DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
GODREJ CONSUMER PRODUCTS LIMITED (Incorporated as a public limited company on November 29, 2000 at Maharashtra, under the Companies Act, 1956) Registered Office: Pirojshahnagar, Eastern Express Highway, Vikhroli, Mumbai 400079 Tel No: (91 22) 25188010 Fax No: (91 22) 25188040 Compliance officer and Contact Person: Mr. Sunil S. Sapre, Executive Vice President (Finance and Commercial) and Company Secretary Email: [email protected] Website: www.godrejcp.com FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF THE COMPANY ONLY DRAFT LETTER OF OFFER ISSUE OF [●] EQUITY SHARES OF Re. 1 EACH AT A PREMIUM OF Rs. [●] PER EQUITY SHARE AGGREGATING TO AN AMOUNT NOT EXCEEDING RS. 4,000 MILLION TO THE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF [●] EQUITY SHARE FOR EVERY [●] EQUITY SHARES HELD ON THE RECORD DATE I.E. [●] (“ISSUE”). THE ISSUE PRICE IS [●] TIMES OF THE FACE VALUE OF THE EQUITY SHARE GENERAL RISKS Investments in equity and equity related securities involve a high degree of risk and Investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in relation to this Issue. For taking an investment decision, Investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this document. Investors are advised to refer to “Risk Factors” on page [•] of this Draft Letter of Offer before making an investment in this Issue. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Draft Letter of Offer is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other material facts, the omission of which makes this Draft Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing Equity Shares of the Company are listed on The Bombay Stock Exchange Limited (“BSE”) and The National Stock Exchange of India Limited (“NSE”). The Company has received “in-principle” approvals from BSE and NSE for listing the Equity Shares arising from this Issue vide letters dated [•] and [•] respectively. For the purposes of the Issue, the Designated Stock Exchange shall be [●]. LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE
JM Financial Consultants Intime Spectrum Registry Private Limited Limited 141, Maker Chambers III, C 13, Pannalal Silk Mills Nariman Point, Compound, Mumbai 400 021 LBS Marg, Bhandup (West), Tel: (91 22) 6630 3030 Mumbai 400 078 Fax: (91 22) 2204 7185 Tel: (91 22) 2596 0320-7 Email: [email protected] Fax: (91 22) 2596 0328-9 Website: www.jmfinancial.in Email: Contact Person: Ms. Poonam Karande [email protected] SEBI Registration No: INM000010361 Website: www.intimespectrum.com Contact Person: Ms. Awani Thakkar SEBI Registration: INR000003761 ISSUE PROGRAMME LAST DATE FOR REQUEST FOR SPLIT ISSUE OPENS ON ISSUE CLOSES ON APPLICATION FORMS [y] [y] [y] DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
TABLE OF CONTENTS
PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA...... 3 FORWARD LOOKING STATEMENTS ...... 7 ABBREVIATIONS & TECHNICAL TERMS...... 8 RISK FACTORS...... 12 THE ISSUE...... 25 SUMMARY FINANCIAL AND OPERATIONAL INFORMATION ...... 26 GENERAL INFORMATION...... 31 CAPITAL STRUCTURE...... 35 OBJECTS OF THE ISSUE...... 45 BASIS FOR ISSUE PRICE ...... 53 STATEMENT OF TAX BENEFITS ...... 56 INDUSTRY OVERVIEW...... 69 BUSINESS...... 72 REGULATIONS AND POLICIES...... 84 HISTORY AND CERTAIN CORPORATE MATTERS...... 88 DIVIDENDS ...... 99 MANAGEMENT...... 100 OUR PROMOTERS...... 113 RELATED PARTY TRANSACTIONS ...... 159 AUDITOR’S REPORT ...... 171 FINANCIAL STATEMENTS ...... 175 NOTES TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS ...... 212 STOCK MARKET DATA FOR EQUITY SHARES OF THE COMPANY...... 224 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 226 MATERIAL DEVELOPMENTS...... 251 TERMS OF THE PRESENT ISSUE...... 284 MAIN PROVISIONS OF ARTICLES OF ASSOCIATION...... 300 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ...... 307 DECLARATION...... 308
DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
OVERSEAS SHAREHOLDERS
The distribution of this Draft Letter of Offer and the issue of Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to keep themselves informed about and observe such restrictions. The Company is making this Issue of Securities on a rights basis to the shareholders of the Company and will dispatch the Letter of Offer and CAF to shareholders who have an Indian address.
No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the Securities may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issue of the Securities or the rights entitlements, distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Securities or the rights entitlements referred to in this Draft Letter of Offer.
Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to this date.
European Economic Area Restrictions
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive at any relevant time (each, a “Relevant Member State”) it has not made and will not make an offer of the Equity Shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Equity Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of Equity Shares to the public in that Relevant Member State at any time:
(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or
(c) In any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purpose of this provision, the expression an “offer of Equity Shares to the public” in relation to any Equity Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Equity Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
This European Economic Area selling restriction is in addition to any other selling restriction set out below.
United Kingdom Restrictions
This document is only being distributed to and is only directed at (i) persons who are outside the United
1 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). The Equity Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Equity Shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
NO OFFER IN THE UNITED STATES
The rights and the Securities of the Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the United States of America or the territories or possessions thereof (the ‘‘United States’’ or ‘‘U.S.’’) or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the Securities Act (‘‘Regulation S’’)), except in a transaction exempt from the registration requirements of the Securities Act. The rights referred to in this Draft Letter of Offer are being offered in India, but not in the United States. The offering to which this Draft Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any Securities or rights for sale in the United States or as a solicitation therein of an offer to buy any of the said Securities or rights. Accordingly, this Draft Letter of Offer and the enclosed CAF should not be forwarded to or transmitted in or into the United States at any time.
Neither the Company nor any person acting on behalf of the Company will accept subscriptions or renunciation from any person, or the agent of any person, who appears to be, or who the Company or any person acting on behalf of the Company has reason to believe is, either a “U.S. person” (as defined in Regulation S) or otherwise in the United States when the buy order is made. Envelopes containing a CAF should not be postmarked in the United States or otherwise dispatched from the United States or any other jurisdiction where it would be illegal to make an offer under the Draft Letter of Offer, and all persons subscribing for the Securities and wishing to hold such Securities in registered form must provide an address for registration of the Securities in India. The Company is making this issue of Securities on a rights basis to shareholders of the Company and the Draft Letter of Offer and CAF will be dispatched to shareholders who have an Indian address. Any person who acquires rights and the Securities will be deemed to have declared, represented, warranted and agreed, (i) that it is not and that at the time of subscribing for the Securities or the rights entitlements, it will not be, in the United States when the buy order is made, (ii) it is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States, and (iii) is authorized to acquire the rights and the Securities in compliance with all applicable laws and regulations.
The Company reserves the right to treat as invalid any CAF which: (i) does not include the certification set out in the CAF to the effect that the subscriber is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the Securities in compliance with all applicable laws and regulations; (ii) appears to the Company or its agents to have been executed in or dispatched from the United States; (iii) where a registered Indian address is not provided; or (iv) where the Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements; and the Company shall not be bound to allot or issue any Securities or rights entitlement in respect of any such CAF.
The Company is informed that there is no objection to a United States shareholder selling its rights in India. Rights entitlement may not be transferred or sold to any U.S. Person.
2 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA
Unless stated otherwise, the financial data in this Draft Letter of Offer is derived from the Company’s restated non-consolidated and restated consolidated financial statements and has been prepared in accordance with Indian GAAP as stated in the report of Auditors, included in section. The Company’s current Fiscal Year commenced on April 1, 2007 and ends on March 31, 2008.
In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off, and unless otherwise specified, all financial numbers in parenthesis represent negative figures. Fiscal year/ Financial year/FY would mean any period of twelve months ended March 31 of that particular year, unless otherwise stated.
For definitions, please see the section titled “Abbreviations and Technical Terms” on page [●] of this Draft Letter of Offer. All references to “India” contained in this Draft Letter of Offer are to the Republic of India, all references to the “US” or the “U.S.” or the “USA”, or the “United States” is to the United States of America, and all references to “UK” or the “U.K.” are to the United Kingdom. All references to “Rupees”, “INR” or “Rs.” are to Indian Rupees, the official currency of the Republic of India, all references to “USD” are to United States Dollars, the official currency of the United States of America, all references to “GBP” or “£” are to Great Britain Pounds, the official currency of the United Kingdom, all references to “ZAR” or “South African Rand” are to the official currency of the Republic of South Africa and all references to “EURO” or “€” are to the official currency of the European Union.
Unless stated otherwise, industry data used throughout this Draft Letter of Offer has been obtained from industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although the Company believes that industry data used in this Draft Letter of Offer is reliable, it has not been independently verified.
3 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
EXCHANGE RATES
The following table sets forth, for the periods indicated, information with respect to the exchange rate between the rupee and the British Pound Sterling ( in rupees per British Pound ) .The exchange rate as at December 14, 2007 was Rs.80.36 = GBP 1.00. No representation is made that the rupee amounts actually represent such British Pound amounts or could have been or could be converted into British Pounds at the rates indicated, any other rate or at all.
Rupee and British Pounds Exchange Rates
Year ended March 31 Period End Average High Low 2006 77.80 79.02 83.94 75.56 2007 85.53 85.72 88.77 77.15
Month Ended April 2007 82.30 83.83 85.36 81.69 May 2007 80.43 80.89 82.02 80.08 June2007 81.63 80.98 81.81 80.21 July 2007 82.03 82.18 83.08 81.23 August 2007 82.55 82.12 82.76 81.39 September 2007 80.34 81.38 82.58 79.88 October 2007 81.35 80.73 81.62 79.74 November 2007 81.78 81.71 82.66 80.52 Source: Reserve Bank of India
The following table sets forth, for the periods indicated, information with respect to the exchange rate between the rupee and the American dollar (in rupees per American Dollar) .The exchange rate as at December 14, 2007 was Rs.39.35 = USD 1.00. No representation is made that the rupee amounts actually represent such American dollar amounts or could have been or could be converted into American dollars at the rates indicated, any other rate or at all.
Rupee and American Dollar Exchange Rates
Year ended March 31 Period End Average High Low 2006 44.61 44.28 46.33 43.30 2007 43.59 45.29 46.95 43.14
Month ended April 2007 41.29 42.15 43.15 40.78 May 2007 40.73 40.78 41.34 40.45 June2007 40.75 40.77 41.01 40.47 July 2007 40.44 40.42 40.66 40.24 August 2007 40.96 40.82 41.57 40.36 September 2007 39.74 40.34 40.94 39.70 October 2007 39.32 39.51 39.79 39.31 November 2007 39.67 39.44 39.85 39.27 Source: Reserve Bank of India
The following table sets forth, for the periods indicated, information with respect to the exchange rate between the rupee and the Euro ( in rupees per Euro) .The exchange rate as at December 14, 2007 was Rs.57.62 = Euro 1.00. No representation is made that the rupee amounts actually represent such Euro amounts or could have been or could be converted into Euro at the rates indicated, any other rate or at all.
4 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Rupee and Euro Exchange Rates
Year ended March 31 Period End Average High Low 2006 54.20 53.88 57.28 51.84 2007 58.14 58.11 59.90 53.77
Month ended April 2007 56.20 57.01 57.79 55.66 May 2007 54.74 55.11 56.07 54.37 June2007 54.79 54.71 55.09 54.32 July 2007 55.42 55.43 55.81 54.96 August 2007 55.96 55.64 56.07 55.16 September 2007 56.30 56.02 56.30 55.59 October 2007 56.75 56.22 56.98 55.49 November 2007 58.46 57.92 59.21 56.83 Source: Reserve Bank of India
The following table sets forth, for the periods indicated, information with respect to the exchange rate between the Indian rupees (Rs) and the South African Rand (ZAR) in Indian rupees per South African Rand. The exchange rate as at December 14, 2007 was Rs.5.85 = ZAR 1.00. No representation is made that the rupee amounts actually represent such South African Rand amounts or could have been or could be converted into South African Rand at the rates indicated, any other rate or at all.
Rupee and South African Rand Exchange Rates
Year ended March 31 Period End Average High Low 2007 5.98 6.48 7.62 5.80
Month ended April 2007 5.88 5.96 6.05 5.84 May 2007 5.71 5.85 5.99 5.69 June2007 5.77 5.72 5.78 5.64 July 2007 5.70 5.82 5.91 5.70 August 2007 5.74 5.67 5.77 5.46 September 2007 5.84 5.69 5.84 5.63 October 2007 6.02 5.86 6.11 5.70 November 2007 5.80 5.91 6.06 5.69 Source: www.oanda.com)
The following table sets forth, for the periods indicated, information with respect to the exchange rate between the rupee and the Malaysian Ringgit (in rupees per Malaysian Ringgit). The exchange rate as at December 14, 2007 was Rs.11.90 = MYR 1.00. No representation is made that the rupee amounts actually represent such Malaysian Ringgit amounts or could have been or could be converted into Malaysian Ringgit at the rates indicated, any other rate or at all.
Rupee and Malaysian Ringgit Exchange Rates
Year ended March 31 Period End Average High Low 2005 11.53 11.83 12.27 11.38 2006 12.10 11.76 12.39 11.36 2007 12.57 12.58 14.55 12.12 Source: oanda.com
The following table sets forth, for the periods indicated, information with respect to the exchange rate between the rupee and the Singapore Dollar (in rupees per Singapore Dollar). The exchange rate as at December 14, 2007 was Rs.27.32 = SGD 1.00. No representation is made that the rupee amounts actually represent such
5 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Singapore Dollar amounts or could have been or could be converted into Singapore Dollar at the rates indicated, any other rate or at all.
Rupee and Singapore Dollar Exchange Rates
Year ended March 31 Period End Average High Low 2005 26.52 26.83 27.55 25.97 2006 27.54 26.65 26.64 25.65 2007 28.64 28.92 29.70 27.58 Source: oanda.com
The following table sets forth, for the periods indicated, information with respect to the exchange rate between the rupee and the UAE Dhiram (in rupees per UAE Dhiram). The exchange rate as at December 14, 2007 was Rs.10.73 = AED 1.00. No representation is made that the rupee amounts actually represent such UAE Dhiram amounts or could have been or could be converted into UAE Dhiram at the rates indicated, any other rate or at all.
Rupee and UAE Dhiram Exchange Rates
Year ended March 31 Period End Average High Low 2005 26.52 26.83 27.55 25.97 2006 27.54 26.65 26.64 25.65 2007 28.64 28.92 29.70 27.58 Source: oanda.com
6 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
FORWARD LOOKING STATEMENTS
The Company has included statements in this Draft Letter of Offer which contain words or phrases such as “will”, “aim”, “is likely to result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of such expressions, that are “forward looking statements”.
All forward looking statements are subject to risks, uncertainties and assumptions about the Company that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from the Company’s expectations include but are not limited to:
• General economic and business conditions in the markets in which the Company operates and in the local, regional and national economies;
• Increasing competition in or other factors affecting the industry segments in which the Company operates;
• Changes in laws and regulations relating to the industries in which the Company operates;
• The Company’s ability to meet its capital expenditure requirements and/or increase in capital expenditure;
• Fluctuations in operating costs and impact on the financial results;
• The Company’s ability to attract and retain qualified personnel;
• Changes in political and social conditions in India or in countries that the Company has entered or may enter, the monetary policies of India and other countries where the Company has its operations, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;
• The performance of the financial markets in India and other countries where the Company has its operations as well as performance of financial markets globally; and
• Any adverse outcome in legal proceedings in which the Company is involved.
For a further discussion of factors that could cause the Company’s actual results to differ, please refer to the sections titled “Risk Factors”, “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing on page [●], [●] and [●] of this Draft Letter of Offer. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither the Company nor the Lead Manager nor any of their respective affiliates or advisors have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI / Stock Exchanges requirements, the Company and Lead Manager will ensure that investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock Exchanges.
7 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ABBREVIATIONS & TECHNICAL TERMS
In this Draft Letter of Offer, all references to “Rupees”, “Rs.” or “INR” refer to Indian Rupees, the official currency of India; references to the singular also refers to the plural and one gender also refers to any other gender, wherever applicable, and the words “Lakh” or “Lac” mean “100 thousand” and the word “million” means “10 lakh” and the word “crore” means “10 million” or “100 lakhs” and the word “billion” means “1,000 million” or “100 crores”. Any discrepancies in any table between the total and the sums of the amounts listed are due to rounding off.
DEFINITIONS
Term Description “GCPL” or “the Company” Godrej Consumer Products Limited, a public limited company incorporated under the provisions of the Companies Act, 1956 having its registered office at Pirojshahnagar, Eastern Express Highway, Vikhroli, Mumbai, Maharashtra, India. “Our” or “we” or “us” Godrej Consumer Products Limited and its subsidiaries, associates and joint ventures on a consolidated basis. “Godrej Group” GCPL and its promoters and promoter group companies
COMPANY/ISSUE RELATED TERMS
Term Description Articles/Articles of Association Articles of Association of the Company Auditors Statutory auditors of the Company, that is, M/s. Kalyaniwalla & Mistry Board / Board of Directors the Board of Directors of the Company Bankers to the Issue HDFC Bank Limited and ABN AMRO Bank N.V. Chairman Mr. Adi Burjorji Godrej, a resident of India Co-Manager Refers to Centrum Capital Limited Designated Stock Exchange means [●] This Draft Letter of Offer dated December 28, 2007 filed with SEBI for its Draft Letter of Offer comments Equity Share(s) or Share(s) The ordinary share(s) of the Company having a face value of Re. 1 unless otherwise specified in the context thereof Equity Shareholder (s) A holder of Equity Shares of the Company Any period of twelve months ended March 31 of that particular year, unless Financial Year/Fiscal/FY otherwise stated Investor(s) The holder(s) of Equity Shares of the Company on the Record Date Issue Issue of [●] Equity Shares of face value of Re. 1 each for cash at a premium of Rs. [●] per share aggregating an amount not exceeding Rs. 4,000 million to the Equity Shareholders of our Company on rights basis in the ratio of [●] Equity Share for every [●] Equity Shares held on the Record Date. Issue Closing Date [•] Issue Opening Date [•] Issue Price Rs. [●] per Equity Share Lead Manager Refers to JM Financial Consultants Private Limited Letter of Offer The letter of offer to be filed with the Stock Exchanges after incorporating SEBI comments on this Draft Letter of Offer Memorandum/Memorandum of The Memorandum of Association of the Company Association Promoter Godrej & Boyce Manufacturing Company Limited, Mr. Adi Burjorji Godrej, Mr. Jamshyd Naoroji Godrej, Mr. Nadir Burjorji Godrej, Mr. Vijay Mohan
8 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Term Description Crishna and Mr. Rishad Kaikhushru Naoroji Promoter Group The individuals and companies listed in the section “Our Promoter Group” on page [●] of this Draft Letter of Offer Record Date [•] Registrar to the Issue/ Registrar Intime Spectrum Registry Limited Renouncees Any persons who have acquired Rights Entitlements from Equity Shareholders Rights Entitlement The number of Equity Shares that a Equity Shareholder is entitled to in proportion to his / her / its shareholding in our Company as on the Record Date Stock Exchange(s) Refers to the BSE and the NSE where the Equity Shares of the Company are presently listed
CONVENTIONAL/GENERAL TERMS
Term Description Act / Companies Act The Companies Act, 1956 and amendments thereto Cenvat The Central Value Added Tax CESTAT The Customs, Excise, Service Tax Appellate Tribunal The Contract Labour (Regulation and Abolition Act), 1970 and amendments CLRA thereto Competition Act The Competition Act, 2002 and amendments thereto Criminal Procedure Code The Criminal Procedure Code, 1973 and amendments thereto Depositories Act The Depositories Act, 1996 and amendments thereto EPS Earnings per share ESI Employees state insurance Income Tax Act Income Tax Act, 1961 and amendments thereto Indian GAAP Generally accepted accounting principles in India Industrial Policy The industrial policy and guidelines issued thereunder by the Ministry of Industry, Government of India, from time to time IPC The Indian Penal Code, 1860 and amendments thereto Modvat The Modified Value Added Tax NAV Net asset value NRE Account A Non-Resident External Account NRO Account A Non-Resident Ordinary Account PAT Profit after tax SEBI Act, 1992 The Securities and Exchange Board of India Act, 1992 and amendments thereto SEBI DIP Guidelines The SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on January 19, 2000 read with amendments issued subsequent to that date SIA The Secretariat of Industrial Assistance SICA The Sick Industrial Companies (Special Provisions) Act, 1985 Securities Act The United States Securities Act of 1933, as amended Takeover Code The SEBI (Substantial Acquisition Of Shares and Takeovers) Regulations, 1997 and amendments thereto Wealth-Tax Act The Wealth-Tax Act, 1957 and amendments thereto
9 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
INDUSTRY RELATED TERMS
Term Description C & F Agents Carrying and Forwarding Agents FMCG Fast Moving Consumer Goods R&D Research and Development TFM Total Fatty Matter TQM Total Quality Management VFM Value for Money
ABBREVIATIONS
Term Description AGM Annual General Meeting AS Accounting Standards, as issued by the Institute of Chartered Accountants of India Bn Billion BSE The Bombay Stock Exchange Limited BIS Bureau of Indian Standards CAF Composite Application Form CDSL Central Depository Services (India) Limited DP Depository Participant DSE Designated Stock Exchange EGM Extraordinary General Meeting ESOP Employee Stock Option Plan FCCB Foreign Currency Convertible Bonds FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 FERA Foreign Exchange Regulation Act, 1973 FI Financial Institutions FII(s) Foreign Institutional Investors registered with SEBI under applicable laws G & B Godrej and Boyce Manufacturing Company Ltd. GBP Great Britain Pound GDP Gross Domestic Product GGME Godrej Global Mid East FZE GHCI Godrej Hair Care Institute GIL Godrej Industries Limited GOI Government of India HUF Hindu Undivided Family IRR Internal Rates of Return ITAT Income Tax Appellate Tribunal Mn Million MoU Memorandum of Understanding NR Non Resident NRI(s) Non Resident Indian(s) NSDL National Securities Depository Limited NSE The National Stock Exchange of India Limited OCB Overseas Corporate Body
10 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Term Description RBI The Reserve Bank of India ROC Registrar of Companies, State of Maharashtra, located at Everest House, Marine Lines, Mumbai 400 020 SCB Scheduled Commercial Banks SCN Show cause notice SEBI Securities and Exchange Board of India STT Securities Transaction Tax UTI Unit Trust of India USD United States Dollar ZAR South African Rand
11 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
RISK FACTORS
The risks described below together with the other information contained in this Draft Letter of Offer should be carefully considered before making an investment decision. The risks described below are not the only ones relevant to the Company or investments in securities of Indian issuers. Additional risks not presently known to the Company or that it currently deems immaterial may also impair the Company’s business operations. The Company’s business, financial condition or results of operations could be materially adversely affected by any of these risks.
This Draft Letter of Offer also contains forward looking statements that involve risks and uncertainties. The Company’s actual results could differ materially from those anticipated in these forward looking statements as a result of certain factors, including the considerations described below and elsewhere in this Draft Letter of Offer.
Risks Related to Our Business
1) There are outstanding legal proceedings against us, our Directors, our Promoter and the Promoter Group Companies.
There are certain legal proceedings pending against our company which if determined against our company could have a material and adverse impact on its business prospects and financial conditions. For further details on legal proceedings against us refer the section titled “Outstanding Litigation and Defaults” on page [●] of the Draft Letter of Offer.
2) If we fail to keep pace with the changes in the industry and market it would result in a decline in demand for our products and revenues.
The markets in which we operate are characterised by regular changes and frequent new product or product variant introductions. Customer preferences in this market are difficult to predict, and changes in those preferences or the introduction of new products by our competitors could put our products at a competitive disadvantage. While we try to introduce new products or variants there is no certainity that these will be commerically accepted or viable or effective and as a result our market share could be affected and we would need to develop new products or variants. Further, inability to foresee or react to changes in market conditions may affect the competitiveness of our products, thereby reducing our market share, which could result in an adverse impact on our business, prospects and results of operation..
3) We face competition which may lead us to increase expenditure on marketing and promotion and thus compress our profitability margins.
We operate in a competitive environment, both in India and in our international operations. There are several strategies adopted by our competitors to increase their market share through advertising, pricing, channel discounts, quality, service, multi location operations, new product introductions and distribution reach among others.
In order to protect our existing market share or capture additional market share in this competitive environment, we may be required to increase expenditure for advertising, promotions and to introduce new products and variants or establish existing products. Due to inherent risks in the marketplace associated with advertising and new product introductions, including uncertainties about trade and consumer acceptance, increased expenditure may not prove successful in maintaining or enhancing our market share and could result in lower profitability.
We compete against a number of manufacturers and marketers, some of which are larger and have substantially greater resources than us, and which may therefore have the ability to spend more aggressively on advertising and marketing. On the other hand, we face potential competition from new entrants who would have more flexibility to respond to changing business and economic conditions than us. In this regard, we may incur increased business risks.
In the event we are unable to keep pace with our current or future competition on any of the above factors, our business, prospects, financial condition and results of operation could be adversely affected.
12 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
4) Our market share in liquid detergents and hair colourants, where we are market leaders may be susceptible to disruptive practices by the competition.
We are market leaders in liquid detergents in India with 78.5% market share and in hair colour with 34.9% market share, for the quarter ended September 30, 2007. Over the last two years, our market share in the hair colourant category has declined from 40.9% in the quarter ended September 2005 to 34.9% in quarter ended September 2007. The lucrative nature of this market may lead potential or existing competitors to increase their focus in this category of business which could lead to further erosion of our market share. Further certain players may indulge in disruptive practices to capture the market share by incurring higher promotional expense, or by any other strategy. Our inability to effectively deal with such a situation could adversely affect our business and market position.
5) We depend on our distributors and failure to manage the distribution network efficiently may adversely affect our performance.
Currently we have nearly 4,500 distributors, super stockists and sub stockists on whom we are dependent for the distribution of our products. While relationships with them have been good, we have no standing contracts with any of these channel partners and most of these distributors and retailers function independently. Many of our distributors and channel partners also distribute products of our competitors. There can be no assurance that we will be successful in continuing to receive uninterrupted, high quality service from these channel partners for all our current and future products.
6) As a manufacturing business, our success depends on the continuous supply and transportation of our products from our manufacturing units to our distributors and customers. This is taken care of by our Carriage and Forwarding agents and transporters and can be subject to certain risks.
We strive to keep optimum inventory at our C & F agents and distributor locations. Inefficient supply chain management may lead to unavailability of products in the market. Ensuring shelf availability for our products warrants quick turnaround time and high level of coordination with C & F agents and transporters. C & F agents provide services such as holding stocks and handling collections which forms an important part of our business. Transporters also have physical custody of stocks in the process of transportation. We have to rely on C & F agents and transporters to carry out an important part of the supply chain. We do not have exclusive contracts with our C & F agents and transporters. Any inefficiency on the part of our C & F agents and transporters could adversely affect our operations and may lead to disruption of supply chain, loss on account of cash and goods resulting in higher costs or lost sales. This may adversely affect our business prospects and results of operation.
7) The launch of new products that prove to be unsuccessful could impact our growth plans and may adversely impact earnings.
We believe that new product introductions in our business segments are one of our avenues for growth. Each of the elements of new product initiatives carries significant risks, as well as the possibility of unexpected consequences, including: acceptance of the new product initiatives by our customers may not be as high as we anticipate; sales of the new products to our customers may not be as high as we anticipate for a number of factors including pricing; our marketing strategies for the new products may be less effective than planned and may fail to effectively reach the targeted consumer base; we may incur costs exceeding our expectations as a result of the continued development and launch of the new products; we may experience a decrease in sales of certain of our existing products as a result of the introduction of related new products; or any delays or other difficulties impacting our ability, or the ability of our third party manufacturers and suppliers, to manufacture, distribute and ship products in a timely manner in connection with launching the new product initiatives.
Each of the risks referred to above could delay or impede our ability to achieve our growth objectives or we may not be successful in achieving our growth objectives at all, through these means, which could have a material adverse effect on our business prospects, results of operations and financial condition.
13 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
8) Some of our products are subject to seasonal variations and as a result, our quarterly results of operations may fluctuate.
Our liquid detergent segment is seasonal in nature, with a major portion of the sales arising in the third quarter of the financial year. The Company registers the maximum sales for its liquid detergent during the period from November to January each year. The sale for soaps also experiences seasonal fluctuations with the Company registering more soap sales in the summer months as compared to the winter months.
As a result of these seasonal fluctuations, our sales and operational results for the seasonal product categories in different quarters within a single fiscal year vary and sales and operational results may not be relied upon as indicators of sales or operational results of other fiscal quarters or of our future performance. Our inability to manage seasonal variations effectively may have an adverse effect on our business and financial condition.
9) The availability of spurious, look-alikes, counterfeit products primarily in our domestic market, could lead to losses in revenues and harm the reputation of our products.
We are exposed to the risk that entities in India and elsewhere could pass off their products as ours, including spurious or pirated products. For example, certain entities could imitate our brand name, packaging material or attempt to create look-alike products or brands. This would not only reduce our market share due to customers confusing spurious products for our products, whereby we may not be able to recover our initial development costs or experience loss in revenues, but could also harm the reputation of our brands. The proliferation of unauthorized copies of our products, and the time lost in defending claims and complaints about spurious products could have a material adverse effect on our reputation, business prospects and results of operations.
10) Product innovation and research and development activities are an integral part of our business model. If our research and product development efforts are not successful, our business may be restricted.
Growth of our future operations also depends upon our ability to successfully carry out research and development of new processes and produce new and higher quality products from a variety of raw materials. These processes must meet regulatory standards where applicable and may require regulatory approvals. The development and commercialization process would require spending of both time and money. Our ongoing investments in research and development for future products and processes may result in higher costs without a proportionate increase in revenues. Delays in any part of the process, our inability to obtain necessary regulatory approvals for our products or failure of a product to be successful at any stage could harm our operating results.
11) We could incur substantial costs resulting from sales recall. This could adversely affect our reputation, result in significant costs to us, and expose us to a risk of litigation and possible liability.
We may be required to recall some of our products from the market due to specific quality issue or the product not meeting the customer requirement.
Such instances can have repercussions on our brand image and may also have financial implications in addition to impacting our market share and demand for our products.
12) Shortfall in the supply of or increase in the price of input materials may affect our business and financial performance.
All our raw materials are procured from vendors. We depend on a limited number of vendors for the procurement of certain key raw materials. If these vendors are temporarily or permanently unable to supply us with these raw materials, our business will be adversely affected.
Raw materials, in particular vegetable oils, which are one of the key raw materials for soaps are subject to price volatility caused by factors including commodity market fluctuations, the quality and availability of supply, currency fluctuations and consumer demand. Any significant change in the cost structure or disruption in supply may affect the pricing and supply of products. If we are not able to increase our product prices to significantly offset increased raw material costs, or if unit volume sales are significantly reduced, it could have a negative impact on our profitability. This may adversely affect our business and financial performance.
14 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
13) Growing penetration of emerging retail formats such as supermarkets/hypermarkets in India may adversely impact our sales and margins.
India has witnessed the emergence of new supermarket/hypermarket chains in the recent past. While the current share of our revenues through these chains is not significant, it is expected that this may rise significantly in the next few years, especially in the larger cities. In general, the trade margins and discounts expected by supermarket chains is higher than traditional retail outlets. Also modern trade outlets may not stock products of all varieties. With the growth in these retail formats in India we would have to increase the focus on marketing of our products through this channel. Though we may be able to save on certain logistic costs, higher sales through these channels may lead to higher costs relating to sales and distribution which may adversely impact our sales and margins and consequently our financial performance.
14) Our business is dependent on our manufacturing facilities and the availability of consumables, spares and utilities. The loss or shutdown of operations at our manufacturing facilities would affect the availability of our products.
Currently we are largely dependent on our manufacturing facilities for sale of our products. Though we have various manufacturing locations, some of our products are dependent on either one or two manufacturing facilities.
Our facilities are subject to operational risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, obsolescence, unavailability of consumables and spare parts, labor disputes, natural disasters, breakout of fires, industrial accidents and the need to comply with relevant government regulations. The occurrence of any of these risks could significantly affect our operating results. We may be required to carry out planned shutdowns of our plants for maintenance, statutory inspections and testing. We may also shut down our plants for capacity expansion and equipment upgrades. Although, we will continue to take precautions to minimize the risk of any significant operational problems at our facilities, our business, financial condition and results of operations will be adversely affected by any disruption of operations at our facilities, including due to any of the factors mentioned above.
15) We are dependent on 3rd party manufacturers for certain products
We are dependent on certain third party manufacturers to process some of our products. Any disruption in their availability or operations will affect such products and may impact our market position for those products and our results of operation
For certain of our products like talcum powder and certain hair colour products, we are dependent on third party manufacturers.
16) We rely on our information technology systems in managing our supply chain, production process, logistics and other integral parts of our business. We rely on our information technology systems in connection with sales accounting, procurement of raw materials, finance accounting, production, distribution and the general running of our day to day business. We have a central database that links all our internal systems and also connects us with our key suppliers and distributors. We also have software for dealing with our suppliers and distributors. Any failure in our information technology systems could result in business interruption, adversely impacting our reputation and weakening of our competitive position and could have a material adverse effect on our financial condition and results of operations.
17) We may face labour disruptions that would interfere with our operations.
We have seven manufacturing locations, five in India and two abroad. The workers of some of these manufacturing units are members of labour unions. For e.g. the workers of our Malanpur factory are members of a labour union. There is a labour agreement every three years and is currently under discussion at the Malanpur factory. If our relationship with our employees suffers from labour unrest resulting in a work stoppage, slowdown or a strike, our production facilities may not be able to continue operations at the normal level, or at all. While we believe that we maintain good relationship with our employees, there can be no assurance that we will not experience future disruptions to our operations due to disputes or other problems with our work force
15 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only which may adversely affect our business. Also, we cannot guarantee that significant suppliers or transportation providers which we use will not experience any strikes, work stoppages or other industrial action in the future. Any such event could disrupt our operations, possibly for a significant period of time, result in increased wages and other costs and have a material adverse effect on our business, results of operations or financial condition.
18) We rely heavily on the Godrej brand name and any dilution of the same could adversely affect our business. We believe the “Godrej” brand commands good recall among the populace in India due to its long presence in the Indian market and the diversified businesses in which the group operates. Our success depends on our ability to maintain the brand image of our existing products and effectively build up brand image for new products and brand extensions. Decrease in product quality due to reasons beyond our control or allegations of product defects, even when false or unfounded, could tarnish the image of the established brands and may cause consumers to choose other products. In addition, because of changing government regulations or implementation thereof, allegations of product contamination or lack of consumer interest in certain products, we may be required from time to time to recall products entirely or from specific markets. However, there can be no assurance that this established brand name will not be adversely affected in the future by events such as actions that are beyond our control, including customer complaints or adverse publicity from any other source. Any damage to this brand name, if not immediately and sufficiently remedied, could have an adverse effect on our business, financial condition and results of operations.
19) The success of our business depends substantially on our promoters, management team, directors and operational workforce. Our inability to retain them could adversely affect our businesses.
Our Promoters, our directors and our key management personnel collectively have many years of experience in managing our various businesses. They provide expertise which enables us to make well informed decisions in relation to our businesses and our future prospects. The loss of one or more members of our senior management team could impact our ability to obtain, retain and execute important engagements and our ability to maintain and grow our revenues. Competition for senior management in our industry is intense, and we may not be able to recruit and retain suitable persons to replace the loss of any of our senior managers in a timely manner. Any loss of our senior managers or other key personnel or the inability to recruit further senior managers or other key personnel could impair our future by impairing our day-to-day operations, hindering our development of new products and harming our ability to develop, maintain and expand our operations.
20) Increase in attrition rates of our operational workforce could adversely affect our business.
A skilled and trained workforce is imperative for the successful continuation and growth of our business. Competition in our industry is intense and over the past few years we have witnessed growing attrition rates. Loss of our operational workforce could impair our future by impairing our day-to-day operations, hindering our development of new products and harming our ability to develop, maintain and expand our operations.
21) The Promoters and Promoter group will exercise significant control on us and may continue to do so as long as they own a majority of the Equity Shares, and the other shareholders will be unable to affect the outcome of shareholder voting during such time.
As on September 30, 2007 our Promoters and Promoter group owned approximately 68% of our paid-up share capital and after completion of the Issue. are expected to continue to hold significant shareholding in us. As a result, the Promoters and Promoter group will have the ability to control our business including matters relating to any sale of all or substantially all of our assets, the timing and distribution of dividends and the election or termination of appointment of our officers and Directors. This control could delay, defer or prevent a change in control of the Company, impede a merger, consolidation, takeover or other business combination involving the Company, or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company even if it is in the best interest of the Company and its shareholders.
22) Our corporate office and other premises from which we operate are not owned by us.
Our corporate office is situated on premises that have been taken on a leave and license agreement, from our group company Godrej Industries Limited. Any adverse impact on the title, ownership rights, development rights of the owners from whose premises we operate or breach of the contractual terms of such leave and license agreements or any inability to renew the said leave and license agreement on terms acceptable to us may
16 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only impede our business operations.
23) All our manufacturing and warehousing operations are being conducted on premises that have been taken on lease. Our inability to seek renewal/extension of such lease terms may cause disruption in our operations.
All our premises on which we operate are taken on lease or leave and license agreements with various third parties, except for Rapidol (Pty) Limited which operates on leasehold land. We may enter into such transactions with third parties in future too. We plan to utilize part of the issue proceeds towards capital expenditure which includes taking more land on leasehold. Any adverse impact on the title, ownership rights, development rights of the owners from whose premises we operate or breach of the contractual terms of such leave and license agreements or any inability to renew the said leases / leave and license agreements on terms acceptable to us may impede our business operations.
24) If we are not able to manage our growth, our business and financial results could be adversely affected.
Our growth strategy involves substantial expansion through organic and inorganic methods of our current businesses. Such a growth strategy will place significant demands on our management as well as our financial, accounting and operating systems. Further, as we expand the scope of and diversify our operations, we may not be able to manage our business efficiently, which could result in delays, increased costs and affect the quality of our products, and may adversely affect our reputation. Such expansion also increases the challenges involved in preserving a uniform culture, set of values and work environment across our businesses, developing and improving our internal administrative infrastructure, particularly our financial, operational, communications, internal control and other internal systems, recruiting, training and retaining management, technical and marketing personnel, maintaining high levels of client satisfaction, and adhering to health, safety, and environmental standards. Our failure to manage our growth could have an adverse effect on our business, financial condition and results of operations.
25) Failure to successfully identify and conclude acquisitions, joint ventures or manage the integration of the businesses acquired or the performance of such businesses being below expectations may cause profitability and operations to suffer.
We have identified strategic acquisitions and initiatives as one of the avenues for our growth. We acquired Keyline Brands UK, an FMCG company in October 2005, the South African business of Rapidol U.K, a hair colour company, in September 2006 and Godrej Global Mid East FZE in October 2007.
We also signed an agreement with SCA Hygiene Products AB, Sweden in March 2007 to form a 50:50 joint venture company known as Godrej SCA Hygiene Limited for the manufacture and marketing of paper based absorbent hygiene products.
If our joint venture does not continue successfully and is subsequently wound up, our business may be disrupted and we may not be able to continue operating in such business segment. Likewise, our acquisitions may not necessarily contribute to our profitability and may divert management attention. This may affect our business and financial performance.
26) We are subject to risks associated with our international operations, which could negatively affect our sales to customers in foreign countries as well as our operations and assets in such countries.
Our subsidiaries Keyline Brands Limited, Rapidol (Pty) Limited and Godrej Global Mid East FZE operate in international jurisdictions namely UK, South Africa and the UAE. This makes them subject to risks that are specific to the country of their operation as well as risks associated with international operations. For instance, fluctuation of the US $ against the British Pound and the Indian Rupee would have an impact on the export revenues and profits of Keyline Brands Limited and Godrej Consumer Products Limited. Fluctuation of the South African Zar against the US $ and therefore against the Indian Rupee would impact the royalty earnings of Godrej Consumer Products Limited from its South African business of Rapidol UK.
In the event of mergers of retail chains in the UK there can be a consequent reduction in the points of sale that may have a bearing on the sale and revenues of Keyline Brands Limited. Our South African subsidiary, Rapidol (Pty) Limited may be subject to the Broad-Based Black Economic
17 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Empowerment Act that regulates the position of companies that intend to do business in South Africa. Privately owned or managed entities are not legally bound to comply with the act at present. The act regulates the positions of multinationals and equity ownership in them. It promotes equity participation in companies by black women and black designated groups and participation by black people at the top management and senior management level. The act also promotes training and skill development initiatives for black people by companies and preferential procurement of goods and services from companies that are in compliance with the Black Economic Empowerment Act.
27) We have not entered into any definitive agreements to utilize the proceeds of the Issue.
We intend to use the proceeds of the Issue for the activities described in section “Objects of the Issue” beginning on page [●] of this Draft letter of Offer. We have not entered into any definitive agreements to utilize such proceeds. We intend to rely on our internal systems and controls to monitor the use of such proceeds. We are considering utilizing a part of the proceeds towards funding an acquisition. If we do not identify or close out any acquisition then a part of the issue proceeds would be unaccounted for.
28) The proposed acquisitions may have a material impact on the Company.
If the Company goes ahead with the proposed acquisitions, the results of operations of the acquired company may materially affect the Company’s business, financial condition and results of operations, and the Company’s actual financial position and results of operations in the future may differ materially from the historical financial data included in this Draft Letter of Offer.
29) There may be unknown risks inherent in the acquisitions
The Company may not be aware of all of the risks associated with the acquisitions. It would be difficult for the Company to conduct a substantial independent due diligence review of any non-public information about the target company. It is possible that there may be material liabilities or other problems with the business of the target company of which the Company is not aware. For example, following completion of these acquisitions, the Company will need to make capital expenditures that may be significant to maintain the assets it has acquired and to comply with regulatory requirements, including environmental laws. The costs and liabilities actually incurred in connection with the acquisitions and subsequent integration process may exceed those anticipated. As a result, after the completion of the acquisition, the Company may be subject to unknown liabilities of the acquired company, which may have a material adverse effect on the Company’s profitability, results of operations and financial position.
30) The Company may experience difficulties in integrating the business of the target companies.
The Company’s ability to achieve the benefits it anticipates from acquisitions will depend in large part upon whether it is able to integrate the businesses of the Company and the targets in an efficient and effective manner. For example, if the operations of the target company are primarily located in markets where the Company currently does not have operations, the Company may not be able to integrate these businesses smoothly or successfully, and the process may take longer than expected.
In addition, the integration of certain operations following the acquisition will require the dedication of significant management resources, which may distract management’s attention from day-to-day business. Also, the Company may want to rely principally on the management team of the target company to run its operations. There can be no assurance that the management team of the target company will remain with it after the acquisition, or that the Company will be successful in managing its expansion into these new markets.
31) Fiscal benefits being enjoyed by us (income tax and excise duty) may not be available in future couldaffect our post-tax profits.
Certain tax deductions are available to us in various states including the North-Eastern states and Himachal Pradesh where some of our factories are situated, under the Income Tax Act. We are eligible for tax deductions under section 80- IB/ 80- IC that provides for tax deductions for industrial undertakings set up in an industrially backward state. For more information on tax deductions refer to page [●] of the Draft Letter of Offer. The Company also enjoys excise benefits in Himachal Pradesh and North Eastern states. There can be no assurance that similar tax benefits will be available to us in future. When our tax benefits expire or terminate, our tax
18 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only expense could materially increase, reducing our profitability.
32) Compliance with, and changes in, safety, health and environmental laws and regulations may adversely affect our results of operations and financial condition.
As a Company engaged in the manufacture of household and personal care products, we are subject to a broad range of safety, health and environmental laws and regulations in the jurisdictions in which we operate. For instance, our production facilities located in India and the disposal and storage of raw materials, chemicals and waste water from such production facilities are subject to Indian laws and Government regulations on safety, health and environmental protection. All these laws and regulations impose controls on our noise emissions, air and water discharges, on the storage, handling, discharge and disposal of chemicals, employee exposure to hazardous substances and other aspects of our operations and products. While we believe we are in compliance in all material respects with all applicable safety, health and environmental laws and regulations, the discharge of our raw materials that are chemical in nature or of other hazardous substances or other pollutants into the air, soil or water may nevertheless cause us to be liable to the Government of India or the State Governments where we operate or to third parties. In addition, we may be required to incur costs to remedy the damage caused by such discharges, pay fines or other penalties or close down the production facilities for non-compliance.
33) Our operations involve handling hazardous material that could expose us to the risk of liabilities, lost revenues and increased expenses.
Our operations are subject to various hazards associated with the production of chemical products, such as the use, handling, processing, storage and transportation of hazardous/explosive materials such as, as well as accidents such as leakage or spillages of chemicals. Any mishandling of hazardous chemical and poisonous substances could also lead to fatal accidents. In order to prevent such mishandling we have established various measures including training of workers, prominent display of safety measures and precaution measures in production areas. In addition, our employees operate heavy machinery at our manufacturing facilities and accidents may occur while operating such machinery.
These hazards can cause personal injury and loss of life, severe damage to and destruction of property and equipment, environmental damage and may result in the suspension of operations and the imposition of civil and criminal liabilities. As a result of past or future operations, there may be claims of injury by employees or members of the public due to exposure, or alleged exposure, to the hazardous materials involved in our business. In addition, we may be subject to claims of injury from indirect exposure to hazardous materials that are incorporated into our products. Liabilities incurred as a result of these events have the potential to adversely impact our financial position. Events like these could also adversely affect our perception with suppliers, customers, regulators, employees and the public, which could in turn affect our financial condition and business performance. While we maintain general insurance against these liabilities, the insurance proceeds may not be adequate to fully cover the substantial liabilities, lost revenues or increased expenses that we might incur.
34) We face the risk of potential liabilities from lawsuits or claims by consumers and distributors.
Our products are marketed and sold all over India as well as to several foreign countries. We face the risk of legal proceedings and product liability claims being brought against us by various entities including consumers, distributors and government agencies for various reasons including for defective products sold or services rendered. If some or all of these lawsuits or claims succeed, it could adversely affect our business and financial performance. This may result in liabilities and/or financial claims against us as well as loss of business and reputation.
35) We are subject to restrictive covenants in certain debt facilities provided to us.
There are restrictive covenants in some agreements we have entered into with various banks and financial institutions for short term and long term borrowings and for other business requirements. As per the terms of some of these agreements we have restrictions on borrowings beyond certain limits and on any corporate restructuring without the prior consent of our lenders. Further, the loan agreements provide that we cannot create any further charges or encumbrances over mortgaged property and that we may not part with hypothecated property or any part thereof without the prior written consent of the lending bank. These restrictive covenants may also affect some of the rights of our shareholders, including payment of dividends in the event of default.
19 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
36) Significant fluctuations in certain foreign currency exchange rates can have an adverse impact on our financial performance.
A part of our revenues are earned and expenses are incurred in currencies such as the USD, GBP, South African Rand and other currencies. Any expansion into new geographies and undertaking of new projects also exposes us to additional foreign currency risks associated with such diversification. While we hedge currency exposures from time to time, as part of our risk management activities, our profitability may be significantly affected by exchange rate fluctuations between the foreign currencies and the Indian Rupee. Further, our hedging arrangements may, at times, limit the benefits of favorable exchange rate movements.
In addition, the policies of the Reserve Bank of India may change from time to time and this may impact our ability to adequately hedge our foreign currency exposures.
37) We have entered into, and may continue to enter into, related party transactions.
We have in the course of our business entered into transactions with related parties that include our promoter and companies forming part of our promoter group such as the leave and license agreement for our corporate offices with GIL, leave and license agreement for the Walkeshwar property with Ms. Parmeshwar Godrej and a cost sharing agreement with GIL. For more information regarding our related party transactions, see the section titled “Related Party Transactions” on page [●] of this Draft Letter of Offer. Further, our business is expected to involve transactions with such related parties, in the future.
38) We may not be sufficiently protected or insured for certain losses that we may incur or claims that we may face against us
We maintain insurance for a variety of risks, including, among others, for risks relating to fire, burglary and certain other losses and damages. Although, we attempt to limit and mitigate our liability for damages arising from negligent acts, errors or omissions through insurance policies, the limitations of liability set forth in our insurance policies may not be enforceable in all instances or may not protect us from liability for damages. These may lead to financial liability/adverse consequences for us. Further, even where we have availed of insurance cover, we may not be able to successfully assert our claims for any liability or loss under the said insurance policies. This may have a material adverse effect on our financial condition, results of operations and prospects.
39) A significant portion of our Objects would not result in creation of tangible assets.
We intend to use a part of the issue proceeds towards prepayment / repayment of a portion of the debt outstanding on the books of the Company, including any additional loans that we may take up. We also plan to make an investment in our wholly owned subsidiary Godrej Netherlands B.V. to prepay its debts. For more details on the use of the issue proceeds see the section titled “Objects of the Issue” beginning on page [●] of the Draft Letter of Offer. Therefore a part of our Objects shall not result in the creation of any tangible assets.
40) We have entered into a Cost and Expense Sharing Agreement with Godrej Industries Limited, (GIL), which is part of our promoter group, which currently expires on March 31, 2008, which if not extended will require us to set up these services in-house and may result in affecting our business and operations
Pursuant to the de-merger of GCPL from erstwhile Godrej Soaps Limited (GSL), certain functions like imports of commodities, legal, information systems, internal audit, corporate HR are being performed by employees of GIL for the Godrej Group. Research & development is being done by employees of GCPL for us as well as for GIL. There can be no certainty that these activities or function will continue in future or may continue in the current form or in a form which is beneficial to us. These are currently provided under a Cost and Expense Sharing Agreement entered into between GCPL and GIL and the agreement is currently valid till March 31, 2008 (for further details please refer to the Business Section on page [•]). In the event either we or GIL choose not to extend the agreement period, we may need to develop these capabilities in-house, which may result in a disruption in our business or we may not be able to effectively transition resulting in a material adverse impact on our business, prospects, financial condition and results of operation.
20 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
41) We have contingent liabilities, which may adversely affect our financial condition.
As of September 30 2007, our contingent liabilities are as follows:
Particulars Amount (in Rs. million)
A. Claims for Excise Duties, Taxes and Other Matters: Excise duty demands against which the Company has preferred appeals 3.43 Sales tax demands against which the Company has preferred appeals 13.63 Income tax matters 5.90 Other matters 0.66 Sub Total 23.62 B. Excise duty demands and penalties in respect of toilet soaps cleared from 121.28 Malanpur during the period of joint venture with Proctor & Gamble C. Guarantees issued by banks, excluding guarantees issued in respect of matters 15.65 reported in (A) above D. Guarantees availed by Company for securing loan availed by Godrej Netherlands 242.64 B.V. Total 403.19
Risks Relating to India
1) A slowdown in economic growth in India could cause our business to suffer.
Our performance and growth are dependent on the health of the Indian economy. The economy could be adversely affected by various factors such as political or regulatory action, including adverse changes in liberalization policies, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, commodity and energy prices and various other factors. Any slowdown in the Indian economy may adversely impact our business and financial performance and the price of our Equity Shares.
2) Any downgrading of India’s debt rating by an independent agency may harm our ability to raise financing.
Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may adversely affect our ability to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. This could have a material adverse effect on our capital expenditure plans, business and financial performance and the price of our Equity Shares.
3) Force Majeure events, terrorist attacks and other acts of violence or war involving India, the United States or other countries could adversely affect the financial markets, result in a loss of investor confidence and adversely affect our business, results of operations, financial condition and cash flows.
Certain events that are beyond our control, such as:
• force majeure events, including earthquakes, cyclones, floods and other natural disasters, such as the recent tsunami which affected several parts of South and South East Asia, including India and Sri Lanka on December 26, 2004;
• terrorist attacks, such as those that occurred in New York and Washington, D.C., on September 11, 2001 and New Delhi on December 13, 2001; and
• other acts of violence or war (including civil unrest, military activity and hostilities among neighboring countries), which may involve India, the United States or other countries.
Any such event could happen at or otherwise affect one or more of our businesses, which would adversely affect our business, results of operations and financial condition. Moreover, these and other similar events may adversely affect worldwide financial markets and could lead to global economic recession. Such events may
21 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only also result in a loss of business confidence or have other consequences that could adversely affect our business, results of operations and financial condition. Any of such events could lower confidence in India, as well. The occurrence of any of the foregoing could therefore adversely affect our financial performance or the market price of the Equity Shares, even if unrelated to any of our projects.
4) An outbreak of an infectious disease or any other serious public health concerns in Asia or elsewhere could have an adverse effect on our business and results of operations.
The outbreak of an infectious disease in Asia or elsewhere or any other serious public health concerns such as AIDS could have a negative impact on the economies, financial markets and business activities in the countries in which our end markets are located, which could have an adverse effect on our business.
5) We are subject to regulatory, economic and political uncertainties in India.
In the early 1990s, India experienced significant inflation, low growth in gross domestic product and shortages of foreign currency reserves. The Indian government provided significant tax incentives and relaxed certain regulatory restrictions in order to encourage foreign investment in specified industries of the economy. There is no assurance that liberalization policies will continue. Furthermore, the rate of economic liberalization could change, and specific laws and policies affecting technology companies, foreign investment, currency exchange rates and other matters affecting investment in our Equity Shares could also change. Since 1996, the Government of India has changed six times and the current Indian government is a coalition of many parties, some of which may differ from India’s current economic policies. Various factors, including a collapse of the present coalition government due to the withdrawal of support of coalition members, could trigger significant changes in India’s economic liberalization and deregulation policies, disrupt business and economic conditions in India generally and our business in particular. Our financial performance and the market price of our shares may be adversely affected by changes in inflation, exchange rates and controls, interest rates, government of India policies, social stability or other political, economic or diplomatic developments affecting India in the future.
Risks Relating to the Issue of Securities
1) There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a shareholder’s ability to sell, or the price at which it can sell, Equity Shares at a particular point in time.
We are subject to a daily “circuit breaker” imposed by all stock exchanges in India, which does not allow transactions beyond specified increases or decreases in the price of the Equity Shares. This circuit breaker operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on Indian stock exchanges. The maximum movement allowed in the price of the Equity Shares before the circuit breaker is triggered is determined by the Stock Exchanges based on the historical volatility in the price and trading volume of the Equity Shares.
The Stock Exchanges do not inform us of the triggering point of the circuit breaker in effect from time to time, and may change it without our knowledge. This circuit breaker limits the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, no assurance may be given regarding your ability to sell your Equity Shares or the price at which you may be able to sell your Equity Shares at any particular time.
2) Our stock price may be volatile, and you may be unable to resell your shares at or above the Issue price or at all.
The market price of our Equity Shares after this Issue will be subject to significant fluctuations in response to, among other factors:
• variations in our operating results and the performance of our business; • adverse media reports about us or the real estate industry; • regulatory developments in our target markets affecting us, our clients or our competitors; • market conditions and perception specific to the real estate industry; • changes in financial estimates by securities research analysts; • loss of one or more significant clients;
22 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
• the performance of the Indian and global economy; • significant developments in India’s economic liberalization and deregulation policies and the fiscal regime; and • Volatility in the Indian and global securities markets.
Many of these factors are beyond our control. There has been recent volatility in the Indian stock markets and our share price could fluctuate significantly as a result of such volatility in the future.
3) Conditions in the Indian securities market may affect the price or liquidity of the Equity Shares.
The Indian securities markets are smaller than securities markets in more developed economies. Indian stock exchanges have in the past experienced substantial fluctuations in the prices of listed securities. Further, the Indian stock exchanges are prone to be volatile. The Indian stock exchanges have also experienced problems that have affected the market price and liquidity of the securities of Indian companies, such as temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time restricted securities from trading, limited price movements and restricted margin requirements. Further, disputes have occurred on occasion between listed companies and the Indian stock exchanges and other regulatory bodies that, in some cases, have had a negative effect on market sentiment. If similar problems occur in the future, the market price and liquidity of the Equity Shares could be adversely affected.
4) You will not receive the Equity Shares and other instruments that you subscribe for in this Issue until thirty days after the date on which this Issue closes, which will subject you to market risk.
The Equity Shares you purchase in this Issue will not be credited to your demat account with depository participants until approximately 30 days from the Issue Closing Date. You can start trading on such Equity Shares only after receipt of listing and trading approvals in respect of these shares. Since the Company’s Equity Shares are already listed on stock exchanges, you will be subject to market risk from the date you pay for the Equity Shares to the date they are listed. Further, there can be no assurance that the Equity Shares allocated to you will be credited to your demat account, or that trading in the Equity Shares will commence within the time periods specified above.
5) Any future issuance of Equity Shares by us or the issue of stock options under an employee stock option plan may dilute the investor’s shareholding or adversely affect trading price of the Equity Shares.
Any future issuance of Equity Shares by us or the issue of stock options under an employee stock option plan where the Company issues further Equity Shares could dilute the investor’s shareholding. Additionally, sales of our Equity Shares by the Promoters could also have an adverse affect on the trading price of the Equity Shares. Such events could also impact our ability to raise capital through an offering of our securities. In addition, any perception by investors that such issuances or sales might occur could also affect the trading price of the Equity Shares.
Notes to Risk Factors:
1. The net worth of the Company on a consolidated basis before the Issue (as on September 30, 2007) was Rs. 1,784 million.
2. The book value per equity share on a consolidated basis as on September 30, 2007 was Rs. 7.90 per Equity Share.
3. The Company has entered into certain related party transactions as disclosed in the section titled “Auditor’s Report – Related Party Disclosures” on page [●] of this Draft Letter of Offer.
4. For details of transactions in Equity Shares of the Company by the Promoter group and Directors of Company in the six months preceding the date of this Draft Letter of Offer, please refer to pages [•] and [•] respectively of this Draft Letter of Offer.
5. For details of interests of the Company’s Directors and key managerial personnel, please refer to the section titled “Management” on page [•] of this Draft Letter of Offer. For details of the interests of the
23 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Promoter and promoter group, please refer to the section titled “Promoter and Promoter Group” on page [•] of this Draft Letter of Offer.
6. Investors may contact the Lead Manager with any complaints, or for information or clarifications pertaining to the Issue. The Lead Manager is obliged to provide a response to investors.
7. Before making an investment decision in respect of this Issue, Investors are advised to review the entire Draft Letter of Offer, and refer to the section titled “Basis for Issue Price” on page [●] of this Draft Letter of Offer.
8. Please refer to the section titled “Basis of Allotment” on page [•] of this Draft Letter of Offer for details of the basis of allotment.
9. Average cost of acquisition per Equity Share for the Promoter is Rs. 17.40
The Company and the Lead Manager are obliged to keep this Draft Letter of Offer updated and inform investors in India of any material developments until the listing and trading of the Equity Shares offered under the Issue commences.
24 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
THE ISSUE
Equity Shares to be issued by the Company [●] Equity Shares on rights basis Rights Entitlement for Equity Shares In the ratio of [●] Equity Share for every [●] Equity Shares held on the Record Date Record Date [●] Issue Price per Equity Share Rs. [●] Equity Shares outstanding prior to the 225,844,076 Equity Shares Issue Equity Shares outstanding after the issue [●] Equity Shares Terms of the Issue For more information, see the section titled “Terms of Present Issue” beginning on page [●] of this Draft Letter of Offer. Terms of Payment For more information, see the section titled “Terms of Present Issue” beginning on page [●] of this Draft Letter of Offer.
25 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
SUMMARY FINANCIAL AND OPERATIONAL INFORMATION
The following tables set forth our selected historical financial information derived from our non-consolidated restated financial statements for the fiscal years ended March 31, 2003, 2004, 2005, 2006 and 2007, and for the six month ended September 30, 2006 and 2007 all prepared in accordance with Indian GAAP, the Companies Act and SEBI DIP Guidelines and restated as described in the Report of the Auditor on Financial Information of [●] included in the section titled “Auditor’s Report” on page [•] of this Draft Letter of Offer, and this table should be read in conjunction with the financial statements mentioned therein and the notes thereto.
Restated Summary Statement of Assets and Liabilities
Rupees in Million As At 30-Sep-07 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03
A Fixed Assets Gross Block 2,612.24 2,436.49 1,592.11 1,798.81 1,698.26 1,490.21 Less: Depreciation (1,033.74) (955.21) (863.87) (791.23) (689.74) (611.98) Net Block 1,578.50 1,481.28 728.24 1,007.58 1,008.52 878.23 Capital Work in Progress 773.29 398.14 70.59 6.56 31.50 0.06 Net Block 2,351.78 1,879.41 798.84 1,014.13 1,040.02 878.29
B Investments 753.91 717.91 500.13 - - 40.00
C Current Assets, Loans and Advances
Inventories 1,087.26 1,172.27 878.87 738.08 491.74 373.35 Sundry Debtors 174.50 97.97 65.19 51.79 132.47 218.58 Cash and Bank Balances 203.93 217.29 137.31 89.67 139.62 71.45 Other Current Assets - - - - - 0.15 Loans and Advances 558.79 456.36 128.31 151.55 82.82 85.42 2,024.48 1,943.89 1,209.68 1,031.09 846.65 748.95
D Liabilities and Provisions
Loan Funds Secured Loans 369.89 478.65 48.74 41.34 192.17 178.50 Unsecured Loans 820.00 650.00 - 20.00 50.00 - Current Liabilities 2,180.61 2,141.69 1,554.91 1,329.79 1,103.67 808.94
Provisions 70.46 82.13 29.08 23.03 (47.17) 89.34 3,440.96 3,352.46 1,632.73 1,414.16 1,298.67 1,076.78
E Deferred Tax Liability / (Asset) (Net) 80.90 79.70 66.30 79.40 76.00 46.50
F Net Worth (A + B + C - D - E) 1,608.31 1,109.05 809.62 551.66 512.00 543.96
Net Worth Represented by:
G Share Capital 225.84 225.84 225.84 226.42 227.45 230.56
H Reserves and Surplus
26 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
As At 30-Sep-07 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 General Reserve 419.27 383.27 251.07 177.41 137.87 174.37 Capital Investment Subsidy Reserve 1.50 1.50 1.50 1.50 1.50 1.50 Capital Redemption Reserve 13.47 13.47 13.47 12.90 11.87 8.75 Profit and Loss Account 948.23 484.97 317.74 133.43 133.31 128.78 1,382.47 883.21 583.78 325.24 284.55 313.40
I Net Worth (G + H) 1,608.31 1,109.05 809.62 551.66 512.00 543.96
Restated Summary Statement of Profit or Loss
Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07 Income Gross Sales: Of Products Manufactured by the 4,543.43 7,771.06 6,674.54 5,763.93 4,817.25 4,316.03 Company Of Goods Traded by the Company 96.90 195.50 244.70 270.70 648.60 954.90 4,640.33 7,966.56 6,919.24 6,034.63 5,465.85 5,270.93 Less: Excise Duty 179.25 381.40 346.05 407.90 570.10 570.07 Net Sales 4,461.08 7,585.16 6,573.19 5,626.73 4,895.75 4,700.86
Processing Charges - - - - 20.15 59.32 Other Income 32.19 53.04 86.65 64.11 11.23 14.17 Increase / (Decrease) in Inventory (147.92) 242.22 124.46 148.00 89.41 27.56
Total Income (A) 4,345.35 7,880.42 6,784.30 5,838.84 5,016.54 4,801.91
Expenditure Materials Consumed and Purchase of 2,107.73 3,924.24 3,160.57 2,932.37 2,441.55 2,258.25 Goods Other Manufacturing Expenses 67.75 181.30 157.21 121.29 244.25 251.93 Power and Fuel 114.16 239.38 209.89 164.35 114.60 111.56 Salaries, Wages and Benefits 263.84 404.97 431.54 329.01 255.59 255.01 Administrative Expenses & Other 270.99 446.35 369.19 328.45 312.74 286.89 Expenses Selling and Distribution Expenses 601.52 1,156.78 994.94 894.62 763.66 820.62 Depreciation and Amortisation 79.81 124.95 107.84 106.59 93.95 89.87 Interest and Financial Charges 47.12 58.44 40.40 24.60 24.27 27.06
Total Expenditure (B) 3,552.92 6,536.41 5,471.58 4,901.28 4,250.61 4,101.19
Net Profit Before Tax and Extraordinary 792.43 1,344.01 1,312.72 937.56 765.93 700.72 Item (A - B)
Provision for Taxation Current Tax 89.00 150.80 109.80 73.50 88.00 139.37 Deferred Tax 1.20 13.40 (13.10) 3.40 29.50 20.60 Fringe Benefits Tax 4.80 7.60 9.00 - - - 95.00 171.80 105.70 76.90 117.50 159.97
Net Profit Before Extra-ordinary Items 697.43 1,172.21 1,207.02 860.66 648.43 540.75
Extraordinary Items (Net of Taxes) - 101.30 - - - -
Adjusted Profit for the Year 697.43 1,273.51 1,207.02 860.66 648.43 540.75
Balance Brought Forward 484.97 317.74 133.43 133.31 128.78 120.81
Amount available for Appropriation 1,182.40 1,591.25 1,340.45 993.97 777.21 661.56
27 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07
Appropriations: Transfer to General Reserve 36.00 132.20 121.40 90.00 65.00 54.50 Proposed Dividend - - - - - 115.07 Interim Dividend 169.38 846.92 790.45 679.34 513.15 348.47 Tax on Distributed Profits 28.79 127.16 110.86 91.20 65.75 14.74 Balance Carried to Balance sheet 948.23 484.97 317.74 133.43 133.31 128.78
Restated Summary Statement of Cash Flows
Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07 CASH FLOW FROM A. OPERATING ACTIVITIES: Net Profit Before Tax as per Audited 792.43 1,344.02 1,312.72 937.56 765.93 700.57 Accounts
Adjustments affecting Cash Flow Prior Period Tax Adjustments - (48.07) (5.03) (35.26) - 5.03 Prior Period Items - - - - (0.15) 2.97
Adjusted Net Profit before Tax 792.43 1,295.95 1,307.69 902.30 765.78 708.57 (Restated)
Adjustments for: Depreciation 79.81 124.95 107.84 106.59 93.95 89.87 Prior Period Items - - - - 0.15 (2.97) (Profit) / Loss on Sale of Fixed 0.13 1.49 (14.64) 2.44 1.18 1.27 Assets (Profit) / Loss on Sale of (1.21) (2.27) (3.87) (0.07) (2.69) (2.26) Investments Interest Expense 54.55 75.85 44.43 30.98 25.63 30.86 Interest Income (7.43) (17.42) (4.03) (6.39) (1.36) (3.79) Dividend Income - - (0.27) (2.48) (0.51) - Foreign Exchange (Gain) / Loss 9.06 7.91 (6.18) 12.84 (11.84) 2.59 Loss on Fixed Asset Discarded - - - - 4.19 - Writeoff of Bad Debts 0.01 0.06 0.22 0.49 11.22 2.52 Provision for Doubtful Debts 0.06 (0.89) (0.85) (4.57) (10.08) - and Advances Written off Old Balances - (3.44) (6.23) (21.88) (4.90) (3.14) Others (0.97) 1.88 0.10 2.30 2.45 (0.42) Discount on Prepayment of - - (0.33) (31.61) - - Deferred Sales Tax Loan 134.01 188.10 116.18 88.65 107 114.54
Operating Profit Before Working 926 1,484 1,424 991 873 823 Capital Changes
Adjustments for: Inventories 85.00 (293.40) (140.79) (246.34) (118.39) (66.99) Trade and Other Receivables (189.19) (298.21) 10.47 53.90 88.03 41.10
28 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07 Trade Payables 316.23 311.87 298.86 128.25 101.44 57.06 212 (279.74) 168.54 (64.19) 71.08 31.17
Cash Generated from / (used in) 1,138.48 1,204.31 1,592.41 926.76 944.27 854.28 Operations
Adjustment for: Income Tax (Paid) / Refunds (76.11) (128.15) (117.41) (29.28) (101.18) (142.05) Received
Net Cash Flow from Operating 1,062.37 1,076.16 1,475.00 897.48 843.09 712.23 Activities
CASH FLOW FROM B. INVESTING ACTIVITIES: Purchase of Fixed Assets (518.15) (985.07) (165.73) (83.69) (259.60) (35.98) Sale of Fixed Assets 0.68 7.19 218.85 3.29 3.32 3.66 Dividend Received - - 0.27 2.48 0.51 - Sale Proceeds of "Snuggy" - 150.00 - - - - Trademark Maturity of Intercorporate - - - - - 50.00 Deposit Interest Received 1.07 6.39 4.03 0.88 1.36 3.79 Purchase of Investments (1,503.50) (2,737.80) (3,651.41) (2,732.51) (2,131.68) (945.50) Sale of Investments 1,468.71 2,522.30 3,155.15 2,732.58 2,174.36 932.33
Net Cash Generated from / (Used in) (551.19) (1,036.99) (438.84) (76.97) (211.73) 8.30 Investing Activities
CASH FLOW FROM C. FINANCING ACTIVITIES: Buyback of Equity Share - - (47.74) (48.50) (97.72) (130.71) Capital Proceeds from Borrowings 1,308.54 1,919.91 909.37 684.64 438.87 958.71 Repayments of Borrowings (1,255.67) (887.87) (948.83) (806.52) (398.87) (966.57) Cash Credits (Net) 7.47 47.28 27.53 (27.96) 25.35 (38.58) Dividend Paid (448.13) (842.33) (779.76) (568.80) (447.10) (548.58) Dividend Tax Paid (76.76) (118.78) (110.96) (73.36) (58.64) - Interest Paid (59.99) (77.40) (38.13) (29.96) (25.08) (30.77)
Net Cash Generated from / (used in) (524.54) 40.81 (988.52) (870.46) (563.19) (756.50) Financing Activities
NET INCREASE / (DECREASE) IN (13.36) 79.98 47.64 (49.95) 68.17 (35.97) CASH AND CASH EQUIVALENTS:
CASH AND CASH EQUIVALENTS AS AT THE BEGINNING Cash and Bank Balances 217.29 137.31 89.67 139.62 71.45 107.42
CASH AND CASH EQUIVALENTS AS AT THE ENDING
29 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07 Cash and Bank Balances 203.88 217.24 137.26 89.76 139.71 71.49 Unrealised Foreign Exchange
Restatement in Cash and Cash Equivalents 0.06 0.06 0.05 (0.09) (0.09) (0.04) Cash and Bank Balances 203.93 217.29 137.31 89.67 139.62 71.45 NET INCREASE / (DECREASE) IN (13.36) 79.98 47.64 (49.95) 68.17 (35.97) CASH AND CASH EQUIVALENTS:
30 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
GENERAL INFORMATION
Dear Equity Shareholder(s),
Pursuant to the resolutions passed by the Board of Directors of the Company at its meeting held on November 23, 2007, it has been decided to make the following offer to the Equity Shareholders of the Company, with a right to renounce:
ISSUE OF [•] EQUITY SHARES OF RE. 1 EACH AT A PREMIUM OF RS. [•] PER EQUITY SHARE AGGREGATING TO AN AMOUNT NOT EXCEEDING RS. 4,000 MILLION TO THE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF [•] EQUITY SHARE FOR EVERY [•] EQUITY SHARES HELD ON THE RECORD DATE I.E. [•] (“ISSUE”). THE ISSUE PRICE IS [•] TIMES OF THE FACE VALUE OF THE EQUITY SHARE.
Registered Office of the Company Godrej Consumer Products Limited, Pirojshahnagar, Eastern Express Highway, Vikhroli, Mumbai 400079, Maharashtra. Registration No. 129806 Corporate Identification No: L24246MH2000PLC129806
We are registered with the Registrar of Companies, State of Maharashtra, located at Everest House, Marine Lines, Mumbai 400 020
The Equity Shares of the Company are listed on the BSE and the NSE.
Board of Directors
Name Category/Designation Mr. Adi Godrej Chairman and Managing Director Mr. Jamshyd Godrej Non Executive Director Mr. Nadir Godrej Non Executive Director Mr. Bala Balachandran Independent Director Ms. Rama Bijapurkar Independent Director Mr. Bharat Doshi Independent Director Mr. Aman Mehta Independent Director Mr. Hoshedar Press Executive Director and President
For further details of the Company’s Directors, see “Management’ on page [•] of this Draft Letter of Offer.
Company Secretary and Compliance Officer
Mr. Sunil S. Sapre Godrej Consumer Products Ltd., Pirojshahnagar, Eastern Express Highway, Vikhroli, Mumbai 400079, Maharashtra. Tel. : (91 22) 2518 8010 Fax : (91 22) 2518 8040 Email: [email protected]
Investors may contact the Compliance Officer for any pre-Issue / post-Issue related matters.
Lead Manager to the Issue
JM Financial Consultants Private Limited, 141, Maker Chamber III Nariman Point
31 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Mumbai 400 021 Tel: (91 22) 6630 3030 Fax: (91 22) 2204 7185 Email: [email protected] Website: www.jmfinancial.in Investor Grievance Email: [email protected] Contact Person: Ms. Poonam Karande SEBI Registration No: INM000010361
Co-Manager to the Issue
Centrum Capital Limited 59, Krishna Chambers, Sir Vithaldas Thackersey Marg, New Marine Lines, Mumbai 400 020 Tel: (91 22) 4030 0500 Fax: (91 22) 4030 0510 Website:www.centrum.co.in Investor Grievance Email: [email protected] Contact Person: Mr. Yogesh Chande SEBI Registration No: INM000010445
The statement of inter se allocation of responsibilities for this Issue is as follows
No. Activities Responsibility Coordinator
1. Capital structuring with the relative components and formalities such JM Financial JM Financial as composition of debt and equity type of instruments.
2. Drafting of offer document and of advertisement/publicity material JM Financial JM Financial including newspaper advertisements and brochure/memorandum containing salient features of the offer document.
The designated Lead Manager shall ensure compliance with SEBI DIP Guidelines and other stipulated requirements and completion of prescribed formalities with the Stock Exchanges and 3. Selection of various agencies connected with the Issue, namely JM Financial JM Financial Registrars to the Issue, printers and advertisement agencies.
4. Retail, Non-Institutional and Institutional marketing strategy which JM Financial JM Financial will cover inter-alia, preparation of publicity budget, arrangement for selection of (i) ad-media, (ii) centres of holding conferences of brokers, investors etc., (iii) bankers to the issue, (iv) collection centres, (v) distribution of publicity and Issue materials including application form and letter of offer.
5. Follow up with Bankers to the Issue to get quick estimates of JM Financial JM Financial collection and advising the Issuer about closure of the Issue based on the correct figures.
6. The post issue activities will involve essential follow up steps which JM Financial JM Financial must include finalization of basis of allotment/weeding out of multiple applications, listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the activities such as Registrars to the Issue, Bankers to the Issue. Whilst, many of the post issue activities will be handled by other intermediaries, the designated Lead Manager shall be responsible for ensuring that these agencies fulfill their functions and enable them to discharge this responsibility through suitable agreements with the Issuer Company.
32 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Legal Advisor for the Issue
Amarchand & Mangaldas & Suresh A. Shroff & Co. Peninsula Chambers Peninsula Corporate Park Ganpatrao Kadam Marg Lower Parel Mumbai 400 013 Tel: (91 22) 6660 4455 Fax: (91 22) 2496 3666
Auditors of the Company
M/s. Kalyaniwalla & Mistry
Kalpataru Heritage, 5th Floor, 127, M. G. Road, Fort, Mumbai 400 001 Tel: (91 22) 2267 7640 Fax: (91 22) 2267 3964 Website: www.km.co.in
Registrar to the Issue
Intime Spectrum Registry Limited C 13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (West), Mumbai 400 078 Tel: (91 22) 2596 0320 Fax: (91 22) 2596 0329 Email: [email protected] Website: www.intimespectrum.com Contact Person: Ms Awani Thakkar SEBI Registration No: INR000003761
Note: Investors are advised to contact the Registrar to the Issue/Compliance Officer of our company in case of any pre-issue/post issue related problems such as non-receipt of Draft Letter of Offer/abridged letter of offer/composite application form/allotment advice/share certificate(s)/refund orders.
Bankers to the Issue:
HDFC Bank Limited ABN AMRO Bank N.V. Process House, 2nd Floor 14, Veer Nariman Road, Kamala Mills Compound Mumbai – 400 023 Senapati Bapat Marg Tel: (91 22) 66585858 Lower Parel, Mumbai 400 013 Fax: (91 22) 22042673 Tel: (91 22) 24961616 Website: www.abnamro.co.in Fax: (91 22) 24963994 Website: www.hdfcbank.com
33 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Bankers to the Company
Central Bank of India State Bank of India M.G Road , 1st floor State Bank Bhavan , Madame Cama Road Fort Mumbai – 400 023 Mumbai – 400 021 Tel: (91 22) 22700946-48 Tel: (91 22) 2883018 Fax: (91 22) 22650686 Fax: (91 22) 22884133 Website: www.centralbankofindia.co.in Website: www.statebankofindia.co.in
Citibank N.A HDFC Bank Limited Citigroup Center Process House, 2nd Floor Bandra Kurla Complex Kamala Mills Compound Bandra (E), Mumbai 400 051 Senapati Bapat Marg Tel: (91 22) 40015757 Lower Parel, Mumbai 400 013 Fax: (91 22) 40065847 Tel: (91 22) 24961616 Website: www.citibank.co.in Fax: (91 22) 24963994 Website: www.hdfcbank.com
The Hongkong & Shanghai Banking Corporation Limited 52/60 Mahatma Gandhi Road Mumbai 400 001 Tel: (91 22) 22674921 Fax: (91 22) 22658309 Website:www.hsbc.co.in
Credit Rating
This being an issue of Equity Shares, no credit rating is required.
34 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
CAPITAL STRUCTURE
Aggregate nominal Aggregate value at value Issue Price (in Rs. Million) (in Rs. Million) Authorized share capital 290,000,000 Equity Shares of Re.1 each 290.00 10,000,000Preference Shares of Re. 1 each 10.00 Issued, Subscribed and Paid up capital 225,844,076 Equity Shares of Re.1 each 225.84
Present Issue being offered to the Equity Shareholders through the Letter of Offer Equity Shares of Re 1 each at a premium of Rs. [●] i.e. [●] [●] [●] at a price of Rs. [●] each
Paid up capital after the Issue After allotment of Equity Shares under the Issue [●] Equity Shares of Re. 1 each [●] Securities premium Account Existing securities premium account prior to the Issue NIL
Securities premium account after the Issue [●]
Notes to Capital Structure
1. Build up of Equity Share Capital
Financial No. of equity Face Issue Cumulative Consideration Reasons for Year/Date of shares Value Price paid-up Allotment Allotment Allotted (Rs.) (Rs.) capital (Rs.) December 6, 70 10 10 700 Cash Issued to subscribers 2000 to Memorandum of Association
March 13, 175 4 - 700 NA Sub-division of the 2001 equity shares from a face value of Re.10 to Rs. 4 each May 3, 2001 59,828,780 4 4 239,315,820 NA Issued pursuant to scheme of demerger with Godrej Soaps Limited 2002 (716,457) 4 236,449,992 NA Buyback from open market pursuant to Section 77A of the Companies Act-on various dates 2003 (1,471,792) 4 230,562,824 NA Buyback from open market pursuant to Section 77A- of the
35 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Financial No. of equity Face Issue Cumulative Consideration Reasons for Year/Date of shares Value Price paid-up Allotment Allotment Allotted (Rs.) (Rs.) capital (Rs.) Companies Act on various dates 2004 (778,353) 4 227,449,412 NA Buyback from open market pursuant to Section 77A of the Companies Act on various dates 2005 (257,886) 4 226,417,868 NA Buyback from open market pusruant to Section 77A of the Companies Act on various dates 2006 (143,448) 4 225,844,076 NA Buyback from open market pusruant to Section 77A of the Companies Act on various dates September 1, 225,844,076 1 - 225,844,076 NA Sub-division of the 2006 equity shares from a face value of Rs. 4 to Re. 1
2. Build up of share capital of the Promoters
Adi Godrej
Date of No. of shares Face Cost of Total Consideration Reasons for acquisition acquired/(sold) Value acquisition Cost allotment/acquisition (Rs.) (Rs.) (Rs.) November 10 10 10 100 Cash As subscriber to MoA 29, 2000 March 13, 25 4 - - - On subdivision of shares 2001 from face value Rs.10 to face value Rs. 4 April 1, 100 4 - 16 - On demerger of the 2001 consumer products division of Godrej Soaps Limited into GCPL September 500 1 - - - On subdivision of shares 1, 2006 from face value Rs.4 to face value Re. 1 Total 500 116
Nadir Godrej
Date of No. of shares Face Cost of Total Cost Consideration Reasons for acquisition acquired/(sold) Value acquisition (Rs.) allotment/acquisition (Rs.) (Rs.) November 10 10 10 100 Cash As subscriber to MoA 29, 2000 March 13, 25 4 - - - On subdivision of 2001 shares from face value Rs.10 to face value Rs. 4
36 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Date of No. of shares Face Cost of Total Cost Consideration Reasons for acquisition acquired/(sold) Value acquisition (Rs.) allotment/acquisition (Rs.) (Rs.) April 1, 223,030 4 - 1,742,448 - On demerger of the 2001 consumer products division of Godrej Soaps Limited into GCPL August 16, 192,300 4 51.9 9,981,331 Cash Purchase 2001 September 1,661,420 1 - - - On subdivision of 1, 2006 shares from face value Rs.4 to face value Re. 1 November 450,000 1 162.18 72,979,100 Cash Purchase 13, 2006 December 140,000 1 149.9 20,985,894 Cash Purchase 28, 2006 Total 2,251,420 105,688,873
Mr. Rishad K Naoroji
Date of No. of shares Face Cost of Total Cost Consideration Reasons for acquisition acquired/(sold) Value acquisition (Rs.) allotment/acquisition (Rs.) (Rs.) April 1, 430,482 4 - 3,616,327 - On demerger of the 2001 consumer products division of Godrej Soaps Limited into GCPL August 16, 192,300 4 51.85 9,971,236 Cash Purchase 2001 March 20, 433,340 4 60 26,000,400 Cash Purchase 2002 2001-02 50 4 - - - Received. from estate of Late Mr. S P Godrej February 22,219 4 590.24 13,114,524 Cash Purchase 24, 2006 February 37,262 4 - - - Gift received 23, 2006 February 71,219 4 - - - Gift received 23, 2006 September 4,747,488 1 11.1 52,702,487 - On subdivision from 1, 2006 face value Rs.4 to Re. 1 December 450,000 1 162.18 72,979,100 Cash Purchase 13, 2006 December 140,000 1 149.9 20,985,894 Cash Purchase 28, 2006 Total 5,337,488 146,667,481
37 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
VM Crishna
Date of No. of shares Face Cost of Total Cost Consideration Reasons for acquisition acquired/(sold) Value acquisition (Rs.) allotment/acquisition (Rs.) (Rs.) April 1, 75,000 4 - 671,346 Cash On demerger of the 2001 consumer products division of Godrej Soaps Limited into GCPL August 16, 58,500 4 51.3 3,001,196 Cash Purchase 2001 September 534,000 1 - 3,672,542 - On subdivision from 1, 2006 face value Rs.4 to Re. 1 November 225,000 1 162.18 36,489,549 Cash Purchase 13, 2006 Total 759,000 40,162,091
Godrej & Boyce Mfg. Co. Ltd.
Date of No. of shares Face Cost of Total Cost Consideration Reasons for acquisition acquired/(sold) Value acquisition (Rs.) allotment/acquisition (Rs.) (Rs.) April 1, 40,116,502 4 23,812,032 On demerger of the 2001 consumer products division of Godrej Soaps Limited into GCPL August 24, (969,450) 4 0.59 (571,976) Cash Sale 2001 March 20, (2,168,360) 4 0.59 (1,279,332) Cash Sale 2002 July 26, (2,279,141) 4 0.59 (1,344,693) Cash Sale 2002 July 25, (2,200,000) 4 0.59 (1,298,000) Cash Sale 2002 November (1,823,703) 4 0.59 (1,075,985) Cash Sale 20, 2002 January 30, (600,000) 4 0.59 (354,000) Cash Sale 2003 March 31, 191,674 4 63.75 12,219,218 Cash Shares transferred 2003 from Godrej Capital Limited on its merger with G&B August 21, (2,700,000) 4 0.59 (1,593,000) Cash Sale 2003 November (2,225,000) 4 63.75 (141,843,750) Cash Sale 2, 2004 May 12, (100,000) 4 63.75 (6,375,000) Cash Sale 2005 September 100,970,088 1 - 1,609,210,778 - On subdivision from 1, 2006 face value Rs.4 to Re. 1 Total 100,970,088 1,609,210,778
3. None of the shares have been issued at a premium in the past. The Securities Premium Account is NIL as on date of filing the DLOF.
38 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
4. The Promoters have confirmed that that they intend to subscribe to the full extent of their entitlement in the Issue. The Promoters reserve the right to subscribe to the full extent of their entitlement in this Issue, either by themselves or in combination of entities controlled by them, including by subscribing for renunciation, if any, made by the promoter group or any other shareholder. The Promoters have provided an undertaking dated December 21, 2007 to apply for additional equity shares in the Issue, to the extent of the unsubscribed portion of the Issue. As a result of this subscription and consequent allotment, the Promoters may acquire shares over and above their entitlement in this Issue, which may result in an increase of the shareholding being above the current shareholding with the entitlement of Equity Shares under the Issue. This subscription and acquisition of additional Equity Shares by the Promoters through the Issue, if any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section on “Objects of the Issue” of the Draft Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of allotments to the Promoters, in this Issue, the Promoter’s shareholding in the Company exceeds their current shareholding. The Promoters shall subscribe to such unsubscribed portion as per the relevant provisions of the law. Allotment to the Promoters of any unsubscribed portion, over and above their entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements.
The Company hereby certifies that, in case the Rights Issue of the Company is completed with the Promoters subscribing to equity shares over and above their entitlement, the public shareholding in the Company after the Rights Issue will not fall below the minimum level of pubic shareholding of 10% as specified in the listing condition or listing agreement.
5. If the Company does not receive minimum subscription of 90% of the Issue on the date of closure of the Issue or the subscription level falls below 90% after the closure of the Issue on account of cheques having being returned unpaid or withdrawal of applications, the Company shall forthwith refund the entire subscription amount received. If there is a delay beyond eight days after the date from which the Company becomes liable to pay the amount, the Company shall pay interest as prescribed under Section 73 of the Companies Act, 1956.
6. Details of the shareholding of the Promoter, Promoter Group and the directors of the Promoter as on December 17, 2007
Name of entities No. of Shares % of Pre-Issue share capital Promoter: Godrej & Boyce Mfg. Co. Limited. 100,970,088 44.7 Mr. A.B. Godrej 500 0.00 Mr. N.B. Godrej 2,251,420 0.99 Mr. V.M. Crishna 759,000 0.34 Mr. R.K. Naoroji 5,337,488 2.36 Promoter Group: Godrej Industries Limited. 23,136,108 10.24 Godrej Investments Private Limited. 2,360,000 1.05 Ms. Parmeshwar .A. Godrej 340,004 0.15 Ms. Nisa .A.Godrej 1,665,799 0.74 Mr. Pirojsha .A.Godrej 1,665,811 0.74 Ms. Tanya .A.Dubhash 1,665,790 0.74 Ms. Pheroza .J.Godrej 1,240,004 0.55 Ms Raika. J.Godrej 2,048,736 0.90 Mr. Navroze .J.Godrej 2,048,736 0.90 Master Burjis .N Godrej 1,028,724 0.45 Master Sohrab .N.Godrej 1,028,728 0.45
39 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Name of entities No. of Shares % of Pre-Issue share capital Master Hormuzd N Godrej 1,028,728 0.45 Ms. Smita .V.Crishna 759,000 0.33 Ms Freyan.V.Crishna 1,909,744 0.85 Ms Nyrika.V.Crishna 1,909,740 0.85 Directors of Promoters: Dr. K. A. Palia 4,200 0.00 Mr. P. D. Lam 13,200 0.00
7. Our Directors, Promoters, Promoter Group and directors of our Promoters have not purchased or sold any Equity Shares, directly or indirectly, during the period of six months preceding the date on which this Draft Letter of Offer is filed with SEBI.
8. Top Ten Shareholders
(a) Top ten shareholders as of December 21, 2007
Name Shares Percentage of pre issue capital (%) Godrej Boyce Manufacturing Co Ltd 100,970,088 44.71 Aberdeen Asset Managers Limited A/C 12,485,520 5.53 Aberdeen International India Opportunities Fund (Mauritius) Limited Godrej Industries Limited 23,136,108 10.24 Fid Funds (Mauritius) Limited 8,298,061 3.67 Rishad Kaikhushru Naoroji 5,337,488 2.36 First State Investments (Hongkong) Limited 4,372,185 1.94 a/c First State Asian Equity Plus Fund Arisaig Partners (Asia) Pte Ltd a/c Arisaig 4,083,647 1.81 India Fund Ltd HSBC Financial Services (Middle East) 3,000,000 1.33 Limited Godrej Investments Pvt. Ltd 2,360,000 1.04 Aberdeen Asset Managers Limited a/c 2,216,000 0.98 Aberdeen Global- Asian Smaller Companies Fund Total: 166,259,097 73.62
(b) Top ten shareholders as of December 14, 2007
Name of the shareholders Total Shares Percentage of pre issue capital (%) Godrej and Boyce Manufacturing Companu 100,970,088 44.71 Limited Aberdeen Asset Managers Ltd A/c Aberdeen 12,485,520 5.53 International India Opportunities Fund (Mauritius) Ltd.
Godrej Industries Ltd. 23,136,108 10.24 FID Funds (Mauritius) Ltd. 8,298,061 3.67 Rishad Kaikhushru Naoroji 5,337,488 2.36 First State Investments (Hongkong) Ltd. A/c 4,372,185 1.94 First State Asian Equity Plus Fund Arisaig Partners (Asia) Pte Ltd. A/c Arisaig 4,083,647 1.81 India Fund Ltd.
40 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Name of the shareholders Total Shares Percentage of pre issue capital (%) HSBC Financial Services (Middle East) Ltd. 3,000,000 1.33 Godrej Investments Pvt. Ltd. 2,360,000 1.04 Aberdeen Asset Managers Ltd. A/c 2,216,000 0.98 Aberdeenglobal – Asian Smaller Companies Fund. TOTAL 166,259,097 73.62
(c) Top ten shareholders as of two years prior to the date of filing this Draft Letter of Offer (December 14, 2005)
Name of the shareholders Total equity Percentage of pre shares of Rs. issue capital (%) 4 Godrej & Boyce Manufacturing Company 2,5242,522 44.71 Limited 7,324,027 12.97 Godrej Industries Limited
Aberdeen Asset Managers Limited A/C 2,854,700 5.06 Aberdeen International India Opportunities Fund (Mauritius) Limited 1,056,172 1.87 Mr. Rishad K. Naoroji The Royal Bank Of Scotland Plc as 900,565 1.60 Depository of First State Asia Pacific Fund a Sub Fund Of First State Investments ICVC 747,415 1.32 Mr. Nadir B Godrej
Arisaig Partners (Asia) Pte Ltd A/C Arisaig 695,011 1.23 India Fund Ltd 588,295 1.04 Mr. Navroze J. Godrej
First State Investments (Hongkong) Limited 577,452 1.02 A/C First State Asian Equity Plus Fund 561,720 0.99 Ms. Nyrika V. Crishna
Aberdeen Asset Managers Limited A/C 554,000 0.98 Aberdeen International Fund Plc Asian Smaller Companies Fund TOTAL 41,101,879 72.80
The Company has not made any public offering of its Equity Shares in the two years immediately preceding the date of filing this Draft Letter of Offer.
9. Shareholding Pattern of the Company as on Decemeber 20, 2007
Category Category of Number of Total Number of Total shareholding as a code shareholder shareholders number of shares held in percentage of total shares dematerialized number of shares form As a As a percentage percentage of (A+B)1 of (A+B+C) (A) Shareholding of Promoter and Promoter
41 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Category Category of Number of Total Number of Total shareholding as a code shareholder shareholders number of shares held in percentage of total shares dematerialized number of shares form As a As a percentage percentage of (A+B)1 of (A+B+C) Group2
(1) Indian (a) Individuals/ 16 26,687,952 26,687,332 11.82 11.82 Hindu Undivided Family (b) Central 0 0 0 0.00 0.00 Government/ State Government(s) (c) Bodies 3 126,466,196 126,466,196 56.00 56.00 Corporate (d) Financial 0 0 0 0.00 0.00 Institutions/ Banks (e) Any Other 0 0 0 0.00 0.00 (specify) Sub-Total 19 153,154,148 153,153,528 67.81 67.81 (A)(1) (2) Foreign (a) Individuals 0 0 0 0.00 0.00 (Non-Resident Individuals/ Foreign Individuals) (b) Bodies 0 0 0 0.00 0.00 Corporate (c) Institutions 0 0 0 0.00 0.00 (d) Any Other 0 0 0 0.00 0.00 (specify) Sub-Total 0 0 0 0.00 0.00 (A)(2) Total 19 153,154,148 153,153,528 67.81 67.81 Shareholding of Promoter and Promoter Group (A)= (A)(1)+(A)(2) (B) Public shareholding3 (1) Institutions (a) Mutual Funds / 24 2,312,438 2,232,586 1.02 1.02 UTI (b) Financial 15 43,432 39,652 0.02 0.02 Institutions/ Banks (c) Central 0 0 0 0.00 0.00 Government/ State Government(s) (d) Venture Capital 0 0 0 0.00 0.00 Funds (e) Insurance 2 360,020 360,020 0.16 0.16 Companies
42 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Category Category of Number of Total Number of Total shareholding as a code shareholder shareholders number of shares held in percentage of total shares dematerialized number of shares form As a As a percentage percentage of (A+B)1 of (A+B+C) (f) Foreign 57 43,275,578 43,249,178 19.16 19.16 Institutional Investors (g) Foreign Venture 0 0 0 0.00 0.00 Capital Investors (h) Any Other 0 0 0 0.00 0.00 (specify) Sub-Total 98 4,5991,468 45,881,436 20.36 20.36 (B)(1) (2) Non-institutions (a) Bodies 895 3,220,227 2,914,407 1.43 1.43 Corporate (b) Individuals - i. Individual 94,195 22,889,649 14,184,693 10.14 10.14 shareholders holding nominal share capital up to Rs. 1 lakh.
ii. Individual 2 585,384 585,384 0.26 0.26 shareholders holding nominal share capital in excess of Rs. 1 lakh. (c) Any Other 1 3,200 3,200 0.00 0.00 (OCB) Sub-Total 95,093 26,698,460 17,687,684 11.82 11.82 (B)(2) Total Public 95,191 72,689,928 63,569,120 32.19 32.19 Shareholding (B)= (B)(1)+(B)(2) TOTAL 95,210 22,584,4076 216,722,648 100.00 100.00 (A)+(B) (C) Shares held by 0 0 0 0.00 0.00 Custodians and against which Depository Receipts have been issued GRAND 95,210 225,844,076 216,722,648 100.00 100.00 TOTAL (A)+(B)+(C)
10. Total number of members of the Company as of October 31, 2007 was 92,106.
11. The present Issue being a rights Issue, as per extant SEBI DIP Guidelines, the requirement of promoters’ contribution and lock-in are not applicable as per clause 4.10.1(c) of the DIP Guidelines.
12. Our company has through a special resolution of the shareholders dated March 14, 2007 instituted the Godrej Consumer Products Limited Employee Stock Option Plan (“GCPL ESOP”). The GCPL ESOP is administered by the Compensation Committee of our Board of Directors. All questions of interpretation of the GCPL ESOP and matters relating thereto shall be determined by the Compensation Committee, whose determination shall be final and binding upon all persons having an interest in the
43 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
GCPL ESOP. For Key terms of the GCPL ESOP, please refer to page [●].
13. As of the date of the DLOF, the Company has not availed of “bridge loans” to be repaid from the proceeds of the Issue for incurring expenditure on the Objects of the Issue.
14. The Directors of the Company or Lead Manager or the Co Manager to the Issue have not entered into any buy-back, standby or similar arrangements for any of the securities being issued through this Draft Letter of Offer.
15. At any given time, there shall be only one denomination of the Equity Shares of the Company. Except as disclosed, the Equity Shareholders of the Company do not hold any warrant, option or convertible loan or debenture, which would entitle them to acquire further shares in the Company.
16. No further issue of capital by way of issue of bonus shares, preferential allotment, rights issue or public issue or in any other manner which will affect the equity capital of the Company, shall be made during the period commencing from the filing of this Draft Letter of Offer with the SEBI and the date on which the securities issued under the Letter of Offer are listed or application moneys are refunded on account of the failure of the Issue. Further, other than as disclosed in this Draft Letter of Offer, presently the Company does not have any intention to alter the equity capital structure by way of split/ consolidation of the denomination of the shares on a preferential basis or issue of bonus or rights or public issue of shares or any other securities within a period of six months from the date of opening of the Issue.
17. The securities being offered in this Issue are on a fully-paid up basis.
18. The Issue will remain open for at least 30 days. However, the Board will have the right to extend the Issue period as it may determine from time to time but not exceeding 60 days from the Issue Opening Date.
19. Our Company has not issued any shares for consideration other than cash or out of revaluation reserve. However, pursuant to the scheme of rearrangement we had allotted shares to the shareholders of Godrej Soaps Limited in lieu of the shares of Godrej Soaps Limited.
44 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
OBJECTS OF THE ISSUE
The objects of the Issue are: (a) Funding of Capital Expenditure, (b) Investment in our Joint Venture, Godrej SCA Hygiene Limited, (c) Prepayment / Repayment of certain debt, (d) Investment in our Subsidiary, Godrej Netherlands B.V, (e) Finance acquisitions & strategic initiatives and to meet general corporate purposes.
The net proceeds of the Issue, after deduction of any issue expenses, are estimated to be approximately [•].
The main objects clause of our Memorandum of Association and objects incidental to the main objects enable us to undertake our existing activities and the activities for which funds are being raised by us through this Issue.
Proceeds of the Issue The details of proceeds of the Issue are summarized in the following table: (In Rs. Million) S. No Description Amount 1. Gross proceeds of the Issue [●] 2. Issue Expenses * [●] 3. Net proceeds of the Issue [●] * To be finalized upon determination of Issue Price and at the stage of LOF
Details of the objects
We intend to utilize the net proceeds of the Issue, as set forth below: (In Rs. Million) S. Expenditure Items Total project To be funded through No cost objects of the Issue 1. Funding of Capital Expenditure 1,445 1,135 2. Investment in our Joint Venture, Godrej SCA Hygiene 205 205 Limited 3. Prepayment / Repayment of certain debt 840 840 4. Investment in our Subsidiary, Godrej Netherlands B.V 464 464 5. Finance acquisitions & strategic initiatives and to meet [•] [•] general corporate purposes Net proceeds of the Issue [•] [•]
The fund requirement and deployment of the funds are based on internal management estimates and have not been appraised by any bank or financial institution. The fund requirement mentioned is based on our current business plan for the expansion of our business. In view of the highly competitive and dynamic nature of the industry in which we operate, we may have to revise our business plan and capital expenditure requirements from time to time and consequently our fund requirement and accordingly, the utilization of proceeds from the Issue may also change. In the event of any variations in actual utilization of funds earmarked for the above activities, any increased fund deployment for a particular activity may be met from funds earmarked from any other activities and/or from our internal accruals. We may deploy / allocate funds between the projects mentioned above, should business reasons require so. The year-wise break down of the funds to be utilised from the net proceeds of the Issue is as under (In Rs. Million) Activity FY 08- 09 FY09- 10 Total Funding of Capital Expenditure 760 375 1,135 Investment in our Joint Venture, Godrej SCA Hygiene Limited 205 - 205 Prepayment / Repayment of certain debt 840 - 840 Investment in our Subsidiary, Godrej Netherlands - B.V 464 464
45 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Activity FY 08- 09 FY09- 10 Total Finance acquisitions & strategic initiatives and to - meet general corporate purposes [●] [●] Total [●] [●] [●]
As of the date of the DLOF, we have not incurred any expenditure in relation to the above stated objects. Out of the total project cost, we propose to fund the amount of Rs. 310 million from our internal accruals. We confirm that our internal accruals are sufficient to meet the fund requirement as reduced by net proceeds of the Issue as stated above. For the six months ended September 2007, GCPL cash accruals on a standalone basis were Rs. 777 million (Net profit after taxation of Rs. 697 million and depreciation of Rs. 80 million). Accordingly we confirm that we will allocate sufficient resources from our internal accruals towards funding the balance amount for the projects mentioned above. In case of a shortfall in the net proceeds from the Issue, we may explore a range of options including utilizing our internal accruals, seeking additional debt from existing and future lenders or lower the amount for prepayment of debt. We believe that such alternate arrangements would be available to fund any such shortfall. In the event of any decrease in the Issue expenses, we intend to utilise such amounts towards general corporate purposes.
Details of the Objects of the Issue
1. Funding of Capital Expenditure
We intend to set up an additional facility consisting of chemical and soap plants at Baddi/Nalagarh Industrial area, Himachal Pradesh. The total project cost of setting up these facilities is estimated at Rs. 1,445 million. The total project cost consists of the cost of land, setting up of the factory buildings and the purchase of plant and machinery. We intend to utilize Rs. 1,135 million out of the Issue proceeds and the balance amount of Rs. 310 million out of our internal accruals for setting up of these facilities. These estimates are based on initial quotations received from various parties as mentioned below.
We currently intend to make the new facility operational by March 2010. The chemical plant would require around 18-24 months for completion and the soap plant would require around 12 months for completion. Accordingly we intend to start with the chemical plant and then build the soap plant at the same location.
The break up of the project cost is as follows: (In Rs. Million) Particulars Estimated total Deployment in FY 08- Deployment in FY 09- cost 09 10 Leasehold land 285(1) 285 - Building for chemical plant 110(2) 75 35 Plant & Machinery for chemical 740(3) 400 340 plant Building for soap plant 90(2) - 90 Plant & Machinery for soap plant 220(3) - 220 Total 1,445 760 685 (1) Based on the quotation received from Sharma Property Dealer and Builders, dated December 18, 2007 (2) Based on the quotation received from M/s Kalsi Brothers dated December 18, 2007 (3) Based on the quotation received from MILINDIA Limited dated December 21, 2007
As the project is at its initial stages, we have not yet entered into any contracts or applied for any approvals that we may require in the ordinary course of constructing and operating the integrated manufacturing facilities.
The land required for setting up these facilities is approximately 30 acres. We intend to acquire the same on a long term leasehold agreement. The average rate based on a quotation from Sharma Property Dealer and Builders, dated December 18, 2007, is estimated at Rs. 9.5 million per acre. Hence the total land cost is estimated at Rs. 285 million.
The cost of the building for chemical plant (including all accessories) is estimated at Rs. 110 million. The cost of the building for soap plant (including all accessories) is estimated at Rs. 90 million. The above estimates are
46 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only based on the quotations received from M/s Kalsi Brothers dated December 18, 2007.
Detailed below are estimated costs for the plants and machineries required for setting up the chemical plant and the soap plant, based on the initial quotation as received from MILINDIA Limited dated December 21, 2007: (In Rs. Million) S. No. Description Estimated basic total cost 1 Chemical plant 740 2 Soap plant 220 TOTAL 960
For the above estimates where the equipment or machineries are yet to be ordered, we have relied upon quotations received by us and our past experience. Wherever a range of quotes have been obtained, we have indicated the lowest of such quotes. In case there is a shortfall of funds we intend to utilize our internal accruals or other funding means to bridge such shortfall. Consequently our actual procurement cost may vary from the ones indicated above.
2. Investment in our Joint Venture, Godrej SCA Hygiene Limited
We have a 50:50 joint venture, Godrej SCA Hygiene Limited, with SCA Hygiene Products AB to manufacture and market paper based absorbent hygiene products. We intend to use Rs. 205 million of the net proceeds, as a part of our capital contribution in Godrej SCA Hygiene Limited, to fund its capital expenditure. The form of capital contribution has not yet been decided.
Godrej SCA Hygiene Limited is going to build up a manufacturing facility at Sinnar in Nasik, Maharashtra to start the manufacture of paper based absorbent hygiene products. The total project cost of the proposed capital expenditure is estimated at Rs. 410 million. We will be making investments of Rs. 205 million, as our share of the capital expenditure in the joint venture.
The break up of the estimated total project cost is as follows: (In Rs. Million) Particulars Estimated total cost Land 30(1) Factory building and related infrastructure 165(2) Plant and Machinery for manufacture of baby diapers 165(3) Plant and Machinery for manufacture of feminine hygiene products 50(4) Total 410 (1) Based on the quotation received from MIDC, Nasik, dated October 31, 2007 (2) Based on the quotation received from Ms. Supriya Padhya dated December 24], 2007 (3) Based on the quotation received from Fameccanica.Data S.p.A dated August 29, 2007 (4) Based on the quotation received from SCA Hygiene Products AG dated December 21, 2007
Godrej SCA Hygiene Limited will require a plot of land measuring around 15 acres in the Sinnar industrial area at Nasik for setting up the proposed manufacturing facility. Based on quotation received from MIDC, Nasik and management estimates the applicable rate for land would be Rs. 500 per square meter. Thus, the estimated cost of land would amount to Rs. 30 Mn.
The total cost of construction of factory building and related infrastructure is estimated at Rs. 165 million, based on the initial quotation received from Ms. Supriya Padhya, Architect, Planner and Interior Designer, dated December 24, 2007. Detailed below are certain initial quotations received from vendors of plant and machinery:
Sr Name of Supplier Type of Machine Quantity Estimated basic total Date of No required cost (Rs. Million) Quotation 1. Fameccanica.Data FA-X Cathay with 1 165 August 29, S.p.A stacker RAD DUAL 2007 2. SCA Hygiene Swing SK 1 50 December 21, Products AB 2007
47 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
3. Prepayment / Repayment of certain debt
As of September 30, 2007, on a standalone basis we have secured loans outstanding of Rs. 370 million and unsecured loans outstanding of Rs. 820 million, as a part of our loan portfolio. For further details, see the section titled “Financial Indebtedness” on page [●] of the Draft Letter of Offer.
In order to enhance our net worth, to reduce leverage and allow flexibility in financial management of our operations, we intend to utilise up to Rs. 840 million of the net proceeds of the Issue towards prepayment / repayment of a portion of our debt, including any additional loans that we may take up. The loans that we propose to prepay / repay are described below:
(In Rs. Million) Sr Name of the Date of Outstanding Rate of Date of Minimum No lender Availment Amount to be Interest Maturity Notice period for Prepaid / per Prepayment Repaid * annum 1. Citibank August 30, 200 8.50% September No minimum notice N.A.(Secured 2006 1, 2009 period loan) 2. Citibank N.A. August 30, 300 8.60% September No minimum notice (Unsecured 2006, 1, 2009 period loan) September 11, 2006, October 3, 2006 3. Citibank March 20, 90 10.25% September No minimum notice N.A.(Unsecure 2007, April 1, 2009 period d loan) 04, 2007 4. ICICI Bank August 14, 250 8.25% March 10, Not Applicable (Unsecured 2007 2008 loan) * Amount outstanding as on 31 March, 2008
Secured loan from Citibank N.A.
We had taken a secured loan of Rs. 400 million on August 30, 2006 from Citibank N.A. for the purchase of “Inecto” and other trademarks in the acquisition of Rapidol (Pty) Limited. As of December 2, 2007 the loan amount outstanding was Rs. 233 million. On March 1, 2008, we are due to make a principal repayment of Rs. 33 million. We intend to prepay the balance loan outstanding as of March 31, 2008 of Rs. 200 million from the net proceeds of the Issue.
This loan is secured by a first charge over the trademarks purchased through proceeds of loan. The same was utilized for the purchase of trademarks during the acquisition of Rapidol (Pty) Limited.
Unsecured loan from Citibank N.A.
The unsecured loan of Rs. 600 million from Citibank N.A., availed of in various tranches on August 30, 2006, September 11, 2006, October 3, 2006, was used to partly fund the capital expansion programme undertaken by the Company at Malanpur, Sikkim and Baddi-Katha. As of December 2, 2007 the loan amount outstanding was Rs. 350 million. On March 1, 2008, we are due to make a principal repayment of Rs. 50 million. We intend to prepay the balance loan outstanding as of March 31, 2008 of Rs. 300 million from the proceeds of the Issue.
This loan is unsecured but is subject to a negative pledge.
Unsecured loan from Citibank N.A.
The unsecured loan of Rs. 150 million from Citibank N.A., availed of in various tranches on March 20, 2007, April 04, 2007, was used to partly fund the capital expansion programme undertaken by the Company at Malanpur, Sikkim and Baddi-Katha. As of December 2, 2007 the loan amount outstanding was Rs. 105 million.
48 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
On March 1, 2008, we are due to make a principal repayment of Rs. 15 million. We intend to prepay the balance loan outstanding as of March 31, 2008 of Rs. 90 million from the proceeds of the Issue.
This loan is unsecured but is subject to a negative pledge.
Repayment of Loan
Unsecured loan from ICICI Bank
The unsecured loan of Rs. 250 million was taken on August 14, 2007 from ICICI Bank and was utilized for general corporate purposes. The unsecured loan taken from ICICI Bank is due for repayment on March 10, 2008. We intend to repay the loan either by using our internal accruals or by taking a bridge loan. We intend to use the proceeds of the Issue, to replenish the funds used to repay the unsecured ICICI loan of Rs. 250 million.
Prepayment Penalties
Secured and Unsecured loan from Citibank N.A.
The Company has the option to repay the outstanding principal amount of the loan in full or in part, before the repayment dates, at an additional cost of 1% of the principal amount being repaid.
4. Investment in our Subsidiary, Godrej Netherlands B.V
Godrej Netherlands B.V (“Godrej Netherlands”) is our wholly owned subsidiary. In order to reduce leverage and to allow flexibility in financial management of our international operations, we will make a capital investment of Rs. 464 million into Godrej Netherlands. The form of capital contribution has not yet been decided. We intend to use Rs. 464 million out of the proceeds of the Issue for the same.
Godrej Netherlands will use these funds to prepay the outstanding debt in its books and will also make a capital investment in its wholly owned subsidiary, Godrej Consumer Products UK Limited (“Godrej UK”). Godrej UK will in turn use the funds invested by Godrej Netherlands to prepay the outstanding debt in its books. The following table explains the nature and use of the capital Investment made by the Company:
(In Rs. Million) Nature of Investment Amount of Purpose of Investment Investment Investment by the Company into Godrej 464 Prepayment of debt and investment in Netherlands B.V subsidiary, Godrej Consumer Products UK Limited Out of which further investment by Godrej 243 Prepayment of debt Netherlands B.V into Godrej Consumer Products UK Limited
Following are the key details about the target loan portfolio of the subsidiaries, in which the prepayment of debt is proposed:
Sr Name of Name Date of Amount Amount Rate of Date of Minimum No the of the Sanction / Sanctioned/Availed to be Interest Maturity Notice borrower lender Availment (In GBP Million) Prepaid period for * (In Rs. Prepayment Million)
1. Godrej ICICI October 3.0 221 LIBOR October 15 days and Netherlands Bank, 31, 2005 + 1.2 % 31, 2010 prepayment UK in integral multiples of GBP 1 Million
49 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Sr Name of Name Date of Amount Amount Rate of Date of Minimum No the of the Sanction / Sanctioned/Availed to be Interest Maturity Notice borrower lender Availment (In GBP Million) Prepaid period for * (In Rs. Prepayment Million)
2. Godrej UK ICICI October 5.5 243 LIBOR October 15 days and Bank, 31, 2005 + 1.1 % 31, 2010 prepayment UK in integral multiples of GBP 1 Million * Amount outstanding as on 31 March, 2008
The key details of the proposed loans to be prepaid are as under:
Godrej Netherlands
Godrej Netherlands had availed of a secured loan of GBP 3 million from ICICI Bank, UK on October 31, 2005 for the purpose of acquisition of Keyline Brands Limited and its subsidiaries. As of September 30, 2007, the loan balance was GBP 3 million (Rs. 241 million). On January 31, 2008, Godrej Netherlands is due to make a principal repayment of GBP 0.25 million (Rs. 20 million). Godrej Netherlands intends to prepay the balance loan outstanding as of March 31, 2008 of GBP 2.75 million (Rs. 221 million) from the capital investment made by the Company.
The said loan is secured by the following: a) charge over assets of Godrej Netherlands b) corporate guarantee from GCPL c) debenture of Inecto Manufacturing Company Limited d) deed of subordination from Godrej UK and Godrej Netherlands in favor of ICICI Bank, UK e) guarantee of Keyline Brands Limited f) charge on the assets of Keyline brands Limited g) guarantee of Inecto Manufacturing Limited h) pledge of shares in Godrej Netherlands by GCPL i) pledge of shares in Godrej UK by Godrej Netherlands
Godrej UK
Godrej UK had availed of a secured loan of GBP 5.5 million from ICICI Bank, UK on October 31, 2005 for the purpose of acquisition of Keyline Brands Limited and its subsidiaries. As of September 30, 2007, the loan balance was GBP 3.58 million (Rs. 287 million). As of October 31, 2007, the loan balance was GBP 3.3 million (Rs. 265 million). Godrej UK is due to make a principal repayment of GBP 0.28 million (Rs. 22 million) on January 31, 2008. Godrej UK intends to prepay the balance loan outstanding as of March 31, 2008 of GBP 3.03 million (Rs. 243 million) from the capital investments made by Godrej Netherlands.
The said loan is secured by the following: a) charge over assets of Godrej Netherlands b) corporate guarantee from GCPL c) debenture of Inecto Manufacturing Company Limited d) deed of subordination from Godrej UK and Godrej Netherlands in favor of ICICI Bank, UK e) guarantee of Keyline Brands Limited f) charge on the assets of Keyline brands Limited g) guarantee of Inecto Manufacturing Limited h) pledge of shares in Godrej Netherlands by GCPL i) pledge of shares in Godrej UK by Godrej Netherlands
50 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Prepayment penalties
There are no prepayment penalties present in either of the loans.
5. Finance acquisitions & strategic initiatives and to meet general corporate purposes
Our growth strategy involves expanding our range of products, both organically and through strategic acquisitions and partnerships. These initiatives are governed by our long term goals and other business objectives. We have in the recent past successfully completed three strategic acquisitions and have formed a joint venture partnership. Please see the section titled “Certain History and Corporate Matters” on page [●] of this Draft Letter of Offer for more details on our past acquisitions.
Going forward, we believe that strategic investments and acquisitions may act as an enabler to growing our business. Accordingly we seek to further enhance and strengthen our position in the FMCG industry by widening our reach through such strategic acquisitions. Towards this end, we intend to use a part of the proceeds towards making strategic investments and acquisitions. The Company is currently looking at various acquisition opportunities and investments in the FMCG sector, both in India as well as overseas.
In a typical acquisition process, the Company enters into non-binding letters of intent after ascertaining the business and commercial interest of the potential target or opportunity. It then evaluates the risks associated with such an acquisition and then either enters into a binding agreement with the target company or terminates the non-binding letter of intent.
While we explore various inorganic growth opportunities in the areas of personal and household care, we are currently evaluating specific opportunities in the hair care category which are at various stages of discussions or negotiations. However, we have not entered into any definitive agreement for any acquisition or for strategic investment. The evaluation would include concluding due diligence and assessing the target with respect to its business profile, risks and the financial position of the target. In the event any definitive documents are signed by us, in this regard, prior to filing of the Letter of Offer with the exchanges, the Company shall comply with the disclosure requirements under the SEBI DIP Guidelines. There can be no certainty that we may enter into any definitive agreements in relation to aforesaid opportunities which are under evaluation or exploration.
We intend to utilise up to Rs. [●] million of the net proceeds of the Issue towards such strategic initiatives including acquisitions or major brand building exercises. The above amount is based on the management’s current estimates and the actual deployment of funds would depend on a number of factors, including the timing of acquisition and results of negotiation. The proceeds allocated towards acquisition may not be the total value of the acquisition, but may provide us with leverage to enter into a binding agreement. Our Company proposes to utilise such part of the Net Proceeds allocated for this acquisition during FY 08-09.
In the event that there is any short fall of the funds required for the acquisitions, then such shortfall shall be met out of internal accruals and in the event, there is a surplus, such amounts shall be utilized towards general corporate purposes.
We may use a part of the proceeds for other corporate needs, which our company in the ordinary course of business may face, or any other purposes. Our management will have the flexibility in utilizing these proceeds under the overall guidance and policies laid down by our Board. In the interim, if opportunities for inorganic growth or any other strategic initiatives arise we may not redeem the borrowings and the funds earmarked for the purpose of repayment and pre-payment may be utilized for the said initiatives. 6. Issue related expenses The Issue related expenses include, among others, lead manager fees, printing and distribution expenses, legal fees, advertisement expenses and registrar and depository fees. The estimated Issue related expenses are as follows: (In Rs. Million) Activity Expenses * Fees of Lead Manager, Registrar to Issue, legal advisor and other advisors [●] and consultants Advertising expenses [●]
51 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Activity Expenses * Printing and stationery, distribution, postage etc. [●] Others [●] Total estimated Issue expenses [●] * To be finalized upon determination of Issue Price and at the stage of LOF
Interim Use of Proceeds
The management of the Company, in accordance with the policies formulated by it from time to time, will have flexibility in deploying the net Issue proceeds. Pending utilization of the net Issue proceeds for the purposes described above, the Company intends to temporarily invest the funds in high quality debt instruments including deposits with banks, mutual funds or temporarily deploy the funds in working capital loan accounts. Such investments will be approved by the Board or its committee from time to time, in accordance with its investment policies.
Funds deployed on the objects of the Issue
The Company till date has not deployed any amount towards the said objects of the Issue proposed to be financed from this Issue. ``````````````````````````````````` Bridge Financing Facility
The unsecured loan of Rs. 250 Million taken on August 14, 2007 from ICICI Bank is due for repayment on March 10, 2008. We intend to repay the loan either by using our internal accruals or by taking a bridge loan. We intend to use the proceeds of the Issue, to replenish the funds used to repay the unsecured ICICI loan of Rs. 250 million.
Monitoring of Utilization of Funds
Our board will monitor the utilization of the proceeds of the Issue. The Company will disclose the utilization of the net Issue proceeds under a separate head in its balance sheet for such fiscal periods till the proceeds of the Issue have been utilized, clearly specifying the purpose for which such proceeds have been utilized. The Company shall make the disclosures as required under the SEBI DIP Guidelines, the listing agreements with the Stock Exchanges and any other applicable law or regulations, clearly specifying the purposes for which the net Issue proceeds have been utilized. The Company will also, in its balance sheet for the applicable fiscal periods, provide details, if any, in relation to all such net Issue proceeds that have not been utilized, thereby also indicating investments, if any, of such currently unutilized net Issue proceeds.
52 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
BASIS FOR ISSUE PRICE
The Issue price has been determined by our Board of Directors in their meeting dated [●]. Investors should also refer to the sections “Risk Factors” and “Auditor’s Report” beginning on pages [] and [...], respectively, of this Draft Letter of Offer to get a more informed view before making any investment decision.
The face value of the Equity Shares is Re. 1 and the Issue price of [●] is [•] times the face value.
Qualitative Factors
• Established brand name and market leadership • Widespread sales and distribution network and supply chain competencies in India • Manufacturing facilities spread across locations both internationally and domestically • Research and Product Development • Qualified employee base and management team
For more details on qualitative factors, which form the basis for computing the price, refer to section titled “Our Business” beginning on page [•] of this Draft Letter of Offer.
Quantitative Factors
Information presented in this section is derived from our Company’s restated financial statements prepared in accordance with Indian GAAP and reported upon by the Auditors in their report dated December 26, 2007. Some of the quantitative factors, which form the basis for computing the price, are as follows:
1. Basic and Diluted Earnings per Share (EPS)- Standalone
Period ended Basic EPS (Rs.) Diluted EPS (Rs.) Weight 2007 5.19 5.19 3 2006 5.34 5.34 2 2005 3.80 3.80 1 Weighted Average 5.01 5.01
2. Basic and Diluted Earnings per Share (EPS)- Consolidated
Period ended Basic EPS (Rs.)(1) Diluted EPS (Rs.)(1) Weight 2007 5.94 5.94 2 2006 5.35 5.35 1 2005(1) -. - - Weighted Average 5.74 5.74 1. The Company prepared its first Consolidated Financial Statements for FY 05-06
Note:
• During the financial year ended March 31, 2007, the face value per equity share of the Company was changed from Rs. 4 to Re. 1 per equity share. The record date for the subdivision was August 31, 2006. As per the requirement of Accounting Standard – 20 on ‘Earnings Per Share’, issued by the Institute of Chartered Accountants of India, the calculation of basic and diluted earnings per share for each of the financial periods given above have been adjusted and restated to reflect the changes mentioned above.
• Basic and Diluted Earnings per share is before any extraordinary items, as appearing in the restated financial statements of our company
53 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
3. Price Earning Ratio (P/E) in relation to the Issue price of Rs. [●] per share
a. P/E based on Basic and Diluted EPS (Standalone) for the year ended March 31, 2007: [●] times b. P/E based on Basic and Diluted EPS (Consolidated) for the year ended March 31, 2007: [●] times c. Industry P/E* i. Highest: 35.2 ii. Lowest: 11.4 iii. Industry Composite^ : 23.7
Source: Capital Market, Volume XXII/20, December 03-16, 2007 (Industry: Personal Care-Indian)
Notes: * P/E computed assuming Fiscal year ended 2007 EPS and closing price as on November 26, 2007 ^ Computed as median of the P/E of benchmark companies enlisted under “Comparison with Other Listed Companies” below
4. Return on Networth (RoNW) - Standalone
Period ended RoNW (%) Weight 2007 114.8 3 2006 149.1 2 2005 156.0 1 Weighted Average 133.1
5. Return on Networth (RoNW) - Consolidated
Period ended RoNW (%) Weight 2007 114.1 2 2006 144.7 1 2005(1) -. - Weighted Average 124.3 1. The Company prepared its first Consolidated Financial Statements for FY 05-06
6. Minimum Return on Total Net Worth after Issue needed to maintain Pre-Issue Basic EPS for the year ended March 31, 2007 is [●]
7. Net Asset Value
NAV (Consolidated) as at September 30, 2007 : Rs. 7.90 per Equity Share NAV (Standalone) as at September 30, 2007 : Rs. 7.12 per Equity Share
Issue price : Rs. [●] per Equity Share
NAV (Consolidated) after the Issue : Rs. [●] per Equity Share NAV (Standalone) after the Issue : Rs. [●] per Equity Share
8. Comparison with other listed companies
EPS (Rs)(1) P/E (times) RoNW (%)(2) NAV (Rs.)(3) Godrej Consumer 5.9 21.9 125.5% 4.9 Products Limited (4) Dabur India 2.6 35.2 59.2% 4.7 Emami 10.1 25.4 40.5% 36.9 Fem Care Pharma 40.3 11.4 57.2% 89.5 J L Morison 29.1 12.3 7.1% 486.1
54 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
EPS (Rs)(1) P/E (times) RoNW (%)(2) NAV (Rs.)(3) Marico 1.8 28.3 49.7% 3.0 Source: Capital Market, Volume XXII/20, Dec 03-16, 2007 (Industry: Personal Care-Indian).Closing price as on November 26, 2007
Notes: 1. Basic EPS for the FY 06-07 2. For the FY 06- 07 3. As at March 31, 2007 4. Figures are based on Consolidated Restated Financials derived from the Auditors Report dated December 26, 2007
The Issue Price of Rs. [●] has been determined by our Board of Directors, on the basis of assessment of market demand for the Equity Shares and the same is justified on the basis of the above factors.
55 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
STATEMENT OF TAX BENEFITS
To, The Board of Directors Godrej Consumer Products Limited, Mumbai.
Dear Sirs,
Statement of Possible Tax Benefits Available to the Company and its shareholders
We hereby report that the enclosed statement provides the possible tax benefits available to the Company and to the shareholders of the Company under the Income tax Act, 1961 (provisions of Finance Act, 2007), Wealth Tax Act, 1957, and the Gift Tax Act, 1958, presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant provisions of the statute. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on the business imperatives the Company faces in the future, the Company may or may not choose to fulfill.
The benefits discussed in the enclosed statement are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws and the fact that the Company will not distinguish between the shares offered for subscription and the shares offered for sale by the selling shareholders, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue.
We do not express any opinion or provide any assurance as to whether:
(i) Company or its shareholders will continue to obtain these benefits in future; or
(ii) The conditions prescribed for availing the benefits has been/ would be met with.
The contents of the enclosed statement are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company.
For Kalyaniwalla & Mistry Chartered Accountants
Falee H. Bilimoria Partner Membership No.42439 Dated : December 17, 2007
56 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
STATEMENT OF TAX BENEFITS
I. SPECIAL TAX BENEFITS
A. SPECIAL TAX BENEFITS AVAILABLE TO THE COMPANY
There are no special tax benefits available to the Company.
B. SPECIAL TAX BENEFITS AVAILABLE TO THE SHAREHOLDERS OF THE COMPANY
There are no special tax benefits available to the shareholders of the Company.
II. GENERAL TAX BENEFITS
The Income Tax Act, 1961 (provisions of Finance Act, 2007), Wealth Tax Act, 1957 and the Gift Tax Act, 1958, presently in force in India, make available the following general tax benefits to companies and to their shareholders. Several of these benefits are dependant on the companies or their shareholders fulfilling the conditions prescribed under the relevant provisions of the statute.
A. BENEFITS TO THE COMPANY UNDER THE INCOME TAX ACT, 1961 (“THE ACT”):
The Company will be entitled to deduction under the sections mentioned hereunder from its total income chargeable to Income Tax.
(a) Dividends Exempt Under section 10 (34)
Under section 10 (34) of the act, Company will be eligible for exemption of income by way of dividend (Interim or final) on shares held in a from domestic Company referred to in section 115-O of the Act.
(b) Income from Units of Mutual Fund exempt under section 10 (35)
The Company will be eligible for exemption of income received from units of mutual funds specified under section 10 (23D) of the Act, income received in respect of units from the Administrator of specified undertaking and income received in respect of from the specified company in accordance with and subject to the provisions of section 10 (35) of the Act.
(c) Computation of Capital Gains
Capital assets may be categorized in to short term capital assets and long term capital assets based on the period of holding shares in a Company, listed securities or units of UTI or units of Mutual Fund specified under section 10 (23D) or zero coupon bond will be considered as long term capital assets if they are held for period exceeding 12 months. Consequently, capital gains arising on sale of these assets held for more than 12 months are considered as “Long Term Capital Gains”. Capital gains arising on sale of these assets held for 12 month or less are considered as “Short Term Capital Gains”.
Section 48 of the Act, which prescribes the mode of computation of Capital Gains, provides for deduction of cost of acquisition/improvement and expenses incurred in connection with the transfer of a capital asset, from the sale consideration to arrive at the amount of Capital Gains. However, in respect of long term capital gains, it offers a benefit by permitting substitution of cost of acquisition/improvement with the indexed cost of acquisition/improvement, which adjusts the cost of acquisition/improvement by a cost inflation index as prescribed from time to time.
57 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
As per the provisions of section 112 (1) (b) of the Act, long term gains as computed above that are not exempt under section 10 (38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge, education cess and secondary higher education cess). However, as per the proviso to section 112 (1), if the tax on long term capital gains resulting on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20 percent with indexation benefit exceeds the tax on long term capital gains computed at the rate of 10 percent without indexation benefit, then such gains are chargeable to tax at consessional rate of 10 percent (plus applicable surcharge, education cess and secondary higher education cess).
Gains arising on transfer of short term capital assets are currently chargeable to tax at the rate of 30 percent (plus applicable surcharge, education cess and secondary higher education cess), at the discretion of assessee. However, as per the provisions of section 111A of the Act, short-term capital gains on sale of equity shares or units of an equity oriented fund on or after 1st October, 2004 where the transaction of sales is subject to Securities Transaction Tax (“STT”) shall be chargeable to tax at a rate of 10 percent (plus applicable surcharge, education cess and secondary higher education cess).
(d) Exemption of capital gain from income tax
(i) Under section 10 (38) of the Act, any long term capital gains arising out of sale of equity shares or a unit of equity oriented fund on or after 1st October, 2004 will be exempt from tax provided that the transaction of sale of such shares or unit chargeable to STT. However, such income shall be taken into account in computing the book profits under section 115JB.
(ii) According to the provisions of section 54EC of the Act and subject to the conditions specified therein, long term capital gains not exempt under section 10 (38) shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six month from the date of transfer. If only part of the capital gain is so reinvested, the exemption shall be allowed proportionately. However, if the said bonds are transferred or converted into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money. Provided that investments made on or after 1st April 2007 in the said bonds should not exceed fifty lakh rupees.
(e) COMPUTATION OF BUSINESS INCOME:
Subject to the fulfillment of conditions prescribed, the company will be eligible, inter-alia, for the following specified deductions in computing its business income:-
(i) The company will be eligible for deduction prescribed under section 80IB/80IC of the Act, in view of the fact that certain manufacturing units of the company are located in special category states.
(ii) Under Section 35 (1) (i) and (iv) of the Act, in respect of any revenue or capital expenditure incurred, other than expenditure on the acquisition of any land, on scientific research related to the business of the Company.
(iii) Under Section 35 (1) (ii) and (iii) of the Act, in respect of any sum paid to a scientific research association which has as its object, the undertaking of scientific research or to any approved university, College or other institution to be used for scientific research or for research in social sciences or statistical scientific research to the extent of a sum equal to one and one fourth times the sum so paid.
58 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
(iv) Subject to compliance with certain conditions laid down in section 32 of the Act, the Company will be entitled to deduction for depreciation:
• In respect of tangible assets (being buildings, machinery, plant or furniture) and intangible assets (being know-how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature acquired on or after 1st day of April, 1998) at the rates prescribed under the Income tax rules,1962;
• In respect of any new machinery or plant which has been acquired and installed after 31st March 2005 by an assessee engaged in the business of manufacture or production of any article of thing, a further sum of 20% of the actual cost of such machinery or plant;
(f) COMPUTATION OF TAX ON BOOK PROFITS:
(i) Under section 115JAA (1A) of the Act, tax credit shall be allowed of any tax paid under section 115 JB of the Act (MAT). Credit eligible for carry forward is the difference between MAT paid and the tax computed as per the normal provisions of the Act. Such MAT credit shall not available for set-off beyond 7 years succeeding the year in which the MAT becomes allowable. The company shall be eligible to set-off the MAT credit, thus carried forward, in the year in which it is required to pay the tax under the regular provisions of the Income-tax Act. The amount which can be set-off is restricted to the difference between the tax payable under the regular provisions of the Act and tax payable under the provisions of section 115JB in that year.
(g) TAX REBATES (TAX CREDITS):
(i) From 1st October, 2004 onwards, Section 88E of the Act allows a rebate for an assessee, upon fulfilling certain conditions, where his total income includes any income which is chargeable under the head “Profits and gains of business or profession” arising from sale of taxable security transaction. Such rebate is to be allowed from the amount of income tax in respect of such transactions calculated by applying average rate of income tax.
(ii) As per the provisions of section 90, for taxes on income paid in Foreign Countries with which India has entered into Double Taxation Avoidance Agreements (Tax Treaties from projects/activities undertaken thereat, the Company will be entitled to the deduction from the India Income-tax of a sum calculated on such doubly taxed income to the extent of taxes paid in Foreign Countries. Further, the company as a tax resident of India would be entitled to the benefits of such Tax Treaties in respect of income derived by it in foreign countries. In such cases the provisions of the Income tax Act shall apply to the extent they are more beneficial to the company. Section 91 provides for unilateral relief in respect of taxes paid in foreign countries.
B. BENEFITS AVAILABLE TO RESIDENT SHAREHOLDERS:
(a) Dividends exempt under section 10 (34)
Under section 10 (34) of the Act, income earned by way of dividend (Interim or final) from domestic Company referred to in section 115-O of the Act is exempt from income tax in the hands of the shareholders.
59 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
(b) Income of a minor exempt up to certain limit
Under Section 10(32) of the Act, any income of minor children clubbed in the total income of the parent under section 64(1A) of the Act will be exempted from tax to the extent of Rs. 1,500 per minor child.
(c) Computation of capital gains
Capital assets may be categorized into short term capital asset and long term capital assets based on the period of holding. Shares in a Company, listed securities or units of UTI or units of mutual fund specified under section 10 (23D) of the Act or zero coupon bonds will be considered as long term capital assets if they are held for a period exceeding 12 months. Consequently, capital gains arising on sale of these assets held for more than 12 months are considered as “long term capital gains”. Capital gains arising on sales of these assets held for 12 months or less are considered as “short term capital gains”.
Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of acquisition/improvement and expenses incurred in connection with the transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of long term capital gains, it offers a benefit by permitting substitution of cost of acquisition/improvement with the indexed cost of acquisition/improvement, which adjusts the cost of acquisition/improvement by a cost inflation index as prescribed from time to time.
As per provisions of section 112 (1) (a) of the Act, long term gains as computed above that are not exempt under section 10 (38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge, education cess and secondary higher education cess). However, as per the proviso to section 112 (1), if the tax on long term capital gains resulting on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20 percent with indexation benefit exceed the tax on long term capital gains computed @ 10 percent without indexation benefit, then such gains are chargeable to tax a consessional rate of 10 percent (plus applicable surcharge, education cess and secondary higher education cess).
Gains arising on transfer of short term capital assets are currently chargeable to tax at the rate of 30 percent (plus applicable surcharge, education cess and secondary higher education cess) at the discretion of assessee. However, as per provisions of section 111A of the Act, short-term capital gains on sale of equity shares or units of mutual funds on or after 1st October, 2004 where the transaction of sale is chargeable to Securities Transaction Tax (“STT”) shall be subject to tax at a rate of 10 percent (plus applicable surcharge, education cess and secondary higher education cess).
Exemption of capital gain from income tax
• Under section 10 (38) of the Act, long term capital gains arising out of sale of equity shares or a unit of equity oriented fund will be exempt from tax provided that the transaction of sale of such equity shares or unit is chargeable to Securities Transaction Tax (“STT”).
• According to the provisions of sections 54EC of the Act and subject to the conditions specified therein, long term capital gains not exempt under section 10 (38) shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only the part of capital gain is so reinvested, the exemption shall be allowed proportionately. In such a case, the cost of such long term specified assets will not qualify for deduction under section 80C of the Act. However, if the said bonds are transferred or converted into money within a
60 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
period of three years from the date of their acquisition the amount of capital gain exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money. Provided that investments made on or after 1st April 2007 in the said bonds should not exceed fifty lakh rupees.
• According to the provisions of section 54F of the Act and subject to the conditions specified therein, in the case of an individual or a Hindu Undivided Family (‘HUF’), gains arising on transfer of a long term capital asset (not being a residential house) are not chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period in a residential house. If only a part of such net consideration is invested within the prescribed period in a residential house, the exemption shall be allowed proportionately. For this purpose, net consideration means full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. Further, if the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such residential house is transferred.
(d) Rebate under section 88E
From 1st October, 2004 onwards, Section 88E of the Act allows a rebate for an assessee, upon fulfilling certain conditions, where his total income includes any income which is chargeable under the head “Profits and gains of business or profession” arising from sale of taxable security transaction. Such rebate is to be allowed from the amount of income tax in respect of such transactions calculated by applying average rate of income tax.
C. BENEFITS AVAILABLE TO NON-RESIDENT INDIAN SHAREHOLDERS (OTHER THAN FIIS AND FOREIGN VENTURE CAPITAL INVESTORS):
(a) Dividends exempt under section 10 (34)
Under section 10 (34) of the Act, income earned by way of dividend (Interim or final) from domestic Company referred to in section 115-O of the Act is exempt from income tax in the hands of the shareholders.
(b) Income of a minor exempt up to certain limit
Under Section 10(32) of the Act, any income of minor children clubbed in the total income of the parent under section 64(1A) of the Act will be exempted from tax to the extent of Rs. 1,500 per minor child.
(c) Computation of capital gains
Capital assets may be categorized into short term capital asset and long term capital assets based on the period of holding. Shares in a Company, listed securities or units of UTI or units of mutual fund specified under section 10 (23D) of the Act or zero coupon bonds will be considered as long term capital assets if they are held for a period exceeding 12 months. Consequently, capital gains arising on sale of these assets held for more than 12 months are considered as “long term capital gains”. Capital gains arising on sales assets held for 12 months or less are considered as “short term capital gains”.
Section 48 of the Act contains provisions in relation to computation of capital gains on transfer of shares of an Indian Company by a non-resident where the investment
61 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only in such shares was made in foreign currency Computation of capital gains arising on transfer of shares in case of non-residents has to be done in the original foreign currency, which was used to acquire the shares. The capital gain (i.e., sale proceeds less cost of acquisition/improvement) computed in the original foreign currency is then converted into Indian Rupees at the prevailing rate of exchange. Benefit of indexation of costs is not available in above case.
According to the provisions of section 112 of the Act, long term capital gains as computed above that are not exempt under section 10 (38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge, education cess and secondary higher education cess).
In case investment is made in Indian Rupees, the long-term capital gains that are not exempt u/s. 10(38) of the Act are to be computed after indexing the cost.
However, as per the proviso to section 112 (1) (c), if the tax on long term gains resulting on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20 percent with indexation benefit exceed the tax on long term gains computed at the rate of 10 percent without indexation benefit, then such gains are chargeable to tax at a consessional rate of 10 percent (plus applicable surcharge, education cess and secondary higher education cess).
Gains arising on transfer of short term capital assets are currently chargeable to tax at the rate of 30 percent (plus applicable surcharge, education cess and secondary higher education cess) at the discretion of assessee. However, as per the provisions of section 111A of the Act, short-term capital gains of equity shares on or after 1st October, 2004 where the transaction of sale is chargeable to STT shall be subject to tax at a rate of 10 percent (plus applicable surcharge, education cess and secondary higher education cess).
(i) Capital gains tax - Options available under the Act
Where shares have been subscribed in convertible foreign exchange
Option of taxation under chapter XII-A of the Act:
Non-resident Indians [as defined in section 115C (e) of the Act], being shareholders of an Indian Company, have the option of being governed by the provisions of Chapter XII-A of the Act, which inter-alia entitles them to the following benefits in respect of income from shares of an Indian Company acquired, purchased or subscribed to in convertible foreign exchange:
• According to the provisions of section115D read with section 115E of the Act and subject to the conditions specified therein, long term capital gains arising on transfer of shares in an Indian Company not exempt under section 10 (38), will be subject to tax at the rate of 10 percent (plus applicable surcharge, education cess and secondary higher education cess) without indexation benefit.
• According to the provisions of section 115F of the Act and subject to the conditions specified therein, gains arising on transfer of a long term capital asset being shares in an Indian company shall not be chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period of six months in any specified asset, if part of such net consideration is invested within the prescribed period of six months in any specified asset the exemption will be allowed on a proportionate basis. For this purpose, net consideration means full value of the consideration
62 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.
Further, if the specified asset in which the investment has been made is transferred within a period of three years from the date of investment, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified asset or savings certificates are transferred.
• As per the provisions of section 115G of the Act, non-resident Indians are not obliged to file a return of income under section 139(1) of the Act, if their source of income is only investment income and / or long term capital gains defined in section 115C of the Act, provided tax has been deducted at source from such income as per the provisions of chapter XVII-B of the Act.
Under section 115H of the Act, where the non-resident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the assessing officer, along with his return of income for that year under section 139 of the Act to the effect that the provisions of the chapter XII-A shall continue to apply to him in relation to such investment income derived from any foreign exchange asset being asset of the nature referred to in sub clause (ii), (iii), (iv) and (v) of section 115C(f) for that year and subsequent assessment years until such assets are converted into money.
As per the provisions of section 115-I of the Act, a non-resident Indian may elect not to be governed by the provisions of chapter XII-A for any assessment year by furnishing his return of income for that assessment year under section 139 of the Act, declaring therein that the provisions of chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the Act.
Where the shares have been subscribed in Indian Rupees:
Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of acquisition/improvement and expenses incurred wholly and exclusively in connection with the transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of long term capital gains, it offers a benefit by permitting substitution of cost of acquisition/improvement with the indexed cost of acquisition/improvement, which adjusts the cost of acquisition/improvement by a cost inflation index, as prescribed time to time.
As per the provisions of section 112(1) (c) of the Act, long term capital gains that are not exempt u/s. 10(38) of the Act as computed above would be subject to tax at a rate of 20 percent (plus applicable surcharge, education cess and secondary higher education cess). However, as per the proviso to Section 112(1) of the Act, if the tax payable in respect of long term capital gains resulting on transfer of listed securities or units, calculated at the rate of 20 percent with indexation benefit exceeds the tax payable on gains computed at the rate of 10 percent without indexation benefit, then such gains are chargeable to tax at the rate of 10 percent without indexation benefit (plus applicable surcharge, education cess and secondary higher
63 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
education cess).
(ii) Exemption of capital gain from income tax
Under section 10(38) of the Act, long term capital gains arising out of sale of equity shares or a unit of equity oriented fund will be exempt from tax provided that the transaction of sale of such equity shares or unit is chargeable to STT.
Accordingly to the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains not exempt under section 10(38) and arising on transfer of a long term capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only part of the capital gain is so reinvested, the exemption shall be allowed proportionately. Provided that investments made on or after 1st April 2007 in the said bonds should not exceed fifty lakh rupees.
In such a case, the cost of such long term specified asset will not qualify for deduction under section 80C of the Act. However, if the said bonds are transferred or converted into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the bonds are transferred or converted into money.
According to the provisions of section 54F of the Act and subject to the conditions specified therein, in the case of an individual, gains arising on transfer of a long term capital asset (not being a residential house) is invested within the prescribed period in a residential house. If only a part of such net consideration is invested within the prescribed period in a residential house, the exemption shall be allowed proportionately for this purpose, net consideration means full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. Further, if the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such residential house is transferred.
(d) Rebate under section 88E
From 1st October, 2004 onwards, Section 88E of the Act allows a rebate for an assessee, upon fulfilling certain conditions, where his total income includes any income which is chargeable under the head “Profits and gains of business or profession” arising from sale of taxable security transaction. Such rebate is to be allowed from the amount of income tax in respect of such transactions calculated by applying average rate of income tax.
(e) Provisions of the Act vis-à-vis provisions of the tax treaty
As per Section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the relevant tax treaty to the extent they are more beneficial to the non- resident.
64 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
D. BENEFITS AVAILABLE TO OTHER NON-RESIDENT SHAREHOLDERS (OTHER THAN FIIS AND FOREIGN VENTURE CAPITAL INVESTORS):
(a) Dividends exempt under section 10 (34)
Under section 10 (34) of the Act, income earned by way of dividend (Interim or final) from domestic Company referred to in section 115-O of the Act is exempt from income tax in the hands of the shareholders.
(b) Income of a minor exempt up to certain limit
Under Section 10(32) of the Act, any income of minor children clubbed in the total income of the parent under section 64(1A) of the Act will be exempted from tax to the extent of Rs. 1,500 per minor child.
(c) Computation of capital gains
Capital assets may be categorized into short term capital asset and long term capital assets based on the period of holding. Shares in a Company, listed securities or units of UTI or unit of mutual fund specified under section 10 (23D) of the Act or zero coupon bond will be considered as long term capital assets if they are held for a period exceeding 12 months. Consequently, capital gains arising on sale of these assets held for more than 12 months are considered as “long term capital gains”. Capital gains arising on sales assets held for 12 months or less are considered as “short term capital gains”.
Section 48 of the Act contains provisions in relation to computation of capital gains on transfer of shares of an Indian Company non-resident. Computation of capital gains arising on transfer of shares in case of non-residents has to be done in the original foreign currency, which was used to acquire the shares. The capital gain (i.e., sale proceeds less cost of acquisition/improvement) computed in the original foreign currency is then converted into Indian Rupees at the prevailing rate of exchange.
According to the provisions of section 112 of the Act, long term gain as computed above that are not exempt under section 10 (38) of the Act would be subject to tax at a rate of 20 percent (plus applicable surcharge and education cess). In case investment is made in India Rupees, the long-term capital gain is to be computed after indexing the cost. However, as per the proviso to section 112 (1) (c), if the tax on long term gains resulting on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20 percent with indexation benefit exceed the tax on long term gains computed at the rate of 10 percent without indexation benefit, then such gains are chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge, education cess and secondary higher education cess).
Gains arising on transfer of short term capital assets are currently chargeable to tax at the rate of 30 percent (plus applicable surcharge, education cess and secondary higher education cess) at the discretion of assessee. However, as per the provisions of section 111A of the Act, short term capital gains of equity shares where the transaction of sale is chargeable to STT shall be subject to tax at a rate of 10 percent (plus applicable surcharge, education cess and secondary higher education cess).
(d) Exemption of capital gain from income tax
• Under section 10(38) of the Act, long term capital gains arising out of sale of equity shares or a unit of equity oriented fund will be exempt from tax provided that the transaction of sale of such equity shares or unit is chargeable to STT.
65 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Accordingly to the provisions of section 54EC of the Act and subject to the conditions specified therein, capital gains not exempt under section 10(38) shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only part of the capital gain is so reinvested, the exemption shall be allowed proportionately. Provided that investments made on or after 1st April 2007 in the said bonds should not exceed fifty lakh rupees. In such a case, the cost of such long term specified asset will not qualify for deduction under section 80C of the Act.
However, if the assessee transfers or converts the notified bonds into money within a period of Three year from the date of their acquisition, the amount of capital gains exempt earlier would become chargeable to tax as long term capital gains in the in which the bonds are transferred or converted into money.
• According to the provisions of section 54F of the Act and subject to the conditions specified therein, in the case of an individual or a HUF, gains arising on transfer of a long term capital term asset (not being a residential house) are not chargeable to tax if the entire net consideration received on such transfer is invested within the prescribed period in a residential house. If only a part of such net consideration is invested the prescribed period in a residential house, the exemption shall be allowed proportionately. For this purpose, net consideration means full value of the consideration received or accrued as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. Further, if the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such residential house is transferred.
(e) Rebate under section 88E
From 1st October, 2004 onwards, Section 88E of the Act allows a rebate for an assessee, upon fulfilling certain conditions, where his total income includes any income which is chargeable under the head “Profits and gains of business or profession” arising from sale of taxable security transaction. Such rebate is to be allowed from the amount of income tax in respect of such transactions calculated by applying average rate of income tax.
(f) Provisions of the Act vis-à-vis provisions of the tax treaty
As per Section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the relevant tax treaty to the extent they are more beneficial to the non- resident.
E. BENEFITS AVAILABLE TO FOREIGN INSTITUTIONAL INVESTORS (‘FII’s’):
(a) Dividends exempt under section 10 (34)
Under section 10 (34) of the Act, income earned by way of dividend (Interim or final) from domestic Company referred to in section 115-O of the Act is exempt from income tax in the hands of the shareholders.
(b) Taxability of capital gains
Under section 10 (38) of the Act, long term capital gains arising out of sale of equity shares or a unit of equity oriented fund will be exempt from tax provided that the
66 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
transaction of sale of such equity shares or unit is chargeable to STT. However, such income shall be taken into account in computing the book profits under section 115JB.
The income by way of short term capital gains or long term capital gains [in case not covered under section 10 (38) of the Act] realized by FII’s on sale of the Company would be taxed at the following rates as per section 115AD of the Act-
• Short term capital gains, other than those referred to under section 111A of the Act shall be taxed @ 30% (plus applicable surcharge, education cess and secondary higher education cess).
• Short term capital gains, referred to under section 111A of the Act shall be taxed @ 10% (plus applicable surcharge, education cess and secondary higher education cess).
• Long term capital gains @10% (plus applicable surcharge, education cess and secondary higher education cess) (without cost indexation).
It may be noted that the benefits of indexation and foreign currency fluctuation protection as provided by section 48 of the Act are not applicable.
According to provisions of section 54EC of the Act and subject to the condition specified therein, long term capital gains not exempt under section 10(38) shall not be chargeable to tax to the extent such capital gains are invested in certain notified bond within six months from the date of transfer. If only part of the capital gain if so reinvested, the exemption shall be allowed proportionately. Provided that investments made on or after 1st April 2007 in the said bonds should not exceed fifty lakh rupees.
However, if the assessee transfers or converts the notified bonds into money within a period of Three year from the date of their acquisition, the amount of capital gains exempt earlier would become chargeable to tax as long term capital gains in the in which the bonds are transferred or converted into money.
Provisions of the Act vis-à-vis provisions of the tax treaty As per Section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the relevant tax treaty to the extent they are more beneficial to the non-resident.
F. BENEFITS AVAILABLE TO MUTUAL FUNDS
As per the provisions of section 10(23D) of the Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or regulations made there under, Mutual Funds set up by public sector banks or public financial institutions or authorized by the Reserve Bank of India would be exempt from income tax subject to the conditions as Central Government may notify. However, the mutual funds shall be liable to pay tax on distributed income to unit holders under section 115R of the Act.
G. BENEFITS AVAILABLE TO VENTURE CAPITAL COMPANIES/ FUNDS
As per the provisions of section 10(23FB) of the Act, any income of Venture Capital Companies/ Funds (set up to raise funds for investment in a venture capital undertaking registered and notified in this behalf) registered with the Securities and Exchange Board of India, would be exempt from income tax, subject to the conditions specified therein. However, the exemption is restricted to the Venture Capital Company and Venture Capital Fund set up to raise funds for investment in a Venture Capital Undertaking, which is engaged in the business as specified under section 10(23FB)(c). However, the income distributed by the Venture Capital Companies/ Funds to its investors would be taxable in the hands of the recipients.
67 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
H. BENEFITS AVAILABLE UNDER THE WEALTH-TAX ACT, 1957
Shares of the company held by the shareholder will not be treated as an asset within the meaning of section 2(ea) of Wealth Tax Act, 1957, hence no wealth tax will be payable on the market value of shares of the company held by the shareholder of the company.
I. BENEFITS AVAILABLE UNDER THE GIFT-TAX ACT, 1958
Gift of shares of the Company made on or after 1st October, 1998 are not liable to Gift tax.
J. Further the tax benefits related to capital gains are subjected to the CBDT circular no. 4/2007 dated 15th June 2007 and on fulfillment of criteria laid down in the circular laid down in the circular, the assessee will be able to enjoy the consessional benefits of taxation on capital gains.
Notes: 1. All the above benefits are as per the current tax law and will be available only to the sole/first named holder in case the shares are held by the joint holders. 2. In respect of non-residents, the tax rates and the consequent taxation mentioned above will be further subject to any benefits available under the relevant Double Taxation Avoidance Agreement (DTAA), if any, between India and the country in which the non-resident has fiscal domicile. 3. In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax advisor with respect to specific tax consequences of his/her participation in the scheme.
68 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
INDUSTRY OVERVIEW
Introduction
The Indian Fast Moving Consumer Goods (FMCG) sector has a present market size in excess of USD 17.36 billion. India is currently the 12th largest consumer market in the world. It is set to increase from current levels to USD 33.4 billion by 2015. Of the total sales, food & beverage at 43% of total and personal care at 22% of total are the largest categories (Source: www.ibef.org).
The Indian FMCG industry is characterized by a well-established distribution network, intense competition between the organized and unorganized sector and low operation costs. The industry is present across the entire value chain which gives India a competitive advantage. Since penetration levels across several categories are low, there is untapped market potential. The burgeoning Indian population particularly the middle class and the rural segments, present an opportunity to the manufacturers of branded products. Growth is also expected to come through from consumers ‘upgrading’ in matured product categories
Constituent Segments
The main segments of the FMCG sector are:
• Personal Care: This segment comprises oral care, hair care, skin care, cosmetics and toiletries, paper products and others.
• Household Care: The household care segment comprises household cleaners, air fresheners, insecticides, metal polish and others.
• Packaged Food and Beverages: The products that comprise this segment are health beverages, soft drinks, staples, cereals, bakery products, snack foods, dairy products and others.
The table below depicts estimated market sizes for some FMCG categories in India:
Category Market Size (Rs billion) Fabric Wash 57 Skin Care 13 Personal Wash 46 Hair Care 28 Oral Care 23 Source: Confederation of Indian Industry data
FMCG Industry Drivers and Trends i) Economic growth & higher per capita income
India’s economic growth has accelerated significantly in the past few years and is likely to remain so for the next few years. As a result, real average household incomes have roughly doubled since 1985 according to McKinsey Global Institute. This has directly benefited the FMCG sector as overall economic growth has been accompanied by increased disposable incomes both in the urban and rural markets which have fuelled consumption demand. Per capita incomes have grown to USD 563 in 2004-05 and continuing growth is likely to vest further purchasing power in the hands of the Indian consumer (Source: Reserve bank of India). ii) Rising middle class
India’s demographics have been favorable to consumption growth with an increase in proportion of consuming population, both age wise and income wise. As per NCAER (National Centre for Applied Economic Research) estimates, 54% of Indians are under 25 years and the number of consumers driving growth is expected to grow from 46 million households in 2003 to 124 million households in 2012. As per EIU (Economist Intelligence Unit), population in the consuming age bracket (defined as consumers in the 15-64 age group) as a proportion of the total population has grown from 61.4% in 1999 to 63.5% in 2004. This increase in proportion of consuming
69 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only population coupled with over 2% per annum growth in population is likely to create a sustained growth in demand for the FMCG industry. iii) Increasing urbanization and untapped rural markets
According to McKinsey Global Institute, the proportion of people dwelling in urban areas will increase from 29% in 2005 to 37% in 2025 with immigration accounting for nearly half of the addition in population. This rise in urbanization along with the rise in travel and communication is likely to result in increasing exposure to western lifestyles, which will, in turn, drive aspirations for lifestyle products and services. In terms of brand choices, rural India has access to only about half the branded products that are available to the urban consumer. However, despite the prospect of a large untapped market, a variety of factors have hindered its full exploitation. With the government’s push to improve the rural infrastructure, the potential of these markets that can be tapped by the FMCG sector may improve in the future. iv) Retail Expansion
Organized retail is witnessing high growth today while its share as a percent of total remains small. The share of organized players in the retailing industry is expected to increase from the current 3% to 10% by 2010E. The growth in organized retail will be beneficial to the FMCG industry as organized retail should drive consumption of products with its different formats that will enhance accessibility and affordability. Gradually, foreign direct investment in retail is expected to be permitted, which would attract overseas retailers in India fuelling demand for FMCG merchandise. v) Branded Sector
Rising per capita and disposable incomes should generate a higher proportion of spending in discretionary items as against necessities. As a result, brand consciousness among a larger public will increase and consumers will prefer to purchase and use branded goods. Since branded goods typically attract premiums for better quality, packaging and overall solution levels, the organized FMCG sector should greatly benefit.
Critical Operating Norms in Indian FMCG sector i) Focus on marketing:
The FMCG industry is heavily marketing focused. Marketing activities involve market research, product development and intense brand building through sales and promotions. Rigorous marketing efforts have yielded high rewards to FMCG companies in the form of strong brands and high brand recall in the minds of consumers leading to brand loyalty. With an entrenched brand, one is able to command better pricing, favorable distribution terms and the ability to extend the brand portfolio through new brand extensions and related product lines. Sales, promotion, advertising and brand marketing initiatives form a large part of the operating costs. ii) New product launches:
With rapidly changing trends and consumer preferences, FMCG companies sustain their market presence through frequent new product launches as well as brand line extensions. Intense competition has also led companies to innovate new products by using different manufacturing processes, convenient packaging, and proprietary ingredients. However, companies must incur heavy launch costs on new products on launch campaigns, free samples and product promotions. Often, products are re-launched by repositioning existing or dormant brands to enhance the lifecycle and target new audiences. iii) Quality of offering it is important to have product offerings of a quality that consumers require. Companies invest in manufacturing facilities and technology upgradation to maintain and improve the quality of their products. Research & product development, including packaging development is also an important aspect in ensuring that quality of offerings matches with the consumr requirement.
70 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only iv) Distribution networks and logistics
Accessibility of products when a consumer requires them is key to a successful FMCG operation in a populated and vast country like India. Therefore, companies strive to establish and continuously expand their distribution networks. They must also undertake effective use of available logistical facilities in infrastructure starved India to reach consumers. Higher penetration through both organized and unorganized retail is necessary to achieve critical volumes. Recently many FMCG companies have installed high end IT networks to maintain connectivity with all participant in the entire value chain to streamline procurement as well as sales. v) Costs and pricing
Input costs are a critical determinant of financial health for an FMCG company as they form a high proportion of total unit cost. Recently certain key input prices have increased steadily causing impact on profitability margins. As a result, it is necessary to hedge against these market swings, achieve greater purchase economies and eventually control costs. Equally, providing good price points to the consumer is the key to success. Promotional offers like contests, festive bundles and freebies are regularly given to ensure protection of market share in elastic segments.
71 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
BUSINESS
Overview
We are part of the Godrej group of companies, which is one of the oldest corporate houses in India. The Godrej group was established in 1897 and has since grown into a Rs.74 billion conglomerate (in terms of FY 06- 07 turnover). The Godrej group was awarded the “Corporate Citizen of the Year” award by the Economic Times in 2002-03.
The Consumer Products business was part of the erstwhile Godrej Soaps Limited (GSL) and was demerged into Godrej Consumer Products Limited in April 2001, pursuant to a scheme of demerger approved by the Hon’ble High Court of Judicature , Mumbai ,dated March 14, 2001.Subsequently , Godrej Soaps Limited was renamed as “Godrej Industries Limited”. We are listed on the BSE and the NSE since 2001.
We are one of the leading companies in the Indian FMCG sector with a presence across household and personal care products. Our product range includes soaps, hair colourants, toiletries and liquid detergents. Some of our leading brands are ‘Cinthol’, ‘Godrej Fair Glow’, ‘Godrej No.1’ and ‘Godrej Shikakai’ in soaps, ‘Godrej Powder Hair Dye’, ‘Renew’, ‘ColourSoft’ in hair colourants and ‘Ezee’ liquid detergent. We currently have five manufacturing facilities in India at Malanpur (Madhya Pradesh), Guwahati (Assam), Baddi- Thana (Himachal Pradesh), Baddi- Katha (Himachal Pradesh) and Sikkim.
We have an international presence in the UK, South Africa and the Middle East, which was established through the following acquisitions:
• In October 2005, the Company acquired the business of Keyline Brands Limited (United Kingdom) which manufactures, markets and distributes cosmetics and toiletries. The Company had a turnover of Rs. 1,668.3 million for the fiscal year ended March 31, 2007.
• In September 2006, the Company acquired the Rapidol (Pty) Limited, and its wholly owned subsidiary Rapidol International Limited. This acquisition gave us entry into the hair colour market for black hair and ownership of ethnic hair colour brand ‘Inecto’ in ten African countries. The Company had a turnover of Rs. 251.2 million for the fiscal year (from September 06 to March 07) ended March 31, 2007.
• In October 2007, the Company acquired 100% equity of Godrej Global Mid East FZE from Godrej International Limited. It was established in Sharjah with the objective of distributing our FMCG products in the Middle East. It has a network of distributors in countries such as U.A.E, Oman, Saudi Arabia, Kuwait and Bahrain.
In March 2007, we entered into a joint venture with SCA Hygiene Products AB, Sweden where we both hold 50% to form Godrej SCA Hygiene Limited a company which manufactures and markets paper based absorbent hygiene products.
Our total income for FY 06-07 was Rs.9,814 million, as compared to Rs.7,186 million for FY 05-06, representing an increase of 37%. Our total income was Rs.5,548 million for the six month ended September 30, 2007. Our net profit for FY 06-07 was Rs.1,392 million, as compared to Rs.1,208 million for the FY 05-06, representing an increase of 15%. Our net profit for the six month ended September 30, 2007 was Rs.755 million.
Competitive Strengths
We believe that the following strengths enable us to compete effectively:
Established brand name and market leadership
We are part of the Godrej Group of companies, which is one of the oldest prominent corporate houses in India. Our market capitalisation was Rs. 31,900 million as of September 30, 2007. Our Group has a long history and experience in manufacturing and distribution of soaps and personal care products across India. Our brands such as ‘Cinthol’, ‘Ezee’, ‘Godrej Powder Hair Dye’ and ‘Godrej No. 1’ command a recall amongst the Indian population.
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GCPL is the second largest player in India in the toilet soap segment with a market share of 10.2% for the quarter ended September 30, 2007.
We are leaders in the hair colourants category in India with a variety of offerings ranging across powders, liquids and creams.
Also, ‘Ezee’ is the market leader in the liquid detergent category with over 75% market share.
Widespread sales and distribution network and supply chain competencies in India
We have a widespread distribution network across India. We have a presence in both the urban and rural markets, enabling us to benefit from the opportunities in both segments. We have a sales team which comprise of over 250 staff spread across the country. We have a network of 33 Carrying and Forwarding agents and over 4,500 distributors, super stockists and sub stockists to support the sales team in India. Our distributors and sub stockists cover around 650,000 retailers in India.
Simultaneously with the expansion of our distribution network, we have made investments in information technology to improve connectivity and provide for data-based decision-making. We have linked our major distributors in India through a system called ‘Sampark’, a collaborative planning, forecasting and replenishment system which along with our ERP (Enterprise Resource Planning) system enables us to track the availability of stock with the distributors, warehouses and the factories. This enables us to structure our production and shipment to our distributors in an efficient manner. This has enabled the distributors to operate effectively with reduced inventory levels, which would translate into better returns for them.
Manufacturing facilities spread across locations both internationally and domestically
Domestically, our manufacturing facilities are spread across the country. Our wide spread manufacturing base helps us to manufacture quality products at a low cost. These facilities follow the Total Quality Management (TQM) management philosophy at our manufacturing facilities. This involves focussed attention on product quality and manufacturing processes. Our Malanpur facility is ISO 14001:2004 certified. Our plant at Baddi- Thana, has been certified by BVQi for ISO: 9001:2000 (Quality Management System), ISO: 14001:1996 (Environmental Management System) and ISO: 18001:1999 (Occupational Health & Safety Management System). Some of these manufacturing facilities are located in areas where fiscal benefits exist.
Internationally, we have manufacturing facilities in UK and South Africa, to manufacture personal care and hair care products.
Research and Product Development
We believe that we have established our reputation as a manufacturer of quality products. In order to cater to the changing needs of our customers, the Company has set up an in-house research and development facility in India to develop products at competitive prices for the domestic and international market. The Godrej Research and Development Centre is recognised by the Department of Science and Technology, New Delhi.
The research and development activities broadly comprise of various processes for developing new products, standardising new analytical methods and identifying substitutes for key raw materials. Through our research and development centre, we continuously interact with consumers to obtain feedback on our products and information obtained are leveraged to complement our new product development activities.
Qualified employee base and management team
We believe that a motivated and empowered employee base is key to our competitive advantage. As of November 30, 2007, we employed over 1,349 full-time employees. The skills and diversity of our employees gives us the flexibility to best adapt to the challenging needs of our diverse businesses. Our personnel policies are aimed towards recruiting talented employees and facilitating their integration into our organization and encouraging the development of their skills and expertise. The Company was ranked No.6 in the Best Employers in India 2007 survey conducted by Hewitt Associate along with Economic Times, ranked 14th in the
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‘Best Companies to Work for in India’, Survey 2007 conducted by Business Today, Mercer Human Resource Consulting and TNS India and was ranked 15th in the Great Places to Work Study 2007 conducted by Grow Talent Company Limited in partnership with Great Places to Work Inc, USA along with Business World.
We are dedicated to the development of expertise and know-how of our employees and continue to invest in them through training and skills.
Business Strategy
Leverage and enhance the Godrej brand name and that of our brands.
One of our key strengths is being part of the Godrej group of companies and the strong brand equity generated by the “Godrej” brand name. We believe that the Godrej brand commands a recall amongst the consumers in India due to its image and goodwill established over the years. We intend to leverage the brand equity that we enjoy as a result of our relationship with the Godrej group of companies. Also, we plan to leverage our existing brands, which have good recall with customers to introduce a wider range of products. For example, we have leveraged our ‘Cinthol’ soaps brand to manufacture and sell ‘Cinthol’ deodorants and ‘Cinthol’ talcum powder.
Focus on enhancing our sales and distribution network within the domestic market
The Company has been focusing on consolidating its network of distributors in bigger towns. We have a distributor in almost every major town in India. We believe that this helps us to increase the availability of our products which in turn creates more awareness for the products and improve the acceptance of new products.
The Company has created a network of super stockists and sub-stockists to tap the opportunity in smaller towns and villages. Certain products like ‘Godrej Powder Hair Dye’ sachet, 50 gram variants of soaps fulfill the needs of consumers in such territories very well and in turn strengthen the distribution network in such areas.
We intend to increase our penetration in the Personal and Household Care segment. We plan to achieve this through growth of our customer base and enlargement of our product portfolio. We already sell certain products under different brand names which enables us to target different socio-economic consumer segments. We also aim to provide an improving level of service to our network of dealers and distributors, for example by providing more frequent deliveries in order to reduce the dealers' inventory levels and therefore their costs and incentivise them to promote our products.
To grow and expand our market share through organic growth
Our toilet soaps category has been outperforming the industry consistently and it grew by 21% in FY 06-07 (industry growth at 7.7%) during the same period the market share of toilet soaps increased to 9.1% in FY 06- 07 from 8.5% in the previous year. Currently, the market share of toilet soaps is at 10.2% (Q2 2007-08). The hair colour and toiletries categories grew by 12% and 20% respectively in FY 06-07 as compared to the previous year.
Towards this end we intend to focus on: a. Value for money offerings; and b. Unique variants of soaps like Godrej No 1 in ‘papaya and lotus’ variant.
For details on our recent product launches, please refer to “New Product Launches”on page [●]. To accelerate growth and expand our international presence through strategic acquisitions and partnerships While continuing to maintain growth momentum in the current territories, we intend to explore expansion into new markets as well. We plan to continue to acquire companies/businesses in the ‘personal and household care’ segment’ in India and internationally. We have gained experience through our previous acquisitions and joint-ventures with established operators in foreign markets. We will evaluate any business opportunities that arise in Indian and international markets and aim to harness our experience of acquiring and integrating new markets with our current operations. We believe that strategic acquisitions may act as an enabler to growing our business. We intend to use a part of the proceeds towards entering into certain strategic acquisitions.
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Continue to upgrade and modernise our plants and facilities to manufacture and supply products at a low cost.
We currently operate out of five manufacturing facilities in India at Malanpur (Madhya Pradesh), Guwahati (Assam), Baddi- Thana (Himachal Pradesh), Baddi- Katha (Himachal Pradesh) and Sikkim. Further, our manufacturing facilities located abroad at UK and South Africa produce a range of personal care products and hair colour products respectively. We believe in maintaining efficient manufacturing facilities for a consistent the quality of our products and to reduce our operational costs. We also focus on management of our logistics, supply chain and distribution functions, which enables us to service our customers better.
Business Categories:
We operate in the domestic and international markets in the following categories in the ‘Personal and Household Care’ segment: • Soaps • Hair Colourants • Toiletries • Liquid Detergents
Domestic Market:
We have a presence in the domestic market through the following product categories:
Soaps
We continue to be the second largest toilet soaps player in India with a market share of 9.1% in FY 06-07 as compared to 8.5% in the previous year. Currently, our market share of toilet soaps is at 10.2% (second quarter of 07-08). Our toilet soap business accounted for 63% of our standalone total sales for the FY 06-07. The following are our main brands in the toilet soap category:
• ‘Cinthol’ • ‘Godrej FairGlow’ • ‘Godrej No.1’ • ‘Evita’ • ‘Godrej Shikakai’ • ‘Crowning Glory’
The following table indicates our market share in this category in the last three fiscal years:
Fiscal 2005 Fiscal 2006 Fiscal 2007 Market Share 8.0% 8.5% 9.1% Source: AC Nielsen
‘Cinthol’, our flagship brand, is one of the oldest toilet soaps brands in India having been launched in 1952.
‘Cinthol’ has been recognised as a Superbrand by Superbrands Council (UK) in 2004 and 2006 and is available in the following variants:
• ‘Cinthol Regular’; • ‘Cinthol Deo’ Soap – ‘Cologne’, ‘Spice’ and ‘Sport’; and • ‘Cinthol Lime Fresh’.
We launched ‘Godrej FairGlow’ brand of soaps in 1999. This soap contains a special natural ingredient, a bio- extract ‘Natural Oxy-G’, that presents a natural and smooth fairness benefit specifically keeping in view the complexions and sensitivities of the Indian consumers.
‘Godrej No. 1 is the largest selling Grade 1 soap brand in the country. The brand provides a Grade 1 quality product at an affordable value for catering to the large portion of the Indian populace.
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The ‘Godrej No. 1’ comes in seven variants, namely ‘Godrej No. 1 Natural’, ‘Godrej No. 1 Rose’, ‘Godrej No. 1 Sandal’, ‘Godrej No. 1 Ayurvedic’, ‘Godrej No. 1 Jasmine’, ‘Godrej No. 1 Lavender’ and ‘Godrej No. 1 Papaya and Lotus’ In FY 06-07 have launched an age control soap called ‘Evita’. This soap consists of alpha hydroxy acid (AHA), which rejuvenates the skin and reduces wrinkles. Our soaps ‘Godrej Shikakai’ and ‘Crowning Glory’ cater to the hair care markets.
Hair Colourants
We are leaders in this category with a market share of 34.9% for the quarter ended September 30, 2007. We have a variety of offerings ranging across powders, liquids and creams. We have priced our products at various price points to satisfy a gamut of consumers. Our hair colorant business grew by 12% during FY 06-07 as compared to FY 05-06. The hair colour category represents 24% of our total standalone sales for the FY 06-07. In December 2006 our powder hair dye (in bottles) received EU certification enabling us to introduce the product in Europe.
‘ColourSoft’ is our premium hair colour brand. It is marketed as Ammonia free and is available in various variants like, ‘Light Brown’, ‘Natural Black’, ‘Natural Brown’, ‘Soft Black’ and ‘Burgundy’. ‘Renew’ is a cream based hair colour targeted at the middle income consumers, and is available in six different variants, namely ‘Natural Black’, ‘Light Brown’, ‘Natural Brown’ ‘Burgundy’, ‘Cinnamon Red’, ‘Light Golden Brown’. In FY 06-07, our ‘Renew’ cream hair colour was relaunched with new packaging. The cream now contains ‘aloe’ and ‘protein’ conditioners that protect hair while colouring. In August 2007 we introduced a 20 ml pack in ‘Natural Black’ and ‘Burgundy’.
We have also recently launched ‘Renew Highlights’ in blonde and red colour.
Our non-premium hair colour category comprises of:
• ‘Godrej Powder Hair Dye’ – Natural Black and Natural Brown – a product suited for the general Indian populace. This is the largest selling hair colourant in this price margin. In FY 06-07, the product was re-launched with added conditioner and perfume. In order to attract the larger consumer base with lower purchasing power or those consumers requiring to use a product in smaller proportions, we introduced hair dyes in 3 gram sachets in 1996.
• ‘Godrej Permanent Liquid Hair Dye’ – Natural Black and Natural Brown - a range of shampoo based permanent hair dye which contains herbal extracts that conditions the hair.
• ‘Godrej Kesh Kala’ – a ‘ready for application’ oil based hair dye that is available in two variants, namely ‘Natural Black’ and ‘Natural Brown’.
• ‘Godrej Nupur Mehendi’, a unique blend which offers natural hair treatment using natural extracts such as amla, brahmi and bhringraj.
Toiletries
This category contributed to 6% of GCPL’s total sales in FY 06-07. Sales increased by 20% in FY 06-07 as compared to FY 05-06 with growth being witnessed across both the product categories falling within this segment, namely, shaving cream and talcum powder.
‘Godrej Shaving Cream’ is amongst the oldest brands in our toiletries category.
The ‘Godrej Shaving Cream’ comprises of four variants, namely:
• ‘Godrej Shaving Cream Rich Foam’ • ‘Godrej Shaving Cream Menthol Mist’ • ‘Godrej Shaving Cream Lime Fresh’ • ‘Godrej Shaving Cream Deluxe Lather’.
76 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The packaging has been redesigned in FY 06-07 to reflect a more contemporary look to appeal to current consumer tastes and preferences.
During FY 07-08, the Company launched its first brand ‘Erasmic Shave Gel’ in India which was acquired through the acquisition of Keyline.
Our talcum powder is available in three brands namely ‘Cinthol’ and ‘Godrej No. 1’. ‘Godrej No. 1’ is available in two variants, ‘Jasmine’ and ‘Sandal’. ‘Cinthol Deo Talc’ is available in four variants and has a special deodorant formula that protects the consumer from body odour.
GCPL has introduced ‘FairGlow’ face wash and Godrej No 1 ‘almond shampoo’ on a test basis during the first quarter of FY 07-08.
Liquid Detergents
This segment broadly comprises of:
• Fabric wash; and • Dish Wash
Fabric Wash
Our ‘Ezee’ liquid detergent is designed for special and delicate garments, including silks and winter wear. This product category contributed 5.1% to our total standalone sales for the FY 06-07. Our brand, ‘Ezee’ is one of the largest selling liquid detergents in India with a market share of 78.5% in this segment (as of September 30, 2007). We have obtained a Woolmark authentication that indicates that the product is ideally suited to wash all woollen materials.
Dish Wash
Godrej Liquid Dishwash, our liquid dishwash is a specially concentrated formulation for washing and cleaning of utensils. We re launched the product in January 2003 with a modern packaging and design.
International Operations
We have expanded our business into the international markets through acquisitions in U.K, South Africa and U.A.E.
Keyline Brands Limited (Keyline) In October 2005, we acquired Keyline Brands Limited UK, a company engaged in the manufacture and marketing of Personal Care products. Though UK forms nearly 90% of the total sales of Keyline, it enables us to also widen our geographical footprint to key areas like Europe, Australia, Canada and Middle East where Keyline has a presence. Through Keyline we are able to manufacture, market, sell and distribute cosmetics, toiletries and men’s grooming categories and have developed a customer base in numerous supermarket chains and discount stores.
Keyline possesses its own integrated functions including sales, marketing, finance, IT, warehousing, logistics services besides an efficient customer service department. It also has a manufacturing unit, Inecto Manufacturing Limited, which is a producer of a large cross section of liquid, lotion and cream products in bottles, tubes and sachets.
The details of the various brands offered by Keyline are as under:
‘ADORN’ Quality hair spray brand ‘AAPRI’ Skin care brand Medicated talcum powder brand which now also has a fast-growing ‘CUTICURA’ hand hygiene business
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‘ENDOCIL’ Skin care brand. ‘ERASMIC’ Shaving products. Diverse range of hair colourants and specialist shampoos and ‘INECTO Hair Care’ conditioners. Range of toiletries, skin care, hair care, hand care and body care with ‘INECTO Pure Coconut’ coconut properties. ‘NULON’ Hand creams and lotions ‘SKYHYDRA’ High altitude skin moisturizer
Keyline brands also distributes brand like Bio-oil, P20, PerspireX, DAX and Foltene Research.
For the year ended March 31, 2007, Keyline reported revenues of Rs 1668.38 million and net profit of Rs 161.31 million.
Rapidol (Pty) Limited (South Africa) (Rapidol)
In September 2006, we acquired the South African business of Rapidol, U.K. as well as its subsidiary Rapidol International Limited. The Rapidol acquisition gives us entry to a significantly sized hair colour market for black hair and ownership of ethnic hair colour brand like Inecto in ten African countries. Our distribution network is spread across South Africa and other African nations such as Zambia, Mozambique, Tanzania, Swaziland, Ghana, Namibia, Zimbabwe, Mauritius, Seychelles and Madagascar.
Rapidol U.K. established its South African branch in 1952 and since then has been a marketer of permanent hair colourants. It has over the years developed a range of hair colourants and hair care products particularly designed to colour and care for colour treated hair in the climatic conditions of Africa.
Rapidol launched the powder hair colour product in South Africa. It sources Inecto Powder Hair colour in 10 grams bottles from the Company in small quantities. There is no fixed long term arrangement between Rapidol and GCPL for providing the manufacture and sale of this product for Rapidol. During December, 2006 the first shipment of GCPL products, namely Godrej No. 1 soap and Renew hair colour was made to Rapidol. For the year ended March 31, 2007, Rapidol reported revenues of Rs 251.27 million and net profit of 29.14 million.
Godrej Global Mid East FZE (GGME) Godrej Global Mideast FZE, a subsidiary of Godrej International Limited was acquired by GCPL in October 2007. Established in Sharjah to distribute Godrej Groups’ FMCG products in Middle East, GGME has a distribution network in UAE, Oman, Saudi Arabia, Kuwait, Qatar and Bahrain. It has an experience of over 10 years in these markets especially in the distribution of soaps, hair colours and toiletries. The acquisition consolidates GCPL’s presence in the Middle East countries and optimizes GGME’s sales potential in these markets.
GGME’s products are available in large modern trade channels and in pharmacies which help to rapidly introduce new products and new brands.
Joint Venture/Strategic Alliance
Godrej SCA Hygiene Limited During March 2007, we signed an agreement with SCA Hygiene Products AB, Sweden to form a 50:50 joint venture company known as Godrej SCA Hygiene Limited to manufacture and market paper based absorbent hygiene products in India. Our ‘Snuggy’ brand was sold in March 2007 to the newly formed joint venture company. The joint venture also has an agreement with the Company for distributing its products in India.
This joint venture will provide us with the opportunity to gain entry into the feminine hygiene products and baby diaper market, which is still in the nascent stage in India. The joint venture gains access to SCA Hygiene
78 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only technology and also enables us to introduce SCA brands into the Indian market.
Manufacturing
We have manufacturing facilities located both in India and internationally. Our various manufacturing facilities, and the products manufactured at these facilities are as follows:
Domestic Manufacturing units
Sr. Location Products Manufactured Year of No commencement 1 Malanpur, Madhya Pradesh Soaps and chemicals July 1991 2 Guwahati, Assam Hair colours and toileteries November 2001 3 Baddi – Thana, Himachal Pradesh Soaps January 2004 4 Baddi- Katha, Himachal Pradesh Soaps and liquid detergents December 2006 5 Sikkim Hair colours and toileteries March, 2007
Malanpur factory: Our Malanpur factory has facilities for fat splitting, distillation and soap manufacturing. The plant has received recognition for good manufacturing practices and superior environmental systems. The Malanpur factory has received “Commendation for Strong Commitment to Excel” category of CII –EXIM Bank Award for Business Excellence 2007 during 15th Quality Summit held at Bangalore in November 2007.
In addition, we have obtained the following certifications:
• Quality System ISO: 9002, and • Environmental Management System ISO: 14001.
The Malanpur factory follows the TQM culture by involving all employees in making the operations efficient and constantly improves the quality to meet the requirements of the customers. It has also consistently won the National Convention of Quality awards. In Fiscal 2004 the plant received the Qimpro Certificate of Merit in recognition of being ‘Proficient and accepted by industry as being a superior operation’ besides also winning the National Safety Council of India’s award ‘in recognition of the development and implementation of effective management systems and procedures. Baddi-Thana factory: This factory has been certified by BVQi for ISO: 9001:2000 (Quality Management System), ISO: 14001:1996 (Environmental Management System), ISO: 18001:1999 (Occupational Health & Safety Management System).
Baddi-Katha factory: In December 2006, the Company commenced commercial production of soaps at its new factory at Katha in Himachal Pradesh. It commenced manufacture of liquid detergents in during the first quarter of Fiscal 2007.
The Guwahati plant commenced operations in Fiscal 2002 and the Sikkim plant commenced operations in March 2007. Both the facilities produce hair colours and toiletries.
International Manufacturing Units
The Company also has manufacturing locations abroad at UK and South Africa, from the acquisition of Keyline Brands Limited and Rapidol (Pty) Limited. The plant at UK is used to manufacture personal care products and the plant in South Africa manufactures hair care products.
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Manufacturing Capacity: (capacity in metric tones) Sr No Year ended Year ended Year ended March 31, 2005 March 31, 2006 March 31, 2007 • Soaps 75,000 75,000 137,333 • Hair Colours and other toiletries 2,210 2,330 4,080 • Fatty acids 52,500 52,500 52,500 • Glycerine 2,300 2,300 2,300 Total Capacity 132,010 132,130 196,213
Competition
The following are our competitors in the various categories:
• In the soaps category, our brands compete with ‘Lux’ and ‘Lifebuoy’- Hindustan Unilever Limited, ‘Nima’ – Nirma. • In the hair colours category, our products compete for market share with ‘Black Rose’ ‘Super Vasmol’ and ‘L’Oreal’ • Our competitors in shaving cream category are ‘Gillette’, ‘Palmolive’, ‘Indian Shaving’, ‘VI john’ and ‘Old Spice’ • Our talcum powder brands, compete with ‘Ponds’- Hindustan Unilever and ‘Denim’ • In the liquid detergent category our brand ‘Ezee’ competes with ‘Genteel’, ‘Safewash- Wipro’ and ‘Surf Excel- Hindustan Unilever Limited’.
Marketing and Sales
Some of the initiatives taken by our Company for the marketing and sale of our products are:
Value For Money (VFM) focus: We believe that all our products possess a distinct ‘value for money’ proposition. Across the entire soap and personal care range, we offer quality products at competitive prices. The quality proposition of GCPL’s product portfolio is further reinforced by the fact that all the key brands of GCPL in the Toilet Soaps category continue to be of Grade-1 quality, according to specification by the BIS (Bureau of Indian Standards).
In order to access the rural markets, we have introduced some of our soap brands in smaller 50 gm packs to strengthen acceptance in the rural segments.
Dedicated Brand Teams: We have appointed marketing managers for marketing and brand building initiatives for each product as well as imbibe new market trends and variations. The brand team is responsible for marketing, advertising, promotions, consumer research and other disciplines that are the key to developing an FMCG brand.
Customized Product Offerings: In line with its objective of building long-term consumer relationships and adapting to various customer needs, we introduce customised products based on specific market requirements.
Focused Communication Strategy: Our advertisements consist of a mix of electronic, print and online media, as well as through various competitions and partnerships to strengthen brand identity.
Sales and Distribution Structure: Our sales force comprises of over 250 field staff spread across the country. A two tier distribution network of super stockists and sub stockists allows for deeper penetration into the rural market. We have 33 C&F Agents and over 4,500 distributors, super stockists and sub stockists to support our sales force. Through our distributors and sub stockist, we cover close to 650,000 retailers.
Operations and Distributions:
We possess an efficient supply chain management system. The objective of GCPL’s supply chain is to make
80 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only available the right product in the right quantity at the right place at the right time.
Project ‘Sampark’, the distributor management initiative of the Company, along with our ERP system provides information exchange between the Company, the C&F Agents warehouse and the dealers to ensure efficient planning, timely delivery and planned level of inventories. This data is used to manage inventories at an appropriate level based on actual sales. GCPL has moved from being a traditional “Push” Operation to becoming a “Pull” Operation.
The primary objective of this process was to design a pull-based supply chain which responds to actual demand than forecasted numbers. As soon as a demand link dispatches goods, it triggers an automatic order on the supply link to replenish the stocks of the demand link to a pre-defined stock norm. The process also helps in prioritizing the dispatches from the supply site, based on the stock positions of all the demand links with reference to the norm.
Through our supply chain management system we are able to effectively communicate with raw material suppliers, third party manufacturers and Carrying & Forwarding Agents to ensure optimal finished product inventory levels and adequate marketplace availability.
Health safety and environment
We comply with applicable health, safety and environmental legislation and other requirements in our operations. We are not currently a party to any environmental proceedings which, if adversely determined, would reasonably be expected to have a material adverse effect on our financial condition or results of operations.
We believe that all accidents and occupational health hazards can be prevented through systematic analysis and control of risks and by providing appropriate training to employees, subcontractors and communities. We encourage our employees to work constantly and proactively toward eliminating or minimizing the impact of hazards to people and the environment. We encourage the adoption of occupational health and safety procedures as an integral part of our operations.
We have implemented a number of precautionary measures for the safety of our manufacturing units and for the better usage and conservation of the environment. In the event of any mishap, we have a mechanism in place to review and improve the existing safety and training mechanisms. Our factories at Malanpur and Baddi-Thana are ISO certified. We undertake periodic surveillance audits to ensure compliance with the various norms. All our factories are ‘no tobacco no smoking’ zones.
We have a SHE (safety, health and environment) policy to take care of safety, health and environment. The main objectives of SHE is to ensure zero accidents, zero health hazards at work and clean and green environment.
New Products Launches
The Company has launched a number of new products / variants over the years, details of which are given below:
FY Particulars
2007-08 We launched the following products in the first quarter of FY 06-07:
• The Company test marketed products in the new categories of shampoo (‘Godrej No. 1’) and face wash (‘Godrej Fairglow’). • New variant of ‘Godrej No.1’ – papaya and lotus soap was launched • Erasmic shave gel launched in India
2006-07 • ‘Renew Highlights’ launched in blonde and red colours • ‘Godrej Powder Hair Dye’ relaunched with added conditioner & perfume. • ‘Renew Cream Hair Colour’ relaunched with aloe & protein conditioners & attractive packaging
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FY Particulars
2005-06 • ‘Evita’ soap introduced in the market • New variants ‘Cinthol Deo Soap Sport’ and ‘Godrej No.1- Lavender’ launched • ‘Fairglow’ soap relaunched with new perfume and packing • 50 gm offerings introduced in a number of soap brands • ‘Godrej No.1’ talc introduced in Sandal and Jasmine fragrances
2004-05 • New variant of Godrej No.1 launched with Jasmine fragrance. • Godrej Renew offered in 4 additional shades – Dark Mahogany, Natural Darkest Brown, Copper Brown and Light Golden Brown • Test market of deluxe lather variant of Godrej shaving cream
Human Resources
We place great importance on developing our human resources. We are ranked No.6 in the Best Employers in India 2007 survey conducted by Hewitt Associate along with Economic Times, ranked 14th in the ‘Best Companies to Work for in India’, Survey 2007 conducted by Business Today, Mercer Human Resource Consulting and TNS India and are ranked 15th in the Great Places to Work Study 2007 conducted by Grow Talent Company Limited in partnership with Great Places to Work Inc, USA along with Business World. Some of the initiatives taken by us are as below: We have a Performance Linked Variable Remuneration approach in our compensation policies, facilitating a performance linked pay system.
The Total Talent Management (TTM) Process at GCPL enables the business to build its future strategic capabilities and structure the development of critical talent for future business needs
GOLD, the Godrej Organization for Learning and Development has been launched with the purpose of energizing and accelerating the Learning Process for employees of Godrej Industries and Associate Companies. This is a key step to becoming a "Learning Organization", which is one of our ten shared values.
Godrej Employee Management System (GEMS) is based on a state-of-the-art IT system (PeopleSoft) which support people processes optimized for our business needs. It helps the organisation in improving the quality of people-related decision making and in providing timely and enhanced HR support for our businesses.
Being part of the Godrej Group we have programmes across the group to facilitate knowledge sharing and promote best practices across the group. In addition, Management Programmes are conducted for front line managers in association with Symbiosis Institute of Business Management.
We have not experienced any major strikes since inception and we consider our relationship with our employees to be satisfactory. As of November 30, 2007, GCPL employed a total of 1,256 individuals
Function No of Employees Manufacturing 800 Sales 335 Marketing & Purchase 26 Finance, HR & R&D 95 Total 1,256
Intellectual property
In addition to other trademarks, we own the “Godrej” trademarks in the categories in which we operate and
82 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only other trademarks that we generally use for our products. In 2006-07, GCPL acquired the “Inecto” and other trademarks in the acquisition of Rapidol (Pty) Limited.
Insurance
We maintain insurance coverage with leading insurers in India. Some of the major risks covered for our business assets are against risk of fire and allied risks, Product Liability insurance, Director and Officers policy and Marine risks.
Brand recognition
We have obtained the following awards for our brands:
• Godrej Consumer Products has been selected as a Business Super brand for the period 2004-06 by the Superbrands Council
• Cinthol, the company’s flagship soap brand was also recognised as a Super brand in 2003-04 by the ‘Superbrands’ Council
• Ezee was recognized as a Super brand in 2006-07 by the ‘Superbrands’ Council
• Godrej No. 1 is the largest selling Grade 1 soap brand in the country. This grade awarded by BIS (Bureau of Indian Standards) is attributable to only quality soaps and stipulates a minimum 76% TFM content and limited level of additives.
• Godrej has been awarded the Platinum prize in the Hair Dye category by Readers Digest in the ‘Trusted Brand – Asia 2007’ awards
83 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
REGULATIONS AND POLICIES
The following description is a summary of the relevant regulations and policies as prescribed by the central / state governments that are applicable to the Company in India. The information detailed in this chapter has been obtained from publications available in the public domain. The regulations set out below are not exhaustive, and are only intended to provide general information to the investors and are neither designed nor intended to be a substitute for professional legal advice.
Introduction
We are one of the leading business groups in the Indian FMCG sector with presence across soaps and personal care products. The following is an overview of the important laws and regulations which are relevant to our business.
Labour Related Legislation
Contract Labour (Regulation and Abolition) Act, 1970
The Company uses the services of contractors who in turn employ contract labour whose number exceeds twenty in respect of some of the sites. Accordingly, the Company is regulated by the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 (the “CLRA”) which requires the Company to be registered as a principal employer and prescribes certain obligations with respect to welfare and health of contract labourers.
The CLRA vests responsibility in the principal employer of an establishment, to which the CLRA applies, to make an application to the concerned officer for registration of the concerned establishment. In the absence of such registration, contract labour cannot be employed in the concerned establishment. Likewise, every contractor, to whom the CLRA applies, is required to obtain a license and may not undertake or execute any work through contract labour except under and in accordance with the license issued. To ensure the welfare and health of the contract labour, the CLRA imposes certain obligations on the contractor in relation to establishment of canteens, rest rooms, drinking water, washing facilities, first aid, other facilities and payment of wages. However, in the event the contractor fails to provide these amenities, the principal employer is under an obligation to provide these facilities within a prescribed time period. Penalties, including both fines and imprisonment, may be levied for contravention of the provisions of the CLRA.
Employees Provident Funds and Miscellaneous Provisions Act, 1952
The Employees Provident Funds and Miscellaneous Provisions Act, 1952 (the “PF Act”) is a labour legislation which ensures compulsory provident fund, family pension fund and deposit linked insurance in factories and other establishments for the benefits of the employees. The rate of contribution has been fixed at 12%. Presently an employee at the time of joining the employment and getting wages up to Rs.6,500 is required to become a member of the employees provident fund organization (the “EPFO”), established in accordance with the provisions of the PF Act. An employee is eligible for membership of fund from the very first date of joining such an establishment.
The PF Act inter alia provides for:
• grant of exemption from the operation of the schemes framed under the PF Act to an establishment, to a class of employees and to an individual employee, on certain conditions;
• appointment of an inspector to secure compliance under the PF Act and the schemes framed there under; and
• mode of recovery of monies due from employers.
The funds established under the PF Act vest in and are administered by the Central Board of Trustees constituted under the PF Act and functions within the overall regulatory control of the Central Government.
84 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Factories Act, 1948
The Factories Act, 1948 (the “Factories Act”) is the principal legislation governing the health, safety, welfare of workers and environmental sanitation in factories. However, it was not until 1987 that the elements of occupational health and safety, and prevention and protection of workers employed in hazardous processes, were truly incorporated in the Factories Act. The Factories Act is enforced by the State Governments through their factory inspectorates. The Factories Act also empowers the State Governments to frame rules, so that the local conditions prevailing in the State are appropriately reflected in the enforcement.
Payment of Bonus Act, 1965
The Payment of Bonus Act, 1965 (the “Bonus Act”) provides for payment of bonus irrespective of profit and makes payment of minimum bonus compulsory to those employees who draw a salary or wage up to Rs. 3,500 per month and have worked for a minimum period of 30 days in a year. The Bonus Act has created a right in every employee to receive a bonus and it has become an implied term in a contract of employment. Bonus is calculated on the basis of the salary or wage earned by the employee during the accounting year. The minimum bonus to be paid to each employee is either 8.33% of the salary or wage or Rs.100, whichever is higher, and must be paid irrespective of the existence of any allocable surplus or profits. If the allocable surplus or profit exceeds minimum bonus payable, then the employer must pay bonus proportionate to the salary or wage earned during that period, subject to a maximum of 20% of such salary or wage. Contravention of the Bonus Act by a company is punishable with imprisonment up to six months or a fine up to Re.1,000 or both against those individuals in charge at the time of contravention of the Bonus Act.
Industrial Disputes Act, 1947
The Industrial Disputes Act, 1947 (the “ID Act”) provides the machinery and procedure for the investigation and settlement of industrial disputes and certain safeguards to the workers. The ID Act aims to improve the service conditions of industrial labour. When a dispute exists or is apprehended, the appropriate government is empowered to refer the dispute to an authority mentioned under the ID Act in order to prevent the occurrence or continuance of the dispute. Reference may be made to a labour court, tribunal or arbitrator, as the case may be, to prevent a strike or lock -out while a proceeding is pending. Wide powers have been given to the labour courts and tribunals under the ID Act while adjudicating a dispute to grant appropriate relief such as modification of contract of employment or to reinstate workmen with ancillary relief.
Payment of Gratuity Act, 1972
Under the Payment of Gratuity Act, 1972 (the “Gratuity Act”), an employee who has been in continuous service for a period of five years will be eligible for gratuity upon his resignation, retirement, superannuation, death or disablement. An employee in a factory is deemed to be in ‘continuous service’ for a period of at least 240 days in a period of 12 months or 120 days in a period of six months immediately preceding the date of reckoning, whether or not such service has been interrupted during such period by sickness, accident, leave, absence without leave, lay-off, strike, lock-out or cessation of work not due to the fault of the employee. The maximum amount of gratuity payable under the Gratuity Act exceeds Rs.0.35 million.
Workmen’s Compensation Act, 1923
Under the Workmen’s Compensation Act, 1923, (the “WC Act”) if personal injury is caused to a workman by accident during employment, his employer is liable to pay him compensation. However, no compensation is required to be paid (i) if the injury does not disable the workman for more than three days, (ii) where the workman, at the time of injury, was under the influence of drugs or alcohol or (iii) where the workman willfully disobeyed safety rules.
Industry Related Legislation
The Drugs and Cosmetics Act, 1940
The Drugs and Cosmetics Act, 1940 (“DCA”) and the Drugs and Cosmetics Rules, 1945 (the “DCA Rules”) regulate the import into, manufacture, distribution, and sale of drugs and cosmetics in India. The enforcement of the DCA and the DCA Rules is entrusted to the Director General of Health Services, Ministry of Health and
85 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Family Welfare, Government of India. The DCA imposes stringent penalties on persons indulging in the manufacture or sale of adulterated or spurious or drugs not of standard quality which are likely to cause death or grievous hurt to the user. DCA makes disclosure of ingredients of the drugs on the label of the container mandatory under section 18 (a) (iii) for the preservation of health and safety of the purchasers. Under the provisions of DCA the central government has the power to prohibit import or manufacture of drugs and cosmetics in the public interest where the government is satisfied that the use of any drug or cosmetic is likely to involve any risk to human beings or animals or that any drug does not have any therapeutic value claimed for it and that in the public interest it is necessary to prohibit the imports of such drugs or cosmetics. Inspectors have been appointed by the state and the central government under DCA to inspect and take samples of the drugs and cosmetics Where an offence is committed by the company, every person who at the time when the offence was committed, was in charge of, and was responsible to the Company for the conduct of the business of the company, as well as the company is deemed to be guilty of the offence and is be liable to be proceeded and punished accordingly.
Pollution Laws
The major statutes in India which seek to regulate and protect the environment against pollution related activities in India include the Water (Prevention and Control of Pollution) Act 1974, the Air (Prevention and Control of Pollution) Act, 1981 and the Environment Protection Act, 1986 (the “Environment Protection Act”). The basic purpose of these statutes is to control, abate and prevent pollution. In order to achieve these objectives, Pollution Control Boards (the “PCBs”), which are vested with diverse powers to deal with water and air pollution, have been set up in each state. The PCBs are responsible for setting the standards for maintenance of clean air and water, directing the installation of pollution control devices in industries and undertaking inspection to ensure that industries are functioning in compliance with the standards prescribed. These authorities also have the power of search, seizure and investigation if the authorities are aware of or suspect pollution that is not in accordance with such regulations. All industries and factories are required to obtain consent orders from the PCBs, which are indicative of the fact that the factory or industry in question is functioning in compliance with the pollution control norms. These consent orders are required to be renewed annually.
The issue of management, storage and disposal of hazardous waste is regulated by the Hazardous Waste Management Rules, 1989 made under the Environment Protection Act. Under these rules, the PCBs are empowered to grant authorization for collection, treatment, storage and disposal of hazardous waste, either to the occupier or the operator of the facility. Water (Prevention and Control of Pollution) Act, 1981
The Water (Prevention and Control of Pollution) Act, 1981 (the “Water Act”) prohibits the use of any stream or well for the disposal of polluting matter, in violation of standards set down by the state PCB. The Water Act also provides that the consent of the state PCB must be obtained prior to opening of any new outlets or discharges, which is likely to discharge sewage or effluent. In addition, the Water Cess Act, 1977 requires a person carrying on any industry which involves the use of water to pay a cess in this regard. The person in charge is to affix meters of certain prescribed standards in order to measure and record the quantity of water consumed by such industry. Furthermore, a monthly return showing the amount of water consumed in the previous month must also be submitted.
Air (Prevention and Control of Pollution) Act, 1981
Air (Prevention and Control of Pollution) Act, 1981 (the “Air Act”) under which any individual, industry or institution responsible for emitting smoke or gases by way of use as fuel or chemical reactions must apply in a prescribed form and obtain consent from the state pollution control board prior to commencing any activity. The state PCB is required to grant, or refuse, consent within four months of receipt of the application. The consent may contain conditions relating to specifications of pollution control equipment to be installed. Within a period of four months after the receipt of the application for consent, the state PCB shall, by an order in writing, and for reasons to be recorded in the order, grant the consent applied for subject to such conditions and for such period as may be specified in the order, or refuse consent.
86 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Trademarks Act, 1999
The Trademarks Act, 1999 (the “TM Act”) covers the registration and protection of all trademarks, which are defined as marks capable of being represented graphically and which are capable of distinguishing the goods or services of one persons from those of the others and may include shape of goods, their packaging and combination of colours. A registered trademark is assignable and can be transmitted in accordance with the provisions of the TM Act. The TM Act specifies the procedure of registration, their correction, alteration or removal from the register if necessary. Both the users and the owners are required to be registered on the payment of a prescribed fee. The Trade Mark Registry is a division of the Controller General of Patents, Designs and Trademarks. The registration of a trademark remains in force for a period of ten years and is renewable provided that the mark remains eligible for protection in accordance with the provisions of the Act. Only registered trademarks can be protected by an action for infringement which may result in penalty or imprisonment. An Intellectual Property Appellate Board (“Appellate Board”) has been set up under the TM Act. The Appellate Board is not be bound by the procedure laid down in the Civil Procedure Code, 1908 (Act 5 of 1908) but is guided by the principles of natural justice and shall be subject to the provisions of the TM Act and the Trade Marks Rules, 2002 (the “TM Rules”).
Regulation of Foreign Investment
Foreign investment in India is governed primarily by the provisions of FEMA. The RBI, in exercise of its power under the FEMA, has notified the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 (“FEMA Regulations”) to prohibit, restrict or regulate, transfer by or issue security to a person resident outside India. As laid down by the FEMA Regulations, no prior consent and approval is required from the RBI, for FDI under the “automatic route” within the specified sectoral caps. In respect of all industries not specified under the automatic route, and in respect of investment in excess of the specified sectoral limits under the automatic route, approval for such investment may be required from the FIPB and/or the RBI.
Other Regulations
In addition to the laws, rules and regulations outlined in the aforesaid sections, various rules and regulations of jurisdictions’ other than India, where the Company has its operations are also applicable to the Company.
87 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
HISTORY AND CERTAIN CORPORATE MATTERS
Overview
Incorporation
Our Company was incorporated on November 29, 2000 as “Godrej Consumer Products Limited” under the provisions of the Companies Act with its registered office at Pirojshahnagar, Eastern Express Highway, Vikhroli, Mumbai 400079. We received the certificate for commencement of business from the Registrar of Companies, Maharashtra on December 15, 2000.
Changes in registered office
Since incorporation, the registered office of our Company has been located at, Pirojshahnagar, Eastern Express Highway, Vikhroli, Mumbai 400079.
Scheme of Arrangement with Godrej Soaps Limited (“Scheme”)
The Hon’ble High Court of Judicature at Bombay sanctioned the scheme of arrangement between Godrej Soaps Limited (GSL) and GCPL under sections 391 and 394 of the Companies Act on March 14, 2001. The Scheme became binding on the Transferor company (GSL) and the Petitioner company (GCPL) and their respective shareholders and creditors with effect from Apri1 1, 2001 (‘Appointed date’) and the whole of the undertaking and properties of the consumer products division of the transferor company except those pertaining to the soap manufacturing plant at Vikhroli and including the movable assets and liabilities of the research and development centre at Vikhroli, were transferred and vested in the Petitioner company at their book values, ignoring revaluation, as done at March 31, 2001, so as to vest in GCPL all the rights, title and interest of GSL therein. All debts, liabilities, contingent liabilities, existing securities and charges, legal proceedings, duties and obligations of whatsoever nature and wherever situate, related to the Consumer Products division of the Transferor company were transferred to the Petitioner company from the date that the scheme becomes operational.
Upon the Scheme becoming operative, GCPL issued one equity share of the face value of Rs. 4 each of GCPL in respect of every one equity share of the face value of Rs.10 each, to every member holding fully paid up equity shares in GSL. The name of GSL was later changed to Godrej Industries Limited (‘GIL’).
Milestones achieved by the Company since incorporation are listed below:
Year Event
2000 • Incorporated in November 2000, as a public company with the main object of taking over the consumer product business of Godrej Soaps Limited pursuant to a scheme of arrangement.
2001 • Commencement of operations as a new company from April 2001, pursuant to a scheme of arrangement from the erstwhile Godrej Soaps Limited • Listing at BSE and NSE. • Factory at Guwahati commences commercial production in October 2001
2003 • Acquisition of brand “Snuggy” in May 2003 • Introduction of Godrej Renew, a cream based hair colour.
2004 • Factory at Baddi commences commercial production in January 2004
2005 • Acquisition of Keyline Brands Limited (UK) in October 2005
2006 • Sub division of shares in August 2006 from shares of face value of Rs.4 each to shares of face value of Re.1 each • Acquisition of Rapidol (Pty) Limited (South Africa) in September 2006
88 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Year Event
• Factory at Katha commences commercial production in December 2006
2007 • Formation of a joint venture company known as ‘Godrej SCA Hygiene Limited’ along with SCA Hygiene Products AB, Sweden in March 2007, to manufacture and market paper based absorbent hygiene products. The “Snuggy” brand has been sold to the joint venture company. • Factory at Sikkim commences commercial production in March 2007 • Acquisition of Godrej Global Mideast FZE in October 2007
Main Objects of the Company
Objects of the Company:
The objects inter alia as contained in the Company’s Memorandum of Association include:
1. To acquire, take over, establish and carry on as a going concern the consumer products business carried on by Godrej Soaps limited, having its registered office at Pirojshahnagar, Eastern Express Highway, Vikhroli, Mumbai 400079 along with the brands and trademarks owned or used by the consumer products business of Godrej Soaps Limited and all or any of the liabilities and assets both moveable and immoveable pertaining to the consumer products business of Godrej Soaps Limited for marketing, selling, distribution and related facilities whether in India or abroad subject to necessary approvals under various laws if required;
2. To establish, acquire and carry on the business of manufacturing, selling distributing/trading, importing, exporting consumer goods such as toilet soaps, perfumes, laundry soaps, detergents, scourers, toiletries, cosmetics, personal care products of all kinds, fabric care products of all kinds, dental care products of all kinds and household consumer products/durables of all kinds
3. To establish, acquire, carry on, manufacture, trade, distribute and deal in articles of food of all kinds and to carry on the business of manufacture of vegetable products, margarine and all kinds of fat and aleginous emulsions and to buy, sell, manufacture, refine, prepare, deal in all kinds of fats, oils and oleaginous substances and all the required ingredients for the manufacture of the Company’s products.
Changes in the Memorandum of Association
The following changes have been made to the Company’s Memorandum of Association:
Date of shareholder approval Changes
Special Resolution passed by Change in the Capital clause consequent to increase in authorized capital members at the from Rs.1 million (consisting of 1,00,000 equity shares of face value of Extraordinary General Rs.10 each) to Rs. 250 million (consisting of 6,25,00,000 equity shares of Meeting held on March 13, face value of Rs. 4 each) 2001 Resolution passed by the Change in the Capital clause consequent to subdivision of shares from shareholders at the Annual face value of Rs. 4 each to Re. 1 each. General Meeting on July 20, 2006 Special Resolution passed by Change in Capital clause consequent to increase in authorized capital shareholders at the EGM from Rs. 250 million to Rs. 300 million. held on October 8, 2007
89 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Subsidiaries
None of our Subsidiaries is listed on any stock exchange and none of them has completed any public or rights issue in the past three years preceding this Draft Letter of Offer
Further, none of our Subsidiaries has become a sick company under the provisions of SICA and is currently under winding up.
1. Godrej Netherlands B.V
Godrej Netherlands B.V was incorporated in Netherlands as our wholly owned subsidiary on October 19, 2005. The principal activities of the Company are the holding and financing of group companies; to render guarantees and to bind the company or assets of the company on behalf of enterprises and companies with which the company forms a group and to render services to enterprises and companies.
Board of Directors:
The Board of Directors of the Company comprises of:
1. Mr. Dorab E. Mistry 2. IMFC Management B.V
Address of the Registered Office:
Amsteldijk 166, 1079 LH, Amsterdam
Shareholding Pattern:
Godrej Consumer Products Limited is the sole shareholder in Godrej Netherlands B.V. The shareholding of Godrej Consumer Products in Godrej Netherlands B.V is 100%.
Financial Performance:
The summary audited financial statements for the last three years are as follows
(Figures in Rs. Million except per share data) Particulars FY 06-07 FY 05-06 Share Capital (200 Shares of 100 Euros each) 1.16 1.62
Reserves 465.36 424.82 Income 18.68 2.69 Profit after tax (PAT) 0.73 10.11 Earnings per share (EPS) (Rs) 366.50 5,055.00
Book value per share (Rs.) 233,102.00 212,572.00
2. Godrej Consumer Products (UK) Limited
Godrej Consumer Products (UK) Limited was incorporated in United Kingdom as the wholly owned subsidiary of Godrej Netherlands B.V in 2005. The principal activities of the company are that of an investment holding Company.
Board of Directors:
The Board of Directors of the Company comprises of:
1. Mr. A. B. Godrej 2. Mr. D. E. Mistry
90 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Address of the Registered Office:
3/5, Armstrong Way, Great Western Industrial Park, Southall, Middlesex, UB2 4SD, England
Shareholding Pattern:
Godrej Netherlands B.V is the sole shareholder in Godrej Consumer Products UK Limited. The shareholding of Godrej Netherlands B.V in Godrej Consumer Products UK Limited is 100%.
Financial Performance:
The summary audited financial statements for the last three years are as follows
(Figures in Rs. Million except per share data) Particulars FY 06-07 FY 05-06 Share Capital (5,000,000 shares of GBP 1 each) 426.27 388.12
Reserves 408.78 282.49 Income 123.00 304.47 Profit after tax (PAT) 98.52 282.47 Earnings per share (EPS) (Rs) 19.71 56.49
Book value per share (Rs.) 167.01 134.12
3. Keyline Brands Limited
Keyline Brands Limited was incorporated as the wholly owned subsidiary of Godrej Consumer Products (UK) Limited in the UK on October 31, 2005. The main activity of the company is that of the marketing and distribution of personal care products such as toiletries and cosmetics.
Board of Directors:
The Board of Directors of the Company comprises of:
1. Mr. A B Godrej 2. Mr. N B Godrej 3. Ms. T A Dubash 4. Mr. H K Press 5. Mr. J R Anklesaria 6. Mr. B M Boyce 7. Mr. A P Fearn 8. Mr. Anand Rangaswamy
Address of the Registered Office:
3/5, Armstrong Way, Great Western Industrial Park, Southall, Middlesex, UB2 4SD, England
Shareholding Pattern:
Godrej Consumer Products (UK) Limited is the sole shareholder in Keyline Brands Limited. The
91 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
shareholding of Godrej Consumer Products (UK) Limited in Keyline Brands Limited is 100%.
Financial Performance:
The summary audited financial statements for the last three years are as follows:
(Figures in Rs. Million except per share data) Particulars FY 06-07 15 months ended 12 months ended March 06 December 04 Share Capital (29,156 2.49 2.26 2.45 shares of GBP 1 each)
Reserves 318.24 261.12 500.90 Income 1,668.38 1,529.25 1,414.13 Profit after tax (PAT) 161.31 137.58 126.16 Earnings per share 5,532.65 4718.75 4,326.90 (EPS) (Rs) Book value per share 10,915.08 24.73 17,264 (Rs.)
4. Inecto Manufacturing Limited
Inecto Manufacturing Limited is the wholly owned subsidiary of Keyline Brands Limited in the UK that became the wholly owned subsidiary of Godrej Consumer Products (UK) Limited on October 31, 2005. It is the manufacturing unit of Keyline Brands and it produces a large cross section of liquid, lotion and cream products in bottles, tubes and sachets.
Board of Directors:
The Board of Directors of the Company comprises of:
1. Mr. H K Press 2. Mr. D E Mistry 3. Mr. J R Anklesaria 4. Mr. B M Boyce 5. Mr. A P Fearn
Address of the Registered Office:
3/5, Armstrong Way, Great Western Industrial Park, Southall, Middlesex, UB2 4SD, England
Shareholding Pattern:
Keyline Brands Limited is the sole shareholder. The shareholding of Keyline Brands Limited is 100%.
Financial Performance:
The summary audited financial statements for the last three years are as follows:
(Figures in Rs. Million except per share data) Particulars FY 06-07 15 months ended 12 months ended March 06 December 04 Share Capital 8.52 7.76 8.43 Reserves 20.23 16.97 13.88 Income 1,71.94 2,21.05 178.24
92 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars FY 06-07 15 months ended 12 months ended March 06 December 04 Share Capital 8.52 7.76 8.43 Profit after tax (PAT) 1.59 4,14.57 15.10 Earnings per share 15.93 4,145.73 150.98 (EPS) (Rs) Book value per share 28.75 24.73 223.08 (Rs.)
5. Inecto Limited
Inecto Limited is the wholly owned subsidiary of Keyline Brands Limited in the UK that became the wholly owned subsidiary of Godrej Consumer Products (UK) Limited on October 31, 2005.
Board of Directors:
The Board of Directors of the Company comprises of:
1. Mr. H K Press 2. Mr. D E Mistry 3. Mr. J R Anklesaria 4. Mr. B M Boyce 5. Mr. A P Fearn
Address of the Registered Office:
3/5, Armstrong Way, Great Western Industrial Park, Southall, Middlesex, UB2 4SD, England
Shareholding Pattern:
Keyline Brands Limited is the sole shareholder. The shareholding of Keyline Brands Limited is 100%.
Financial Performance:
The company has been dormant since incorporation. For the year ended March 31, 2007 the company was entitled to exemption under section 249AA (1) of the Companies Act 1985, whereby it is not required to prepare its audited accounts.
6. Rapidol (Pty) Limited
Rapidol (Pty) Limited became the wholly owned subsidiary of our company on September 1, 2006. The company is engaged in the manufacture of hair care products. The acquisition of Rapidol also gives the Company ownership of hair colour brand ‘Inecto’.
Board of Directors:
The Board of Directors of the Company comprises of:
1. Mr. A B Godrej 2. Mr. N B Godrej 3. Ms. T A Dubash 4. Mr. H K Press 5. Mr. J R Anklesaria 6. Mr. K A Harrison 7. Ms. D Lowe
93 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Address of the Registered Office:
11, Young Road, Pinetown, South Africa
Shareholding Pattern:
Godrej Consumer Products Limited is the sole shareholder. The shareholding of Godrej Consumer Products Limited is 100%.
Financial Performance:
The summary audited financial statements for the seven months ended March 31, 2007 are as follows:
(Figures in Rs. Million except per share data) Particulars 7 months ended March 31, 2007 Share Capital (18,050,000 shares of Zar 1 each) 1,07.89
Reserves 29.13 Income 2,53.41 Profit after tax (PAT) 29.13 Earnings per share (EPS) (Rs) 0.16 Book value per share (Rs.) 0.75
7. Godrej Global Mid East FZE
Godrej Global Mid East FZE, UAE became the wholly owned subsidiary of our company on October 1, 2007. The company is engaged in the distribution and manufacture of cosmetics and personal care products in UAE and the other Gulf Council Countries.
Board of Directors:
The Board of Directors of the Company comprises of:
1. Mr. A B Godrej 2. Mr. N B Godrej 3. Ms. T A Dubash 4. Mr. D E Mistry 5. Mr. R H Khajotia
Address of the Registered Office:
P.O.Box 7966, Sharjah United Arab Emirates
Shareholding Pattern:
Godrej Consumer Products Limited is the sole shareholder. The shareholding of Godrej Consumer Products Limited is 100%.
Financial Performance:
The summary audited financial statements for the last three years are as follows:
(Figures in Rs. Million except per share data) Particulars FY 06-07 FY 05-06 FY 04-05 Share Capital (5 shares of 250,000 USD each) 53.84 55.72 54.66
Reserves (48.59) (54.62) (55.86)
94 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars FY 06-07 FY 05-06 FY 04-05 Share Capital (5 shares of 250,000 USD each) 53.84 55.72 54.66
Income 97.93 91.88 74.06 Profit after tax (PAT) 4.18 2.32 2.26 Earnings per share (EPS) (Rs) 0.84 0.46 0.45 Book value per share (Rs.) 1.05 0.22 (0.24)
8. Cosmetics That Care Limited
Cosmetics That Care Limited was the wholly owned subsidiary of Keyline Brands Limited in the UK that became the wholly owned subsidiary of Godrej Consumer Products (UK) Limited on October 31, 2005. Cosmetics That Care Limited has been wound up with effect from May 22, 2007.
The board of Cosmetics That Care Limited passed a resolution on August 11, 2006 to voluntarily wind up the company. The Companies House, UK officially wound up the company on May 22, 2007.
9. Cuticura Labs Limited
Cuticura Labs Limited was the wholly owned subsidiary of Keyline Brands Limited in the UK that became the wholly owned subsidiary of Godrej Consumer Products (UK) Limited on October 31, 2005. Cuticura Labs Limited has been wound up with effect from July 24, 2007.
The Board of Cuticura Labs Limited passed a resolution on August 11, 2006 to voluntarily wind up the company. The Companies House, UK officially wound up the company on July 24, 2007.
Joint Venture
Godrej SCA Hygiene Limited
The company has entered into a joint venture agreement with SCA Hygiene Products AB on March 24, 2007 pursuant to which they agreed to form a joint venture called Godrej SCA Hygiene Limited to manufacture and market paper based absorbent hygiene products
Board of Directors:
The Board of Directors of the Company comprises of:
1. Mr. Adi B. Godrej 2. Ms. Tanya A. Dubash 3. Mr. Hoshedar K. Press 4. Mr. Martin Kallstrom 5. Mr. Peter Dahlquist 6. Mr. Bertil Gustav Lunden
Address of the Registered Office:
Pirojshanagar, Eastern Express Highway, Vikhroli East, Mumbai-400079
Shareholding Pattern:
The company and SCA Hygiene Products AB hold 50% each of the issued, subscribed and paid up share capital of Godrej SCA Hygiene Limited.
Financial Performance:
The first financial year of the company will end on March 31, 2008. Hence financials for the past three years are unavailable.
95 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Key Agreements:
Detailed below is the summary of the key agreements entered into by the Company.
Joint Venture agreement with SCA Hygiene Products AB
The Company has entered into a joint venture agreement with SCA Hygiene Products AB on March 24, 2007 pursuant to which they agreed to form a joint venture called Godrej SCA Hygiene Limited. The agreement provides that the Company and SCA Hygiene Products AB shall hold 50% each of the issued, subscribed and paid up share capital of Godrej SCA Hygiene Limited. The agreement provides that Godrej SCA Hygiene Limited shall carry on the following business activities namely: (i) importing and/or manufacturing the products; (ii) marketing the products excluding the distribution of the products; and (iii) any other business as is mutually agreed in writing between the Company and SCA Hygiene Limited AB. The products covered under the agreements are: (a) baby diapers under the trademark Libero (b) feminine hygiene products the trademark Libresse and/or Libra and (c) such other products as may be mutually agreed in writing by the Company and SCA Hygiene Limited AB from time to time. In the event the shareholders’ equity as shown in the balance sheet of Godrej SCA Hygiene Limited at any time is less than half of its share capital, then parties to the agreement i.e. the Company or SCA Hygiene Limited AB shall be entitled to require that Godrej SCA Hygiene Limited be liquidated and shall by notice inform the other party of the intent to so liquidate the company. Should the other party not agree to such a liquidation, it may continue the business, provided that it agrees to acquire, by notice in writing to the other party, (a) the other party’s shares at a price corresponding to the share of the Godrej SCA Hygiene Limited’s equity represented by said shares and (b) all claims that the other party has against Godrej SCA Hygiene Limited on account of credits at a price corresponding to their full value and to cause the other party to be released from all liabilities.
Agreement for sale of shares between Godrej international Limited (‘Seller’), GCPL (‘Buyer’) and Godrej Global Mid East FZE (‘GGME)
This agreement for sale of shares was entered into on October 1, 2007. The Seller is a wholly owned subsidiary of GIL and holds five fully paid equity shares of face value of USD 250,000 each of GGME, representing 100% of the issued and paid up equity share capital of the company. The Seller has agreed to sell to the Buyer the 5 equity shares, constituting its total shareholding in GGME at USD 287,860 per share aggregating to a total value of USD 1,439,300 through this agreement. The Buyer will bear the stamp duty payable on the purchase of the shares, including stamping of this agreement. This agreement cannot be assigned, delegated, sold or transferred, whether by operation of law or otherwise, by either party without the prior written consent of the other. Neither party can cancel or amend this agreement without the express consent and concurrence of the other party.
Cost and Expense Sharing Agreement between GIL and GCPL.
GCPL entered into a cost and expenses sharing agreement with GIL on April 29, 2004. GIL owns the office at Pirojshahnagar, Eastern Express Highway, Vikhroli, Mumbai which is jointly used as a corporate office by GCPL and GIL, and accordingly both the companies agreed to bear the cost and expenses of common facilities such as corporate human resources, corporate services, corporate audit & assurance, corporate technical services, commodities & imports, research and development, quality control, canteen, transport and staff quarters, to avoid duplication and achieve efficiency. The ratio in which the expenses incurred every month are to be shared will be fixed at the beginning of the financial year and will remain constant for the year. The agreement does not obligate either party to allow the use of any facility to the other nor does it create tenancy or other such rights between the parties. The agreement is valid for a period of three years from April 1, 2004 and can be extended for two further periods of three years each on terms to be mutually decided by the parties. Currently, the agreement has been extended up to March 31, 2008. The agreement can be terminated by either party on giving three months prior written notice to the other party. Either party may terminate this agreement in the event of a breach of any of its terms by the other party.
Leave and License Agreement between GIL and GCPL
GIL (‘Licensor’) entered into a non-exclusive leave and license agreement with GCPL (‘Licensee’) on December 30, 2004 to provide the Licensee with office premises situated on the plot of land forming part of
96 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Pirojshahnagar, Eastern Express Highway, Vikhroli (E), Mumbai on payment of license fee/ compensation of Rs. 73,000 per month. The leave and license agreement was initially for a period of 33 months from January 1, 2005 and has been further extended to March 31, 2008. The Licensee will pay the license fee by the tenth day of each month and any delay in the payment of such fees will attract additional interest at the rate of 18% per annum, compounded monthly. The Licensee will not assign, transfer or sub-license its rights under this agreement without the prior written consent of the Licensor. The Licensee and its agents will comply with the requirements of such acts, rules and regulations that may from time to time be made applicable in respect of the licensed premised from time to time and will indemnify the Licensor against all liabilities, costs and expenses in respect of non-observance and non-compliance of such laws and regulations. The parties agree that the occupation of the licensed premises by the Licensee immediately after expiry or termination of this agreement will amount to an act of trespass and the Licensee will pay to the Licensor a sum of Rs. 109,500 per day, for wrongful use and occupation of the licensed premises. The Licensee agrees that as long as this agreement is in force it will not reduce its paid-up capital nor take any action that is likely to result in the reduction of its paid-up capital; if the Licensee’s paid-up capital falls below that the agreement will stand terminated ipso facto and the Licensee will hand over vacant possession of the premises to the Licensor. The registration and stamp duty charges of this agreement will be borne exclusively by the Licensee.
Leave and License Agreement between Ms. Parmeshwar Adi Godrej and GCPL
This agreement was entered into between Ms. Parmeshwar Godrej (‘Licensor’) and GCPL (‘Licensee’) for the use of the premises situated at Walkeshwar Road, Malabar Hill for the residence of its Chairman and Managing Director. The agreement is valid for 5 years from December 28, 2005 to December 27, 2010. The Licensee has to pay a license fee of Rs. 1,075,620 per month, subject to deduction of applicable taxes for the use, occupation and enjoyment of the premises. The Licensee will have a period of three months to hand over peaceful possession of the premises to the Licensor. The Licensee will bear the stamp duty and registration charges required to be paid. The Licensee will pay the monthly gas, electric and water charges incurred in the period covered by this agreement or any extension of this agreement. Either party has the right to terminate this agreement without assigning any reason by giving the other party three months notice in writing. If the Licensee fails or refuses to handover vacant and peaceful possession of the premises to the Licensor for any reason whatsoever it will be liable to pay twice the amount of compensation specified for each month or part thereof during such wrongful occupation. This agreement cannot be assigned, delegated, sold or transferred, whether by operation of law or otherwise, by either party without the prior written consent of the other. Neither party can cancel or amend this agreement without the express consent and concurrence of the other party.
Agreement for purchase of shares of Keyline Brands Limited
Godrej Consumer Products (UK) Limited entered into an agreement with Brian Boyce and others for purchase of shares of Keyline Brands Limited on October 31, 2005. The consideration for the sale of shares was GBP 17.05 million. GCPL acquired the entire business of Keyline Brands Limited. The agreement also gave GCPL ownership of brands such as Erasmic , Nulon , Aapri etc .
Agreement for purchase of business of Rapidol
GCPL signed the sale of business agreement with Rapidol Limited & Rapidol International Limited for a consideration of South African Rand 18000000 (Eighteen Million) on July 3 , 2006. GCPL acquired the South African business of Rapidol Limited & Rapidol International Ltd.
GCPL also signed a separate agreement for purchase of Trademark & Intellectual Property with Rapidol Limited & Rapidol International for considerations of South African Rand 57000000 ( fifty seven Million ) . This gave ownership rights to GCPL of the Rapidol trademarks- INECTO , SOFELENE and many others
Deed of Assignment of Trademarks with Godrej SCA Hygiene Limited
The Company has entered into a Deed of Assignment of Trademarks dated March 24, 2007 with Godrej SCA Hygiene Limited whereby it has agreed to transfer and assign its trademarks and the goodwill in respect thereof and all the rights, title and interest in the trademarks together with all benefits and advantages accruing therefrom and rights and privileges attached thereto to Godrej SCA Hygiene Limited for a sum of Rs. 90 million to be paid by Godrej SCA Hygiene Limited to the Company. The trademarks forming the subject matter of the agreement are all the “Snuggy” marks of which the Company has been the proprietor.
97 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Deed of Assignment of Copyrights with Godrej SCA Hygiene Limited
The Company has entered into a Deed of Copyrights dated March 24, 2007 with Godrej SCA Hygiene Limited whereby it has agreed to transfer and assign the copyrights and the goodwill in respect thereof and all the rights, title and interest in the copyrights together with all benefits and advantages accruing therefrom and rights and privileges attached thereto to Godrej SCA Hygiene Limited for a sum of Rs. 60 million to be paid by Godrej SCA Hygiene Limited to the Company. The copyrights forming the subject matter of the agreement are all the “Snuggy” marks of which the Company has been the proprietor.
Celebrity Agreements
The Company has entered into agreements with certain celebrities during FY 07-08 and entities that manage the endorsements/advertisements of the celebrities The agreements provide for engaging the services of the celebrities in connection with the advertisement, promotion, marketing and endorsement of certain products manufactured by the Company. The agreements shall remain in force for a period of 2 years commencing from the date when the advertising material is first put on display for public viewing. The Company shall pay a sum of Rs. 75 million to the celebrities and entities in consideration of the services provided and obligations undertaken by the celebrities.
98 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
DIVIDENDS
The Company has been a dividend paying company and has paid dividends in each of the last five years. The following are the dividend pay outs in the last five years by the Company:
Fiscal Dividend per Equity Share of Re. 1 each * Amount (In Rs. million)(1) (Amount in Rs.) 2003 2.00 463 2004 2.25 513 2005 3.00 679 2006 3.50 790 2007 3.75 847 (1) Excluding dividend tax where applicable
*The Equity Shares of the Company were sub divided from a face value of Rs 4 per share to a face value of Re 1 per share in the financial year 06-07.
The amounts paid as dividends in the past are not necessarily indicative of our dividend policy or dividend amounts, if any, in the future.
Pursuant to the terms of some of our existing loan agreements, we cannot declare or pay any dividend to our Shareholders during any financial year if we are in default of payment. For further details, see the section titled “Financial Indebtedness” beginning on page [●] of this Draft Letter of Offer.
99 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
MANAGEMENT
Board of Directors
The following table sets forth details regarding the Company’s Board of Directors as on December 15, 2007
Sr. Name, Designation, Address, Nationality Age Other Directorships No. Occupation and Term 1. Mr. Adi Godrej Indian 65 Godrej & Boyce Manufacturing. Aashraye Godrej House, years Company Limited 67 Walkeshwar Road, Godrej Industries Limited Malabar Hill, Godrej Agrovet Limited Mumbai 400 006 Godrej Sara Lee Limited Godrej Commodities Limited Occupation: Godrej Properties Limited Godrej Hershey Foods & Beverages Industrialist Limited Godrej Upstream Limited Designation: Nutrine Confectionery Company Limited Chairman and Managing Director Godrej SCA Hygiene Limited Swadeshi Detergents Limited (Non Independent Director) Vora Soaps Limited Godrej International Limited DIN : 00065964 Godrej Consumer Products (UK) Limited Term: From April 1, 2007 to March Keyline Brands Limited 31, 2010 Rapidol (Pty) Limited Godrej Investments Private Limited Godrej Hicare Limited Godrej Global Mid East FZE
2. Mr. Jamshyd Godrej Indian 58 Bajaj Auto Limited 40-D, B. G. Kher Marg, 2nd Floor, years Geometric Limited Mumbai 400 006 Godrej and Boyce Manufacturing Company Limited Occupation: Godrej Industries Limited Godrej Properties Limited\ Industrialist Godrej Commodities Limited Godrej Upstream Limited Designation: Haldia Petrochemicals Limited Godrej & Khmji (Middle East) LLC (Non Executive Director) Godrej (Malaysia) Sdn. Bhd. Godrej (Singapore) Pte. Limited DIN : 00076250 Godrej (Vietnam) Company Limited ACI Godrej Agrovet Private Limited Term: Godrej Investments Private Limited Tata Trustee Company Limited Liable to retire by rotation Illinois Institute of Technology (India) Private Limited Godrej Agrovet Limited Godrej Sara Lee Limited Antrix Corporation Limited Breach Candy Hospital Trust Singapore-India Partnership Foundation Bombay Stock Exchange Limited Lawkim Limited
100 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Sr. Name, Designation, Address, Nationality Age Other Directorships No. Occupation and Term 3. Mr. Nadir Godrej Indian 56 Godrej & Boyce Manufacturing 40-D, B. G. Kher Marg, 2nd Floor, years Company Limited Mumbai 400 006 Godrej Agrovet Limited Godrej Global Solutions Limited Occupation: Godrej Industries Limited Godrej Properties Limited Industrialist Godrej Sara Lee Limited Godrej Upstream Limited Designation: KarRox Technologies Limited Mahindra & Mahindra Limited Non Executive Director Goldmohur Foods & Feeds Limited Godrej Gold Coin Aquafeed Limited DIN : 00066195 Boston Analytic LLC Compass BPO Limited Term: Godrej Global Mid East FZE Godrej International Limited Liable to retire by rotation ACI Godrej Agrovet Private Limited Keyline Brands Limited Rapidol Pty Limited Avestha Gengraine Technologies Private Limited Poultry Processors’ Association of India Cbay Systems Holding Limited
4. Mr. Bala Balachandran Indian 73 Allsec Technologies Limited 3269, Prestwick Lane, North Brook, years Air Control Bolder Coloron Systems IL, 600 062 Private Limited Solid Systems Engineering Private Limited Occupation: Service Great Lakes and Institute of Management Designation:
Independent Director
DIN : 00472998
Term: Liable to retire by rotation
5. Ms. Rama Bijapurkar Indian 50 Credit Rating and Information Services 9CD, Mona Apartments, years of India Limited 46 F, Bhulabhai Desai Road, Infosys Technologies Limited Mumbai 400 026 Axis Bank Limited CRISIL Risk and Infrastructure Occupation: Director Solutions Limited Entertainment Network (India) Limited Designation: Subhiksha Trading Services Limited Mahindra Holidays & Resorts India Independent Director Limited Ambit Corporate Finance Pte. Limited DIN : 00001835 Give Foundation
Term: Liable to retire by rotation
101 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Sr. Name, Designation, Address, Nationality Age Other Directorships No. Occupation and Term 6. Mr. Bharat Doshi Indian 58 Mahindra and Mahindra Financial 8, St. Helen’s Court, Peddar Road, years Services Limited Mumbai 400 026 Mahindra and Mahindra Limited Mahindra Holdings and Finance Ltd. Occupation: Service Mahindra Holdings Ltd. Mahindra Intertrade Limited Designation: Mahindra Steel Service Centre Limited NSE IT Limited Independent Director Mahindra Rural Housing Finance Limited DIN : 00012541 Mahindra International Limited Tech Mahindra Limited Term: Mahindra USA Inc Bristlecone Limited Liable to retire by rotation Mahindra (China) Tractor Company Limited Franklin Templeton Trustee Services Private Limited The Mahindra United World college of India Indian Institute of Management, Kozhikode The Associated Chambers of Commerce and Industry of India Mahindra Foundation K.C. Mahindra Education Trust Lalit Doshi Memorial Foundation Mahindra and Mahindra Employee’s Stock Option Trust
7. Mr. Aman Mehta Indian 61 Wockhardt Pharmaceuticals Limited 4/7, Shantiniketan, years Jet Airways Limited New Delhi 110 021 Max Healthcare Institute Limited Cairn India Limited Occupation: Director Tata Consultancy Limited Emaar MFG Land Limited Designation: Vedanta Resources Plc, PCCW Limited Independent Director Tata America International Corporation
DIN : 00009364
Term: Liable to retire by rotation
8. Mr. Hoshedar Press Indian 58 Keyline Brands Limited 11, Panchsheel, years Inecto Manufacturing Limited 64, Pali Hill, Bandra (West), Rapidol (Pty) Limited Mumbai 400 050 Ensemble Holding & Finance Limited Godrej SCA Hygiene Limited Occupation: Director
Designation:
Executive Director and President
DIN : 00254417
102 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Sr. Name, Designation, Address, Nationality Age Other Directorships No. Occupation and Term
Term: April 1, 2007 to April 30, 2010
Brief Biographies of the Directors
Mr. Adi Godrej has been a Director since 2001 and is the Chairman and Managing Director of our Company. He holds a Bachelor of Science and Master of Science from the Massachusetts Institute of Technology, U.S.A. Mr. Adi Godrej is a Director of numerous companies, including Godrej and Boyce Manufacturing Company Limited, Godrej Agrovet Limited, Godrej International Limited, Godrej Global Mid East FZE. He is the Chairman of The Board of Trustees of the Dadabhai Naoroji Memorial Prize Fund. He is former Chairman and President of the Indian Soap and Toiletries Makers' Association, the Central Organisation for Oil Industry and Trade, the Solvent Extractors' Association of India, the Compound Livestock Feeds Manufacturers' Association, the Indo-American Society and the Governing Council of the Narsee Monjee Institute of Management Studies and former member of the Dean's Advisory Council of the MIT Sloan School of Management and the Wharton Asian Executive Board. Mr. Godrej is a member of Tau Beta Pi (The Engineering Honor Society). Mr. Godrej also serves as a member of the Governing Board of the Indian School of Business. Mr. Godrej is a recipient of several awards and recognitions including the Rajiv Gandhi Award.
Mr. Jamshyd Godrej has been a Director since 2001 and is a Non- Executive Director of our Company. He holds a Bachelor of Science from the Illinois Institute of Technology, U.S.A. He joined the board of management of Godrej and Boyce Manufacturing Company Limited as a director in 1974, became managing director in 1991 and chairman of the board in 2000. Mr. Jamshyd Godrej is the President of World Wide Fund for Nature, India and the former President of Confederation of Indian Industry and the Indian Machine Tool Manufacturers' Association.
Mr. Nadir Godrej has been a Director since 2001 and is a Non-Executive Director of our Company. He holds a Bachelor of Science (Chemical Engineering) from the Massachusetts Institute of Technology, U.S.A. and a degree in (Chemical Engineering) from Stanford, U.S.A. Mr. Nadir Godrej is the Chairman of Godrej Agrovet Limited. He is the managing director of Godrej Industries Limited and director in numerous companies.
Mr. Bala Balachandran has been a Director since 2001 and is an Independent Director of the Company. He holds a degree in Bachelor of Science (Mathematics/Statistics) and has completed his masters in Mathematics/Statistics from Annamalai University. Mr. Bala Balachandran began his teaching career in 1960 while a graduate student at Annamalai University, India. In 1967 he moved to the University of Dayton and in 1971 to Carnegie-Mellon to work on his doctorate. In 1973 he joined the faculty of Kellogg Graduate School of Management. From 1979-1983 he chaired the Department of Accounting and Information Systems and Decision Sciences. He is also director of the Accounting Research Center.
Ms. Rama Bijapurkar has been a Director since 2001 and is an Independent Director of our Company. She holds a post graduate diploma in management from the Indian Institute of Management, Ahmedabad. She has her own strategic marketing consulting practice and works across a wide range of sectors, helping organizations develop the market strategy as part of their business strategy. In addition to her consulting practice, she teaches at Indian Institute of Management, Ahmedabad.
Mr. Bharat Doshi has been a Director since 2001 and is an Independent Director of our Company. He has completed his Bachelor of Commerce and Masters in Law from the Bombay University and is also a Chartered Accountant and a Company Secretary. Mr. Bharat Doshi is presently the Executive Director and Group CFO of Mahindra & Mahindra Limited. Mr. Doshi joined Mahindra & Mahindra Limited in 1973 and has held various senior managerial positions. He was elevated to the company's board in 1992.
Mr. Aman Mehta has been a Director since 2006 and is an Independent Director of our Company. Mr. Aman Mehta has a Bachelor's degree in Economics from Delhi University. He has over 35 years of experience in various positions with The Hong Kong and Shanghai Banking Corporation group. He was the Manager, Corporate Planning at The Hong Kong and Shanghai Banking Corporation's headquarters in Hong Kong. Mr. Aman Mehta also became Chairman of The Hong Kong and Shanghai Banking Corporation Bank, Malaysia,
103 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Berhad on January 1, 1999 and a Director of The Hong Kong and Shanghai Banking Corporation Bank Australia Limited. Mr. Mehta retired from The Hong Kong and Shanghai Banking Corporation in December 2003 and presently is an independent non-executive director of several public companies.
Mr. Hoshedar Press has been a Director since 2001 and is the Executive Director and President of the Company. He holds a Bachelor of Technology degree from Indian Institute of Technology, Mumbai and a Post Graduate Diploma in Business Administration from Indian Institute of Management, Ahmedabad. Mr. Hoshedar.K. Press joined Godrej Soaps Limited as a Management Trainee in 1972. He led the marketing division during the joint venture of Godrej Soaps with Proctor & Gamble. After the restructuring of the Joint Venture in 1996, Mr. Hoshedar.K. Press returned to Godrej Soaps Limited and helped the company in regaining strength in the market with its own brands.
Compensation of the Directors
The following tables set forth all compensation paid by the Company to the Directors for the fiscal year ended March 31, 2007
Name of Director Salary and Perquisites (Rs) Commission Sitting Total (Rs) Allowances* (Rs) (Rs) Fees Mr. Adi. B. Godrej 9,830,000 15,463,000 - - 25,293,000 Mr. Jamshyd Godrej - - 800,000 80,000 880,000 Mr. Nadir. B. Godrej - - 800,000 80,000 880,000 Ms. Rama Bijapurkar - - 800,000 130,000 930,000 Mr. Bala - - 800,000 110,000 910,000 Balachandran Mr. Bharat Doshi - - 800,000 130,000 930,000 Mr. Anupam Puri - - 266,667 30,000 296,667 Mr. Aman Mehta - - 745,205 80,000 825,205 Mr. Hoshedar. K. 11,089,000 2,000,000 - - 13,089,000 Press * Including contribution to provident fund and performance linked variable remuneration
Shareholding of the Directors of the Company
The following table details the shareholding of the Directors in their personal capacity as at the date of this Draft Letter of Offer.
Name of Directors Number of Number of Equity Shares Equity Shares (Pre-Issue) (Post-Issue)* Mr. Adi Godrej 100 [●] Mr. Jamshyd Godrej NIL [●] Mr. Nadir Godrej 3,280,024 [●] Mr. Bala Balachandran NIL [●] Ms. Rama Bijapurkar 7,980 [●] Mr. Bharat Doshi 12,000 [●] Mr. Aman Mehta NIL [●] Mr. Hoshedar Press 10,088 [●]
Changes in the Board of Directors during the last three years
Name Date of Appointment/ Cessation Reason
Mr. Anupam Puri July 31, 2006 Resignation Mr. Aman Mehta April 26, 2006 Appointment
104 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Borrowing Powers of our Board
The shareholders of the Company by a resolution passed at the EGM held on February 16, 2001 have authorized the Board of Directors to borrow any sum or sums of money that together with the money already borrowed by the Company shall not exceed in the aggregate at any one time Rs. 200 Crore, irrespective of the fact that such aggregate amount of borrowing outstanding at any one time, may exceed the aggregate for the time being of the paid-up capital of the Company and its free reserves.
Terms of appointment of the Chairman and Managing Director, Mr. Adi Godrej
At the AGM held on July 20, 2006, the shareholders of the Company approved the reappointment and terms of remuneration of Mr. Adi Godrej as Managing Director designated as “Chairman and Managing Director” for a period of three years commencing from April 1, 2007 up to March 31, 2010. The terms and conditions of Mr. Adi Godrej’s appointment were determined through a contract dated March 30, 2007 between Mr. Adi Godrej and the Company.
A. Remuneration
(i) Fixed Compensation
Fixed compensation includes basic salary and the company’s contribution to provident fund and gratuity. The basic salary shall be in the scale of Rs. 4, 50,000 to Rs. 7, 50,000 per month, payable monthly.
(ii) Performance Linked Variable Remuneration (PLVR)
PLVR according to applicable scheme of the Company for each of the financial years 2007- 2008, 2008-2009 and 2009-2010 or as may be decided by the Board of Directors.
(iii) Flexible Compensation
In addition to Fixed Compensation and PLVR, Mr. Adi Godrej will be entitled to the following allowances, perquisites, benefits, facilities and amenities as per rules of the Company and subject to the relevant provisions of the Companies Act, 1956 (collectively called “perquisites and allowances”). These perquisites and allowances may be granted to the Managing Director in such form and manner as the Board may decide:
a) Furnished residential accommodation (including maintenance of such accommodation, provision of or reimbursement of expenditure incurred on gas, water, power and furnishing) or house rent allowance in lieu thereof as per the rules of the Company;
b) Payment/reimbursement of medical/hospitalization expenses for the Managing Director and his family, hospitalization and accident insurance for self and family in accordance with the rules of the Company;
c) Leave travel assistance for the Managing Director and his family in accordance with the rules of the Company;
d) Payment/reimbursement of club fees;
e) Earned/privilege leave, on full pay and allowance, not exceeding 30 days in a financial year. Encashment/accumulation of leave will be permissible in accordance with the Rules specified by the Company. Casual/Sick leave as per the rules of the Company;
f) Provision of Company maintained car(s) with driver for official use;
105 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
g) Provision of free telephone facilities or reimbursement of telephone expenses at residence including payment of local calls and long distance official calls;
h) Such other perquisites and allowances as per the policy/rules of the Company in force and/or as may be approved by the Board from time to time.
B. Overall Remuneration
The aggregate of the remuneration as specified above or paid additionally in accordance with the rules of the Company in any financial year, which the Board in its absolute discretion pay to the Managing Director from time to time, shall not exceed the limits prescribed from time to time under Sections 198, 309 and other applicable provisions of the Companies Act, 1956 read with Schedule XIII to the said Act as may for the time being, be in force.
C. Minimum Remuneration
Notwithstanding the foregoing, where in any financial year during the currency of the tenure of the Managing Director, the Company has no profits or its profits are inadequate, the remuneration will be subject to Schedule XIII to the Companies Act, 1956.
Terms of appointment of the Whole-time Director, Mr. Hoshedar Press
At the AGM held on July 20, 2006, the shareholders of the Company approved the reappointment and terms of remuneration of Mr. Hoshedar Press as Whole time Director designated as “Executive Director and President” for a period of three years and one month commencing from April 1, 2007 up to April 30, 2010. The terms and conditions of Mr. Hoshedar Press’s appointment were determined through a contract dated March 30, 2007 between him and the Company.
A. Remuneration
(i) Fixed Compensation
Fixed compensation includes basic salary and the company’s contribution to provident fund and gratuity. The basic salary shall be in the scale of Rs. 300,000 to Rs. 600,000 per month, payable monthly.
(ii) Performance Linked Variable Remuneration (PLVR)
PLVR according to applicable scheme of the Company for each of the financial years 2008, 2009, 2010 and 2011 or as may be decided by the Board of Directors.
(iii) Flexible Compensation
In addition to Fixed Compensation and PLVR, Mr. Hoshedar Press will be entitled to the following allowances, perquisites, benefits, facilities and amenities as per rules of the Company and subject to the relevant provisions of the Companies Act, 1956 (collectively called “perquisites and allowances”). These perquisites and allowances may be granted to the Executive Director and President in such form and manner as the Board may decide:
a) Housing as per rules of the Company (i.e. unfurnished residential accommodation and house rent allowance at applicable rate as per Company’s rules or house rent allowance as per Company’s rules);
b) Furnishing at residence as per rules of the Company;
c) Supplementary Allowance;
d) Leave travel assistance for the Whole-time director and his family in accordance with the rules of the Company;
106 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
e) Payment/reimbursement of medical/hospitalization expenses for the Whole-time director and his family in accordance with the rules of the Company;
f) Group insurance cover, group mediclaim cover;
g) Payment/reimbursement of club fees, food vouchers, petrol reimbursement;
h) Company car with driver for official use, provision of telephone(s) at residence;
i) Payment/reimbursement of telephone expenses;
j) Housing loan as per rules of the Company, contingency loan as per rules of the Company. These loans shall be subject to Central Government approval, if any;
k) Earned/privilege leave, on full pay and allowance, not exceeding 30 days in a financial year. Encashment/accumulation of leave will be permissible in accordance with the rules specified by the Company. Casual/sick leave as per the rules of the Company;
l) Such other perquisites and allowances as per the policy/rules of the Company in force and/or as may be approved by the Board from time to time.
B. Overall Remuneration
The aggregate of the remuneration as specified above or paid additionally in accordance with the rules of the Company in any financial year, which the Board in its absolute discretion pay to the Whole timeDirector from time to time, shall not exceed the limits prescribed from time to time under Sections 198, 309 and other applicable provisions of the Companies Act, 1956 read with Schedule XIII to the said Act as may for the time being, be in force.
C. Minimum Remuneration
Notwithstanding the foregoing, where in any financial year during the currency of the tenure of the Whole time Director, the Company has no profits or its profits are inadequate, the remuneration will be subject to Schedule XIII to the Companies Act, 1956.
Corporate Governance
There are five board level Committees in the Company, which have been constituted and function in accordance with the relevant provisions of the Companies Act and the Listing Agreement. These are (i) Audit Committee, (ii) Human Resource Committee, (iii) Nomination Committee, (iv) Compensation Committee and (v) Shareholders’ Committee. A brief on each Committee, its scope and its composition is given below:
Audit Committee
The Audit Committee consists of:
1. Mr. Bharat Doshi, Chairman, Independent Director 2. Mr. Bala Balachandran, Independent Director 3. Ms. Rama Bijapurkar, Independent Director 4. Mr. Aman Mehta, Independent Director
The Audit Committee is responsible for reviewing the Company’s compliance with internal control systems; reviewing the findings of the internal auditor relating to various functions of the Company; holding periodic discussions with the statutory auditors and the internal auditors of the Company concerning the accounts of the Company, internal control systems; the scope of audit and observations of the independent auditors and internal auditors; reviewing the quarterly, half-yearly and annual financial results of the Company before submission to the Board of Directors; and making recommendations to the Board of Directors on any matter relating to the financial management of the Company, including audit reports, the appointment of auditors and the
107 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only remuneration of the auditors.
The Audit Committee met four times during the FY 06-07.
Human Resources Committee
The Human Resources Committee consists of:
1. Ms. Rama Bijapurkar, Chairperson, Independent Director 2. Mr. Bala Balachandran, Independent Director 3. Mr. Bharat Doshi, Independent Director 4. Mr. Aman Mehta, Independent Director
The Human Resources Committee is responsible for reviewing the human resource policies and practices of the Company and, in particular, policies regarding remuneration of whole-time directors and senior managers, reviewing the senior management compensation, obtaining in principle approval of the compensation philosophy and issues relating to induction of new people and attrition.
The Human Resources Committee met once during the FY 06-07.
Nomination Committee
The Nomination Committee consists of:
1. Ms. Rama Bijapurkar, Chairperson, Independent Director 2. Mr. Bala Balachandran, Independent Director 3. Mr. Bharat Doshi, Independent Director 4. Mr. Aman Mehta, Independent Director
The Nomination Committee is responsible for identifying and nominating for the board’s approval, suitable candidates to fill board vacancies as and when they arise, drawing up selection criteria and appointment procedures for directors, periodically reviewing the structure, size and composition (including the skills, knowledge and experience) of the board and make recommendations to the board with regard to any changes and board evaluation.
The Nomination Committee met once during the FY 06-07.
Compensation Committee
The Compensation Committee consists of:
1. Mr. Bala Balachandran, Chairperson, Independent Director 2. Ms. Rama Bijapurkar, Independent Director 3. Mr. Bharat Doshi, Independent Director 4. Mr. Aman Mehta, Independent Director
The Compensation Committee is responsible for administration of the GCPL ESOP. All questions of interpretation of the GCPL ESOP and matters relating thereto are determined by the Compensation Committee.
Shareholder Committee
The Shareholder Committee consists of:
1. Mr. Nadir Godrej, Chairperson, Non Executive Director 2. Mr. Jamshyd Godrej, Non Executive Director 3. Mr. Adi Godrej, Chairman and Managing Director of the Company 4. Mr. Hoshedar Press, Executive Director and President and Whole-time Director
108 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The Shareholder Committee looks into redressing of shareholder complaints like transfer of shares, non-receipt of balance sheet and non-receipt of declared dividends.
The Shareholder Committee met ten times during the FY 06-07.
Key Managerial Personnel
The details of the Company’s key managerial personnel are as follows:
Mr. Rakesh Sinha, aged 49 years, is the Chief Operating Officer- Marketing and Operations of the Company. He holds a Ph.D. and joined our Company on July 1, 1981. He has 27 years of work experience. His gross salary for Fiscal 2007 was Rs 6.98 million.
Mr. Sunil Sapre, aged 44 years, is the Executive Vice President- Finance, Commercial and Company Secretary of our Company. He is a Chartered Accountant and a qualified Company Secretary. He joined our Company on April 15, 1987. He has 20 years of work experience. His gross salary for FY 06-07 was Rs 6.86 million.
Mr. Rajesh Tiwari, aged 49 years, is the Executive Vice President- Operations. He is a Chartered Accountant. He joined our Company on November 2, 1988. He has 19 years of work experience. His gross salary for Fiscal 2007 was Rs 5.28 million
Mr. A. Rangarajan, aged 58 years, is the Executive Vice President - Research and Development. He has a Bachelors Degree in Technology. He joined our Company on November 2, 1998. He has 35 years of work experience .His gross salary for Fiscal 2007 was Rs 5.97 million.
Mr. Bhupinder Singh Sodhi, aged 56 years, is the Executive Vice President - Sales. He holds a bachelor degree in commerce along with a diploma in business administration. He joined our Company on December 1, 1973. He has 35 years of work experience. His gross salary for Fiscal 2007 was Rs 6.13 million.
Mr. Sumit Mitra, aged 34 years, is the Executive Vice President – Human Resources. He has completed his Masters in Business Administration. He has 11 years of work experience. He joined our Company on June 1, 1997. His gross salary for Fiscal 2007 was Rs 2.54 million.
Mr. Jimmy Anklesaria, aged 52 years, is the Executive Vice President – International Business and Business Administration. He has completed his Masters in Business Administration. He joined our Company on July 14, 2005. He has 29 years of work experience. His gross salary for Fiscal 2007 was Rs 6.67 million.
Mr. Sunder Nurani, aged 44 years, is the Vice President – Research and Development. He has completed his Ph.D. He joined our Company on September 9, 2006, prior to which he was employed with Dabur India Limited. He has 19 years of work experience. His gross salary for Fiscal 2007 was 3.9 million.
Mr. V. Suresh, aged 41 years, is the Vice President Marketing. He has completed his He joined our Company on November 5, 2007. He was earlier employed with Bausch and Lomb.
All the above mentioned key managerial personnel are permanent employees of the Company.
Employee Stock Option Scheme (ESOS)
Our company has through a special resolution of the shareholders dated March 14, 2007 instituted the Godrej Consumer Products Limited Employee Stock Option Plan (“GCPL ESOP”). The GCPL ESOP is administered by the Compensation Committee of our Board of Directors. All questions of interpretation of the GCPL ESOP and matters relating thereto shall be determined by the Compensation Committee, whose determination shall be final and binding upon all persons having an interest in the GCPL ESOP. Key terms of the GCPL ESOP are set out below:
(i) The eligibility criteria for offering the options will be determined by the Compensation Committee from time to time, taking into consideration the grade, performance, merit, length of the service, future potential contribution, conduct and other factors as may be deemed appropriate by the committee. The maximum number of options that may be granted per employee per year shall not exceed 2, 00,000
109 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
options.
(ii) All employees of GCPL and its subsidiaries are eligible for being granted the GCPL ESOP. However, an employee who is a Promoter or belongs to the Promoter Group; and a director who either by himself or through his relatives or a body corporate, directly or indirectly holds more than 10% of the outstanding shares of the company, shall not be able to participate in the GCPL ESOP.
(iii) The options shall vest in the eligible employees within such period as may be prescribed by the Compensation Committee. This period will not be less than one year and may extend upto three years from the date of grant of options. Vesting may occur in tranches, subject to the terms and conditions stipulated by the Compensation Committee.
(iv) The exercise period will commence from the date of vesting and will extend up to a period of two years from the date of the respective vesting of options. The options will lapse if not exercised within the specified exercise period. The allotment of equity shares on exercise of options will be in accordance with the terms and conditions framed by the Compensation Committee.
(v) The Compensation Committee has constituted an independent trust viz. Godrej Consumer Products Limited Employee Stock Option Trust (the “Trust”) to subscribe to the shares of the Company pursuant to offer for sale by the Company by using the loan funds from the Company or its subsidiaries and in accordance with section 77 (2) (b) of the Companies Act. The Trust will purchase the shares of the Company in the secondary market by utilizing the loan funds and hold the shares till the time of exercise of options by the eligible employees in accordance with the GCPL ESOP.
(vi) The Board of Directors may, subject to compliance with applicable laws, at any time, alter, amend, vary, suspend or terminate the GCPL ESOP subject to the approval of shareholders of the Company at the general meeting, wherever necessary, for such variation.
The Board pursuant to resolution dated January 20, 2007 approved the grant of 2,000,000 Equity Shares of nominal value of Re.1/- under the ESOP.
Pursuant to resolutions passed by the Compensation Committee on March 21 and March 22, 2007, the Trust has purchased 850,000 shares of the Company from the secondary market by using the loan funds given by the Company. Out of the shares so purchased, the Compensation Committee has through a resolution passed on April 2, 2007, allotted a total of 750,000 options to certain eligible employees of the Company. These options will vest in the concerned employees at the end of three years from the date of grant of options. The Trust also purchased additional 10,000 shares on June 26, 2007 and allotted 110,000 options on July 12, 2007 to certain eligible employees. On December 7, 2007 the Trust purchased 75,000 shares and allotted options for the same on December 11, 2007 to eligible employers.
110 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Management Organizational Chart
H K Press Executive Director & President
Sumit Mitra R K Sinha B S Sodhi A Rangarajan Jimmy Anklesaria S S Sapre EVP COO EVP Sales EVP EVP EVP Human Resources Marketing & Research & Development International Business Finance and Operations & Business Development Commercial & Company Secretary
Kailash Maneck Katpatia Jaideep Mallick Rajesh Tiwari Tadkase Sundar Nurani GM International GM Finance & EVP AVP Sales VP Business Commercial Operations Research & Development
R K Shahaney V.Suresh VP Sales VP Marketing Ishaq Srinivasan Chinikamwala Sampath GM international GM Finance & Business Commercial
K D Dotiwalla P P Buch AVP Sales AVP Marketing K. Suryanarayan GM Finance T S Bedi Sameer Penkar GM Sales GM Marketing
Anirudh Singh Pradip Ughade GM Business GM Marketing Development
Subha Iyer GM Group Media
Ouseph Francis GM Purchase
Note: • Boxes with double border indicates Key Managerial Personal • COO – Chief Operating Officer • EVP – Executive Vice President • VP – Vice President • AVP –Associate Vice President • GM – General Manager
111 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Shareholding of Key Managerial Personnel in the Company
Name of Key Managerial Personnel No. of Equity Shares held (Pre-Issue) Dr. Rakesh Kumar Sinha 1400 Mr. Sunil S. Sapre 600 Mr. Bhupinder S. Sodhi 88 Mr. Jimmy R Anklesaria 400
Interest of Promoters, Directors and Key Managerial Personnel
Except as stated in “Related Party Transactions” on page [●] of this Draft Letter of Offer, and to the extent of shareholding in the Company, the promoter and promoter group does not have any other interest in the Company’s business.
The Non-Executive Directors of the Company may be deemed to be interested to the extent of fees, payable to them for attending meetings of the Board or a Committee. The Managing Director and other Whole-time Directors may be deemed to be interested to the extent of remuneration paid to them for services rendered by them as officers of the Company as well as fees, if any payable . All the directors may also be deemed to be interested to the extent of commission paid to them and Equity Shares, if any, already held by them or their dependants and relatives in the Company, or that may be subscribed for and allotted to them, out of the present Issue in terms of the Draft Letter of Offer and also to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. The key managerial personnel of the Company do not have any interest in the Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them during the ordinary course of business and to the extent of the Equity Shares held by them or their dependants in the Company, if any.
Changes in the Company’s Key Managerial Personnel during the last three years
Name Designation Date of Reasons joining/leaving Ms. Jai Bendre VP Marketing April 25, 2005 Appointment Mr. P.K. Roy VP (Exports) April 28, 2006 Resignation Ms. Jai Bendre EVP Marketing June 30, 2006 Resignation Mr. Jimmy Anklesaria VP Business Development July 14, 2005 Appointment Mr. Vilas Shirhatti VP (R&D) March 15, 2006 Resignation Mr. Sundar Nurani VP (R&D) September 4, 2006 Appointment Mr. V. Suresh VP Marketing November 5, 2007 Appointment
112 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
OUR PROMOTERS
The promoters of our Company are:
1. Mr. Adi Burjorji Godrej; 2. Mr. Jamshyd Naoroji Godrej; 3. Mr. Nadir Burjorji Godrej; 4. Mr. Vijay Mohan Crishna; 5. Mr. Rishad Kaikhushru Naoroji; and 6. Godrej and Boyce Manufacturing Company Limited.
1. Mr. Adi Burjorji Godrej
PAN – AAEPG5459R Passport Number - Z1777579 Voter ID Number - MT/04/024/273279 Driving License Number – 224126 Bank Account Number – Central Bank of India, Vikhroli (West), A/c no. 100037
For more details of Mr. Adi Burjorji Godrej, see the section titled “Our Management – Board of Directors” on page [●] of this Draft Letter of Offer.
2. Mr. Jamshyd Naoroji Godrej
PAN – AACPG0840L Passport Number - F9136240 Voter ID Number - MT/04/024/099982 Driving License Number - 294377 Bank Account Number – Central Bank of India, Vikhroli (West), A/c no. 1030377258
For more details of Mr. Jamshyd Burjorji Godrej, see the section titled “Our Management – Board of Directors” on page [●] of this Draft Letter of Offer.
3. Mr. Nadir Burjorji Godrej
PAN – AADPG7643Q Passport Number - F1649524 Voter ID Number - MT/04/024/099721 Driving License Number - LMV367848 Bank Account Number – Central Bank of India, Vikhroli (West), A/c No.1030377860
For more details of Mr. Nadir Burjorji Godrej, see the section titled “Our Management – Board of Directors” on page [●] of this Draft Letter of Offer.
113 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
4. Mr. Vijay Mohan Crishna
PAN – AACPC1580F Passport Number - F4296041 Voter ID Number - MT/04/024/009615 Driving License Number – 9615 Bank Account Number – Central Bank of India, Vikhroli (West), A/c no. 1030379255
Mr. Vijay Mohan Crishna has been a Promoter of GCPL since its incorporation in 2001. He holds a Bachelor of Economics degree from St. Stephen’s College, University of Delhi. He worked in the field of advertising with DaCunha Associates in Bombay. In 1977, he became the CEO of Lawkim Pvt. Ltd. In 1991, he formed a joint- venture company called Statomat Special Machines India in collaboration with Statomat of Germany, Francis Klein and Lawkim Pvt. Ltd. for manufacturing high precisions machines for motor production. In 1993, he was appointed to the Board of Godrej-GE Appliances. He also serves on the Board of Trustees of the Bombay Scottish Orphanage Society and is also a member of the advisory board of the Institute for Technology, Navi Mumbai.
5. Mr. Rishad Kaikhushru Naoroji
PAN – AACPN9750C Passport Number - F0686674 Voter ID Number - MT/04/019/165181 Driving License Number - 350972 Bank Account Number – Central Bank of India, Vikhroli (West), A/c no. 1030377893
Mr. Rishad Kaikhushru Naoroji has been a Promoter of GCPL since its incorporation in 2001. He holds a Bachelor of Commerce degree from Bombay University. He is currently the director of the Godrej group companies. He has authored a handbook entitled “Birds of Prey of the Indian Subcontinent”. He is the Project Co-ordinator for the Parsi vulture project.
6. Godrej and Boyce Manufacturing Company Limited
Godrej and Boyce Manufacturing Company Limited (“G&B”) was incorporated on March 3, 1932 as a limited liability under the Indian Companies Act, 1913 and its registered office is located at Pirojshahnagar, Vikhroli, Mumbai-79.
The main business of G&B is manufacturing and marketing of various consumer durables, office equipment and industrial products.
The board of directors of G&B are as follows:
1) Mr. Jamshyd N. Godrej 2) Mr. Adi B. Godrej 3) Mr. Nadir B. Godrej 4) Mr. Vijay M. Crishna 5) Mr. Kavas N. Petigara 6) Mr. Behram A. Hathikhanavala 7) Mr. Fali P. Sarkari 8) Mr. Pradip P. Shah 9) Ms. Anita Ramachandran 10) Mr. Pheroze D. Lam
114 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
11) Dr. Kyamas A. Palia
The shareholding pattern of G&B as on September 30, 2007:
No. Name of Shareholder No. of Shares Percentage 1 Tanya A. Dubash and Adi B. Godrej 9,609 1.45
2 Nisa A. Godrej and Adi B. Godrej 9,609 1.45
3 Pirojsha A. Godrej and Adi B. Godrej 9,609 1.45
4 Adi B. Godrej 32,240 4.87
5 Parmeshwar A. Godrej and Adi B. Godrej 4,473 0.68
6 Nadir B. Godrej 65,540 9.89
7 Nyrika V. Crishna and Smita V. Crishna 15,114 2.28
8 Freyan V. Crishna and Smita V. Crishna 15,113 2.28
9 Smita V. Crishna 35,313 5.33
10 Raika J. Godrej and Jamshyd N. Godrej 16,411 2.48
11 Navroze J. Godrej and Jamshyd N. Godrej 16,412 2.48
12 Jamshyd N. Godrej 32,717 4.94
13 Rishad K. Naoroji and Nadir B. Godrej 16,385 2.47
14 Rishad K. Naoroji and Jamshyd N. Godrej 16,385 2.48
15 Rishad K. Naoroji and Smita V. Crishna 16,385 2.47
16 Rishad K. Naoroji and Adi B. Godrej 16,385 2.47
17 A F Golwalla, N. D. Sidhva, H. P. Daruwalla and P. D. Lam (Trustees, 157,500 23.77 Pirojsha Godrej Foundation)
18 Lawkim Limited 690 0.10
19 Godrej Holdings Private Limited 10 0.00
20 Godrej Investments Private Limited 176,732 26.67
21 Surveyors & Co. Private Limited 11 0.00
Total 662,643 100
For details of shareholding of G&B in our Company, please refer to section titled “Capital Structure” on page [●] of this Draft Letter of Offer.
115 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Financial Performance
The summary audited financial statements for the last three years are as follows: (Amount in Rs. million) Particulars For year ended March For year ended March For year ended March 31, 2007 31, 2006 31, 2005 Equity Capital 66.26 66.26 66.26 Reserves & Surpluses 5,549.75 4,916.47 4,418.88 (Excluding Revaluation Reserve) Total Income 28430.93 21641.84 4,485.12 Profit / (Loss) After Tax 1,097.63 392.04 458.59 Earning Per Share 1,656.00 592.00 692.00 Book Value per Share (Net 8,475.00 7,519.00 6,768.00 Asset Value)
G&B has not become a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, 1985 and it is not under winding up. Further, G&B has confirmed that it has not been detained as wilful defaulter by the RBI or any other governmental authority and there are no violations of securities laws committed by it in the past or are pending against it.
Other details relating to G&B
PAN AAACG1395D
Bank Account Details Central Bank of India [Address of the Bank] Account Number: CC A/c No. 15031
Company Identification Number U28993MH1932PLC001828
Address of RoC Mumbai, Maharashtra located at Everest, 100, Marine Drive, Mumbai 400002, Maharashtra
Companies with which the promoters have disassociated in the last three years:
The Promoter has not disassociated itself with any company in the last three years.
Interests of Promoter in the Company
Except as stated in “Related Party Transactions” on page [●] of this Draft Letter of Offer, and to the extent of shareholding in the Company, the Promoter and promoter group do not have any other interest in the Company’s business.
116 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
OUR PROMOTER GROUP
Apart from our Promoters and our Subsidiaries, the following Companies and Individuals constitute our Promoter Group:
I. Promoter Group Companies
1) Aadhar Retailing Services Limited 2) Bahar AgroChem and Feeds Private Limited 3) Cartini India Limited 4) Ensemble Holdings and Finance Limited 5) Geometric Software Solutions Company Limited 6) Girikandra Holiday Homes & Resorts Limited 7) Godrej (Malaysia) Sdn. Bhd 8) Godrej (Singapore) Pte Limited. 9) Godrej Agrovet Limited 10) Godrej Commodities Limited 11) Godrej Developers Private Limited 12) Godrej Efacec Automation & Robotic Limited 13) Godrej Global Solutions (Cyprus) Limited 14) Godrej Global Solutions Inc. 15) Godrej Global Solutions Limited 16) Godrej Gokarna Oil Palm Limited 17) Godrej Hicare Limited 18) Godrej Holdings Private Limited 19) Godrej Industries Limited 20) Godrej Infrotech Limited 21) Godrej International Limited 22) Godrej Investments Private Limited 23) Godrej Oil Plantations Limited 24) Godrej Properties Limited 25) Godrej Real Estate Private Limited 26) Godrej Reality Private Limited 27) Godrej Sara Lee Limited 28) Godrej Seaview Properties Private Limited 29) Godrej Upstream Limited 30) Godrej Waterside Properties Private Limited 31) Golden Feed Products Limited 32) Goldmohur Foods and Feeds Limited 33) Happy Highrises Limited 34) J T Dragon Pte Limited 35) Lawkim Limited 36) Mercury Manufacturing Company Limited 37) Prashant Metal Forming Industries Private Limited 38) Statomat Special Machines India Private Limited 39) Swadeshi Detergents Limited 40) Tahir Properties Limited 41) Vora Soaps Limited
117 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
II. Individuals
Name Relationship with the Promoters 1) Ms. Parmeshwar A. Godrej Wife of Mr. Adi Godrej 2) Ms. Nisa A. Godrej Daughter of Mr. Adi Godrej 3) Mr. Pirojsha A. Godrej Son of Mr. Adi Godrej 4) Ms. Tanya A. Dubhash Daughter of Mr. Adi Godrej 5) Ms. Pheroza J. Godrej Wife of Mr. Jamshyd Godrej 6) Ms. Raika J. Godrej Daughter of Mr. Jamshyd Godrej 7) Mr. Navroze J. Godrej Son of Mr. Jamshyd Godrej 8) Ms. Rati N. Godrej Wife of Mr. Nadir Godrej 9) Master Burjis N. Godrej Minor son of Nadir Godrej 10) Master Sohrab N. Godrej Minor son of Nadir Godrej 11) Master Hormuzd N. Godrej Minor son of Nadir Godrej 12) Ms. Smita V. Crishna Wife of Mr. Vijay Mohan Crishna 13) Ms. Freyan V. Crishna Daughter of Mr. Vijay Mohan Crishna 14) Ms. Nyrika V. Crishna Daughter of Mr. Vijay Mohan Crishna
1) Aadhaar Retailing Services Limited (“ARSL”)
ARL was incorporated on March 10, 2006. ARSL is engaged in the business of retailing, selling, buying and providing services in all types of goods and equipments, including consumer, household lifestyle and fast moving consumer durable and non-durable goods.
The registered office of ARSL is located at:
Pirojshanagar Nagar Eastern Express Highway Vikroli (East) Mumbai – 400 079
The directors of ARSL are: (a) Mr. B. S. Yadav (b) Mr. R. S. Vijan (c) Ms. Nisa A. Godrej
ARSL is a wholly owned subsidiary of Godrej Agrovet Limited.
The summary audited financial statements for the period March 10, 2006 to March 31, 2007 are as follows:
(Amount in Rs. Million) Particulars For the year ended March 31, 2006 Equity Share Capital 0.50 Reserves & Surpluses Nil (Excluding Revaluation Reserve) Total Income 1.80 Profit / (Loss) After Tax (0.13) Earning Per Share (2.59) Book Value per Share (Net Asset Value) 10
ARL has not made any public issue or rights issue in the last three years except allotment of 392,500 shares on private placement basis on May 23, 2007
ARL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is under winding up.
118 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
2) Bahar Agrochem and Feeds Private Limited (“BAFPL”)
BAFPL was incorporated on June 20, 1986 as a private limited company. BAFPL is engaged in the business of processing, converting, producing, manufacturing, formulating, using, buying, acquiring, storing, packaging, selling, transporting all types of agro-chemicals including long chain alcohols, its precursors and derivatives, sterols, furfural, plant growth promoters and plant growth suppressors.
The registered office of BAFPL is located at:
E-24, MIDC, Lote Parshuram, Tal. Khed, Dist. Ratnagiri, 415722.
The directors of BAFPL are:
Mr. J. Y. Gupte Mr. S. P. Tipnis Mr. N. G. Iyer
The shareholding pattern of the Company is as follows:
No. Name of Shareholder Number of % of Shares Held shares 1 Mr. Rishad Kaikhushru Naoroji 50,000 20.01 2 Ms. Tanya A. Dubash jointly with Mr. A. B. Godrej and Ms. 16,658 6.67 Parmeshwar A. Godrej 3 Ms. Nisa A. Godrej jointly with Mr. A. B. Godrej and Ms. 16,658 6.67 Parmeshwar A. Godrej 4 Mr. Pirojshah A. Godrej jointly with Mr. A. B. Godrej and Ms. 16,659 6.67 Parmeshwar A. Godrej 5 Mr. Navroze J. Godrej jointly with Mr. J. N. Godrej and Ms. 24,988 10.00 Pheroza J. Godrej 6 Ms. Raika J. Godrej jointly with Mr. J. N. Godrej and Ms. 24,987 9.99 Pheroza J. Godrej 7 Ms. Rati N. Godrej jointly with Mr. N. B. Godrej 49,975 19.99 8 Ms. Freyan V. Crishna jointly with Mr. Vijay M. Crishna and 24,988 10.00 Ms. Smita V. Crishna 9 Ms Nyrika V. Crishna jointly with Mr. Vijay M. Crishna and 24,987 9.99 Ms. Smita V. Crishna Total 249,900 100.00
The summary audited financial statements for the last three financial years are as follows:
(Amount in Rs. Million) Particulars For the year ended For the year ended For the year ended March 31, 2007 March 31, 2006 March 31, 2005 Equity Share Capital 2.50 2.50 2.50 Reserves & Surpluses 34.35 26.24 25.16 (Excluding Revaluation Reserve) Total Income 95.80 105.90 81.57 Profit / (Loss) After Tax 9.52 2.50 3.39 Earning Per Share 38.10 10.02 13.58 Book Value per Share (Net 147.44 115.01 110.69 Asset Value)
119 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The company has not made any public issue or rights issue in the previous three years. There has been not change in the share capital in the last three years.
BAFPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is under winding up.
3) Cartini India Limited (“Cartini”)
Cartini was incorporated on March 2, 1992. Cartini is involved in the business of manufacturing and/or marketing of various products.
The registered office of Cartini is located at:
Plot No 2, Mulshi Road Pirangut, Mulshi, Pune – 411 042
The directors of Cartini are:
Mr. K K Dastur Mr. V R Dhala Mr. James Kurian Mr. B D Mistry Mr. X K Marker
The shareholding pattern of Cartini is as follows:
Equity Shareholding:
No. Name of Shareholder No. of Equity Shares % of shares 1 Godrej & Boyce Mfg. Co. Ltd. 1,490 2.43 2 Lawkim Ltd. 30,005 49.03 3 Godrej Holdings Pvt. Ltd. 5 0.01 4 Tanya A Dubash & Parmeshwar A Godrej 1,970 3.22 5 Pirojsha A Godrej & Parmeshwar A Godrej 1,992 3.26 6 Nisa A Godrej & Parmeshwar A Godrej 1,985 3.24 7 Raika J Godrej & Pheroza J Godrej 2,976 4.86 8 Navroze J Godrej & Pheroza J Godrej 2,969 4.85 9 Mst. Sohrab N Godrej & Rati N Godrej 187 0.31 10 Mst. Burjis N Godrej & Rati N Godrej 5,745 9.39 11 Rishad K Naoroji & Pheroza J Godrej 373 0.61 12 Rishad K Naoroji 5,558 9.08 13 Freyan V Crishna & Smita V Crishna 2,969 4.85 14 Nyrika V Crishna & Smita V Crishna 2,969 4.85 Total 61,193 100.00
Preference Shareholding:
No. Name of Shareholder No. of Preference % of shares Shares 1 Tanya A Dubash & Parmeshwar A Godrej 321,396 6.63 2 Pirojsha A Godrej & Parmeshwar A Godrej 324,986 6.71 3 Nisa A Godrej & Parmeshwar A Godrej 323,851 6.68 4 Raika J Godrej & Pheroza J Godrej 485,688 10.02 5 Navroze J Godrej & Pheroza J Godrej 484,560 10 6 Mst. Sohrab N Godrej & Rati N Godrej 30,473 0.63 7 Mst. Burjis N Godrej & Rati N Godrej 937,498 19.35
120 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
No. Name of Shareholder No. of Preference % of shares Shares 8 Rishad K Naoroji & Pheroza J Godrej 60,946 1.26 9 Rishad K Naoroji 907,026 18.72 10 Freyan V Crishna & Smita V Crishna 484,553 10 11 Nyrika V Crishna & Smita V Crishna 484,553 10 Total 4,845,530 100
The summary audited financial statements for the last three financial years are as follows:
(Amount in Rs. Million) Particulars F. Y. 2006-07 F. Y. 2005-06 F. Y. 2004-05 Equity Capital 0.61 31.50 31.50 Preference Capital 48.46 - - Reserves & Surplus 81.66 0 0 Total Income 130.72 31.50 31.50 Profit / (Loss) After Tax 88.38 (33.28) (15.19) Earning Per Share (Equity) 1397.59 (10.56) (4.82) Book Value per Share (Equity) 2136.23 10 10
Cartini has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
4) Ensemble Holdings & Finance Limited (“EHFL”)
EHFL was incorporated on February 17, 1992. EHFL is an investment company involved in the business of investing, buying, selling trade in shares, stocks, debentures etc.
The registered office of the EHFL:
Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai 400 079.
The directors of EHFL are: Ms. T.A. Dubash Mr. C.K. Vaidya Mr. M. Eipe Mr. H.K. Press
The shareholding pattern of EHFL is as follows:
S.No. Name of the Shareholder No. of Shares held Percentage 1. Godrej Industries Limited 3,770,160 99.89 2. Godrej Agrovet Limited 4,000 0.11 Total 3,774,160 100.00
The summary audited financial statements for the last three financial years are as follows:
(in Rs. Million) Particulars For year ended For year ended For year ended March 31, 2007 March 31, 2006 March 31, 2005 Equity Capital 37.74 37.74 37.74 Reserves & Surpluses 104.59 102.36 84.95 (Excluding Revaluation Reserve) Total Income 8.06 57.33 3.04 Profit / (Loss) After Tax 7.46 56.67 2.05
121 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars For year ended For year ended For year ended March 31, 2007 March 31, 2006 March 31, 2005 Earning Per Share 1.98 15.02 0.54 Book Value per Share (Net Asset Value) 16.45 15.79 11.16
EHFL has not made a public or rights issue in the last three years.
EHFL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
5) Geometric Limited (Geometric)
Geometric was incorporated on March 25, 1994. It is involved in the business of designing, developing, market and support software particularly in the field of computer aided design and computer aided manufacture and to provide services such as designing and developing of customized solutions in the field of computer aided manufacture, computer aided design, modeling, geometry, machining, drafting, drawing, interfacing with other software on a project and/or contract basis.
The registered office of Geometric is located at:
Plant 6, Pirojshahnagar, Vikhroli (West), Mumbai 400 079.
The directors of Geometric are:
Mr. Jamshyd N. Godrej Manu M. Parpia Dr. Ravi Gopinath Dr. Kyamas A. Palia Mr. Milind S. Sarwate Dr. Richard Riff Mr. Marc Dulude Ms. Anita Ramachandran Ms. Renuka Ramnath
The Shareholding Pattern of Geometric is as follows:
Category of shareholder No. of Total no. of Total shareholding as a % shareholders shares of total no. of shares As a % of (A+B+C) (A) Shareholding of Promoter and Promoter
Group (1) Indian 9 16552405 26.7 (2) Foreign Total shareholding of Promoter and 9 16552405 26.7 Promoter Group (A) (B) Public Shareholding (1) Institutions 38 21377805 34.48 (2) Non-Institutions 21359 24072565 38.82 Total Public shareholding (B) 21397 45450370 73.3 (C) Shares held by Custodians and against - - - which Depository Receipts have been issued Total (A)+(B)+(C) 21406 62002775 100
122 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Audited financials for the last three years are as follows:
(Amount in Rs. Million.) Particulars F Y 2007 F Y 2006 F Y 2005 Equity Capital 123.86 113.32 111.55 Share Application Money 0.03 - 0.62 Reserves & Surpluses 2113.04 1311.12 1090.42 (Excluding Revaluation Reserve) Total Income 3942.63 2302.59 1733.00 Profit / (Loss) After Tax 438.84 321.48 318.37 Earning Per Share-Basic 6.20 4.59 4.97 Earning Per Share-Diluted 6.08 4.53 4.92 Book Value per Share (Net Asset Value) 16.08 23.33 19.78
Share quotation
The equity shares of Geometric Limited are listed on the NSE and the BSE.
The details of the highest and lowest price on the NSE during the preceding six months are as follows:
Month High (Rs.) Low (Rs.) June 2007 132.30 108.50 July 2007 128.80 101.55 August 2007 109.00 94.85 September 2007 103.45 94.95 October 2007 99.00 68.20 November 2007 85.90 69.45 Source: www.nse-india.com
The market capitalisation of Geometric as on the closing price of 71.60 per equity share on the NSE on November 30, 2007 was Rs.4476.68 million.
The details of the highest and lowest price on the BSE during the preceding six months are as follows:
Month High (Rs.) Low (Rs.) June 2007 131.90 108.50 July 2007 128.00 102.50 August 2007 109.40 95.10 September 2007 103.00 94.40 October 2007 98.50 80.10 November 2007 83.00 69.00 Source: www.bseindia.com
The market capitalisation of Geometric as on the closing price of Rs.71.60 per equity share on the BSE on November 30, 2007 was Rs. 4442.56 million.
Details of public/ rights issue:
Geometric has not made any public or rights issue in the last three years and there has been no change in the capital structure in the last six months other than allotment of 106145 equity shares under ESOP
Geometric has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is under winding up.
Mechanism for redressal of investor grievance:
The Company has constituted a Shareholders’ / Investors’ Grievance Committee to look into and investigate
123 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only investors’ complaints like transfer of shares, non-receipt of declared dividends, etc. and take necessary steps for redressal thereof. The Committee consists of two Non-executive Directors and one Executive Director
Number of complaints for the year ended March 31, 2007
Fifty six new complaints received during the year from shareholders / investors were resolved. There were no complaints pending as at the beginning or at the end of the year. Any investor grievance received has been resolved within six days.
Number of Complaints for the year ended March 31, 2007
Complaints outstanding as on April 1, 2006 Nil Complaints received during the year ended March 31, 2007 56 Complaints resolved during the year ended March 31, 2007 56 Complaints outstanding as on March 31, 2007 Nil
6) Girikandra Holiday Homes & Resorts Limited (GHHL)
GHHL was incorporated on August 8, 1995. GHHL is involved in the business of real estate
The registered office of GHHL is located at
Godrej Bhavan, 4th Floor, 4A, Home Street, Fort, Mumbai - 400 001
Directors of GHHL are
Ms T A Dubash Mr V Srinivasan Mr. Milind S Korde
The shareholding pattern of GHHL is as follows
Sr. No. Name of the Shareholder Share Holdings % age 1 Godrej Properties & Investments Ltd. 494 98.80 2 Ms. Tanya A. Dubash and 1 0.20 3 Mr. Amit Choudhury and 1 0.20 4 Mr. Milind Korde and 1 0.20 5 Mr. Nitin Wagle and 1 0.20 6 Mr. K. T. Jithendran and 1 0.20 7 Mr. Shodhan Kembhavi and 1 0.20 TOTAL 500 100.00
The summary audited financial statement for the last three financial years are as follows
Particulars FY 2006-07 FY 2005-06 FY 2004-05 Equity Capital 0.50 0.50 0.50 Reserves & Surplus - - - Total Income - - - Profit / (Loss) After Tax 0.00 0.00 0.00 Earning Per Share (5) (5) (5) Book Value per Share (Net Asset Value) 959.85 959.85 959.85
124 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
GHHL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 as amended nor is under winding up
7) Godrej (Malaysia) Sdn. Bhd.
Godrej Malaysia SDN (BHD) (GMSB) was incorporated onApril 29, 1965.The business of GMSB is Manufactures of Steel Office Furniture.
The Registered Office of GMSB is located at
15, Jalan Segambut Atas, Segambut Industrial Area, Kuala Lumpur 51200
The Directors of GMSB are
Mr J N Godrej Mr A K Bardy Mr D G S Gill Mr M F Unwalla Mr P D Lam
The shareholding pattern of GMSB is as below
Sr. No. Name of the Shareholder Share Holdings % age 1 Godrej & Boyce Mfg Co Ltd 256826 83.01 2 Aspi Khurshed Bardy 314 0.10 3 Mr.Datto G.S.Gill 13,648 4.41 4 Mr.Sangat Singh 9,566 3.09 5 Ms.Pavitar Kaur 9,566 3.09 6 Ms. Ng.Kooi Bee 290 0.09 7 M/s Chellam Invts.Sdn.Bhd. 3,200 1.03 8 M/s Yarl Enterprises Sdn. Bhd. 4,000 1.29 9 Mr. Satpal Singh 12,000 3.88 Total 100.00
The summary audited financial statement for the last three financial years are as follows (Amount in Rs. Million) Particulars F.Y. 2006 F.Y. 2005 F.Y. 2004 Equity Capital 38.71 36.97 35.67 Reserves & Surplus ( Excluding Revaluation Reserve) 310.63 273.01 260.57 Total Income 65.07 121.08 92.48 Profit / (Loss) After Tax Earning Per Share 27.72 5.72 9.58 Book Value per Share (Net Asset Value) 0.00 0.00 0.00
8) Godrej Sinagpore Pte Ltd
Godrej Sinagpore Pte Ltd (GSPL) was incorporated on October 16, 1971. The business of GSPL is manufactures of steel office furniture.
The Registered Office of GSPL is located at
11, Lok Yang Way,
125 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Jurong, Singapore 628632.
The Directors of GSPL are
Mr. J.N.Godrej Mr. M.F.unwalla Mr. Toh aa hea Mr. P. D. Lam
The shareholding pattern is as follows
Sr. No. Name of the Shareholder Share Holdings % age
1 Godrej & Boyce Mfg. Co. Ltd. 24,720 58.55% 2 MR. ASPI KHURSHED BARDY 3 0.01% 3 Steel Seal Equipment Ltd. 17,500 41.45% TOTAL 42,223 100.00 The summary audited financial statement for the last three financial years are as follows
(Amount in Rs. Million) Particulars F.Y. 2006 F.Y. 2005 F.Y. 2004 Equity Capital 12.15 12.82 13.09 Reserves & Surplus (Excluding Revaluation Reserve) 296.61 324.25 337.47 Total Income Profit / (Loss) After Tax 0.11 144.58 112.71 Earning Per Share Book Value per Share (Net Asset Value) -29.05 -5.77 2.40
9) Godrej Agrovet Limited (“GAL”)
The Company was incorporated on November 25, 1991. GAL is engaged in the dealing in all types of animal and poultry feeds and agro chemicals.
The registered office of GAL is located at:
Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai 400 079.
The directors of GAL are:
Mr. Nadir B. Godrej Mr. Balram Singh Yadav Mr. Adi B. Godrej Mr. Jamshyd N. Godrej Mr. Vijay M. Crishna Mr. Kavas N. Petigara Ms. Tanya A. Dubash Dr. Sudheer L. Anaokar Mr. Amit B. Choudhury Ms. Nisa A. Godrej
126 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The shareholding pattern of the GAL is as follows:
No. Name of Shareholder Number of % of shares Shares 1 Mr. A. B. Godrej 396 0.01
2 Mr. N. B. Godrej 586,080 5.79
3 Godrej Industries Limited 7,112,951 70.29
4 Godrej Industries Limited jointly with Mr. R. S. Vijan 1 0.00
5 Godrej Industries Limited jointly with. Dr. S. S. Sindhu 1 0.00
6 Godrej Industries Limited jointly with Mr. V. V. Chaubal 1 0.00
7 Godrej Industries Limited jointly with Mr. B. S. Yadav 1 0.00
8 Godrej Industries Limited jointly with Dr. P. N. Narkhede 1 0.00
9 Mr. Rishad K. Naoroji 586,080 5.79
10 Mr. Pirojsha A. Godrej 195,360 1.93
11 Ms. Tanya A. Dubash 195,360 1.93
12 Ms. Nisa A. Godrej 195,360 1.93
13 Mr. Navroze J. Godrej 293,040 2.90
14 Ms. Raika J. Godrej 293,040 2.90
15 Ms. Nyrika V. Crishna 293,040 2.90
16 Ms. Freyan V. Crishna 293,040 2.90
17 M/s. Swadeshi Detergents Limited 68,500 0.68
18 M/s. Ensemble Holdings & Finance Limited 6,500 0.06
Total 10,118,752 100.00
The summary audited financial statements for the last three financial years are as follows:
(Amount in Rs. Million) Particulars For the year For the year For the year ended ended March ended March March 31, 2005 31, 2007 31, 2006 Equity Share Capital 101.89 71.19 71.19 Reserves & Surpluses 741.12 554.82 519.04 (Excluding Revaluation Reserve) Total Income 7,128.52 6,055.59 5,685.18 Profit / (Loss) After Tax 27.50 68.25 141.72 Earning Per Share 3.61 9.59 19.91 Book Value per Share (Net Asset Value) 110.55 87.94 82.88
During the current Fiscal Year 2008, GAL made a rights issue to its existing shareholders at a premium of Rs. 490 per share out of which GIL subscribed to 2 million Equity Shares. The allotment of these Equity Shares is yet to be done.
127 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
During the Fiscal Year 2007, GAL made a private placement of 3 million Equity Shares of Rs. 10 each at a premium of Rs. 90 per share to GIL. GAL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act. 1985, as amended nor is under winding up.
10) Godrej Commodities Limited (“GCL”)
GCL was incorporated on February 3, 1986. GCL is involved in the business of bulk trading of vegetable oils.
The registered office of the GCL:
Plot No 5, New Industrial Area No 1 Mandideep, District-Raisen Bhopal -462046 MP
The directors of GCL are: Mr. A. B. Godrej Mr. J.N. Godrej Mr. K.K. Dastur Mr. M.P. Pusalkar Mr. A.B. Choudhury
The shareholding pattern of GCL as on September 30, 2007 is as follows:
Equity Share Capital
The shareholding pattern of Godrej Commodities Limited as on September 30, 2007 is as follows:
Category of shareholder No. of Total no. of Total shareholding as a % of shareholders shares total no. of issued and outstanding Equity Shares (A)Shareholding of Promoter and Promoter Group (1) Indian 2 14,742,951 68.17 (2) Foreign - - - Total shareholding of Promoter and 2 14,742,951 68.17 Promoter Group (B) Public Shareholding (1) Institutions - - - (2) Non-Institutions 6,272 6,883,287 31.83 Total Public Shareholding 6,272 6,883,287 31.83 ©Shares held by Custodians and - - - against which Depository Receipts have been issued Grand Total [(A)+(B)+(C)] 6,274 21,626,238 100.00
Preference Share Capital
5,000,000 shares of Face value Rs 10 each is held by Godrej Industries Limited, out of which Rs 9 is paid up.
The summary audited financial statements for the last three financial years are as follows: (Amount in Rs. Million) Particulars For year ended March For year ended March For year ended March 31, 2007 31, 2006 31, 2005 Equity Capital 21,626 21,626 21,626 Preference Capital 450.00 450.00 450.00
128 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars For year ended March For year ended March For year ended March 31, 2007 31, 2006 31, 2005 Reserves & Surplus Nil Nil Nil
Total Income 153.24 332.73 233.16 Profit / (Loss) After Tax 6.11 3.89 2.95 Earning Per Share 0.09 0.01 0.05 Book Value per Share (Net 0.00 0.00 0.00 Asset Value)
GCL has not made any public or rights issue in the last three years.
GCL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
Share quotation
The equity shares of GCL.are listed on BSE. The details of the highest and lowest price on the BSE during the preceding six months are as follows:
Month High (Rs.) Low (Rs.) June 2007 11.85 10.65 July 2007 12.24 10.55 August 2007 10.75 9.56 September 2007 12.38 9.71 October 2007 11.79 8.00 November 2007 19.10 8.20 Source: www.bseindia.com
The market capitalisation of GCL as on the closing price of 15.88 per equity share on the BSE on November 30, 2007 was Rs.343.20 million.
Mechanism for redressal of investor grievance:
The Company has constituted a shareholders’ Committee to look into redressal of shareholders complaints regarding transfer of shares, non receipt o balance sheet as required in clause 49 of the listing agreement, The Committee consists of two non executive Directors. Mr Kiran Rajput, the Company Secretary is the presently the compliance officer. Any investor grievance received has been resolved within six days.
Number of complaints for the year ended March 31, 2007
Four complaints were received and resolved during the year ended March 31, 3007. There were no complaints pending as at the beginning or at the end of the year.
11) Godrej Developers Private Ltd (GDPL)
Godrej Developers Private Limited (GDPL) was incorporated on March 15, 2007. GDPL is in the business of Real Estate.
The Registered Office of GDPL is located at
Godrej Bhavan 4th Floor, 4A, Home Street, Fort, Mumbai - 400 001
The Directors of GDPL are
129 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
1. Mr. Milind Korde 2. Mr. K.T. Jithendran
The shareholding pattern of GDPL is as follows:
Sr. No. Name of the Shareholder Share Holdings Percentage 1 Godrej Properties limited 49,999 100.00 2 Mr. A. B. Godrej 1 0.00 TOTAL 50,000 100.00
The summary audited financial statement for the last three financial years are as follows
(Amount in Rs.) Particulars F.Y. 2006-07 F.Y. 2005-06 F.Y. 2004-05 Equity Capital 0.50 - - Reserves & Surplus ( Excluding Revaluation Reserve) - - - Total Income - - - Profit / (Loss) After Tax (0.26) - - Earning Per Share (0.52) - - Book Value per Share (Net Asset Value) 9.15 - -
GDPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 as amended nor is at under winding up
12) Godrej Efacec Automation & Robotics Limited (GEAR)
GEAR was incorporated on November 22, 1996. GEAR is involved in the business of manufacturing, servicing and trading of automated storage and retrieval system and other objects.
The registered office of GEAR is located at:
Plant 4, 1st floor Pirojshanagar Vikhroli Mumbai – 400079.
The directors of GEAR are:
Mr. P.D.Lam Dr. K.M.Palia Mr. A.M.Visvanathan Mr. Mario Augusto do Rosario Barbosa Mr. Domenico Casella Mr. Francisco Bernardo Sampaio De Almada Lobo
The shareholding pattern of GEAR is as follows:
No. Name of Shareholder No. of shares held % of shares 1 Godrej & Boyce Manufacturing Company Limited 750,000 50.00
2 Efacec Automation & Robotics Limited, Portugal 750,000 50.00 Total 1,500,000 100.00
130 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The summary audited financial statements for the last three financial years are as follows:
(Amount in Rs. Million) Particulars F. Y. 2006-07 F. Y. 2005-06 F. Y. 2004-05 Equity Capital 15.00 15.00 15.00 Reserves & Surpluses 9,72 3.33 4.67 Total Income 72.04 13.83 15.01 Profit / (Loss) After Tax 6.38 - (1.34) (1.74) Earning Per Share 4.26 (0.89) (1.07) Book Value per Share (Net Asset Value) 16.47 12.22 13.11
GEAR has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up
13) Godrej Global Solutions (Cyprus) Limited (“GGSCL”)
GGSCL was incorporated on January 19, 2005. GGSCL is involved in the business of holding of investments and financing.
The registered office of GGSCL:
Arch, Makariou III 229, Meliza Court, 4th Floor, PC 3105, Limassol, Cyprus
The directors of GGSL are:
Mr. R.H.Khajotia Mr. Dorab.E.Mistry Mr. Eva Agahtangelou Mr. Sanjay S. Tipnis Mr. Stelios Savvides
The shareholding pattern of GGSCL (equity shares) is as follows:
No. Name of Shareholder No. of Ordinary Shares Held of USD 1 % of shares 1 Godrej Global Solutions Limited 600,000 100.00 Total 600,000 100.00
The shareholding pattern of GGSL (preference shares) is as follows:
No. Name of Shareholder No. of Preference Shares Held of USD 1 % of shares 1 Godrej Global Solutions Ltd 1,500,000 100 Total 1,500,000 100
The summary audited financial statements for the last three financial years are as follows:
(Amount in Rs. Million) Particulars Fiscal Year 2007 Fiscal 2006 19th Jan 05- 31st (1st Jan 06- 31st March 06) Dec 05 Equity Capital 25.83 26.77 0.01 Preference Share Capital 64.58 66.92 Nil Reserves & Surpluses 3.19 1.15 1.49 Total Income 3.18 0.81 2.25 Profit / (Loss) After Tax 2.09 (0.32) 1.49 Earning Per Share - - -
131 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars Fiscal Year 2007 Fiscal 2006 19th Jan 05- 31st (1st Jan 06- 31st March 06) Dec 05 Book Value per Share (Net - - - Asset Value)
GGSCL is not under winding up.
14) Godrej Global Solutions, Inc (“GGSI”)
GGSI was incorporated on January 21, 2005. GGSI is involved in the business of providing Healthcare related Business Process Outsourcing Services.
The registered office of the GGSI:
275 Grove Street Suite 2-400, Newton, MA 02466
The directors of GGSI are:
Mr. Sanjay S. Tipnis Mr. Jim Madison
GGSI is the wholly owned subsidiary of GGSCL
The summary audited financial statements for the last three financial years are as follows:
(Amount in Rs. million) Particulars Fiscal Fiscal 2006 Fiscal 2005 2007 (January 1, 06- March 31, (April 8, 05- December 31, 06) 05)
Equity Capital 43.05 44.61 45,10 Reserves & Surpluses 7.66 0.75 Nil (Excluding Revaluation Reserve) Total Income 23.25 5.99 8.87 Profit / (Loss) After Tax 6.93 0.75 (0.49) Earning Per Share Nil Nil Nil Book Value per Share (Net Asset Nil Nil Nil Value)
GGSI has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
15) Godrej Global Solutions Limited (“GGSL”)
GGSL was incorporated on February 28, 2003. GGSL is involved in the business of processing health care claims and data processing related business process outsourcing services.
The registered office of the GGSL:
Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai 400 079.
132 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The directors of GGSL are:
Mr. N.B.Godrej Mr. C.K.Vaidya Mr. Sanjay S. Tipnis Mr. F.P.Sarkari Mr. K.N.Petigara Mr. V.Srinivasan Mr. S.Ahmadullah
The shareholding pattern of GGSL (equity shares) is as follows:
No. Name of Shareholder No. of Shares Held % of shares 1 Ensemble Holdings & Finance Ltd 8,340 0.06
2 Godrej Industries Ltd. 8,630,831 63.41
3 Godrej Industries Ltd. (Rs.7/- paid up) 4,971,429 36.53
4. Others 6 -
Total 13,610,606 100.00
The shareholding pattern of GGSL (preference shares) is as follows:
No. Name of Shareholder No. of Shares Held % of shares 1 Jaideep Baldev Patharia 9,000 50.00
2 Sushanta Sudhir Bhattacharjee 4,500 25.00
3 Akil Jadumani Mohanty 4,500 25.00
Total 18,000 100.00
The summary audited financial statements for the last three financial years are as follows:
(Amounts in Rs. Million) Particulars Fiscal 2007 Fiscal 2006 Fiscal 2005 Equity Capital 86.39 427.42 538.47 Preference Capital 34.80 34.80 Reserves & Surpluses 51.37 51.37 Nil (Excluding Revaluation Reserve) Total Income 140.03 82.27 1.67 Profit / (Loss) After Tax (20.36) (0.61) 1.03 Earning Per Share (0.47) (0.01) 0.02 Book Value per Share (Net Asset Value) Nil Nil Nil
GGSL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
16) Godrej Gokarna Oil Palm Limited (“GGOPL”)
GGOPL was incorporated on November 15, 2006. GGOPL is engaged in the business of planters and cultivators and to own, purchase or otherwise acquire estates, lands and nurseries and to produce, process, purchase, import, export, sell, trade and deal in palm oil (in all its forms), oil palm seeds and seedings.
133 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The registered office of GGOPL is located at:
Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai 400 079.
The directors of GGOPL are: Mr. B. S. Yadav Mr. R. S. Vijan Mr. S. K. Gupta
GGOPL is a wholly owned subsidiary of Godrej Agrovet Limited.
The summary audited financial statements for fiscal 2007 (November 15, 2006 to March 31, 2007) are as follows: (Amount in Rs million) Particulars For the period ended March 31, 2007 Equity Share capital Reserves & Surpluses Nil (Excluding Revaluation Reserve) Total Income Nil Profit / (Loss) After Tax (0.03) Earning Per Share N.A. Book Value per Share (Net Asset Value) N.A
GGOPL has allotted 50,000 equity shares to subscribers of the memorandum of association on June 18, 2007.
The Company has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is under winding up.
17) Godrej Hicare Limited (“GHL”)
GHL was incorporated as Godrej and Kis Pvt. Ltd. on May 31, 1993. It was dealing in photographic and printing machines. The name of the company was changed to Godrej Photo-me Limited on March 10, 1998. Due to various reasons the business operations of this company were gradually discontinued. In 2003, the company acquired pest management and bulk chemicals business from Godrej Sara Lee Ltd. The name of the company was gain changed to Hicare Ltd. On February 7, 2005.
GHL is involved in the business of pest management services, products and bulk chemical.
The registered office of GHL:
Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai 400 079.
The directors of GHL are:
(a) Mr. A. B. Godrej; (b) Mr. A. Mahendran; (c) Mr. V. M.Crishna; and (d) Mr. M. Eipe.
134 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The shareholding pattern of the GHL is as follows:
No. Name of Shareholder No. of Shares Held % of shares 1 Godrej Industries Limited 6,647,100 84.14
2 A. Mahendran 1,000,000 12.66
3 Ensemble Holding & Finance Limited 4,800 0.06
4 Sufenas Netherlands B V 24,000 0.30
5 N. B. Godrej 45,000 0.57
6 Smita Vijay Crishna 45,000 0.57
7 N. J. Godrej 45,000 0.57
8 Rishad K. Naoroji 44,100 0.56
9 Nisa A. Godrej 45,000 0.57
Total 7,900,000 100.00
The summary audited financial statements for the last three financial years are as follows
(Amount in Rs. Million) Particulars For year ended March For year ended March For year ended March 31, 2007 31, 2006 31, 2005 Equity Capital 56.20 56.20 36.00 Reserves & Surpluses Nil Nil Nil Total Income 299.55 211.22 120.58 Profit / (Loss) After Tax 18.23 10.43 (11.30)
Earning Per Share 3.24 2.29 (3.29) Book Value per Share (Net Nil Nil Nil Asset Value)
Except for the 4,300,000 equity shares issued, out of which Godrej Industries Limited subscribed to 3,540,000, the company has not made any other public issue or rights issue in the last three years. Currently GIL holds 6,647,100 shares.
GHL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
18) Godrej Holdings Private Limited (“GHPL”)
GHPL was incorporated on August 1, 1983. GHPL is an investment holding Company.
The registered office of the GHPL: Pirojshanagar, Vikhroli, Mumbai 400 079.
The directors of GHPL are:
(a) Mr. R. K. Naoroji (b) Ms. S. V. Crishna (c) Ms. T. A. Dubash
135 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The shareholding pattern of the GHPL is as follows:
No. Name of Shareholder Number of Shares % of shares 1 Mr. R K Naoroji and Ms. P J Godrej 1,933 19.33
2 Ms. T A Dubash and Ms. P A Godrej 667 6.67
3 Mr. N A Godrej and Ms. P A Godrej 666 6.66
4 Mr. P A Godrej and Ms. P A Godrej 667 6.67
5 Mr. R J Godrej and Ms. P J Godrej 1,000 10.00
6 Mr. N J Godrej and Ms. P J Godrej 1,067 10.67
7 Ms. F V Crishna and Ms. S V Crishna 1,000 10.00
8 Ms. N V Crishna and Ms. S V Crishna 1,000 10.00
9 Mr. B N Godrej and Ms. R N Godrej 666 6.66
10 Mr. S N Godrej and Ms. R N Godrej 667 6.67
11 Mr. H N Godrej and Ms. R N Godrej 667 6.67
Total 10,000 100
The summary audited financial statements for the last three financial years are as follows:
(Amount in Rs million.) Particulars For year ended March For year ended March For year ended March 31, 2007 31, 2006 31, 2005 Equity Capital 0.10 0.10 0.10 Reserves & Surpluses 1.20 1.19 1.16 (Excluding Revaluation Reserve) Total Income 1.30 1.29 1.26 Profit / (Loss) After Tax 0.01 0.02 0.03 Earning Per Share 1.10 2.45 0.15 Book Value per Share (Net 130.00 128.90 126.45 Asset Value)
GHPL has not made any public or rights issue in the last three years.
GHPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
19) Godrej Industries Limited (“GIL”)
GIL was incorporated on March 7, 1988 as Gujarat-Godrej Innovative Chemicals Limited (GGICL) in Gujarat. GIL is involved in the business of manufacture and sale of oleo- chemicals and surfactants, distribution of diagnostics equipment, estate management and finance and investments.
The erstwhile Godrej Soaps Limited was merged with GGICL with effect from April 1, 1994 and the name of GGICL was changed to Godrej Soaps Limited (GSL). The Registered office was shifted from Gujarat to Maharashtra with effect from March 1, 1996.
136 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Subsequently, under a scheme of arrangement, the consumer products division of the GSL was demerged with effect from April 1, 2001 into a separate company, Godrej Consumer Products Limited (GCPL) and GSL was renamed as GIL, on April 2, 2001.
Further, the vegetable oils and processed foods manufacturing business of Godrej Foods Limited was transferred to the GIL with effect from June 30, 2001. Thereafter, the foods division (except Wadala factory) was sold to Godrej Beverages and Foods Limited on March 31, 2006.
The registered office of GIL is located at:
Pirojshanagar Nagar Eastern Express Highway Vikroli (East) Mumbai – 400 079
The directors of GIL, as on September 30, 2007 are as follows:
(a) Mr. A. B. Godrej (b) Mr. J. N. Godrej (c) Mr. N. B. Godrej (d) Mr. S. A. Ahmadullah (e) Mr. V. M. Crishna (f) Mr. K. K. Dastur (g) Mr. V. N. Gogate (h) Mr. K. N. Petigara (i) Mr. F. P. Sarkari (j) Mr. V. F. Banaji (k) Ms. T. A. Dubash (l) Mr. M. Eipe (m) Mr. M. P. Pusalkar (n) Mr. C. K. Vaidya
The shareholding pattern of Godrej Industries Limited as on September 30, 2007 is as follows:
Category of shareholder No. of Total no. of Total shareholding as a % of shareholders shares total no. of issued and outstanding equity shares (A)Shareholding of Promoter and Promoter Group (1) Indian 13 251,234,174 86.08 (2) Foreign - - - Total shareholding of Promoter and 13 251,234,174 86.08 Promoter Group (B) Public Shareholding (1) Institutions 39 11,488,984 3.94 (2) Non-Institutions 19,784 29,128,494 9.98 Total Public Shareholding 19,823 40,617,478 13.92 (C)Shares held by Custodians and - - - against which Depository Receipts have been issued Grand Total [(A)+(B)+(C)] 19,836 291,851,652 100
On November 20, 2007, GIL allotted 279,06,950 equity shares of Re.1 each to Qualified Institutional Buyers (QIB). Consequently the paid up equity capital of the Company has increased from Rs.291,851,652 to Rs.319,758,602. The above table would change to this effect.
137 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The summary audited financial statements for the last three years are as follows:
(Amount in Rs. Million) Particulars Fiscal Year 2007 Fiscal Year 2006 Fiscal Year 2005 Equity Capital 291.85 291.85 291.85 Reserves & Surpluses 3,631.69 3,192.59 2,758.61 (Excluding Revaluation Reserve) Total Income 7,829.12 8,026.99 8,182.71 Profit / (Loss) After Tax 780.61 711.24 757.72 Earning Per Share* 2.67 2.47 2.60 Book Value per Share (Net Asset 31.46 25.24 21.11 Value)* * All Earning per Share and Book Value per Share details in this chapter are not in million.
Share quotation
The equity shares of Godrej Industries Limited are listed on the NSE and the BSE. The details of the highest and lowest price on the NSE during the preceding six months are as follows:
Month High (Rs.) Low (Rs.) June 2007 211.1 168.15 July 2007 220.55 190.75 August 2007 203.2 161.15 September 2007 189.25 171.85 October 2007 213.35 161.05 November 2007 197.75 283.2 Source: www.nse-india.com
The market capitalisation of GIL as on the closing price of 283.20 per equity share on the NSE on November 30, 2007 was Rs 90,555 million.
The details of the highest and lowest price on the BSE during the preceding six months are as follows:
Month High (Rs.) Low (Rs.) June 2007 210.85 168.30 July 2007 220.50 190.20 August 2007 203.10 161.00 September 2007 189.00 170.40 October 2007 212.95 160.70 November 2007 281.90 Source: www.bseindia.com
The market capitalisation of GIL as on the closing price of 281.90 per equity share on the BSE on November 30, 2007 was Rs. 90,140 million.
Other details of GIL:
Details of public/ rights issue:
GIL has not made any public or rights issue in the last three years and there has been no change in the capital structure in the last six months other than as follows:
On November 20, 2007, GIL allotted 279,06,950 equity shares of Re.1 each to Qualified Institutional Buyers (QIB). Consequently the paid up equity capital of the Company has increased from Rs.291, 851,652 to Rs.319,758,602.
138 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
GIL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is under winding up.
Mechanism for redressal of investor grievance:
The Company has constituted a Shareholders Committee to look into and redress Shareholders and Investor Complaints, Mr S K Bhatt, Executive Vice President (Corporate Services) & Company Secretary is the compliance officer.
This Committee looks into redressal of shareholder complaints regarding transfer of shares, non receipt of balance sheet and non receipt of declared dividends, as required in clause 49 of the Listing Agreement. Any investor grievance received has been resolved within six days.
Number of Complaints for the year ended March 31, 2007
Complaints outstanding as on April 1, 2006 Nil Complaints received during the year ended March 31, 2007 56 Complaints resolved during the year ended March 31, 2007 56 Complaints outstanding as on March 31, 2007 Nil
20) Godrej Infotech Limited (Godrej Infotech)
Godrej Infotech Limited was incorporated on February 25, 1997. The business of the company is related to information technology including computer hardware and software and database management.
The Registered Office of Godrej Infotech is located at
Plant 10, Pirojshanagar, Vikhroli, Mumbai 400079.
The Directors of Godrej Infotech are
(a) Mr K. A. Palia (b) Mr P. E. Fouzdar (c) Mr. K. K. Dastur (d) Mr. S.N. Irani (e) Mr. R.D. Contractor
The shareholding patter of Godrej Infotech is as follows
No. Name of Shareholder No. of Shares Held %age 1 Godrej & Boyce Mfg Co Ltd. 5050 52.06%
2 Nisa A Godrej & Ms. P A Godrej Godrej 310 3.20%
3 Pirojsha A Godrej & Ms. P A Godrej 310 3.20%
4 Tanya A Dubhash & Ms. P A Godrej 310 3.20%
5 Raika J Godrej & Mrs P J Godrej 465 4.79%
6 Navroze J Godrej & P J Godrej 465 4.79%
7 B N Godrej & Mrs R N Godrej 310 3.20%
8 S N Godrej & Mrs R N GODREJ 310 3.20%
139 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
No. Name of Shareholder No. of Shares Held %age 9 H N Godrej & R N Godrej 310 3.19%
10 Rishad K Naoroji 930 9.59%
11 Freyan V Crishna & S V Crishna 465 4.79%
12 Nyrika V Crishna & S V Crishna 465 4.79%
Total 9700 100%
The summary audited financial statement for the last three financial years are as follows
(Amount in Rs. Million) Financial Details FY 2007-08 FY 2006-07 FY 2005-06 (Rs. In lakhs) Equity Capital 9.70 9.70 9.70 Reserves & Surplus 330.93 307.73 294.59 Sales/Income from 2045.03 1521.09 1317.04 Operations PAT 24.31 14.21 19.21 EPS 251 147 199 Book Value per share 21083 15681 13578 (Rs.
Godrej Infotech has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 as amended nor is under winding up.
21) Godrej International Limited (GINL)
Godrej International Limited was established in 1993 in the Isle of Man by Godrej Soaps Limited to undertake trading in vegetable oils worldwide. As a result of the demerger in 2001, the company GINL went to Godrej Industries Limited. The company continues to trade in vegetable oils.
The Registered office of GINL is located at
8 Finch Road Douglas IM1 2PT Isle of Man
The directors of GINL are
(a) Mr Adi Godrej (b) Mr Nadir B Godrej (c) Mr Aspi K Bardy (d) Mr Dorab E Mistry (e) Mr Andrew B Byers (f) Mr Lynsey Elliott
The shareholding patter of GINL is as follows
No. Name of Shareholder No. of Shares Held %age of face value 1GBP 1 Godrej Industries Ltd 2355000 100%
140 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
No. Name of Shareholder No. of Shares Held %age of face value 1GBP Total 2355000 100%
The summary audited financial statement for the last three financial years are as follows (Amount in Rs. Million) Particulars F Y 2007 F Y 2006 F Y 2005 Equity Capital 183.00 187.80 100.30 Reserves & Surpluses 130.30 104.30 92.50 (Excluding Revaluation Reserve) Total Income 2,677.20 2,263.30 1,709.20 Profit / (Loss) After Tax 28.60 17.10 17.50 Earning Per Share 1.10 0.65 1.16 Book Value per Share (Net Asset Value) 12.02 11.21 12.81
22) Godrej Investments Private Limited (“GIPL”)
GIPL was incorporated on August 8, 1975. GIPL is an investment company with the main objective of holding shares.
The registered office of GIPL is located at:
Pirojshanagar, Vikhroli, Mumbai 400 079.
The directors of GIPL are: (a) Mr. A B Godrej (b) Mr. J N Godrej (c) Mr. R K Naoroji (d) Mr. E J Kalwachia (e) Mr. H P Daruwalla
The shareholding pattern of GIPL is as follows:
No. Name of Shareholder Number of Shares % of shares 1 Mr. Adi B Godrej and Ms. P A Godrej 8,310 2.45
2 Ms. Nisa A Godrej and Ms. P A Godrej 19,805 5.85
3 Mr. Pirojsha A Godrej and Ms. P A Godrej 19,805 5.85
4 Ms. Tanya A Godrej and Ms. P A Godrej 19,805 5.85
5 Ms. Raika J Godrej and Ms. P J Godrej 33,863 10
6 Mr. Navroze J Godrej and Ms. P J Godrej 33,862 10
7 Mr. Nadir B Godrej and Mr. R N Godrej 40,635 12
8 Mr. Nadir B Godrej 27,090 8
9 Mr. Rishad K Naoroji 67,725 20
10 Ms. Freyan V Crishna and Ms. S V Crishna 33,863 10
141 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
No. Name of Shareholder Number of Shares % of shares 11 Ms. Nyrika V Crishna and Ms. S V Crishna 33,862 10
Total 338,625 100
The summary audited financial statements for the last three financial years are as follows:
(Amount in Rs. Million) Particulars For the year ended For the year For the year March 31, 2007 ended March ended March 31, 2006 31, 2005 Equity Capital 33.86 33.86 33.86 Reserves & Surpluses 205.18 151.44 112.40 (Excluding Revaluation Reserve)
Total Income 239.04 185.31 146.27 Profit / (Loss) After Tax 53.74 39.04 37.44 Earning Per Share 158.69 115.29 110.57 Book Value per Share (Net Asset Value) 705.92 547.23 431.94
GIPL has not made any public or rights issue in the last three years
GIPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
23) Godrej Oil Plantations Limited (“GOPL”)
GOPL was incorporated on August 18, 2006. GOPL is engaged in the business of planting varieties of oil seeds such as palm, coconuts, sunflower, rapeseeds, mustard, soybean, groundnut and cotton.
The registered office of GOPL is located at:
Pirojshanagar Nagar Eastern Express Highway Vikroli (East) Mumbai – 400 079
The directors of GOPL are:
(a) Mr. B. S. Yadav (b) Mr. R. S. Vijan (c) Mr. S. K. Gupta
GOPL is a wholly owned subsidiary of Godrej Agrovet Limited.
The summary audited financial statements for the period August 18, 2006 to March 31, 2007 are as follows:
(Amount in Rs. Million)
Particulars Fiscal Year 2007 Equity capital 0.50 Reserves & Surpluses Nil (Excluding Revaluation Reserve) Total Income 27.75 Profit / (Loss) After Tax (1.56) Earning Per Share (31.14) Book Value per Share (Net Asset Value) 10
142 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
GOPL has not made any public or rights issue in the last three years except allotment of 50,000 equity shares to the subscribers to the Memorandum on October 26, 2006 subsequent to the incorporation of the GOPL on August 18, 2006.
There has been no change in the capital structure in the last six months and has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is under winding up.
24) Godrej Properties Limited (GPL)
Godrej Properties Limited (GPL) was incorporated on February 8, 1985. GPL is in the business of Real Estate
The Registered Office of GPL is located at
Godrej Bhavan 4th Floor, 4A, Home Street, Fort, Mumbai - 400 001
The Directors of GPL are
(a) Mr. Adi B. Godrej (b) Mr. Nadir B. Godrej (c) Mr. Jamshyd N. Godrej (d) Ms. Parmeshwar Adi Godrej (e) Ms. Pheroza Jamshyd Godrej (f) Ms. Smita Vijay Crishna (g) Mr. R.K. Naoroji (h) Mr. Amit Choudhury (i) Mr. Milind Korde
The shareholding pattern of GPL is as below:
Sr. No. Name of the Shareholder No. of shares % of shares 1 Godrej Industries limited. 49,801,159 82.42 2 Vora Soaps limited. 30,915 0.05 3 Bahar Agrochem and Feeds Private Limited. 1,245,780 2.06 4 Ensemble Foldings and Finance Limited. 691,155 1.14 5 Nisa A. Godrej 576,747 0.95 6 Pirojsha A. Godrej 576,747 0.95 7 Raika J. Godrej 830,520 1.37 8 Navroj J. Godrej 899,730 1.49 9 Nadir B. Godrej 1,730,250 2.86 10 Freyan V. Crishna 899,730 1.49 11 Nyrika V. Crishna 830,520 1.37 12 Rishad K. Naoroji 1,730,250 2.86 13 Tanya Arvind Dubash 1,730,250 2.86 Total 60,420,259
143 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The summary audited financial statement for the last three financial years are as follows
(Amount in Rs. Million) Particulars F.Y. 2006-07 F.Y. 2005-06 F.Y. 2004-05
Equity Capital 64.45 64.45 64.45 Reserves & Surplus 520.59 413.99 351.48 Total Income 1,372.62 704.58 418.48 Profit / (Loss) After Tax 414.52 133.89 58.33 Earning Per Share 64.31 20.67 9.08 Book Value per Share (Net Asset Value) 90.78 74.24 64.54
GPL allotted 51,556,360 Equity Shares as bonues shares on November 29, 2007.During the Fiscal 2007, GPL made a rights issue of Equity Shares at a premium of Rs. 610 per share.Against this rights issue 2,419,354 Equity Shares were allotted to GIL.
GPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 as amended nor is at under winding up
25) Godrej Real Estate Private Limited (GREPL)
Godrej Real Estate Private Limited (GREPL) was incorporated on March 15, 2007. GREPL is in the business of Real Estate
The Registered Office of GREPL is located at
Godrej Bhavan 4th Floor, 4A, Home Street, Fort, Mumbai - 400 001
The Directors of GREPL are
(a) Mr. Milind Korde (b) Mr. K.T. Jithendran
The shareholding pattern of GREPL is as follows
Sr. No. Name of the Shareholder Share Holdings % age 1 Godrej Properties limited. 49,999 100.00 2 Mr. A. B. Godrej 1 0.00 TOTAL 50000 100.00
The summary audited financial statement for the last three financial years are as follows
(Amount in Rs.) Particulars F.Y. 2006-07 F.Y. 2005-06 F.Y. 2004-05 Equity Capital 0.50 - - Reserves & Surplus ( Excluding Revaluation Reserve) - - - Total Income - - - Profit / (Loss) After Tax (0.03) - - Earning Per Share (0.52) - - Book Value per Share (Net Asset Value) 9.15 - -
144 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
GREPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 as amended nor is at under winding up
26) Godrej Realty Private Limited
GRPL was incorporated on June 27, 2005. GRPL is in the business of real estate.
The registered office of GRPL is located at
Godrej Bhavan, 4th Floor, 4A, Home Street, Fort, Mumbai - 400 001
Directors of GRPL are
(a) Mr. Pirojsha Godrej (b) Mr. Milind Korde (c) Mr. Naresh Nadkarni
The shareholding pattern of GRPL is as follows
Sr. No. Name of the Shareholder Share Holdings % age 1 Godrej Properties Limited 509,999 51.00 2 HDFC Venture Trustee Company Limited 490,000 49.00 3 Milind Korde and Godrej Properties Limited 1 0.00 TOTAL 1000000 100.00
The summary audited financial statement for the last three financial years are as follows (Amount in Rs. Million) Particulars F.Y. 2006-07 F.Y. 2005-06 F.Y. 2004-05 Equity Capital 10.00 10.00 - Reserves & Surplus ( Excluding Revaluation Reserve) - - - Total Income 1.03 0.08 - Profit / (Loss) After Tax (1.14) - - Earning Per Share (1.14) - - Book Value per Share (Net Asset Value) 8.86 10.00 -
GRPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 as amended nor is at under winding up
27) Godrej Sara Lee Limited (GSLL)
Godrej Sara Lee Limited was incorporated on April 10, 1987 in Mumbai. It is involved in the business of manufacture and marketing of mosquito repellants, air care, hair care, shoe care and home care.
The Registered office of GSLL is located at
Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai 400 079
The directors of GSLL are
(a) Adi Godrej
145 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
(b) A Mahendran (c) N B Godrej (d) J N Godrej (e) Adriaan Nuhn (f) Marc de Groen (g) Ravi Venkateswar (h) Vincent Janssen
The shareholding patter of GSLL is as follows
No. Name of Shareholder No. of Shares % age 1 Sara Lee Mauritius Holding Private Limited 13024125 51%
2 Godrej Industries Limited 5107122 20%
3 Godrej and Boyce Mfg. Co. Ltd. 7406246 29%
4 Godrej and Boyce Mfg. Co. Ltd. + Mr. J N Godrej 4 5 Godrej Industries Limited + Mr. Adi Godrej 1 6 Godrej Industries Limited + Mr. Nadir Godrej 1 7 Godrej Industries Limited + Ms. Tanya Dubhais 1 TOTAL 25537500 100%
The summary audited financial statement for the last three financial years are as follows
Particulars F Y 2007 F Y 2006 F Y 2005 Equity Capital 102150 102150 102150 Reserves & Surpluses 872138 568509 528075 (Excluding Revaluation Reserve) Total Income 5230422 4479904 4410099 Profit / (Loss) After Tax 667618 542740 384786 Earning Per Share 26.14 21.25 15.07 Book Value per Share (Net Asset Value) 32.20 19.61 17.32
GSLL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 as amended nor is under winding up.
28) Godrej Sea View Properties Private Ltd
Godrej Sea View Properties Private Limited (GSVPPL) was incorporate on March 14, 2007 GSVPPL is in the business of Real Estate
The Registered office of GSVPPL is located at
Godrej Bhavan 4th Floor, 4A, Home Street, Fort, Mumbai - 400 001
The Directors of GSVPPL are
(a) Mr. Milind Korde (b) Mr. K.T. JithendranThe shareholding patter on GSVPPL is as follows
146 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Sr. No. Name of the Shareholder No. of shares % of shares 1 Godrej Properties limited. 49,999 100.00 2 Mr. A. B. Godrej 1 0.00 TOTAL 50000 100.00
The summary audited financial statement for the last three financial years are as follows
(Amount in Rs. Million) Particulars F.Y. 2006-07 F.Y. 2005-06 F.Y. 2004-05 Equity Capital 0.50 - - Reserves & Surplus - - - ( Excluding Revaluation Reserve) Total Income - - - Profit / (Loss) After Tax (0.03) - - Earning Per Share (0.52) - - Book Value per Share (Net Asset Value) 9.15 - -
GSVPPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 as amended nor is under winding up
29) Godrej Upstream Limited (“GUL”)
GUL was incorporated on May 30, 2003. GUL is involved in the business of providing call centre and contact management services.
The registered office of the GUL is located at:
Chitalsar, Manpada SV Road, Thane 400 610
The directors of GUL are:
(a) Mr. Adi B. Godrej (b) Mr. Nadir B. Godrej (c) Mr. Jamshyd N. Godrej (d) Mr. Vijay M. Crishna (e) Mr. Xercsis K. Marker (f) Mr. V. Srinivasan
The shareholding pattern of GUL is as follows:
No. Name of Shareholder No. of Shares Held % of shares
1 Lawkim Limited 13,260,000 59.57
2 Godrej Industries 9,000,000 40.43
Total 22,260,000 100.00
147 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The summary audited financial statements for the last three financial years are as follows:
(Amount in Rs. Million) Particulars For the year ended For the year ended For the year ended March 31, 2007 March 31, 2006 March 31, 2005 Equity Capital 222.60 222.60 222.60 Reserves & Surpluses Nil Nil Nil (Excluding Revaluation Reserve) Accumulated Losses (184.43) (133.16) (102.95) Total Income 184.25 102.68 84.76 Profit / (Loss) After Tax (51.27) (30.21) (48.99) Earning Per Share (2.30) (1.36) (2.28) Book Value 1.71 4.01 5.37
GUL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
30) Godrej Waterside Properties Pvt Ltd. (GWPPL)
GWPPL was incorporated on June 27, 2005. GWPPL is in the business of real estate.
The registered office of GWPPL is located at
Godrej Bhavan, 4th Floor, 4A, Home Street, Fort, Mumbai - 400 001
Directors of GWPPL are
(a) Mr. Pirojsha Godrej (b) Mr. Milind Korde (c) Mr. K.T. Jitendran (d) Mr. Naresh Nadkarni
The shareholding pattern of GWPPL is as follows:
Sr. No. Name of the Shareholder Share holding % age 1 Godrej Properties Limited 509,999 51.00 2 Mr. Milind Korde and 1 0.00 3 HDFC Venture Trustee Company Limited 490,000 49.00 TOTAL 1,000,000 100.00
The summary audited financial statement for the last three financial years are as follows
(Amount in Rs. Million) Particulars F.Y. 2006-07 F.Y. 2005-06 F.Y. 2004-05 Equity Capital 0.50 0.50 - Reserves & Surplus ( Excluding Revaluation Reserve) - - - Total Income 0.39 - - Profit / (Loss) After Tax (1.85) - - Earning Per Share (37.00) - - Book Value per Share (Net Asset Value) (27.04) 10.00 -
148 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
GWPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 as amended nor is under winding up
31) Golden Feed Products Limited (“GFPL”)
GFPL was incorporated on May 27, 2003. GFPL is engaged in the shrimp feed business.
The registered office of GFPL is located at:
Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai 400 079.
The directors of GFPL are: (a) Mr. B. S. Yadav (b) Dr. S. L. Anaokar (c) Dr. P. N. Narkhede (d) Dr. S. S. Sindhu
GFPL is a wholly owned subsidiary of Godrej Agrovet Limited.
The summary audited financial statements for the last three financial years are as follows
(Amount in Rs. Million) Particulars For the year ended For the year For the year March 31, 2007 ended March ended March 31, 31, 2006 2005 Equity Share Capital 0.50 0.50 0.50 Reserves & Surpluses Nil Nil Nil (Excluding Revaluation Reserve) Total Income 94.08 34.60 Nil Profit / (Loss) After Tax (1.56) (14.00) Nil Earning Per Share (31) (280) Nil Book Value per Share (Net Asset Value) 10 10 Nil
GFPL has not made any public or rights issue in the last three years.
GFPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is under winding up.
32) Goldmohur Foods and Feeds Limited (“GFFL”)
GFFL was incorporated on November 2, 1974. GFFL is engaged business of manufacturing and marketing of animal feeds including poultry feed, broiler feeds, pellets and mash and cattle feed.
The registered office of GFFL is located at:
Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai 400 079.
The directors of GFFL are:
(a) Mr. N. B. Godrej (b) Mr. B. S. Yadav (c) Dr. S. L. Anaokar
149 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
(d) Mr. V. Srinivasan (e) Mr. R. S. Vijan
GFFL is a wholly owned subsidiary of Godrej Agrovet Limited.
The summary audited financial statements for the last three financial years are as follows
(Amount in Rs. Million) Particulars For the year For the year ended For the year ended ended March 31, March 31, 2006 March 31, 2005 2007 Equity Capital 18.38 18.38 18.38
Reserves & Surpluses 182.45 189.18 170.73 (Excluding Revaluation Reserve) Total Income 3,263.51 2,958.77 3,086.07 Profit / (Loss) After Tax 32.04 53.80 34.54 Earning Per Share 17.43 29.27 16.02 Book Value per Share (Net Asset Value) 109.26 112.93 102.89
GFFL has not made a public issue or rights issue in the last three years.
GFFL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is under winding up.
33) Happy High Rises Limited (HHRL)
Happy High Rises Limited was incorporated on May 14, 1993. HHRL is in the business of real estate.
The Registered Office of HHRL is located at
No.23, The Legacy, 25A, Shakespeare Sarani, Kolkata, West Bengal – 700017
The Directors of HHRL are a
(a) Mr. Milind Korde (b) Mr. K.T. Jithendran (c) Mr. Rajendra Khetawat
The shareholding pattern of HHRL is as follows
Sr. No. Name of the Shareholder Share Holdings % age 1 Godrej Properties Ltd. 203114 100.00 2 Mr. Milind Korde and 1 0.00 3 Mr. K. T. Jithendran and 1 0.00 4 Mr. Nitin Wagle and 1 0.00 5 Mr. Shodhan Kembhavi and 1 0.00 6 Mr. Rajendra Khetawat and 1 0.00 7 Mr. K.P. Sudheer and 1 0.00 TOTAL 203120 100.00
150 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The summary audited financial statements for the last three financial years are as follows
Particulars F.Y. 2006-07 F.Y. 2005-06 F.Y. 2004-05 Equity Capital 2.03 2.03 1.53 Reserves & Surplus - - - Total Income - - - Profit / (Loss) After Tax (0.01) (0.01) 0.00 Earning Per Share (0.03) (0.07) (0.02) Book Value per Share (Net Asset Value) 9.64 9.67 9.63
34) J T Dragon Pte Limited
J T Dragon Pte Limited (JTD) was incorporated on June 29, 1990. The business of JTD is Investment Holding Company owning 100% of Godrej Vietnam (Co) Ltd.
The Registered office of JTD is located at
11 Lok Yang Way Jurong, Singapore 628632
The Directors are as follows
(a) Mr. A.K.Bardy (b) Mr. M.F.Unwalla (c) Mr. Toh AA Hea
The shareholding patter of JTD is as follows
Sr. No. Name of the Shareholder Share Holdings % age
1 Godrej (Singapore) Pte. Ltd. 2,002,750 38.47% 2 Godrej (Malaysia) Sdn.Bhd. 2,002,750 38.47% 3 Godrej Investments Pvt.Ltd. 1,200,000 23.05% .TOTAL 5,205,500 100.00%
The summary audited financial statement for the last three financial years are as follows
(Amount in Rs. Million) Particulars F.Y. 2006 F.Y. 2005 F.Y. 2004 Equity Capital 149.76 141.28 144.24 Reserves & Surplus ( Excluding Revaluation Reserve) Total Income 2.47 2.98 3.09 Profit / (Loss) After Tax Earning Per Share Book Value per Share (Net Asset Value) (0.69) (0.05) 3.25
35) Lawkim Limited (“Lawkim”)
Lawkim was incorporated on July 16, 1960. Lawkim is involved in the business of manufacturing and selling of various types of electric motors and motor parts.
The registered office of the Lawkim:
151 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Chitalsar, Manpada SV Road, Thane 400 610
The directors of Lawkim are:
(a) Mr. Jamshyd N. Godrej (b) Mr. Vijay M. Crishna (c) Mr. Saleem A. Ahmadullah (d) Mr. Homi P. Daruwalla (e) Mr. Edul. J. Kalwachia
The shareholding pattern of Lawkim is as follows
No. Name of Shareholder No. of equity shares held % of shares 1 Jamshyd Godrej / Pheroza Godrej 1148 0.08
2 Freyan Crishna / Smita Crishna / Vijay Crishna 2,258 3.75
3 Nyrika Crishna / Smita Crishna / Vijay Crishna 2,259 3.75
4 Nadir Godrej / Rati Godrej 12,050 20.00
5 Parmeshwar Godrej / Adi Godrej 7,528 12.49
6 Nisa Godrej/ Parmeshwar Godrej / Adi Godrej 1,505 2.50
7 Raika Godrej / Pheroza Godrej / Jamshyd Godrej 2,236 3.71
8 Pheroza Godrej / Jamshyd Godrej 7,532 12.50
9 Vijay Crishna / Smita Crishna 3,036 5.04
10 Tanya Dubash / Parmeshwar Godrej 1,508 2.50
11 Adi Godrej / Parmeshwar Godrej 8 0.01
12 Navroze Godrej / Pheroza Godrej / Jamshyd Godrej 2,240 3.71
13 Rishad Naoraoji / Jamshyd Godrej / Adi Godrej 12,050 20.00 46 14 Smita Crishna / Vijay Crishna 4500 7.46
15 Pirojsha Godrej / Adi Godrej 1,506 2.50
Total 60264 100
The summary audited financial statements for the last three financial years are as follows:
(Amount in Rs. Million) Particulars For the year ended For the year ended For the year ended March 31, 2007 March 31, 2006 March 31, 2005 Equity Capital 6.03 6,03 6,03 Reserves & Surpluses 42.45 61.94 140.41 (Excluding Revaluation Reserve) Total Income 503.18 479.22 430.71 Profit / (Loss) After Tax (19.49) (78.47) (83.35) Earning Per Share (323.36) (1,302.13) (1,383.09)
152 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars For the year ended For the year ended For the year ended March 31, 2007 March 31, 2006 March 31, 2005 Book Value per Share (Net 804.44 1,127.80 2,429.93 Asset Value)
Lawkim has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
36) Mercury Manufacturing Company Limited (MMCL)
Mercury Manufacturing Company Limited (MMCL) was incorporated on November 11, 1992 The business of MMCL is manufacture and export of steel office furniture such as filing and storage cabinets etc.
The Registered Office of MMCL is located at
Plot no. D3, MEPZ-Special Economic Zone, Tambaram, Chennai 600 045.
The Directors of MMCL are
(a) Dr.K.A.Palia, (b) Mr.P.D.Lam, (c) Mr.V.R.Dhala, (d) Mr.P.E.Fouzdar and (e) Mr.R.K.Shankar
The shareholding pattern of MMCL is as below
Sr. No. Name of the Shareholder Share % age 1 Godrej (Singapore) Pte. Ltd., 311250 8.30 2 Godrej(Malayisa) Sdn. Bhd. 311250 8.30 3 Steel Seal Equipment Ltd. Bahamas 1867500 49.80 4 Godrej & Boyce Mfg. Co. Ltd. and nominees 1260000 33.60 TOTAL 3750000 100.00
The summary audited financial statement for the last three financial years are as follows
(Amount in Rs. Mn) Particulars F.Y. 2006-07 F.Y. 2005-06 F.Y. 2004-05 Equity Capital 37.50 37.50 37.50 Reserves & Surplus 70.80 60.67 55.23 Total Income 249.82 248.57 174.18 Profit / (Loss) After Tax 20.94 13.99 9.12 Earning Per Share 5.58 3.73 2.43 Book Value per Share (Net Asset Value) 28.88 26.78 24.73
MMCL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 as amended nor is under winding up
37) Prashant Metal Forming Industries Private Limited (“PMF”)
PMF was incorporated on April 29, 1991. PMF is involved in the business of winding and repair of motors.
The registered office of PMF is located at:
153 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
R-374, 1st floor TTC Industrial Area Thane Belapur Road Rabale Navi Mumbai
The directors of PMF are:
(a) Mr Percy Fouzdar (b) Mr X K Marker
The shareholding pattern of PMF is as follows:
No. Name of Shareholder No. of shares Held % of shares 1 Lawkim Ltd. 800 21.62%
2 Pirojsha A Godrej & Ms. P.A.Godrej 190 5.14%
3 Nisa A. Godrej & Ms.P.A.Godrej 190 5.14%
4 Tanya A. Godrej & Ms. P.A.Godrej 200 5.41%
5 Navroze J. Godrej & Ms. P.J.Godrej 290 7.84%
6 Raika J Godrej & Ms. P.J.Godrej 290 7.84%
7 Nadir B. Godrej & Rati N. Godrej 580 15.68%
8 Rishad K. Naoroji 580 15.68%
9 Freyan V. Crishna & S.V.Crishna 290 7.84%
10 Nyrika V. Crishna & S.V.Crishna 290 7.84% Total 3,700 100
The unaudited summary financial statements for the last three financial years
(Amount in Rs. Million) Particulars F. Y. 2006-07 F. Y. 2005-06 F. Y. 2004-05 Equity Capital 0.37 0.37 0.37 Reserves & Surpluses NA NA NA (Excluding Revaluation Reserve) Total Income 2.50 (PROVI) 6.10 6.38 Profit / (Loss) After Tax 1.00 (PROV) 0.60 0.36 Earning Per Share NA 167.86 93.07 Book Value per Share (Net Asset Value) 100 100 100
PMF has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
38) Statomat Special Machines (India) Private Limited (SSMPL)
SSMPL was incorporated on January 1, 1992. SSMPL is involved in the business of manufacturer of special purpose machines.
The registered office of SSMPL is located at:
Plot No. R-719, TTC Industrial area,
154 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
MIDC, Rabale, Near Alpha Laval, Navi Mumbai 400 701
The directors of SSMPL are:
(a) Mr. Vijay Mohan Crishna (b) Mr. Ghanshyam Agrawal (c) Mr. Sadik Sadiku
The Shareholding Pattern of SSMPL is as follows:
No. Name of Shareholder No. of Shares Held % of shares 1 Vijay Mohan Crishna 10 0.03
2 Ghanshyam Agrawal 1,410 4.70
3 Francis Klein & Co. Pvt. Ltd. 3,210 10.69
4 Statomat Special Maschinen GmbH 18,000 59.94
5 Lawkim Private Limited 6,000 19.98
6 Rajkumar Agrawal 1,400 4.66
Total 30,030 100.00
The summary audited financial statements for the last three financial years are as follows:
(Amount in Rs. Mn) Particulars F. Y. 2006-07 F. Y. 2005-06 F. Y. 2004-05 Equity Capital 3.00 3.00 3.00 Reserves & Surpluses 20.06 17.98 16.22 (Excluding Revaluation Reserve) Total Income 34.41 37.19 64.73 Profit / (Loss) After Tax 2.08 1.77 5.60 Earning Per Share 69.20 58.81 186.42 Book Value per Share (Net Asset Value) 768.06 698.85 640.04
SSMPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up
39) Swadeshi Detergents Limited (“SWL”)
SWL was incorporated on May 23, 1974. SWL is involved in the business of manufacturing, distilling, extracting, drawing, refining, purifying, selling, importing detergents, whitening or bleaching agents etc.
The registered office of the SWL:
Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai 400 079.
The directors of SWL are:
(a) Mr. A.B. Godrej (b) Mr. K.N. Petigara
155 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
(c) Mr. C.K. Vaidya (d) Mr. A. Choudhury
The shareholding pattern of the SWL is as follows:
S.No. Name of the Shareholder No. of Shares held Percentage 1) Godrej Industries Limited 209,370 41.08 2) Mr. A.B. Godrej jointly with Ms. P.A. Godrej and 100 0.02 3) Ms. Freyan V. Crishna 72,930 14.31 4) N.B. Godrej jointly with R.N. Godrej 50 0.01 5) N.A. Godrej jointly with A. B. Godrej and Ms. P.A. Godrej 17 0.00 6) P.A. Godrej jointly with A. B. Godrej and Ms. P.A. Godrej 17 0.00 7) T.A. Dubhash jointly with A. B. Godrej and Ms. P.A. Godrej 16 0.00 8) J.N. Godrej for Master Navroze J. Godrej 30 0.01 9) Ms. N.A. Godrej 40,000 7.85 10) N.B. Godrej 38,700 7.59 11) P.J. Godrej 79,900 15.68 12) Ms. J.N. Godrej jointly with PJG 20 0.00 13) Smita V. Crishna jointly VMC 20 0.00 14) Mr. A.B. Godrej jointly with Mrs P.A. Godrej 20 0.00 15) Mr. N.B. Godrej jointly with Ms. R.N. Godrej 20 0.00 16) Mr. R.K. Naoroj jointly with J.N. Godrej/ A.B. Godrej 20 0.00 17) Ms. T.A. Dubhash jointly with J.N. Godrej and A.B. Godrej 37,000 7.26 18) Mr. V.M. Crishna for Ms. N.V. Crishna 20 0.00 19) Mr. R.J. Godrej 20 0.00 20) Mr. R.K. Naoroji 31,400 6.16 21) Total 509,670 100.00
The summary audited financial statements for the last three financial years are as follows: (in Rs. Million) Particulars For year ended March For year ended March For year ended March 31, 2007 31, 2006 31, 2005 Equity Capital 5.10 5.10 5.10 Reserves & Surpluses Nil Nil Nil
Total Income 1.78 1.32 1.88 Profit / (Loss) After Tax 1.22 0.16 0.38 Earning Per Share 2.39 0.11 0.74 Book Value per Share (Net (17.28) (19.67) (19.79) Asset Value)
SWL has not made any public or rights issue in the last three years.
SWL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
40) Tahir Properties Limited (TPL)
Tahir Properties Limited was incorporated on May 16, 1994. It is involved in the business of purchasing land, development rights, immovable properties and erecting and constructing houses, pulling down, rebuilding, enlarging, altering and improving existing house, buildings or works thereon and generally dealing with and improving property and selling, leasing, letting, mortgaging or otherwise disposing of the lands, houses, building and other property of the company or others.
156 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The Registered office of TPL is located at
Godrej Bhavan 4th Floor, 4A, Home Street, Fort, Mumbai - 400 001
The directors of TPL are
(a) Ms. Pheroza J. Godrej (b) Ms. Tanya A. Dubash (c) Mr. C.K. Vaidya (d) Mr. Milind Korde
The shareholding pattern of TPL is as follows
No. Name of Shareholder No. of Shares % age 1 Godrej Industries Ltd(Rs. 20/- paid up) 25 0.00529 2 Godrej Properties & Investments Ltd. 2 0.00042 3 Godrej Properties & Investments Ltd. (Rs.20 paid up ) 70 0.01481 4 Mr. Amit Choudhury and Godrej Properties & Investments Ltd. 1 0.00021 5 Mr. Milind Korde and Godrej Properties & Investments Ltd. 1 0.00021 6 Mr. Nitin Wagle and Godrej Properties & Investments Ltd. 1 0.00021 7 Mr. K. T. Jithendran and Godrej Properties & Investments Ltd. 1 0.00021 8 Mr. Shodhan Kembhavi and Godrej Properties & Investments Ltd. 1 0.00021 10 Ms. Rati N. Godrej 50215 10.62263 11 Ms. Vijaya Mody 64194 13.57980 12 Ms. Pramila D. Jiwrajka and Mr. Dilip B. Jiwrajka (H.U.F.) 32197 6.81105 13 N.B. Godrej 32097 6.78990 14 Mr. Manish Poddar 32197 6.81105 15 NTS Pvt. Ltd. 50315 10.64379 16 Ms. Mythili Mahendran 32197 6.81105 17 Gaurav Kapur & Harrishma Kapur 32197 6.81105 18 Jaideep Mehrotra 50315 10.64379 19 Nitesh Shetty 32197 6.81105 19 Sushma Dalal 32297 6.83221 20 Ms. Monisha Advani 32197 6.81105 Total 472717 100.00000
The summary audited financial statement for the last three financial years are as follows
(Amount in Rs.Million) Particulars F Y 2007 F Y 2006 F Y 2005 Equity Capital 47.26 47.26 42.24 Reserves & Surpluses 396.48 396.48 396.48 (Excluding Revaluation Reserve) Total Income NIL NIL NIL Profit / (Loss) After Tax (0.01) (0.01) (0.01) Earning Per Share (0.014) (0.016) (0.016) Book Value per Share (Net Asset Value) 938.80 938.82 1038.55
157 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
TPL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 as amended nor is under winding up.
41) Vora Soaps Limited (“VSL”)
VSL was incorporated on October 18, 1979.VSL is involved in the business of manufacturing, refining, importing and exporting of soap, detergent, chemical, cosmetics etc.
The registered office of the VSL:
Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai 400 079.
The directors of VSL are: (a) Mr. A.B. Godrej (b) Mr. K.N. Petigara (c) Mr. C.K. Vaidya (d) Mr. A. Choudhury
The shareholding pattern of the VSL is as follows:
S.No. Name of the Shareholder No. of Shares held % of shares 1) F.V. Crishna 2,000 10.00 2) N.A. Godrej 1,332 6.66 3) N.B. Godrej 3,996 19.98 4) Ms. P.A. Godrej jointly with N.A. Godrej 666 3.33 5) Mr. P.A. Godrej 1,336 6.68 6) Ms. P.J. Godrej for Mr. N.J. Godrej 2,000 10.00 7) R.J. Godrej 2,000 10.00 8) S.V. Crishna for N.V. Crishna 2,000 10.00 9) T.A. Dubash 666 3.33 Total 20,000 100.00
The summary audited financial statements for the last three financial years are as follows: (Amount in Rs. Million) Particulars For year ended March For year ended March For year ended March 31, 2007 31, 2006 31, 2005 Equity Capital 2.00 2.00 2.00 Reserves & Surpluses 0.00 0.00 0.00 (Excluding Revaluation Reserve)
Total Income 0.67 0.06 0.08 Profit / (Loss) After Tax 0.48 0.02 0.11 Earning Per Share 24.25 0.87 5.44 Book Value per Share (Net Asset (30.52) (54.77) (55.64) Value)
VSL has not made a public or rights issue in the last three years.
VSL has not become a sick company under the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985, as amended nor is it under winding up.
158 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
RELATED PARTY TRANSACTIONS
Related Party Transactions for the Half Year Ended September 30, 2007
A) List of Related Parties:
a) Enterprise having control over reporting enterprise:
i) Godrej & Boyce Mfg. Co. Limited.
b) Subsidiaries:
i) Godrej Netherlands B.V ii) Godrej Consumer Products (UK) Limited (a subsidiary of Godrej Netherlands B.V.) iii) Keyline Brands Limited (a subsidiary of Godrej Consumer Products (UK) Limited) iv) Inecto Manufacturing Limited (a subsidiary of Keyline Brands Limited) v) Inecto Limited (a subsidiary of Keyline Brands Limited) vi) Cosmetics That Care Limited (a subsidiary of Keyline Brands Limited) vii) Cuticura Laboratories Limited (a subsidiary of Keyline Brands Limited) viii) Rapidol (Pty) Limited
c) Joint Venture:
i) Godrej SCA Hygiene Limited
d) Enterprises under common control with whom transactions have taken place during the year:
i) Godrej Industries Limited ii) Godrej HiCare Limited iii) Godrej Agrovet Limited iv) Godrej Beverages & Foods Limited v) Godrej Global Mid East FZE
e) Enterprise over which Key management personnel exercise significant influences :
i) Godrej Investments Privated Limited
f) Key Management Personnel and Relatives :
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President iii) Ms. Parmeshwar A. Godrej, Wife of Mr. Adi B. Godrej iv) Ms. Khoorsheed H. Press, Wife of Mr. Hoshedar K. Press
159 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Transactions with Related Party as on 30th September 2007
Rs million Particulars Enterprise Enterprises Subsidiary Joint Enterprise over Relatives of Key Total having under Companies Venture which key Key management control over common Company management management personnel & reporting control personnel personal Relatives enterprise exercise (G&B) significant influence 1. Sale of goods 0.08 56.00 6.22 - - - - 62.31 2. Purchase of materials, spares and capital equipment 7.42 31.37 - 13.45 - - - 52.23 Establishment 3. and other 2.73 59.76 - 0.26 - - - 62.76 expenses 4. Royalty - - 23.07 - - - - 23.07 Dividend 5. 201.94 46.27 - - 4.72 0.68 0.02 253.63 remitted Managerial 6. ------11.16 11.16 Remuneration 7. Lease Rentals paid (also included in remuneration paid to Mr ABG) - - - - - 6.45 - 6.45 Outstanding 8. balances as at Sep 30, 2007 Receivable 0.09 2.86 11.73 - - - - 14.68 Payable 0.36 9.24 - 0.28 - - - 9.89 Guarantees 9. - - 242.64 - - - - 242.64 outstanding
Related Party Transactions For the Year Ended March 31, 2007
A) List of Related Parties :
a) Enterprise having control over reporting enterprise :
i) Godrej & Boyce Mfg. Co. Limted.
b) Subsidiaries :
i) Godrej Netherlands B.V ii) Godrej Consumer Products (UK) Limited (a subsidiary of Godrej Netherlands B.V.) iii) Keyline Brands Limited (a subsidiary of Godrej Consumer Products (UK) Limited) iv) Inecto Manufacturing Limited (a subsidiary of Keyline Brands Limited) v) Inecto Limited (a subsidiary of Keyline Brands Limited) vi) Cosmetics That Care Limited (a subsidiary of Keyline Brands Limited) vii) Cuticura Laboratories Limited (a subsidiary of Keyline Brands Limited) viii) Rapidol (Pty) Limited
c) Joint Venture :
i) Godrej SCA Hygiene Limited
160 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only d) Enterprises under common control with whom transactions have taken place during the year :
i) Godrej Industries Limited ii) Godrej HiCare Limited iii) Godrej Agrovet Limited iv) Godrej Beverages & Foods Limited v) Godrej Global Mid East FZE e) Enterprise over which Key management personnel exercise significant influences :
i) Godrej Investments Privated Limited f) Key Management Personnel and Relatives :
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President iii) Ms. Parmeshwar A. Godrej, Wife of Mr. Adi B. Godrej iv) Ms. Khoorsheed H. Press, Wife of Mr. Hoshedar K. Press
161 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
B) Transactions with Related Party as on 31st March 2007
Rs. million Particulars Enterprise Enterprises Subsidiary Joint Enterprise over which key Relatives of Key Total having control under common Companies Venture management personnel exercise Key management over reporting control Company significant influence management personnel & enterprise (G&B) personal Relatives 1. Sale of goods 1.22 107.53 3.73 - - - - 112.48 2. Purchase of materials, spares and capital equipment 75.77 118.56 - - - - - 194.33 3. Establishment and other expenses 3.85 110.85 - (0.30) - - - 114.39 4. Investments made - - 120.03 100.00 - - - 220.03 5. Sale of Brand - - - 156.00 - - - 156.00 6. Royalty - - 27.58 - - - - 27.58 7. Loan Given - - 36.55 - - - - 36.55 8. Loan Repaid - - 36.55 - - - - 36.55 9. Interest received on Loan - - 0.28 - - - - 0.28 10. Dividend remitted 378.64 158.78 - - 8.85 1.28 0.04 547.58 11. Managerial Remuneration ------38.38 38.38 12. Lease Rentals paid - - - - - 12.91 - 12.91 13. Outstanding balances as at Sep 30,2007 Receivable 0.02 25.17 13.15 - - - - 38.34 Payable 0.91 24.97 - - - - 9.26 35.14 14. Guarantees outstanding - - 255.60 - - - - 255.60
162 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Related Party Transactions For the Year Ended March 31, 2006
A) List of Related Parties :
a) Enterprise having control over reporting enterprise :
i) Godrej & Boyce Mfg. Co. Limited.
b) Subsidiaries :
i) Godrej Netherlands B.V ii) Godrej Consumer Products (UK) Limited (a subsidiary of Godrej Netherlands B.V.) iii) Keyline Brands Limited (a subsidiary of Godrej Consumer Products (UK) Limited) iv) Inecto Manufacturing Limited (a subsidiary of Keyline Brands Limited) v) Inecto Limited (a subsidiary of Keyline Brands Limited) vi) Cosmetics That Care Limited (a subsidiary of Keyline Brands Limited) vii) Cuticura Laboratories Limited (a subsidiary of Keyline Brands Limited)
c) Enterprises under common control with whom transactions have taken place during the year:
i) Godrej Industries Limited ii) Godrej Foods Limited iii) Godrej HiCare Limited iv) Godrej Agrovet Limited v) Godrej Beverages & Foods Limited vi) Godrej Global Mid East FZE vii) Godrej Properties Limited. viii) Gold Mohar Foods & Feeds Limited
d) Enterprise over which Key management personnel exercise significant influences :
i) Godrej Investments Privated Limited
e) Key Management Personnel and Relatives :
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President iii) Ms. Parmeshwar A. Godrej, Wife of Mr. Adi B. Godrej iv) Ms. Khoorsheed H. Press, Wife of Mr. Hoshedar K. Press
163 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Transactions with Related Party as on 31st March 2006
Rs million Particulars Enterprise Enterprises Subsidiary Enterprise over which Relatives of Key Key management Total having control under common Companies key management management personnel & over reporting control personnel exercise personal Relatives enterprise (G&B) significant influence 1. Sale of goods 1.12 130.39 - - - - 131.51 2. Purchase of materials, spares and capital equipment 6.96 107.32 - - - - 114.28 3. Establishment and other expenses 2.16 84.68 - - - - 86.84 4. Finance provided – Loan - - 240.54 - - - 240.54 5. Loan Repaid - - 240.54 - - - 240.54 6. Finance provided – Equity - - 490.13 - - - 490.13 7. Interest received on Loan - - 3.02 - - - 3.02 8. Guarantees given - - 232.44 - - - 232.44 9. Dividend remitted 353.90 78.75 - 1.77 - 0.04 434.45 10. Managerial Remuneration - - - - - 27.97 27.97 11. Sale of Residential properties - - - - 217.26 - 217.26 12. Lease Rentals - - - - 3.37 - 3.37 13. Outstanding balances as at March 31,2006 Receivable 0.16 18.23 - - - - 18.38 Payable 0.50 24.29 - - 3.37 11.12 39.28 14. Guarantees outstanding - - 232.44 - - - 232.44
164 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Related Party Transactions For the Year Ended March 31, 2005
A) List of Related Parties :
a) Enterprise having control over reporting enterprise :
i) Godrej & Boyce Mfg. Co. Limited.
b) Enterprises under common control with whom transactions have taken place during the year :
i) Godrej Industries Limited ii) Godrej Appliances Limited. iii) Godrej Sara Lee Limited. iv) Godrej Hi Care Limited. v) Godrej Agrovet Limited vi) Godrej Tea Limited vii) Lawkim Limited. viii) Godrej Global Mid East FZE
c) Key Management Personnel and Relatives :
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President
165 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
B) Transactions with Related Party as on 31st March 2005
Rs. million Particulars Enterprise Enterprises Subsidiary Joint Enterprise over which key Relatives of Key Total having control under common Companies Venture management personnel exercise Key management over reporting control Company significant influence management personnel & enterprise (G&B) personal Relatives 1. Sale of goods 1.36 114.53 - - - - - 115.89 2. Purchase of materials, spares and capital equipment 19.80 285.59 - - - - - 305.39 3. Establishment and other expenses 3.73 81.70 - - - - - 85.43 4. Raw material taken on loan and returned during the year - 40.69 - - - - - 40.69 5. Deposits placed against material loan and returned back - 42.10 - - - - - 42.10 6. Dividend remitted 264.55 60.73 - - - - 0.02 325.29 7. Managerial Remuneration ------19.21 19.21 8. Outstanding balances as at March 31, 2005 Receivable 0.10 17.49 - - - - - 17.59 Payable 0.06 7.63 - - - - 7.02 14.71
166 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Related Party Transactions For the Year Ended March 31, 2004
A) List of Related Parties :
a) Enterprise having control over reporting enterprise :
i) Godrej & Boyce Mfg. Co. Limited., the holding Company (upto September 23, 2003)
b) Enterprises under common control with whom transactions have taken place during the year:
i) Godrej Industries Limited ii) Godrej Appliances Limited. iii) Godrej Agrovet Limited iv) Godrej Properties & Investments Limited. v) Godrej Tea Limited vi) Ensemble Holdings & Finance Limited. vii) Godrej Global Mid East FZE
c) Enterprise over which Key management personnel exercise significant influences :
i) Bahar Agrochem & Feeds Pvt. Limited.
d) Key Management Personnel and Relatives :
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President
167 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Transactions with Related Party as on 31st March 2004
Rs million Particulars Enterprise Enterprises Subsidiary Joint Venture Enterprise over which key Key management Total having control under common Companies Company management personnel personnel & over reporting control exercise significant Relatives enterprise (G&B) influence 1. Sale of goods 1.14 115.98 - - - - 117.12 2. Purchase of materials, spares and capital equipment 70.01 238.80 - - - - 308.80 3. Processing charges paid - 284.79 - - - - 284.79 4. Establishment and other expenses 2.00 110.27 - - - - 112.27 5. Dividend remitted 229.81 28.40 - - - 0.01 258.22 6. Managerial Remuneration - - - - - 16.75 16.75 7. Advances against contract 11.96 - - - - - 11.96 8. Outstanding balances as at March 31,2004 Receivable 15.22 19.02 - - - - 34.24 Payable 1.97 22.80 - - - 5.27 30.04
168 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Related Party Transactions For the Year Ended March 31, 2003
A) List of Related Parties :
a) Enterprise having control over reporting enterprise :
i) Godrej & Boyce Mfg. Co. Limited., the holding Company.
b) Enterprises under common control with whom transactions have taken place during the year
i) Godrej Industries Limited ii) Godrej Appliances Limited. iii) Godrej Agrovet Limited iv) Godrej Properties & Investments Limited. v) Godrej Tea Limited vi) Ensemble Holdings & Finance Limited. vii) Godrej Global Mid East FZE
c) Enterprise over which Key management personnel exercise significant influences :
i) Bahar Agrochem & Feeds Pvt. Limited.
d) Key Management Personnel and Relatives :
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President
169 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Transactions with Related Party as on 31st March 2003
Rs million Particulars Enterprise Enterprises Subsidiary Joint Enterprise Relatives of Key Total having under Companies Venture over which Key management control common Company key management personnel & over control management personal Relatives reporting personnel enterprise exercise (G&B) significant influence 1. Sale of goods 1.25 133.84 - - 0.01 - - 135.11 2. Purchase of 1.27 282.42 - - - - - 283.69 materials, spares and capital equipment Processing - 337.73 - - - - - 337.73 3. charges paid Establishment 0.82 107.50 - - - - - 108.32 4. and other expenses 5. Interest Paid - 0.02 - - - - - 0.02 Interest - 0.35 - - - - - 0.35 6. received Intercorporate - 3.70 - - - - - 3.70 7. Deposit Accepted Dividend 323.98 8.80 - - - - 0.01 332.79 8. remitted Managerial ------15.30 15.30 9. Remuneration Advances 6.75 ------6.75 10. against contract 11. Outstanding balances as at March 31, 2003 Receivable 6.83 13.06 - - - - - 19.89 Payable - 43.79 - - - - 5.66 49.45
170 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
AUDITOR’S REPORT
The Board of Directors, GODREJ CONSUMER PRODUCTS LIMITED Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai 400079.
Dear Sirs,
1. We have examined the attached financial information of GODREJ CONSUMER PRODUCTS LIMITED (“the Company”), as approved by the Rights Issue Committee of the Board of Directors of the Company, prepared in terms of the requirements of :
a) Paragraph B, Part II of Schedule II to the Companies Act, 1956 (‘the Act’);
b) The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, as amended to date (‘the SEBI Guidelines’); and
c) Our terms of engagement agreed upon with you in accordance with our engagement letter dated November 27, 2007, in connection with the proposed rights issue of equity shares by the Company.
2. This information has been extracted by the Management from the financial statements for the years ended March 31, 2003, 2004, 2005, 2006 and 2007. We have also examined the financial information of the Company for the half year ended September 30, 2007, prepared by the Management and approved by the Rights Issue Committee of the Board of Directors for the purpose of disclosure in the offer document of the Company mentioned in paragraph (1) above. The financial information for the above period was examined to the extent practicable, for the purpose of audit of financial information in accordance with the Auditing and Assurance Standards issued by the Institute of Chartered Accountants of India. Those standards require that we plan and perform our audit to obtain reasonable assurance, whether the financial information under examination is free of material misstatement. Based on the above, we report that in our opinion and according to the information and explanations given to us, we have found the same to be correct and the same have been accordingly used in the financial information appropriately.
3. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Companies Act, 1956, the SEBI Guidelines and terms of our engagement agreed with you, we further report that:
a) The Restated Summary Statement of Assets and Liabilities of the Company, as at March 31, 2003, 2004, 2005, 2006, 2007 and for the half year ended September 30, 2007, examined by us, as set out in Annexure I to this report are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies, Notes and Changes in Significant Accounting Policies as appearing in Annexure III.
b) The Restated Summary Statement of Profit or Loss of the Company for the years ended March 31, 2003, 2004, 2005, 2006, 2007 and for the half year ended September 30, 2007, examined by us, as set out in Annexure II to this report are after making adjustments and regrouping as in our opinion were appropriate and more fully described in Significant Accounting Policies, Notes and Changes in Significant Accounting Policies as appearing in Annexure III.
c) Based on the above, we are of the opinion that the restated financial information have been made after incorporating:
171 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
i) Adjustments for any material amounts in the respective financial years to which they relate; and ii) Extra-ordinary items that need to be disclosed separately in the accounts and qualifications requiring adjustments, if any.
d) We have also examined the following other financial information set out in Annexures, prepared by the Management and approved by the Rights Issue Committee of the Board of Directors, for the years ended March 31, 2003, 2004, 2005, 2006, 2007 and for the half year ended September 30, 2007.
i) Restated Statement of Cash Flows as appearing in Annexure IV to this report. ii) Statement of Investment as appearing in Annexure V to this report. iii) Statement of Debtors as appearing in Annexure VI to this report. iv) Statement of Loans and Advances as appearing in Annexure VII to this report. v) Statement of Secured Loans as appearing in Annexure VIII to this report. vi) Statement of Unsecured Loans as appearing in Annexure IX to this report. vii) Statement of Other Income as appearing in Annexure X to this report. viii) Statement of Contingent Liabilities as appearing in Annexure XII to this report. ix) Accounting Ratios as appearing in Annexure XII to this report. x) Capitalization Statement as appearing in Annexure XIII to this report. xi) Statement of Tax Shelters as appearing in Annexure XIV to this report. xii) Statement of Related Party Transactions as appearing in Annexure XV to this report, duly extracted from the audited financial statements for the respective years, the relationship and transactions between the Company and its related parties have been identified by Management and relied upon by us. xiii) Statement of Details of Dividend as appearing in Annexure XVI to this report.
4. With respect to the Restated Summary Statement of Consolidated Assets and Liabilities, Restated Summary Statement of Consolidated Profit and Loss Account and Consolidated Statement of Cash Flows of the Company, its subsidiaries and its jointly controlled entity (collectively referred to as “Group”):
a) We did not audit the financial statements of Keyline Brands Limited, UK, Inecto Manufacturing Limited, UK and Rapidol (Proprietary) Limited, SA, the subsidiaries whose financial statements reflect the Group’s share of:
i) total assets of Rs. 605.5 million, Rs. 530.5 million and Rs. 283.4 million as at September 30, 2007, March 31, 2007 and 2006 respectively; ii) total revenues of Rs. 1,263.57 million, Rs. 2,126.0 million and Rs. 4,25.1 million for the period ended September 30, 2007, years ended March 31, 2007 and 2006 respectively; and iii) net cash flows amounting to Rs. 77.77 million, Rs. 99.2 million and Rs. 346.9 million for the period ended September 30, 2007, years ended March 31, 2007 and 2006 respectively;
as considered in the consolidated financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries is based solely on the report of the other auditors.
b) The financial statements of Godrej Netherlands, B.V. and Godrej Consumer Products (UK) Ltd. (the investment companies) and Cuticura Labs Limited, Inecto Limited and Cosmetics That Care Limited (the dormant subsidiary companies) for the respective years whose financial statements reflect the Group’s share of:
172 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
i) total assets of Rs. 2,092.46 million, Rs. 2,183.2 million and Rs. 821.3 million as at September 30, 2007 (excluding Cuticura Labs Limited and Cosmetics That Care Limited the subsidiaries which were wound up during the period), March 31, 2007 and 2006 respectively; ii) total revenues of Rs. 45.53 million, Rs. 2,256.5 million and Rs. Nil for the period ended September 30, 2007 (excluding Cuticura Labs Limited and Cosmetics That Care Limited the subsidiaries which were wound up during the period), years ended March 31, 2007 and 2006 respectively; and iii) net cash flows amounting to Rs. 20.22 million, Rs. 1.9 million and Rs. 19.8 million for the period ended September 30, 2007 (excluding Cuticura Labs Limited and Cosmetics That Care Limited the subsidiaries which were wound up during the period), years ended March 31, 2007 and 2006 respectively;
have not been audited and have been considered in the consolidated financial statements based solely on the unaudited separate financial statements certified by the Management.
c) We have examined the Restated Summary Statement of Consolidated Assets and Liabilities of the Group as at March 31, 2006, 2007 and as at September 30, 2007, as appearing in Annexure XVII to this report, along with the Notes to the Restated Consolidated Financial Statements as appearing in Annexure XX to this report. d) We have examined the Restated Summary Statement of Consolidated Profit or Loss of the Group for the years ended March 31, 2006, and 2007 and for the half year ended September 30, 2007. as appearing in Annexure XVIII to this report, along with the Notes to the Restated Consolidated Financial Statements as appearing in Annexure XX to this report.
e) We have examined the Restated Summary Statement of Consolidated Cash Flows of the Group for the years ended March 31, 2006, and 2007 and for the half year ended September 30, 2007, as appearing in Annexure XIX to this report.
f) We have also examined the following:
i) Statement of Debtors (Consolidated) as appearing in Annexure XXI to this report. ii) Statement of Secured Loans (Consolidated) as appearing in Annexure XXII to this report. iii) Statement of Unsecured Loans (Consolidated) as appearing in Annexure XXIII to this report. iv) Statement of Investment (Consolidated) as appearing in Annexure XXIV to this report. v) Accounting Ratios on Consolidated Financials as appearing in Annexure XXV to this report.
g) We report that the Consolidated Financial Statements have been prepared by the Management of Godrej Consumer Products Limited in accordance with the requirements of Accounting Standard (AS) 21 - Consolidated Financial Statements issued by the Institute of Chartered Accountants of India.
5. In our opinion, the financial information of the Company as stated above, read along with the Significant Accounting Policies and Notes, after making adjustments / restatements and regroupings as considered appropriate, has been prepared in accordance with Part IIB of Schedule II to the Act and the SEBI Guidelines.
6. This report is intended solely for your information and for inclusion in the Offer Document in connection with the specific Rights Issue of the Company and is not to be used, referred to, or distributed for any other purpose without our prior written consent.
For and on behalf of KALYANIWALLA & MISTRY
173 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
CHARTERED ACCOUNTANTS
Daraius Z. Fraser PARTNER M. No.: 42454
Place: Mumbai Date: December 26, 2007.
174 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
FINANCIAL STATEMENTS
Restated Summary Statement of Assets and Liabilities
Rupees in Million As At 30-Sep-07 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03
A Fixed Assets Gross Block 2,612.24 2,436.49 1,592.11 1,798.81 1,698.26 1,490.21 Less: Depreciation (1,033.74) (955.21) (863.87) (791.23) (689.74) (611.98) Net Block 1,578.50 1,481.28 728.24 1,007.58 1,008.52 878.23 Capital Work in Progress 773.29 398.14 70.59 6.56 31.50 0.06 Net Block 2,351.78 1,879.41 798.84 1,014.13 1,040.02 878.29
B Investments 753.91 717.91 500.13 - - 40.00
C Current Assets, Loans and Advances
Inventories 1,087.26 1,172.27 878.87 738.08 491.74 373.35 Sundry Debtors 174.50 97.97 65.19 51.79 132.47 218.58 Cash and Bank Balances 203.93 217.29 137.31 89.67 139.62 71.45 Other Current Assets - - - - - 0.15 Loans and Advances 558.79 456.36 128.31 151.55 82.82 85.42 2,024.48 1,943.89 1,209.68 1,031.09 846.65 748.95
D Liabilities and Provisions
Loan Funds Secured Loans 369.89 478.65 48.74 41.34 192.17 178.50 Unsecured Loans 820.00 650.00 - 20.00 50.00 - Current Liabilities 2,180.61 2,141.69 1,554.91 1,329.79 1,103.67 808.94
Provisions 70.46 82.13 29.08 23.03 (47.17) 89.34 3,440.96 3,352.46 1,632.73 1,414.16 1,298.67 1,076.78
E Deferred Tax Liability / (Asset) (Net) 80.90 79.70 66.30 79.40 76.00 46.50
F Net Worth (A + B + C - D - E) 1,608.31 1,109.05 809.62 551.66 512.00 543.96
Net Worth Represented by:
G Share Capital 225.84 225.84 225.84 226.42 227.45 230.56
H Reserves and Surplus General Reserve 419.27 383.27 251.07 177.41 137.87 174.37 Capital Investment Subsidy Reserve 1.50 1.50 1.50 1.50 1.50 1.50 Capital Redemption Reserve 13.47 13.47 13.47 12.90 11.87 8.75 Profit and Loss Account 948.23 484.97 317.74 133.43 133.31 128.78 1,382.47 883.21 583.78 325.24 284.55 313.40
I Net Worth (G + H) 1,608.31 1,109.05 809.62 551.66 512.00 543.96
175 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE II
Restated Summary Statement of Profit or Loss
Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07 Income Gross Sales: Of Products Manufactured by the 4,543.43 7,771.06 6,674.54 5,763.93 4,817.25 4,316.03 Company Of Goods Traded by the Company 96.90 195.50 244.70 270.70 648.60 954.90 4,640.33 7,966.56 6,919.24 6,034.63 5,465.85 5,270.93 Less: Excise Duty 179.25 381.40 346.05 407.90 570.10 570.07 Net Sales 4,461.08 7,585.16 6,573.19 5,626.73 4,895.75 4,700.86
Processing Charges - - - - 20.15 59.32 Other Income 32.19 53.04 86.65 64.11 11.23 14.17 Increase / (Decrease) in Inventory (147.92) 242.22 124.46 148.00 89.41 27.56
Total Income (A) 4,345.35 7,880.42 6,784.30 5,838.84 5,016.54 4,801.91
Expenditure Materials Consumed and Purchase of 2,107.73 3,924.24 3,160.57 2,932.37 2,441.55 2,258.25 Goods Other Manufacturing Expenses 67.75 181.30 157.21 121.29 244.25 251.93 Power and Fuel 114.16 239.38 209.89 164.35 114.60 111.56 Salaries, Wages and Benefits 263.84 404.97 431.54 329.01 255.59 255.01 Administrative Expenses & Other 270.99 446.35 369.19 328.45 312.74 286.89 Expenses Selling and Distribution Expenses 601.52 1,156.78 994.94 894.62 763.66 820.62 Depreciation and Amortisation 79.81 124.95 107.84 106.59 93.95 89.87 Interest and Financial Charges 47.12 58.44 40.40 24.60 24.27 27.06
Total Expenditure (B) 3,552.92 6,536.41 5,471.58 4,901.28 4,250.61 4,101.19
Net Profit Before Tax and Extraordinary 792.43 1,344.01 1,312.72 937.56 765.93 700.72 Item (A – B)
Provision for Taxation Current Tax 89.00 150.80 109.80 73.50 88.00 139.37 Deferred Tax 1.20 13.40 (13.10) 3.40 29.50 20.60 Fringe Benefits Tax 4.80 7.60 9.00 - - - 95.00 171.80 105.70 76.90 117.50 159.97
Net Profit Before Extra-ordinary Items 697.43 1,172.21 1,207.02 860.66 648.43 540.75
Extraordinary Items (Net of Taxes) - 101.30 - - - -
Adjusted Profit for the Year 697.43 1,273.51 1,207.02 860.66 648.43 540.75
Balance Brought Forward 484.97 317.74 133.43 133.31 128.78 120.81
Amount available for Appropriation 1,182.40 1,591.25 1,340.45 993.97 777.21 661.56
Appropriations: Transfer to General Reserve 36.00 132.20 121.40 90.00 65.00 54.50 Proposed Dividend - - - - - 115.07 Interim Dividend 169.38 846.92 790.45 679.34 513.15 348.47 Tax on Distributed Profits 28.79 127.16 110.86 91.20 65.75 14.74 Balance Carried to Balance sheet 948.23 484.97 317.74 133.43 133.31 128.78
176 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE III
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO RESTATED ACCOUNTS
I. RESTATED FINANCIAL STATEMENTS
The restated financial statements have been prepared in respect of the five financial years ended March 31, 2003, 2004, 2005, 2006, 2007 and for the half year ended September 30, 2007, being the last date to which the accounts of the Company have been made up, after making such adjustments, restatements and regroupings as were considered necessary.
II. SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Convention: The financial statements are prepared under the historical cost convention, on accrual basis, in accordance with the generally accepted accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.
2. Fixed Assets: Fixed Assets are stated at cost of acquisition or construction, less accumulated depreciation. Cost includes all expenses related to acquisition and installation of the concerned assets.
Direct financing cost incurred during the construction period on major projects is also capitalised. Exchange differences on repayment and year end translation of foreign currency liabilities relating to acquisition of fixed assets is adjusted to the carrying cost of the respective assets.
Fixed Assets acquired under finance lease are capitalised at the lower of their fair value and the present value of the minimum lease payments.
3. Intangible Assets: The cost of acquisition of trade marks is amortised equally over the best estimate of its useful life not exceeding a period of ten years, except in the case of ‘Rapidol’ brand, where the brand is amortised equally over a period of twenty years.
4. Investments: Investments are classified into current and long term investments. Long term investments are carried at cost. Provision for diminution, if any, in the value of investments is made to recognize a decline, other than temporary. Current investments are stated at lower of cost and net realisable value.
5. Inventories: Inventories are valued at lower of cost and net realisable value. Cost is computed on the weighted average basis and is net of cenvat. Finished goods and work in progress include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Finished goods also include excise duty. Provision is made for cost of obsolescence and other anticipated losses, whenever considered necessary.
6. Provisions and Contingent Liabilities: Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
177 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
7. Revenue Recognition: Sales are recognised when goods are supplied and are recorded net of returns, trade discounts, rebates, sales taxes and excise duties. Export incentives are accounted on accrual basis and include the estimated value of export incentives receivable under the Duty Entitlement Pass Book Scheme. Dividend income is recognised when the right to receive the same is established. Interest income is recognised on a time proportion basis.
8. Borrowing Costs: Borrowing costs that are directly attributable to the acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of that asset till the date it is put to use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
9. Foreign Currency Transactions: Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated at the period end exchange rates. Forward exchange contracts, remaining unsettled at the period end, backed by underlying assets or liabilities are also translated at period end exchange rates. Premium or discount on forward foreign exchange contracts is amortised over the period of the contract and recognised as income or expense for the period. Exchange gains/losses are recognised in the Profit and Loss Account except for exchange differences relating to fixed assets, which are adjusted in the cost of the asset. Non Monetary foreign currency items like investments in foreign subsidiaries are carried at cost and expressed in Indian currency at the rate of exchange prevailing at the time of making the original investment.
10. Research and Development Expenditure: Revenue expenditure on research and development is charged to the Profit and Loss Account of the year in which it is incurred. Capital expenditure incurred during the year on research and development is shown as addition to fixed assets.
11. Retirement Benefits: Retirement benefits to employees comprise payments under defined contribution plans like provident fund and family pension. Payments under defined contribution plans are charged to the Profit and Loss Account. The liability in respect of defined benefit schemes like gratuity and leave encashment benefit on retirement is provided on the basis of actuarial valuation at the end of each year. The liability for retirement gratuity is funded through a trust created for the purpose.
12. Depreciation: Leasehold land is amortised equally over the lease period.
Depreciation is provided pro rata to the period of use, on the Straight Line Method at the rates specified in Schedule XIV to the Companies Act, 1956, except for computer hardware which is depreciated over 4 years.
Assets costing less than Rs. 5,000 are depreciated at 100% in the year of acquisition.
13. Impairment Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. Impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. The impairment loss to be expensed is determined as the excess of the carrying amount over the higher of the asset’s net sales price or present value as determined above.
178 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
14. Taxes on Income: Current tax is the amount of tax payable on the taxable income for the year determined in accordance with the provisions of the Income-tax Act, 1961.
Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets on unabsorbed tax losses and tax depreciation are recognised only when there is a virtual certainty of their realisation and on other items when there is reasonable certainty of realisation. The tax effect is calculated on the accumulated timing differences at the year end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
15. Incentive Plans: The Company has a scheme of Performance Linked Variable Remuneration (PLVR) which rewards its employees based on Economic Value Addition (EVA). The PLVR amount is related to actual improvements made in EVA over the previous year when compared with expected improvements. The EVA awards flow through a notional bank whereby only pre- specified portion of the bank is distributed each year and balance is carried forward. Only the amount distributed out of notional bank is charged to Profit and Loss Account. The notional bank is held at risk and charged to EVA of future years and payable at that time if future performance so warrants.
16. Segment Reporting: The Company has only one business segment in which it operates viz. Personal and Household Care.
III. NOTES TO RESTATED FINANCIAL STATEMENTS
1. Changes in Equity Share Capital: Pursuant to the approval of the shareholders at the Annual General Meeting held on July 20, 2006, each equity share having a face value of Rs. 4/- has been split into 4 equity shares of Re. 1/- each with effect from September 1, 2006.
2. Prior Period Items: In the financial statements for the years ended March 31, 2003, 2004, 2005, 2006, 2007 and for the half year ended September 30, 2007, certain items have been identified as prior period items. For the purpose of this statement, such prior period items have been appropriately adjusted in the respective years to which they pertain.
3. Capital Commitments: Estimated value of contracts remaining to be executed on capital account as at September 30, 2007 to the extent not provided for Rs. 72.13 million.
4. Loans and Advances: The Company has granted a loan amounting to Rs. 124.50 million as at September 30, 2007 to The Godrej Consumer Products Limited ESOP Trust, a trust set up for administering the Employees Stock Option Plan of the Company set up for the employees / Directors of the Company and / or of the Company’s subsidiaries. The aforesaid loan is repayable at the end of five years from the date of the loan agreement viz March 21, 2007.
5. Hedging Contracts: The Company uses forward exchange contracts to hedge its foreign exchange exposure in accordance with its Forex policy as determined by a Forex Committee. As at September 30, 2007, the Company had 48 outstanding forward exchange contracts to purchase foreign currency aggregating to US Dollars 24.07 million at an average rate of Rs. 41.59 per US Dollar. The uncovered foreign exchange exposure as at September 30, 2007 is US Dollars 1.38 million.
179 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
6. Fixed Assets: a) Trademarks represent the cost of acquisition of certain Godrej soaps, toiletries and detergent brands acquired in pursuance of scheme of demerger and cost of Snuggy brand. The remaining amortisation period of the trademarks is between four to six years. The Rapidol brand is amortised over a period of twenty years. The major influencing factor behind amortising the Rapidol brand over a period of twenty years is that the Rapidol brand viz. Inecto has a market share of about 80% in the South African markets in respective category. It has been in existence for more than 80 years and has had a 30 % growth during the period under review.
b) Borrowing costs capitalized under closing work in progress amounts to Rs. 13.26 million.
7. Incentive Plans: The amount carried forward in notional bank after distribution of PLVR for the financial year 2006-07 is Rs. 152.60 million as on September 30, 2007. The said amount is not provided in the books of account and is payable in future, if performance so warrants.
180 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE IV
Restated Summary Statement of Cash Flows
Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07 CASH FLOW FROM A. OPERATING ACTIVITIES: Net Profit Before Tax as per Audited 792.43 1,344.02 1,312.72 937.56 765.93 700.57 Accounts
Adjustments affecting Cash Flow Prior Period Tax Adjustments - (48.07) (5.03) (35.26) - 5.03 Prior Period Items - - - - (0.15) 2.97
Adjusted Net Profit before Tax 792.43 1,295.95 1,307.69 902.30 765.78 708.57 (Restated)
Adjustments for: Depreciation 79.81 124.95 107.84 106.59 93.95 89.87 Prior Period Items - - - - 0.15 (2.97) (Profit) / Loss on Sale of Fixed 0.13 1.49 (14.64) 2.44 1.18 1.27 Assets (Profit) / Loss on Sale of (1.21) (2.27) (3.87) (0.07) (2.69) (2.26) Investments Interest Expense 54.55 75.85 44.43 30.98 25.63 30.86 Interest Income (7.43) (17.42) (4.03) (6.39) (1.36) (3.79) Dividend Income - - (0.27) (2.48) (0.51) - Foreign Exchange (Gain) / Loss 9.06 7.91 (6.18) 12.84 (11.84) 2.59 Loss on Fixed Asset Discarded - - - - 4.19 - Writeoff of Bad Debts 0.01 0.06 0.22 0.49 11.22 2.52 Provision for Doubtful Debts 0.06 (0.89) (0.85) (4.57) (10.08) - and Advances Written off Old Balances - (3.44) (6.23) (21.88) (4.90) (3.14) Others (0.97) 1.88 0.10 2.30 2.45 (0.42) Discount on Prepayment of - - (0.33) (31.61) - - Deferred Sales Tax Loan 134.01 188.10 116.18 88.65 107 114.54
Operating Profit Before Working 926 1,484 1,424 991 873 823 Capital Changes
Adjustments for: Inventories 85.00 (293.40) (140.79) (246.34) (118.39) (66.99) Trade and Other Receivables (189.19) (298.21) 10.47 53.90 88.03 41.10 Trade Payables 316.23 311.87 298.86 128.25 101.44 57.06 212 (279.74) 168.54 (64.19) 71.08 31.17
Cash Generated from / (used in) 1,138.48 1,204.31 1,592.41 926.76 944.27 854.28 Operations
Adjustment for: Income Tax (Paid) / Refunds (76.11) (128.15) (117.41) (29.28) (101.18) (142.05) Received
181 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07 Net Cash Flow from Operating 1,062.37 1,076.16 1,475.00 897.48 843.09 712.23 Activities
CASH FLOW FROM B. INVESTING ACTIVITIES: Purchase of Fixed Assets (518.15) (985.07) (165.73) (83.69) (259.60) (35.98) Sale of Fixed Assets 0.68 7.19 218.85 3.29 3.32 3.66 Dividend Received - - 0.27 2.48 0.51 - Sale Proceeds of "Snuggy" - 150.00 - - - - Trademark Maturity of Intercorporate - - - - - 50.00 Deposit Interest Received 1.07 6.39 4.03 0.88 1.36 3.79 Purchase of Investments (1,503.50) (2,737.80) (3,651.41) (2,732.51) (2,131.68) (945.50) Sale of Investments 1,468.71 2,522.30 3,155.15 2,732.58 2,174.36 932.33
Net Cash Generated from / (Used in) (551.19) (1,036.99) (438.84) (76.97) (211.73) 8.30 Investing Activities
CASH FLOW FROM C. FINANCING ACTIVITIES: Buyback of Equity Share - - (47.74) (48.50) (97.72) (130.71) Capital Proceeds from Borrowings 1,308.54 1,919.91 909.37 684.64 438.87 958.71 Repayments of Borrowings (1,255.67) (887.87) (948.83) (806.52) (398.87) (966.57) Cash Credits (Net) 7.47 47.28 27.53 (27.96) 25.35 (38.58) Dividend Paid (448.13) (842.33) (779.76) (568.80) (447.10) (548.58) Dividend Tax Paid (76.76) (118.78) (110.96) (73.36) (58.64) - Interest Paid (59.99) (77.40) (38.13) (29.96) (25.08) (30.77)
Net Cash Generated from / (used in) (524.54) 40.81 (988.52) (870.46) (563.19) (756.50) Financing Activities
NET INCREASE / (DECREASE) IN (13.36) 79.98 47.64 (49.95) 68.17 (35.97) CASH AND CASH EQUIVALENTS:
CASH AND CASH EQUIVALENTS AS AT THE BEGINNING Cash and Bank Balances 217.29 137.31 89.67 139.62 71.45 107.42
CASH AND CASH EQUIVALENTS AS AT THE ENDING Cash and Bank Balances 203.88 217.24 137.26 89.76 139.71 71.49 Unrealised Foreign Exchange
Restatement in Cash and Cash Equivalents 0.06 0.06 0.05 (0.09) (0.09) (0.04) Cash and Bank Balances 203.93 217.29 137.31 89.67 139.62 71.45 NET INCREASE / (DECREASE) IN (13.36) 79.98 47.64 (49.95) 68.17 (35.97) CASH AND CASH EQUIVALENTS:
182 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE V
Statement of Investments Rupees in Million Particulars As at As at 30-Sep-07 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03
Unquoted : 200 Equity shares of € 100 each in Godrej 491.26 491.26 490.13 - - - Netherlands B.V. 18,050,000 Equity shares of ZAR 1 each in 126.65 126.65 - - - - Rapidol (Pty) Ltd 1,000,000 Equity shares of Rs.10 each in 100.00 100.00 - - - - Godrej SCA Hygiene Ltd
Mutual Fund : 900,641 units in Birla Sunlife Mutual Fund- - - 10.00 - - - Cash Plus Liquid Scheme of Rs.10/- 2,456,598 units in Birla Sunlife Mutual - - - - - 40.00 Fund -Birla Cash Plus- Growth option 2,909,306 units in Birla Sunlife Mutual 36.00 - - - - - Fund-Cash Plus Liquid Scheme of Rs.10/-
Total 753.91 717.91 500.13 - - 40.00
183 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE VI
Sundry Debtors Rupees in Million Particulars As at As at 30-Sep-07 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03
A. Debts Outstanding for a Period
Exceeding Six Months Unsecured - Considered Good 2.83 2.73 2.92 3.79 7.77 17.09 Related Parties ------Considered Doubtful ------
Less: Provision For Doubtful Debts (2.83) (2.73) (2.92) (3.79) (7.77) (17.09)
Total (A) ------
B. Other Debts Unsecured - Considered Good 174.02 95.45 46.96 34.30 113.45 217.27 Related Parties 0.48 2.52 18.23 17.49 19.02 1.31 Considered Doubtful ------Less: Provision For Doubtful Debts ------
Total (B) 174.50 97.97 65.19 51.79 132.47 218.58
Total (A + B) 174.50 97.97 65.19 51.79 132.47 218.58
'Note : In the absence of relavant information on the ageing of debts due from related parties, debts due from related parties have been considered to be due for less than six months only.
184 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE VII
Loans and Advances Rupees in Million Particulars As at As at 30-Sep- 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 07
A. Advances Towards Purchase Commitments Related Parties ------Other Parties ------
Total (A) ------
B. Advances Recoverable in Cash or in Kind or for Value to be Received Unsecured - Considered Good 469.00 365.17 48.65 69.80 48.08 46.27 Related Parties ------
Total (B) 469.00 365.17 48.65 69.80 48.08 46.27
C. Balance with Customs and Excise Authorities 69.03 68.05 61.71 64.29 16.14 21.79
D. Sundry Deposits 20.76 19.74 17.95 17.46 15.63 17.36
E. Advance Payments of Income Tax - 3.40 - - 2.97 - (Net of Provisions)
Total (A + B + C + D + E) 558.79 456.36 128.31 151.55 82.82 85.42
185 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE VIII
Secured Loans Rupees in Million Particulars As at As at 30-Sep-07 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03
(A) Term Loan
Citibank NA 266.66 333.33 - - - -
Total (A) 266.66 333.33 - - - -
(B) Other Loans
a) Working Capital Loan - 50.00 - 20.00 - -
b) Cash Credit Central Bank of India 23.90 36.15 9.50 7.47 33.71 18.12 State Bank of India 0.20 8.02 - - - - Citibank NA 4.30 - - - - - HSBC 0.11 - - - - - HDFC Bank 69.47 46.37 33.75 8.25 9.97 0.21 Others 0.02 - - - - -
98.00 90.53 43.25 15.72 43.68 18.33
c) Sales Tax Deferment Loan from Madhya Pradesh State Industrial Development Corporation Limited 1.48 1.48 3.68 5.48 148.49 160.16
d) Sales Tax Deferment Loan from Himachal Pradesh General Sales Tax 3.75 3.31 1.81 0.14 - -
Total (B) 103.23 145.32 48.74 41.34 192.17 178.50
Total (A + B) 369.89 478.65 48.74 41.34 192.17 178.50
186 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE VIII (Contd.)
Secured Loans Rupees in Million Bank Name Nature of Loan Limits Rate of Interest Security Offered Sanctioned Packing Cash Packing Credit Credit Credit Foreign Currency
Working Capital Limits
Central Bank of India 60 13%
State Bank of India 40 12.75%
Citibank NA Working Capital 30 14.50% Secured by hypothecation of HSBC 30 15.50% stock and book debts HDFC Bank 30 N.A. 15.50% N.A.
Total 190
Bank Name Nature of Loan Limits Rate of Repayment Security Offered Sanctioned Interest Terms Rs.
Term Loan Limits
Citibank NA Long Term Loan 400 8.50% Repayment of Secured against principal Hypothecation of amount in trademark and Copyright every quarter acquired from Rapidol amounting to (Proprietary) Limited Rs.3.33 crores. Interest to be serviced at monthly intervals. Total 400
Bank Name Nature of Loan Limits Rate of Repayment Security Offered Sanctioned Interest Terms Rs.
Sales Tax Deferment Loan Long Term Loan N.A. N.A. Repayment is At Malanpur factory: from Madhya Pradesh State made after 5 a) First charge by way of Industrial Development years from the equitable mortgage of Corporation Limited date of immovable properties and collection of b) Hypothecation of movable sales tax assets, save and except, book debts and subject to charges already created by the Company.
187 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Bank Name Nature of Loan Limits Rate of Repayment Security Offered Sanctioned Interest Terms Rs. Sales Tax Deferment Loan Long Term Loan N.A. N.A. Repayment is At Baddi Location: from Himachal Pradesh General made after 5 Bank guarantee in favour of Sales Tax years from the Sales Tax Authorities. date of collection of sales tax ANNEXURE IX
Unsecured Loans Rupees in Million Particulars As at As at 30-Sep-07 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03
HSBC Bank 50 - - - - - Citibank 520 650 - 20 - - ICICI Bank 250 - - - - - HDFC Bank - - - - 50 -
Total 820 650 - 20 50 -
Rupees in Million Nature Of Loan Lender Amount Rate Of Repayment Terms Interest Long Term Corporate Loan Citibank 120 10.25% p.a. Repayment of principal amount in fixed every quarter amounting to Rs.1.5 crores. Interest to be serviced at monthly intervals. Long Term Corporate Loan Citibank 400 8.60% p.a.fixed Repayment of principal amount in every quarter amounting to Rs. 5 crores. Interest to be serviced at monthly intervals. Total (A) 520 Short Term Corporate Loan ICICI Bank 250 8.25% p.a fixed Bullet repayment for principal on due date. Interest to be serviced at monthly intervals. Short Term Corporate Loan HSBC Bank 50 8.00% p.a fixed Bullet repayment for principal on due date. Interest to be serviced at monthly intervals. Total (B) 300
Total (A + B) 820
188 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE X
Other Income Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07
Recurring Income Dividend - - 0.27 2.48 0.51 - Royalty Income 23.07 27.59 - - - - Claim Received 1.82 7.68 55.57 3.09 2.26 5.56 Miscellaneous Income 6.08 15.50 11.09 22.29 5.79 6.35 Profit on Sale of Investment (Net) 1.22 2.27 3.87 0.07 2.68 2.26
32.19 53.04 70.80 27.93 11.23 14.17
Non-recurring Income Discount on repayment of deferred Sales Tax Loan - - 0.32 31.61 - - Provision for Advances w/back - - 0.85 4.57 - - Profit on Sale of Fixed Assets - - 14.68 - - -
- - 15.85 36.18 - -
Total 32.19 53.04 86.65 64.11 11.23 14.17
189 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XI
Contingent Liabilities Rupees in Million Particulars As at As at 30-Sep-07 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03
A. Claims for Excise Duties, Taxes and Other Matters: 1. Excise duty demands against which 3.43 3.18 6.18 6.18 13.19 19.06 the Company has preferred appeals - Net of Tax 2.26 2.11 4.10 3.92 8.46 12.00
2. Sales Tax Demands against which 13.63 3.59 3.12 3.10 1.89 7.33 the Company has preferred appeals - Net of Tax 9.00 2.38 2.07 1.97 1.22 4.63
3. Income Tax matters Demand Notice 5.90 66.85 - - - - issued by Additional Commissioner Of Income - tax for assessment year 2004-05 for disallowance of certain expenses and tax benefits.
4. Other Matters 0.66 0.66 0.25 0.25 37.91 48.92 - Net of Tax 0.44 0.44 0.17 0.16 24.31 30.94
B. Excise Duty demands and penalties in repsect of toilet soaps cleared from Malanpur Factory during the period of joint venture with Procter & Gamble, confimed by CESTAT vide its order dated February 2002.The amount of duty and penalties which is to be quantified by the Commissioner of Excise in accordance with the findings of CESTAT is estimated at : 121.28 121.28 121.28 142.46 125.99 125.99 The Company had filed an appeal against the order of CESTAT before the Supreme Court of India. By a subsequent CESTAT order passed in September 2004, all the assessments for the period April 1993 to March 1996 have been held to be provisional, thus negating the earlier stand of CESTAT - Net of Tax 100.67 100.87 100.87 116.39 103.39 102.84
C. Guarantees issued by banks, excluding 15.65 21.23 23.65 17.19 10.36 6.74 guarantees issued in repsect of matters reported in (a) above.
D. Guarantees of GBP 3 million given by the 242.64 255.60 232.44 - - - Company for securing loan availed by Godrej Netherlands B.V., a wholly owned subsidiary.
190 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XII
Statement of Accounting Ratios Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07
Net Profit after Tax available for Rs. (A) 697.43 1,172.21 1,207.02 860.66 648.43 540.75 Equity Share Holders as per Annexure II (Before Extra Ordinary Items).
Extra Ordinary Items (Net of Rs. - 101.30 - - - - Tax).
Net Profit after Tax available for Rs. (B) 697.43 1,273.51 1,207.02 860.66 648.43 540.75 Equity Share Holders as per Annexure II (After Extra Ordinary Items).
Weighted average number of (C) 225,844,076 225,844,076 225,972,592 226,620,808 228,661,712 232,701,840 shares outstanding during the year / period.
No. of Shares outstanding at the (D) 225,844,076 225,844,076 225,844,076 226,417,868 227,449,412 230,562,824 end of the year / period.
Face Value per Equity Share (In 1 1 1 1 1 1 Rupees)
Net Worth - As per Annexure I Rs. (E) 1,608.31 1,109.05 809.62 551.66 512.00 543.96
Basic and Diluted Earnings per Share (A / C) 3.09 5.19 5.34 3.80 2.84 2.32 (face value Re 1/- each) (Before Extra Ordinary Items)
Basic and Diluted Earnings per Share (B / C) 3.09 5.64 5.34 3.80 2.84 2.32 (face value Re 1/- each) (After Extra Ordinary Items)
Return on Net worth % (B / E) 43.36% 114.83% 149.08% 156.01% 126.65% 99.41%
Net Asset Value per Share (E / D) 7.12 4.91 3.58 2.44 2.25 2.36
Formula used for above Ratio:
Earnings Per Share (Basic) = Net Profit after tax available for equity shareholders Weighted average number of equity shares outstanding during the year
Return on Net Worth = Net Profit after tax available for equity shareholders Net Worth
Net Asset Value per Share = Net Worth Number of equity shares outstanding at the end of the year
Notes : During the financial year ended March 31, 2007, the face value per equity share of the Company was changed from Rs. 4 to Re. 1 per equity share with effect from September 1, 2006. As per the requirement of Accounting Standard AS-20 Earnings Per Share, issued by the Institute of Chartered Accountants of India, the calculation of basic and diluted earnings per share for each of the financial periods given above have been adjusted and restated to reflect the changes mentioned above.
191 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XIII
Capitalisation Statement Rupees in Million Particulars As at Post Issue Sept 30, 2007 Borrowing Short - Term Debt Working Capital Loans: Secured Loans from Banks 364.66 Other Secured Loans 5.23 Unsecured Loan from Banks 300.00 (A) 669.89 Long Term Debt From Banks 520.00 Vehicle Loans - (B) 520.00 * REFER NOTE Total Debt (C) 1,189.89
Shareholders' Funds Equity Share Capital (D) 225.84 Reserves and Surplus 1,382.47
Total Shareholders Funds (E) 1,608.31
Total Debt / Net Worth (C / E) 0.74
Long Term Debt / Equity Share Capital (B / C) 0.32
* Note: Post Issue information can be ascertained only at the Letter of Offer stage.
192 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XIV
Statement of Tax Shelters Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07
Profit Before Tax as per (A) 789.43 1,344.02 1,312.72 937.56 765.93 700.57 Audited Accounts
Tax Rate (B) 33.99% 33.66% 33.66% 36.59% 36.75% 36.75%
Tax at Actual Rate on Profits (A * B) 268.33 452.40 441.86 343.08 281.48 257.46
Permanent Differences (Profit) / Loss on Sale of - 1.49 (14.64) 2.44 5.36 1.27 Fixed Assets (Profit) / Loss on Sale of - (2.27) (3.87) (0.07) (2.69) 2.68 Investments Deductions under section 80 (637.78) (1,275.56) (1,047.12) (713.69) (435.28) (251.65) IB / IC Deductions under section 80 - - - - (1.57) (3.08) HHC Share Buyback Expenditure - - 0.67 0.59 1.02 2.35 Donations - 0.14 0.11 0.01 0.00 0.02 Dividend exempt under - - (0.27) (2.48) (0.51) - section 10 (34) Others - (0.36) (0.13) (29.99) 2.04 1.90 Total (C) (637.78) (1,276.57) (1,065.26) (743.20) (431.63) (246.51)
Timing Differences Provision for Depletion in Value of Investments - - - - - (4.95) Prior Period Items - - - - - (3.45) Difference Between Book (21.07) (53.50) 12.73 (53.56) (64.00) (69.96) Depreciation and Tax Depreciation Provision for Doubtful Debts - (0.97) (0.87) (6.39) (10.29) 0.94 Other Allowable Deductions - 9.30 13.21 17.38 (26.33) 1.89 Total (D) (21.07) (45.17) 25.07 (42.58) (100.62) (75.53)
Net Adjustments (E) = (C+ D) (658.86) (1,321.74) (1,040.19) (785.77) (532.25) (322.04)
Tax Savings Thereon (F) = (E*B) (223.95) (444.90) (350.13) (287.53) (195.60) (118.35)
Profit / (Loss) as per Income- (G) = (A + E 130.57 22.28 272.53 151.79 233.68 378.53 tax )
Income-tax other than Capital G * B 44.38 7.50 91.73 55.54 85.88 139.11 Gains Short Term Capital Gains - 7.65 13.03 0.41 0.01 -
Total Income-tax as per Return (H) 44.38 15.15 104.76 55.95 85.89 139.11 of Income
Taxable Income u/s 115JB 789.86 1,450.51 1,303.44 935.08 763.46 697.47 under MAT
Tax Payable under MAT (I) 89.49 162.75 109.68 73.32 60.12 54.93
Tax Expense (Maximum of (H) 89.49 162.75 109.68 73.32 85.89 139.11
193 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07 and (I)
Interest Under Section 234 ------
Total Tax Expense 89.49 162.75 109.68 73.32 85.89 139.11
Carry Forward of Losses and Unabsorbed Deprecitation Speculative Loss ------Long Term Capital Loss ------
Tax Provision as per books of 89.00 163.60 109.80 73.50 88.00 144.40 account
Notes: 1) Statement of Tax Shelters for the half year ended September 2007, has been prepared on estimated basis. 2) The tax shelter is worked out on the basis of Profits as per the audited accounts and is not based on profits as per the Restated Summary Statement of Profit or Loss attached as Annexure II.
194 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XVI
Details of Dividend Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07
No. of Equity Shares of Re. 1/- each 225,844,076 225,844,076 - - - - fully paid up
No. of Equity Shares of Rs. 4/- each - - 56,461,019 56,604,467 56,862,353 57,640,706 fully paid up
Dividend Interim Rs. 169.38 846.92 790.45 679.34 513.15 348.47 Final Rs. - - - - - 115.07
Rate of Dividend Interim 75% 375% 350% 300% 225% 150% Final - - - - - 50%
Total Amount of Dividend Rs. 169.38 846.92 790.45 679.34 513.15 463.54 Amount of Tax on Distributed Rs. 28.79 127.16 110.86 91.20 65.75 14.74 Profits
195 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Related Party Transactions for the Half Year Ended September 30, 2007
A) List of Related Parties:
a) Enterprise having control over reporting enterprise:
i) Godrej & Boyce Mfg. Co. Limited.
b) Subsidiaries:
i) Godrej Netherlands B.V ii) Godrej Consumer Products (UK) Limited (a subsidiary of Godrej Netherlands B.V.) iii) Keyline Brands Limited (a subsidiary of Godrej Consumer Products (UK) Limited) iv) Inecto Manufacturing Limited (a subsidiary of Keyline Brands Limited) v) Inecto Limited (a subsidiary of Keyline Brands Limited) vi) Cosmetics That Care Limited (a subsidiary of Keyline Brands Limited) vii) Cuticura Laboratories Limited (a subsidiary of Keyline Brands Limited) viii) Rapidol (Pty) Limited
c) Joint Venture:
i) Godrej SCA Hygiene Limited
d) Enterprises under common control with whom transactions have taken place during the year:
i) Godrej Industries Limited ii) Godrej HiCare Limited iii) Godrej Agrovet Limited iv) Godrej Beverages & Foods Limited v) Godrej Global Mid East FZE
e) Enterprise over which Key management personnel exercise significant influences:
i) Godrej Investments Privated Limited
f) Key Management Personnel and Relatives:
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President iii) Ms. Parmeshwar A. Godrej, Wife of Mr. Adi B. Godrej iv) Ms. Khoorsheed H. Press, Wife of Mr. Hoshedar K. Press
196 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Transactions with Related Party as on 30th September 2007
Rs million Particulars Enterprise Enterprises Subsidiary Joint Enterprise over which key Relatives of Key Total having control under common Companies Venture management personnel exercise Key management over reporting control Company significant influence management personnel & enterprise (G&B) personnel Relatives 1. Sale of goods 0.08 56.00 6.22 - - - - 62.31 2. Purchase of materials, spares and capital equipment 7.42 31.37 - 13.45 - - - 52.23 3. Establishment and other expenses 2.73 59.76 - 0.26 - - - 62.76 4. Royalty - - 23.07 - - - - 23.07 5. Dividend remitted 201.94 46.27 - - 4.72 0.68 0.02 253.63 6. Managerial Remuneration ------11.16 11.16 7. Lease Rentals paid (also included in remuneration paid to Mr ABG) - - - - - 6.45 - 6.45 8. Outstanding balances as at Sep 30, 2007 Receivable 0.09 2.86 11.73 - - - - 14.68 Payable 0.36 9.24 - 0.28 - - - 9.89 9. Guarantees outstanding - - 242.64 - - - - 242.64
197 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Related Party Transactions For the Year Ended March 31, 2007
A) List of Related Parties :
a) Enterprise having control over reporting enterprise :
i) Godrej & Boyce Mfg. Co. Limted.
b) Subsidiaries :
i) Godrej Netherlands B.V ii) Godrej Consumer Products (UK) Limited (a subsidiary of Godrej Netherlands B.V.) iii) Keyline Brands Limited (a subsidiary of Godrej Consumer Products (UK) Limited) iv) Inecto Manufacturing Limited (a subsidiary of Keyline Brands Limited) v) Inecto Limited (a subsidiary of Keyline Brands Limited) vi) Cosmetics That Care Limited (a subsidiary of Keyline Brands Limited) vii) Cuticura Laboratories Limited (a subsidiary of Keyline Brands Limited) viii) Rapidol (Pty) Limited
c) Joint Venture :
i) Godrej SCA Hygiene Limited
d) Enterprises under common control with whom transactions have taken place during the year :
i) Godrej Industries Limited ii) Godrej HiCare Limited iii) Godrej Agrovet Limited iv) Godrej Beverages & Foods Limited v) Godrej Global Mid East FZE
e) Enterprise over which Key management personnel exercise significant influences :
i) Godrej Investments Privated Limited
f) Key Management Personnel and Relatives :
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President iii) Ms. Parmeshwar A. Godrej, Wife of Mr. Adi B. Godrej iv) Ms. Khoorsheed H. Press, Wife of Mr. Hoshedar K. Press
198 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
B) Transactions with Related Party as on 31st March 2007
Rs. million Particulars Enterprise Enterprises Subsidiary Joint Enterprise over which key Relatives of Key Total having control under common Companies Venture management personnel exercise Key management over reporting control Company significant influence management personnel & enterprise (G&B) personnel Relatives 1. Sale of goods 1.22 107.53 3.73 - - - - 112.48 2. Purchase of materials, spares and capital equipment 75.77 118.56 - - - - - 194.33 3. Establishment and other expenses 3.85 110.85 - (0.30) - - - 114.39 4. Investments made - - 120.03 100.00 - - - 220.03 5. Sale of Brand - - - 156.00 - - - 156.00 6. Royalty - - 27.58 - - - - 27.58 7. Loan Given - - 36.55 - - - - 36.55 8. Loan Repaid - - 36.55 - - - - 36.55 9. Interest received on Loan - - 0.28 - - - - 0.28 10. Dividend remitted 378.64 158.78 - - 8.85 1.28 0.04 547.58 11. Managerial Remuneration ------38.38 38.38 12. Lease Rentals paid - - - - - 12.91 - 12.91 13. Outstanding balances as at Sep 30,2007 Receivable 0.02 25.17 13.15 - - - - 38.34 Payable 0.91 24.97 - - - - 9.26 35.14 14. Guarantees outstanding - - 255.60 - - - - 255.60
199 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Related Party Transactions For the Year Ended March 31, 2006
A) List of Related Parties :
a) Enterprise having control over reporting enterprise :
i) Godrej & Boyce Mfg. Co. Limited.
b) Subsidiaries :
i) Godrej Netherlands B.V ii) Godrej Consumer Products (UK) Limited (a subsidiary of Godrej Netherlands B.V.) iii) Keyline Brands Limited (a subsidiary of Godrej Consumer Products (UK) Limited) iv) Inecto Manufacturing Limited (a subsidiary of Keyline Brands Limited) v) Inecto Limited (a subsidiary of Keyline Brands Limited) vi) Cosmetics That Care Limited (a subsidiary of Keyline Brands Limited) vii) Cuticura Laboratories Limited (a subsidiary of Keyline Brands Limited)
c) Enterprises under common control with whom transactions have taken place during the year :
i) Godrej Industries Limited ii) Godrej Foods Limited iii) Godrej HiCare Limited iv) Godrej Agrovet Limited v) Godrej Beverages & Foods Limited vi) Godrej Global Mid East FZE vii) Godrej Properties Limited. viii) Gold Mohar Foods & Feeds Limited
d) Enterprise over which Key management personnel exercise significant influences :
i) Godrej Investments Privated Limited
e) Key Management Personnel and Relatives :
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President iii) Ms. Parmeshwar A. Godrej, Wife of Mr. Adi B. Godrej iv) Ms. Khoorsheed H. Press, Wife of Mr. Hoshedar K. Press
200 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Transactions with Related Party as on 31st March 2006
Rs million Particulars Enterprise Enterprises Subsidiary Enterprise over which Relatives of Key Key management Total having control under common Companies key management management personnel & over reporting control personnel exercise personnel Relatives enterprise (G&B) significant influence 1. Sale of goods 1.12 130.39 - - - - 131.51 2. Purchase of materials, spares and capital equipment 6.96 107.32 - - - - 114.28 3. Establishment and other expenses 2.16 84.68 - - - - 86.84 4. Finance provided – Loan - - 240.54 - - - 240.54 5. Loan Repaid - - 240.54 - - - 240.54 6. Finance provided – Equity - - 490.13 - - - 490.13 7. Interest received on Loan - - 3.02 - - - 3.02 8. Guarantees given - - 232.44 - - - 232.44 9. Dividend remitted 353.90 78.75 - 1.77 - 0.04 434.45 10. Managerial Remuneration - - - - - 27.97 27.97 11. Sale of Residential properties - - - - 217.26 - 217.26 12. Lease Rentals - - - - 3.37 - 3.37 13. Outstanding balances as at March 31,2006 Receivable 0.16 18.23 - - - - 18.38 Payable 0.50 24.29 - - 3.37 11.12 39.28 14. Guarantees outstanding - - 232.44 - - - 232.44
201 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Related Party Transactions For the Year Ended March 31, 2005
A) List of Related Parties :
a) Enterprise having control over reporting enterprise :
i) Godrej & Boyce Mfg. Co. Limited.
b) Enterprises under common control with whom transactions have taken place during the year :
i) Godrej Industries Limited ii) Godrej Appliances Limited. iii) Godrej Sara Lee Limited. iv) Godrej Hi Care Limited. v) Godrej Agrovet Limited vi) Godrej Tea Limited vii) Lawkim Limited. viii) Godrej Global Mid East FZE
c) Key Management Personnel and Relatives :
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President
202 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
B) Transactions with Related Party as on 31st March 2005
Rs. million Particulars Enterprise Enterprises Subsidiary Joint Enterprise over which key Relatives of Key Total having control under common Companies Venture management personnel exercise Key management over reporting control Company significant influence management personnel & enterprise (G&B) personnel Relatives 1. Sale of goods 1.36 114.53 - - - - - 115.89 2. Purchase of materials, spares and capital equipment 19.80 285.59 - - - - - 305.39 3. Establishment and other expenses 3.73 81.70 - - - - - 85.43 4. Raw material taken on loan and returned during the year - 40.69 - - - - - 40.69 5. Deposits placed against material loan and returned back - 42.10 - - - - - 42.10 6. Dividend remitted 264.55 60.73 - - - - 0.02 325.29 7. Managerial Remuneration ------19.21 19.21 8. Outstanding balances as at March 31, 2005 Receivable 0.10 17.49 - - - - - 17.59 Payable 0.06 7.63 - - - - 7.02 14.71
203 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Related Party Transactions For the Year Ended March 31, 2004
A) List of Related Parties :
a) Enterprise having control over reporting enterprise :
i) Godrej & Boyce Mfg. Co. Limited., the holding Company (upto September 23, 2003)
b) Enterprises under common control with whom transactions have taken place during the year :
i) Godrej Industries Limited ii) Godrej Appliances Limited. iii) Godrej Agrovet Limited iv) Godrej Properties & Investments Limited. v) Godrej Tea Limited vi) Ensemble Holdings & Finance Limited. vii) Godrej Global Mid East FZE
c) Enterprise over which Key management personnel exercise significant influences :
i) Bahar Agrochem & Feeds Pvt. Limited.
d) Key Management Personnel and Relatives :
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President
204 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Transactions with Related Party as on 31st March 2004
Rs million Particulars Enterprise Enterprises Subsidiary Joint Venture Enterprise over which key Key management Total having control under common Companies Company management personnel personnel & over reporting control exercise significant Relatives enterprise (G&B) influence 1. Sale of goods 1.14 115.98 - - - - 117.12 2. Purchase of materials, spares and capital equipment 70.01 238.80 - - - - 308.80 3. Processing charges paid - 284.79 - - - - 284.79 4. Establishment and other expenses 2.00 110.27 - - - - 112.27 5. Dividend remitted 229.81 28.40 - - - 0.01 258.22 6. Managerial Remuneration - - - - - 16.75 16.75 7. Advances against contract 11.96 - - - - - 11.96 8. Outstanding balances as at March 31,2004 Receivable 15.22 19.02 - - - - 34.24 Payable 1.97 22.80 - - - 5.27 30.04
205 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Related Party Transactions For the Year Ended March 31, 2003
A) List of Related Parties :
a) Enterprise having control over reporting enterprise :
i) Godrej & Boyce Mfg. Co. Limited., the holding Company.
b) Enterprises under common control with whom transactions have taken place during the year
i) Godrej Industries Limited ii) Godrej Appliances Limited. iii) Godrej Agrovet Limited iv) Godrej Properties & Investments Limited. v) Godrej Tea Limited vi) Ensemble Holdings & Finance Limited. vii) Godrej Global Mid East FZE
c) Enterprise over which Key management personnel exercise significant influences :
i) Bahar Agrochem & Feeds Pvt. Limited.
d) Key Management Personnel and Relatives :
i) Mr. Adi B. Godrej, Chairman and Managing Director ii) Mr. Hoshedar K. Press Executive Director and President
206 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XV
Transactions with Related Party as on 31st March 2003
Rs million Particulars Enterprise Enterprises Subsidiary Joint Enterprise Relatives of Key Total having under Companies Venture over which Key management control common Company key management personnel & over control management personnel Relatives reporting personnel enterprise exercise (G&B) significant influence - 135.11 1. Sale of goods 1.25 133.84 - 0.01 - - 2. Purchase of - 283.69 materials, 1.27 282.42 - - - - spares and capital equipment Processing - 337.73 3. charges paid - 337.73 - - - - Establishment - 108.32 4. and other 0.82 107.50 - - - - expenses - 0.02 5. Interest Paid - 0.02 - - - - Interest - 0.35 6. received - 0.35 - - - - Intercorporate - 3.70 7. Deposit - 3.70 - - - - Accepted Dividend - 332.79 8. remitted 323.98 8.80 - - - 0.01 Managerial - 15.30 9. Remuneration - - - - - 15.30 Advances - 6.75 10. against 6.75 - - - - - contract 11. Outstanding balances as at March 31, 2003 - 19.89 Receivable 6.83 13.06 - - - - - 49.45 Payable - 43.79 - - - 5.66
207 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XVII
Restated Summary Statement of Consolidated Assets and Liabilities
Rupees in Million As At 30-Sep-07 31-Mar-07 31-Mar-06
A Fixed Assets Gross Block 2,836.50 2,699.13 1,770.79 Less: Depreciation (1,139.53) (1,105.18) (991.81) Net Block 1,696.97 1,593.95 778.98 Capital Work in Progress 773.29 398.14 70.59 Net Block 2,470.26 1,992.09 849.57
Goodwill 871.84 885.67 851.41
B Investments 36.06 0.06 10.06
C Current Assets, Loans and Advances Inventories 1,340.88 1,352.34 1,004.67 Sundry Debtors 653.45 483.22 303.25 Cash and Bank Balances 358.58 474.95 263.43 Loans and Advances 574.55 464.79 142.80 2,927.45 2,775.30 1,714.15
D Liabilities and Provisions Loan Funds Secured Loans 972.62 1,086.09 687.20 Unsecured Loans 820.00 650.00 - Current Liabilities 2,546.83 2,519.96 1,787.31
Provisions 100.79 97.28 50.08 4,440.24 4,353.33 2,524.59
E Deferred Tax Liability / (Asset) (Net) 81.55 79.80 65.68
F Net Worth (A + B + C - D - E) 1,783.80 1,219.99 834.92
Net Worth Represented by: G Share Capital 225.84 225.84 225.84
H Reserves and Surplus General Reserve 419.27 383.27 251.07 Capital Investment Subsidy Reserve 1.50 1.50 1.50 Share Premium Account - - - Capital Redemption Reserve 13.47 13.47 13.47 Foreign Currency Translation Reserve (1.66) (8.78) 24.31 Profit and Loss Account 1,125.38 604.69 318.73 1,557.96 994.15 609.08
I Net Worth (G + H) 1,783.80 1,219.99 834.92
208 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XVII
Restated Summary Statement of Consolidated Profit or Loss Rupees in Million Particulars Half Year Ended Financial Year Ended 30-Sep-07 31-Mar-07 31-Mar-06 Income Gross Sales: Of Products Manufactured by the Company 5,702.51 9,894.18 7,318.79 Of Goods Traded by the Company 96.90 19.55 24.47 5,799.42 9,913.73 7,343.26 Less: Excise Duty 179.25 381.40 346.05 Net Sales 5,620.17 9,532.33 6,997.21
Other Income 8.14 26.48 87.77 Increase / (Decrease) in Inventory (79.82) 255.09 100.56
Total Income (A) 5,548.49 9,813.90 7,185.54
Expenditure Materials Consumed and Purchase of Goods 2,725.08 4,876.81 3,362.32 Other Manufacturing Expenses 83.75 197.78 161.28 Power and Fuel 116.74 244.39 210.77 Salaries, Wages and Benefits 352.81 543.83 475.39 Administrative Expenses and Other Expenses 316.87 528.54 398.60 Selling and Distribution Expenses 918.78 1,599.17 1,076.92 Depreciation and Amortisation 89.45 142.05 114.70 Interest and Financial Charges 65.20 96.29 64.74
Total Expenditure (B) 4,668.68 8,228.86 5,864.72
Net Profit Before Tax and Extraordinary Item (A - B) 879.81 1,585.04 1,320.82
Provision for Taxation Current Tax 117.98 222.72 117.56 Deferred Tax 2.12 13.12 (13.76) Fringe Benefits Tax 4.84 7.60 9.00 124.95 243.44 112.80
Net Profit Before Extra-ordinary Items 754.86 1,341.60 1,208.02
Extraordinary Items (Net of Taxes) - 50.65 -
Adjusted Profit for the Year 754.86 1,392.25 1,208.02
Balance Brought Forward 604.69 318.72 133.42
Amount Available for Appropriation 1,359.55 1,710.97 1,341.44
Appropriations: Transfer to General Reserve 36.00 132.20 121.40 Interim Dividend 169.38 846.92 790.45 Tax on Distributed Profits 28.79 127.17 110.86
Balance Carried to Balance Sheet 1,125.38 604.68 318.73
209 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XIX
Restated Summary Statement of Consolidated Cash Flows Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 30-Sep-07 A. CASH FLOW FROM OPERATING ACTIVITIES: Net Profit Before Tax as per Audited Accounts 879.81 1,585.04 1,320.82 Adjustments affecting cash flow Prior period tax adjustment - (48.07) (5.03)
Adjusted Net Profit before Tax (Restated) 879.81 1,536.97 1,315.79
Adjustments for: Depreciation 90.29 142.05 114.70 (Profit) / Loss on Sale of Investments (1.21) (2.27) (3.87) Interest Expense 76.24 135.49 68.60 Interest Income (11.53) (39.21) (3.86) Dividend Income - - (0.27) Foreign Exchange (Gain)/Loss (0.17) 6.71 (6.18) (Profit)/Loss on Fixed Asset Sold/Discarded 0.07 1.94 (14.64) Writeoff of Bad debts 0.01 0.06 0.22 Provision for Doubtful Debts & Advances 2.49 (0.64) (0.85) Written off Old Balances - (3.44) (6.23) Others (0.97) (5.99) 8.24 Discount on Prepayment of Deferred Sales Tax Loan - - (0.33) 155.25 235 156
Operating Profit Before Working Capital Changes 1,035.05 1,771.66 1,471.33
Adjustments for: Inventories 4.18 (347.67) (120.08) Trade & Other Receivables (294.42) (453.08) (72.43) Trade Payables 308.38 433.02 280.07 18.15 (367.73) 87.56
Cash Generated from / (Used in) Operations 1,053.20 1,403.93 1,558.89
Adjustment for: Income Tax (Paid) / Refunds Received (112.36) (200.06) (132.33) Net Cash Flow from Operating Activities 940.84 1,203.87 1,426.56
B. CASH FLOW FROM INVESTING ACTIVITIES: Purchase of Fixed Assets (523.56) (1,127.79) (166.11) Sale of Fixed Assets 0.74 14.85 218.85 Dividend Received - - 0.27 Sale proceeds of "Snuggy" Trademark - 150.00 - Interest Received 14.85 28.18 3.91 Purchase of Investments (1,503.50) (2,529.90) (4,575.99) Sale of Investments 1,468.71 2,522.30 3,155.15 Others - (0.13) - Net Cash Generated from / (used in) Investing Activities (542.76) (942.50) (1,363.92)
210 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 30-Sep-07 C. CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from Issue of Capital - - (47.74) Proceeds from Borrowings 1,395.08 1,919.91 1,862.14 Repayments of Borrowings (1,300.75) (918.89) (1,237.40) Cash Credits (Net) 7.47 47.28 27.53 Dividend Paid (448.14) (842.33) (779.76) Tax on Distributed Profits (76.77) (118.78) (110.96) Interest Paid (91.35) (137.04) (55.89)
Net Cash Generated from / (Used in) Financing Activities (514.45) (49.84) (342.09)
NET INCREASE/(DECREASE) IN CASH AND CASH (116.37) 211.52 (279.45) EQUIVALENTS:
CASH AND CASH EQUIVALENTS AS AT THE BEGINNING Cash and Bank Balances 474.95 263.43 542.88
CASH AND CASH EQUIVALENTS AS AT THE ENDING Cash and Bank Balances 358.52 474.89 263.26 Unrealised Foreign Exchange Restatement in Cash & Cash Equivalents 0.06 0.05 0.17 Cash and Bank Balances 358.58 474.95 263.43
NET INCREASE/(DECREASE) IN CASH AND CASH (116.37) 211.52 (279.45) EQUIVALENTS:
211 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XX
NOTES TO THE RESTATED CONSOLIDATED FINANCIAL STATEMENTS
I. RESTATED CONSOLIDATED FINANCIAL STATEMENTS
The restated consolidated financial statements have been prepared in respect of the two financial years ended March 31, 2006, 2007 and for the half year ended September 30, 2007, being the last date to which the accounts of the Company have been made up, after making such adjustments, restatements and regroupings as were considered necessary. Prior to March 31, 2006, the Company did not have any subsidiaries and hence, no consolidated financial statements are available for periods prior to March 31, 2006.
II. SIGNIFICANT ACCOUNTING POLICIES
1. Accounting Convention: The financial statements are prepared under the historical cost convention, on accrual basis, in accordance with the generally accepted accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.
2. Fixed Assets: Fixed Assets are stated at cost of acquisition or construction, less accumulated depreciation. Cost includes all expenses related to acquisition and installation of the concerned assets.
Direct financing cost incurred during the construction period on major projects is also capitalised. Exchange differences on repayment and year end translation of foreign currency liabilities relating to acquisition of fixed assets is adjusted to the carrying cost of the respective assets.
Fixed Assets acquired under finance lease are capitalised at the lower of their fair value and the present value of the minimum lease payments.
3. Intangible Assets: The cost of acquisition of trade marks is amortised equally over the best estimate of its useful life not exceeding a period of ten years, except in the case of ‘Rapidol’ brand which was acquired during the year and where the brand is amortised equally over a period of twenty years.
4. Investments: Investments are classified into current and long term investments. Long term investments are carried at cost. Provision for diminution, if any, in the value of investments is made to recognize a decline, other than temporary. Current investments are stated at lower of cost and net realisable value.
5. Inventories: Inventories are valued at lower of cost and net realisable value. Cost is computed on the weighted average basis and is net of cenvat. Finished goods and work in progress include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Finished goods also include excise duty. Provision is made for cost of obsolescence and other anticipated losses, whenever considered necessary.
6. Provisions and Contingent Liabilities: Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
212 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
7. Revenue Recognition: Sales are recognised when goods are supplied and are recorded net of returns, trade discounts, rebates, sales taxes and excise duties. Export incentives are accounted on accrual basis and include the estimated value of export incentives receivable under the Duty Entitlement Pass Book Scheme. Dividend income is recognised when the right to receive the same is established. Interest income is recognised on a time proportion basis.
8. Borrowing Costs: Borrowing costs that are directly attributable to the acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of that asset till the date it is put to use. Other borrowing costs are recognised as an expense in the period in which they are incurred.
9. Foreign Currency Transactions: Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated at the period end exchange rates. Forward exchange contracts, remaining unsettled at the period end, backed by underlying assets or liabilities are also translated at period end exchange rates. Premium or discount on forward foreign exchange contracts is amortised over the period of the contract and recognised as income or expense for the period. Exchange gains/losses are recognised in the Profit and Loss Account except for exchange differences relating to fixed assets, which are adjusted in the cost of the asset. For the purpose of Consolidation of Non-integral Foreign Operations, all assets and liabilities, both monetary and non-monetary are translated at the closing rate. Items of income and expenditure are translated at exchange rates at the date of the relevant transactions. All resulting exchange differences are accumulated in a Foreign Currency Translation Reserve until disposal of the net investment.
10. Research and Development Expenditure: Revenue expenditure on research and development is charged to the Profit and Loss Account of the year in which it is incurred. Capital expenditure incurred during the year on research and development is shown as addition to fixed assets.
11. Retirement Benefits: Retirement benefits to employees comprise payments under defined contribution plans like provident fund and family pension. Payments under defined contribution plans are charged to the Profit and Loss Account. The liability in respect of defined benefit schemes like gratuity and leave encashment benefit on retirement is provided on the basis of actuarial valuation at the end of each year. The liability for retirement gratuity is funded through a trust created for the purpose.
12. Depreciation: Leasehold land is amortised equally over the lease period. Depreciation is provided pro rata to the period of use, on the Straight Line Method at the rates specified in Schedule XIV to the Companies Act, 1956, except for computer hardware which is depreciated over 4 years. Assets costing less than Rs. 5,000 are depreciated at 100% in the year of acquisition. Depreciation in the subsidiary companies is provided on the Straight line method over the expected useful lives of the respective assets ranging between 3 years to 10 years. The impact on depreciation of the difference in expected useful lives between the holding company and subsidiaries is not material.
13. Impairment Management periodically assesses using, external and internal sources, whether there is an indication that an asset may be impaired. Impairment occurs where the carrying value exceeds the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. The impairment loss to be expensed is determined as the excess of
213 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
the carrying amount over the higher of the asset’s net sales price or present value as determined above.
14. Taxes on Income: Current tax is the amount of tax payable on the taxable income for the year determined in accordance with the provisions of the Income-tax Act, 1961. Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets on unabsorbed tax losses and tax depreciation are recognised only when there is a virtual certainty of their realisation and on other items when there is reasonable certainty of realisation. The tax effect is calculated on the accumulated timing differences at the year end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
15. Incentive Plans: The Company has a scheme of Performance Linked Variable Remuneration (PLVR) which rewards its employees based on Economic Value Addition (EVA). The PLVR amount is related to actual improvements made in EVA over the previous year when compared with expected improvements. The EVA awards flow through a notional bank whereby only pre- specified portion of the bank is distributed each year and balance is carried forward. Only the amount distributed out of notional bank is charged to Profit and Loss Account. The notional bank is held at risk and charged to EVA of future years and payable at that time if future performance so warrants.
16. Segment Reporting: The Company has only one business segment in which it operates viz. Personal and Household Care.
III. NOTES TO RESTATED CONSOLIDATED FINANCIAL STATEMENTS
1. Particulars of Subsidiaries and Joint Ventures
a) The subsidiary companies considered in the consolidated financial statements are:
S.No Name of the Company Country of Percentage of Incorporation Holding 1. Godrej Netherlands B.V. Netherlands 100% 2. Godrej Consumer Products (UK) UK 100% Limited (100% subsidiary of Godrej Netherlands B.V.) 3. Keyline Brands Limited UK 100% 4. Inecto Manufacturing Limited UK 100% (100% Subsidiary of Keyline Brands Limited) 5. Cuticura Labs Limited UK 100% (100% subsidiary of Keyline Brands Limited) (Please see para c) below) 6. Inecto Limited UK 100% (100% subsidiary of Keyline Brands Limited) 7. Cosmetics That Care Limited UK 100% (100% Subsidiary of Keyline Brands Limited) (Please see para d) below)
214 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
S.No Name of the Company Country of Percentage of Incorporation Holding 8. Rapidol (Proprietary) Limited South Africa 100%
b) Interest in Joint Ventures:
S.No Name of the Company Country of Percentage of Incorporation Holding 1. Godrej SCA Hygiene Limited India 50%
c) Cuticura Labs Limited Cuticura Labs Limited was the wholly owned subsidiary of Keyline Brands Limited in the UK that became the wholly owned subsidiary of Godrej Consumer Products (UK) Limited on October 31, 2005. the company has been wound up with effect from July 24, 2007
d) Cosmetics That Care Limited Cosmetics That Care Limited was the wholly owned subsidiary of Keyline Brands Limited in the UK that became the wholly owned subsidiary of Godrej Consumer Products (UK) Limited on October 31, 2005. The company has been wound up with effect from May 22, 2007.
2. Principles of Consolidation:
a) The consolidated financial statements relate to Godrej Consumer Products Limited, the Holding Company, its wholly owned subsidiaries and it’s interest in jointly controlled entities (collectively referred to as “the Group”). The consolidation of accounts of the Company with its subsidiaries has been prepared in accordance with Accounting Standard (AS) 21 ‘Consolidated Financial Statements’ and the consolidation of its interest in joint ventures has been prepared in accordance with Accounting Standard (AS) 27 ‘Financial Reporting of Interests in Joint Ventures’. The financial statements of the parent and its subsidiaries are combined on a line by line basis and intra group balances, intra group transactions and unrealized profits or losses are fully eliminated. The Company uses the proportionate consolidation method for reporting its interest in the assets, liabilities, income and expenses of the jointly controlled entities. Separate line items are included to disclose its share in the assets, liabilities, income and expenses of the jointly controlled entity.
b) The financial statements of the subsidiaries and joint venture used in the consolidation are drawn up to the same reporting date as that of the Company i.e. up to September 30, 2007. The financial statements of Keyline Brands Limited, Inecto Manufacturing Limited, Rapidol (Proprietory) Limited, SA and Godrej SCA Hygiene Limited have been audited as at and for the years / period ended September 30, 2007, March 31, 2007 and 2006. The financial statements of Godrej Netherlands, B.V. and Godrej Consumer Product (UK) Ltd. (the investment companies) and Cuticura Labs Limited, Inecto Limited and Cosmetics That Care Limited (the dormant subsidiary companies) for the years / period ended September 30, 2007, March 31, 2007 and 2006, have not been audited and have been consolidated on the basis of accounts certified by the Management.
c) In the consolidated financial statements, ‘Goodwill’ represents the excess of the cost to the Company of its investments in the subsidiaries and / or joint ventures over its share of equity, at the respective dates on which the investments are made. Alternatively, where the share 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.
215 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
3. Changes in Equity Share Capital: Pursuant to the approval of the shareholders at the Annual General Meeting held on July 20, 2006, each equity share having a face value of Rs. 4/- has been split into 4 equity shares of Re. 1/- each with effect from September 1, 2006.
4. Prior Period Items: In the financial statements for the years ended March 31, 2006, 2007 and for the half year ended September 30, 2007, certain items have been identified as prior period items. For the purpose of this statement, such prior period items have been appropriately adjusted in the respective years to which they pertain.
5. Capital Commitments: Estimated value of contracts remaining to be executed on capital account as at September 30, 2007 to the extent not provided for Rs. 72.13 million.
6. Loans and Advances: The Company has granted a loan amounting to Rs. 124.50 million as at September 30, 2007 to The Godrej Consumer Products Limited ESOP Trust, a trust set up for administering the Employees Stock Option Plan of the Company set up for the employees / Directors of the Company and / or of the Company’s subsidiaries. The aforesaid loan is repayable at the end of five years from the date of the loan agreement viz. from March 21, 2007.
7. Hedging Contracts: The Company uses forward exchange contracts to hedge its foreign exchange exposure in accordance with its forex policy as determined by a Forex Committee. As at September 30, 2007, the Company had 48 outstanding forward exchange contracts to purchase foreign currency aggregating to US Dollars 24.07 million at an average rate of Rs. 41.59 per US Dollar. The uncovered foreign exchange exposure as at September 30, 2007 is US Dollars 1.38 million.
8. Fixed Assets:
a) Trademarks represent the cost of acquisition of certain Godrej soaps, toiletries and detergent brands acquired in pursuance of a Scheme of Demerger and the cost of Snuggy brand. The remaining amortisation period of the trademarks is between four to six years. The Rapidol brand is amortised over a period of twenty years. The major influencing factor behind amortising the Rapidol brand over a period of twenty years is that the Rapidol brand viz. Inecto has a market share of about 80% in the South African markets in respective category. It has been in existence for more than 80 years and has had a 30 % growth during the period under review.
b) Borrowing costs capitalized under closing work in progress amounts to Rs. 13.26 million.
9. Incentive Plans The amount carried forward in notional bank after distribution of PLVR for the financial year 2006-07 is Rs. 152.60 million as on September 30, 2007. The said amount is not provided in the books of account and is payable in future, if performance so warrants.
216 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XXI
Statement of Debtors (Consolidated) Rupees in Million Particulars Half Year Ended Financial Year Ended 30-Sep-07 31-Mar-07 31-Mar-06
A. Debts Outstanding for a Period Exceeding Six Months Unsecured - Considered Good 2.83 2.99 2.92 Related Parties - - - Considered Doubtful - - -
Less: Provision For Doubtful Debts (2.83) (2.99) (2.92)
Total (A) - - -
B. Other Debts Unsecured - Considered Good 652.97 480.70 285.02 Related Parties 0.48 2.52 18.23 Considered Doubtful - - - Less: Provision For Doubtful Debts - - -
Total (B) 653.45 483.22 303.25
Total (A + B) 653.45 483.22 303.25
Note : In the absence of relavant information on the ageing of debts due from related parties, debts due from related parties have been considered to be due for less than six months only.
217 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XXII
Statement of Secured Loans (Consolidated) Rupees in Million Particulars Half Year Financial Year Ended Ended 30-Sep-07 31-Mar-07 31-Mar-06
(A) Term Loan
Citibank NA 266.66 333.33 - ICICI Bank UK 593.15 607.44 638.46
Total (A) 859.81 940.77 638.46
(B) Other Loans
a) Working Capital Loan - 50.00 -
b) Cash Credit Central Bank of India 23.90 36.15 9.50 State Bank of India 0.20 8.02 - Citibank NA 4.30 - - HSBC 0.11 - - HDFC Bank 69.47 46.37 33.75 First National Bank 9.58 Others 0.02 - - 107.58 90.53 43.25
c) Sales Tax Deferment Loan from Madhya Pradesh State 1.48 1.48 3.68 Industrial Development Corporation Limited
d) Sales Tax Deferment Loan from Himachal Pradesh General 3.75 3.31 1.81 Sales Tax
Total (B) 112.81 145.32 48.74
Total (A + B) 972.62 1,086.09 687.20
218 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XXII (Contd.)
SECURED LOANS Rupees in Million Bank Name Nature of Loan Limits Rate of Interest Security Offered Sanctioned Packing Cash Packing Credit Credit Credit Foreign Currency
Working Capital Limits
Central Bank of India 60 13%
State Bank of India 40 12.75%
Citibank NA Working Capital 30 14.50% Secured by hypothecation of HSBC 30 15.50% stock and book debts HDFC Bank 30 N.A. 15.50% N.A.
Total 190
Bank Name Nature of Loan Limits Rate of Repayment Security Offered Sanctioned Interest Terms Rs.
Term Loan Limits
Citibank NA Long Term Loan 400 8.50% Repayment of Secured against principal Hypothecation of amount in trademark and Copyright every quarter acquired from Rapidol amounting to (Proprietary) Limited Rs.3.33 crores. Interest to be serviced at monthly intervals. ICICI Bank UK Long Term Loan LIBOR+1.2 Repayment of Secured against Charge on principal Assets of Keyline Brands amount in Limited. every quarter amounting to GBP.2.50 Lakhs. Interest to be serviced at monthly intervals. ICICI Bank UK Long Term Loan LIBOR+1.1 Repayment of Secured against Charge on principal Assets of Keyline Brands amount in Limited. every quarter amounting to GBP.2.75 Lakhs. Interest to be serviced at monthly intervals. Total 400
219 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Bank Name Nature of Loan Limits Rate of Repayment Security Offered Sanctioned Interest Terms Rs.
Sales Tax Deferment Loan Long Term Loan N.A. N.A. Repayment is At Malanpur factory: from Madhya Pradesh State made after 5 a) First charge by way of Industrial Development years from the equitable mortgage of Corporation Limited date of immovable properties and collection of b) Hypothecation of movable sales tax assets, save and except, book debts and subject to charges already created by the Company.
Sales Tax Deferment Loan Long Term Loan N.A. N.A. Repayment is At Baddi Location: from Himachal Pradesh General made after 5 Bank guarantee in favour of Sales Tax years from the Sales Tax Authorities. date of collection of sales tax
220 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XXIII
Statement of Unsecured Loans (Consolidated)
Rupees in Million Particulars Half Year Ended Financial Year Ended 30-Sep-07 31-Mar-07 31-Mar-06
HSBC Bank 50 - - Citibank 520 650 - ICICI Bank 250 - - HDFC Bank - - -
Total 820 650 -
Rupees in Million Nature Of Loan Lender Amount Rate Of Repayment Terms Interest Long Term Corporate Loan Citibank 120 10.25% p.a. Repayment of principal amount in fixed every quarter amounting to Rs.1.5 crores. Interest to be serviced at monthly intervals. Long Term Corporate Loan Citibank 400 8.60% p.a.fixed Repayment of principal amount in every quarter amounting to Rs. 5 crores. Interest to be serviced at monthly intervals. Total (A) 520 Short Term Corporate Loan ICICI Bank 250 8.25% p.a fixed Bullet repayment for principal on due date. Interest to be serviced at monthly intervals. Short Term Corporate Loan HSBC Bank 50 8.00% p.a fixed Bullet repayment for principal on due date. Interest to be serviced at monthly intervals. Total (B) 300
Total (A + B) 820
221 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XXIV
Statement of Investments (Consolidated)
Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 30-Sep-07
Quoted 2,500 Equity shares in Creightons plc. 0.06 0.06 0.06
Mutual Fund : 900,641 units in Birla Sunlife Mutual Fund-Cash Plus Liquid Scheme of Rs.10/- - 10.00 2,909,306 units in Birla Sunlife Mutual Fund -Cash Plus- Liquid Scheme of Rs.10/- 36.00 - -
Total 36.06 0.06 10.06
222 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
ANNEXURE XXV
Statement of Accounting Ratios on Consolidated Financials
Rupees in Million Particulars Half Year Ended Financial Year Ended 30-Sep-07 31-Mar-07 31-Mar-06
Net Profit after Tax available for Equity Share Holders as per Rs. (A) 754.86 1,341.60 1,208.02 Annexure II (Before Extra Ordinary Items).
Extra Ordinary Items (Net of Tax). Rs. - 50.65 -
Net Profit after Tax available for Equity Share Holders as per Rs. (B) 754.86 1,392.25 1,208.02 Annexure II (After Extra Ordinary Items).
Weighted average number of shares outstanding during the (C) 225,844,076 225,844,076 225,972,592 year / period.
No. of Shares outstanding at the end of the year / period. (D) 225,844,076 225,844,076 225,844,076
Face Value per Equity Share (In Rupees) 1 1 1
Net Worth - As per Annexure XVII Rs. (E) 1,783.80 1219.99 834.92
Basic and Diluted Earnings per Share (face value Re 1/- each) (A / C) 3.34 5.94 5.35 (Before Extra Ordinary Items)
Basic and Diluted Earnings per Share (face value Re 1/- each) (B / C) 3.34 6.16 5.35 (After Extra Ordinary Items)
Return on Net worth % (B / E) 42.32% 114.12% 144.69%
Net Asset Value per Share (E / D) 7.90 5.40 3.70
Formula used for above Ratio:
Earnings Per Share (Basic) = Net Profit after tax available for equity shareholders Weighted average number of equity shares outstanding during the year
Return on Net Worth = Net Profit after tax available for equity shareholders Net Worth
Net Asset Value per Share = Net Worth Number of equity shares outstanding at the end of the year
Notes :
1. 'During the financial year ended March 31, 2007, the face value per equity share of the Company was changed from Rs. 4 to Rs. 1 with effect from September 1, 2006. As per the requirement of Accounting Standard AS-20 Earnings Per Share, issued by the Institute of Chartered Accountants of India, the calculation of basic and diluted earnings per share for each of the financial periods given above have been adjusted and restated to reflect the changes mentioned above.
223 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
STOCK MARKET DATA FOR EQUITY SHARES OF THE COMPANY
The Company’s Equity Shares are listed on the BSE and the NSE. As the Company’s shares are actively traded on the BSE and the NSE, stock market data has been given separately for each of these Stock Exchanges.
While reviewing the information below, it should be noted that pursuant to the resolution passed by the shareholders in the Annual General Meeting held on July 20, 2006, the equity shares of the Company were subdivided from shares of face value Rs. 4 each to shares of face value Re. 1 each. The record date for the subdivision was August 31, 2006. The shares were traded in the stock exchanges after the subdivision with effect from August 24, 2006.
The high and low prices recorded on the BSE and the NSE for the preceding three years and the number of Equity Shares traded on the days the high and low prices were recorded are stated below.
BSE Year ending High Date of Volume on Low Date of Volume Average March 31 (Rs.) High date of (Rs.) Low on date of price for high (no. of low (no. the year shares) of shares) (Rs.) 2005 329.00 7 March , 2,201 150.05 07 April, 860 228.88 2005 2004 2006 764.00 31 March, 45,179 260.00 20 April, 3,225 452.16 2006 2005 1st April 2006 798.70 03 April, 20,612 488.00 08 June, 5,547 678.85 to 23rd August 2006 2006 2006 24th August 194.00 25 106,960 135.20 05 March, 17,537 160.03 2006 to 31st August, 2007 March 2007 2006 Source: Note: The Equity Shares were sub-divided from a face value of Rs. 4 to a face value of Re. 1 each, with effect from August 24, 2006
NSE Year ending High Date of Volume on Low Date of Low Volume Average March 31 (Rs.) High date of high (Rs.) on date of price for (no. of low (no. of the year shares) shares) (Rs.) 2005 338.40 24 January, 6,781 153.50 06 April, 1,389 229.36 2005 2004
2006 774.00 31 March, 59,004 255.30 27 April, 3,929 452.75 2006 2005
1st April 2006 797.85 07 April, 46,960 500.00 08 June, 15,659 678.45 to 23rd August 2006 2006 2006 24th August 194.00 25 August, 189,453 136.00 05 March, 26,943 160.18 2006 to 31st 2006 2007 March 2007 Source: Note: The Equity Shares were sub-divided from a face value of Rs. 4 to a face value of Re. 1 each, with effect from August 24, 2006
The high and low prices and volume of Equity Shares traded on the respective dates during the last six months is as follows:
224 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
BSE Month, High Date of High Volume on Low Date of Low Volume on Average Year (Rs.) date of (Rs.) date of low price for high (no. (no. of the year of shares) shares) (Rs.) June, 2007 146.50 29 June, 2007 344,171 129.00 08 June, 68,134 135.43 2007 July, 2007 143.50 31 July, 2007 14,585 132.80 06 July, 61,399 138.26 2007 August, 145.00 08 August, 39,959 130.25 02 August, 15,590 137.65 2007 2007 2007 September, 145.00 14 38,835 134.10 03 6,084 139.63 2007 September, September, 2007 2007 October, 143.00 03 October, 29,883 116.60 24 October, 49,383 126.37 2007 2007 2007 November, 139.00 16 74,610 119.00 08 9,962 127.21 2007 November, November, 2007 2007 Source: www.bseindia.com Note: In the event the high and low price of the Equity Shares are the same on more than one day, the day on which there has been higher volume of trading has been considered for the purposes of this section
NSE Month, High Date of High Volume on Low Date of Low Volume on Average Year (Rs.) date of (Rs.) date of low price for high (no. (no. of the year of shares) shares) (Rs.) June, 2007 147.00 29 June, 2007 547,190 115.65 25 June, 34,689 134.83 2007 July, 2007 144.00 02 July, 2007 95,181 132.65 06 July, 68,424 138.35 2007 August, 143.50 09 August, 298,787 131.25 06 August, 14,494 137.84 2007 2007 2007 September, 145.00 14 52,557 135.00 03 17,892 139.77 2007 September, September, 2007 2007 October, 142.95 03 October, 85,446 115.00 17 October, 25,813 126.52 2007 2007 2007 November, 140.00 16 November, 138,991 120.00 15 November, 184,842 127.44 2007 2007 2007
Source: www.nseindia.com Note: In the event the high and low price of the Equity Shares are the same on more than one day, the day on which there has been higher volume of trading has been considered for the purposes of this section
The closing market price was Rs. 129.25 on the BSE on November 26, 2007, the trading day immediately following the day on which Board meeting was held to approve the Issue.
The closing market price was Rs. 129.15 on the NSE on November 26, 2007, the trading day immediately following the day on which Board meeting was held to approve the Issue.
The closing market price was Rs. [●] on the BSE on [●], the trading day on which the Equity Shares started trading on an ex-rights basis.
The closing market price was Rs. [●] on the NSE on [●], the trading day on which the Equity Shares started trading on an ex-rights basis.
225 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion of our financial condition and results of operations together with our audited financial statements (as restated) for the six month period ended September 30, 2007 and the last three financial years ended on March 31, 2007, 2006 and 2005 including the notes thereto and the reports thereon, beginning on page [●] of this Draft Letter of Offer. You are also advised to read the section titled “Risk Factors” beginning on page [●] of this Draft Letter of Offer, which discusses a number of factors and contingencies that could impact our financial condition, results of operations and cash flows. The financial Statements are prepared in accordance with Indian GAAP, the Companies Act and the SEBI (DIP) Guidelines and restated as described in the Auditors’ Report of M/s. Kalyaniwalla & Mistry, Chartered Accountants dated December 26 2007.
All references to a particular year are to the twelve month period ended on March 31 of that year. Our historical financial performance may not be considered as indicative of future financial performance. In this section, any reference to “we”, “us” or “our” refers to Godrej Consumer Products Limited on a consolidated basis. All market share data has been taken from AC Nielsen unless specified separately.
Overview
We are part of the Godrej group of companies, which is one of the oldest corporate houses in India. The consumer products business was part of the erstwhile Godrej Soaps Limited (GSL) and was demerged into Godrej Consumer Products Limited in April 2001, pursuant to a scheme of arrangement dated March 14, 2001 approved by the Hon’ble High Court of Judicature at Bombay.
GCPL is one of the leading companies in the Indian FMCG sector. Our product range includes soaps, hair colourants, toiletries and liquid detergents. Some of our leading brands are Cinthol, Godrej Fair Glow, Godrej No.1 and Godrej Shikakai in soaps, Godrej Powder Hair Dye, Renew, ColourSoft in hair colourants and Ezee in liquid detergent.
GCPL is the second largest player in India in the toilet soap segment with a market share of 10.2% (Q2 07-08) and is the leader in the hair colourants category with a variety of offerings ranging across powders, liquids and creams. Ezee is the market leader in the liquid detergent category with over 75% market share (Q2 07-08)
On the basis of the portfolio of products, risks and returns, we have identified “Personal and Household Care” as the single business segment.
Sales Mix (Rs. Million) GCPL - FY 06-07 FY 05-06 FY 04-05 STANDALONE Products Sales % of sales Sales % of sales Sales % of sales Soaps 4,751 62.6% 3,927 59.7% 3,341 59.4% Hair colours 1,819 24.0% 1,625 24.7% 1,336 23.7% Toiletries 474 6.2% 394 6.0% 245 4.4% Liquid detergents 388 5.1% 397 6.0% 365 6.5% Contract manufacturing - - 78 1.2% 200 3.6% By-products 153 2.0% 152 2.3% 140 2.5% Total 7,585 100.0% 6,573 100.0% 5,627 100.0%
226 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
The sales mix primarily comprises of the following categories:
• Soaps: We are the second largest toilet soaps player in India with a market share of 10.2% (Q2 07-08). The toilet soap category accounted for 62.6% of our standalone sales for FY 06-07. Some of our main brands in the toilet soap category include Cinthol, Godrej FairGlow, Godrej No.1, etc. • Hair Colourants: We are leaders in this category in India, with a market share of 34.9% (second quarter of this Fiscal). Our product offerings in hair colourants range across various formats such as powder, liquid, cream and oil based liquid. The hair colourants category accounted for 24.0% of our standalone sales for the FY 06-07. Some of our main brands in the hair colourants category include Godrej Powder Hair Dye, Renew and ColourSoft • Toiletries: This category mainly consists of shaving cream and talcum powder. GCPL entered the face wash and shampoo categories during the first quarter of FY 07-08. Our Toiletries category accounted for 6.2% of our standalone sales for FY 06-07. Godrej Shaving Cream is amongst the oldest brands in this category . • Liquid Detergents: This category broadly comprises of fabric wash and dish wash. Our liquid detergents business accounted for 5.1% of our standalone sales for Fiscal 2007. Our brands in liquid detergents category are Ezee (liquid detergents) and Godrej Liquid Dish wash • Contract Manufacturing: The opportunity for contract manufacturing arose due to market demand and availability of spare capacity in GCPL. During Fiscal 2007 we focused on catering to internal requirements and did not carry out contract manufacturing. However, with the additional facility set up in Katha in December 2006, we may consider utilisation of any spare capacity available towards contract manufacturing
We have expanded our presence through the following international acquisitions:
• In October 2005, the Company acquired the business of Keyline Brands Limited (United Kingdom) which manufactures, markets and distributes cosmetics and toiletries. The Company had a turnover of Rs. 1,668.3 million for the fiscal year ended March 31, 2007.
• In September 2006, the Company acquired the Rapidol (Pty) Limited, and its wholly owned subsidiary Rapidol International Limited. This acquisition gave us entry into the hair colour market for black hair and ownership of ethnic hair colour brand ‘Inecto’ in ten African countries. The Company had a turnover of Rs. 251.2 million for the fiscal year (from September 06 to March 07) ended March 31, 2007.
• In October 2007, the Company acquired 100% equity of Godrej Global Mid East FZE from Godrej International Limited. It was established in Sharjah with the objective of distributing our FMCG products in the Middle East. It has a network of distributors in countries such as U.A.E, Oman, Saudi Arabia, Kuwait and Bahrain.
In March 2007, we entered into a joint venture with SCA Hygiene Products AB, Sweden where we both hold 50% to form Godrej SCA Hygiene Limited a company which manufactures and markets paper based absorbent hygiene products.
We currently have five manufacturing facilities in India at Malanpur (MP), Guwahati (Assam), Baddi – Thana (HP), Baddi - Katha (HP) and Sikkim. In December 2006, we commenced commercial production at our new factory at Katha in H.P. During March 2007, we commenced production at our new factory in Sikkim for manufacture of hair colour and creams. Through our subsidiaries, we have manufacturing facilities in UK and South Africa.
For further details please refer to the chapters titled “Business” and “History and Certain Corporate Matters” appearing on page [●] and [●] of this Draft Letter of Offer
Factors Affecting Results of Operations
Demand for our products
The markets in which we operate are characterised by changes or introduction of new products or variants.
227 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Customer preferences in this market could vary, and inability to respond effectively to changes in the preferences could put our products at a competitive disadvantage.
Over the years, we believe our market research and product development efforts have helped us in identifying consumer requirements and catering to their needs through new product launches or enhancement of existing product portfolio. For example, over the last two years we have launched new variants of Godrej No. 1 soap such as lavender, papaya and lotus. We also test marketed the face wash and shampoo categories during the first quarter of this Fiscal.
Competition and pricing pressures
We operate in a competitive market environment. We compete against a number of manufacturers and marketers, some of which are larger and have substantially greater resources than us, and may therefore have the ability to spend more aggressively on advertising and marketing. Flexibility to respond to changing business and economic conditions is an important element towards maintaining a competitive position in the industry.
We believe our ability to anticipate and respond to pricing pressures, market changes in the household and personal care industry has helped us in maintaining our competitive position. For example we havetactically introduced promotional schemes such as “Buy 3 get 1 free” in soaps, or cross promote our products – “free Fairglow soap on purchase of Ezee”.
Price and availability of raw materials
We depend on the adequate and timely availability of key raw materials. Any significant change in the cost structure or disruption in supply may affect the pricing and supply of products. If we are not able to increase our product prices to significantly offset increased raw material costs, or if unit volume sales are significantly reduced, it could have a negative impact on our profitability.
During Fiscal 2007, there was a significant increase in the price of vegetable oil, which is one of the key ingredients for soap. To protect our profitability margins, we exercised price increases for most of our soaps in second half of Fiscal 2007 and the first quarter of this Fiscal.
Brand Image
Our success depends on our ability to maintain the brand image of our existing products and effectively build up brand image for new products and brand extensions. Product quality issues, real or imagined, or allegations of product defects, even when false or unfounded, could tarnish the image of the established brands and may cause consumers to choose other products.
However, we believe that the “Godrej” brand name is very well recognised and respected not only in our product offerings but also in other products like locks, furniture and consumer durables which are offered by our group companies. In addition, we have implemented TQM and have received ISO certifications for our key facilities, which we believe enables us to offer consistent and reliable product offerings.
Distribution
The ability to reach to customers across India is critical for players in the FMCG sector. Companies generally use distributors, wholesalers and retailers to reach out to the various parts of the country. The ability to have a wide spread reach through a combination of the above intermediaries is key for ensuring availability of products to the end consumer.
In addition to our own sales force, we have tied up with 33 carrying and forwarding agents and over 4,500 distributors, superstockists and sub stockists, who help us manage our supply chain efficiently and reach out to 650,000 retailers across the country. We have linked our major distributors in India through a system called ‘Sampark’, a collaborative planning, forecasting and replenishment system which along with our ERP (Enterprise Resource Planning) system enables us to track the availability of stock with the distributors, warehouses and the factories
Some of the other factors that may affect our business include potential labour disruptions, stability of economic
228 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only policies and the political situation in India, etc. For more information on these and other factors/developments which have or may affect us, see “Risk Factors”, “Industry Overview” and “Our Business” beginning on pages [●], [●] and [●], respectively of this Draft Letter of Offer. For a description of the significant accounting policies followed by our Company please refer to the section titled “Financial Statements - Significant Accounting Policies” beginning on page [●] of this Draft Letter of Offer.
Results of Operations
The following table sets forth for the periods indicated, certain items derived from our restated consolidated financial statements, in each case stated in absolute terms and as a percentage of total income. Amounts have been rounded to ensure percentages total to 100% as appropriate.
229 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Restated Summary Statement of Consolidated Profit or Loss Rupees in Million Particulars Half Year Ended Financial Year Ended 30-Sep-07 31-Mar-07 31-Mar-06 Income Gross Sales: Of Products Manufactured by the Company 5,702.51 9,894.18 7,318.79 Of Goods Traded by the Company 96.90 19.55 24.47 5,799.42 9,913.73 7,343.26 Less: Excise Duty 179.25 381.40 346.05 Net Sales 5,620.17 9,532.33 6,997.21
Other Income 8.14 26.48 87.77 Increase / (Decrease) in Inventory (79.82) 255.09 100.56
Total Income (A) 5,548.49 9,813.90 7,185.54
Expenditure Materials Consumed and Purchase of Goods 2,725.08 4,876.81 3,362.32 Other Manufacturing Expenses 83.75 197.78 161.28 Power and Fuel 116.74 244.39 210.77 Salaries, Wages and Benefits 352.81 543.83 475.39 Administrative Expenses and Other Expenses 316.87 528.54 398.60 Selling and Distribution Expenses 918.78 1,599.17 1,076.92 Depreciation and Amortisation 89.45 142.05 114.70 Interest and Financial Charges 65.20 96.29 64.74
Total Expenditure (B) 4,668.68 8,228.86 5,864.72
Net Profit Before Tax and Extraordinary Item (A - B) 879.81 1,585.04 1,320.82
Provision for Taxation Current Tax 117.98 222.72 117.56 Deferred Tax 2.12 13.12 (13.76) Fringe Benefits Tax 4.84 7.60 9.00 124.95 243.44 112.80
Net Profit Before Extra-ordinary Items 754.86 1,341.60 1,208.02
Extraordinary Items (Net of Taxes) - 50.65 -
Adjusted Profit for the Year 754.86 1,392.25 1,208.02
Balance Brought Forward 604.69 318.72 133.42
Amount Available for Appropriation 1,359.55 1,710.97 1,341.44
Appropriations: Transfer to General Reserve 36.00 132.20 121.40 Interim Dividend 169.38 846.92 790.45 Tax on Distributed Profits 28.79 127.17 110.86
Balance Carried to Balance Sheet 1,125.38 604.68 318.73
230 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Restated Summary Statement of Standalone Profit or Loss
Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07 Income Gross Sales: Of Products Manufactured by the 4,543.43 7,771.06 6,674.54 5,763.93 4,817.25 4,316.03 Company Of Goods Traded by the Company 96.90 195.50 244.70 270.70 648.60 954.90 4,640.33 7,966.56 6,919.24 6,034.63 5,465.85 5,270.93 Less: Excise Duty 179.25 381.40 346.05 407.90 570.10 570.07 Net Sales 4,461.08 7,585.16 6,573.19 5,626.73 4,895.75 4,700.86
Processing Charges - - - - 20.15 59.32 Other Income 32.19 53.04 86.65 64.11 11.23 14.17 Increase / (Decrease) in Inventory (147.92) 242.22 124.46 148.00 89.41 27.56
Total Income (A) 4,345.35 7,880.42 6,784.30 5,838.84 5,016.54 4,801.91
Expenditure Materials Consumed and Purchase of 2,107.73 3,924.24 3,160.57 2,932.37 2,441.55 2,258.25 Goods Other Manufacturing Expenses 67.75 181.30 157.21 121.29 244.25 251.93 Power and Fuel 114.16 239.38 209.89 164.35 114.60 111.56 Salaries, Wages and Benefits 263.84 404.97 431.54 329.01 255.59 255.01 Administrative Expenses & Other 270.99 446.35 369.19 328.45 312.74 286.89 Expenses Selling and Distribution Expenses 601.52 1,156.78 994.94 894.62 763.66 820.62 Depreciation and Amortisation 79.81 124.95 107.84 106.59 93.95 89.87 Interest and Financial Charges 47.12 58.44 40.40 24.60 24.27 27.06
Total Expenditure (B) 3,552.92 6,536.41 5,471.58 4,901.28 4,250.61 4,101.19
Net Profit Before Tax and Extraordinary 792.43 1,344.01 1,312.72 937.56 765.93 700.72 Item (A – B)
Provision for Taxation Current Tax 89.00 150.80 109.80 73.50 88.00 139.37 Deferred Tax 1.20 13.40 (13.10) 3.40 29.50 20.60 Fringe Benefits Tax 4.80 7.60 9.00 - - - 95.00 171.80 105.70 76.90 117.50 159.97
Net Profit Before Extra-ordinary Items 697.43 1,172.21 1,207.02 860.66 648.43 540.75
Extraordinary Items (Net of Taxes) - 101.30 - - - -
Adjusted Profit for the Year 697.43 1,273.51 1,207.02 860.66 648.43 540.75
Balance Brought Forward 484.97 317.74 133.43 133.31 128.78 120.81
Amount available for Appropriation 1,182.40 1,591.25 1,340.45 993.97 777.21 661.56
Appropriations: Transfer to General Reserve 36.00 132.20 121.40 90.00 65.00 54.50 Proposed Dividend - - - - - 115.07 Interim Dividend 169.38 846.92 790.45 679.34 513.15 348.47 Tax on Distributed Profits 28.79 127.16 110.86 91.20 65.75 14.74 Balance Carried to Balance sheet 948.23 484.97 317.74 133.43 133.31 128.78
231 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Total Income
Our total income comprises of:
• Income from sale of finished goods; • Other income
Sale of finished goods
Our product range includes soaps, hair colourants, toiletries and liquid detergents. The Company does not have any reportable segment as defined in Accounting Standard (AS-17) on "Segment Reporting" issued by the Institute of Chartered Accountants of India.
Sale of goods is recognized on dispatch to customers. Sales include excise duty and are net of returns, sales tax and turnover discounts.
Almost all of our goods are manufactured at our in-house facilities with a small portion being processed at third party locations.
Other Income
Other income primarily comprised of income from insurance and other claims, profit on sale of fixed assets and profit on sale of investments. Some of these incomes may be recurring in nature.
Other revenue is recognized on accrual basis, except in case of insurance claims which are accounted for on cash basis.
Expenditure
Our total expenditure, comprised of raw materials consumed, other manufacturing expenses, power & fuel, salaries, wages and benefits, administrative expenses and other expenses, selling and distribution expenses, depreciation and amortization and interest and financial charges
Raw Materials consumed: comprised of costs incurred in purchase and procurement of raw materials. Majority of our raw materials are procured from outside of India.
Purchases of material are accounted net of sales of Raw Material / Packing Material and are net of reimbursement of taxes. Purchases are accounted after adjusting the rate differences (net) received / paid on hedge contracts and for non fulfillment of material delivery contracts and roll-over of contracts
Other Manufacturing expenses: comprised of processing charges incurred on account of manufacture of our products through third parties and costs incurred on stores and spares.
Power and Fuel: comprised of expenses incurred on power and fuel consumed at our manufacturing and administrative facilities
Salaries, Wages and Benefits: Our payment to and provision for employees comprises salaries, wages, allowances, bonuses, retrenchment benefits, incentives paid to staffs/workers and other staff welfare expenses like gratuity and leave encashment.
Administrative expenses and other expenses: Our administrative and general expenses relate to expenses incurred for general administration. These primarily comprised of rent charges, expenses on account of repairs and maintenance, travel and conveyance, insurance charges, losses incurred on account of fluctuations in foreign exchange rates, etc.
Selling and Distribution expenses: are expenses incurred in relating to the promotion, sales and distribution of our products. These primarily consist of outward freight charges, advertisement and publicity expenses and sales promotion expenses
232 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Depreciation and Amortization: includes depreciation of building, plant and machinery, furniture, fixtures, motor vehicles, computers and certain other items used in factory, offices, retail stores. Depreciation on fixed assets has been provided under the Straight Line Method at the rates specified in Schedule XIV to the Companies Act, 1956, pro-rata to the period of use. Cost of acquisition of leasehold land is amortized over the unexpired period of lease
Interest and financial charges: The finance charges incurred by us include interest charges payable by us for short term and long term loans including working capital loans and financial charges like processing fees for loans and bank guarantees.
Borrowing costs that are directly attributable to the acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of that asset till the date it is put to use. Other borrowing costs are recognized as an expense in the period in which they are incurred.
Taxation: Taxes comprise current tax, deferred tax and fringe benefit tax.Deferred taxes are measured using the tax rates and laws that have been enacted as of the date of financial statements in which they are recorded, and are accounted for in accordance with AS-22 issued by the ICAI on “Accounting for Taxes on Income”
Inventories:
Raw-materials: Raw-materials, stores, spares and packing materials are valued at lower of cost and net realizable value
Work-in-progress: is valued at weighted average cost of direct material, direct labour and factory overheads.
Finished goods: are valued at lower of at lower of cost and net realizable value.
FINANCIAL RESULTS FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 2007
Consolidated financials for the six month period ended September 2007 include: - financials attributable to Keyline Brands Limited; - financials attributable to Rapidol Pty Limited and - proportionate share of GCPL in the joint venture operations of Godrej SCA Hygiene limited
Income
Our total income on a consolidated basis for the six month period ended September 2007 amounted to Rs.5,547.14 million. Total income on a standalone basis amounted to Rs. 4,342.35 million
For the six month period ended September 2007, • Keyline contributed Rs.985 million and accounted for 17.8% of the consolidated total income • Rapidol contributed Rs.248 million and accounted for 4.5% of the consolidated total income • SCA contributed Rs.11 million and accounted for 0.2% of the consolidated total income
Sales
Our sales (net of excise duty) on a consolidated basis for the six month period ended September 2007 amounted to Rs.5,620 million. On a standalone basis, sales amounted to Rs.4,641 million.
Other Income
On a consolidated basis, other income for the six month period ended September 2007 amounted to Rs.8 million. This primarily comprised insurance & other claims received by the Company. As a percentage of net sales, other income remained stable at 0.7%, for the six month period ended September 30, 2007.
On a stand alone basis, other income for the six month period ended September 2007 amounted to Rs.32 million. This primarily comprised royalty received from subsidiary company, insurance & other claims received by the Company.
233 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Increase / (Decrease) in Inventory
On a consolidated basis, inventory for the six month period ended September 30, 2007 decreased by Rs.80 million. Finished goods inventory for the six month period ended September 30, 2007 decreased by Rs.31 million & WIP decreased by Rs.111 million. It primarily consists of WIP in relation to soap production, which was higher as at March 31, 2007 to meet the higher demand anticipated for the summer season.
On a standalone basis, inventory for the six month period ended September 30, 2007 decreased by Rs.148 million.
Expenditure
Our total expenditure, comprised of raw materials consumed, other manufacturing expenses, power & fuel, salaries, wages and benefits, administrative expenses and other expenses, selling and distribution expenses, depreciation and amortisation and interest & financial charges.
On a consolidated basis, total expenditure for the six month period ended September 30, 2007 amounted to Rs.4,669 million. On a stand alone basis, total expenditure for the six month period ended September 30, 2007 amounted to Rs.3,553 million.
Materials consumed and purchase of goods
On a consolidated basis, expenditure on account of raw materials consumed for the six month period ended September 30, 2007 amounted to Rs.2,725 million. This accounted for 58.4% of the total expenditure for the six month period ended September 30, 2007.
As a percentage of consolidated net sales, raw materials consumed decreased from 51.2% in Fiscal 2007 to 48.5% for the six month period ended September 30, 2007. During the past few quarters, the vegetable oil prices have been rising and the Company has effected price increases for soaps. The raw material costs as a percentage to sales is influenced by both these factors.
Other Manufacturing expenses
On a consolidated basis, other manufacturing expenses for the six month period ended September 30, 2007 amounted to Rs.84 million. This accounted for 1.8% of the total expenditure for the six month period ended September 30, 2007.
As a percentage of consolidated net sales, other manufacturing expenses decreased from 2.1% in Fiscal 2007 to 1.8% for the six month period ended September 30, 2007.
Power and Fuel
On a consolidated basis, power and fuel expenses for the six month period ended September 30, 2007 amounted to Rs.117 million. This accounted for 2.5% of the total expenditure for the six month period ended September 30, 2007.
As a percentage of consolidated net sales, power and fuel expenses decreased from 2.6% in Fiscal 2007 to 2.1% for the six month period ended September 30, 2007.
Salaries, Wages and Benefits
On a consolidated basis, staff costs for the six month period ended September 30, 2007 amounted to Rs.353 million. This accounted for 7.6% of the total expenditure for the six month period ended September 30, 2007.
As a percentage of consolidated net sales, salaries, wages & benefits increased from 5.7% in Fiscal 2007 to 6.3% for the six month period ended September 30, 2007. This is on account of increase in manpower in the new plants and the normal annual increments to salaries and wages.
234 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Administrative expenses and Other Expenses
On a consolidated basis, administrative and other expenses for the six month period ended September 30, 2007 amounted to Rs.317 million. This accounted for 6.8% of the total expenditure for the six month period ended September 30, 2007.
As a percentage of consolidated net sales, administrative and other expenses increased from 5.5% in Fiscal 2007 to 5.6% for the six month period ended September 30, 2007.
Selling and Distribution expenses
On a consolidated basis, selling and distribution expenses for the six month period ended September 30, 2007 amounted to Rs.919 million. This accounted for 19.7% of the total expenditure for the six month period ended September 30, 2007.
As a percentage of consolidated net sales, selling and distribution expenses decreased from 16.8% in Fiscal 2007 to 16.4% of sales for the six month period ended September 30, 2007.
Depreciation and Amortisation
On a consolidated basis, depreciation and amortisation charges for the six month period ended September 30, 2007 amounted to Rs.90 million. This accounted for 1.9% of the total expenditure for the six month period ended September 30, 2007.
During the six month period ended September 30, 2007 we added gross fixed assets of Rs.137.4 million.
As a percentage of consolidated net sales, depreciation and amortization charges increased from 1.5% in Fiscal 2007 to 1.5% of sales for the six month period ended September 30, 2007.
Interest and financial charges
On a consolidated basis, interest and financial charges for the six month period ended September 30, 2007 amounted to Rs.65 million. This accounted for 1.4% of the total expenditure for the six month period ended September 30, 2007.
As a percentage of consolidated net sales, interest and financial charges increased from 1.0% of Fiscal 2007 to 1.2% for the six month period ended September 30, 2007. This is due to higher average borrowings to meet the capital expenditure requirements and acquisitions.
Total Loan funds on a consolidated basis increased 3.2% from Rs.1,736 million as of March 31, 2007 to Rs.1,793 million as of September 30, 2007.
Profit before tax and Extraordinary items
On a consolidated basis, profit before tax and extraordinary items for the six month period ended September 30, 2007 amounted to Rs.880 million. Our profit before tax as a percentage of net sales decreased from 16.6% in fiscal 2007 to 15.7% for the six month period ended September 30, 2007.
Provision for tax
Provision for tax comprises of charges on account of current tax, deferred tax and fringe benefit tax. Provision for tax charged to the consolidated statement of profit and loss for the six month period ended September 30, 2007 amounted to Rs.125 million.
As a percentage of consolidated profit before tax, provision for tax charged during the year decreased from 15.4% of profit before tax in fiscal 2007 to 14.2% for the six month period ended September 30, 2007. We have been assessed on a Minimum Alternate Tax basis since fiscal 2005
235 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Net Profit
As a result of the foregoing, our consolidated net profit after tax (before extraordinary items) for the six month period ended September 30, 2007 amounted to Rs.754.70 million.. As a percentage of consolidated net sales, the net profit decreased from 14.1% in FY 06-07 to 13.4% for the six month period ended September 30, 2007.
There were no extraordinary income / charges for the six month period ended September 30, 2007
COMPARISON OF FISCAL 2007 AND FISCAL 2006
In September 2006, we acquired the South African business of Rapidol U.K. and its subsidiary Rapidol International, which is a key step towards expanding our global presence.
We also entered into a joint venture with SCA Hygiene Products AB, Sweden, an initiative that gives us an entry into the feminine hygiene products and technical strengths in the baby diaper markets, which are nascent categories.
Consolidated financials for fiscal 2007 include: - full year financials attributable to Keyline Brands Limited (5 months for fiscal 2006); - 7 months financials attributable to Rapidol Pty Limited (Nil for fiscal 2006) and - proportionate share of our Company in the joint venture operations of Godrej SCA Hygiene limited (formed in March 2007)
Consequent to the above, the consolidated financial statements for fiscal 2007 are not comparable to fiscal 2006.
Income
Our total income on a consolidated basis increased by 36.6% from Rs.7,186 million in fiscal 2006 to Rs.9,814 million in fiscal 2007. Total income on a standalone basis increased by 16.2% from Rs.6,784 million in fiscal 2006 to Rs.7,880 million in fiscal 2007.
Of the consolidated total income in fiscal 2007, • Keyline contributed Rs. 1,675million and accounted for 16.9% of the consolidated total income • Rapidol contributed Rs.276 million and accounted for 2.8% of the consolidated total income • SCA contributed NIL and accounted for NIL% of the consolidated total income
Sales
On a consolidated basis, our net sales increased by 36.2% from Rs.6,997 million in fiscal 2006 to Rs.9,532 million in fiscal 2007. On a standalone basis, our net sales increased by 15.4% from Rs.6,573 million in fiscal 2006 to Rs.7,585 million in fiscal 2007 due to a combination of increase in the sales volume of existing products, introduction of new products and price increase in certain products.
Our toilet soap sales grew by 21.0% in fiscal 2007. Our hair colourants sales grew by 11.9% in fiscal 2007. Our Toiletries sales grew by 20.3% in fiscal 2007. Liquid detergents sales reduced by 2.3% in fiscal 2007 due to a weak winter
Other income On a consolidated basis, our other income decreased by 69.8% from Rs.88 million in fiscal 2006 to Rs.27 million in fiscal 2007. This was primarily due to the insurance claim of Rs.56 million accrued in fiscal 2006 as compared to Rs.8 million in fiscal 2007.
As a percentage of consolidated net sales, other income decreased from 1.2% of sales in fiscal 2006 to 0.3% of sales in fiscal 2007
Increase / (Decrease) in Inventory
On a consolidated basis, inventory for FY 2006-07 increased by Rs.255 million. Finished goods inventory
236 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only increased by Rs.146 million & WIP increased by Rs.109 million.
On a standalone basis, inventory for FY 2006-07 decreased by Rs.242 million. Finished goods inventory increased by Rs.121 million & WIP increased by Rs.121 million.
The WIP in relation to soap production was higher as at March 31, 2007 to meet the higher demand anticipated for the summer season.
Expenditure
Our total expenditure, comprised of raw materials consumed, other manufacturing expenses, power & fuel, salaries, wages and benefits, administrative expenses and other expenses, selling and distribution expenses, depreciation and amortisation and interest and financial charges.
Our total expenditure on a consolidated basis increased by 40.3% from Rs.5,865 million in fiscal 2006 to Rs.8,229 million in fiscal 2007. Total expenditure as a percentage of consolidated net sales increased from 83.8% in fiscal 2006 to 86.3% fiscal 2007.
Materials consumed and purchase of goods
On a consolidated basis, expenditure on account of raw materials consumed increased by 45.0% from Rs.3,362 million in fiscal 2006 to Rs.4,877 million in fiscal 2007. As a percentage of consolidated net sales, raw materials consumed increased from 48.1% in fiscal 2006 to 51.2% in fiscal 2007. This accounted for 59.3% of the total expenditure for FY 2006-07
On a standalone basis, expenditure on account of raw materials consumed increased by 24.2% from Rs.3,161 million in Fiscal 2006 to Rs.3,924 million in Fiscal 2007. As a percentage of standalone net sales, raw materials consumed increased from 48.1% in Fiscal 2006 to 51.7% in fiscal 2007. This accounted for 60.0% of the total expenditure for FY 2006-07
Vegetable oil prices have been rising since beginning of FY 06-07. However, the Company effected price increases for soaps only in the third quarter of 2007. As a result, the raw material cost as a percentage of sales has shown an increase.
Other Manufacturing expenses
On a consolidated basis, manufacturing expenses increased by 22.6% from Rs.161 million in fiscal 2006 to Rs.198 million in fiscal 2007. As a percentage of consolidated net sales, other manufacturing expenses increased from 2.3% in fiscal 2006 to 2.1% in fiscal 2007. This accounted for 2.4% of the total expenditure for FY 2006- 07
On a standalone basis, manufacturing expenses increased by 15.3% from Rs.157 million in fiscal 2006 to Rs.181 million in fiscal 2007. As a percentage of standalone net sales, other manufacturing expenses remained constant at 2.3% in fiscal 2006 &. in fiscal 2007. This accounted for 2.8% of the total expenditure for FY 2006- 07
During FY 06-07, the Company closed its Silvassa factory and the products were processed by a third party for the remaining part of the year.
Power and Fuel
On a consolidated basis, Power and Fuel expenses increased by 16.0% from Rs.211 million in fiscal 2006 to Rs.244 million in fiscal 2007. As a percentage of consolidated net sales, Power and Fuel expenses decreased from 3.0% of sales in fiscal 2006 to 2.6% of sales in fiscal 2007. This accounted for 3.0% of the total expenditure for FY 2006-07
On a standalone basis, Power and Fuel expenses increased by 14.1% from Rs.210 million in fiscal 2006 to Rs.239 million in fiscal 2007. As a percentage of standalone net sales, Power and Fuel expenses remained constant at 3.2% in fiscal 2006 and in fiscal 2007. This accounted 3.7% of the total expenditure for FY 2006-07
237 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
This was primarily due to a proportional increase in production at the existing facilities as also the commencement of operations at the Katha facility.
Salaries, Wages and Benefits
On a consolidated basis, staff costs increased by 14.4% from Rs.475 million in fiscal 2006 to Rs.544 million in fiscal 2007. As a percentage of consolidated net sales, staff costs decreased from 6.8% of sales in fiscal 2006 to 5.7% of sales in fiscal 2007. This accounted for 6.6% of the total expenditure for FY 2006-07.
On a standalone basis, staff costs decreased by 6.2% from Rs.431.54 million in fiscal 2006 to Rs.404.97 million in fiscal 2007. As a percentage of standalone net sales, staff costs decreased from 6.6% of sales in fiscal 2006 to 5.3% of sales in fiscal 2007. This accounted for 6.2% of the total expenditure for FY 2006-07.
This was primarily due to payment of lower performance incentives.
Administrative and Other Expenses
On a consolidated basis, administrative and other expenses increased by 32.6% from Rs.399 million in fiscal 2006 to Rs.529 million in fiscal 2007. As a percentage of consolidated net sales, administrative and other expenses decreased from 5.7% in fiscal 2006 to 5.5% in fiscal 2007. This accounted for 6.4% of the total expenditure for FY 2006-07.
On a standalone basis, administrative and other expenses increased by 20.9% from Rs.369 million in fiscal 2006 to Rs.446 million in fiscal 2007. As a percentage of standalone net sales, administrative and other expenses decreased from 5.6% in fiscal 2006 to 5.9% in fiscal 2007.
There has been an increase in rent due to additional premises taken on lease. Further, there was a loss incurred due to foreign currency fluctuations, which forms a part of other expenses.
Selling and Distribution expenses
On a consolidated basis, selling and distribution expenses increased by 48.5% from Rs.1,077 million in fiscal 2006 to Rs.1,599 million in fiscal 2007. As a percentage of consolidated net sales, selling and distribution expenses increased from 15.4% in fiscal 2006 to 16.8% in fiscal 2007. This accounted for 19.4% of the consolidated total expenditure for FY 2006-07.
On a standalone basis, selling and distribution expenses increased by 16.3% from Rs.995 million in fiscal 2006 to Rs.1,157 million in fiscal 2007. As a percentage of standalone net sales, selling and distribution expenses increased from 15.1% in fiscal 2006 to 15.3% in fiscal 2007. This accounted for 17.7% of the standalone total expenditure for FY 2006-07.
The increase is primarily on account of higher advertisement & sales promotion cost, which was due to a conscious effort on the part of the management to promote our existing and new products
Depreciation and Amortisation
On a consolidated basis, depreciation and amortisation charge increased by 23.8% from Rs.115 million in fiscal 2006 to Rs.142 million in fiscal 2007. As a percentage of consolidated net sales, depreciation and amortisation charge increased from 1.6% in fiscal 2006 to 1.5% in fiscal 2007. This accounted for 1.7% of the consolidated total expenditure for FY 2006-07.
On a standalone basis, depreciation and amortisation charge increased by 15.9% from Rs.108 million in fiscal 2006 to Rs.125 million in fiscal 2007. As a percentage of standalone net sales, depreciation and amortisation charge remained constant at 1.6% in fiscal 2006 and in fiscal 2007. This accounted for 1.9% of the standalone total expenditure for FY 2006-07.
The increase was due to addition of Rs.928.34 million of fixed assets in the form of trademarks, plant and machinery and computer systems during fiscal 2007. During the year, the company added new facilities at
238 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Baddi – Katha and Sikkim and acquired trademarks through the Rapidol acquisition.
Depreciation as a percentage of gross block decreased from 6.5% in fiscal 2006 to 5.3% in fiscal 2007.
Interest and financial charges
On a consolidated basis, our interest and financial charges increased by 48.7% from Rs.65 million to Rs.96 million in fiscal 2007. As a percentage of consolidated net sales, interest charges increased from 0.9% in fiscal 2006 to 1.0% in fiscal 2007. This accounted for 1.2% of the consolidated total expenditure for FY 06-07.
On a standalone basis, our interest and financial charges increased by 44.7% from Rs.40 million to Rs.58 million in fiscal 2007. As a percentage of standalone net sales, interest charges increased from 0.6% in fiscal 2006 to 0.8% in fiscal 2007. This accounted for 0.9% of the consolidated total expenditure for FY 06-07.
Total loan funds on a consolidated basis increased 152.6% from Rs.687 million as of March 31, 2006 to Rs.1,736 million as of March 31, 2007. This increase was mainly due to an increase in long term unsecured borrowings of Rs.650 million, taken to partly fund the capital expenditure requirements of the Company and secured loans of Rs.400 million, taken for the purpose of acquisition of trademarks
Profit before tax
As a result of the foregoing, our consolidated profit before tax increased by 20.0% from Rs.1,321 million in fiscal 2006 to Rs.1,585 million in fiscal 2007. Our profit before tax as a percentage of consolidated net sales decreased from 18.9% in fiscal 2006 to 16.6% in fiscal 2007.
Our standalone profit before tax increased by 2.4% from Rs.1,313 million in fiscal 2006 to Rs.1,344 million in fiscal 2007. Our profit before tax as a percentage of standalone net sales decreased from 20% in fiscal 2006 to 17.7% in fiscal 2007.
Provision for tax
Charges on account of provision for tax liabilities on a consolidated basis increased by 115.8% from Rs.113 million to Rs.243 million in fiscal 2007. As a percentage of consolidated profit before tax, provision for tax increased from 8.5% in fiscal 2006 to 15.4% in fiscal 2007.
Charges on account of provision for tax liabilities on a standalone basis increased by 62.5% from Rs.106 million to Rs.172 million in fiscal 2007. As a percentage of standalone profit before tax, provision for tax increased from 8.5% in fiscal 2006 to 12.8% in fiscal 2007.
This was on account of increased profits, higher tax rates applicable to subsidiary companies and an increase in the Minimum Alternate tax rate from 8.4% in fiscal 2006 to 11.2% in fiscal 2007. We have been assessed on a Minimum Alternate tax basis since fiscal 2005
Net Profit before extraordinary items
As a result of the foregoing, our consolidated profit after tax (before extraordinary items) increased by 11.1% from Rs.1,208 million in fiscal 2006 to Rs.1,342 million in fiscal 2007. As a percentage of consolidated net sales, the net profit before extraordinary items decreased from 17.2% in fiscal 2006 to 14.1% in fiscal 2007.
Extraordinary Income
During Fiscal 2007, the Company sold its Snuggy brand to the joint venture company Godrej SCA Hygiene Limited. The profit on sale of this brand (net of taxes) of Rs. 101 million has been disclosed as an extra ordinary item.
On a consolidated basis 50% of this profit, amounting to Rs.51 million, has been shown as an extraordinary item
COMPARISON OF FISCAL 2006 AND FISCAL 2005
239 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
In October 2005, we acquired Keyline Brands UK, a company engaged in manufacturing, distribution and marketing of Personal Care products. Through this acquisition, we were able to widen our geographical footprint to key areas like UK, Europe, Australia and Canada. Through Keyline we are able to manufacture, market, sell and distribute cosmetics, toiletries and men’s grooming categories, and have developed a customer base in numerous supermarket chains and discount stores
Consolidated financials for fiscal 2006 include 5 months financials attributable to Keyline Brands Limited (Nil for fiscal 2005). Consequent to this, the consolidated financial statements for fiscal 2006 are not comparable to the standalone financials for fiscal 2005.
Income
On a consolidated basis, our total income increased by 23.1% from Rs.5,839 million in fiscal 2005 to Rs 7,186 million in fiscal 2006.
On a standalone basis, total income increased by 16.2% from Rs.5.839 million in fiscal 2005 to Rs.6,784 million in fiscal 2006.
Keyline accounted for 6.1% of the consolidated total income in fiscal 2006
Sales
Our net sales on a consolidated basis increased by 24.4% from Rs.5,627 million in fiscal 2005 to Rs.6,997 million in fiscal 2006.
On a standalone basis, net sales increased by 16.8% from Rs.5,627 million in fiscal 2005 to Rs.6,573 million in fiscal 2006, due to a combination of increase in the sales volume of existing products, introduction of new products and price increase in certain products.
Our toilet soap sales grew by 17.5% in fiscal 2006. Sales of hair colourant products increased by 21.6% in fiscal 2006. Our Toiletries sales grew by 60.8% in fiscal 2006. Liquid detergents sales increased by 8.8% in fiscal 2006.
Other Income
On a consolidated basis, other income increased by 36.9% from Rs.64 million in fiscal 2005 to Rs.88 million in fiscal 2006. As a percentage of consolidated net sales, other income increased from 1.1% of sales in fiscal 2006 to 1.3% of sales in fiscal 2007
On a standalone basis, other income increased by 35.2% from Rs.64 million in fiscal 2005 to Rs.87 million in fiscal 2006. As a percentage of standalone net sales, other income increased from 1.1% of sales in fiscal 2006 to 1.3% of sales in fiscal 2007
This was primarily due to profits earned on sale of certain fixed assets of the Company amounting to Rs.15 million and insurance claims of Rs.56 million accrued during fiscal 2006. In fiscal 2005, the Company had earned income by way of discount on pre-payment of deferred sales tax loan amounting to Rs.32 million.
Increase / (Decrease) in Inventory
On a consolidated basis, inventory for FY 2005-06 increased by Rs.101 million. Finished goods inventory increased by Rs.100 million & WIP increased by Rs.1 million.
On a standalone basis, inventory for FY 2005-06 increased by Rs.124 million. Finished goods inventory increased by Rs.79 million & WIP increased by Rs.45 million.
The increase in finished goods inventory is in line with increase in sales. The WIP in relation to soap production was higher as at March 31, 2007 to meet the higher demand anticipated for the summer season.
240 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Expenditure
Our total expenditure, comprised of raw materials consumed, other manufacturing expenses, power & fuel, salaries, wages and benefits, administrative expenses and other expenses, selling and distribution expenses, depreciation and amortisation and interest and financial charges.
On a consolidated basis, our total expenditure increased by 19.7% from Rs.4,901 million in fiscal 2005 to Rs.5,865 million in fiscal 2006. Total expenditure as a percentage of total income decreased from 87.1% in fiscal 2005 to 83.8% fiscal 2006.
On a standalone basis, our total expenditure increased by 11.6% from Rs.4,901 million in fiscal 2005 to Rs.5,472 million in fiscal 2006. Total expenditure as a percentage of total income decreased from 87.1% in fiscal 2005 to 83.2% fiscal 2006.
Materials consumed and purchase of goods
On a consolidated basis, expenditure on account of raw materials consumed increased by 14.7% from Rs.2,932 million in fiscal 2005 to Rs.3,362 million in fiscal 2006. As a percentage of consolidated net sales, raw materials consumed decreased from 52.1% in fiscal 2005 to 48.1% in fiscal 2006. This constituted 57.3% of consolidated total expenditure in FY 2005-06.
On a standalone basis, expenditure on account of raw materials consumed increased by 7.8% from Rs.2,932 million in fiscal 2005 to Rs.3,161 million in fiscal 2006. As a percentage of standalone net sales, raw materials consumed decreased from 52.1% in fiscal 2005 to 48.1% in fiscal 2006. This constituted 57.8% of standalone total expenditure in FY 2005-06.
This was primarily due to certain price increases effected during the year and reduction in average sales tax rates consequent to introduction of VAT in several states.
Other Manufacturing expenses
On a consolidated basis, manufacturing expenses increased by 32.9% from Rs.121 million in fiscal 2005 to Rs.161 million in fiscal 2006. As a percentage of consolidated net sales, other manufacturing expenses increased from 2.2% in fiscal 2005 to 2.3% in fiscal 2006. This constituted 2.8% of consolidated total expenditure in FY 2005-06.
On a standalone basis, manufacturing expenses increased by 29.6% from Rs.121 million in fiscal 2005 to Rs.157 million in fiscal 2006. As a percentage of standalone net sales, other manufacturing expenses increased from 2.2% in fiscal 2005 to 2.4% in fiscal 2006. This constituted 2.9% of standalone total expenditure in FY 2005-06.
This was primarily due to higher processing charges for certain products by third parties.
Power and Fuel
On a consolidated basis, power and fuel expenses increased by 28.2% from Rs.164 million in fiscal 2005 to Rs.211 million in fiscal 2006. As a percentage of consolidated net sales, power and fuel expenses increased from 2.9% in fiscal 2005 to 3.0% in fiscal 2006. This constituted 3.6% of consolidated total expenditure in FY 2005-06.
On a standalone basis, Power and Fuel expenses increased by 27.7% from Rs.164 million in fiscal 2005 to Rs.210 million in fiscal 2006. As a percentage of standalone net sales, power and fuel expenses increased from 2.9% in fiscal 2005 to 3.2% in fiscal 2006. This constituted 3.8% of standalone total expenditure in FY 2005-06.
Salaries, Wages and Benefits
On a consolidated basis, staff costs increased by 44.5% from Rs.329 million in fiscal 2005 to Rs.475 million in fiscal 2006. As a percentage of consolidated net sales, staff costs increased from 5.9% in fiscal 2005 to 6.8% in
241 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only fiscal 2006. This constituted 8.1% of consolidated total expenditure in FY 2005-06.
On a standalone basis, staff costs increased by 31.2% from Rs.329 million in fiscal 2005 to Rs.432 million in fiscal 2006. As a percentage of standalone net sales, staff costs increased from 5.9% in fiscal 2005 to 6.6% in fiscal 2006. This constituted 7.9% of standalone total expenditure in FY 2005-06.
This was primarily due to higher performance pay during the year.
Administrative & Other Expenses
On a consolidated basis, administrative & other expenses increased by 21.4% from Rs.328 million in fiscal 2005 to Rs.399 million in fiscal 2006. As a percentage of consolidated net sales, administrative and other expenses decreased from 5.8% in fiscal 2005 to 5.7% in fiscal 2006. This constituted 6.8% of consolidated total expenditure in FY 2005-06.
On a standalone basis, administrative & other expenses increased by 12.4% from Rs.328 million in fiscal 2005 to Rs.369 million in fiscal 2006. As a percentage of standalone net sales, administrative and other expenses decreased from 5.8% in fiscal 2005 to 5.6% in fiscal 2006. This constituted 6.7% of standalone total expenditure in FY 2005-06.
This was primarily due to a proportional increase in sales and also an increase in consultancy charges for a supply chain related initiative.
Selling and Distribution expenses
On a consolidated basis, selling and distribution expenses increased by 20.4% from Rs.895 million in fiscal 2005 to Rs.1,077 million in fiscal 2006. As a percentage of consolidated net sales, selling and distribution expenses decreased from 15.9% in fiscal 2005 to 15.4% in fiscal 2006. This constituted 18.4% of consolidated total expenditure in FY 2005-06.
On a standalone basis, selling and distribution expenses increased by 11.2% from Rs.895 million in fiscal 2005 to Rs.995 million in fiscal 2006. As a percentage of standalone net sales, selling and distribution decreased from 15.9% in fiscal 2005 to 15.1% in fiscal 2006. This constituted 18.2% of standalone total expenditure in FY 2005-06.
The increase was due to increase in freight costs due to establishment of additional warehouses which was done in Q4 of Fiscal 04-05. The increase in advertisement & sales promotion was in line with sales growth during the year.
Depreciation and Amortisation
On a consolidated basis, depreciation and amortisation charge increased by 7.6% from Rs.107 million in fiscal 2005 to Rs.115 million in fiscal 2006. As a percentage of consolidated net sales, depreciation and amortization expenses decreased from 1.9% in fiscal 2005 to 1.6% in fiscal 2006. This constituted 2.0% of consolidated total expenditure in FY 2005-06.
On a standalone basis, depreciation and amortisation charge increased by 7.6% from Rs.107 million in fiscal 2005 to Rs.108 million in fiscal 2006. As a percentage of standalone net sales, depreciation and amortisation charge decreased from 1.9% in fiscal 2005 to 1.6% in fiscal 2006. This constituted 2.0% of standalone total expenditure in FY 2005-06. Depreciation as a percentage of gross block increased from 5.9% in fiscal 2005 to 6.8% in fiscal 2006.
Interest and financial charges
On a consolidated basis, our interest and financial charges increased by 163.2% from Rs.25 million to Rs.65 million in fiscal 2006. As a percentage of consolidated net sales, interest and financial charges expenses increased from 0.4% in fiscal 2005 to 0.9% in fiscal 2006. This constituted 1.1% of consolidated total expenditure in FY 2005-06.
242 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
On a standalone basis, interest and financial charges increased by 64.2% from Rs.25 million in fiscal 2005 to Rs.40 million in fiscal 2006. As a percentage of standalone net sales, interest and financial charges decreased from 0.4% in fiscal 2005 to 0.6% in fiscal 2006. This constituted 0.7% of standalone total expenditure in FY 2005-06.
This was primarily due to the loans taken by the subsidiary companies for the acquisition of Keyline Brands Limited in UK.
Total Loan funds on a consolidated basis increased 1020% from Rs.61 million as of March 31, 2005 to Rs.687 million as of March 31, 2006. This increase was mainly due to an increase in long term borrowings for the purpose of acquisition of Keyline Brands Limited.
Profit before tax
As a result of the foregoing, our consolidated profit before tax increased by 40.9% from Rs.938 million in fiscal 2005 to Rs.1,321 million in fiscal 2006. Our profit before tax as a percentage of total consolidated net sales increased from 16.7% in fiscal 2005 to 18.9% in fiscal 2006.
Our standalone profit before tax increased by 40.0% from Rs.938 million in fiscal 2005 to Rs.1,313 million in fiscal 2006. Our profit before tax as a percentage of net sales increased from 16.7% in fiscal 2005 to 20.0% in fiscal 2006.
Provision for tax
On a consolidated basis, our provision for tax liabilities increased by 46.7% from Rs.77 million in FY 04-05 to Rs.113 million in fiscal 2006. As a percentage of consolidated profit before tax, provision for tax increased from 8.2% of profit before tax in fiscal 2005 to 8.5% in fiscal 2006.
On a standalone basis, our provision for tax liabilities increased by 37.5% from Rs.77 million to Rs.106 million in fiscal 2006. As a percentage of standalone profit before tax, provision for tax decreased from 8.2% in fiscal 2005 to 8.1% in fiscal 2006.
This was on account of increased sales and profitability & the introduction of Fringe Benefit Tax.
Net Profit before extraordinary items
As a result of the foregoing, our consolidated profit after tax (before extraordinary items) increased by 40.4% from Rs.861 million in fiscal 2005 to Rs.1,208 million in fiscal 2006. As a percentage of consolidated net sales, the net profit increased from 15.3% in fiscal 2005 to 17.3% in fiscal 2006.
On a standalone basis, our profit after tax (before extraordinary items) increased by 40.2% from Rs.861 million in fiscal 2005 to Rs.1,207 million in fiscal 2006. As a percentage of standalone net sales, the net profit increased from 15.3% in fiscal 2005 to 18.4% in fiscal 2006.
COMPARISON OF FISCAL 2005 AND FISCAL 2004
Income
Our total income increased by 16.4% from Rs.5,017 million in fiscal 2004 to Rs.5,839 million in fiscal 2005
Sales
Our net sales increased by 14.9% from Rs.4,896 million in fiscal 2004 to Rs.5,627 million in fiscal 2005. This was primarily due to increase in sales volume and reduction in effective excise rates.
Other Income
Other income increased by 470.9% from Rs.11 million in fiscal 2004 to Rs.64 million in fiscal 2005. This was primarily due to discount on prepayment of deferred sales tax loan, accounted as other income in fiscal 2005
243 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Increase / (Decrease) in Inventory
On a standalone basis, inventory for FY 2004-05 increased by Rs.148 million. Finished goods inventory decreased by Rs.167 million & WIP decreased by Rs.19 million.
The increase in finished goods inventory is in line with increase in sales.
Expenditure
Our total expenditure, comprised of raw materials consumed, other manufacturing expenses, power & fuel, salaries, wages and benefits, administrative expenses and other expenses, selling and distribution expenses, depreciation and amortisation and interest and financial charges.
Our total expenditure increased by 15.3% from Rs.4,251 million in fiscal 2004 to Rs.4,901 million in fiscal 2005. Total expenditure as a percentage of net sales decreased from 86.8% in fiscal 2004 to 87.1% fiscal 2005.
Materials consumed and purchase of goods
Expenditure on account of raw materials consumed increased by 20.1% from Rs.2,442 million in fiscal 2004 to Rs.2,932 million in fiscal 2005, which is primarily due to variations in the mix of products sold.
As a percentage of net sales, raw materials consumed increased from 49.9% in fiscal 2004 to 52.1% in fiscal 2005. This constituted 59.8% of the total expenditure in FY 2004-05.
Other Manufacturing expenses
Other manufacturing expenses decreased by 50.3% from Rs.244 million in fiscal 2004 to Rs.121 million in fiscal 2005. This was primarily due to discontinuation of contract manufacturing of certain soaps at third party locations.
As a percentage of sales, manufacturing expenses decreased from 5.0% of sales in fiscal 2004 to 2.2% of sales in fiscal 2005. This constituted 2.5% of the total expenditure in FY 2004-05.
Power and Fuel
Power and Fuel expenses increased by 43.4% from Rs.115 million in fiscal 2004 to Rs.164 million in fiscal 2005. This was primarily due to a proportional increase in sales and the commencement of operations at additional facility at Baddi - Thana.
As a percentage of net sales, Power and Fuel expenses increased from 2.3% in fiscal 2004 to 2.9% in fiscal 2005. This constituted 3.4% of the total expenditure in FY 2004-05.
Salaries, Wages and Benefits
Staff costs increased by 28.7% from Rs.256 million in fiscal 2004 to Rs.329 million in fiscal 2005. This was primarily due higher performance incentives.
This is on account of increase in manpower in the new plants and the normal annual increments to salaries & wages.
As a percentage of net sales, staff costs increased from 5.2% in fiscal 2004 to 5.9% in fiscal 2005. This constituted 6.7% of the total expenditure in FY 2004-05.
Administrative & Other Expenses
Administrative & Other expenses increased by 5.0% from Rs.313 million in fiscal 2004 to Rs.328 million in fiscal 2005. This was primarily due to additional rent on new warehouses set up in Q4 of FY 2004-05 and
244 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only increase in consultancy charges.
As a percentage of sales, administrative &other expenses decreased from 6.4% of sales in fiscal 2004 to 5.8% of sales in fiscal 2005. This constituted 6.7% of the total expenditure in FY 2004-05.
Selling and Distribution expenses
Selling and distribution expenses increased by 17.2% from Rs.764 million in fiscal 2004 to Rs.895 million in fiscal 2005. The increase in the advertisement & sales promotion expenses was due to a conscious effort on the part of the management to promote our existing and new products
As a percentage of sales, selling and distribution expenses increased from 15.6% of sales in fiscal 2004 to 15.9% of sales in fiscal 2005. This constituted 18.3% of the total expenditure in FY 2004-05.
Depreciation and Amortisation
Depreciation and Amortisation charge increased by 13.5% from Rs.94 million in fiscal 2004 to Rs.107 million in fiscal 2005.
The increase was due to a net addition of Rs. 101 million of fixed assets in the form of mostly plant and machinery, buildings and office equipment during fiscal 2005. During the year, the company added an additional facility at Baddi – Thana. Depreciation as a percentage of gross block increased from 5.5% in fiscal 2004 to 5.9% in fiscal 2005.
As a percentage of sales, depreciation and amortisation expenses remained constant at 1.9% of sales in fiscal 2004 and in fiscal 2005. This constituted 2.2% of the total expenditure in FY 2004-05.
Interest and financial charges
Our interest and financial charges increased by 1.4% from Rs.24 million in fiscal 2004 to Rs.25 million in fiscal 2005. As a percentage of sales, interest charges decreased from 0.5% of sales in fiscal 2004 to 0.4% of sales in fiscal 2005. This constituted 0.5% of the total expenditure in FY 2004-05.
Profit before tax
As a result of the foregoing, our profit before tax increased by 22.4% from Rs.766 million in fiscal 2004 from Rs.938 million in fiscal 2005. Our profit before tax as a percentage of net sales increased from 15.6% in fiscal 2004 to 22.4% in fiscal 2005.
Provision for tax
Our provision for tax decreased by 34.6% from Rs.118 million in fiscal 2004 to Rs.77 million in fiscal 2005. This was mainly because we became assessable under Minimum Alternate Tax beginning fiscal 2005
As a percentage of profit before tax, provision for tax decreased from 15.3% of profit before tax in fiscal 2004 to 8.2% in fiscal 2005.
Net Profit before extraordinary items
As a result of the foregoing, our profit after tax (before extraordinary items) increased by 32.7% from Rs.648 million in fiscal 2004 to Rs.861 million in fiscal 2005. As a percentage of net sales, the net profit increased from 13.2% in fiscal 2004 to 15.3% in fiscal 2005.
FINANCIAL INDEBTEDNESS
For details of our secured and unsecured loans see sections titled "Financial Indebtedness" and “Financial Statements” beginning on pages [●] and [●] of this Draft Letter of Offer.
LIQUIDITY AND CAPITAL RESOURCES
245 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Our primary liquidity requirements have been to finance working capital, capital expenditures and acquisitions. We have met these requirements from cash flows from operations and short-term and long-term borrowings.
Net Worth
As of March 31, 2007 & March 31, 2006, our consolidated net worth, which is defined as the difference between (a) total assets and (b) total liabilities and provisions, was Rs.1,220 million & Rs.835 million respectively. As of March 31, 2005, our standalone net worth (as defined above), was Rs.552 million.
Net Cash Flows
The table below summarizes our cash flows as restated for fiscal 2007, 2006, 2005 and 2004:
(Rs. in millions) Fiscal 2007 Fiscal 2006 Fiscal 2005 (Consolidated) (Consolidated) (Standalone) Net cash from (used in) operating activities 1,204 1,427 897 Net cash from (used in) investing activities (943) (1,364) (77) Net cash from (used in) financing activities (50) (342) (870)
As of March 31, 2007, March 31, 2006 and March 31, 2005, we had cash and cash equivalents of Rs. 475 million, Rs. 263 million and Rs.90 million respectively.
Cash Flows from Operating Activities
Our consolidated cash flow from operations (before making adjustments for changes in working capital and tax) increased by 20.4% from Rs.1,471 million in fiscal 2006 to Rs.1,772 million in fiscal 2007. The net cash flow from operations (post the adjustment for working capital & tax payments) decreased by 15.6% from Rs.1426 million in Fiscal 2006 to Rs.1,204 million in fiscal 2007. The decrease in operating cash flow has been primarily on account of decrease in inventory and trade receivables.
Our consolidated cash flow from operations (before making adjustments for changes in working capital and tax) increased by 48.5% from Rs.991 million in fiscal 2005 to Rs.1,471 million in fiscal 2006. The net cash flow from operations (post the adjustment for working capital & tax payments) increased by 59.0% from Rs.898 million in Fiscal 2005 to Rs.1,426 million in fiscal 2006.
Our standalone cash flow from operations (before making adjustments for changes in working capital and tax) increased by 13.5% from Rs.873 million in fiscal 2004 to Rs.991 million in fiscal 2005. The net cash flow from operations (post the adjustment for working capital & tax payments) increased by 6.5% from Rs.843 million in Fiscal 2004 to Rs.898 million in fiscal 2005.
Cash Flows from Investment Activities
Our cash flow from or used in investment activities represents sale and purchase of fixed assets and investments.
Our cash flow used in investment activities decreased by 30.9% from Rs.(1364) in fiscal 2006 to Rs.(943) million in fiscal 2007. This was primarily due to amount spent on acquisition of trademarks in the acquisition of Rapidol and capital expenditure incurred on setting up of new facilities at Baddi-Katha and Sikkim.
Our cash flow used in investment activities increased by 1,671% from Rs.(77) million in fiscal 2005 to Rs.(1364) million in fiscal 2006. This was primarily due investments made in our subsidiary company Godrej Netherlands Limited for the acquisition of Keyline Brands Limited.
The cash flow from investments decreased by 64% from Rs.(212) million in fiscal 2004 to Rs.(77) million in fiscal 2005.
246 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Cash Flows from Financing Activities
Our cash flow from or used in our financing activities is determined primarily by the level of our borrowings, the schedule of principal and interest payments on them and the issuance of share capital.
Our cash flow from financing activities decreased by 85.4% from Rs.(342) million in fiscal 2006 to Rs.(50) million in fiscal 2007, primarily as a result of a increase in borrowings..
Our cash flow from financing activities decreased by 61% from Rs (870) million in fiscal 2005 to Rs. (342) million in fiscal 2006 due to additional borrowings for the acquisition of Keyline Brands Limited.
Our cash flow from financing activities increased by 54.5% from Rs.(871) million in FY 2004-05 to Rs.(563) million in FY 2003-04, primarily as a result of a increase in dividend payouts inclusive of dividend tax..
Financial Condition
Assets
Fixed Assets: Our total fixed assets net of depreciation were Rs.1,992 million, 850 million on a consolidated basis as at March 31, 2007, March 31, 2006 respectively and Rs.1014 million as at 31 March 2005. Our fixed assets comprise of factory building, plant and machinery, office equipment, trademarks, computers, furniture- fixture, dyes and tools.
Current Assets, Loans and Advances: The total current assets, loans and advances were Rs.2,775 million, Rs.1,714 million on a consolidated basis as at March 31, 2007, March 31, 2006 respectively and Rs.1031 million as at 31 March 2005. Our current assets, loans and advances comprise our inventory, sundry debtors, cash and bank balances and loans and advances.
Inventory: The inventory consists of raw materials, work in process and finished products which are unsold on the date of the financial statements, which is valued at cost or net realizable value, whichever is lower as per Indian Accounting Standard - 2. Our inventory was Rs.1352 million, Rs.1005 million and Rs.738 million as at March 31, 2007, 2006 and 2005 respectively. Raw materials constituted Rs.3819 million, Rs.3181 million and Rs.2932 million as at March 31, 2007, 2006 and 2005 respectively. Work in progress constituted Rs.2172 million, Rs.1084 million and Rs.607 million as at March 31, 2007, 2006 and 2005 respectively. Finished products constituted Rs.7148 million, Rs.5442 million and Rs.3647 million as at March 31, 2007, 2006 and 2005 respectively. The increase in our inventories during the aforementioned fiscal years was primarily due to increased inventory requirements to support our expansion plans.
Receivables: Total accounts receivable was Rs.483 million, Rs.303 million and Rs.52 million as at March 31, 2007, 2006 and 2005, respectively.
Loans and Advances: Our total loans and advances were Rs.465 million, Rs.143 million and Rs.152 million as at March 31, 2007, 2006 and 2005 respectively.
Cash and Bank balances: Total Cash and Bank balances was Rs.475 million, Rs.263 million and Rs.152 million as at March 31, 2007, 2006 and 2005, respectively.
Liabilities
Current Liabilities and Provisions: Our total current liabilities and provisions were Rs.2520 million, Rs. 1787 million and Rs.1330 million as at March 31, 2007, 2006 and 2005, respectively.
Our current liabilities include sundry creditors and provisions.
Off-Balance Sheet Arrangements (Contingent Liabilities)
As at March 31, 2007, 2006, 2005, and 2004, we had contingent liabilities in the following amounts, as disclosed in our restated financial statements:
247 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Contingent Liabilities
Rupees in Million Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07
A. Claims for Excise Duties, Taxes and Other Matters: 1. Excise duty demands against 3.43 3.18 6.18 6.18 13.19 19.06 which the Company has preferred appeals - Net of Tax 2.26 2.11 4.10 3.92 8.46 12.00
2. Sales Tax Demands against 13.63 3.59 3.12 3.10 1.89 7.33 which the Company has preferred appeals - Net of Tax 9.00 2.38 2.07 1.97 1.22 4.63
3. Income Tax matters Demand 5.90 66.85 - - - - Notice issued by Additional Commissioner Of Income - tax for assessment year 2004-05 for disallowance of certain expenses and tax benefits.
4. Other Matters 0.66 0.66 0.25 0.25 37.91 48.92 - Net of Tax 0.44 0.44 0.17 0.16 24.31 30.94
B. Excise Duty demands and 121.28 121.28 121.28 142.46 125.99 125.99 penalties in repsect of toilet soaps cleared from Malanpur Factory during the period of joint venture with Procter & Gamble, confimed by CESTAT vide its order dated February 2002.The amount of duty and penalties which is to be quantified by the Commissioner of Excise in accordance with the findings of CESTAT is estimated at : The Company had filed an appeal against the order of CESTAT before the Supreme Court of India. By a subsequent CESTAT order passed in September 2004, all the assessments for the period April 1993 to March 1996 have been held to be provisional, thus negating the earlier stand of CESTAT - Net of Tax 100.67 100.87 100.87 116.39 103.39 102.84
C. Guarantees issued by banks, 15.65 21.23 23.65 17.19 10.36 6.74 excluding guarantees issued in repsect of matters reported in (a) above.
D. Guarantees of GBP 3 million 242.64 255.60 232.44 - - -
248 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Particulars Half Year Financial Year Ended Ended 31-Mar-07 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03 30-Sep-07 given by the Company for securing loan availed by Godrej Netherlands B.V., a wholly owned subsidiary.
Transactions with Associate Companies and Related Parties
We enter into transactions with companies which are controlled by members of our Promoter group and other related parties in the ordinary course of our business. For details regarding our related party transactions, please see section titled “Financial Statements - Related Party Transactions” beginning on page [●] of this Draft Letter of Offer.
Quantitative and Qualitative Disclosure about Market Risk
We are exposed to market risk from changes in interest rates. The following discussion is based on our financial statements under Indian GAAP.
Interest Rate Risk
Our financial results are subject to changes in interest rates, which may affect our debt service obligations. Our long-term debts in the books of subsidiaries , bear interest at floating rates linked with LIBOR, as determined from time to time, totalled Rs.609.40 million as at March 31, 2007. Upward fluctuations in interest rates increase the cost of both existing and new debts.
Other Information
Significant economic changes that materially affected or are likely to affect income from continuing operations: Other than as mentioned under section titled “Risk Factors” and ‘Factors affecting results of operations’ in the section entitled “Management’s Discussion and Analysis of Financial Condition & Results of Operations”, to our knowledge, there are no other significant economic changes that materially affect or are likely to affect income from continuing operations.
Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations: Other than as described in this Draft Letter of Offer, particularly in the sections titled “Risk Factors” and “Management Discussion and Analysis of Financial Conditions and Results of Operations” beginning on pages [●] and [●] of this Draft Letter of Offer, to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on our income from continuing operations.
Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known: Other than as described in the section titled “Risk Factors” and “Management Discussion and Analysis of Financial Conditions and Results of Operations” beginning on pages [●] and [●] of this Draft Letter of Offer, to our knowledge there are no changes in future relationship between costs and income that are expected to have a material adverse impact on our operations and finances.
The extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices: Changes in revenues during the last three years are explained in the section entitled “Management’s Discussion and Analysis of Financial Condition & Results of Operations” under the subsections titled “Comparison of fiscal 2007 with fiscal 2006”, “Comparison of fiscal 2006 with fiscal 2005” and “Comparison of fiscal 2005 with fiscal 2004” under the respective paragraphs entitled “Income”.
Unusual or infrequent events or transactions: There have been no events, to our knowledge, other than as described in this section & the section titled “Business” beginning on page [●] of this Draft Letter of Offer,
249 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only which may be called “unusual” or “infrequent”.
Total turnover of each major industry segment in which the issuer company operated: The Company operates in only one industry segment: Fast Moving Consumer Goods (FMCG).
The extent to which business is seasonal: Our liquid detergent category is seasonal in nature, with a major portion of the sales arising in the third quarter of the financial year. The Company registers the maximum sales for its liquid detergent during the period from November to January each year. The sale for soaps also experiences seasonal fluctuations with the Company registering more soap sales in the summer months as compared to the winter months.
Competitive conditions: Competitive conditions are described under the sections titled “Risk Factors”, “Industry Overview”, “Our Business” beginning on pages [●], [●] and [●] of this Draft Letter of Offer.
Significant Developments after September30, 2007 that may affect our future Results of Operations
In compliance with AS 4, to our knowledge no circumstances other than as disclosed in this Draft Letter of Offer have arisen since the date of the last financial statements contained in the Draft Letter of Offer which materially and adversely affect or are likely to affect, the trading and profitability of the Company, or the value of our assets or their ability to pay their material liabilities within the next 12 months.
250 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
MATERIAL DEVELOPMENTS
Other than those disclosed in the Draft Letter of Offer, there are no material developments since the date of the last audited financial statements.
251 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
DESCRIPTION OF CERTAIN INDEBTEDNESS
Details of Secured Borrowings
The Company’s secured borrowings on a stand alone basis as on September 30, 2007 are as follows:
A. Secured Loans
Total Amount sanctioned Outstanding Date(s) of Rate of Repayment Lender Security Amount (in Rs. Availment Interest Terms (in million) Million) Citibank N.A. 400 266.66 August 30, 8.50% per Rs.33.33 The loan is 2006 annum million have to secured by a be paid every 3 first charge months starting over the from December trademarks 1, 2006 and the purchased last installment through has to be paid proceeds of the by September loan in such 1, 2009. manner as acceptable to the Bank. Central Bank 190 97.98 Not The banks Based on the The loan is of India, State applicable will charge terms agreed secured by Bank of India, interest on upon from time first charge on HDFC Bank the to time GCPL’s Limited, outstanding stocks of raw Citibank and amount in materials, the Hong accordance semi-finished Kong & with such and finished Shanghai rates as goods, stores Banking they may and spares not Corporation determine relating to Limited (CBI from time plant and Consortium) to time machinery, bills receivable, book debts and all other movables.
B. Unsecured Loans
Total Amount sanctioned Outstanding Date(s) of Rate of Repayment Lender Security Amount (in Rs. Availment Interest Terms (in million) Million) Citibank N.A. 600 400 August 30, 8.60% per Repayment of Unsecured but 2006, annum principal subject to a September amount in negative 11, 2006 every quarter pledge and amounting to
252 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
October 3, Rs. 50 million 2006 and the last installment has to be paid by September 1, 2009.
Citibank N.A. 150 120 March 20, 10.25% per Repayment of Unsecured but 2007 and annum principal subject to a April 04, amount in negative 2007 every quarter pledge amounting to Rs. 15 million and the last installment has to be paid by September 1, 2009.
ICICI Bank 250 250 August 14, 8.25% per Bullet - 2007 annum repayment of principal on March 10, 2008 HSBC Bank 50 50 August 3, 8.00% per Repayment of - 2007 annum outstanding principal on October 3, 2007
Corporate Actions
Some of the corporate actions for which the Company requires the prior written consent of lenders include the following:
1. Entering into a merger, amalgamation, consolidation or reorganization, if such merger, amalgamation, consolidation or reorganization would result in a material adverse effect, potential event of default or significant change in management control.
2. Declaring or paying any dividend or authorizing or making any distribution to its shareholders/ members or permit withdrawal of amounts brought in, unless the Company has paid all dues in respect of the facility up to the date on which the dividend is proposed to be declared or paid; or made provisions satisfactory to the Bank; or if an event of default in repayment of principal or interest has occurred.
3. Creating or incurring any further indebtedness for borrowed money or for deferred purchases except any secured indebtedness which arises in the ordinary course of business in excess of Rs. 2,000 million.
4. Creating or permitting to be created, over any of its fixed assets, any mortgage, charge, lien or other encumbrance or otherwise alienate such fixed assets.
253 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
OUTSTANDING LITIGATION AND DEFAULTS
Except as described below, there are no outstanding litigation, suits or criminal or civil prosecutions, proceedings or tax liabilities against the Company, the Directors, the Promoter or group companies and there are no defaults, non payment of statutory dues, over dues to banks/ financial institutions, defaults against banks/ financial institutions, defaults in dues payable to holders of any debentures, bonds or fixed deposits, and arrears on preference shares issued by the Company (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of part 1 of Schedule XIII of the Companies Act, 1956). The following are the outstanding litigation or pending litigations or suits or proceedings against GCPL and criminal complaints or cases, defaults, non payment or overdues of statutory dues, proceedings initiated for any economic or civil offences and disciplinary action taken by SEBI or stock exchanges against GCPL, its subsidiaries and other group companies and outstanding or pending litigations or suits or proceedings against the subsidiaries and other group companies.
A. Litigation against Godrej Consumer Products Limited
1. Criminal Cases (including cases filed against employees of GCPL)
(i) The Asst. Controller of Weights and Measures, Godhra filed a criminal complaint (C.C No. 681 of 1985) against the Company for alleged discrepancies in Godrej Shaving round packages in the Chief Judicial Magistrate’s Court at Godhra. It was alleged that the packages contravened the provisions of the Standard of Weights and Measures Act and the Standard of Weights and Measures (Packaged Commodities) Rules 1971 by not declaring important information regarding the manufacturer/packer.
The Company filed an application was filed in the Gujarat High Court to quash the criminal case on the grounds of delay as the complaint filed was barred by limitation. The High Court while remandin the case to the lower authorities directed the magistrate to first decide the question of limitation. The case is pending at the Chief Judicial Magistrate’s Court at Godhra.
(ii) A distributor of GCPL filed a criminal complaint against Mr. Adi Godrej and Mr. Y. Chadha (field executive), under sections 406 and 420 of the IPC before the chief judicial magistrate at Etawah, for non-payment of dues. GCPL filed a petition under the Allahabad High Court under section 482 Cr. P. C. asking for a stay of the proceedings before the chief judicial magistrate. The High Court stayed the proceedings by an order dated April 4, 2003 and the matter is pending for final disposal before the Allahabad High Court.
2. Labour Cases
(i) Four labour cases have been filed in the labour court of Gwalior by the workers of the manufacturing unit of the Company, at Malanpur, for reinstatement with back wages. The workers alleged that termination from service is excessive punishment and that they were not given an opportunity to be heard at the stage of the domestic enquiry. The workers had earlier filed these cases under the Madhya Pradesh Industrial Relations Act in the Madhya Pradesh High Court which decided that the Madhya Pradesh Industrial Relations Act was not applicable to GCPL. These cases have now been filed under the Madhya Pradesh Industrial Disputes Act. The total amount due under all these cases is Rs. 1.4 million. The suits are pending.
(ii) Dheeraj Saxena, a worker of GCPL has filed a complaint against GCPL with the labour office, New Delhi claiming that gratuity amount of Rs. 41,798 is payable to him by the Company. Dheeraj Saxena has also filed a suit with the additional district and sessions judge, Karkardooma for an amount of Rs. 363,474 that was not released to him due to non- submission of ‘no objection certificates’ from the stockists. The suit is pending.
3. Excise Cases
(i) A show cause notice was issued to the Vikhroli factory of Godrej Soaps Limited on July 23,
254 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
1997 for addition of advertisement and sales pro promotion expenses to the assessable value and demanding duty short paid amounting to Rs. 217,854,233. On March 27, 1998 an identical notice was issued by the Commissioner of Central Excise, Indore to the Malanpur factory (M.P.) with identical charges for the identical amount, but addressed only to Godrej Soaps Limited.
The show cause notices were combined for adjudication before the Bombay Commissioner, who ordered confiscation of the plant and machinery of GSL but allowed their redemption on the payment of fines. He also imposed penalty equal to the amount of duty confirmed on GSL and directed recovery of interest.
The Assessee filed an appeal before the CEGAT, Mumbai. The Tribunal allowed the appeal with respect to the show cause notice issued by the Mumbai Commissioner since the show cause notice was based on provisional assessments. The proceedings were remanded to the Commissioner, Indore for quantification of clearances made from the Malanpur unit during the relevant period and computation of the short levy of duty and penalty.
By a subsequent CESTAT order passed in September 2004, all the assessments for the period from April 1993 to March 1996 have been held to be provisional.
An appeal was filed by GCPL and other parties involved with the Supreme Court on April 24, 2002. The Supreme Court passed an order on March 28, 2005 directing GCPL to quantify the apportionment of advertisement and publicity expenses based on clearances. On such quantification the liability of GCPL works out to Rs. 121.28 million. The matter is yet to come up for final hearing in the Supreme Court.
(ii) Two show cause notices were issued to GCPL for the recovery of Cenvat Credit amounting to Rs. 4,724,744 and Rs. 3,077,740 respectively. The Commissioner of Central Excise and Customs, Indore passed an order dated June 25, 2004; whereunder the demand for Rs. 4, 7 24,744 under one of the notices was dropped. The Commissioner ordered recovery of Cenvat Credit of Rs. 3,077,740 from GCPL and also imposed a penalty of Rs. 3,077,740 under Rule 57 AH read with section 11 AC of Central Excise Act, 1944. GCPL filed an appeal in CESTAT, Mumbai. CESTAT passed the order for pre-deposit of Rs. 0.8 million under section 35 of the Central Excise Act. Matter stayed.
(iii) Three Show Cause notices dated January 4, 2007; January 5, 2007 and June 4, 2007 were issued against GCPL claiming that the Cenvat Credit of service tax paid on outward transportation is not admissible to GCPL. The Deputy Commissioner Customs & Central Excise, Gwalior passed an order dated August 30, 2007 ordering recovery of Cenvat Credit of service tax amounting to Rs. 213,422 taken on outward transportation. The order also allowed for recovery of interest on the applicable rate and an equivalent penalty. GCPL has filed an appeal against the order on November 19, 2007. The appeal is pending.
(iv) Show cause notice was issued to GCPL for recovery of Cenvat Credit for availing Cenvat Credit in contravention of the provisions of Rule 9 (1) of the Cenvat Credit Rules. The Deputy Commissioner Customs & Central Excise, Division, Gwalior passed an order on June 19, 2007 ordering the recovery of Cenvat Credit of Rs. 35,543 along with penalty and interest. GCPL has filed an appeal against the order Commissioner Central Excise (Appeals), Gwalior. The appeal is pending.
(v) A show cause notice dated November 13, 2007 was issued to GCPL by the commissioner of customs and central excise, Indore on the ground that excise duty paid on toilet soaps cleared to institutional buyers should be paid on ‘MRP’ basis and not on the basis of ‘transaction value’. GCPL is in the process of filing a reply to the show cause notice.
4. Sales Tax
(i) During the sales tax assessment for the year 2004-2005 the deputy commissioner asked for reconciliation of opening and closing stocks. A quantitative reconciliation was submitted to
255 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
the deputy commissioner but he insisted on value reconciliation, which is not mandatory under the West Bengal Sales Tax Act. The deputy commissioner increased the sales turnover of the company by Rs. 50 million and levied penalty and interest on the amount. The amount involved in the case is Rs. 10.64 million. GCPL has filed an appeal against the assessment order. The notice for hearing of the appeal has not been received.
(ii) The Madhya Pradesh sales tax authorities raised a differential demand on soaps, shaving round and Anoop hair oil that was sold by Godrej Soaps Limited on behalf of Godrej HiCare Limited and raised a demand of Rs. 4,062,000, for the accounting year 1996-97. Godrej Soaps Limited filed an appeal against this demand with appellate deputy commissioner, commercial taxes, Indore after depositing 10% of the total demand, i.e. Rs. 407,000. In the same order demand for Rs. 510,825 was raised towards differential demand on shaving rounds. Godrej Soaps Limited filed an appeal against this fresh order of demand with appellate deputy commissioner, commercial taxes, Indore by depositing 10% of the total demand, i.e. Rs. 11,000. Both appeals are pending.
(iii) The Madhya Pradesh sales tax authorities raised a differential demand on soaps and shaving round for the accounting year 1998-99 and issued a demand order on June 14, 2002 for Rs. 2,364,099. Godrej Soaps Limited filed an appeal with the appellate additional deputy commissioner, Indore after depositing 10% of the total demand, i.e. Rs. 240,000. The additional deputy commissioner passed an order on October 17, 2003 granting refund of Rs. 160,000. The matter is still pending for final disposal.
(iv) The Madhya Pradesh sales tax authorities issued a demand order on April 23, 2003 for Rs. 1,782,449 against GCPL, for the accounting year 1999-2000. GCPL filed an appeal with the additional commissioner, Indore after depositing 10% of the total demand, i.e. Rs. 180,000 on July 17, 2003, who passed an order on March 31, 2004 partially allowing the appeal. GCPL filed an appeal against this order with the additional commissioner, commercial tax, Indore. The appeal is pending.
(v) Sales tax department, Indore issued an order against Godrej Soaps Limited on January 17, 2005 for FY 01-02, raising a demand of Rs. 3,190,165 on account of sales tax on closing stock as on March 31, 2002. As on March 31, 2002 there was no closing stock in Godrej Soaps limited since they had not made any sale since April 2001. GCPL filed an appeal against the order in the Bombay High Court and the case has been remanded back to the relevant sales tax authority.
(vi) The department of commercial taxes, Ernakulam, did not allow the exemption claimed by GCPL on account of interstate branch transfer of goods and treated that amount as local sales and assessed it for tax. The department issued a demand for Rs. 564,040 as per assessment order dated July 18, 2005. The department also imposed a penalty of Rs 100,000 for evasion of tax. GCPL filed an appeal with the deputy commissioner (appeals) on November 4, 2005 against this assessment order. The appeal is pending.
(vii) The department of commercial taxes, Ernakulam levied a penalty of Rs. 48,093 in respect of consignement dispatched to Trichur on July 24, 2002. GCPL approached the intelligence officer who levied a penalty of Rs. 8,654 and allowed the balance amount. GCPL filed an appeal against the order of the intelligence officer before the deputy commissioner (appeals), Ernakulam. The deputy commissioner dismissed this appeal by his order dated April 19, 2006. GCPL has filed a second appeal against this dismissal before the sales tax appellate tribunal, Ernakulam on July 22, 2006 and the same is still pending.
(viii) The joint commissioner, commercial taxes, Hyderabad rejected the claim for deduction in taxable turnover made by GCPL and issued a demand order for Rs.0.5 million to GCPL. GCPL filed an appeal against this order with the appellate deputy commissioner, commercial taxes and filed a stay petition with the joint commissioner, commercial taxes. The joint commissioner rejected the stay petition. GCPL then filed a writ petition (W.P. No 17716 of 2007) in the Andhra Pradesh High Court at Hyderabad to set aside the order of the joint commissioner and restrain the sales tax authorities from collecting the balance disputed tax
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until the disposal of the appeal before the appellate deputy commissioner. The High Court allowed the writ petition subject to 50% of the disputed tax being deposited with the sales tax authorities. The appeal before the appellate deputy commissioner is pending.
(ix) A truck containing the goods of GCPL was detained at Siliguri, West Bengal for error in the documents relating to the truck. A show cause notice and seizure receipt was delivered to GCPL on August 18, 2007 by the sales tax officer, Siliguri range. An invoice of Rs. 3,448,134 was raised and a penalty of 50% of the invoice value was levied. GCPL filed a revision case before the West Bengal taxation tribunal (RN 285 of 2007). After final hearing the taxation tribunal released the seized goods after receiving an undertaking from GCPL but has not pronounced the final order yet.
(x) A truck containing the goods of GCPL was detained at the Zirakpur border by the taxation inspector due to documentation error i.e. one invoice in favour of GCPL being handwritten and the other being computerized. The excise and taxation officer, Mohali summoned the consignor company to appear before him. After the hearing he declared that there was an attempt to evade the tax due to the state of Punjab and imposed a penalty of Rs. 54,498. GCPL has filed an appeal before the assistant commissioner (appeals), Mohali.
5. Intellectual Property Cases
(i) Peshawar Soaps and Chemicals limited filed a suit against GCPL. They obtained an exparte injunction in June 2000 against GCPL from using the mark “Nikhar” on their soap. The stay was vacated by the Delhi High Court in December 2000. The matter is pending in appeal with the Delhi High Court. Neither the plaintiffs nor their lawyers have been appearing for this case and in the circumstances GCPL has asked for appropriate direction from the Registrar of the Delhi High Court to place the matter for dismissal apart from contesting the matter on merit. The next hearing at the Delhi High Court is on January 28, 2008.
(ii) Dabur India Limited filed a trademark infringement suit against GCPL before the Delhi High Court in 2001, alleging that GCPL has infringed / passed off ‘Fair Glow’, and sought interim stay against GCPL from using the mark “Fair Glow” on their cream. GCPL contested the matter on the ground that they are the prior users of the mark apart from the fact that Dabur has neither registered the mark in India nor used the same in India and accordingly no interim relief was granted to Dabur and the matter is pending for final disposal before the Delhi High Court. The matter is listed before the Delhi High Court for compromise/ cross-examination of the plaintiff witnesses on January 23, 2008.
(iii) Ashok Kumar Jain trading in the name and style of “Cosmo International” filed a infringement suit against GCPL alleging that GCPL is infringing / passing off trade mark “ Fair Glow” and sought interim stay against GCPL on the ground that he has been using the mark prior to GCPL. GCPL contested the matter and opposed the interim stay application. In the meanwhile GCPL filed a separate counter suit against him for infringement of its trade mark “Fair Glow” on the ground of prior use. Both the matters are pending for final disposal before the Delhi High Court and posted for plaintiffs evidence on April 1, 2008.
6. Consumer Cases
(i) A consumer complaint (No. 4995 of 1994) was filed by E.J. Johnson against Godrej Soaps Limited in the year 1994 in the consumer dispute redressal forum, Faridabad. The complaint was regarding hair fall due to usage of a brand of hair oil called Anoop hair oil that was sold by Godrej Soaps Limited and manufactured by Arshik Herbal Remedies. The package of the hair oil did not mention date of manufacture, batch number or the proper method of application. The complainant sought compensation to the tune of Rs. 0.3 million.
(ii) Vipin Dwivedi, an ex-employee of GCPL who resigned from the services of the Company following criminal breach of trust and a member of GCPL’s exempted provident fund trust filed a complaint (Complaint No. 70 of 2007) with the consumer disputes redressal forum, Mumbai suburban district, Mumbai against GCPL, and the trustees of the PF Trust . He filed
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the complaint for alleged deficiency in service and unfair trade practices adopted by the company in not releasing the PF amount to him. The PF amount was held back as per the directions of the PF Commissioner as Vipin was employed in some other organisation. Subsequently, the PF Commissioner directed the release of the PF amount including interest, amounting to a total of Rs. 812, 119 which GCPL deposited in the district consumer disputes redressal forum –Mumbai on December 14, 2007. The matter is now pending for final disposal.
(iii) Mr. Vipin Dwivedi also filed a consumer complaint inter alia against the Godrej Industries Employees Credit Society Ltd, Mr. Adi Godrej, Mr. Nadir Godrej and GCPL alleging that Society has not cleared the money lying in his Society Account. GCPL, Mr. Adi Godrej and Mr. Nadir Godrej have filed their reply to the same before the district consumer disputes redressal forum – Mumbai and the matter is pending for arguments and final disposal
(iv) A consumer complaint (No. 13 of 2002) was filed against GCPL in the consumer dispute redressal forum, Agartala. The reason for the complaint was adverse reaction after using the hair dye manufactured by GCPL. The amount involved in the suit is Rs. 25,000. The case is pending before the consumer dispute redressal forum, Agartala.
(v) M/s Jahnvi traders filed a consumer complaint against GCPL on March 13, 2003 for an amount of Rs. 96,500. GCPL appealed to the state commission (consumer dispute and redressal forum), Lucknow. The case is pending with the state commission, Lucknow.
7. Miscellaneous Cases
(i) The food inspector filed a suit against the canteen contractor of the Malanpur unit of the Company for alleged violations of the rules of the Prevention of Food Adulteration Act in 1994 before the Judicial Magistrate First Class, Bhind, Madhya Pradesh. The food inspector filed an application for impleading the vice president, Mr. Sudhir Awasthi as an accused in the proceedings, on the ground that he was in charge if the company and canteen was being run under his guidance. The Company has filed detailed objections against the proposed impleading. The matter is pending for consideration thereof and for the appearance of the canteen contractor. The amount involved in the case is Rs. 125,000.
(ii) Employee State Insurance Scheme, Indore issued a notice of demand against non-deduction from the traveling salesman. GCPL has filed a reply stating that the adequate payment has been deposited and records can be checked and verified by the appropriate authority. The said inspection is awaited. The amount involved in this case is Rs. 1.5 million.
(iii) Mr. Dwarkaprasd of Bhardwaj General, Itarsi filed a civil suit (No 3013 of 2005) against GCPl for the recovery of Rs. 109,334 in the court of the first additional district magistrate, Hoshangabad. Mr. Dwarkaprasd claimed that he had returned goods sold to him by GCPL and wanted a refund on the same. The court of the first additional district magistrate dismissed the suit since Mr. Dwarkaprasd could not prove that he had returned the goods. Mr. Dwarkaprasd has filed an appeal in the High Court of Jabalpur. The appeal is pending.
(iv) GCPL supplied a container load of Godrej Color Soft and Renew Hair Color to Sawhney & Co Limited.of London. Sawhney and Company Limited. returned the said goods 6 months after the consignment was duly delivered to them allegedly on the ground that the goods were not confirming to the standards and for breach of contract. Sawhney & Co Ltd filed a case against GCPL before the U.K courts . The case is pending before the UK courts .
B. Litigation by Godrej Consumer Products Limited
Excise Cases
(i) The Guwahati factory of GCPL had filed refund claims with the excise department; Guwahati because under Notification No. 32 of 1999 GCPL is entitled to get a refund on the excise duty paid on goods manufactured in the North Eastern states. The department deducted a certain
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amount from the amount refunded in January 2005, on the grounds that they are not entitled to pay education cess by utilizing their Cenvat credit account and can only pay it from their personal ledger account. The department also deducted amount towards payment of education cess for the period from February 2005 to October 2006 on the same grounds. The department also deducted education cess for the period October 2004 to June 2005 along with interest. All the above matters were filed for appeal and the Commissioner (Appeals) passed an order allowing payment of education cess from Cenvat credit. However, the excise department did not refund the illegally deducted money. The department appealed against this order before the CESTAT and the appeal was dismissed. GCPL filed a writ petition (W.P. No 5733/ 2006) in the Guwahati High Court to issue a writ of certiorari or any other appropriate order or direction quashing the refund orders of the Guwahati state excise authority to the extent of deduction of education cess and interest thereon and repay the sum illegally withheld from the petitioners with interest. On November 27, 2006 the Guwahati High Court passed an order staying the deduction of education cess from refund applications filed by GCPL from time to time. GCPL has also filed applications claiming refund of secondary and higher secondary education cess before the Guwahati High Court. The total amount involved in the matter till date is Rs. 11,103,222. The matter is pending before the Guwahati High Court for final disposal.
(ii) Swadeshi Detergent Limited used to manufacture detergents for Godrej Soaps Limited. They claimed certain excise exemptions in the price list for the period from July 1, 1986 to March 31, 1995 and for April 1, 1995 to June 30, 1996. In the provisional assessment the exemptions were disallowed and a demand of Rs. 18,6 12,659 was raised on Swadeshi Detergents Limited. In 1997 Swadeshi Detergents Limited filed an appeal against this provisional assessment and demand order with CESTAT, New Delhi. Godrej Soaps Limited was also made a party to the proceedings. On May 23, 2003 the CESTAT passed an order asking the excise department to finalize the assessment and then raise the demand. The matter is pending with the deputy commissioner, central excise, Ghaziabad, for final assessment.
Income Tax Cases
GCPL had filed an appeal with the Commissioner of Income Tax (Appeals) against the order of the additional commissioner of income tax dated April 24, 2007. The CIT (Appeals) has accepted the basis of allocation of expenses adopted by GCPL and has directed the Assessing Officer to allow the deduction under sections 80 IB and 80 IC of the Income Tax act as claimed by GCPL in the return of income. Only the issue related to depreciation of the Snuggy brand has been disallowed. GCPL has filed an appeal against the order on that particular issue.
Civil Cases
GCPL (erstwhile Godrej Soaps Limited) entered into a manufacturing agreement with Marks Aleli (India) Pvt. Ltd. in September 1996 for the manufacture and supply of soaps, from September 1996 to February 1999. GCPL made various supplies to Marks Aleli and drew invoices aggregating to a total value of Rs. 8,286,392. Godrej Soaps Limited sent a letter of demand to Marks Aleli for the repayment of the outstanding amount. Marks Aleli failed to make the payment of the outstanding amount and GCPL (following demerger of Godrej Soaps Limited) filed a suit (No. 966 of 2001) in the Bombay High Court for recovery of the amount due along with interest, aggregating to the total sum of Rs.10, 084,426. The case is pending at the Bombay High Court. The case is pending before the Bombay High Court. The defendants are yet to file their written statement after which matter would be transferred to the list of commercial causes. There is a counter suit by Marks Aleli & Co Ltd against GCPL filed before the Bombay High Court seeking to recover almost the same amount and the same is pending for final disposal. GCPL yet to file written statement in the matter
Negotiable Instrument Cases
(i) GCPL filed a suit (No. 1064 of 2007) under section 138 of the Negotiable Instrument Act 1981 for dishonour of cheques, in the Court of the Chief Judicial Magistrate, Ranchi against M/s Pragati Traders and another. Pragati Traders had purchased soaps and cosmetics from the Company and had issued cheques towards the payment. The amount due from Pragati Traders
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is Rs. 9.3 million. The examination of witnesses is over. The next date of hearing is January 5, 2008 for issuing summons.
(ii) GCPL filed a suit (No. 1065 of 2007) under section 138 of the Negotiable Instrument Act 1981 for dishonour of cheques, in the Court of the Chief Judicial Magistrate, Ranchi against M/s Pragati Traders and another. Pragati Traders had purchased soaps and cosmetics from the Company and had issued cheques towards the payment. The amount due from Pragati Traders is Rs. 1.7 million. The examination of witnesses is over. The next date of hearing is January 5, 2008 for issuing summons.
(iii) GCPL filed a suit (No. 1721 of 2007) under Section 420 of the India Penal Code and Section 138 read with section 141 of the Negotiable Instrument Act 1981 for dishonour of cheques, in the Court of the Chief Judicial Magistrate, Ranchi against M/s Meghraj & Sons & Another. The amount involved in the case is Rs. 0.4 million. The next hearing is on January 19, 2008 for examination of witnesses.
(iv) GCPL filed a suit (No. 447 of 2007) under section 138 of the Negotiable Instrument Act 1981 for dishonour of cheques, in the Court of the Chief Judicial Magistrate, Kolkata against M.M. Enterprises. The amount involved in the case is Rs. 0.3 million. The affidavit for evidence has been filed and the next hearing is on February 2, 2008.
(v) GCPL filed a suit under section 138 of the Negotiable Instrument Act 1981and section 420 of IPC for dishonour of cheques, in the Court of the Chief Judicial Magistrate, Ghaziabad on April 19, 2002 against M/s Sanjay Kumar Bansal and Sons and Mr. Sanjay Kumar Bansal. The amount involved in the case is Rs. 0.9 million.
(vi) GCPL filed a complaint petition (C.C. No 612 of 2005) in the court of sub-divisional magistrate, Cuttack against Sunshine agency and its proprietor Raghunath Senapati for dishonour of cheques. The sub-divisional magistrate took cognizance of the offence and issued summons to Mr. Senapati. The sub-divisional magistrate issued a warrant against Mr. Senapati for not appearing before the court. Mr. Senapati filed a petition under section 482 of the Cr. P. C. before the Orissa High Court for quashing the warrant and other proceedings against him before the sub-divisional magistrate’s court. The High Court has stayed the proceedings and the matter is pending before the Orissa High Court.
MRTP Cases
(i) M/s. Godrej Soaps Limited filed a complaint (No. 265/96) with the Monopolies and Restrictive Trade Practices commission on October 10, 1996 against Akay Cosmetics for adopting unfair methods and indulging in restrictive trade practices by advertising their hair dye as hair colour and comparing the powder hair dye of the informant, unfavorably with their own.
The commission directed Akay cosmetics to remove the hoardings of the impugned advertisement and to desist from continuing with that advertisement campaign. The respondents complied with the direction of the commission. There is no contingent or financial liability. The case is pending for final disposal with the commission.
Intellectual Property Cases
(i) Godrej Soaps Limited filed a case against Sunchem (India) Limited in 1987 in the Bombay High Court for restraining them from infringing and passing off of the Godrej hair dye trademark by the defendants by selling their product under the brand name “Gogo” hair dye. The Plaintiffs have been restrained by depicting the mark Gogo in the particular manner ie like Godrej and the matter is pending for final disposal before the Bombay High Court.
Miscellaneous Cases
(i) The Guwahati unit of GCPL filed a writ petition against the State of Assam represented by the
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Commissioner and Secretary (Finance) to the Govt. of Assam in the Guwahati High Court in November 2006, for the refund of entry tax amounting to Rs. 8.7 million, paid under a levy that had been pronounced unconstitutional by a previous decision of a single judge bench of the Guwahati High Court. The Division bench of the Guwahati High Court pronounced the levy to be unconstitutional. The decision regarding refund of tax paid by GCPL under the impugned levy is still pending with the Guwahati High Court.
(ii) GCPL filed a case against M/s Bradma of India Limited, before the High Court of Bombay in 2004. GCPL had purchased 12 LINX continuous inkjet printing machines from the defendant. GCPL also entered into 2 annual maintenance contracts with M/s Bradma for Vikhroli and Malanpur factories under which defendants were bound to provide necessary maintenance services. The printing machines suffered from inherent technical defects leading to mis-prints, non-readable prints and non-printing. Despite installation of new software, the performance standards of the machines did not improve and GCPL called upon M/s Bradma to make payments of the sum of Rs. 0.6 million, as per the undertaking given by M/s Bradma. M/s Bradma failed to do this. GCPL filed a suit for recovery of money due along with an interest at the rate of 18% on the same. The amount involved in the case is Rs. 0.7 million. The case is pending before the Bombay High Court for the filing of written statement by the defendants.
C. Litigation against Directors
Adi Godrej
1. Grentex Wools Pvt. Ltd filed a criminal case (Case No 41/SW/2006) in December 2004 with the 42nd metropolitan magistrate court Vikhroli, Mumbai on grounds of criminal breach of trust, misappropriation and falsification of accounts against Godrej Properties Limited and Adi Godrej as its director, while an arbitration proceedings was pending involving the same matter. The metropolitan magistrate, Vikhroli confirmed the charge and was on the stage of issuing process when GPL filed an appeal with the sessions court, Mumbai for quashing the case. The sessions court rejected the appeal and directed the metropolitan magistrate to issue process. GPL along with its directors and other employees filed a criminal writ petition with the Mumbai High Court challenging the order passed by the sessions judge. In the said criminal petition, Grentex Wools Pvt. Ltd. has submitted to the High Court that in view of the pending arbitration proceeding, Grentex will not proceed with the criminal case pending before the metropolitan magistrate court at Vikhroli. The amount involved in the case is Rs. 10 million.
2. Mr. Vipin Dwivedi an ex-employee of GCPL who resigned from the services of the Company following criminal breach of trust and a member of GCPL’s exempted provident fund filed a consumer complaint inter alia against the Godrej Industries Employees Credit Society Ltd, Mr. Adi Godrej, Mr. Nadir Godrej and GCPL alleging that Society has not cleared the money lying in his Society Account. GCPL, Mr. Adi Godrej has filed their reply to the same before the district consumer disputes redressal forum – Mumbai and the matter is pending for arguments and final disposal.
3. A criminal complaint was filed againt Godrej HiCare Ltd and its directors Adi Godrej and A.Mahendran by G.D. Gupta. The Mumbai High Court has stayed the proceedings against Adi Godrej and A. Mahendran and the case will proceed against Godrej Hicare Ltd before the Borivli court.
Jamshyd Godrej
1. Two special leave petitions (No. 9684-9687 of 2007) and (No. 21536 of 2007) have been filed by Chatterjee Petrochem (India) Private Limited and Chaterjee Petrochem (Mauritius) Company and Others, against Haldia Petrochemicals Ltd., which are pending for adjudication before the Hon’ble Supreme Court. As a director of Haldia Petrochemicals Ltd. Mr. Jamshyd Godrej is a respondent in these SLPs.
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Nadir Godrej
1. A criminal complaint under Section 212 (9) of the Companies Act, 1956 was filed before the Addl. Chief Judicial Magistrate at Esplanad, Mumbai against Mr Nadir Godrej by the Asst. Registrar of Companies, Maharashtra for the alleged violation of Section 212 of Companies Act. The same was challenged by us under Section 482 of the Criminal Procedure Code before the Hon’ble Bombay High Court and the said petition is yet to come up for hearing after being listed for hearing once in month of Sept 2007.
2. Mr. Vipin Dwivedi an ex-employee of GCPL who resigned from the services of the Company following criminal breach of trust and a member of GCPL’s exempted provident fund filed a consumer complaint inter alia against the Godrej Industries Employees Credit Society Ltd, Mr. Nadir Godrej, Mr. Adi Godrej, and GCPL alleging that Society has not cleared the money lying in his Society Account. GCPL and Mr. Nadir Godrej has filed their reply to the same before the district consumer disputes redressal forum – Mumbai and the matter is pending for arguments and final disposal
Bharat Doshi
1. A criminal complaint (No 4354 of 2000) has been filed against Mr. Bharat Doshi and other Directors of Ramani Hotels Limited by the registrar of companies for contravening the provisions of section 211 of the Companies Act, by not publishing its annual accounts for the year 1997-98 as per Schedule VI to the Companies Act. A petition for quashing the complaint was filed in the Mumbai High Court and the High Court granted a stay on the proceedings on December 5, 2005. The petition is pending for final hearing. Mr. Doshi has ceased to be the director of Ramani Hotels Limited from September 29, 2000.
2. A criminal complaint (No 600 of 2003) was filed by the security guard board against Mahindra realty and Infrastructure Developers Limited (MRIDL) on the ground that it had engaged private security guards without registering itself with the security guard board before the magistrate court, Ballard Pier, Mumbai. Mr. Bharat Doshi though never a director or officer of MRIDL has been wrongfully included in the complaint. A petition under section 482 of the Cr. P. C. was filed before the Bombay High Court for quashing the complaint. The High Court has stayed the proceedings before the Magistrate’s court. The application is pending in the High Court for final hearing.
3. A criminal complaint (No 4008 of 2006) was filed by the labour athourity under the Contract Labour Act against Mahindra and Mahindra Limited, Mr. Bharat Doshi and others in charge of a plant at Rudrapur for employing contract labour in the work which is barred by the authorities under the notification, before the chief judicial magistrate, Rudrapur. A petition for quashing the complaint has been filed before the Uttranchal High Court. The High Court has granted a stay to the proceedings before the magistrate and the petition is pending for final hearing.
D. Litigation against Promoters and Promoter Groups
Godrej and Boyce Manufacturing Company Limited
Litigation against the company
1. There are 145 consumer cases filed by various parties against Godrej and Boyce Manufacturing Company before various consumer fora. The total amount that is the subject matter of these cases aggregates approximately to Rs. 3.1 million.
2. There are 129 labour related cases pending against Godrej and Boyce Manufacturing Company Limited filed by the labour employed by the company, before various courts and tribunals. Further, there 213 claims filed by temporary workmen employed by the company filed before the Industrial Court, Mumbai wherein the workmen have claimed for permanency of employment in the company.
3. There are 33 excise cases pending against Godrej and Boyce Manufacturing Company Limited before various fora. The total amount that is the subject matter of these cases aggregates approximately to Rs. 354.8 million.
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4. There are 134 sales tax cases pending against Godrej and Boyce Manufacturing Company Limited before various sales tax authorities. The total amount that is demanded in these cases aggregates approximately to Rs. 282.2 million. . 5. There are 21 civil cases filed by various parties against Godrej and Boyce Manufacturing Company before various fora. The total amount that is the subject matter of these cases aggregates approximately to Rs. 24.1 million.
6. There are 4 criminal cases filed by various parties against Godrej and Boyce Manufacturing Company before various fora. The total amount that is the subject matter of these cases aggregates approximately to Rs. 0.2 million.
7. There are 7 miscellaneous cases filed by various parties against Godrej and Boyce Manufacturing Company before various fora.
Litigation by the company
1. There are 149 Negotiable Instruments Act cases filed by Godrej and Boyce Manufacturing Company Limited against various parties before various fora .The total amount that is the subject matter of these cases aggregates approximately to Rs 108.7 million.
2. There are 28 civil cases filed by Godrej and Boyce Manufacturing Company Limited against various parties before various fora .The total amount that is the subject matter of these cases aggregates approximately to Rs 37.7 million.
3. There are 8 Consumer cases filed by Godrej and Boyce Manufacturing Company Limited against various parties before various fora .The total amount that is the subject matter of these cases aggregates approximately to Rs 0.3 million.
4. There are 19 Criminal cases filed by Godrej and Boyce Manufacturing Company Limited against various parties before various fora .The total amount that is the subject matter of these cases aggregates approximately to Rs 20.27 million.
5. There are 2 Property cases filed by Godrej and Boyce Manufacturing Company Limited against various parties before various fora .The total amount that is the subject matter of these cases aggregates approximately to Rs 0.1 million.
6. There are 22 miscellaneous cases filed by Godrej and Boyce Manufacturing Company Limited against various parties before various fora .The total amount that is the subject matter of these cases aggregates approximately to Rs 11.21 million
Godrej Industries Limited
1. There are 35 sales tax cases pending against GIL before various authorities. The total amount that is the subject matter of these cases aggregates approximately to Rs. 46,650,000.
2. There are 14 income tax cases pending against GIL before various authorities. The total amount that is the subject matter of these cases aggregates approximately to Rs. 164,508,345.
3. There are 77 excise cases pending against GIL before various authorities. The total amount that is the subject matter of these cases aggregates approximately to Rs. 104,088,400.
4. There are 38 customs cases pending against GIL before various authorities. The total amount that is the subject matter of these cases aggregates approximately to Rs. 82,128,254.
5. There are 5 criminal cases pending against GIL before various authorities. The total amount that is the subject matter of these cases aggregates approximately to Rs. NIL.
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6. There are 28 miscellaneous cases pending against GIL before various authorities. The total amount that is the subject matter of these cases aggregates approximately to Rs. 22,600,000.
Godrej Properties Limited
Litigation against the Company
1. Padmanabha Subbayya Shetty and Mohini Padmanabha Shetty have filed a Suit in the High Court of Mumbai for a claim of Rs. 200,000 against Godrej Properties Limited.
2. Mr. Moulvi has filed a Special Civil Suit against Godrej Properties Limited and others before the Senior Division Civil Court, Kalyan, for declaration of ownership to title, injunction and partition of the suit property. The suit is pending.
3. There are 5 consumer cases filed by various parties against Godrej Properties Limited before various consumer fora. The total amount that is the subject matter of these cases aggregates approximately to Rs. 100 million.
4. Grentex Wools Private Limited has filed a criminal case against Godrej Properties Limited along with its directors and other employees. The amount involved in the case is approximately 10 million. The case is pending before the metropolitan magistrate court, Vikhroli.
5. Zinnia Cooperative Housing Society filed a complaint before the judicial magistrate first class, Kalyan under Maharashtra Ownership of Flats Act 1963 and sections 269 and 270 of the Indian Penal Code against Godrej Properties Limited. The matter is pending with the judicial magistrate first class, Kalyan.
6. There are group cases relating to motor accident compensation claims filed by four individuals against Godrej Properties Limited and New India Assurance Co., as insurers of Godrej Properties Limited. These suits are filed with the motor accident tribunal Greater Mumbai, Thane and Kalyan.
7. There is one labour case filed against Godrej Properties Limited, relating to motor accident compensation claim for injuries sustained when on duty as driver of the vehicles.
Litigation by the Company
1. There is 1 consumer case filed by Godrej Properties Limited. It is a special leave petition against an order passed in the national consumer forum, pending before the Supreme Court The total amount that is the subject matter of these cases aggregates approximately to Rs. 0.8 million.
2. Godrej Properties Limited along with Sitaldas Estate Private Limited had in the year 2000 filed eviction cases before the Small Causes Court, Main Branch, Mumbai, against the tenants of Sital Baug, Walkeshwar, Mumbai. Eviction cases against 34 tenants were filed, out of which 24 have been settled by filing consent terms in court. 10 eviction cases are currently pending.
3. Godrej Properties Limited has filed a case before the Labour Court, Thane against the Akhil Maharashtra Kamgar Union, against its four ex-site employees viz. Mr. Prasad Shrikhande, Mr. Kiran Wale, Mr. Anil D’Cunha and Mr. Vishram Kudalkar. The matter is pending and the next date of hearing is January 4, 2008.
Geometric Limited
Litigation against the Company
1. There are 10 cases pending against Geometric Limited before the Assistant Commissioner of Customs.
2. Consulting Engineers Corporation have filed a case against Geometric Limited and certain other entities before the United States District Court for Eastern District of Virginia.
264 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Litigation by the Company
1. Geometric Limited has filed 2 consumer cases against United India Insurance Company Limited before certain district consumer redressal forum.
2. Geometric Limited has filed a criminal complaint against Mr. Shekhar Verma before the Metropolitan Magistrate, New Delhi.
Godrej Sara Lee Limited
Litigation against the Company
1. There are 38 sales tax cases pending against Godrej Sara Lee Limited before various courts, tribunals and sales tax authorities. The total amount that is demanded in these cases aggregates approximately to Rs.105.82 million.
2. There are 4 excise cases pending against Godrej Sara Lee Limited before various courts and tribunals. The total amount that is the subject matter in these cases aggregates approximately to Rs.10 million.
3. There are 5 cases pending against Godrej Sara Lee Limited under Trade & Merchandise Marks Act before various Courts, Tribunals and other fora.
4. There are 3 cases pending before various authorities, consumer court, etc. against Godrej Sara Lee, the total amount that is the subject matter in these cases aggregates approximately Rs. 0.2 million.
Litigation by the Company
1. Godrej Sara Lee Limited has filed an appeal before the Commissioner (Appeals) relating to a service tax demand aggregating approximately to Rs. 0.4 million.
2. There are 7 cases filed by Godrej Sara Lee Limited under Trade & Merchandise Marks Act before various Courts, Tribunals and other fora
Godrej HiCare Limited
1. There are 14 consumer cases pending against Godrej HiCare Limited before various fora filed by various consumers. The total amount that is the subject matter of these cases aggregates approximately to Rs. 18.31 million.
2. A criminal complaint was filed againt Godrej HiCare and its directors Adi Godrej and Anand Mahendran by G.D. Gupta. The Mumbai High Court has stayed the proceedings against Adi Godrej and Anand Mahendran and the case will proceed against Godrej Hicare before the Borivili court.
Godrej Infotech Limited
There is a suit pending against Godrej Infotech Limited before the court of District Judge, New Delhi for the recovery of possession, recovery of rent, mesne profits as well as permanent injunction in relation to a flat which the company took on lease for a period of 11 months from August 7, 2006 till July 6, 2007. The total amount that is the subject matter of the case aggregates approximately to Rs. 264,000/-.
Goldmohur Foods and Feeds Limited
Litigation against the company
1. There are 5 consumer cases filed against Goldmohur Foods and Feeds Limited before various fora by various consumers. The total amount that is the subject matter of these cases aggregates approximately to Rs. 0.7 million.
265 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
2. There are 6 criminal cases filed against Goldmohur Foods and Feeds Limited before various fora. The total amount that is the subject matter of these cases aggregates approximately to Rs. 0.6 million.
3. There are 6 civil cases filed against Goldmohur Foods and Feeds Limited before various fora. The total amount that is the subject matter of these cases aggregates approximately to Rs. 0.4 million.
Litigation by the company
1. Goldmohur Foods and Feeds Limited have filed 4 appeals before various fora. The total amount that is the subject matter of these cases aggregates approximately to Rs. 2.1 million.
Godrej Agrovet Limited
Litigation against the Company
1. There are 15 cases filed by various parties against Godrej Agrovet Limited under the Insecticides Act, 1968 and the Fertiliser (Control) Order, 1985.
2. The Assistant Commissioner (Foods) and Local (Health) Authority, Food & Drug Administration, Maharashtra issued a notice dated May 9, 2007 under section 13(2) of the Prevention of Food Adulteration Act, 1954 against Godrej Agrovet Limited regarding certain sample of sunflower oil. The matter is currently pending before the Chief Judicial Magistrate, Pune.
3. There are 3 cases pending against Godrej Agrovet Limited under the Trademarks Act, 1999. These matters are pending before various courts and trademark authorities.
4. There is a case pending against Godrej Agrovet Limited before the Commissioner of Central Excise, Jammu in relation to denial of refund of excise duty paid arising out of an issue relating to classification of goods. The amount involved is approximately Rs. 2,17,68,005/-.
5. There are 3 civil cases filed by various parties against Godrej Agrovet Limited before various courts. The total amount that is the subject matter of these cases aggregates approximately to Rs. 1,076,993/-.
6. There are 2 sales tax cases pending against Godrej Agrovet Limited before the Sales Tax Appellate Tribunal and sales tax authorities. The total amount that is demanded in these cases aggregates approximately to Rs. 4,74,16,000/-.
7. The Factory Inspector has filed a criminal case against Mr. C.K.Vaidya, occupier of the factory, for alleged non compliance of the Factories Act, 1948. The case is filed in respect of one contract worker who died in Godrej Agrovet Limited’s Miraj plant while on duty.
8. Godrej Agrovet Limited has received a notice dated August 8, 2007 issued by the Advocate, Mr. Rajesh Sharma, Chandigarh on behalf of Ms. Sandeep Kaur, w/o Shri Satnam Singh in relation to photographs taken for Aadhaar advertisement campaign at some locations in the Northern Region.
Litigation by the company
1. Godrej Agrovet Limited has filed an appeal in CESTAT, Mumbai against the order of Commissioner of Customs confirming a demand of Rs. 2,500,000/- against the alleged demand of Rs. 37,25,000/- in respect of import of machinery.
2. Godrej Agrovet Limited has filed an arbitration case. The amount involved is approximately Rs. 39,836,366.
Bahar Agro Chem and Feeds Pvt. Ltd.
1. There are 12 cases filed by various parties against Godrej Bahar Limited under the Insecticides Act, 1968 and the Fertilizer (Control) Order, 1985 before various courts and tribunals. The total amount that is the subject matter of these cases aggregates approximately to Rs. 34.86 million.
266 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Godrej Commodities Limited
1. Godrej Commodities Limited has filed a cheque bouncing case against Julon Foods and its proprietor Mr. Mehta before the court of magistrate at Bhoiwada, Mumbai. The case is pending for final disposal.
Tahir Properties Limited
1. Municipal Corporation of Greater Mumbai filed a suit against Tahir Properties Limited under the Bombay Municipal Corporation Act for fixing land under construction tax. The matter is pending in appeal in the High Court of Bombay.
Lawkim Limited
Litigation against the company
1. There are two excise duty demand cases filed against Lawkim Limited. The total amount that is the subject matter of these cases aggregates approximately to Rs. 1.08 million.
2. There are two show cause notices in respect of classification disputes from the excise authorities against Lawkim Limited. Lawkim has filed a writ petition against these notices in the Mumbai High Court. The total amount that is the subject matter of these cases aggregates approximately to Rs. 4.92 million.
Litigation by the company
1. Lawkim Limited has filed an appeal against the order of the additional district judge, Thane in the Mumbai High Court in relation to dispute relating to approximately one acre of land.
267 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
GOVERNMENT APPROVALS
In view of the approvals listed below, GCPL can undertake this Issue and current business activities and no further material approvals are required from any government authority for GCPL to continue their activities.
Approvals for the Issue
1. In-principle approval from the National Stock Exchange of India Limited dated [●], 2007 and;
2. In-principle approval from the Bombay Stock Exchange Limited dated [●], 2007
Approvals for the Company’s business
The Company requires various approvals for it to carry on its business in India and overseas. The approvals that the Company requires include the following.
(a) Approvals and registrations in India
SIKKIM
The Government of Sikkim, Department of commerce and Industries vide their letter (No: 604/DI/2006-07) dated December 11, 2006 provided their approval for the establishment of toiletries and cosmetic factory at Mamring, South Sikkim.
Certificate of registration dated December 18, 2006 under rule 9 of the Central Excise Rules, 2002 granted by the Office of the Assistant Commissioner of Central Excise, Gangtok Division, Siliguri certifying that Godrej Consumer Products Limited is registered for manufacturing of excisable goods at Godrej Consumer Products Limited, Mamring, Namthang Road, Rangpo, South Sikkim, 737132. The registration number is AABCG3365JXM005. The registration certificate would cease to be valid if the constitution of the management undergoes change.
Certificate of registration dated September 23, 2006 under rule 5 (1) of the Central Sale Tax (Registration and Turnover) Rules, 1957 granted by the Office of the Joint Commissioner, Income and Commercial Tax division, Government of Sikkim certifying that Godrej Consumer Products Limited is registered as a dealer under section 7(1)/ 7(2) of the Central Sales tax Act, 1956. The business involves use of machinery, chemicals, packing material for the manufacture of cosmetics and toiletries.
Certificate of registration dated April 1, 2005 issued by the Income Tax and Commercial Taxes Division, Finance, Revenue and Expenditure Division, Government of Sikkim certifying that our Company is registered as a dealer under the Sikkim Value Added Tax Act, 2005 with TIN 11040331160 with effect from April 1, 2007. The dealer would be dealing in the manufacturing of toiletries and cosmetics. The factory and warehouse is situated at Mamring, South Sikkim.
Letter bearing No. RNE/WB/31718/CC/SRO/SLG/2456 dated January 29, 2007 from the Employees Provident Fund Organisation, West Bengal, Sub Regional Office, Bhavishyanidhi Bhawan, Hill Cart Road, Siliguri allotting code No: WB/SLG/3718 to the Company’s factory located at Mamring, South Sikkim. This is with effect from November 11, 2006.
License dated March 26, 2007 issued by the Drugs and Cosmetics Cell, Government of Sikkim, Department of Health and Family Welfare Gangtok for the manufacture of cosmetics for sale pr for distribution. The license is valid until December 31, 2011. The License no is M/436/06 (COS). As per the terms of the license, the licensee shall inform the Licensing authority in writing in the event of any change in the constitution of the Company. If there is any change in the constitution of Company, the license shall be deemed to be valid for a maximum period of three months from the date on which the change takes place.
Certificate of registration (No SEF and SEC/2007 08/15) dated June 1, 2007 under rule 6 (4) of the Sikkim Ecology Fund and Environment Cess Rules, 2007 granted by the Government of Sikkim, Income and Commercial Tax Division, Finance Revenue and Expenditure Department Jorethang (South Sikkim) certifying that Godrej Consumer Products Limited is registered as a dealer under the Sikkim Ecology Fund and
268 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Environment Cess Act, 2005 for the purchase and sale of machinery, chemicals, packing materials cosmetics and toiletries and also for importing and sale of machinery, chemicals, packing materials cosmetics and toiletries.
Certificate of registration (No 13/ISMW/S) dated January 11, 2007 under clause (a) of sub-section (2) of the Inter-State Migrant Workmen (Regulation of Employment and Conditions of service) Act, 1979 and the rules made thereunder to Godrej Consumer Products Limited for migrant workmen to be employed for the production and sale of toiletries. The maximum number of migrant workmen employed on any day shall be 200 only.
Consent to operate (No 954/SPCB) dated March 24, 2007 issued by the State Pollution Control Board, Department of Forest, Environment and Wildlife Management, Government of Sikkim to operate a cosmetics and toiletries manufacturing unit for a period of 2 months under the provisions of Section 25 of Water (Prevention and Control of Pollution) Act 1974, Section 21 of Air (Prevention and Control of Pollution) Act, 1981 and provisions of Manufacture, Storage, Import of Hazardous Chemicals Rules, 1989 and Hazardous Wate (Management and Handling) Rules, 1989.
Certificate of Verification (No 2179) issued by the office of the Controller of Legal Metrology, Governmenr of Sikkim under Rule 16 (3) of the Standard Weights and Measures (Enforcement) Act, 1985 For the following weights:
Sr No Class or Type Capacity 7637 Electronic Weights 300 Kgs 7640 Electronic Weights 600 Kgs
The next date of verification is on June 8, 2008.
Certificate of Verification (No 2178) issued by the office of the Controller of Legal Metrology, Governmenr of Sikkim under Rule 16 (3) of the Standard Weights and Measures (Enforcement) Act, 1985 For the following weights:
Sr No Class or Type Capacity 7635 Electronic Scale 15 Kgs 7636 Electronic Scale 15 Kgs 7638 Electronic Scale 150 Kgs 7639 Electronic Scale 150 Kgs
The next date of verification is on June 8, 2008.
Certificate of Verification (No 2181) issued by the office of the Controller of Legal Metrology, Governmenr of Sikkim under Rule 16 (3) of the Standard Weights and Measures (Enforcement) Act, 1985 For the following weights:
Sr No Class or Type Capacity 1127501051 and Electronic 210 grams. Class II 1127501052 Weighing Scale 11270442038 and Electronic 60 grams 1127132864 Weighing Scale
The next date of verification is on July 5, 2008.
Certificate of registration dated April 11, 2007 under rule 6 (4) of the Sikkim Ecology Fund and Environment Cess Rules, 2007 granted by the Government of Sikkim, Income and Commercial Tax Division, Finance Revenue and Expenditure Department Jorethang (South Sikkim) certifying that Godrej Consumer Products Limited is registered as a dealer under the Sikkim Ecology Fund and Environment Cess Act, 2005 for the purchase and sale of machinery, chemicals, packing materials cosmetics and toiletries and also for importing and sale of machinery, chemicals, packing materials cosmetics and toiletries.
269 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
BADDI
Certificate of registration dated July 17, 2003 issued by the Assessing Authority, Nalagargh district, Solan certifying that our Company is registered as a dealer under the Himachal Pradesh General Sales Tax Act, 1968 under rule 6 of the Himachal Pradesh General Sales Tax Rules, 1969 for manufacturing of all types of toilet soaps/EZEE, talcs etc and trading thereof. This was further amended to include Liquid Hair Dye, Kesh Kala, Nupur Mehendi, Kali Mehendi, Powder Hair dye, Liquid Detergent. The certificate is valid till cancellation.
Letter bearing No. HP 14 13389-34/806 dated January 15, 2007 from the Regional Office, Employees State Insurance Corporation, Parwanoo (Himachal Pradesh) for registration of factories under section (2)/1 (5) of the Employee State Insurance Corporation Act. The factory located at Plot No 6, Apparel park cum industrial area, Katha, Baddi, Himachal Pradesh was allotted code No: 14-43389-34.
Letter bearing No. Gov/HP/5277 dated October 16, 2006 from the Employees Provident Fund Organisation, Kasumpti, Shimla allotting code No: HP/5277 being a unit of the Company. This is with effect from August 1, 2006.
Acknowledgement from the Ministry of Commerce and Industry, (NO 3130/SIA/IMO/2006) Secretariat for Industrial Assistance dated June 12, 2006 for Godrej Consumer Products Limited , Plot No 6 Apparel cum industrial area, Katha, Baddi for the manufacture of:
3051 Toilet Soap (including medicated soap excluding laundry soap) 65,000 tonnes 3052 Organic surface active agents (surgfactants) and preparations excluding items 1,000 tonnes reserved for SSI sector 3053 Perfumes and toilet waters excluding items reserved for SSI sector. 12,000 tonnes
Liquid synthetic detergent excluding laundry soap 50,000 tonnes 3054 Preparation for oral or dental hygiene (excluding items reserved for SSI sector) 500 tonnes 3055 Cosmetics and toilet soap aids (excluding items reserved for SSI sector) 20,000 tonnes 3056 Preparation for use on the hair (excluding items reserved for SSI sector) 2,000 tonnes 3057 Other (including scented sachets) (excluding items reserved for SSI sector) 12,000 tonnes
Note:- the acknowledgement is subject to the provisions of press note 6 dated July 29, 1993 and Press note no 17 dated November 28, 1997 regarding the significance, implications and legal status of filing if Industrial Entrepreneur memorandum
Structure safety stability certificate by Mr Ramesh Pangasa, submitted by M/s Godrej Consumer Products Limited for the construction of Industrial Plot No 6 measuring 25555 square feet at the Apparel Park- cum- Industrial Area Katha, Baddi, Solan, Himachal Pradesh.
Approval from the director of industries Himachal Pradesh, Shimla - 1, dated December 26, 2005 revision of items/ capacity for the manufacture of toilet soaps, liquid detergent, Shampoos, Shaving Soaps at Baddi. The revised parameters are as follows:
Approved earlier Revised proposal Items of manufacture Toilet soaps, liquid detergent toilet Soaps, liquid detergent Proposed annual capacity Toilet soap 45000 MT Toilet soaps 65000
Liquid detergents 10000 MT Detergents 12000 Proposed Investment Rs 2000 lacs Rs 3,000lacs Power requirement 3000KW 2500 KW Water requirements 400 KL 150 KL
Letter from the Himachal Pradesh State Environment protection and Pollution control Board, Baddi providing
270 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only an in principle approval only for the purpose of State level single Window Clearance and Monitoring Authority for the setting up of a unit for the manufacturing of toilet soaps, liquid detergents, shampoos, shaving soaps at Baddi District, Solan Himachal Pradesh.
Letter bearing No Ind. Dev F (34) Regn (L&M)-780/2005 dated July 27, 2005 from the Director of Industries Himachal Pradesh assigning provisional registration No. 02/09/661/Regn (L&M) for:
1. Item of Manufacturing Toilet soaps, liquid detergents, shampoos and shaving saps 2. Proposed location Baddi, District Solan 3. Proposed investment Rs 2000 Lacs 4. Land requirements Minimum need based 5. Power requirement 3000 KW 6. Proposed employment 200 Nos
Guwahati
Certificate of registration dated January 11, 2001 under rule 9 of the Central Excise Rules, 2002 granted by the Superintendant of Central Excise certifying that Godrej Consumer Products Limited is registered for manufacturing goods at Bamunimaidan Industrial Estate, Bye lane -1, Guwahati - 781021. The registration number is AABCG3365JXM003. The registration certificate is valid till it is surrendered or till it is revoked or suspended.
Certificate of registration dated February 11, 2003 under rule 3(3) of the Assam Entry Tax Rules, 2001 granted by Superintendant of Taxes Guwahati certifying that Godrej Consumer Products Limited has been granted registration under the Assam Entry Tax Act, 2001.
Certificate of registration dated March 24, 2006 issued by the Chief Inspector of Factories, Assam to Godrej Consumer Products Limited, Shed No 9, 10, 11, 12 Bamunimaidan Industrial Estate, Bye lane -1, Guwahati - 781021. The factory shall not employ more than 250 persons on any one day and shall not use motive power exceeding 460 Horse Power. The license is valid till December 12, 2007.
Certificate of stability dated June 15, 2004 under rule 3-B of section 6-112 of the Assam factories (Amendment) Rules, 1984 granted by the Chief Inspector of Factories, Assam to Godrej Consumer Products Limited, Bamunimaidan Industrial Estate, Bye lane -1, Guwahati – 781021stating that the buildings which have been constructed are structurally sound.
License to manufacture cosmetics for sale dated May 24, 2006 issued by the Drug Licensing Authority. The license number allotted is 6M/2001. The license shall expire on January 1, 2011.
Consent to operate dated May 10, 2007 issued by the Pollution Control Board, Assam to operate a DG set under the provisions air Act and water act. The consent is valid till March 31, 2008.
Certificate of registration dated June 9, 2006 under sub- section (2) of section 7 of the Contract Labour (Regulation and Abolition) Act, 1970 issued by Labour Officer, Assam to Godrej Consumer Products Limited, Bamunimaidan Industrial Estate, Bye lane -1, Guwahati – 781021 for. The factory shall not employ more than 300 contract labourers on any day through each contractor. Contract labourers can be employed for loading, unloading, gardening, clearing, material handling and house keeping.
License dated November 21, 2002 under section 273 of the Guwahati Municipal Corporation Act, 1969 granted to Godrej Consumer Products Limited, Bamunimaidan Industrial Estate, Bye lane -1, Guwahati – 781021. The license is valid till March 31, 2008.
Certificate on employment of people of Assam dated November 15, 2002 by the Director of Employment, Guwahati to Godrej Consumer Products Limited, Bamunimaidan Industrial Estate, Bye lane -1, Guwahati – 781021, certifying that the number of people of Assam in the managerial cadre is 80% and in the non- managerial cadre is 91%.
Certificate of registration dated April 18, 2006 under section (2) of section 17 of the standard weights and
271 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only measure (enforcement) Act 1985 issued by the office of the controller of legal metrology certifying that Godrej Consumer Products Limited, Bamunimaidan Industrial Estate, Bye lane -1, Guwahati – 781021 is a registered user of weights and measures. The date of renewal of this certificate is April 18, 2011.
Certificate of registration dated April 13, 2005 under section 33 of the standard weights and measures (enforcement) Act, 1985 read with rule 35 of the Standards of weights and measures (packaged commodities) rules, 1977 issued by the office of the controller of legal metrology certifying that Godrej Consumer Products Limited, Bamunimaidan Industrial Estate, Bye lane -1, Guwahati – 781021 has been registered to pre pack cosmetics.
Acknowledgement from the Ministry of Commerce and Industry, (NO 623/IIM/PROD/2001) Secretariat for Industrial Assistance dated December 28, 2001 to Godrej Consumer Products Limited, Plot intimating commencement of commercial production for the following products against the following item codes
3057 Manufacture of preparations for use on hair. 1,00 tonnes 3056 Manufacture of cosmetics and toilet aids 1,000 tonnes
Letter bearing No. HP 43-3637-100 dated February 22, 2002 from the Regional Director, Employees State Insurance Corporation, Guwahati for registration of factories under section (2)/1 (5) of the Employee State Insurance Corporation Act. The factory located at Shed No 9, 10, 11, 12 Bamunimaidan Industrial Estate, Bye lane -1, Guwahati - 781021 was allotted code No: 43-3637-100.
Regional Director, Employees State Insurance Corporation, Guwahati for registration of factories under section (2)/1 (5) of the Employee State Insurance Corporation Act. The factory located at Shed No 9, 10, 11, 12 Bamunimaidan Industrial Estate, Bye lane -1, Guwahati - 781021 was allotted code No: 43-3637-100.
Certificate of registration dated January 27, 2005 under section 69 of the Finance Act 1994 (32 of 1994) certifying that granted by the Superintendant of Central Excise certifying that Godrej Consumer Products Limited is registered for payment of service tax on goods transport agency. The registration number is GTA/GHY – I/01.
Order dated March 9, 2004 by the Labour Commissioner, Assam, Guwahati certifying the standing orders of Godrej Consumer Products Limited.
Certificate of registration dated March 30, 2001 under rule 5 (1) of the Central Sale Tax (Registration and Turnover) Rules, 1957 granted by the Office of the superintendent of taxes Guwahati, Assam certifying that Godrej Consumer Products Limited is registered as a dealer under section 7(1)/ 7(2) of the Central Sales tax Act, 1956. The business involves partly wholesale and partly retail and stock transfer to other states. The registration is valid until cancelled.
Madhya Pradesh
Consent dated February 2, 2007 issued by the Madhya Pradesh Pollution Control Board under Section 21 of the Air (Prevention and Control of Pollution) Act, 1981. The consent is valid from February 7, 2007 till January 31, 2008.
Consent dated February 2, 2007 issued by the Madhya Pradesh Pollution Control Board under Section 25/26 of the Water (Prevention and Control of Pollution) Act, 1981. The consent is valid from February 7, 2007 till January 31, 2008.
License No. 9/10936/BHD/2MLI dated November 15, 2006 issued by the Chief Inspector of Factories, Madhya Pradesh to work the factory at Malanpur, Bhind for use as a factory employing not more than 1000 workers on any one day during the year and having installed power exceeding 5000 horse power to manufacture toilet soaps, sodium salt of fatty acids, stearic acids etc. The license is valid till December 31, 2007.
Certificate of registration dated September 17, 2007 issued by the Madhya Pradesh Boiler Inspection Department to Godrej Consumer Products Limited, Malanpur, Bhind, Madhya Pradesh for use of a boiler. The certificate is valid till September 13, 2008.
272 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
License No. P/HQ/MP/15/302(P13397) dated November 1, 1990 issued by the Chief Controller of Explosives to Godrej Consumer Products Limited, Malanpur, Bhind, Madhya Pradesh to import and store petroleum in installation. The license is valid till December 31, 2008.
Certificate of registration dated December 3, 1990 under sub-section (2) of section 7 of the Contract Labour (Regulation and Abolition) Act, 1970 issued by the Govermnent of Madhya Pradesh, office of the registering officer to Godrej Soaps Limited, U-30, Malanpur Industrial Area, District Bhind, Madhya Pradesh. The name in the certificate of registration was changed to Godrej Consumer Products Limited on March 15, 2002.
Certificate of renewal of license dated January 1, 2003 issued by the licensing authority, Foods and Drugs Administration, Madhya Pradesh to Godrej Consumer Products Limited U-30, Industrial Area, Malanpur - 477116 to manufacture cosmetics for sale. The license is valid till December 31, 2007.
Renewal of authorization dated January 6, 2007 issued by the Madhya Pradesh Pollution Control Board under the Hazardous Wastes (Management and Handling) Rules, 1989 to Godrej Consumer Products Limited, U-30, Industrial Area, Malanpur – 477116, Bhind, Madhya Pradesh. The consent is valid from March 3, 2006 till March 2, 2008.
License No. S/HO/MP/03/47 dated January 19, 2007 issued by the Joint Chief Controller of Explosives, Ministry of Commerce and Industry, Petroleum and Explosives Safety Organisation to Godrej Consumer Products Limited, Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai – 400079 for storage of Hydrogen gas in pressure vessels at Malanpur, Bhind, Madhya Pradesh. The license is valid upto March 31, 2009.
Letter dated May 24, 2002 issued by the office of the Additional Commissioner of Income Tax TDS circle, Gwalior to Godrej Consumer Products Limited, G-1, Godrej House, 447, Ravi Nagar, Gwalior, Madhya Pradesh – 474002 for allotment of tax deduction account number under Section 203A of the Income Tax Act, 1961.
Certificate of registration dated January 10, 2005 under section 69 of the Finance Act 1994 (32 of 1994) granted by the Superintendant of Central Excise certifying that Godrej Consumer Products Limited, U-30, Industrial Area, Malanpur, Bhind, Madhya Pradesh is registered for payment of service tax on goods transport agency. The registration number is ST/R-I/GWL/G.T.A./35/2004-05.
Certificate of registration dated July 18, 2005 under Rule 9 of the Central Excise Rules, 2002 granted by the Assistant Commissioner of Central Excise, Division, Gwalior certifying that Godrej Consumer Products Limited, U-30, Industrial Area, Malanpur, Bhind, Madhya Pradesh is registered for manufacture of excisable goods. The registration number is AABCG3365JXM004
Letter dated September 12, 1996 issued by the Madhya Pradesh Electricity Board to Godrej Soaps Limited, U- 30, Industrial Area, Malanpur, Bhind – 477116, Madhya Pradesh granting permission for installation and running of DG sets.
License No. 02/GWL/WH/2002-03 issued under Section 58 of the Customs Act, 1962 by the Deputy Commissioner, Central Excise Division, Gwalior to Godrej Consumer Products Limited, U-30, Industrial Area, Malanpur, Bhind, Madhya Pradesh licensing the premises as a private bonded warehouse. The license is valid upto March 5, 2008.
273 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
STATUTORY AND OTHER INFORMATION
Authority for the Issue
Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on November 23, 2007 it has been decided to make the rights offer to the Equity Shareholders of the Company with a right to renounce. The details of such approval will be included in the Letter of Offer.
Prohibition by SEBI
Neither the Company, nor the Directors or the Promoter Group Companies, or companies with which the Company’s Directors are associated with as directors nor promoters have been prohibited from accessing or operating in the capital markets under any order or direction passed by SEBI. Further, none of the directors or person(s) in control of the Promoter have been prohibited from accessing the capital market under any order or direction passed by SEBI. Further neither the Promoter, the Company or group companies has been declared as wilful defaulters by RBI / Government authorities.
Eligibility for the Issue
The Company is an existing company registered under the Companies Act whose Equity Shares are listed on the BSE and the NSE. It is eligible to offer this Issue in terms of Clause 2.4.1(iv) of the SEBI (DIP) Guidelines.
Disclaimer Clause
AS REQUIRED, A COPY OF THIS DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THIS DRAFT LETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED / CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THIS DRAFT LETTER OF OFFER. THE LEAD MANAGER, JM FINANCIAL CONSULTANTS PRIVATE LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THIS DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES FOR DISCLOSURE AND INVESTOR PROTECTION IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT LETTER OF OFFER, THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE THE LEAD MANAGER, JM FINANCIAL CONSULTANTS PRIVATE LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED DECEMBER 28, 2007 WHICH READS AS FOLLOWS:
1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIALS MORE PARTICULARLY REFERRED TO IN THE ANNEXURE HERETO IN CONNECTION WITH THE FINALIZATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;
2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE
274 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:
(A) THE DRAFT LETTER OF OFFER FORWARDED TO THE BOARD IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE; (B) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY THE BOARD, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND (C) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000 AND OTHER APPLICABLE LEGAL REQUIREMENTS.
3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND THAT TILL DATE SUCH REGISTRATION IS VALID.
4. WE HAVE SATISFIED OURSELVES ABOUT THE WORTH OF THE UNDERWRITERS TO FULFILL THEIR UNDERWRITING COMMITMENTS. – NOT APPLICABLE
5. WE CERTIFY THAT WRITTEN CONSENT FROM SHAREHOLDERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN, WILL NOT BE DISPOSED / SOLD / TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT PROSPECTUS WITH THE BOARD TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT PROSPECTUS. – NOT APPLICABLE
6. WE CERTIFY THAT CLAUSE 4.6 OF THE SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000, WHICH RELATES TO SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE CLAUSE HAVE BEEN MADE IN THE DRAFT PROSPECTUS/LETTER OF OFFER. – NOT APPLICABLE
7. WE UNDERTAKE THAT CLAUSES 4.9.1, 4.9.2, 4.9.3 AND 4.9.4 OF THE SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION AND SUBSCRIPTION FROM ALL FIRM ALLOTTEES WOULD BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE COMPANY ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE. – NOT APPLICABLE
8. WHERE THE REQUIREMENTS OF PROMOTERS’ CONTRIBUTION IS NOT APPLICABLE TO THE ISSUER, WE CERTIFY THE REQUIREMENTS OF PROMOTERS’ CONTRIBUTION UNDER CLAUSE 4.10 (C) ARE NOT APPLICABLE TO THE ISSUER.
275 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
9. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE ‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.
10. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SECTION 73(3) OF THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE LETTER OF OFFER. WE FURTHER CONFIRM THAT THE ARRANGEMENT TO BE ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY COMPLIES WITH THIS CONDITION.
11. WE CERTIFY THAT NO PAYMENT IN THE NATURE OF DISCOUNT, COMMISSION, ALLOWANCE OR OTHERWISE SHALL BE MADE BY THE ISSUER OR THE PROMOTERS, DIRECTLY OR INDIRECTLY, TO ANY PERSON WHO RECEIVES SECURITIES BY WAY OF FIRM ALLOTMENT IN THE ISSUE.
12. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE LETTER OF OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE.
13. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER:
(A) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE ONLY ONE DENOMINATION FOR THE SHARES OF THE COMPANY AND (B) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME.
The filing of this Draft Letter of Offer does not, however, absolve the Company from any liabilities under section 63 or section 68 of the Companies Act or from the requirement of obtaining such statutory or other clearance as may be required for the purpose of the proposed Issue. SEBI further reserves the right to take up, at any point of time, with the Lead Manager any irregularities or lapses in this Draft Letter of Offer.
Caution
The Company and the Lead Manager accept no responsibility for statements made otherwise than in this Draft Letter of Offer or in any advertisement or other material issued by the Company or by any other persons at the instance of the Company and anyone placing reliance on any other source of information would be doing so at his own risk.
The Lead Manager and the Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of this Draft Letter of Offer with SEBI.
Disclaimer with respect to jurisdiction
This Draft Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules and
276 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Mumbai, India only.
Selling Restrictions
The distribution of this Draft Letter of Offer and the issue of Equity Shares on a Rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession this Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. The Company is making this Issue of Securities on a rights basis to the shareholders of the Company and will dispatch the Letter of Offer and CAF to shareholders who have provided an Indian address.
No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that this Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the Securities may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issue of the Securities or the rights entitlements, distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Securities or the rights entitlements referred to in this Draft Letter of Offer.
Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as of any time subsequent to this date.
The Draft Letter of Offer was filed with SEBI, Plot No.C4-A, 'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai 400051, for its observations. After SEBI gives its observations, the Letter of Offer will be filed with the Designated Stock Exchange as per the provisions of the Act
United States Restrictions THE RIGHTS ENTITLEMENTS THAT MAY BE PURCHASED PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, RESOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OF AMERICA OR THE TERRITORIES OR POSSESSIONS THEREOF (THE “UNITED STATES” OR THE “U.S.”) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, “US PERSONS” (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”)), EXCEPT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE RIGHTS REFERRED TO IN THIS DRAFT LETTER OF OFFER ARE BEING OFFERED IN INDIA, BUT NOT IN THE UNITED STATES. THE OFFERING TO WHICH THIS DRAFT LETTER OF OFFER RELATES IS NOT, AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS, AN OFFERING OF ANY SHARES OR RIGHTS FOR SALE IN THE UNITED STATES OR AS A SOLICITATION THEREIN OF AN OFFER TO BUY ANY OF THE SAID SHARES OR RIGHTS. ACCORDINGLY, THIS DRAFT LETTER OF OFFER SHOULD NOT BE FORWARDED TO OR TRANSMITTED IN OR INTO THE UNITED STATES AT ANY TIME. NEITHER THE COMPANY NOR ANY PERSON ACTING ON BEHALF OF THE COMPANY WILL ACCEPT SUBSCRIPTIONS OR RENUNCIATIONS FROM ANY PERSON, OR THE AGENT OF ANY PERSON, WHO APPEARS TO BE, OR WHO THE COMPANY OR ANY PERSON ACTING ON BEHALF OF THE COMPANY HAS REASON TO BELIEVE IS, EITHER A “U.S. PERSON” (AS DEFINED IN REGULATION S) OR OTHERWISE IN THE UNITED STATES. ANY PERSON SUBSCRIBING TO THE EQUITY SHARES OFFERED HEREBY WILL BE DEEMED TO REPRESENT THAT SUCH PERSON IS NOT A U.S. PERSON (AS DEFINED IN REGULATION S) OR OTHERWISE IN THE UNITED STATES AND HAS NOT VIOLATED ANY U.S. SECURITIES LAWS IN CONNECTION WITH THE EXERCISE.
European Economic Area Restrictions
277 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive at any relevant time (each, a “Relevant Member State”) the Company has not made and will not make an offer of the Equity Shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Equity Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of Equity Shares to the public in that Relevant Member State at any time:
(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or
(c) In any other circumstances which do not require the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purpose of this provision, the expression an “offer of Equity Shares to the public” in relation to any Equity Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Equity Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
This European Economic Area selling restriction is in addition to any other selling restriction set out below.
United Kingdom Restrictions
This Draft Letter of Offer is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). The Equity Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Equity Shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
Designated Stock Exchange
The Designated Stock Exchange for the purposes of this Issue will be the [●].
Disclaimer Clause of the BSE
The Bombay Stock Exchange Limited (“the Exchange”) has given vide its letter dated [●] permission to the Company to use the Exchange’s name in this Draft Letter of Offer as one of the Stock Exchanges on which this Company’s securities are proposed to be listed. The Exchange has scrutinized this Draft Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Company. The Exchange does not in any manner: (i) warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Letter of Offer; or (ii) warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or (iii) take any responsibility for the financial or other soundness of this Company, its Promoter, its management or any scheme or project of this Company; and it should not for any reason be deemed or construed that this Draft Letter of Offer has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other
278 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only reason whatsoever.
Disclaimer Clause of the NSE
As required, a copy of this Draft Letter of Offer has been submitted to National Stock Exchange of India Limited (“NSE”). NSE has given vide its letter dated [●] permission to the Issuer to use the Exchange’s name in this Draft Letter of Offer as one of the Stock Exchanges on which the Issuer’s securities are proposed to be listed. The NSE has scrutinized this Draft Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the Issuer. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or construed that the Draft Letter of Offer has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Letter of Offer; nor does it warrant that the Issuer’s securities will be listed or will continue to be listed on NSE; nor does it take any responsibility for the financial or other soundness of the Issuer, its Promoter, its management or any scheme or project of the Issuer.
Every person who desires to apply for or otherwise acquire any securities of the Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.
Impersonation
As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of sub- section (1) of section 68A of the Companies Act which is reproduced below:
“Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or otherwise induces a Company to allot, or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years”
Dematerialized dealing
The Company has entered into agreements dated March 23, 2001 and March 22, 2001 with National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited respectively, and its Equity Shares bear the ISIN INE 102D01028].
Listing
The existing Equity Shares are listed on the BSE and the NSE. The Company has made applications to the BSE and NSE for permission to deal in and for an official quotation in respect of the Equity Shares being offered in terms of this Draft Letter of Offer. The Company has received in-principle approvals from BSE and the NSE by letters dated [●] and [●], respectively. The Company will apply to the BSE and NSE for listing of the Equity Shares to be issued pursuant to this Issue.
If the permission to deal in and for an official quotation of the securities is not granted by any of the Stock Exchanges mentioned above, within 42 days from the Issue Closing Date, the Company shall forthwith repay, without interest, all monies received from applicants in pursuance of this Draft Letter of Offer. If such money is not paid within eight days after the Company becomes liable to repay it, then the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under the section 73 of the Act.
Consents
Consents in writing of the Auditors, Lead Manager, Legal Advisor, Registrar to the Issue, Bankers to the Issue and Bankers to the Company to act in their respective capacities have been obtained and filed with SEBI, along with a copy of the Draft Letter of Offer and such consents have not been withdrawn up to the time of delivery of this Draft Letter of Offer for registration with the stock exchanges.
279 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Kalyaniwalla and Mistry, the Auditors of the Company have given their written consent for the inclusion of their Report in the form and content as appearing in this Draft Letter of Offer and such consents and reports have not been withdrawn up to the time of delivery of this Draft Letter of Offer for registration with the stock exchanges.
Kalyaniwalla and Mistry have given their written consent for inclusion of statement of tax benefits in the form and content as appearing in this Draft Letter of Offer, accruing to the Company and its members.
To the best of the Company’s knowledge there are no other consents required for making this Issue. However, should the need arise, necessary consents shall be obtained by the Company.
Expert Opinion, if any
Except in the sections titled “Auditor’s Report” and “Statement of Tax Benefits” on page [●] and [●] of this Draft Letter of Offer, no expert opinion has been obtained by the Company in relation to this Draft Letter of Offer.
Expenses of the Issue
The expenses of the Issue payable by the Company including brokerage, fees and reimbursement to the Lead Manager, Auditors, Legal Advisor, Registrar to the Issue, printing and distribution expenses, publicity, listing fees, stamp duty and other expenses are estimated at Rs. [●] (around [●]% of the total Issue size) and will be met out of the proceeds of the Issue.
Amounts in Rs. million S. Particulars Amount* % of net % of total No. proceeds of the expenses of the Issue Issue 1. Fees of the Lead Manager, Registrar to the Issue, Legal Advisor, Auditors and other [●] [●] [●] advisors 2. Printing and stationery, distribution, postage, [●] [●] [●] etc. 3. Advertisement and marketing expenses [●] [●] [●] 4. Other expenses [●] [●] [●] Total [●] [●] [●] * Amounts will be finalized at the time of filing the Letter of Offer and determination of Issue price and other details.
Fees Payable to the Lead Manager to the Issue
The fees payable to the Lead Manager to the Issue are set out in the engagement letter issued by the Company to the Lead Manager and the Memorandum of Understanding entered into by the Company with the Lead Manager, copies of which are available for inspection at the registered office of the Company.
Previous Issues by the Company
The Company has not undertaken any previous public or rights issue during the last five years.
Date of listing on the Stock Exchange
The Equity Shares of the Company were first listed on the Bombay Stock Exchange in June 18, 2001. The Company’s Equity Shares were listed on the National Stock Exchange in June 20, 2001.
Issues for consideration other than cash
The Company has not issued Equity Shares for consideration other than cash or out of revaluation reserves, other than issuances mentioned in the section “Capital Structure” on page [●] of the Draft Letter of Offer.
280 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Outstanding Debentures or Bonds and Preference Shares
The Company has not issued any debentures, bonds or preference shares in the past.
Option to Subscribe
Other than the present Issue, the Company has not given any person any option to subscribe to the Equity Shares of the Company.
Issue Schedule
Issue Opening Date: [●] Last date for receiving requests for split forms: [●] Issue Closing Date: [●]
The Board may however decide to extend the issue period as it may determine from time to time but not exceeding 60 days from the Issue Opening Date.
Allotment Advices / Refund Orders
The Company will issue and dispatch allotment advice/ share certificates/ demat credit and/or letters of regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any, within a period of 42 days from the date of closure of the Issue. If such money is not repaid within eight days from the day the Company becomes liable to pay it, the Company shall pay that money with interest as stipulated under section 73 of the Companies Act.
Applicants residing at centers where clearing houses are managed by the Reserve Bank of India (RBI) will get refunds through ECS only (Electronic Clearing Service) except where Applicants are otherwise disclosed as applicable/eligible to get refunds through direct credit and RTGS.
In case of those Applicants who have opted to receive their Rights Entitlement in dematerialized form using electronic credit under the depository system, and advice regarding their credit of the Equity Shares shall be given separately. Applicants to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post intimating them about the mode of credit of refund within 42 working days of closure of the Issue.
In case of those Applicants who have opted to receive their Rights Entitlement in physical form and the Company issues an allotment advice, the corresponding share certificates will be dispatched within one month from the date of allotment. For more information please refer to the section titled ‘Allotment advice/ Share Certificates/Demat Credit’ on page [•] of this Draft Letter of Offer.
The refund order exceeding Rs.1,500 would be sent by registered post/speed post to the sole/first Applicant's registered address. Refund orders up to the value of Rs.1,500 would be sent under certificate of posting. Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole/first Applicant. Adequate funds would be made available to the Registrar to the Issue for this purpose.
Promise versus Performance
1. The Company
The Company has not made any issue of securities since its incorporation as Godrej Consumer Products Limited on March 14, 2001 following the demerger of Godrej Soaps Limited.
281 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Investor Grievances and Redressal System
The Company has adequate arrangements for redressal of Investor complaints. Well-arranged correspondence system developed for letters of routine nature. The share transfer and dematerialization for the Company is being handled by Computech Sharecapital Limited and share transfer agent. Letters are filed category wise after having attended to. Redressal norm for response time for all correspondence including shareholders complaints is within six days.
The contact details of the share registrars are:
Computech Sharecapital Limittd 147, M.G. Road Opposite . Jehangir Art Gallery Mumbai 400 001 Mumbai 400 [●] Tel: (91 22) 2263 5000 Fax: (91 22) 22635005 Email: [email protected]
Status of Complaints
(a) Total number of complaints received during last financial year (2006-2007): 252 (b) No. of shareholders complaints as of April 1, 2007: Nil (c) Total number of complaints received during current financial year, upto December 21, 2007: 145 (d) Status of the complaints: Nil (as on December 21, 2007) (e) Time normally taken by it for disposal of various types of Investor grievances: upto 6 days
Investor Grievances arising out of this Issue
The Company’s investor grievances arising out of the Issue will be handled by Intime Spectrum, who are the Registrar to the Issue. The Registrar will have a separate team of personnel handling only post-Issue correspondence.
The agreement between the Company and the Registrar will provide for retention of records with the Registrar for a period of at least [●] year from the last date of dispatch of Allotment Advice share certificate / warrant / refund order to enable the Registrar to redress grievances of Investors.
All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as folio number, name and address, contact telephone / cell numbers, email id of the first applicant, number and type of shares applied for, Application Form serial number, amount paid on application and the name of the bank and the branch where the application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the Renouncee should be furnished.
The average time taken by the Registrar for attending to routine grievances will be 15 days from the date of receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavour of the Registrar to attend to them as expeditiously as possible. The Company undertakes to resolve the Investor grievances in a time bound manner.
Investors may contact the Compliance Officer / Company Secretary in case of any pre-Issue/ post -Issue related problems such as non-receipt of allotment advice/share certificates/ demat credit/refund orders etc. His address is as follows:
Mr. Sunil Sapre Company Secretary and Compliance Officer, Godrej Consumer Products Ltd., Pirojshahnagar, Eastern Express Highway, Vikhroli, Mumbai 400079, Maharashtra. Tel. : (91 22) 2518 8010
282 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Fax : (91 22) 2518 8048 Email:[email protected]
Changes in Auditors during the last three years
The Company has not changed its auditors in the last three years
Capitalization of Reserves or Profits
The Company has not capitalized any of its reserves or profits for the last five year other than those mentioned in the section “Capital Structure” on page [●] of the Draft Letter of Offer.
Revaluation of Fixed Assets
There has been no revaluation of the Company’s fixed assets for the last five years.
Minimum Subscription
If the Company does not receive minimum subscription of 90% of the Issue on the date of closure of the Issue or the subscription level falls below 90% after the closure of the Issue on account of cheques having being returned unpaid or withdrawal of applications, the Company shall forthwith refund the entire subscription amount received. If there is a delay beyond eight days after the date from which the Company becomes liable to pay the amount, the Company shall pay interest as prescribed under Section 73 of the Companies Act, 1956.
Additional Subscription by the Promoter
The Promoters have confirmed that that they intend to subscribe to the full extent of our entitlement in the Issue. The Promoters reserve the right to subscribe to the full extent of their entitlement in this Issue, either by themselves or in combination of entities controlled by them, including by subscribing for renunciation, if any, made by the promoter group or any other shareholder. The Promoters have provided an undertaking dated December 21, 2007 to apply for additional equity shares in the Issue, to the extent of the unsubscribed portion of the Issue. As a result of this subscription and consequent allotment, the Promoters may acquire shares over and above their entitlement in this Issue, which may result in an increase of the shareholding being above the current shareholding with the entitlement of Equity Shares under the Issue. This subscription and acquisition of additional Equity Shares by the Promoters through the Issue, if any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section on “Objects of the Issue” of the Draft Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of allotments to the Promoters, in this Issue, the Promoter’s shareholding in the Company exceeds their current shareholding. The Promoters shall subscribe to such unsubscribed portion as per the relevant provisions of the law. Allotment to the Promoters of any unsubscribed portion, over and above their entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements.
283 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
TERMS OF THE PRESENT ISSUE
The Equity Shares, now being issued, are subject to the terms and conditions contained in this Draft Letter of Offer, the enclosed Composite Application Form (“CAF”), FEMA, the Memorandum and Articles of Association of the Company, approvals from the RBI, the provisions of the Companies Act, 1956, guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies from time to time, terms and conditions as stipulated in the allotment advice or security certificate and rules as may be applicable and introduced from time to time.
Authority for the Issue
This Issue is being made pursuant to a resolution passed by the Board of Directors of the Company under section 81(1) of the Companies Act at its meeting held on November 23, 2007.
Basis for the Issue
The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the Depositories in respect of the Equity Shares held in the Electronic Form and on the Register of Members of the Company in respect of the Equity Shares held in physical form at the close of business hours on [●] (the “Record Date”), fixed in consultation with the Stock Exchanges.
Rights Entitlement
As your name appears as beneficial owner in respect of the Equity Shares held in the Electronic Form or appears in the Register of Members as an Equity Shareholder on the Record Date, you are entitled to the number of Equity Shares shown in Block I of Part A of the enclosed CAF.
The eligible Equity Shareholders are entitled to the following:
[●] Equity Share for every [●] Equity Shares held on the Record Date.
Principal Terms of Equity Shares
Face Value
Each Equity Share will have the face value of Re. 1.
Issue Price
Each Equity Share shall be offered at an Issue Price of Rs. [●] for cash, at a premium of Rs. [●] per Equity Share.
Rights Entitlement Ratio
The Equity Shares are being offered on rights basis to the existing Equity Shareholders of the Company in the ratio of [●] Equity Shares for every [●] Equity Shares held on the Record Date.
Fractional Entitlement
For Equity Shares being offered on a rights basis under this Issue, if the shareholding of any of the Equity Shareholders is less than [●] Equity Shares or not in the multiple of [●], the fractional entitlement of such holders shall be ignored. Shareholders whose fractional entitlements are being ignored would be given preference in allotment of one additional share each if they apply for additional shares.
For e.g. if a Equity Shareholder holds between [●] and [●] Equity Shares, he will be entitled to [●] Equity Share on a rights basis. He will also be given a preference for allotment of 1 additional Equity Share if he has applied for the same.
284 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Those Equity Shareholders have a holding less than [●] Equity Shares and therefore entitled to zero Equity Shares under this Issue shall be despatched a CAF with zero entitlement. Such equity shareholders are entitled to apply for additional Equity Shares. However, they cannot renounce the same in favour of third parties. CAF with zero entitlement will be non-negotiable/non-renouncable.
For e.g. if a Equity Shareholder holds between [●] and [● Equity Shares, he will be entitled to Nil Equity Shares on rights basis. He will be given a preference for allotment of 1 additional Equity Share if he has applied for the same.
Terms of the Payment
Full amount of Rs. [●] per Equity Share is payable on application.
The payment towards the Equity Shares offered will be as under:
Re. 1 per share Towards Share Capital Rs. [●] per share Towards Share Premium Account
Rights of the Equity Shareholder
Subject to applicable laws, the equity shareholders shall have the following rights:
Right to receive dividend, if declared;
Right to attend general meetings and exercise voting powers, unless prohibited by law;
Right to vote on a poll in person or by proxy;
Right to receive offers for rights shares and be allotted bonus shares, if announced;
Right to receive surplus on liquidation;
Right to free transferability of shares; and
Such other rights as may be available to a shareholder of a listed public company under the Companies Act and Memorandum and Articles of Association.
For a detailed description of the main provisions of the Company’s Articles of Association dealing with voting rights, dividends, forfeiture, lien, transfer and transmission, and/or consolidating/splitting, see the section titled “Main Provisions of Articles of Association” on page [●] of this Draft Letter of Offer.
Ranking of the Equity Shares
The Equity Shares issued and allotted on a Rights Basis as a part of this Issue and the Equity Shares allotted on conversion of the Warrants shall be subject to the Memorandum and Articles of Association of the Company and shall rank pari passu in all respects including dividends with the existing Equity Shares of the Company.
Market Lot
The Equity Shares of the Company are tradable only in dematerialized form. The market lot for Equity Shares in dematerialised mode is one. In case of holding of Equity Shares in physical form, the Company would issue to the allottees one certificate for the Equity Shares allotted to each folio (“Consolidated Certificate”).
Joint Holders
Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint tenants with the benefit of survivorship subject to the provisions contained in the Articles.
285 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Nomination
In terms of Section 109A of the Act, nomination facility is available in case of Equity Shares. The applicant can nominate any person by filling the relevant details in the CAF in the space provided for this purpose.
In case of Equity Shareholders who are individuals, a sole Equity Shareholder or the first named Equity Shareholder, along with other joint Equity Shareholders, if any, may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Equity Shares. A person, being a nominee, becoming entitled to the Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale of the Equity Share by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. When the Equity Share is held by two or more persons, the nominee shall become entitled to receive the amount only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on request at the registered office of the Company or such other person at such addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant portion of the CAF.
Only one nomination would be applicable for one folio. Hence, in case the Equity Shareholder(s) has already registered the nomination with the Company, no further nomination needs to be made for Equity Shares that may be allotted in this Issue under the same folio.
In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination for the Equity Shares to be allotted in this Issue. Nominations registered with respective Depositary Participant (“DP”) of the applicant would prevail. Any applicant desirous of changing the existing nomination is requested to inform its respective DP.
Notices
All notices to the Equity Shareholder(s), required to be given by the Company shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation and one regional language daily newspaper with wide circulation and/or, will be sent by ordinary post / registered post / speed post to the registered holders of the Equity Shares from time to time.
Listing and trading of Equity Shares proposed to be issued.
The Company’s existing Equity Shares are currently traded on the BSE and the NSE under the ISIN INE [●]. The fully paid up Equity Shares proposed to be issued on a rights basis shall be listed and admitted for trading on the BSE and the NSE under the existing ISIN for fully paid Equity Shares of the Company. The fully paid up Equity Shares allotted pursuant to this Issue will be listed as soon as practicable but in no case later than 10 days from the date of allotment. The Company has made an application for “in-principle” approval for listing of the Equity Shares in accordance with clause 24(a) of the Listing Agreement to the BSE and NSE through letters dated [●], 2007 and [●], 2007 and has received such approval from the BSE through letter no. [●], dated [●], 2007 and from NSE through letter no. [●], dated, [●], 2007.
The distribution of this Draft Letter of Offer on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions.
The Company is making this issue of Equity Shares on a rights basis to the shareholders of the Company and will dispatch this Letter of Offer/Abridged Letter of Offer and CAF to shareholders who have provided an Indian address.
Additional Subscription by the Promoter
The Promoters have confirmed that that they intend to subscribe to the full extent of their entitlement in the Issue. The Promoters reserve the right to subscribe to the full extent of their entitlement in this Issue, either by themselves or in combination of entities controlled by them, including by subscribing for renunciation, if any,
286 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only made by the promoter group or any other shareholder. The Promoters have provided an undertaking dated December 21, 2007 to apply for additional equity shares in the Issue, to the extent of the unsubscribed portion of the Issue. As a result of this subscription and consequent allotment, the Promoters may acquire shares over and above their entitlement in this Issue, which may result in an increase of the shareholding being above the current shareholding with the entitlement of Equity Shares under the Issue. This subscription and acquisition of additional Equity Shares by the Promoters through the Issue, if any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section on “Objects of the Issue” of the Draft Letter of Offer, there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of allotments to the Promoters, in this Issue, the Promoter’s shareholding in the Company exceeds their current shareholding. The Promoters shall subscribe to such unsubscribed portion as per the relevant provisions of the law. Allotment to the Promoters of any unsubscribed portion, over and above their entitlement shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous listing requirements.
For further details please refer to section titled “Basis of Allotment” beginning on page [●] of this Draft Letter of Offer.
Procedure for Application
The CAF for Equity Shares would be printed in black ink for all Equity Shareholders. In case the original CAFs are not received by the applicant or is misplaced by the applicant, the applicant may request the Registrar to the Issue, for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address.
Acceptance of the Issue
You may accept the Issue and apply for the Equity Shares offered, either in full or in part, by filling the enclosed CAFs and submit the same along with the application money payable to the Bankers to the Issue at any of the collection branches as mentioned on the reverse of the CAFs before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of the Company in this regard. Applicants at centers not covered by the branches of collecting banks can send their CAFs together with the cheque drawn at par on a local bank at Mumbai/demand draft payable at Mumbai to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected.
Option available to the Equity Shareholders
The CAFs will clearly indicate the number of Equity Shares that the Equity Shareholder is entitled to.
If the Equity Shareholder applies for an investment in Equity Shares, then he can:
• Apply for his entitlement in part;
• Apply for his entitlement in part and re99nounce the other part;
• Apply for his entitlement in full;
• Apply for his entitlement in full and apply for additional Equity Shares.
Additional Equity Shares
You are eligible to apply for additional Equity Shares over and above the number of Equity Shares (as the case may be) you are entitled to, provided that you have applied for all the Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, in consultation if necessary with the Designated Stock Exchange and in the manner prescribed under the section entitled ‘Basis of Allotment’ on page [●] of this Draft Letter of Offer.
287 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
If you desire to apply for additional Equity Shares, please indicate your requirement in the place provided for additional shares in Part A of the CAF. The renouncee applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares.
Where the number of additional Equity Shares applied for exceeds the number available for allotment, the allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.
Renunciation
This Issue includes a right exercisable by you to renounce the Equity Shares offered to you either in full or in part in favour of any other person or persons. Your attention is drawn to the fact that the Company shall not allot and/or register any Equity Shares in favour of more than 3 persons (including joint holders), partnership firm(s) or their nominee(s), minors, HUF, any trust or society (unless the same is registered under the Societies Registration Act, 1860 or the Indian Trust Act or any other applicable law relating to societies or trusts and is authorized under its constitution or bye-laws to hold Equity Shares, as the case may be).
Any renunciation from Resident Indian Shareholder(s) to Non-resident Indian(s) or from Non-resident Indian Shareholder(s) to Resident Indian(s) or from Non-resident Indian shareholder(s) to other Non-resident Indian(s) is subject to the renouncer (s)/renounce(s) obtaining the approval of the FIPB and/or necessary permission of the RBI under the FEMA and such permissions should be attached to the CAF. Applications not accompanied by the aforesaid approvals are liable to be rejected.
By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003. Accordingly, the existing Equity Shareholders of the Company who do not wish to subscribe to the Equity Shares being offered but wish to renounce the same in favour of renouncee shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s).
Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid. Submission of the enclosed CAF to the Banker to the Issue at its collecting branches specified on the reverse of the CAF with the form of renunciation (Part ‘B’ of the CAF) duly filled in shall be conclusive evidence for the Company of the person(s) applying for Equity Shares in Part ‘C]’ of the CAF to receive allotment of such Equity Shares. The renouncees applying for all the Equity Shares renounced in their favour may also apply for additional Equity Shares. Part ‘A’ of the CAF must not be used by the renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to renounce any Equity Shares in favour of any other person.
Procedure for renunciation
To renounce all the Equity Shares offered to a shareholder in favour of one renouncee
If you wish to renounce the offer indicated in Part ‘A’, in whole, please complete Part ‘B’ of the CAF. In case of joint holding, all joint holders must sign Part ‘B’ of the CAF. The person in whose favour renunciation has been made should complete and sign Part ‘C’ of the CAF. In case of joint renouncees, all joint renouncees must sign this part of the CAF.
To renounce in part/or renounce the whole to more than one person(s)
If you wish to either accept this offer in part and renounce the balance or renounce the entire offer under this Issue in favour of two or more renouncees, the CAF must be first split into requisite number of forms.
Please indicate your requirement of split forms in the space provided for this purpose in Part ‘D’ of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the last date of receiving requests for split forms. On receipt of the required number of split forms from the Registrar, the procedure as mentioned in paragraph above shall have to be followed.
In case the signature of the Equity Shareholder(s), who has renounced the Equity Shares, does not agree with the specimen registered with the Company, the application is liable to be rejected.
288 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Renouncee (s)
The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part ‘C’ of the Application Form and submit the entire Application Form to the Bankers to the Issue on or before the Issue Closing Date along with the application money in full.
Change and/ or introduction of additional holders
If you wish to apply for Equity Shares jointly with any other person(s), not more than three, who is/are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed.
However, this right of renunciation is subject to the express condition that the Board of Directors of the Company shall be entitled in its absolute discretion to reject the request for allotment from the renouncee(s) without assigning any reason thereof.
Instructions for Options
Please note that:
• Part ‘A’ of the CAF must not be used by any person(s) other than the Equity Shareholder to whom this Draft Letter of Offer has been addressed. If used, this will render the application invalid. • Request by the applicant for the split application form should reach the Company on or before [•], . • Only the Equity Shareholder to whom this Draft Letter of Offer has been addressed to and not the renouncee(s) shall be entitled to renounce and to apply for split application forms. Forms once split cannot be split further. • Split form(s) will be sent to the applicant(s) by post at the applicant’s risk.
Additional Equity Shares
You are eligible to apply for additional Equity Shares over and above the number of Equity Shares you are entitled to, provided that you have applied for all the Equity Shares without renouncing them in whole or in part in favor of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be in the manner prescribed under the section entitled ‘Basis of Allotment’ on page [•] of this Draft Letter of Offer. Where the number of additional Equity Shares applied for exceeds the number available for allotment, the allotment would be made on a fair and equitable basis in consultation with the Stock Exchange.
The summary of options available to the Equity Shareholder is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the enclosed CAF:
Option Available Action Required 1. Accept whole or part of your entitlement Fill in and sign Part A (All joint holders must sign) without renouncing the balance. 2. Accept your entitlement in full and apply Fill in and sign Part A including Block III relating to the for additional Equity Shares acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)
3. Renounce your entitlement in full to one Fill in and sign Part B (all joint holders must sign) person (Joint renouncees are considered indicating the number of Equity Shares renounced and as one). hand it over to the renouncee. The renouncee must fill in and sign Part C (All joint renouncees must sign)
289 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Option Available Action Required 4. Accept a part of your entitlement and Fill in and sign Part D (all joint holders must sign) renounce the balance to one or more requesting for Split Application Forms. Send the CAF to renouncee(s) the Registrar to the Issue so as to reach them on or before the last date for receiving requests for Split Forms. OR Splitting will be permitted only once.
Renounce your entitlement to all the On receipt of the Split Form take action as indicated Equity Shares offered to you to more below. than one renouncee For the Equity Shares you wish to accept, if any, fill in and sign Part A.
For the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand it over to the renouncee. Each of the renouncee should fill in and sign Part C for the Equity Shares accepted by them.
5. Introduce a joint holder or change the This will be treated as a renunciation. Fill in and sign Part sequence of joint holders B and the renouncee must fill in and sign Part C.
Availability of duplicate CAF
In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a duplicate CAF on the request of the applicant who should furnish the registered folio number/ DP and Client ID number and his/ her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the Registrar to the Issue within 15 days from the Issue Opening Date. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the applicant violates any of these requirements, he / she shall face the risk of rejection of both the applications.
Application on Plain Paper
An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Issue on plain paper, along with Demand Draft, net of bank and postal charges payable at Mumbai which should be drawn in favor of the “GCPL – Rights Issue” and the Equity Shareholders should send the same by registered post directly to the Registrar to the Issue.
The envelope should be superscribed “GCPL – Rights Issue” and should be postmarked in India. The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars:
• Name of Issuer, being Godrej Consumer Products Limited • Name and address of the Equity Shareholder including joint holders • Registered Folio Number/ DP and Client ID no. • Number of Equity Shares held as on Record Date • Number of Rights Equity Shares entitled • Number of Rights Equity Shares applied for • Number of additional Equity Shares applied for, if any • Total number of Equity Shares applied for • Total amount paid at the rate of Rs. [●] per Equity Share • Particulars of cheque/ demand draft • Savings/Current Account Number and name and address of the bank where the Equity Shareholder will be depositing the refund order
290 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
• PAN, photocopy of the PAN card/ PAN communication of the applicant and for each applicant in case of joint names, irrespective of the total value of the Equity Shares applied for pursuant to the Issue. • Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the Company
Please note that those who are making the application otherwise than on original CAF shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications. The Company shall refund such application amount to the applicant without any interest thereon.
Last date of Application
The last date for submission of the duly filled in CAF is [•]. The Issue will be kept open for a minimum of 30 (thirty) days and the Board or any committee thereof will have the right to extend the said date for such period as it may determine from time to time but not exceeding 60 (sixty) days from the Issue Opening Date.
If the CAF together with the amount payable is not received by the Bankers to the Issue/ Registrar to the Issue on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/ Committee of Directors, the offer contained in this Draft Letter of Offer shall be deemed to have been declined and the Board/ Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under the section “Basis of Allotment”.
INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALIZED FORM.
Basis of Allotment
Subject to the provisions contained in this Draft Letter of Offer, the Articles of Association of the Company and the approval of the Designated Stock Exchange, the Board will proceed to allot the Equity Shares in the following order of priority:
(a) Full allotment to those Equity Shareholders who have applied for their rights entitlement either in full or in part and also to the renouncee(s) who has/ have applied for Equity Shares renounced in their favour, in full or in part.
(b) For Equity Shares being offered on a rights basis under this Issue, if the shareholding of any of the Equity Shareholders is less than [●] Equity Shares or is not in the multiple of [●], the fractional entitlement of such holders shall be ignored. Shareholders whose fractional entitlements are being ignored would be given preferential allotment of one additional share each if they apply for additional shares. Allotment under this head shall be considered if there are any unsubscribed Equity Shares after allotment under (a) above. If number of Equity Shares required for allotment under this head are more than the number of shares available after allotment under (a) above, the allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.
(d) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as part of the Issue and have also applied for additional Equity Shares. The allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after making full allotment in (a), (b) and (c) above. The allotment of such Equity Shares will be at the sole discretion of the Board/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not preferential allotment.
(e) Allotment to renouncees who having applied for all the Equity Shares renounced in their favour, have applied for additional Equity Shares provided there is surplus available after making full allotment under (a), (b), (c) and (d) above. The allotment of such Equity Shares Board/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not preferential allotment.
291 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
After taking into account allotment to be made under (a) above, if there is any unsubscribed portion, the same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of the Takeover Code which would be available for allocation under (b), (c), (d) and (e) above. The Promoter has provided an undertaking dated December 21, 2007 to the Company to apply for additional Equity Shares to the extent of the unsubscribed portion of the Issue. As a result of this subscription and consequent allotment, the Promoter may acquire shares over and above their entitlement in the Issue, which may result in an increase of the shareholding being above the current shareholding with the entitlement of Equity Shares under the Issue. This subscription and acquisition of additional Equity Shares by the Promoter, if any, will not result in change of control of the management of the Company and shall be exempt in terms of proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, other than meeting the requirements indicated in the section on “Objects of the Issue” on page [•] of this Draft Letter of Offer), there is no other intention/purpose for this Issue, including any intention to delist the Company, even if, as a result of allotments to the Promoter, in this Issue, the Promoter’s shareholding in the Company exceeds their current shareholding. In the event of oversubscription, allotment will be made within the overall size of the Issue.
Allotment to the Promoter of any unsubscribed portion, over and above their entitlement shall be done in compliance with Clause 40A of the Listing Agreement and the other applicable laws prevailing at that time.
Underwriting
The present Issue is not underwritten.
Allotment / Refund
The Company will issue and dispatch allotment advice/ share certificates/demat credit and/ or letters of regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any, within a period of six weeks from the Issue Closing Date. If such money is not repaid within eight days from the day the Company becomes liable to pay it, the Company shall pay that money with interest as stipulated under Section 73 of the Act.
Applicants residing at centers where clearing houses are managed by the Reserve Bank of India (RBI), will get refund through ECS only except where applicant are otherwise disclosed as applicable/eligible to get refunds through direct credit and RTGS.
In case of those applicants who have opted to receive their Right Entitlement in dematerialized form by using electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately. Applicants to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post intimating them about the mode of credit refund with a period of 6 (six) weeks from the Issue Closing Date. In case of those Applicants who have opted to receive their Rights Entitlement in physical form, the Company will issue the corresponding share/debenture certificates under section 113 of the Companies Act or other applicable provisions if any. Any refund order exceeding Re.1,500 will be dispatched registered post/ speed post to the sole/ first applicant’s registered address. Refund orders up to the value of Re.1,500 would be sent under the certificate of posting. Such cheques or pay orders will be payable at par at all place where the applications were originally accepted and will be marked ‘Account Payee only’ and would be drawn in the name of the sole/ first applicant. Adequate funds would be made available to the Registrar to the Issue for this purpose.
Payment of Refund
Mode of making refunds
The payment of refund, if any, would be done through any of the following modes:
1. ECS – Payment of refund would be done through ECS for applicants having an account at any of the following fifteen centres: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram. This mode of payment of refunds would be subject to availability of complete bank account details
292 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
including the MICR code as appearing on a cheque leaf, from the Depositories. The payment of refunds is mandatory for applicants having a bank account at any of the abovementioned fifteen centres, except where the applicant, being eligible, opts to receive refund through NEFT, direct credit or RTGS.
2. NEFT (National Electronic Fund Transfer) – Payment of refund shall be undertaken through NEFT wherever the applicants’ bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR), if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method.
3. Direct Credit – Applicants having bank accounts with the existing bankers of the Company shall be eligible to receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by the Company.
4. RTGS – Applicants having a bank account at any of the abovementioned fifteen centres and whose refund amount exceeds Re.1 million, have the option to receive refund through RTGS. Such eligible applicants who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the Refund Bank(s) for the same would be borne by the Company. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by the applicant.
5. For all other applicants, including those who have not updated their bank particulars with the MICR code, the refund orders will be despatched under certificate of posting for value up to Re.1,500 and through Speed Post/ Registered Post for refund orders of Re.1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole/first applicant and payable at par.
Allotment advice / Share Certificates/Demat Credit
Allotment advice/ share certificates/ demat credit or letters of regret will be dispatched to the registered address of the first named applicant or respective beneficiary accounts will be credited within 6 (six) weeks, from the date of closure of the subscription list. In case the Company issues allotment advice, the relative share certificates will be dispatched within one month from the date of allotment. Allottees are requested to preserve such allotment advice (if any) to be exchanged later for share certificates.
Option to receive Equity Shares in Dematerialized Form
Applicants to the Equity Shares of the Company issued through this Issue shall be allotted the securities in dematerialized (electronic) form at the option of the applicant. The Company signed a bipartite agreement with National Securities Depository Limited (NSDL) on July [●], which enables the Investors to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates. The Company has also signed a bipartite agreement with Central Depository Services (India) Limited (CDSL) on [●] which enables the Investors to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates.
In this Issue, the allottees who have opted for Equity Shares in dematerialized form will receive their Equity Shares in the form of an electronic credit to their beneficiary account with a depository participant. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Applications, which do not accurately contain this information, will be given the securities in physical form. No separate applications for securities in physical and/or dematerialized form should be made. If such applications are made, the application for physical securities will be treated as multiple applications and is liable to be rejected. In case of partial allotment, allotment will be done in demat option for the securities sought in demat and balance, if any, will be allotted in physical securities.
The Equity Shares will be listed on the BSE & NSE.
293 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Procedure for availing the facility for allotment of Equity Shares in this Issue in the electronic form is as under:
• Open a beneficiary account with any depository participant (care should be taken that the beneficiary account should carry the name of the holder in the same manner as is exhibited in the records of the Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as with the Company). In case of Investors having various folios in the Company with different joint holders, the Investors will have to open separate accounts for such holdings. Those equity shareholders who have already opened such Beneficiary Account (s) need not adhere to this step.
• For equity shareholders already holding Equity Shares of the Company in dematerialized form as on the Record Date, the beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Equity Shares pursuant to this Offer by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the allotment of securities arising out of this Issue may be made in dematerialized form even if the original Equity Shares of the Company are not dematerialized. Nonetheless, it should be ensured that the Depository Account is in the name(s) of the Equity Shareholders and the names are in the same order as in the records of the Company.
Responsibility for correctness of information (including applicant’s age and other details) filled in the CAF vis-à-vis such information with the applicant’s depository participant, would rest with the applicant. Applicants should ensure that the names of the applicants and the order in which they appear in CAF should be the same as registered with the applicant’s depository participant. If incomplete / incorrect beneficiary account details are given in the CAF the applicant will get Equity Shares in physical form. The Equity Shares pursuant to this Offer allotted to Investors opting for dematerialized form, would be directly credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant’s depository participant will provide to him the confirmation of the credit of such Equity Shares to the applicant’s depository account. Renouncees will also have to provide the necessary details about their beneficiary account for allotment of securities in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected. Utilisation of Proceeds
Subscription received against this Issue will be kept in a separate bank account(s) and the Company would not have access to such funds unless it has received minimum subscription of 90%, of the Issue and the necessary approvals of the Stock Exchanges, to use the amount of subscription.
General instructions for applicants a) Please read the instructions printed on the enclosed CAF carefully. b) Application should be made on the printed CAF, provided by the Company except as mentioned under the head Application on plain paper and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of this Draft Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the applicants, details of occupation, address, father’s / husband’s name must be filled in block letters. c) The CAF together with cheque / demand draft should be sent to the Bankers to the Issue / Collecting Bank or to the Registrar to the Issue and not to the Company or Lead Manager to the Issue. Applicants residing at places other than cities where the branches of the Bankers to the Issue have been authorised by the Company for collecting applications, will have to make payment by Demand Draft payable at Mumbai of an amount net of bank and postal charges and send their application forms to the Registrar to the Issue by REGISTERED POST. If any portion of the CAF is / are detached or separated, such
294 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
application is liable to be rejected. d) Applications for any value made by the applicant or in the case of application in joint names, each of the applicants, should mention his/ her PAN number allotted under the Income-Tax Act, 1961 and also submit a photocopy of the PAN card(s) or a communication from the Income Tax authority indicating allotment of PAN (“PAN Communication”) along with the application for the purpose of verification of the number. Applicants who do not have PAN are required to provide a declaration in Form 60 / Form 61 prescribed under the I.T. Act along with the application. CAFs without this photocopy/ PAN Communication/ declaration will be considered incomplete and are liable to be rejected. e) Applicants are advised that it is mandatory to provide information as to their savings/current account number and the name of the Company with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees. Application not containing such details is liable to be rejected. f) The payment against the application should not be effected in cash if the amount to be paid is Rs. 20,000 or more. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon. Payment against the application if made in cash, subject to conditions as mentioned above, should be made only to the Bankers to the Issue. g) Signatures should be either in English or Hindi or in any other language specified in the Eight Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company. h) In case of an application under power of attorney or by a body corporate or by a society, a certified true copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under this Offer and to sign the application and a copy of the Memorandum and Articles of Association and / or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the above referred documents are already registered with the Company, the same need not be a furnished again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue. i) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per the specimen signature(s) recorded with the Company. Further, in case of joint applicants who are renouncees, the number of applicants should not exceed three. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant. j) All communication in connection with application for the Equity Shares including any change in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first / sole applicant Equity Shareholder, folio numbers and CAF number. Please note that any intimation for change of address of Equity Shareholders, after the date of allotment, should be sent to the Registrar and Transfer Agents of the Company, in the case of Equity Shares held in physical form and to the respective depository participant, in case of Equity Shares held in dematerialized form. k) Split forms cannot be re-split. l) Only the person or persons to whom Equity Shares have been offered and not renouncee(s) shall be entitled to obtain split forms. m) Applicants must write their CAF number at the back of the cheque / demand draft. n) Only one mode of payment per application should be used. The payment must be either in cash or by cheque / demand draft drawn on any of the banks, including a co-operative bank, which is situated at
295 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
and is a member or a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted. o) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or post-dated cheques and postal / money orders will not be accepted and applications accompanied by such cheques / demand drafts / money orders or postal orders will be rejected. The Registrar will not accept payment against application if made in cash. (For payment against application in cash please refer point (f) above) p) No receipt will be issued for application money received. The Bankers to the Issue / Collecting Bank/ Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.
Grounds for Technical Rejections
Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following:
• Amount paid does not tally with the amount payable for; • Bank account details (for refund) are not given; • Age of First Applicant not given; • PAN photocopy/ PAN Communication/ Form 60 / Form 61 declaration not given for Application of any value; • In case of Application under power of attorney or by limited companies, corporate, trust, etc., relevant documents are not submitted; • If the signature of the existing shareholder does not match with the one given on the Application Form and for renounce(s) if the signature does not match with the records available with their depositories; • If the Applicant desires to have shares in electronic form, but the Application Form does not have the Applicant’s depository account details; • Application Forms are not submitted by the Applicants within the time prescribed as per the Application Form and the Letter of Offer; • Applications not duly signed by the sole/joint Applicants; • Applications by OCBs; • Applications accompanied by Stockinvest; • In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Applicants (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s identity; • Applications that do not include the certification set out in the CAF to the effect that the subscriber is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the Securities in compliance with all applicable laws and regulations; • Applications which have evidence of being executed in/dispatched from the US; • Applications by ineligible Non-residents (including on account of restriction or prohibition under applicable local laws) and where a registered address in India has not been provided; • Applications where the Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements; • Duolicate Applications
296 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Mode of payment for Resident Equity Shareholders/ Applicants
• All cheques / drafts accompanying the CAF should be drawn in favour of the Collecting Bank (specified on the reverse of the CAF), crossed ‘A/c Payee only’ and marked ‘GCPL-Rights Issue’ • Applicants residing at places other than places where the bank collection centres have been opened by the Company for collecting applications, are requested to send their applications together with Demand Draft for the full application amount, net of bank and postal charges favouring the Bankers to the Issue, crossed ‘A/c Payee only’ and marked ‘GCPL-Rights Issue’ payable at Mumbai directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. The Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any. Mode of payment for Non-Resident Equity Shareholders/ Applicants
As regards the application by non-resident equity shareholders, the following conditions shall apply:
Payment by non-residents must be made by demand draft payable at Mumbai / cheque payable drawn on a bank account maintained at Mumbai or funds remitted from abroad in any of the following ways:
Application with repatriation benefits
• By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad (submitted along with Foreign Inward Remittance Certificate); or
• By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in Mumbai; or
• By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable in Mumbai; or FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.
• Non-resident investors applying with repatriation benefits should draw cheques/drafts in favour of ‘GCPL-Rights Issue-Equity-NR’ payable at Mumbai and must be crossed ‘account payee only’ for the full application amount
Application without repatriation benefits
As far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in Mumbai or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. In such cases, the allotment of Equity Shares will be on non-repatriation basis.
All cheques/drafts submitted by non-residents applying on a non-repatriation basis should be drawn in favour of ‘GCPL-Rights Issue-Equity-NR payable at Mumbai and must be crossed ‘account payee only’ for the full application amount. The CAFs duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.
Applicants may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO accounts as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/ FCNR/ NRO account should be enclosed with the CAF. Otherwise the application shall be considered incomplete and is liable to be rejected. New demat account shall be opened for holders who have had a change in status from resident Indian to NRI.
Note:
• In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to IT Act. • In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity
297 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
Shares cannot be remitted outside India. • The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF. • In case of an application received from non-residents, allotment, refunds and other distribution, if any, will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to necessary approvals.
Investment by FII
In accordance with the current regulations, the following restrictions are applicable for investment by FIIs;
The issue of Euiqty Shares under this issue should not exceed 10% of the post issue paid up capital of the company. In respect of an FII investing in the Equity shares on behalf of its sub account, the investment on behalf of each sub-account shall not exceed 5% of the total paid iup capital of the Company. In accordance with foreign investment limits applicable to the Company, the total FII investment cannot exceed 24%of the total paid-up capital of the company.
Payment by Stockinvest
In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003- 04 dated November 5, 2003, the Stockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue
Disposal of application and application money
No acknowledgment will be issued for the application moneys received by the Company. However, the Bankers to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF.
The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto.
In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Equity Shares, will be refunded to the applicant within six weeks from the close of the Issue.
For further instruction, please read the Composite Application Form (CAF) carefully.
Utilization of Issue Proceeds
The Board of Directors declares that:
(i) The funds received against this Issue will be transferred to a separate bank account other than the bank account referred to sub-section (3) of Section 73 of the Act.
(ii) Details of all moneys utilized out of the Issue shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the purpose for which such moneys has been utilized.
(iii) Details of all such utilized moneys out of the Issue, if any, shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the form in which such unutilized moneys have been invested. The funds received against this Issue will be kept in a separate bank account and the Company will not have any access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90% of the Issue has been received by the Company.
Undertakings by the Company
1. The complaints received in respect of the Issue shall be attended to by the Company expeditiously and satisfactorily.
298 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
2. All steps for completion of the necessary formalities for listing and commencement of trading at all Stock exchanges where the securities are to be listed will be taken within seven working days of finalization of basis of allotment.
3. The funds required for dispatch of refund orders/ allotment letters/ certificates by registered post shall be made available to the Registrar to the Issue.
4. Except as disclosed, no further issue of securities affecting equity capital of the Company shall be made till the securities issued/offered through the Issue are listed or till the application moneys are refunded on account of non-listing, under-subscription etc.
5. The Company accepts full responsibility for the accuracy of information given in this Letter of Offer and confirms that to best of its knowledge and belief, there are no other facts the omission of which makes any statement made in this Letter of Offer misleading and further confirms that it has made all reasonable enquiries to ascertain such facts.
6. All information shall be made available by the Lead Manager and the Issuer to the investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc.
Important
• Please read this Draft Letter of Offer carefully before taking any action. The instructions contained in the accompanying Composite Application Form (CAF) are an integral part of the conditions of this Draft Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected.
• All enquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for Split Application Forms must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and superscribed ‘GCPL – Rights Issue’ on the envelope and postmarked in India) to the Registrar to the Issue at the following address:
Intime Spectrum Registry Limited C 13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (West), Mumbai 400 078
• It is to be specifically noted that this Issue of Equity Shares is subject to the section entitled ‘Risk Factors’ beginning on page [•] of this Draft Letter of Offer.
• The Issue will be kept open for at least 30 days unless extended, in which case it will be kept open for a maximum of 60 days.
299 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
MAIN PROVISIONS OF ARTICLES OF ASSOCIATION
Capitalized terms used in this section have the meaning that has been given to such terms in the Articles of Association. Pursuant to Schedule II of the Companies Act, 1956 and SEBI DIP Guidelines, the main provisions of the Articles of Association of the Company are set forth below:
TABLE “A” EXCLUDED
Article 1 provides that, “The regulations contained in Table A, in the First schedule to the Companies Act, 1956, shall not apply to this Company, but the regulations for the management of the Company and for the observance of the members thereof and their representatives shall, subject to any exercise of the statutory powers of the Company in reference to the repeal or alteration of, or addition to, its regulations by Special resolution, as prescribed by the said Act, be such as are contained in these Articles.”
CAPITAL AND INCREASE AND REDUCTION OF CAPITAL
Amount of Capital
Article 3 provides that the authorized Share Capital of the Company is Rs, 300 million divided into 290 million equity shares of Re.1 each and 10 million unclassified shares of Re.1 each. It also provides the power to the Board of Directors of the Company to increase or reduce the capital and to divide the capital of the Company for the time being into several classes therein and to attach thereto respectively such preferential, deferred, qualified or special rights, privileges or conditions as may be determined by or in accordance with the Articles of Association of the Company and to vary, modify, amalgamate or abrogate any such rights, privileges or conditions in such manner as may for the time being be provided and thought expedient.
Notwithstanding anything contained herein, the company shall be entitled to dematerialize its shares, debentures and other securities pursuant to the Depositories Act, 1996 and offer its shares, debentures and other securities for subscription on a detematerialised form.
Increase of Capital
Article 4 provides that “The Company may from time to time, by Ordinary Resolutions, increase its authorized capital by such sum to be divided into shares of such amounts as may be specified in the resolution.”
Article 5 provides that any capital raised by the creation of new shares shall be considered as part of the existing capital, except so far as otherwise provided by the conditions of issue or by the these presents.
Redeemable Preference Shares
Article 6 provides that the Company shall have the power to issue preference shares liable to redemption at the option of the Company and the resolution authorising such issue shall prescribe the manner, terms and conditions of redemption.
Article 7 provides that “On the issue of redeemable preference shares under the provisions of the Article 6 hereof the following provisions shall take effect:
(a) no such shares shall be redeemed except out of the profits of the Company which would otherwise be available for dividend or out of the proceeds of a fresh issue of shares made for the purpose of the redemption;
(b) no such shares shall be redeemed unless they are fully paid;
(c) the premium, if any, payable on redemption must have been provided for out of the profits of the Company or the Company’s security premium account before the shares are redeemed (d) where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits, which would otherwise have been available for dividend, be transferred to a reserve fund, to be called the “Capital Redemption Reserve Account” a sum equal to the nominal amount of the shares
300 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
redeemed and the provisions of the Act relating to the reduction of the share capital of the Company shall, except as provided in the Act or herein apply as if the capital redemption reserve account were paid up share capital of the Company.
Reduction of Capital
Article 8 provides that the Company may from time to time, by special resolution reduce its capital redemption reserve account or premium account in any manner for the time being authorised by law and in particular capital may be paid off on the footing that it may be called upon again or otherwise.
Consolidation, division and sub-division
Article 9 provides the Company in a general meeting may from time to time sub-divide or consolidate its shares or any of them. The Company may also cancel shares which have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.
SHARES
Numbering of Shares
Article 14 provides that the shares in the capital shall be numbered progressively according to their several denominations provided. However the provisions relating to progressive numbering shall not apply to the dematerialised shares or shares likely to be dematerialised in the future or issued in future in dematerialised form.
Deposit and calls etc. to be payable immediately
Article 18 provides that “The money(if any) which the Board shall, on allotment of any shares being made by them, require or direct to be paid by way of deposit, call or otherwise, in respect of any shares allotted by then, shall immediately on the insertion of the name of the allottee in the Register of Members as holder of such shares become a debt due to and recoverable by the Company from the allottee thereof and shall be paid by him accordingly.
Company not bound to recognise any interest in share other than that of the registered holder
Article 25 provides that the Company shall be entitled to treat the person whose name appears on the Register of Members as the holder of any share or where the name appears as the beneficial owner of shares in the records of the Depository as the absolute owner thereof and accordingly shall not be bound to recognise any benami trust or equitable, contingent, future or partial interest in any share or any right in respect of a share other than an absolute right thereto in accordance with these Articles, or as ordered by a court of competent jurisdiction or by law otherwise provided)
UNDERWRITING AND BROKERAGE
Commission may be paid
Article 28 provides that subject to provisions of the Act, “The Company may at any time pay a commission to any person in consideration of his subscribing or agreeing to subscribe for any shares in or debentures of the Company, or procuring, or agreeing to procure subscriptions for any shares or debentures in the Company. Such commission may be satisfied by payment of cash or by allotment of fully or partly paid shares or partly in one way and partly in the other.
INTEREST OUT OF CAPITAL
Payment of Interest out of Capital
Article 30 provides that the Company may pay interest on so much of that share capital as is for the time being paid up for the period at the rate and subject to the conditions and restrictions and may charge the same to capital as part of the cost of construction of the work or building or the provisions of plant
301 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
CERTIFICATES
Discretion to refuse sub-division or consolidation of certificates
Article 23(a) provides that no certificate of any shares shall be issued either in exchange for those which are subdivided or consolidated or in replacement of those which are defaced, torn or old, decrepit, worn out, or where the cages on the reverse for recording transfers have been duly utilised unless the certificate in lieu of which it is issued, is surrendered to the Company.
Issue of new certificates in place of those defaced, lost or destroyed
Article 23(d) provides that if a share certificate is lost or destroyed, a new certificate shall only be issued with the prior consent of the Board and on such terms, if any as to evidence and indemnity as to the payment of out of pocket expenses incurred by the Company in investigating evidence as the Board thinks fit.
CALLS
Director may make calls
Article 31 provides that the Board may from time to time subject to the terms on which any share may been issued make such call as it thinks fit upon the members in respect of all moneys unpaid on the shares held by them respectively and each member shall pay the amount of every call so made on him.
Notice of Calls
Article 32 provides that fourteen days notice in writing of any call be given by the Company specifying the time and place of payment and the person or persons to whom such calls shall be paid.
Calls to date from resolution
Article 33 provides that a call shall be deemed to have been made at the time when the resolution authorising such call was passed at a meeting of the Board.
Directors may extend Time
Article 36 provides that the Board may from time to time extend the time fixed for payment of any call and may extend such time as to all or any of the members who owing to their residence at a distance or other cause, the Board may deem fairly entitled to such extension.
Calls to carry Interest
Article 37 provides that if any member fails to pay any call due from him on the day appointed for payment thereof or any extension thereof as aforesaid, he shall be liable to payment to pay interest on the same from the day appointed for the payment thereof to the actual payment of such at a rate as shall be fixed by the Board not exceeding 24(twenty four) percent per annum.
FORFEITURE OF SHARES
Company’s lien on shares
Article 42 provides that the Company shall have no lien on it’s fully paid-up-shares. In the case of partly paid up shares, the company shall have first and paramount lien only in respect of moneys called for or payable at a fixed time in respect of such shares. Any such lien shall extend to all dividends.
If Money payable on shares not paid notice to be given to Member
Article 45 provides that if any member fails to pay any call or installment of a call on or before the day appointed for the same or any extension thereof, the Board may at any time or during such time as the call or
302 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only installment remains unpaid, give notice to him requiring him to pay the same together with any interest that may have accrued and all expenses that may have been incurred by the Company for such non payment.
Form of Notice
Article 46 provides that the notice shall name a day and a place or places on and at which such call or installment and such interest thereupon at such rate not exceeding 24(twenty four) percent per annum as the Directors shall determine from the day on which such call or installment ought to have been paid. The notice shall also state that in event of non payment the shares in respect of which the calls was made or installment is payable, will be liable to be forfeited.
In default of payment, shares to be forfeited
Article 47 provides that if the requirements of any such notice given under Article 46 are not complied with, every or any shares in respect of which such notice has been given, may at the time thereafter before payment of all calls, interest and, expenses due in respect thereof, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends declared or any other moneys payable in respect of the forfeited share and not actually paid before the forfeiture.
TRANSFER AND TRANSMISSION OF SHARES
Directors may refuse to register transfer
Article 62 provides that “In case of partly paid shares, an application for registration is made by the transferor; the Company shall give notice of the application to the transferee in accordance with the provisions of Section 110 of the Act.
Title of shares of deceased holder
Article 63 provides that the executors or administrators or holders of a succession certificate or the legal representatives of a deceased member shall be the only persons recognised by the Company as having any title to the shares registered in the name of such member. The Company will not be bound to recognise such individuals unless they have first obtained probate or letters of administration or succession certificate as the case may be from a duly constituted court in the Union of India
Fee for Transfer
Article 67 provides that the Company shall not charge any fee for registration of transfer of shares and debentures; for sub-division and consolidation of shares and debentures certificates and for sub-division of letters of allotment and split, consolidation renewal and pucca transfer receipts into denominations corresponding to the market units of trading; for issue of new certificates in replacement of those which are old, decrepit or where the columns on the reverse for recording transfers have fully utilised; for registration of any power of attorney, probate, letters of administration or similar other documents.
MEETING OF MEMBERS
Annual General Meeting
Article 79 provides that the Company shall in each year hold a general meeting as its annual general meeting in addition to any other meeting in that year. All general meetings other than annual general meetings shall be called extraordinary meetings. The first annual general meeting shall be held within eighteen months from the date of incorporation of the Company and the next general meeting shall be held within six months after the expiry of the financial year in which the first annual general meeting was held and thereafter an annual general meeting shall be, held within six months after the expiry of each financial year, provided that not more than fifteen months shall lapse between the date of one annual general meeting and that of the next. It shall be called on a day which is not a public holiday. At every general meeting of the Company there shall be laid on the table the Directors Report and audited statement of accounts. The Board shall cause to be prepared the annual list of members, summary of the share capital, balance sheet and profit and loss account and forward the same to the registrar.
303 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
PROCEEDINGS AT THE GENERAL MEETINGS
Quorum at General Meeting
Article 87 provides that five members present in person shall be the quorum for a general meeting.
If Quorum not present, Meeting to be dissolved and adjourned
If at the expiration of half an hour from the time appointed for holding a meeting of the Company, a quorum is not present, the meeting if convened by or upon the requisition of members shall stand dissolved. In any other case the meeting shall stand adjourned to the same day in the next week or if that day is a public holiday until the next succeeding day which is not a public holiday.
Chairman of General Meeting
Article 90 provides that the Chairman (if any) of the Board shall be entitled to take chair at every general meeting whether annual or extraordinary. If for some reason the chair is not taken by such individual, then the members present shall elect another Director as chairman and if no Director be present or if all the Directors present decline to take the chair then the members present shall elect one of their members to be the Chairman.
Poll to be taken, if demanded
Article 95 provides that if a poll is demanded as aforesaid the same shall be subject to Article 97 be taken at such time and place in the city or town in which the registered office of the Company is for the time being situated and either by open voting or ballot as the chairman shall direct and either at once or after an interval or adjournment or otherwise and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.
VOTING OF MEMBERS
Members in arrears not to vote
Article 99 provides that no member shall be entitled to vote either personally or by proxy at any general meeting or meeting of a class of shareholders either upon a show of hands or upon a poll in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or in regard to which the company has exercised any right of lien.
Number of Votes to which a member is entitled
Article 100 provides that every member, not disqualified by Article 99 shall be entitled to be present and to speak and vote at such meeting, and on a show of hands every member present in person shall have one vote and upon a poll the voting right of every member present in person or by proxy shall be paid in proportion to his share of the paid up equity share capital of the Company.
Voting in person and by proxy
Article 104 provides that votes may be given either personally or by proxy. A body corporate being a member may vote either by a proxy or by a representative authorised in accordance with the Act and such representative shall be entitled to exercise the same rights and powers on behalf of the body corporate which he represents as that body could exercise if it were an individual member.
Appointment of Proxy
Article 106 provides that every proxy (whether a member or not) shall be appointed in writing under the hand of the appointee or his attorney or if such appointee is a body corporate under the common seal of such body corporate or be signed by an officer or any attorney duly authorised by it and any committee or guardian may also appoint such proxy. The proxy so appointed shall not have the right to speak at the meeting.
304 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
DIRECTORS
Number of Directors
Article 115 provides that unless otherwise determined in a General Meeting and subject to the provisions of Section 252 of the Act, the number of Directors of the Company shall not be less than three or more than twelve excluding Nominee Director as mentioned in Article 116
Nominee Director
Article 116 provides that the Directors shall have subject to the provisions of the Act, the power to agree that such appointer shall have the right to appoint by a notice in writing addressed to the Company one or more persons as Director or Directors, whole time or non whole time of the Company for such period and on such conditions as may be mentioned. Such nominee director/s may not be liable to retire by rotation nor may be required to hold qualifications shares. The Board of Directors of the Company shall have no power to remove from office the nominee director/s. The nominee director shall be entitled to the same rights and privileges and be subject to the same obligations as any other Director of the Company. He shall be entitled to receive all notices of attend all general meetings, board meetings and of the meetings of the committee of which the nominee Director/s is/are member(s) as also minutes of such meetings.
Appointment of Alternate Directors
Article 117 provides that the Board may appoint an alternate Director to Act for a Director during his absence for a period of not less than three months from the State in which the meetings of the Board are ordinarily held. An alternate Director appointed under this article shall not hold office for a period longer than that permissible to the original Director in whose place he has been appointed and shall vacate office if and when the original Director returns to that state.
Appointment of Additional Director
Article 118 provides that the Board shall have power at any time and from time to time to appoint any other qualified person to be an additional Director but so that the total number of Directors shall not at any time exceed the maximum fixed under Article 115. Any such additional Director shall hold office only upto the date of the next annual general meeting.
Directors Powers to fill casual vacancies
Article 119 provides that the Board shall have the power at any time to appoint any other qualified person to be a Director to fill a casual vacancy. Any person so appointed shall hold office only upto the date upto which the Director in whose place he is appointed would have held office if it had not been vacated by him
Share Qualification of Directors
Article 120 provides that a Director shall not be required to hold any qualification shares
Remuneration to a Director
Article 121 provides that the Managing Director who is in the whole time employment of the Company may be paid remuneration either by way of monthly payment or at a specified percentage of the net profits of the Company or partly by one way and partly by the other. If the Director is neither a Managing Director in the whole time employment, he may be paid remuneration either by way of monthly, quarterly or annual payment with the approval of the central government or by way of commission if the company by a special resolution authorised such payment.
305 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
RETIREMENT AND ROTATION OF DIRECTORS
Retirement by Rotation
Article 130 provides that two-thirds of the total number of Directors of the Company shall be persons whose period of office is liable to determination by retirement and at every Annual General Meeting of the Company. One-third of such of the Directors are liable to retire by rotation. Subject to Section 256(2) of the Act, the Directors to retire by rotation under this Article at every Annual General Meeting shall be those who have been longest in office since their last appointment, but as between persons who became Directors on the same day, those who are to retire, shall in default of and subject to any agreement among themselves, be determined by lot.
PROCEEDINGS OF MEETINGS OF THE BOARD OF DIRECTORS
Meetings of Directors
Article 144 provides that the Directors may meet together as a Board for the dispatch of business from time to time, and shall so meet atleast once in every three months and atleast four such meetings shall be held every year.
Quorum
Article 146 provides that the quorum for a meeting of the Board shall be one-third of its total strength or two Directors, whichever is higher, provided that where the number of interested Directors exceeds or is equal to two third of the total strength and the number of Directors who are not interested, present at the meeting being not less than two, shall be the quorum during such time, and provided that the presence of the Managing Director/Whole Time Director shall be included for a quorum.
POWERS OF THE DIRECTORS
General Powers of the Directors
Article 156 provides that the Board may exercise all such powers of the Company and do all such acts and things as are not, by the Act or any other Act or by the Memorandum of by the Articles of Association of the Company required to be exercised by the Company in a General Meeting.
306 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following Contract (not being contracts entered in to in the ordinary course of business carried on by the Company or entered into more than two years before the date of this Draft Letter of Offer) which are or may be deemed material have been entered or are to be entered in to by the Company. These Contracts and also the documents for inspection referred to hereunder, may be inspected at the Registered Office of the Company Secretary situated at Pirojshahnagar, Eastern Express Highway, Vikhroli, Mumbai 400079 from 10.00 a.m. to 1.00 p.m., from the date of this Draft Letter of Offer until the date of closure of the Subscription List on working days.
(A) MATERIAL CONTRACTS 1. Engagement Letter dated December 5, 2007 received from the Company appointing JM Financial Consultants Private Limited, to act as the Lead Manager to the Issue. 2. Engagement letter dated December 15, 2007 from the Company appointing Centrum Capital Limited, to act as the Co- Manager to the Issue. 3. Memorandum of Understanding dated December 27, 2007 entered into with the Lead Manager to the Issue. 4. Memorandum of understanding dated December 13, 2007, with the Registrar, Intime Spectrum Registry Limited.
(B) DOCUMENTS 1. Memorandum and Articles of Association of the Company. 2. Certificate of Incorporation of the Company dated November 29, 2000. 3. Consents of the Directors, Company Secretary, Auditors, Lead Manager to the Issue, Bankers to the Issue, Registrar to the Issue to include their names in the Draft Letter of Offer to act in their respective capacities. 4. Shareholders Resolution passed at the Annual General Meeting held on August 3, 2007 appointing Kalyaniwalla and Mistry as statutory auditors of the Company. 5. Copy of the Board Resolution dated November 23, 2007 approving this Issue. 6. Letter dated December 17, 2007 from the Auditors of the Company confirming Tax Benefits as mentioned in this Draft Letter of Offer. 7. The Report of the Auditors Kalyaniwalla and Mistry as set out herein dated Decemeber 26 2007 in relation to the restated financials of the Company for the last five years. 8. Annual Report of the Company as also that of Subsidiaries (wherever applicable) for the last five financial years. 9. In-principle listing approval dated [●], 2007 and [●], 2007 from the BSE and the NSE respectively. 10. Letter No. [●] dated [●] issued by the Securities and Exchange Board of India for the Issue. 11. Due Diligence Certificate dated December 28, 2007 from the Lead Manager 12. Bipartite Agreement dated [●] between the Company, & NSDL for offering depository option to the investors. 13. Bipartite Agreement dated [●] between the Company & CDSL for offering depository option to the investors.
307 DRAFT LETTER OF OFFER Dated December 28, 2007 For Equity Shareholders of the Company only
DECLARATION No statements made in this Draft Letter of Offer shall contravene any of the provisions of the Companies Act, 1956 and the rules made thereunder. All the legal requirements connected with the said issue as also the guidelines, instructions etc. issued by SEBI, Government and any other Competent Authority in this behalf have been duly complied with.
SIGNED BY ALL THE DIRECTORS OF THE COMPANY
______Mr. Adi Godrej Chairman and Managing Director
______Mr. Jamshyd Godrej Non Executive Director
______Mr. Nadir Godrej Non Executive Director
______Prof. Bala Balachandran Independent Director
______Ms. Rama Bijapurkar Independent Director
______Mr. Bharat Doshi Independent Director
______Mr. Aman Mehta Independent Director
______Mr. Hoshedar Press Executive Director & President
______
Mr. Sunil S. Sapre Executive Vice-President (Finance & Commercial) and Company Secretary Place: Mumbai Date: December 28, 2007
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