances 5 523797 5346124 Loans & Advances 6 264402568 105286436 1257887606 421811235 Less: current Liabilities andprovisionsCurrent Liabilities 7 963617296 424649894 963617296 424649894 net current assets/(Liabilities) 294270310 (2838659)Profit And Loss Account 3408444 1,851808 300019000 500000 notes to accounts & accounting policies 12

annexure to the auditors’ reportReferred to in paragraph (3) of our report of even date.1. (a) The Company has maintained proper records showing full particulars, including

quantitativedetailsandsituationoffixedassets. (b) Asexplainedtous,theCompanyhasaprogramforphysicalverificationoffixedassets

at periodic intervals. In our opinion, theperiod of verification is reasonable havingregard to the size of the Company

(c) Thereisnodisposaloffixedassetsduringtheyear.2. (a) Themanagementhasconductedphysicalverificationofinventoryatreasonableintervals. (b) In our opinion, the procedures of physical verification of inventory followedby 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 and no material discrepancies werenoticedonphysicalverification.

3. (a) TheCompanyhasnotgrantedanyloans,securedorunsecured,tocompanies,firmsorother parties covered in the register maintained under Section 301 of the Companies Act, 1956

(b) Consequently, the question of commenting on the rates of interest and terms and conditions of the loans granted being prejudicial to the interest of the Company, receipt of regular principal and interest and reasonable steps for recovery of principal and interest does not arise.

(c) TheCompanyhasnottakenanyloans,securedorunsecured,fromcompanies,firmsorother parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(d) Consequently, the question of commenting on the rates of interest and other terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and interest does not arise.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the natureofitsbusiness,forthepurchaseofinventory,fixedassetsandforthesaleofgoods.There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.

5. (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 and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.


6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.


8. The maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has no statutory

dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess. According to the information and explanations given to us, there are no undisputed dues, payable in respect of the above as at 31st March, 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty, Cess on account of any dispute.

10. TheCompany’saccumulatedlossesattheendofthefinancialyeararelessthanfiftypercentof its net worth. During the current year the Company has not incurred cash losses. However, it has incurred cash losses in the immediately preceding financial year.

11. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in dues to debenture holders. There arenoduestobanksandfinancialinstitutions.


13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/mutualbenefitfund/societies.

14. In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments.

15. In our opinion and according to the information and explanations given to us, the Company hasnotgivenanyguaranteeforloanstakenbyothersfrombanksorfinancialinstitutions.

16. Based on our examination and according to the information and explanations given to us, there were no term loans during the year.

17. According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short term basis for long term investments.

18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. Based on our examination and according to the information and explanations given to us, during the current year, the Company has issued 29,000,000 debentures of Rs. 10/- each. The securities as required by the Debenture Trust Deed have been created.

20. The Company has not raised any money through a public issue during the year.21. Based on the audit procedures performed and information and explanations given by the



KaLyaniWaLLa & mistryChartered Accountantsermin K. iraniPartnerMembership No. 35646Place:MumbaiDated:April 30,2008.

BaLance sheet as at 31st march, 2008 profit and Loss accoUnt for the year ended on 31st march, 2008 schedule for the For the year ended year ended 31.03.08 31.03.07 rupees Rupees

income 8 3018792 394262 (Tax Deducted at Source Rs. 664797/- [Previous year Rs. 88473/-])

eXpenditUre

Code of Sales 9 - -

Administration Expenses 10 - 2721400

Interest and Finance Charges 11 2933792 389262

Depreciation 669636 88408

Loss for the year 584636 2804808

Provision for Deferred Tax (972000) 953000

Loss After Tax 1556636 1851808

Brought Forward Loss (1,851,808) -

Loss Carried Forward (3,408,444) (1,851,808)

Earning per share (basic/diluted) in Rs. (Refer Note No. 5) (2.40) (37.00)

notes to accounts and accounting policies 12

The Schedules referred to above form an integral Signatures to the Balance Sheetpart of the Balance Sheet and Schedules 1 to 7 and 12As per our Report of even dateFor and on behalf of Kalyaniwalla & mistryChartered Accountants ermin K. irani milind s. Korde naresh nadkarniPartner Directors

Mumbai,Dated:April 30,2008.

TheSchedulesreferredtoaboveformanintegral SignaturestoProfitandLossAccountpartoftheProfitandLossAccount andSchedules8to12As per our Report of even dateFor and on behalf of Kalyaniwalla & mistryChartered Accountants ermin K. irani milind s. Korde naresh nadkarniPartner Directors

Mumbai,Dated:April 30,2008.

144

schedULes forminG part of the accoUnts for the year ended on 31st march, 2008 as at As at 31.03.08 31.03.07 rupees RupeesschedULe 1 : share capitaLauthorised1000000 Equity shares of Rs. 10/- each 10000000 500000 10000000 500000issued & subscribed and paid Up1000000 Equity shares of Rs. 10/- each, fully paid-up 10000000 500000(510000 equity shares (Previous year 50000) are held byGodrej Properties Limited the Holding Company & its nominee) 10000000 500000schedULe 2 : secUred Loans10% secured redeemable optionally convertible debentures 290000000 -(refer note 2) 290000000 -schedULe 3 : fiXed assets

particulars Gross Block depreciation net Block

as at1st april,

2007rs.

additionsrs.

deduc- tionsrs.

as at31st

march,2008rs.

Upto1st april,

2007rs.

for theyearrs.

Upto31st

march,2008rs.

as at31st

march,2008rs.

as at31st

march,2007rs.

Land (Refer Note 2) - 356380 - 356380 - - - 356380 - Furniture & Fixtures 80591 356172 - 436763 65526 55424 120950 315813 15065 OfficeEquipments 59331 368612 - 427943 701 50949 51650 376293 58630 Computers 482337 558375 - 1040712 22181 365038 387219 653493 460156 Motor Car - 836492 - 836492 - 198225 198225 638267 - total 622259 2476031 - 3098290 88408 669636 758044 2340246 533851 Previous Year - 622259 - 622259 - - 88408 533851 -

as at As at 31.03.08 31.03.07 rupees RupeesschedULe 4 : inVentoryConstruction work in progress 992961241 311178675

992961241 311178675 schedULe 5 : cash & BanK BaLanceCash 35381 16530 Balance with Scheduled Bank - On current Account 488416 5329594

523797 5346124 schedULe 6 : Loans & adVances(Unsecured & considered good)Advances recoverable in cash or kind or for value to be received- Secured (Secured against Bank/Corporate Guarantee) 209799643 35273927 - Others 51273387 69616764 Interest accrued 2574785 305789 Advance Tax and Tax Deducted at Source 754753 89956

264402568 105286436 schedULe 7 : cUrrent LiaBiLitiesSundry Creditors (Refer Note 3) 63133655 1609144 Investor Education & Protection Fund - - Advances received against Sale 134464000 94892000 Other Liabilities 749657795 328148750 Interest Accrued but not due 16361846 -

963617296 424649894 schedULe 8 : incomeInterest received 2933792 394262 Other Income 85000 -

3018792 394262

Tax deducted at source 664797 88473

schedULe 9 : cost of saLes Opening Stock 311178675 - add : expenditure during the yearConstruction Material & Labour 555196734 235956947 Architect Fees 4383667 7631073 Advertisment Expenses 3605860 3774807 Over heads 63672897 44568084 Interest 54923409 19247765

992961241 311178675

Less:ClosingStock 992961241 311178675

Cost of Sales - -

schedULe 10 : administration eXpensesProfessional Charges - 2721400

- 2721400

schedULe 11 : interest and financiaL charGesInterest PaidOther Loans 57857201 16126997

Total Interest Paid 57857201 16126997

Add:Brokerage&otherFinancialCharges - 82781

Total Interest/Finance Charges Paid 57857201 16209778

Less:TransferredtoCostofSales 54923409 15820516

net interest 2933792 389262

schedULe 12 : notes to accoUnts and accoUntinG poLicies

1) accoUntinG poLicies a) General The financial statements are prepared under the historical cost convention in

accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

b) fixed assets Fixed assets are stated at cost of acquisition or construction less accumulated

depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.

Carrying amount of cash generating units/assets are reviewed at Balance Sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.

c) depreciation/amortization DepreciationhasbeenprovidedonWrittenDownValuebasis,attheratesspecifiedin

Schedule XIV of the Companies Act, 1956. d) inventories Inventoriesarevaluedasunder: a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At cost Construction Work-in-Progress includes cost of land, premium for development

rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.

e) revenue recognition The Company is following the “Percentage of Completion Method” of accounting. As

perthismethod,revenueinProfit&LossAccountattheendoftheaccountingyearisrecognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.


Income from operation of commercial complexes is recognized over the tenure of the lease/ service agreement.

Interest income is accounted on an accrual basis at contracted rates. f) Borrowing cost Interest and Finance charges incurred in connection with borrowing of funds, which

are incurred for the development of long term projects are transferred to Construction Work in Progress/Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost/rates as per Agreements respectively.


g) earnings per share The basic earnings per share is computed using the weighted average number of

common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.

h) foreign currency transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the

date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year-end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year-end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract.Exchangegains/lossesarerecognisedintheProfitandLossAccount.

i) provision for taxation Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using

the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between

the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that thereisareasonablecertaintythatsufficientfuturetaxableincomewillbeavailableagainst which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the Balance Sheet date.

j) provisions and contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations,

the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from the

pasteventsbuttheirexistenceisconfirmedbytheoccurrenceornon-occurrenceofone or more uncertain future events not wholly within the control of the Company.

2) secured Loans 29,000,000 10% Secured optionally Convertible Debentures of Rs. 10 each are redeemable at the

end of the 7 years from the deemed date of allotment July 4, 2007 and are secured to the extent ofspecificimmovableassetsoftheCompanydisclosedunderthehead“FixedAssets”.

The Company shall create a Debenture Redemption Reserve as required under Section 117 (C)oftheCompaniesAct,1956fromtheyearinwhichprofitsareavailableforcreation.

3) due to micro, small and medium enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into

force from October 2, 2006, certain disclosures are required to be made relating to Micro,

145

Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

4) deferred tax TheTaxeffectofsignificanttemporarydifferencesthatresultedinthedeferredtaxassets

andliabilitiesare:

particulars current year(rs.)

Previous Year(Rs.)

AssetsLosses Carried Forward - 975016LiabilitiesDepreciation on Fixed Assets (19000) (22016)deferred tax asset / (Liability) (19000) 953000

5) earnings per share

particulars current yearrs.

Previous Year Rs.

LossfortheYearasperProfit&LossAccount (1556636) (1851808)Weighted average no. of Equity Shares outstanding 649590 50000Basic/Diluted earnings per share (Rs.) (2.40) Rs. (37.00)Nominal value of shares (Rs.) 10 10

6) Lease The Company’s significant leasing arrangements are in respect of operating leases for

Commercial premises. Lease expenditure for operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises given under operating leases areasunder:


Previous Year(Rs.)

Future minimum lease payments under non-cancelable operating leases- Not later than 1 year 470156 -

7) amounts paid to auditors


Previous Year(Rs.)

Audit Fees 89984 89792 Consultancy charges 28060 Niltotal 118044 89792

8) segment information As the company has only one business segment, disclosure under Accounting Standard 17


9) related party disclosure 1. Relationships: (i) ShareholdersintheCompany:GodrejPropertiesLimited(GPL)holds51%ofthe

share capital of the Company. GPL is the Subsidiary of Godrej Industries Limited (GIL). GIL is subsidiary of Godrej & Boyce Manufacturing Company Limited (G&B), the ultimate holding company.

(ii) Investing party in respect of which the reporting enterprise is an associate. – HDFC Venture Trustee Company Limited.

2. The following transactions were carried out with the related party in the ordinary courseofthebusiness:

s r. no.

particulars G&B GpL hdfc Venture trustee company Limited

1. Issue of Equity Share Capital --

4600000-

4900000-

2. Issue of Debentures --

147900000-

142100000-

3. Purchase of Fixed Assets 552872-

--

--

4. Expenses charged by other company --

56345158342031262

--

5. Interest on Debentures --

10789426-

10366311-

6. Advances Received --

567094306-

--

7. Outstanding payables --

741494783278077329

8017304-

8. Debentures Outstanding --

147900000-

142100000-

10) Prior period financial statements have been audited by a firm of CharteredAccountantsother than Kalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts,whichhavebeenre-groupedandre-classifiedwherevernecessarytoconformtocurrentyear’sclassification.

11) Previousyearfigureshavebeenregrouped/rearrangedwhereevernecessarytoconfirmtocurrentyear’sclassification.

12) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.

13) additionaL information as reqUired Under part iV of the schedULe Vi to the companies act, 1956

Balance sheet abstract for the year ended 31st march, 2008 and company’s General Business Profile

1 registration details Registration No. U70100MH2005PTC154255 State Code 11 Balance Sheet Date 31st March, 2008 2 capital raised during the year (amount in rs. thousands) Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement - Capital 9,500 - Premium Nil 3 position of mobilisation and deployment of funds (amount in rs. thousands) Total Liabilities 1263636 Total Assets 1263636 sources of funds Paid-up capital 10000 Reserves & Surplus - Secured Loans 290000 Unsecured Loans - Deferred Tax Liability 19 application of funds Net Fixed Assets 2340 Investments - Net Current Assets 294270 Deferrred Tax Asset - Misc. Expenditure - Accumulated Losses 3408 4 performance of company (amount in rs. thousands) Turnover - Total Expenditure 3603 Profit/(Loss)beforeTax (585) Profit/(Loss)afterTax (1557) Earning per Share in Rs. (2.40) Dividend Rate % - 5 Generic names of three principal products/services of company N.A.

cash fLoW statement for the year ended 31st march, 2008

particulars current year Previous Year rupees Rupees

cash flow from operating activitiesLoss for the Year (584636) (2804808)adjustment for:Depreciation 669636 88408 Interest paid 57857201 16209778 Interest income (2933792) (394262)

Operating Profit before working capital changes 55008409 13099116 adjustment for:Change in Inventory (681782566) (311178675)Change in Loans & Advances (156182340) (104890691)Change in Current Liabilities/Provisions 522605556 424649894

(260350941) 21679644 Taxes Paid (Net) 664797 89956

net cash flow from operating activities (261015739) 21589688 cash flow from investing activitiesPurchase of Fixed Assets (2476031) (622259)Interest Received 664796 88473

net cash flow from investing activities (1811235) (533786)cash flow from financing activities Issue of Share Capital 9500000 - Increase in Secured Loan 290000000 - Interest paid (41495355) (16209778)

net cash flow from financing activities 258004645 (16209778)net increase/(decrease) in cash & cash equivalent (4822328) 4846124 cash & cash equivalent -opening Balance 5346124 500000

cash & cash equivalent - closing Balance 523797 5346124

For and on behalf of Kalyaniwalla & mistryChartered Accountants ermin K. irani milind s. Korde naresh nadkarniPartner Directors

Mumbai,Dated:April30,2008

notes :1. TheCashflowstatementhasbeenpreparedunderthe 'IndirectMethod'assetout inthe

AccountingStandard(AS)3on'CashFlowStatement'andpresentscashflowsbyoperating,investingandfinancingactivities.

2. Figuresforthepreviousyearhavebeenregrouped/restatedwherevernecessarytoconfirmtothisyear'sclassification

146

DIRECTORS’ REPORT FOR THE YEAR ENDED ON MARCH 31, 2008To The Shareholders

Your Directors have pleasure in submitting their Report together with the Audited Accounts for the year ended March 31, 2008.

1. FINANCIAL HIGHLIGHTS :

TheaccountingresultsfortheperiodendedMarch31,2008revealthatthereisdeficitattheend of the period.

2. REVIEW OF OPERATIONS :

During the year the Company has commenced the construction activities in the project.

3. DIVIDEND :

Astherearenoprofits,theDirectorsregretthatnodividendcanberecommended.

4. CHANGE OF AUTHORISED CAPITAL :

AUTHORISED CAPITAL :

During the year the Company has increased its Authorised Capital from Rs.5 Lac to Rs.10 Lac.

ISSUE OF CUMULATIVE REDEEMABLE PREFERENCE SHARES :

During the year the Company issued 10,000 10% Non-Convertible Cumulative Redeemable Preference Shares of Rs.10/- each to Godrej Properties Limited.

5. DIRECTORS :

In accordance with the provisions of the Articles of Association, Mr. Milind S. Korde, retires by rotation and being eligible, offers himself for re-appointment.

6. APPOINTMENT OF AUDITORS :

M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent.

7. DIRECTORS’ RESPONSIBILITY STATEMENT :

YourDirectorsconfirm:


(ii) that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a

trueandfairviewofthestateofaffairsoftheCompanyattheendofthefinancialyearended March 31, 2008 and of the loss of the Company for that year;




(a) Since the Company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.

(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign ExchangeEarningsandOutgo,requiredunderSection217(1)(e)oftheCompaniesAct,1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors)Rules,1988isprovidedhereunder:

(i) Conservation of Energy:

Expenses on account of Energy are negligible.

(ii) Technology Absorption:

It is an on going process.

(iii) Foreign Exchange Earning and Outgo:

The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure during the year.

9. ACKNOWLEDGEMENT:

Your Directors take this opportunity to thank all the associates for their co-operation.


MILIND S. KORDE K.T. JITHENDRAN

Director Director

Mumbai,Dated:April30,2008

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ DEVELOPERS PRIVATE LIMITED1. We have audited the attached Balance Sheet of GODREJ DEVLOPERS PRIVATE LIMITED, as

atMarch31,2008andalsotheProfitandLossAccountandtheCashFlowStatementoftheCompanyfortheyearendedonthatdateannexedthereto.Thesefinancialstatementsarethe responsibility of the Company’s management. Our responsibility is to express an opinion onthesefinancialstatementsbasedonouraudit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. ThoseStandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

3. This reportdoesnot includea statementon thematters specified inparagraph4of theCompanies (Auditor’s Report) Order, 2003, issued by the Department of Company Affairs, in terms of Section 227(4A) of the Companies Act, 1956, since in our opinion and according to the information and explanations given to us, the said Order is not applicable to the Company.

4. Furtherwereportthat: a) We have obtained all the information and explanations, which to the best of our


Company so far as appears from our examination of such books. c) TheBalanceSheet,ProfitandlossAccountandtheCashFlowStatementdealtwithby

this report are in agreement with the books of account. d) Inouropinion,theBalanceSheet,ProfitandLossAccountandtheCashFlowStatement

dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information requiredbytheCompaniesAct,1956,inthemannersorequiredandgiveatrueandfairviewinconformitywiththeaccountingprinciplesgenerallyacceptedinIndia:


ii) inthecaseoftheProfitandLossAccount,ofthelossoftheCompanyfortheyearended on that date; and


5. On the basis of the written representations received from the directors as on March 31, 2008, and taken on record by the Board of Directors, we report that, none of the directors isdisqualifiedasonMarch31,2008frombeingappointedasadirectorintermsofClause(g)of sub-section (1) of Section 274 of the Companies Act, 1956.

For and on behalf ofKALYANIWALLA & MISTRYCharteredAccountants


Place:MumbaiDated:April30,2008.

147

BALANCE SHEET AS AT MARCH 31, 2008 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008

SCHEDULES FORMING PART OF THE ACCOUNT

Schedule As at As at 31.03.08 31.03.07 Rupees RupeesSOURCES OF FUNDS :Shareholders’ Funds Share Capital 1 600,000 500,000Loan Funds - -

600,000 500,000APPLICATION OF FUNDSFixed Assets - -Investments - -Current Assets, Loans and Advances Inventory 2 141,768,467 - Cash & Bank Balances 3 205,989 500,000 Loans & Advances 4 100,428,010 -

242,402,466 500,000Less: Current Liabilities and Provisions Current Liabilities 5 241,844,975 42,509

241,844,975 42,509

Net Current Assets 557,491 457,491Miscellaneous Expenditure(to the extent not written off or adjusted) Preliminary Expenditure 14,736 16,578Profit and Loss Account 27,773 25,931

600,000 500,000


The Schedules referred to above form an integral Signatures to the Balance Sheetpart of the Balance Sheet. and Schedules 1 to 5 and 9

As per our Report of even date.


ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRANPartner Director Director

Mumbai,Dated:April30,2008.

Schedule For the For the Period Ended Year Ended 31.03.08 31.03.07 Rupees Rupees

INCOME – –

EXPENDITURE

Cost of Sales 6 – –

Administration Expenses 7 – 24,089

Interest and Finance Charges 8 – –

Preliminary Expenses written off 1,842 1,842


Brought Forward Loss (25,931) –

Loss Carried Forward (27,773) (25,931)


NOTES TO ACCOUNTS AND ACCOUNTING POLICIES 9

TheSchedulesreferredtoaboveformanintegral SignaturestoProfitandLossAccountpartoftheProfitandLossAccount. andSchedules6to9

As per our Report of even date.




As at As at 31.03.08 31.03.07 Rupees RupeesSCHEDULE 1 : SHARE CAPITALAuthorised90,000EquitysharesofRs.10/-each 900,000 500,00010,000 10% Non-Convertible Cumulative Redeemable Preference 100,000 -

Share of Rs. 10/- each 1,000,000 500,000

Issued, Subscribed and Paid-up50,000EquitysharesofRs.10/-each,fullypaid-up 500,000 500,000(All the above Shares are held by Godrej Properties Limited, the Holding company and its nominee)

10,000 10% Non-Convertible Cumulative Redeemable Preference 100,000 - Shares of Rs. 10/- each., fully paid-up(All the above Shares are held by Godrej Properties Limited, the Holding company) 600,000 500,000

SCHEDULE 2 : INVENTORYConstruction work-in-progress 141,768,467 -

141,768,467 -

SCHEDULE 3 : CASH AND BANK BALANCECashandChequesinhand 11,439 500,000Balances with Scheduled Bank - on Current Accounts 194,550 -

205,989 500,000SCHEDULE 4 : LOANS AND ADVANCES(Unsecured and considered good unless otherwise stated)Advances recoverable in cash or kind or for value to be received - Secured (Secured against Bank Guarantee) 52,590 - - Others 100,375,420 -

100,428,010 -

SCHEDULE 5 : CURRENT LIABILITIESSundry Creditors (Refer Note 5 ) 810,511 17,355Investors Education and Protection Fund - - Other Liabilities 241,034,464 25,154 241,844,975 42,509

For the For the Year Ended Period Ended 31.03.2008 31.03.2007 Rupees RupeesSCHEDULE 6 : COST OF SALES

OpeningStock: – –

Add: Expenditure/ Transfers from Advances/ Taken over during the year Construction, Material and Labour 93,226,136 – Architect Fees 15,714,857 – Advertisement Expenses 537,602 – Overheads 20,302,141 – Interest 11,987,731 –

141,768,467 – Less:ClosingStock: 141,768,467 –

Cost of Sales – –

SCHEDULE 7 : ADMINISTRATION EXPENSESOther Admistrative expenses – 24,089

– 24,089

SCHEDULE 8 : INTEREST AND FINANCIAL CHARGESInterest Paid - Others 11,987,731 -

Total Interest/Finance Charges Paid 11,987,731 – Less:TransferredtoCostofSales 11,987,731 –

Net Interest – –

SCHEDULE 9 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES1. Accounting Policies a) General The accounts are prepared under the Historical Cost Convention, using the accrual

method of accounting, the accounting standard issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

b) Inventories Inventoriesarevaluedasunder: a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At Cost

148

Construction Work in Progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.

c) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As

perthismethod,revenueinProfitandLossAccountattheendoftheaccountingyearisrecognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.


Interest income is accounted on an accrual basis at contracted rates. d) Borrowing Cost Interest and Finance charges incurred in connection with borrowing of funds, which are

incurred for the development of long-term projects, are transferred to Construction Work-in-Progress as a part of the cost of the projects at weighted average of the borrowing cost.


e) Earnings Per Share The basic earnings per share is computed using the weighted average number of

common shares outstanding during the period. Diluted earnings per share is computed usingtheweightedaveragenumberofcommonanddilutivecommonequivalentsharesoutstanding during the period, except where the results would be anti-dilutive.

f) Provision for Taxation Taxexpensecomprisesbothcurrent,deferredandfringebenefittax. Currentandfringebenefittaxismeasuredattheamountexpectedtobepaidtothe


the taxable income and the accounting income that originate in one period and are capableofreversalinoneormoresubsequentperiods.Deferredtaxassets,subjecttoconsideration of prudence, are recognized and carried forward only to the extent that thereisareasonablecertaintythatsufficientfuturetaxableincomewillbeavailableagainst which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.

g) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the

date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates. The premium payable on foreign exchange contracts is amortised over the period of the contract.Exchangegains/lossesarerecognisedintheProfitandLossAccount.

h) Provisions and Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations,

the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from

thepasteventsbuttheirexistenceisconfirmedbytheoccurrenceornon-occurrenceof one or more uncertain future events not wholly within the control of the Company. There is no contingent liability as on the balance sheet date.

2. Miscellaneous Expenditure Miscellaneous expenditure is amortized over a period of 10 years.3. 10,000 10% Non-Convertible Cumulative Redeemable Preference shares of Rs.10/- each

issued on 24th March, 2008 are redeemable at any time at the option of holder or as per the provision of Companies Act ,1956.

4. Preference dividend


Previous PeriodRs.

Arrears of Cumulative Preference Dividend 191 N.A

5. Due to Micro, Small and Medium Enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force

fromOctober2,2006,certaindisclosuresarerequiredtobemaderelatingtoMicro,Smalland Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

6. Earnings Per Share


Previous PeriodRs.

LossfortheyearasperProfitandLossAccount 1,842 25,931Weightedaverageno.ofequitysharesoutstanding 50,000 50,000Basic Earnings Per Share (Rs.) (0.04) (0.52)Nominal value of shares (Rs.) 10 /- 10 /-

7. Amounts paid to Auditors

Particulars Current Year(Rs.)

Previous Period(Rs.)

Audit Fees 89,896 6,734

Certification 33,708 Nil

Total 123,604 6,734

8) Segment Information As the Company has only one business segment, disclosure under Accounting Standard 17


9) Related Party Disclosure Related party disclosures as required by AS-18, “Related Party Disclosures”, are given

below: 1. Relationships: Shareholders:GodrejPropertiesLimited(GPL)holds100%oftheShareCapitalofthe

Company. 2. The following transactions were carried out with the related party in the ordinary

courseofthebusiness:

Sr. No.


GPL

1 IssueofEquity/PreferenceshareShares 100,000500,000

2 Expenses Charged 152,029,96618,420

3 Advances received 85,500,000NIL

4 Outstanding payables 236,234,68718,420

Figures not bold are for previous year10. Lease The Company’s significant leasing arrangements are in respect of operating leases for

Commercial premises. Lease expenditure for operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises given under operating leases areasunder:


Previous Period(Rs.)

Future minimum lease payments under non-cancellable operating leases- Not later than 1 year 470,156 –

11. Prior period financial statements have been audited by a firm of CharteredAccountantsother than Kalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts,whichhavebeenre-groupedandre-classifiedwherevernecessarytoconformtocurrentyear’sclassification.

12. Previousyearfigureshavebeenre-grouped/re-arrangedwhereevernecessarytoconfirmtocurrentyear’sclassification.

13. AdditionalInformationasrequiredunderPartIVofScheduleVIoftheCompaniesAct,1956to the extent not applicable has not been given.

149

14. Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956

Balance Sheet Abstract for the Year ended March 31, 2008 And Company’s General Business Profile

1. Registration Details RegistrationNo. : U45200MH2007PTC168783 StateCode : 11 BalanceSheetDate : March31,2008

2. Capital raised during the year (Amount in Rs. thousands) PublicIssue : Nil RightsIssue : Nil BonusIssue : Nil PrivatePlacement -Capital : 100 -Premium : Nil

3. Position of mobilisation and deployment of funds (Amount in Rs. thousands) TotalLiabilities : 242,445 TotalAssets : 242,445 Sources of Funds Paid-upcapital : 600 Reserves&Surplus : - SecuredLoans : - UnsecuredLoans : - Application of Funds NetFixedAssets : - Investments : - NetCurrentAssets : 557 MiscellaneousExpenditure : 15 AccumulatedLosses : 28

4. Performance of Company (Amount in Rs. thousands) Turnover : - TotalExpenditure : 2 Profit/(Loss)beforeTax : (2) Profit/(Loss)afterTax : (2) EarningperShareinRs. : (0.04) DividendRate% : -

5. Generic Names of three principal products/servicesofCompany : N.A.

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008 Current Year Previous Period Rupees Rupees

Cash Flow from Operating ActivitiesLoss for the year (1,842) (25,931)

Adjustment for:

Interest Paid 11,987,731 –Preliminary Expenses 1,842 1,842

Operating Loss before working capital changes 11,987,731 (24,089)

Adjustment for:Change in Inventory (141,768,467) –Change in Loans and Advances (100,428,010) –Change in Current Liabilities/Provisions 241,802,466 42,509Preliminary Expenses incurred – (18,420)

Net Cash Flow from Operating activities 11,593,720 –

Cash Flow from Investing Activities – –

Cash Flow from Financing ActivitiesIssue of Share Capital 100,000 500,000Interest Paid (11,987,731) –

Net Cash Flow from Financing Activities (11,887,731) 500,000

Net Increase/(Decrease) in Cash and Cash Equivalent (294,011) 500,000

Cash and Cash Equivalent - Opening Balance 500,000 –

Cash and Cash Equivalent - Closing Balance 205,989 500,000

Notes:

1. Thecashflowstatementhasbeenpreparedunderthe 'IndirectMethod'assetout intheAccountingStandard(AS)3on'CashFlowStatement',andpresentscashflowsbyoperating,investingandfinancingactivities.

2. Figuresforthepreviousyearhavebeenregrouped/restatedwherevernecessarytoconfirmtothisyear'sclassification.




150

TO THE SHAREHOLDERS

Your Directors have pleasure in submitting their Report together with the Audited Accounts for the year ended 31ST March, 2008.


The accounting results for the period ended 31st March, 2008 reveal that there is deficit at the end of the period.

2. REVIEW OF OPERATIONS :

During the year the Company has entered into Development Agreement for developing the property at Patancheru, Hyderabad with Rallis India Ltd.

The Company has made an application for approval to set up a Sector Specific Economic Zone for Information Technology (IT) and IT Enabled Services (ITES) at its project at Patancheru, Hyderabad.

3. DIVIDEND :

As there are no profits, the Directors regret that no dividend can be recommended.

4. DIRECTORS :

In accordance with the provisions of the Articles of Association, Mr. Milind S. Korde, retires by rotation and being eligible, offers himself for re-appointment.




Your Directors confirm:


(ii) that 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

BOARD OF DIRECTORS’ REPORT FOR THE PERIOD ENDED 31ST MARCH, 2008

true and fair view of the state of affairs of the Company at the end of the financial year ended 31ST March, 2008 and of the loss of the Company for that year;




(a) Since the Company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, are not given.

(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder :

(i) Conservation of Energy : Expenses on account of Energy are negligible.

(ii) Technology Absorption : It is an on going process.

(iii) Foreign Exchange Earning & Outgo : The Company has not earned any Foreign Exchange nor incurred any Foreign

Exchange Expenditure during the year.

8. ACKNOWLEDGEMENT :



Milind S. Korde K.T. Jithendran Directors

Mumbai, Dated : April 30, 2008.

1. We have audited the attached Balance Sheet of GODREJ REAL ESTATE PRIVATE LIMITED, as at 31st March 2008 and also the Profit and Loss Account and 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.


3. This report does not include a statement on the matters specified in paragraph 4 of the Companies (Auditor’s Report) Order, 2003, issued by the Department of Company Affairs, in terms of Section 227(4A) of the Companies Act, 1956, since in our opinion and according to the information and explanations given to us, the said Order is not applicable to the Company.

4. Further we report that:


b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books.

c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ REAL ESTATE PRIVATE LIMITED

e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the 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:


ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and,


5. On the basis of the written representations received from the directors as on 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.



ERMIN K. IRANIPartner


Place: Mumbai

Dated: April 30, 2008

151

Schedule As at As at

31.03.2008 31.03.2007

Rupees Rupees

SOURCES OF FUNDS

Shareholders’ Funds

Share Capital 1 500,000 500,000

Loan Funds - -

500,000 500,000


Fixed Assets 2

Gross Block 99,990 -

Less : Depreciation 13,784 -

Net Block 86,206 -

INVESTMENTS - -

CURRENT ASSETS, LOANS & ADVANCES

Inventory 3 728,176,550 -

Cash & Bank Balances 4 128,957 500,000

Loans and advances 5 1,677,500 -

729,983,007 500,000

LESS : CURRENT LIABILITIES & PROVISIONS

Current Liabilities 6 729,625,506 42,509

729,625,506 42,509

NET CURRENT ASSETS 357,501 457,491

MISCELLANEOUS EXPENDITURE

(to the extent not written off or adjusted)

Preliminary Expenditure 14,736 16,578

PROFIT & LOSS ACCOUNT 41,557 25,931

500,000 500,000


BALANCE SHEET AS AT 31ST MARCH, 2008

Schedule For the For the

Year Ended Period Ended

31.03.2008 31.03.2007

Rupees Rupees

INCOME - -

EXPENDITURE

Cost of sales 7 - -

Administration Expenses 8 - 24,089

Interest & Finance Charges 9 - -

Depreciation 13,784 -


Loss for the Year (15,626) (25,931)

Brought Forward Loss (25,931) -




PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008

The Schedules referred to above form an Signatures to the Balance Sheetintegral part of the Balance Sheet. and Schedules 1 to 6 and 10As per our Report of even date. For and on behalf ofKALYANIWALLA & MISTRY Chartered AccountantsERMIN K. IRANI MILIND S. KORDE Directors Partner K.T. JITHENDRAN Directors Mumbai, Dated : April 30, 2008.

The Schedules referred to above form an Signatures to the Profit & Loss Accountintegral part of the Balance Sheet. and Schedules 7 to10As per our Report of even date. For and on behalf ofKALYANIWALLA & MISTRY Chartered Accountants

ERMIN K. IRANI MILIND S. KORDE Directors Partner K.T. JITHENDRAN Directors Mumbai, Dated : April 30, 2008.


As at As at

31.03.2008 31.03.2007

Rupees Rupees

SCHEDULE 1

SHARE CAPITAL

AUTHORISED

50,000 Equity shares of Rs. 10/- each 500,000 500,000

500,000 500,000

ISSUED, SUBSCRIBED & PAID UP

50,000 Equity shares of Rs. 10/- each, fully paid up 500,000 500,000

(All the above Shares are held by Godrej Properties Limited, the Holding Company and its nominee)

500,000 500,000

Particulars Gross Block Depreciation Net Block As at

1st April 2007

Additions Deductions As at

31st March 2008

Upto For the Year

Upto As at As at

1st April 2008

31st March 2008

31st March 2008

31st March 2007

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Office Equipment

- 7,990 - 7,990 - 462 462 7,528 -

Computer - 92,000 - 92,000 - 13,322 13,322 78,678 -

TOTAL - 99,990 - 99,990 - 13,784 13,784 86,206 -

Previous Year - - - - - - - - -


As at As at

31.03.2008 31.03.2007

Rupees Rupees

SCHEDULE 3

INVENTORY

Construction Work in Progress 728,176,550 -

728,176,550 -

SCHEDULE 2 FIXED ASSETS

152

As at As at

31.03.2008 31.03.2007

Rupees Rupees

SCHEDULE 4

CASH & BANK BALANCE

Cash & Cheques In hand - 500,000

Balances with Scheduled Bank - On Current Accounts 128,957 -

128,957 500,000

SCHEDULE 5

LOANS & ADVANCES

(Unsecured Considered good unless otherwise stated)

Advances recoverable in cash or kind or for value to be received

1,677,500 -

1,677,500 -

SCHEDULE 6

CURRENT LIABILITIES

Sundry Creditors (Refer Note No 2) - 17,355

Investor Education & Protection Fund - -

Other Liabilities 729,625,506 25,154

729,625,506 42,509

SCHEDULE 7

COST OF SALES

Opening Stock - -

Add : Expenditure/Transfers from Advances/Taken over

during the year

Development Rights 621,654,630 -

Advertisement Expenses 69,663 -

Overheads 14,038,359 -

Interest 92,413,898 -

728,176,550 -

Less : Closing Stock: 728,176,550 -

Cost of Sales - -

SCHEDULE 8

ADMINISTRATION EXPENSES

Other Operating Expenses - 24,089

- 24,089

SCHEDULE 9

INTEREST AND FINANCIAL CHARGES

Interest Paid

Other loans 91,572,098 -

Total Interest Paid 91,572,098 -

Add: Brokerage & other Financial Charges 841,800 -

Total Interest/Finance Charges Paid 92,413,898 -

Less: Transferred to Cost of Sales 92,413,898 -

NET INTEREST - -

SCHEDULES FORMING PART OF THE ACCOUNTSrecoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.

c) Depreciation/Amortization

Depreciation has been provided on Written Down Value basis, at the rates specified in Schedule XIV of the Companies Act, 1956.

d) Inventories

Inventories are valued as under :

a) Completed Flats - At lower of Cost or Market value

b) Construction Work-in-Progress - At Cost

Construction Work in Progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.

e) Revenue Recognition

The Company is following the “Percentage of Completion Method” of accounting. As per this method, revenue in Profit and Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.


f) Borrowing Cost

Interest and Finance charges incurred in connection with borrowing of funds, which are incurred for the development of long-term projects, are transferred to Construction Work in Progress as a part of the cost of the projects at weighted average of the borrowing cost.


g) Provision for Taxation

Tax expense comprises both current, deferred & fringe benefit tax.

Current and fringe benefit tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws.

Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.

h) Foreign Currency Transactions

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains/losses are recognised in the Profit and Loss Account.

i) Earnings Per Share

The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.

j) Provisions and Contingent Liabilities


Contingent liabilities are disclosed in respect of possible obligations that arise from the past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. There is no contingent liability as on the balance sheet date.

k) Miscellaneous Expenditure

Miscellaneous expenditure is amortized over a period of 10 years.

2) Due to Micro, Small and Medium Enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2 October, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

SCHEDULE 10

NOTES TO ACCOUNTS AND ACCOUNTING POLICIES

1) Accounting Policies

a) General

The financial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

b) Fixed Assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.

Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the

153


Particulars Current Year Previous Period

Loss for the year as per Profit & Loss Account (Rs.) (15,626) (25,931)

Weighted average no. of equity shares outstanding 50,000 50,000

Basic/Diluted earnings per share (Rs.) (0.31) (0.52)

Nominal value of shares (Rs.) 10 /- 10 /-


Particulars Current Year

(Rs.)

Previous Period

(Rs.)

Audit Fees 89,896 6,734

Certification 2,248 Nil

Total 92,144 6,734

5) Segment Information

As the company has only one business segment, disclosure under Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.

6) Related Party Disclosure

Related party disclosures as required by AS-18, "Related Party Disclosures", are given below:

1. Relationships: Shareholders Godrej Properties Limited (GPL) holds 100% of the Share Capital of the

Company. 2. The following transactions were carried out with the related parties in the ordinary

course of the business:

Sr. No Particulars Current Year Rs.

GPL

1 Issue of equity share capital NIL5,00,000

2 Expenses charged by other companies 675,246,97318,420

3 Advances received 54,270,225NIL

4 Outstanding payables 722,892,17718,420

Figures in italics are for previous year

7) Prior period financial statements have been audited by a firm of Chartered Accountants other than Kalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts, which have been re-grouped and re-classified wherever necessary to conform to current year’s classification.

8) Previous year figures have been rearranged/regrouped wherever necessary to confirm to current year’s classification.

9) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.

SCHEDULES FORMING PART OF THE ACCOUNTS CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008

Current Year Previous Year

Rupees Rupees



Adjustment for:


Interest Paid 92,413,898 -

Preliminary expenses 1,842 1,842

Operating Loss before working capital changes 92,413,898 (24,089)

Adjustment for:

Change in Inventory (728,176,550) -

Change in Loans & Advances (1,677,500) -

Change in Current Liabilities/Provisions 729,582,997 42,509

Preliminary Expenses - (18,420)

Net Cash Flow from Operating Activities 92,142,845 -


Purchase of Fixed Assets (99,990) -

Net Cash Flow from Investing Activities (99,990) -


Issue of Share Capital - 500,000

Interest Paid (92,413,898) -

Net Cash Flow from Financing Activities (92,413,898) -

Net Increase/(Decrease) in Cash & Cash Equivalent (371,043) 500,000

Cash & Cash Equivalent - Opening Balance 500,000 -

Cash & Cash Equivalent - Closing Balance 128,957 500,000

Notes :

1. The cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash flows by operating, investing and financing activities.

2. Figures for the previous year have been regrouped/ restated wherever necessary to conform to this year’s classification.

For and on behalf ofKALYANIWALLA & MISTRY Chartered Accountants

ERMIN K. IRANI MILIND S. KORDE DirectorsPartner K.T. JITHENDRAN Directors Mumbai, Dated : April 30, 2008.

Balance Sheet abstract for the Year ended 31st March, 2008 And Company’s General

Business Profile1 Registration Details Registration No. : U45200MH2007PTC168818 State Code : 11 Balance Sheet Date : 31st March, 20082 Capital raised during the year (Amount in Rs. thousands) Public Issue : Nil Rights Issue : Nil Bonus Issue : Nil Private Placement - Capital : Nil - Premium : Nil3 Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities : 730,126 Total Assets : 730,126 Sources of Funds Paid-up capital : 500 Reserves & Surplus : -

Secured Loans : - Unsecured Loans : - Application of Funds Net Fixed Assets : 86 Investments : - Net Current Assets : 358 Misc. Expenditure : 15 Accumulated Losses : 42 4 Performance of Company (Amount in Rs. thousands) Turnover : - Total Expenditure : 16 Profit / (Loss) before Tax : (16) Profit / (Loss) after Tax : (16) Earning per Share in Rs. : (0.31) Dividend Rate % : -5 Generic Names of three principal products / services of Company : N.A.

154

DIRECTORS’ REPORT FOR THE YEAR ENDED ON MARCH 31, 2008

TO THE SHAREHOLDERSYour Directors have pleasure in submitting their Report together with the Audited Accounts for the year ended 31st March, 2008.1. FINANCIAL HIGHLIGHTS : Theaccountingresultsfortheperiodended31stMarch,2008revealthatthereisdeficitat

the end of the period.2. REVIEW OF OPERATIONS : The Company has not commenced any activities during the year.3. DIVIDEND : Astherearenoprofits,theDirectorsregretthatnodividendcanberecommended.4. DIRECTORS : In accordance with the provisions of the Articles of Association, Mr. Milind S. Korde, retires

by rotation and being eligible, offers himself for re-appointment.5. APPOINTMENT OF AUDITORS : M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General

Meeting and are eligible for re-appointment for which they have given their consent.6. DIRECTORS’ RESPONSIBILITY STATEMENT: YourDirectorsconfirm: (i) that in the preparation of the annual accounts, the applicable accounting standards

have been followed; (ii) that the Directors have selected such accounting policies and applied them consistently

and made judgements and estimates that are reasonable and prudent so as to give a trueandfairviewofthestateofaffairsoftheCompanyattheendofthefinancialyearended 31st March, 2008 and of the loss of the Company for that year;




(a) Since the Company has no employees, the particulars of the employees to be disclosed under Section 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.

(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign ExchangeEarningsandOutgo,requiredunderSection217(1)(e)oftheCompaniesAct,1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors)Rules,1988isprovidedhereunder:

(i) ConservationofEnergy:


(ii) TechnologyAbsorption:


(iii) ForeignExchangeEarningandOutgo:


8. ACKNOWLEDGEMENT:


For and on Behalf of the Board of Directors

MILIND S. KORDE K.T. JITHENDRAN Director Director


REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ SEA VIEW PROPERTIES PRIVATE LIMITED1. We have audited the attached Balance Sheet of GODREJ SEA VIEW PROPERTIES PRIVATE

LIMITED,asat31stMarch,2008andalso theProfitandLossAccountandtheCashFlowStatementoftheCompanyfortheyearendedonthatdateannexedthereto.Thesefinancialstatements are the responsibility of the Company’s management. Our responsibility is to expressanopiniononthesefinancialstatementsbasedonouraudit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. ThoseStandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

3. This reportdoesnot includea statementon thematters specified inparagraph4of theCompanies (Auditor’s Report) Order, 2003, issued by the Department of Company Affairs, in terms of Section 227(4A) of the Companies Act, 1956, since in our opinion and according to the information and explanations given to us, the said Order is not applicable to the Company.

4. Furtherwereportthat:


b) In our opinion, proper books of account as required by law have been kept by theCompany so far as appears from our examination of such books.

c) TheBalanceSheet,ProfitandlossAccountandtheCashFlowStatementdealtwithbythis report are in agreement with the books of account.

d) Inouropinion,theBalanceSheet,ProfitandLossAccountandtheCashFlowStatementdealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information requiredbytheCompaniesAct,1956,inthemannersorequiredandgiveatrueandfairviewinconformitywiththeaccountingprinciplesgenerallyacceptedinIndia:


ii) inthecaseoftheProfitandLossAccount,ofthelossoftheCompanyfortheyearended on that date; and


5. On the basis of the written representations received from the directors as on 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the directors isdisqualifiedason31stMarch,2008frombeingappointedasadirectorintermsofClause(g) of sub-section (1) of Section 274 of the Companies Act, 1956.



Mumbai, April 30, 2008.

155

BALANCE SHEET AS AT MARCH 31, 2008 Schedule As at As at 31.03.2008 31.03.2007 Rupees RupeesSOURCES OF FUNDSShareholders’ Funds Share Capital 1 500,000 500,000Loan Funds - -

500,000 500,000

APPLICATION OF FUNDSFixed Assets - - - -

INVESTMENTS - -

Current Assets, Loans and AdvancesCash and Bank Balances 2 468,324 500,000

468,324 500,000

Less: Current Liabilities and Provisions CurrentLiabilities 3 49,320 42,659

49,320 42,659

Net Current Assets 419,004 457,341

Miscellaneous Expenditure(to the extent not written off or adjusted)Preliminary Expenditure 14,736 16,578

Profit and Loss Account 66,260 26,081

500,000 500,000


The Schedules referred to above form an integral Signatures to the Balance Sheetpart of the Balance Sheet. and Schedules 1 to 3 and 5As per our Report of even date.For and on behalf ofKALYANIWALLA & MISTRYCharteredAccountants



Schedule For the For the Year Ended Period Ended 31.03.2008 31.03.2007 Rupees Rupees

INCOME - -

EXPENDITURE

Administration Expenses 4 38,337 24,239


(40,179) (26,081)

Lossfortheperiod (40,179) (26,081)

LossbroughtforwardtotheBalancesheet (26,081) -

(66,260) (26,081)


NOTES TO ACCOUNTS AND ACCOUNTING POLICIES 5

TheSchedulesreferredtoaboveformanintegral SignaturestoProfitandLossAccountpartoftheProfitandLossAccount. andSchedules4and5As per our Report of even dateFor and on behalf ofKALYANIWALLA & MISTRYCharteredAccountants




SCHEDULES FORMING PART OF THE ACCOUNT As at As at 31.03.2008 31.03.2007 Rupees Rupees

SCHEDULE 1 : SHARE CAPITALAUTHORISED50,000EquitysharesofRs.10/-each 500,000 500,000

500,000 500,000

Issued, Subscribed and Paid-up50,000EquitysharesofRs.10/-each,fullypaid-up 500,000 500,000(All the above Shares are held by Godrej Properties Limited,theHoldingcompanyanditsnominee)

500,000 500,000

SCHEDULE 2 : CASH & BANK BALANCEBalance with Scheduled Bank - on Current Account 468,324 500,000

468,324 500,000

SCHEDULE 3 : CURRENT LIABILITIESSundry Creditors (Refer Note 2) – 17,505OtherLiabilities 49,320 25,154

49,320 42,659

SCHEDULE 4 : ADMINISTRATION EXPENSESAudit fees 28,098 6,734Professional fees – 17,505Other Operating Expenses 10,239 –

38,337 24,239

SCHEDULE 5 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES1. Accounting Policies a) General The financial statements are prepared under the historical cost convention in

accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

b) Miscellaneous Expenditure Miscellaneous expenditure is amortized over a period of 10 years.

c) Earning Per Share

The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed usingtheweightedaveragenumberofcommonanddilutivecommonequivalentsharesoutstanding during the period, except where the results would be anti-dilutive.

2. Due to Micro, Small and Medium Enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2nd October, 2006, certain disclosures are required to be made relating toMicro, Small and Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

3. Earnings per share


Previous YearRs.

LossfortheYearasperProfitandLossAccount (40,179) (26,081)

Weightedaverageno.ofequitysharesoutstanding 50,000 50,000

Basic/Diluted earnings per share (Rs.) (0.80) (0.52)


4. Amounts paid to Auditors:

Current Year(Rs.)

Previous Year(Rs.)

Audit Fees 28,098 6,734

Total 28,098 6,734

5. Related Party Disclosure

Related party disclosures as required by AS-18, “Related Party Disclosures”, are given below:

1. Relationships:

Shareholders (the Godrej Group Shareholding) in the Company Godrej Properties Limited(GPL)holds100%intheCompany.GPListheSubsidiaryofGodrejIndustriesLimited (GIL). GIL is subsidiary of Godrej & BoyceManufacturing Company Limited(G&B), the ultimate holding company

156


Sr. No.

Particulars Current Year (Rs.) GPL

1 IssueofEquityShareCapital –5,00,000

2 Re-imbursement of Expenses 2,81018,420

3 Outstanding payables 21,23018,420

(Figures in italics are for previous year)

6. Prior period financial statements have been audited by a firm of CharteredAccountantsother than Kalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts,whichhavebeenre-groupedandre-classifiedwherevernecessarytoconformtocurrentyear’sclassification

7. Previousyearfigureshavebeenre-grouped/re-arrangedwhereevernecessarytoconfirmtocurrentyear’sclassification.

8. AdditionalInformationasrequiredunderPartIVofScheduleVIoftheCompaniesAct,1956to the extent not applicable has not been given.

9. Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956

Balance Sheet Abstract for the Year ended 31st March, 2008 and Company’s General Business Profile

1. Registration Details RegistrationNo. : U45200MH2007PTC168730 StateCode : 11 BalanceSheetDate : 31stMarch,2008

2. Capital raised during the year (Amount in Rs. thousands) PublicIssue : Nil RightsIssue : Nil BonusIssue : Nil PrivatePlacement -Capital : Nil -Premium : Nil

3. Position of mobilisation and deployment of funds (Amount in Rs. thousands) TotalLiabilities : 549 TotalAssets : 549 Sources of Funds Paid-upcapital : 500 ReservesandSurplus : – SecuredLoans : – UnsecuredLoans : – Application of Funds NetFixedAssets : – Investments : – NetCurrentAssets : 419 MiscellaneousExpenditure : 15 AccumulatedLosses : 66

4. Performance of Company (Amount in Rs. thousands) Turnover : – TotalExpenditure : (40) Profit/(Loss)beforeTax : (40) Profit/(Loss)afterTax : (40) EarningperShareinRs. : (0.80) DividendRate% : –

5. Generic Names of three principal products/services of Company : N.A.

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008 Current Year Previous Period Rupees Rupees

Cash Flow from Operating ActivitiesLossfortheYear (40,179) (26,081)Adjustment for : Preliminary Expenses 1,842 1,842

Operating Loss before working capital changes (38,337) (24,239)Adjustment for : ChangesinCurrentLiabilitiesandProvisions 6,661 42,659 Preliminary Expenses Incurred - (18,420)

Net Cash Flow from Operating Activities (31,676) –

Net Cash Flow from Investing Activities - – Cash Flow from Financing Activities Issue of Share Capital - 500,000

Net Cash Flow from Financing Activities - 500,000

Net Increase/(Decrease) in Cash and Cash Equivalent (31,676) 500,000

Cash and Cash Equivalent - Opening Balance 500,000 -

Cash and Cash Equivalent - Closing Balance 468,324 500,000

Notes:

1. Thecashflowstatementhasbeenpreparedunderthe‘IndirectMethod’assetoutintheAccountingStandard(AS)3on‘CashFlowStatement’,andpresentscashflowsbyoperating,investingandfinancingactivities.

2. Figures for the previous year have been regrouped/restated wherever necessary to conform tothisyear’sclassification.




157


TO THE SHAREHOLDERS

Your Directors have pleasure in submitting their Report alongwith the Audited Accounts for the period ended 31st March, 2008.


Theaccountingresultsfortheperiodended31stMarch,2008revealthatthereisprofitatthe end of the period.

2. DIVIDEND :

There is no Dividend declared for the year ended 31st March, 2008.

3. REVIEW OF OPERATIONS:

During the year the Company was taken over by Godrej Properties Limited.

Godrej Properties Limited has purchased all the shares of the Company from Gulmohar Trading Pvt. Ltd. and Others.

4. CHANGE IN ARTICLES OF ASSOCIATION :

Your Company has pursuant to a resolution passed in the Extra-ordinary General Meeting held on Jan 11, 2008, adopted a new set of articles in substitution for and to the exclusion of all the existing Articles of the Company.

5. CHANGE OF REGISTERED OFFICE OF THE COMPANY :

The Company has received confirmation from the Company Law Board for shifting ofthe Registered office of the Company from the State ofWest Bengal to the State ofMaharashtra.

6. DIRECTORS :

Mr. Milind Korde was appointed as an Additional Director of the Company, pursuant to Section 260 of the Companies Act 1956 with effect from 16thJuly,2007andholdsofficetilltheensuingAnnual General Meeting.

Mr. K.T. Jithendran was appointed as an Additional Director of the Company, pursuant to Section 260 of the Companies Act 1956 with effect from 16thJuly,2007andholdsofficetillthe ensuing Annual General Meeting.

Mr. Rajendra Khetawat was appointed as an Additional Director of the Company, pursuant to Section 260 of the Companies Act 1956 with effect from 18thJuly,2007andholdsofficetill the ensuing Annual General Meeting.

Mr. Ram Ratan Modi, Director of the Company resigned on 19thJuly,2007.TheBoarddesiresto place on record the valuable services rendered by Mr. Ram Ratan Modi during his tenure as a Director of the Company.

Mr. Hemant Jain, Director of the Company resigned on 19thJuly,2007.TheBoarddesirestoplace on record the valuable services rendered by Mr. Hemant Jain during his tenure as a Director of the Company.

Mr. Arun Dutta, Director of the Company resigned on 19thJuly,2007.TheBoarddesirestoplace on record the valuable services rendered by Mr. Arun Dutta during his tenure as a Director of the Company




YourDirectorsconfirm:


(ii) that 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 trueandfairviewofthestateofaffairsoftheCompanyattheendofthefinancialyear ended 31stMarch,2008andoftheprofitoftheCompanyforthatyear;




(a) Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.

(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign ExchangeEarningsandOutgo,requiredundersection217(1)(e)oftheCompaniesAct,1956readwiththeCompanies(DisclosureofParticularsintheReportoftheBoardofDirectors)Rules,1988isprovidedhereunder:

(i) ConservationofEnergy:


(ii) TechnologyAbsorption:


(iii) ForeignExchangeEarning&Outgo:


10. ACKNOWLEDGEMENT:



MILIND S. KORDE K.T. JITHENDRAN

DIRECTORS

Place:MumbaiDated:April30,2008

1. WehaveauditedtheattachedBalanceSheetofHAPPY HIGHRISES LIMITED, as at 31st March 2008andalsotheProfitandLossAccount,andtheCashFlowStatementoftheCompanyfortheyearendedonthatdateannexedthereto.ThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatements based on our audit.

2. WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedinIndia.ThoseStandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmade bymanagement, aswell as evaluating the overall financial statementpresentation.Webelievethatourauditprovidesareasonablebasisforouropinion.

3. AsrequiredbytheCompanies(Auditor’sReport)Order,2003,issuedbytheCentralGovernmentin terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statementonthemattersspecifiedinparagraphs4and5ofthesaidOrder.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

a) Wehave obtained all the information and explanations,which to the best of ourknowledge and belief were necessary for the purposes of our audit.

b) Inouropinion,properbooksofaccountasrequiredbylawhavebeenkeptbytheCompany so far as appears from our examination of such books.

c) TheBalanceSheet,ProfitandLossAccountandtheCashFlowStatementdealtwithby this report are in agreement with the books of account.

d) Inouropinion,theBalanceSheet,ProfitandLossAccountandtheCashFlowStatementdealt with by this report comply with the accounting standards referred to in sub-

REPORTOFTHEAUDITORSTOTHEMEMBERSOFHAPPY HIGHRISES LIMITED

section (3C) of section 211 of the Companies Act, 1956.

e) In our opinion and to the best of our information and according to the explanations given tous,thesaidaccountsreadwiththenotesthereon,givetheinformationrequiredbytheCompaniesAct,1956,inthemannersorequiredandgiveatrueandfairviewinconformitywiththeaccountingprinciplesgenerallyacceptedinIndia:

i) inthecaseoftheBalanceSheet,ofthestateofaffairsoftheCompanyasat31st March, 2008;

ii) inthecaseoftheProfitandLossAccount,oftheprofitoftheCompanyfortheyear ended on that date and,

iii) inthecaseoftheCashFlowStatement,ofthecashflowsoftheCompanyforthe year ended on that date.

5. On the basis of the written representations received from the directors as on 31st March, 2008,andtakenonrecordbytheBoardofDirectors,wereportthat,noneofthedirectorsisdisqualifiedason31st March, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.



ERMIN K. IRANIPARTNER


Place:MumbaiDated:April30,2008

158

Referred to in paragraph (3) of our report of even date.1) (a) The Company has maintained proper records showing full particulars, including

quantitativedetailsandsituationoffixedassets. (b) Asexplainedtous,theCompanyhasaprogramforphysicalverificationoffixedassets

atperiodicintervals.Inouropinion,theperiodofverificationisreasonablehavingregard to the size of the Company and the nature of is assets.

(c) Thereisnodisposaloffixedassetsduringtheyear.2) (a) Themanagement has conducted physical verification of inventory at reasonable

intervals. (b) Inouropinion,theproceduresofphysicalverificationofinventoryfollowedbythe

managementarereasonableandadequateinrelationtothesizeoftheCompanyandthe nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies werenoticedonphysicalverification.

3) (a) TheCompanyhasnotgrantedanyloans,securedorunsecured,tocompanies,firmsorother parties covered in the register maintained under Section 301 of the Companies Act, 1956

(b) Consequently, thequestionofcommentingon the ratesof interestandtermsandconditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and the interest and reasonable steps for recovery of principal and interest does not arise.

(c) TheCompanyhasnottakenanyloans,securedorunsecured,fromcompanies,firmsorother parties covered in the register maintained under Section 301 of the Companies Act, 1956

(d) Consequently,thequestionofcommentingontheratesofinterestandothertermsand conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensuratewith the size of the Company andthenatureofitsbusiness,forthepurchaseofinventory,fixedassetsandforthesaleofgoods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.

5) Basedontheauditproceduresappliedbyusandaccordingtotheinformationandexplanationsprovided by the Management, we are of the opinion that there are no transactions that need to be entered in the register maintained under section 301 of the Companies Act, 1956.

6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.


8) The maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.

9) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has no statutory

ANNEXURE TO THE AUDITORS’ REPORTdues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, IncomeTax,ValueAddedTax,SalesTax,WealthTax,ServiceTax,Custom Duty, Excise Duty, Cess and other statutory dues incurred during the year. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues outstanding ofIncomeTax,SalesTax,ValueAddedTax,ServiceTax,CustomDuty,WealthTax,ExciseDuty, Cess on account of any dispute.

10) TheCompany’saccumulatedlossesattheendofthefinancialyeararelessthanfiftypercentof its net worth. During the current year the Company has not incurred cash losses. However, it has incurred cash losses in the immediately preceding financial year.

11) TheCompanydoesnothaveanyduestofinancialinstitution,bankordebentureholders.12) According to the information and explanations given to us and based on the documents and

records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/mutualbenefitfund/societies.


15) In our opinion and according to the information and explanations given to us, the Company hasnotgivenanyguaranteeforloanstakenbyothersfrombanksorfinancialinstitutions.

16) Basedonourexaminationandaccordingtotheinformationandexplanationsgiventous,the company has not taken any term loans during the year.

17) According to the information and explanations given to us and an overall examination of the BalanceSheetandCashFlowsoftheCompany,wereportthattheCompanyhasnotutilizedfunds raised on short-term basis for long-term investment.

18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19) The Company did not issue any debentures during the year.20) The Company has not raised any money through a public issue during the year.21) Basedontheauditproceduresperformedandinformationandexplanationsgivenbythe


For and on behalf ofKALYANIWALLA & MISTRYChartered AccountantsERMIN K. IRANIPartnerMembership No. 35646Place:MumbaiDated:April30,2008.

Schedule As at31.03.08

Rupees

As at31.03.07

RupeesSOURCES OF FUNDSSHAREHOLDERS’ FUNDS Share Capital 1 2,031,200 2,031,200 LOAN FUNDS - -

2,031,200 2,031,200 APPLICATION OF FUNDSFIXED ASSETS GrossBlock 2 3,200 - Less:Depreciation 3,200 - NetBlock - - INVESTMENTS - - CURRENT ASSETS, LOANS & ADVANCES Inventory 3 774,188,736 - Cash&BankBalances 4 1,995,940 8,144,103 Loans & Advances 5 449,894 5,408,730

776,634,570 13,552,833 LESS : CURRENT LIABILITIES & PROVISIONS Current Liabilities 6 774,659,031 11,593,933

774,659,031 11,593,933 NET CURRENT ASSETS 1,975,539 1,958,900 MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)Preliminary Expenditure 15,534 17,260 PROFIT & LOSS ACCOUNT 40,127 55,040

2,031,200 2,031,200 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 9

TheSchedulesreferredtoaboveformanintegralpartoftheBalanceSheet.As per our Report of even date. SignaturestotheBalanceSheetand

Schedules 1 to 6 and 9For and on behalf ofKALYANIWALLA & MISTRYChartered AccountantsERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRANPartner DIRECTORSMumbai,Dated:April 30, 2008

BALANCESHEETASAT31STMARCH,2008

Schedule For the Year ended

31.03.08 Rupees

For the Year ended

31.03.07 Rupees

INTEREST INCOME 146,443 4,800

(Tax Deducted at Source Rs.41,970/-[ Previous year Rs. Nil] )

EXPENDITURE

Cost of Sales 7 - -

Administration Expenses - 9,936

Interest & Finance Charges 8 146,443 -


Preliminary Expenses written off 1,726 -

Loss for the Year (4,926) (5,136)

Interest Income of Previous year 19,839 -

Profit/(Loss)fortheYear 14,913 (5,136)

BroughtForwardLoss (55,040) (49,904)


EarningpershareBasic/DilutedinRs.(ReferNote3) 0.07 (0.03)


TheSchedulesreferredtoaboveformanintegralpartoftheProfit&LossAccountAs per our Report of even date. SignaturestoProfit&LossAccountand

Schedules 7 to 9For and on behalf ofKALYANIWALLA&MISTRYChartered AccountantsERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner DIRECTORSMumbai,Dated:April30,2008

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008

159

As at 31.03.08

Rupees

As at 31.03.07

Rupees SCHEDULE1:SHARECAPITAL

AUTHORISED250,000EquitysharesofRs.10/-each 2,500, 000 2,500,000

2,500,000 2,500,000 ISSUED,SUBSCRIBED&PAIDUP

203,120EquitysharesofRs.10/-each,fullypaid-up 2,031,200 2,031,200

(All of the above shares are held by Godrej Properties Limited, the Holding Company and its nominee)

2,031,200 2,031,200

SCHEDULES FORMING PART OF THE ACCOUNTS As at

31.03.08 Rupees

As at 31.03.07

Rupees SCHEDULE 3INVENTORYConstruction work in progress 774,188,736 -

774,188,736 - SCHEDULE 4 CASH&BANKBALANCECash&Cheques-in-Hand 10,115 74,307 BalanceswithScheduledBank

1,985,825 69,796 - 8,000,000

1,995,940 8,144,103

SCHEDULE2:FIXEDASSETSParticulars GrossBlock Depreciation NetBlock

As at1st April 2007

Additions Deductions As at31st Mar. 2008

Upto1st April 2007

For theYear

Upto31st Mar. 2008

As at31st Mar. 2008

As at31st March, 2007

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.OfficeEquipments - 3,200 - 3,200 - 3,200 3,200 - - Total - 3,200 - 3,200 - 3,200 3,200 - - PreviousYear - - - - - - - - -

SCHEDULE 5LOANS & ADVANCES(Unsecured & considered good unless otherwise stated)Advances recoverable in cash or kind or for value to be received

403,472 5,408,730

Advance Tax and Tax Deducted at Source 46,422 - 449,894 5,408,730

SCHEDULE 6CURRENTLIABILITIESSundry Creditors (Refer Note 2) 644,437 - Investor Education & Protection Fund - - Other liabilities 774,014,594 11,593,933

774,659,031 11,593,933

SCHEDULE 7COST OF SALES Opening Stock - Add:ExpenditureduringtheyearLand 672,965,851 - Construction, Material & Labour 1,924,303 - Architect Fees 3,822,978 - Advertisment Expenses 2,779,434 - Over heads 34,043,864 - Interest 58,652,306 -

774,188,736 - Less:ClosingStock 774,188,736 - Cost of Sales - -

SCHEDULE 8INTEREST AND FINANCIAL CHARGESInterest PaidOther loans 58,798,749 - Total Interest Paid 58,798,749 - Less:TransferredtoCostofSales 58,652,306 - NET INTEREST 146,443 -

1. Accounting Policiesa) General Thefinancialstatementsarepreparedunderthehistoricalcostconventioninaccordance

with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

b) Miscellaneous Expenditure Preliminary expenditure is amortised over a period of 10 years.c) Fixed Assets Fixedassetsarestatedatcostofacquisitionorconstructionlessaccumulateddepreciation.

Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.

Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.

d) Depreciation / Amortization DepreciationhasbeenprovidedonWrittenDownValuebasis,attheratesspecifiedinSchedule

XIVoftheCompaniesAct,1956.e) Inventories Inventoriesarevaluedasunder: a) Completed Flats - At lower of Cost or Market value b) ConstructionWork-in-Progress - Atcost

SCHEDULE 9: NOTES TO ACCOUNTS AND ACCOUNTING POLICIES

ConstructionWork in Progress includes cost of land, premium for development rights,construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.

f) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As per this

method,revenueinProfit&LossAccountattheendoftheaccountingyearisrecognizedinproportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.


Interest income is accounted on an accrual basis at contracted rates.g) Borrowing Cost Interest and finance charges incurred in connectionwith borrowing of funds,which are

incurredforthedevelopmentoflongtermprojects,aretransferredtoConstructionWorkin Progress / Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost / rates as per Agreements respectively.


h) Earnings Per Share The basic earnings per share is computed using the weighted average number of common

shares outstanding during the period. Diluted earnings per share are computed using the weightedaveragenumberofcommonanddilutivecommonequivalentsharesoutstandingduring the period, except where the results would be anti-dilutive.

i) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the date

of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised intheProfitandLossAccount.

j) Provision For Taxation Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using the

applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between the taxable

income and the accounting income that originate in one period and are capable of reversal in oneormoresubsequentperiods.Deferredtaxassets,subjecttoconsiderationofprudence,are recognized and carried forward only to the extent that there is a reasonable certainty thatsufficientfuturetaxableincomewillbeavailableagainstwhichsuchdeferredtaxassetscan be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.

k) Provisions And Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations, the

amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from the past

eventsbuttheirexistenceisconfirmedbytheoccurrenceornon-occurrenceofoneormoreuncertain future events not wholly within the control of the Company.

2) Due to Micro, Small and Medium Enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force

from2October2006,certaindisclosuresarerequiredtobemaderelatingtoMicro,Small&Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.



Previous YearRs.

Profit/(Loss)asperProfit&LossAccount 14,913 (5,136)Weightedaverageno.ofequitysharesoutstanding 203,120 203,120

EarningspershareBasic/Diluted(Rs.) 0.07 (0.03)


160

10) Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956BalanceSheetAbstractfortheYearended31stMarch,2008AndCompany’sGeneralBusinessProfile

1 Registration DetailsRegistration No. U51909MH1993PLC180464 State Code 11 BalanceSheetDate 31st March, 2008

2 Capital raised during the year (Amount in Rs. thousands)Public Issue Nil Rights Issue Nil BonusIssue Nil Private Placement - Capital Nil - Premium Nil

3 Position of mobilisation and deployment of funds (Amount in Rs. thousands)Total Liabilities 776,690 Total Assets 776,690 Sources of FundsPaid-up capital 2,031 Reserves & Surplus - Secured Loans - Unsecured Loans - Deferred Tax Liability - Application of FundsNet Fixed Assets - Investments - Net Current Assets 1,976 Misc. Expenditure 16 Accumulated Losses 40

4 Performance of Company (Amount in Rs. thousands)Turnover - Total Expenditure 151 Profit/(Loss)beforeTax (5)Profit/(Loss)afterTax 15 Earning per Share in Rs. 0.07 Dividend Rate % -

5 Generic Names of three principal products /services of Company N.A.



PreviousYear(Rs.)

Audit Fees 89,888 3,933Certification 393,260 NilTotal 483,148 3,9335) Segment Information As the company has only one business segment, disclosure under Accounting Standard 17


6) Related Party Disclosure Related party disclosures as required byAS-18, “Related Party Disclosures’, are given

below: 1. Relationships: Shareholders (the Godrej Group Shareholding) in the Company Godrej Properties

Limited (GPL) holds 100% in the Company. GPL is the Subsidiary of Godrej Industries Limited(GIL).GILisasubsidiaryofGodrej&BoyceManufacturingCompanyLimited(G&B),theultimateholdingCompany.


Sr. No Particulars GPLAmount

Rs. 1. Expenses Charged 82,085,060

NIL 2. Advances Received 689,950,000

NIL3. Outstanding payables 760,197,423

NIL Figures in italics are for previous year.7) Priorperiodfinancial statements havebeenauditedby afirmofCharteredAccountants

other than Kalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts,whichhavebeenre-grouped&re-classifiedwherevernecessarytoconformtocurrentyear’sclassification.

8) Previousyearfigureshavebeen rearranged/regroupedwherevernecessary toconfirmtocurrentyear’sclassification.

9) AdditionalInformationasrequiredunderPartIVofScheduleVIoftheCompaniesAct,1956to the extent not applicable has not been given.

SCHEDULES FORMING PART OF THE ACCOUNTSCurrent Year

Rupees Previous Year

RupeesCash Flow from Operating ActivitiesLoss for the year (4,926) (5,136)Adjustment for:Depreciation 3,200 - Interest Paid 58,798,749 - Preliminary Expenses 1,726 - Interest Income (146,443) - Operating Profit /(Loss) before working capital changes 58,652,306 (5,136)

Adjustment for:Change in Inventory (774,188,736) - Change in Loans & Advances 5,005,258 (167,128)Change in Current Liabilities / Provisions 763,065,098 7,907,791

52,533,926 7,735,527 Taxes Paid (Net) 46,422 - Net Cash Flow from Operating Activities 52,487,504 7,735,527

Cash Flow from Investing ActivitiesPurchase of Fixed Assets (3,200) - Interest Received 166,282 - Net Cash Flow from Investing Activities 163,082 - Cash Flow from Financing Activities Interest Paid (58,798,749) - Net Cash Flow from Financing Activities (58,798,749) -

Net Increase/ (Decrease) in Cash & Cash Equivalent (6,148,163) -

Cash & Cash Equivalent -Opening Balance 8,144,103 408,576 Cash & Cash Equivalent -Closing Balance 1,995,940 8,144,103

Notes:1.Thecashflowstatementhasbeenpreparedunderthe‘IndirectMethod’assetoutintheAccountingStandard(AS)3on‘CashFlowStatement’,andpresentscashflowsbyoperating,investingandfinancingactivities.2. Figures for the previous year have been regrouped/ restated wherever necessary to conform tothisyear’sclassification


ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner DIRECTORS Place:MumbaiDated:April30,2008


161

DIRECTORS’ REPORT FOR THE YEAR ENDED ON MARCH 31, 2008To The Shareholders,Your Directors submit their Report along with the audited Accounts for the year ended on March 31, 2008.Review of operationsYour Company’s performance during the year as compared with that of the previous year is summarised below: This Year Previous Year (Rs.’000) (Rs.’000)Gross Revenue earned 19737 8062Profit/(Loss) for the year 19426 7896Provision for Taxation 2205 438Adjustment in respect of prior years - -Loss brought forward (80250) (80521)Loss carried forward (79270) (80250)DividendThe Board of Directors have declared and paid interim dividend for year 2007-08 of Rs.2.50 per share. The same is recommended as the final dividend for the year. Compliance with guidelines issued by the Reserve Bank of IndiaYour Company has been granted a Certificate of Registration by Reserve Bank of India to carry on the business as Non-Banking Financial Institution.Your Company has not accepted any public deposits during the year under review, nor does it propose to accept the same. As such, pursuant to Non-Banking Financial Companies (Reserve Bank) Directions, 1998, issued by Reserve Bank of India vide notification No.DFC.114/DG (SPT) dated January 2, 1998, your Company is not required to obtain rating from a rating agency in this regard. Hence, rating for Fixed Deposit obtained from CRISIL in 1996-97 has not been renewed.In view of the above, there are no overdue or unclaimed deposits. DirectorsDuring the year under review, Mr. C. K. Vaidya resigned from the Board of the Company w.e.f. May 21, 2008 The Board wishes to place on record its appreciation for his contribution during his tenure with the Company. In accordance with Article 124 of the Articles of Association of your Company, Mr. M. Eipe retires by rotation and being eligible offers himself for re-appointment

AuditorsYou are requested to appoint Auditors for the current year and fix their remuneration. The retiring auditors, M/s. Kalyaniwalla Mistry & Associates, Chartered Accountants are eligible for re-appointment.Directors’ Responsibility StatementPursuant to the provisions contained in Section 217 (2AA) of the Companies Act, 1956, the Directors of your Company confirm :a) that in the preparation of the annual accounts, the applicable accounting standards have

been followed and no material departures have been made from the same;b) that they have selected such accounting policies and applied them consistently and made

judgements 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 loss of the Company for that period;

c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguard of the assets of the Company and for preventing and detecting fraud and other irregularities;

d) that they have prepared the annual accounts on a going concern basis.Additional InformationThe additional information required to be given under the Companies Act, 1956, has been laid out in the Accounts to the extent applicable. The notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.The information in respect of Conservation of energy, Technology Absorption and Foreign Exchange earnings and outgo, required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 has not been given, since such requirement is not applicable to the Company.The particulars, required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, have not been given, since the Company did not employ any person during the year under review.


M. EIPE H. K. PRESS Director DirectorMumbai, May 28, 2008

REPORT OF THE AUDITORSTo The Members of ENSEMBLE HOLDINGS & FINANCE LIMITED1. We have audited the attached Balance Sheet of Ensemble Holdings and Finance Limited as at March

31, 2008 and also the Profit and Loss Account and Cash Flow statement 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.


3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditors' Report) (Amendment) Order 2004, issued by the Central Government in terms of section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to 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 such books; c. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with

the books of account;

d. In our opinion, the Profit and Loss Account and Balance Sheet dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with the 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 ac-counting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008,

(ii) in the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date

(iii) in the case of Cash Flow Statement, of the cash flow for the year ended on that date.5. On the basis of the written representations received from the Directors as on March 31, 2008, and

taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2008, from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For and on behalf ofKALYANIWALLA MISTRY AND ASSOCIATESCharteredAccountants

V. M. PADWALPartnerMembership No.: 49639


ANNExURE TO THE AUDITORS’ REPORTReferred to in Paragraph 3 of our report of even date on the accounts of Ensemble Holdings & Finance Limited for the year ended March 31, 2008:1. a) The Company, during the current year, has not granted any loans, secured or unsecured, to any

companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and the outstanding from one company covered in the register maintained under section 301 of the Companies Act, 1956 is Rs. 23,110,000/-

b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions of unsecured loans given by the Company, are prima facie not prejudicial to the interest of the Company except for unsecured loan given to Godrej Hicare Limited which has been adequately provided for.

c) All parties except for Godrej Hicare Limited have repaid the principal amounts as stipulated and have been regular in the payment of interest.

d) In our opinion, the Company has taken reasonable steps for the recovery of principal and interest in respect of overdue balance of Rs.23,110,000/- due from Godrej Hicare Limited.

e) The Company had taken unsecured loans from a company covered in the register maintained under section 301 of the Companies Act, 1956. The amount involved during the year was Rs. 12,00,000/- and the same was repaid during the year.

f) According to information and explanations given to us, we are of the opinion that the rate of interest and other terms and conditions on which loans have been taken from the company covered in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

g) The company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest.

2. 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 all transactions that need to be entered into the register in pursuance of section 301 of the Companies Act, 1956, have been so entered.

b) These transactions have been made at reasonable prices having regard to the prevailing market prices at the relevant time.

3. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed thereunder.

4. The Company has an internal audit system, which in our opinion, is commensurate with the size and nature of its business.

5. a) According to the records examined by us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Income Tax and other statutory dues as applicable to it. According to the information and explanation given to us, no undisputed amounts payable in respect of statutory dues were outstanding, at the year end for a period of more than six months from the date they became payable.

b) According to the information and explanation given to us there are no dues of sales tax, income tax, wealth tax, service tax, excise duty or cess, which have not been deposited on account of any dispute.

6. The accumulated losses of the Company as at end of the financial year are more than fifty percent of its net worth. The company has not incurred cash losses during the current financial year and in the immediate preceding financial year.

7. According to the information and explanations given to us and the records examined by us, we observed that the company has not borrowed any money from financial institutions or banks or debenture holders.

8. According to the information and explanations given to us the Company has not granted loans and advances on the basis of security by way of pledge of shares and other securities.

9. In our opinion and according to the information and explanation given to us, the nature of the activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies.

10. In our opinion, the Company has maintained proper records of the transactions and contracts of the investments dealt in by the Company and timely entries have been made therein. The investments made by the Company are held in its own name.

11. According to the information and explanations given to us and the records examined by us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

12. According to the information and explanations given to us and the records examined by us we observed that the Company has not taken any term loan.

13. On the basis of an overall examination of the balance sheet and cash flows of the Company and the information and explanation given to us, we report that the company has not utilised any funds raised on short-term basis for long-term investments.

14. The Company has not made any preferential allotment of shares to parties or companies covered under section 301 of the Companies Act, 1956.

15. The Company did not issue any debentures during the financial year.16. The Company has not raised any money through a public issue during the year.17. Based upon the audit procedures performed and the information and explanation given by the management,

we report that no fraud on or by the Company has been noticed or reported during the year.18. In our opinion, clauses (i), (ii), (iv) and (viii) of paragraph 4 of the Companies (Auditor’s Report) Order,

2003 are not applicable.


KALYANIWALLA MISTRY AND ASSOCIATESCharteredAccountants

V.M. PADWALPartnerMembership No.: 49639

Mumbai, May 28,2008

162

BALANCE SHEET AS AT MARCH 31, 2008 This Year Previous Year Schedule Rupees Rupees

SOURCE OF FUNDS

1. SHAREHOLDERS' FUNDS

(a) Share Capital 1 37741600 37741600

(b) Reserves & Surplus 2 109745512 104594668

147487112 142336268


1. Investments 3 25925566 31202440

2. Current Assets, Loans and Advances

(a) Cash and Bank Balances 4 20079916 1461530

(b) Other Current Assets 5 1930989 440110

(c) Loans and Advances 6 20441208 29114660

42452113 31016300

LESS: Current Liabilities and Provisions 7

Current Liabilities 160622 132215

Provisions – –

160622 132215

NET CURRENT ASSETS 42291491 30884085

3. ProfitandLossAccount 79270055 80249743

Total 147487112 142336268


The Schedules referred to above form an integral part of the Balance Sheet

As per our Report of even date attached. Signatures to Balance Sheet and Schedules 1 to 7 and 11For and on behalf ofKALYANIWALLA MISTRY AND ASSOCIATESCharteredAccountants M. EIPE Director H.K. PRESS DirectorV. M. PADWAL S. SRINIVASAN CompanySecretaryPartner


SCHEDULES ANNExED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008

This Year Previous Year Rupees RupeesSCHEDULE 2 : RESERVES & SURPLUS

SHARE PREMIUM

As per last Balance Sheet 84945040 84945040

Special Reserves u/s 45IC of RBI Act, 1934Opening Balance 13236752 –Add Transferred from Profit and Loss Account 3433896 16670648 13236752General ReserveOpening Balance 6412876Add: Transferred from Profit and Loss Account 1716948 8129824 6412876

109745512 104594668

This Year Previous Year Rupees RupeesSCHEDULE 1 : SHARE CAPITAL

AUTHORISED

5000000 Equity Shares of Rs. 10/- each 50000000 50000000

ISSUED, SUBSCRIBED AND PAID UP

3774160 Equity Shares of Rs. 10/- each fully paid up 37741600 37741600

37741600 37741600

(100% Shares are held by Godrej Industries Ltd., the Holding Company)

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008 This Year Previous Year Schedule Rupees Rupees

INCOMEInterest Income 8 3363815 2114248Dividend 6828 3992965Profit on sale of investments (Net) 16240125 1809937Profit on sale of Mutual Funds 125964 135160Miscellaneous Income - 9558

19736732 8061868ExPENDITUREExpenses 9 142215 150302Interest 10 888 15904Provision for dimunition on investments 167293 -

310396 166206

PROFIT/(LOSS) BEFORE TAx 19426336 7895662Provision for Taxation 2205000 438000

PROFIT/(LOSS) AFTER TAx 17221336 7457662Adjustments for Income tax of prior years (51854) -

PROFIT AVAILABLE FOR APPROPRIATION 17169482 7457662APPROPRIATIONDividend 1st Interim 9435400 Final - 9435400 4340284Dividend Distribution Tax 1603550 608730Transfer to Special Reserve Fund u/s 45IC of RBI Act, 1934 3433896 1491532Transfer to General Reserves 1716948 745766

16189794 7186312Balance available for set off against b/f deficit in P & L A/c 979688 271350Loss brought forward (80249743) (80521093)

Loss Carried Forward (79270055) (80249743)

Earnings Per Share 11 (6) 4.55 1.98



As per our Report of even date attached. Signatures to Profit & Loss Account and Schedules 8 to 11For and on behalf ofKALYANIWALLA MISTRY AND ASSOCIATESCharteredAccountants M. EIPE Director H. K. PRESS DirectorV. M. PADWAL S. SRINIVASAN CompanySecretaryPartner


163

SCHEDULES ANNExED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008

This Year Previous Year Rupees RupeesSCHEDULE 4 : CASH AND BANK BALANCESCash on hand 1131 2852 Balances with Scheduled Banks in Current Accounts 78785 1458678 in FD with Banks 20000000 -

20079916 1461530

SCHEDULE 5 : OTHER CURRENT ASSETSAccrued Interest 1930989 440110

1930989 440110 SCHEDULE 6 : LOANS AND ADVANCES(Unsecured, considered good, unless stated otherwise)ESOP Loans 20266637 18800000 Share Application Money (considered doubtful) 300000 300000 Intercorporate Deposits (considered good) - 10000000 Intercorporate Deposits (considered doubtful) 23110000 23110000 23410000 33410000 Less : Provision for Doubtful Loans and Advances (23410000) (23410000) - 10000000 Advance Payment of Taxes 174571 314660 (Net of provision for tax Rs.3163000/- previous year Rs.958000) 20441208 29114660 SCHEDULE 7: CURRENT LIABILITIES & PROVISIONSCurrent LiabilitiesSundry Creditors 160622 132215

SCHEDULE 8 : INTEREST INCOME (Gross)On Loans (TDS Rs.448106/- previous year Rs.344292/-) 1977521 1547125 On Intercorporate Deposits (TDS Rs.184990/-, previous year Rs.127013/-) 816370 567123 On Fixed Deposits with Bank (TDS Rs.125009/- previous year Rs.Nil-) 551853 - On Refund recd from Income-tax 18071 - TOTAL 3363815 2114248

SCHEDULE 9 : ExPENSESSalary 60000 60000 Profession Tax 2500 2500 Directors’ sitting fees 500 1500 Auditors’ Remuneration 44944 44944 Professional Charges 30000 30000 Miscellaneous Expenses 4271 11358 TOTAL 142215 150302

SCHEDULE 10 : INTEREST On Inter Corporate Borrowings 888 15904 TOTAL 888 15904

SCHEDULE 3 : INVESTMENTS

Quantity AmountInvestee Company/Institution Face Quantity as on Acquired Sold Quantity as on As on As on

Value 01.04.07 during during 31.03.08 31.03.08 31.03.07 the year the year Rupees Rupees

Long Term Investments (At Cost)Equity shares - QuotedOther CompaniesAgro Tech Foods Ltd. 10 1 - - 1 53 53 Colgate Palmolive India Ltd. 10 1 - - 1 151 151 Dabur India Ltd. 1 3 - - 3 59 59 Henkel India Ltd. 10 1 - - 1 31 31 Hindustan Unilever Ltd. 1 751 - - 751 90589 90589 Gillette India Ltd. 10 1 - - 1 400 400 Marico Industries Ltd. 1 40 - - 40 271 271 Nirma Ltd. 5 2 - - 2 255 255 Procter & Gamble Hygiene & Health Care Ltd. 10 1 - - 1 490 490 Venkys India Ltd. 10 1 - - 1 37 37 UnquotedCompanies under the Same Management:Godrej Properties Ltd.(bonus acquired during the year) 10 76795 614360 - 691155 5488688 5488688 Godrej Agrovet Ltd. 10 6500 800 - 7300 1407697 1011402 Godrej Hicare Ltd. 10 4800 - - 4800 48000 48000 Godrej Global Solutions Ltd. 10 8340 - - 8340 302290 302290 Godrej Gokarna Oil Palm Limited 10 - 2 - 2 3240 - (Formerly Godrej Oil Palm Ltd)Other Companies:karROX Technologies Ltd. 10 250000 - - 250000 10050000 10050000 Personalitree Academy Ltd. 10 389269 - - 389269 11027991 11027991 Avesthagen Limited (Formerly Avestha Gengraine 10 31000 - 31000 - - 13984875 Technologies Pvt. Ltd.)Unquoted : Non-Convertible DebenturesCompanies under the Same Management :Godrej Oil Plantations Limited 10 - 160 - 160 1,600 - (Formerly Godrej Aquafeed Ltd.)Current InvestmentsMutual Funds - UnquotedLIC Mutual Fund - Growth Plan 8747196 273037 37169038 42278619 Less : Provision for diminution in value of Investments 11243472 11076179

25925566 31202440 Aggregate Book Value of Investments : Quoted Investments 92336 92336 Unquoted Investments 25833230 31110104 25925566 31202440 Market Value of quoted investments 177314 159342

SCHEDULE 11: NOTES TO ACCOUNTS1. SignificantAccountingPolicies a) Accounting Convention : The financial statements are prepared under the historical cost convention, on accrual

basis in accordance with the generally accepted accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act,1956.

b) Income recognition : (i) Dividend income is recognised when the right to receive the same is established. (ii) Interest income is recognised on time proportion basis. (iii) Profit/loss on sale of investments is accounted on the trade dates. c) Investments : Long-term investments are carried at cost. Provision for diminution, if any, in the

value of each long-term investment is made to recognise decline, other than that of a temporary nature. The fair value of a long-term investment is ascertained with reference to its market value, the investee’s assets and results and the expected cash flows from the investments.

d) Taxes on Income Current Tax is the amount of tax payable on the taxable income for the year determined

in accordance with the provisions of the Income Tax Act, 1961 Deferred tax is recognised on timing differences, being the differences between the

taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets subject to the consideration of prudence are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year end based on the tax rate and laws enacted or substantially enacted on the Balance Sheet date.

2. Investments : i) The Company has acquired and sold the following investments during the year:

This Year Previous Year No.of units/ Purchase No.of units/ Purchase shares Cost (Rs.) shares Cost (Rs.) LIC Mutual Fund 1826882 25552804 1169380 15426963

ii) Godrej Agrovet Limited (GAVL), a Company under same management, as per the scheme of arrangement under Section 391 to 394 of Companies Act, 1956, has demerged/transferred its Oil Palm business and Jatropha plantation carried on in the states of Andhra Pradesh, Orissa, Mizoram, and Gujarat to Godrej Oil Plantations Limited (Formerly known as Godrej Aquafeed Limited) with effect from April 1, 2007 as per the order of High Court, Mumbai dated January 11, 2008. As per the terms of the aforesaid scheme, the Company has been allotted 160 debentures.

164

SCHEDULES ANNExED TO AND FORMING PART OF ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008 iii) GAVL has, under the aforesaid scheme, also demerged/transferred its Oil Palm business

carried on in the states of Goa and Karnataka to Godrej Gokarna Oil Palm Limited (Formerly known as Godrej Oil Palm Limited) with effect from April 1, 2007 as per the order of High Court, Mumbai dated September 28, 2007. As per the terms of the aforesaid scheme, the Company has been allotted 2 equity shares.

iv) Events occurring after the balance sheet date In May 2008, the Company has, subject to the approval of the shareholders, agreed to sell its entire holding in Godrej Global Solutions Limited for a consideration of Rs. 1.34 lac. The anticipated loss on the transaction has been provided for, during the year.

3. Amount due from a Company under the same management This Year Previous Year Rupees Rupees Godrej Hicare Ltd 23110000 23110000

23110000 23110000 4. Auditors’ Remuneration: (includes service tax wherever applicable) This Year Previous Year

Rupees Rupees Audit Fees 28090 28090 Tax Audit Fees 16854 16854

44944 44944

5. Earnings per share

a) Net Profit/(Loss) after Tax available for shareholders 17169482 7457662

b) Weighted Average Number of Equity Shares 3774160 3774160

c) Basic and Diluted Earnings per Share of Rs.10 each 4.55 1.98

6. Related Party Disclosures a) Related Parties with whom transactions have taken place during the quarter, with the

name and description of relationship. Parties where control exists. Godrej Industries Limited, the holding company Godrej & Boyce Mfg. Co. Ltd., the ultimate holding company Related Parties with whom transactions have taken place during the year Holding Company Fellow Subsidiaries Godrej Industries Limited Godrej Properties Limited Godrej Agrovet Limited Individualexercisingsignificantinfluenceovertheenterprise Ms. T. A. Dubash Mr. C. K. Vaidya Mr. M. Eipe Mr. H. K. Press b) Transactions with Related Parties

(Rs. in Lac)

Sr.No.

Nature of Transaction Holding Company

Subsidiary Company

Fellow Subsidiary

Associate/Joint

Venture

Key Mang Personnel

Relatives of Key

Mangement Personnel

Total

i) Acceptance of ICB 12.00 - - - - - 12.00 Previous Year 5.00 - - - - - 5.00

ii) Refund of ICB 12.00 - - - - - 12.00 Previous Year 5.00 - - - - - 5.00

iii) Interest paid on ICB 0.01 - - - - - 0.01 Previous Year 0.16 - - - - - 0.16

iv) Dividend Received - - - - - - - Previous Year - - 39.91 - - - 39.91

v) Refund of VRS Loan - - - - - - - Previous Year 0.81 - - - - - 0.81

vi) Interest Received on VRS Loan

- - - - - - -

Previous Year 0.14 - - - - - 0.14 vii) Sale of Investments 302.25 - - - - - 302.25

Previous Year 128.63 - - - - - 128.63 viii) Dividend Paid 94.35 - - - - - 94.35

Previous Year 80.14 - 0.09 - - - 80.23 ix) Remuneration - - - - 0.60 - 0.60

Previous Year - - - - 0.60 - 0.60

c) The significant Related Party Transactions are as under(Rs. in Lac)

Nature of Transaction AmountAcceptance of ICBGodrej Industries Limited 12.00 Refund of ICBGodrej Industries Limited 12.00 Interest paid on ICBGodrej Industries Limited 0.01 Sale of InvestmentsGodrej Industries Limited 302.25Dividend PaidGodrej Industries Limited 94.35Godrej Agrovet Limited –RemunertionMr. H. K. Press 0.60

7. Additional information required under Schedule VI, Part II of the Companies Act, 1956 to the extent not applicable has not been given.

8. Previous year’s figures have been regrouped/reclassified whereever necessary.

9. ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE1. Registration details Registration No. : 11-65457 State Code : 11 Balance Sheet Date : 31.03.2008 2. Capital raised during the year (Amount in Rs. Thousands) Public Issue : - Rights Issue : - Bonus Issue : - Private Placement : - 3. Position of mobilisation and deployment of funds (Amount in Rs. Thousands) Total Liabilities : 147487 Total Assets : 147487 Sources of funds : Paid-up Capital : 37742 Reserves & Surplus : 109746 Secured Loans : - Unsecured Loans : - Application of funds : Net Fixed Assets : - Investments : 25926 Net Current Assets : 42291 Miscellaneous Expenditure : - Accumulated Losses : 79270 4. Performance of Company (Amount in Rs. Thousands) Turnover (Total Income) : 19737 Total Expenditure : 310 Profit before tax : 19426 Profit after tax : 17221 Earnings per share in Rs. : Rs.4.55 Dividend rate (%) : 25%5. Generic names of three principal : The Company is a Loan products/services of the Company and Investment Company

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008 This Year Previous Rupees RupeesCashflowfromOperatingActivitiesProfit before tax 19,426,336 7,894,162 Adjustments for :Profit on sale of long-term investments (16,240,125) (1,809,937)Profit on sale of Mutual Fund (125,964) (135,160)Provision for Dimunition in value of long-term Investments 167,293 - Interest Expense - GIL 888 15,904 Operating Profit before working capital changes 3,228,428 5,964,969

Adjustments for :Accrued Interest (1,490,879) (439,306)Sundry Debtors - 453,350 Trade Payables 28,407 (4,170,068)

Cash generated from operations 1,765,956 1,808,945 Direct Taxes paid (2,233,354) (480,305)Direct Taxes refund recd 116,589 - Net Cash from operating activities (350,809) 1,328,640

CashflowfromInvestingActivitiesProceeds from sale of investments 56,176,805 30,921,733 New investments made (34,701,135) (16,150,000)Loans 8,533,363 (10,178,883)Net cash generated/(used) from investing activities 30,009,033 4,592,850

CashflowfromFinancingActivitiesIntercorporate Borrowings (Net)Interest Paid on Borrowings (888) (15,904)Dividend Paid (9,435,400) (4,340,284)Tax on Distributed Profits (1,603,550) (608,730)

Net cash generated/(used) from financing activities (11,039,838) (4,964,918)Net increase/(decrease) in cash and cash equivalents 18,618,386 956,572 Cash in and cash equivalents (opening balance) 1,461,530 504,958 Cash in and cash equivalents (closing balance) 20,079,916 1,461,530

As per our Report attached Signatures to Cash Flow StatementFor and on behalf ofKALYANIWALLA MISTRY AND ASSOCIATESCharteredAccountants M. EIPE Director H.K. PRESS DirectorV.M. PADWAL S. SRINIVASAN CompanySecretaryPartner Mumbai, May 28, 2008

165

SCHEDULE TO BALANCE SHEET OF A NON-BANKING FINANCIAL COMPANY(asrequiredintermsofParagraph9BBof

Non-BankingFinancialCompaniesPrudentialNorms(ReserveBank)Directions,1998)

(Rs. in lacs) Particulars LIABILITIES SIDE :1. Loans and advances availed by the NBFCs inclusive of Amount Amount interest accrued thereon but not paid: Outstanding overdue (a) Debentures : Secured Nil Nil : Unsecured Nil Nil (other than falling within the meaning of public deposits*) Nil Nil (b) Deferred Credits Nil Nil (c) Term Loans Nil Nil (d) Inter-corporate loans and borrowing Nil Nil (e) Commercial Paper Nil Nil (f) Public Deposits* Nil Nil (g) Other Loans (specify nature) Nil Nil * Please see Note 1 below2. Break-up of (1)(f) above (Outstanding public deposits inclusive of interest accrued thereon but not paid): (a) In the form of Unsecured debentures Nil Nil (b) In the form of partly secured debentures Nil Nil i.e. debentures where there is a shortfall in the value of security (c) Other public deposits Nil Nil * Please see Note 1 below ASSETS SIDE :3. Break-up of Loans and Advances including bills receivables Amount outstanding [other than those included in (4) below] : (a) Secured Nil (b) Unsecured i) Loans/Advances 202.67 ii) Inter Corporate Deposits 231.10 iii) Advance Payment of Taxes 1.744. Break up of Leased Assets and stock on hire and hypothecation loans counting towards EL/HP activities (i) Lease assets including lease rentals under sundry debtors : (a) Financial lease Nil (b) Operating lease Nil (ii) Stock on hire including hire charges under sundry debtors : (a) Assets on hire Nil (b) Repossessed Assets Nil (iii) Hypothecation loans counting towards EL/HP activities (a) Loans where assets have been repossessed Nil (b) Loans other than (a) above Nil5. Break-up of Investments : Current Investments : 1. Quoted : (i) Shares : (a) Equity Nil (b) Preference Nil (ii) Debentures and Bonds Nil (iii) Units of mutual funds Nil (iv) Government Securities Nil (v) Others (please specify) Nil 2. Unquoted : (i) Shares : (a) Equity Nil (b) Preference Nil (ii) Debentures and Bonds Nil (iii) Units of mutual funds 87.47 (iv) Government Securities Nil (v) Others (Please specify) Nil

Long Term investments : 1. Quoted : (i) Share : (a) Equity 0.92 (b) Preference - (ii) Debentures and Bonds Nil (iii) Units of mutual funds Nil (iv) Government Securities Nil (v) Others (Please specify) Nil 2. Unquoted : (i) Shares : (a) Equity 283.30 (b) Preference - (ii) Debentures and Bonds Nil (iii) Units of mutual funds Nil (iv) Government Securities Nil (v) Others (Please specify) Nil6. Borrower group-wise classification of all leased assets, stock-on-hire and loans and advances : Please see Note 2 below Category Amount net of provisions Secured Unsecured Total 1. Related Parties ** (a) Subsidiaries Nil Nil Nil (b) Companies in the same group : Loans Godrej Industries Ltd. Nil Nil Nil (c) Other related parties Inter Corporate Deposits - Godrej Photo-Me Ltd. Nil Nil Nil 2. Other than related parties a) Advance Tax Payment Nil 1.74 1.74 Total Nil 1.74 1.747. Investorgroup-wiseclassificationofallinvestments (current and long term) in shares and securities (both quoted and unquoted): Please see note 3 below Category Market Value/Break up or fair Book Value (Net value or NAV of Provisions) 1. Related Parties ** (a) Subsidiaries Nil Nil (b) Companies in the same group : Quoted Nil Nil Unquoted 4323.01 72.52 (c) Other related parties Nil Nil 2. Other than related parties Quoted : 1.77 0.92 Unquoted : 187.43 185.82 Total 4510.44 259.26 ** As per Accounting Standard of ICAI (Please see Note 3) # Start up Company hence fair value considered at face value.8. Other information Particulars Amount (i) Gross Non-Performing Assets (a) Related parties Nil (b) Other than related parties Nil (ii) Net Non-Performing Assets (a) Related parties Nil (b) Other than related parties Nil (iii) Assets acquired in satisfaction of debt Nil

Notes : 1. As defined in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of

Public Deposits (Reserve Bank) Directions, 1998. 2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial

Companies Prudential Norms (Reserve Bank) Directions, 1998. 3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for

valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long-term or current in column (5) above.

166

Godrej International LimitedDirectors’ reportThe directors present their report and accounts for the year ended 31 March 2008.principal activities and review of the businessThe company trades worldwide in vegetable oils. The commodity boom has continued and the company has been able to benefit from these conditions. The company’s assessment of market behaviour proved to be quite accurate and this resulted in record turnover and profits. Turnover for the year increased 63% at $100,139,390 while profits increased 124% to $ 1,360,464results and dividendsThe Company does not propsoe to distribute a dividend this year. During the year, the company undertook a Buy back of 250,000 ordinary shares of £1 at a price of US$ 10 per share. The shares bought back were cancelled. The outlook for the year 2008 continues to be favourableFuture developmentsThe directors aim to maintain the management policies which have resulted in the company’s substantial growth in recent years. They consider that the next year will show a further significant growth in sales.DirectorsThe directors who served during the year and their intersts in the share capital of the company were as follows : £1 Ordinary shares 2008 2007Adi B Godrej (Indian) 1 1 Nadir B Godrej (Indian) - - Aspi K Bardy (Indian) - -Dorab E Mistry (British) - -Andrew B Byers (British) (Appointed 28 February 2007) - -Lynsey Elliott (British) (Appointed 28 February 2007) - -

political and charitable donationsThe company made no political or chartiable contributions during the year.Directors’ responsibilitiesCompany law requires the directors to prepare accounts for each financial year which give a true and fair view of the state of affairs of the company and of the profit or loss for that period. In preparing those accounts, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; and - prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will continue in business.The directors are responsible for maintaining proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the accounts comply with the Companies Acts 1931 to 2004. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.AuditorsA resolution to reappoint Keith W Woods & Co LLC as auditors will be put to the members at the Annual General Meeting. This report was approved by the board on 16 May 2008.

L elliott AccASecretary

Date : May 16, 2008

We have audited the accounts of Godrej International Limited for the year ended 31 March 2008 which comprise pages 5 to 15. These accounts have been prepared under the historical cost convention and the accounting policies set out therein.respective responsibilities of directors and auditorsAs described in the Statement of Directors’ Responsibilities the company’s directors are responsible for the preparation of the accounts in accordance with applicable law. In the absence of comparable accounting standards in the Isle of Man, the Directors have chosen to apply United Kingdom Accounting Standards where they do not conflict with Isle of Man Statute.Our responsibility is to audit the accounts in accordance with relevant legal and regulatory requirements together with our own professional ethical guidance.We report to you our opinion as to whether the accounts give a true and fair view and are properly prepared in accordance with the Companies Acts 1931 to 2004. We also report to you if, in our opinion, the Directors’ Report is not consistent with the accounts, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and transactions with the company is not disclosed.We read the Directors’ Report and consider the implications for our report if we become aware of any apparent misstatements within it.Basis of audit opinionWe conducted our audit in accordance with United Kingdom Auditing Standards issued by the

Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the accounts, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed.We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the accounts are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the accounts.opinionIn our opinion the accounts give a true and fair view of the state of the company’s affairs as at 31 March 2008 and of its profit for the year then ended and have been properly prepared in accordance with the Companies Acts 1931 to 2004.Keith W Woods & Co LLCChartered Certified Accountants

14 Douglas StreetPeelIsle of Man

16 May 2008

inDepenDent AuDitors’ report to the shArehoLDers oF GoDrej internAtionAL LimiteD

notes 2,008 2,007 $ rs. Lac $ rs. Lac

Fixed assetsInvestments 6 3,055,000 1,226 4,312,060 1,875 Current assetsDebtors 7 2,207,993 886 3,218,170 1,421 Cash at bank and in hand 2,263,178 908 1,179,505 513

4,471,171 1,794 4,397,675 1,934 Creditors: amounts falling due within one year

8 (1,459,697) (586) (1,554,592) (676)

Net current assets 3,011,474 1,208 2,843,083 1,258 Total assets less current liabilities 6,066,474 2,434 7,155,143 3,133

Creditors: amounts falling due after more than one year

9 - - 13 -

6,066,474 2,434 7,155,156 3,133 Capital and reservesCalled up share capital 10 3,805,361 1,527 4,209,327 1,830 Capital redemption reserve 11 - - - - Profit and loss account 12 2,261,113 907 2,945,829 1,303

13 6,066,474 2,434 7,155,156 3,133

BALAnce sheet As At 31 mArch, 2008

A B Byers ACADirector D E MistryApproved by the board on 16 May 2008 Director

Notes 2008 2007$ Rs. Lac $ Rs. Lac

Turnover 2 100,139,390 40,176 61,573,658 26,772 Cost of sales (98,632,450) (39,571) (60,726,793) (26,410)Gross profit 1,506,940 605 846,865 362 Distribution costs - - - - Administrative expenses (407,656) (164) (165,480) (50)Other operating income - - (14,745) - Operating profit 3 1,099,284 441 666,640 312 Exceptional items:Profit on the disposal of investments 3 182,240 73 - -

182,240 73 - - 1,281,524 514 666,640 312

Interest receivable 129,404 52 15,807 7 Interest payable 4 (50,464) (20) (75,167) (33)Profit on ordinary activities before taxation

1,380,464 546 607,280 286

Tax on profit on ordinary activities 5 - - - - Profit for the financial year 1,360,464 546 607,280 286 Dividends:ordinary dividend on equity shares

10 - - - -

Retained profit for the financial year

12 1,360,464 546 607,280 286

Continuing operationsNone of the company's activities were acquired or discontinued during the above two financial years

proFit AnD Loss Account For the YeAr enDeD 31 mArch, 2008

167

stAtement oF totAL recoGniseD GAins AnD Losses For the YeAr enDeD 31 mArch 2008

notes 2,008 2,007 $ rs. Lac $ rs. Lac

Profit for the financial year 1,360,464 546 607,280 286 Unrealised surplus on revaluation of properties

12 - - - -

Total recognised gains and losses related to the year

1,360,464 546 607,280 286

Total recognised gains and losses since last accounts

1,360,464 546

notes 2,008 2,007

$ rs. Lac $ rs. Lac

Reconciliation of operating profit to net cash

inflow from operating activities

Operating profit 1,099,284 441 66,640 312

(Decrease)/Increase in debtors 1,010,177 405 (828,826) (382)

(Decrease)/Increase in creditors (330,827) (133) 309,256 134

Net cash outflow from operating activities 1,778,834 713 147,070 64

cAsh FLoW stAtement

Net cash outflow from operating activities 1,778,834 714 147,070 64

Returns on investments and servicing of finance

14 78,940 32 (59,360) (26)

Taxation - - - -

Capital expenditure 14 1,439,300 577 - -

3,297,074 1,323 87,710 38

Equity dividends paid - - (156,300) (68)

3,297,074 1,323 (68,580) (30)

Management of liquid resources 14 - - - -

Financing 14 (2,254,256) (908) 54,744 24

Increase/(decrease) in cash 1,032,818 415 (13,846) (6)

Reconciliation of net cash flow to movement in net debt

Increase/(decrease) in cash in the period 1,083,672 435 (13,845) (6)

Increase in debt and lease financing (235,743) (95) (54,744) (24)

Change in net debt 15 847,929 340 (68,588) (30)

(Net debt ) / Net funds at 1 April (44,239) (18) 24,349 11

Net funds/(net debt) at 31 March 803,690 322 (44,239) (19)

cAsh FLoW stAtement For the YeAr enDeD 31 mArch 2008

notes to the Accounts For the YeAr enDeD 31 mArch 2008

1 Accounting policiesAccounting Convention -The accounts have been prepared under the historical cost convention and in accordance with applicable accounting standards.Foreign currencies -Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. All differences are taken to the profit and loss account.

2 turnoverTurnover represents the invoiced value of goods supplied by the company, net of value added tax and trade discounts.

Turnover is attributable to one continuing activity, the trading of vegetable oils.3 exceptional items 2008 2007

$ rs. Lac $ Rs. LacProfit on disposal of investments 182,240 73 - -

182,240 73 - - 4 interest payable 2008 2007

$ rs. Lac $ Rs. Lac

Bank loans and overdrafts 50464 20 75,167 33 Other loans - - - -

50464 20 75167 335 Taxation

The company qualifies as a Non Resident Company incorporated in the Isle of Man. Non Resident Companies do not suffer taxation in the Isle of Man.

7 Debtors 2008 2007$ rs. Lac $ Rs. Lac

Trade debtors 3,137,151 1,259 416,927 181 Amount owed by group undertakings and undertakings in which the company has a participating in which

108,964 44 100,014 43

Other debtors (1,043,534) (419) 2,688,816 1,191 Prepayments and accrued income 5,412 2 12,412 5 Amounts recoverable on long term contracts - - - -

2,207,993 886 3,218,170 1,420

8 creditors: amounts falling due within one year

2008 2007

$ rs. Lac $ Rs. Lac

Bank loans and overdrafts 1,459,488 586 1,223,757 532 Trade Creditors - - 1,825 1 Amount owed by group undertakings and undertakings in which the company has a participating in which

(28) - 300,000 130

Other creditors 235 - 235 - Accruals and deferred income 2 - 28,775 13

1,459,697 586 1,554,592 676

9 creditors: amounts falling due after one year

2008 2007

$ rs. Lac $ Rs. LacBank loans - - (13) -

- - (13) -


6 investmentsInvestment in Other Total

Subsidiary Undertaking Investments$ Rs. Lac $ Rs. Lac $ Rs. Lac

costAt 1 April 2007 1,257,060 504.33 3,055,000 1225.67 4,312,060 1728Additions - - - - - -Disposals (1,257,060) 504.33 - - (1,257,060) 504.33

At 31 March 2008 - - 3,055,000 1225.67 3,055,000 1225.67

On 11 December 1997 the company acquired the entire issued share capital (UD$507,060) of Godrej Global ME, a company incorporated in the United Arab Emirates on 1 November 1997. On 10 March 2003 the company invested a further sum of US$750,000 in the equity share capital of GGME. On 3rd October 2007, the company dispossed off its investment in Godrej Global ME for $ 1,439,300.Other investments 2008 2007

$ rs. Lac $ Rs. LacUnlisted investments 3,055,000 1,328 3,055,000 1,328

3,055,000 1,328 3,055,000 1,328

On 4 April 2001, the company invested US$1 million in 496,000 C Bay Systems Ltd (C Bay) 8% Series E Cumulative Convertible Redeemable Preferred Stock of US$ 0.1 per share at a price of US$ 0.2 per share. This representes approximately 6% of the issued share capital of C Bay. C Bay is incorporated in Delaware, U.S.A.

On 8 March 2004, the company Invested US$ 2,055,000 in equity shares of New Market Limited, a company incorporated in the isle of Man. This represente approximately 18% of the issued share capital of Newmarket Limited.

10 share capital 2008 2007$ rs. Lac $ Rs. Lac

Authorised:Ordinary shares of £1 each 4,000,000 1,605 4,000,000 1,739

4,000,000 1,605 4,000,000 1,739 2008 2007

2008 2007 $ rs. Lac $ Rs. LacAllotted, called up and fully paid:Ordinary shares of £1 each

2,355,000 2,605,000 3,805,361 1,527 4,209,327 1,830

3,805,361 1,527 4,209,327 1,830 Movement in share capital 2008 2007

$ rs. Lac $ Rs. LacAt 1 April 4,209,327 1,689 4,209,327 1,830 Shares redeemed (403,966) (162) - - At 31 March 3,805,361 1,527 4,209,327 1,830

168


11 capital redemption reserve 2008 2007$ rs. Lac $ Rs. Lac

At 1 April - - - - Shares Redeemed 2,096,034 841 - - Transfer from the profit and loss account (2,096,034) (841) - - At 31 March - - - -

12 Profit and loss account 2008 2007$ rs. Lac $ Rs. Lac

At 1 April 2,996,683 1,202 2,338,549 1,017 Retained Profit 1,360,464 546 607,280 286 Transfer to capital redemption reserve (2,096,034) (841) - -At 31 March 2,261,113 907 2,945,829 1,303

13 reconciliation of movement in shareholders’ funds 2008 2007

$ rs. Lac $ Rs. LacAt 1 April 7,206,010 2,891 6,547,876 2,847 Profit for the financial yer 1,360,464 546 607,280 286 Shares redeemed (403,966) (162) - - Net capital redemption reserve transfer (should be nil) (4,192,068) (1,682) - - At 31 March 3,970,440 1,593 7,155,156 3,133

14 Gross cash flows 2008 2007$ rs. Lac $ Rs. Lac

Returns on investments and servicing of finance

Interest received 129,404 52 15,807 7

Interest paid (50,464) (20) (75,167) (33)

78,940 32 (59,360) (26)

Capital Expenditure

Receipts from sale of investments 1,439,300 577 - -

1,439,300 577 - -

Financing

Redemption of share capital (2,500,000) (1,003) - -

Loan advance 235,744 95 54,744 24

(2,264,256) (908) 54,744 24

15 Analysis of changes in net debtAt 31 march 2007 cash Flows non-cash changes At 31 march 2008

$ rs. Lac $ rs. Lac $ rs. Lac $ rs. Lac

Cash at bank and in hand

1,179,505 473.21 1,083,673 434.77 - - 2,263,178 907.99

Debt due within 1 year

(1,223,757) 490.97 (235,731) 94.58 - - (1,459,488) 585.55

Debt due within 1 year

13 - (13) - - - - -

total (44,239) 17.75 847,929 340.19 - - 803,690 322.45

16 ultimate parent company

In April 2001 Godrej Soaps Limited, the owner of all the company’s share capital, was demerged into two separate entities: Godrej Consumer Products Limited and Godrej Industries Limited. The assets and liabilities of Godrej Soaps Limited were divided between the two new companies. The entire share capital of Godrej International Limited is now held by Godrej Industries Limited.

Godrej Industries Limited is currently listed on the Bombay Stock Exchange and the National Stock Exchange.

The financial statements of Godrej Industries Limited are available from : The Secretary, Godrej Industries Limited, Eastern Express Highway, Vikhroli, Mumbai 400079, India.

169

DIRECTORS’ REPORT FOR THE YEAR ENDED ON MARCH 31, 2008To the Members,Your Directors submit their Report along with the Audited Accounts of your Company for the year ended March 31, 2008.Operating ResultsYour Company’s performance during the year as compared with the previous year is summarized below: March 31, 2008 March 31, 2007 (Rs. Lacs) (Rs. Lacs)Total Income 3007.60 2995.53Profit/(Loss) for the year 200.40 182.35before extraordinary items (After tax)Profit/(Loss) After Extraordinary Items 265.41 182.35Add: Balance brought Forward (1158.26) (1340.60)Deficit Carried Forward (892.85) (1158.26) Operations Review :Total income of your Company has gone up from Rs. 2996 lacs in the previous year to Rs. 3008 lacs in the current year. During the year the Company has closed its bulk chemical business to concentrate on its service business. During the year your Company migrated and started company managed service centers to enhance the quality of services to its customers. This transition had temporary set back on company’s top line however would have phenomenal long-term advantage to the Company. Company is looking at handling about 50% of its business through its own service center in 2009.During the year revenue from services has gone up from Rs. 2377 lacs in previous year to Rs. 2792 lacs in current year which is a growth of 17%. The Company’s profit after tax of Rs. 265 lacs for the year as compared to Rs. 182 lacs in the previous year shows an impressive growth of 46%.The Company has invested substantially in manpower resources which is critical for the success for service industry. The Company expects good revenue in the coming year from new customer acquisition and deepening relation with current ones. Dividend :In view of the accumulated losses, your Directors do not recommend any dividend for the year.Directors :There are no changes in the Directorship in the Company. In accordance with Article 150 of the Articles of Association of your Company, one of the Directors of the Company, Mr. A.B. Godrej retires by rotation in the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.Auditors :You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors, M/s Kalyaniwalla & Mistry (KMA) & Chartered Accountants, are eligible for re-appointment.Audit Committee :The Audit Committee which was appointed pursuant to the provision of Sec 292A of the Companies Act, 1956 has reviewed the accounts for the year ended Mar 31st 2008.Note on Auditors Report :Erosion of Net worth (Note 4(i) of Auditors report and (note 10 of Annexure to Auditors report)Though the accumulated losses of the Company exceed its paid up capital, the shareholders are very supportive of the Pest management business and are committed to infuse funds as and when required to for working capital and other requirements.Fixed Assets Register (Note 1 (b) of Annexure to Auditors report)Your Company is in process of conducting physical verifications of fixed assets.Repayment of Loans from Group Companies (Note 3(e) of Annexure to Auditors report)Due to the accumulated losses, the repayment of the loans of the group companies is not being made. Your Company is regular in repayment of loans taken from other Corporate in the form of Inter Corporate Deposits.

Directors Responsibility Statement :Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm:a) that in the preparation of the annual accounts, the applicable accounting standards have

been followed and no material departures have been made from the same;b) that they have selected such accounting policies and applied them consistently and made

judgements 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 or loss of the Company for that period;


d) that they have prepared the annual accounts on a going concern basis.Conservation of Energy, Technology Absorption:The information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo, required under Section 217(1)(e) of the Companies Act,1956, read with the Company’s (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 has not been given, since such requirement is not applicable to the Company.Particulars of Employees:Statement under Section 217(2A) of the Companies Act, 1956 read with the Company’s (Particulars of Employees) Rules, 1975.A) Persons employed for a part of the financial year under review and each of whom was

in receipt of remuneration for that part which, in the aggregate, was not less than Rs. 2,00,000/- per month.

Sr.No.

Name Designation GrossRemun- eration (Rs. ‘000)

Qualifi-cation

Years of Experi-ence inGHCL

Date of Commen-cementof employ-ment

Age(Years)

Partic-ulars of previous Emplo-yment

Previous Experience (Years)

1 Vikas Hajela

Chief Operating Officer

3,122 PGDMM 2 18.01.05 54 GSLL 31

2 S. Anand

Exe. Vice President

4,458 CA, ICWAI

4 21.01.04 42 GSLL 18

Note: The Gross remuneration include the Gratuity and Leave encashment for the current year on accrual basis.Foreign Exchange earnings and Outgo:Expenditure in Foreign Currency Current Year PreviousYear March 2008 March 2007 (Rs. Lacs) (Rs. Lacs)License Fees Nil NilTraining Expenses Nil NilTravelling Expenses Nil Nil Consultancy Charges Nil 16.35Additional InformationThe additional information as required to be given under the Companies Act, 1956 has been laid out in the schedules attached to and forming part of the Balance Sheet and Profit and Loss Account, including the Notes to Accounts which are self explanatoryAcknowledgementYour Board wishes to thank all its members, Bankers, Franchisees, Employees, Suppliers and customers for their continued support and help for the growth of the Company.

For and on behalf of the Board of Directors A.B. Godrej

ChairmanMumbai : April 9, 2008

1. We have audited the attached Balance Sheet of GODREJ HICARE LIMITED, as at March 31, 2008 and also the Profit and Loss Account and 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 from material misstatement. 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.


4. Further to our comments in the Annexure referred to in para (3) above, we report that: i) The accumulated losses of the Company as at March 31, 2008 exceed its paid up capital

resulting in the erosion of its net worth. The accounts for the year have been prepared on the ‘Going Concern’ basis on the understanding that finance will continue to be available to the Company for working capital requirements from the promoters.

ii) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.

iii) 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 these books.

iv) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with, by this report are in agreement with the books of account.

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ HICARE LIMITED v) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow

Statement dealt with by this report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956.

vi) In our opinion and to the best of our information and according to the explanations given to us, subject to paragraph (i) above, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:


ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date;


5. On the basis of the written representations received from the Directors as on March 31, 2008, and taken on record by the Board of Directors, we report that, none of the Directors are disqualified as on March 31, 2008 from being appointed as a Director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For and on behalf ofKALYANIWALLA & MISTRY Chartered AccountantsERMIN K. IRANIPartnerMembership No. 35646Place: MumbaiDated: April 9, 2008

170

Annexure to the Auditors’ ReportReferred to in paragraph (3) of our report of even date.1. (a) As per the information and explanations given to us, the Company is in the process

of updating its records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has not conducted a physical verification of fixed assets during the year, in view of which we are unable to comment on discrepancies, if any.

(c) The disposal of fixed assets during the year does not affect the going concern assumption.2. (a) The management has conducted physical verification of inventory at reasonable intervals. (b) In our opinion, the 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.


3. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

(b) Consequently, the question of commenting on the rate of interest and the other terms and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and interest and reasonable steps taken for recovery of principal and interest due does not arise

(c) The Company has taken unsecured loans of Rs. 97,810,000/- from five companies listed in the register maintained under Section 301 of the Companies Act, 1956.

(d) In case of these loans, interest has been waived by the respective companies. In our opinion, the other terms and conditions of these loans are not prima facie prejudicial to the interests of the Company.

(e) The payment of principal for above amounts has not been regular. 4. In our opinion and according to the information and explanations given to us, there are

adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls.

5. (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 and 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) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from public and the provisions of Section 58A, 58AA or any other provision of the Companies Act, 1956, read with the rules framed there under are not applicable.


8. The maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, in respect of the Company’s products.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally

regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Service Tax, Cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues payable in respect of the above as at March 31, 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Income Tax, Customs Duty, Service tax, Wealth Tax, Excise Duty or cess on account of any dispute, other than the following:

Name of the Statute Nature Amount Period to Forum where of Dues (Rs.) which the the dispute is amount relates pending Bombay Sales Tax Act, 1959 Sales Tax 700,000 2000-2001 Maharashtra Sales Tax Tribunal Central Sales Tax Act, 1956 Central Sales Tax 5,000,000 2000-2001 Maharashtra Sales Tax Tribunal

10. The Company’s accumulated losses at the end of the financial year are in excess of fifty percent of its net worth. There are no cash losses in the current and the immediately preceding financial year.

11. According to the information and explanations given to us and based on the documents and records produced before us, there are no dues to banks, financial institutions or debenture holders.


13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.

14. The Company does not deal in shares, securities, debentures and other investments.15. According to the information and explanations given to us, the Company has not given any

guarantee for loans taken by others from banks and financial institutions.16. The Company did not have any term loans during the year.17. According to the information and explanations given to us and on an overall examination

of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investment.

18. The Company has not made a preferential allotment of shares during the year to parties covered in the register maintained under Section 301 of the Companies Act, 1956.

19. The Company did not issue any debentures during the year.20. The Company has not raised any money through a public issue during the year.21. Based on the audit procedures performed and information and explanations given by the

management, we report that no fraud on or by the Company has been noticed or reported during the year.

For and on behalf ofKALYANIWALLA & MISTRY Chartered AccountantsERMIN K. IRANIPartnerMembership No. 35646Place: MumbaiDated: April 9, 2008


The Schedules referred to above form an Signatures to Balance Sheet and integral part of the Balance Sheet Schedules 1 to 11 and 17

As per our Report of even date.For and on behalf of

KALYANIWALLA & MISTRY A.B.GODREJ A MAHENDRAN Chartered Accountants Chairman Managing Director

ERMIN K. IRANI RAMESH IYER Partner Company Secretary

Mumbai : April 9, 2008

Schedule Current Year Previous Year Rs. Rs. SOURCES OF FUNDS : 1. SHAREHOLDERS FUNDS Share Capital 1 56,200,000 56,200,000 2. LOAN FUNDS Secured Loans 2 29,759,249 19,114,088 Unsecured Loans 3 143,410,000 134,310,000 229,369,249 209,624,088 APPLICATION OF FUNDS : 1. FIXED ASSETS 4 Gross Block 32,908,388 20,453,140 Less : Depreciation 11,223,829 8,230,125 Net Block 21,684,559 12,223,015 2. INVESTMENTS 5 68,905 68,905 3. DEFERRED TAX ASSET 3,530,000 1,535,000 4. CURRENT ASSETS, LOANS AND ADVANCES Inventory 6 30,780,742 26,864,719 Sundry Debtors 7 87,290,735 77,064,818 Cash and Bank Balances 8 16,361,057 11,654,782 Loans and Advances 9 98,631,633 81,565,959 233,064,166 197,150,278 LESS : CURRENT LIABILITIES AND PROVISIONS Current liabilities 10 115,286,190 115,403,281 Provisions 11 2,977,270 1,775,725 118,263,460 117,179,006 NET CURRENT ASSETS 114,800,706 79,971,272 5. PROFIT and LOSS ACCOUNT 89,285,079 115,825,895 229,369,249 209,624,088 NOTES TO ACCOUNTS 17

Schedule Current Year Previous Year Rs. Rs. INCOME :Gross Sales 13,656,651 50,485,610 Less : Excise Duty - 1,908,583 Net Sales 13,656,651 48,577,027 Service Income 279,150,481 237,733,236 (Tax Deducted at Source Rs. 1,147,264/-, Previous year - Rs. 632,558)Other Income 12 7,953,129 13,242,305 300,760,261 299,552,568 EXPENDITURE :Raw Materials Consumed 13 41,927,361 61,163,839 Purchase of Traded Goods 10,746,793 9,862,569 Inventory Change 14 (4,054,977) (954,916)Expenses 15 228,421,287 205,971,039 Interest and Finance Expense 16 1,219,044 2,257,479 Depreciation 3,316,818 2,219,041 281,576,326 280,519,050 Profit for the Year before Extra Ordinary Item 19,183,935 19,033,518 Remission of Deposits 6,500,000 - Profit for the Year after Extra Ordinary Item 25,683,935 19,033,518 Less : Current Tax - MAT 3,225,000 2,060,000 Fringe Benefit Tax 1,138,119 675,000 MAT Credit Entitlement (3,225,000) - Deferred Tax (1,995,000) (1,936,000)Profit for the Year after Tax 26,540,816 18,234,518 Deficit Brought Forward (115,825,895) (134,060,413)Deficit carried to Balance Sheet (89,285,079) (115,825,895)Basic/Diluted Earnings per Share before Extraordinary Items (Refer Note 15) 3.57 3.24 Basic/Diluted Earnings per Share after Extraordinary Items (Refer Note 15) 4.72 3.24 NOTES TO ACCOUNTS 17


The Schedules referred to above form an Signatures to Profit & Loss Account integral part of the Profit and Loss Account Schedules 12 to 17

As per our Report of even dateFor and on behalf of

KALYANIWALLA & MISTRY A.B.GODREJ A MAHENDRAN Chartered Accountants Chairman Managing Director

ERMIN K. IRANI RAMESH IYER Partner Company Secretary

Mumbai : April 9, 2008

171

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2008 Current Year Previous Year Rupees RupeesSCHEDULE 1 : SHARE CAPITALAuthorised:8000000 Equity Shares of Rs.10/- each 80000000 80000000Issued and Subscribed7900000 Equity Shares of Rs. 10/- each 79000000 79000000Paid-up4100000 Equity Shares of Rs. 10/- each fully paid 41000000 410000003800000 Equity Shares of Rs. 10/- each, Rs. 4/- paid. 15200000 15200000 56200000 56200000Of the above:6647100 shares are held by Godrej Industries Ltd., the Holding Company

SCHEDULE 4 : FIXED ASSETS (Amount in Rs.)

Current Year Previous Year Rupees RupeesSCHEDULE 2 : SECURED LOANSCash Credit 29759249 19114088(Secured against hypothecation of stock & book debts) 29759249 19114088

SCHEDULE 3 : UNSECURED LOANSIntercorporate deposits (due within a year, or at call) 143410000 134310000

143410000 134310000

ASSETS GROSS BLOCK DEPRECIATION NET BLOCKAs at

April 1, 2007Additions Deductions As at

March 31, 2008Upto

April 1, 2007For the Year Deductions Upto

March 31, 2008As at

March 31, 2008As at

Marcb 31, 2007

Tangibles

Improvements to Lease Hold Premises - 2186693 - 2186693 - 182224 - 182224 2004469 -

Factory Building 82400 97800 - 180200 22364 6912 - 29276 150924 60036

Plant and Machinery 5956306 2649002 826570 7778738 3868779 587714 180697 4275796 3502942 2087527

Office Equipment 226868 3106798 108027 3225639 51289 289643 28190 312742 2912897 175578

Furniture and Fixture 610253 3687807 152271 4145789 91121 416015 43625 463511 3682278 519132

Spray and Service Kit 59000 - - 59000 59000 - - 59000 - -

Computer Hardware 1961559 186128 261307 1886380 710471 477974 70602 1117843 768537 1251089

Vehicles 495694 1799195 - 2294889 40426 111323 - 151749 2143140 455268

Intangibles

Trade Marks 9000000 - - 9000000 2870137 900000 - 3770137 5229863 6129863

Computer Software 2061060 90000 - 2151060 516538 345013 - 861551 1289509 1544522

TOTAL 20453140 13803423 1348175 32908388 8230125 3316818 323114 11223829 21684559 12223015

Previous Year Total 17353167 3099973 - 20453140 6011084 2219041 - 8230125 12223015 11342083

Current Year Rupees

Previous Year Rupees

SCHEDULE 5 : INVESTMENTS LONG TERMIn Mutual Funds, Unquoted43.19 units of Templeton India Treasury Management Account Regular Plan - Growth 68905 68905

68905 68905Net Asset Value 86705 80438

SCHEDULE 6: INVENTORYRaw material 1765802 385444Packing Material 586977 284863Finished Goods 9773825 5718849Service Stock 18247108 20068533Photographic equipment 814057 814057Less : Provision for Stock obsolesence 407028 407028

407029 407029 30780742 26864719

SCHEDULE 7: SUNDRY DEBTORS(Unsecured and considered good unless otherwise stated)Due for more than six months

Considered good 45497236 31400811Considered doubtful 5495884 2718884

50993120 34119695Other debts

Considered good 41793499 4566400792786619 79783702

Less : Provision for doubtful debts 5495884 271888487290735 77064818

SCHEDULE 8: CASH AND BANK BALANCESCash on hand 09331 01610Balances with scheduled banks

In Current Accounts 7800142 6148343In Fixed Deposit Account 4644420 4263620In Margin Deposit Account 3907164 1241209

16361057 11654782

SCHEDULE 9 : LOANS AND ADVANCES(Unsecured and considered good unless otherwise stated)Advances recoverable in cash or in kind or for value to be received 77946881 71711757

Advance to Suppliers 9416884 3480385Deposits 7328667 4610669Advance Tax and Tax Deducted at Source (Net of Provision for Taxation Rs. 7903119 and MAT Credit Receivable

3939201 1763148

Rs. 3225000/-, Previous Year Rs. 3540000/-) 98631633 81565959

Current Year Previous Year Rupees RupeesSCHEDULE 10 : CURRENT LIABILITIESCurrent Liabilities:Sundry Creditors (Refer Note 4) 11741984 26965355Investor Education and Protection Fund - -Security Deposits 12149661 13474661Advance from Customers 56859341 40630979Other Liabilities 34241034 34029889Interest accrued but not due 294170 302397

115286190 115403281

SCHEDULE 11 : PROVISIONSLeave Encashment 2977270 1775725 2977270 1775725

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008SCHEDULE 12 : OTHER INCOMEPublicity and Information Support 4719998 10988057Sundry Credit balance written back - 554063Technical Know - How Fees 3000000 -Miscellaneous Income 233131 1700185 7953129 13242305

SCHEDULE 13 : MATERIALSa) Raw Material and Packing Material Consumed Opening stock 670308 4853009 Add : Purchases during the year 6155644 17605232

6825952 22458241 Less : Closing stocks 2352780 670308

4473172 21787933b) Service Stock Consumed 37454189 39375906

41927361 61163839

SCHEDULE 14 : INVENTORY CHANGEOpening stock Photographic equipments 407029 814057 Finished goods 5718849 4356905

6125878 5170962Less : Closing Stock Photographic equipments 407029 407029 Finished goods 9773826 5718849

10180855 6125878

(4054977) (954916)

172

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008 Current Year Previous Year Rupees RupeesSCHEDULE 15 : EXPENSESSalaries, Bonus and Allowances 60833525 37198224Contribution to Provident Fund and Other Funds 4547265 2178292Staff Welfare Expenses 1012129 477423Processing Charges 791596 2318094Electricity Expenses 762849 481151Rent, Rates and Taxes 9180409 4445016Repairs and MaintenanceMachinery and Equipment 19345 46596Others 338223 170671 357568 217267Insurance 637752 601890Freight and Transportation Expenses 3499185 4226884Service Center Expenses 69365112 68244802Advertising, Publicity and Sales Promotion Expenses 43276854 58264824Discount 16990 4427575Travelling and Conveyance 9178727 6384052Legal and Professional Charges 5514019 6453210Provision for Doubtful debts 2777000 2339283Customer Settlememts - 1210153Postage, Telephone and Stationary 6201688 3341253Fixed Asset written off due to fire (Net off Insurance claim received Rs. 330710/-) 379187 -IT Expenses 3365765 1752748General Expenses 6723667 1307898 228421287 205870039

SCHEDULE 16 : INTEREST AND FINANCE EXPENSESInterest Paid - Bank 598120 4200 - Inter Corporate deposits 6052999 1878888 - Others 1305237 1190067 7956356 3073155Other Financial Charges 1432284 1334072 9388640 4407227Less : Interest Received - Bank Deposits 536233 207387 - Others 7633363 1942361(Tax deducted at source Rs.536,658/-, 8169596 2149748Previous year Rs. 449,499/-) 1219044 2257479

SCHEDULE 17 : NOTES TO ACCOUNTS1. Significant Accounting Policies a) Accounting Conventions The accounts have been prepared on historical cost convention. The Company follows

mercantile system of accounting and recognises income and expenditure on accrual basis. b) Fixed Assets Fixed assets have been stated at cost and include incidental and/or installation/

development expenses incurred in putting the asset to use and interest on borrowing incurred during the construction period. Pre-operative expenses for major projects are also capitalised, where appropriate.

c) Depreciation/Amortization 1) Spray and Service Kits and Vehicles : On Straight Line Method basis at the rates

prescribed by Schedule XIV to the Companies Act, 1956. 2) Computers and Other Assets: On Written down Value basis at the rates prescribed

by Schedule XIV to the Companies Act, 1956. 3) Improvements to lease hold premises are amortized over a period of 5 years. 4) Following tangible assets are amortized as follows: Asset Type Period (a) Trademarks 10 years (b) Computer Software 6 years d) Impairment Carrying amount of cash generating units/assets are reviewed at balance sheet date

to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized wherever carrying amount exceeds the recoverable amount.

e) Inventories Raw materials and Service Stock are valued at weighted average cost. Finished goods are valued at lower of cost and net realisable value.These costs include

cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

Stores and spares are valued at weighted average cost. f) Employee Benefits Short-term Employee Benefits All employees benefits payable wholly within twelve months of rendering the service

are classified as short-term employee benefits. Benefits such as salaries and wages, bonus etc. are recognised at actual amounts due in the period in which the employee renders the related sevice. Performance incentives are recognised only when its declared and is due to employee.

Post employment Benefits Defined Contribution Plan Payments made to defined contribution plans such as Providend Fund are charged to

profit and loss account as they fall due.

Defined Benefit Plans The Cost of providing benefits i.e. gratuity is determened using the projected Unit

Credit Method, with actuarial valuations carried out as at the balance sheet date. Acturial gains and losses are recognised immidiately in the Profit & Loss Account

The Fair Value of the plan assets is reduced from the gross obligation under the defined benefit plan, to recognise the obligation on net basis.

Past service cost is recognised as expense on straight line basis over the average period until the benefits becomes vested.

Other long-term employee benefits Other long-term employee benefits viz. leave encashment is recognised as an expense

in the profit and loss account as, and when they accrue. The Company determines the liability using the Projected Unit Credit Method, with acturial valuations carried out as at the balance sheet date. Actuarial Gain and losses in respect such benefis are charged to the profit and loss account.

g) Research and Development Revenue expenditure on Research and Development is charged to Profit and Loss

Account of the year in which it is incurred. Capital expenditure incurred during the year on Research and Development is shown as addition to Fixed Assets.

h) Revenue Recognition Revenue from Pest Management services is recognized as and when the services are

rendered. Sales are net of returns, rebates, sales tax, etc. i) Foreign Exchange Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the

date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains/losses are recognised in the Profit and Loss Account.

j) Earnings Per Share The basic earning per share is computed using the weighted average number of

common shares outstanding during the period. Diluted earning per share is computed using the weighted average number of the common and dilutive common equivalent shares outstanding during the period except where the results would be anti dilutive.

2. CONTINGENT LIABILITIES a) Claims against company not acknowledged as debts Current Year Previous Year i) Sales Tax demand for Financial Year 2000-01 700,000 - for which the Company is in appeal ii) Central Sales Tax demand for Financial Year 5,000,000 - 2000-01 for which the Company is in appeal i) Customer Claims 17,625,000 18,318,000 b) Bank Guarantee given by the Company amounting to Rs. 3907164 (Previous year

Rs. 1241209)3. Capital Commitments The estimated value of contracts remaining to be executed on capital account to the extent

not provided for is Rs. 897983 (Previous Year Rs. 3208634) 4. Micro, Small and Medium Enterprise The Company is in the process of compiling relevant information from its supplier about

their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. As the Company has not received any intimation from its suppliers as on date regarding their status under the above said Act, no disclosure has been made.

5. The Company has not provided for interest for the year on certain Inter Corporate Deposits received, as the same has been waived by the concerned companies in view of the financial position of the Company.

6. Expenditure in Foreign Currency Current Year Previous Year Consultancy Charges Nil 16355567. Accounting for Leases The lease rentals in respect of office and factory space charged during the period and

maximum obligations on non-cancellable operating leases payable as per the rentals stated in the lease agreement are given in accordance with the Accounting Standard (AS-19) on “Leases” issued by the Institute of Chartered Accountants of India.

(Amounts in Rupees)

Current Year Previous Year

a) Lease Rentals paid during the year 6056715 1777514

b) Future Lease Obligations− Due within one year of the Balance Sheet date− Due between one year and five years− Due after five years

6,672,2634,737,899

-

20519843704898

-

173

Significant Related Party Transactions

a) Sales and Other Income Godrej Agrovet Ltd. 325,053 (457,173) Godrej Sara Lee Ltd. 3,378,300 (487,347) Godrej Properties Ltd. 183,266 (1,455,822) Godrej Consumer Products Ltd 101,900 (NIL) Godrej Hersheys Foods & 649,556 Beverages Ltd. (NIL)

b) Purchases (Net of Returns) Godrej Sara Lee Ltd. 117,133 (NIL)

c) Expenses charged by other Companies Godrej Agrovet Ltd. 49,569 (NIL) Godrej Hersheys Food & Beverages Ltd. 678,786 (1,227,467) Godrej Sara Lee Ltd. 1,207,514 (56,867)

d) Expenses charged to Godrej Agrovet Ltd. 2,054 other Companies (NIL) Godrej Hersheys Food & 72,063 Beverages Ltd. (8,686) Godrej Sara Lee Ltd. NIL (40,800)

e) Outstanding Receivables Godrej Agrovet Ltd. 72,957 (Net of Payables) (NIL)

Godrej Sara Lee Ltd. 4,133,677 (723,827)

Godrej Properties Ltd. 4,020,222 (1,441,559)

Godrej Hersheys Food & 463,321 Beverages Ltd. (NIL) Godrej Consumer 141,308 Products Ltd. (NIL)

Item Units Current Year Previous Year

Quantity Value (Rs.) Quantity Value

(Rs.) 8. Inventories of Finished goods

Traded goodsPrint Leader Nos. 3 176,143 3 176,143 Imager Nos. 5 230,886 5 230,886

407,029 407,029 Insecticides Ltrs. 313 173,078 367 216,038

Nos. 100 32,011 100 32,012 Kgs. 16 17,243 - -

Fly Catcher Nos. 4,429 8,420,138 814 3,872,400 9,049,500 4,527,479

Manufactured goodsInsecticides Ltrs. 2,521 1,078,534 2,759 1,185,064

Kgs. 11,064 52,820 24,142 413,335 1,131,354 1,598,399

Total 10,180,854 6,125,878

9. Sales (Net of Excise duty)Item Units Quantity Value (Rs.) Quantity Value (Rs.)

Traded goodsFly Catcher Nos. 1,975 8,114,239 316 2,258,240 Insecticides Kgs. 400 519,232 1,774 527,028

Ltrs. 674 237,597 13,058 5,852,907 Manufactured goodsInsecticides Ltrs. 16,018 4,457,783 83,086 38,581,541

Kgs. 46,172 327,800 130,400 1,357,310 Total 13,656,651 48,577,027

10. Purchases for ResaleItem Units Quantity Value (Rs.) Quantity Value (Rs.)

Insecticides Ltrs 620 130,194 12,058 4,366,993 Kgs. 435 357,062 1,524 109,696

Fly Catcher Nos. 5,590 10,259,537 1,130 5,385,880 Total 10,746,793 9,862,569

11. Raw Material Consumed Item Units Quantity Value (Rs.) Quantity Value (Rs.)

Basic Chemicals Kgs. 41,734 4,160,069 140,167 20,276,018 Service Stock Kgs. 37,454,189 39,375,906 Others Nos. 313,103 1,511,916

Total 41,927,361 61,163,839

12. Value of consumption of Raw Materials, Spares and ConsumablesItem % Value (Rs.) % Value (Rs.) Raw MaterialsIndiginious 91 38,260,390 73 44,682,320 Imported (including custom duty) 9 3,666,971 27 16,481,519

41,927,361 61,163,839 13. Installed Capacity and actual production

Item Units Installed Capacity Production Current

Year Previous

Year Current

Year Previous

Year Insecticides Ltrs. 240,000 240,000 4,755 43,950 Insectisides (Processed Outside)

Kgs. 33,094 -

Ltrs. - 11,025 32,535 Total 240,000 240,000 48,874 43,950

14. CIF Value of ImportsItem Units Quantity Value (Rs.) Quantity Value (Rs.)

Insecticide Kgs 30,760 4,053,547 57,300 15,375,964 Fly Catcher Nos. 5,100 10,322,281 1,130 5,385,880 Total 14,375,828 20,761,844

15. Earning Per Share

Particulars Current Year Previous Year Profit after tax as per profit and loss account before Extraordinary Income. Rs. 20,040,816 18,234,518 Profit after tax as per Profit and Loss account after Extraordinary Income Rs. 26,540,816 18,234,518 Weighted average number of equity shares of Rs. 10 each 5,620,000 5,620,000 Basic/Diluted Earnings Per Share before Extraordinary Income Rs. 3.57 3.24 Basic/Diluted Earnings Per Share after Extraordinary Income Rs. 4.72 3.24

16. Related Party disclosure as required by AS - 18 “Related Party Disclosures” are given below: Relationships (i) Shareholders (the Godrej Group shareholding) in the Company - Godrej Industries Limited (GIL) - 84.1% - GIL is a subsidiary of Godrej & Boyce (Mfg.) Co. Limited, the ultimate holding co. (ii) Other related parties in the Godrej Group where common control exist. Godrej Agrovet Ltd. Godrej Sara Lee Ltd. Godrej Properties Ltd. Godrej Hershey Food & Beverages Ltd. Godrej Consumer Products Ltd. (iii) Key Management Personnel Mr. A. Mahendran (Managing Director) The following transactions were carried out with the related parties in the ordinary

course of business:Details relating to parties referred to in items (i) and (ii) above:

Sr. Particulars Godrej Group Other Related No. Shareholders parties Ultimate Holding in the Holding Co. Co. Godrej Group

(i) (i) (ii)

1 Purchase of Fixed Assets 2,023,965 NIL NIL (403,600) (NIL) (NIL)

2 Sales and Other Income 1,021,595 202,857 4,638,075 (266,568) (774,438) (2,400,342)

3 Purchases (net of returns) 11,442 23,995 117,133 (NIL) (NIL) (NIL)

4 Expenses charged by other Companies 94,002 4,288,886 1,935,869 (228) (1,699574) (1,284,333)

5 Expenses charged to other Companies 114,639 NIL 74,117 (NIL) (NIL) (49,486)

6 Sundry Deposit with other Companies NIL NIL NIL (1,450) (355,500) (6,000)

7 Outstanding Receivables, (net of Payables) 1,968,609 (189,600) 8,831,485 (183,020) (423,926) (2,314,375)

Note : Figures in Italics represents previous year figures.

174

17. Deferred Tax The Tax effects of significant temporary differences that resulted in deferred tax assets and

liabilities are:- Current Year Previous Year Provision for Stock - 137,000 Provision for Doubtful debts 1,868,051 787,000 Others 1,662,382 611,000 Deferred Tax Asset/(Liability) 3,530,433 1,535,00018. Auditors Remuneration Current Year Previous Year Statutory Audit 134,832 134,688 Audit under other Statutes 33,708 33,672 Total 168,540 168,36019. The amount of exchange difference included in the Profit and Loss Account, under the

related heads of expenses/(income), is Rs. (232,778/-) (Previous year expense Rs. 57,419).20. The Company is engaged in the business of rendering pest management services and sale of

related insecticides which is its only primary business segment. The Company operates in economic environments which are subject to same risks and returns and hence no disclosure is required under AS 17 - Accounting Standard on Segment Reporting.

21. Disclosure under AS –15 (Revised 2005) Employee Benefits : Defined Contribution plans : Contributions to Defined Contribution Plan, recognized as expense for the year are as under : Employer’s Contribution to Provident Fund Rs.1,621,659/- Defined Benefit Plan: Gratuity Change in present value of obligation Liability at the beginning of the period 2,543,360 Interest cost 203,469 Current Service Cost 440,765 Benefit Paid (1,771,644) Actuarial (gain)/loss on obligation 1,710,527 Liability at the end of the year 3,126,477 Change in Plan Asset Fair value of Plan Assets as the beginning of the period 2,507,907 Expected Return on Plan Asset 200,633 Contributions 476,686 Benefit Paid (1,771,644) Actuarial gain/(loss) on obligation 8,678 Fair Value of Plan Assets at the end of the Period 1,422,260 Total Actuarial Gain/(Loss) to be recognized (1,701 848) Actual Return on Plan Assets Expected Return on Plan Assets 200,633 Actuarial gain/(loss) on Plan Assets 8,678 Actual Return on Plan Assets 209,311 Amount recognised in the Balance sheet Liability at the end of the period 3,126,477 Fair value of Plan Assets at the end of the Period 1,422,260 Difference 1,704,217 Amount Recognized in the Balance Sheet 1,704,217 Expenses Recognized in the Income Statement Current Service cost 440,765 Interest Cost 203,469 Expected Return on Plan Assets (200,633) Net Actuarial (gain)/ loss to be recognized 1,701,848 Expense recognized in P&L 2,145,450 Balance Sheet Reconciliation Opening net Liability 35,453 Expense as above 2,145,450 Employers Contribution paid (476,686) Closing net Liability 1,704,217 Assumption used in accounting for the gratuity plan Discount Rate 8.00 % Salary escalation rate 5.00 % Expected Rate of Return on Plan Assets 8.00 % General Descriptions of significant defined plans Gratuity Plan Gratuity is payable to all eligible employees on retirement, death or on separation/

termination in terms of the Payment of Gratuity Act or as per the Company’s policy which ever is beneficial to the employees.

22. Prior period financial statements have been audited by a firm of Chartered Accountants other than Kalyaniwalla & Mistry. The opening balances are being taken as per the previous year’s accounts, which have been regrouped and reclassified wherever necessary to conform to the current year’s presentation.

23. Information required under Schedule VI to the Companies Act 1956, have been given to the extent applicable.

Current Year Rs.

Previous Year Rs.

A. Cash Flow from Operating Activities :Profit for the Year before Extra Ordinary Item 19,183,935 19,033,518 Adjustments for :Depreciation 3,316,818 2,219,041 Interest expense 9,388,640 4,407,227 Interest Income - (2,149,748)Fixed Asset written off due to fire 379,187 - Operating Profit/(Loss) before working capital changes 32,268,580 23,510,037 Adjustments for :(Increase)/Decrease Inventories (3,916,024) (4,587,767)(Increase)/Decrease Trade and Other receivables (25,115,538) (78,120,422)Increase/(Decerase) Trade and Other payables 1,092,684 47,485,979

4,329,702 (11,712,173)Direct and Fringe Benefit Taxes paid (3,314,172) (3,609,154)Net Cash Flow from Operating activities 1,015,530 (15,321,327)

B. Cash Flow from Investing Activities :Purchase of Assets (13,803,423) (3,099,973)Insurance Claim Received for Asset Lost due to fire 645,874 - Interest Income - 2,149,748 Net Cash used in investing activities (13,157,549) (950,225)

C. Cash Flow from Financing Activities :Increase/(Decrease) in Cash CreditsTerm Loans 10,645,161 19,114,088 Increase/(Decrease) in Inter Corporate Deposits 15,600,000 (5,000,000)Interest paid (9,396,867) (4,104,830)Net Cash from financing activities 16,848,294 10,009,258 Net Increase in Cash and Cash Equivalents 4,706,274 (6,262,294)Add : Cash and Cash equivalents (Opening Balance) 11,654,782 17,917,076 Cash and Cash equivalents (Closing Balance) 16,361,057 11,654,782


Notes 1. Cash flow statement has been prepared under the Indirect method as set out in the acounting

standsrds AS-3 on Cash Flow Statement as present cash flows by operating, investing and financing activities.

2. Previous year figures are regrouped/restated whereever necessary to confirm to this year’s classification.

KALYANIWALLA & MISTRY A. B. GODREJ A. MAHENDRAN Chartered Accountants Chairman Managing Director ERMIN K. IRANI RAMESH IYER Partner Company Secretary

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE1. Registration details Registration No. : U29294MH1993PTC072222 State Code : 11 Balance Sheet Date : March 31,2008

2. Capital raised during the year Public Issue : - Rights Issue : - Bonus Issue : - Private Placement : -

3. Position of mobilisation and deployment of funds Total Liabilities : 347,632,709 Total Assets : 347,632,709 Sources of funds Paid up Capital : 56,200,000 Reserves & Surplus : - Secured Loans : 29,759,249 Unsecured Loans : 143,410,000 Deferred Tax Liability : - Application of funds Net Fixed Assets : 21,684,559 Investments : 68,905 Deferred Tax Asset : 3,530,000 Net Current Assets : 114,800,706 Miscellaneous Expenditure : - Accumulated Losses : 89,285,079

4. Performance of Company Turnover (Total Income) : 300,760,261 Total Expenditure : 281,576,326 Profit/(Loss) before tax : 25,683,935 Profit/(Loss) after tax : 26,540,816 Earnings per share in Rs. : 4.72 Dividend rate (%) : -

5. Generic names of three principal products/services of the Company Item Code No. Nil Product Description Pest Control Services Item Code No. 3808.1* Product Description Insecticides Item Code No. 90.10* Product Description Photographic Equipment and Spares (* Represents Heading No. of the Harmonized Commodity Description and Coding System)

175

Godrej Global Solution Limited

DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH,2008.To,The Members ofGODREJ GLOBAL SOLUTIONS LIMITEDYour Directors present their Sixth Annual Report together with the Audited Accounts of the Company for the year ended 31st March 2008.

FINANCIAL RESULTS:

Particulars Year ended 31.3.08 [Rupees]

Year ended 31.3.07 [Rupees]

Income from Services 134,154,730 140,031,074Other Income 2,763,995 494,690Total Income 136,918,724 140,525,764Less: Total Expenditure 161,626,947 160,038,116Profit/[Loss] Before Tax (24,708,222) (19,512,352)Less: Fringe Benefit Tax (429,386) (851,931)Profit [Loss] After Tax (25,137,608) (20,364,283)Profit /(Loss) brought forward (20,982,522) (618,240)Profit/(Loss) carried forward (46,120,130) (20,982,523)

DIVIDEND:

In view of the loss sustained by the Company, your Directors do not recommend any dividend for the year under review.

OPERATIONS & FUTURE OUTLOOK:

The year ended March 31, 2008 has been a challenging year for your company. Given that the revenues of your company are predominantly from the US, the dollar depreciation against the rupee impacted the revenues and consequently revenues for the year stand reduced at Rs. 134,154,730 as compared to the previous year revenues of Rs. 140,031,074. Your company responded to this challenge by rationalizing the capacity of its delivery centre at Belapur, Navi Mumbai as well as downsized the corporate office at Vikhroli. Your company continued to operate with constraints on growth funding and presently your company is exploring various strategic options for funding its growth plans. During the year, Your Company continued to focus on its core business segments such as healthcare insurance claims form processing, rebate and survey forms processing, medical transcription, medical billing and document conversion services and strived towards improving operational efficiencies. Labour attrition did pose some challenge and your company continuously evaluates and implements innovative options to attract and retain talent.

DIRECTORS:

In accordance with the provisions of the Companies Act, 1956, read with the Articles of Association of the Company, Mr. N.B. Godrej and Mr. S. Ahmadulla Directors of the Company, will retire by rotation at the ensuing Annual General Meeting. However, being eligible, they have offered themselves for re-appointment. Your Directors recommend their re-appointment for your approval.

STATUTORY INFORMATION:

a. Conservation of Energy, Foreign Exchange Earnings & Outgo and Technology Absorption:

As required under Section 217[1][e] of the Companies Act, 1956, the necessary details are given hereunder:

The activities of the Company being service oriented, the particulars required to be furnished in respect of conservation of energy are not applicable. However, all efforts are being made by the Company to conserve energy at all the stages of its activities.

During the year under review, the Company has earned Rs. 134,154,730/- in foreign currency. However, it has spent Rs. 960,965/- in foreign currency, the details of which are available in points 10 and 11 of the Notes to the Accounts (Schedule 16) for the year. Further, the Company has not imported any foreign technology and hence the requisite particulars in this regard are not applicable.

b. Particulars of Employees:

The particulars required under Section 217(2A) of the Companies Act, 1956 read with the Companies ( Particulars of Employees)Rules 1975:-

Name Designation Gross remuneration (Rs)

Qualification Experience (yrs)

Date of commencement of employment

Age Particulars of previous employment

Sanjay Tipnis

Managing Director

72,81,382 /- B.com, ACA 24 1-09-2004 43 Godrej Remote Services Ltd.

c. Audit Committee:

As required under Section 292A of the Companies Act, 1956, the Audit Committee of Directors of the Company consisted of Mr. N.B. Godrej, Mr. F.P. Sarkari and Mr. K.N. Petigara. The said Committee met four times during the year and has performed the functions as prescribed under the said Section and its terms of reference.

d. Fixed Deposits:

The Company has not accepted any deposits from the public during the year under review.

e. Directors’ Responsibility Statement:

In accordance with the requirement under Section 217[2AA] of the Companies Act, 1956, the Directors hereby confirm:

1. that in the preparation of the accounts for the financial year ended 31st March 2008, the applicable accounting standards have been followed along with proper explanation relating to material departures;

2. that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 under review and also of the Loss of the Company for that period;

3. that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. that the Directors have prepared the accounts for the financial year ended 31st March 2008 on a going concern basis.

INSURANCE:

All the assets of the Company are adequately insured.

AUDITORS REPORT:

The present Auditors of the Company, M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai, holds their office until the conclusion of the ensuing Annual General Meeting. The Company has received an eligibility Certificate from them pursuant to Section 224[1B] of the Companies Act, 1956.

Your Directors recommend their re-appointment at the ensuing Annual General Meeting for your approval.

ACKNOWLEDGEMENTS:

Your Directors place on record their sincere thanks to all the Government Departments concerned with the operations of the Company, the Bankers and employees of the Company, and to Godrej Industries Limited, for their continued support and co-operation.

FOR AND ON BEHALF OF THE BOARDPlace: MumbaiDate: May 02, 2008

Regd. Office:Pirojshanagar, Sanjay S. Tipnis C.K. VaidyaEastern Express Highway, Managing Director DirectorVikhroli [East], Mumbai-400 079.

REPORT OF THE AUDITORSTO THE MEMBERS OF GODREJ GLOBAL SOLUTIONS LIMITED

1. We have audited the attached Balance Sheet of Godrej Global Solutions Limited as at March 31, 2008 and also the Profit and Loss Account and Cash Flow statement 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 the 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, as amended by the Companies (Auditors’ Report) (Amendment) Order 2004, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

a. We have obtained all the information and explanations which do 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 such books;

c. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

d. In our opinion, the Profit and Loss Account and Balance Sheet dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

e. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with the 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 March 31. 2008.

(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date

(iii) in the case of Cash Flow Statement, of the cash flow for the year ended on that date.

5. On the basis of the written representations received from the Directors as on March 31, 2008, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 3!, 2008, from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.



V. M. PADWALPartner

Membership No: (F) 49639

Mumbai, May 2. 2008.

176

ANNEXURE TO THE AUDITOR’S REPORTReferred to in Paragraph 3 of our report of even date on the accounts of Godrej Global Solutions Limited for the year ended March 31, 2008:

1. a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

b) The Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the frequency of verification is reasonable having regards to the size of the Company and nature of its assets. The discrepancies reported on such verification were not material and have been properly dealt with in the books accounts.

c) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

2. a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Conipanies Act, 1956.

3. In our opinion and according to the information and to explanation given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of fixed assets and sale of services. During the course of our audit no major weakness has been observed in the internal controls.

4. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, 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, having regards to the explanation that many of the items are of special nature and their prices cannot be compared with alternative quotations, the transactions made in the pursuance of contracts or arrangement entered in the register maintained under 301 of the Companies Act, 1956 in respect of any party during the period have been made at the prices which are reasonable having regards to prevailing market prices at the relevant time.

5. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed there under.

6. The Company has an internal audit system, which in our opinion, is commensurate with the size and nature of its business.

7. a) According to the records examined by us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Cess and other statutory dues as applicable to it. According to the information and explanation given to us, no undisputed amounts payable in respect of statutory dues were outstanding at the year end for a period of more than six months from the date they became payable.

b) According to the information and explanation given to us and the records examined by us there are no dues of income tax or cess outstanding on account of any dispute.

8. The accumulated losses of the Company as at end of the financial year do not exceed fifty percent of its net worth. The company has incurred cash losses during the current financial year and has not incurred cash losses in the immediate preceding financial year.

9. According to the information and explanations given to us and the records examined by us, we observed that the company has not defaulted in repayment of dues to financial institutions or banks or debenture holders.

10. According to the information and explanations given to us the Company has not granted loans and advances on the basis of security by way of pledge of shares and other securities.

11. In our opinion and according to the information and explanation given to us, the nature of the activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies.

12. In our opinion, the Company has maintained proper records of’ the transactions and contracts of the investments dealt in by the Company and timely entries have been made therein. The investments made by the Company are held in its own name.

13. According to the information and explanations given to us and the records examined by us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

14. According to the information and explanations given to us and the records examined by us on an overall basis, the term loans were applied for the purpose for which they were obtained.

15. On the basis of an overall examination of the balance sheet of the Company and the information and explanation given to us, we report that the company has not utilized any funds raised on short-term basis for long-term investments.

16. The Company has not made any preferential allotment of shares to parties or companies covered under section 301 of the Companies Act, 1956.

17. According to the information and explanation given to us and the records examined by us, the Company did not issue any debentures during the financial year.

18. The Company has not raised any money through a public issue during the year.

19. Based upon the audit procedures performed and the information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

20. In our opinion, clauses (ii) and (viii) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 are not applicable.


KALYA NIWALLA & MISTRYChartered Accountants

V. M. PADWALPartner

Membership No: (F) 49639Mumbai, May 2. 2008


Schedule

Year EndedMarch 31, 2008

(Amount Rs)


(Amount Rs) SOURCE OF FUNDS 1 SHAREHOLDERS’ FUNDS (a) Share capital 1 121,371,773 121,371,773 (b) Reserves & surplus 2 51,374,134 51,374,134

172,745,907 172,745,9072 BORROWED FUNDS (a) Secured loans 3 38,394,938 42,034,821

38,394,938 42,034,821 211,140,845 214,780,728

APPLICATION OF FUNDS 1 FIXED ASSETS 4 (a) Gross block 59,208,580 57,533,801 (b) Less:Accumulated depreciation 42,284,972 29,113,787 (c) Net block 16,923,608 28,420,014

2 INVESTMENTS 5 95,936,300 91,840,8003 DEFERRED TAX ASSET 288,313 288,3134 CURRENT ASSETS, LOANS AND ADVANCES (a) Cash & bank balances 6 5,403,357 8,747,767 (b) Debtors 7 51,904,737 56,313,073 (c) Loans and advances 8 15,410,090 24,474,861

72,718,184 89,535,701LESS: CURRENT LIABILITIES AND PROVISIONS

(a) Current liabilities 9 17,602,451 14,429,874 (b) Provisions 10 3,243,234 1,856,749

20,845,685 16,286,623NET CURRENT ASSETS 51,872,499 73,249,078

5 PROFIT AND LOSS ACCOUNT 46,120,130 20,982,523 211,140,845 214,780,728

NOTES TO ACCOUNTS 16The schedules referred to above form an integral part of the balance sheet.

As per our report attached. For and on behalf of the boardFor and on behalf ofKALYANIWALLA & MISTRYChartered Accountants V M Padwal S. S. Tipnis Managing Director Partner C. K. Vaidya DirectorMumbai, May 2, 2008 A.K.Singla Company Secretary


PROFIT & LOSS ACCOUNT FOR THE PERIOD ENDED MARCH 31, 2008

Schedule


(Amount Rs)


(Amount Rs)

INCOME

Income from services 134,154,730 140,031,074

Other income 11 2,763,995 494,690

136,918,724 140,525,764

EXPENDITURE

Staff expenses 12 75,851,516 71,290,277

Establishment expenses 13 35,866,421 39,383,921

Other operating expenses 14 24,125,670 28,043,151

Interest & finance charges 15 5,918,546 3,889,350

Depreciation 4 19,864,794 17,431,417

161,626,947 160,038,116

PROFIT / (LOSS) FOR THE YEAR -Before Tax (24,708,222) (19,512,352)

Fringe benefit tax (429,386) (851,931)

PROFIT / (LOSS) FOR THE YEAR -After Tax (25,137,608) (20,364,283)

Profit / (Loss) brought forward (20,982,522) (681,240)

Profit / (Loss) carried forward (46,120,130) (20,982,523)

Basic earning per share (face value of Rs 10 per share) (1.85) (0.47)


The schedules referred to above form an integral part of the profit & loss account.

177


(Amount Rs)


(Amount Rs) SCHEDULE 1 : SHARE CAPITALAUTHORISED 59,900,000 (Previous year 59,900,000) equity shares of Rs 10/- each 599,000,000 599,000,000 100,000 (Previous year 100,000) preference shares of Rs 10/- each 1,000,000 1,000,000

600,000,000 600,000,000 ISSUED AND SUBSCRIBED 47,714,038 (Previous year 47,714,038) equity shares of Rs.10/- each 477,140,380 477,140,380 18,000 (Previous year 18,000) preference shares of Rs.10/- each 180,000 180,000

477,320,380 477,320,380 PAID UP Fully paid up equity shares 8,639,177 (Previous year 8,639,177) equity shares of Rs 10/- each fully paid up 86,391,770 86,391,770 4,971,429 (Previous year 4,971,429 ) equity shares of Rs 10/- each Rs 7.00 paid up (P.Y. Rs 7.00 paid up) 34,800,003 34,800,003 Fully paid up preference shares 18,000 (Previous year 18,000) preference shares of Rs.10/- each 180,000 180,000

121,371,773 121,371,773


(Amount Rs)


(Amount Rs)

SCHEDULE 2 : RESERVES & SURPLUS

Capital reserve

Opening balance 1,554,134 1,554,134

Additions during the year - -

1,554,134 1,554,134

Securities premium account

Opening balance 49,820,000 49,820,000

Add: Additions during the year - -

49,820,000 49,820,000

51,374,134 51,374,134

SCHEDULE 3 : SECURED LOANS

Term loan from bank 30,849,979 42,034,821

Cash Credit from bank 7,544,959 -

38,394,938 42,034,821

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2008


Asset Gross Block Depreciation Net Block

As On1-Apr-07

Additions for the year

Deletions for the year

As On31-Mar-08

As On1-Apr-07

For the year ended

Reductions for the year ended

As On31-Mar-08

As On31-Mar-08

As On31-Mar-07

Leasehold Improvements 6,436,853 7,864,037 5,129,260 9,171,630 4,831,978 5,437,483 4,341,541 5,927,920 3,243,710 1,604,875

Computers 41,656,808 594,521 1,496,526 40,754,803 21,734,514 12,224,871 1,407,308 32,552,075 8,202,728 19,922,295

Office Equipments 6,340,081 945,667 1,389,586 5,896,163 1,794,375 1,265,670 441,841 2,618,204 3,277,958 4,545,706

Furniture & Fixtures 1,435,911 1,160,634 874,708 1,721,837 639,185 603,024 502,912 739,296 982,541 796,726

Vehicle 1,664,148 - - 1,664,148 113,735 333,741 - 447,476 1,216,672 1,550,413

Total 57,533,801 10,564,859 8,890,080 59,208,580 29,113,787 19,864,789 6,693,602 42,284,972 16,923,608 28,420,015

Previous Year 37,589,594 20,367,566 423,358 57,533,802 11,900,449 17,431,416 218,078 29,113,787 28,420,015 25,689,145

SCHEDULE 5 : INVESTMENTS

Investee Company / Institutions

FaceValue

(Rs)

QuantityAs On

1-Apr-07

Acquired upto

31-Mar-08

Soldupto

31-Mar-08

QuantityAs On

31-Mar-08

Amount (Rs)As On

31-Mar-08

Amount (Rs)As On

31-Mar-07

LONG TERM INVESTMENTS Unquoted Equity Shares-Fully Paid Godrej Upstream Limited - - - - - - - Verseon LLC - Class A preferred units (US$ 1.90) - - - - - - - Investment in Subsidiary Company Equity Shares in Godrej Global Solutions (Cyprus) Ltd face value of US$ 1.00 each 44 600,000 - - 600,000 26,240,228 26,240,229 Preference Shares in Godrej Global Solutions (Cyprus) Ltd face value of US$ 1.00 each 44 1,500,000 100,000 - 1,600,000 69,696,072 65,340,068

- - - - - Investment in the capital of Partnership firm View Group LP - - CURRENT ASSETS Unquoted Units of Mutual Fund Templeton India Treasury Management - - Prudential ICICI Liquid Plan Institutional Plus - - TOTAL 95,936,300 91,580,297


(Amount Rs)


(Amount Rs)

SCHEDULE 6 : CASH & BANK BALANCES

Cash on hand 63,065 59,257

Balances with bank

In Current Account 2,005,292 8,515,760

In Fixed Deposit 3,335,000 172,750

5,403,357 8,747,767

SCHEDULE 7 : DEBTORS

(Unsecured and considered good)

Outstanding for more than six months 698,849 1,282,425

Outstanding for less than six months 51,205,888 55,030,648

51,904,737 56,313,073


(Amount Rs)


(Amount Rs) SCHEDULE 8 : LOANS AND ADVANCES Advances recoverable in cash or in kind

or for value to be received 1,166,755 1,016,189

Security deposits 9,996,884 13,608,084

Other deposit 439,291 180,542

Accrued interest 124,785 10,509

Staff loan 833,615 1,190,811

Advance payment of taxes 2,848,760 8,468,726

15,410,090 24,474,861

SCHEDULE 9 : CURRENT LIABILITIES Sundry creditors 1,937,268 1,155,594

Others 15,665,183 13,274,280

17,602,451 14,429,874

178


(Amount Rs)


(Amount Rs) SCHEDULE 10 : PROVISIONS Provision for employee retirement benefit 3,243,234 1,856,749

3,243,234 1,856,749 SCHEDULE 11 : OTHER INCOME Interest (gross) - Bank 147,185 11,697 - Staff loan 129,545 53,159 Interest on IT Refund for the Asst Year 05-06 680,180 – Dividend – 418,483 Profit on sale of investment - 2,437 Profit on sale of fixed assets 1,289,809 6,801 Miscellaneous income 517,276 2,113

2,763,995 494,690 SCHEDULE 12 : STAFF EXPENSES Salary, bonus, exgratia 65,465,714 60,477,186 Contribution to providend fund and other funds 7,361,868 7,502,485 Staff welfare 3,023,934 3,310,606

75,851,516 71,290,277 SCHEDULE 13 : ESTABLISHMENT EXPENSES Rent 17,240,478 17,652,556 Office maintenance 6,389,572 7,713,353 Electricity 6,919,866 7,423,059 Communication expenses 4,827,530 6,381,913 Repairs and maintenance 488,976 213,039

35,866,421 39,383,921 SCHEDULE 14 : OTHER OPERATING EXPENSES Legal & professional expenses 10,119,260 10,030,360 Insurance 135,969 212,744 Conveyance and travelling 1,201,879 4,795,494 Recruitment & training 82,300 3,997,393 Processing cost 2,312,476 3,648,042 Exchange difference - loss (net) 4,059,659 1,462,636 Donation 6,000 – Sundry Assets W/off 1,083,509 24,080 General expenses 5,124,616 3,872,403

24,125,670 28,043,151 SCHEDULE 15 : INTEREST & FINANCE CHARGES Interest on bank loan 5,125,396 3,226,056 Other bank/financial charges 793,150 663,294

5,918,546 3,889,350

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2008


1. Background

Godrej Global Solutions Limited (“the Company”) was incorporated on February 28, 2003 as a limited liability company. The main business of the company is to carry out IT enabled services and back office support functions.

2. Significant Accounting Policies.

a) Accounting Convention

The financial statements are prepared under the historical cost convention, on accrual basis in accordance with the generally accepted accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

b) Fixed Asset

Fixed Assets are stated at cost less accumulated depreciation. Cost includes all expenses related to acquisition and installation of the concerned asset.

c) Asset Impairment

The Company reviews the carrying values of tangible and intangible assets for any possible impairment at each balance sheet date. An Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value at appropriate discount rate.

d) Investments

Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognize a decline, other than that of a temporary nature. The fair value of a long-term investment is ascertained with reference to its market value, the investee’s assets and results and the expected cash flows from the investments.

Current investments are carried at lower of cost and fair value.

e) Provisions and Contingent Liabilities


Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company.

f) Revenue Recognition

Income from services is recognized on completion of service as per terms of the contract. Interest income is recognized on a time proportion basis. Dividend income is recognised when the right to receive the same is established.

g) Depreciation

Leasehold Improvements are amortized equally over the lease period. Depreciation is provided pro-rata to the period of use on the Straight Line Method over the estimated useful life of assets which is as under:

Computers 3 Years Office Equipment 5 Years Furniture & Fixture 5 Years Motor Vehicle 5 Years

h) Employee Benefits

Obligations pertaining to short term employee benefits are recognized as cost in the period in which the employee renders the related service.

The cost of non accumulating compensated absences is recognized in the period in which such absences occur. The cost of accumulating compensated absences is recognized in the period in which the employee renders the service that increase his entitlement to future compensated absences.

The amount of contributions payable to a defined contribution plan in exchange for service rendered by an employee is recognized as a cost, in the period in which such service was rendered. However if the said contribution falls due twelve months after the period in which the employee has rendered the related service, the amount of contribution to be recognized as above is discounted at appropriate rates.

In case of defined benefit plans actuarial techniques are used to make a reliable estimate of the amount of benefits that the employee has earned in return for the services in the current and past period. These estimates are based on certain actuarial assumptions about demographic and financial variables, which influence the cost of benefits. Projected Unit Cost Method is used to discount the aforesaid amount of benefit in order to determine the present value of defined benefit obligation and current service cost.

The rates used to discount post employment benefit obligation are determined by reference to market yields at balance sheet date on government bonds of appropriate currency and term.

i) Taxes on Income

Provision for current tax is ascertained on the basis of the taxable income for the year determined in accordance with the provision of Income Tax Act. 1961.

Deferred tax is recognised on timing differences; being the difference between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more accounting periods. Deferred tax assets subject to the consideration of prudence are recognised and carried forward only to the extent that there is reasonable certainty that sufficient future taxable income will be realised. The tax effect is calculated on the accumulated timing difference at the year-end and based on the tax rate and laws enacted on substantially enacted on the balance sheet date.

j) Foreign Currency Transactions

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Monetary Assets and Liabilities denominated in foreign currency are translated at the period end exchange rates. Exchange gain/losses are recognised in the profit and loss account except for exchange differences related to fixed assets, which are adjusted in the cost of the assets. Non Monetary foreign currency items like investments in foreign subsidiaries are carried at cost and expressed in Indian currency at the rate of exchange prevailing at the time of making the original investment.

3. Redemption of Preference shares

Due to inadequacy of divisible profits, the Company has not redeemed 18,000 preference shares of Rs 10/- each at par, due for redemption on May 31, 2007.

4. Secured loan

Term loan from bank are secured by

- Charge by way of hypothecation of assets on movable fixed assets of the Company

- Hypothecation of the entire current assets of the Company.

- Irrevocable and unconditional Corporate Guarantee from Godrej Industries limited.

5. Operating Lease

The company’s significant leasing agreements are in respect of operating lease for office premises. These leasing agreements are cancelable and renewable by mutual consent on mutually acceptable terms. The aggregate lease rentals payable by the company are charged to profit and loss account as a rent amounting to Rs. 204.68 Lacs (Previous year Rs. 217.66 Lacs). The future minimum lease payments under non-cancelable operating leases due within a period of one year are estimated at Rs. 136.82 Lacs (Previous year. Rs. 216.16 Lacs) and due within a period of one year but less than five years are estimated at Rs. 609.71 Lac (Previous year Rs. 392.24 Lacs).

6. Retirement benefits

i. Defined Contribution Plans:

Amount of Rs. 41.77 lacs is recognized as an expense and included in “Contribution to provident and other funds” (Schedule 12) in the profit and loss account.

ii. Defined Benefit Plans:

a) General Descriptions of defined plans (Gratuity Plan)

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service, or retirement, whichever is earlier. The benefit vests after five years of continuous service.

b) The amounts recognized in Balance Sheet are as follows:

Period Beginning 31-3-2006 31-3-2007 31-3-2008

Present Value of obligation 31March – 1,041,858 1,286,822

Present Value of Assets – – –

Liability recognized in Balance Sheet 381,978 1,041,858 1,286,822

c) The amounts recognized in Profit and Loss Account are as follows:

Period Beginning 31-3-2007 31-3-2008

Current service Cost 559,289 474,819

Interest Cost 28,648 78,139

Expected Return on

Plan Assets – –

Net Actuarial gain 71,943 (307,994)

Net Periodic Cost 659,880 244,964

179

d) The reconciliation of opening and closing balances of present value of the defined benefit obligation showing the effects during the period:

31-3-2006 31-3-2007 31-3-2008

Projected benefit obligations, at beginning of period

381,978 1,041,858

Service Cost 559,289 474,819

Interest cost 28,648 78,139

Past service Cost ---------- ----------

Actuarial (gain ) loss On obligation 71,943 (307,994)

Benefit Paid ---------- ----------

Projected Benefit obligation, end of the period 381,978 1,041,858 1,286,822

e) Movement in net liability recognized in Balance Sheet

Period beginning 31-3-2006 31-3-2007 31-3-2008

Opening net liability – 381,978 1,041,858

Expenses as above – 659,880 244,964

Contributions Paid – – –

Closing net liability 381,978 1,041,858 1,286,822

f) Actuarial Assumptions

ECONOMIC ASSUMPTIONS:

• Interest (Discount Rate)

The discount rate of 7.5% has been used for the purpose of Actuarial valuation of the Liability.

• Salary Increment Rate

Keeping in view the long term nature of the liability and increasing trend of inflation; the salary incremental rate of 5% would be appropriate to project the future salary Growth.

DEMOGRAPHIC ASSUMPTIONS:

• Mortality

The latest compiled Table LIC a (1994-96) is used for the purpose of valuation:

• Retirement Age

The employees in all cadre retire at 58 years

• Withdrawal:

The Attrition rate is related to completion of service. Nearly 20 % of employees will leave without claiming Gratuity.

7. Related Party Disclosures

a) Related Parties with whom transactions have taken place during the year, with the name and description of relationship.

Parties with whom control exists: Godrej Industries Limited; the Holding company. Godrej & Boyce Manufacturing Co Ltd; the Ultimate Holding Company

Wholly Owned Subsidiaries: Godrej Global Solutions Inc. Godrej Global Solutions (Cyprus) Ltd

Key Management Personnel Mr. N.B.Godrej Mr. Sanjay Tipnis

b) Transactions with Related Parties – Parent and Fellow Subsidiaries

(Amount Rs)

Nature of Transaction HoldingCompany

Leave & License

Previous Year

Service Charges

Previous Year

Other Expenses

Previous Year

573,220

1,123,440

2,514,793

3,516,282

872,896

373,549

Call Money Received

Previous Year

Repayment of equity shares

Previous Year

-

-

204,234,258

-

Sale of Investments

Previous Year

Balance Outstanding as of 31-3-2007

Receivable

-

204,234,258

-

-

c) Transactions with Related Parties – Subsidiaries and Others

(Amount Rs)

Nature of Transaction

Wholly Owned

SubsidiaryCompanies

GGSI

Wholly Owned

SubsidiaryCompanies

GGSCL

AssociateCompanyPersonnel

KeyManagement

Total

Investment in Pref Shares

- 4,095,500 - - -

Previous Year - - - - -

Investment in Equity Shares

- - - - -


Export of Services 99,618,890 - - - 99,618,890

Previous Year 96,196,640 - - - 96,196,640

Interest Income - - - - -


Inter Corporate Deposit -

- - - - -

Given - - - - -


Inter Corporate Deposit

- - - - -

Repaid - - - - -


Managerial Remuneration

- - - 7,281,382 7,281,382

Previous Year - - - 5,901,912 5,901,912

8. Managerial Remuneration

Particulars CurrentYear

PreviousYear

Salaries and allowances paid 4,939,938 4,106,613

Provision for Bonus and Incentives 2,038,480 1,525,000

Contribution to Provident Fund 302,964 270,299

Sitting Fees 110,000 115,000

Total 7,391,382 6,016,912

9. Auditors Remuneration included in General Expenses

(Excluding service tax)

Audit Fees 900,000 900,000

Tax Audit Fees 100,000 100,000

Total 10,00,000 10,00,000

10. Earning in Foreign Currency

Income from services 134,154,730 140,031,074

1 1. Expenditure in Foreign Currency

Marketing Expenses Nil Nil

Traveling Expenses 569,581 855,602

Books & Periodicals 18,958 19,692

Professional Fees Nil 9,406

Training Nil 3,860,970

Liability Insurance 18,295 25,765

Software Development & Maintenance 17,956 44,429

Business Development 336,175 Nil

12. Earning Per Share

Net profit / (loss) after tax available to shareholders (25,137,608) (20,364,283)

Number of Equity Shares:

As at commencement of the year 13,610,606 47,714,038

As at the end of the year 13,610,606 13,610,606

Weighted Average Number of Equity Shares 13,610,606 43,517,624

Basic Earning per Share of Rs 10/- each (1.85) (0.47)

13. Additional information required under Schedule VI Part II of the Companies Act 1956, to the extent not applicable has not been given.

14. Figures of the previous year have been regrouped wherever necessary.

SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008

180

Disclosure as required vide Part IV of Schedule VI of the Companies Act, 1956.Balance Sheet Abstract and Company’s General Business Profile

Amount in Rs. Thousands

I Registration Details

Registration No 11-139431

State Code 11

Balance Sheet date March 31, 2008

II Capital raised during the year

Public Issue -

Rights Issue -

Bonus Issue -

Private Placement

III Position of mobilisation and deployment of funds

Total Liabilities 211,140

Total Assets 59,209

Sources of funds:

Paid-up capital 121,372

Reserves and surplus 51,374

Secured loans 38,395

Unsecured loans

Application of funds

Net fixed assets 16,924

Investments 95,936

Deferred Tax Asset 288

Net current assets 51,872

Miscellaneous expenditure -

Accumulated losses 20,983

IV Performance of the Company

Total Income 136,919

Total expenditure 161,626

Profit / (loss) before tax (24,708)

Profit / (loss) after tax (25,138)

Earning per share (in Rs) (1.85)

Dividend rate % -

V Generic names of principle products / services of company (as per monetary terms)

Item code NA

Product description IT Service

Particulars March 31, 2008 March 31, 2007

(Amount Rs) (Amount Rs)

Cash flow from operating activities

Net loss before tax (24,708,222) (19,512,352)

Adjustment for:

Depreciation 19,864,794 17,431,417

Interest Paid 5,918,546 3,889,350

(Profit)/loss on fixed assets scrapped / sold (1,289,809) (6,801)

(Profit)/loss on investments sold – (2,437)

Dividend income – (418,483)

Interest income (956,910) (64,856)

Operating profit before working capital changes (1,171,601) 1,315,838

Adjustment for:

Trade and other receivables 7,853,140 (31,208,241)

Trade payables 4,559,062 5,653,057

Cash generated from operations 11,240,601 (24,239,346)

Direct taxes FBT (paid) / refund (429,386) (851,931)

Direct taxes (paid) / refund 5,619,966 (2,058)

Total cash generated from operating activites 16,431,181 (25,093,335)

Net cash from/(used) in operating activities 16,431,181 (25,093,335)

Cash flow from investing activities

Purchase of fixed assets (10,564,859) (20,367,566)

Sale of fixed assets 3,486,287 212,081

Investment in Subsidiary Company (4,095,500) -

Sale of long term investments - 204,234,258

Downward revision of investments - 136,800,570

Purchase of current investments - (10,420,921)

Sale of current investments - 32,942,373

Interest income 956,910 64,856

Dividend income - 418,483

Net cash from/(used) in investing activities (10,217,163) 343,884,135

Cash flow from financing activities

Repayment of equity share capital - (204,233,750)

Reduction in equity share capital - (136,800,570)

Proceeds from long term borrowings (3,639,883) 32,072,639

Repayment of long term borrowing - (29,992,203)

Interest paid (5,918,546) (3,889,350)

Net cash from financing activities (9,558,429) (342,843,234)

Net increase in cash and cash equivalents (3,344,410) (24,052,434)

Cash and cash equivalents as at beginning of the year 8,747,767 32,800,201

Cash and cash equivalents as at end of March 31, 2008 5,403,357 8,747,767

(Note: To finance working capital requirements, the Company’s Bankers have sanctioned a totalfund based limit of Rs 450 lacs. Of this, limits utilized as on March 31, 2008 is Rs 75.45 lacs)


Cash Flow Statement for the year ended March 31, 2008.

181

DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008

The Board of Directors presents its report and audited financial statements of the Company for the year ended 31 March 2008.

Principal activity

The principal activity of the Company, which is unchanged from last year, is that of holding of investments and financing.

Results and Dividends

The Company’s results for the year are set out below. The Board of Directors does not recommend the payment of a dividend and the net profit for the year is retained.

Share capital

Authorised capital

On 24 March 2008, the authorised share capital of the Company was increased by an additional issue of 100.000 Preference shares at US$1 each.

Issued capital

On 24 March 2008, the Company made an additional cash issue of 100,000 Preference shares of US$1 each fully paid.

Board of DirectorsThe members of the Board of Directors of the Company as at 31 March 2008 as at the date of this report are Stellos Sawides, Eva Agathangelou, Rohinton Homi Khajotia - (Resigned on 15.4.2008) Dorab Erach Mistry - (Resigned on 15.4.2008) and Sanjay Tipnis, all of them were members of the board throughout the year ended 31 March 2008.In accordance with the Company’s Articles of Association all directors presently members of the Board continue in office.There were no significant changes in the assignment of responsibilities and remuneration of the Board of Directors.Independent AuditorsThe independent auditors, PKF Savvides & co Ltd, have expressed their willingness to continue in office and a resolution giving authority to the Board of Directors to fix their remuneration will be proposed at the Annual General Meeting.By order of the Board of Directors,Hive Management Services LimitedSecretaryLimassol – Cyprus22 April 2008

Independent Auditors’ ReportTo the Members of GODREJ GLOBAL SOLUTIONS(CYPRUS) LIMITEDReport on the Financial Statements

We have audited the financial statements of GODREJ GLOBAL SOLUTIONS (CYPRUS) LIMITED, which comprise the balance sheet as at 31 March, 2008 and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Board of Directors’ Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap 113. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies: and making accounting estimates that are reasonable in the circumstances.

Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Company GODREJ GLOBAL SOLUTIONS (CYPRUS) LIMITED as of 31 March 2008 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU and the requirements of Cyprus Companies Law, Cap. 113.

Report on other legal requirements

Pursuant to the requirements of the Companies Law, Cap. 113, we report the following:• We have obtained all the information and explanations we considered necessary for the

purposes of our audit.• In our opinion, proper books of account have been kept by the Company.• The Company’s financial statements are in agreement with the books of account.• In our opinion and to the best of our information and according to the explanations given to

us, the financial statements give the information required by the Companies Law, Cap. 113, in the manner so required.

• In our opinion, the information given in the report of the Board of Directors on page 2 is consistent with the financial statements.

Other Matter

This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with section 156 of Companies Law, Cap.113 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.

PKF Savvides & Co Ltd

Certified Public Accountants 229, Arch Makarios III AvenueMeliza Court (Tel.00357-25868000)4th,5th & 6th Floor3105 Limassol: - Cyprus 22 April, 2008

01.04.2007 01.04.2007 01.04.2006 01.04.200631.03.2008 31.03.2008 31.03.2007 31.03.2007

ASSETS Note US$ Rs in Lacs US$ Rs in LacsNon-current assetsInvestments 7 1,500,000 595.50 1,000,000 430.50 Trade and other receivables 8 755,000 299.74 1,055,000 454.18

2,255,000 895.24 2,055,000 884.68 Current assetsTrade and other receivables 8 2,498 0.99 66,465 28.61 Cash at bank and in hand 64,497 25.61 62,960 27.10

66,995 26.60 129,425 55.72 Total assets 2,321,995 921.83 2,184,425 940.39 EQUITY AND LIABILITIESEquity and reservesShare capital 9 2,200,000 873.40 2,100,000 904.05 Retained earnings 112,384 44.62 74,183 31.94

2,312,384 918.02 2,174,183 935.99

Current liabilitiesTrade and other payables 10 8,778 3.48 5,567 2.40 Current tax liabilities 11 833 0.33 4,675 2.01

9,611 3.82 10,242 4.41 Total equity and liabilities 2,321,995 921.83 2,184,425 940.39

BALANCE SHEET AS MARCH 31, 2008 STATEMENT OF CHANGES IN EQUITY YEAR ENDED 31ST MARCH, 2008

On 22 April 2008 the Board of Directors of GODREJ GLOBAL SOLUTIONS (CYPRUS) LIMITED authorised these financial statements for issue.

Companies which do not distribute 70% of their profits after tax, as defined by the relevant tax law, within two years after the end of the relevant tax year, will be deemed to have distributed as dividends 70% of these profits. Special contribution for defence at 15% will be payable on such deemed dividends to the extent that the shareholders are Cyprus tax residents. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time. This special contribution for defence is payable for the account of the shareholders.

Share capital Retained earnings TotalUS $ Rs. in Lacs US $ Rs. in Lacs US $ Rs. in Lacs

Balance - 01 April 2006 2,100,000 904.05 25,702 11.06 2,125,702 915.11

Net profit for the year - - 48,481 20.87 48,481 20.87

At 31 March 2007 2,100,000 904.05 74,183 31.94 2,174,183 935.99

Net profit for the year - - 38,201 16.45 38,201 16.45Issue of share capital 100,000 43.05 - - 100,000 43.05

At 31 March 2008 2,200,000 947.10 112,384 48.38 2,312,384 995.48

182

01.04.2007 to 31.03.2008 01.04.2006 to 31.03.2007

Note US $ Rs. in lacs US $ Rs. in lacs

Revenue 3 52,351 22.54 73,850 31.79

Administration Expenses (9,748) (4.20) (5,971) (2.57)

Operating Profit 4 42,603 18.34 67,879 29.22

Net fianance costs 5 (1,051) (0.45) (532) (0.23)

Profit before tax 41,552 1.79 67,347 28.99

Tax 6 (3,351) (1.44) (18,866) (8.12)

Net profit for the year 38,201 16.45 48,481 20.87

INCOME STATEMENT YEAR ENDED 31ST MARCH, 2008

01.04.2007 to 31.03.2008

01.04.2006 to 31.03.2007

Note US$ Rs. in lacs US$ Rs. in lcas

CASH FLOWS FROM OPERATINGE ACTIVITIES

Profit before tax 41,552 17.89 67,347 28.99

Adjustments for:

Interest income 3 (52,351) (22.54) (73,850) (31.79)

Cash flows used in operations before working capital changes

(10,799) (4.65) (6,503) (2.80)

Decrease / (increase) in trade and other receivables

363,967 156.69 (5,796) (2.50)

Increase / (decrease) in trade and other payables

3,211 1.38 (19,503) (8.40)

Cash flows from / (used in) operations 356,379 153.42 (31,802) (13.69)

Interest received 52,351 22.54 73,850 31.79

Tax paid (7,193) (3.10) (6,806) (2.93)

Net cash from operating activities 401,537 172.86 35,242 15.17

CASH FLOWS FROM INVESTING ACTIVITIES

Payment for purchase of investment 7 (500,000) (215.25) - -

Net cash used in investing activities (500,000) (215.25) - -

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of share capital 100,000 43.05 - -

Net cash from financing activities 100,000 43.05 - -

Net increase in cash and cash equivalents

1,537 0.66 35,242 15.17

Cash and cash equivalents:

At beginning of the year 62,960 27.10 27,718 11.93

At end of the year 64,497 27.77 62,960 27.10

The cash and cash equivalents include the following:

Cash at bank and in hand 64,497 27.77 62,960 27.10

Bank overdrafts - - - -

64,497 27.77 62,960 27.10

CASH FLOW STATEMENT YEAR ENDED 31ST MARCH, 2008

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 20081. Incorporation and principal activities

Country of incorporation

The Company GODREJ GLOBAL SOLUTIONS (CYPRUS) LIMITED was incorporated in Cyprus on 19 January, 2005 as a private company with limited liability under the Companies Law, Cap. 113. Its registered office is at 229, Arch. Makarios III Avenue, Meliza Court, 4th floor,, 3105 Limassol – Cyprus.

Principal activity

The principal activity of the company, which is unchanged from last year, is that of holding of investments and financing.

2. Accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented in these financial statements unless otherwise stated.

Basis of preparation

The Company has prepared these parent’s separate financial statements for compliance with the requirements of the Cyprus Income Tax Law.

01.04.2007 to 31.03.2008 01.04.2006 to 31.03.2007

US $ Rs. in lacs US $ Rs. in lcas

Interest receivable 52,351 22.54 73,850 31.79

52,351 22.54 73,850 31.79

01.04.2007 to 31.03.2008 01.04.2006 to 31.03.2007


Operating profit is stated a f t e r c h a n g i n g t h e following items:

Auditors’ remuneration 6,495 2.80 5,567 2.40

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The financial statements have been prepared under the historical cost convention.

Adoption of new and revised IFRSs

During the current year the Company adopted all the new and revised IFRSs and International Accounting Standards (IAS), which are relevant to its operations and are effective for accounting periods commencing on 01 April 2007.

The adoption of these Standards did not have a material effect on the financial statements.

At the date of authorization of these financial statements some Standards were in issue but not yet effective. The Board of Directors expects that the adoption of these Standards in future periods will not have a material effect on the financial statements of the Company.

Subsidiary companies

Investment in subsidiary companies are stated at cost less provision for impairment in value, which is recognized as an expense in the period in which the impairment is identified. Investments held for trading are classified as current assets and are stated at fair value, with any resultant gain or loss recognized in the income statement. When the company has the positive intent and ability to hold bonds maturity, these are stated at amortised cost less impairment losses. Other investments held by the company are classified as being available-for-sale and are stated at fair value, with any resultant gain or loss recognized directly to equity. When an investment is sold collected or otherwise disposed of or when the carrying amount of the investments is impaired, the cumulative gain or loss recognized in equity is transferred to the income statement.

The fair value of investments held for trading and investments available-for-sale is their quoted price, excluding disposal costs, at the balance sheet date. Where a quoted price is not available and other methods of determining fair value inappropriate, the investment is stated at cost. Any sale of investment is recognized when the actual transfer of shares from the registrar takes place.

Revenue recognition

Revenues earned by the Company are recognised on the following bases:

• Interest income

Interest income is recognized on a time-proportion basis using the effective interest method.

Foreign currency translation

(1) Functional and presentation currency

Items included in the Company’s financial statements are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in United States Dollars (US$), which is the Company’s functional and presentation currency.

(2) Transaction and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement.

Tax

Current tax liabilities and assets for the current and prior periods are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and laws that have been enacted, or substantively enacted, by the balance sheet date.

Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.

3. Revenue

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 2008

4. Operating Profit

183

5. Finance costs

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH, 2008

01.04.2007 to 31.03.2008 01.04.2006 to 31.03.2007

US $ Rs. in lacs US $ Rs. in lacs

Net forieng exchange transaction losses

212 0.08 189 0.08

Interest expense 35 - - -

Other finance expenses 804 0.35 343 0.15

1,051 0.45 532 0.01

6. Tax

01.04.2007 to 31.03.2008

01.04.2006 to 31.03.2007


Corporation tax - current year 4,101 1.76 3,000 1.29

Corporation tax - prior years (750) (0.32) 1,675 0.72

Defence contribution - current year - - 7,385 3.18

Defence contribution - prior years - - 6,806 2.93

Charge for the year 3,351 1.44 18,866 8.12

The company is liable to pay corporation tax at the rate of 10% on its chargeable profits.

Under certain conditions interest may be subject to defence contribution at the rate of 10%. In such cases 50% of the same interest will be exempt from corporation tax, thus having an effective tax rate burden of approximately 15%.

7. Investments

01.04.2007 to 31.03.2008 01.04.2006 to 31.03.2007

US $ Rs. in lacs US $ Rs. lcas

On 01 April 2007 1,000,000 430.50 1,000,000 430.50

Acquisition of new shares issued 500,000 215.25 - -

At 31 March 2008 1,500,000 645.75 1,000,000 430.50

8. Trade and other receivables

01.04.2007 to 31.03.2008 01.04.2006 to 31.03.2007

US $ Rs. in lcas US $ Rs. in lcas

Trade receivables - - 66,465 28.61

Loan Receivable 755,000 325.02 1,055,000 454.18

Deposits and prepayments 2,498 1.08 - -

757,498 326.10 1,121,465 482.79

Less non-current receivables (755,000) (325.03) (1,055,000) (454.18)

Current portion 2,498 1.08 66,465.00 28.61

Godrej Global Solutions INC (Subsidiary

Company registered in USA) 755,000 325.03 1,055,000 454.18

755,000 325.03 1,055,000 454.18

The above loan carries interest at the rate of 7% per annum on the outstanding amount and it is receivable by the end of 31 March, 2010. The interest receivable is accounted for on an accrual basis. The interest income was US$52,351 for the period ended 31 March, 2008.

01.04.2007 01.04.200631.03.2008 31.03.2007

Number of Shares Number of Shares

AuthorisedOrdinary shares of US$1 each 600,000 600,000 Preference shares of US$1 each 1,600,000 1,500,000 Current portion 2,200,000 2,100,000 Issued and fully paidOn 01 April 2007 2,100,000 2,100,000 Issue of shares 100,000 - As at 31 March, 2008 2,200,000 2,100,000

9. Share capital

01.04.2007 to 31.03.2008 01.04.2006 to 31.03.2007


Accruals 8,778 3.78 5,567 2.40

8,778 3.78 5,567 2.40

Authorised capital

On 24 March 2008, the authorized share capital of the Company was increased by an additional issue of 100,000 Preference shares at US$1 each.

Issued capital

On 24 March 2008, the Company made an additional cash issue of 100,000 Preference shares of US$1 each fully paid.

10. Trade and other payables

01.04.2007 to 31.03.2008 01.04.2006 to 31.03.2007


Corporation tax 833 0.36 4,675 2.01

833 0.36 4,675 2.01

DETAILED INCOME STATEMENT YEAR ENDED 31ST MARCH, 2008

01.04.2007 to 31.03.2008 01.04.2006 to 31.03.2007

Page US $ Rs. in lcas US $ Rs. in lcas

Interest receivable 52,351 22.54 73,850 31.79

Operating expenses

Administration Expenses 15 (9,748) (4.20) (5,971) (2.57)

Operating Profit 42,603 18.34 67,879 29.22

Finance costs 16 (1,051) (0.45) (532) (0.23)

Net profit for the year before tax

41,552 17.89 67,347 2.77

The details of the subsidiaries are as follows:

Name Country of incorporation

Class of shares

held

Holding

%

Godrej Global Solutions INC USA Ordinary 100

The fair values of trade and other payables due within one year approximate to their carrying amounts as presented above.

11. Current tax liabilities

12. Related party transactions

The company, in the normal course of business, trades with other businesses that fall within the definition of related party contained in International Accounting Standard 24.

13. Parent company

The parent company is Godrej Global Solutions Ltd, a company registered in India.

14. Contingent liabilities

The Company had no contingent liabilities as at 31 March 2008.

15. Commitments

The Company had no capital or other commitments as at 31 March 2008.

16. Fair value of assets and liabilities

The fair value of an assets or liability represents the replacement cost or an obligation to be settled at an arms length transaction. The fair value of all the assets and liabilities of the company approaches their accounting value as stated in the financial statements.

17. Post balance sheet events

Current assets and liabilities of the company are adjusted to reflect any post balance sheet events and include additional information for amounts calculated on the basis ruling at the balance sheet date.

184

FINANCE COSTS YEAR ENDED 31ST MARCH, 2008

01.04.2007 01.04.2006

31.03.2008 31.03.2007

US $ Rs in Lacs

Fianance costs

Interest expense

Interest on taxes 35 -

Other finance expenses

Bank charges 804 0.35

Net foreign exchange transation losses

Realised exchange loss/(gain) 212 0.08

1,051 0.43

OPERATING EXPENSES YEAR ENDED 31ST MARCH, 2008

01.04.2007 to 31.03.2008 01.04.2006 to 31.03.2007


Administration expenses

Auditors’ remuneration 6,495 2.80 5,567 2.40

Professional fees 833 0.36 2,899 1.25

Issuing cost of additional equity 2,420 1.04 (3,147) 1.35

Consultancy fees - - 652 0.28

9,748 4.20 5,971 2.57

185

DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008

We are pleased to submit the report for the period from APRIL 1, 2007 TO MARCH 31, 2008

PRINCIPAL ACTIVITIES

The Company’s principal activity during the period under review was that of providing Healthcare - related Business Process Outsourcing Services

COMPANYS’ RESULTS

Net Profit / (loss) for the period : $ (9,383)

Retained earnings as of March 31, 2008 : $ 168,436

DIVIDENDS

No dividend is recommended to be paid for the period ended March 31, 2008

EVENTS SINCE BALANCE SHEET DATE

There have been no events since the balance sheet date which affect the company’s results or performance.

POLITICAL OR CHARITABLE CONTRIBUTIONS

The company made no political or charitable contributions during the year.

For GODREJ Global Solutions, Inc

Sanjay TipnisDirector

April 18, 2008

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS Of GODREj GLOBAL SOLUTIONS, Inc.To the Board of Directors and Stockholder

Godrej Global Solutions, Inc.

Boston, Massachusetts

We have audited the accompanying balance sheet of Godrej Global Solutions, Inc. (a Delaware corporation) as of March 31, 2008, and the related statements of operations, changes in stockholder’s equity and cash flows for the year then ended. 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.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 the 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.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Godrej Global Solutions, Inc. as of March 31, 2008, and the result of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Newton, Massachusetts

April 18, 2008

BALANCE SHEET AS AT MARCH 31, 2008 US $ Rs in Lacs

Sales 3,164,223 1,256.20

Cost of Goods sold 2,490,365 988.67

Gross Profit 673,858 267.52

Operating Expenses 460,546 182.84

Operating Income 213,312 84.68

Other Income (Expenses)

Interest Income 13,070 5.19

Impairmnent of goodwill (29,032) (11.53)

Amortization of Intangible Assets (161,757) (64.22)

Interest Expenses (52,351) (20.78)

(230,070) (91.34)

Net (loss) before provision for Income Taxes (16,758) (6.65)

Benefit from income taxes 7,375 2.93

Net (loss) (9,383) (3.73)

AssetsUS$ Rs in Lakhs

Current Assets Cash and Cash Equivalents 165,291 65.62Accounts receivable - trade 366,549 145.52Deferred tax asset 12,061 4.79Prepaid and other assets 75,232 29.87

Total Current Assets 619,133 245.80

Intangible assets, net of accumalated amortization of $584912 65,923 26.17

Goodwill 2,981,564 1183.68

Total Non- Current Assets 3,047,487 1209.85

Total Assets 3,666,620 1455.65

Liabilities and stockholder’s equity

Current Liabilities

Account payable 1,194,763 474.32

Accrued expenses 26,735 10.61

Total Current Liabilities 1,221,498 484.93

Long Term Liabilities

Note Payable 755,000 299.74

Deffered Tax Liability 21,686 8.61

Total Long term liabilities 776,686 308.34

Stockhoder’s equity

Common Stock, 0.01 par value, 51,000 shares authorized,

issued and outstanding 510 0.20

Additional paid in capital 1,499,490 595.30

Retained earnings 168,436 66.87

Total Stockholder's equity 1,668,436 662.37

Total liabilities and stockholder's equity 3,666,620 1455.65

STATEMENT OF OPERATIONS FOR THE YEAR ENDEDMARCH 31, 2008

The accompanying notes are in integral part of these financial statements.

Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on 31st March 2008 (US$ 1.00 = Rs 39.70)

For Godrej Global Solutions, Inc.Sanjay Tipnis

DirectorDate : April 18, 2008

The accompanying notes are integral part of these financial statements.

Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on 31st March 2008 (US$ 1.00 = Rs 39.70)

For Godrej Global Solutions, Inc.Sanjay Tipnis

DirectorDate : April 18, 2008

186

STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY FOR THE YEAR ENDED MARCH 31, 2008

Common Stock

Number of Shares

$0.01 Par Value

Additional Paid-in

Capital US $

Retained Earnings

US $

Total US $

Balance at April 1, 2007 1,000 10 999,990 177,819 1,177,819

Issuance of common stock 50,000 500 499,500 - 500,000

Net loss - - - (9,383) (9,383)

Balance at March 31, 2008 51,000 510 1,499,490 168,436 1,668,436

Notes Accompanying the Financial Statements For the Year Ended March 31, 2008Note 1 - Nature of the BusinessGodrej Global Solutions, Inc. (the “Company” or “GGSI”) was incorporated on January 21, 2005, under the laws of the state of Delaware; The Company began its operations on April 8, 2005, the day it acquired the assets of another company. The Company’s principal activity is to provide information technology services consisting of business process outsourcing services. Presently, the principal areas of industry it services are claims processing for insurance companies and healthcare third party administrators.Note 2 - Summary of Significant Accounting Policies Fair Value of Financial InstrumentsThe carrying amounts of the Company’s financial instruments, which include accounts receivable, accounts payable and other accrued expenses, approximate their fair values due to their short maturities.Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results could differ from those estimates.Cash and Cash EquivalentsThe Company considers all highly-liquid financial instruments purchased with original maturity of three months or less at the date of purchase to be cash equivalents for financial statement purposes. Cash equivalents are stated at cost plus accrued interest, which approximates fair value. At March 31, 2008, cash equivalents consist of bank deposits and short term investments.Accounts ReceivableAccounts receivable are stated at the amount the Company expects to collect from customers. An allowance for doubtful accounts is provided for that portion of accounts receivable considered to be uncollectible, based upon historical experience and management’s evaluation of outstanding accounts receivable at the end of the year. Accounts receivable is presented net of an allowance for doubtful accounts of $13,394 at March 31, 2008.Note 2 -Summary of Significant Accounting Policies (Continued) Long-Lived AssetsThe Company reviews long-lived assets for impairment whenever an event or changes in circumstances indicates that the carrying amount of such assets may not be recoverable. The carrying values of long- lived assets are assessed for recoverability based on estimated future undiscounted cash flows associated with them. Where this assessment indicates a deficit, the assets are written down to market value. For assets which do not have a readily determinable market value, the assets are written down to their estimated market value calculated based on estimated future discounted cash flows. Assets to be disposed of are reported at the lower of the carrying value or fair value, less the cost to sell.Goodwill and Intangible AssetsThe Company evaluates the carrying value of goodwill at least annually to determine whether impairment may exist. The evaluation of whether goodwill is impaired consists of a comparison of the fair value of the reporting unit, to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill, and a comparison of the implied fair value of the reporting unit’s goodwill to the carrying amount of that goodwill. If the carrying amount exceeds fair value an impairment loss is recognized equal to that excess.Intangible assets are initially measured based on their fair values. Intangible assets are being amortized on a straight-line basis over a period of four years.Revenue RecognitionRevenues generated from providing services to customers are recognized at the time the services are provided. Revenue earned from fixed-price engagements is recognized on a straight-line basis over the service period.Note 2 - Summary of Significant Accounting Policies (Continued)Income TaxesIncome tax expense consists of current tax expense and the net change in tax deferred tax assets or liability during the year.The current income tax expense from operations consists of India income taxes payable in connection with earnings generated n India.Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to

taxable income in the years in which the temporary differences are expected to be received or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the income statement in the period of enactment of the change.Concentration of Credit RiskConcentration of credit risk exists when changes in economic, industry or geographic factors occur.Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable. To minimize customer credit risk, ongoing credit evaluations of customers’ financial condition are performed, although collateral generally is not required.The Company maintains its cash in bank deposit accounts in several institutions which at times may exceed the federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. At March 31, 2008, the Company has approximately $29,000 in excess of the FDIC insured limits. The Company has not experienced any losses in such accounts.During the year ended March 31, 2008 the Company provided services to four customers that constituted approximately 92% of sales. The Company anticipates the growth of the business will overcome any loss of future revenue from these customers. The Company currently uses only one vendor, an affiliate, for the outsourcing of data processing. Management believes the vendor can be replaced with other outsourcing vendors if necessary.Note 3 - Goodwill During the year ended March 31, 2008, the company identified an impairment related to goodwill as one customer on the customer list did not renew their contract. The amount of the impairment was determined based on the amounts allocated to customers within the overall list of customers at acquisition, and amounted to $29,032. Goodwill is comprised of the following: Goodwill Goodwill

March 31, 2007 Impairment March 31, 2008

Expertise of employees $ 302,420 120.06 lacs (Rs.) – $ 302,420 120.06 lacs (Rs.)

Customer list 893,653 – (29,032) 864,621 –

Entry into U.S. markets 1,814,523 – – 1,814,523 –

Total goodwill $ 3,010,596 1196.2 lacs (Rs.) (29,032) $ 2,981,564 1183.68 lacs (Rs.)

Note 4 - Stockholder’s EquityCommon SharesAs of April 1, 2007, there were 1,000 Common Shares, which have a $0.01 par value, issued to Godrej Global Solutions (Cyprus) Limited (“GGSC”). On September 5, 2007, the Company issued an additional 50,000 common shares of $0.01 par for $500,000 to GGSC. Each share of common stock is entitled to one vote. The holders of common stock are entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors.Note 5 - Note PayableDuring the fiscal year ended March 31, 2008, the Company issued an additional unsecured note amounting to $200,000 in favor of GGSC. Further $500,000 of the principal amount of another note payable was converted into common stock. All the notes payable bear interest at the rate of 7% per annum. The entire amount of the principal is due on May 31, 2010. Total interest expense was $52,351 for the year ended March 31, 2008. The outstanding notes payable as of March 31, 2008 is $755,000.Note 6 - Income TaxesAs of March 31, 2008, the Company’s deferred taxes are as follows:

US $ Rs. in lacsDeferred tax asset – currentAccounts receivable 5,358 2.13Net operating loss carry forward 6,703 2.66Total deferred tax asset – current 12,061 4.79Deferred tax asset (liability) – long-termAmortization of goodwill (69,033) 2.74Amortization of intangible assets 47,347 1.88Total deferred tax asset (liability) – long-term (21,686) 8.60The Company’s provision for income taxes for the yearended March 31, 2008, is as follows:Deferred tax benefit 7,375 2.93

Note 7 - Employee Benefit Plans The Company sponsors a defined contribution plan (individual retirement account) covering substantially all its employees. Company contributions are at the discretion of the Board of Directors. Defined contribution pension expense for the Company was $55,000 for the year ended March 31, 2008.Note 8 - Related Party TransactionsThe Company’s data entry and related services are provided by Godrej Global Solutions Limited, an affiliate wholly owned by the Company’s parent, for servicing the Company’s clients. During the period ended March 31, 2008, the Company’s expenses include $2,490,365 for the services provided by Godrej Global Solutions Limited. As of March 31, 2008, the amount in accounts payable due to Godrej Global Solutions Limited is $1,194,763.Note 9 - Intangible Assets In connection with acquisition of the assets of Outsource Offshore Inc. (“OOI”), the assets acquired included $650,835 of intangible assets other than goodwill. All of these intangible assets is attributable to the value of the contracts purchased from OOI. The Company estimates the useful lives of the contracts remaining at March 31, 2008, to extend over a period of up to one year. Amortization in the amount of $161,757 was recorded in the fiscal year ended March 31, 2008.Estimated amortization expense for the year ending March 31, 2009 amounts to $65,923 after which the intangible assets will be fully amortized.Note 10 - Commitments and Contingencies The Company extended the lease for its office space located in Newton, Massachusetts from November 2007 to April 2008 with base rental payments increasing to $1,700 a month. Rent expense for the year ended March 31, 2008, was $20,457.

187

US $ Rs in Lacs

Cash Flows from Operating activities

Net loss $(9,383) (3.73)

Adjustments to reconcile net income to net cash

provided by operating activities

Amortization of intangible assets 161,757 64.22

Bad debts expense 13,394 5.32

Impairment of Goodwill 29,032 11.53

Deferred tax benefit (7,375) (2.93)

Changes in operating assets and liabilities

Decrease in Accounts receivable 19,656 7.80

Increase in prepaid and other assets (64,273) (25.52)

Increase in accounts payable 77,565 30.79

Increase in accrued expenses 3,493 1.39

Net Cash provided by operating activities 223,866 88.87

Cash flows from investing activities

Purchase of goodwill (1,132,483) (449.60)

Cash flows from financing activities

Proceeds from note payable 200,000 79.40

Net decrease in cash annd cash equivalents (708,617) (281.32)

Cash and Cash equivalents- April 1, 2007 873,908 346.94

Cash and Cash equivalents- March 31, 2008 $165,291 65.62

Supplemental disclosure of non- cash investing and financing activities

Decrease in note payable $500,000 198.50

Supplemental disclosure of cash flow information

Cash Paid during the year for interest $52,351 20.78

Cash paid during the year for income taxes $63,367 25.16

The accompanying notes are an integral part of this financial statements

STATEMENT OF CASH FLOW FOR THE YEAR ENDED MARCH 31, 2008

FOR YOUR USE

Registered Office : Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai – 400 079.

Proxy Form Folio No. ............................... Client ID No. .......................... DP ID No. ..............................

I/We ....................................................................................................................................................of ................................................................................................................................. being a member/members of the abovementioned Company, hereby appoint ................................................................................or failing him ...................................................................... as my/our proxy to vote for me/us on my/our behalf at the TWENTIETH ANNUAL GENERAL MEETING of the Company to be held on Tuesday, July 29, 2008 at 4.30 p.m. and at anyadjournment thereof. This form is to be used in favour of the resolution(s)......................................................................... /against the resolution/s..................................................................................................... Unless otherwise instructed the proxy will act as he thinks fit.Signed this ................. day of ......................... 2008.

Signature ...........................................................

Note : Proxy Forms must reach the Company’s Registered Office not less than 48 hours before the Meeting.

Registered Office : Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai – 400 079.

ATTENDANCE SLIP

I hereby record my presence at the TWENTIETH ANNUAL GENERAL MEETING of the Company to be held at Y.B. Chavan Centre, Nariman Point, Mumbai - 400 021 on Tuesday, July 29, 2008 at 4.30 p.m.

..................................................................................................... .......................................................................... Name of attending Member/Proxy Member’s/Proxy’s Signature (To be signed at the time of handing over this slip)

Notes :1. Shareholder/Proxyholder wishing to attend the Meeting must bring the Attendance Slip to the Meeting and hand-over at the

entrance duly signed.2. Shareholder/Proxyholder should bring his/her copy of the Annual Report for reference at the Meeting.

Folio No. ............................... Client ID No. .......................... DP ID No. ..............................

AffixRe 1/-

RevenueStamp

directors - godrej industries ltd · 2009-11-19 · 4 notice to shareholders notice is hereby given...

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