gil_annualreport_2002_03

Annual Report 2002-2003

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GODREJ INDUSTRIES LIMITED

DIRECTORS

A.B. Godrej Chairman

J.N. Godrej

N.B. Godrej Managing Director

S.A. Ahmadullah

V.M. Crishna

K.K. Dastur

N.C. Gawankar

V.N. Gogate

K.N. Naoroji

K.N. Petigara

F.P. Sarkari

V.F. Banaji Executive Director (Corporate H.R.)(appointed w.e.f. April 1, 2003)

T.A. Dubash Director (Marketing)

M. Eipe Executive Director & President (Chemicals)

M.P. Pusalkar Executive Director & President (Foods Div.)

C.K. Vaidya Executive Director (Corporate H.R.)(resigned w.e.f. April 1, 2003)

COMPANY SECRETARY

S.K. Bhatt

AUDITORS

Kalyaniwalla & Mistry, Chartered Accountants

Industries Limited

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REGISTERED OFFICE : Pirojshanagar,Eastern Express Highway,Vikhroli (East), Mumbai 400 079.Phone: 022 - 2518 8010, 2518 8020, 2518 8030Fax : 022 - 2518 8074, 2518 8066website : http://www.godrejinds.com

FACTORIES : Vikhroli Pirojshanagar, Eastern Express Highway,Vikhroli, Mumbai 400 079.Phone : 022 - 2518 8010, 2518 8020, 2518 8030Fax : 022 - 2518 8068/2518 8074

Valia Burjorjinagar,Plot No. 3, Village Kanerao,Taluka - Valia, District Bharuch,Gujarat 393 135.Phone : 02643 - 270756 to 270760Fax : 02643 - 270018

Wadala L.M.Nadkarni MargNear M.P. T. HospitalWadala (East), Mumbai - 400 037Phone : 022 - 2412 6320/23, 2414 6296Fax : 022 - 2412 6204, 2416 4599

Mandideep Plot No. 5, New Industrial Area No. 1Mandideep, District RaisenBhopal - 462 046, MPPhone : 07480 - 233405 - 6Fax : 07480 - 233409

BRANCHES : Delhi Laxmi Insurance Building2/2-A, Asaf Ali Road, New Delhi 110 002.Phone : 011 - 2323 3775, 2323 3777, 2323 6776Fax : 011 - 2323 3778

Kolkata Block GN, Sector-V,Salt Lake City, Kolkata 700 091.Phone : 033 - 2357 3556, 2357 3555Fax : 033 - 2357 3945

Chennai "Kings Cross"New # 102, (Old # 81)Pasum Pon Muthuramalinga Thevar Road(Chamiers Road)Chennai - 600 028.Phone : 044 - 24315721, 24315722Fax : 044 - 24315723

London 284A, Chase Road, SouthgateLondon N14 - 6HFPhone : (004420) - 88860145Fax : (004420) - 88869424

BANKERS : Central Bank of IndiaBank of IndiaState Bank of IndiaHDFC Bank Ltd.Citibank N.A.

REGISTRARS : Computech Sharecap Ltd.147, Mahatma Gandhi RoadOpp. Jehangir Art GalleryFort, Mumbai 400 023.Phone: 022 - 2267 1824-26Fax : 022 - 2267 0380E-Mail : [email protected]

CONTENTS Page Nos.

Financial Highlights ........................................................ 3

Notice .............................................................................. 4-10

Directors’ Report along with ManagementDiscussion and Analysis Report .................................. 11-16

Report on Corporate Governance ............................... 17-19

Shareholders' Information ............................................ 20-21

Auditors’ Report ............................................................. 22-23

Accounts ......................................................................... 24-40

Consolidated Accounts .................................................. 41-54

Statement Pursuant to Section 212 ............................ 55

SUBSIDIARIES

Godrej Agrovet Limited ................................................. 56-64

Goldmohur Foods & Feeds Limited ............................ 65-70

Godrej Properties & Investments Limited ................... 71-75

Girikandra Holiday Homes & Resorts Ltd. ................. 76-77

Godrej Remote Services Limited .................................. 78-81

Godrej Global Solutions Limited .................................. 82-83

Ensemble Holdings & Finance Limited ....................... 84-87

Godrej International Limited ......................................... 88-89

Godrej Global Mid East FZE ......................................... 90-93

Proxy Form .................................................................... 95


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Chemicals 41258

Foods 16520

Estate Management 2172

Processing Charges 3914Medical Diagnostics 714Income from Mfg. & Other BusinessOperations 673Income from Financial Operations 2240Others 289

Total 67780

Materials 40866

Staff Costs 6251

Depreciation 2211

Interest 2024

Other Operating Expenses 10620

Total 61972

Break-up of Total Income

Rs. Lac

Break-up of Total Expenditure

Rs. Lac

GODREJ INDUSTRIES LIMITED – FINANCIAL HIGHLIGHTS(Rs. lac)

2002-03 2001-02 2000-01 1999-00 1998-99BALANCE SHEETSOURCES OF FUNDS :Shareholders’ Funds

Share Capital 2919 3699 5979 5979 6313Reserves & Surplus 21511 21030 27559 25679 22051

Loan FundsSecured Loans 14815 15051 16701 22375 33312Unsecured Loans 7432 13456 9547 11881 13131Deferred Tax Liability 3466 1347 — — —

50143 54583 59786 65914 74807APPLICATION OF FUNDS :Fixed Assets 28130 29099 33799 32815 32309Investments 18646 14619 17075 19043 24081Net Working Capital 2944 9987 8076 12666 17489Miscellaneous Expenditure 423 878 836 1390 928

50143 54583 59786 65914 74807INCOME AND PROFIT FIGURES :

Total Income 67780 53465 79786 71620 90981Expenditure other than Interest and Depreciation 57737 43408 65935 57218 85894Profit before Interest, Depreciation and Tax 10043 10057 13851 14402 5087Interest (net) 2024 3218 3711 4774 5976Profit/(Loss) before Depreciation and Tax 8019 6839 10140 9628 (889)Depreciation 2211 2154 2531 2342 2104Profit/(Loss) before Tax and exceptional items 5808 4685 7609 7286 (2993)Exceptional items - expense — 624 3194 547 —Provision for Current Tax 421 150 350 641 —Net Profit/(Loss) after Tax 5387 3911 4065 6098 (2993)Provision for Deferred Tax 2119 923 — –– ––Adjustment in respect of prior years -(Income)/Expense (153) (121) (25) (90) 383Net Profit/(Loss) after taxes and adjustments 3421 3109 4090 6188 (3376)

Note : The figures for 2002-03 are not comparable with those of the previous years in view of the schemes of arrangement with Godrej Consumer Products Limited and Godrej Foods Limited, in financial year 2001-02.

Total Expenditure 2002-2003Total Income 2002-2003

Industries Limited

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NOTICE TO SHAREHOLDERSNOTICE is hereby given that the FIFTEENTH ANNUAL GENERAL MEETING of themembers of GODREJ INDUSTRIES LIMITED will be held on Monday, August 25, 2003at 3.00 P.M. at Y B Chavan Centre, Nariman Point, Mumbai – 400 021, to transact thefollowing business :ORDINARY BUSINESS :1. To consider and adopt the Audited Profit & Loss Account for the year ended

March 31, 2003, the Balance Sheet as at that date, the Auditors’ Report thereonand the Directors’ Report.

2. To declare dividend for the financial year ended March 31, 2003.3. To appoint a Director in place of Ms. Tanya A. Dubash, who retires by rotation and

being eligible, offers herself for re-appointment.4. To appoint a Director in place of Mr. Mathew Eipe, who retires by rotation and

being eligible offers himself for re-appointment.5. 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 authorizethe Board of Directors of the Company to fix their remuneration. M/s. Kalyaniwalla& Mistry, Chartered Accountants, the retiring Auditors are eligible for re-appointment.

SPECIAL BUSINESS :6. To consider and, if thought fit, to pass with or without modification, the

following resolution as an ORDINARY RESOLUTION :-RESOLVED that pursuant to section 256 and all other applicable provisions, if any,of the Companies Act, 1956, the vacancy caused by the retirement of Mr. K.N.Naoroji who retires by rotation at this Annual General Meeting and who does notseek re-appointment be not filled up.

7. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as an ORDINARY RESOLUTION :-RESOLVED that pursuant to section 256 and all other applicable provisions, if any,of the Companies Act, 1956, the vacancy caused by the retirement ofMr.N.C.Gawankar who retires by rotation at this Annual General Meeting and whodoes not seek re-appointment be not filled up.

8. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as an ORDINARY RESOLUTION :-RESOLVED THAT Mr. V. F. Banaji, who was appointed as an Additional Directorwith effect from April 1, 2003 by the Board of Directors vide Resolution passedon March 25, 2003 and who holds office as such upto the date of this meetingand is eligible for appointment as Director, and in respect of whom notice underSection 257 of the Companies Act, 1956, has been received, be and is herebyappointed as a Director of the Company, retiring by rotation.

9. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIIIand other applicable provisions, if any, of the Companies Act, 1956, approval ofthe Company be and is hereby accorded for the appointment and remuneration ofMr. V.F. Banaji as a whole-time director of the Company designated as ExecutiveDirector (Corporate HR), for a period of one year from April 1, 2003 to March 31,2004 on the terms and conditions as contained in the Agreement dated April 3,2003 entered into between the Company and Mr. V. F. Banaji, abstract of whichwas circulated to the members of the Company in terms of Section 302 of theCompanies Act, 1956.

10. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIIIand other applicable provisions, if any, of the Companies Act, 1956, approval ofthe Company be and is hereby accorded for the re-appointment and remunerationof Mr. V. F. Banaji as a whole-time Director of the Company designated asExecutive Director (Corporate HR) for a period of three years from April 1, 2004to March 31, 2007, on the terms and conditions as contained in the Agreementto be entered into between the Company and Mr. V. F. Banaji, a draft of which isplaced before the meeting and for the purpose of identification, initialed by theChairman.

11. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIIIand other applicable provisions, if any, of the Companies Act, 1956, approval ofthe Company be and is hereby accorded for the re-appointment and remunerationof Ms. T.A. Dubash as a whole-time director of the Company designated asDirector (Marketing), for a period of three years from April 1, 2004 to March 31,2007 on the terms and conditions as contained in the Agreement to be enteredinto between the Company and Ms. T.A. Dubash, a draft of which is placed beforethe meeting and for the purpose of identification, initialed by the Chairman.

12. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIIIand other applicable provisions, if any, of the Companies Act, 1956, approval ofthe Company be and is hereby accorded for the re-appointment and remuneration

of Mr. M. Eipe as a whole-time director of the Company designated as ExecutiveDirector & President (Chemicals), for a period of three years from April 1, 2004to March 31, 2007 on the terms and conditions as contained in the Agreement tobe entered into between the Company and Mr. M. Eipe, a draft of which is placedbefore the meeting and for the purpose of identification, initialed by the Chairman.

13. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIIIand other applicable provisions, if any, of the Companies Act, 1956, approval ofthe Company be and is hereby accorded for the re-appointment and remunerationof Mr. M. P. Pusalkar as a whole-time director of the Company designated asExecutive Director & President (Foods Division), for a period of three years fromApril 1, 2004 to March 31, 2007 on the terms and conditions as contained in theAgreement to be entered into between the Company and Mr. M. P. Pusalkar, adraft of which is placed before the meeting and for the purpose of identification,initialed by the Chairman.

14. To consider and if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-RESOLVED THAT pursuant to Section 372A and all other applicable provisions, ifany, of the Companies Act, 1956 including any statutory modification or re-enactment thereof for the time being in force and as may be enacted from time totime (hereinafter referred to as ‘the Act’), the Company be and is hereby authorisedto further invest upto Rs.60 crore (Rupees Sixty Crore only) in addition to theamount already invested, by way of subscription, purchase or otherwise in securitiesof Godrej Consumer Products Limited, notwithstanding that the aggregate of theloans and investments so far made in or to be made in, and the guarantees so fargiven or to be given to all bodies corporate, exceeds the limits laid down by theAct.RESOLVED FURTHER THAT the Board of Directors of the Company be and ishereby authorised to take from time to time all decisions and steps necessary orexpedient or proper in respect of the above investment including the timing, thetype, the amount and other terms and conditions of such investment and varyingthe same through transfer, sale, disinvestment or otherwise, either in part or infull, as it may, in its absolute discretion, deem appropriate.

15. To consider and if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-RESOLVED pursuant to the provisions of Section 61 of the Companies Act, 1956,(including any statutory modification(s) or re-enactment thereof for the time beingin force and as may be enacted hereafter), the Securities and Exchange Board ofIndia (Delisting of Securities) Guidelines, 2003 ("the Guidelines") and subject tosuch approvals, permissions and sanctions as may be necessary and subject tosuch considitions and modifications as may be prescribed or imposed whilegranting such approvals, permissions and sanctions, consent of the Company beand is hereby accorded for voluntary delisting of the equity shares of the Company,from all Stock Exchanges other than from The Stock Exchange, Mumbai and TheNational Stock Exchange of India Ltd., i.e. delisting from The Stock Exchange,Ahmedabad, The Delhi Stock Exchange Association Limited, Madras Stock ExchangeLimited and The Calcutta Stock Exchange Association Limited, in terms of Clause5 and 5.2 of the Guidelines, to enable the Company to save listing fees and otheradministrative costs.FURTHER RESOLVED that the Board of Directors of the Company be and ishereby authorised to do all such acts as may be necessary to give effect to theabove.

16. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as an ORDINARY RESOLUTION :-RESOLVED THAT in supersession of the resolution passed at the General Meetingof the Company held on August 22, 1994, consent of the Company be and ishereby accorded to the Board of Directors of the Company to contribute tocharitable, benevolent and other funds not directly relating to the business of theCompany or the welfare of its employees, such amounts from time to time, asthe Board of Directors of the Company may, in their discretion, deem fit, notexceeding Rs. 2.00 crore (Rupees Two Crore only) in any financial year commencingApril 1, 2003 notwithstanding that the aggregate of such contributions are inexcess of the limits laid down in Section 293(1)(e) or any other sections of theCompanies Act, 1956.

By Order of the Board of Directors

S. K. BHATTGeneral Manager (Corporate Services)

& Company Secretary

Mumbai, May 28, 2003

Registered Office :Pirojshanagar, Eastern Express Highway,Vikhroli (East), Mumbai 400 079.


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NOTES :

1. The relative Explanatory Statement in respect of business under Item Nos. 6 to 16set out in the Notice is annexed hereto.

2. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT APROXY TO ATTEND AND ON POLL, TO VOTE INSTEAD OF HIMSELF. SUCH APROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES IN ORDER TOBE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48HOURS BEFORE THE MEETING. A PROXY SO APPOINTED SHALL NOT HAVEANY RIGHT TO SPEAK AT THE MEETING.

3. The Register of Members and Share Transfer Books of the Company will be closedfrom August 19, 2003 to August 25, 2003 for ascertaining the names of theshareholders to whom the dividend which shall be declared at the AGM is payable.In respect of shares held in electronic form, the dividend will be payable on thebasis of beneficial ownership as per details furnished by National Securities DepositoryLtd. and Central Depository Services (India) Ltd., for this purpose.

4. Pursuant to Section 205A (5) of the Companies Act, 1956, as amended, anymoney transferred to the Unpaid Dividend Account of the Company which remainsunpaid or unclaimed for a period of seven years from the date the dividend becamedue for payment shall be transferred by the Company to the Investor Educationand Protection Fund of the Central Government and the Shareholders shall not beable to claim any unpaid dividend from the said fund or from the Companythereafter.

Members who have not encashed the dividend warrant(s) so far, Final Dividend1996 and 1997 or any subsequent dividend payment(s) are requested to maketheir claims to the Company immediately. Please note that as per Section 205C ofthe Companies Act, 1956, no claim shall lie against the Company or the said Fundin respect of individual amounts which remain unclaimed or unpaid for a period ofseven years from the date dividend became due for payment and no payment shallbe made in respect of any such claims.

5. Members are requested to bring their copy of the Annual Report to the AnnualGeneral Meeting.

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

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

Item No. 6

In accordance with Article 127 of the Articles of Association of the Company,Mr. K.N. Naoroji retires by rotation at the ensuing Annual General Meeting. In view of hisadvanced age, Mr. K.N. Naoroji, has not offered himself for re-appointment. The Boardproposes that the vacancy caused by his retirement shall not be filled up.Mr. K.N. Naoroji has been on the Board of the Company since 1995 and the Boardrecords its appreciation for the contribution made by him during his tenure with theCompany.

The Board recommends the passing of this resolution. None of the directors of theCompany except Mr. K.N. Naoroji are interested in the resolution.

Item No. 7

In accordance with Article 127 of the Articles of association of the Company,Mr. N.C. Gawankar retires by rotation at the ensuing Annual General Meeting. In view ofhis advanced age, Mr. N.C. Gawankar, has not offered himself for re-appointment. TheBoard proposes that the vacancy caused by his retirement shall not be filled up.Mr. N.C. Gawankar has been on the Board of the company since 1995 and the Boardrecords its appreciation for the contribution made by him during his tenure with theCompany.

The Board recommends the passing of this resolution. None of the directors of theCompany, except Mr. N.C. Gawankar are interested in the resolution.

Item No. 8 and 9

Mr. V.F. Banaji joined the Company on February 10, 2003 as Executive Director –Designate (Corporate HR). He has taken over the Corporate HR function fromMr. C.K. Vaidya.

The Board of Directors of the Company had, vide its resolution passed on March 25, 2003,appointed Mr. V.F. Banaji as an Additional Director designated as Executive Director (CorporateHR) with effect from April 1, 2003, on the remuneration, terms and conditions containedin the agreement dated April 3, 2003 entered into between the Company and him.

The Company had circulated to the shareholders, the abstract of the terms of theagreement which is required to be given to every Member under Section 302 of theCompanies Act, 1956, on April 11, 2003.

The particulars of remuneration and other terms and conditions of appointment ofMr. V.F. Banaji are given below :

1. Mr. V.F. Banaji (hereinafter referred to as the Whole-time Director) shall perform hisduties subject to the superintendence, control and direction of the Board ofDirectors of the Company.

2. Period of appointment: from April 1, 2003 to March 31, 2004.

3. In consideration of the performance of his duties, the Whole-time Director shall beentitled to receive remuneration as stated hereinbelow:-

I. Basic Salary :

In the scale of Rs. 70,000/- to Rs. 2,00,000/- per month. The RemunerationCommittee of the Board of Directors will determine the amount of salarypayable to the Whole-time Director.

II. Performance Linked Variable Remuneration :

Performance Linked Variable Remuneration according to the Scheme of theCompany for each of the financial years 2002-03 and 2003-04 as may bedecided by the Remuneration Committee/Board of Directors of the Companybased on Economic Value Added in the business and other relevant factorsand having regard to the performance of the Whole-time Director subject toa ceiling of 36 months’ average basic salary, for each year.

III. Perquisites and other matters :

Classified into four categories A, B, C and D as detailed below :

Category A

(1) Housing :

A. Unfurnished residential accommodation, and House Rent Allowance equivalentto 30% of Basic salary.

OR

House rent allowance equivalent to 55% of the Basic salary.

B. Furnishing at residence subject to a ceiling of Rs.2,00,000/- for a period of5 years in accordance with the Company’s Scheme.

(2) Medical Reimbursement :

Reimbursement of domiciliary medical expenses incurred/insurance premium forthe Whole-time Director and his family (excluding hospitalisation, nursing homeand surgical charges), subject to a ceiling of one month’s average basic salary in afinancial year. Reimbursement of hospitalisation, nursing home and surgical chargesfor the Whole-time Director and his family subject to a limit of Rs.1 lac perfinancial year which can be accumulated according to the Company’s Rules.

(3) Leave Travel Concession :

Leave Travel Concession for the Whole-time Director and his family once in afinancial year incurred in accordance with the Rules specified by the Companysubject to a ceiling of 10% of average basic salary in a financial year, subject to amaximum of Rs.75,000/- in a financial year.

(4) Club :

Reimbursement of Club fees of one Club subject to a ceiling of Rs.50,000/-(excluding entrance fees/life membership fees) in a financial year.

For the purposes of medical reimbursements and leave travel concession underCategory A, ‘family’ means the spouse, dependent children and dependent parentsof the Whole-time Director.

Category B

(1) Company’s contributions towards Provident Fund, Superannuation Fund or AnnuityFund as per the Rules framed under the Company’s relevant Scheme. These shallbe subject to a ceiling of the amount upto which the said contributions are eithersingly or put together not taxable, under the Income Tax Act, 1961.

(2) Gratuity not exceeding 50% of average basic salary drawn in the last year of servicefor each completed year of service. Such gratuity shall be payable according to therules of the Company. If the Whole-time Director is re-appointed, gratuity will bepaid at the end of his tenure with the Company.

(3) Earned/privilege leave, on full pay and allowance, not exceeding 30 days in afinancial year. Encashment of leave will be permissible in accordance with the Rulesspecified by the Company. Casual/Sick leave as per the rules of the Company.

Industries Limited

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Category C

The following shall not be included in the computation of perquisites :-

(1) Provision for use of Company’s cars.

(2) Provision of free telephone facilities or reimbursement of telephone expenses atresidence, including payment of local calls and long distance official calls.

Category D - Loans

(a) Granting of housing loans according to Company’s Scheme subject to CentralGovernment’s approval, if applicable.

Notes :

I. Unless otherwise stipulated, for the purpose of the above, the perquisites shall beevaluated as per Income Tax Rules wherever actual cost cannot be determined.

II. Notwithstanding the foregoing, where in any Financial Year during the currency ofthe tenure of the Whole-time Director, the Company has no profits or its profitsare inadequate, the remuneration by way of salary, commission and perquisitesshall not exceed the maximum limits prescribed in Schedule XIII to the CompaniesAct, 1956 except with the approval of the Central Government.

III. The limits specified above are the maximum limits and the Remuneration Committee/Board may in its absolute discretion pay to Whole-time Director lower remunerationand revise the same from time to time within the maximum limits stipulatedabove.

IV. In the event of any re-enactment or re-codification of the Companies Act, 1956 orthe Income Tax Act, 1961 or amendments thereto, the foregoing shall continue toremain in force and the reference to various provisions of the Companies Act,1956 or the Income Tax Act, 1961 shall be deemed to be substituted by thecorresponding provisions of the new Act or the amendments thereto or the Rulesand notifications issued thereunder.

V. If at any time the Whole-time Director ceases to be in the employment of theCompany for any cause whatsoever, he shall cease to be a Director of the Company.

VI. The Whole-time Director is appointed by virtue of his employment in the Companyand his appointment is subject to the provisions of Section 283(1) of the Act,while at the same time the Whole-time Director is liable to retire by rotation.The appointment is terminable by giving three months’ notice in writing on eitherside.

The Agreement entered into with the Whole-time Director is available for inspection at theRegd. Office of the Company from 10.00 A.M. to 12.00 Noon, Monday to Friday(except public holidays) upto the date of the Annual General Meeting.

Mr. V.F. Banaji (49) is B.A. from Nagpur University. He brings with him a wealth ofexperience as an HR professional, having worked with Telco from 1973 to September1997 and the position he last occupied in Telco was General Manager (HR) reporting tothe Executive Director (Corporate Affairs). From October 1997 to September 1999 heworked as the Executive Director (HR) on the board of ALSTOM Ltd. in India. FromOctober 1999, till he joined Godrej Industries Ltd., he was designated as the ProjectDirector – ALSTOM People System and was based in Paris which is the headquarters ofALSTOM.

Since Mr. V.F. Banaji was appointed as Additional Director, he holds office upto the dateof this Annual General Meeting, in terms of the provisions contained in Section 260 ofthe Companies Act, 1956. Notice under Section 257 of the Companies Act, 1956 hasbeen received from a member signifying intention to propose the appointment of theaforesaid person as Director retiring by rotation at this Annual General Meeting. Resolution8 is sought to be passed for approval of appointment of Mr. V.F. Banaji as directorretiring by rotation.

Your Board is of the opinion that considering the qualifications and experience ofMr. V.F. Banaji, his appointment as Whole-time Director of the Company will be beneficialto the Company.

Resolution No. 9 is sought to be passed for approval of his appointment and remunerationfor the period April 1, 2003 to March 31, 2004.

The Statement containing information as required under Schedule XIII of the CompaniesAct, 1956 is enclosed.

The Board of Directors of the Company recommends the passing of the resolutions asset out at Item Nos.8 and 9 of the Notice.

Mr. V.F. Banaji may be deemed to be interested in the resolution.

None of the other Directors of the Company are concerned or interested in the resolution.

Item No. 11

Ms. T.A. Dubash was appointed as a whole-time director designated as Director (Marketing)and her term expires on March 31, 2004. It is proposed to re-appoint Ms. T.A. Dubash

as a whole-time director designated as Director (Marketing) for a further period of threeyears with effect from April 1, 2004 on the remuneration, terms and conditions as perthe agreement to be entered into with her, the details of which are given below.

1. Ms. T.A. Dubash (hereinafter referred to as the Whole-time Director) shall performher duties subject to the superintendence, control and direction of the Board ofDirectors of the Company.

2. Period of appointment: from 1/4/2004 to 31/3/2007.

3. In consideration of the performance of her duties, the Whole-time Director shall beentitled to receive remuneration as stated hereinbelow:-

I. Basic Salary :

In the scale of Rs.1,40,000/- to Rs.3,00,000/- per month. The RemunerationCommittee of the Board of Directors will determine the amount of salarypayable to Ms. T.A. Dubash depending on her performance, profitability ofthe Company and other relevant factors.

The basic salary approved for 2003-04 is Rs. 1,40,000/- per month.


Performance Linked Variable Remuneration according to the Scheme of theCompany for each of the financial years as may be decided by theRemuneration Committee/Board based on Economic Value Added in thebusiness and other relevant factors and having regard to the performance ofthe Whole-time Director subject to a ceiling of 36 months' average basicsalary, for each year.


Classified into four categories A, B, C and D:

Category A

(1) Housing :

A. Unfurnished residential accommodation, the perquisite value of which, shallbe calculated in accordance with the Income-tax Rules, 1961, and HouseRent Allowance equivalent to 30% of Basic salary.

OR




a) Reimbursement of domicillary medical expenses incurred/insurance premiumpaid for the Whole-time Director and her family (excluding hospitalisation,nursing home and surgical charges), subject to a ceiling of one month’saverage basic salary in a financial year.

b) Reimbursement of hospitalisation, nursing home and surgical charges forthe Whole-time Director and her family subject to a limit of Rs.1 lacper financial year which can be accumulated according to the Company’sRules.

c) Health Insurance for the Whole-time Director and her family, subject to aceiling of Rs.1,00,000/- in a financial year for the premium payable inrespect of such insurance.


Leave Travel Concession (for the Whole-time Director and her family once in afinancial year incurred in accordance with the Rules specified by the Company)subject to a ceiling of 10% of average basic salary in a financial year, subject to amaximum of Rs.75,000/- in a financial year as may be decided by the Board.

(4) Club :

Reimbursement of Club fees of a maximum of two Clubs subject to a ceiling ofRs.50,000/- (excluding entrance fees/life membership fees) in a Financial year.

For the purposes of medical reimbursements and leave travel concession underCategory A, ‘family’ means the spouse and dependent children and dependentparents of the Whole-time Director.

Category B


(2) Gratuity not exceeding 50% of average basic salary drawn in the last year of servicefor each completed year of service. Such gratuity shall be payable according to the


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rules of the Company. If the Whole-time Director is reappointed, gratuity will bepaid at the end of her tenure with the Company.


Category C

The following shall not be included in the computation of perquisites:-

(1) Provision for use of Company’s cars for official use.

(2) Provision of free telephone facilities or reimbursement of telephone expenses atresidence, including payment of local calls and long distance official calls.

Category D - Loans

Granting of housing loans according to Company’s Scheme subject to Central Governmentapproval, if any.

Notes :

I. Unless otherwise stipulated, for the purpose of the above, the perquisites shall beevaluated as per Income Tax Rules wherever actual cost cannot be determined.

II. Notwithstanding the foregoing, where in any Financial Year during the currency ofthe tenure of the Whole-time Director, the Company has no profits or its profitsare inadequate, the remuneration by way of salary, commission and perquisitesshall not exceed, the maximum limits prescribed in Schedule XIII to the CompaniesAct, 1956, except with the approval of the Central Government.

III. The limits specified above are the maximum limits and the Remuneration Committee/Board may in its absolute discretion pay to the Whole-time Director lowerremuneration and revise the same from time to time within the maximum limitsstipulated above.


V. The Whole-time Director is liable to retire by rotation.

VI. The appointment is terminable by giving three months’ notice in writing on eitherside.

A draft of the agreement to be entered into with the Whole-time Director is available forinspection at the Regd. Office of the Company from 10.00 A.M. to 12.00 Noon,Monday to Friday (except public holidays) upto the date of the Annual General Meeting.

The above constitutes the abstract of the terms of the agreement which is required to begiven to every member under the provisions of Section 302 of the Companies Act, 1956.

The Statement containing information as required under Schedule XIII of the CompaniesAct, 1956 is enclosed.

The Board of Directors of the Company recommends the passing of the resolution as setout at Item no.11 of the Notice.

Ms. T.A. Dubash may be deemed to be interested in the resolution. Mr. A.B. Godrej,being her relative, may be deemed to be interested in the resolution. None of the otherDirectors of the Company are concerned or interested in the resolution.

Item Nos.10, 12 and 13

The tenure of the following Whole-time Directors with the Company expires on March31, 2004.

Mr. V.F. Banaji – Executive Director (Corporate HR)

Mr. M. Eipe – Executive Director & President (Chemicals)

Mr. M.P. Pusalkar – Executive Director & President (Foods Division)

It is also proposed to seek approval of shareholders for re-appointment and remunerationof Mr. V.F. Banaji, Mr. M. Eipe and Mr. M.P. Pusalkar for a further period of three yearsfrom April 1, 2004 to March 31, 2007, on the remuneration, terms and conditions givenbelow:-

1. Mr. V.F. Banaji, Mr. M. Eipe and Mr. M.P. Pusalkar (hereinafter referred to as theWhole-time Directors) shall perform their duties subject to the superintendence,control and direction of the Board of Directors of the Company.

2. Period of appointment: from 1/4/2004 to 31/3/2007.

3. In consideration of the performance of their duties, the Whole-time Directors shallbe entitled to receive remuneration as stated hereinbelow:-

I. Basic Salary :

In the scale of Rs.1,10,000/- to Rs.3,00,000/- per month. The RemunerationCommittee / Board of Directors will determine the amount of salary payableto the Whole-time Directors and the amount of increments payable everyyear depending on the performance of the Whole-time Directors, profitabilityof the Company and other relevant factors.

The basic salaries approved for 2003-04 are as follows:-

Mr. V. F. Banaji- Rs. 1,40,000/- per month

Mr. Mathew Eipe- Rs. 1,70,000/- per month

Mr. M. P. Pusalkar- Rs. 1,12,000/- per month


Performance Linked Variable Remuneration according to the Scheme of theCompany for each of the financial years as may be decided by theRemuneration Committee/Board of Directors of the Company based onEconomic Value Added in the business and other relevant factors andhaving regard to the performance of Whole-time Director subject to a ceilingof 36 months’ average basic salary, for each year.


Classified into four categories A, B, C and D as detailed below :

Category A

(1) Housing :

A. Unfurnished residential accommodation, and House Rent Allowance equivalentto 30% of Basic salary.

OR




Reimbursement of domiciliary medical expenses incurred/insurance premium forthe Whole-time Directors and their family (excluding hospitalisation, nursing homeand surgical charges), subject to a ceiling of one month’s average basic salary in afinancial year. Reimbursement of hospitalisation, nursing home and surgical chargesfor Whole-time Directors and their family subject to a limit of Rs.1 lac per financialyear which can be accumulated according to the Company’s Rules.


Leave Travel Concession (for the Whole-time Directors and their family once in afinancial year incurred in accordance with the Rules specified by the Company)subject to a ceiling of 10% of average basic salary in a financial year, subject to amaximum of Rs.75,000/- in a financial year for each of them.

(4) Club :

Reimbursement of Club fees of one Club subject to a ceiling of Rs.50,000/-(excluding entrance fees/life membership fees) in a financial year.

(5) Education Allowance :

Reimbursement of Education Allowance to Mr. M.P. Pusalkar @ Rs.10,000/- permonth.

For the purposes of medical reimbursements and leave travel concession underCategory A, ‘family’ means the spouse, dependent children and dependent parentsof the Whole-time Directors.

Category B


(2) Gratuity not exceeding 50% of average basic salary drawn in the last year of servicefor each completed year of service. Such gratuity shall be payable according to therules of the Company. If the Whole-time Directors are reappointed, gratuity will bepaid at the end of their tenure with the Company.


Industries Limited

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Category CThe following shall not be included in the computation of perquisites :-(1) Provision for use of Company’s cars for official use.(2) Provision of free telephone facilities or reimbursement of telephone expenses at

residence, including payment of local calls and long distance official calls.Category D - Loans(a) Granting of loans according to Company’s Scheme subject to Central Government’s

approval, if applicable.(b) Continuation of Loans already availed :

Housing Loan to Mr. M.P. Pusalkar as on 28.05.03 – Rs.5,69,290/-Contingency Loan to Mr. M.P. Pusalkar as 28.05.03 – Rs.81,663/-

Notes :I. Unless otherwise stipulated, for the purpose of the above, the perquisites shall be

evaluated as per Income Tax Rules wherever actual cost cannot be determined.II. Notwithstanding the foregoing, where in any Financial Year during the currency of

the tenure of the Whole-time Directors, the Company has no profits or its profitsare inadequate, the remuneration by way of salary, commission and perquisitesshall not exceed, the maximum limits prescribed in Schedule XIII to the CompaniesAct, 1956 except with the approval of the Central Government.

III. The limits specified above are the maximum limits and the Remuneration Committee/Board may in its absolute discretion pay to Whole-time Directors lower remunerationand revise the same from time to time within the maximum limits stipulatedabove.


V. If at any time the Whole-time Directors cease to be in the employment of theCompany for any cause whatsoever, they shall cease to be Directors of theCompany.

VI. Whole-time Directors are appointed by virtue of their employment in the Companyand their appointment is subject to the provisions of Section 283(1) of the Act,while at the same time the Whole-time Directors are liable to retire by rotation. Theappointment is terminable by giving three months’ notice in writing on either side.

A draft of the agreement to be entered into with the Whole-time Directors is available forinspection at the Regd. Office of the Company from 10.00 A.M. to 12.00 Noon,Monday to Friday (except public holidays) upto the date of the Annual General Meeting.Your Board is of the opinion that considering the qualifications and experience ofMr. V.F. Banaji, Mr. M. Eipe and Mr. M.P. Pusalkar, their re-appointment as Whole-timeDirectors of the Company will be beneficial to the Company.The particulars given above constitute the abstract of the terms of the agreements whichis required to be given to every member under the provisions of Section 302 of theCompanies Act, 1956.The Statement containing information as required under Schedule XIII of the CompaniesAct, 1956 is enclosed.The Board of Directors of the Company recommends the passing of the resolutions asset out at Item nos. 10, 12 and 13 of the Notice.Mr. V.F. Banaji, Mr. M. Eipe and Mr. M.P. Pusalkar may be deemed to be interested inthe resolution. None of the other Directors of the Company are concerned or interestedin the resolution.

Item No.14

Particulars of the company where investment is proposed to be made :Name of the Principal business Purpose of Source of funds Nature of concern or interestCompany & of the Company investment of directorsaddress ofRegd. Office

Godrej Manufacturing A good Internal generation Mr A.B. Godrej, Mr. J.N. Godrej,Consumer and marketing investment of funds/ Mr. N.B. Godrej, Mr. K.K. Dastur,Products of fast moving opportunity borrowings. Mr.M. Eipe, Ms. T.A.Dubash,Limited consumer Mr. V.N. Gogate, Mr. V.M.Pirojshanagar, products Crishna, Mr. M.P. Pusalkar,Eastern such as soaps, Mr. K.N. Petigara. Mr. F.P.Express detergents, Sarkari and Mr. S.A. AhmadullahHighway, toiletries may be deemed to beVikhroli, personal care interested in this resolutionMumbai products, etc. on account of their being400 079 directors and/or shareholders

in Godrej Consumer ProductsLtd. None of the otherDirectors of the Company areconcerned or interested in theresolution.

The Board of Directors of the Company recommends the passing of the resolution as setout at Item no. 14 of the Notice.Item No. 15The Company is at present listed on the Stock Exchange, Mumbai, The National StockExchange of India Ltd., The Stock Exchange, Ahmedabad, The Delhi Stock ExchangeAssociation Limited, Madras Stock Exchange Limited and The Calcutta Stock ExchangeAssociation Limited.There has been negligible trading in equity shares of the Company on The StockExchange, Ahmedabad, The Delhi Stock Exchange Association Limited, Madras StockExchange Limited and The Calcutta Stock Exchange Association Limited. It is, therefore,proposed to voluntarily delist the equity shares of the Company from these StockExchanges, pursuant to the provisions contained in Securities and Exchange Board ofIndia (Delisting of Securities) Guidelines, 2003 ("the Guidelines") so as to enable savingof listing fees and other administratrive costs. The Guidelines require that prior approvalof shareholders by special resolution should be taken.The Company shall continue to be listed on the Stock Exchange, Mumbai and theNational Stock Exchange, which have nationwide trading terminals. In terms of Clause5.2 of the Guidelines, the Company is not required to offer exit opportunity to theshareholders situated in the regions of the Stock Exchanges from where the equity sharesof the Company are proposed to be delisted and hence the same is not being made.None of the Directors of the Company are concerned or interested in the resolution.The Board of Directors of the Company recommends the passing of the resolution as setout at Item No. 15 of the Notice.Item No. 16Section 293(1)(e) of the Companies Act, 1956 provides that no Company shall contributeto charitable and other funds not directly relating to the business of the Company or thewelfare of the employees, any amounts the aggregate of which will, in any financial year,exceed Rs. 50,000/- or 5% of average net profits as determined in accordance with theprovisions of Section 349 & 350 during the three financial years immediately preceding,whichever is greater. The Company's accumulated loss u/s. 349 of the Companies Act,1956 as on March 31, 2003 is Rs. 22.00 crore.The shareholders of the Company had, in their meeting held on August 22, 1994approved a limit of Rs. 50.00 lac p.a., u/s. 293(1)(e) of the Companies Act, 1956 forgiving donations to charitable trusts, etc. It is proposed to increase this limit to Rs. 2.00crore p.a. w.e.f. April 1, 2003. The Board of Directors of the Company recommends thepassing of the resolution as set out at Item No. 16 of the Notice.None of the Directors of the Company are concerned or interested in the resolution.



& Company SecretaryMumbai, May 28, 2003.

Registered Office :Pirojshanagar,Eastern Express Highway,Vikhroli (East), Mumbai 400 079.

Statement In Terms of Schedule XIII of the Companies Act, 1956 relating ToRemuneration Payable to the Whole-Time Directors

I. General Information1. Nature of Industry – Oleo-Chemicals, Edible oils, Fats, and Processed

Foods2. Date or expected date of commencement of commercial production –

The Company was incorporated on March 7, 1988 as a Public LimitedCompany.

3. Financial performance based on given indicators – as per the auditedfinancial results for the year ended March 31, 2003

(Rs. lac)Sales of products and services 65250Other Income 2530Total income 67780Total expenditure other than interest & depreciation 57737Profit Before Depreciation, Interest and Tax 10043Depreciation 2211Profit Before Interest and Tax 7832Interest and financial charges (net) 2024Profit Before Tax 5808Provision for Current Tax 421Profit after Current Tax 5387Provision for Deferred Tax 2119Adjustments in respect of prior years – net income 153Profit After Tax 3421


9

4. Export performance and net foreign exchange earned for the year endedMarch 31, 2003

(Rs. lac)FOB value of Exports 9719Interest income 28

5. Foreign investments as on March 31, 2003

In shares of Godrej International Ltd., the Company’swholly owned subsidiary 961

In equity shares of Compass Connections Ltd. 124

In Optionally Convertible Subordinated Notes ofCBay Systems Ltd. 390

II. Information about the appointee

1. Background details :

� Mr. Vistasp Banaji is B.A. from Nagpur University and joined theCompany w.e.f. 10/2/03. Before joining the Company, he had workedin senior positions in HR in several other companies, the last beingas the Project Director – ALSTOM People System and was based inParis which is the headquarters of ALSTOM.

� Ms. T. A. Dubash is A.B. with Economics & Political Science fromBrown University, Rhode Island, USA and has been with the Companysince 1994.

� Mr. Mathew Eipe is B.Tech. (Chem.) from IIT, Mumbai, PGDM fromIIM, Kolkata and has been with the Company for over 25 years.Before taking over the Chemicals Division, he handled variousresponsibilities in Sales, Marketing and Operations of the Company.

� Mr. M.P. Pusalkar is B.Tech. (Elec) from Indian Institute of Technology(Kanpur) and MMS from JBIMS, Mumbai and has been in the Godrejgroup for over 26 years. Earlier he was the Managing Director ofGodrej Foods Ltd. (GFL). He has handled various functions inmanufacturing, marketing, etc. On the demerger of the Foods Divisionof GFL into the Company, Mr. Pusalkar became Executive Director &President (Foods Division) of the Company on 1st April 2002.

2. Past remuneration :

The remuneration paid during the year ended March 31, 2003 isas under :-

Salary Perquisites Total(Rs.) (Rs.) (Rs.)

Mr. V.F. Banaji* 204000 89429 293429Ms. T.A. Dubash 3958820 722077 4680897Mr. M. Eipe 3991220 625580 4616800Mr. M.P. Pusalkar 2904640 308494 3213134

*Mr. V.F. Banaji joined the Company w.e.f February 10, 2003

3. Job profile and suitability :

� Mr. V.F. Banaji: is the Executive Director (Corporate H.R.) andheads the Corporate H.R. functions of the Group.

� Ms. T.A. Dubash: is Director (Marketing) and is responsible forthe marketing functions of the Company.

� Mr. M. Eipe: is the Executive Director & President (Chemicals) andheads the Chemicals Division of the Company.

� Mr. M.P. Pusalkar: is the Executive Director & President (FoodsDivision) and heads the Foods Division of the Company.

4. Remuneration proposed :

Details of the proposed remuneration of Mr. V.F. Banaji, Ms. T.A. Dubash,Mr. M. Eipe and Mr. M.P. Pusalkar are given in the Explanatory Statementsto the resolutions.

Brief particulars of the remuneration are given below :

Rupees

Description LimitsBasic salary range per month In the range of Rs.1,10,000/- to Rs.3,00,000/-

p.m. The present monthly basic salaries are givenbelow :Mr. V.F. Banaji – Rs.1,40,000/-Ms. T.A. Dubash – Rs.1,40,000/-Mr. M. Eipe – Rs.1,70,000/-Mr. M.P. Pusalkar – Rs.1,12,000/-

Performance linked bonus Based on performance subject to a ceiling of 36months’ average basic salary

HRA Unfurnished residential accommodation and HouseRent Allowance equivalent to 30% of basic salaryOrHouse Rent Allowance equivalent to 55% of basicsalary

Perquisites As per rules of the Company

5. Comparative remuneration profile with respect to industry, size of thecompany, profile of the position and person :Taking into consideration the size of the Company, the profile of theAppointees, the responsibilities shouldered by them and the industrybenchmarks, the aforesaid remuneration is commensurate with theremuneration package paid to similar senior level appointees in othercompanies.

6. Pecuniary relationship directly or indirectly with the Company, or relationshipwith the managerial personnel, if any :

Besides the remuneration proposed, Executive Directors do not have anyother pecuniary relationship with the Company and its managerial personnel.However, certain amounts are outstanding in respect of housing loans /contingency loans, availed earlier by the Appointees for which, monthlydeductions are being made in accordance with the rules applicable to theemployees of the Company.

III. Other information

1. Reasons of loss or inadequate profits :

The Company was incorporated in March 1988 as Gujarat Godrej InnovativeChemicals Ltd. (GGICL), which was engaged in the manufacture of industrialchemicals like Alpha Olefin (AO), Alpha Olefin Sulphonate (AOS), FattyAlcohols, Fatty Acids, Glycerin etc. This company was incurring losses sinceits inception due to the fact that the project was capital intensive in natureand the manufacture of AO and AOS was not having much industrialapplication in our country then. This resulted in heavy accumulated lossesu/s 349 of the Companies Act, 1956.

Also, the Company is depreciating its assets on the straight line method atthe rates provided in Schedule XIV. But for the purpose of managerialremuneration, as per section 350, the depreciation is considered on thewritten down value method, at the rates specified in Schedule XIV, andthese rates are higher and therefore there is higher depreciation charge andlower profits.

2. Steps taken or proposed to be taken for improvement :

The Company has been concentrating its efforts on expanding both domesticand export markets. The Company has also taken steps for better workingcapital management, and lowering borrowing costs. These have contributedto reduction of interest cost and improved the operating profits. This isevident with the turnaround of the Company achieved after the loss itposted for the year ended March 31,1999. The Company earned a PAT ofRs.3421 lac during the year ended March 31, 2003 and the accumulatedloss under section 349 of the Companies Act, 1956 as at the year endreduced to Rs.2042 lac from Rs.8210 lac as on March 31, 2002. Theprogressive improvement in the performance of the Company and reductionin the accumulated losses under section 349 is evident from the followingtable.

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(Rs. lac)

Financial Year Accumulated losses u/s 3491998-99 -20,1241999-00 -18,5152000-01 -12,2192001-02 -8,2102002-03 -2,042

3. Expected increase in productivity and profits in measurable termsThe total income and PBIT of each of our segments for the year endedMarch 31, 2003 as compared to the previous year are given below :

Total Income (Rs. lac)

Sr. No. Segment 2002-03 2001-021. Chemicals 44882 389302. Foods 17590 96523. Estate Management 2177 21784. Others 2864 2650

Total 67513 53410

Profit Before Interest and Tax (Rs. lac)

Sr. No. Segment 2002-03 2001-021. Chemicals 5649 46122. Foods 87 12193. Estate Management 1537 16494. Others 1798 679

Total Profit Before Interest & Tax 9071 8159Less: interest (2024) (3218)Unallocated expenses (net),prior period items (1086) (759)Profit Before Tax 5961 4182

As can be seen from the above, there has been an overall increase in both Income andProfits as compared to the previous year.



& Company SecretaryMumbai, May 28, 2003.

Registered Office :Pirojshanagar,Eastern Express Highway,Vikhroli (East), Mumbai 400 079.

Details of the Directors seeking appointment/reappointment at the forthcomingAnnual General Meeting (In pursuance of Clause 49 of the Listing Agreement)

Mr. Vistasp F. Banaji (49) is B.A. from Nagpur University and joined the Companyw.e.f. 10/2/03. Before joining the Company he had worked in senior positions in HR inseveral other companies the last being as the Project Director – ALSTOM People Systemand was based in Paris which is the headquarters of ALSTOM.

Directorship in other companies : NoneChairman/Member of other committees of Companies : None

Ms. T. A. Dubash (34) is A.B. with Economics & Political Science from BrownUniversity, Rhode Island, USA and has been with the Company since 1994.

Directorship in other companies :Chairperson in: Godrej Remote Services Ltd., Ensemble Holdings & Finance Ltd.Director in Tahir Properties Ltd., Girikandra Holiday Homes and Resorts Ltd., GodrejGlobal Mideast FZE, Godrej Holdings Pvt. Ltd.

Chairman/Member of other committees of Companies :Member- Shareholders’ Committee: Godrej Industries Ltd.

Mr. Mathew Eipe (50) is B.Tech. (Chem.) from IIT, Mumbai, PGDM from IIM, Kolkataand has been with the Company for over 25 years. Before taking over the ChemicalsDivision, he handled various responsibilities in Sales, Marketing and Operations of theCompany.

Directorship in other companies :Director in Ensemble Holdings & Finance Ltd.Chairman/Member of other committees of Companies : None

M.P. Pusalkar (54) is B.Tech (Elec) from Indian Institute of Technology (Kanpur) andMMS from JBIMS, Mumbai and has been in the Godrej group for over 26 years. Earlierhe was the Managing Director of Godrej Foods Ltd. (GFL). He has handled variousfunctions in manufacturing, marketing, etc. Upon the demerger of the Foods division ofGFL into the Company Mr. Pusalkar became President & Executive Director (FoodsDivision) of the Company with effect from 1st April 2002.

Directorship in other companies : Godrej Foods Ltd.

Chairman/Member of other committees of Companies :

Member- Audit Committee : Godrej Foods Ltd.

Member- Shareholders’ Grievance Committee: Godrej Foods Ltd.


11

Dear Shareholders,Your Directors have pleasure in submitting the Annual Report along with the AuditedAccounts for the year ended March 31, 2003.

REVIEW OF OPERATIONSYour Company’s performance during the year as compared with that during the previousyear is summarized below.

(Rs. lac)Year ended March, 31

2003 2002

Sale of products and services 65250 51195Other Income 2530 2270

Total Income 67780 53465Total expenditure other than Interest and Depreciation 57737 43408

Profit before Interest, Depreciation and Taxation 10043 10057Depreciation 2211 2154

Profit before Interest and Taxation 7832 7903Interest and Financial Charges (net) 2024 3218

Profit before Tax before Exceptional items 5808 4685Exceptional items - net expense – 624

Profit before Taxation 5808 4061Provision for Current Tax 421 150

Profit after Current Tax 5387 3911Provision for Deferred Tax 2119 923

Profit after Current and Deferred Taxation 3268 2988Adjustments in respect of prior years – net income 153 121Surplus brought forward 9234 6745

Profit after Tax available for appropriation 12655 9854AppropriationYour Directors recommend appropriation as under:Dividend on Equity Shares 973 370Tax on distributed profits 125 –Transfer to General Reserve 342 250Surplus Carried Forward 11215 9234

Total Appropriation 12655 9854

The total income grew by over 26.7% from Rs. 53465 lac to Rs. 67780 lac and the PBTrose to Rs. 5808 lac, an increase of 43% over last year.

DIVIDEND

The Board of Directors of your Company recommend a final dividend of Rs. 2/- per share ofRs. 6/- each, aggregating to Rs. 972.84 lac, as against an interim dividend ofRs. 0.60 per equity share of Rs. 6/- each aggregating to Rs. 370.26 lac in the previous year.

MANAGEMENT DISCUSSION & ANALYSIS

There is a separate section on Management Discussion and Analysis in this AnnualReport, which, inter alia, covers the following :

• Industry Structure and Development• Opportunities and Threats• Risks and Concerns• Internal Control Systems and their adequacy• Human Resources and Industrial Relations• Discussion on financial performance with respect to operational performance• Segment-wise performance• Outlook

The same is appended as Annexure A to the Directors’ Report.

SUBSIDIARY AND ASSOCIATE COMPANIES

Your Company has interests in several industries including animal feeds, poultry andagro-products, property development, household insecticides, tea, infotech, etc. throughits subsidiary/associate companies.

DIRECTORS' REPORT FOR THE YEAR ENDED MARCH 31, 2003During the year, Godrej Tea Ltd., a new company co-promoted by the Godrej group inthe branded Tea/coffee business commenced operations. It has launched ‘Godrej NobleHouse’ & ‘Godrej Chai House’ brands of tea during the year.

The group also incorporated a new company, Godrej Global Solutions Limited, in thebusiness process outsourcing (BPO) and back office support areas.

Godrej Sara Lee Limited (GSLL) has continued to be a leader in the household insecticidesindustry. During the year GSLL launched Europe’s No. 1 car perfume, Ambi Pur in 3fragrances, which has received encouraging response.

Godrej Agrovet Limited (GAVL) performed well during the year with its total incomeincreasing to Rs. 47639 lac as compared to Rs. 43964 lac in the previous year and ProfitAfter Tax growing from Rs. 510 lac to Rs. 887 lac during this year. GAVL has declaredan interim dividend of 63% and final dividend of 16% as compared to dividend of 40%in the previous year. Goldmohur Foods and Feeds Ltd., a wholly owned subsidiary ofGAVL recorded total income of Rs. 31727 lac during the year as compared to Rs. 32677lac during the previous year.

Godrej Properties & Investments Ltd. (GPIL) had a difficult year. Though its total incomeincreased to Rs. 4205 lac during the year as compared to Rs. 1525 lac achieved in theprevious year, its Profit after Tax declined to Rs. 130 lac from Rs. 408 lac in the previousyear. GPIL has paid interim dividend of 15.52% as against 38.79% declared in theprevious year.

Godrej International Limited (GINL) has posted a net profit of US$ 219771 as comparedto US$ 70331 in the previous year. GINL has proposed a final dividend of 7 US cents perordinary share of £1 aggregating to US$ 105350, as against ‘nil’ in the previous year.During the year, your Company infused equity of US$ 300000 in GINL.

Godrej Global MidEast FZE (GGME) has posted a loss of AED 2480513 as against a lossof AED 2580710 in the previous year. During the year GINL infused further equity ofUS$ 750000 in GGME, out of which US$ 100000 was by conversion of loan.

Godrej Remote Services Limited (GRSL), which is in the medical transcription business,incurred loss of Rs. 121 lac as against a loss of Rs. 181 lac in the previous year.

SHARE CAPITAL

The Board of Directors had, at its meeting held on February 22, 2002, approved aScheme of Arrangement under Section 391 of the Companies Act, 1956, for thepurchase of equity shares of your Company up to a maximum of 40% of its paid upequity capital, at a price of Rs.18/- per share, and the subsequent cancellation of theshares so purchased. Subsequently, the shareholders and creditors of the Companyapproved the Scheme at their Meeting held on April 6, 2002, and the High Court,Mumbai approved the Scheme vide its order dated June 6, 2002. Trading in equity sharesof the Company had been stopped from July 17, 2002 to January 15, 2003 and fromJuly 18, 2002 to February 24, 2003 by The Stock Exchange, Mumbai and National StockExchange respectively, while the Scheme was in progress, in terms of the Court Order.Your Company has completed the purchase of the shares pursuant to the Scheme. TheNon-promoter shareholding after the aforesaid purchase is 11.39% of the total capital.The paid-up share capital of your Company stands reduced to Rs. 2919 lac (4,86,41,942equity shares of the Face Value of Rs. 6/- each) from Rs. 3698 lac (6,17,10,218 equityshares of the Face Value of Rs. 6/- each).

FINANCIAL POSITION

The financial position of your Company continues to be sound. The loan funds as at theend of the year decreased to Rs. 22248 lac as compared to Rs. 28507 lac as at the endof the previous year. This reduction was possible mainly on account of operating profitsand reduction in working capital. Your Company has the topmost rating of A1+ fromICRA for its commercial paper programme. The rating indicates that the prospect oftimely repayment of debt/ obligation is best.

MANUFACTURING FACILITIES

During the year, the factories of the Chemicals division at Vikhroli and Valia recordedincrease in throughput, productivity, as well as plant reliability. Both the factories arealready ISO 9001:2000 certified for their quality management systems. Further, Vikhrolifactory has been certified to be ISO 14001 compliant by BVQI for its environmentmanagement system. Valia Factory is expecting such certification shortly.

Various initiatives were undertaken during the year in both the factories for de-bottlenecking,reducing energy consumption and cost and quality improvement. In this context, TotalProductivity Maintenance (TPM) systems implemented in these factories are proving tobe very useful.

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The manufacturing facilities of Foods Division are located at Wadala in Mumbai, Mandideepin Bhopal and at Mysore in Karnataka. As a part of operational restructuring, to improvecapacity utilisation and reduce operating costs, your Board had approved sale of thedivision’s Mysore factory and had obtained the approval of shareholders in October 2002by postal ballot. The said factory has been sold in April 2003. TPM initiatives continueat the Wadala and Mandideep factories to further improve operational efficiencies.

RESEARCH AND DEVELOPMENT

During the year under review, the R&D efforts of the Company focused on improvingquality of the products and setting new benchmarks on cost per unit and purity. Thisresulted in development of new processes for the manufacture of surfactants, pureunsaturated fatty acids, treatment of sweet water and de-poisoning oils for premiumfatty acids.

A joint product application group has been constituted with Marketing to translate R&Dknowledge into new value added products and applications.

INFORMATION SYSTEMS

Your Company has launched its ambitious e-CRM initiative for the Chemical businesswhereby Customers would be able to get proactive information on the status of theirdispatches, order details etc. directly on the net. This initiative is a clear manifestation ofthe importance your Company attaches to Customer service and is expected to significantlyreduce the time the customer currently spends with GIL in conducting business transactions.The ultimate aim of this initiative is to retain existing Customers and get a greater shareof their business.

Your Company has also launched its Employee Portal, which provides for instantdissemination of relevant information across the organization, besides improving operationalefficiency in day-to-day administrative tasks within the organization.

ENVIRONMENT AND SOCIAL CONCERN

Your Company continues its efforts for the betterment of the environment. Your Company’sfactory at Valia has completed the initial audit for ISO 14001 certification and final auditis scheduled in the month of May 2003. Your Company has been actively engaged inpromoting education of school children in Kanerao Village. As a part of its socialcommitment, Valia Factory continued with provision of medical facilities and drinkingwater to the Village, and contributed towards the development of a sports complex atAnkleshwar.

Vikhroli Factory has been certified for ISO-14001 wherein the main focus was onpreventing pollution and keep all plants and surroundings environment friendly. TheVikhroli Factory has focused on identification of waste and eliminating the same and alsoinitiated energy conservation measures.

Your Company has, during the year under review, also actively participated in a programmeorganized for Aids awareness.

FIXED DEPOSITS

Your Company has stopped accepting Fixed Deposits from the public during the year.Public Deposits of an aggregate amount of Rs. 2242 lac which have matured during theyear have been paid.

DEPOSITORY SYSTEM

Your Company’s equity shares have been made available for dematerialisation throughNational Securities Depository Limited & Central Depository Services (India) Limited. Asof March 31, 2003, 98.05% of the equity shares of your Company were held in dematform.

DIRECTORS

In accordance with Article 127 of the Articles of association of the Company,Ms. T.A. Dubash, Mr. M. Eipe, Mr. K.N. Naoroji and Mr. N.C. Gawankar retire byrotation at the ensuing Annual General Meeting, Ms. T.A. Dubash and Mr. M. Eipe areeligible and offer themselves for re-appointment. Mr. K.N. Naoroji and Mr. N.C. Gawankar,in view of their advanced age, have not offered themselves for re-appointment.The Boardproposes that the vacancy caused by their retirement shall not be filled up. The Boardrecords its appreciation for the contribution made by Mr. K.N. Naoroji and Mr. N.C.Gawankar during their tenure with the Company.

Mr. C.K. Vaidya, Executive Director - Corporate HR of the Company resigned w.e.fApril 1, 2003 and has moved to Godrej Agrovet Ltd., a subsidiary of your Company. TheBoard records its appreciation for the contribution made by Mr. C.K. Vaidya during his

tenure with the Company. Mr. Vistasp Banaji was appointed as Executive Director -Corporate HR w.e.f. April 1, 2003 in place of Mr. C.K. Vaidya. Notice under section 257of the Companies Act, 1956 has been received from a member signifying intention topropose his appointment as Director in the forthcoming Annual General Meeting.

AUDITORS

You are requested to appoint Auditors for the current year and fix their remuneration. Theretiring auditors, Kalyaniwalla & Mistry, Chartered Accountants, are eligible forreappointment.

Pursuant to directions from the Department of Company Affairs, P.M. Nanabhoy & Co.,Cost Accountants, have been appointed as cost auditors for the year 2002-03. They arerequired to submit their report to the Central Government within 180 days from the endof the accounting year.

AUDIT COMMITTEE

The Audit Committee, which was constituted pursuant to the provisions of Section292A of the Companies Act, 1956 and the listing agreement, has reviewed the Accountsfor the year ended March 31, 2003.

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 standardshave been followed and no material departures have been made from the same;

b. that they have selected such accounting policies and applied them consistently andmade judgements and estimates that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company at the end of the financial yearand of the profit or loss of the Company for that period;

c. that they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguardingthe 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.

AUDITORS' CERTIFICATE

The Auditors have certified the Company’s compliance of the requirements of CorporateGovernance in terms of Clause 49 of the Listing Agreement and the same is annexed tothe Report on Corporate Governance.

ADDITIONAL INFORMATION

Annexure B to this Report gives information in respect of conservation of Energy,Technology absorption and Foreign Exchange earnings and outgo, required under Section217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particularsin the Report of the Board of Directors) Rules, 1988 and forms a part of the Directors’Report.

Annexure C to this Report provides the particulars required under Section 217(2A) of theCompanies Act, 1956, read with the Companies (Disclosure of Particulars in the Reportof the Board of Directors) Rules, 1988 and forms a part of the Directors’ Report.

The notes to the Accounts referred to in the Auditors’ Report are self-explanatory andtherefore do not call for any further explanation.

ACKNOWLEDGEMENT

Your Directors thank the Union Government, the Government of Maharashtra, MadhyaPradesh, Karnataka, Gujarat as also all the Government agencies, banks, financialinstitutions, shareholders, customers, employees, fixed deposit holders, vendors andother related organisations, 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 DirectorsA.B. Godrej

Mumbai, May 28, 2003 Chairman


13

INDUSTRY STRUCTURE AND DEVELOPMENTS

The year saw an improvement in India’s economic growth with the Index of IndustrialProduction improving to an estimated 5.0% vis-à-vis 2.7% last year (as reported byCMIE).

Despite this improvement, in view of prevailing uncertainties in political and economicspheres both in the domestic and international context the economic growth continuedto be perceived as being sluggish and the consumer sentiments did not improve much.

Your Company largely operates in the Oleo-Chemicals, edible oils, fats and processedfood industries. The division-wise performance and outlook have been covered separatelyin this report.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

GIL’s total income for 2002-03 was Rs. 67780 lac as compared to Rs. 53465 lac in theprevious year. Your Company recorded a Profit before Tax of Rs. 5808 lac and a Profitafter Tax of Rs. 3268 lac in 2002-03, as compared to Rs. 4061 lac and Rs. 2988 lac,respectively in 2001-02.

2002-03 2001-02• Profitability ratios

(%)PBDIT/Sales 15.39% 19.64%PBT/Sales 8.90% 7.93%PAT/Sales 5.01% 5.84%Return on Capital Employed 21.06% 18.02%Return on Net Worth 12.85% 12.53%Basic EPS (Rs.) 5.87 5.08Diluted EPS (Rs.) 5.87 5.08

• Financial risk ratios

Debt/Equity 0.87 1.20

Interest coverage 3.87 2.26

The operational performance of the various businesses of your Company is discussedin the following section of this report.

SEGMENTAL PERFORMANCE

The segment-wise break-up of sales, PBIT (including prior period income) and capitalemployed for the year under review is as follows:

(Amounts in Rs. lac)

1. Segment Revenue (Income from Operations) 2002-03 2001-02

Chemicals 44882 38930 Foods 17590 9652 Estate Management 2177 2178 Others 2864 2650

Total 67513 53410

2. Segment Results (Profit before interest & tax)

Chemicals 5649 4612 Foods 87 1219 Estate 1537 1649 Others 1798 679 Profit Before Interest and Tax 9071 8159 Less: Interest (Net) (2024) (3218) Unallocated expenses (Net), Prior period items (1086) (759)

Profit Before Tax 5961 4182

3. Segment Capital Employed

Chemicals 20618 27897 Foods 4340 6160 Estate 3100 2438 Others 21920 18458

Total 49978 54953

CHEMICALS DIVISION

Sales of the division grew 15% in value and 13% in volume terms. The domesticbusiness grew by 24%. The exports business reduced about 3% in value terms onaccount of lower selling prices and rupee appreciation.

The Chemicals division operates in the oleo-chemical and surfactants industry with abalanced blend of domestic and international operations. The division continued itsde-bottlenecking, quality improvement and cost cutting initiatives with vigour during theyear to improve throughput and profitability. These initiatives coupled with efficientsourcing, coverage of raw materials provides competitive advantage to the operations ofthis division.

Product category-wise performance is reviewed below:

Fatty Acids

Fatty acids, comprising Stearic Acids, Oleic Acids, and other specialty Fatty Acids accountedfor 38% of the turnover of this division and showed a growth of 57% in value termsand 31% in volume terms over the last year.

This growth can be attributed to an increase in demand in end-use segments, as also tothe increased market share that your company has garnered in these segments. Exportsto niche markets continued during the year.

Glycerin

Glycerin accounted for 11% of the turnover of this division.

During the year, sales in this category increased 6% in value and 2% in volume, despitea de-growth in demand. Your Company continued to maintain its leadership in thisproduct category. To optimize contribution from this portfolio, appropriate balance betweendomestic and exports sales would continue to be maintained.

Alpha Olefin Sulphonate (AOS)

GIL is a pioneer and market leader in AOS production and marketing in India. AOScontributed 16% to the turnover of this division. Godrej AOS is now incorporated in anumber of well-known detergent and shampoo brands in the country. The product formand delivery is customized to suit the convenience of the end-users, which has helped inimproving its usage as a cost effective alternative surfactant. GIL continues to grow wellin this segment on the strength of consistent quality and service. The volume growth hasbeen a good 23% though in value terms there is a drop of 14% on account ofconversion of sales into a processing arrangement.

Fatty Alcohols

Fatty Alcohols contributed 35% to the turnover of this division. This segment hascontinued to grow steadily over the years. Fatty Alcohols are mainly used in Laundry andpersonal care applications in the domestic market and for cosmetics and industrialapplications in the international market. Significant growth in the domestic market thisyear has helped improve the margins for this category.

In the international arena, new markets and market segments were addressed. With thetightness in some product categories and the bearish outlook on raw material prices, theprospects for this category seem good in the coming year.

FOODS DIVISION

The foods division recorded sales of Rs.16519 lac during the year under review.

The uncertainty in the Edible Fats industry continued during the year. The price of EdibleOils increased substantially during the year due to a drop in Kharif and Rabi Crop onaccount of a poor monsoon. Intense competition in the category is preventing profitablerise in selling prices.

Excise duty was imposed on branded edible oil category at the end of the year, makingbranded players uncompetitive as compared to the unbranded products.

The Processed Foods Division saw the carbonated soft drink industry becoming veryaggressive by launching lower priced packs. Failure of the mango crop, led to higherprice of pulp and consequently, lower off take.

There are two categories in this division, viz., Edible Oil & Fats and Processed Foods.

Edible Oils & Fats

The turnover during the year under review was Rs. 14091 lac. Intense competition fromlocal players impacted the majority in this business. The division continued to focus onincreasing margins and selling only in profitable areas. At the end of the year, unbrandedproducts were introduced to effectively counter the impact of excise duty imposition onbranded packs.

MANAGEMENT DISCUSSION AND ANALYSIS

ANNEXURE "A" FORMING PART OF DIRECTORS' REPORT

Industries Limited

14

Blended oils were introduced by your company during the year to offer competitivelypriced edible oil to the consumer.

Processed Foods

The total turnover of products in this category was Rs. 2428 lac.

This division handles tetrapak fruit drinks. This category has declined on account ofintense competitive pressures from the carbonated soft drinks category. In this scenario,your company focused on institutional sales segment to improve the sale of “Jumpin”-tetrapak fruit drink.

The sale of mango pulp was impacted due to a poor crop and consequent high pulpprices. At the end of the year, the Iraq war led to suspension of exports of mango pulp,compounding the problem.

The Division successfully commissioned a Tea-Coffee pre-mix plant set up for HindustanCoca-Cola Beverage Pvt. Ltd.

Over all, focus of the Division continued to be predominantly on improving profitabilityin both the above categories during the year.

ESTATE MANAGEMENT

The total income from this business was Rs. 2172 lac as compared to Rs. 2178 lac inthe previous year.

Your Company continues to effectively utilize the available space by giving the unutilizedspace on Leave & Licence basis to other reputed corporates. Availability of space incentral and western parts of the city, coupled with a slow down in the e-com sector willkeep the pressure on the revenue generated from this operation.

MEDICAL DIAGNOSTICS

The medical diagnostics division achieved a turnover of Rs. 714 lac for the year, recordinga growth of 39% in value terms over the last year. The focus of the division was onefficient working capital management and expansion in the product portfolio to includerapid test kits, to improve profitability. New rapid test kits for HIV were launchedsuccessfully. The division plans to consolidate the turnaround achieved this year, andimprove profitability further by introducing more rapid test kits and equipment.

FINANCE

The dividend income decreased from Rs. 2091 lac in the previous year to Rs. 1898 lacduring the year.

HUMAN RESOURCES / INDUSTRIAL RELATIONS

The thrust for this year was to convert ‘Potential to Performance’. Coaching was chosenas a key means to build performing leaders and an initiative called ‘SPARK: Ignite thegenius’ was launched. All managers in GIL were equipped with the competency to coachtheir teams and those who displayed particular talent were groomed as Master-coaches.

GIL tied up with one of the top ranking management institutes in the country, to buildmanagerial capabilities amongst those junior and middle level executives who did not haveformal management education. The purpose was to develop a better understanding ofhow different functional areas impact organizational performance and how they must beintegrated, to successfully meet the Company’s business goals.

On an average 5 man-days of training was received by each GIL employee. Apart fromconventional training, about a third of the white-collared employees made use of thelearning opportunity provided by e-Gyan, the e-learning initiative. To improve team workand people sensitivity, series of outdoor experiential programmes were also organized.

The Employee Portal for GIL employees went live in December, 2002. The portal hasbeen named Godrejite and is designed to provide a single point access for Companyinformation & policies as well as for workflows, like Leave & Attendance, Salary Statements,Performance Management, Knowledge Sharing, etc. It is helping employees work better,faster and smarter.

Industrial relations at all locations were cordial. The deployment of Total ProductiveMaintenance (TPM) and adoption of the EVA framework at all manufacturing locationshelped improve performance. The total number of persons employed in GIL as onMarch 31, 2003 was 2195.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

GIL has a proper and adequate system of internal controls to ensure that all assets aresafeguarded and protected against loss from unauthorised use or disposition, and thattransactions are authorised, recorded and reported correctly.

The Corporate Audit & Assurance Dept. issues well documented Operating Proceduresand Authorisations, which have adequate built-in controls, right at the beginning of anyactivity. Adequate checks are built in to cover all monetary transactions with properdelineation of authority.

The Company’s ERP System, viz. MFG/PRO, provides adequate level of system-basedchecks and controls. GIL has also developed and adopted a formal Information TechnologyPolicy (including IT Security), which is periodically reviewed.

The internal control is supplemented by an extensive programme of internal and externalaudits, review by management and documented policies, guidelines and procedures. Thesystem is designed to ensure that financial and other records are reliable for preparingfinancial information and other data and for maintaining accountability for assets.

OPPORTUNITIES AND THREATS

The continuing addition of new capacity in the Chemicals industry is likely to bring inchallenges by creating a situation of supply possibly overtaking demand over the mediumterm. The effort of the joint product application group in developing customized andvalue added products and identifying newer applications for existing products is expectedto help converting this into a potential opportunity.

In the Edible Oils category, blended oils have shown good opportunity for growth andthe Foods Division shall continue to exploit this by launching new variants. In order tocounter the pressure on margins by reducing costs, your Company is looking at thirdparty outsourcing of its products.

In the Processed Foods Division, there is a good export opportunity for the fruit pulpbusiness. Unutilised capacity in Tetrapak fruit drink manufacture due to seasonality of theproducts, continues to remain a threat for the Division.

RISKS AND CONCERNS

Weather conditions, demand for edible oils for human consumption, oilseed production,etc., affect the availability and price of vegetable oils, which impacts both the Chemicalsand the Foods businesses. Similarly, the growth of the end-user industries like detergents,polymers, industrial applications, cosmetics and personal care, etc., affect the volume andprofitability of the sales of the Chemicals division, while the foods division is moreimpacted from changes in the domestic and import duty structure, competition fromunorganized as well as international players, etc.

Macro-economic factors like natural calamities, unexpected political developments, economicslow down, etc., are likely to affect the industry as also the businesses of your Company.Apart from the above, legislative changes (e.g. tax, duty and levy structures - both localand central) could also have their impact on the business performance.

OUTLOOK FOR 2003-04

The outlook for the various product categories of the Chemicals division remains positive.The falling vegetable oil prices, tightness in the supply position of some of the finishedproducts augurs well for the business and also opens up opportunities for growth inniche markets.

The Foods Division has focussed on its capacity utilisation by way of third party processingand/or hiving off excess idle capacity. In this connection, the Division sold its Mysoreplant for manufacturing Tetrapak fruit drinks, in the month of April 2003. This isexpected to lead to better utilisation of its existing capacity at Mandideep as well as savingin fixed expenses. The Division is also exploring the possibility of new business in boththe categories.

CAUTIONARY STATEMENT

Some of the statements in this management discussion and analysis describing theCompany’s objectives, projections, estimates and expectations may be ‘forward lookingstatements’ within the meaning of applicable laws and regulations. Actual results mightdiffer substantially or materially from those expressed or implied. Important developmentsthat could affect the Company’s operations include a downtrend in domestic industry,significant changes in political and economic environment in India, tax laws, importduties, litigation and labour relations.


15

ANNEXURE "B" FORMING PART OF THE DIRECTORS’ REPORT

iii) Own generated through SteamTurbine Generator -Co-generationUnits (kWh in lac) 344.37 327.52KWH per SM3 of N. Gas 2.15 2.60Cost (Rs. in lac) 1249.28 944.87Rate per Unit (Rs.) 3.63 2.88Fuel Oil (LSHS, FO, SKO and LDO)Total Quantity (KL) 12475.32 8907.68Total Amount (Rs. in lac) 1423.4 1060.79Rate per unit (Rs. per litre) 11.41 11.83Natural GasTotal Quantity (NM3 lac) 98.50 89.40Total Amount (Rs. in lac) 979.20 673.60Rate per unit (Rs. per NM3) 9.94 7.53PitchesTotal Quantity (MT) 1736.00 1322.00Total Cost (Rs. in lac) 91.43 60.89Rate per unit (Rs. per MT) 5266.49 4606.09

b) Consumption per unit of production

Natural Gas Electricity Furnace Oil(NM3/MT) (kWh/MT) (Litre/MT)

2002-03 2001-02 2002-03 2001-02 2002-03 2001-02

Fatty Acid 31.92 22.41 91.37 100.86 48.13 50.05

Fatty Alcohol 87.72 54.66 427.88 435.34 21.47 4.03

Alpha OlefinSulphonate 97.78 71.13 127.00 144.63 16.47 5.86

Fruit Juice/ Pulp – – 138.35 513.95 – –

Oils/Vanaspati – – 199.06 186.96 121.75 73.54

Glycerin 820.796 479.67 624.86 595.06 214.64 89.58

B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Specific areas in which R&D was carried out by the Company- During theyear under review, Research & Development efforts in the following areasstrengthened the company’s operations through technology absorption,adaptation and innovation:

• Oils, Fats, Fatty Acids & Fatty Alcohols

• Glycerin & Surfactants

• Packaging

2. Benefits derived as a result of the above R&D

• Development of a new process for the manufacture of surfactants.

• Development of a new process for manufacture of pure unsaturatedfatty acids.

• Development of a new mixed surfactant system.

• Development of a new process for treatment of sweet water.

• Process for depoisoning oils fit for premium fatty acids.

• New processes led to savings in energy as well as lower capitalexpenditure for future products.

• Opened avenues to new markets / customers.

• Ensured the sale of existing products due to synergy in the newsystem.

• New process proved to be highly user friendly to operating personnel:It also led to a better quality of finished product.

3. Future Plan of Action

• Continue to support Marketing and Manufacturing.

• Find new applications for the existing products.

• Develop new products and processes.

• Assist Sales team to effectively satisfy customer demands.

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

A. Conservation of Energy

I. (A) Energy conservation measures undertaken:

(i) Installation of bigger capacity air compressor in replacement of twocompressors, to enable saving of power.

(ii) Installation of bigger capacity I D fan in hydrogen plant in place oftwo fans, to save power.

(iii) Modification of chilling units in flakers to get power savings.

(iv) Installation of Variable Frequency Drive (VFD) pump to get powersaving & better product quality.

(v) Installation of heat exchangers in FSP to recover the heat from theFat Splitting Process.

(vi) Substitution of LDO by Piped Natural Gas as a measure of Fuel CostReduction and also as an initiative under ISO-14001 to reduce thepollution in the atmosphere.

(vii) Reduction in Self consumption of Steam in Co-Generation plant.

(viii) Study on Heat Recovery from the steam distribution system.

(ix) Use of Fatty acid Pitch as fuel Boilers.

(x) Replacement of old motors by energy efficient motors.

(B) Proposed energy conservation measures

(i) Installation of Plate Heat Exchangers in dirty water services withdedicated pumping arrangements to enable power saving, and acleaner environment.

(ii) Further conversion of DG set to LDO-Natural Gas operation to enablefuel cost saving.

(iii) Installation of Steam turbine to get full utilisation of pressure energyand get saving of cost.

(iv) Recovery of heat from the exhaust of D G set.

(v) Automation of H.P boiler to increase its efficiency and powersaving.

(vi) Installation of separate cooling towers for plants to get power savingand reduction of Shut Down time.

(vii) Review use of bore well water.

(viii) Reduce the steam consumption in Soap Making and Soap DryingProcess.

(ix) Changing over from LSHS / FO to piped Natural Gas in boilers toreduce the fuel cost and to further improve the stack emissions inthe atmosphere.

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

Saving in energy cost during the period under consideration.

III. The details of energy consumption are given below. These details cover theOperation of your Company’s factories at Vikhroli, Valia, Wadala, Mandideep, andMysore.a) Power and Fuel consumption

This Year Previous Year

Electricityi) Purchased

Units (kWh in lac) 139.07 152.14Total Amount (Rs. in lac) 731.58 799.03Rate per Unit (Rs.) 5.26 5.25

ii) Own generated through D.G. SetsUnits (kWh in lac) 6.48 12.78KWH per litre of Fuel Oil 2.75 2.55Cost (Rs. in lac) 42.46 81.88Rate per unit (Rs.) 6.55 6.41

a) Power and Fuel consumption (Contd.)This Year Previous Year

Industries Limited

16

ANNEXURE "C" FORMING PART OF DIRECTORS' REPORTSTATEMENT UNDER SECTION 217(2A) READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF THE DIRECTORS’ REPORT FORTHE YEAR ENDED MARCH 31, 2003.A. Persons employed throughout the financial year under review and each of whom was in receipt of remuneration for the financial year which, in the aggregate,

was not less than Rs. 24,00,000/-.B. Persons employed for a part of the year under review and each of whom was in receipt of remuneration for that part which, in the aggregate, was not less than

Rs. 200,000/- per month.

Sr Name Designation Gross Qualification Experience Date of Age Particulars of PreviousNo. Remuneration (Years) commence- (Years) Employment

(Rs.) ment ofemployment

A. Persons employed throughout the Financial Year.1 Ms. T.A. Dubash Director (Marketing) 4,856,577 A.B. with Economics and 12 21-Jan-91 34 First Job

Political Science2 M. Eipe Executive Director & 4,819,012 B.Tech. (Chems.), IIT, Mumbai, 26 1-Jun-77 50 First Job

President (Chemicals) PGDM, IIM, Kolkata3 N.B. Godrej Managing Director 7,075,903 B.S., Chem. Engg. (M.I.T., U.S.A.) 27 24-Dec-76 51 First Job

M.S., Chem. Engg. (Stanford, U.S.A.)M.B.A., Harvard Business School, U.S.A.

4 R.H. Khajotia General Manager (London Branch) 3,131,229 B.Com. (Hons), LLB(II), MMS 23 1-Jun-79 49 ICICI Ltd.5 D.E. Mistry Vice-President (London Branch) 5,134,910 B.Com. (Hons), LLB(II) A.C.A, PGDMS 25 18-Oct-77 50 First Job6 M.P. Pusalkar Executive Director and 3,360,014 B.Tech (Elec), IIT-Kanpur, MMS, JBIMS 30 1-Apr-02 54 Godrej Foods Ltd.

President (Foods Div.)7 V.J. Soares Vice-President 4,655,353 B.Sc. (Hons)., P.G.D.M. 34 2-Jun-69 57 First Job

(Comm. Imports & Med. Diag.)8 C.K. Vaidya Executive Director (Corporate HR) 4,668,886 B.Tech (Mech)., IIT Mumbai, 29 1-Jan-73 53 Godrej Agrovet Ltd.

PGDM, IIM., Kolkata for 5 Years9 C.D. Wakankar Vice-President 2,518,220 B.Com. (Hons)., ACA, ICWA 33 20-Feb-81 53 Johnson & Johnson Ltd.

(Corporate Audit & Assurance) for 3&1/2 Years

B. Persons employed for a part of the Financial Year1 N.T. Bamji Dy. General Manager

(Chemicals-Mktg.) 2,816,611 B.Sc., D.M.M., DBM 39 1-Oct-64 59 First Job2 A.S. Chavan Worker 696,618 IX STD 22 1-Jan-81 45 First Job3 S.B. Chavan Worker 636,910 S.S.L.C 24 1-Oct-79 47 First Job4 K.K. Dastur Executive Director (Finance) 5,627,929 B.Com. A.C.A. 38 1-Jul-65 61 First Job5 Ms. H.A. Gharat Clerk 339,233 S.S.C. 38 1-Apr-65 61 First Job6 B. Venkatrao Officer (Engg Services) 423,988 S.S.L.C. 39 1-Apr-64 61 Weston Vegetable Oil Ltd.

NOTES :1. Nature of Employment Contractual or otherwise :

(a) The appointments of Managing Director and Executive Directors are contractual and terminable by three month’s notice on either side.(b) The appointments of the remaining employees are non-contractual and are terminable by three month’s/one month’s notice on either side.

2. Other terms and conditions :(a) In case of Managing Director and Executive Directors, gross remuneration as shown above, includes salary, performance bonus pertaining to FY 01-02 received by them

in the current financial year, house rent allowances, Company’s contribution to Provident Fund, Gratuity, Leave encashment and monetary value of perquisites which aregiven in terms of the agreement entered into with them.

(b) In case of all other employees, gross remuneration shown above, includes salary, performance bonus (wherever applicable) pertaining to FY 01-02 received by them inthe current financial year, house rent allowance (wherever applicable), reimbursement of medical expenses, gratuity , compensation on voluntary retirement (whereverapplicable), monetary value of perquisites (wherever applicable) as per Income Tax Rules, leave travel assistance, company’s contribution to Provident Fund and other Funds,as per the Company’s Rules.

(c) The designations represent the nature of duties performed by them.(d) In the case of all the employees, the ages shown are as of last birth date and the particulars of previous employment pertain to the immediate past employment.

3. Relatives of Directors:(a) Mr. A.B. Godrej, Chairman is related to Ms. T.A. Dubash, Director (Marketing) and Mr. N.B. Godrej, Managing Director.(b) Mr. N.B. Godrej , Managing Director is related to Mr. A.B. Godrej, Chairman.(c) None of the other employees listed above is related to any Director of the Company.

4. There is no employee in respect of whom details are required to be given under sub-clause (iii) of Section 217(2A) of the Companies Act, 1956.

4. Expenditure on R&D

This Year Previous YearRs. lac Rs. lac

(a) Capital Nil Nil

(b) Recurring 94.79 111

(c) Total 94.79 111

(d) Total R&D expenditure as a percentageof total sales turnover 0.16% 0.36%

5. The Company’s exports marginally declined from Rs. 10901 lac in theprevious year (including deemed exports Rs. 473 lac) to Rs. 10490 lac inthe current year (including deemed exports of Rs. 770 lac). The Companycontinues to export refined glycerin, fatty alcohol and other chemicals todeveloped as well as developing countries all over the world mainly U.S.A.,U.A.E., Japan, South Africa, Germany, U.K., France, Malaysia, Singaporeand Srilanka.


Foreign exchange used 19625 14867

Foreign exchange earned 9746 10492


17

Clause 49 of the listing agreement with the Indian Stock Exchanges stipulates the normsand disclosure standards that have to be followed on the corporate governance front bylisted Indian companies.

The Company’s philosophy of corporate governance is to achieve business excellence byenhancing long term welfare of all its stakeholders.

BOARD OF DIRECTORS

a) Board Structure

The Board of Directors of the Company comprises fifteen Directors, which includeone Managing Director and four Whole-Time Executive Directors. The remaining tenare Non-Executive Directors, with five of them being Independent Directors. Thedetails are given in Table 1 :

b) Board meetings held & Directors’ attendance record

The Board meets atleast once in a quarter to consider among other business,quarterly performance of the company and financial results. During the year eightBoard meetings were held on 30th April, 2002, 30th July, 2002, 14th August,2002, 3rd September, 2002, 28th September, 2002, 23rd October, 2002, 8thNovember, 2002 and 17th January, 2003. The details are given in Table 1 :

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

Name of Director Category Board Meetings Board Meetings Whether Directorshipsheld during the attended during attended held in public

year the year last AGM companiesincorporatedin India as at

year-end

A.B. Godrej Chairman 8 8 Yes 12(4)

J.N. Godrej Non-Executive Director 8 4 No 12 (6)

N.B. Godrej Managing Director 8 5 No 14 (4)

S.A. Ahmadullah Non-Executive and 8 7 Yes 1(1)Independent Director

V.M. Crishna Non-Executive Director 8 5 Yes 6(3)

K.K. Dastur Non-Executive Director 8 7 Yes 3(1)

N.C. Gawankar Non-Executive and 8 8 Yes 2(1)Independent Director

V.N. Gogate Non-Executive and 8 8 Yes 3(1)Independent Director

K.N. Naoroji Non-Executive Director 8 0 No 2(1)

K.N. Petigara Non-Executive and 8 8 Yes 5(1)Independent Director

F.P. Sarkari Non-Executive and 8 7 Yes 2(1)Independent Director

T.A. Dubash Whole-time Director 8 6 Yes 5(1)

M. Eipe Whole-time Director 8 6 Yes 2(1)

M.P. Pusalkar Whole-time Director 8 8 Yes 2(2)

C.K. Vaidya Whole-time Director 8 8 Yes 7(1)

Notes:

1) Figures in ( ) denote listed companies.

2) Board Meetings held during the year represents the no. of meetings held duringthe tenure of that director.

3) Mr. K.K. Dastur was a Whole-time Director upto April 30, 2002 and is a Non-Executive Director from May 1, 2002.

4) Mr. C.K. Vaidya ceased to be a director with effect from April 1, 2003.

None of the Directors is a member of more than 10 Board-level committees, or aChairman of more than five such committees, as required under Clause 49 of thelisting agreement.

c) Information supplied to the Board

Among others, this includes:

• Annual operating plans and budgets, capital budgets, and any updates thereon,

• Quarterly results of the Company,

• Minutes of meeting of audit committee and other committees,

• Information on recruitment and remuneration of senior officers just below theBoard level,

• Materially important show cause, demand, prosecution and penalty notices,

• Fatal or serious accidents or dangerous occurrences,

REPORT ON CORPORATE GOVERNANCE• Any materially significant effluent or pollution problems,

• Any materially relevant default in financial obligations to and by the Company orsubstantial non-payment for goods sold by the Company,

• Any issue which involves possible public or product liability claims of a substantialnature,

• Details of any joint venture or collaboration agreement,

• Transactions that involve substantial payment towards goodwill, brand equity orintellectual property,

• Significant labour problems and their proposed solutions,

• Significant development in the human resources and industrial relations front,

• Sale of material nature, of investments, subsidiaries, assets, which is not in thenormal course of business,

• Quarterly details of foreign exchange exposure and the steps taken by managementto limit the risks of adverse exchange rate movement, and

• Non-compliance of any regulatory, statutory nature or listing requirements aswell as shareholder services such as non-payment of dividend and delays inshare transfer.

The Board of GIL is regularly presented with all information under the above heads,wherever applicable. These are submitted either as part of the agenda papers well inadvance of the Board meetings or are tabled in the course of the Board meetings.

d) Directors with materially significant related party transactions, pecuniary orbusiness relationship with the company

Mr. K. K. Dastur, Non-Executive Director was appointed on retainer basis for aperiod of one year with effect from May 1, 2002, and approval of shareholders wasobtained in the Annual General Meeting held on September 28, 2002 u/s 314 of theCompanies Act, 1956. None of the other directors, apart from drawing Director'sremuneration, have any other materially significant related party transactions, pecuniaryor business relationship with the Company.

e) Remuneration of Directors: sitting fees, salary, perquisites and commissions

The details of remuneration package of Directors and their relationships with eachother are given in Table 2.

Table 2: Remuneration paid or payable to Directors for the year endedMarch 31, 2003Name of Relationship with Sitting Commission Salary Perquisites TotalDirector other Directors fees on profits

(Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

A.B. Godrej Brother of N.B. Godrej Nil Nil Nil Nil NilJ.N. Godrej None Nil NA NA NA NilN.B. Godrej Brother of A.B. Godrej Nil NA 6009620 742283 6751903S.A. Ahmadullah None 52000 NA NA NA 52000V.M. Crishna None 51000 NA NA NA 51000K.K. Dastur None 60000 Nil 2177640 115132 2292772N.C. Gawankar None 40000 NA NA NA 40000V.N. Gogate None 62000 NA NA NA 62000K.N. Naoroji None Nil NA NA NA NilK.N. Petigara None 62000 NA NA NA 62000F.P. Sarkari None 55000 NA NA NA 55000T.A. Dubash Daughter of A.B. Godrej Nil Nil 3958820 722077 4680897M. Eipe None Nil Nil 3991220 625580 4616800M.P. Pusalkar None Nil Nil 2904640 308494 3213134C.K. Vaidya None Nil Nil 4441606 336700 4778306

Notes :

Mr. K.K. Dastur was a Whole-time Director upto April 30, 2002 and is now a Non-Executive and Independent Director from May 1, 2003

Salary paid to Mr. N.B. Godrej, Mr. K.K. Dastur, Ms. T.A. Dubash, Mr. M. Eipe andMr. C.K. Vaidya and Mr. Pusalkar includes a performance linked bonus of Rs.1689620, Rs. 1983890, Rs. 1689620, Rs. 1689620, Rs. 2172406 and Rs. 1071040respectively for the previous year, i.e. the year ended March 31, 2002.

Performance linked variable remuneration based on Economic Value Added in thebusiness and other relevant factors for Mr. N.B. Godrej, Ms. T.A. Dubash, Mr. V.Banaji, Mr. K.K. Dastur, Mr. M. Eipe, Mr. C.K. Vaidya and Mr. M.P. Pusalkar for2002-03, is payable in 2003-04 based on the Company’s performance in 2002-03,for which necessary applications shall be made to Central Government for approval.The service contracts of the Whole-Time Directors are for a period of three years witha notice period of three months.

Industries Limited

18

f) Committees of the Board

Audit Committee

GIL’s audit committee comprises of three Independent & Non-Executive Directors.They are Mr. V.N. Gogate (Chairman), Mr. S.A. Ahmadullah and Mr. F.P. Sarkari.Mr. V.N. Gogate, the Chairman of the audit committee is a qualified CharteredAccountant and Company Secretary and is knowledgeable in finance, accounts andcompany law. All the members of the committee are eminent professionals anddraw upon their experience and expertise across a wide spectrum of functional areassuch as finance and corporate strategy. Minutes of each of the audit committeemeetings are placed before the Board meetings. The Company Secretary acts assecretary to the audit committee. The audit committee met four times during theyear. Table 3 gives the attendance record.

Table 3 : Attendance record of audit committee members

Name of Director No. of meetings held Meetings attended

Mr. V.N. Gogate 4 4

Mr. S.A. Ahmadullah 4 3

Mr. F.P. Sarkari 4 4

Note : No. of meetings held represents the no. of meetings held during the tenureof the Director as a member of the Audit Committee.

The Audit Committee of GIL performs the following functions :

• Overview of the Company’s financial reporting process and the disclosure of itsfinancial information to ensure that the financial statement is correct, sufficientand credible.

• Recommending the appointment and removal of external auditor, fixation ofaudit fee and approval for payment for any other services.

• Reviewing with management the annual financial statements before submissionto the board, focusing primarily on

� Any changes in accounting policies and practices.

� Major accounting entries based on exercise of judgement by the management.

� Qualifications in draft audit report.

� Significant adjustments arising out of audit.

� The going concern assumption.

� Compliance with accounting standards.

� Compliance with stock exchanges and legal requirements concerning financialstatements.

� Any related party transactions, i.e. transactions of the Company of materialnature, with promoters or the management, their subsidiaries or relatives,etc. that may have potential conflict with the interests of Company atlarge.

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

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

• Discussing with internal auditors any significant findings and following it up.

• Reviewing the findings of any internal investigations by the internal auditors intomatters where there is suspected fraud or irregularity or failure of internalcontrol systems of a material nature and reporting the matter to the Board.

• Discussing with external auditors before the audit commences, nature andscope of audit as well as conducting post-audit discussion to ascertain any areaof concern.

• Reviewing the Company’s financial and risk management policies.

• Looking into the reasons for substantial defaults in payment to depositors,debenture holders, shareholders (in case of non-payment of declared dividend)and creditors.

Remuneration Committee

Setting up of a remuneration committee for determining a company’s policy onremuneration packages for Executive Directors constitutes a non-mandatory provisionof Clause 49 of the Listing Agreement with the Stock Exchanges. GIL set up itsremuneration committee on February 22, 2002 to review the human resourcespolicies and practices of the Company and, in particular, policies regarding remunerationof Whole-Time Directors and senior managers. The committee discusses humanresources policies such as compensation and performance management.

GIL’s remuneration committee consists of the following directors: Mr. S.A. Ahmadullah(Chairman and Independent Director); Mr. N.B. Godrej (Managing Director);Mr. V.N. Gogate (Independent Director) and Mr. K.N. Petigara (Independent Director).During the year ended March 31, 2003, resolutions were passed by the Committeein circulation on May 22, 2002 for approval of remuneration payable in 2002-03,and the committee also met once on August 14, 2002 where all the members ofthe Committee attended.

GIL has adopted EVA as a tool for driving performance, and has linked improvementsin EVA to performance linked variable remuneration (PLVR) for Managing Director,Whole-Time Directors, managers and officers of the company.

Shareholders Committee

Among other functions, this committee looks into redressal of shareholder complaintsregarding transfer of shares, non-receipt of balance sheet and non-receipt of declareddividends, as required in clause 49 of the Listing Agreement. The committeeconsists of the following members: Mr. K.N. Petigara (Chairman and IndependentDirector); Mr. N.B. Godrej (Managing Director); Mr. V.M. Crishna (Non-ExecutiveDirector), Ms. T.A. Dubash (Whole-Time Director) and Mr. K.K. Dastur(Non-executive & Independent Director).

MANAGEMENT

a) Management discussion and analysis

This annual report has a detailed chapter on management discussion and analysis.

b) Disclosures by management to the Board

All details relating to financial and commercial transactions where Directors may havea potential interest are provided to the Board, and the interested Directors neitherparticipate in the discussion, nor do they vote on such matters.

SHAREHOLDERS

a) Disclosures regarding appointment or re-appointment of Directors

According to the Articles of Association of GIL, at every annual general meeting ofthe Company one-third of the Directors are liable to retire by rotation. Thus,Ms. T.A. Dubash, Mr. N.C. Gawankar, Mr. K.N. Naoroji and Mr. M. Eipe shall retireat this Annual General Meeting of the Company. Ms. T.A. Dubash andMr. M.Eipe are eligible and offer themselves for re-appointment. Mr. K.N. Naorojiand Mr. N.C. Gawankar, in view of their advanced age, have not offered themselvesfor re-appointment. The Board proposes that the vacancy caused by their retirementshall not be filled up. Mr. V. Banaji who was appointed as Additional Director holdsoffice upto the forthcoming Annual General Meeting and offers himself for re-appointment. Information about the Directors who are being appointed/ re-appointedis given as an annexure to the Notice of the AGM.

b) Communication to shareholders

GIL has its own web-site and all vital information relating to the Company and itsperformance, including quarterly results, official press releases are posted on theweb-site. The Company’s web-site address is www.godrejinds.com. The quarterly,half-yearly and annual results of the Company’s performance are published in leadingEnglish dailies like Business Standard / Financial Express.

c) Investor grievances

As mentioned before, the Company has constituted a Shareholders Committeeto look into and redress Shareholder and investor complaints. Mr. S.K. Bhatt, GeneralManager (Corporate Services) & Company Secretary is the compliance officer.

d) Share transfer

GIL has outsourced its share transfer function to M/s. Computech Sharecap Ltd.,which is registered with the SEBI as a Category 1 Registrar and Transfer Agent.


19

Auditors' Certificate on Corporate Governance

To the Members ofGodrej Industries Limited,Mumbai.

We have examined the compliance of conditions of Corporate Governance by Godrej Industries Limited (the Company) for the year ended on March 31, 2003 as stipulated in Clause49 of the Listing Agreement of the said Company with the stock exchanges.

The compliance of the conditions of Corporate Governance is the responsibility of the management. Our review was limited to the procedures and implementation thereof, adoptedby the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements.

In our opinion and according to the information and explanations given to us, we state that to the best of our knowledge the Company has complied wth the conditions of CorporateGovernance stipulated in Clause 49 of the above mentioned Listing Agreement.

We state that as per the report given by the Registrars and Share Transfer Agents of the Company and presented to the Shareholders/Investor Grievance Committee, no investorgrievances received during the year ended March 31, 2003 were remaining unattended/pending against the Company for a period exceeding thirty days.

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

For and on behalf ofKALYANIWALLA & MISTRY

Chartered Accountants

V.R. MehtaPartner


Sr. Date of Nature of Item Total No. of Percentage of Percentage of Percentage ofNo. Resolution Resolution votes polled votes in favour votes against votes invalid

1. October 23, 2002 Ordinary Sale of Mysore Unit of the Company in terms ofSection 293(1)(a) of the Companies Act, 1956. 44386476 99.89 0.06 0.05

2. October 23, 2002 Special Giving guarantee to Godrej Tea Pvt. Ltd. underSection 372 A of the Companies Act, 1956. 44386476 99.54 0.40 0.06

3. October 23, 2002 Special Alteration of main objects of the Memorandumof Association of the Company. 44386476 99.76 0.17 0.07

4. October 23, 2002 Special Alteration of other objects of the Memorandumof Association of the Company. 44386476 99.67 0.27 0.06

5. March 19, 2003 Special Approval to invest in equity shares of and/or placeintercorporate deposits with and/or invest in debenturesof and/or make loans to and/or give guarantee(s) toGodrej Tea Ltd. under Section 372A of theCompanies Act, 1956. 43329684 99.81 0.17 0.02

6. March 19, 2003 Special Approval to invest in equity shares of and/or placeintercorporate deposits with and/or invest in debenturesof and/or make loans to and/or give guarantee(s) toGodrej Global Solutions Ltd. under Section 372A ofthe Companies Act, 1956. 43329684 99.80 0.17 0.03

e) Details of non-compliance

There has been no instance of GIL not complying with any matter related to capital markets.

f) General body meetings

Year Venue Date Time

1998-99 Udayachal Primary School Hall, September 24, 1999 10.30 A.M.Pirojshanagar, Vikhroli (East),Mumbai 400 079

1999-00 - do - July 1, 2000 3.30 P.M.

2000-01 - do - July 28, 2001 3.30 P.M.

2001-02 - do - September 28, 2002 3.00 P.M.

g) Postal ballots

During the year certain resolutions were passed by shareholders by postal ballot on October 23, 2002 and on March 19, 2003. Notices of postal ballot were mailed to allshareholders alongwith postage prepaid envelopes. Mr. Bharat Shemlani, Chartered Accountant had been appointed as scrutinizer for both the postal ballots, who submitted hisreport to the Chairman, Mr. A B Godrej. The details of the postal ballot are given below:

Industries Limited

20

Annual General Meeting

Date : August 25, 2003

Time : 3.00 P.M.

Venue : Y.B. Chavan Centre, General Jagannath Bhonsle Marg,Nariman Point, Mumbai 400 021.

Financial Calendar

Financial year: April 1 to March 31

For the year ended March 31, 2003, results were announced on:

● July 30, 2002 : First quarter

● October 23, 2002 : Half yearly

● January 17, 2003 : Third quarter

● May 28, 2003 : Fourth quarter and annual

Record Date/Book Closure

A dividend of Rs.2/- per share of Rs 6/- each has been recommended by the Board ofDirectors of the Company. For payment of dividend, the book closure is from August 19,2003 to August 25, 2003.

Listing information

The company’s equity shares are listed and traded on the stock exchanges at Mumbai,Ahmedabad, Chennai, Delhi and Kolkata, and the National Stock Exchange.

Name of the Stock Exchange Stock code

Stock Exchange Mumbai 500164National Stock Exchange GODREJINDAhmedabad Stock Exchange 20840Delhi Stock Exchange 07124Madras Stock Exchange GODREJSOAPCalcutta Stock Exchange 17038 (for physical)

10017038 (for demat)

The ISIN Number of GIL on both NSDL and CDSL is INE233A01027.

There has been negligible trading in equity shares of the Company on Ahmedabad StockExchange, Delhi Stock Exchange, Madras Stock Exchange and Calcutta Stock Exchange.The Board of Directors of the Company has passed a resolution for voluntarily delistingthe equity shares of the Company from these Stock Exchanges, pursuant to the provisionscontained in the Securities and Exchange Board of India (Delisting of Securities) Guidelines,2003. It is proposed to take the approval of shareholders for the above, in the forthcomingAnnual General Meeting. The Company shall continue to be listed on the Stock Exchange,Mumbai, and on National Stock Exchange.

Stock Data

Tables 1 and 2 respectively give the monthly high and low prices and volumes of equityshares of GIL at The Stock Exchange, Mumbai (BSE) and the National Stock Exchange(NSE) for the year ended March 31, 2003. Chart A compares GIL’s share price at the BSEversus the sensex.

Table 1: Monthly high and low prices and trading volumes of equity shares of GILat BSE for the year ended March 31, 2003.

Date High Low Volume(Rs.) (Rs.) (No. of Shares)

April - 02 16.80 15.80 291812

May - 02 17.25 13.30 220757

June - 02 17.95 16.60 350199

July - 02 * 24.35 17.30 1200276

January - 03 ** 22.00 16.00 224354

February - 03 17.10 13.00 135352

March - 03 17.80 14.05 169868

SHAREHOLDERS' INFORMATIONNote:

* Trading stopped from July 17, 2002 due to scheme of arrangement u/s391 for purchase of equity shares.

** Trading recommenced on January 16, 2003.

� High and low are in rupees per traded share. Volume is the total monthlyvolume of trade (in numbers) in equity shares of GIL on the BSE.

Table 2: Monthly high and low prices and trading volumes of equity shares of GILat NSE for the year ended March 31, 2003

Date High Low Volume(Rs.) (Rs.) (No. of Shares)

April-02 16.85 15.90 858741

May -02 17.20 16.00 914299

June -02 18.00 16.55 967297

July -02 * 24.45 17.30 3879905

February -03 ** 17.50 13.50 3304

March-03 15.60 13.85 88257

Note :

* Trading stopped from July 18, 2002 due to scheme of arrangement u/s391 for purchase of equity shares.

** Trading recommenced on February 25, 2003.

� High and low are in rupees per traded share. Volume is the total monthlyvolume of trade (in numbers) in equity shares of GIL on the NSE.

Chart A - GIL share performance compared to the BSE Sensex for FY 02-03

Distribution of shareholding

Tables 3 and 4 give the distribution pattern of shareholding of GIL by size class andownership respectively as on March 31, 2003.

Table 3: Distribution of shareholding by size class as on March 31, 2003

Number of Number of Shareholders Number Shareholdingshares shareholders % of shares held %

1 - 500 14687 93.11 1321635 2.72

501 - 1000 551 3.49 450524 0.93

1001 - 2000 244 1.55 374242 0.77

2001 - 3000 88 0.56 224466 0.46

3001 - 4000 28 0.18 100443 0.21

4001 - 5000 35 0.22 170657 0.35

5001 - 10000 54 0.34 422499 0.87

10001 & above 87 0.55 45577476 93.70

Total 15774 100.00 48641942 100.00

0

1000

2000

3000

4000

5000

0

5

10

15

20

25

GIL Share Performance compared to the BSE Sensex for FY 02-03

Sensex GIL

BSE Sensex

GIL Share PriceTrading of GIL Shares

stopped from 17-7-2002on a/c of share purchase

scheme

Trading of GIL Sharesre-commenced on 16-1-2003


21

Table 4: Distribution of shareholding by ownership as on March 31, 2003

Category Shares held % of holding(as being reported to stock exchanges) (nos.)

Promoter’s holding

Promoters 43099770 88.61

Persons deemed to act in concert with promoters 0 0.00

Institutional investors

Mutual funds & UTI 1007 0.00

Banks, financial institutions & insurance companies 666555 1.37

Foreign institutional investors 1100 0.00

Others

Private corporate bodies 710078 1.46

Indian public 3972265 8.17

NRI / OCBs 191167 0.39

Total 48641942 100.00

Shares held in physical and dematerialised form

As on March 31,2003, 98.06 per cent of GIL’s shares were held in dematerialised formand the remaining 1.94 per cent in physical form. The break up is listed below:

No. of Folios No. of Folios No. of Shares No. of Total Totalin Physical in Demat in Physical shares Folios SharesMode Mode Mode in Demat

Mode

7760 8014 943987 47697955 15774 48641942

Share Transfer

Share transfers and related operations for GIL are conducted by Computech SharecapLtd, which is registered with the SEBI as a Category 1 Registrar and Transfer Agent.

Investor correspondence should be addressed to:

Computech Sharecap Ltd.147, M.G. Road,Opp. Jehangir Art GalleryMumbai 400023Tel: 022-22671824/22671825Email: [email protected]: 022-22670380

Compliance Officer

Mr. S. K. Bhatt,

General Manager (Corporate Services) & Company Secretary.

Ph : 25188010 Fax : 25188074 E-mail : [email protected]

Number and nature of complaints regarding shares for the year endedMarch 31, 2003

Nature of complaint Number of Numbercomplaints redressed

Non-receipt of dividend 332 332

Non-receipt of shares lodged for transfer 77 77

Complaints on scheme of arrangement forpurchase of shares 572 572

Others 7 7

Total 988 988

Exchange of old certificates of equity shares of GSL for equity shares of GIL andGCPL.

With effect from April 1, 2001, the consumer products business of erstwhile GodrejSoaps Ltd. (GSL) was demerged into a separate company called Godrej ConsumerProducts Ltd. (GCPL), and the name of the company was changed to Godrej IndustriesLtd. (GIL). Equity shares of the face value of Rs. 6/- and Rs. 4/- each were allotted inGIL and GCPL respectively in lieu of the equity shares of the face value of Rs. 10/- inGSL.

Any shareholder who has not yet exchanged his/her old certificates of GSL shares forshare certificates of GIL and GCPL can do so by surrendering the old certificate(s) to theRegistrar, after cancelling the certificate(s) and defacing them with the words “ submittedfor exchange “.

Allotment of equity shares of GIL to shareholders of Godrej Foods Ltd. (GFL)

In terms of the scheme of arrangement between GFL and GIL, the shareholders of GFLwere allotted 1 equity share of Rs. 6/- each in GIL against every 15 equity shares ofRs. 10/- each held by them in GFL on March 13, 2002.

Scheme of Arrangement for purchase of equity shares

Pursuant to the scheme of arrangement u/s 391 for purchase of equity shares of thecompany which was approved by the High Court of Bombay, 13068276 equity shares ofRs 6/- each were purchased during the year at a consideration of Rs. 18/- per share, andthe said shares were cancelled on December 27, 2002.

Industries Limited

22

1. We have audited the attached Balance Sheet of GODREJ INDUSTRIES LIMITED, asat March 31, 2003, the Profit and Loss Account of the Company for the year endedon that date annexed thereto and the Cash Flow Statement for the year ended onthat date. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statementsbased on our audit.

2. We conducted our audit in accordance with auditing standards generally acceptedin India. Those Standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of materialmis-statement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

3. As required by the Manufacturing and Other Companies (Auditors' Report) Order,1988, issued by the Central Government of India in terms of Section 227 (4A) ofthe Companies Act, 1956, we annex hereto a statement on the matters specifiedin paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we reportthat:

a) We have obtained all the information and explanations which to the best ofour 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 keptby the Company so far as appears from our examination of such books andproper returns adequate for the purpose of our audit have been receivedfrom the branches not visited by us. The Branch Auditor’s Report has beenforwarded to us and has been appropriately dealt with.

c) The Balance Sheet and Profit and Loss Account dealt with by this reportare in agreement with the books of account and with the audited returnsfrom the branches.

d) In our opinion, the Balance Sheet and Profit and Loss Account dealt withby 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 9 (b) of Schedule 22- Notes to Accounts,regarding the recoverability of advances given to certain individuals amountingto Rs. 1033 lac being contingent upon the transfer and/or disposal of theshares pledged against the loan; and

note 20 of Schedule 22 - Notes to Accounts, regarding the PerformanceLinked Variable Remuneration payable to the Managing Director and ExecutiveDirectors amounting to Rs. 98.26 lac for the financial year 2002-2003being subject to approval of the Central Government.

f) In our opinion and to the best of our information and according to theexplanations given to us, the said accounts subject to paragraph (e) above,and read with the notes thereon, give the information required by theCompanies Act, 1956, in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted inIndia:

i) in the case of the Balance Sheet, of the state of affairs of theCompany as at March 31, 2003;

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

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

5. On the basis of the written representations received from the Directors as onMarch 31, 2003, and taken on record by the Board of Directors, we report thatnone of the Directors is disqualified as on March 31, 2003, from being appointedas a Director in terms of clause (g) of sub-section (1) of Section 274 of theCompanies Act, 1956.

For and on behalf of

KALYANIWALLA & MISTRYChartered Accountants

V.R. MehtaPartner

M. No.: 32083


REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ INDUSTRIES LIMITED


23

Annexure to the Auditors' Report(Referred to in paragraph (3) of our report of even date)1. The Company has maintained adequate records showing particulars including

quantitative details and situation of fixed assets. Some fixed assets have beenverified by the management during the year in accordance with a phased programmeof verification adopted by the Company. In our opinion, the frequency of verificationis reasonable having regard to the size of the Company and nature of its assets.No material discrepancies between the book records and the physical inventorywere noticed in respect of the assets physically verified during the year.

2. The fixed assets have not been revalued during the year.

3. The stocks of finished goods, stores, spare parts and raw materials have beenphysically verified by the management during the year. In our opinion, the frequencyof such verification is reasonable.

4. In our opinion and according to the information and explanations given to us, theprocedures of physical verification of stocks followed by the management arereasonable and adequate in relation to the size of the Company and the nature ofits business.

5. The discrepancies noticed on verification between the physical stocks and the bookrecords were not material in relation to the operations of the Company and thesame have been properly dealt with in the books of account.

6. On the basis of our examination of the stock records, in our opinion, the valuationof stocks is fair and proper and in accordance with the normally accepted accountingprinciples and is on the same basis as in the preceding year.

7. In our opinion, the rate of interest and other terms and conditions of depositsaccepted by the Company from companies listed in the register maintained underSection 301 of the Companies Act, 1956 and from companies under the samemanagement as defined under Section 370 (IB) of the Companies Act, 1956 arenot prima facie prejudicial to the interest of the Company.

8. The Company has during the year granted loans to/placed deposits with companieslisted in the register maintained under Section 301 of the Companies Act, 1956and to companies under the same management as defined under Section 370 (IB)of the Companies Act, 1956. In our opinion, the rates of interest and other termsand conditions of such loans/deposits are not prima facie prejudicial to the interestof the Company.

9. The parties to whom loans and advances in the nature of loans have been given arerepaying the principal amounts as stipulated and are also generally regular inpayment of interest, wherever applicable, except for the advances given to certainindividuals as stated in Note 9 (b) of Schedule 22-Notes to Accounts.

10. In our opinion and according to the explanations given to us, there are adequateinternal control procedures, commensurate with the size of the Company and thenature of its business for purchases of stores, raw materials including components,plant and machinery, equipment and other assets, and for sale of goods.

11. In our opinion and according to the information and explanations given to us, thetransactions of purchase of goods and materials and sale of goods, materials andservices in respect of transactions made in pursuance of contracts or arrangementsentered in the register maintained under Section 301 of the Companies Act, 1956,and aggregating during the year to Rs. 50,000 or more in respect of each party,are reasonable having regard to prevailing market prices for such goods, materialsor services, where available, or the prices at which transactions for similar goods,materials or services have been made with other parties.

12. As explained to us, the Company has a regular procedure for the determination ofunserviceable or damaged stores, raw materials and finished goods. Adequateprovision has been made in the accounts for the loss arising on the items sodetermined.

13. In our opinion and according to the information and explanations given to us, theCompany has complied with the provisions of Section 58A of the Companies Act,1956, and the Companies (Acceptance of Deposits) Rules, 1975 with regard todeposits accepted from the public.

14. In our Opinion, reasonable records have been maintained by the Company for thesale and disposal of realisable by-products and scrap.

15. In our opinion, the Company has an internal audit system commensurate with itssize and nature of its business.

16. We have broadly reviewed the books of account maintained by the Company inrespect of the manufacture of vanaspati pursuant to the order passed by theCentral Government for maintenance of cost records under Section 209 (1) (d) ofthe Companies Act, 1956, and are of the opinion that prima facie the prescribedaccounts and records have been maintained. We have not, however, made adetailed examination of the records with a view to determine whether they areaccurate or complete. To the best of our knowledge and according to the informationgiven to us, the Central Government has not prescribed maintenance of costrecords under Section 209 (1) (d) of the Companies Act, 1956 for any otherproducts of the Company.

17. According to the records of the Company, the Provident Fund and Employees'State Insurance dues have been regularly deposited during the year with theappropriate authorities.

18. According to the information and explanations given to us, there were no undisputedamounts payable in respect of income-tax, wealth tax, sales tax, customs duty andexcise duty which have remained outstanding as at March 31, 2003 for a periodof more than six months from the date they became payable.

19. In our opinion and according to the information and explanations given to us, nopersonal expenses have been charged to revenue accounts other than those payableunder contractual obligations or in accordance with the generally accepted businesspractice.

20. The Company is not a sick industrial company within the meaning of clause(0) ofsub-section (I) of Section 3 of the Sick Industrial Companies (Special Provisions)Act, 1985.

21. In respect of the trading activities of the Company, damaged goods have beendetermined and adequate provision for the loss, if any, has been made in theaccounts.

22. In respect of the investment activities, the Company has maintained proper recordsand registers of transactions and contracts in respect of the investments purchasedand sold during the year and timely entries have been made therein. The investmentsmade by the Company are held in its own name except for the shares of GhardaChemicals Ltd.

For and on behalf ofKALYANIWALLA & MISTRY

Chartered Accountants

V.R. MehtaPartner

M. No. : 32083


Industries Limited

24

BALANCE SHEET AS AT MARCH 31, 2003This Year Previous Year

Schedule Rs. lac Rs. lac Rs. lac

SOURCES OF FUNDS

1. Shareholders’ Funds

(a) Share capital 1 2918.52 3698.30

(b) Reserves & surplus 2 21510.77 21029.98

24429.29 24728.28

2. Loan Funds

(a) Secured loans 3 14815.48 15051.15

(b) Unsecured loans 4 7432.16 13456.31

22247.64 28507.46

3. Deferred Tax Liability 3466.00 1347.00

TOTAL 50142.93 54582.74

APPLICATION OF FUNDS

4. Fixed Assets 5

(a) Gross block 49699.03 48611.88

(b) Less: Depreciation 21974.28 19770.26

(c) Net block 27724.75 28841.62

(d) Capital work-in-progress 404.75 257.73

28129.50 29099.35

5. Investments 6 18646.01 14618.46

6. Current Assets, Loans and Advances

(a) Inventories 7 10879.01 8064.03

(b) Sundry debtors 8 7660.12 7368.70

(c) Cash and bank balances 9 1877.20 1543.32

(d) Accrued intreest 10.49 52.55

(e) Loans and advances 10 3146.36 5436.28

23573.18 22464.88

Less : Current Liabilities and Provisions

(a) Liabilities 11 17372.06 10266.50

(b) Provisions 12 3256.61 2211.29

20628.67 12477.79

Net Current Assets 2944.51 9987.09

7. Miscellaneous Expenditure 13 422.91 877.84

(To the extent not written off or adjusted)

TOTAL 50142.93 54582.74

Notes to Accounts 22

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 and 22

For and on behalf of A. B. Godrej N. B. GodrejKalyaniwalla & Mistry Chairman Managing DirectorChartered Accountants

V. R. Mehta S. K. BhattPartner Company SecretaryMumbai, May 28, 2003


25

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 0N MARCH 31, 2003

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 22



This Year Previous YearSchedule Rs. lac Rs. lac

INCOME

Sale of Products & Services 14 65250.60 51194.66

Other Income 15 2529.64 2270.55

67780.24 53465.21

EXPENDITURE

Materials consumed and purchase of goods 16 42387.22 29218.49

Expenses 17 16870.83 13587.68

Inventory change 18 (1520.83) 602.10

Interest and financial charges (net) 19 2024.26 3217.50

Depreciation 2210.98 2154.04

(Net of transfer from Revaluation Reserve

Rs. 235.58 lac, Previous year Rs. 237.33 lac) 61972.46 48779.81

Profit Before Tax & Exceptional items 5807.78 4685.40

Exceptional items 20 – (624.47)

Profit Before Tax 5807.78 4060.93

Provision for taxation

— Current Tax 421.00 150.00

— Deferred Tax 2119.00 923.00

Profit for the year after taxation 3267.78 2987.93

Prior Period adjustments (net) 21 152.85 121.65

3420.63 3109.58

Surplus brought forward 9234.20 6744.88

Profit After Tax Available For Appropriation 12654.83 9854.46

APPROPRIATIONS

Proposed Dividend

— Interim – 370.26

— Final 972.84 –

Tax on distributed profits 124.64 –

Transfer to General Reserve 342.10 250.00

Surplus carried forward 11215.25 9234.20

TOTAL 12654.83 9854.46

Basic & Diluted EPS Rs. 6 per share 5.87 5.08

NOTES TO ACCOUNTS 22

Industries Limited

26

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2003


SCHEDULE 1 : SHARE CAPITAL

AUTHORISED :

13,33,33,333 Equity Shares of Rs. 6 each 8000.00 8000.00

10,00,00,000 Unclassified Shares of Rs.10 each 10000.00 10000.00

18000.00 18000.00ISSUED, SUBSCRIBED AND PAID-UP :

4,86,41,942 (Previous year 6,17,10,218) Equity Shares of Rs.6 each fully paid 2918.52 3702.61

Less : Calls in Arrears — 4.31

2918.52 3698.30

(Refer note 5 of schedule 22)Of the above :

(i) 4,01,02,008 (Previous year 4,10,59,727) shares are held by Godrej & Boyce Mfg. Co. Limited, the holding Company

(ii) 2,59,24,636 (Previous year 3,50,00,938) shares are allotted for consideration other than cash pursuant to schemes of amalgamation/arrangement.

(iii) 1,59,50,953 (Previous year 1,99,42,927) shares are allotted as fully paid bonus shares by way of capitalisation of Securities premium account.

This Year Previous YearRs. lac Rs. lac Rs. lac

SCHEDULE 2 : RESERVES AND SURPLUS

Securities Premium AccountAs per last balance sheet 469.90 6903.67Less : Premium paid on shares purchased and

cancelled as per scheme of arrangement (469.90) –Less : Reduction consequent to scheme of

arrangement with GFL – (6433.77)Add: : Premium received during the year 8.51 –

8.51 469.90Capital Investment Subsidy ReserveAs per last balance sheet 25.00 40.00Less : Transferred to GCPL consequent to scheme of arrangement – 15.00

25.00 25.00

Revaluation ReserveAs per last balance sheet 3775.17 4012.50Less : Depreciation on revalutation component

and deduction due to sale/discard of fixed assets (282.69) (237.33)

3492.48 3775.17

Capital Redemption ReserveAs per last balance sheet 3125.00 3125.00

General ReserveAs per last balance sheet 4400.71 5950.70Add : Transferred from Profit & Loss Account 342.10 250.00Less : Deferred tax liability as on April 1, 2001 – (424.00)Less : Reduction consequent to scheme of arrangement – (1375.99)Less : Premium paid on shares purchased and

cancelled as per scheme of arrangement (1098.28) –

3644.53 4400.71

Profit & Loss Account 11215.25 9234.20

21510.77 21029.98


27


SCHEDULE 3 : SECURED LOANS

Term loans from financial institutions – 682.80

Term loans from banks 11619.20 10151.40

Bank overdrafts 3196.28 4216.95

14815.48 15051.15

Particulars of securities (refer note 6 of schedule 22)

SCHEDULE 4 : UNSECURED LOANS

Fixed deposits 4726.05 7056.65

Intercorporate deposits 500.00 2240.00

Short term loans from banks 2206.11 4159.66

7432.16 13456.31

Amount repayable within one year 4089.52 8868.41

SCHEDULE 5 : FIXED ASSETS

(Rs. lac)

ASSETS GROSS BLOCK DEPRECIATION NET BLOCK

Assets Assets Depreciation Depreciationtransferred taken over upto 1-4-2001 upto 30-6-2001

consequent to consequent to transferred taken overscheme of scheme of consequent to consequent to

As at arrangement on arrangement on Deductions/ As on Upto scheme of scheme of Deductions/ For the Upto As on As on01.04.2002 1.4.2001 30.6.2001 Additions Adjustments 31.3.2003 31.03.2002 arrangement arrangement Adjustments Year 31.3.2003 31.3.2003 31.03.2002

LAND 271.33 – – – 12.32 259.01 16.56 – – – 1.64 18.20 240.81 254.78BUILDINGS 8740.67 – – 236.53 32.14 8945.06 1678.70 – – 6.72 210.30 1882.28 7062.78 7061.97PLANT & MACHINERY 36085.97 – – 958.82 243.87 36800.92 16809.85 – – 153.46 1962.17 18618.56 18182.36 19275.85RESEARCH CENTRE 120.04 – – – 5.35 114.69 38.72 – – 3.06 3.38 39.04 75.65 81.32FURNITURE & FIXTURES 1047.26 – – 86.55 3.35 1130.46 511.35 – – 1.21 74.90 585.04 545.42 535.91OFFICE & OTHEREQUIPMENTS 810.00 – – 135.28 29.98 915.30 367.48 – – 13.32 46.38 400.54 514.76 442.78VEHICLES 782.61 – – 63.05 120.27 725.39 259.63 – – 64.77 69.30 264.16 461.23 522.98TRADEMARKS 754.00 – – – – 754.00 87.97 – – – 75.40 163.37 590.63 666.03Assets AcquiredUnder Finance LeaseVEHICLES – – – 54.20 – 54.20 – – – – 3.09 3.09 51.11 –

TOTAL – This Year 48611.88 – – 1534.43 447.28 49699.03 19770.26 – – 242.54 2446.56 21974.28 27724.75 28841.62

- Previous Year 53211.75 14,347.32 6263.30 3700.94 216.79 48611.88 19879.83 4445.27 2021.18 76.85 2391.37 19770.26

CAPITAL WORK-IN-PROGRESS 404.75 257.73

TOTAL 28129.50 29099.35

NOTES :

1. Land includes leasehold land of Rs.139.46 lac (Previous Year Rs.141.10 lac) which is being amortised over the period of lease.

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

3. Depreciation for the year include Rs.235.58 lac (Previous Year Rs.237.33 lac) being depreciation on revalued component of the fixed assets.

4. Gross block, deductions / adjustments includes Rs. 47.11 lac (Previous Year Rs. Nil) being the revalued component of assets sold/discarded during the year.

5. Buildings include Rs.0.01 lac (previous year Rs.0.01 lac) being the value of investment in shares of Co-operative Housing Society.

6. Buildings includes Rs. 2651.08 lac (previous year Rs. 2484.32 lac) being the cost of equity shares in Tahir Properties Ltd., representing the right of the Company to five flatsin the property.

Industries Limited

28

LONG TERM INVESTMENTS - At Cost

A. TRADE INVESTMENTS :Quoted :Equity Shares : Fully PaidGodrej Consumer Products Ltd. 4 – 22,00,000 – 22,00,000 2404.11 –Unquoted :Equity Shares : Fully PaidCompass Connections Ltd. £0.25 10,029 3,663 – 13,692 124.55 97.01Gharda Chemicals Ltd. 100 114 – – 114 (a) 11.57 11.57Godrej Photo–Me Ltd. 10 9,71,100 – – 9,71,100 97.11 97.11Godrej Sara Lee Ltd. 4 65,01,750 1,27,687 – 66,29,437 5881.63 5479.63Godrej Tea Ltd. 10 – 13,86,496 – 13,86,496 138.65 –Hybrigene Biotechnology Ltd. 10 – 50,000 25,000 25,000 2.50 –Swadeshi Detergents Ltd. 10 2,09,370 – – 2,09,370 191.33 191.33Tahir Properties Ltd. (Partly Paid) 100 25 – – 25 (b) 0.01 0.01

Preference Shares : Partly PaidGodrej Foods Ltd. 10 – 50,00,000 – 50,00,000 (c) 425.00 –(8% 10 year Redeemable CumulativePreference Shares)Tahir Properties Ltd. (Class-A) 100 25 – – 25 (d) 0.02 0.02

Optionally Convertible Subordinated NotesC Bay Systems Ltd. $800,000 – – – – (e) 390.50 –

B. INVESTMENT IN SUBSIDIARY COMPANIES :Unquoted :Equity Shares : Fully PaidEnsemble Holdings & Finance Ltd. 10 37,70,160 – – 37,70,160 1318.14 1318.14Godrej Agrovet Ltd. 10 41,06,956 – – 41,06,956 3367.11 3367.11Godrej Global Solutions Ltd. (Partly Paid) 10 – 6,00,000 – 6,00,000 (f) 20.70 –Godrej International Ltd. £1 13,20,000 1,85,000 – 15,05,000 960.83 817.91Godrej Properties & Investments Ltd. 10 50,73,965 – – 50,73,965 3836.46 3836.46Godrej Remote Services Ltd. 10 27,79,562 20,16,086 – 47,95,648 (g) 479.56 277.95Sahyadri Aerosols Ltd. 100 3,202 – 3,202 – (h) – 2.15(voluntary liquidated)

C. OTHER INVESTMENTS :Quoted :Equity Shares : Fully PaidGesco Corporation Ltd. 10 – 9 – 9 – –Tata Engineering & Locomotive Co. Ltd. 10 9,376 – – 9,376 30.00 30.00The Great Eastern Shipping Co. Ltd. 10 86 – – 86 0.01 0.01

Unquoted :Bharuch Eco-Aqua Infrastructure Ltd. 10 4,40,000 – – 4,40,000 (i) 17.60 17.60- (Partly Paid)

Government SecuritiesUnquoted :National Plan Certificate 31,600 – – – – 0.32 0.32Kisan Vikas Patra 2,000 – – – – 0.02 0.0211.99% Govt. Stock 2009 – – – – – – 51.7814% Govt. Stock 2005 – – – – – – 5.2210.25% Govt Stock 2012 – – – – – – 71.09(sold during the year)

Units of Mutual FundsUnquoted :Unit Trust of India – Unit Scheme 1964 10 25,66,703 – – 25,66,703 383.00 383.00

Shares in Co-operative Societies – Fully PaidUnquoted :The Saraswat Co-op. Bank Ltd. 10 1,000 – – 1,000 0.10 0.10

20080.83 16055.54Less : Provision for diminution in value of Investments (1434.82) (1437.08)

18646.01 14618.46

Investee Company / Institutions Face Number AmountValue Qty. Acquired Sold Qty. As on As on

as on during during as on Notes 31.03.03 31.03.02(Rs.) 01.04.02 Year Year 31.03.03 Rs. lac Rs. lac

SCHEDULE 6 : INVESTMENTS


29

Aggregate Book Value of InvestmentsQuoted 2434.12 30.01Unquoted 16211.89 14588.45

18646.01 14618.46

Market Value of Quoted Investments 2310.33 14.55NOTES :(a) The said shares have been refused for registration by the investee company.(b) Rs. 80 per share is payable in one or more calls on these shares.(c) Rs. 1.50 per share is payable in one or more calls on these shares.(d) Rs. 30 per share is payable in one or more calls on these shares.(e) Optionally Convertible Subordinated Notes are convertible into 8% Series E Cumulative Redeemable Preferred Stock of US $0.01 par value at the conversion price of US $ 2.60

per share upto 15th July, 2003, at the option of the investor.(f) Rs.6.55 per share is payable in one or more calls on these shares.(g) Right shares subscribed during the year.(h) The Company’s wholly owned subsidiary Sahyadri Aerosols Ltd. has been wound up on March 10, 2003. The assets received on distribution have been adjusted towards the

cost of the investment and the surplus on final distribution credited to the profit and loss account.(i) Rs.6 per share is payable in one or more calls on these shares.


SCHEDULE 7 : INVENTORIES(at lower of cost and net realisable value)Stores and spares 488.27 399.13Raw materials 5861.21 4656.23Work–in–progress 1180.36 1094.43Finished goods 3349.14 1914.24

10879.01 8064.03

SCHEDULE 8 : SUNDRY DEBTORS (UNSECURED)Debts outstanding over six monthsConsidered good 66.50 1.63Considered doubtful 296.29 323.05

362.79 324.68Other debt, considered good 7593.62 7367.07

7956.41 7691.75Less : Provision for doubtful debts 296.29 323.05

7660.12 7368.70

SCHEDULE 9 : CASH AND BANK BALANCESCash and cheques on hand 25.64 16.13Balances with scheduled banks :– on current accounts 1070.58 817.28– on deposit accounts (refer note 8 of schedule 22) 780.98 709.91

1877.20 1543.32

SCHEDULE 10 : LOANS AND ADVANCES(Unsecured and considered good unless otherwise stated)Loans and Advances (refer note 9 of schedule 22) 1418.16 1762.36Advances recoverable in cash or in kind or forvalue to be received (net of provision for doubtful advancesRs. 594.31 lac, Previous year Rs. 665.31 lac) 510.82 807.38Intercorporate deposits– Subsidiary companies 232.50 546.40– Others 89.40 277.38Deposits and balances with– Customs & excise authorities 172.14 800.94– Others 723.34 669.65Advance payment of taxes – 572.17(Net of provision for tax, Previous year Rs. 1301 lac)

3146.36 5436.28

Investee Company / Institutions Face Number AmountValue Qty. Acquired Sold Qty. As on As on

as on during during as on Notes 31.03.03 31.03.02(Rs.) 01.04.02 Year Year 31.03.03 Rs. lac Rs. lac

Industries Limited

30

This Year Previous YearSCHEDULE 11 : CURRENT LIABILITIES Rs. lac Rs. lac Rs. lacSundry creditors– due to small scale industrial undertakings 80.38 66.00– others 14205.06 7119.75

14285.44 7185.75Advances from customers 31.08 158.30Sundry deposits 1114.70 1061.74Investor Education & Protection Fund *– Unclaimed dividend 79.28 78.42– Unpaid Application Money 3.43 -– Unpaid Matured Deposits 122.46 10.91– Unpaid Matured Debentures 133.60 124.03– Interest accrued on above 66.60 66.60Other liabilities 1343.01 1231.59Interest accrued but not due 192.46 349.16

17372.06 10266.50* There is no amount due and outstanding to be credited to investor Education and Protectioin Fund.

except for Rs. 3.73 lac.

SCHEDULE 12 : PROVISIONSProposed dividend– Interim – 370.26– Final 972.84 –Provision for tax on distributed profits 124.64 –Provision for Taxation (net of advance tax Rs. 1045.42 lac) 36.52 –Provision for retirement benefits 2122.61 1841.03

3256.61 2211.29SCHEDULE 13 : MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)Deferred revenue expenditure– Gratuity

Balance at the beginning of the year 51.00 91.00Less : Amortised during the year (40.00) (40.00)Balance at the end of the year 11.00 51.00

– Voluntary retirement compensationBalance at the beginning of the year 599.76 744.94Add : Deferred during the year 27.31 67.18Less : Amortised during the year (215.16) (212.36)Balance at the end of the year 411.91 599.76

– Deferred revenue expenditureBalance at the beginning of the year 227.08 –Add : Deferred during the year – 227.08Less : Amortised during the year 227.08 –Balance at the end of the year – 227.08

422.91 877.84SCHEDULE 14 : SALE OF PRODUCTS AND SERVICESSales (gross) 63714.28 49825.63Less : Excise duty 4791.81 3934.44Sales (net) 58922.47 45891.19Processing charges 3914.09 2736.82Storage charges – 83.53Export incentives 242.42 304.70Licence fees and service charges 2171.62 2178.42

65250.60 51194.66SCHEDULE 15 : OTHER INCOMEInterest :– Government Securities 36.00 13.65– Income tax refund 266.62 4.80Dividend– from subsidiary companies 534.30 538.86– from long term trade investments 1363.35 1552.11

Miscellaneous income 286.58 161.13

Profit on sale of fixed assets (net) 1.27 –

Profit on sale of long term investments 39.26 –

Provision for depletion in value of long term investments written back 2.26 –2529.64 2270.55


31

SCHEDULE 16 : MATERIALS CONSUMED AND PURCHASE OF GOODSRaw Materials Consumed :Stocks at the commencement of the year 4656.23 5995.95Less : Stocks transferred to GCPL consequent to scheme of arrangement – 1689.62

4656.23 4306.33Add : Purchases (net) 39439.35 28730.99

44095.58 33037.32Less : Stocks as at the close of the year 5861.24 4656.23Raw Materials consumed during the year 38234.34 28381.09Purchase of goods for resale 4152.88 837.40

42387.22 29218.49SCHEDULE 17: EXPENSESSalaries, wages and allowances 5460.20 4943.85Contribution to provident fund and other funds 337.32 306.64Employee welfare expenses 453.39 376.61Stores and spares consumed 865.96 767.27Power and fuel 4021.28 3124.87Processing charges 34.91 31.78Rent 128.99 107.47Rates and taxes 432.33 420.39Repairs and maintenance - Machinery 761.03 695.02- Buildings 260.07 198.18- Other assets 27.48 26.00Insurance 118.56 133.76Freight 1166.41 1118.24Commission 357.01 317.21Discount 158.50 80.11Advertisement and publicity 174.04 48.96Sales promotion 300.22 264.98Selling and distribution expenses 494.84 445.71Bad debts written off 45.90 321.38Provision for doubtful debts and advances written back (35.60) (1110.54)Loss on sale of fixed assets – 34.12Miscellaneous expenses 2043.96 1675.53Less: Expenses recovered for shared services (735.97) (739.86)

16870.83 13587.68SCHEDULE 18 : INVENTORY CHANGEStocks at the commencement of the year

Finished goods 1914.24 4592.08Work-in-progress 1094.43 1744.35

3008.67 6336.43Less: Stocks transferred to GCPL

consequent to scheme of arrangementFinished goods – 2,451.58Work-in-progress – 274.08

– 2,725.66Less: Stocks at the close of the year :

Finished goods 3349.14 1914.24Work-in-progress 1180.36 1094.43

4529.50 3008.67 (Increase) / Decrease in Inventory (1520.83) 602.10

SCHEDULE 19 : INTEREST AND FINANCIAL CHARGES (Net)Interest paid- on debentures and fixed loans 1280.22 1110.74- on bank overdrafts 212.05 268.14- other interest 39.18 1468.12

1531.45 2847.00Less: Interest received- on loans & deposits 95.22 121.89- on Customer balances, etc. 46.57 54.52

141.79 176.41Net Interest 1389.66 2670.59Brokerage and other financial charges 634.60 546.91

2024.26 3217.50SCHEDULE 20 : EXCEPTIONAL ITEMSLoss on Sale of long term investments – 1174.31Provision for depletion in value of long term investments written back – (549.84)

– 624.47SCHEDULE 21 : PRIOR PERIOD ADJUSTMENTSExcess provision for Income -tax 152.85 31.50Depreciation – 7.03Excess provision for expenses (net) – 83.12

152.85 121.65


Industries Limited

32

SCHEDULE 22 : NOTES TO ACCOUNTS

1. Background

The Company was incorporated under the Companies Act, 1956 on March 7, 1988under the name of Gujarat-Godrej Innovative Chemicals Limited. The business andundertaking of the erstwhile Godrej Soaps Limited was transferred to the Companyunder a scheme of amalgamation with effect from April 1, 1994 and the Company’sname was changed to Godrej Soaps Ltd. Subsequently, under a scheme of arrangementthe Consumer Products division of the Company was demerged with effect fromApril 1, 2001 into a separate company, Godrej Consumer Products Limited (GCPL)and the vegetable oils and processed foods manufacturing business of GodrejFoods Ltd. was transferred to the Company with effect from June 30, 2001. TheCompany’s name was changed to Godrej Industries Limited on April 2, 2001.

The Company is engaged in the businesses of manufacture and marketing ofchemicals, vegetable oils and processed foods, trading in medical diagnostic productsand estate management.

2. Significant Accounting Policies

a) Accounting Convention

The financial statements are prepared under the historical cost convention, onaccrual basis, in accordance with the generally accepted accounting principles inIndia, the Accounting Standards issued by the Institute of Chartered Accountantsof India and the provisions of the Companies Act, 1956.

b) Fixed Assets

Fixed Assets are stated at cost or as revalued as the case may be, less accumulateddepreciation. Cost includes expenses related to acquisition and installation ofthe concerned assets. Exchange differences arising on account of repaymentand year end translation of foreign currency liabilities relating to acquisition offixed assets is adjusted to the carrying cost of the respective assets.

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

c) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition / construction ofthe underlying fixed assets are capitalised as a part of the respective asset.

d) Investments

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

e) Inventories

Inventories are valued at lower of cost or net realisable value. Cost is computedon weighted average basis and is net of modvat. Finished goods and work-in-progress include cost of conversion and other costs incurred in bringing theinventories to their present location and condition. Provision is made for thecost of obsolescence and other anticipated losses, wherever considered necessary.

f) Foreign Exchange Transactions

Transactions in foreign currency are recorded at the exchange rates prevailing onthe date of the transaction. Assets and liabilities related to foreign currencytransactions, remaining unsettled at the year end, are stated at the contractedrates, when covered under forward foreign exchange contracts and at year-endrates in other cases. The premium payable on forward foreign exchange contractsis amortised over the period of the contract. Exchange gains and losses arerecognised in the Profit and Loss Account except in respect of liabilities incurredto acquire fixed assets in which case they are adjusted to the carrying amountof such fixed assets.

g) 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/despatch of the goods, as per the terms of contract.

Export incentives are accounted on accrual basis and include the estimated valueof duty free import entitlement under the Advance Licence Benefit Scheme andexport incentives receivable under the Duty Entitlement Pass Book Scheme andthe Duty Drawback Scheme.

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 basisover the lease term.

h) Research and Development Expenditure

Revenue expenditure on Research & Development is charged to the Profit andLoss Account of the year in which it is incurred. Capital expenditure incurredduring the year on Research & Development is shown as addition to fixedassets.

i) Depreciation

Leasehold land is amortised equally over the lease period.

Trademarks are amortised over a period of ten years.

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

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

Depreciation on the revalued component is provided on the straight line methodbased on the balance useful life of the assets as certified by the valuers. Suchdepreciation is withdrawn from Revaluation Reserve and credited to Profit andLoss Account.

j) Retirement Benefits

Retirement benefits to employees comprise payments under approved providentfund plans, leave encashment and gratuity to eligible employees. Paymentsunder approved provident fund plans are charged to revenue. The liability inrespect of future payment of gratuity to retiring employees and leave encashmentbenefit on retirement is provided on the basis of an actuarial valuation at theend of each financial year.

k) 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 theprevious year when compared with expected improvements. The EVA awardsflow through a notional bank whereby only the prescribed portion of the bankis distributed each year and the balance is carried forward. The amount distributedout of the notional bank is charged to profit & loss account. The notional bankis held at risk and charged to EVA of future years and is payable at that time,if future performance so warrants.

l) Hedging

Import of crude palm oil by the Company are being hedged by futures contracton offshore Commodities Exchange. Gains or losses on settled contracts isrecognised in the profit and loss account and is included in the cost ofmaterials consumed. Futures contracts not settled as on the Balance Sheet dateare marked to market and losses, if any, are recognised in the profit and lossaccount, whereas, the unrealised profit is ignored.

m) Deferred Revenue Expenditure

The incremental gratuity liability for the service period prior to March 31, 1994arising as a result of the amendment to The Payment of Gratuity Act, 1972 hasbeen deferred and is being amortised equally over a period of ten financial years.

The compensation payable under the Voluntary Retirement Schemes, the benefitof which is expected to accrue in future is deferred over its payback period. Thecompensation is generally amortised over three to five years depending on thepay back period.

n) Taxes on Income

Current tax is the amount of tax payable on the taxable income for the yeardetermined in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognised on timing differences, being the differences betweenthe taxable income and accounting income that originate in one period and arecapable of reversal in one or more subsequent periods. Deferred tax assetssubject to the consideration of prudence are recognised and carried forwardonly to the extent that there is a reasonable certainty that sufficient futuretaxable income will be available against which such deferred tax assets can berealised. The tax effect is calculated on the accumulated timing differences atthe year end and based on the tax rate and laws enacted or substantially enactedon the balance sheet date.


33

Schedule 22 : Notes to Accounts (contd.)

o) Segment Reporting

The Accounting Policies adopted for segment reporting are in line with theAccounting Policies of the Company. Segment assets include all operatingassets used by the business segments and consist principally of fixed assets,debtors and inventories. Segment liabilities include the operating liabilities thatresult from the operating activities of the business segment. Liabilities thatcannot be allocated between the segments are shown as part of unallocatedcorporate assets and liabilities respectively. Income / Expenses relating to theenterprise as a whole and not allocable on a reasonable basis to businesssegments are reflected as unallocated corporate income / expenses.

3. Contingent Liabilities

This year Previous YearRs. lac Rs. lac

a) Claims for excise duties, taxes and othermatters not acknowledged by the Company :i) excise duty - Rs. 3736.80 lac

(Previous Year Rs. 3615.53 lac) - net of tax 2363.53 2487.25ii) lease rent claimed by Mumbai Port

Trust in respect of land leased to theFoods division. The lease has notbeen renewed since 1990 - Rs. 1150.00 lac(Previous Year Rs. 1862.97 lac) - net of tax 727.38 1197.89

iii) other matters - Rs. 3861.50 lac(Previous Year Rs. 3313.87lac) - net of tax 2676.27 2123.42

b) Guarantees issued by banks, excluding guaranteesissued in respect of matters reported in (a) above 590.79 354.67

c) Guarantees given by the Company in respect of credit/guarantee limits sanctioned by banks to subsidiaryand other companies. 3560.00 207.00

d) Uncalled liability on partly paid shares/debentures 140.73 95.73

4. Capital Commitments


Estimated value of contracts remaining to beexecuted on capital account, to the extent notprovided 51.60 227.31

5. Share Capital

The scheme of arrangement under Section 391 of the Companies Act, 1956between Godrej Industries Ltd. and its shareholders for the purchase and subsequentcancellation of equity shares was approved by the shareholders at the Extra-ordinaryGeneral Meeting held on April 6, 2002 and by the Honorable High Court ofJudicature at Mumbai on June 6, 2002. Pursuant thereto, 1,30,68,276 equityshares have been purchased by the Company for a consideration of Rs. 18/- pershare and cancelled in terms of Section 100 of the Companies Act, 1956, asprovided under the scheme.

Consequently, the Issued, Subscribed and Paid up capital of the Company standsreduced by Rs. 784.09 lacs. The premium paid for purchase of the said shares hasbeen adjusted from the Securities Premium Account to the extent of Rs. 469.90 lacand from General Reserve to the extent of Rs. 1098.28 lac.

6. Secured Loans

a) Term loans from banks are secured by :

- first charge by way of equitable mortgage of the immovable properties atVikhroli factory,

- hypothecation of specified movable assets of the Company at Vikhroli andValia factories,

- first charge by way of equitable mortgage of the immovable properties atValia factory.

b) Working capital facilities sanctioned by banks are secured by :

- hypothecation of stocks and book debts, and

- second charge by way of equitable mortgage of the immovable propertiesat Wadala.

7. Sundry DebtorsThis year Previous Year

Rs. lac Rs. lac

Sundry Debtors include amount due from acompany under the same management :Godrej Consumer Products Ltd. 195.80 439.78

8. Cash and Bank BalancesBalances with Scheduled Banks in Deposit Accountsinclude deposits held by bank as security againstguarantees issued on behalf of suppliers of theCompany 17.11 113.41

9. Loans and Advancesa) Loans and Advances include an amount of Rs. 6.69 lac (Previous Year

Rs. 66.66 lac) due from directors and Rs. 0.20 lac (Previous Year Rs. 7.10 lac)from an Officer of the Company under the contingency and housing loanscheme of the Company. Maximum balance during the year Rs. 14.60 lac(Previous Year Rs. 7.98 lac).

b) Loans and Advances include Rs. 1033 lac (Previous Year Rs. 1033 lac) advancedby the Company to certain individuals against the pledge by way of deposit ofequity share of Gharda Chemicals Ltd. The Company is in the process ofenforcing the security and getting the shares transferred in its name. Interest onthe aforesaid loans and advances amounting to Rs. 315 lac was accrued uptoMarch 31, 2000 and has been fully provided for, no interest is being accruedthereafter. The recoverability of the loans and advances is contingent upon thetransfer and / or disposal of said shares. In the opinion of the management, thevalue of the said shares is greater than the amount of the loans and advances.

c) Loans & Advances to subsidiary Companies

Maximum balance Balance at year endoutstanding This Year Previous Year

during the year Rs. lac Rs. lacRs. lac

i) Ensemble Holdings& Finance Ltd. 289.00 232.50 44.00

ii) Godrej Properties& Investments Ltd. 200.00 Nil Nil

iii) Godrej Foods Ltd. 450.00 Nil 250.00

d) Loans & Advances to associateCompaniesi) Swadeshi Detergents Ltd. 252.40 89.40 252.40

e) Ensemble Holdings & Finance Ltd, to whom Godrej Industries Ltd. has given aloan, has made investments in Godrej Industries Ltd. and its subsidiaries.

i) Godrej Industries Ltd. (shares received pursuant to scheme of arrangementwith Godrej Foods Ltd.)

ii) Godrej Tea Ltd.

iii) Godrej Global Solutions Ltd.

iv) Hybrigene Biotechnology Pvt. Ltd.

v) Godrej Photo-me Ltd.

vi) Godrej Remote Services Ltd.

f) Loans and Advances where there is no repayment schedule or repayment isbeyond seven years:


i) D. Kavasmanek and Others 1033.00 1033.00(refer (b) above)

10. Liabilities

a) The liability for future payment of Voluntary Retirement Compensation aggregatingRs. 3.77 lac (Previous Year Rs.26.78 lac) will be accounted in subsequent years asand when the same accrues and becomes due to the workmen. This compensationis payable in future and is over and above the compensation already paid under otherschemes and included in deferred revenue expenditure.

Industries Limited

34


b) No amount has been claimed from the Company under the Interest on DelayedPayments to Small Scale and Ancillary Industrial Undertakings Act, 1993.

c) Sundry creditors include Rs. 80.38 lac (Previous Year Rs. 66 lac) due to small scaleindustrial undertakings. The names of small scale industrial undertakings to whoman amount is outstanding for more than 30 days are as under :

Akshay Inorganics

Ambica Chemicals Industries

Amelon Synthetics Corporation

Amrapali Foods

Anupam Enterprise

Aristoplast Industries

B. Brothers Decoraters

Cummins Diesel S&S (Ind.) Ltd.

Doshi Heaters Pvt. Ltd.

Jalaram Box Makers (P) Ltd.

Jay Gaskets Pvt. Ltd.

Jayant Packing Industry

Krishna Barrels Pvt. Ltd.

Kumar Dharia ID Services

Mevada Engineering Works

MIL Controls Ltd.

Multi-Tech Engineers Pvt. Ltd.

N. R. Packaging Industries

Neo Fab

Nirmal Industries

Sanjoo Printers

Snowtech Process Eqpt. Pvt. Ltd.

Suneeta Chemicals

Sungrace Agro Process Pvt. Ltd.

d) The above information regarding small scale industrial undertakings has beendetermined to the extent such parties have been identified on the basis of informationavailable with the Company, and has been relied upon by the Auditors.

11. Incentive Plans

The amount carried forward in notional bank as on March 31, 2003, after distributionof PLVR for the FY 2002-03 is Rs. 253.49 lacs. The said amount is not providedin the books of accounts and is payable in future if performance so warrants.

12. Leases

a) The Company has entered into leave and licence agreements in respect of itscommercial and residential premises. These are not non-cancelable and rangebetween 11 months to 35 months and are renewable by mutual consent onmutually acceptable terms. The particulars of the premises under leave andlicence arrangement are as under :


Rs. Lac Rs. Lac

Gross carrying amount of premises 3732.82 3524.63

Accumulated depreciation 743.52 652.93

Depreciation for the period 90.59 102.72

b) Finance Leases :

The Company has acquired vehicles under Finance Lease. Liability for minimumlease payment is secured by hypothecation of vehicle acquired under the lease.The minimum lease payments outstanding as on March 31, 2003, in respect ofvehicle leased are as under:

Period Total minimum lease Present valuepayments outstanding Un-matured of minimum

as on March 31, 2003 Interest lease payments

Rs. Lac Rs. Lac Rs. Lac

Within one year 14.96 2.33 14.43Later than one year andnot later than five years 41.45 2.89 36.36

Total 56.41 5.22 50.79

13. Deferred Tax

Major components of deferred tax arising on account of timing differences as onMarch 31, 2003 are :

Assets This Year Previous Year

Rs. Lac Rs. lac

Business Losses 1,481 4,227

Provision for retirement benefits 586 538

Provision for doubtful debts / advances 317 361

Others 40 36

2,424 5,162

Liabilities

Depreciation 5,751 6,234

VRS Expenses 134 191

Deferred Revenue Expenditure 5 84

5,890 6,509

Net Deferred Tax Liability 3,466 1,347

14. Hedging

Reserve Bank of India has permitted the Company to hedge its exposure on CrudePalm Oil on offshore exchanges to the extent of its imports. Accordingly, theCompany is hedging import of crude palm oil on the Malaysian CommoditiesExchange by way of futures contracts. The particulars of the futures contracts forthe year are as under :

Details Purchase Sale

Total number of contracts entered during the year 66 56

Number of units under above contracts 326 206

Futures contracts not settled as on March 31, 2003 10 –

Number of units under above contracts 120 –

15. Profit & Loss Account

a) The amount of exchange loss on account of fluctuation of the rupee againstforeign currencies and the net charges for forward foreign exchange contractsadded to the carrying amount of fixed assets during the year is Rs. 85.62 lac(Previous Year Rs. 123.50 lac). The exchange difference included in the Profit &Loss Account is a loss of Rs. 370.36 lac (Previous Year Rs. 219.29 lac). Theexchange difference in respect of forward exchange contracts to be recognised insubsequent accounting periods is Rs. 29.20 lac (Previous Year Rs. 99.94 lac).

b) Research & Development Expenditure of revenue nature charged to the Profit &Loss Account amounts to Rs. 94.79 lac (Previous Year Rs. 111.29 lac).


35


16. Segment InformationInformation about Primary Business Segment Rs. lac

Chemicals Foods Estate Others TotalThis Year Previous Year This Year Previous Year This Year Previous Year This Year Previous Year This Year Previous Year

Revenue

External Sales 44882.04 38930.25 17590.02 9651.96 2177.39 2178.42 2864.17 2649.71 67513.62 53410.34

Results

Segment result before interest,exceptional items and tax 5649.28 4612.01 87.17 1219.03 1536.84 1649.40 1798.08 1303.42 9071.37 8783.86

Exceptional items

- Loss on sale of long terminvestment, net of provisionwritten back – – – – – – – (624.47) – (624.47)

Segment result beforeinterest and tax 5649.28 4612.01 87.17 1219.03 1536.84 1649.40 1798.08 678.95 9071.37 8159.39

Unallocated expenses net ofunallocated income (1086.48) (759.31)

Interest Expense (net) (2024.26) (3217.50)

Profit before tax 5960.63 4182.58

Taxes (2540.00) (1073.00)

Profit after taxes 3420.63 3109.58

Segment Assets 36476.81 36814.24 8326.34 7838.50 3978.27 2664.62 21990.18 19019.23 70771.60 66336.59

Unallocated Assets – 572.00

Total Assets 70771.60 66908.59

Segment Liabilities 15858.42 15019.21 3986.08 1998.55 878.09 798.20 70.18 561.00 20792.77 18376.96

Unallocated Liabilities 24452.06 23433.18

Total Liabilities 45244.83 41810.14

Total Cost incurred during theyear to acquire segment assets 1102.62 1179.00 183.00 17.00 248.81 1756.00 0.00 749.00 1534.43 3701.00

Segment depreciation 1778.46 1866.28 300.00 232.72 98.95 53.02 33.57 2.02 2210.98 2154.04

Information about Secondary Business Segments

Revenue by Geographical Markets

India 57053.09 42961.87

Outside India 10460.53 10448.47

Total 67513.62 53410.34

Carrying Amount of Segment Assets

India 70771.60 66908.59

Outside India – –

Total 70771.60 66908.59

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 risksand returns, the organisational structure and the internal reporting system.

2. The Chemicals segment includes Oleochemicals such as Fatty Acids, Fatty Alcohols, Alfa Olefin Sulphonates and Refined Glycerin.

The Foods segement includes refined vegetable oils and vanaspati, fruit and vegetable puree, pulp juices and fruit beverages.

The Estate segment comprises the business of giving premises on leave and licence basis.

Others includes medical diagnostics business and finance operations.

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.

Industries Limited

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17. Related Party Disclosuresa) Related Parties with whom transactions have taken place during the year,

with the names and description of relationship.Party where control exists :Godrej & Boyce Mfg. Co. Ltd., the holding company.Subsidiary companies :Ensemble Holdings & Finance Ltd.Girikandra Holiday Homes & Resorts Ltd.Godrej Agrovet Ltd.Godrej Global Mid-East FZEGodrej Global Solutions Ltd.Godrej International Ltd.Godrej Properties & Investments Ltd.Godrej Remote Services Ltd.Godrej Tea Ltd.Goldmohur Foods & Feeds Ltd.Hybrigene Biotechnology Ltd.Sahyadri Aerosols Ltd.Tahir Properties Ltd.

b) Transactions with Related Parties

Rs. lacEnterprisesover which

KeyManagement

Relative PersonnelAssociate/ Key of Key exercise

Holding Subsidiary Fellow Joint Venture Management Management significantNature of Transaction Company Companies Subsidiaries Companies Personnel Personnel influence Total

Sale of Goods 17.95 0.47 2930.84 3.25 – – 0.44 2952.95Previous Year 13.42 0.90 1433.07 37.84 – – 1.26 1486.49Purchase of goods & equipment 56.86 6.24 1173.27 43.24 – – – 1279.61Previous Year 89.11 – 1290.08 7.57 – – – 1386.76Processing charges received – – 1931.99 – – – – 1931.99Previous Year – – 1786.03 – – – – 1786.03Commission received – – 33.00 – – – – 33.00Previous Year – – 20.49 – – – – 20.49Recovery of establishment & other expenses 4.49 244.70 1121.73 229.35 – – 0.06 1600.33Previous Year – 281.72 2015.78 261.44 – – 0.05 2558.99Establishment & other expenses paid 151.34 211.32 55.60 1.82 – – – 420.08Previous Year 107.77 64.91 54.32 28.59 – – – 255.59Refund of Deposit – 12.71 2.00 23.20 – – – 37.91Previous Year – – – – – – – –Interest received – 18.05 24.39 – 0.35 – – 42.79Previous Year – 34.40 27.31 – 3.03 – – 64.74Interest paid – – 4.16 – – – – 4.16Previous Year – 15.67 7.65 – – – – 23.32Finance provided including loans & equitycontributions 23.02 1149.09 3029.00 429.58 – – – 4630.69Previous Year – 2921.18 817.32 – 1.20 – – 3739.70Finance received during the year – 0.70 200.00 – 1.98 – – 202.68Previous Year – 800.00 1765.00 – – – – 2565.00Finance repaid during the year – – 500.00 – – – – 500.00Previous Year – – – – – – – –Guarantees & collaterals given – 3500.00 – 60.00 – – – 3560.00Previous Year – – 5000.00 – – – – 5000.00Dividend income – 534.30 88.00 1275.33 – – – 1897.63Previous Year – 538.86 – 1526.61 – – – 2065.47Dividend paid 246.36 0.59 – – 3.25 – – 250.20Previous Year 1203.29 2.88 – – 12.68 – – 1218.85Provision for diminution in value of investments – – – – – – – –Previous Year – 901.34 – 97.11 – – 191.32 1189.77Balances Written Off – – – – – – – –Previous Year – – – 76.61 – – – 76.61Remuneration – – – – 255.28 6.40 – 261.68Previous Year – – – – 242.36 1.88 – 244.24Balance Outstanding as on March 31, 2003Receivables 1.94 279.31 195.80 8.93 6.69 – 89.42 582.09Previous Year 0.85 69.54 967.46 7.45 73.37 – 252.40 1371.07Payables 1.23 73.53 85.36 4.65 – – 0.11 164.88Previous Year 5.82 – 568.80 17.08 – – – 591.70

Fellow Subsidiaries :Godrej Appliances Ltd.Godrej Consumer Products Ltd.Godrej Foods Ltd.Godrej Infotech Ltd.Associate / Joint Venture Companies :Godrej SaraLee Ltd.Godrej Photo-Me Ltd.Swadeshi Detergents Ltd.Compass Connections Ltd.Key Management Personnel :Mr. N.B. GodrejMs. T.A. DubashMr. Mathew EipeMr. C.K. VaidyaMr. M.P. PusalkarRelative of Key Management Personnel :Ms. Nisa A. GodrejEnterprises over which key management personnel exercise significant influenceBahar Agrochem & Feeds Pvt. Ltd.


37


18. Earnings per ShareThis Year Previous Year

a. Calculation of weighted average number of equity shares

Number of shares at the beginning of the year Nos. 6,17,10,218 5,98,28,780

Shares issued pursuant to the scheme of arrangement Nos. – 18,81,438

Shares bought back pursuant to the scheme of arrangement for buyback Nos. 1,30,68,276 –

Number of equity shares outstanding at the end of the year Nos. 4,86,41,942 6,17,10,218

Weighted average number of equity shares outstanding during the year Nos. 5,82,37,279 6,12,39,858

b. Net profit after tax available for equity shareholders Rs. lac 3420.63 3109.58

c. Basic and diluted earnings per share of Rs. 6 each Rupees 5.87 5.08

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


Profit for the year after tax as per Profit & Loss Account 3267.78 2987.93

Add : Depreciation as per accounts 2210.98 2154.04

Managerial Remuneration 311.37 225.42

(Profit)/loss on sale of assets as per books (1.27) 34.12

Prior period adjustments (Income) 152.85 121.65

Provision for doubtful debts / advances anddepletion in value of investments (37.86) (1660.38)

Provision for Tax 2540.00 1073.00

5176.07 1947.85

8443.85 4935.78

Less : Losses of the earlier year 8210.79 12219.97

Depreciation under Section 350 of the Companies Act, 1956 2197.26 2066.79

Profit on sale of assets under Section 349 38.66 34.12

Profit/( loss ) on sale of investments 39.26 (1174.31)

10485.97 13146.57

Net Profit / (Loss) for the purpose of Directors’ Remuneration (2042.12) (8210.79)

20. Managerial RemunerationThis PreviousYear Year

Rs. lac Rs. lac

Salaries and allowances 268.62 196.78

Contribution to Provident Fund 10.43 8.41

Estimated Monetary value of perquisites 28.50 18.58

Directors’ Fees 3.82 1.65

TOTAL 311.37 225.42

The Company has been applying to the Central Government for approval for payment ofPerformance Linked Variable Remuneration (PLVR) to the Managing Director and to theExecutive Directors in the year in which such PLVR is actually due for payment. Accordingly,PLVR for the financial year 2001-02 (Managing Director – Rs. 16.90 lac and ExecutiveDirectors – Rs. 86.07 lac), was applied for approval along with remuneration for thefinancial year 2002-03. The Central Government has approved the said remuneration and

PLVR as remuneration for the year 2002-03. The Company proposes to obtain the approvalof Central Government for PLVR for financial year 2002-03 (Managing Director – Rs. 20.96lac and Executive Directors – Rs. 77.30 lac) as provided in the accounts for the year2002-03 along with the approval for managerial remuneration for financial year 2003-04.21. Auditors’ Remuneration

(Excluding Service Tax)

This PreviousYear Year

Rs. lac Rs. lac

Audit fees (including Rs. 0.75 lac tobranch auditors, Previous Year Rs. 0.64 lac) 21.55 21.46

Tax audit fees 3.75 3.81

Certification and other services 11.28 5.24

Tax Consultation and representation 4.92 7.90

Consultation and management services 3.80 10.07

Out of pocket expenses 0.62 1.42

TOTAL 45.92 49.90

Industries Limited

38

26. Licensed, Installed and Utilised CapacityItem Unit Licensed Installed Capacity Actual

Capacity ProductionThis Previous This PreviousYear Year Year Year

SCHEDULED

Fatty Acids MT } 32000 32000 49201 40397Glycerin MT } 8280 8280 8139 7909Alpha Olefin and its precursors }and derivatives MT } 35000 35000 63579 51624Soaps MT } 26381 26381 20729 19075Cosmetics MT } 1200 1200 – –Fruit Beverages & Fruit based products KL } 30000 30000 5834 3392Fruit & Vegetable Puree, Pulp & Juices MT } N.A. 5000 5000 4860 1561Refined Oils & Vanaspati MT } 38700 38700 20358 16046Dietetic & Geriatic foods MT } 250 250 41 28U.H.T./Sweetend Flavoured }Milk KL } 1800 1800 – –Synthetic Detergents MT } 11250 11250 13384 11492Hydrogen (Captive consumption) NM3 } 1224000 1224000 569748 543602Oxygen (By-Product) NM3 } 612000 612000 284874 271801

22. Sales

This Year Previous YearItem Unit Quantity Value Quantity Value

Rs. lac Rs. lac

Fatty Acids MT 53591 15744.58 40940 10067.22Glycerin MT 7955 4306.97 7831 4051.57Alpha Olefin and its precursors and derivatives MT 58603 21206.52 57951 21816.04Oils & Vanaspati MT 30286 14091.43 17635 7689.98Fruit & Vegetable Puree, Pulp & Juices MT 2843 945.25 3254 585.00Fruit beverages and fruit based products KL 5487 1483.14 2946 820.00Medical Diagnostic Products – 714.11 – 515.05Others – 430.47 – 346.33

TOTAL 58922.47 45891.19


23. Inventories - Finished GoodsMarch 31, 2003 March 31, 2002 March 31, 2001

Item Unit Quantity Value Quantity Value Quantity ValueRs. lac Rs. lac Rs. lac

Fatty Acids MT 1959 731.61 949 318.65 1052 323.05Glycerin MT 309 180.19 37 19.54 23 12.83Alpha Olefin and its precursors and derivatives MT 3256 1190.39 2066 732.63 1658 750.58Oils & Vanaspati MT 786 396.00 1127 455.15 – –Fruit & Vegetable Puree, Pulp & Juices MT 1751 388.07 220 52.00 – –Fruit beverages and fruit based products KL 944 262.10 652 149.00 – –Medical Diagnostic Products – 177.60 – 187.27 – 353.10Others 23.18 – –

TOTAL 3349.14 1914.24 1439.56

24. Raw Materials ConsumedThis Year Previous Year

Unit Quantity Value Quantity ValueRs. lac Rs. lac

Oils & Fats MT 138129 30145.40 127812 23070.45Chemicals and Catalysts MT 13500 3799.78 12720 2372.03Fruit Pulp & Concentrates KL 10496 947.97 4291 210.00Packing Materials, etc. 3341.19 2728.61

TOTAL 38234.34 28381.09

Note :Raw materials consumption includes consumption for production of captively consumed items.

25. Purchase of GoodsThis Year Previous Year

Unit Quantity Value Quantity ValueRs. lac Rs. lac

Fatty Acids MT 191 55.00 142 38.08Oils & Vanaspati MT 8872 3454.93 1462 510.00Medical Diagnostic Products 531.55 224.58Others 111.40 64.74

TOTAL 4152.88 837.40


39


Notes :a. The Licensed capacities are not applicable in view of the exemption from

licensing granted under Notification SO 477(E) dated 25th July 1991, issuedunder the Industries (Development & Regulation) Act, 1951.

b. Alpha Olefin and its precursors and derivatives includes Fatty Alcohols and A.O.Sulphonates.

c. Installed capacity excludes the installed capacity for manufacture of intermediateswhich are intended to be used for internal consumption to manufacture A.O.and its precursors and derivatives.


27. Value of Imports on CIF Basis(includes only Imports directly made)Raw materials 18372.53 12797.81Goods for resale 163.72 166.14Stores & spares 119.50 402.01Capital goods 51.12 40.95

TOTAL 18706.87 13406.91

28. Expenditure in Foreign CurrencyConsultancy Fee – 44.67Interest 509.21 621.36Travelling expenditure 76.08 78.32Other expenditure 206.18 299.73Expenses for Foreign Branch:- Salaries and allowance 80.24 70.77- Rent 20.14 17.01- Others 26.14 26.83

TOTAL 917.99 1158.69


29. Value of Consumption ofRaw Materials & Spares % %Raw MaterialsImported (including duty content) 24552.99 64 17939.75 63Indigenous 13681.35 36 10441.34 37

38234.34 100 28381.09 100SparesImported (including duty content) 335.50 39 323.15 42Indigenous 530.46 61 444.12 58

865.96 100 767.27 100

30. Dividends Remitted in ForeignCurrency (subject to deduction oftax, as applicable)Interim Dividend for Financial Year2001-02 to 141 shareholderson 9,854 shares 0.05 0.30

TOTAL 0.05 0.30

31. Earnings in Foreign ExchangeExport of goods (F.O.B. : this yearRs. 9202.81 lac 9719.01 10428.17Previous Year Rs. 9833.41 lac)Dividend – 63.56Interest 27.62 –

TOTAL 9746.63 10491.73

33. Additional Information as required Under Part IV of Schedule VI to theCompanies Act, 1956

1. Registration Details

Registration No. : 97781

State Code : 11

Balance Sheet Date : 31/3/2003

2. Capital raised during the year(Amount in Rs. lac)

Public Issue : Nil

Rights Issue : Nil

Bonus Issue : Nil

Private Placement (Preference) : Nil

3. Position of mobilisation anddeployment of funds (Amount in Rs. lac)

Total Liabilities : 50142.93

Total Assets : 50142.93

Sources of Funds

Paid-up Capital : 2918.52

Reserves & Surplus : 21510.77

Secured Loans : 14815.48

Unsecured Loans : 7432.16

Deferred Tax Liability : 3466.00

Application of Funds

Net Fixed Assets : 28129.50

Investments : 18646.01

Net Current Assets : 2944.51

Misc. Expenditure : 422.91

Accumulated Losses : Nil

4. Performance of Company(Amount in Rs. lac)

Turnover (Income from Operations) : 65250.60

Total Expenditure (Net of Other Income) : 59442.82

Profit/(Loss) before tax : 5807.78

Profit/(Loss) after tax : 3420.63

Earning per Share in Rs.

(on an annualised basis) : 5.87

Dividend rate % : 33.33%

Generic Names of the three principalproducts/services of Company

Item Code No. : 38.23*

Product description : Fatty Acids/Fatty AlcoholsItem Code No. : 15.16*

Product description : Vanaspati/Refined OilsItem Code No. : 22.02*

Product description : Fruit Drinks

(* represents Heading No. of the Harmonized Commodity Description and CodingSystem)

32. Figures for the previous year have been regrouped wherever necessary. Figures forthe Previous Year include the figures for the manufacturing business of GodrejFoods Limited from June 30, 2001. The current year's figures are accordingly notcomparable to those of the Previous Year.

Industries Limited

40

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2003This Year Previous Year

Rs. lac Rs. lacA. Cash Flow from Operating Activities :

Profit before tax and exceptional items 5807.78 4060.93Adjustments for :Depreciation 2210.98 2154.04Foreign exchange (27.82) 103.49Loss/(Profit) on sale of investments (39.26) 1174.31Loss/(Profit) on sale of fixed assets (1.27) 34.12Dividend income (1897.65) (2090.97)Interest income (444.41) (194.86)Interest expense 2166.05 3393.91Voluntary retirement compensation and other expenses deferred (27.31) (294.26)Deferred expenditure written off 482.24 252.36Provision for doubtful debts and sundry balances written back (net) (65.90) (1339.00)Others 8.15 111.17Operating profit before working capital changes 8171.58 7365.24Adjustments for :Inventories (2814.98) 286.59Trade and other receivables 835.98 1743.49Trade payables 7597.55 (2243.64)Cash generated from operations 13790.13 7151.68Direct taxes paid (499.00) (571.24)Direct taxes refund received 828.38 64.51Net Cash from operating activities 14119.51 6644.95

B. Cash Flow from Investing Activities :Purchase of fixed assets (1869.88) (1036.86)Proceeds from sale of fixed assets 139.74 106.02Purchase of investments (4158.05) (1656.87)Proceeds from sale of investments 172.02 1764.03Intercorporate deposits/Loans (net) 611.24 (166.96)Interest received 476.98 158.15Dividend received 1897.65 2090.97Net Cash generated/(used) from investing activities (2730.30) 1258.48

C. Cash Flow from Financing Activities :Purchase of shares under a scheme of arrangement (2341.40) –Proceeds from share capital 1.26 –Proceeds from borrowings 14023.28 26124.46Repayments of borrowings (19021.26) (29636.44)Bank overdrafts (net) (1028.76) 1333.14Repayment of finance lease liabilities (1.47) (1.63)Interest paid (2322.75) (3737.14)Dividend paid (364.23) (1765.20)Tax on distributed profits – (182.94)Net Cash used in financing activities (11055.33) (7865.75)

Net increase in cash and cash equivalents 333.88 37.68Cash and cash equivalents (Opening Balance) 1543.32 2266.91Add : Cash and cash equivalents taken over from Godrej Foods Limited – 447.00Less : Cash and cash equivalents transferred to Godrej Consumer Products Limited – (1208.27)

1543.32 1505.64

Cash and cash equivalents (Closing Balance) 1877.20 1543.32Notes :1. Cash and Cash equivalents.

Cash on hand and balances with banks 1877.53 1540.33Effect of exchange rate changes (0.33) 2.99Cash and cash equivalents 1877.20 1543.32

2. Repayments of borrowings are net of Intercorporate borrowings aggregating Rs. 2375.00 lac (Previous Year Rs. 19060.59 lac).3. To finance working capital requirements, the Company’s Bankers have sanctioned a total fund-based limit of Rs. 5800 lac. Of this, limits utilised as on March 31, 2003 is

Rs. 3196.28 lac.4. The figures of previous year have been regrouped wherever necessary.

S.K. BHATT A.B. GODREJ ChairmanMumbai, May 28, 2003 Company Secretary N.B. GODREJ Managing Director

AUDITORS’ CERTIFICATE

We have verified the above Cash Flow Statement of Godrej Industries Limited derived from the Audited Financial Statements for the year ended March 31, 2003 and found the sameto be drawn in accordance therewith and also with the requirements of Clause 32 of the listing agreements with stock exchanges.For and on behalf of KALYANIWALLA & MISTRYChartered Accountants

V.R. MEHTAPartnerMumbai, May 28, 2003


41

1. We have examined the attached Consolidated Balance Sheet of Godrej IndustriesLimited, its subsidiaries, joint ventures and associates as at March 31, 2003, theConsolidated Profit and Loss Account for the year ended on that date annexedthereto and the Consolidated Cash Flow Statement for the year then ended. Theseconsolidated financial statements are the responsibility of Godrej Industries Limited’smanagement. Our responsibility is to express an opinion on these financial statementsbased on our audit.

2. We conducted our audit in accordance with generally accepted auditing standardsin India. These Standards require that we plan and perform the audit to obtainreasonable assurance whether the financial statements are prepared, in all materialaspects, in accordance with an identified financial reporting framework and are freeof material misstatements. An audit includes, examining on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates madeby management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of certain subsidiaries, joint ventures andassociates, whose financial statements reflect total assets of Rs. 6603.77 lac as atMarch 31, 2003 and total revenues of Rs. 48251.66 lac for the year then ended.These financial statements have been audited by other auditors whose report hasbeen furnished to us and our opinion, insofar as it relates to the amounts includedin respect of the subsidiaries, joint ventures and associates is based solely on thereport of the other auditors.

4. We report that the consolidated financial statements have been prepared by theCompany in accordance with the requirements of Accounting Standard (AS) 21 -Consolidated Financial Statements, Accounting Standard (AS) 23 – Accountingfor Investments in Associates in Consolidated Financial Statements and AccountingStandard (AS) 27 – Financial Reporting of Interests in Joint Ventures, issued bythe Institute of Chartered Accountants of India and on the basis of the separateaudited financial statements of Godrej Industries Limited, its subsidiaries, jointventures and associates included in the consolidated financial statements.

5. Reference is invited to:

Note 9 (b) of Schedule 22- Notes to Accounts, regarding the recoverability of

CONSOLIDATED ACCOUNTS

REPORT OF THE AUDITORS TO THE BOARD OF DIRECTORS OF GODREJ INDUSTRIES LIMITED

advances given to certain individuals amounting to Rs. 1033 lac being contingentupon the transfer and/or disposal of the shares pledged against the loan; and

Note 20 of Schedule 22- Notes to Accounts, regarding the Performance LinkVariable Remuneration payable to the Managing Director and Executive Directorsamounting to Rs. 98.26 lac for the financial year 2002-2003 being subject toapproval of the Central Government.

6. On the basis of the information and explanation given to us and on the considerationof the separate audit reports on the individual audited financial statements ofGodrej Industries Limited and its aforesaid subsidiaries, joint ventures and associates,in our opinion, the consolidated financial statements, subject to paragraph 5above, give a true and fair view in conformity with the accounting principlesgenerally accepted in India:

a) in case of the Consolidated Balance Sheet, of the consolidated state ofaffairs of Godrej Industries Limited, its subsidiaries and its interests in jointventures and associates as on March 31, 2003;

b) in case of the Consolidated Profit and Loss Account, of the consolidatedresults of operations of Godrej Industries Limited, its subsidiaries and itsinterests in joint ventures and associates for the year then ended; and

c) in case of the Consolidated Cash Flow Statement, of the consolidated cashflows of Godrej Industries Limited, its subsidiaries and its interests in jointventures and associates for the year then ended.

For and on behalf of

KALYANIWALLA & MISTRYChartered Accountants

V. R. MEHTAPartner

M. No.: 32083

Mumbai: May 28, 2003.

Industries Limited – Consolidated Accounts

42


SOURCES OF FUNDS

1. Shareholders’ Funds

(a) Share capital 1 2912.58 3692.36

(b) Reserves & Surplus 2 24988.62 24018.09

27901.20 27710.452. Minority Interest 4753.64 2668.11

3. Loan Funds

(a) Secured loans 3 26791.60 25618.83

(b) Unsecured loans 4 13770.42 19798.20

40562.02 45417.034. Deferred Tax Liability 3841.67 1663.50

TOTAL 77058.53 77459.09

APPLICATION OF FUNDS

5. Fixed Assets 5

(a) Gross block 64723.53 59847.59

(b) Less: Depreciation 26165.93 22566.10

(c) Net block 38557.61 37281.49

(d) Capital work-in-progress 481.65 274.13

39039.26 37555.626. Goodwill (on Consolidation) 11602.23 6927.70

7. Investments 6 4085.71 5697.01

8. Current Assets, Loans and Advances

(a) Inventories 7 24148.25 19145.45

(b) Sundry debtors 8 15192.34 16887.27

(c) Cash and bank balances 9 3764.71 3271.77

(d) Other Current Assets 12.15 59.14

(e) Loans and advances 10 13428.88 14184.53

56546.33 53548.16Less : Current Liabilities and Provisions

(a) Liabilities 11 32303.71 24634.08

(b) Provisions 12 3702.14 2547.52

36005.85 27181.60

Net Current Assets 20540.48 26366.56

9. Miscellaneous Expenditure 13 1790.85 912.20(To the extent not written off or adjusted)

TOTAL 77058.53 77459.09Notes to Accounts 22

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2003

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 and 22




43


INCOME

Sale of Products & Services 14 166163.18 127820.85Other Income 15 2405.52 1944.52

168568.70 129765.37EXPENDITURE

Materials consumed and purchase of goods 16 122919.46 89834.47Expenses 17 34705.01 26482.31Inventory change 18 (2693.55) 681.55Interest and financial charges (net) 19 3525.35 4845.74Depreciation 3249.55 2981.21(including share in jointly controlled entities Rs. 135.74 lac)(Net of transfer from Revaluation ReserveRs. 235.24 lac, Previous year Rs. 237.33 lac)Amount transferred to project in progress (9.02) (97.72)

161696.80 124727.56

Profit Before Tax & Exceptional items 6871.90 5037.81Exceptional items 20 — (673.71)

Profit Before Tax 6871.90 4364.10Provision for taxation- Current Tax 772.38 449.21- Deferred Tax 1902.59 1129.00

Profit for the year after taxation 4196.93 2785.89Prior Period adjustments (net) 21 82.13 136.52

4279.05 2922.41Share of Loss in Associates (125.45) —

Profit before Minority Interest 4153.60 2,922.41Share of Minority Interest (744.14) (282.44)

Profit after Minority Interest 3409.46 2639.97Transfer from Debenture Redemption Reserve — 112.50Surplus brought forward 10606.04 8783.21Adjustment for subsidiaries added/deleted 1276.35 —Share in jointly controlled entities (209.68) —

Profit After Tax Available For Appropriation 15082.16 11535.67

APPROPRIATIONS :Dividend on Equity shares- Interim 1091.57 369.66- Final 1021.03 —Tax on distributed profits 139.23 54.97Transfer to General Reserve 607.32 505.00Surplus carried forward 12223.01 10606.04

TOTAL 15082.16 11535.67

Basic & Diluted EPS of Rs. 6 per share 5.86 4.32Notes to Accounts 22

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2003

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 22




44


SCHEDULE 1 : SHARE CAPITALAuthorised:

13,33,33,333 Equity shares of Rs.6 each 8000.00 8000.0010,00,00,000 Unclassified Shares of Rs.10 each 10000.00 10000.00

18000.00 18000.00Issued, Subscribed and Paid Up:

4,85,42,952 (Previous year 6,16,11,228)Equity shares of Rs. 6 each fully paid 2912.58 3696.67Less : Calls in arrears — 4.31

2912.58 3692.36Of the above,(i) 4,01,02,008 (previous year 4,10,59,727) shares are held by Godrej & Boyce Mfg. Co. Limited, the holding company(ii) 2,59,24,636 (previous year 3,50,00,938) shares are alloted for consideration other than cash pursuant to schemes of amalgamation / arrangement.(iii) 1,59,50,953 (previous year 1,99,42,927) shares are alloted as fully paid bonus shares by way of capitalisation of Securities premium account.

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED MARCH 31, 2003

SCHEDULE 5 : FIXED ASSETSASSETS GROSS BLOCK DEPRECIATION NET BLOCK

Share Assets Assets Depreciationin Transferred taken over Share upto 1.4.2001 upto 30.6.2001

jointly consequent to consequent to in transferred taken overcontrolled scheme of scheme of Jointly consequent to consequent to

As on entities arrangement on arrangement on Deductions/ As on Upto entities scheme of scheme of Deductions/ For the Upto As on As on01.04.2002 added 1.4.2001 30.6.2001 Additions Adjustments 31.3.2003 31.03.2002 added arrangement arrangement Adjustments Year 31.03.2003 31.03.2003 31.03.2002

GOODWILL 6.44 - - - - 6.44 - 1.29 - - - 1.29 - - - 5.15LAND 1454.94 - - - 25.65 16.11 1464.48 41.15 - - 4.34 45.49 1418.99 1413.79BUILDINGS 9928.37 - - - 1680.52 68.25 11540.64 2086.22 - - - 88.86 286.77 2284.13 9256.51 7842.15PLANT & MACHINERY 40654.63 - - - 1731.73 302.92 42083.44 18162.00 - - - 184.36 2332.03 20309.67 21773.77 22492.62RESEARCH CENTRE 155.69 - - - - 5.35 150.34 49.38 - - - 3.06 5.07 51.39 98.95 106.31FURNITURE & FIXTURES 1357.41 - - - 144.23 10.19 1491.45 678.59 - - - 6.72 111.29 783.16 708.29 678.82OFFICE & OTHER 1092.10 - - - 185.70 44.23 1233.57 504.15 - - - 24.41 138.47 618.21 615.36 587.95EQUIPMENTSVEHICLES 1412.04 - - - 221.70 263.92 1369.82 538.92 - - - 150.11 176.25 565.06 804.76 873.12TREES DEVELOPMENT COST 464.09 - - - - - 464.09 123.41 - - - - 25.15 148.56 315.53 340.68TECHNICAL KNOWHOW FEES 200.00 - - - - - 200.00 95.70 - - - - 33.33 129.03 70.97 104.30TRADEMARKS 3121.89 - - - 0.10 - 3121.99 285.29 - - - - 233.27 518.56 2603.43 2836.60Assets Under Finance Lease - Vehicles - - - - 54.20 - 54.20 - - - - - 3.09 3.09 51.11 -Share in Jointly controlled entities - 1,528.18 - - 106.23 84.90 1549.51 - 622.13 - - 48.28 135.73 709.58 839.93 -

TOTAL - This Year 59847.60 1,528.18 - - 4,150.06 802.31 64723.53 22566.10 622.13 - - 507.09 3484.79 26165.93 38557.61 37281.49

- Previous Year 65024.63 - 14,347.32 6493.96 3155.40 479.08 59847.59 21889.95 - 4445.27 2120.03 217.15 3218.54 22566.10 37281.49

Capital Work-in-progress 481.65 274.13

TOTAL 39039.26 37555.62

1. Land includes leasehold land of Rs. 240.87 Lac (Previous Year Rs. 281.61 Lac) which is being amortised over the period of lease.2. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on 30th June, 1992 on the basis of a Valuation Report submitted by professional valuers.3. Depreciation for the year includes Rs. 235.24 Lac (Previous Year Rs. 237.33 Lac) being depreciation on revalued component of the fixed assets.4. Gross block, deductions / adjustments include Rs. 47.11 lac (Previous Year Rs. Nil) being the revalued component of assets sold/discarded during the year.5. Buildings include Rs. 0.01 lac (previous year Rs. 0.01 lac) being the value of investment in shares of Co-operative Housing Society.

SCHEDULE 2 : RESERVES AND SURPLUS Rs. lacAs at 1st Share in Additions Deductions As at 31st

April, 2002 jointly March,controlled 2003

entitiesCapital ReservesSecurities Premium Account 1560.55 – 8.51 (469.90) 1099.16Capital Investment Subsidy Reserve 40.01 – 11.54 – 51.55Revaluation Reserve 3775.17 – – (282.69) 3492.48Capital Redemption Reserve 3125.00 228.89 – – 3353.89Total Capital Reserve 8500.73 228.89 20.05 (752.59) 7997.08Revenue ReservesGeneral Reserve 4911.31 348.18 607.32 (1098.28) 4768.53Profit and Loss Account 10606.05 (153.22) 1770.18 – 12223.01Total Revenue Reserves 15517.36 194.96 2377.50 (1098.28) 16991.54Total Reserves - 31st March, 2003 24018.09 423.85 2397.55 (1850.87) 24988.62Total Reserves - 31st March, 2002 29764.86 – 2739.32 (8486.09) 24018.09


SCHEDULE 3 : SECURED LOANSTerm loans from financial institutions 950.00 2682.80Term loans from banks 19364.91 15738.12Bank overdrafts 6476.69 6447.91From State Industrial Corporation of Maharashtra Ltd. — 750.00

26791.60 25618.83


SCHEDULE 4 : UNSECURED LOANSFixed deposits 5518.74 8011.32Intercorporate deposits 1436.83 3714.77Commercial paper 1000.00 1000.00Short term loans from banks 800.00 5829.66Loan from financial institutions 4331.11 1020.25Sales tax deferment facility 259.61 222.20Share in jointly controlled entities 424.13 —

13770.42 19798.20

(Rs. lac)


45

SCHEDULE 6 : INVESTMENTS

FACE Number Notes —— Amount ——VALUE as on As on As on

31.03.03 31.03.03 31.03.02(Rs.) Rs. lac Rs. lac

LONG TERM INVESTMENTS - At cost

A. TRADE INVESTMENTS :Equity Shares : Fully PaidQuoted :Godrej Consumer Products Ltd. 4 22,00,000 2404.11 —Alacrity Housing Ltd. 10 100 0.01 0.01Alsa Construction & Housing Ltd. 10 100 0.01 0.01Ansal Buildwell Ltd. 10 100 0.01 0.01Ansal Properties & Construction Ltd. 10 100 0.01 0.01Ansal Properties & Industries Ltd. 10 100 0.03 0.03D. S. Kulkarni Developers Ltd. 10 100 0.01 0.01Godrej Foods Ltd. 10 14,84,864 13.64 13.64Golden Agro-tech Industries Ltd. 10 - — 0.02Lok Housing & Construction Ltd. 10 100 0.01 0.01Mantri Housing & Construction Ltd. 10 100 0.02 0.02Premier Housing & Industrial Ent. Ltd. 10 100 0.02 0.02Radhe Developers Ltd. 10 100 0.01 0.01

Unquoted :Joint Venture :Godrej Photo-Me Ltd. 10 — — 97.59Godrej Sara Lee Ltd. 4 — — 5479.63

Associates :Compass Connections Ltd. £0.25 13,692 117.21 97.01Personalitree Academy Ltd. 10 389,269 92.00 110.28Swadeshi Detergents Ltd. 10 209,370 91.48 191.33

Others :Gharda Chemicals Ltd. 100 114 (a) 11.57 11.57karROX Technologies Ltd. 10 250,000 100.50 100.50

Preference Shares : Fully PaidC Bay Systems Ltd. $0.10 495,050 465.30 465.30

Preference Shares : Partly PaidGodrej Foods Ltd. 10 5,000,000 (b) 425.00 —(8% 10 year Redeemable CumulativePreference Shares)

Optionally Convertible Subordinated NotesC ‘Bay Systems Ltd. $800,000 (c) 314.52 —

B. OTHER INVESTMENTS :Equity Shares: Fully PaidQuotedTata Engineering & Locomotive Co. Ltd. 10 9,376 30.00 30.00The Great Eastern Shipping Co. Ltd. 10 186 0.04 0.04A. B. Corp. Ltd. 10 25,000 0.03 0.03Sandesh Ltd. 10 — — 6.30Unitech Ltd. 10 100 0.06 0.06United Textiles Ltd. 10 23,700 0.02 0.02Others 10 1 (d) 0.12 0.03

UnquotedBharuch Eco-Aqua Infrastructure Ltd. - Partly paid 10 440,000 17.60 17.60

Government SecuritiesUnquoted :National Plan Certificate 31600 0.32 0.04National Savings Certificates 142000 0.77 1.42Indira Vikas Patra 13000 0.21 0.13Kisan Vikas Patra 2000 0.02 0.30

11.99% Govt. Stock 2009* 5000000 — 51.78

SCHEDULES FORMING PART OF THE CONSOLIDATED .. (contd.)


46


SCHEDULE 7 : INVENTORIES(at lower of cost and net realisable value)Stores and spares 611.18 527.37Raw materials 12142.98 8849.43Work-in-progress 1525.41 1198.36Finished goods 6110.49 4184.08Stock-in-trade 1437.86 —Projects-in-progress 963.44 4386.21Share in jointly controlled entities 1356.89 —

24148.25 19145.45

SCHEDULE 8 : SUNDRY DEBTORS(Unsecured)Debts outstanding over six monthsConsidered good 1232.49 978.70Considered doubtful 961.51 1084.74

2194.00 2063.44Other debts, considered good 13424.20 15908.57

15618.20 17972.01Less: Provision for doubtful debts (961.51) (1084.74)

14656.69 16887.27Share in jointly controlled entities 535.65 —

15192.34 16887.27

SCHEDULE 9 : CASH AND BANK BALANCESCash and cheques on hand 147.97 212.59Balances with scheduled banks- on current accounts 2363.05 2211.90- on deposit accounts (refer note 8) 996.44 847.27Share in jointly controlled entities 257.25 –

3764.71 3271.77

SCHEDULE 10 : LOANS AND ADVANCES(Unsecured and considered good unless otherwise stated)Loans & Advances 2468.47 1682.30Advances recoverable in cash or in kind or forvalue to be received (net of provision for doubtfuladvances Rs. 830.63 lac, previous year Rs. 891.91 lac) 8865.54 9129.52Intercorporate deposits- Associate companies 89.40 546.40- Others 239.10 377.38Deposits and balances with- Customs & excise authorities 185.60 804.56- Others 1109.54 998.13Advance payment of taxes 110.90 646.24(net of Provision for tax Rs. 4586.34 lac,previous year Rs. 4551.94 lac)Share in jointly controlled entities 360.33 —

13428.88 14184.53SCHEDULE 11 : CURRENT LIABILITIESAcceptances 686.49 271.05Sundry creditors 23600.65 14706.65Advances from customers 421.74 5544.47Sundry deposits 2275.88 1924.38Investor Education & Protection Fund*- Unclaimed dividend 79.28 78.42- Unpaid Application Money 3.43 —- Unpaid Matured Deposits 122.46 10.91- Unpaid Matured Debentures 133.60 124.03- Interest accrued on above 66.60 66.60Other liabilities 2408.51 1475.23Interest accrued but not due 222.53 432.33Share in jointly controlled entities 2282.54 –

32303.71 24634.08

* There is no amount due and outstanding to be credited to Investor Education &Protection Fund, except for Rs. 3.73 lac.

FACE Number Notes —— Amount ——VALUE as on As on As on

31.03.03 31.03.03 31.03.02(Rs.) Rs. lac Rs. lac

14% Govt. Stock 2005 * 450000 — 5.2210.25% Govt. Stock 2012* 7120000 — 71.09* (sold during the year)

Units of Mutual FundsUnquotedUnit Trust Of India - Unit Scheme 1964 10 2,566,703 383.00 383.00

Shares in Co-operative Societies - Fully PaidUnquoted :The Saraswat Co-op. Bank Ltd. 10 2,000 0.20 0.20Sachin Industrial Co-op. Bank Ltd. 500 3 0.02 0.02

Share in Jointly controlled entities 45.33 —

4513.21 7134.29Less: Provision for diminution in value of Investments (427.50) (1437.28)

4085.71 5697.01Aggregate Book Value of InvestmentsQuoted 2448.16 50.28Unquoted 1637.55 5646.73

4085.71 5697.01

Market Value of Quoted Investments 2339.53 21.64

NOTES :(a) The said shares have been refused for registration by the investee company(b) Rs. 1.50 per share is payable in one or more calls on these shares.(c) Optional Convertible Subordinated Notes are convertible into 8% Series E Cumulative Redeemable Preferred Stock of US $0.01 at par value at the conversion price of

US$ 2.60 per share upto 15th July, 2003, at the option of the investor.(d) Others represents investments in Companies where the number of shares held and amount is insignificant.




47


SCHEDULE 17 : EXPENSESSalaries, wages and allowances 8170.86 7169.75

Contribution to provident fund and other funds 498.23 445.77

Employee welfare expenses 762.64 619.15

Stores and spares consumed 1217.51 1050.05

Power and fuel 5211.13 4128.41

Processing charges 2809.83 2873.70

Rent 422.56 365.61

Rates and taxes 506.40 487.22

Repairs and maintenence

- Machinery 878.03 681.08

- Buildings 286.03 231.78

- Other assets 50.87 51.06

Insurance 172.77 180.74

Freight 2282.35 2109.73

Commission 2024.20 1910.94

Discount 163.78 80.11

Advertisement and publicity 680.90 284.54

Sales promotion 434.34 264.98

Selling and distribution expenses 520.12 445.71

Bad debts written off 45.90 321.38

Provisions / (write back of provision)

for doubtful debts and advances 273.85 (282.07)

Provision for depletion in value of long term investment 0.59 —

Loss on sale of fixed assets — 16.73

Cost of Project Management 5.99 64.53

Miscellaneous expenses 3573.42 2981.41

Share in jointly controlled entities 3712.71 —34705.01 26482.31

SCHEDULE 18 : INVENTORY CHANGEStocks at the commencement of the year

Finished goods 4055.92 6674.59

Work-in-progress 1198.36 1939.18

Shares, securities, etc. — 47.72

Share in jointly controlled entities 663.76 —

5918.04 8661.49

Less : Stocks transferred to GCPL

consequent to scheme of arrangement

Finished goods — 2451.58

Work-in-progress — 274.08

— 2725.66

Less : Stocks at the close of the year :

Finished goods 6044.91 4055.92

Work-in-progress 1621.81 1198.36

Share in jointly controlled entities 944.87 –

8611.59 5254.28

(Increase) / Decrease in Inventory (2693.55) 681.55



SCHEDULE 12 : PROVISIONSProposed dividend- Interim — 369.66- Final 1021.03 —Provision for tax on distributed profits 139.23 —Provision for retirement benefits 2490.19 2177.86Share in Jointly controlled entities 51.69 —

3702.14 2547.52

SCHEDULE 13 : MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)Deferred revenue expenditure- Gratuity 11.00 51.00- Voluntary retirement compensation 411.91 612.46- Preliminary Expenses 104.07 —- Brand Promotion Expenses 620.56 —- Software Development Expenses 121.75 —- Others 39.05 248.74Share in jointly controlled entities 482.51 —

1790.85 912.20

SCHEDULE 14 : SALE OF PRODUCTS AND SERVICESSales (gross) 154144.30 125526.99Less: Excise duty 4791.81 3934.44Sales (net) 149352.49 121592.55Processing charges 3914.09 2736.82Storage charges 12.18 103.27Export incentives 242.42 304.70Licence fees and service charges 2054.56 2024.92Consultancy & Other charges — 52.52Project / Development Management Fees 796.47 1006.07Share in jointly controlled entities 9790.97 —

166163.18 127820.85SCHEDULE 15 : OTHER INCOMEInterest : - Government Securities 36.00 13.65 - Income tax refund 277.91 4.80 - Others 69.75 29.19Provision for depletion in value of long investmentswritten back 2.26 —Dividend- from other investments — 25.50- from long term trade investments 1363.38 1527.56Miscellaneous income 583.72 343.82Profit on sale of fixed assets 11.65 —Profit / (loss) on sale of long term investment 23.71 —Share in jointly controlled entities 37.14 —

2405.52 1944.52

SCHEDULE 16 : MATERIALS CONSUMED AND PURCHASE OF GOODSRaw materials consumed :Stocks at the commencement of the year 13472.31 12467.01Less : Stocks transferred to GCPL consequent

to the scheme of arrangement — 1689.6213472.31 10777.39

Add : Purchases (net) 110129.43 86015.64123601.74 96793.03

Less : Stocks as at the close of the year 14041.97 11206.01Raw Materials consumed during the year 109559.77 85587.02Purchase of goods for resale 8295.03 4247.44Share in jointly controlled entities 5064.66 —

122919.46 89834.47


48


SCHEDULE 19 : INTEREST AND FINANCIAL CHARGES (Net)

Interest paid

- on debentures and fixed loans 1293.10 1880.60

- on bank overdrafts 1292.64 806.05

- to Financial Institutions 289.72 367.97

- on Inter Corporate deposits 331.93 310.61

- other interest 160.83 1533.40

3368.22 4898.63

Less: Interest received

- on loans & deposits 86.13 82.27

- on customer balances, etc. 46.99 64.27

- projects and landlords 549.14 617.77

- others 14.55 26.99

696.81 791.30



Net Interest 2671.41 4107.33

Brokerage and other financial charges 795.52 738.41

Share in jointly controlled entities 58.42 –

3525.35 4845.74

SCHEDULE 20 : EXCEPTIONAL ITEMS

Loss on Sale of long term investments — 1174.31

Provision for depletion in value

of long term investments written back — (500.60)

— 673.71

SCHEDULE 21 : PRIOR PERIOD ADJUSTMENTS

Income-tax 136.94 31.50

Depreciation — 7.03

Excess provision for expenses (net) (55.89) 97.99

Share in jointly controlled entities 1.08 —

82.13 136.52

SCHEDULE 22 : NOTES TO ACCOUNTS

1. Significant Accounting Policies :

a) Accounting Convention

The financial statements are prepared under the historical cost convention, onaccrual basis, in accordance with the generally accepted accounting principles inIndia, the Accounting Standards issued by the Institute of Chartered Accountantsof India and the provisions of the Companies Act, 1956.

b) Fixed Assets

Fixed Assets are stated at cost or as revalued as the case may be, less accumulateddepreciation. Cost includes all expenses related to acquisition and installation, ofthe concerned asset. Exchange differences arising on account of repayment andyear end translation of foreign currency liabilities relating to acquisition of fixedassets are adjusted to the carrying cost of the respective assets.

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

c) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition / construction ofthe underlying fixed assets are capitalised as a part of the respective asset.

d) Investments

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

e) Inventories

Inventories are valued at lower of cost and net realisable value. Cost is computedon weighted average basis and is net of modvat. Finished goods and work-in-progress include cost of conversion and other costs incurred in bringing theinventories to their present location and condition. Obsolescence and otheranticipated losses are provided for wherever considered necessary.

Construction Work-in-progress is valued at cost.

f) Foreign Exchange Transactions

Transactions in foreign currency are recorded at the exchange rates prevailing onthe date of the transaction. Assets and liabilities related to foreign currencytransactions, remaining unsettled at the year end, are stated at the contractedrates, when covered under forward foreign exchange contracts and at year-endrates in other cases. The premium payable on forward foreign exchange contractsis amortised over the period of the contract. Exchange gains/losses are recognisedin the Profit and Loss Account except in respect of liabilities incurred to acquirefixed assets in which case they are adjusted to the carrying amount of suchfixed assets.

g) Revenue Recognition

Sales are recognised where goods are supplied and are recorded net of returns,trade discounts, rebates, sales taxes and excise duty.

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

Export incentives are accounted on accrual basis and include the estimated valueof duty free import entitlement under the Advance Licence Benefit Scheme andexport incentives receivable under the Duty Entitlement Pass Book Scheme andthe Duty Drawback Scheme.

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 basisover the lease term.

h) Research and Development Expenditure

Revenue expenditure on Research & Development is charged to the Profit andLoss Account of the year in which it is incurred. Capital expenditure incurred


49

during the year on Research & Development is shown as addition to fixedassets.

i) Depreciation

Leasehold land is amortised equally over the lease period.

Trademarks are amortised over a period of four to fifteen years depending onthe expected utilisation.

Depreciation is provided on the straight line method at the rates specified inSchedule XIV to the Companies Act, 1956, except in some subsidiary companies,the impact of which is not material. Computer hardware is depreciated over itsestimated useful life of 4 years.

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

Depreciation on the revalued component is provided on the straight line methodbased on the balance useful life of the assets as certified by the valuers. Suchdepreciation is withdrawn from Revaluation Reserve and credited to Profit andLoss Account.

j) Retirement Benefits

Retirement benefits to employees comprise payments under approved providentfund plans, leave encashment and gratuity to eligible employees. Paymentsunder approved provident fund plans are charged to revenue. The liability inrespect of future payment of gratuity to retiring employees and leave encashmentbenefit on retirement is provided on the basis of an actuarial valuation at theend of each financial year.

k) Deferred Revenue Expenditure

The incremental gratuity liability for the service period prior to March 31, 1994arising as a result of the amendment to The Payment of Gratuity Act, 1972 hasbeen deferred and is being amortised equally over a period of ten financial years.

The compensation payable under the Voluntary Retirement Schemes, the benefitof which is expected to accrue in future is deferred over its payback period. Thecompensation is generally amortised over three to five years depending on thepay back period.

Preliminary Expenses and Share issue expenses are amortised in ten equalinstalments.

Software development expenses and Brand promotion expenses, TechnicalKnow-how fees paid for training of personnel are being amortised over a periodof 3 years.

l) Hedging

Import of crude palm oil by the Company are being hedged by futures contracton offshore Commodities Exchange. Gains or losses on settled contracts isrecognised in the Profit and Loss Account and is included in the cost ofmaterials consumed. Futures contracts not settled as on the Balance Sheet dateare marked to market and losses, if any, are recognised in the Profit and LossAccount, whereas, the unrealised profit is ignored.

m) Taxes on Income

Current tax is the amount of tax payable on the taxable income for the yeardetermined in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognised on timing differences, being the differences betweenthe taxable income and accounting income that originate in one period and arecapable of reversal in one or more subsequent periods. Deferred tax assetssubject to the consideration of prudence are recognised and carried forward

only to the extent that there is a reasonable certainty that sufficient futuretaxable income will be available against which such deferred tax assets can berealised. The tax effect is calculated on the accumulated timing differences atthe year end and based on the tax rate and laws enacted or substantially enactedon the Balance Sheet date.

n) Segment Reporting

The Accounting Policies adopted for segment reporting are in line with theAccounting Policies of the Company. Segment assets include all operatingassets used by the business segments and consist principally of fixed assets,debtors and inventories. Segment liabilities include the operating liabilities thatresult from the operating activities of the business segment. Assets and Liabilitiesthat cannot be allocated between the segments are shown as part of unallocatedcorporate assets and liabilities respectively. Income / Expenses relating to theenterprise as a whole and not allocable on a reasonable basis to businesssegments are reflected as unallocated corporate income / expenses.

2. Basis of Consolidation :

(a) Principles of Consolidation :

The consolidated financial statements relate to Godrej Industries Limited, theholding company, its majority owned subsidiaries, Joint ventures and Associates.The consolidation of accounts of the Company with its subsidiaries has beenprepared in accordance with the requirements of Accounting Standard (AS) 21‘Consolidated Financial Statements’. The financial statements of the parent andits subsidiaries are combined on a line by line basis and intra group balances,intra group transactions and unrealised profits or losses are fully eliminated.

In the consolidated financial statements, ‘Goodwill’ represents the excess of thecost of investments in the subsidiaries and/or joint ventures over its share ofequity, at the dates on which the investments are made. Alternatively, where theshare of equity as on the date of investment is in excess of cost of investment,it is recognised as ‘Capital Reserve’ in the consolidated financial statements.

Minority interest in the net assets of consolidated subsidiaries consists of theamount of equity attributable to the minority shareholders at the dates onwhich investments are made by the Company in the subsidiary companies andfurther movements in their share in the equity, subsequent to the dates ofinvestment as stated above.

Investments in Joint Ventures are dealt with in accordance with AccountingStandard (AS) 27 ‘Financial Reporting of Interests in Joint Ventures’. TheCompany’s interest in jointly controlled entities are reported using proportionateconsolidation, whereby the Company’s share of jointly controlled assets andliabilities and the share of income and expenses of the jointly controlled entitiesare reported as separate line items.

Investments in Associates are dealt with in accordance with Accounting Standard(AS) 23 ‘Accounting for Investments in Associates in Consolidated FinancialStatements’ issued by the Institute of Chartered Accountants of India. Effecthas been given to the carrying amount of investments in associates using the‘Equity method’. The Company’s share of the post acquisition profits or lossesis included in the carrying cost of investments.

The financial statements of the subsidiaries, joint ventures and associates usedin the consolidation are drawn upto the same reporting date as of the Companyi.e. year ended March 31, 2003.

The figures for the earlier year have not been re-computed for Joint Venture andAssociate Companies which in the earlier year were accounted for as investmentsunder Accounting Standard (AS) 13 ‘Accounting for Investments’ and which inthis year have been accounted for as Joint Venture Companies under AccountingStandard (AS) 27 and as Associate Companies under Accounting Standard(AS) 23.


50

b) Information on subsidiaries, joint ventures and associates :

The subsidiary companies considered in the consolidated financial statements are:

S.No. Name of the company Country of PercentageIncorporation of Holding

1. Godrej Agrovet Ltd. India 57.69%

2. Goldmohur Foods & Feeds Ltd. India 57.69%

(100% subsidiary of Godrej Agrovet Ltd.)

3. Godrej Properties & Investments Ltd. India 82.85%

4. Tahir Properties Ltd. India 62.86%

(30.47% holding by Godrej Industries Ltd. and

39.10% held by Godrej Properties & Investments Ltd.)

5. Girikandra Holiday Homes & Resorts Ltd. India 82.85%

(100% subsidiary of Godrej Properties &

Investments Ltd.)

6. Godrej Remote Services Ltd. India 99.99%

7. Ensemble Holdings & Finance Ltd. India 99.95%

8. Sahyadri Aerosols Ltd. India 100.00%

9. Godrej International Ltd., UK U.K. 100.00%

10. Godrej Global Mid-East FZE, UAE U.A.E. 100.00%

(100% subsidiary of Godrej International Ltd.)

11. Godrej Tea Ltd. India 53.08%

12. Godrej Global Solutions Ltd. India 99.98%

13. Hybrigene Biotechnology Ltd. India 99.92%

The Joint Ventures considered in the consolidated financial statements are :


i) Godrej SaraLee Ltd. India 25.96%

ii) Godrej Photo-Me Ltd. India 40.46%

Interest in Assets, Liabilities, Income and Expenses of jointly controlled entities :

Rs. lac

Assets 3877.80

Liabilities 2797.63

Income 9828.11

Expenses 8690.42

The Associates considered in the consolidated financial statements are :


i) Swadeshi Detergents Ltd. India 46.44%

ii) Compass Connections Ltd. U.K. 21.16%

Iii) Personalitree Academy Ltd. India 26.00%

(held by Ensemble Holdings & Finance Ltd.)

Investment in Associates : Rs. lac

Swadeshi Compass PersonalitreeDetergents Ltd. Connections Ltd. Academy Ltd.

Cost of Acquisition (a) 191.34 124.54 110.28

Goodwill included in cost of acquisition 91.48 79.66 80.38

Share in profits / (loss) of associates

post acquisition (b) (99.86) (7.33) (18.28)

Carrying cost of Investments (a) – (b) 91.48 117.21 92.00

3. Contingent Liabilities :


a) Claims for excise duties, taxes and other

matters not acknowledged by the Company :

i) excise duty - Rs. 3742.80 lac (Previous

Year Rs. 3621.53 lac) - net of tax : 2367.33 2491.05

ii) lease rent claimed by Mumbai Port Trust

in respect of land leased to the Foods

division. The lease has not been renewed

since 1990 - Rs. 1150.00 lac (Previous Year

Rs. 1862.97 lac) – net of tax: 727.38 1197.89

iii) other matters - Rs.4096.78 lac (Previous

Year Rs. 3693.37 lac) - net of tax : 2990.85 2374.84

b) Guarantees issued by banks, excluding

guarantees issued in respect of matters

reported in (a) above 716.61 466.73

c) Guarantees given by the Company in respect

of credit/guarantee limits sanctioned by banks to

subsidiary and other companies. 9260.00 4007.00

d) Uncalled liability on partly paid shares/debentures 140.81 95.73

e) Consideration payable for acquisition of shares insubsidiary company. — 76.00

f) Share in jointly controlled entities 296.88 —

4. Capital Commitments :

Estimated value of contracts remaining to be executedon capital account, to the extent not provided 81.98 276.01

5. Deferred Tax :

Major components of Deferred Tax arising on accountof timing differences as at March 31, 2003 are:

Assets

Business Losses 2069.40 4226.83

Provision for retirement benefits 586.00 543.25

Provision for doubtful debts / advances 562.44 437.61

Others 198.80 145.57

Share in Jointly Controlled Entities 80.47 —

3497.11 5353.36

Liabilities

Depreciation 6791.17 6741.73

VRS Expenses 134.00 191.31

Deferred Revenue Expenditure 293.86 83.82

Share in Jointly Controlled Entities 119.75 —

7338.78 7016.86

Net Deferred Tax Liability 3841.67 1663.50

6. Loans and Advances

Loans and Advances include Rs. 1033 lac (Previous Year Rs. 1033 lac) advanced bythe Company to certain individuals against the pledge by way of deposit of equityshare of Gharda Chemicals Ltd. The Company is in the process of enforcing thesecurity and getting the shares transferred in its name. Interest on the aforesaid


51

loans and advances amounting to Rs. 315 lac was accrued upto March 31, 2000and has been fully provided for, no interest is being accrued thereafter. The recoverabilityof the loans and advances is contingent upon the transfer and/or disposal of saidshares. In the opinion of the management, the value of the said shares is greaterthan the amount of the loans and advances.

7. Leases

a) The Company has entered into leave and licence agreements in respect of itscommercial and residential premises. These are not non-cancelable and rangebetween 11 months to 35 months and are renewable by mutual consent onmutually acceptable terms. The particulars of the premises under leave andlicence arrangement are as under :


Rs. lac Rs. lac

Gross carrying amount of premises 3732.82 3524.63

Accumulated depreciation 743.52 652.93

Depreciation for the period 90.59 102.72

b) Finance Leases

The Company has acquired vehicles under Finance Lease. Liability for minimumlease payment is secured by hypothecation of vehicle acquired under the lease.The minimum lease payments outstanding as on March 31, 2003, in respect ofvehicle leased are as under :

Total minimum lease Present value

payments outstanding Un-matured of minimumPeriod as on March 31, 2003 Interest lease payments

Rs. lac Rs. lac Rs. lac

Within one year 14.96 2.33 14.43

Later than one year and

not later than five years 41.45 2.89 36.36

Total 56.41 5.22 50.79

8. Hedging

Reserve Bank of India has permitted the Company to hedge its exposure on CrudePalm Oil on offshore exchanges to the extent of its imports. Accordingly, theCompany is hedging import of crude palm oil on the Malaysian CommoditiesExchange by way of futures contracts. The particulars of the futures contracts forthe year are as under :

Details Purchase Sale

Total number of contracts entered during the year 66 56

Number of units under above contracts 326 206

Futures contracts not settled as on March 31, 2003 10 –

Number of units under above contracts 120 –

9. Profit and Loss Account

The amount of exchange loss on account of fluctuation of the rupee against foreigncurrencies and the net charges for forward foreign exchange contracts added to thecarrying amount of fixed assets during the year is Rs. 85.62 lac (Previous year

Rs. 123.50 lac). The exchange difference included in the Profit and Loss Account isa loss of Rs. 413.86 lac (Previous year Rs. 277.86 lac). The exchange difference inrespect of forward exchange contracts to be recognised in subsequent accountingperiods is Rs. 208.34 lac (Previous year Rs. 242.99 lac).

10. Managerial Remuneration

The Company has been applying to the Central Government for approval for paymentof Performance Linked Variable Remuneration (PLVR) to the Managing Director andto the Executive Directors in the year in which such PLVR is actually due forpayment. Accordingly, PLVR for the financial year 2001-02 (Managing Director - Rs.16.90 lac and Executive Directors - Rs. 86.07 lac), was applied for approval alongwith remuneration for the financial year 2002-03. The Central Government hasapproved the said remuneration and PLVR as remuneration for the year 2002-03.The Company proposes to obtain the approval of Central Government for PLVR forfinancial year 2002-03 (Managing Director - Rs. 20.96 lac and Executive Directors -Rs. 77.30 lac) as provided in the accounts for the year 2002-03 along with theapproval for managerial remuneration for financial year 2003-04.

11. Related Party Disclosures :

a) Party where control exists

Godrej & Boyce Mfg. Co. Ltd. the holding company.

b) Related Parties with whom transactions have taken place during the year :

Fellow Subsidiaries

Godrej Appliances Ltd.

Godrej Consumer Products Ltd.

Godrej Foods Ltd.

Godrej Infotech Ltd.

Associate / Joint Venture Companies

Compass Connections Ltd.

Godrej Photo-Me Ltd.

Godrej SaraLee Ltd.

Swadeshi Detergents Ltd.

Key Management Personnel

Mr. N.B. Godrej

Ms. T.A. Dubash

Mr. Mathew Eipe

Mr. C.K. Vaidya

Mr. M.P. Pusalkar

Relative of Key Management Personnel

Ms. Nisa A. Godrej

Enterprises over which Key Management Personnel exercise significantinfluence

Bahar Agrochem & Feeds Pvt. Ltd.


52

c) Transactions with Related Parties Rs. lac

Nature of Transaction Holding Fellow Associate/ Key Relative of Enterprises TotalCompany Subsidiaries Joint Venture Management Key over which

Companies Personnel Management Key Mgmt.Personnel Personnel

exercisesignificantinfluence

Sale of Goods 17.95 2940.15 3.25 – – 0.44 2961.79Previous Year 13.42 1433.07 37.84 – – 1.26 1485.59Purchase of goods & equipment 65.79 1342.13 43.24 – – – 1451.16Previous Year 106.63 1290.22 7.57 – – – 1404.42Processing charges received – 1931.99 – – – – 1931.99Previous Year – 1786.03 – – – – 1786.03Commission received – 33.00 – – – – 33.00Previous Year – 20.49 – – – – 20.49Recovery of establishment & other expenses 4.49 1121.73 229.35 – – 0.06 1355.63Previous Year – 2017.16 261.44 0.27 – 0.05 2278.92Establishment & other expenses paid 155.99 78.59 25.04 – – – 259.62Previous Year 111.18 64.34 28.59 – – – 204.11Refund of deposit – 2.00 23.20 – – – 25.20Previous Year – – – – – – –Interest received – 24.58 – 0.35 – 0.03 24.96Previous Year – 20.73 – – – 3.03 23.76Interest paid – 4.64 – – – – 4.64Previous Year – 7.78 – – – – 7.78Finance provided including loans & equitycontributions 23.02 3066.00 448.68 – – 8.00 3545.70Previous Year – 1995.29 514.36 – – 1.20 2510.85Finance received during the year – 300.00 – 1.98 – – 301.98Previous Year – 1785.00 – – – – 1785.00Finance repaid during the year – 500.00 – – – – 500.00Previous Year – – – – – – –Guarantees & collaterals given – – 60.00 – – – 60.00Previous Year – – – – – – –Dividend income – 88.00 1275.33 – – – 1363.33Previous Year – 0.76 – – – – 0.76Dividend paid 246.36 – – 6.23 – 2.18 254.77Previous Year 1203.29 – – 12.68 – 5.58 1221.55Balances Written Off – – – – – – –Previous Year – 65.00 – – – – 65.00Remuneration – – – 255.28 6.40 – 261.68Previous Year – 65.00 – 242.36 1.88 – 309.24Balance Outstanding as on March 31, 2003Receivables 25.83 204.34 8.93 6.69 – 89.42 335.21Previous Year 23.85 967.46 7.45 73.37 – 252.40 1324.53Payables 1.23 85.45 4.74 – – 0.11 91.53Previous Year 7.23 568.83 17.08 – – – 593.14

12. Earning Per Share : This Year Previous Yeara. Calculation of weighted average number of equity shares

Number of shares at thebeginning of the year Nos. 6,16,11,228 5,98,28,780Shares issued pursuant to the scheme ofarrangement Nos. — 18,81,438Less : Shares of the Company held byEnsemble Holdings & Finance Ltd.a subsidiary company Nos. — (98,990)Shares bought back pursuant to the schemeof arrangement for buyback Nos. 1,30,68,276 —

12. Earning Per Share (Contd.) This Year Previous Year

Number of equity shares outstanding at theend of the year Nos. 4,85,42,952 6,16,11,228

Weighted average number of equity sharesoutstanding during the year Nos. 5,81,38,289 6,11,65,616

b. Net profit after tax available for equityshareholders Rs. lac 3409.47 2639.98

c. Basic and diluted earnings per share ofRs. 6 each Rupees 5.86 4.32


53

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the

prim

ary

segm

ent.

Segm

ents

hav

e be

en id

entif

ied

taki

ng in

to a

ccou

nt th

e na

ture

of t

he p

rodu

cts,

the

diffe

rent

ris

ks a

nd r

etur

ns, t

he o

rgan

isat

iona

l stru

ctur

e an

d th

e in

tern

alre

porti

ng s

yste

m.

2.Ch

emic

als

segm

ent i

nclu

des

Oleo

Che

mic

als

such

as

Refin

ed G

lyce

rin, F

atty

Aci

ds, F

atty

Alc

ohol

s an

d Al

fa O

lefin

Sul

phon

ates

.

Anim

al F

eed

segm

ent i

nclu

des

the

busi

ness

of c

ompo

und

feed

for c

attle

, pou

ltry,

acq

uatic

ani

mal

s, e

tc.

Food

s se

gmen

t inc

lude

s re

fined

veg

etab

le o

ils a

nd v

anas

apti,

frui

t and

veg

etab

le p

uree

, pul

p, ju

ices

and

frui

t bev

erag

es.

Esta

te s

egm

ent c

ompr

ises

the

busi

ness

of d

evel

opin

g co

mm

erci

al &

resi

dent

ial p

rope

rty a

nd g

ivin

g pr

emis

es o

n le

ase

or le

ave

and

licen

ce b

asis

.

Hous

ehol

d In

sect

icid

es s

egm

ent i

nclu

des

the

busi

ness

of h

ouse

hold

& e

nviro

nmen

tal p

est c

ontro

l sol

utio

ns.

Othe

rs in

clud

es M

edic

al D

iagn

ostic

s, A

gri I

nput

s, In

tegr

ated

Pou

ltry,

Oil

Palm

, Med

ical

Tra

nscr

iptio

n, te

a an

d Fi

nanc

e op

erat

ions

.

3.Th

e ge

ogra

phic

al s

egm

ents

are

as

follo

ws

:- S

ales

in In

dia

repr

esen

t sal

es to

cus

tom

ers

loca

ted

in In

dia.

- Sal

es o

utsi

de In

dia

repr

esen

t sal

es to

cus

tom

ers

loca

ted

outs

ide

Indi

a.


54

14. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2003This year Previous year

Rs. lac Rs. lacA. Cash Flow from Operating Activities :

Profit before tax and exceptional items 6871.91 4364.11Adjustments for :Depreciation 3249.55 2981.21Foreign exchange (25.42) 136.79Loss / (Profit) on sale of investments (23.71) 1174.31Loss / (Profit) on sale of fixed assets (12.90) 16.73Dividend income (1363.38) (1553.06)Interest income (1094.88) (838.94)Interest expense 4222.15 5637.04Voluntary retirement compensation and other expenses deferred (880.64) (261.08)Deferred expenditure written off 581.91 265.34Provision for doubtful debts and sundry balances written off (net) (83.78) (461.29)Others (55.91) 163.03Operating profit before working capital changes 11384.90 11624.19Adjustments for :Inventories (2955.08) (206.15)Trade and other receivables 2483.37 9405.71Trade payables 5736.57 (9449.41)Cash generated from operations 16649.76 11374.34Direct taxes paid (1061.13) (914.94)Direct taxes refund received 964.83 64.51Net Cash from Operating Activities 16553.46 10523.91

B. Cash Flow from Investing Activities :Purchase of fixed assets (3123.57) (2539.61)Proceeds from sale of fixed assets 312.09 208.32Purchase of investments (3691.49) (2034.12)Proceeds from sale of investments 180.16 1754.69Intercorporate deposits / Loans (net) 799.74 (5.46)Interest received 1696.27 804.37Dividend received 1363.38 1553.06Net Cash used in Investing Activities (2463.42) (258.75)

C. Cash Flow from Financing Activities :Purchase of shares under a scheme of arrangement (2341.40) –Proceeds from share capital 376.25 –Proceeds from borrowings 21971.69 38823.23Repayments of borrowings (25915.14) (40875.57)Bank overdrafts (net) (1473.66) (4.42)Repayment of finance lease liabilities (1.47) (1.63)Interest paid (5015.21) (6017.09)Dividend paid (1844.93) (2010.32)Tax on distributed profits (51.28) (282.78)Net Cash used in Financing Activities (14295.15) (10368.58)

Net decrease in cash and cash equivalents (205.11) (103.42)Cash and cash equivalents (Opening Balance) 3271.77 4132.44Add : Share in opening cash & cash equivalents of jointly controlled entities 698.05 –Add : Cash & cash equivalents taken over from Godrej Foods Limited – 447.00Add : Cash & cash equivalents taken over from Godrej Plant Biotech Limited – 4.02Less : Cash & cash equivalents transferred to Godrej Consumer Products Limited – (1208.27)

3969.82 3375.19

Cash and cash equivalents (Closing Balance) 3764.71 3271.77(including share in jointly controlled entities - Rs. 257.18 lac)

Notes :1. Cash and Cash equivalents

Cash on hand and balances with banks 3765.74 3268.78Effect of exchange rate changes (1.03) 2.99Cash and cash equivalents 3764.71 3271.77

2. The above cashflow statement includes share of cashflows from jointly controlled entities as under:a. Net cash from operating activities 1250.32 –b. Net cash used in investing activities (95.83) –c. Net cash used in financing activities (1595.36) –

3. Repayments of borrowings are net of Intercorporate borrowings aggregating Rs. 5575.00 lac (Previous year 25034.41 lac)


55

STATEMENT REGARDING SUBSIDIARY COMPANIES PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956

1. Name of the Company Godrej Godrej Godrej Ensemble Godrej Godrej Godrej Goldmohur Girikandra HolidayAgrovet Properties & Remote Holdings International Global Global Foods & Homes & ResortsLimited Investments Services & Finance Limited Solutions MidEast Feeds Ltd. Pvt. Ltd.

Limited Limited Limited Ltd. FZE

2. The Company’s interest in the

subsidiaries as on March 31, 2003

a. Number of Equity Shares 4106956 5073965 4795648 3770160 1505000 600000 (See note (see note (see note

Total Number of Shares 7118752 6444545 4806531 3774160 1505000 650000 6 below) 7 below) 8 below)

b. Face Value 10 10 10 10 £1 (US$1.52) 10

c. Extent of Holding 57.69% 78.73% 99.77% 99.89% 100% 92.31%

3. Net aggregate Profit/(Loss) of the

subsidiary company so far it concerns Rs. Lac Rs. Lac Rs. Lac Rs. Lac US$ Rs. Lac _ _ –

the members of the Company

A. For the financial year ended on

March 31, 2003

i. Not dealt with in the books of

Account of the Company 252.73 23.71 (120.85) (15.42) 219,771 Nil – _ _

ii. Dealt with in the books of Account

of the Company 258.74 78.73 Nil Nil Nil Nil – _ _

B. For the subsidiary company’s

previous financial years since it

became a subsidiary

i. Not dealt with in the books of

Account of the Company 1,302.31 552.89 (181.22) (644.46) 1,440,522 Nil _ _ –

ii. Dealt with in the books of Account

of the Company 1,225.06 768.80 Nil Nil 736.605 Nil – _ –

Notes :1. The Financial Year of all subsidiary companies have ended on March 31, 2003.

2. 2,65,680 Equity Shares of Rs. 10 each fully paid up in Godrej Properties & Investments Ltd. are held by Ensemble Holdings & Finance Ltd. which is a subsidiary of the Company.

3. 10833 Equity Shares of Rs. 10 each fully paid up in Godrej Remote Services Ltd. are held by Ensemble Holdings & Finance Ltd. a subsidiary of the Company.

4. 4,000 Equity Shares of Rs. 10 each fully paid up in Ensemble Holdings & Finance Ltd., are held by Godrej Agrovet Ltd., a subsidiary of the Company.

5. 49940 Equity Shares of Rs. 10 each fully paid up in Godrej Global Solutions Ltd. are held by Ensemble Holdings & Finance Ltd., a subsidiary of the Company.

6. 5 Ordinary Shares of US$ 2,50,000 each fully paid up in Godrej Global MidEast FZE. (representing 100% of the Share Capital) are held by Godrej International Ltd., a subsidiaryof the Company.

7. 21,58,170 equity shares of the face value of Rs.10 each fully paid in Goldmohur Foods & Feeds Ltd. (representing 100% of the share capital) is held by Godrej Agrovet Ltd.,a subsidiary of the Company.

8. 495 equity shares of the face value of Rs.1000 each fully paid up in Girikandra Holiday Homes and Resorts Pvt. Ltd. (representing 99% of the share capital) are held by GodrejProperties & Investment Ltd., a subsidiary of the Company.

A. B. GODREJ Chairman

N. B. GODREJ Managing Director

S.K. BHATTMumbai, May 28, 2003 Company Secretary

gil_annualreport_2002_03

Documents

directors report

analysis report

annual report

auditors report

vikhroli pirojshanagar

vikhroli east

godrej chairmanj

dubash director marketingm