INNOVATING FOR A BRIGHTER FUTURE. www.godrejinds.com GODREJ INDUSTRIES LT D. GODREJ INDUSTRIES LIMITED

File : GIL Annual Report10 Pg 9-26 / Size: Close Size: 20.3cm(w)x26cm(h) Annual Report 2009–2010

GODREJ INDUSTRIES LIMITED

DIRECTORS

A.B. Godrej Chairman

J.N. Godrej

N.B. Godrej Managing Director

S.A. Ahmadullah

J.S. Bilimoria

A.B. Choudhury

V.M. Crishna

K.K. Dastur

N.D. Forbes

V.N. Gogate

K.N. Petigara

F.P. Sarkari

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

M. Eipe Executive Director & President (Chemicals)

COMPANY SECRETARY

V. Srinivasan

AUDITORS

Kalyaniwalla & Mistry, Chartered Accountants

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

FACTORIES : Vikhroli Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai 400 079. Phone : 022-2518 8010, 2518 8020, 2518 8030 Fax : 022-2518 8066, 2518 8064 Valia Burjorjinagar, (DTA & EOU) Plot No. 3, Village Kanearo, Taluka - Valia, District Bharuch, Gujarat 393 135. Phone : 02643 - 270756 to 270760 Fax : 02643 - 270018 Wadala L.M. Nadkarni Marg, CONTENTS Page Nos. Near M.P.T. Hospital, Chairman’s Statement ...... 03 Wadala (East), Mumbai 400 037. Financial Highlights ...... 04 Phone : 022 - 2415 4816, 2414 8770 Notice ...... 05 Fax : 022 - 2414 6204 Directors’ Report along with Management BRANCHES : Delhi 4th Floor, Delite Theatre Building, Discussion and Analysis Report ...... 11 4/1, Asaf Ali Road, New Delhi 110 002. Report on Corporate Governance ...... 24 Phone : 011 - 2326 1066 Fax : 011 - 2326 1088 Shareholders’ Information ...... 31 Kolkata Block GN, Sector - V, Auditors’ Report ...... 33 Salt Lake City, Kolkata 700 091. Standalone Accounts ...... 36 Phone : 033 - 2357 3555 Fax : 033 - 2357 3945 Consolidated Accounts ...... 66 London 284A, Chase Road, Southgate, Statement Pursuant to Section 212 ...... 88 London N14 - 6HF., UK Phone : (004420) - 88860145 SUBSIDIARIES Fax : (004420) - 88869424 Godrej Agrovet Limited ...... 92 BANKERS : Central Bank of India Golden Feed Products Limited ...... 108 State Bank of India Godrej Oil Palm Limited ...... 112 Bank of India HDFC Bank Ltd. Cauvery Palm Oil Limited ...... 119 Citibank N.A. Natures Basket Limited ...... 126 Hong Kong and Shanghai Banking Corp. Ltd. Ensemble Holdings & Finance Limited ...... 133 DBS Bank Ltd. IDBI Bank Ltd. Godrej Properties Limited ...... 139

Godrej Realty Private Limited ...... 152 REGISTRARS Godrej Real Estate Private Limited ...... 156 & TRANSFER AGEN T : Computech Sharecap Ltd. Godrej Developers Private Limited ...... 160 147, Mahatma Gandhi Road, Opp. Jehangir Art Gallery, Fort, Godrej Seaview Properties Private Limited ....164 Mumbai 400 001. Happy Highrises Limited ...... 168 Phone : 022 - 2263 5000 to 2263 5002 Godrej Waterside Properties Limited...... 172 Fax : 022 - 2263 5001 e-Mail : [email protected] Godrej Estate Developers Private Limited ..... 176 Godrej International Limited ...... 180

2 Annual Report 2009–2010

CHAIRMAN’S STATEMENT

DearD Shareholders, ItIt is my pleasure to write to you following a positive year that began in recovery from the globalg economic crisis and turned into a good year for Godrej Industries. During the economic downturn,d we focused on various initiatives to improve our operational effi ciencies and de-risk oour portfolio. These initiatives have enabled us to reinvent our processes and reinvigorate oour business and we expect to reap benefi ts in this current growth cycle. OOur diversifi ed business model is unique with interests in the form of operating businesses, ssubsidiaries, joint ventures and investments. This variety allows our shareholders to partake iinn growth in our entire range of businesses, including oleo-chemicals, agriculture, real estate, cconsumer products, and foods. These sectors are essential parts of the Indian economy, and with growth in the Indian economy now in full swing, these are very exciting times at Godrej. We have always laid strong emphasis on green and environmentally friendly business practices, which in turn have lead to strong advantages and dividends. We have maintained our position as market leaders in the Indian oleo-chemicals and surfactants space. Our chemical business had healthy profi t margins this year due to consistently strong demand and normalized raw material prices. In addition, we have signifi cantly improved effi ciencies and reduced costs in the division, which will yield results in the years to come. Results from the agri and palm oil business have been especially encouraging and we anticipate these businesses to be among the most impressive growth drivers going forward. There has been considerable growth in the consumer and healthcare business due to high consumer demand for our products across the country. The Godrej brand reaches over 470 million consumers daily and our business always strives to exceed our customers’ changing expectations. Our property development business was successfully listed on the stock exchanges this year and we have projects under construction in several cities across India. There is tremendous demand for residential housing, and affordable housing is an area of particular interest. We expect a housing boom in the next decade, supported by robust economic progress and readily available mortgages. We will harness this potential by continuing to cater to this need and anticipate very aggressive growth for our property development business. The downturn challenged us at Godrej, but we viewed it as an opportunity to evaluate our operations to energize ourselves and our businesses. We focused on initiatives that would enable us to be a company of the future. We have worked on redefi ning the Godrej brand to strengthen brand unity across our broad range of businesses. We reinforced our commitment to innovation, adding technology while improving effi ciency to processes that uphold our high quality standards while sustaining product affordability. Godrej has over a century of industry experience and is one of the most trusted business houses in India. Our management practices and code of conduct have ensured good governance across our businesses. In line with our corporate values, we renewed our responsibility to create social capital by implementing initiatives to improve and create social awareness on issues like disability rights, healthcare, education, environmental issues, and social welfare. Our high standards are present throughout the group’s various businesses and ensure our dedication to our shareholders, business partners, and employees. We hope to continually improve our businesses and envision an even brighter future for Godrej. I appreciate our employees for their outstanding contribution, our business partners, vendors, business associates as well as the Central and State Governments for their support. I would also like to thank our shareholders for their sustained encouragement and support.

Yours faithfully,

Adi Godrej Chairman

3 FINANCIAL HIGHLIGHTS (Rs. Lac) 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 BALANCE SHEET SOURCES OF FUNDS : Shareholders’ Funds Share Capital 3,176.25 3,197.59 3,197.59 2,918.52 2,919.00 2,919.00 Reserves & Surplus 99,093.36 99,514.61 102,644.47 38,142.56 34,217.00 30,618.00 Secured Loans 20,418.89 23,282.16 24,948.07 33,092.48 24,910.00 22,075.00 Unsecured Loans 34,342.14 36,814.31 18,618.92 13,677.13 7,803.00 3,557.00 Deferred Tax Liability 3,198.20 3,278.20 3,619.20 3,980.00 3,818.00 2,502.00 160,228.84 166,086.87 153,028.25 91,810.69 73,667.00 61,671.00 APPLICATION OF FUNDS : Fixed Assets 29,828.78 28,870.84 27,142.37 28,704.33 28,594.00 25,100.00 Investments 114,761.99 114,808.02 77,548.43 48,566.78 37,135.00 33,577.00 Net Working Capital 15,638.07 22,022.14 47,269.56 12,937.47 5,719.00 2,868.00 Miscellaneous Expenditure - 385.87 1,067.89 1,602.11 2,219.00 126.00 160,228.84 166,086.87 153,028.25 91,810.69 73,667.00 61,671.00 INCOME AND PROFIT Total Income 99,169.73 97,148.32 83,881.74 78,291.22 80,270.00 82,353.00 Expenditure other than Interest and Depreciation 82,306.87 86,745.94 67,119.44 64,077.98 69,661.00 70,117.00 Profi t before Interest, Depreciation and Tax 16,862.86 10,402.38 16,762.30 14,213.24 10,609.00 12,236.00 Interest (net) 6,024.79 6,106.12 3,443.74 3,830.78 2,837.00 2,582.00 Profi t before Depreciation and Tax 10,838.07 4,296.26 13,318.56 10,382.46 7,772.00 9,654.00 Depreciation 2,838.80 2,646.19 2,547.00 2,426.36 2,259.00 2,148.00 Profi t before Tax and exceptional items 7,999.27 1,650.07 10,771.56 7,956.10 5,513.00 7,506.00 Exceptional items - (expense)/income - 26.00 310.28 94.75 3,510.80 - Provision for Current Tax (13.47) 123.27 561.87 82.77 545.16 401.00 Net Profi t after Tax 8,012.74 1,552.80 10,519.97 7,968.08 8,478.64 7,105.00 Provision for Deferred Tax (80.00) (341.00) (361.00) 162.00 1,316.00 (470.00) Adjustment in respect of prior years - (expense)/income - (86.11) - - 50.08 2.00 Net Profi t after taxes and adjustments 8,092.74 1,807.69 10,880.97 7,806.08 7,112.56 7,577.00

Total Income 2009-2010 Total Expenditure 2009-2010

Break-up of Total Income Break-up of Total Expenditure Rs. Lac Rs. Lac

Materials 51,680.87

Chemicals 78,123.55 Staff Costs 10,582.61

Estate 2,775.39 Depreciation 2,838.80

Finance & Investment 17,081.77 Interest 6,024.79

Others 1,189.02 Other Operating 20,043.39 99,169.73 Expenses 91,170.46

4 Annual Report 2009–2010

NOTICE TO SHAREHOLDERS

NOTICE is hereby given that the TWENTY-SECOND ANNUAL GENERAL MEETING of the members of GODREJ INDUSTRIES LIMITED will be held on Tuesday, July 27, 2010 at 4.30 P.M. at Y B Chavan Centre, Nariman Point, Mumbai – 400 021, to transact the following business:- ORDINARY BUSINESS: 1. To consider and adopt the Audited Profi t & Loss Account and Cash Flow Statement for the year ended March 31, 2010, the Balance Sheet as at that date, the Auditors’ Report thereon, the Directors’ Report along with Management Discussion and Analysis Report and the Statement of Corporate Governance. 2. To declare dividend for the fi nancial year ended March 31, 2010. 3. To appoint a Director in place of Mr. F.P. Sarkari, who retires by rotation and being eligible, offers himself for reappointment. 4. To appoint a Director in place of Mr. S.A. Ahmadullah, who retires by rotation and being eligible, offers himself for reappointment. 5. To appoint a Director in place of Mr. A.B. Godrej, who retires by rotation and being eligible, offers himself for reappointment. 6. To appoint a Director in place of Mr. K.K. Dastur, who retires by rotation and being elgible, offers himself for reappointment. 7. To appoint Auditors to hold offi ce from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting, and to authorize the Board of Directors of the Company to fi x their remuneration. M/s. Kalyaniwalla & Mistry, Chartered Accountants, the retiring Auditors are eligible for reappointment. SPECIAL BUSINESS: To consider and if thought fi t, to pass with or without modifi cation(s), the following resolutions :- 8. Approval for not fi lling up the vacancy caused by the retirement of Mr. V.N. Gogate as an Ordinary Resolution : RESOLVED THAT pursuant to Section 256 and all other applicable provisions, if any, of the Companies Act, 1956, the vacancy caused by the retirement of Mr. V.N. Gogate who retires by rotation at this Annual General Meeting and who does not seek reappointment be not fi lled up. 9. Appointment of Mr. A.B. Choudhury as a Director, liable to retire by rotation as an Ordinary Resolution : RESOLVED THAT Mr. A.B. Choudhury, who was appointed by the Board of Directors as an Additional Director with effect from August 5, 2009 and who holds offi ce upto the date of this Annual General Meeting in terms of Section 260 of the Companies Act, 1956 (“the Act”) and is eligible for appointment as Director in terms of Section 258 of the Act, and in respect of whom the Company has received notice under Section 257 of the Act, proposing his candidature for the offi ce of Director of the Company, be and is hereby appointed as a Director of the Company, liable to retire by rotation. 10. Reappointment of and remuneration payable to Mr. N.B. Godrej, Managing Director as a Special Resolution : RESOLVED THAT pursuant to the provisions of Sections 198, 269, 309, 310, Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956, approval of the Company be and is hereby accorded for the reappointment of and terms of remuneration payable to including the remuneration to be paid in the event of loss or inadequacy of profi t in any fi nancial year during the tenure of appointment of Mr. N.B. Godrej as Managing Director of the Company, for a period of three years from April 1, 2011 to March 31, 2014 on the terms and conditions as contained in the Agreement to be entered into between the Company and Mr. N.B. Godrej, a draft of which is placed before the meeting and for the purpose of identifi cation,initialled by the Chairman with liberty to the directors/compensation committee to alter and vary the terms and conditions of the said appointment in such manner as may be agreed to between the directors and Mr. N.B. Godrej. 11. Approval to invest in CBay Infotech Ventures Pvt. Ltd. under Section 372A of the Companies Act, 1956 as a Special Resolution: RESOLVED THAT pursuant to Section 372A and all other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modifi cation or re-enactment thereof for the time being in force and as may be enacted from time to time) (hereinafter referred to as ‘the Act’), and/or subject to any other approvals, as may be required, the Company be and is hereby authorised to further invest in securities of CBay Infotech Ventures Pvt. Ltd. (CIVPL) by subscription/ purchase from other shareholders or otherwise in addition to the limits already sanctioned, upto a sum of Rs.2 crore (Rupees Two Crore Only), notwithstanding that the aggregate of the loans and investments so far made in or to be made in and the guarantees so far given or to be given to all bodies corporate, exceed the limits laid down by the Act. RESOLVED FURTHER THAT the Management Committee of the Board of Directors, Mr. A.B. Godrej, Chairman, Mr. N.B. Godrej, Managing Director, Ms. T.A. Dubash, Executive Director & President (Marketing), Mr. M. Eipe, Executive Director & President (Chemicals), Mr. V. Srinivasan, Executive Vice-President (Finance & Estate) & Company Secretary, and Mr. C.G. Pinto, Associate Vice-President (Finance), be and are hereby severally authorised to take from time to time all decisions and steps necessary or

5 expedient or proper in respect of the above investment including the timing, the amount and other terms and conditions of such transactions and also to take all other decisions including varying any of them through recall, renewal, transfer, sale, disinvestment or otherwise, either in part or in full, as it may, in its absolute discretion, deem appropriate, subject to the limits specifi ed above. RESOLVED FURTHER THAT this resolution be valid for a period from the date of approval of the shareholders to March 31, 2014 and that during this period, the limits indicated hereinabove in case of divestment, renewal, transfer or sale of investment as the case may be, be restored to the original sanctioned limit of Rs. 2 crore.

By Order of the Board of Directors V. SRINIVASAN Executive Vice-President (Finance & Estate) & Company Secretary Mumbai, May 26, 2010 Registered Offi ce : Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai 400 079.

NOTES: 1. The relative Explanatory Statement in respect of business under Item No. 8 to 11 as set out in the Notice is annexed hereto. 2. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND ON POLL, TO VOTE INSTEAD OF HIMSELF. SUCH A PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE MEETING. A PROXY SO APPOINTED SHALL NOT HAVE ANY RIGHT TO SPEAK AT THE MEETING. 3. The Register of Members and Share Transfer Books of the Company will be closed from July 20, 2010 to July 27, 2010 (both days inclusive) for ascertaining the names of the shareholders to whom the dividend which, if declared at the Annual General Meeting, is payable. In respect of shares held in electronic form, the dividend will be payable on the basis of benefi cial ownership as per details furnished by National Securities Depository Ltd. and Central Depository Services (India) Ltd., for this purpose. 4. Those Members who have so far not encashed their dividend warrants for the below mentioned fi nancial years, may claim or approach the Company for the payment thereof as the same will be transferred to the ‘Investor Education and Protection Fund’ of the Central Government, pursuant to Section 205C of the Companies Act, 1956 on the respective dates mentioned there against. Please note that as per Section 205C of the Companies Act, 1956, no claim shall lie against the Company or the aforesaid Fund in respect of individual amounts which remain unclaimed or unpaid for a period of seven years from the date the dividend became due for payment and no payment shall be made in respect of such claims. Dividend for the Financial Year ended Due date for transfer 31.03.2003 25.08.2010 31.03.2004 26.07.2011 31.03.2005 26.07.2012 31.03.2006 24.07.2013 31.03.2007 27.07.2014 31.03.2008 29.07.2015 31.03.2009 29.07.2016 5. Members are requested to bring their copy of the Annual Report to the Annual General Meeting. 6. Members are requested to send in their queries at least a week in advance to the Company Secretary at the Registered Offi ce of the Company to facilitate clarifi cations during the meeting.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956. Item No. 8 In accordance with Article 127 of the Articles of Association of the Company, Mr. V.N. Gogate retires by rotation at the ensuing Annual General Meeting. In view of his advanced age, Mr. V.N. Gogate, has not offered himself for reappointment. The Board proposes that the vacancy caused by his retirement shall not be fi lled up. Mr. V.N. Gogate has been on the Board of the Company since 1995 and the Board records its appreciation for the contribution made by him during his tenure with the Company.

6 Annual Report 2009–2010

The Board recommends passing of this resolution. None of the Directors of the Company except Mr. V.N. Gogate, are interested in the resolution. Item No.9 The Board of Directors had on August 4, 2009, appointed Mr. A.B. Choudhury as an Additional Director with effect from August 5, 2009, to hold offi ce till the date of the next Annual General Meeting of the Company. It is proposed to appoint him as Director, liable to retire by rotation. Brief profi le of Mr. A.B. Choudhury, in terms of the Listing Agreement, is provided elsewhere in the Notice. The Board recommends passing of this resolution. None of the Directors of the Company except Mr. A.B. Choudhury, are interested in the resolution. Item No.10 Reappointment of and remuneration payable to Mr. N.B. Godrej, Managing Director The tenure of Mr. N.B. Godrej as Managing Director of the Company will expire on March 31, 2011. It is proposed to reappoint Mr. N.B. Godrej for a further period of three years from April 1, 2011 to March 31, 2014. Mr. N.B. Godrej shall perform his duties subject to the superintendence, control and direction of the Board of Directors of the Company. In consideration of the performance of his duties, Mr. N.B. Godrej shall be entitled to receive remuneration as stated hereinbelow :- 1. Fixed Compensation: Fixed Compensation shall include Basic Salary and the Company’s Contribution to Provident Fund and Gratuity Fund. The Basic Salary shall be in the range of Rs. 7,00,000/- p.m. to Rs. 13,00,000/-p.m. (presently Rs. 5,00,000/- p.m. to Rs. 9,00,000/- p.m.). The Basic Salary approved by the Compensation Committee to Managing Director for the year 2010-11 is Rs. 77,22,000 p.a. The Annual Basic Salary and increments will be decided by the Compensation Committee/Board of Directors depending on the performance of the Managing Director, the profi tability of the Company and other relevant factors. 2. Performance Linked Variable Remuneration (PLVR): Performance Linked Variable Remuneration according to the Scheme of the Company for each of the fi nancial years as may be decided by the Compensation Committee/Board of Directors of the Company based on Economic Value Added (EVA) in the business and other relevant factors and having regard to the performance of the Managing Director for each year. 3. Flexible Compensation: In addition to the Fixed Compensation and PLVR, the Managing Director shall be entitled to the following allowances, perquisites, benefi ts, 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 the manner as the Board may decide as per the Rules of the Company. • Housing (i.e. unfurnished residential accommodation OR House Rent Allowance at 85% of Basic Salary); • Furnishing at residence; • Supplementary Allowance; • Leave Travel Assistance; • Payment/reimbursement of domiciliary medical expenses for self and family; • Payment/reimbursement of Food Vouchers, fuel reimbursement; • Company cars with driver for offi cial use, provision of telephone(s) at residence, payment/reimbursement of expenses there of; • Housing Loan, Contingency Loan as per rules of the Company. These loans shall be subject to Central Government approval, if any; • Earned/privilege leave, on full pay and allowance, not exceeding 30 days in a fi nancial year. Encashment/accumulation of leave will be permissible in accordance with the Rules specifi ed by the Company. Casual/Sick leave as per the rules of the Company; • 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. The maximum cost to the Company per annum for the aggregate of the allowances listed above for the Managing Director shall be Rs. 60,00,000/- p.a. (Presently Rs. 26,40,000/-) plus car (including driver salary, fuel, maintenance and other incidental expenses) plus housing (i.e. furnished residential accommodation cost of which shall be at actuals OR House Rent Allowance at 85% of the basic salary). In addition to the above, the Managing Director shall be eligible to encashment of leave, club facilities, group insurance cover, group hospitalisation cover and/or any other allowances, perquisites and facilities as per the rules of the Company.

7 Explanation: i) For the Leave Travel Assistance and reimbursement of medical and hospitalisation expenses, ‘family’ means the spouse, dependent children and dependent parents. ii) Perquisites shall be evaluated at actual cost or if the cost is not ascertainable the same shall be valued as per Income Tax Rules. 4. Overall Remuneration: The aggregate of salary and perquisites as specifi ed above or paid additionally in accordance with the rules of the Company in any fi nancial 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, unless approved by the Central Government. 5. Loans: (a) Granting of loans according to Company’s Scheme subject to Central Government’s approval, if applicable. (b) Continuation of Loans, if already availed. Notes : I. Unless otherwise stipulated, for the purpose of the above, the perquisites shall be evaluated as per Income Tax Rules wherever actual cost cannot be determined. II. Notwithstanding the foregoing, where in any Financial Year during the currency of the tenure of the Managing Director, the Company has no profi ts or its profi ts are inadequate, the remuneration by way of salary, commission and perquisites shall not exceed, the maximum limits prescribed in Schedule XIII to the Companies Act, 1956, except with the approval of the Central Government. III. The limits specifi ed above are the maximum limits and the Compensation Committee / Board may in its absolute discretion pay to the Managing Director lower remuneration and revise the same from time to time within the maximum limits stipulated above. IV. In the event of any re-enactment or re-codifi cation of the Companies Act, 1956 or the Income Tax Act, 1961 or amendments thereto, the foregoing shall continue to remain in force and the reference to various provisions of the Companies Act, 1956 or the Income Tax Act, 1961 shall be deemed to be substituted by the corresponding provisions of the new Act or the amendments thereto or the Rules and notifi cations issued thereunder. V. If at any time the Managing Director ceases to be in the employment of the Company for any cause whatsoever, he shall cease to be the Managing Director of the Company. VI. The Managing Director is appointed by virtue of his employment in the Company and his appointment is subject to the provisions of Section 283(1) of the Companies Act, 1956. The appointment is terminable by giving three months’ notice in writing on either side. Mr. N.B. Godrej, may be deemed to be interested in the resolution at item no.10. Mr. A.B. Godrej, being relative of Mr. N.B. Godrej, may be deemed to be interested in the resolution. None of the other Diretors are interested in the resolution. Item No.11 Particulars of the Company where investment is proposed:

Name & Regd. Investment Amount of Principal Purpose of Source of funds Nature of Offi ce of the as on date in proposed business of investment Concern/ Company Rs. Crore and investment the Company interest of % of existing (Rs. Crore) Directors holding CBay Infotech 1.00 2.00 Development of A good Internal None of the Ventures Pvt. Ltd. (8%) IT Park, IT and investment sources/ Directors are Godrej ITES, Software opportunity borrowings interested in Industries Development, the resolution. Complex, BPO activities Gate No. 4, Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai – 400 079.

8 Annual Report 2009–2010

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

Name of the Mr. F.P. Sarkari Mr. S.A. Mr. A.B. Godrej Mr. K.K. Dastur Mr. A.B. Choudhury Mr. N.B. Godrej Director Ahmadullah Age 78 70 68 68 67 58 Nationality Indian Indian Indian Indian Indian Indian Date of 30-01-2002 03-01-1995 07-03-1988 01-04-2001 05-08-2009 07-03-1988 appointment on the Board Shareholding in the 20,000 6,000 Nil 3,606 Nil 12,20,572 company Qualifi cation(s) F.C.A. B.A. (Cantab.) B.S., M.S. from B.Com., A.C.A. Masters in B.S.from Massachusetts Economics and MMS Massachusetts Institute of from JBIMS Institute of Technology, U.S.A. Technology, U.S.A. M.S. in Chem. Engg., Stanford University. MBA, Harvard Business School. Expertise in specifi c Finance Marketing Engineering and Finance and Marketing, General Engineering and functional area and General Management Accounts Management and Management Management Real Estate Directorships held in Godrej & Boyce Mfg. Globe Theatres Godrej Consumer Godrej Infotech Ltd. Wadala Godrej Agrovet Ltd. other companies Co. Ltd. Private Ltd. Products Ltd. Oil Field Commodities Ltd. Godrej Tyson Foods Tropicana Enterprise Nadir Company Godrej Hershey Ltd. Instrumentation Godrej Agrovet Ltd. Ltd. Pvt. Ltd. Private Ltd. Godrej Sara Lee (India) Ltd. Swadeshi Detergents Godrej Oil Palm Ltd. Motorsports Ltd. Cartini India Ltd. Ltd. Godrej & Boyce Mfg. Association of India Swadeshi Detergents Wadala Godrej Properties Co Ltd. Ltd. Commodities Ltd. Ltd. Godrej Properties Vora Soaps Ltd. Netel (India) Ltd. Vora Soaps Ltd. Ltd. Godrej Properties Transwarranty Godrej Waterside Godrej Consumer Ltd. Finance Ltd. Properties Pvt. Ltd. Products Ltd. Godrej Hygiene Mahindra & Products Ltd. Mahindra Ltd. Nutrine Godrej Sara Lee Confectionery Ltd. Company Ltd. KarROX Godrej & Boyce Mfg. Technologies Ltd. Co. Ltd. Godrej Gold Coin Godrej Agrovet Ltd. Aquafeed Ltd. Godrej Investments The Indian Hotels Pvt. Ltd. Co.Ltd. Godrej Consumer Tata Teleservices Products (UK) Ltd. (Mah.) Ltd. Keyline Brands Ltd. Cauvery Palm Oil Rapidol (Pty) Ltd. Ltd. Godrej International Godrej International Ltd. Ltd. Godrej Global Mid Godrej Global Mid East FZE East FZE, Godrej Consumer ACI Godrej Products Mauritius Agrovet Pvt. Ltd., Ltd. Bangladesh. Godrej Kinky Keyline Brands Ltd. Products Holdings Rapidol (Pty) Ltd. Ltd. Poultry Processors Association of India Godrej Consumer (Chairman). Products Holding (Mauritius) Ltd. Godrej Nigeria Holdings Ltd. Indian School of Business, Member of the Executive Board

9 Name of the Mr. F.P. Sarkari Mr. S.A. Mr. A.B. Godrej Mr. K.K. Dastur Mr. A.B. Choudhury Mr. N.B. Godrej Director Ahmadullah Chairmanships/ Godrej & Boyce Nil Godrej Consumer Wadala Wadala Godrej Consumer Memberships of Mfg. Co. Ltd.: Products Ltd.: Commodities Ltd.: Commodities Ltd.: Products Ltd.: committees in other Chairman of Audit Member of Chairman of Member of Chairman of companies Committee Shareholders Audit Committee Shareholder’s Shareholders Chairman of Committee Chairman of Committee Committee Remuneration Godrej Sara Lee Remuneration Member of Audit Godrej Sara Lee Committee Ltd.: Committee Committee Ltd.: Chairman of Audit Oil Field Godrej Properties Member of Audit Committee Instrumentation Ltd.: Committee (India) Ltd.: Godrej Hershey Member of Audit Mahindra & Ltd.: Chairman of Audit Committee Mahindra Ltd.: Committee Chairman of Audit Member of Member of Audit Committee Netel (India) Ltd.: Investors Grievance Committee Godrej Properties Chairman of Audit Committee Ltd.: Committee Chairman of Transwarranty Investors’ Grievance Finance Ltd.: Cum Share Transfer Member of Audit Committee Committee

By Order of the Board of Directors V. SRINIVASAN Executive Vice-President (Finance & Estate) & Company Secretary Mumbai, May 26, 2010 Registered Offi ce : Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai 400 079.

10 Annual Report 2009–2010 DIRECTORS’ REPORT MANAGEMENT DISCUSSION AND ANALYSIS There is a separate section on Management Discussion and Analysis appended as Annexure A to this Report, which includes To the Shareholders, the following: Your Directors have pleasure in submitting the Annual Report along • Industry Structure and Developments with the Audited Accounts for the year ended March 31, 2010. • Discussion on fi nancial performance with respect to operational REVIEW OF OPERATIONS performance • Segmentwise performance Your Company’s performance during the year as compared with that during the previous year is summarized below. • Human Resources and Industrial Relations • Opportunities and Threats Rs. Crore • Internal Control Systems and their adequacy Year ended March 31, • Risks and Concerns 2010 2009 • Outlook Sales of products and services 816.37 817.45 SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES Other Income 175.33 154.03 Your Company has interests in several industries including Total Income 991.70 971.48 animal feeds, poultry and agro-products, oil palm plantation, Total Expenditure other than Interest property development, personal and home care, beverages and and Depreciation 823.07 867.46 confectionery, etc. through its subsidiary / associate / joint Profit before Interest, Depreciation venture companies. and Tax 168.63 104.02 Godrej Agrovet Limited (GAVL): Depreciation 28.39 26.46 The turnover of GAVL increased from Rs. 1,283.46 crore to Profi t before Interest and Tax 140.24 77.56 Rs. 1,391.60 crore, an 8% increase over the previous year. The Interest and Financial Charges (net) 60.25 61.06 Profi t after tax but before extra ordinary income increased from Profi t before Tax 79.99 16.50 Rs. 13.32 crore to Rs. 21.71 crore. Provision for Current Tax (0.14) 1.23 The year under review saw the core businesses of Animal Feeds Profi t after Current Tax 80.13 15.27 and Agri Inputs returning an extremely good performance, both Provision for Deferred Tax (0.80) (3.41) in revenue and profi t. Profi t after Current and Deferred Taxation 80.93 18.68 The Animal Feed business recorded a growth of 16% in revenue Profi t on sale of undertaking and 31% in profi t. The profi tability grew due to expansion of (extraordinary item, net of tax) – 0.26 contribution margins and control over fixed overheads. The expansion of contribution margins was possible due to effi cient Net Profi t 80.93 18.94 sourcing, improved formulation and successful R & D efforts. Adjustments in respect of prior years – (0.86) The Agricultural Inputs business grew by 19% in revenue and 22% Surplus brought forward (after adjusting in profi tability. This success is even more impressive in the light excess provision for dividend & tax on of a failed monsoon and drought conditions that followed. The distributed profi t) 294.18 324.37 sales growth was fuelled by innovative products from in-house Profi t after Tax available for R & D in addition to growth in the more commoditised pesticides appropriation 375.11 342.45 and Organic Manure Mixture. Appropriation GAVL enjoyed signifi cantly lower borrowing costs on account of Your Directors recommend appropriation effi cient treasury management. GAVL also successfully implemented as under: SAP in its Animal Feed business and the implementation has started Dividend on Equity Shares 47.65 39.97 yielding signifi cant business benefi ts. Tax on distributed profi ts 7.91 6.79 During the year, GAVL transferred its entire shareholding in Natures Transfer to General Reserve 8.09 1.81 Basket Limited (NBL) to your Company. GAVL continues to be the holding Company of Godrej Oil Palm Limited (GOPL), Cauvery Palm Surplus Carried Forward 311.46 293.88 Oil Limited (CPOL) and Golden Feed Products Limited (GFPL). Total Appropriation 375.11 342.45 Godrej Properties Limited (GPL): The total income increased by Rs. 20.22 crore from Rs. 971.48 During the year 2009–10, GPL entered the capital market crore to Rs. 991.70 crore. The Net Profi t for the year was Rs. 80.93 with an Initial Public Offer (IPO) of 9,429,750 equity shares of crore as compared to Rs.18.94 crore in the previous year. Rs. 10/- each, through 100% Book Building Process wherein 7,732,405 equity shares were allotted to the subscribers, at a DIVIDEND premium of Rs. 480/- per share and 1,697,345 equity shares were allotted to certain Anchor Investors at a premium of Rs. 520/- per The Board of Directors of your Company recommends a fi nal share. The issue was subscribed about 3.6 times. GPL shares were dividend of Rs. 1.50 per equity share of Re. 1/- each, aggregating listed on the Bombay Stock Exchange Limited and National Stock Rs. 47.65 crore (previous year Rs. 1.25 per equity share). Exchange of India Limited on January 5, 2010.

11 GPL posted a total revenue of Rs. 313.43 crore for the year ended saw an overwhelming response in key states leading to a jump in March 31, 2010 from Rs. 255.52 crore for the year ended March sales post the event. 31, 2009, thereby a growth of 23% over last year. The net profi t Godrej Consumer Products Limited (GCPL): grew by 62% at Rs. 124.19 crore for the year ended March 31, 2010 from Rs. 76.62 crore for the year ended March 31, 2009. During the GCPL is one of the leading companies in the FMCG sector with year, GPL successfully completed several projects, most notably a presence in the Personal and Household Care business. During the 1st Phase of Godrej Waterside - commercial project in Kolkata, the year under review the company has endeavored to build on Godrej Woodsman Estate - a residential project in Bangalore and its strong foundation and to create an even stronger future. The Godrej Coliseum in Mumbai. At the end of 2009-10, the completed year has seen the introduction of many new products combined developed area of GPL stood at 7.55 mn sq. ft. compared to 3.63 with several other growth initiatives which included a focused mn sq. ft. in 2008-09. During the year GPL successfully launched expansion into the rural and interior regions. GCPL’s new product mid-income residential projects in Ahmedabad and Kolkata and it introductions span all the company’s categories comprising soaps, commenced operations in Chandigarh, Chennai and Mangalore. hair colourants, toiletries and a new range of hand hygiene products. All these launches have been after a rigorous amount GPL launched a state-of-the art township project, Godrej Garden of research and interaction with the target consumer. City in Ahmedabad in March 2010. It is one amongst 16 founding projects of the Climate Positive Development Program, a Clinton In the soaps business GCPL introduced two new variants of Godrej Climate Initiative (CCI) program that will support the development No. 1 namely ‘Lime and Aloe Vera’ and ‘Moisturising soap’ with of large-scale urban projects that demonstrate cities can grow nourishment of Milk Cream & Almonds. With this the Godrej No. 1 in ways that are “Climate Positive.” Climate Positive real estate portfolio now comprises nine variants. Godrej No. 1 is one of the three chosen power brands of GCPL and is today valued at over developments will strive to reduce the amount of on-site CO2 emissions to below zero. The project received an overwhelming Rs. 500 crore. During the year, Godrej No. 1 maintained its leadership response, the fi rst phase has been entirely booked within 10 days position in the States of Uttaranchal, Punjab, Himachal, and Gujarat of its launch. and has emerged as the leader in Uttar Pradesh as well. Godrej International Limited (GINL): In the hair colourants business, GCPL re-launched its ‘Godrej Expert Hair colour’ brand during the year. This is GCPL’s power GINL trades worldwide in vegetable oils. GINL’s turnover increased brand. Godrej Expert Colour is now available in liquid form as well by about 4% to US$ 120.27 million from US$ 115.50 million whilst as powder form. In Renew brand, GCPL launched Godrej Renew’s profi ts increased by about 11% to US$ 1.53 million from US$ 1.38 Ravishing Reds Collection with two new shades, Wine Red and Plum million. The company improved its turnover and profi ts despite Crazy. Both these new launches have been very well liked. diffi cult markets and lower unit value of vegetable oils. As the world economy recovers, the company should continue to do GCPL’s international operations too performed encouragingly well. especially on the back of the ‘One Africa’ program which enabled it to derive numerous synergies across the continent and thereby Godrej Hershey Limited (GHL): strengthen GCPL’s presence. Keyline brands’ key offerings, namely Your Company holds a 43.4% stake in GHL. During the year under the ‘Cuticura’ Hand Hygiene range, ‘Bio-oil’, P20 performed review, beverages grew 8% over the previous year and chocolate strongly. In South Africa ‘Inecto’ Powder Hair Colours have been syrup grew 82% over the previous year. The gross margin was relaunched. ‘Cuticura’ Hand Hygiene range, Godrej Expert Hair under pressure due to unprecedented rise in commodity prices Colour and Godrej Nupur Mehendi were launched in the GCC and particularly, sugar, glucose and dairy products. There were some the Middle East in the current year. major cost saving projects undertaken that yielded benefi ts during GCPL acquired 49% stake in Godrej Sara Lee Limited (GSLL), an this year. unlisted joint venture between the Godrej Group and Sara Lee Nutrine Confectionery Company Limited (NCCL): Corporation USA earlier during the year. Subsequently in, May 2010 it entered into an agreement to acquire the remaining 51% NCCL, a 100% subsidiary of GHL, is a major player in confectionery stake. GSLL has a range of products that are complementary to business in India. Its product portfolio includes strong brands such GCPL’s existing offerings and there is signifi cant potential to derive as MahaLacto, Nutrine Eclairs, Koko Naka, Honey Fab, Aam Ras, synergies from the combined operations. GCPL has also been able Aasay, SuperStar and Gulkand. Nutrine Lollipop was re-launched to acquire strong, local, personal and household care brand in key with an innovative packaging that provided the much needed emerging markets. It has acquired Megasari, a leading FMCG player momentum to the brand thereby doubling its sales. Nutrine in household care sector in Indonesia and has agreed to acquire Froot Shoot was re-launched with a modern and contemporary Tura, a leading personal care player in Nigeria. packaging to appeal more to the kids and upgrade the brand to justify Rs. 2/- price point. Nutrine Chatkeeli Imli was launched Financial Performance of GCPL in Q4 which marked the move of GHL into spicy / tangy segment On a consolidated basis, GCPL registered a net income of of fruit candies. This market contributes to about 30% of fruit Rs. 2,088.50 crore as compared to Rs. 1,433.13 crore in the confectionary and is growing at a very healthy rate. previous year and GCPL’s profi t after tax increased by 96% from For the fi rst time, a customer relationship program was held for Rs. 173.26 crore in the previous year to Rs. 339.59 crore in the Maha Lacto in which over 2,000 channel partners were invited in a current year. GCPL has paid a total dividend at the rate of Rs. 4.25 ‘Meet & Greet’ Dhoni event. This was held in Chennai and turned per equity share of face value Re. 1. out to be a huge hit with the wholesalers and distributors who Godrej Hygiene Care Limited (GHCL) participated in the same. The Board of Directors of your Company, at its meeting held in May Apart from this, a consumer promotion was launched in which 2009, approved a scheme for the merger of GHCL a 100% subsidiary kids were invited to meet their idol – M.S. Dhoni. This promotion of your Company, into Godrej Consumer Products Limited (GCPL).

12 Annual Report 2009–2010

The scheme has been approved by the Hon’able High Court, fractionated fatty acids for the polymer, oilfi eld and lubricant Bombay in October 2009. The Appointed date of the merger is industries. Parallel to these activities, the R&D department has June 1, 2009 and the assets and liabilities of GHCL stands taken up initiatives to develop customers for specialty surfactants transferred to and vested in GCPL from that date. Pursuant to the and glycerin for oral care and personal care products to meet said scheme of arrangement, 51,07,125 equity shares held by GHCL their specifi c needs. in Godrej Sara Lee Limited, stood transferred to and vested in GCPL INFORMATION SYSTEMS and your Company received 209,39,409 equity shares of GCPL in lieu thereof as per the terms of the Scheme of Arrangement. 25% Your Company had entered into a strategic alliance with Hewlett of these shares are locked in till November 2012. Packard (HP) for a comprehensive IT outsourcing and transformation project. The transition to HP services has been smooth and without FINANCIAL POSITION any disruption to business operations. The fi nancial position of your company continues to be sound. The customer relationship management package (eCRM) has been The loan funds at the end of the year stand at Rs. 547.61 crore as re-launched on the robust SAP platform. The domestic portal, compared to Rs. 600.96 crore at the end of the previous year. The named Rishta has been rolled out to 150 plus customers. The debt equity ratio is 0.52 as compared to 0.57 last year. international eCRM was launched in February 2010 and already Your Company continues to hold the topmost rating of A1+ has 50 plus key customers. from ICRA for its commercial paper program (Rs. 140 crore) EMPLOYEE STOCK OPTION PLAN (ESOP): (enhanced from Rs. 100 crore). ICRA has also assigned an A1+ During the fi nancial year 2009-10, 20 employees of the Company rating for its short term debt instruments/other banking facilities were granted ESOPs based on their leadership responsibility and (Rs. 595 crore) (enhanced from Rs. 570 crore). This rating of ICRA potential: represents highest-credit quality carrying lowest-credit risk. ICRA also assigned LAA rating for long-term debt, working capital and Date of Grant of ESOP No. of ESOP No. of employees other banking facilities (Rs. 370 crore) (enhanced from Rs. 330 August 10, 2009 8,60,000 20 crore). This rating represents high-credit quality carrying low- credit risk. Disclosure in compliance with clause 12 of the Securities and Exchange Board of India (Employees Stock Purchase Scheme) MANUFACTURING FACILITIES Guidelines, 1999 is given in Annexure B attached and forms a part The Chemicals Division of your Company has manufacturing of this report. facilities at Vikhroli and Valia. Effective January 1, 2010, leadership GROUP FOR INTERSE TRANSFER OF SHARES across both the factories has been integrated with one head for manufacturing and engineering services. As required under Clause 3(1) (e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Vikhroli: Regulations, 1997, persons constituting Group (within the meaning Vikhroli factory has successfully implemented OHSAS 18001: 2007 as defi ned in the Monopolies and Restrictive Trade Practices Act, standards last year. 1969) for the purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of the aforesaid SEBI Post implementation of OHSAS 18001: 2007, surveillance audit Regulations are given in Annexure C attached herewith and forms of the Integrated Management System (Quality Management a part of this Report. Systems-ISO 9001:2000, Environment Management Systems-ISO 14001:2004 and Occupational Health & Safety Assessment Series- HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS OHSAS 18001:2007), was conducted by Bureau Veritas. Your Company encourages a culture that develops and empowers The factory has been re-certifi ed for the Integrated Management people, promotes team building, nurtures new ideas and uses System in which ISO 9001:2000 has been upgraded to ISO 9001:2008 information technology to support HR processes and initiatives. standards during last year. These efforts were recently recognized when the Company received an award for “Excellence in HR through Technology” at Valia: the World HRD Congress held in Mumbai on February 13, 2010. Valia factory has successfully recertifi ed for ISO-14001:2004 & Your Company has always emphasized on quality and its employees ISO-9001:2008 upgradation after surveillance audit conducted by are encouraged to get involved in the never-ending process of Bureau Veritas to check the effectiveness and improvements under improving quality through Total Quality Management and quality the system and on environment and quality front. The factory is circles. Two quality circles from the Vikhroli Factory of the recommended for continuation of both certifi cates. This factory Company were recognized as “Excellent Quality Circles” by the has successfully implemented cost effective separation of C8, C10, Quality Circle Forum of India in the 23rd National Convention on C12 and C14 alcohols. Quality Circles held in Bangalore from 19–21 December 2009. Vegoils Division: Industrial relations at all plant locations remained harmonious. This Division continues as a contract processor of edible oils and Regular structured safety meetings were held with employees and vanaspati. The division recorded a turnover of Rs. 2.44 crore as safety programmes were conducted for them throughout the year. against Rs. 2.45 crore in the previous year. Inclusiveness RESEARCH AND DEVELOPMENT It has been the endeavour of your Company to provide opportunities Activities have been initiated to develop new process/modify to socially and economically underprivileged persons, particularly existing processes for the manufacturing of premium quality those belonging to Scheduled Castes / Scheduled Tribes and fatty acids from economy grade raw materials for high value physically challenged individuals. Your Company supports

13 underprivileged children for education through scholarships and Vikhroli factory continues to convert the bio degradable waste into mid-day meal programs at the school level. bio compost with the help of an NGO. The Vikhroli factory focused Your Company gave permanent employment to fi ve physically on waste elimination and also continued energy conservation challenged persons. measures. CORPORATE SOCIAL RESPONSIBILITY The Valia factory has improved / modifi ed in Generation / Transfer/ Treatment / Monitoring and disposal pattern of waste water and Your Company as part of the Godrej group aims to build a brighter, treated water. Achieved signifi cant reduction of main waste water more sustainable India. pollutant parameter i.e. COD Value at inlet of ETP compared to During the year your Company undertook various activities as a part last year and streamlined/optimized the operation and treatment of its Corporate Social Responsibility. Your Company instituted the capability of ETP. Indian chapter of ‘Table For Two’ initiative at the World Economic Forum’s India Summit in December last year. This initiative was FIXED DEPOSITS targeted at addressing hunger and malnutrition in the developing Your Company continues to accept public deposits for 13, 24 and world by combining our organization’s tradition of serving society 36 months’ tenure. The Fixed Deposits scheme has received an and your individual involvement. overwhelming response and the management of the company Your Company continues to support Heroes AIDS Project (HAP). is thankful to all the investors for participating in the scheme HAP is a national HIV/AIDS initiative launched in July 2004 to and for the trust reposed in the company. During the year ended work with media organizations and societal leaders in India. It March 31, 2010, deposits aggregating to Rs. 76.38 crore have been seeks to develop coordinated campaigns to address the spread mobilised and deposits aggregating to Rs. 0.60 crore have been of HIV/AIDS and reduce stigma and discrimination by infl uencing repaid on maturity. The Company has no overdue deposits other public perception and policy through two platforms, advocacy than unclaimed deposits. and communications. DEPOSITORY SYSTEM Under the Teach for India initiative, your Company has sponsored Your Company’s equity shares are available for dematerialisation one Company employee for a period of 2 years under Teach for India Fellowship program which is run by Teach for India, an through National Securities Depository Limited and Central organization established in 2008 to bridge the educational divide Depository Services (India) Limited. As of March 31, 2010, 99.68 % and increase the participation of highly skilled leaders in the of the equity shares of your Company were held in demat form. education sector of India. Under this program, the sponsored BUYBACK employee is committed to teach for two years in low-income urban Pursuant to the resolution passed by the Board of Directors of the and rural public schools. During the year, your Company donated Company and in accordance with the provisions of the Companies fl y catcher machines through Lions Club to various hospitals, Act, 1956 and the Securities and Exchange Board of India (Buyback orphanages, old age homes, home for blind, BMC run schools etc. of Securities) Regulations, 1998, the Company made a Public Your Company distributed scholarships to Scheduled Caste (SC) Announcement to Buyback 57,00,000 equity shares (“Maximum / Scheduled Tribes (ST) primary school children covering three schools and also distributed note books to SC/ST primary school Offer Shares”) of Re. 1 each, from the existing owners of equity children in village Kanerao. shares other than Persons in Control, at a price not exceeding Rs. 275 (Rupees Two Hundred and Seventy Five Only) per equity ENVIRONMENT AND SOCIAL CONCERN share (the “Maximum Offer Price”) payable in cash, for an Your Company continues its efforts for the betterment of the aggregate amount not exceeding Rs. 99 crore (“Maximum Offer environment and conservation of scarce natural resources. Size”). During the year your Company bought back and extinguished Your Company planted 4,500 trees in the Company’s premises 21,33,710 equity shares of face value Re. 1 each. The total amount at Valia and environmental training sessions were conducted invested in the Buyback is Rs. 28,86,58,132/- representing 29.16% by Company’s personnel at ITI Valia and Anchor Institute, DDIT, of the Maximum Offer Size. The change in the paid up capital of Ahmedabad and Ankleshwar. the Company consequent to the Buyback is given hereunder :- Your Company continued “Rain water harvesting” initiatives Particulars No. of shares undertaken at its factory and in the staff quarters at Vikhroli. So far 18,500 m3 of water has been collected at Vikhroli factory and Equity share capital before Buyback (i.e. on May 319,758,602 staff quarters for the Year 2009-10. This process has resulted in 24, 2009) saving water and consequently, the costs, thereof. Less: Equity Shares bought back and extinguished 2,133,710 To prevent pollution to environment, efforts are made to convert (from May 25, 2009 to July 28, 2009 ) waste from the factories into an environment friendly product Equity share capital after Buyback (i.e. on July 317,624,892 and then dispose off the same safely. Your Company continued 29, 2009) its arrangement with Trans Thane Creek Waste Management DEVELOPMENT OF PROPERTY AT VIKHROLI Association for the treatment of solid waste being generated at the Company’s factory at Vikhroli. More areas of wasteland have During the year your Company has entered into a Memorandum of been converted into garden using water from ETP. Understanding (MoU) with Godrej & Boyce Mfg. Co. Ltd. and Godrej As part of your Company’s continued commitment to conserve Properties Ltd. for development of the property at Vikhroli. natural resources, and also to ward off the ever increasing water The binding MoU provides for setting up of suitable Special Purpose shortage, the Company has successfully commissioned a Reverse Vehicle(s) to execute joint development of the property as also Osmosis plant to upgrade ETP treated water to boiler feed water the commercial terms for such development including the sharing resulting into effective recycling of ETP treated water. of costs and revenues/profi t between your Company and GPL, who

14 Annual Report 2009–2010 would be developing the said property. The MoU is subject to all the the Company’s compliance of the requirements of Corporate parties obtaining appropriate corporate and statutory permissions/ Governance in terms of clause 49 of the Listing Agreement and the consents to execute the defi nitive agreements inter-se and the same is annexed to the Report on Corporate Governance. Company obtaining appropriate shareholders’ approval. ADDITIONAL INFORMATION DIRECTORS Annexure D to this Report gives information in respect of In accordance with Article 127 of the Articles of Association of the Conservation of Energy, Technology absorption and Foreign Company, Mr. F.P. Sarkari, Mr. S.A. Ahmadullah, Mr. A.B. Godrej, Exchange Earnings and Outgo, required under Section 217(1)(e) Mr. K.K. Dastur retire by rotation at the ensuing Annual General of the Companies Act, 1956, read with the Companies (Disclosure Meeting and offer themselves for reappointment. Mr. V.N. Gogate, of Particulars in the Report of the Board of Directors) Rules, 1988 also retires by rotation at this Annual General Meeting. However in and forms a part of the Directors’ Report. view of his advanced age, Mr. V.N. Gogate has not offered himself Information as per Section 217(2A) of the Companies Act, 1956, for reappointment. Mr. V.N. Gogate has been on the Board of the read with the Companies (Disclosure of Particulars in the Report of Company since 1995 and the Board records its appreciation for the the Board of Directors) Rules, 1988 forms a part of the Directors’ contribution made by him during his tenure with the Company. Report. As per the provisions of Section 219(1) (b) (iv) of the AUDITORS Companies Act, 1956, the Report and Accounts are being sent You are requested to appoint Auditors for the current year and to the Shareholders of the Company, excluding the statement to authorise the Board to fi x their remuneration. The retiring of particulars of employees u/s 217(2A) of the Companies Act, auditors, Kalyaniwalla and Mistry, Chartered Accountants, are 1956. Any shareholder interested in obtaining a copy of the same eligible for reappointment. A certifi cate from the Auditors has may write to the Company Secretary at the registered offi ce of been received to the effect that their reappointment, if made, the Company. would be within the limits prescribed under Section 224(1B) of The Notes to the Accounts referred to in the Auditors’ Report is the Companies Act, 1956. self-explanatory. However in respect of the qualifi cations in the AUDIT COMMITTEE Audit Report, we state as follows: The Audit Committee, which was constituted pursuant to the Loans and Advances include Rs. 10.33 crore (Previous year Rs. 10.33 provisions of Section 292A of the Companies Act, 1956 and the crore) advanced by the Company to certain individuals against listing agreement, has reviewed the Accounts for the year ended pledge by way of deposit of equity shares of Gharda Chemicals March 31, 2010. The members of the Audit Committee are Ltd. The Company has enforced its security and lodged the shares Mr. F.P. Sarkari (Chairman), Mr. V.N. Gogate, Mr. S.A. Ahmadullah and for transfer in its name, however, the transfer application has Mr. K.N. Petigara, all Independent Directors. The Board of Directors been rejected by Gharda Chemicals Ltd. and the Company fi led of the Company at its meeting held on May 26, 2010 has appointed an appeal before the Company Law Board against the rejection. Mr. K.K. Dastur as an Audit Committee member with immediate The investee company had in the meanwhile, moved the Bombay effect. High Court and the Court remanded the matter back to CLB. The CLB has advised that the parties may approach the Bench after DIRECTORS’ RESPONSIBILITY STATEMENT fi nal disposal of the suit fi led by the investee company and the Pursuant to the provisions contained in Section 217(2AA) of the application made by minority shareholders under section 397/398 Companies Act, 1956, the Directors of your Company confi rm: before the Hon’ble High Court. The Company has fi led an appeal a) that in the preparation of the annual accounts, the applicable with the Hon’ble High Court against the order of the Company accounting standards have been followed and no material Law Board under Section 10 F of the Companies Act 1956, which departures have been made from the same; has been admitted. b) that such accounting policies have been selected and applied The recoverability of the advance is contingent upon the consistently, and such judgments and estimates have been transfer and/or disposal of the said shares. It is the opinion of made that are reasonable and prudent so as to give a true and the management that the underlying value of the said shares is fair view of the state of affairs of the Company at the end of substantially greater than the amount of the loan. the fi nancial year and of the profi t or loss of the Company for ACKNOWLEDGEMENT that period; Your Directors thank the Union Government, the Governments of c) that proper and sufficient care has been taken for the Maharashtra and Gujarat as also all the Government agencies, maintenance of adequate accounting records in accordance banks, fi nancial institutions, shareholders, customers, employees, with the provisions of this Act for safeguarding the assets of fi xed deposit holders, vendors and other business associates, who, the Company, for preventing and detecting fraud and other through their continued support and co-operation, have helped as irregularities; partners in your Company’s progress. d) that the annual accounts have been prepared on a going concern basis. For and on behalf of the Board of Directors CORPORATE GOVERNANCE A.B. Godrej As required by the existing clause 49 of the Listing Agreements with Chairman the Stock Exchanges, a detailed report on Corporate Governance is included in the Annual Report. The Auditors have certifi ed Mumbai, June 4, 2010

15 ANNEXURE “A” FORMING PART OF THE DIRECTORS’ REPORT MANAGEMENT DISCUSSIONS AND ANALYSIS Business Structure GIL

Own business Chemicals, Estate Management, Shareholding Finance & Investment %

Godrej Godrej Godrej Godrej Other Agrovet Consumer Products Hershey Properties Investments 75.2% 23.5% 43.4% 69.4%

Godrej Sara Lee Ltd. Nutrine Various Keyline, Rapidol, Godrej Confectionery SPVs Hygiene, GGME 100%

JVs Godrej Tyson Foods Godrej Feed Godrej Oil Cauvery Oil ACI Godrej Agrovet Products Palm Palm Godrej IJM Palm Oil 100% 80% 90% Godrej Goldcoin Aquafeed

INDUSTRY STRUCTURE AND DEVELOPMENTS Particulars 2009-10 2008-09 The global meltdown experienced last year, with India being no Profi t Before Taxation 79.99 16.50 exception, has given way to a strong recovery shown this year Profi t After Current Taxation 80.13 15.27 particularly by the Indian economy. The GDP growth rate is Profi t After Current & Deferred Taxation 80.93 18.68 expected to remain relatively strong in 2009-10 at around 7.2% as Earnings per Equity Share (Rs.) 2.54 0.56 per the advance estimate by Central Statistical Organisation (CSO). Profi tability ratios are as follows: The manufacturing sector contribution in this is high at 9%. The per capita income is up by 5.4% as per advance estimate by CSO. PBDIT/Total Income 17.00 10.71 With the Index of Industrial Production showing growth of 10.1% PBT/Total Income 8.07 1.70 and within that, manufacturing sector growing at 10.5% compared PAT/Total Income 8.16 1.86 to same period of last year, the outlook for the coming year looks Return on Capital Employed 8.61 4.70 promising. However, rising food infl ation is an area of concern. Return on Net Worth 7.67 1.71 Overall, the Indian economy has shown signs of growth in almost Basic EPS (Rs.) 2.54 0.56 all the sectors. With the resurgence of positive sentiments, the The Financial risk ratios are as follows: Indian economy is expected to maintain and expand its growth Debt/Equity 0.52 0.57 rate in the coming year. Interest coverage 2.33 1.27 FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE Rs. Crore The highlights of overall performance are as follows: Segment Performance 2009-10 2008-09 1. Segment Revenue Rs. Crore Chemicals 781.24 778.19 Particulars 2009-10 2008-09 Estate 27.75 31.54 Sales 816.37 817.45 Finance & Investments 170.82 147.26 Total Income 991.70 971.48 Others 11.89 14.49 Total 991.70 971.48

16 Annual Report 2009–2010

Rs. Crore Glycerin Segment Performance 2009-10 2008-09 Glycerin accounted for 4% of the turnover of this division. Revenues decreased by 36% in view of the low price of Glycerin. This is 2. Segment Results (PBIT) largely a by-product and additional sales are mostly opportunistic, Chemicals 52.38 (18.32) depending on market conditions. Estate 18.19 21.78 Other initiatives Finance & Investments 158.28 147.26 Your Company continued its strong focus on cost reduction and Others (5.39) (4.80) operational effi ciency improvement initiatives, which included reduction in the net working capital employed and reduction in Total 223.46 145.92 the variable costs of production. Less: Interest (Net) (60.25) (61.06) Your Company also successfully added specialty and value added Less: Unallocated expenses (Net) (83.22) (68.36) products in its portfolio which are expected to improve the margins Profi t Before Tax 79.99 16.50 for the division going forward. 3. Segment Capital Employed Your Company has developed a customer relationship management website (eCRM) that enables customers to track their orders and Chemicals 266.00 250.11 transactions as also receive updates through personalized web Estate 61.12 42.36 pages 24x7. This initiative has been accorded recognition from Finance & Investments 1,276.63 1,343.08 Businessweek magazine and your Company was adjudged as Others 22.95 25.51 amongst the top 25 unsung innovators. Unallocated (604.00) (633.94) Your Company had made an application to Maharashtra Industrial Development Corporation (MIDC) for allotment of 20 acres of Total 1,022.70 1,027.12 industrial land in their industrial area at Ambernath to enable CHEMICALS DIVISION expansion/relocation of some of the plants of the Chemicals division and/or for the purpose of diversifi cation of business. MIDC The Chemicals division operates in the oleo-chemical and has favourably considered the Company’s application and an Offer surfactant industries. The division has a blend of domestic and Letter has been issued based on which the Company has signed international operations and continued its leadership position the agreement to lease. in the Indian market. The division achieved export turnover of Rs. 300 crore in this fi scal, accounting for about 37% of its turnover. Outlook The recovery of the global economy leading to a robust increase in The outlook for the coming year 2010-11 is mixed at this point demand helped the growth in this division. The product category- in time. International prices and demand are showing signs of wise review follows: improvement and if the recovery trend continues, the chemicals Fatty Acids business is well poised to take advantage. If new capacities for oleo-chemicals that were announced earlier go on stream, there Fatty Acids portfolio, comprising stearic acid, oleic acid, as well as could be an oversupply situation in the market affecting the prices. specialty fatty acids, accounted for about 40% of the turnover of However, most of the new plants are set up to produce mid chain the division. Continuous cost reduction and market development alcohols. Your Company has a competitive advantage due to its initiatives have helped grow this category by about 9% in value unique strategy of offering higher chain alcohols. terms and 8% in volume terms. The division plans to enhance the sales of its specialty fatty acids in the domestic as well as export Focus on increasing sales of integrated specialty derivative markets. products of fatty alcohol will improve profi tability as well as de-risk the business from the adverse movements in the fatty Fatty Alcohol alcohol market. Fatty Alcohols accounted for 34% of the sales revenue of the Your Company is actively expanding its presence in the Chemicals division. Revenue decreased by 11% largely due to the international market for its specialty derivative products by getting fall in commodity prices leading to a reduction in unit selling price R&D approvals from multinational corporations. though volume increased by 3%. Your Company is also focusing on specialty fatty acids and their Through effective customer relationship management and supply co-products, which will improve its leadership position in terms chain initiatives, the division could maintain and grow its share of market share as also profi tability. with major global corporations. The growth in sales of fatty alcohols in Europe was aided by ‘Just in Time’ (JIT) supplies with ESTATE MANAGEMENT improved logistics management. Your Company has reached over The Ghatkopar - Vikhroli – Kanjur - Powai belt, of Mumbai suburb is 62 countries in the world through its exports. continuing to witness major development activity. The area around the registered offi ce of your Company at Vikhroli is developing at With customer focused manufacturing and marketing strategies, a brisk pace. The ongoing projects of widening of the Eastern it is expected that revenues from this segment will improve in Express Highway, additional fl yovers on the southern end, metro the coming year. terminal in the vicinity and other infrastructure projects will Surfactants be a catalyst for attracting mixed use developmental activity Surfactants contributed 18% to the turnover of the division. As a and is expected to make this suburb, a desired location in the forward integration and de-risking strategy, the division is strongly coming years. focusing on fatty alcohol based surfactants such as Sodium Lauryl Reputed corporates continue to lease spaces in your Company Ethoxy Sulphate (SLES) and Sodium Lauryl Sulphate (SLS) in addition for their business operations. The green environment, excellent to Alpha Olefi n Sulphonate (AOS), particularly in improving the infrastructure and close proximity to CBD, airport, New Mumbai presence in the international market. Your company has started and the extended suburbs are major positives, in making Vikhroli exporting SLES and SLS to various countries. Sales grew by 41% in a preferred location. value terms as compared to last year. This portfolio is expected Your Company has entered into a Memorandum of Understanding to grow steadily in the future. (MoU) with Godrej & Boyce Manufacturing Co. Ltd. and Godrej

17 Properties Ltd. for development of property at Vikhroli. In view of Your Company has in place, all the procedures and practices that the proposed development, some areas given on leave and licence are in line with the ISO Security Standards. Your Company is now basis would not be renewed for further periods. The revenue could ISO 27001 certifi ed. also be affected due to the reduction in average rentals as areas OPPORTUNITIES AND THREATS given on higher rentals come up for renewal. The improvement in the global economic and liquidity situation The total income from this business for the year was Rs. 27.75 crore as compared to Rs. 31.54 crore in the previous year. coupled with more stable commodity prices, the stimulus package by the Indian Government and various Governments globally, FINANCE AND INVESTMENTS provides an opportunity for growth for the Chemicals division. At During the year, your Company continued to earn return from its the same time, if new capacity additions announced earlier go on investments in the form of dividend of Rs. 42.80 crore (previous stream, there could be an over supply situation in the market which year Rs. 50.21 crore) and realised capital appreciation of Rs. 104.38 can put pressure on margins. Specialty products are expected to crore (previous year Rs. 56.27 crore). improve margin and strengthen your Company’s position in the During the year, Godrej Hygiene Care Limited (GHCL) (formerly oleo-chemicals space. known as Godrej Hygiene Care Private Limited), 100% subsidiary The Estate management business can continue to do well, by of your Company, was merged with Godrej Consumer Products Limited (GCPL) under a scheme of arrangement fi led with Hon’ble optimizing the available space usage in the campus and leveraging High Court, Bombay w.e.f. June 1, 2009 and all assets and liabilities the benefi ts of the location such as assured power supply, better of GHCL stand transferred to and vested in GCPL. Your Company connectivity and infrastructural benefi ts. The over supply situation received 209,39,409 equity shares of GCPL in lieu thereof as per for commercial space in the Real Estate market continues to put the scheme of arrangement. Out of the equity shares received, pressure on the rentals and the margins. In the coming months 25% equity shares are locked in till November 2012. the rentals will continue to be under pressure till the demands During the year, our subsidiary Godrej Properties Limited for commercial space picks-up and the sentiments turn buoyant successfully completed its IPO and listed on BSE and NSE. with the improvement in the economic situation. Your Company acquired 100% stake in Natures Basket Limited RISKS AND CONCERNS during the year. Your Company sold its entire stake in Compass Your Company has put a risk management framework in place BPO Limited. post a comprehensive review of its risk management process. As earlier reported, your Company had sold its subsidiary company The review involved understanding the existing risk management Godrej Hi Care Ltd. The per capita income is up by 5.4% as per initiatives, zero-based identifi cation and assessment of risks in advance estimate by CSO. (GHCL) in March, 2009 last year. As per the various businesses as also the relative control measures and the Share Purchase Agreement entered into with the purchaser, arriving at the desired counter measures keeping in mind the risk the sellers of GHCL were entitled to additional consideration on appetite of the organization. The Risk Committee has periodically achievement of stipulated fi nancial parameters based on which reviewed the risks in the various businesses and recommended your Company received additional consideration during the year appropriate risk mitigating actions. which is refl ected in the accounts. The Commodity based businesses are likely to be affected by HUMAN RESOURCES, INDUSTRIAL RELATIONS vagaries of the weather, demand for edible oil, oilseed production, Industrial Relations at all locations were cordial. The total number of etc. The increase in bio-diesel manufacturing capacity is expected persons employed in your Company as on March 31, 2010 was 1,264. to impact vegetable oil prices. The business is exposed to INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY commodity price risks relating to raw materials which account for Your Company has a proper and adequate system of Internal the largest portion of the costs of both the Chemicals and Vegoils Controls, to ensure that all assets are safeguarded and protected businesses. The Chemicals business growth will also depend on the against loss from unauthorized use or disposal and that transactions growth of end user industries like polymer, detergent, cosmetic are authorized, recorded and reported correctly. Your Company’s and personal care. Corporate Audit and Assurance Department which is ISO 9001 As a signifi cant employer and chemicals producer, to ensure certifi ed, issues well documented operating procedures and occupational safety, employment standards, production safety, authorities with adequate built-in controls at the beginning of any and environmental protection, your Company maintains strict activity and revised procedures if there is any major change. The internal control is supplemented by an extensive programme of safety, health, environmental protection and quality control internal, external audits and periodic review by the management. programs to monitor and control these operational risks. The system is designed to adequately ensure that fi nancial and Macro economic factors including economic and political other records are reliable for preparing fi nancial information and developments, natural calamities which affect the industrial other data and for maintaining accountability of assets. sector generally would also affect the businesses of your Company. Corporate Audit & Assurance Department, during the year, Legislative changes resulting in a change in the taxes, duties and facilitated a review of your Company’s risk management levies, whether local or central, also impact business performance programme. The risks and mitigation measures were reviewed and relative competitiveness of the businesses. by your Company’s Risk Committee and corrective measures initiated. CAUTIONARY STATEMENT During the year the Corporate Audit & Assurance Department Some of the statements in this management discussion and analysis carried out various reviews and provided assurance on compliances describing the Company’s objectives, projections, estimates to laid down policies, process and internal controls. and expectations may be ‘forward looking statements’ within INFORMATION SECURITY the meaning of applicable laws and regulations. Actual results Your Company accords great importance to the security of its might differ substantially or materially from those expressed or information assets. To ensure that this gets desired focus and implied. Important developments that could affect the Company’s attention, a Chief Information Security Offi cer, who is attached operations include a downtrend in industry, signifi cant changes in to the Corporate Audit and Assurance Department, is entrusted political and economic environment in India and abroad, tax laws, with the task of ensuring that your Company has the requisite import duties, litigation and labour relations. security posture. 18 Annual Report 2009–2010

ANNEXURE “B” FORMING PART OF THE DIRECTORS’ REPORT As per the Securities & Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 following information is disclosed in respect of Godrej Industries Limited Employee Stock Option Plans I and II: Sr. Heading Particulars No. a Options granted during the year ESOP II : 8,60,000 b The pricing formula ESOP I : Market Price plus Interest at such a rate not being less than the Bank Rate then prevailing compoundable on an annual basis for the period commencing from the date of Grant of the Option and ending on the date of intimating Exercise of the Option to the Company. ESOP II : Grant Price* plus Interest at such a rate as may be decided from time to time compoundable on an annual basis for the period commencing from the date of Granting of the Options and ending on the date of intimating Exercise of the Option to the Company. * Grant Price means higher of market price or average cost of shares purchased by the Trust for that specifi c grant, including any unallotted shares lying with the Trust if utilized for that specifi c grant, plus interest on the loan taken to purchase the said shares at such rate as may be decided from time to time and compoundable on annual basis till the date of grant. c Options vested during the year ESOP I : 18,00,000 d Options exercised during the year ESOP I : 21,00,000 e The total number of shares arising as a result of exercise of Nil. option As shares purchased from secondary market, there is no further issue of shares as a result of exercise of options. f Options lapsed/revoked during the year ESOP I : 1,19,250 g Variation of terms of options Annexure 2 h Money realized by exercise of options ESOP I : Rs.19,28,61,756/- i Total number of options in force ESOP I : 55,80,700 equity shares of nominal value of Re.1/- each. ESOP II: 8,60,000 equity shares of nominal value of Re.1/- each. j Employee-wise details of options granted to: i) senior managerial personnel; Annexure 1 ii) any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during Annexure 1 that year. iii) identifi ed employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital NIL (excluding outstanding warrants and conversions) of the Company at the time of grant; k Diluted Earnings Per Share (EPS) pursuant to issue of shares on There is no fresh issue of shares hence, not applicable. exercise of option calculated in accordance with Accounting Standard (AS) 20 ‘Earnings Per Share’. l Where the company has calculated the employee compensation The company has calculated the employee compensation cost cost using the intrinsic value of the stock options, the difference using the intrinsic value of stock options. Had the fair value method between the employee compensation cost so computed and the been used, in respect of stock options granted the employee employee compensation cost that shall have been recognized if compensation cost for the Company would have been higher by it had used the fair value of the options, shall be disclosed. The Rs. 11.02 crore, Profi t after tax lower by Rs. 11.02 crore and impact of this difference on profi ts and on EPS of the Company basic EPS would have been lower by Rs. 0.35. shall also be disclosed. m Weighted average exercise prices and weighted average fair Weighted average exercise price of the options granted during values of options shall be disclosed separately for options whose the year is Rs. 179.86 plus interest. exercise price either equals or exceeds or is less than the market Weighted average fair value of the option granted during the price of the stock. year is Rs. 84.77.

19 n A description of the method and signifi cant assumptions used The fair value of the options granted has been calculated using during the year to estimate the fair values of options, including Black – Scholes Options pricing formula and the signifi cant the following weighted average information: assumptions made in this regard are as follows: i) risk-free interest rate, 6.68% ii) expected life, 4 years iii) expected volatility, 70% iv) expected dividends, and 0.69% Rs. 1.25 per share v) the price of the underlying share in market at the time of Weighted average market price at the time of grant of option option grant Rs. 153.05 per option.

Annexure 1 : Senior Managerial Personnel which period shall be not less than one year and may extend Name Options granted upto fi ve years from the date of grant of Options. Vesting may occur in tranches, subject to the terms and conditions Vivek Gambhir 6,00,000 of Vesting, as may be stipulated by the Compensation Rajiv Bakshi 50,000 Committee. Praful Bhat 50,000 In the event that, during the 4th and 5th year of the vesting Options granted to all the above employees are in excess of 5% of period, the average of the closing market price of the shares the total options granted during the year. of the Company on the Bombay Stock Exchange and National Annexure 2 : Stock Exchange on each day exceeds the Exercise Price by not less than Rs. 50/- for a consecutive period of thirty Amendment to ESOP terms for employees who were granted days, the Options shall be deemed to have vested on the day ESOP’s on April 5, 2007 and April 11, 2007: immediately following the thirtieth day, as determined by the (a) Clause no.5.4: Compensation Committee. Existing Clause: (b) First paragraph of Clause No.5.5 The Employee Stock Options granted under GIL ESOP shall vest Existing Clause: as follows: From the date of Vesting of the Options, the Option Grantee The Options shall vest in the eligible employees within such shall be entitled to Exercise the Options within such period period as may be prescribed by the Compensation Committee, as may be prescribed by the Compensation Committee which which period shall be not less than one year and may extend period shall not exceed a period of two years from the date upto three years from the date of grant of Options. Vesting of the respective Vesting of the Options. may occur in tranches, subject to the terms and conditions Amended Clause: of vesting, as may be stipulated by the Compensation Committee. From the date of Vesting of the Options, the Option Grantee shall be entitled to Exercise the Options within such period Amended Clause: as may be prescribed by the Compensation Committee which The Employee Stock Options granted under GIL ESOP shall vest period shall not exceed a period of three years from the date as follows: of the respective Vesting of the Options. The Options shall vest in the eligible employees within such period as may be prescribed by the Compensation Committee,

20 Annual Report 2009–2010

ANNEXURE “C” FORMING PART OF THE DIRECTORS’ REPORT The following is the list of persons constituting Group (within the meaning as defi ned in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of regulation 10 to 12 of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 1997 (“the said Regulations”), provided Clause 3(1)(e) of the said Regulations: 1. Godrej & Boyce Mfg. Co. Ltd. 40. ACI Godrej Agrovet Pvt. Ltd. 2. Cartini India Ltd. 41. Godrej Hersheys Ltd. 3. Godrej Investments Pvt. Ltd. 42. Nutrine Confectionery Co. Ltd. 4. Godrej Efacec Automation & Robotics Ltd. 43. Godrej SaraLee Ltd. 5. Godrej Holdings Pvt. Ltd. 44. Tahir Properties Ltd. 6. Godrej (Malaysia) Sdn. Bhd. 45. Godrej Consumer Products Ltd. 7. Godrej (Singapore) Pte. Ltd. 46. Rapidol (Pty) Ltd. 8. J T Dragon Pte. Ltd. 47. Godrej Netherlands BV 9. Mercury Mfg. Co. Ltd. 48. Godrej Global Mid East FZE 10. Veromatic International BV 49. Godrej Consumer Products Mauritius Ltd. 11. Water Wonder Benelux BV 50. Godrej Hygiene Products Ltd. (formerly known as SCA 12. Geomeric Ltd. Hygiene) 13. Godrej & Khimji (Middle East) LLC 51. Godrej Consumer Products Holdings Mauritius Ltd. 14. Godrej Infotech Ltd. 52. Godrej Consumer Products Dutch Cooperatief U.A. (Netherlands) 15. Veromatic Services B.V. 53. ABG Venture LLP 16. Godrej International Ltd. 54. NBG Enterprise LLP 17. Ensemble Holdings & Finance Ltd. 55. JNG Enterprise LLP 18. Swadeshi Detergents Ltd. 56. SVC Enterprise LLP 19. Vora Soaps Ltd. 57. RKN Enterprise LLP 20. Godrej Properties Ltd. 58. Godrej & Boyce Enterprise LLP 21. Godrej Realty Pvt. Ltd. 59. Mr. Adi B. Godrej 22. Godrej Waterside Properties Pvt. Ltd. 60. Mrs. Parmeshwar A. Godrej 23. Godrej Real Estate Pvt. Ltd. 61. Mrs. Tanya A. Dubash 24. Godrej Developers Pvt. Ltd. 62. Mr. Pirojsha A. Godrej 25. Godrej Sea View Properties Pvt. Ltd. 63. Ms. Nisaba A. Godrej 26. Godrej Estate Developers Pvt. Ltd. 64. Mr. Nadir B. Godrej 27. Happy Highrises Ltd. 65. Mrs. Rati N. Godrej 28. Godrej Agrovet Ltd. 66. Master Burjis N. Godrej 29. Golden Feed Products Ltd. 67. Master Sorab N. Godrej 30. Godrej Oil Palm Ltd. 68. Master Hormuzd N. Godrej 31. Cauvery Palm Oil Ltd. 69. Mr. Jamshyd N. Godrej 32. Godrej Tyson Foods Limited 70. Mrs. Phiroza J. Godrej 33. Bahar Agrochem & Feeds Pvt. Ltd. 71. Mr. Navroze J. Godrej 34. Natures Basket Ltd. 72. Ms. Raika J. Godrej 35. Aadhaar Retailing Ltd. 73. Mrs. Smita V. Crishna 36. Godrej IJM Palm Oil Ltd. 74. Mr. Vijay M. Crishna 37. Godrej Gold Coin Aquafeed Ltd. 75. Ms. Freyan Crishna 38. Polychem Hygiene Laboratories Pvt. Ltd. 76. Ms. Nyrika Crishna 39. Creamline Dairy Products Ltd. 77. Mr. Rishad K. Naoroji

21 ANNEXURE “D” FORMING PART OF THE III. Details of energy consumption DIRECTORS’ REPORT The details of energy consumption are given below. These details cover the operations of your Company’s factories at INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE Vikhroli, Valia and Wadala. COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) (A) Power and Fuel consumption RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, Electricity TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS This Year Previous AND OUTGO Year A. Conservation of Energy i) Purchased I. (A) Energy Conservation measures undertaken: Units (KWH in lac) 313.27 290.55 Total Amount (Rs. in crore) 20.55 19.35 Vikhroli Rate per Unit (Rs.) 6.56 6.66 1. Heat Exchanger for fl aker installed to reduce the power consumption & improve the quality of stearic acid. Annual ii) Own generated through D.G. savings of Rs. 0.01 crore accrued. Sets 2. Continued working in consultation with CII for the Mission Units (KWH in lac) 0.54 1.00 for Sustainable Growth. Cost (Rs. in crore) 0.08 0.16 3. Dedicated lines for fatty acid transfer to eliminate steam Rate per unit (Rs.) 15.42 15.73 wastage resulting in savings in fuel worth Rs. 0.15 crore per annum. iii) Own generated through Steam 4. Installation of VFDs in splitting and Flaking sections Turbine Generator - resulting in power savings worth Rs. 0.02 crore per Co-generation annum. Units (KWH in lac) 202.90 218.54 Valia Cost (Rs. in crore) 16.22 13.25 1. Power saving in AOS cooling tower by process improvement Rate per Unit (Rs.) 7.99 6.07 resulting into saving of Rs. 0.21 crore per annum. 2. Saving in power due to stopping of chiller & utilizing of Fuel Oil (LSHS, FO and LDO) VAM in fl aker worth Rs. 0.25 crore per annum. Total Quantity (KL) 2,309.93 7,242.70 3. Reduction in NG consumption in various sections by Total Amount (Rs. in crore) 3.85 16.00 improvement of process resulting in savings of Rs. 0.52 Rate per Unit (Rs. per litre) 16.67 22.09 crore per annum. Natural Gas 4. Installation of VFD’s in AOS & EOU plant resulting in power 3 savings worth Rs. 0.08 crore per annum. Total Quantity (SM lac) 270.49 223.14 Total Amount (Rs. in crore) 38.98 29.80 5. Installation of lighting transformer in DTA plant resulting Rate per Unit (Rs. per SM3) 14.41 13.35 in power savings worth Rs. 0.02 crore per annum. (B) Proposed Energy Conservation Measures: Pitches 1. Change of Vacuum system of fractionation plant to save Total Quantity (MT) 683.05 957.05 fuel cost. Total Cost (Rs. in crore) 0.88 1.51 2. To improve steam distribution network at Valia factory to Rate per unit (Rs. per MT) 12,870.00 15,812.00 eliminate steam wastages. (B) Consumption per unit of production 3. Replacement of feed pumps running in series by higher capacity pump with savings in power consumption. Natural Gas Electricity Furnace Oil 3 4. Installation of powerless wind ventilators in all godowns Particulars ( SM /MT ) (Kwh/MT) (Litre/MT) Pitches 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 of Valia & thereby saving power consumed by the exhaust fans. Fatty Acid 79.28 56.95 77.07 76.01 18.82 24.69 - 15.86 II. Impact of measures on reduction of energy consumption and Fatty Alcohol 96.49 89.57 429.96 424.64 3.24 7.61 - - consequent impact on the cost of production of goods A.O.S. 22.12 16.39 142.89 146.22 1.26 4.38 - 1.38 Saving in energy costs during the period under consideration. Glycerin 343.74 247.43 606.30 614.59 58.17 109.08 - 49.46

Oils & Vanaspati - - 144.09 174.72 - 60.00 54.28 85.86

22 Annual Report 2009–2010

B. Technology Absorption, Adaptation and Innovation IV. Expenditure on R&D : Rs. crore I. Specifi c areas in which R&D carried out by the Company : This Year Previous During the year under review, Research & Development Year efforts in the following areas strengthened the Company’s (a) Capital Nil Nil operation through technology absorption, adaptation and (b) Recurring 3.27 1.73 innovation. (c) Total 3.27 1.73 • Oils and Fatty Acids (d) Total R&D expenditure as 0.40% 0.21% • Fatty Alcohol a percentage of total sales turnover • Surfactants C. Foreign Exchange earnings and outgo • Glycerin The Chemicals Division’s exports were Rs. 339.26 crore in the • Customer Centric Formulations for Personal Care current year (including deemed exports of Rs. 39.62 crore) as Product Applications compared to Rs. 367.74 crore in the previous year (including II. Benefi ts derived as a result of the above R&D. : deemed exports Rs. 45.91 crore). The Company continues to • Premium quality fatty acids from economy grade raw export refi ned glycerin, fatty alcohol and other chemicals to materials. over 62 countries including U.S.A., U.A.E., Japan, South Africa, Germany, U.K., France, Malaysia, China, Australia, Mexico, • Understanding the impact of raw material quality Singapore and Sri Lanka. and manufacturing process on the quality of the Rs. crore fi nished goods. This Year Previous • Manufacture of high value pure cut fatty acids, Year specifi cally for the polymer, oil fi eld and lubricant Foreign exchange used 242.10 257.41 industries. Foreign exchange earned 299.70 323.90 • Qualifi cation of specialty surfactants for oral care and personal care products. • Value added derivatives of glycerin so as to enter certain niche markets. • Value added formulations of fatty acids so as to enter niche markets. III. Future Plan of Actions : • Specialty chemicals from Glycerin, so as to enter niche markets in the field of Pharmaceuticals, Personal Care and Industrial Lubricants. • Specialty chemicals used in personal care formulations – foam boosters, conditioning agents, co-surfactants, viscosifying and pearlizing agents.

23 REPORT ON CORPORATE GOVERNANCE Clause 49 of the listing agreement with the Indian Stock Exchanges are Non-Executive Directors, with eight of them being stipulates the norms and disclosure standards that have to be Independent Directors. On April 30, 2010 two Whole- followed on the Corporate Governance front by listed Indian time Executive Directors retired from the services of the companies. Company and hence ceased to be Directors. No Director 1. THE COMPANY’S PHILOSOPHY is related to any other Director on the Board in terms of The Company is a part of the Godrej Group which has the defi nition of “relative” given under the Companies established a reputation for honesty and integrity. The Act, 1956, except (1) Mr. A.B. Godrej and Mr. N.B. Godrej, Company’s philosophy of corporate governance is to achieve who are brothers, (2) Ms. T.A. Dubash who is the daughter business excellence by enhancing the long-term welfare of of Mr. A.B. Godrej and (3) M r. J. N. Godrej and Mr. V. M. all its stakeholders. The Company believes that corporate Crishna, who are brothers-in-law. The details are given governance is about creating outperforming organisations, i.e. in Table 1 and 2 respectively: organizations that consistently succeed in the marketplace b) Board meetings held and Directors’ attendance against competition and thereby enhance the value of all its record stakeholders. The Board meets atleast once in a quarter to consider THE GOVERNANCE STRUCTURE among other businesses, quarterly performance of the 2. BOARD OF DIRECTORS Company and fi nancial results. To enable the Board to a) Board Structure discharge its responsibilities effectively and take informed The Board of Directors of the Company comprises sixteen decisions, necessary information is made available to the Directors, which includes one Managing Director and four Board. During the year four Board meetings were held on Whole-time Executive Directors. The remaining eleven May 27, 2009, July 29, 2009, October 31, 2009 and January 25, 2010. The details are given in Table 1: Table 1: Details about the Company’s Board of Directors & meetings attended by the Directors during the year Name of Director Category Board Board Whether Directorships Number of Chairmanship/ meetings meetings attended held in public Membership in other held during attended last AGM companies incorporated Board Committees as at the year during in India as at year- end the year-end the year $ Chairmanship Membership A.B. Godrej Chairman – Non-Executive 4 4 Yes 11(3) 4 1 J.N. Godrej Non-Executive 4 3 Yes 9(5) 1 3 N.B. Godrej Managing Director 4 4 Yes 14(5) 1 2 S.A. Ahmadullah Non-Executive – Independent 4 4 Yes 1(1) - 1 Jimmy Bilimoria Non-Executive - Independent 4 3 Yes 8(5) 4 4 V.M. Crishna Non-Executive 4 4 Yes 4(1) - - K.K. Dastur Non-Executive - Independent 4 4 Yes 7(3) 3 1 N.D. Forbes Non-Executive - Independent 4 3 Yes 3(3) - - V.N. Gogate Non-Executive – Independent 4 4 Yes 1(1) - 1 A. Maira* Non-Executive Independent 1 1 NA NA NA NA A.B. Choudhury* Non-Executive - Independent 2 2 NA 6(3) - 4 K.N. Petigara Non-Executive - Independent 4 4 Yes 5(1) 1 2 F.P. Sarkari Non-Executive - Independent 4 4 Yes 1(1) 2 - V.F. Banaji Whole-time 4 4 Yes 2(2) - 1 T.A. Dubash Whole-time 4 3 Yes 6(1) - 2 M. Eipe Whole-time 4 4 Yes 3(1) - 1 M.P. Pusalkar Whole-time 4 3 Yes 2(2) 1 2 Note: (i) $ Alternate directorships and directorships in private companies, foreign companies and associations are excluded. (ii) Figures in ( ) denote listed companies.

24 Annual Report 2009–2010

(iii) *Mr. A. Maira resigned with effect from July 24, 2009 and Signifi cant development in the human resources and Mr. A.B. Choudhury was appointed with effect from August 5, industrial relations front, 2009 in his place. Sale of material nature of investments, subsidiaries, (iv) Board Meetings held during the year represent the number of assets, which is not in the normal course of meetings held during the tenure of that director. business, None of the Directors is a member of more than 10 Board-level Quarterly details of foreign exchange exposure and committees, or a Chairman of more than fi ve such committees, the steps taken by management to limit the risks of as required under Clause 49 of the listing agreement. adverse exchange rate movement, c) Information supplied to the Board Non-compliance of any regulatory, statutory nature or Among others, this includes: listing requirements as well as shareholder services Annual operating plans and budgets, capital budgets, such as non-payment of dividend and delays in share and any updates thereon, transfer. Quarterly results of the Company, The Board of the Company is presented with all information Minutes of meetings of audit committee and other under the above heads, whenever applicable. These are committees, submitted either as part of the agenda papers well in advance Information on recruitment and remuneration of of the Board meeting or are tabled in the course of the Board senior offi cers just below the Board level, meeting. Materially important show cause, demand, prosecution d) Directors with materially significant related party and penalty notices, transactions, pecuniary or business relationship with Fatal or serious accidents or dangerous the Company occurrences, Except for drawing remuneration, none of the Directors Any materially significant effluent or pollution have any other materially significant related party problems, transactions, pecuniary or business relationship with the Any materially relevant default in fi nancial obligations Company. Attention of Members is drawn to the disclosures to and by the Company or substantial non-payment of transactions with related parties set out in Notes to for goods sold by the Company, Accounts – Schedule 22, Note No.20, forming part of the Any issue which involves possible public or product Annual Report. liability claims of a substantial nature, e) Remuneration of Directors: sitting fees, salary, Details of any joint venture or collaboration agreement, perquisites and commissions and Number of Shares held by Non-Executive Directors Transactions that involve substantial payment towards goodwill, brand equity or intellectual property, The details of remuneration package of Directors and their Significant labour problems and their proposed relationships with each other are given in Table 2. The number of solutions, shares held and dividend paid are given in Table 3. Table 2: Remuneration in Rupees paid or payable to Directors for the year ended March 31, 2010 Amt. in Rs. Name of Director Relationship with Directors Sitting Commission Salary Perquisites Provident Total fees on profi ts Fund A. B. Godrej Brother of N.B. Godrej 1,60,000 Nil Nil Nil Nil 1,60,000 Father of T.A. Dubash J. N. Godrej Brother-in-law of V. M. Crishna Nil Nil Nil Nil Nil Nil N. B. Godrej Brother of A.B. Godrej Nil Nil 1,31,33,314 1,01,74,378 8,25,840 2,41,33,532 S. A. Ahmadullah None 1,20,000 Nil Nil Nil Nil 1,20,000 J.S. Bilimoria None 60,000 Nil Nil Nil Nil 60,000 V. M. Crishna Brother-in-law of J. N. Godrej 80,000 Nil Nil Nil Nil 80,000 K. K. Dastur None 80,000 Nil Nil Nil Nil 80,000 N.D. Forbes None 60,000 Nil Nil Nil Nil 60,000 V. N. Gogate None 1,20,000 Nil Nil Nil Nil 1,20,000 A. Maira None 20,000 Nil Nil Nil Nil 20,000 A.B. Choudhury None 40,000 Nil Nil Nil Nil 40,000 K. N. Petigara None 1,20,000 Nil Nil Nil Nil 1,20,000 F. P. Sarkari None 1,00,000 Nil Nil Nil Nil 1,00,000 V. F. Banaji None Nil Nil 1,39,10,873 64,31,173 7,93,800 2,11,35,846 T. A. Dubash Daughter of A.B. Godrej Nil Nil 1,12,17,514 76,69,659 5,95,944 1,94,83,117 M. Eipe None Nil Nil 1,16,46,514 54,14,434 6,47,424 1,77,08,372 M. P. Pusalkar None Nil Nil 1,44,25,226 51,23,157 4,29,696 1,99,78,079

25 Notes: Table 4: Attendance record of audit committee members 1. Salary to Mr. N.B. Godrej, Mr. V.F. Banaji, Ms. T.A. Dubash, Mr. Name of Director No. of meetings Meetings M. Eipe and Mr. M.P. Pusalkar includes a performance linked held attended variable remuneration of Rs.62,51,314/- Rs.72,95,873/-, Mr. F.P. Sarkari 4 4 Rs. 62,51,314/-, Rs.62,51,314/- and Rs.1,08,44,426/- Mr. S.A. Ahmadullah 4 4 respectively for the year ended March 31, 2010 payable in Mr. V.N. Gogate 4 4 2010-11. Mr. K.N. Petigara 4 4 2. The service contracts of the Whole-time Directors are for a period of three years with a notice period of three months. Notes: Table 3: Number of shares held by Non-Executive Directors and Committee Meetings held during the year represents the no. of dividend paid meetings held during the tenure of that director. The Audit Committee of the Company performs the following Name of Non-Executive Shares held as Dividend paid functions: Director on March 31, during the 2010 year (Rupees) Overview of the Company’s fi nancial reporting process and A.B. Godrej Nil Nil the disclosure of its fi nancial information to ensure that the fi nancial statement is correct, suffi cient and credible. A.B. Godrej * 11,21,226 Nil Recommending the appointment/removal of external auditor, J.N. Godrej * 32,21,472 Nil fi xation of audit fees and approval for payment for any other F.P. Sarkari 20,000 25,000.00 services. F.P. Sarkari * 62,000 Nil Reviewing with management the annual fi nancial statements S.A. Ahmadullah 6,000 7,500.00 before submission to the board for approval with particular S.A. Ahmadullah * 11,700 Nil reference to: V.N. Gogate 1,878 2,347.50 Matters that needs to be included in the Director’s V.N. Gogate * 270 Nil Responsibility Statement to be included in the Board’s V.M. Crishna Nil Nil Report in terms of Clause (2AA) of the Section 217 of the J.S. Bilimoria Nil Nil Companies Act, 1956. N.D. Forbes 5,000 Nil Change if any in accounting policies and practices and A.B. Choudhury Nil Nil reasons for the same. K.N. Petigara Nil Nil Major accounting entries involving estimates based on K.K. Dastur 3,606 4,507.50 exercise of judgement by the management. K.K. Dastur * 25,400 Nil Signifi cant adjustments made in the fi nancial statements K.K. Dastur ** 9,570 Nil arising out of audit fi ndings. * Shares held as second holder Compliance with listing and other requirements relating ** Shares held as third holder to fi nancial statements. Committees of the Board Disclosure of any related party transactions. Any qualifi cation in the draft audit report. 3. AUDIT COMMITTEE Reviewing with the management, the quarterly fi nancial The Company’s Audit Committee comprises of four statement before submission to the Board for approval. Independent and Non-Executive Directors. They are Mr. F.P. Reviewing with the management, performance of the statutory Sarkari (Chairman), Mr. S.A. Ahmadullah, Mr. V.N. Gogate and and internal auditors, and adequacy of the internal control Mr. K.N. Petigara. Effective May 26, 2010, Mr. K. K. Dastur system. (Independent Director) was appointed as a member of the committee. Mr. F.P. Sarkari is the Chairman of the Committee, Reviewing the adequacy of internal audit function, if any, a Chartered Accountant and is knowledgeable in fi nance, including the structure of Internal Audit Department, staffi ng accounts and company law. All the members of the committee and seniority of the offi cial heading the department, reporting are eminent professionals and draw upon their experience and structure coverage and frequency of internal audit. expertise across a wide spectrum of functional areas such as Discussion with internal auditors any signifi cant fi ndings and fi nance and corporate strategy. Minutes of each of the audit follow up thereon. committee meetings are placed before the Board Meeting. Mr. Reviewing the fi ndings of any internal investigation by the V. Srinivasan, Executive Vice-President (Finance & Estate) & internal auditors into matters where there is suspected Company Secretary acts as a secretary to the audit committee. fraud or irregularity or failure of internal control systems of The Audit Committee met four times during the year i.e. on a material nature and reporting the matter to the Board. May 27, 2009, July 29, 2009, October 31, 2009 and January Discussion with statutory auditors before the audit commences, 25, 2010. Table 4 gives the attendance record. about the nature and scope of audit as well as post-audit discussions to ascertain any area of concern.

26 Annual Report 2009–2010

Looking into the reasons for substantial defaults in payment Number of complaints regarding shares for the year ended to the depositors, debenture holders, shareholders (in case March 31, 2010 of non-payment of declared dividend) and creditors. Complaints outstanding as on April 1, 2009 Nil Reviewing the functioning of Whistle Blower mechanism. Complaints received during the year ended 20 4. COMPENSATION COMMITTEE March 31, 2010 Setting up of a Compensation Committee for determining a Complaints resolved during the year ended 20 company’s policy on remuneration packages for Executive March 31, 2010 Directors constitutes a non-mandatory provision of Clause Complaints outstanding as on March 31, 2010 Nil 49. The Company set up its Remuneration Committee on There are no pending share transfers as on March 31, 2010. February 22, 2002 to review the human resources policies and practices of the Company and in particular, policies regarding 6. MANAGEMENT remuneration of Whole-Time Directors. The Committee a) Management discussion and analysis discusses human resources policies such as compensation and This annual report has a detailed chapter on management performance of management. The Remuneration Committee discussion and analysis. was renamed as Compensation Committee by the Board of Directors at its meeting held on October 24, 2005. b) Disclosures by management to the Board The Compensation Committee consists of the following All details relating to financial and commercial directors: Mr. S.A. Ahmadullah (Chairman and Independent transactions where Directors may have a potential interest Director); Mr. N.B. Godrej (Managing Director); Mr. V.N. Gogate are provided to the Board, and the interested Directors (Independent Director) and Mr. K.N. Petigara (Independent neither participate in the discussion, nor do they vote on Director). Effective May 26, 2010, Mr. A.B. Choudhary such matters. (Independent Director) was appointed as a memeber of 7. DISCLOSURES the committee. During the year ended March 31, 2010, the a) Materially signifi cant related party transaction that committee met on May 27, 2009, July 29, 2009, August 10, may have potential confl ict of interests of Company at 2009 and January 25, 2010. The attendance details are given large in Table 5. During the year 2009-10, there were no materially Table 5: Attendance record of Compensation Committee signifi cant related party transactions, i.e. transactions members of the Company of material nature, with its promoters, Name of Director No. of meetings Meetings attended the Directors or the management, their subsidiaries or held relatives, etc. that may have potential confl ict with the interests of the Company at large. Attention of Members Mr. S.A. Ahmadullah 44 is drawn to the disclosures of transactions with related Mr. V.N. Gogate 4 4 parties set out in Notes to Accounts – Schedule 22, Note Mr. K.N. Petigara 4 4 No. 20, forming part of the Annual Report. Mr. N.B. Godrej 4 4 b) Whistle Blower Policy Mr. V. Srinivasan, Executive Vice-President (Finance & Estate) & With a view to establish a mechanism for protecting the Company Secretary acts as the secretary to the Committee. employees reporting unethical behaviour, fraud, violation The Company has adopted EVA as a tool for driving performance, of Company’s Code of Conduct, the Board of Directors has and has linked improvements in EVA to Performance Linked adopted a Whistle Blower Policy. During the year 2009- Variable Remuneration (PLVR) of Managing Director, Whole- 10, no personnel has been denied access to the Audit Time Directors, Managers and Offi cers of the Company. Committee. 5. SHAREHOLDERS COMMITTEE c) Policy to Prevent Sexual Harassment at the work Among other functions, this committee looks into redressal place of shareholder complaints regarding transfer of shares, The Company is committed to creating and maintaining non-receipt of Balance Sheet and non-receipt of declared an atmosphere in which employees can work together, dividends, as required in Clause 49 of the Listing Agreement. without fear of sexual harassment, exploitation or The Committee consists of the following members: Mr. A.B. intimidation. Every employee is made aware that the Godrej (Chairman), Mr. V.F. Banaji, Ms. T.A. Dubash, Mr. M. Company is strongly opposed to sexual harassment and Eipe and Mr. M.P. Pusalkar. On April 30, 2010 Mr. V. F. Banaji that such behaviour is prohibited both by law and by the and Mr. M. P. Pusalkar retired from the services of the Company Godrej group. To redress complaints of sexual harassment, and hence ceased to be Directors of the Company. During the a Complaint Committee has been formed which is headed year, 11 meetings of the Committee were held. by Ms. T.A. Dubash, Executive Director & President Mr. V. Srinivasan, Executive Vice-President (Finance & Estate) & (Marketing). Members of the Committee include, among Company Secretary acts as the secretary to the Committee. others, a representative from an NGO familiar with the issue of sexual harassment. Name and designation of Compliance Offi cer: Mr. V. Srinivasan, Executive Vice-President (Finance & Estate) & Company Secretary.

27 d) Details of compliance with mandatory requirement b) Details of Special Resolutions Passed in previous three Annual General Meetings. Particulars Clause of Compliance Listing Status Date of Number Details of Special Resolution Passed Agreement Yes / No AGM of Special I. Board of Directors 49 I Yes Resolution (A) Composition of Board 49 (IA) Yes passed (B) Non-Executive Directors’ July 27, 1 1) Reappointment and remuneration compensation & disclosures 49 (IB) Yes 2007 payable to Mr. N.B. Godrej as Managing (C) Other provisions as to Director of the Company. Board and Committees 49 (IC) Yes (D) Code of Conduct 49 (ID) Yes July 29, 6 1) To further invest in securities of and/ II. Audit Committee 49 (II) 2008 or place intercorporate deposits with (A) Qualifi ed & Independent and/or make loans or any other form Audit Committee 49 (IIA) Yes of debt to and/or investment in Godrej Properties Ltd., upto a sum of Rs. 25 (B) Meeting of Audit Committee 49 (IIB) Yes crore, u/s 372A of the Companies Act, (C) Powers of Audit Committee 49 (IIC) Yes 1956. (D) Role of Audit Committee 49 (IID) Yes 2) To further invest in securities of and/ (E) Review of Information by or place intercorporate deposits with Audit Committee 49 (IIE) Yes and/or make loans or any other form III. Subsidiary Companies 49 (III) Yes of debt to and/or investment in Godrej IV. Disclosures 49 (IV) Agrovet Ltd., upto a sum of Rs. 20 (A) Basis of related party crore, u/s 372A of the Companies Act, transactions 49 (IV A) Yes 1956. 3) To further invest in securities of and/ (B) Board disclosures 49 (IV B) Yes or place intercorporate deposits with (C) Proceeds from public issues, 49 (IV C) Not and/or make loans or any other form of rights issues, preferential applicable debt to and/or investment in Ensemble 49 (IV D) } issues etc. at present Holdings & Finance Ltd., upto a sum of (D) Remuneration of Directors 49 (IV E) Yes Rs. 10 crore, u/s 372A of the Companies (E) Management 49 (IV F) Yes Act, 1956. (F) Shareholders 49 (IV G) Yes 4) To further invest in securities of and/ V. CEO/CFO Certifi cation 49 (V) Yes or place intercorporate deposits with VI. Report on Corporate Governance 49 (VI) Yes and/or make loans or any other form of debt to and/or investment in Boston VII. Compliance 49 (VII) Yes Analytics Inc., upto a sum of Rs. 15 e) Details of Non-compliance crore, u/s 372A of the Companies Act, There has not been any non-compliance by the Company 1956. and no penalties or strictures were imposed on the 5) Revision in the terms of remuneration Company by the Stock Exchanges or SEBI or any statutory payable to Ms. Nisaba A. Godrej. authority, on any matter related to capital markets. 6) Amendment to Articles of Association f) Declaration by Chairman & Managing Director of the Company. The declaration by the Managing Director stating that all July, 29 5 1) Reappointment and remuneration the Board Members and senior management personnel 2009 of Ms. T.A. Dubash as a Whole-time have affi rmed their compliance with the said code of Director of the Company. conduct for the year ended March 31, 2010, is annexed 2) Reappointment and remuneration of to the Corporate Governance Report. Mr. V.F. Banaji as a Whole-time Director 8. GENERAL BODY MEETINGS of the Company. 3) Reappointment and remuneration of a) Details of last three AGMs Mr. M. Eipe as a Whole-time Director Year Venue Date Time of the Company. 2006-07 Y. B. Chavan Centre, July 27, 2007 4.30 P.M. 4) Reappointment and remuneration of Nariman Point, Mr. M. P. Pusalkar as a Whole-time Mumbai 400 021. Director of the Company. 2007-08 - do - July 29, 2008 4.30 P.M. 5) To approve New Employees Stock Option Scheme and to authorize 2008-09 - do - July 29, 2009 4.30 P.M. persons in this regard.

28 Annual Report 2009–2010

c) Postal Ballot all shareholders along with postage prepaid envelopes. During the year, pursuant to the provisions of Section Mr. Bharat Shemlani, Chartered Accountant, had been 192A of the Companies Act, 1956 read with the Companies appointed as scrutinizer for the postal ballots, who (Passing of the Resolution by Postal Ballot) Rules 2001, submitted his reports to the Chairman, Mr. A.B. Godrej. certain resolutions were passed by shareholders by The details of the postal ballots are given below :- postal ballot. The Notice of postal ballot were mailed to

Sr. Date of Nature of Item Total no. No. of No. of No. of No. announcement resolution of votes votes in votes invalid of results polled favour against votes % % % 1. September Special To invest in securities of and/or place 1550 99.96 0.01 0.03 23,2009 intercorporate deposits with and/or make loans or any other form of debt to and/or investment in and/or give guarantees in connection with loan(s) given by any other person to Godrej Hershey Limited. Special To place intercorporate deposits with and/or 1550 99.80 0.01 0.19 make loans or any other form of debt to Tricom India Limited. 2. March 26, 2010 Special Modifi cation of the Godrej Industries Limited 2206 99.38 0.30 0.32 Employees Stock Option Plan

d) Procedure adopted for Postal Ballot Gogate, also retires by rotation at this Annual General Meeting. (i) The Board at its meeting approves the items to be However in view of his advanced age, Mr. V.N. Gogate has not passed through postal ballot and authorizes one of offered himself for reappointment and the Board proposes that the functional Directors and the Company Secretary the vacancy caused by his retirement shall not be fi lled up. to be responsible for the entire process of postal Information about the Directors who are being appointed/ ballot. reappointed is given as an annexure to the Notice of the (ii) A professional such as a Chartered Accountant/ AGM. Company Secretary, who is not in employment of the b) Communication to shareholders Company, is appointed as the Scrutinizer for the poll process. All vital information relating to the Company and its performance, including quarterly results, offi cial press releases (iii) Notice of postal ballot along with the ballot papers are posted on the web site of the Company. The Company’s are sent to the shareholders along with a self- web-site address is www.godrejinds.com. The quarterly and addressed envelope addressed to the Scrutinizer. annual results of the Company’s performance are published in (iv) An advertisement is published in a National news leading English dailies like Economic Times, Business Standard, paper about the dispatch of ballot papers and notice Business Line, etc. The Company has also posted information of postal ballot. relating to its fi nancial results and shareholdings pattern on (v) The duly completed postal ballot papers are received electronic data information fi ling and retrieval system (EDIFAR) by the Scrutinizer. at www.sebiedifar.nic.in. Effective fron April 1, 2010, the (vi) Scrutinizer gives his report to the Chairman. EDIFAR system was discontinued and now the information is uploaded at www.corfi ling.co.in. (vii) The Chairman announces the results of the postal ballot in a meeting convened for the same. c) Investor grievances (viii) Results are intimated to the Stock Exchange and are As mentioned before, the Company has constituted a put up on the Notice Board of the Company as well Shareholders Committee to look into and redress Shareholders as on the Company’s Website. and investor complaints. Mr. V. Srinivasan, Executive Vice- President (Finance & Estate) & Company Secretary is the SHAREHOLDERS AND MEANS OF COMMUNICATION compliance offi cer. a) Disclosures regarding appointment or reappointment of d) Share transfer Directors The Company has outsourced its share transfer function to According to the Articles of Association of the Company, at M/s. Computech Sharecap Ltd., which is registered with the every Annual General meeting of the Company one-third of SEBI as a Category 1 Registrar and Transfer Agent. the Directors are liable to retire by rotation. Mr. F.P. Sarkari, Mr. S.A. Ahmadullah, Mr. A.B. Godrej, Mr. K.K. Dastur shall e) Details of non-compliance retire at this Annual General Meeting of the Company and There has been no instance of the Company not complying being eligible offer themselves for reappointment. Mr. V.N. with any matter related to capital markets.

29 Declaration by Managing Director I, N.B. Godrej, Managing Director of Godrej Industries Limited (GIL), hereby confi rm pursuant to clause 49(1)(D) of the listing agreement that: The Board of Directors of GIL has laid down a code of conduct for all Board members and senior management of the Company. The said code of conduct has also been posted on the Company’s website viz. www.godrejinds.com. All the Board members and senior management personnel have affi rmed their compliance with the said code of conduct for the year ended March 31, 2010. N.B. Godrej Mumbai, May 26, 2010 Managing Director

Auditors’ Certifi cate on Corporate Governance To the Members of Godrej Industries Limited We have examined the compliance of conditions of Corporate Governance by Godrej Industries Limited for the year ended on March 31, 2010, as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock exchanges. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to a review of procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the fi nancial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance stipulated in Clause 49 of the above mentioned Listing Agreement. We state that such compliance is neither an assurance as to the future viability of the Company nor of the effi ciency or effectiveness with which the management has conducted the affairs of the Company. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants V.R. Mehta Partner Membership No. 32083 Mumbai, May 26, 2010 Firm Registration No. 104607W

30 Annual Report 2009–2010

Shareholders’ Information i) Annual General Meeting Table 2: Monthly high and low prices and trading volumes Date : July 27, 2010 of equity shares of the Company at NSE for the year ended March 31, 2010 Time : 4.30 p.m. Venue : Y.B. Chavan Centre, Gen. Jagannathrao Bhonsle Volume Marg, Nariman Point, Mumbai- 400 021. Date High (Rs.) Low (Rs.) (No. of Shares) ii) Financial Calendar April 2009 86.50 52.50 1,85,98,529 May 2009 139.90 75.10 3,07,36,903 Financial year: April 1 to March 31 June 2009 154.00 118.25 1,23,06,921 For the year ended March 31, 2010, results were announced on: July 2009 158.80 112.00 1,16,30,542 • July 29, 2009 : First quarter August 2009 189.40 138.45 1,66,41,474 • October 31, 2009 : Half year September 2009 213.30 171.25 2,63,58,688 • January 25, 2010 : Third quarter October 2009 217.60 175.60 1,91,87,884 • May 26, 2010 : Annual November 2009 212.20 162.50 98,77,792 December 2009 219.00 171.50 1,46,84,999 iii) Record Date/Book Closure January 2010 193.30 141.00 93,89,024 A dividend of Rs. 1.50/- per equity share of Re. 1/- each has February 2010 164.00 135.00 83,01,926 been recommended by the Board of Directors of the Company. March 2010 166.50 139.40 68,74,674 For payment of dividend, the book closure is from July 20, Note: High and low are in Rupees per traded share. Volume 2010 to July 27, 2010 (both days inclusive). is the total monthly volume of trade (in numbers) in equity iv) Listing information shares of the Company on the NSE. The Company’s equity shares are listed on The Bombay Stock Chart A – The Company’s share performance compared to Exchange Ltd. and The National Stock Exchange of India Ltd. the BSE Sensex for FY 2009-2010 Name of the Stock Exchange Stock code The Bombay Stock Exchange Ltd. (BSE) 500164 National Stock Exchange of India Ltd. (NSE) GODREJIND The ISIN Number of the Company on both NSDL and CDSL is INE233A01035. v) Stock Data Tables 1 and 2 respectively give the monthly high and low

prices and volumes of equity shares of the Company at BSE and BSE Sensex the NSE for the year ended March 31, 2010. Chart A compares

the Company’s share price at the BSE versus the Sensex. GIL Share Price (Rs.) Table 1: Monthly high and low prices and trading volumes of equity shares of the Company at BSE for the year ended March 31, 2010 Mar Volume BSE Sensex GIL Share Price Date High (Rs.) Low (Rs.) (No. of Shares) April 2009 86.55 52.30 1,52,37,302 vi) Distribution of shareholding: May 2009 139.75 75.30 2,04,97,428 Tables 3 and 4 give the distribution pattern of shareholding June 2009 155.95 120.10 90,52,324 of the Company by size and ownership respectively as on July 2009 158.45 112.00 84,05,526 March 31, 2010. August 2009 189.55 138.60 1,19,45,092 Table 3: Distribution of shareholding by size as on September 2009 213.70 174.00 1,67,92,934 March 31, 2010 October 2009 217.85 175.50 1,16,42,200 November 2009 212.20 162.00 59,25,713 Number of Number of Share- Number of Share- December 2009 218.95 171.50 83,91,771 shares shareholders holders % shares held holding % January 2010 193.40 139.50 52,78,904 1 - 500 56,302 86.94% 67,33,123 2.12% February 2010 163.85 136.60 41,85,306 501 – 1,000 4,540 7.01% 35,57,110 1.12% March 2010 166.50 140.00 31,37,601 1,001 – 2,000 1,977 3.05% 29,87,570 0.94% Note: High and low are in Rupees per traded share. Volume 2,001 – 3,000 645 1.00% 16,82,675 0.53% is the total monthly volume of trade (in numbers) in equity 3,001 – 4,000 262 0.40% 9,41,923 0.30% shares of the Company on the BSE.

31 Number of Number of Share- Number of Share- vii) Shares held in physical and dematerialised form shares shareholders holders % shares held holding % As on March 31, 2010, 99.68 percent of the Company’s shares 4,001 – 5,000 214 0.33% 9,98,210 0.31% were held in dematerialised form and the remaining 0.32 5,001 – 10,000 391 0.60% 28,58,707 0.90% percent in physical form. The break up is listed below: 10,001 & above 428 0.66% 29,78,65,574 93.78% Number of Shareholders Number of Shareholding Total 64,759 100.00% 31,76,24,892 100.00% Category shareholders % shares held % Table 4: Distribution of shareholding by ownership as on March Physical 2,685 4.15% 10,11,687 0.32% 31, 2010 Electronic 62,074 95.85% 31,66,13,205 99.68% Total 64,759 100.00% 31,76,24,892 100.00% Category (as being reported to Shares held % of holding Stock Exchanges) (nos.) viii) Outstanding GDRs/ADRs/Warrants/Convertible instruments Promoter’s holding and their impact on equity Promoters 25,12,34,174 79.10 The Company does not have any outstanding GDRs / ADRs / Persons deemed to act in concert warrants / convertible instruments. with promoters – – ix) Share Transfer Institutional investors Share transfers and related operations for the Company are Mutual funds & UTI 71,242 0.02 conducted by Computech Sharecap Limited, which is registered Banks, financial institutions & 1,31,28,996 4.13 with the SEBI as a Category 1 Registrar. Share transfer is normally insurance companies effected within the maximum period of 30 days from the date Foreign institutional investors 68,44,623 2.15 of receipt, if all the required documentation is submitted. Others x) Investor correspondence should be addressed to: Private corporate bodies 1,17,31,995 3.69 Computech Sharecap Limited Indian public 3,32,96,779 10.48 147, M.G. Road, Opp. Jehangir Art Gallery, NRI / OCBs 13,17,083 0.41 Mumbai 400 001. Total 31,76,24,892 100.00 Tel: 022-22635000 / 22635001 Email: [email protected] Fax: 022-22635001

32 Annual Report 2009–2010

REPORT OF THE AUDITORS' TO THE MEMBERS OF GODREJ INDUSTRIES LIMITED

1. We have audited the attached Balance Sheet of Godrej by the employees and the market price of the underlying Industries Limited as at March 31, 2010 and also the Profi t equity shares of the unexercised options at the end of and Loss Account and Cash Flow Statement of the Company the exercise period. In the opinion of the management, for the year ended on that date, both annexed thereto. These the fall in the value of the underlying equity shares is on fi nancial statements are the responsibility of the Company’s account of market volatility and the loss, if any, can be management. Our responsibility is to express an opinion on determined only at the end of the exercise period, in view these fi nancial statements based on our audit. of which provision for the diminution is not considered necessary in the fi nancial statements. 2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those Standards require f) Reference is invited to note 9 (a) of Schedule 22 - Notes to that we plan and perform the audit to obtain reasonable Accounts, regarding the recoverability of advances given assurance about whether the fi nancial statements are free to certain individuals amounting to Rs. 1,033 lac being of material misstatement. An audit includes examining, on a contingent upon the transfer and/or disposal of the shares test basis, evidence supporting the amounts and disclosures pledged against the loan. The said shares were lodged for in the fi nancial statements. An audit also includes assessing transfer which application was rejected and the Company the accounting principles used and signifi cant estimates made has preferred an appeal to the Company Law Board. The by management, as well as evaluating the overall fi nancial investee company had in the mean while moved the High statement presentation. We believe that our audit provides Court but the matter was referred back to the Company a reasonable basis for our opinion. Law Board, where the matter is awaiting hearing. The impact thereof on the profi t for the year and the reserves 3. As required by the Companies (Auditor's Report) Order, as at March 31, 2010 could not be ascertained. 2003, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure g) In our opinion and to the best of our information and a statement on the matters specifi ed in paragraphs 4 and 5 according to the explanations given to us, the said of the said Order. accounts subject to paragraph (f) above, and read with the notes thereon, give the information required by the 4. Further to our comments in the Annexure referred to in Companies Act, 1956, in the manner so required and give paragraph 3 above, we report that: a true and fair view in conformity with the accounting a) We have obtained all the information and explanations principles generally accepted in India: which to the best of our knowledge and belief were i) in the case of the Balance Sheet, of the state of affairs necessary for the purpose of our audit. of the Company as at March 31, 2010; b) In our opinion, proper books of account as required by law ii) in the case of the Profi t and Loss Account, of the have been kept by the Company so far as appears from our profi t of the Company for the year ended on that examination of such books and proper returns adequate date; and for the purposes of our audit have been received from the branches not visited by us. The Branch Auditor’s Report iii) in the case of the Cash Flow Statement, of the cash has been forwarded to us and has been appropriately dealt fl ows of the Company for the year ended on that with. date. c) The Balance Sheet, Profi t and Loss Account and Cash Flow 5. On the basis of the written representations received from the Statement dealt with by this report are in agreement with directors of the Company as on March 31, 2010 and taken on the books of account and with the audited returns from record by the Board of Directors, we report that none of the the branches. directors of the Company is disqualifi ed as on March 31, 2010 from being appointed as a director in terms of clause (g) of d) In our opinion, the Balance Sheet, Profi t and Loss Account sub-section (1) of section 274 of the Companies Act, 1956. and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. e) Without qualifying our opinion, we draw attention to Note For and on behalf of 11 (b) of Schedule 22 – Notes to Accounts, regarding a loan of Rs. 8,113 lac (previous year Rs. 7,359 lac) to a Trust Kalyaniwalla & Mistry for purchase of the company’s shares from the market Chartered Accountants equivalent to options granted under an Employee Stock Registration No. 104607W Option Plan. As at March 31, 2010, the market value of Viraf R. Mehta the shares held by the ESOP Trust is lower than the cost Partner of acquisition of the shares by Rs. 3,456 lac (previous M. No: 32083 year Rs. 5,331 lac). The repayment of the loans granted to the ESOP Trust is dependent on the exercise of options Mumbai, May 26, 2010

33 Godrej Industries Limited ANNEXURE TO THE AUDITORS' REPORT Referred to in Paragraph (3) of our report of even date on the (g) The loans outstanding at the year end are at call and accounts of Godrej Industries Limited for the year ended 31st have not been recalled during the year. The company is March, 2010. generally regular in payment of interest. 1) (a) The Company is generally maintaining proper records (h) There are no overdue amounts exceeding Rs. one lakh. showing full particulars, including quantitative details 4) In our opinion and according to the information and and situation of fi xed assets, except in case of certain explanations given to us, there is an adequate internal control continuous process plants where item-wise values are system commensurate with the size of the Company and the not available and in case of furniture, fittings and nature of its business, for the purchase of inventory and fi xed equipment at Vikhroli where the records maintained show assets and for the sale of goods and services. Further, on the quantitative details with their situation and values based basis of our examination of the books and records and the on valuation by an approved valuer. information and explanations given to us, we have not come (b) The Company has a program for physical verifi cation of across any continuing failure to correct major weakness in the fi xed assets at periodic intervals. In our opinion, the period internal control system. of verifi cation is reasonable having regard to the size of 5) (a) Based on the audit procedures applied by us and according the Company and the nature of its assets. No material to the information and explanations provided by the discrepancies between the book records and the physical management, we are of the opinion that the particulars inventory were reported for the assets verifi ed during the of contracts or arrangements referred to in section 301 year. of the Act have generally been entered in the register (c) In our opinion the fi xed assets disposed off by the Company required to be maintained under that section. during the year were not substantial and therefore do not (b) In our opinion and according to the information and affect the going concern assumption. explanations given to us, having regard to the explanation 2) (a) The management has conducted physical verifi cation of that many of the items are of a special nature and their inventory at reasonable intervals. prices cannot be compared with alternative quotations, (b) In our opinion, the procedures of physical verifi cation of the transactions made in pursuance of contracts or inventory followed by the management are reasonable arrangements entered in the register maintained under and adequate in relation to the size of the Company and section 301 of the Companies Act, 1956 have been made the nature of its business. at prices which are reasonable having regard to the (c) The Company is maintaining proper records of inventory. prevailing market prices at the relevant time. The discrepancies noticed on verification between 6) In our opinion and according to the information and physical inventories and book records were not material explanations given to us, the Company has complied with in relation to the operations of the Company and the same the directives issued by the Reserve Bank of India and the have been properly dealt with in the books of account. provisions of section 58A and 58AA or any other relevant 3) (a) The Company had granted unsecured loans to three provisions of the Act and the rules framed there under in companies listed in the register maintained under section respect of the deposits accepted from the public. 301 of the Companies Act, 1956, of which two loans of Rs. 7) The Company has an internal audit system, which in our 474 lakh were outstanding at the year end. The maximum opinion, is commensurate with the size of the Company and amount of loans granted to the said companies during the the nature of its business. year was Rs. 1,040 lakh. 8) In our opinion and to the best of our knowledge and according (b) In our opinion and according to the information and to the information given to us, the Central Government has explanations given to us, the rate of interest and other not prescribed maintenance of cost records under section 209 terms and conditions of loans given are prima facie not (1) (d) of the Companies Act, 1956 for any of the products of prejudicial to the interest of the Company. the Company. (c) The loans outstanding at the year end are at call and 9) (a) According to the records examined by us, the Company have not been recalled during the year. The companies is generally regular in depositing undisputed statutory are generally regular in payment of interest. dues including Provident Fund, Investor Education and (d) There are no overdue amounts exceeding Rs. one lakh. Protection Fund, Employees’ State Insurance, Income Tax, (e) The Company has taken unsecured loans from three Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise companies listed in the register maintained under section Duty, cess and other statutory dues applicable to it with 301 of the Companies Act, 1956, of which one loan of Rs. the appropriate authorities. According to the information 100 lakh was outstanding at the year end. The maximum and explanations given to us, no undisputed amounts amount of loans taken from the said companies during payable in respect of the aforesaid dues were outstanding the year was Rs. 480 lakh. as at March 31, 2010 for a period of more than six months (f) In our opinion and according to the information and from the date of becoming payable. explanations given to us, the rate of interest and other (b) According to the information and explanations given to terms and conditions of loans taken are prima facie not us and the records examined by us, there are no dues of prejudicial to the interest of the Company. Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs

34 Annual Report 2009–2010

Duty, Excise Duty or cess which have not been deposited on account of any dispute, other than those stated hereunder: Name of statute Rs in Lac. Period to which amount relates Forum where dispute is pending Central Excise 3.60 2002-03,2006-07 Assistant Commissioner 28.23 1996-97, 2005-06,2009-10 Commissioner 74.03 1982-83,1998-99,1999-02,1993-94 CESTAT 695.04 1978-79,1976-85,1995-96 High Court 391.15 1993-97 The Supreme Court Custom Duty 39.43 1978-83,1991-92,2003-04 Assistant Commissioner 112.08 1987-93 Commissioner 25.44 1978-79,2003-04 CESTAT 109.11 1978-93 High Court Sales Tax 26.16 1996-97,1997-98,2001-02,2002-06 Sales Tax Offi cer 40.13 1996-00,2001-02,2003-05,2006-07 Assistant Commissioner 76.97 2000-03,2004-05,2006-07 Commissioner 63.10 1990-92,1994-96,1997-98,2003-05 Tribunal 9.88 2003-04 High Court Others Stamp Duty 182.23 2000 Controlling Revenue Authority Municipal Taxes 1,188.78 1984-2002 The Bombay High Court Entry Tax 4.26 1997-99 Dy. Commissioner 23.56 1997-2003 Tribunal 1.03 2000-01 The Supreme Court

10) The Company has no accumulated losses as at the end of the 16) According to the information and explanations given to us fi nancial year and it has not incurred any cash losses in the and the records examined by us, on an overall basis, the term current and immediately preceding fi nancial years. loans have been applied for the purpose for which the loans were obtained. 11) According to the information and explanations given to us and based on the documents and records produced to us, the 17) On the basis on an overall examination of the balance sheet Company has not defaulted in repayment of dues to a fi nancial and cash fl ows of the Company and the information and institution, bank or debenture holders as at the balance sheet explanations given to us, we report that the Company has date. not utilized the funds raised on short-term basis for long term investment. 12) The Company has maintained adequate documents and records 18) The Company has not made any preferential allotment in respect of loans and advances granted on the basis of of shares to parties or companies covered in the register security by way of pledge of shares and other securities, except maintained under section 301 of the Companies Act, 1956. for the shares referred to in note 9(b) of Schedule 22 which have not been transferred in the name of the Company. 19) The Company did not issue any debentures during the year. 13) In our opinion and according to the information and 20) The Company has not raised any money through a public issue explanations given to us, the nature of activities of the during the year. Company does not attract any special statute applicable to 21) Based on the audit procedures performed and information chit fund and nidhi / mutual benefi t fund / societies. and explanations given by the management, we report that no fraud on or any fraud by the Company has been noticed or 14) In our opinion, the Company has maintained proper records reported during the year. of the transactions and contracts in respect of investments purchased and sold during the year and timely entries have For and on behalf of been made therein. The investments made by the Company Kalyaniwalla and Mistry are held in its own name except for the shares referred to in Chartered Accountants note (d) of Schedule 6. Registration No. 104607W 15) According to the information and explanations given to us and Viraf R. Mehta the records examined by us, it is our opinion that the terms Partner and conditions of the guarantees given by the Company for M. No. 32083 loans taken by others from banks or fi nancial institutions are not prejudicial to the interest of the Company. Mumbai, May 26, 2010

35 Godrej Industries Limited

BALANCE SHEET AS AT MARCH 31, 2010

This Year Previous Year Schedule Rs. lac Rs. lac Rs. lac SOURCES OF FUNDS 1. Shareholders’ Funds (a) Share capital 1 3,176.25 3,197.59 (b) Reserves & surplus 2 99,093.36 99,514.61 102,269.61 102,712.20 2. Loan Funds (a) Secured loans 3 20,418.89 23,282.16 (b) Unsecured loans 4 34,342.14 36,814.31 54,761.03 60,096.47 3. Deferred Tax Liability 3,198.20 3,278.20 TOTAL 160,228.84 166,086.87 APPLICATION OF FUNDS 4. Fixed Assets 5 (a) Gross block 61,512.98 57,854.70 (b) Less: Depreciation / Impairment 33,881.80 31,467.99 (c) Net block 27,631.18 26,386.71 (d) Capital work-in-progress 2,197.60 2,484.13 29,828.78 28,870.84 5. Investments 6 114,761.99 114,808.02 6. Current Assets, Loans and Advances (a) Inventories 7 13,476.87 9,355.62 (b) Sundry debtors 8 11,086.55 16,099.98 (c) Cash and bank balances 9 1,508.61 2,851.17 (d) Loans and advances 10 17,535.41 14,794.20 43,607.44 43,100.97 Less : Current Liabilities and Provisions (a) Liabilities 11 21,035.53 14,045.42 (b) Provisions 12 6,933.84 7,033.41 27,969.37 21,078.83 Net Current Assets 15,638.07 22,022.14 7. Miscellaneous Expenditure 13 — 385.87 (To the extent not written off or adjusted) TOTAL 160,228.84 166,086.87 Signifi cant Accounting Policies 21 Notes to Accounts 22

The Schedules referred to above form an integral part of the Balance Sheet. As per our Report attached Signatures to Balance Sheet and Schedules 1 to 13, 21 and 22 For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company Secretary Mumbai, May 26, 2010

36 Annual Report 2009–2010

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010 Schedule This Year Previous Year Rs. lac Rs. lac Rs. lac INCOME Turnover (gross) (refer note 15) 85,629.45 87,468.82 Less: Excise duty 3,992.70 5,723.44 Turnover (net) 81,636.75 81,745.38 Other Income 14 17,532.98 15,402.94 99,169.73 97,148.32 EXPENDITURE Materials consumed and purchase of goods 15 53,416.89 54,317.99 Expenses 16 30,626.00 30,173.54 Inventory change 17 (1,736.02) 2,254.41 Interest and fi nancial charges (net) 18 6,024.79 6,106.12 Depreciation 2,838.80 2,646.19 (Net of transfer from Revaluation Reserve Rs. 99.50 lac, Previous year Rs. 133.69 lac) 91,170.46 95,498.25 Profi t before Taxation and Extraordinary Items 7,999.27 1,650.07 Provision for Taxation - Current Tax 877.00 - - MAT credit (877.00) - - Deferred Tax (80.00) (341.00) - Fringe benefi t Tax - 58.00 - Adjustment for tax of previous years (net) (13.47) 65.27 (93.47) (217.73) Profi t after Taxation and before Extraordinary Items 8,092.74 1,867.80 Extraordinary Items (Net of Tax) 19 - 26.00 Profi t after Extraordinary Items 8,092.74 1,893.80 Prior Period adjustments (net) 20 - (86.11) Net Profi t 8,092.74 1,807.69 Surplus brought forward 29,387.78 32,437.14 Add : Excess provision of proposed dividend 26.05 - Add : Excess provision of tax on distributed profi t 4.43 - 29,418.26 32,437.14 Amount Available For Appropriation 37,511.00 34,244.83 Appropriations Proposed Dividend - Final 4,764.37 3,996.99 Tax on distributed profi ts 791.30 679.29 Transfer to General Reserve 809.28 180.77 Surplus carried forward 31,146.05 29,387.78 TOTAL 37,511.00 34,244.83 Basic & Diluted Earnings per share before Extraordinary Items 2.54 0.56 Basic & Diluted Earnings per share after Extraordinary Items 2.54 0.57 (refer note 19) Signifi cant Accounting Policies 21 Notes to Accounts 22 The Schedules referred to above form an integral part of the Profi t & Loss Account.

As per our Report attached Signatures to Profi t and Loss Account and Schedules 14 to 22 For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company Secretary Mumbai, May 26, 2010

37 Godrej Industries Limited

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010 This year Previous year Rs. lac Rs. lac A. Cash Flow from operating activities : Profi t before tax 7,999.27 1,650.07 Adjustments for : Depreciation 2,838.80 2,646.19 Unrealised Foreign exchange (182.56) 494.16 Profi t on sale of investments (10,538.71) (5,939.18) Profi t on sale of fi xed assets (9.44) (99.01) Dividend income (4,280.11) (5,021.39) Interest income (1,274.66) (1,747.39) Interest expense 6,042.10 5,850.65 Deferred expenditure written off 385.87 682.02 Provision/(write back) for diminution in value of investments 1,253.52 (1,686.04) Provision/(Write back) for doubtful debts & sundry balances (net) (25.56) 480.63 Others - (86.11) Operating Profi t/(Loss) before working capital changes 2,208.52 (2,775.40) Adjustments for : Inventories (4,121.25) 10,415.57 Trade and other receivables 4,516.48 9,501.27 Trade payables 6,320.95 (10,714.37) Cash generated from operations 8,924.70 6,427.07 Direct taxes paid (1,227.00) (2,384.91) Direct taxes refund / received 12.56 407.86 Net Cash from operating activities 7,710.26 4,450.02 B. Cash Flow from investing activities : Purchase of fi xed assets (4,020.67) (4,635.73) Proceeds from sale of fi xed assets 49.67 135.37 Purchase of investments (82,577.71) (173,103.49) Proceeds from sale of investments 91,908.92 135,094.16 Intercorporate deposits / Loans (net) (922.17) (562.95) Interest received 1,193.14 1,265.99 Dividend received 4,280.11 5,021.39 Net Cash used in investing activities before extraordinary item 9,911.29 (36,785.26) Proceeds from sale of Medical Diagnostics Division - 26.00 Net Cash from/(used in) investing activities after extraordinary item 9,911.29 (36,759.26) C. Cash Flow from fi nancing activities : Proceeds from borrowings 82,500.00 122,617.69 Repayments of borrowings (84,620.90) (103,825.30) Equity share capital bought back (2,886.58) - Bank overdrafts (net) (3,193.27) (2,644.43) Interest paid (6,115.79) (5,724.49) Dividend paid (3,972.71) (4,012.62) Tax on distributed profi ts (674.86) (679.29) Net Cash (used in)/from fi nancing activities (18,964.11) 5,731.56 Net decrease in cash and cash equivalents (1,342.56) (26,577.68) Cash and cash equivalents (Opening Balance) 2,851.17 29,428.85 Cash and cash equivalents (Closing Balance) 1,508.61 2,851.17 Notes : 1. Cash and Cash equivalents Cash on hand and balances with banks 1,504.39 2,845.86 Effect of exchange rate changes 4.22 5.31 Cash and cash equivalents 1,508.61 2,851.17 2. Cash and cash equivalents include Deposits with Bank as security against guarantees issued amounting to Rs. 18.50 lac (Previous year Rs.18.50 lac). 3. To fi nance working capital requirements, the Company’s Bankers have sanctioned a total fund- based limit of Rs. 7,500 lac. Of this, limits utilised as on March 31, 2010 is Rs. 3,918.89 lac. 4. The fi gures of previous year have been regrouped wherever necessary.

As per our Report attached Signatures to Cash Flow Statement For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company Secretary Mumbai, May 26, 2010

38 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010 This Year Previous Year Rs. lac Rs. lac

SCHEDULE 1 : SHARE CAPITAL Authorised: 800,000,000 Equity shares of Re. 1 each 8,000.00 8,000.00 100,000,000 Unclassifi ed Shares of Rs.10 each 10,000.00 10,000.00 18,000.00 18,000.00 Issued, Subscribed and Paid Up: 317,624,892 (Previous Year 319,758,602) Equity shares of Re.1 each fully paid 3,176.25 3,197.59 3,176.25 3,197.59 Of the above, (i) 187,202,388 (Previous Year 187,202,388) shares are held by Godrej & Boyce Mfg. Co. Limited, the holding company. (ii) 155,547,816 (Previous Year 155,547,816) shares are allotted for consideration other than cash pursuant to schemes of amalgamation/arrangement. (iii) 95,705,718 (Previous Year 95,705,718) shares are allotted as fully paid bonus shares by way of capitalisation of Securities Premium Account. This Year Previous Year SCHEDULE 2: RESERVES AND SURPLUS Rs. lac Rs. lac Rs. lac Securities Premium Account As per last balance sheet 58,515.68 58,515.68 Less : Premium paid to buyback of shares (2,865.24) - 55,650.44 58,515.68 Capital Investment Subsidy Reserve As per last balance sheet 25.00 25.00 Capital Redemption Reserve As per last balance sheet 3,125.00 3,125.00 Add : Transfer from General Reserve on buyback of shares 21.34 - 3,146.34 3,125.00 Revaluation Reserve As per last balance sheet 1,409.93 1,671.21 Less : Depreciation on revalued component and deduction due to sale/discard of fi xed assets (123.55) (261.28) 1,286.38 1,409.93 General Reserve As per last balance sheet 7,051.21 6,870.44 Less: Transfer to Capital Redemption Reserve (21.34) - Add :Transferred from profi t & loss account 809.28 180.77 7,839.15 7,051.21 Profi t & Loss Account 31,146.05 29,387.79 99,093.36 99,514.61 SCHEDULE 3: SECURED LOANS Term loans from banks 10,000.00 12,170.00 Bank overdrafts, packing credits, etc. 1,418.89 4,612.16 Commercial paper 2,500.00 - Other loans 6,500.00 6,500.00 20,418.89 23,282.16 Particulars of securities (refer note 5)

SCHEDULE 4: UNSECURED LOANS Short term loans - From Banks 18,500.00 21,000.00 - From others — 2,500.00 Other loans from banks — 8,000.00 Commercial paper 6,000.00 3,000.00 Fixed Deposits 9,742.14 2,164.31 Intercorporate borrowing 100.00 150.00 34,342.14 36,814.31 Amount repayable within one year 25,610.31 26,650.00

39 Godrej Industries Limited

SCHEDULE 5 : FIXED ASSETS Rs. Lac ASSETS GROSS BLOCK DEPRECIATION / IMPAIRMENT NET BLOCK As on Additions Deductions/ As on Upto Deductions/ For the Upto As on As on 01.04.2009 Adjustments 31.03.2010 31.03.2009 Adjustments Year 31.03.2010 31.03.2010 31.03.2009 Tangible Assets Land - Freehold 113.90 — — 113.90 — — — — 113.90 113.90 - Leasehold 147.97 — — 147.97 25.86 — 1.54 27.40 120.57 122.11 Buildings 6,659.12 3,074.02 2.83 9,730.31 2,477.52 0.07 209.62 2,687.07 7,043.24 4,181.60 Plant & Machinery 44,142.40 870.10 460.18 44,552.32 25,824.88 427.14 2,225.62 27,623.36 16,928.96 18,317.52 Research Centre 127.06 — — 127.06 57.46 — 3.68 61.14 65.92 69.60 Furniture & Fixtures 1,194.56 136.75 62.13 1,269.18 701.71 44.66 78.25 735.30 533.88 492.85 Offi ce & Other 1,137.34 100.87 34.01 1,204.20 598.42 15.93 55.01 637.50 566.70 538.92 Equipments Vehicles / Vessels 2,597.88 14.55 17.91 2,594.52 396.60 16.71 199.99 579.88 2,014.64 2,201.28 Intangible Assets Trademarks 463.00 — — 463.00 378.12 — 46.30 424.42 38.58 84.88 Software 964.84 68.00 — 1,032.84 805.57 — 64.65 870.22 162.62 159.27 Assets acquired under fi nance lease Vehicles 306.63 — 28.95 277.68 201.85 19.98 53.64 235.51 42.17 104.78 TOTAL - This Year 57,854.70 4,264.29 606.01 61,512.98 31,467.99 524.49 2,938.30 33,881.80 27,631.18 26,386.71 - Previous Year 55,822.44 2,693.68 661.42 57,854.70 29,173.75 485.64 2,779.88 31,467.99 Capital Work-in-Progress 2,197.60 2,484.13 TOTAL 29,828.78 28,870.84 1. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on 30th June, 1992 on the basis of a Valuation Report submitted by professional valuers. 2. Depreciation for the year includes Rs.99.50 Lac (Previous Year Rs.133.69 lac) being depreciation on revalued component of the fi xed assets. 3. Gross block deductions includes Rs. 82.63 lac (Previous Year Rs.313.25 lac) being the revalued component of assets sold/discarded during the year. 4. Accumulated depreciation includes impairment loss of Rs. 510.36 lac (Previous year Rs 510.36 lac) on certain plant & machinery. 5. Capital work-in-progress is net of impairment loss of Rs.204.10 lac (Previous Year Rs. 204.10 lac) provided on an infructuous asset under construction. SCHEDULE 6 : INVESTMENTS PARTICULARS OF INVESTMENTS : Face value Number Amount (Rs.) Qty. as on Acquired Sold/adjusted Qty. as on Notes As on As on Investee Company / Institutions 01.04.09 during the during the 31.03.10 31.03.10 31.03.09 year year Rs. lac Rs. lac LONG TERM INVESTMENTS : At Cost A. TRADE INVESTMENTS Equity Shares : Fully Paid Bharuch Eco-Aqua Infrastructure Ltd. 10 440,000 - - 440,000 44.00 44.00 Preference Shares : Partly paid Wadala Commodities Ltd. 10 5,000,000 - - 5,000,000 (a) 450.00 450.00 (8% Redeemable Cumulative Preference Shares, 2012) B. OTHER INVESTMENTS : Fully Paid unless stated otherwise Equity Shares : Quoted : Godrej Consumer Products Ltd. 1 55,369,989 21,074,631 4,000,000 72,444,620 (b) 51,372.93 49,223.86 Unquoted : Avesthagen Limited 10 195,577 6,626 - 202,203 1,242.83 1,142.83 Compass BPO Ltd. £0.25 13,692 1,805 15,497 - (c) - 124.55 CBay Infotech Ventures Pvt. Ltd. 10 32,258 - 32,258 100.00 100.00 Gharda Chemicals Ltd. 100 114 - - 114 (d) 11.57 11.57 Godrej Hershey Ltd. 10 32,587,046 - - 32,587,046 17,740.44 17,740.44 HyCa Technologies Pvt. Ltd. 10 12,222 - 12,222 125.00 125.00 Swadeshi Detergents Ltd. 10 209,370 - - 209,370 191.33 191.33 Tahir Properties Ltd. (Partly paid) 100 25 - - 25 (a) 0.01 0.01 Common Stock/Membership Units : Quoted CBay Systems Holdings Ltd., BVI $0.10 8,182,148 - - 8,182,148 3,809.30 3,809.30 Unquoted : CBay Systems Ltd., USA $0.01 4,091,073 - - 4,091,073 253.52 253.52 Boston Analytics Inc. $1 1,055,629 - - 1,055,629 688.09 688.09 Verseon Corporation - Class A Preferred Shares $1.90 2,631,578 - 2,631,578 1,142.34 1,142.34

40 Annual Report 2009–2010

Face value Number Amount (Rs.) Qty. as on Acquired Sold/adjusted Qty. as on Notes As on As on Investee Company / Institutions 01.04.09 during the during the 31.03.10 31.03.10 31.03.09 year year Rs. lac Rs. lac Preference Shares : Unquoted : Tahir Properties Ltd. (Class - A) (partly paid) 100 25 - - 25 (a) 0.02 0.02 Optionally convertible Loan notes/Debentures : Unquoted : Compass BPO Ltd. (10%) £1000 97 - 97 - (c) - 83.19 Verseon Corporation (13%) $1,000,000 - - - - (e) 397.60 397.60 Boston Analytics Inc. (15%) $750,000 - - - - (f) 299.68 299.68 Boston Analytics Inc. (20%) $1,550,000 - - - - (f) 673.03 673.03 Boston Analytics Inc. (12%) $950,000 - - - - (g) 469.21 469.21 Tricom India Limited (8%) 10 13,135,050 - 13,135,050 - - 1,313.51 Non-convertible Debentures : Godrej Oil Plantations Limited 10 175,737 - 175,737 - - 17.57 Shares in Co-operative Society : Fully Paid Unquoted : The Saraswat Co-op Bank Ltd. 10 1,000 - - 1,000 0.10 0.10 Investment in the capital of Partnership Firm : View Group LP - - - - 0.01 0.01 C. INVESTMENT IN SUBSIDIARY COMPANIES Equity Shares : Quoted : Godrej Properties Ltd. (listed on 5.1.2010) 10 48,495,209 - - 48,495,209 18,528.60 18,528.60 Unquoted : Ensemble Holdings & Finance Ltd. 10 3,774,160 - - 3,774,160 1,318.94 1,318.94 Godrej Agrovet Ltd. 10 9,112,956 - - 9,112,956 16,317.91 16,317.91 Godrej Gokarna Oil Palm Limited 10 2,584 - 2,584 41.86 41.86 Godrej International Ltd. £1 2,355,000 - - 2,355,000 1,651.61 1,651.61 Godrej Hygiene Care Pvt. Ltd. (received 22,03,190 1 500,000 22,533,350 23,033,350 - (b) - 4.00 bonus shares & thereafter sub divided into 10 shares of Re 1 each) Natures Basket Limited 10 7,050,000 7,050,000 501.25 - 117,371.18 116,163.68 Less : Provision for diminution in value of Investments (2,609.19) (1,355.67) 114,761.99 114,808.02 Aggregate book value of Investments Quoted 73,710.83 53,033.16 Unquoted 41,051.16 61,774.86 114,761.99 114,808.02 Market Value of Quoted Investments 443,052.00 75,725.27

NOTES: (a) Uncalled Liability on partly paid shares - Tahir Properties Ltd. - Equity - Rs. 80 per share. - Tahir Properties Ltd. - Preference - Rs. 30 per share. - Wadala Commodities Limited - Preference - Re. 1 per share. (b) 97,50,000 shares of Godrej Consumer Products Limited have been pledged as security against loan from J.P. Morgan Securities India Pvt. Ltd. and 52,34,852 received under the scheme of arrangement are locked in till November 24, 2012. (c) 1,805 equity shares received on conversion of loan notes. (d) The said shares have been refused for registration by the investee company. (e) Optionally Convertible Notes are convertible as under : - Verseon Corporation - After December 1, 2008 until the due date but not later than Sepember 15, 2012. (f) The optionally convertible Promissory notes (15%) of Boston Analytics Inc. in respect of which the company did not exercise the conversion option and Boston Analytics Inc. promissory notes (20%) were due for redemption on June 30, 2009 and August 21, 2009 respectively. The said promissory notes have not been redeemed as of the Balance Sheet date. (g) 12% promissory notes repayable on or before March 31, 2011 along with interest on maturity.

41 Godrej Industries Limited

This Year Previous Year Rs. lac Rs. lac

SCHEDULE 7: INVENTORIES (at lower of cost and net realisable value) Stores and spares 1,192.44 1,333.39 Raw materials 5,030.25 2,504.07 Work-in-progress 4,237.76 2,676.28 Finished goods 3,016.42 2,841.88 13,476.87 9,355.62 SCHEDULE 8: SUNDRY DEBTORS (Unsecured) Debts outstanding over six months Considered doubtful 102.21 144.63 Other debts Considered good 11,086.55 16,099.98 11,188.76 16,244.61 Less: Provision for doubtful debts 102.21 144.63 11,086.55 16,099.98 SCHEDULE 9: CASH AND BANK BALANCES Cash and cheques on hand 15.55 14.35 Balances with scheduled banks - on current account 1,459.56 215.32 - on deposit account (refer note 8) 33.50 2,621.50 1,508.61 2,851.17 SCHEDULE 10: LOANS AND ADVANCES (Unsecured and considered good unless otherwise stated) Loans and Advances (refer note 9 a) 2,482.64 2,307.33 Loan to GIL ESOP Trust 7,301.80 7,358.70 (net of provision for doubtful advances Rs. 329.14 lac, previous year Rs.313 lac)

Advances recoverable in cash or in kind or for value to be received (net of provision for doubtful advances Rs. 585.67 lac, previous year Rs.549.58 lac) 1,964.60 1,932.72 Intercorporate deposits 1,387.51 35.00

Deposits and balances with - Customs & excise authorities 540.62 619.19 - Others 776.56 687.48 Advance payment of taxes 3,081.68 1,853.78 (Net of Provision for tax Rs. 1670.91 lac, previous year Rs.761.90 lac) 17,535.41 14,794.20

42 Annual Report 2009–2010

This Year Previous Year Rs. lac Rs. lac

SCHEDULE 11 : CURRENT LIABILITIES Sundry creditors (refer note 10) - Outstanding dues of micro enterprises and small enterprises 85.28 47.17 - others 18,399.08 10,906.31 Advances from customers 307.22 577.76 Sundry deposits 1,521.81 1,280.79 Investor Education & Protection Fund * - Unclaimed dividend 16.97 18.74 - Unclaimed Matured Deposits 9.46 9.21 - Unclaimed interest on Matured Deposits 4.87 - Other liabilities 423.42 864.32 Interest accrued but not due on loans 267.42 341.12 21,035.53 14,045.42 * There is no amount due and outstanding to be credited to the Investor Education and Protection Fund. SCHEDULE 12 : PROVISIONS Proposed dividend 4,764.37 3,996.99 Provision for tax on distributed profi ts 791.30 679.29 Provision for retirement benefi ts 1,378.16 2,357.13 6,933.84 7,033.41 SCHEDULE 13: MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) Deferred revenue expenditure Voluntary retirement compensation Balance at the beginning of the year 385.87 1,067.89 Less : Amortised during the year (385.87) (682.02) - 385.87 SCHEDULE 14: OTHER INCOME Interest (Gross) : - Debentures 76.27 159.46 - Income tax refund - 41.98 - Deposits 1,181.08 1,537.60 (Tax deducted at source Rs. 121.11 lac, previous year Rs. 584 lac) Dividend - from subsidiary companies 1,384.58 2,132.25 - from long term investments 2,895.53 2,889.14 Profi t on sale of fi xed assets (Net) 9.44 99.01 Profi t on sale of long term investments 10,437.56 5,626.55 (refer notes 6 and 16) Profi t on sale of current investments 101.15 312.63 Provision for diminution in investment written back (refer note 16) - 1,686.04 Bad debt recovered 747.97 9.24 Miscellaneous income 699.40 909.04 17,532.98 15,402.94

43 Godrej Industries Limited

This Year Previous Year Rs. lac Rs. lac SCHEDULE 15 : MATERIALS CONSUMED AND PURCHASE OF GOODS Raw materials consumed : Stocks at the commencement of the year 2,504.07 10,380.37 Add : Purchases (net) 55,556.98 45,917.74 58,061.05 56,298.11 Less : Stocks as at the close of the year 5,030.25 2,504.07 Raw Materials consumed during the year 53,030.80 53,794.04 Purchase of goods for resale 386.09 523.95 53,416.89 54,317.99 SCHEDULE 16: EXPENSES Salaries, wages and allowances 9,273.84 7,033.16 Contribution to provident fund and other funds 731.23 662.42 Employee welfare expenses 577.54 597.28 Stores and spares consumed 797.21 1,203.58 Power and fuel 6,561.57 6,820.18 Processing charges 648.50 292.12 Rent 440.44 418.17 Rates and taxes 535.08 534.75 Repairs and maintenance - Machinery 853.70 703.34 - Buildings 706.15 646.46 - Other assets 27.48 159.30 Insurance 140.66 128.40 Freight 2,557.85 3,146.21 Commission 388.44 351.38 Discount 378.66 286.08 Advertisement and publicity 1,264.97 1,095.29 Selling and distribution expenses 627.36 821.54 Provision for doubtful debts and advances (25.56) 480.63 Provision for depletion in value of investments 1,253.52 - Excise duty 194.79 429.64 (Including Rs. 38.91 lac, previous year Rs. 329.09 lac on inventory change ) Foreign exchange loss 5.22 2,160.50 Miscellaneous expenses 2,904.85 2,828.84 Less: Expenses recovered under cost sharing agreement for use of common facilities (217.50) (625.73) 30,626.00 30,173.54

44 Annual Report 2009–2010

Rs. lac This Year Previous Year Rs. lac Rs. lac SCHEDULE 17 : INVENTORY CHANGE Stocks at the commencement of the year - Finished goods 2,841.88 3,447.66 - Work-in-progress 2,676.28 4,324.91 5,518.16 7,772.57 Less: Stocks at the close of the year : - Finished goods (3,016.42) (2,841.88) - Work-in-progress (4,237.76) (2,676.28) (7,254.18) (5,518.16) (Increase)/Decrease in Inventory (1,736.02) 2,254.41

SCHEDULE 18 : INTEREST AND FINANCIAL CHARGES (Net) Interest paid - on fi xed loans 4,367.92 4,627.93 - on bank overdrafts 25.14 36.12 - other interest 667.83 375.40 5,060.89 5,039.45 Less: Interest received - on Customer balances, etc. 17.31 5.68 - others - 2.67 17.31 8.35 Net Interest 5,043.58 5,031.10 Other fi nancial charges 981.21 811.20 Foreign exchange loss - 263.82 6,024.79 6,106.12 SCHEDULE 19 : EXTRAORDINARY ITEMS Profi t on sale of Medical Diagnostics business - 26.00 - 26.00

SCHEDULE 20 : PRIOR PERIOD ADJUSTMENTS Short provision for expenses - (86.11) - (86.11)

45 Godrej Industries Limited SCHEDULE 21: SIGNIFICANT ACCOUNTING POLICIES

1. Accounting Convention 8. Inventories The fi nancial statements are prepared Under the historical Inventories are valued at lower of cost and net realisable cost convention, on the accrual basis of accounting, value. Cost is computed on weighted average basis and is in accordance with the generally accepted accounting net of modvat. Finished goods and work in progress include principles in India, the Accounting Standards presecribed in cost of conversion and other costs incurred in bringing the the Companies (Accounting Standard) Rules, 2006 and the inventories to their present location and condition. Provision relevant provisions of the Companies Act, 1956. is made for the cost of obsolescence and other anticipated losses, wherever considered necessary. 2. Use of Estimates 9. Provisions and Contingent Liabilities The preparation of fi nancial statements in conformity with generally accepted accounting principles requires the Provisions are recognised in the accounts in respect of present management to make estimates and assumptions that affect probable obligations, the amount of which can be reliably the reported balances of assets and liabilities as of the date estimated. of the fi nancial statements and reported amounts of income Contingent Liabilities are disclosed in respect of possible and expenses during the period. Management believes that obligations that arise from past events but their existence the estimates used in the preparation of fi nancial statements is confi rmed by the occurrence or non occurrence of one or are prudent and reasonable. Actual results could differ from more uncertain future events not wholly within the control the estimates. of the Company. 3. Fixed Assets 10. Foreign Exchange Transactions Fixed Assets are stated at cost or as revalued as the case may (i) Transactions in foreign currency are recorded at exchange be, less accumulated depreciation. Cost includes expenses rates prevailing on the day of the transaction. Monetary related to acquisition and any directly attributable cost of assets and liabilities denominated in foreign currency, bringing the assets to it’s intended working condition. remaining unsettled at the period end are translated at Fixed Assets acquired under fi nance lease are capitalised closing rates. The difference in translation of monetary at the lower of their face value and present value of the assets and liabilities and realised gains and losses on minimum lease payments. foreign currency transactions are recognised in the Profi t and Loss Account. 4. Intangible Assets (ii) Forward exchange contracts other than those entered Intangible assets are stated at cost of acquisition less into to hedge foreign currency risk of fi rm commitments accumulated amortisation. The cost of acquisition of trade or highly probable forecast transactions are translated marks is amortised equally over a period of ten years. at period end exchange rates. Premium or discount on Computer software is amortised over a period of six years such forward exchange contracts is amortised as income on the straight line method. or expense over the life of the contract. 5. Impairment of Assets (iii) Realised gain or losses on cancellation of forward The Company reviews the carrying amounts of tangible and exchange contracts are recognised in the Profi t and Loss intangible assets for any possible impairment at each balance Account of the period in which they are cancelled. sheet date. An impairment loss is recognized when the (iv) Exchange differences in respect of other unexpired carrying amount of an asset exceeds its recoverable amount. foreign currency derivative contracts, which have been Impairment loss, if any, is recognised in the period in which entered into to hedge foreign currency risks are marked impairment takes place. to market and losses, if any, are recognised in the Profi t 6. Borrowing Costs and Loss Account. Borrowing costs that are directly attributable to the 11. Revenue Recognition acquisition / construction of the qualifying asset are Sales are recognised when goods are supplied and are capitalised as a part of the cost of such asset, upto the date recorded net of returns, trade discounts, rebates, sales taxes of acquisition / completion of construction. and excise duties. 7. Investments Income from processing operations is recognised on Investments are classified into long-term and current completion of production / dispatch of the goods, as per the investments. Long term investments are carried at cost. terms of contract. Provision for diminution, if any, in the value of each long Export incentives receivable under the Duty Entitlement Pass term investment is made to recognise a decline, other Book Scheme and Duty Drawback Scheme are accounted on than of a temporary nature. The fair value of a long term accrual basis. investment is ascertained with reference to its market value, the investee’s assets and results and the expected cash fl ows Dividend income is recognised when the right to receive the from the investment. same is established. Current investments are stated at lower of cost and fair Interest income is recognised on a time proportion basis. value. Income on assets given on operating lease is recognised on a straight line basis over the lease term.

46 Annual Report 2009–2010

SCHEDULE 21: SIGNIFICANT ACCOUNTING POLICIES

12. Research and Development Expenditure 16. Hedging Revenue expenditure on Research & Development is charged The company uses forward exchange contracts to hedge it’s to the Profi t and Loss Account of the year in which it is foreign exchange exposures and commodity futures contracts incurred. Capital expenditure incurred during the year on to hedge the exposure to oil price risks. Gains or losses on Research & Development is included under additions to fi xed settled contracts is recognized in the profi t and loss account. assets. Futures contracts not settled as on the Balance Sheet date 13. Depreciation are marked to market and losses, if any, are recognized in the profi t and loss account, whereas, the unrealized profi t is Leasehold land is amortised equally over the lease period. ignored. Gains or losses on the commodity futures contracts is Leasehold improvements are amortised over fi ve years. recorded in the profi t & loss account under cost of materials Depreciation is provided on the straight line method at the consumed. rates specifi ed in Schedule XIV to the Companies Act, 1956, 17. Deferred Revenue Expenditure except for computer hardware which is depreciated over its estimated useful life of 4 years. The compensation payable under the Voluntary Retirement Schemes, the benefi t of which is expected to accrue in future Depreciation on assets acquired during the year is provided is deferred over its payback period. The compensation is for the full accounting year and no depreciation is charged on generally amortised over three to fi ve years depending on the the assets sold/discarded during the year, except in case of pay back period, however, the pay back period is restricted major additions and deductions exceeding rupees one crore to March 31, 2010. in which case, proportionate depreciation is provided. 18. Taxes on Income Depreciation on the revalued component is provided on the straight line method based on the balance useful life of Tax expense comprises both current and deferred tax. Current the assets as certifi ed by the valuers. Such depreciation is tax is the amount of tax payable on the assessable income withdrawn from Revaluation Reserve and credited to Profi t for the year determined in accordance with the provisions and Loss Account. of the Income Tax Act, 1961. 14. Employee Benefi ts Deferred tax is recognized on timing differences, being the differences between the taxable income and accounting Liability is provided for the retirement benefits of income that originate in one period and are capable of reversal provident fund, gratuity, leave encashment and pension in one or more subsequent periods. Deferred tax assets on benefit in respect of all eligible employees of the unabsorbed tax losses and tax depreciation are recognized company. only when there is virtual certainty of their realisation and (i) Defi ned Contribution Plan on other items when there is reasonable certainty that Employee benefi ts in the form of Provident Fund and suffi cient future taxable income will be available against family pension are considered as defi ned contribution which such deferred tax assets can be realised. The tax plans and the contributions are charged to the Profi t and effect is calculated on the accumulated timing differences Loss of the year when the contributions to the respective at the year end based on the tax rate and laws enacted or funds are due. substantially enacted on the balance sheet date. (ii) Defi ned Benefi t Plan 19. Segment Reporting Retirement benefi ts in the form of Gratuity and Pension The Accounting Policies adopted for segment reporting plan for eligible employees considered as defined are in line with the Accounting Policies of the Company. benefi t obligations and are provided for on the basis of Segment assets include all operating assets used by the an actuarial valuation, using the projected unit credit business segments and consist principally of fi xed assets, method, as at the date of the Balance Sheet. debtors and inventories. Segment liabilities include the (iii) Other long-term benefi ts operating liabilities that result from the operating activities Long-term compensated absences and Long Service of the business. Segment assets and liabilities that cannot awards are provided for on the basis of an actuarial be allocated between the segments are shown as part of valuation, using the projected unit credit method, as at unallocated corporate assets and liabilities respectively. the date of the Balance Sheet. Income / Expenses relating to the enterprise as a whole and Actuarial gain/losses comprising of experience not allocable on a reasonable basis to business segments are adjustments and the effects of changes in acturial refl ected as unallocated corporate income / expenses. assumptions are immediately recognized in the Profi t and Loss Account. 15. Incentive Plans The Company has a scheme of Performance Linked Variable Remuneration (PLVR) which rewards its employees based on Economic Value Addition (EVA). The PLVR amount is related to actual improvement made in EVA over the previous year when compared with expected improvements.

47 Godrej Industries Limited SCHEDULE 22: NOTES TO ACCOUNTS

1. Background This Year Previous Year Rs. Lac Rs. Lac The Company was incorporated under the Companies Act, 1956 on March 7, 1988 under the name of Gujarat-Godrej (vii) Industrial relations Innovative Chemicals Limited. The business and undertaking matters under appeal 199.70 204.71 of the erstwhile Godrej Soaps Limited was transferred to the (viii) Others 130.76 224.43 Company under a scheme of amalgamation with effect from b) Guarantees issued by banks, April 1, 1994 and the Company’s name was changed to Godrej excluding guarantees issued in Soaps Ltd. Subsequently, under a scheme of arrangement the respect of matters reported in Consumer Products division of the Company was demerged (a) above 733.04 666.65 with effect from April 1, 2001 into a separate company, Godrej c) Guarantees given by the Consumer Products Limited (GCPL) and the vegetable oils and Company in respect of credit/ processed foods manufacturing business of Godrej Foods Ltd. guarantee limits sanctioned by was transferred to the Company with effect from June 30, banks to subsidiary and other 2001. The Foods division (except Wadala factory) was then companies. 1,431.21 2,225.00 d) Letter of credit issued by bank sold to Godrej Hershey Ltd., on March 31, 2006 The Company’s on behalf of the company 617.74 84.26 name was changed to Godrej Industries Limited on April 2, e) Uncalled liability on partly paid 2001. shares/debentures 50.03 50.03 The Company is engaged in the businesses of manufacture and f) Additional consideration payable marketing of oleo-chemicals, their precursors and derivatives, for acquisition of certain shares bulk edible oils, estate management and investment on the occurrence of certain activities. contingent events - 104.13 2. Contingent Liabilities 3. Capital Commitments This Year Previous Year This Year Previous Year Rs. Lac Rs. Lac Rs. Lac Rs. Lac a) Claims against the Company not acknowledged as debts: Estimated value of contracts (i) Excise duty demands remaining to be executed on relating to disputed capital account, to the extent not classifi cation, post provided 86.35 1,694.43 manufacturing 4. Share Capital expenses, assessable Post receipt of SEBI exemption under regulation 3(1)(l) of the values, etc. which the Takeover Code, the Company issued a Public Announcement Company has contested on 29th April, 2009 and on 20th May, 2009 for Buyback upto and is in appeal at 57,00,000 of its shares from the open market at a price not various levels. 1,192.05 1,198.23 (ii) Customs Duty demands exceeding Rs. 275/- per share for an aggregate consideration relating to lower not exceeding Rs. 99 crore. Under the Buyback programme, charge, differential the Company has bought back and extinguished 21,33,710 duty, classifi cation, etc. 286.08 856.94 shares at a consideration of Rs. 2,887 lac. The premium paid (iii) Sales Tax demands on Buyback of shares amounting to Rs 2,865.24 lac has been relating to purchase adjusted from the Securities Premium Account. The Buyback tax on Branch Transfer programme has been completed. / Non availability of C The resultant excess provision of proposed divided and tax on Forms, etc at various distributed profi t due to Buyback of shares is added in surplus levels. 216.24 1,697.68 brought forward of profi t & loss account (iv) Octroi demand relating to classifi cation issue on 5. Loans import of Palm Stearine a) Term loans from banks are secured by fi rst charge by and interest thereon. 1,217.63 1,124.04 way of equitable mortgage of the immovable properties (v) Stamp duties claimed on including land, building and plant & machinery at Valia certain properties which factory. are under appeal by the Company 182.23 182.23 b) Working capital facilities sanctioned by banks are (vi) Income Tax demands secured by hypothecation of stocks and book debts. against which the c) Other loans are secured by pledge of 97,50,000 shares company has preferred of Godrej Consumer Products Limited so as to result in appeals 1,498.03 1,220.36 a collateral cover of three times the loan facility.

48 Annual Report 2009–2010

SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)

d) The Company had during the year raised Rs. 37500 7. Sundry Debtors lac (Previous year Rs.15000 lac) against the issue of This Year Previous Year commercial paper. The amount outstanding there against Rs. Lac Rs. Lac as on March 31, 2010 is Rs. 8500 lac. Sundry Debtors include the 6. Investments following amounts due from a) The Company had sold its entire holding in Godrej companies under the same Hicare Limited, a subsidiary company, in March 2009. management: The profi t thereon based on the minimum consideration Godrej Consumer Products - 123.27 received was recognised in the accounts for the year Ltd. ended on 31st March 2009. During the year, the company Godrej Agrovet Ltd. - 18.71 has received an additional consideration of Rs 2759 Godrej Hershey Ltd. 5.18 49.32 lac (net) on Godrej HiCare achieving certain fi nancial Godrej Properties Ltd. - 21.33 performance parameters which consideration has been Godrej Saralee Ltd. - 25.60 recognised as exceptional income in this year. Godrej SCA Hygiene Ltd. - 0.02 b) The Board of Directors at its meeting held on May 27, 2009, approved a scheme for the merger of Godrej Godrej & Boyce Mfg. Co. Ltd. - 5.44 Hygiene Care Limited (GHCL), a 100% subsidiary of Godrej International Ltd. 1.59 1.59 Godrej Industries Limited, into Godrej Consumer Godrej Hygiene Care Pvt. Ltd. Products Limited (GCPL). The scheme has been approved (Formerly known as Build Tough by the Hon’ble High Court, Bombay on 8th October, Properties Pvt. Ltd.) - 4,741.61 2009. The Appointed date of the merger being June 1, Natures Basket Ltd. 17.67 - 2009, the assets and liabilities of GHCL stand transferred Godrej Oil Palm Ltd. 4.57 - to and vested in GCPL from that date. Pursuant to the said scheme of arrangement, 51,07,125 (20%) equity 8. Cash and Bank Balances shares held by GHCL in Godrej Sara Lee Limited , a 49:51 This Year Previous Year unlisted joint venture Company between the Godrej Rs. Lac Rs. Lac Group and Saralee Corporation, USA stand transferred to and vested in GCPL and the Company has received Balances with Scheduled Banks 209,39,409 equity shares of GCPL in lieu thereof as per in Deposit Accounts include: the terms of the Scheme of Arrangement. 25% of these - deposits held by bank as 18.50 18.50 shares are locked in till 24th November, 2012. security against guarantees c) The Company has acquired and sold the following issued. investments during the year: 9. Loans and Advances a) Loans and Advances include Rs. 1,033 lac (Previous year Mutual Funds - This Year Previous Year Rs. 1,033 lac) advanced by the Company to certain Liquid - Growth schemes individuals against pledge by way of deposit of equity No. of Unts Rs Lac No. of Unts Rs Lac shares of Gharda Chemicals Ltd. The Company has enforced its security and lodged the shares for transfer Birla Cash Plus Liquid 88,296,420 12,715.00 96,361,450 13,080.00 in its name, however, the transfer application has been Prudential ICICI rejected by Gharda Chemicals Ltd. and the Company fi led Liquid 141,505,480 25,742.00 160,464,990 19,870.00 an appeal before the Company Law Board against the KMMF Liquid 18,592,371 3,455.00 12,196,981 2,000.00 rejection. The investee company had in the meanwhile, LIC MF Liquid Fund - - 69,580,260 10,425.00 moved the Bombay High court and the Court remanded the UTI Liquid fund 545,617 7,710.00 1,223,373 16,875.00 matter back to CLB. The CLB has advised that the parties may approach the Bench after fi nal disposal of the suit SBI Magnum Liquid 55,087,628 11,000.00 158,554,280 23,695.00 fi led by the investee company and the application made Templeton Mutual Fund - - 476,664 6,155.00 by minority shareholders under Section 397/398 before the Standard Hon’ble High Court. The company has fi led an appeal with Chartered the Hon’ble High Court against the order of the Company Liquidity Manager Law Board under Section 10 F of the Companies Act to the Fund - - 385,209 4,485.00 High Court, which has been admitted.” ING Vysya Liquid - - 32,822,955 4,230.00 Interest on the aforesaid loan amounting to Rs. 315 lac Deutsche Insta was accrued upto March 31, 2000 and has been fully Cash Plus Fund 4,364,601 500.00 76,356,419 8,140.00 provided for, no interest is being accrued thereafter. HDFC Liquid Fund 87,569,997 15,869.00 113,755,533 19,190.00 The recoverability of the advance is contingent upon the transfer and/ or disposal of the said shares. It is the

49 Godrej Industries Limited

SCHEDULE 22: NOTES TO ACCOUNTS (Contd.) opinion of the management that the underlying value of ESOP I the said shares is substantially greater than the amount This Year Previous Year of the loan. No. of Wt. No. of Wt. b) Loans and Advances include a loan of Rs 1382.43 lac to Options average Options average exercise exercise an individual secured by pledge of 38,97,454 shares of price ( * ) price ( * ) Godrej Hershey Ltd. Options c) outstanding at the Maximum beginning of the year 7,799,950 190.43 7,309,500 177.10 Balance Options granted during Previous during the year : the year This Year Year 2 May, 2008 - - 340,000 284.60 26 May, 2008 - - 835,450 276.70 Rs. Lac Rs. Lac Rs. Lac 3 June, 2008 - - 150,000 254.45 I. Loans & Advances to Options exercised subsidiary companies during the year : 2,100,000 91.84 - - Godrej Properties Ltd. 550.00 - - Options forfeited / Natures Basket Ltd. 455.00 455.00 - expired during the II. Loans and Advances year : 119,250 284.45 835,000 209.87 to associate Options companies outstanding at the Swadeshi Detergents 35.00 19.00 35.00 year end 5,580,700 228.06 7,799,950 190.43 Ltd. ESOP II III. Loans and Advances This Year Previous Year where there is no No. of Wt. No. of Wt. repayment schedule Options average Options average or repayment is exercise exercise price ( * ) price ( * ) beyond seven years Options - - - - D. Kavasmanek and 1,033.00 1,033.00 1,033.00 outstanding at the Others (refer (a) beginning of the above). year IV. Investments by the Options granted loanee in the shares during the year : of parent company 10 August, 2009 860,000 179.86 - - and subsidiary Options exercised - - - - company during the year : Options forfeited / - - - - GIL ESOP Trust 8,728.27 7,301.80 7,358.70 expired during the year : 10. Disclosure of sundry creditors under current liabilities is based Options on the information available with the company regarding the outstanding at the status of the suppliers as defi ned under the “Micro, Small year end 860,000 179.86 - - and Medium Enterprises Development Act, 2006”. Amount ( * ) The Wt. average exercise price stated above is the price on overdue as on 31st March 2010 to Micro, Small and Medium the grant date and will be increased by the interest cost at the Enterprises on account of principal amount together with prevailing rates upto the exercise of the option. interest, aggregate to Rs. Nil (Previous year – Rs. Nil). The weighted average balance life of options outstanding as on 11. Employee Stock Option Plans 31st March 2010 is 4.08 years. a) In December 2005, the Company had instituted an The options granted shall vest after three to fi ve years from the Employee Stock Option Plan (GIL ESOP) as approved by date of grant of option, provided the employee continues to be the Board of Directors and the Shareholders, for the in employment and the option is exercisable within two years allotment of 15,00,000 options, increased to 90,00,000 after vesting. options on split of shares convertible into 90,00,000 equity shares of Re.1 each to eligible employees of participating Modifi cation of the ESOP scheme : The vesting period for options companies. granted on 05/04/07 and on 11/04/07 was increased to a maximum of 5 years and the exercise period to 3 years from vesting. The scheme is administered by an independent ESOP Trust created with ILFS Trust Co. Ltd. which purchases from the The employee share based payment plans have been accounted market shares equivalent to the number of options granted based on the intrinsic value method and no compensation expense by the Compensation Committee. The particulars of the has been recognized since the market price of the underlying share scheme and movements during the year are as under: at the grant date is the same / less than the exercise price of the option, the intrinsic value therefore being Nil.

50 Annual Report 2009–2010

SCHEDULE 22: NOTES TO ACCOUNTS (Contd.) The fair value of the share options has been determined using the The aggregate future minimum lease payments are as under : Black-Scholes Option Pricing Model. Had the fair value method of accounting been used, the net profi t and earnings per share would Period This Year Previous Year have been as per the pro forma amounts indicated below. Rs. Lac Rs. Lac Lease payment recognised in 2,625.40 2,949.71 This Year Previous the profi t & loss account Rs. Lac Year Rs. Lac Future lease payments Net Profi t (as reported) 8,092.74 1,807.69 - Within one year 2,625.72 2,791.35 Less : Stock based compensation expense - Later than one year and not 4,719.23 2,745.00 determined under fair value based later than fi ve years method (Pro Forma) 1,102.33 1,072.14 Lease taken by the Company Net Profi t (Pro Forma) 6,990.41 735.55 Amt. Rs. Amt. Rs. (b) Operating Lease: Basic & Diluted Earnings per share before The Company’s signifi cant leasing arrangements are in Extraordinary Items (as reported) 2.55 0.58 respect of operating lease for land, offi ce premises, Basic & Diluted Earnings per share before residential premises, machinery and storage tanks. The Extraordinary Items (Pro Forma) 2.20 0.25 agreegate lease rentals paid by the Company are charged Basic & Diluted Earnings per share after to profi t & loss account. Extraordinary Items (as reported) 2.55 0.57 Basic & Diluted Earnings per share after Period This Year Previous Year Extraordinary Items (Pro Forma) 2.20 0.23 Rs. Lac Rs. Lac Lease payment recognised in the 440.44 418.17 b) The independent ESOP trust has purchased shares of the profi t & loss account Company from the market against the options granted. The purchases are fi nanced by loans from the Company amounting Future lease commitments to Rs. 8,113.31 lac (previous year Rs. 7,358.70 lac). As on - Within one year 399.87 412.53 31 March 2010, the market value of the shares purchased by - Later than one year and not 323.41 336.07 the Trust is lower than the acquisition cost of the shares by later than fi ve years Rs. 3,456.05 lac (previous year Rs. 5,331.24 lac). (c) Finance Leases: The repayment of the loans granted to the ESOP trust is The company has acquired vehicles under Finance Lease. dependent on the exercise of the options by the employees and Liability for minimum lease payment is secured by the market price of the underlying shares of the unexercised hypothecation of the vehicles acquired under the lease. options at the end of the exercise period. The fall in value of The minimum lease payments outstanding as on March the underlying equity shares is on account of market volatility 31, 2010, in respect of vehicles acquired under lease are and the loss, if any, can be determined only at the end of as under: the exercise period. In view of the aforesaid, provision for diminution of Rs. 3,456.05 lac (previous year Rs. 5,331.24 lac) Period Total Un-matured Present is not considered necessary in the fi nancial statements. minimum Interest value of 12. Lease lease minimum payments lease Leases granted by the Company outstanding as payments (a) Operating Lease: on March 31, The company has entered into leave and licence 2010 agreements in respect of its commercial and residential Rs. Lac Rs. Lac Rs. Lac premises. The non-cancelable portion of the leases range Within one year 48.54 8.47 45.71 between 3 months to 36 months and are renewable by Later than one year 14.43 2.07 11.73 mutual consent on mutually acceptable terms. Leave and not later than and licence arrangements being similar in substance to fi ve years operating leases. The company has also granted lease 62.97 10.54 57.44 for freehold land. The particulars of the operating lease arrangements are as under: This Year Previous Year Rs. Lac Rs. Lac Gross carrying amount of 1,913.45 1,785.95 premises Accumulated depreciation 870.14 763.43 Depreciation for the period 50.89 50.87

51 Godrej Industries Limited

SCHEDULE 22: NOTES TO ACCOUNTS (Contd.) 13. Deferred Tax ii) Un-hedged foreign currency exposures Details This Year Previous Year Major components of deferred tax arising on account of timing Purchase Sale Purchase Sale differences as at the year end are: Uncovered This Year Previous Year Foreign exchange Rs Lac Rs Lac exposure as at the Assets year end Provision for retirement benefi ts 225.00 521.00 - US Dollar (million) 13.78 8.42 2.08 3.56 Provision for doubtful debts / 338.00 355.00 - Euro (million) 0.04 - 0.04 0.17 advances - GBP (million) - 0.03 - - VRS Expenses 215.00 298.00 Others 327.00 30.00 15. Turnover 1,105.00 1,204.00 Liabilities This Year Previous Year Rs Lac Rs Lac Depreciation 4,303.20 4,482.20 Turnover includes Net Deferred Tax Liability 3,198.20 3,278.20 i) Processing charges 607.58 1,048.51 ii) Export Incentives 180.20 963.18 14. Hedging Contracts iii) Licence fees and service 2,803.19 3,140.68 The Company uses forward exchange contracts to hedge charges its foreign exchange exposure relating to the underlying 3,590.97 5,152.37 transactions and fi rm commitments. The use of the foreign exchange forward contracts reduces the risk on cost to the 16. Exceptional Items company. The Company also uses commodity futures contracts This Year Previous Year to hedge it’s exposure to vegetable oil price risk. The Company Rs Lac Rs Lac does not use foreign exchange forward contracts or commodity i) Profi t on sale of long term 10,437.56 5,626.55 future contracts for trading or speculation purposes. investments i) Derivative instruments outstanding: ii) Write back / (Provision) for - 1,686.04 a) Commodity futures contracts diminution in investment Details This Year Previous Year 17. Profi t & Loss Account Purchase Sale Purchase Sale Futures contracts 1 - 6 - a) Exchange differences recognised in the Profi t & Loss outstanding Account for the year is a loss of Rs. 5.22 lac (Previous year loss of Rs. 2424.32 lac). The exchange difference in Number of units 1,040 - 4,500 - respect of forward exchange contracts to be recognised under above in subsequent accounting periods is Rs. 26.38 lac contracts in MT. (Previous year Rs. 21.31 lac). b) Forward Exchange contracts b) Research & Development Expenditure of revenue nature Details This Year Previous Year charged to the Profi t & Loss Account amounts to Rs. Purchase Sale Purchase Sale 327.31 lac (Previous year Rs.173.30 lac). Total number 31 9 24 6 of contracts outstanding Foreign currency value - US Dollar (million) 9.47 1.85 10.04 2.42 - Euro (million) - 2.00 - 0.50

52 Annual Report 2009–2010

SCHEDULE 22: NOTES TO ACCOUNTS (Contd.) 18. Earning Per Share This Year Previous Year a) Calculation of weighted average number of equity shares Number of shares at the beginning of the year Nos. 319,758,602 319,758,602 Number of equity shares outstanding at the end of the year Nos. 317,624,892 319,758,602 Weighted average number of equity shares outstanding during the year Nos. 318,247,978 319,758,602 b) Net profi t after tax excluding extraordinary items Rs. lac 8,092.74 1,781.69 c) Net profi t after tax available for equity shareholders Rs. lac 8,092.74 1,807.69 (including extraordinary items) d) Basic and diluted earnings per share of Re 1 each Rupees 2.54 0.56 excluding extraordinary Items e) Basic and diluted earnings per share of Re 1 each Rupees 2.54 0.57 including extraordinary Items Note: There is no impact on basic as well as diluted earnings per share on account of the ESOP, as the scheme does not envisage any fresh issue of share capital. 19. Segment Information Information about primary business segments. Rs. lac

Chemicals Estate Finance & Investments Others Total This Year Previous This Year Previous This Year Previous This Year Previous This Year Previous Year Year Year Year Year Revenue External Sales 78123.55 77818.57 2775.39 3154.26 17081.77 14726.08 1189.02 1449.41 99169.73 97148.32 Inter segment sale ------Total Income 78123.55 77818.57 2775.39 3154.26 17081.77 14726.08 1189.02 1449.41 99169.73 97148.32 Results Segment result before 5238.25 (1832.02) 1819.47 2177.91 15828.25 14726.08 (539.48) (480.10) 22346.49 14591.87 interest and tax Unallocated expenses (8322.43) (6835.68) Interest Expense (net) (6024.79) (6106.12) Profi t before tax 7999.27 1650.07 Taxes 93.47 217.73 Profi t after taxes and 8092.74 1867.80 before extraordinary items Add: Extraordinary Items - 26.00 (Net of taxes) Add/(Less): Prior Period - (86.11) Items Net Profi t 8092.74 1807.69 Segment Assets 44848.58 38806.09 7943.25 5571.54 129455.39 134973.07 2836.10 3157.69 185083.32 182508.39 Unallocated Assets 3114.89 4657.31 Total Assets 188198.21 187165.70 Segment Liabilities 18248.42 13795.00 1831.58 1335.98 1792.64 664.75 541.05 606.82 22413.69 16402.55 Unallocated Liabilities 63514.91 68050.95 Total Liabilities 85928.60 84453.50 Total Cost incurred during 902.36 1261.72 3057.49 1688.52 17.91 1,724.12 14.67 7.77 3992.43 4682.13 the year to acquire segment assets Segment depreciation 2083.57 2034.48 108.97 64.92 155.50 59.98 237.14 213.72 2585.18 2373.10 Unallocated depreciation 253.62 273.09 Total Depreciation 2838.80 2646.19 Information about Secondary Business Segments Revenue by Geographical markets India 69199.69 64737.13 Outside India 29970.04 32390.47 Total 99169.73 97127.60

Carrying Amount of Segment Assets India 188198.21 187165.70 Outside India - - Total 188198.21 187165.70

53 Godrej Industries Limited

SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)

Notes: 1. The Company has disclosed Business Segment as the primary segment. Segments have been identifi ed taking into account the nature of the products, the different risks and returns, the organisational structure and the internal reporting system. 2. Chemicals segment includes Oleo Chemicals such as Fatty Alcohols, Fatty Acids, Alfa Olefi n Sulphonates and Refi ned Glycerin. Estate segment comprises the business of giving premises on leave and license basis. Finance & Investments segment comprises of investment in subsidiaries, associate companies & other investments. Others includes business of refi ned vegetable oils and vanaspati and energy generation through windmills. 3. The geographical segments are as follows - Sales in India represent sales to customers located in India - Sales outside India represent sales to customers located outside India.

20. Related Party Disclosures a) Names of related parties and description of relationship Parties where control exists Key Management Personnel Godrej & Boyce Mfg. Co. Ltd., the holding company Mr. A.B. Godrej Chairman Mr. N.B. Godrej Managing Director Subsidiary companies Ms. T.A. Dubash Executive Director & President (Marketing) Godrej Agrovet Ltd. Mr. M. Eipe Executive Director Golden Feeds Products Ltd. & President (Chemicals) Cauvery Palm Oil Ltd. Mr. V. Banaji Executive Director & President Godrej Oil Palm Ltd. (Group Corporate Affairs) Godrej Properties Ltd. Mr. M.P. Pusalkar Executive Director & President Godrej Developers P. Ltd. (Corporate Projects) Godrej Real Estate P. Ltd. Godrej Realty P. Ltd. Relatives of Key Management Personnel Godrej Sea View Properties P. Ltd. Ms. P.A. Godrej Wife of Mr. A.B. Godrej Godrej Waterside Properties P. Ltd. Ms. N.A. Godrej Daughter of Mr. A.B. Godrej Happy Highrises Ltd. Mr. P.A. Godrej Son of Mr. A.B. Godrej Godrej Estate Developers P. Ltd. Ms. R.N. Godrej Wife of Mr. N.B. Godrej Natures Basket Ltd. Mst. B.N. Godrej Son of Mr. N.B. Godrej Ensemble Holdings & Finance Ltd. Mst. S.N. Godrej Son of Mr. N.B. Godrej Godrej International Ltd. Mst. H.N. Godrej Son of Mr. N.B. Godrej Godrej Hygiene Care Pvt. Ltd. ( up to 31.05.2009)

Fellow Subsidiaries: Enterprises over which key management Wadala Commodities Ltd. personnel exercise signifi cant infl uence Godrej (Malaysia) Sdn Bhd Godrej Netherlands BV Godrej (Singapore) Pte Ltd. Rapidol (Pty) Ltd. Godrej Infotech Ltd. Godrej Global Mideast FZE Veromatic International BV Godrej Hygiene Products Ltd. Veromatic Services BV Godrej Consumer Products Mauritius Ltd. Water Wonder Benelux BV Godrej Consumer Products Holding (Mauritius) Ltd. Godrej ConsumerBiz Ltd. (up to 01.06.2009) Godrej Holdings Pvt. Ltd. Godrej Investments Pvt. Ltd. Bahar Agrochem & Feeds Pvt. Ltd. Other related parties with whom the Company had Vora Soaps Ltd. transactions during the year Tahir Properties Ltd. Associate / Joint Venture Companies Godrej Tyson Foods Ltd. Godrej Consumer Products Ltd. (also fellow subsidiary) Godrej Hershey Ltd. Swadeshi Detergents Ltd. Compass BPO Ltd. (up to 08.03.2010) Godrej Sara Lee Ltd. (up to 31.05.2009)

54 Annual Report 2009–2010

SCHEDULE 22: NOTES TO ACCOUNTS (Contd.) b) Transaction with Related Parties (Rs. lac)

Nature of Transaction Holding Subsidiary Fellow Associate/ Key Relative Enterprises Total Company Companies Subsidiaries Joint Venture Management of Key over which Key Companies Personnel Management Mangement Personnel Personnel exercise signifi cant infl uence Sale of Goods - 5.64 - 935.93 - - 13.54 955.11 Previous Year - - - 1,277.97 - - 5.29 1,283.26 Sale of Fixed Assets ------Previous Year - 4.94 - - - - - 4.94 Purchase of goods 0.73 17.87 - 753.97 - - - 772.57 Previous Year 23.29 4.78 - 761.99 - - 0.06 790.12 Purchase of Fixed Assets 45.48 883.30 - - - - 928.78 Previous Year 207.10 1,441.40 - - - 100.00 - 1,748.49 Processing charges received - - - 157.55 - - - 157.55 Previous Year - - - 198.38 - - - 198.38 Commission / Royalty received - 123.59 - 182.99 - - - 306.58 Previous Year - 105.14 - 178.89 - - - 284.03 Licence fees / Service charges / Storage Income 0.27 203.12 - 426.66 - - - 630.05 Previous Year 0.39 165.66 7.69 707.30 - - 9.45 890.49 Other Income 0.12 22.63 - 18.09 - - - 40.84 Previous Year 1.11 28.85 - 41.71 - - 0.02 71.69 Recovery of establishment & Other Expenses - 175.86 0.78 756.33 - - - 932.97 Previous Year 30.90 154.75 0.89 1,192.16 - - 3.40 1,382.11 Rent, Establishment & other exps paid 294.49 49.51 7.40 243.07 - 64.68 0.49 659.64 Previous Year 304.36 73.93 19.11 168.62 - 82.31 0.84 649.17 Interest received - 61.43 - 2.24 - - - 63.67 Previous Year - 17.22 - - - - 3.50 20.72 Interest paid - 12.51 8.00 6.12 - - - 26.63 Previous Year - 6.54 8.00 - - - - 14.54 Dividend income - 1,303.51 - 2,895.51 - - - 4,199.02 Previous Year - 2,132.25 - 2,889.12 - - - 5,021.37 Dividend paid 2,340.03 - - - 70.93 249.23 - 2,660.19 Previous Year 2,340.03 - - - 68.62 729.47 - 3,138.11 Remuneration - - - - 1,024.39 87.07 - 1,111.46 Previous Year - - - - 792.16 55.74 - 847.90 Purchase of Investments - 5,244.97 - - - - - 5,244.97 Previous Year - 4.00 - 35,129.26 - - - 35,133.26 Sale of Investments - 17.57 - - - - - 17.57 Previous Year 4,291.80 4,729.78 - - - - - 9,021.58 Intercorporate Deposits -Accepted - 525.00 - 405.00 - - - 930.00 Previous Year - 265.78 - 17.44 - - - 283.22 Intercorporate Deposits Repaid during the year - 575.00 - 405.00 - - - 980.00 Previous Year - 231.15 - 22.30 - - - 253.45 Intercorporate Deposits -Advanced - 1,005.00 - - - - - 1,005.00 Previous Year - 1,300.00 - - - - - 1,300.00 Intercorporate Deposits Repayment received during the year - 550.00 - 16.00 - - - 566.00 Previous Year - 1,300.00 - - - - - 1,300.00 Shares in Associate Compnay acquired under a scheme of arrangement - - - 4,747.72 - - - 4,747.72 Previous Year ------Directors Fees - - - - 1.60 - - 1.60 Previous Year - - - - 2.1 0 - - 2.10 Balance Outstanding as on March 31, 2010 Receivables - 18.34 3.11 4.72 - - 12.61 38.78 Previous Year 20.52 4,764.21 0.13 177.16 - - 9.65 4,971.67 Payables 22.91 243.76 0.27 108.15 - - 0.09 375.18 Previous Year - 163.01 6.84 155.01 - - (0.12) 324.74 Guarantees Outstanding - 500.00 - 1,431.21 - - - 1,931.21 Previous Year - - - 2,225.00 - - - 2,225.00

55 Godrej Industries Limited

SCHEDULE 22: NOTES TO ACCOUNTS (Contd.) c) The Signifi cant Related Party transactions are as under:

Nature of Transaction This Year Previous Year Nature of Transaction This Year Previous Year Rs. Lac Rs. Lac Rs. Lac Rs. Lac Sale of goods Interest received - Godrej Consumer Products Ltd. 927.98 1,188.61 - Godrej Properties Ltd. 35.71 - - Rapidol PTY Ltd. 11.95 - - Natures Basket Ltd. 25.72 - - Godrej Properties Ltd. 3.83 - - Swadeshi Detergents Ltd. 2.24 3.50 - Godrej Saralee Ltd. - 89.36 - Godrej Agrovet Ltd. - 17.22

Sale of fi xed assets Interest paid - Godrej Properties Ltd. - 4.94 - Ensemble Holdings & Finance Ltd. 12.51 6.54 - Wadala Commodities Ltd. 8.00 8.00 Purchase of Fixed Assets - Godrej Consumer Products Ltd. 6.12 - - Godrej Properties Ltd. 883.30 1,398.48 - Godrej & Boyce Mfg. Co. Ltd. 45.48 186.03 Processing Charges received - Godrej Hershey Ltd. 157.55 198.38 Purchase of goods - Godrej Consumer Products Ltd. 538.07 531.11 Inter Corporate Deposits - Accepted - Godrej Hershey Ltd. 215.16 225.02 - Ensemble Holdings & Finance Ltd. 525.00 250.00 - Godrej Oil Palm Ltd. 17.87 - - Godrej Consumer Products Ltd. 405.00 - - Godrej & Boyce Mfg. Co. Ltd. 0.73 44.36 - Heroes Aids Project - 100.00 Inter Corporate Deposits - Repaid - Godrej Hi Care Ltd. - 46.87 - Ensemble Holdings & Finance Ltd. 575.00 200.00 - Godrej Saralee Ltd. - 5.86 - Godrej Consumer Products Ltd. 405.00 -

Commission / Royalty received Inter Corporate Deposits - Advanced - Godrej Hershey Ltd. 180.04 173.43 - Godrej Properties Ltd. 550.00 - - Godrej Properties Ltd. 122.34 102.63 - Natures Basket Ltd. 455.00 - - Godrej Consumer Products Ltd. 2.95 5.46 - Godrej Agrovet Ltd. - 1,300.00 - Natures Basket Ltd. 1.25 - - Godrej Global Solutions Ltd. - 2.51 Inter Corporate Deposits - Repayment Received - Godrej Properties Ltd. 550.00 - Licence fees / Service charges / - Swadeshi Detergents Ltd. 16.00 - Storage income - Godrej Consumer Products Ltd. 182.26 211.72 - Godrej Agrovet Ltd. - 1,300.00 - Compass BPO Ltd. 154.79 172.69 - Godrej Agrovet Ltd. 103.24 101.31 Dividend income - Godrej Properties Ltd. 73.52 33.09 - Godrej Consumer Products Ltd. 2,895.51 1,854.93 - Godrej Hershey Ltd. 49.88 84.75 - Godrej Properties Ltd. 1,212.38 1,961.86 - Godrej Saralee Ltd. 39.73 238.14 - Godrej Agrovet Ltd. 91.13 91.13 - Natures Basket Ltd. 22.21 7.69 - Godrej Saralee Ltd. - 1,034.19 - Godrej Oil Palm Ltd. 4.15 - - Ensemble Holdings & Finance Ltd. - 79.26 - Godrej Hicare Ltd. - 25.88 - Godrej SCA Hygiene Ltd. - 9.45 Dividend paid - Godrej Global Solutions Ltd. - 5.37 - Godrej & Boyce Mfg. Co. Ltd. 2,340.03 2,340.03

56 Annual Report 2009–2010

SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)

Nature of Transaction This Year Previous Year Nature of Transaction This Year Previous Year Rs. Lac Rs. Lac Rs. Lac Rs. Lac Remuneration to Key Management Other Income Personnel - Godrej Agrovet Ltd. 20.07 22.32 - Mr. N. B. Godrej 241.34 219.84 - Godrej Consumer Products Ltd. 11.14 17.65 - Mr. V. F. Banaji 211.36 151.58 - Godrej Hershey Ltd. 5.66 10.98 - Mr. M. P. Pusalkar 199.78 131.84 - Godrej Properties Ltd. 1.37 3.64 - Ms. T. A. Dubash 194.83 137.82 - Natures Basket Ltd. 1.18 - - Mr. M. Eipe 177.08 135.02 - Godrej Saralee Ltd. 1.29 13.08 - Mr. C. K. Vaidya - 16.06 - Godrej Hicare Ltd. - 2.89 - Godrej & Boyce Mfg. Co. Ltd. - 1.11 Remuneration to Relatives of Key Management Personnel - Ms. Nisaba A. Godrej 87.07 53.57 Recovery of Establishment & other - Mr. Pirojsha Godrej - 2.17 expenses - Godrej Consumer Products Ltd. 686.49 983.25 - Godrej Agrovet Ltd. 121.14 96.31 Sale of Investments - Godrej Hershey Ltd. 63.22 108.88 - Godrej Oil Palm Ltd. 17.57 - - Godrej Properties Ltd. 54.50 41.04 - Godrej & Boyce Mfg. Co. Ltd. - 4,291.80 - Godrej Saralee Ltd. 6.24 100.00 - Godrej Hygiene Care Pvt. Ltd. - 4,729.78 - Godrej Hicare Ltd. - 16.52 - Godrej & Boyce Mfg. Co. Ltd. - 30.90 Purchase of Investments - Godrej SCA Hygiene Ltd. - 3.42 - Godrej Agrovet Ltd. 501.25 - - Godrej Global Solutions Ltd. - 0.89 - Godrej Hygiene Care Pvt. Ltd. 4,743.72 4.00 - Godrej Consumer Products Ltd. - 31,689.26 Rent, Establishment & other exps - Godrej Hershey Ltd. - 3,440.00 paid - Godrej & Boyce Mfg. Co. Ltd. 294.49 304.36 - Godrej Consumer Products Ltd. 232.14 136.39 Shares in Associate company acquired under a scheme of arrangement - Ms. R.N. Godrej 64.68 82.31 - Godrej Consumer Products Ltd. 4,747.72 - - Godrej Properties Ltd. 42.63 18.24 - Godrej Hershey Ltd. 7.26 - - Wadala Commodities Ltd. 5.77 6.38 - Godrej Agrovet Ltd. 3.92 29.31 - Natures Basket Ltd. 2.96 2.88 - Godrej Infotech Ltd. 1.63 9.85 - Godrej Saralee Ltd. - 32.20 - Godrej Hicare Ltd. - 26.38

57 Godrej Industries Limited

SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.)

This Year Previous Year Rs.’lac Rs.’lac Rs.’lac 21. Computation of Profi ts under Section 349 of the Companies Act, 1956 Profi t for the year after tax as per Profi t & Loss Account 8,092.74 1,807.69 Add: Depreciation as per accounts 2,838.80 2,646.19 Managerial Remuneration 1,024.39 827.26 Directors’ Fees 9.60 10.35 Profi t / (loss) on sale of assets under Section 349 9.44 27.49 Provision for doubtful debts / advances (25.53) 480.63 Provision for depletion in value of investments 1,253.49 - Provision for Tax (including tax on extraordinary items) 93.47 217.73 5,203.66 4,209.65 13,296.40 6,017.34 Less: Depreciation under Section 350 of the Companies Act, 1956 2,812.80 2,619.81 Profi t / (loss) on sale of assets as per books 9.44 99.01 Profi t on sale of investments 10,437.56 5,626.55 Profi t on sale of M.D. division - 26.00 Provision for diminution in investment written back - 1,686.04 Brought forward loss u/s 349 of the Companies Act 1956 4,867.33 - 18,127.13 10,057.41 Net Profi t for the purpose of Directors’ Remuneration (4,830.73) (4,040.07) Managerial remuneration payable - - Managerial remuneration paid / payable as per approval of Central Govt. 1,024.39 827.26 22. Managerial Remuneration Salaries and allowances 902.65 686.97 Contribution to Provident Fund 32.93 30.27 Estimated Monetary value of perquisites 88.81 110.02 TOTAL 1,024.39 827.26 The above does not include contribution to Gratuity Fund as separate fi gures are not available. 23. Auditors’ Remuneration Audit fees (including Rs. 1.09 lac to branch auditors, Previous Year Rs.1.13 lac) 32.09 30.02 Tax audit fees 5.00 4.80 Certifi cation and other services 9.70 11.30 Tax Consultation and representation 10.47 9.40 Consultation and management services 4.80 5.45 Out of pocket expenses 1.28 1.12 TOTAL 63.34 62.09

58 Annual Report 2009–2010

SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.)

24. Turnover (Net) Item Unit This Year Previous Year Quantity Value Quantity Value Rs.’lac Rs.’lac Fatty Acids MT 58888 31624.03 51352 27554.26 Glycerin MT 9120 3192.27 8904 4832.14 Alpha Olefi n and its precursors MT 49598 28942.92 47959 32247.82 Synthetic Detergent MT 19089 13439.79 15137 10988.08 Medical Diagnostic Products 0.00 160.29 Others 4437.74 5841.13 TOTAL 81636.75 81623.72

25. Inventories - Finished Goods Item Unit MARCH 31, 2010 MARCH 31, 2009 MARCH 31, 2008 Quantity Value Quantity Value Quantity Value Rs.’lac Rs.’lac Rs.’lac Fatty Acids MT 1653 855.86 1054 555.60 1437 667.62 Glycerin MT 250 91.04 140 55.44 282 197.69 Alpha Olefi n and its precursors MT 2920 1,737.81 2822 1,876.34 3627 2171.95 Synthetic Detergent MT 445 327.41 519 352.84 1185 408.36 Others 4.30 1.66 2.04 TOTAL 3016.42 2841.88 3447.66

26. Raw Materials Consumed

Unit This Year Previous Year Quantity Value Quantity Value Rs.’lac Rs.’lac Oils & Fats MT 127646 39731.74 103421 39893.90 Chemicals and Catalysts MT 22540 9512.07 22412 10208.01 Packing Materials, etc. 3786.99 3692.13 TOTAL 53030.80 53794.04 Raw materials consumption includes consumption for production of captively consumed items.

27. Purchase of Goods

Unit This Year Previous Year Quantity Value Quantity Value Rs.’lac Rs.’lac Refi ned oil, Soaps, Toileteries, etc. 262.82 361.72 Others 123.27 162.23 TOTAL 386.09 523.95

59 Godrej Industries Limited

SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.)

28. Licensed, Installed and Utilised Capacity Item Unit Licensed Installed Capacity Actual Capacity Production This Previous This Previous Year Year Year Year Fatty Acids MT } 73300 73300 59488 50969 Glycerin MT } 8280 8280 9230 8663 Alpha Olefi n and its precursors MT } 65000 65000 49696 47154 Refi ned Oils & Vanaspati MT } 38700 38700 6354 9189 Synthetic Detergents MT } 29250 29250 23126 22738 Hydrogen (Captive consumption) NM 3 } 19200000 19200000 - - Oxygen (By-Product) NM 3 } - - - - NOTES : 1. The Licensed Capacities are not applicable in view of the exemption from licensing granted under Notifi cation SO 477 ( E ) dated 25th July 1991, issued under the Industries ( Development & Regulation Act,1951). 2. Installed capacity excludes the installed capacity for manufacture of intermediates which are intended to be used for internal consumption to manufacture A.O. and its precursors and derivatives. 3. Production of Synthetic Detergent includes 4111 MT (Previous year 7871 MT) produced under process contracts for third parties. 4. Production of Refi ned Oils & Vanaspati is under process contract.

This Year Previous Year This Year Previous Rs.’lac Rs.’lac Rs.’lac Year Rs.’lac 29. Value of Imports on CIF Basis (includes only Imports 31. Value of Consumption directly made) of Raw Materials & Spares Raw materials 23,095.75 22,264.53 %% Goods for resale - 156.93 Raw Materials Stores & spares 183.62 247.65 Imported (including 25,897.78 49 33,844.55 63 Capital goods 1.69 1,251.24 duty content) 23,281.06 23,920.35 Indigenous 27,133.02 51 19,949.49 37 30. Expenditure in Foreign 53,030.80 100 53,794.04 100 Currency Spares Interest - 33.53 Imported (including 232.89 29 370.54 31 duty content) Travelling expenditure 83.05 62.21 Indigenous 564.32 71 833.04 69 Other expenditure 675.70 1,553.56 797.21 100 1,203.58 100 Expenses for Foreign Branch: 32. Dividends Remitted in Foreign - Salaries and allowance 135.81 136.26 Currency - Rent 21.05 23.05 (subject to deduction of tax, as applicable) - Others 13.79 12.14 Final Dividend for Financial Year 929.40 1,820.75 2008-09 to 89 shareholders on 0.97 0.07 77548 shares TOTAL 0.97 0.07 33. Earnings in Foreign Exchange Export of goods 29,964.26 32,183.63 (F.O.B. : this year Rs. 28065.74 lac previous year Rs.30616.20 lac) Others 5.78 206.84 29,970.04 32,390.47

60 Annual Report 2009–2010

SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.)

34. Employee Benefi ts The amounts recognised in the Company’s fi nancial statements as at the year end are as under: Gratuity Pension This Year Previous Year This Year Previous Year Rs.’lac Rs.’lac Rs.’lac Rs.’lac a) Change in Present Value of Obligation Present value of the obligation at the beginning of the year 2,435.53 2,214.96 106.64 73.28 Current Service Cost 106.44 102.70 - - Interest Cost 183.46 177.20 - - Contribution by Plan Participants - - - - Actuarial (Gain) / Loss on Obligation 12.67 (57.45) (50.89) 45.67 Foreign Currency exchange rate changes - - - - Benefi ts Paid (2.22) (1.88) (12.00) (12.31) Past Service Cost - - - - Amalgamations - - - - Curtailments - - - - Settlements - - - -

Present value of the obligation at the end of the year 2,735.88 2,435.53 43.75 106.64

b) Change in Plan Assets Fair value of Plan Assets at the beginning of the year 1,536.33 1,458.81 - - Expected return on Plan Assets 115.22 116.70 - - Actuarial (Gain)/Loss on Plan Assets (46.40) 39.18 - - Foreign Currency exchange rate changes - - - - Contributions by the Employer 900.00 - - - Contributions by Plan Participants - - - - Benefi ts Paid - - - - Amalgamations - - - - Settlements - - - -

Fair value of Plan Assets at the end of the year 2,597.95 1,536.33 - -

c) Amounts Recognised in the Balance Sheet: Present value of Obligation at the end of the year 2,735.88 2,435.53 - - Unrecognised Past Service Cost - - - - Fair value of Plan Assets at the end of the year 2,597.95 1,536.33 - - Net Obligation at the end of the year 137.93 899.20 - -

d) Amounts Recognised in the statement of Profi t and Loss: Current Service Cost 106.44 102.70 - - Interest cost on Obligation 183.46 177.20 - - Expected return on Plan Assets (115.22) (116.70) - - Expected return on Reimbursement Right recognised as an asset - - - - Net Actuarial (Gain) / Loss recognised in the year (33.71) (18.28) - - Past Service Cost - - - - Effect of Curtailment or Settlement - - - - Net Cost Included in Personnel Expenses 140.97 144.92 - -

e) Actual return on Plan Assets 161.61 77.53 - -

f) Estimated contribution to be made in next fi nancial year

g) Actuarial Assumptions i) Discount Rate 8.00% P.A. 7.5% P.A. 8.00% P.A. 7.5% P.A. ii) Expected Rate of Return on Plan Assets 8.00% P.A. 7.5% P.A. - - iii) Salary Escalation Rate 5.00% P.A. 4.5% P.A. 5.00% P.A. 4.5% P.A. iv) Employee Turnover - - - - v) Mortality L.I.C 1994-96 L.I.C 1994-96 L.I.C 1994-96 L.I.C 1994-96 ULTIMATE ULTIMATE ULTIMATE ULTIMATE

The estimates of future salary increases, considered in actuarial valuation, take account of infl ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

61 Godrej Industries Limited

SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.)

35. Interest in Joint Ventures: The Company’s interests, as a venturer, in jointly controlled entities are: Name Countries of Principal activities Percentage of Percentage of Incorporation Ownership interest Ownership interest as at 31st March, as at 31st March, 2010 2009 Godrej SaraLee Ltd. India Household Insectisides - - (upto 28 March 2009) Godrej Hersheys Ltd India Beverages & Foods 43.00% 43.00% The Company’s interests in Joint Venture are reported as Long Term Investments (Schedule “6”) and stated at cost less provision, if any, for permanent diminution in value of such investments. The Company’s share of each of the assets, liabilities, income and expenses, etc. related to its interests in these joint ventures are: This year Previous year Rs. ‘lac Rs. ‘lac I. ASSETS 1. Fixed Assets 3,565.13 3,522.56 2. Investments - 17,740.44 3. Current Assets, Loans and Advances a) Inventories 1,765.15 2,278.14 b) Sundry Debtors 633.39 1,142.08 c) Cash and Bank Balances 564.59 664.78 d) Other Current Assets - - e) Loans and Advances 2,856.06 2,304.36

II. LIABILITIES 1. Loan Funds a) Secured Loans 3,669.19 5,772.32 b) Unsecured Loans 4,031.25 462.25 2. Current Liabilities and Provisions a) Liabilities 2,492.71 2,443.69 b) Provisions 248.54 287.24 3. Deferred Tax- Net - -

III. INCOME 1. Turnover (net of excise) 15,404.32 32,772.45 2. Other Income 774.86 329.42

IV. EXPENSES 1. Material consumed and purchase of goods 10,195.30 18,702.96 2. Expenses 6,943.21 11,792.39 3. Inventory change 246.82 (102.89) 4. Depreciation 331.96 419.87 5. Interest 591.25 556.48 6. Provision for Taxation - 376.01

V. OTHER MATTERS 1. Contingent Liabilities 1,828.36 683.70 2. Capital Commitments 263.16 13.33

62 Annual Report 2009–2010

SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.) 36. Figures for the previous year have been regrouped wherever necessary. 37. Additional Information as Required Under Part IV Of Schedule VI To The Companies Act, 1956

1. Registration Details Registration No. : 97781 State Code : 11 Balance Sheet Date : 31/3/2010 2. Capital raised during the year (Amount in Rs. lac) Public Issue : Nil Rights Issue : Nil Bonus Issue : Nil Private Placement : Nil

3. Position of mobilisation and deployment of funds (Amount in Rs. lac) Total Liabilities : 160,228.84 Total Assets : 160,228.84

Sources of Funds Paid-up Capital : 3,176.25 Reserves & Surplus : 99,093.36 Secured Loans : 20,418.89 Unsecured Loans : 34,342.14 Defered Tax Liability : 3,198.20

Application of Funds Net Fixed Assets : 29,828.78 Investments : 144,761.99 Net Current Assets : 15,638.07 Misc. Expenditure : – Accumulated Losses : -

4. Performance of Company (Amount in Rs. lac) Turnover (Total Income) : 99,169.73 Total Expenditure : 91,170.46 Profi t/(Loss) before tax (Including extra ordinary income) : 7,999.27 Profi t/(Loss) after tax : 8,092.74 Earning per Share in Rs. (on an annualised basis) : 2.54 Dividend rate % : 150.00 Generic Names of three principal products/services of Company Item Code No. : 38.23 * Product description : Fatty Acids/Fatty Alcohols Item Code No. : 15.16 * Product description : Vanaspati/Refi ned Oils

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

63 Godrej Industries Limited REPORT OF THE AUDITORS TO THE BOARD OF DIRECTORS OF THE GODREJ INDUSTRIES LIMITED ON CONSOLIDATED FINANCIAL STATEMENTS

1. We have audited the attached Consolidated Balance Sheet the Group’s share of associates’ profit upto March of Godrej Industries Limited and its subsidiaries as at March 31, 2010 of Rs. 1,325.14 lakhs and the share of profi t 31, 2010, and also the Consolidated Profi t and Loss Account for the year of Rs. 387.62 lakhs has been included in and Consolidated Cash Flow Statement for the year then the consolidated fi nancial statements on the basis of ended, both annexed thereto. These consolidated fi nancial unaudited management accounts. statements are the responsibility of Godrej Industries Limited’s 4. We report that the consolidated fi nancial statements have been management. Our responsibility is to express an opinion on these fi nancial statements based on our audit. prepared by the management of Godrej Industries Limited in accordance with the requirements of Accounting Standard 2. We conducted our audit in accordance with the auditing (AS) 21 - Consolidated Financial Statements, Accounting standards generally accepted in India. Those standards require Standard (AS) 23 – Accounting for Investments in Associates in that we plan and perform the audit to obtain reasonable Consolidated Financial Statements and Accounting Standard assurance whether the financial statements are free of (AS) 27 – Financial Reporting of Interests in Joint Ventures material misstatements. An audit includes, examining on a issued by the Institute of Chartered Accountants of India. test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing 5. Without qualifying our opinion, we draw attention to Note 15 the accounting principles used and signifi cant estimates made (b) of Schedule 23 – Notes to Accounts, regarding a loan of by management, as well as evaluating the overall fi nancial Rs.17,330 lakh to a Trust for purchase of the Godrej Industries statement presentation. We believe that our audit provides Ltd. shares from the market equivalent to options granted a reasonable basis for our opinion. under an Employee Stock Option Plan. As at March 31, 2010, the market value of the shares held by the ESOP Trust is lower 3. (a) We did not audit the fi nancial statements of certain than the cost of acquisition of the shares by Rs. 7,871 lakh. The subsidiaries and joint ventures, whose fi nancial statements repayment of the loans granted to the ESOP Trust is dependent refl ect the group’s share of total assets of Rs. 13,241.63 on the exercise of options by the employees and the market lakhs as at March 31, 2010, and the group’s share of price of the underlying equity shares of the unexercised total revenues of Rs. 80,780.27 lakhs and net cash options at the end of the exercise period. In the opinion of infl ows amounting to Rs. 91.99 lakhs for the year ended the management, the fall in the value of the underlying equity on that date as considered in the consolidated fi nancial shares is on account of market volatility and the loss, if any, statements. These fi nancial statements have been audited can be determined only at the end of the exercise period, in by other auditors whose reports have been furnished to view of which provision for the diminution is not considered us and our opinion, insofar as it relates to the amounts necessary in the fi nancial statements. included in respect of the subsidiaries and joint ventures is based solely on the report of the other auditors. 6. Reference is invited to note 14 (a) of Schedule 23 - Notes to Accounts, regarding the recoverability of advances given (b) As stated in Note 2 of Schedule 23, the fi nancial statements to certain individuals amounting to Rs. 1033 lac being of a Jointly controlled entity, whose fi nancial statements contingent upon the transfer and/or disposal of the shares refl ect the Group’s share of total revenue of Rs. 1,958.75 pledged against the loan. The said shares were lodged for lakhs and net cash inflows amounting to Rs. 284.00 transfer which application was rejected and the Company has lakhs for the year ended on that date are not audited preferred an appeal to the Company Law Board. The investee as of the date of this report and have been included in company had in the mean while moved the High Court but the consolidated fi nancial statements on the basis of the matter was referred back to the Company Law Board, unaudited management accounts. where the matter is awaiting hearing. The impact thereof (c) As stated in Note 2 of Schedule 23, the fi nancial statements on the profi t for the year and the reserves as at March 31, of certain associates whose fi nancial statements refl ect 2010 could not be ascertained.

64 Annual Report 2009–2010

7. Based on our audit and on consideration of the reports of c) in case of the Consolidated Cash Flow Statement, of other auditors on separate fi nancial statements and the the consolidated cash fl ows for the year ended on that management’s certification of the unaudited financial date. statements, in our opinion, the consolidated financial statements, subject to the observations in paragraphs 3 and For and on behalf of 6 above, give a true and fair view in conformity with the accounting principles generally accepted in India: Kalyaniwalla & Mistry Chartered Accountants a) in case of the Consolidated Balance Sheet, of the Registration No. 104607W consolidated state of affairs of the Godrej Industries Limited Group as March 31, 2010; Viraf R. Mehta Partner b) in case of the Consolidated Profi t and Loss Account, of the Membership No: 32083 consolidated results of operations for the year ended on that date; and Mumbai, May 26, 2010

65 Godrej Industries Limited — Consolidated Account CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2010

This Year Previous Year Schedule Rs. lac Rs. lac Rs. lac SOURCES OF FUNDS 1. Shareholders’ Funds (a) Share capital 1 3,176.26 3,197.59 (b) Reserves & surplus 2 173,382.79 137,590.92 176,559.05 140,788.51 2. Minority Interest 31,546.64 11,831.77 3. Loan Funds (a) Secured loans 3 71,494.68 80,264.90 (b) Unsecured loans 4 76,624.40 77,081.89 148,119.08 157,346.79 4. Deferred Tax Liability 5,078.50 5,016.16 TOTAL 361,303.27 314,983.23 APPLICATION OF FUNDS 5. Fixed Assets 5 (a) Gross block 92,508.15 86,908.24 (b) Less: Depreciation / Impairment 44,841.35 41,811.79 (c) Net block 47,666.80 45,096.45 (d) Capital work-in-progress 3,857.57 2,454.54 51,524.37 47,550.99 6. Goodwill (on consolidation) 48,096.18 52,346.04

7. Investments 6 92,747.15 65,266.38 8. Current Assets, Loans and Advances (a) Inventories 7 103,581.11 74,335.73 (b) Sundry debtors 8 42,305.82 87,519.93 (c) Cash and bank balances 9 14,788.78 12,520.42 (d) Other Current Assets 23.34 21.94 (e) Loans and advances 10 84,498.52 77,718.56 245,197.57 252,116.58 Less : Current Liabilities and Provisions (a) Liabilities 11 67,949.70 94,525.35 (b) Provisions 12 8,312.30 8,287.59 76,262.00 102,812.94 Net Current Assets 168,935.57 149,303.64 9. Miscellaneous Expenditure 13 - 516.18 (To the extent not written off or adjusted) TOTAL 361,303.27 314,983.23 Signifi cant Accounting Policies 22 Notes to Accounts 23

The Schedules referred to above form an integral part of the Balance Sheet. As per our Report attached Signatures to Balance Sheet and Shedules 1 to 13, 22 and 23 For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company Secretary Mumbai, May 26, 2010

66 Annual Report 2009–2010

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010

Schedule This Year Previous Year Rs. lac Rs. lac Rs. lac INCOME Turnover (gross) 345,802.11 343,467.80 Less: Excise duty 4,384.96 7,298.81 Turnover (net) 341,417.15 336,168.99 Other Income 14 36,705.14 25,175.62 378,122.29 361,344.61 EXPENDITURE Materials consumed and purchase of goods 15 249,771.66 240,819.35 Cost of sales - Property Development 16 20,004.58 12,123.89 Expenses 17 68,740.66 72,048.13 Inventory change 18 (1,671.29) 3,583.96 Interest and fi nancial charges (net) 19 14,961.81 14,959.54 Depreciation 5,017.27 4,702.77 (Net of transfer from Revaluation Reserve Rs. 99.50 lac previous year Rs. 133.69 lac) 356,824.69 348,237.64 Profi t Before Tax & Extraordinary Items 21,297.60 13,106.97 Profi t from continuing operations before tax 21,297.60 12,976.80 Income tax - current tax (5,252.58) (5,158.47) - MAT credit entitlement 877.04 - - deferred tax (95.69) 29.88 - Adjustment for tax of previous years (net) (5.47) (166.41) Profi t from continuing operations after tax 16,820.90 7,681.80 Profi t from discontinuing operations before tax - 130.17 Income tax - current tax - (34.59) - deferred tax - (7.53) Profi t from discontinuing operations after tax - 88.05 Profi t for the year after taxation before extraordinary items 16,820.90 7,769.85 Extraordinary Items (net of tax) 20 - 2,122.32 Profi t for the year after extraordinary items 16,820.90 9,892.17 Prior Period adjustments (net) 21 - (85.02) 16,820.90 9,807.15 Share of profi t in Associates 8,102.60 3,622.24 Profi t before Minority Interest 24,923.50 13,429.39 Share of Minority Interest (4,598.78) (2,282.39) Profi t after Minority Interest 20,324.72 11,147.00 Surplus brought forward 41,254.15 36,308.59 Excess provision of proposed dividend 26.05 - Excess provision of tax on distributed profi t 4.43 - Adjustment of opening profi t of subsidiaries/Jointlly controlled entities on acquisition/deletion (1,806.20) 316.99 39,478.43 36,625.58 Adjustment of goodwill pursuant to scheme of arrangement in a jointly controlled entity - (52.85) Amount available For Appropriation 59,803.15 47,719.73 APPROPRIATIONS: Proposed Dividend on Equity Shares 4,764.37 3,996.99 Tax on distributed profi ts 1,327.89 1,135.14 Transfer to Special Reserve under Section 45IC of RBI Act, 1934 64.04 27.97 Transfer to General Reserve 2,278.37 1,305.48 Surplus carried forward 51,368.48 41,254.15 TOTAL 59,803.15 47,719.73 Basic & Diluted Earnings per share before extra ordinary items 6.39 2.82 Basic & Diluted Earnings per share after extra ordinary items 6.39 3.49 (refer note 21) Signifi cant Accounting Policies 22 Notes to Accounts 23

The Schedules referred to above form an integral part of the Profi t and Loss Account. As per our Report attached Signatures to Profi t and Loss account and Shedules 14 to 23 For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company Secretary Mumbai, May 26, 2010

67 Godrej Industries Limited — Consolidated Account CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010

This year Previous year Rs. lac Rs. lac A. Cash Flow from operating activities : Profi t before tax 21,297.60 13,106.97 Adjustments for : Depreciation 5,017.27 4,702.77 Unrealised Foreign exchange (360.72) 504.23 Profi t on sale of investments (24,652.84) (13,490.71) (Loss)/Profi t on sale of fi xed assets 133.30 (80.64) Dividend income (326.04) (563.35) Interest income (9,874.59) (7,994.24) Interest expense 14,288.85 14,108.75 Deferred expenditure written off 1,002.03 744.50 Provision/(write-back) of provision in diminution on value of investments 1,022.42 (1,688.19) Provision/(write-back) of provision for doubtful debts/advances (net) (58.01) 1,127.83 Others - 811.76 Operating profi t before working capital changes 7,489.27 11,289.68 Adjustments for : Inventories (30,594.47) (10,587.80) Trade and other receivables 37,819.53 (22,241.61) Trade payables (20,286.20) (7,278.80) Cash used in operations (5,571.87) (28,818.53) Direct taxes paid (5,494.70) (8,965.26) Direct taxes refund received 12.56 408.44 Voluntary retirement compensation paid (486.33) - Net Cash used in operating activities (11,540.34) (37,375.35) B. Cash Flow from investing activities : Purchase of fi xed assets (9,460.17) (7,522.79) Proceeds from sale of fi xed assets 177.25 448.86 Purchase of investments (112,664.01) (171,623.51) Proceeds from sale of investments 117,453.21 140,269.02 Intercorporate deposits/Loans (net) (362.54) (1,177.63) Interest received 9,809.00 7,224.42 Dividend received 326.04 561.36 Net Cash from/(used in) investing activities before extraordinary items 5,278.78 (31,820.27) Proceeds from transfer of business/demerger - 8,894.05 Proceeds from sale of Medical Diagnostics Division - 26.00 Net Cash from/(used in) investing activities after extraordinary items 5,278.78 (22,900.22) C. Cash Flow from fi nancing activities : Equity shares capital bought back (2,886.58) - Proceeds from issue of share capital to minority 42,816.71 1,371.13 Proceeds from borrowings 107,062.65 151,045.60 Repayments of borrowings (106,939.77) (105,546.62) Bank overdrafts (net) (9,748.96) 8,870.35 Interest paid (15,351.63) (14,773.73) Dividend paid (4,283.53) (3,248.47) Tax on distributed profi ts (1,100.18) (1,186.79) Net Cash from fi nancing activities 9,568.71 36,531.47 Net increase/(decrease) in cash and cash equivalents 3,307.15 (23,744.10) Cash and cash equivalents (Opening Balance) 12,520.42 36,491.60 Add: cash and cash equivalents taken over pursuant to Business Acquisition - 23.92 Le ss : cash and cash equivalents on Demerger/Transfer/Dilution (1,038.79) (251.00) Cash and cash equivalents (Closing Balance) 14,788.78 12,520.42 (including share in jointly controlled entities - Rs. 1,163.24 lac) Notes : 1. Cash and Cash equivalents. Cash on hand and balances with banks 14,630.24 12,515.11 Effect of exchange rate changes 158.54 5.31 Cash and cash equivalents 14,788.78 12,520.42 2. Cash and cash equivalents include Deposit with Bank as security amounting to Rs. 25.00 lac (previous year Rs. 18.50 lac) and Rs. 344.23 lac (previous year Rs. 340.15 lac) received from fl at buyers and held in trust. 3. The above cashfl ow statement includes share of cashfl ows from jointly controlled entities as under: a. Net cash used in operating activities (738.82) b. Net cash used in investing activities (1,054.08) c. Net cash from fi nancing activities 2,128.58 4. During the year, Godrej Hygiene Care Ltd., a 100% subsidiary of Godrej Industries Ltd. (GIL) was merged with Godrej Consumer Products Ltd. (GCPL) as approved by Hon'ble High Court, Bombay on 8th October, 2009. GIL received 2,09,39,409 equity shares of GCPL under the scheme of arrangement. The said transation has no impact on the cash fl ows of the Company. 5. The fi gures of previous year have been regrouped wherever necessary.

As per our Report attached Signatures to Cash Flow Statement For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company Secretary Mumbai, May 26, 2010

68 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010 This Year Previous Year Rs. lac Rs. lac SCHEDULE 1 : SHARE CAPITAL Authorised: 800,000,000 Equity shares of Re. 1 each 8,000.00 8,000.00 100,000,000 Unclassifi ed Shares of Rs.10 each 10,000.00 10,000.00 18,000.00 18,000.00 Issued, Subscribed and Paid Up: 317,624,892 (previous year 319,758,602) Equity shares of Re.1 each fully paid 3,176.26 3,197.59 3,176.26 3,197.59 Of the above, (i) 187,202,388 (Previous year 187,202,388) shares are held by Godrej & Boyce Mfg. Co. Limited, the holding company (ii) 155,547,816 (Previous year 155,547,816) shares are allotted for consideration other than cash pursuant to schemes of amalgamation/arrangement. (iii) 95,705,718 (Previous year 95,705,718) shares are allotted as fully paid bonus shares by way of capitalisation of Securities premium account. SCHEDULE 2 : RESERVES AND SURPLUS

As at Additions Deductions Adjustment on As at 1.4.2009 aquisition/deletion 31.03.2010

Securities Premium Account 80,200.24 31,935.05 6,933.24 - 105,202.05 81,804.71 - 1,604.47 - 80,200.24

Capital Investment Subsidy Reserve 71.04 - - - 71.04 52.27 18.77 - - 71.04

Revaluation Reserve 1,409.93 - 123.55 - 1,286.38 1,671.21 - 261.28 - 1,409.93

Special Reserve u/s. 451C of RBI Act, 1934 194.95 64.02 - - 258.97 166.98 27.97 - - 194.95

Capital Redemption Reserve 3,125.00 21.34 - - 3,146.34 3,301.34 - 176.34 - 3,125.00

Capital Reserve 3.87 - - - 3.87 - 3.87 - - 3.87

General Reserve 10,875.12 1,697.98 21.34 (537.63) 12,014.13 10,316.14 1,305.48 746.50 - 10,875.12

Foreign Exchange Fluctuation Reserve 456.62 (432.44) - 7.35 31.52 (176.79) 764.93 131.52 - 456.62

Profi t & Loss Account 41,254.15 20,355.20 8,434.67 (1,806.20) 51,368.48 36,308.58 11,147.00 6,518.42 316.99 41,254.15 Total - This Year 137,590.92 53,641.15 15,512.80 (2,336.48) 173,382.79 Total - Previous Year 133,444.44 13,268.02 9,438.53 316.99 137,590.92 SCHEDULE 3 : SECURED LOANS Term loans from banks 36,931.40 39,144.71 1% Secured Redeemable Optionally Convertible Debentures 2,156.00 2,156.00 Bank overdrafts, packing credits, etc . 17,474.81 25,338.37 Commercial Paper 2,500.00 - Other Loans 6,500.00 6,500.00 Share in jointly controlled entities 5,932.47 7,125.82 71,494.68 80,264.90 The Secured Redeemable Optionally Convertible Debentures issued by a Subsidiary company are redeemable at the end of 7 years from the date of allotment i.e. in 2013-14.

69 Godrej Industries Limited — Consolidated Account

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) This Year Previous Year Rs. lac Rs. lac SCHEDULE 4 : UNSECURED LOANS Fixed deposits 17,231.57 2,164.31 Intercorporate deposits 750.72 300.00 Commercial Paper 6,000.00 3,000.00 Short term loans - from Banks 47,656.57 60,150.28 - from Others - 2,500.00 Other loans from banks - 8,000.00 Sales tax deferment facility 466.74 466.74 Share in jointly controlled entities 4,518.80 500.56 76,6 24.40 77,081.89

SCHEDULE 5 : FIXED ASSETS Rs. Lac ASSETS GROSS BLOCK DEPRECIATION / IMPAIRMENT NET BLOCK As on Deductions/ As on Upto Deductions/ For the Upto As on As on 01.04.2009 Additions Adjustments 31.03.2010 01.04.2009 Adjustments Year 31.03.2010 31.03.2010 31.03.2009 Tangible Assets Land - Freehold 988.96 395.94 0.54 1,384.36 4.13 4.13 - - 1,384.36 984.83 - Leasehold 170.84 188.89 (0.54) 360.27 27.43 (4.13) 3.87 35.43 324.84 143.41 Buildings 9,473.96 3,294.84 14.93 12,753.87 3,474.91 (28.73) 430.24 3,933.88 8,819.99 5,999.05 Plant & Machinery 52,398.27 3,145.01 737.58 54,805.70 29,036.31 706.51 2,990.95 31,320.75 23,484.95 23,361.96 Research Centre 164.13 0.20 18.21 146.12 80.43 11.61 4.93 73.75 72.37 83.70 Furniture & Fixtures 1,768.40 231.16 134.44 1,865.12 943.94 83.77 123.08 983.25 881.87 824.46 Offi ce & Other Equipments 1,856.38 344.74 123.43 2,077.69 819.22 54.14 112.38 877.46 1,200.23 1,037.16 Vehicles / vessels 3,266.00 138.13 169.13 3,235.00 637.12 108.85 278.17 806.44 2,428.56 2,628.88 Trees Development Cost 117.03 - - 117.03 39.95 - 19.96 59.91 57.12 77.08 Intangible Assets Trademarks 1,180.47 - - 1,180.47 449.85 - 82.17 532.02 648.45 730.62 Technical Know-how 200.00 - - 200.00 199.98 (0.01) - 199.99 0.01 0.02 Software 1,057.23 737.22 0.38 1,794.07 829.55 0.15 158.26 987.66 806.41 227.68 ASSETS ACQUIRED UNDER FINANCE LEASE Vehicles 306.63 - 28.95 277.68 201.85 19.98 53.64 235.51 42.17 104.78 Share in jointly controlled entities 13,959.94 912.52 2,561.69 12,310.77 5,067.14 1,130.57 858.73 4,795.30 7,515.47 8,892.80 TOTAL - This Year 86,908.24 9,388.65 3,788.74 92,508.15 41,811.81 2,086.84 5,116.38 44,841.35 47,666.80 45,096.43 - Previous Year 91,262.05 6,035.11 10,388.92 86,908.24 41,543.06 4,567.73 4,836.46 41,811.79 Capital Work in-Progress 3,857.57 2,454.54 TOTAL 51,524.37 47,550.97

1. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on 30th June, 1992 on the basis of a Valuation Report submitted by professional valuers. 2. Depreciation for the year includes Rs. 99.50 lac (Previous Year Rs. 133.69 lac) being depreciation on revalued component of the fi xed assets. 3. Accumulated depreciation includes impairment loss of Rs. 540.26 lac on plant & machinery in an earlier year. 4. Capital work-in-progress is net of impairment loss of Rs. 204.10 lac provided in an earlier year on an infructuous asset under construction.

70 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) SCHEDULE 6 : INVESTMENTS Number Amount (Rs. lac) Investee Company / Institutions Face value Qty. as on Acquired during Sold/adjusted Qty. as on Notes As on 31.03.10 As on (Rs) 01.04.09 the year during the year 31.03.10 31.03.09 LONG TERM INVESTMENTS : At Cost A. TRADE INVESTMENTS Equity Shares : Fully Paid Bharuch Eco-Aqua Infrastructure Ltd. 10 440,000 - - 440,000 44.00 44.00 Preference Shares : Partly paid Wadala Commodities Ltd. 10 5,000,000 - - 5,000,000 (a) 450.00 450.00 (8% Redeemable Cumulative Preference Shares, 2012) B. OTHER INVESTMENTS : Fully paid unless stated otherwise Equity Shares Quoted : Godrej Consumer Products Ltd. 1 55,369,989 21,074,631 4,000,000 72,444,620 (b) 58,040.80 51,163.47 Amrutanjan Healthcare Limited 10 15,423 15,423 - - 54.11 Mafatlal Industries Limited 10 - 122,050 7,716 114,334 87.35 - Others 7.58 7.68 Unquoted : Associate Companies Swadeshi Detergents Ltd. 10 209,370 - - 209,370 - - Creamline Diary Products Ltd. 10 2,671,993 - - 2,671,993 1,689.46 1,504.98 Polychem Hygine Laboratories Pvt. Ltd. 10 455,000 - - 455,000 306.99 242.21 Personalitree Academy Ltd. 10 389,269 - - 389,269 - - Compass BPO Ltd. £0.25 13,692 1,805 15,497 - (c) - 132.24 Other Companies Avesthagen Limited 10 195,577 6,626 - 202,203 1,080.43 980.43 Cbay Infotech Ventures Pvt. Ltd. 10 32,258 - - 32,258 100.00 100.00 Gharda Chemicals Ltd. 100 114 - - 114 (d) 11.57 11.57 Tahir Properties Ltd. (Partly paid) 100 25 - - 25 (a) 0.01 0.01 KaROX Technologies Ltd. 10 250,000 - - 250,000 100.50 100.50 HyCa Technologies Pvt. Ltd. 10 12,222 - - 12,222 125.00 125.00 Aadhar Retailing Ltd. 10 1,900,000 2,565,000 - 4,465,000 2,099.50 121.21 Common Stock/Membership Units : Unquoted : CBay Systems Ltd., USA $0.01 4,091,073 - - 4,091,073 253.52 253.52 Boston Analytics Inc. $1 1,067,754 - - 1,067,754 688.09 688.09 Verseon Corporation - Class A Preferred Shares $1.90 2,631,578 - 2,631,578 1,142.34 1,142.34 Newmarket Limited £1.00 100 - - 100 922.70 1,042.30 Quoted: CBaySystems Holdings Ltd., BVI $0.10 9,604,540 - - 9,604,540 4,258.30 4,316.50 Preference Shares : Unquoted : Tahir Properties Ltd. (Class - A) (partly paid) 100 25 - - 25 (a) 0.02 0.02 Government Securities Unquoted : National Saving Certifi cate ------0.25 Optionally convertible Loan notes / debentures : Unquoted : Compass BPO Ltd. (10%) £1000 97 - 97 - (c) - 83.19 Verseon Corporation (13%) $1,000,000 - - - - (e) 397.60 397.60 Boston Analytics Inc. (15%) $750,000 - - - - (f) 299.68 299.68 Boston Analytics Inc. (20%) $1,550,000 - - - - (f) 673.03 673.03 Boston Analytics Inc. (12%) $950,000 - - - - (g) 469.21 469.21 Tricom India Limited (8%) 10 13,135,050 - 13,135,050 - - 1,313.51 Shares in Co-operative Society : Fully Paid Unquoted : The Saraswat Co-op Bank Ltd. 10 2,000 2,500 - 4,500 0.45 0.13 Sachin Industrial Co-op Society 500 3 - - 3 0.02 0.02 Amitabh Bachhan Corporation Ltd. 10 25,000 - - 25,000 0.03 - Investment in the capital of Partnership Firm : View Group LP - - - - - 0.01 0.01 CURRENT INVESTMENTS Units of Mutual Fund : Unquoted: SBI Mutual Fund - Cash option 477.73 - National Savings certifi cate 0.25 - Kotak Floater - LT - Daily Dividend Reinvest 3,533.03 - JPMorgan India Treasury Fund - Super IP - Daily Dividend Reinvest 1,948.56 - Reliance Money Manager Fund - IP - Daily Dividend Reinvest 1,931.11 - ICICI Prudential Flexible Income Plan - Premium - Daily Dividend Reinvest 3,532.79 - LIC MF Savings Plus Fund - Daily Dividend Reinvest 3,535.16 - HDFC Cash Mgmt. Fund - Treasury Advantage - WP - Dly Dividend Reinvest 3,532.84 - IDFC Money Manager - Treasury Plan - Plan C - Daily Dividend Reinvest 2,523.42 - FORTIS Money Plus Fund - IP - Daily Dividend Reinvest 243.52 - 94,506.60 65,716.81 Less : Provision for diminution in value of Investments (1,759.45) (450.43) 92,747.15 65,266.38 Aggregate book value of Investments Quoted 61,945.03 55,034.56 Unquoted 30,802.12 10,231.82 92,747.15 65,266.38 Market Value of Quoted Investments 194,388.98 73,559.03 NOTES: (a) Uncalled Liability on partly paid shares - Tahir Properties Ltd. - Equity - Rs. 80 per share. - Tahir Properties Ltd. - Preference - Rs. 30 per share. - Wadala Commodities Limited - Preference - Re. 1 per share. (b) 97,50,000 shares of Godrej Consumer Products Limited have been pledged as security against loan from J.P. Morgan Securities India Pvt. Ltd. and 52,34,852 received under the scheme of arrangement are locked in till November 24, 2012. (c) 1,805 equity shares received on conversion of loan notes (d) The said shares have been refused for registration by the investee company. (e) Optionally Convertible Notes are convertible as under : - Verseon Corporation - After December 1, 2008 until the due date but not later than Sepember 15, 2012. (f) The optionally convertible promissory notes (15%) of Boston Analytics Inc. in respect of which the company did not exercise the conversion option and Boston Analytics Inc. promissory notes (20%) were due for redemption on June 30, 2009 and August 21, 2009 respectively. The said promissory notes have not been redeemed as of the Balance Sheet date. (g) 12% promissory notes repayable on or before March 31, 2011 along with interest on maturity.

71 Godrej Industries Limited — Consolidated Account

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) This Year Previous Year This Year Previous Year Rs. lac Rs. lac Rs. lac Rs. lac SCHEDULE 7: INVENTORIES SCHEDULE 11 : CURRENT LIABILITIES (at lower of cost and net realisable value) Acceptances 12,359.30 2,131.81 Stores and spares 1,657.41 1,469.59 Sundry creditors 38,189.03 30,321.59 Raw materials 13,725.24 10,191.17 Advances from customers 3,694.02 44,598.35 Construction work-in-progress 72,461.01 47,550.14 Work-in-progress 4,240.06 2,680.98 Sundry deposits 2,463.87 2,070.00 Stock under cultivation 778.53 445.09 Investor Education & Protection Fund Finished Goods 5,862.88 5,412.59 - Unclaimed Dividend 16.97 18.74 Stock-in-trade 48.17 36.28 - Unpaid Matured Deposits 11.29 16.82 Poultry stock 1,703.98 2,055.76 - Interest accrued on above 4.87 - Share in jointly controlled entities 3,103.83 4,494.13 Other liabilities 7,009.70 7,727.20 103,581.11 74,335.73 Interest accrued but not due on loans 613.34 667.64 SCHEDULE 8: SUNDRY DEBTORS (Unsecured) Share in jointly controlled entities 3,587.31 6,973.20 Debts outstanding over six months 67,949.70 94,525.35 Considered good 2,506.44 1,878.50 SCHEDULE 12 : PROVISIONS Considered doubtful 500.11 744.33 Proposed dividend 4,764.37 3,996.99 3,006.55 2,622.83 Other debts Provision for tax on distributed profi ts 1,327.89 956.60 Considered good 38,593.42 82,962.61 Provision for retirement benefi ts 1,917.87 2,788.80 (Includes unbilled revenue of Rs. 7,502.36 Share in jointly controlled entities 302.17 545.20 lac, previous year Rs. 2,197.48 lac) 8,312.30 8,287.59 41,599.97 85,585.44 SCHEDULE 13: MISCELLANEOUS Less: Provision for doubtful debts (500.11) (789.00) EXPENDITURE 41,099.86 84,796.44 Share in jointly controlled entities 1,205.96 2,723.49 (To the extent not written off or adjusted) 42,305.82 87,519.93 Deferred revenue expenditure SCHEDULE 9: CASH AND BANK BALANCES - Voluntary retirement compensation - 386.75 Cash and cheques on hand 756.40 1,019.74 Share in jointly controlled entities - 129.43 Balances with scheduled banks - on current accounts 6,356.39 4,623.28 - 516.18 - on deposit accounts (refer note 11) 6,315.99 5,242.80 SCHEDULE 14: OTHER INCOME Share in jointly controlled entities 1,360.00 1,634.60 Interest : 14,788.78 12,520.42 - Debentures 14.84 159.46 SCHEDULE 10: LOANS AND ADVANCES - Income tax refund - 41.98 (Unsecured and considered good unless - Deposits 2,765.71 2,702.32 otherwise stated) Loans and Advances (refer note 14 a) 2,482.64 5,135.76 - From projects, landlords & others 7,073.41 4,921.11 Loan to ESOP Trusts 18,524.85 15,375.82 Dividend 326.04 563.35 (net of provision for doubtful loans Profi t on sale of fi xed assets (Net) - 80.64 Rs. 329.14 lac, previous year Rs. 313 lac) Profi t on sale of long term investments 24,549.96 13,168.66 Advances recoverable in cash or in kind 10,881.44 12,757.21 (refer note 19) or for value to be received Profi t on sale of current investments 102.88 322.05 (net of provision for doubtful advances of Provision for depletion in value of Rs. 875.53 lac investment written back - 1,688.19 previous year Rs. 1214.10 lac) Bad debt recovered 747.97 9.24 Mobilisation Advances (secured against 3,417.43 4,254.77 bank/corporate guarantee) Miscellaneous income 1,082.69 1,173.12 Intercorporate deposits 2,839.63 1,973.75 Share in jointly controlled entities 41.64 345.50 Deposits and balances with 36,705.14 25,175.62 - Customs & excise authorities 562.26 635.28 - Others 32,643.85 21,650.90 Due on Management Projects (refer note 14 b) 6,777.18 8,704.80 Advance payment of taxes 3,692.25 2,437.37 (Net of provision for tax) Share in jointly controlled entities 2,676.99 4,792.90 84,498.52 77,718.56

72 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) This Year Previous Year This Year Previous Year Rs. lac Rs. lac Rs. lac Rs. lac SCHEDULE 15 : MATERIALS CONSUMED SCHEDULE 18 : INVENTORY CHANGE AND PURCHASE OF GOODS Stocks at the commencement of the year Raw materials consumed : Finished goods 5,412.59 5,955.89 Stocks at the commencement of the year 10,191.17 15,422.68 Work-in-progress 2,680.98 6,242.45 Add : Purchases (net) 232,232.28 207,103.36 Stock under cultivation 445.09 534.57 242,423.45 222,526.04 Poultry stock 2,055.76 1,917.53 Less : Stocks as at the close of the year 13,725.24 10,191.17 Share in jointly controlled entities 2,137.63 2,034.73 Raw Materials consumed during the year 228,698.21 212,334.87 12,732.05 16,685.17 Purchase of goods for resale 10,026.27 9,781.52 Less: Stock adjustment for subsidiaries - 369.16 Share in jointly controlled entities 11,047.18 18,702.96 deleted 249,771.66 240,819.35 Less: Stocks at the close of the year : SCHEDULE 16 : COST OF SALES-PROPERTY Finished goods 5,862.88 5,412.59 DEVELOPMENT Work-in-progress 4,240.06 2,680.98 Stocks at the commencement of the year 47,586.42 28,479.19 Stock under cultivation 778.53 445.09 Add : Construction Expenditure during 44,927.34 31,231.12 Poultry stock 1,703.98 2,055.76 the year Share in jointly controlled entities 1,817.89 2,137.63 92,513.76 59,710.31 14,403.34 12,732.05 Less : Stocks as at the close of the year 72,509.18 47,586.42 (Increase)/Decrease in Inventory (1,671.29) 3,583.96 20,004.58 12,123.89 SCHEDULE 19 : INTEREST AND SCHEDULE 17: EXPENSES FINANCIAL CHARGES (Net) Salaries, wages and allowances 15,844.26 12,483.81 Interest paid Contribution to provident fund and other funds 1,121.04 990.99 - on debentures and fi xed loans 5,725.24 7,004.19 Employee welfare expenses 983.41 983.86 - on bank overdrafts 5,314.90 4,174.71 Stores and spares consumed 1,321.29 1,717.51 - on Intercorporate deposits 482.76 223.55 Power and fuel 8,522.70 8,757.36 - other interest 1,342.24 1,416.99 Processing charges 5,229.55 4,920.46 12,865.14 12,819.44 Rent 1,190.35 1,106.45 Less: Interest received Rates and taxes 664.71 632.61 - on loans & deposits - 26.95 Repairs and maintenance - on Customer balances, etc. 17.31 5.68 - Machinery 1,035.57 992.03 - others 3.32 136.74 - Buildings 735.50 683.43 20.63 169.37 - Other assets 301.54 218.80 Net Interest 12,844.51 12,650.07 Insurance 237.84 203.65 Other fi nancial charges 1,423.71 1,289.31 Freight 3,601.47 4,363.60 Foreign exchange loss - 263.82 Commission 6,789.95 5,636.75 Share in jointly controlled entities 693.59 756.34 Discount 400.54 286.24 14,961.81 14,959.54 Advertisement and publicity 1,349.32 1,816.18 SCHEDULE 20 : EXTRAORDINARY ITEMS Selling and distribution expenses 627.36 821.39 Profi t on Sale of business - 2,122.32 Bad debts written off 404.40 285.39 - 2,122.32 Provision for doubtful debts and advances (462.41) 1,127.83 SCHEDULE 21 : PRIOR PERIOD Provision for depletion in the value of long 1,022.42 - ADJUSTMENTS term investments Short provision for expenses - (85.02) Loss on Sale of Fixed Assets 133.30 - - (85.02) Excise duty on inventory change 194.79 429.64 Foreign Exchange loss / (gain) 4.91 2,155.55 Miscellaneous expenses 6,264.14 7,214.61 Share in jointly controlled entities 11,222.71 14,219.99 68,740.66 72,048.13

73 Godrej Industries Limited — Consolidated Account

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) SCHEDULE 22: SIGNIFICANT ACCOUNTING POLICIES:- progress/Management Project Receivables at weighted average a) Accounting Convention of the borrowing cost/rates as per agreement respectively. g) Investments The fi nancial statements are prepared under the historical cost convention, on the accrual basis of accounting, in accordance Investments are classified into long-term and current with the generally accepted accounting principles in India investments. Long term investments are carried at cost. and the Accounting Standards prescribed in the Companies Provision for diminution, if any, in the value of each long term (Accounting Standard) Rules, 2006 and the relevant provisions investment is made to recognise a decline, other than of a of the Companies Act, 1956. temporary nature. The fair value of a long term investment is ascertained with reference to its market value, the investee's b) Use of Estimates assets and results and the expected cash fl ows from the The preparation of fi nancial statements in conformity with investment. generally accepted accounting principles requires the Current investments are carried at lower of cost and fair management to make estimates and assumptions that affect value. the reported balances of assets and liabilities as of the date of the fi nancial statements and reported amounts of income h) Inventories and expenses during the period. Management believes that Inventories are valued at lower of cost and net realisable the estimates used in the preparation of fi nancial statements value. Cost is computed on weighted average basis and is are prudent and reasonable. Actual results could differ from net of modvat. Finished goods and work in progress include the estimates. cost of conversion and other costs incurred in bringing the c) Fixed Assets inventories to their present location and condition. Provision is made for the cost of obsolescence and other anticipated Fixed Assets are stated at cost or as revalued as the case may losses, wherever considered necessary. be, less accumulated depreciation. Cost includes expenses related to acquisition and any directly attributable cost of Construction work-in-progress includes cost of land, premium bringing the assets to its intended working condition. for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Fixed Assets acquired under fi nance lease are capitalised at the Group. lower of their face value and present value of the minimum lease payments. i) Provisions and Contingent Liabilities d) Intangible Assets Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably The group has evaluated the useful lives of the Intangible estimated. Assets – Goodwill, Trademarks, Non-compete fees, Acquisition value of contracts, etc based on the nature of business, growth Contingent Liabilities are disclosed in respect of possible rates and estimated discounted cash fl ows. The intangible obligations that arise from past events but their existence assets are amortised over the estimated useful lives as is confi rmed by the occurrence or non-occurrence of one or follows. more uncertain future events not wholly within the control of the Group. Particulars Estimated useful lives j) Foreign Exchange Transactions Goodwill 8 - 20 years i) Transactions in foreign currency are recorded at exchange Trade marks 8 - 15 years rates prevailing on the day of the transaction. Monetary Technical Know-how 10 years assets and liabilities denominated in foreign currency, remaining unsettled at the period end are translated at Non-compete fees 7 - 8 years closing rates. The difference in translation of monetary Computer software 4 - 6 years assets and liabilities and realised gains and losses on foreign currency transactions are recognised in the Profi t e) Impairment of Assets and Loss Account. The group reviews the carrying amounts of tangible and ii) Forward exchange contracts other than those entered intangible assets for any possible impairment at each balance into to hedge foreign currency risk of fi rm commitments sheet date. An impairment loss is recognized when the or highly probable forecast transactions are translated carrying amount of an asset exceeds its recoverable amount. at period end exchange rates. Premium or discount on Impairment loss, if any, is recognised in the period in which such forward exchange contracts is amortised as income impairment takes place. or expense over the life of the contract. f) Borrowing Costs iii) Realised gain or losses on cancellation of forward exchange Borrowing costs that are directly attributable to the acquisition/ contracts are recognised in the Profi t and Loss Account of construction of the qualifying asset are capitalised as a part of the period in which they are cancelled. the cost of such asset, upto the date of acquisition/completion iv) Exchange differences in respect of other unexpired foreign of construction. Borrowing costs incurred for the development currency derivative contracts, which have been entered of long term projects are included under Construction work in

74 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) into to hedge foreign currency risks are marked to market withdrawn from Revaluation Reserve and credited to Profi t and losses, if any, are recognised in the Profi t and Loss and Loss Account. Account. n) Employee Benefi ts k) Revenue Recognition Liability is provided for the retirement benefi ts of provident Sales are recognised where goods are supplied and are fund, gratuity, leave encashment and pension benefi t in recorded net of returns, trade discounts, rebates, sales taxes respect of all eligible employees of the Group. and excise duty. i) Defi ned Contribution Plan Income from processing operations is recognised on completion Employee benefi ts in the form of Provident Fund and family of production / dispatch of the goods, as per the terms of pension are considered as defi ned contribution plans and contract. the contributions are charged to the Profi t and Loss of the Export incentives receivable under the Duty Entitlement Pass year when the contributions to the respective funds are Book Scheme and the Duty Drawback Scheme are accounted due. on accrual basis. ii) Defi ned Benefi t Plan Revenue from construction activity is recognized on Retirement benefi ts in the form of Gratuity and Pension “Percentage of Completion Method” of accounting. As per this plan for eligible employees considered as defined method, revenue is recognised in proportion to the actual cost benefi t obligations and are provided for on the basis of incurred for the work completed as against the total estimated an actuarial valuation, using the projected unit credit cost of project under execution with the Company. method, as at the date of the Balance Sheet. Determination of revenues under the percentage of completion iii) Other Long-term Benefi ts method necessarily involves making estimates, some of which Long-term compensated absences and Long Service awards are of a technical nature, concerning, where relevant, the are provided for on the basis of an actuarial valuation, percentages of completion, costs to completion, the expected using the projected unit credit method, as at the date of revenues from the project/activity and the foreseeable losses the Balance Sheet. to completion. Such estimates have been relied upon by the Actuarial gain/losses comprising of experience adjustments auditors. and the effects of changes in acturial assumptions are Dividend income is recognised when the right to receive the immediately recognized in the Profi t and Loss Account. same is established. o) Incentive Plans Interest income is recognised on a time proportion basis. The Group has a scheme of Performance Linked Variable Remuneration (PLVR) which rewards its employees based on Income on assets given on operating lease is recognised on a Economic Value Addition (EVA). The PLVR amount is related straight line basis over the lease term. to actual improvement made in EVA over the previous year l) Research and Development Expenditure when compared with expected improvements. Revenue expenditure on Research & Development is charged to p) Hedging the Profi t and Loss Account of the year in which it is incurred. The group uses forward exchange contracts to hedge its Capital expenditure incurred during the year on Research & foreign exchange exposures and commodity futures contracts Development is included under additions to fi xed assets. to hedge the exposure to oil price risks. Gains or losses on m) Depreciation settled contracts is recognized in the profi t and loss account. Leasehold land is amortised equally over the lease period. Futures contracts not settled as on the Balance Sheet date Leasehold improvements are amortised over fi ve years. are marked to market and losses, if any, are recognized in Depreciation is provided on the straight line method at the the profi t and loss account, whereas, the unrealized profi t is rates specifi ed in Schedule XIV to the Companies Act, 1956, ignored. Gains or losses on the Commodity futures contracts is except in some subsidiary companies, where depreciation recorded in the profi t & loss account under cost of materials has been provided on the written down value method. The consumed. impact of the differing method of depreciation has not q) Deferred Revenue Expenditure been ascertained but is not likely to be material. Computer The compensation payable under the Voluntary Retirement hardware is depreciated over its estimated useful life of 4 Schemes, the benefi t of which is expected to accrue in future years. is deferred over its payback period. The compensation is Depreciation on assets acquired during the year is provided generally amortised over three to fi ve years depending on the for the full accounting year and no depreciation is charged on pay back period, however the pay back period is restricted to the assets sold/discarded during the year, except in case of March 31, 2010. major additions and deductions exceeding rupees one crore r) Taxes on Income in which case, proportionate depreciation is provided. Tax expense comprises both current and deferred tax. Current Depreciation on the revalued component is provided on the tax is the amount of tax payable on the assessable income for straight line method based on the balance useful life of the year determined in accordance with the provisions of the the assets as certifi ed by the valuers. Such depreciation is Income Tax Act, 1961.

75 Godrej Industries Limited — Consolidated Account

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) Deferred tax is recognized on timing differences, being the Investments in Associates are dealt with in accordance with differences between the taxable income and accounting Accounting Standard (AS) 23 ‘Accounting for Investments in income that originate in one period and are capable of reversal Associates in Consolidated Financial Statements’. Effect has in one or more subsequent periods. Deferred tax assets on been given to the carrying amount of investments in associates unabsorbed tax losses and tax depreciation are recognized only using the ‘Equity method’. The Company’s share of the post when there is virtual certainty of their realisation and on other acquisition profi ts or losses is included in the carrying cost of items when there is reasonable certainty that suffi cient future investments. taxable income will be available against which such deferred 2. The fi nancial statements of the subsidiaries, joint ventures tax assets can be realised. The tax effect is calculated on the and associates used in the consolidation are drawn upto accumulated timing differences at the year end and based on the same reporting date as of the Company i.e. year ended the tax rate and laws enacted or substantially enacted on the March 31, 2010. balance sheet date. The accounts of Creamline Dairy Products Ltd., Polychem s) Segment Reporting Hygiene Laboratories Pvt. Ltd., & Al Rahba International The Accounting Policies adopted for segment reporting are Trading Ltd., associate companies, have not been audited for in line with the Accounting Policies of the Company. Segment the year ended March 31, 2010 as of the Balance Sheet date assets include all operating assets used by the business and have been consolidated on the basis of the accounts as segments and consist principally of fi xed assets, debtors and certifi ed by their respective management. inventories. Segment liabilities include the operating liabilities 3. Information on subsidiaries, joint ventures and that result from the operating activities of the business. associates: Segment assets and liabilities that cannot be allocated (a) The subsidiary companies considered in the consolidated between the segments are shown as part of unallocated fi nancial statements are: corporate assets and liabilities respectively. Income / Expenses relating to the enterprise as a whole and not allocable on Sr. Name of the Company Country of Percentage of Holding a reasonable basis to business segments are refl ected as No. Incorporation unallocated corporate income / expenses. This Year Previous SCHEDULE 23: NOTES TO ACCOUNTS:- Year 1. Principles of Consolidation: 1 Godrej Agrovet Ltd. India 75.26% 75.26% The consolidated financial statements relate to Godrej 2 Golden Feed Products India 75.26% 75.26% Industries Limited, the holding company, its majority owned Ltd. subsidiaries, Joint ventures and Associates (collectively (100% subsidiary of referred to as Group). The consolidation of accounts of the Godrej Agrovet Ltd.) Company with its subsidiaries has been prepared in accordance 3 Godrej Oil Palm Limited India 60.21% 60.21% with Accounting Standard (AS) 21 ‘Consolidated Financial (formerly known as Statements’. The fi nancial statements of the parent and its Godrej Aquafeed subsidiaries are combined on a line by line basis and intra group Limited) balances, intra group transactions and unrealized profi ts or (80% subsidiary of losses are fully eliminated. Godrej Agrovet Ltd.) In the consolidated fi nancial statements, ‘Goodwill’ represents 4 Cauvery Palm Oil India 67.73% 38.38% the excess of the cost to the Company of its investment in Limited the subsidiaries and/or joint ventures over its share of equity, (51% subsidiary of at the respective dates on which the investments are made. Godrej Agrovet Ltd. Alternatively, where the share of equity as on the date of upto 19-05-09) investment is in excess of cost of investment, it is recognised as ‘Capital Reserve’ in the consolidated fi nancial statements. (90% subsidiary of Godrej Agrovet Ltd. Minority interest in the net assets of consolidated subsidiaries from 20-05-09) consists of the amount of equity attributable to the minority shareholders at the respective dates on which investments 5 Natures Basket Ltd. are made by the Company in the subsidiary companies and 100% subsidiary of India 75.26% 75.26% further movements in their share in the equity, subsequent (Godrej Agrovet Ltd. to the dates of investment as stated above. upto 30-06-09) Investments in Joint Ventures are dealt with in accordance with (100% subsidiary of India 100.00% 0.00% Accounting Standard (AS) 27 ‘Financial Reporting of Interests Godrej Industries Ltd. in Joint Ventures’. The Company’s interest in jointly controlled from 01-07-09) entities are reported using proportionate consolidation, 6 Godrej Properties Ltd. India 70.42% 81.40% whereby the Company’s share of jointly controlled assets and 7 Godrej Realty Pvt. Ltd. India 35.91% 41.51% liabilities and the share of income and expenses of the jointly (51% subsidiary of controlled entities are reported as separate line items. Godrej Properties Ltd.)

76 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) Sr. Name of the Company Country of Percentage of Holding (b) Interests in Joint Ventures: No. Incorporation Sr. Name of the Company Country of Percentage of This Year Previous No. Incorporation Holding Year This Year Previous 8 Godrej Waterside India 35.91% 41.51% Year Properties Pvt. Ltd. 1 Godrej Sara Lee Ltd. India 20.00% 20.00% (51% subsidiary of (Shares held by 100% Godrej Properties Ltd.) subsidiary Godrej 9 Godrej Developers Pvt India 35.91% 41.51% Hygiene Care Pvt. Ltd.) Ltd. (up to 31-05-09) (51% subsidiary of 2 Godrej Sara Lee Bangladesh 20.00% 20.00% Godrej Properties Ltd.) Bangladesh Pvt. Ltd. 10 Godrej Real Estate India 70.42% 81.40% (100% subsidiary of Private Limited Godrej Sara Lee Ltd.) (100% subsidiary of (up to 31-05-09) Godrej Properties Ltd.) 3 Godrej Sara Lee Lanka Sri Lanka 20.00% 20.00% 11 Godrej Seaview India 54.74% 81.40% Pvt. Ltd. Properties Private (100% subsidiary of Limited Godrej Sara Lee Ltd.) (77.73% subsidiary of (up to 31-05-09) Godrej Properties Ltd.) 4 ACI Godrej Agrovet Bangladesh 37.63% 37.63% 12 Happy Highrises Limited India 35.91% 81.40% Pvt. Ltd. (51% subsidiary of (joint venture partner Godrej Properties Ltd.) of Godrej Agrovet Ltd.) 13 Godrej Estate India 35.91% 81.40% 5 Godrej Gold Coin India 36.88% 36.88% Developers Pvt. Ltd. Acqafeed Ltd. (51% subsidiary of (joint venture partner Godrej Properties Ltd.) of Godrej Agrovet Ltd.) 14 Godrej Hygiene Care India 100% 100% 6 Godrej IJM Palm Oil India 36.29% 36.29% Pvt. Ltd. Ltd. (formerly Godrej (up to 31-05-09) Gokarna Oil Palm Ltd.) 15 Ensemble Holdings & India 100% 100% (joint venture partner Finance Ltd. of Godrej Agrovet Ltd.) 16 Godrej International UK 100% 100% 7 Godrej Tyson Foods India 36.88% 36.88% Ltd., UK Ltd. (joint venture partner of Godrej Agrovet Ltd.) 8 Godrej Hershey India 43.00% 43.00% Limited 9 Nutrine Confectionery Ltd. (100% subsidiary India 43.00% 43.00% of Godrej Hershey Limited)

77 Godrej Industries Limited — Consolidated Account

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) (c) Investment in Associates: Sr. Name of the Cost of Goodwill Share in Provision Carrying Company Acquisition included profi ts / for cost of No. Sr. Name of the Company Country of Percentage of Holding in cost of (loss) of diminution Investments No. Incorporation acquisition associates in the This Year Previous post value of Year acquisition investments 1 Swadeshi Detergents India 41.08% 41.08% 5 Al Rahba International Ltd. Trading LLC 8.10 (246.37) (8.10) – 2 Godrej Consumer India 23.51% 21.55% 8.10 69.55 (8.10) – – Products Limited 6 Polychem 3 Personalitree Academy India 26.00% 26.00% Hygiene Lab Pvt. Ltd. Ltd. 162.75 88.99 144.24 306.99 (associate of Ensemble 162.75 88.99 79.46 – 242.21 Holdings & Finance 7 Compass Connection Ltd. – – – – – Ltd.) (up to 08-03-10) 124.54 80.56 73.87 66.17 132.24 4 Creamline Dairy India 19.57% 19.57% Total this year 52,883.38 35,915.48 7,283.16 129.29 60,037.25 Products Ltd. Total previous 50,858.85 38,617.17 2,373.97 189.92 53,042.90 (associate of Godrej year Agrovet Ltd.) 5 Al Rahba International U.A.E. 33.87% 25.08% 6. Contingent Liabilities Trading LLC Sr. Description This Year Previous Year (associate of Godrej No. Rs. Lac Rs. Lac Agrovet Ltd.) (a) Claims against the Company not acknowledged as debts: 6 Polychem Hygiene India 19.57% 19.57% 1) Excise duty demands relating to disputed classifi cation, 2,388.53 2,029.35 Laboratories Pvt. Ltd. post manufacturing expenses, assessable values, etc. (associate of Godrej which the Company has contested and is in appeal Agrovet Ltd.) at various levels 2) Customs Duty demands relating to less charge, 286.08 856.94 7 Compass Connections UK 20.71% 20.71% differential duty, classifi cation, etc Limited 3) Sales Tax demand relating to purchase tax on 557.75 2,054.42 (up to 08-03-10) Branch Transfer / Non availability of C Forms, etc at various levels 4. The accounting policies of certain subsidiaries, joint ventures 4) Octroi demand relating to classifi cation issue on 1,217.63 1,124.04 & associates especially regarding the method of depreciation, import of Palm Stearine and interest thereon amortization of technical know-how and accounting for retirement 5) Stamp duties claimed on certain properties which are 330.73 330.73 under appeal by the Company benefi ts are not in consonance with the group accounting policies. 6) Income Tax demands against which the company has 1,561.02 2,297.56 No effect has been given in the consolidated fi nancial statements preferred appeals on account of such differing accounting policies, where the impact 7) Industrial relations matters under appeal 219.59 234.60 is not expected to be material. 8) Others 238.07 289.67 5. The break-up of Investment in Associates is as under: (b) Guarantees issued by banks, excluding guarantees 733.04 666.65 issued in respect of matters reported in (a) above Sr. Name of the Cost of Goodwill Share in Provision Carrying (c) Guarantees given by the Company in respect of 6,932.97 4,313.66 Company Acquisition included profi ts / for cost of No. credit/guarantee limits sanctioned by banks to in cost of (loss) of diminution Investments subsidiary and other companies acquisition associates in the (d) Letters of credit issued by bank on behalf of the 617.74 84.26 post value of company acquisition investments (e) Uncalled liability on partly paid shares/debentures - 41.70 1 Swadeshi Detergents Ltd. 191.32 91.46 (130.27) 61.05 – (f) Additional consideration against acquisition of 50.03 50.11 shares 191.32 91.46 (135.81) 55.51 – (g) Case/Claim fi led by Processors for claiming various 41.70 104.13 2 Godrej Consumer expenses Products Limited 51,372.93 35,540.15 6,667.87 – 58,040.80 (h) Share in Jointly Controlled Entities 1,828.36 1,106.70 49,223.86 37,845.36 1,939.61 – 51,163.47 3 Personalitree 7. Capital Commitments Academy Ltd. 110.28 42.84 (42.04) 68.24 – Sr. Description This Year Previous Year 110.28 42.84 (42.04) 68.24 – No. Rs. Lac Rs. Lac 4 Creamline Dairy 1 Estimated value of contracts remaining to be 755.09 1,938.14 Products Ltd. 1,038.00 398.41 651.46 – 1,689.46 executed on capital account, to the extent not 1,038.00 398.41 466.98 – 1,504.98 provided 2 Share in Jointly Controlled Entities 378.82 138.74

78 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) 8. Share capital and the Company has received 209,39,409 equity shares Post receipt of SEBI exemption under regulation 3(1)(l) of the of GCPL in lieu thereof as per the terms of the Scheme of Takeover Code, the Company issued a Public Announcement Arrangement. 25% of these shares are locked in till 24th on 29th April, 2009 and on 20th May, 2009 for Buyback upto November, 2012. 57,00,000 of its shares from the open market at a price not 11. Cash & Bank Balances exceeding Rs. 275/- per share for an aggregate consideration Balances with scheduled banks on deposit accounts include not exceeding Rs. 99 crore. Under the Buyback programme, Rs.344.23 lac (Previous year Rs.340.15 lac) received from fl at the Company has bought back and extinguished 21,33,710 buyers and held in trust on their behalf in a corpus fund and shares at a consideration of Rs. 2,887 lac. The premium paid Rs. 6.50 lac deposit pledged with government authorities on Buyback of shares amounting to Rs 2,865.24 lac has been 12. Deferred Tax adjusted from the Securities Premium Account. The Buyback programme has been completed. Major components of Deferred Tax arising on account of timing differences as at March 31, 2010 are: The resultant excess provision of proposed divided and Tax on distributed profi t due to Buyback of shares is added in surplus Description This Year Previous Year brought forward of profi t & loss account. Assets 9. Loans Provision for retirement benefi ts 228.64 521.00 a) Term loans from banks are secured by fi rst charge by Provision for doubtful way of equitable mortgage of the immovable properties debts/advances 547.55 784.71 including land, building and plant & machinery at Valia VRS Expenses 215.00 298.00 factory. Others 581.31 (213.42) b) Working capital facilities sanctioned by banks are secured 1,572.50 1,390.29 by hypothecation of stocks and book debts. Liabilities c) Other loans are secured by pledge of 97,50,000 shares Depreciation 6,648.53 6,385.94 of Godrej Consumer Products Limited so as to result in a Share in Jointly Controlled Entities 2.47 20.51 collateral cover of three times the loan facility. 6,651.00 6,406.45 d) The Company had during the year raised Rs. 37,500 Net Deferred Tax Liability 5,078.50 5,016.16 lac (Previous year Rs.15,000 lac) against the issue of commercial paper. The amount outstanding there against as on March 31, 2010 is Rs. 8,500 lac. Loans & Advances: e) The Secured Redeemable Optionally Convertible 13. The Group has been entering into Development Agreements Debentures are secured to the extent of specific with landlords. Development Manager Fees amounting to immovable assets of the Group disclosed under the head Rs. 60,230,839/- (Previous Year Rs. 60,230,839/-) accrued “Fixed Assets”. as per terms of the Agreement are receivable by the Group 10. Investments based upon progress milestones specifi ed in the respective a) The Company had sold its entire holding in Godrej Hicare Agreements and have been disclosed as Development Manager Limited, a subsidiary company, in March 2009. The profi t Fees accrued but not due in Schedule 10. thereon based on the minimum consideration received 14. a) Loans and Advances include Rs. 1,033 lac (Previous year was recognised in the accounts for the year ended on Rs. 1,033 lac) advanced by the Company to certain 31st March 2009. During the year, the company has individuals against pledge by way of deposit of equity received an additional consideration of Rs. 2,759 lac (net) shares of Gharda Chemicals Ltd. The Company has on Godrej HiCare achieving certain fi nancial performance enforced its security and lodged the shares for transfer parameters which consideration has been recognised as in its name, however, the transfer application has been exceptional income in this year. rejected by Gharda Chemicals Ltd. and the Company fi led b) The Board of Directors at its meeting held on May 27, 2009, an appeal before the Company Law Board against the approved a scheme for the merger of Godrej Hygiene Care rejection. The investee Company had in the meanwhile, Limited (GHCL), a 100% subsidiary of Godrej Industries moved the Bombay High Court and the Court remanded the Limited, into Godrej Consumer Products Limited (GCPL). matter back to CLB. The CLB has advised that the parties The scheme has been approved by the Hon’able High may approach the Bench after fi nal disposal of the suit Court, Bombay on 8th October, 2009 . The Appointed fi led by the investee company and the application made date of the merger being June 1st, 2009, the assets by minority shareholders under Section 397/398 before the and liabilities of GHCL stand transferred to and vested Hon’ble High Court. The Company has fi led an appeal with in GCPL from that date. Pursuant to the said scheme the Hon’ble High Court against the order of the Company of arrangement, 51,07,125 (20%) equity shares held by Law Board under Section 10 F of the Companies Act to the GHCL in Godrej Sara Lee Limited, a 49:51 unlisted joint High Court, which has been admitted. venture Company between the Godrej Group and Saralee Interest on the aforesaid loan amounting to Rs. 315 lac Corporation, USA stand transferred to and vested in GCPL was accrued upto March 31, 2000 and has been fully

79 Godrej Industries Limited — Consolidated Account

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) provided for, no interest is being accrued thereafter. ESOP II : The recoverability of the advance is contingent upon This Year Previous Year the transfer and/or disposal of the said shares. It is the No. of Wt. average No. of Wt. opinion of the management that the underlying value of Options exercise Options average the said shares is substantially greater than the amount price ( * ) exercise of the loan. price ( * ) 14. b) Due on Management Projects include a sum of Options outstanding at the Rs. 21,564,700/- (Previous Year Rs. 21,479,389/-) on beginning of the year - - - - account of a project, where the matter is sub-judice Options granted during the with arbitrators. year: 10th August, 2009 860,000 179.86 - - 15. Employee Stock Option Plans Options exercised during the a) In December 2005, the group had instituted an Employee year : - - - - Stock Option Plan (GIL ESOP) as approved by the Board Options forfeited / expired of Directors and the Shareholders, for the allotment of during the year : - - - - 15,00,000 options, increased to 90,00,000 options on split Options outstanding at the of shares convertible into 90,00,000 equity shares of Re.1 year end 860,000 179.86 - - each to eligible employees of participating companies. In July 2009, the Company had instituted an Employee GPL ESOP Stock Option Plan II (GIL ESOP II) as approved by the Board This Year Previous Year of Directors and the Shareholders, for the allotment of No. of Wt. average No. of Wt. 90,00,000 convertible into 90,00,000 shares of the nominal Options exercise Options average value of Re.1 each to eligible employees of participating price ( * ) exercise companies. price ( * ) In F.Y. 2007-08, Godrej Properties Limited (GPL) instituted Options outstanding at the an Employee Stock Option Plan (GPL ESOP) approved by beginning of the year 442,700 620.00 442,700 620.00 the Board of Directors, Shareholders and the Remuneration Options granted during the Committee which provides for the allotment of 442,700 year: - - - - options convertible into 442,700 Equity Shares of Options exercised during the year : - - - - Rs. 10/- each to eligible employee of Godrej Properties Limited and its subsidiary companies (the participating Options forfeited / expired during the year : 39,000 620.00 - - companies). Options outstanding at the The schemes are administered by an independent ESOP year end 403,700 620.00 442,700 620.00 Trust created with ILFS Trust Co. Ltd. which purchases (*) The Wt. average exercise price stated above is the price on from the market, shares equivalent to the number of the grant date and will be increased by the interest cost at the options granted by the Compensation Committee. The prevailing rates upto the exercise of the option. particulars of the scheme and movements during the year are as under: The weighted average balance life of options outstanding as on 31st March, 2010 is 3.82 years. ESOP I This Year Previous Year The weighted average balance life of options outstanding as on 31st March, 2010 for ESOP I is 3.74 years and for ESOP II is 4.30 No. of Wt. average No. of Wt. Options exercise Options average years. price ( * ) exercise The options granted shall vest after three years from the date price ( * ) of grant of option, provided the employee continues to be in Options outstanding at the employment and the option is exercisable within two years after beginning of the year 7,799,950 190.43 7,309,500 177.10 vesting. Options granted during the year : Modifi cation of the ESOP scheme : 2nd May, 2008 - - 340,000 284.60 1. The vesting period for options granted on 05/04/07 and on 26th May, 2008 - - 835,450 276.70 11/04/07 was increased to a maximum of 5 years and the 3rd June, 2008 - - 150,000 254.45 exercise period to 3 years from vesting. Options exercised during the year 2,100,000 91.84 - - 2. The exercise period of unvested options of retiring employees Options forfeited / expired increased from 6 months to 2 years. during the year : 119,250 284.45 835,000 209.87 3. The options granted to the employees of participating company Options outstanding at the shall continue in case of restructuring including sale of shares year end 5,580,700 235.48 7,799,950 190.43 of participating Company.

80 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) The employee share based payment plans have been accounted mutual consent on mutually acceptable terms. Leave based on the intrinsic value method and no compensation expense and licence arrangements being similar in substance to has been recognized since the market price of the underlying share operating leases. The company has also granted lease at the grant date is the same / less than the exercise price of the for freehold land. The particulars of the operating lease option, the intrinsic value therefore being Nil. arrangements are as under: The fair value of the share options has been determined using the This Year Previous Year Black-Scholes Option Pricing Model. Had the fair value method of Rs Lac Rs Lac accounting been used, the net profi t and earnings per share would Gross carrying amount of premises 1,913.45 1,785.95 have been as per the pro forma amounts indicated below. Accumulated depreciation 870.14 763.43 Depreciation for the period 50.89 50.87 This Year Previous Year Rs. Lac Rs. Lac The aggregate future minimum lease payments are as under : Net Profi t (as reported) 20,317.34 11,147.00 This Year Previous Year Period Rs Lac Rs Lac Less : Stock based compensation expense determined under fair Lease payment recognised in the 3,157.87 3,433.55 value based method (Pro Forma) 2,665.86 2,645.00 profi t & loss account Future lease payments Net Profi t (Pro Forma) 17,651.48 8,502.00 - Within one year 3,484.95 3,347.89 Amt. Rs. Amt. Rs. - Later than one year and not later 6,622.90 3,632.33 Basic & Diluted Earnings per than fi ve years share before Extraordinary Items (as reported) 6.39 2.82 Lease taken by the group Basic & Diluted Earnings per b) Operating Lease: share before Extraordinary Items The Company’s signifi cant leasing arrangements are in (Pro Forma) 5.56 2.68 respect of operating lease for land, offi ce premises, Basic & Diluted Earnings per residential premises, machinery and storage tanks. The share after Extraordinary Items agreegate lease rentals paid by the Company are charged (as reported) 6.39 3.49 to profi t & loss account Basic & Diluted Earnings per share after Extraordinary Items This Year Previous Year (Pro Forma) 5.56 2. 66 Period Rs Lac Rs Lac Lease payment recognised in the 440.44 418.17 b) The independent ESOP trust has purchased shares of profi t & loss account GIL from the market against the options granted. The Future lease commitments purchases are fi nanced by loans from the group companies - Within one year 399.87 412.53 amounting to Rs 17330.08 lac (previous year Rs 17304.07 lac). As on 31 March 2010, the market value of the shares - Later than one year and not later 323.41 336.07 purchased by the Trust is lower than the acquisition cost than fi ve years of the shares by Rs 7871.22 lac (previous year Rs 12306.77 c) Finance Leases: lac) The company has acquired vehicles under Finance Lease. The repayment of the loans granted to the ESOP trust is Liability for minimum lease payment is secured by dependent on the exercise of the options by the employees hypothecation of the vehicles acquired under the lease. and the market price of the underlying shares of the The minimum lease payments outstanding as on March unexercised options at the end of the exercise period. 31, 2010, in respect of vehicles acquired under lease are The fall in value of the underlying equity shares is on as under: account of market volatility and the loss, if any, can be determined only at the end of the exercise period. In view Total minimum of the aforesaid, provision for diminution of Rs 7871.22 lac lease Present (previous year Rs 12306.77 lac) is not considered necessary payments value of in the fi nancial statements. outstanding as minimum 16 Leases: Period on March 31, Un-matured lease 2010 Interest payments Leases granted by the group Rs Lac Rs Lac Rs Lac a) Operating Lease: Within one year 48.54 8.47 45.71 The company has entered into leave and licence Later than one year and agreements in respect of its commercial and residential not later than fi ve years 14.43 2.07 11.73 premises. The non-cancelable portion of the leases range 62.97 10.54 57.44 between 3 months to 36 months and are renewable by

81

Godrej Industries Limited — Consolidated Account

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) 17. Hedging Contracts 19. Exceptional Items The group uses forward exchange contracts to hedge its foreign This Year Previous Year exchange exposure relating to the underlying transactions and Rs Lac Rs Lac fi rm commitments. The use of the foreign exchange forward contracts reduces the risk on cost to the company. The group Included under Other Income also uses commodity futures contracts to hedge it’s exposure i) Profi t on sale of long term to vegetable oil price risk. The group does not use foreign investments 10,564.43 8,969.63 exchange forward contracts or commodity future contracts ii) Write back / (Provision) for for trading or speculation purposes. diminution in investment - 1,688.19 i) Derivative instruments outstanding: 20. Profi t & Loss Account a) Commodity futures contracts a) Exchange differences recognised in the Profi t & Loss Account for the year is a loss of Rs. 4.91 lac (Previous Details This Year Previous Year year loss of Rs. 2,419.37 lac). The exchange difference in Purchase Sale Purchase Sale respect of forward exchange contracts to be recognised in Futures contracts subsequent accounting periods is Rs. 26.38 lac (Previous outstanding 1 - 6 - year Rs. 21.31 lac). Number of units b) Research & Development Expenditure of revenue nature under above charged to the Profi t & Loss Account amounts to Rs. 327.31 contracts in MT. 1,040 - 4,500 - lac (Previous year Rs. 173.30 lac). b) Forward Exchange contracts 21. Earnings Per Share: Details This Year Previous Year This Year Previous Year Purchase Sale Purchase Sale a. Calculation of Total number weighted average of contracts number of equity outstanding 31 9 24 6 shares: Foreign currency Number of shares at Nos. 319,758,602 319,758,602 value the beginning of the year - US Dollar (million) 9.47 1.85 10.04 2.42 Number of equity Nos. 317,624,892 319,758,602 - Euro (million) - 2.00 - 0.50 shares outstanding ii) Un-hedged foreign currency exposures at the end of the year Details This Year Previous Year Weighted average Nos. 318,247,978 319,758,602 Purchase Sale Purchase Sale number of equity Uncovered Foreign shares outstanding exchange exposure during the year as at the year end b. Net profi t after Rs. 'lac 20,324.72 9,024.68 - US Dollar (million) 13.78 8.42 2.08 3.56 tax excluding - Euro (million) 0.04 - 0.04 0.17 extraordinary items - GBP (million) - 0.03 - - c. Net profi t after Rs. 'lac 20,324.72 11,147.00 tax available for 18. Turnover equity shareholders This Year Previous Year including Rs Lac Rs Lac extraordinary items Turnover includes d. Basic and diluted Rupees 6.39 2.82 i) Processing charges 539.83 948.01 earnings per ii) Export Incentives 180.20 963.18 share of Re. 1 each excluding iii) Licence fees and service 2,494.50 6,679.45 extraordinary Items charges iv) Project / Development 2,230.18 1,352.69 e. Basic and diluted Rupees 6.39 3.49 Management Fees earnings per v) Claims 717.84 45.10 share of Re. 1 vi) Other income from 145.52 84.87 each including customers extraordinary Items vii) Share in jointly controlled 12,604.92 13,949.39 Note: There is no impact on basic as well as diluted earnings entities per share on account of the ESOP, as the scheme does not 18,912.99 24,022.69 envisage any fresh issue of share capital.

82 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)

22. Related Party Disclosures a) Names of related parties and description of relationship Parties where control exists Key Management Personnel Godrej & Boyce Mfg. Co. Ltd., the holding company Mr. A.B. Godrej Chairman Mr. N.B. Godrej Managing Director Fellow Subsidiaries: Ms. T.A. Dubash Executive Director Wadala Commodities Ltd. & President (Marketing) Godrej (Malaysia) Sdn Bhd Mr. M. Eipe Executive Director Godrej (Singapore) Pte Ltd. & President (Chemicals) Godrej Infotech Ltd. Mr. V. Banaji Executive Director & President Veromatic International BV (Group Corporate Affairs) Veromatic Services BV Mr. M.P. Pusalkar Executive Director & President Water Wonder Benelux BV (Corporate Projects) Godrej ConsumerBiz Ltd. (up to 01.06.2009) Mr. B.S. Yadav Managing Director (Godrej Agrovet Ltd.) Other related parties with whom the Company had Mr. M.S. Korde Managing Director transactions during the year (Godrej Properties Ltd.) Associate / Joint Venture Companies Mr. Pirojsha Godrej Executive Director Godrej Consumer Products Ltd. (also a fellow subsidiary) (Godrej Properties Ltd.) Godrej Hershey Ltd. Mr. H.K. Press Vice-Chairman Swadeshi Detergents Ltd. (Godrej Consumer Products Ltd.) Compass BPO Ltd. ( up to 08.03.2010) Mr. Dalip Sehgal Managing Director HDFC Venture Trustee Co. Ltd. (Godrej Consumer Products Ltd.) Red Fort India Real Estate Mr. Vivek Mathur Managing Director HDFC PMS (Godrej Hershey Ltd.) Milestone Real Estate Fund Mr. C.H. Gopal Deputy General Manager (Godrej Hershey Ltd.) Enterprises over which key management personnel exercise signifi cant infl uence Relatives of Key Management Personnel Godrej Netherlands BV Ms. P.A. Godrej Wife of Mr. A.B. Godrej Rapidol (Pty) Ltd. Ms. N.A. Godrej Daughter of Mr. A.B. Godrej Godrej Global Mideast FZE Mr. P.A. Godrej Son of Mr. A.B. Godrej Godrej Hygiene Products Ltd. Ms. R.N. Godrej Wife of Mr. N.B. Godrej Godrej Consumer Products Mauritius Ltd. Mst. B.N. Godrej Son of Mr. N.B. Godrej Godrej Consumer Products Holding (Mauritius) Ltd. Mst. S.N. Godrej Son of Mr. N.B. Godrej Godrej Holdings P. Ltd. Mst. H.N. Godrej Son of Mr. N.B. Godrej Godrej Investments Pvt. Ltd. Cartini India Ltd. Bahar Agrochem & Feeds Pvt. Ltd. Vora Soaps Ltd. Tahir Properties Ltd. Godrej Tyson Foods Ltd.

83 Godrej Industries Limited — Consolidated Account

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)

b) Transactions with Related Parties Rs. Lac

Nature of Transaction Holding Fellow Associate/ Key Relative Enterprises over Total Company Subsidiaries Joint Venture Management of Key which Key Mangement Companies Personnel Management Personnel exercise Personnel signifi cant infl uence Sale of Goods 19.88 - 945.78 - - 13.53 979.19 Previous Year 29.09 - 1,327.34 - - 49.28 1,405.71 Advance given 140.13 - - - - - 140.13 Previous Year 88.22 - - 20.16 40.00 - 148.38 Loan given ------Previous Year - - - 173.00 - - 173.00 Loan repaid ------Previous Year - - - 23.99 - - 23.99 Purchase of goods 76.84 - 687.92 - - 1,218.72 1,983.48 Previous Year 141.57 - 1,087.79 - - 1.99 1,231.35 Purchase of Fixed Assets 233.17 - - - - - 233.17 Previous Year 242.00 - 4.16 - 100.00 - 346.16 Processing charges received - - 89.81 - - - 89.81 Previous Year - - 198.38 - - - 198.38 Commission / Royalty received - - 105.57 - - - 105.57 Previous Year - - 178.89 - - - 178.89 Licence fees / Service Charges / Storage Income 0.27 - 397.27 - - - 397.54 Previous Year 0.39 7.69 - - - - 8.08 Other Income 0.12 - 15.40 - - - 15.52 Previous Year 1.11 - - - - - 1.11 Recovery of establishment & Other Expenses - 2.13 772.04 2.40 - 2.39 778.96 Previous Year 30.90 0.89 1,991.57 - - - 2,023.36 Rent, Establishment & other exps. paid 1,656.58 52.57 267.96 - 193.76 0.49 2,171.36 Previous Year 1,604.75 21.73 174.51 2.17 117.33 0.84 1,921.33 Interest received - - 2.24 - - - 2.24 Previous Year - - 2.26 147.26 - 3.50 153.02 Interest paid - 8.00 27.68 - - - 35.68 Previous Year - 8.00 167.75 - - - 175.75 Dividend income - - 2,895.51 - - - 2,895.51 Previous Year - - 1,854.93 - - - 1,854.93 Dividend paid 7,334.07 - - 135.17 264.03 31.92 7,765.19 Previous Year 2,340.03 - - 92.40 729.47 71.33 3,233.23 Remuneration - - - 1,830.76 87.07 - 1,917.83 Previous Year - - - 1,258.80 55.74 - 1,314.54 Purchase of Investments ------Previous Year - - 39,331.56 - - - 39,331.56 Sale of Investments - - 20,357.72 - - - 20,357.72 Previous Year 4,291.80 - 4,202.30 - - - 8,494.10 Intercorporate Deposits -Accepted - - 405.00 - - - 405.00 Previous Year - - 17.44 - - - 17.44 Intercorporate Deposits Repaid during the year - - 405.00 - - - 405.00 Previous Year - - 22.30 - - - 22.30 Intercorporate Deposits -Advanced ------Previous Year - - 175.00 - - - 175.00 Intercorporate Deposits Repayment received during the year - - 16.00 - - - 16.00 Previous Year - - 175.00 - - - 175.00 Issue of equity shares 302.97 - - - - - 302.97 Previous Year ------Directors Fees - - - 2.23 - - 2.23 Previous Year - - - 4.17 - - 4.17 Balance Outstanding as on March 31, 2010 Receivables - 3.11 4.72 - - 12.61 20.44 Previous Year 29.93 0.13 187.14 - - 9.65 226.85 Payables 212.64 0.27 450.29 - - 32.55 695.75 Previous Year 90.06 6.84 319.23 - - 0.12 416.25 Debentures Outstanding - - 2,156.00 - - - 2,156.00 Previous Year - - 2,156.00 - - - 2,156.00 Guarantees Outstanding - - 1,431.21 - - - 1,431.21 Previous Year - - 2,225.00 - - - 2,225.00

84 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) c) The signifi cant Related Party transactions are as under:

Nature of Transaction This Year Previous Year Nature of Transaction This Year Previous Year Rs. Lac Rs. Lac Rs. Lac Rs. Lac Sale of goods Interest received - Godrej Consumer Products Ltd. 927.98 1,204.21 - Swadeshi Detergents Ltd. 2.24 3.50 - Godrej & Boyce Mfg. Co. Ltd. 19.88 29.09 - Mr. A. Mahendran - 147.26 - Rapidol PTY Ltd. 11.95 - - Godrej Hershey Ltd. - 2.26 - Godrej Hershey Ltd. 11.44 15.87 - Godrej Saralee Ltd. 6.36 107.26 Interest paid - Godrej Global Mideast FZE - 43.99 - HDFC Venture Trustee Co. Ltd. 21.56 - - Wadala Commodities Ltd 8.00 8.00 Purchase of Fixed Assets - Godrej Consumer Products Ltd. 6.12 - - Godrej & Boyce Mfg. Co. Ltd. 233.17 186.03 - Red Fort India Real Estate - 167.75

Purchase of goods Inter Corporate Deposits - Accepted - Bahar Agrochem & Feeds Pvt. Ltd. 1,218.72 - - Godrej Consumer Products Ltd. 405.00 - - Godrej Consumer Products Ltd. 538.07 531.11 - Godrej Hershey Ltd. 149.26 225.02 Inter Corporate Deposits - Repaid - Godrej & Boyce Mfg. Co. Ltd. 76.84 197.53 - Godrej Consumer Products Ltd. 405.00 - - Godrej Saralee Ltd. 0.59 18.50 - Godrej Hygiene Products Ltd. - 317.32 Inter Corporate Deposits - Advanced - Heroes Aids Project - 100.00 - Godrej Hershey Ltd. - 175.00

Processing Charges received Inter Corporate Deposits - Repayment Received - Godrej Hershey Ltd. 89.81 198.38 - Swadeshi Detergents Ltd. 16.00 - - Godrej Hershey Ltd. - 175.00 Commission received - Godrej Hershey Ltd. 102.62 173.43 Dividend income - Godrej Consumer Products Ltd. 2.95 5.46 - Godrej Consumer Products Ltd. 2,895.51 1,854.93

Licence fee / Storage income Dividend paid - Godrej Consumer Products Ltd. 182.26 211.72 - Godrej & Boyce Mfg. Co. Ltd. 7,334.07 2,340.03 - Compass BPO Ltd. 154.79 172.69 - Mr. Pirojsha Godrej 65.47 23.78 - Godrej Saralee Ltd. 31.78 238.14 - Mr. N. B. Godrej 64.38 71.33 - Godrej Hershey Ltd. 28.43 84.75 - Ms. T. A. Dubash 53.36 - - Ms. Nisaba A. Godrej 53.36 - Other Income - Bahar Agrochem & Feeds Pvt. Ltd. 31.14 - - Godrej Consumer Products Ltd. 11.14 17.65 - Godrej Hershey Ltd. 3.23 10.98 Remuneration to Key Management Personnel - Godrej Saralee Ltd. 1.03 13.08 - Mr. A. B. Godrej 132.79 58.55 - Mr. H. K. Press 117.59 34.76 Recovery of Establishment & other expenses - Mr. Dalip Sehgal 105.22 1.35 - Godrej Consumer Products Ltd. 716.41 983.25 - Mr. N. B. Godrej 241.34 219.84 - Godrej Hershey Ltd. 50.26 108.87 - Mr. V. F. Banaji 211.36 151.58 - Godrej Saralee Ltd. 4.99 107.06 - Mr. M. P. Pusalkar 199.78 131.84 - Godrej Hygiene Products Ltd. 2.28 30.46 - Ms. T. A. Dubash 194.83 137.82 - Compass BPO Ltd. 0.38 - - Mr. Mathew Eipe 177.08 135.02 - Godrej & Boyce Mfg. Co. Ltd. - 32.40 - Mr. M.S. Korde 149.46 145.89 - Mr. Vivek Mathur 78.66 - Rent, Establishment & other exps. paid - Mr. B.S. Yadav 130.49 91.75 - Godrej & Boyce Mfg. Co. Ltd. 1,656.58 1,604.75 - Mr. Pirojsha Godrej 84.74 34.63 - Godrej Consumer Products Ltd. 260.90 136.65 - Mr. C.H. Gopal 7.41 - - Ms. P.A. Godrej 129.07 27.82 - Mr. A. Mahendran - 68.64 - Ms. R.N. Godrej 64.68 82.31 - Mr. Ravi Venkateswar - 31.07 - Godrej Infotech Ltd. 46.80 12.47 - Mr. C. K. Vaidya - 16.06 - Wadala Commodities Ltd. 5.77 6.38 - Godrej Hershey Ltd. 4.14 0.56 Remuneration to Relatives of Key Management - Godrej Saralee Ltd. 2.93 37.25 Personnel - Ms. M. Mahendran - 7.20 - Ms. Nisaba A. Godrej 87.07 53.57 - Mr. Pirojsha Godrej - 2.17 Advance given - Godrej & Boyce Mfg. Co. Ltd. 140.13 88.23 Sale of Investments - Ms. M. Mahendran - 40.00 - Milestone Real Estate Fund 8,610.00 - - HDFC PMS 7,000.00 - Loan given - Godrej & Boyce Mfg. Co. Ltd. - 4,291.80 - Mr. A. Mahendran - 193.15 - Red Fort India Real Estate - 4,202.30

Loan repaid Purchase of Investments - Mr. A. Mahendran - 23.17 - Godrej Consumer Products Ltd. - 31,689.26 - Mr. Ravi Venkateswar - 0.81 - Godrej Hershey Ltd. - 3,440.00

Issue of equity shares Shares in Associate Compnay acquired under a scheme of arrangement - Godrej & Boyce Mfg. Co. Ltd. 302.97 - - Godrej Consumer Products Ltd. 4,747.72 -

85 Godrej Industries Limited — Consolidated Account

Year Year Year 179.63 454.53 (85.02) 4702.77 2122.32 9807.15 7529.00 4851.94 6471.04 6650.67 4248.24 Previous Previous Previous Previous 3622.24 11147.00 37943.99 18439.15 13106.97 91084.91 98136.66 13429.39 (7529.00) (9877.48) (5337.12) (2282.39) Previowus Previowus 368873.61 399357.02 361344.61 270259.70 417796.17 361344.61 178871.00 412944.23 277007.66 417796.17 361344.61 (14959.54) (Rs. lac) Total This Year 0.00 0.00 288.87 5017.27 8102.60 5663.72 5116.29 4728.40 8272.86 1138.86 9411.72 n Sulphonates, n This Year This Year fi 20324.72 50047.31 20001.24 21297.60 16820.90 94782.44 70706.35 24923.50 (5663.72) (4476.70) (4598.78) 417564.06 378122.29 283339.85 437565.30 378122.29 190299.90 432449.01 383786.01 261006.25 437565.30 378122.29 (13787.90) (14961.81) Year 35.19 993.78 (35.19) 6076.84 1414.97 Previous Previous 31808.16 51755.68 10984.34 51790.87 51755.68 Others Total This Year 798.07 6233.85 6902.16 1299.35 2521.63 (798.07) 32446.88 49449.70 50247.77 49449.70 Year 59.98 ned glycerine, Alfa Ole ned glycerine, 664.75 fi 4177.11 Previous Previous 10527.95 10528.25 14705.36 10528.25 1,917.97 (4177.11) 140208.92 This Year ces, nectors and drinks, other beverages Investments d licensing of properties. 17.91 agement services. 155.50 1792.64 4396.28 11431.97 12685.36 17081.64 12685.36 (4396.28) 135345.32 Alcohols, re ls. Year dia represent sales to customers located outside India. 96.76 sh. 474.72 245.96 fi (96.76) 9769.19 2730.93 Previous Previous (300.16) 17727.17 17823.93 17727.17 This Year 92.52 423.55 331.96 (92.52) 9034.76 2711.15 Beverages & Foods Beverages Finance & 16063.87 16156.39 16063.87 (1561.80) Year 1.47 (1.47) 310.09 222.27 6238.98 3171.31 3275.18 Previous Previous 19490.78 19492.25 19490.78 ed taking into account the nature of products, the. different risks and fi

This Year 0.00 0.00 0.00 Household 0.15 Insecticides 28.38 (0.15) 165.47 1958.74 1958.89 1958.74 Year 546.79 927.16 179.75 Previous Previous (546.79) 32022.48 17349.22 54632.79 32569.27 32022.48 148857.11 This Year (contd.) Development 308.95 359.88 ned vegetable oils & vanaspati and international oil trading. 3184.60 fi (308.95) 48012.35 24592.46 18682.70 48321.30 48012.35 173369.69 Year 7.77 49.94 (44.52) 100.50 3638.26 1360.64 Previous Previous (100.50) 53827.63 53928.13 53827.63 This Year 67.62 14.67 73.36 67.75 547.80 (67.75) 2935.95 57642.70 57710.45 57642.70 Year 453.84 402.10 3013.24 Previous Previous 18223.73 98191.92 10693.03 98191.92 2,553.31 100745.23 (2,553.31) - - This Year 396.40 3879.49 1208.14 19582.88 21821.48 114179.55 114179.55 114179.55

ned vegetable oils, vanaspati and tea. fi Year 17.87 964.52 (17.87) 2094.46 Previous Previous 77800.70 40612.67 13795.00 77818.57 77800.70 (1849.89) - - This Year Chemicals Animal Feed Oils Veg Estate & Property 902.36 5238.25 2083.57 44848.58 18248.42 78130.02 78130.02 t in associates fi t after Minority Interest fi Sodium Lauryl Sulphate and Ether Sulphate. confectionary products and sale of re returns, the organisational structure and internal reporting system. t before tax t after taxes t before Minority Interest fi fi fi 23. Segment Information Information about primary business segments Depreciation Total Information about Secondary Business Segments Revenue by Geographical markets Total RevenueTotal 78130.02 Less: Intersegment Sales Segment Assets Unallocated Assets India (B) ResultsSegment result before interest, exceptional items and tax Unallocated expenses Interest Expense (net) Pro Total Assets Total Pro Outside India Segment Liabilities Taxes Add : Extra Ordinary items (Net of Tax) Add : Extra Ordinary items (Net of items Period Add: Prior Pro Share of pro Total Unallocated Liabilities Share of Minority Interest Net Pro Carrying Amount of Segment assets Carrying India Total Sales Total Total Liabilities Total (A) Revenue External Sales Outside India Total Cost incurred during the year to acquire segment assets Intersegment Sales Cost incurred on unallocated assets Cost incurred during Total the year to acquire segment assets Segment Depreciation Unallocated Depreciation 3. shrimp and Animal Feed segment includes the business of production and sale compound feeds for cattle, poultry, 4. oils segment includes the business of processing and bulk trading re Veg 5. Estate & property development segment includes the business of and sale real estate leasing leave an 6. Household Insecticides segment includes the business of production and sale household insecticides & commercial pest man The geographical segments are as follows - Sales in India represent sales to customers located India. outside In 10. 7. 7. Beverages and Foods segment includes the business of processing, production sale fruit pulp, tomato puree, jui 8. Finance & Investments includes investments in subsidiaries, associates companies and other 9. Plantations, energy generation through windmil Agri Inputs and tissue culture, Oil Palm Others includes Integrated Poultry, SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS THE CONSOLIDATED OF SCHEDULES FORMING PART Notes: 1. The Company has disclosed Business Segment as the primary segment. Segments have been identi 2. Acids, Fatty Chemicals segment includes the business of production and sale Oleochemicals surfactants such as Fatty

86 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) 24. Employee Benefi ts

The amounts recognised in the Company’s fi nancial statements as at the year end are as under: Gratuity Leave Encashment Pension This Year Previous Year This Year Previous Year This Year Previous Year Rs. lac Rs. lac Rs. lac Rs. lac Rs. lac Rs. lac a) Change in Present Value of Obligation Present value of the obligation at the beginning of the year 3,108.98 2,897.14 126.67 110.51 106.64 73.28 Current Service Cost 173.00 172.53 14.20 18.33 - - Interest Cost 233.20 228.81 8.75 7.83 - - Contribution by Plan Participants ------Actuarial (Gain) / Loss on Obligation 100.08 (43.51) (11.03) 19.29 (50.89) 45.67 Foreign Currency exchange rate changes ------Effect of Liability Transfer in 2.39 8.42 - - - - Benefi ts Paid (175.73) (154.41) (21.41) (29.29) (12.00) (12.31) Past Service Cost ------Amalgamations ------Curtailments ------Settlements 8.60 - 0.86 - - - Plan Amendments - - (2.40) - - - Present value of the obligation at the end of the year 3,450.52 3,108.98 115.64 126.67 43.75 106.64

b) Change in Plan Assets Fair value of Plan Assets at the beginning of the year 1,872.84 1,806.12 - - - - Expected return on Plan Assets 143.01 144.69 - - - - Actuarial (Gain) / Loss on Plan Assets (66.31) 48.68 - - - - Foreign Currency exchange rate changes ------Contributions by the Employer 1,035.75 83.76 - - - - Contributions by Plan Participants ------Benefi ts Paid (139.62) (113.05) - - - - Amalgamations ------Settlements ------

Fair value of Plan Assets at the end of the year 2,978.29 1,872.84 - - - -

c) Amounts Recognised in the Balance Sheet: Present value of Obligation at the end of the year 3,369.53 3,029.24 - - - - Unrecognised Past Service Cost ------Fair value of Plan Assets at the end of the year 2,985.39 1,882.86 - - - - Net Obligation at the end of the year 384.14 1,146.38 - - - -

d) Amounts Recognised in the statement of Profi t and Loss: Current Service Cost 173.43 172.37 14.20 18.33 - - Interest cost on Obligation 233.20 228.76 8.75 7.83 - - Expected return on Plan Assets (143.01) (144.69) - - - - Expected return on Reimbursement Right recognised as an ------asset Net Actuarial (Gain) / Loss recognised in the year 31.28 0.87 (11.03) 19.29 - - Past Service Cost ------Effect of Curtailment or Settlement 8.60 - 0.86 - - - Net Cost Included in Personnel Expenses 303.50 257.31 12.78 45.45 - -

e) Actual return on Plan Assets 209.32 96.01 - - - -

f) Estimated contribution to be made in next fi nancial year

g) Actuarial Assumptions i) Discount Rate (p.a.) 7.55%-8.00% 7.55%-8.00% 8.00% 7.55% 8.00% 7.5% ii) Expected Rate of Return on Plan Assets (p.a.) 7.55%-8.00% 7.55%-8.00% - - - - iii) Salary Escalation Rate (p.a.) 5%-6% 5%-6% 4.00% 4.00% 5.00% 4.5% iv) Employee Turnover (p.a.) - The estimates of future salary increases, considered in actuarial valuation, take account of infl ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

87 Godrej Industries Limited — Consolidated Account Statement regarding Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956

1. Name of the Subsidiary Company Godrej Godrej Ensemble Godrej Natures Godrej Agrovet Properties Holdings & International Basket Oil Limited Limited Finance Limited Limited Palm Limited Ltd. 2. The company's interest in the subsidiaries as on March 31, 2010 a. Number of Equity Shares 9,112,956 48,495,209 3,774,160 2,355,000 7,050,000 (See note Total Number of Shares 12,118,752 69,850,009 3,774,160 2,355,000 7,050,000 1 below) b. Face Value 10 10 10 £1 10 c. Extent of Holding 75.20% 69.43% 100.00% 100.00% 100.00%

3. Net aggregate profi t/(Loss) of the subsidiary company so far it concerns Rs. lac Rs. lac Rs. lac Rs. lac Rs. lac the members of the Company

A. For the fi nancial year ended on March 31, 2010 i. Not dealt with in the books of 2,452.13 8,647.93 320.12 725.85 (624.07) Account of the Company ii. Dealt with in the books of Account — ———— of the Company

B. For the subsidiary company's previous fi nancial years since it became a subsidiary i. Not dealt with in the books of 3,195.70 10,209.77 (347.58) 26,510.57 — Account of the Company ii. Dealt with in the books of Account 3,294.33 7,606.35 560.80 11,348.28 — of the Company Notes: The Financial Year of the subsidiary companies has ended on March 31, 2010 1. 56,400 Equity Shares of Rs.10 each in Godrej Oil Palm Ltd. (formerly Godrej Oil Plantations Ltd.) (representing 80% of the share capital) are held by Godrej Agrovet Ltd. 2. 50,000 Equity Shares of Rs.10 each in Golden Feed Products Ltd. (representing 100% of the share capital) are held by Godrej Agrovet Ltd. 3. 34,20,000 Equity Shares of Rs.10 each in Cauvery Palm Oil Ltd. (representing 90% of the share capital) are held by Godrej Agrovet Ltd. 4. 25,500 Equity Shares of Rs.10 each in Godrej Estate Developers Pvt. Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd. 5. 34,031 Equity Shares of Rs.10 each in Godrej Developers Pvt. Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd. 6. 49,999 Equity Shares of Rs.10 each in Godrej Real Estate Pvt. Ltd. (representing 99.99% of the share capital) are held by Godrej Properties Ltd. 7. 5,10,000 Equity Shares of Rs.10 each in Godrej Realty Pvt. Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd.

88 Annual Report 2009–2010

Golden Cauvery Godrej Godrej Godrej Godrej Godrej Godrej Happy Feed Palm Estate Developers Real Estate Realty Seaview Waterside Highrises Products Oil Developers Pvt. Ltd. Pvt. Ltd. Pvt. Ltd. Properties Properties Ltd. Limited Limited Pvt. Ltd. Ltd. Pvt. Ltd.

(See note (See note (See note (See note (See note (See note (See note (See note (See note 2 below) 3 below) 4 below) 5 below) 6 below) 7 below) 8 below) 9 below) 10 below)

8. 3,88,636 Equity Shares of Rs.10 each in Godrej Sea View Properties Pvt. Ltd. (representing 77.73% of the share capital) are held by Godrej Properties Ltd. 9. 5,10,000 Equity Shares of Rs.10 each in Godrej Waterside Properties Pvt. Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd. 10. 103,592 Equity Shares of Rs.10 each in Happy Highrises Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd. 11. 691,155 Equity Shares of Rs.10 each in Godrej Properties Ltd. are held by Ensemble Holdings & Finance Ltd. 12. 8,100 Equity Shares of Rs.10 each in Godrej Agrovet Ltd. are held by Ensemble Holdings & Finance Ltd.

A.B. Godrej N.B. Godrej Chairman Managing Director

M. Eipe V. Srinivasan Executive Director & Executive Vice President President (Chemicals) (Finance & Estate) & Mumbai, May 26, 2010 Company Secretary

89 NOTES Annual Report 2009–2010

Godrej Industries Limited ACCOUNTS OF SUBSIDIARY COMPANIES 2009-2010

91 Godrej Agrovet Limited

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010

To The Shareholders and Profi t & Loss Account of your Company. Your Directors have pleasure in submitting their Report along with the audited Accounts for the JOINT VENTURES fi nancial year ended on March 31, 2010. Your Company continues to have Joint Venture arrangement in ACI Godrej Agrovet Private Limited Financial Results (Bangladesh), Godrej Gold Coin Aquafeed Limited, Godrej IJM Palm Oil Limited and Godrej Tyson Your Company’s performance during the year as compared with that during the previous year is Foods Limited. summarised below: - CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS THIS YEAR PREVIOUS YEAR AND OUTGO Rs. lac Rs. lac The information in respect of these matters, required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Total Income 141306.37 132068.88 Rules, 1988 and forming part of this Report, is annexed hereto (Annexure - A). Profi t Before Taxation (PBT) 2493.22 2684.46 Less : Provision for Taxation 322.54 1352.81 DIRECTORS Add : Extraordinary Income/(Expense)(Net) — 4505.67 During the year under review, there have been no changes in the Directors of the Company. Profi t After Taxation (PAT) 2170.68 5837.72 Mr. B. S. Yadav, formerly the ‘Executive Director & President’ has been redesignated as “Managing Balance Brought Forward from Previous Year 11535.09 5987.82 Director” w.e.f. May 20, 2009. Total 13705.77 11825.14 Mr. A. B. Godrej, Ms. Nisaba A. Godrej and Mr. Amit B. Choudhury retire by rotation at the ensuing Appropriations: Annual General Meeting of the Company in accordance with Section 256 of the Companies Act, 1956 Final Dividend 242.37 121.18 and Article 124 of the Articles of Association of the Company and being eligible offer themselves Tax on Dividend 41.20 20.60 for re-appointment. General Reserve 217.07 148.28 AUDITORS Balance Carried Forward to Balance Sheet 13205.13 11535.09 You are requested to appoint Auditors for the current year and authorize the Board to fi x their Total 13705.77 11825.14 remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment. A certifi cate from the Auditors has been received to the effect Review of Operations that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) The year under review saw the core businesses of Animal Feeds and Agricultural Inputs returning of the Companies Act,1956. an extremely good performance, both in revenue and profi tability. This represents the fulfi llment ADDITIONAL INFORMATION of the strategy kicked off in FY2008 to refocus Godrej Agrovet on its core competency of selling The additional information required to be given under the Companies Act, 1956, has been laid out in high-quality, yield-improving inputs to Indian farmers. Since then we have divested, partially or the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to fully, our non-core businesses in areas such as rural retail (Aadhaar), poultry integration/processing the Auditors’ Report are self-explanatory and therefore do not call for any further explanation . (Godrej Tyson Foods), and gourmet food retail (Natures Basket). Going forward, we remain steadfastly committed to improving the productivity of Indian farmers by innovating products and services that AUDIT COMMITTEE sustainably increase crop and livestock yields. Pursuant to the provisions of Section 292 A of the Companies Act, 1956, your Company has constituted The business-wise performance is reviewed hereunder: the Audit Committee of the Board of Directors. ANIMAL FEEDS: The following Directors are the Members of the Audit Committee: - The Animal Feed business recorded a good growth of 16% in revenue and 31% in profi tability. Despite (1) Mr. K. N. Petigara – Chairman almost-fl at sales volumes, profi tability grew due to expansion of contribution margins and control (2) Dr. S. L. Anaokar – Member over fi xed overheads. (3) Mr. B. S. Yadav – Member Cattle Feed volumes rose modestly year-on-year, arresting the persistent trend of falling sales volumes The Audit Committee, pursuant to the terms of reference specifi ed by the Board from time to time in that category. We attribute this success to our decision to divide the Animal Feed sales force into has made recommendations to the Board in respect of internal control systems, half-yearly & annual seperate teams for Cattle, Poultry and Aqua, which came into effect in September 2009. fi nancial statements, standard accounting principles, Risk Management policies, etc. The Board of Poultry Feed had a more diffi cult year, suffering de-growth in some regions. This was mostly due Directors has since accepted the recommendations of the Audit Committee. to market conditions, where industry growth stalled from lower placement of chicks. The situation REMUNERATION COMMITTEE is expected to be corrected in the coming year, and with more beaks to feed, sales volumes are projected to rise again. Pursuant to the provisions of Schedule XIII to the Companies Act, 1956, your Company has constituted Remuneration Committee of the Board of Directors to approve the payment of remuneration to Expansion of contribution margins was possible due to effi cient sourcing, improved formulation, the Managerial Personnel. and successful R&D efforts. The Central Buying Organization (CBO) was successful in forecasting the soya meal market, as well as in their positions in imported amino acids and fi sh meal. Aggressive The following Directors are the Members of the Remuneration Committee :- efforts to stock raw materials for Cattle Feed also paid off. The Animal Nutrition Innovation Center (1) Mr. K. N. Petigara – Chairman (ANIC) also supported margin expansion through breakthroughs in feed formulation, performance, (2) Dr. S. L. Anaokar – Member and quality. Additionally, ANIC made substantial progress in advancing their pipeline of innovative cattle nutrition products towards commercialization. Over time, it is expected that ANIC will help (3) Mr. Amit Choudhury – Member transform Godrej Agrovet into the most innovative feed company in South Asia. MANAGING COMMITTEE AGRICULTURAL INPUTS: Your Company has constituted the Managing Committee of Board of Directors consisting of the The Agricultural Inputs business grew by 19% in revenue and 22% in profi tability. This success is following Directors pursuant to Article 144 of the Articles of Association of the Company :- even more impressive in light of the failed monsoon, and the drought conditions which followed. (1) Mr. N. B. Godrej (Chairman) Sales growth was fueled by innovative products from in-house R&D (HBR, Hitweed and Zymegold) (2) Mr. A. B. Godrej (Member) in addition to growth in more commoditized pesticides and OMM. (3) Mr. B. S. Yadav (Member) Contribution margins remained relatively steady at the product level. Working capital requirements for the business increased due to rising trade receivables and the interest cost on the same impacted (4) Dr. S. L. Anaokar (Member) profi tability. Going forward, greater efforts will be made to grow the business aggressively while (5) Ms. Nisaba A. Godrej (Member) keeping working capital requirements in check. RESPONSIBILITY STATEMENT Agricultural Inputs R&D continued their focus on the development of innovative agrochemicals Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors this year. Key projects include the development of crop-specifi c selective herbicides, synthesis of of your Company confi rm :- intermediates, and innovation of a next generation PGR for cereals. a) that in the preparation of the annual accounts, the applicable accounting standards have FINANCE AND INFORMATION SYSTEMS: been followed and no material departures have been made from the same; Your Company managed treasury operations very effi ciently. Excellent treasury management resulted b) that they have selected such accounting policies and applied them consistently and made in your Company procuring funds at a signifi cantly lower pricing. Your Company continues to enjoy judgments and estimates that are reasonable and prudent so as to give a true and fair view the apex rating of A1+ from ICRA for its Commercial Paper Programme of Rs. 15 crore and for its of the state of affairs of the Company at the end of the fi nancial year and of the profi t or short-term borrowing program of Rs. 230 crore. Your Company also continues to enjoy the rating loss of the Company for that period; LA+ for its long-term borrowing program of Rs. 27 crore. Your Company, successfully implemented SAP, a world renowned, ERP solution in the Animal Feed business of your Company. Your Company c) that they have taken proper and suffi cient care for the maintenance of adequate accounting is also in the process of implementing SAP in the rest of the businesses and the corporate offi ce. records in accordance with the provisions of this Act for safeguarding the assets of the Implementation of SAP in your Company has already started to yield signifi cant business benefi ts. Company for preventing and detecting fraud and other irregularities; OTHER INITIATIVES: d) that they have prepared the annual accounts on a going concern basis. Your Company continues to accord great importance to the security of its information assets. During HUMAN RESOURCES the year under review, your Company was accredited with ISO 27001 for Information Security Management System in all its Regional Offi ces in addition to the accreditation for Information Your Company continues to take various initiatives for the development of its human resources and Security Management System in its Corporate Offi ce. has maintained healthy and harmonious industrial relations. The Board would like to place on record its sincere appreciation for the unstinted support it continues to receive from all associates. DIVIDEND PARTICULARS OF EMPLOYEES Your Directors have recommended a Final dividend for 2009-10 amounting to Rs. 2 per share of face value of Rs. 10/- each, i.e. 20%. Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Disclosure FIXED DEPOSITS of Particulars in the Report of the Board of Directors) Rules, 1988 forms a part of the Directors’ Your Company has not accepted any public deposits during the fi nancial year under review. Report. As per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Report and SUBSIDIARY COMPANIES Accounts are being sent to the Shareholders of the Company, excluding the statement of particulars of employees u/s 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy Your Company continues to be the Holding Company of Golden Feed Products Ltd. (GFPL), Cauvery Palm Oil Limited (CPOL) and Godrej Oil Palm Limited (GOPL). During the year under review, your of the same may write to the Company Secretary at the registered offi ce of the Company. Company sold 100% of the shares in Natures Basket Limited (NBL). Consequent to this sale, the aforesaid Company ceases to be the subsidiary of your Company. For and on behalf of the Board of Directors The audited Balance Sheets of GFPL, CPOL and GOPL as at March 31, 2010 together with their audited N. B. GODREJ Profi t & Loss Accounts, Directors’ Reports and Auditors’ Reports are attached to the Balance Sheet Mumbai, May 17, 2010. Chairman

92 Annual Report 2009–2010

4. Nimin, a urea use effi ciency enhancer being evaluated at the University of ANNEXURE 'A' Mauritius ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT 5. Patents granted to the Company on:- (a) the use of a mycoherbicide in INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE combination with Hitweed, the cotton herbicide for control of weeds; and (b) COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, on the technology of online urea coating with Nimin 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE 6. Patent applications published on:- (a) a neem based composition for coating EARNINGS & OUTGO : nitrogenous fertilizers; and (b) a novel process for synthesis of rice herbicide A) Conservation of Energy 7. Development of two neem based customized products for a US customer and Your Company continues its policy of implementing/promoting various energy conservation the same being registered with US EPA measures as the same is an effective means of saving cost and also a corporate social 8. Bountee, HBR based PGR product registered as ‘Zaidee’ by a Kenyan responsibility. Various systems installed to conserve energy are regularly reviewed. distributor Some of the measures adopted by the Company during the year under review for conservation 9. CIB registration obtained for export of both Technical Material and Formulation of energy were as follows :- of a rice herbicide 1) Use of DG set as an alternative source of energy 10. New customer-centric initiative taken for developing an alternative to very toxic 2) Use of CNG, a clean fuel without adulteration, in genset, boiler, lab and canteen as Hydrogen Cyanamide product used in grape growing an alternate to HSD 11. A project sponsored with the National Research Centre for Citrus for enhancing 3) Change in offi ce weekly off to power staggering day sweetness in oranges. 4) Maintenance of power factor level at 0.98 II. The Company’s expenditure on R&D is given below :- 5) Installation of wood fi re boiler in place of diesel fi re boiler Expenditure on R & D 6) Plant-wise installation of sub energy meter to know product-wise actual energy THIS YEAR PREVIOUS YEAR consumption Rs. lac Rs. lac. 7) Installation of appropriate meters in accordance with the equipment load requirement The adoption of above energy conservation measures has resulted in the following benefi ts (a) Capital — — to the Company :- (b) Recurring 212.22 129.99 a) Direct reduction in fuel & steam cost (c) Total 212.22 129.99 b) Low combustion on account of clean fuels (d) Total R & D expenditure as 0.15% 0.10 % c) Decline in process & storage losses a percentage of total turnover d) Enhancement in the life of plant & machinery C. Foreign Exchange earnings and outgo B) Technology Absorption, Adaptation and Innovation I. Your Company’s efforts to export agricultural inputs (Vipul–liquid, Achook, Nimin) to I. Your Company continuously carried out during the year under review, in-house research US, Kenya and other promising markets continued during the year. in quality systems and standards. Some key initiatives undertaken in this regard include the following :- THIS YEAR PREVIOUS YEAR Rs. lac Rs. lac 1. Continuous R&D activities in the areas of – II. Foreign exchange used 3155.58 3398.69 (i) development of selective herbicides for different crops; III. Foreign exchange earned 73.20 151.73 (ii) reduction of TDC of existing products through improvements in chemical processes, purifications, raw material substitutions, synthesis of intermediates and making and testing of improved formulations For and on behalf of the Board of Directors 2. Development of a package of herbicide application practices for total control N. B. GODREJ of weeds in cotton Chairman 3. University trials on a new PGR for improving cereal yields under progress Mumbai, May 17, 2010. REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ AGROVET LIMITED

1. We have audited the attached Balance Sheet of Godrej Agrovet Limited, as at 31st March 2010 can be determined only at the end of the exercise period, in view of which provision and also the Profi t and Loss Account and the Cash Flow Statement of the Company for the for the diminution is not considered necessary in the fi nancial statements. year ended on that date annexed thereto. These fi nancial statements are the responsibility d) In our opinion, proper books of account as required by law have been kept by the of the Company’s management. Our responsibility is to express an opinion on these fi nancial Company so far as appears from our examination of these books. statements based on our audit. e) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt 2. We conducted our audit in accordance with auditing standards generally accepted in India. with by this report are in agreement with the books of account. Those Standards require that we plan and perform the audit to obtain reasonable assurance f) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow about whether the fi nancial statements are free of material misstatement. An audit includes Statement dealt with by this report comply with the Accounting Standards referred to examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial in sub-section (3C) of section 211 of the Companies Act, 1956. statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement g) In our opinion and to the best of our information and according to the explanations presentation. We believe that our audit provides a reasonable basis for our opinion. given to us, the said fi nancial statements read with the notes thereon, subject to (b) above, give the information required by the Companies Act, 1956, in the manner so 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government required and give a true and fair view in conformity with the accounting principles in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on generally accepted in India: the matters specifi ed in paragraphs 4 and 5 of the said Order. i) in the case of the Balance Sheet, of the state of affairs of the Company as at 4. Further to our comments in the Annexure referred to in paragraph (3) above, we report 31st March, 2010; and that: ii) in the case of the Profi t and Loss Account, of the profi t for the year ended on a) We have obtained all the information and explanations, which to the best of our that date. knowledge and belief were necessary for the purposes of our audit. iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for b) As referred to in Note 6 of Schedule 15, Notes to accounts, investments in a joint the year ended on that date. venture and an associate aggregating to Rs. 90,852 thousands, exceeds the book value 5. On the basis of the written representations received from the Directors as on 31st March, of the shares of those companies. The Company has also advanced Rs. 80,618 thousands 2010, and taken on record by the Board of Directors, we report that, none of the Directors to those companies. However, in view of the benefi ts of future profi tability of these is disqualifi ed as on 31st March, 2010 from being appointed as a Director in terms of clause companies being non-quantifi able at this stage, we are unable to determine the quantum (g) of sub-section (1) of section 274 of the Companies Act, 1956. of the possible diminution in the value of these investments / advances. c) Without qualifying our opinion, we draw attention to Note 27 of Schedule 15, Notes For and on behalf of to accounts, regarding a loan of Rs. 676,212 thousand to an ESOP Trust for purchase KALYANIWALLA & MISTRY of the holding company’s shares from the market equivalent to options granted under Chartered Accountants an Employee Stock Option Plan. As at March 31, 2010, the market value of the shares Firm Registration No. : 104607W held by the ESOP Trust is lower than the cost of acquisition of the shares by Rs. 325,404 thousand. The repayment of this loan granted to the ESOP trust is dependent on the ERMIN K. IRANI exercise of the options by the employees and the market price of the underlying shares Partner of the unexercised options at the end of the exercise period. The fall in value of the Membership No. 35646 underlying equity shares is on account of current market volatility and the loss, if any, Mumbai, May 17, 2010

93 Godrej Agrovet Limited

Annexure to the Auditors’ Report Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues Referred to in paragraph (3) of our report of even date. applicable to it with the appropriate authorities. According to the information and 1) (a) The Company has maintained proper records showing full particulars, including explanations given to us, there are no undisputed dues payable in respect of above as quantitative details and situation of fi xed assets. at 31st March 2010 for a period of more than six months from the date they became (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets payable. at periodic intervals. In our opinion, the period of verifi cation is reasonable having (b) According to the information and explanations given to us, there are no dues outstanding regard to the size of the Company and the nature of its assets. No material discrepancies of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty or cess have been reported on such verifi cation. on account of any dispute, other than the following: (c) In our opinion, the disposal of fi xed assets during the year does not affect the going concern assumption. Name of Statute Nature of the Dues Amount Forum where dispute is (Rs.’000) pending 2) (a) The Management has conducted physical verifi cation of inventory at reasonable intervals. Excise Duty Act Excise duty & 119,648 Commissioner of Central interest from April Excise (b) In our opinion, the procedures of physical verifi cation of inventory followed by the 2006 to March management are reasonable and adequate in relation to the size of the Company and 2010 on account of the nature of its business. Classifi cation matter. (c) The Company is maintaining proper records of inventory. The discrepancies noticed Sales Tax Act Sales tax & interest 34,151 Commissioner, Appellate on physical verifi cation of inventory as compared to book records were not material thereon from FY 1993- Tribunal and High Court in relation to the operations of the Company and the same have been properly dealt 94 to 1995-96. with in the books of account. Income Tax Act Demand raised for AY 2,929 Commissioner of Income 3) (a) The Company has granted unsecured loans amounting to Rs. 186,130 thousands to seven 2007-08 Tax (Appeals) companies covered in the register maintained under section 301 of the Companies Act, 10) The Company does not have accumulated losses at the end of the fi nancial year and it has 1956. The maximum amount outstanding during the year was Rs. 234,054 thousands not incurred any cash losses in the current and immediately preceding fi nancial year. and the year end balance of loan granted to such parties was Rs. 138,864 thousands. 11) According to the information and explanations given to us and based on the documents and (b) The Company has not charged interest on unsecured loans / advances amounting to records produced to us, the Company has not defaulted in repayment of dues to banks. The Rs. 12,216 thousands given to one company which is prima facie prejudicial to the Company does not have dues to fi nancial institutions or debenture holders. interest of the Company. The rate of interest of other unsecured loans and the other terms and conditions of the all the loans are not prima facie prejudicial to the interests 12) According to the information and explanations given to us and based on the documents and of the Company. records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (c) As informed to us the receipt of principal and interest, to the extent due, has been regular. 13) In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and (d) As informed to us, there are no overdue amounts exceeding rupees one lakh and hence nidhi/ mutual benefi t fund/ societies. the question of commenting on reasonable steps taken for recovery of principal and interest does not arise. 14) In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments. (e) The Company has not taken any loans, secured or unsecured from companies, fi rms or other parties covered in the register maintained under section 301 of the Companies 15) According to the information and explanations given to us, the Company has given a corporate Act, 1956 during the year. The maximum amount involved during the year was Rs. guarantee for loans taken by its subsidiary/associate from banks. The terms and conditions 11,700 thousands and year-end balance of loan taken from such party was Rs. Nil. are not prima facie prejudicial to the interest of the Company. (f) The rate of interest and the other terms and conditions of the unsecured loan taken 16) According to the information and explanations given to us, term loans were applied for the is not prima facie prejudicial to the interest of the Company. purpose for which the loans were obtained. (g) The payment of principal amounts and interest was also regular. 17) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not 4) In our opinion and according to the information and explanations given to us, there are utilized funds raised on short-term basis for long term investment. adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods 18) The Company has not made any preferential allotment of shares to parties or companies and services. During the course of our audit, we have not observed a continuing failure to covered in the register maintained under section 301 of the Companies Act, 1956. correct major weakness in internal controls. 19) The Company did not have outstanding debentures during the year. 5) (a) Based on the audit procedures applied by us and according to the information and 20) The Company has not raised any money through a public issue during the year. explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956 21) During the course of our examination of the book of account and records of the Company, have been entered into the register required to be maintained under that section. carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given and representations made by the (b) The transactions made in pursuance of such contracts or arrangements, were made at Management, no major fraud on or by the Company, has been noticed or reported during prices which are reasonable having regard to prevailing market prices at the relevant the year. time, except for certain transactions for which, there are no similar services rendered to other parties or have been entered into on an reciprocal basis and hence the prices are not comparable. 6) In our opinion and according to the information and explanations given to us, the Company For and on behalf of has not accepted any deposits from the public and hence the provisions of section 58A, 58AA KALYANIWALLA & MISTRY or any other provision of the Companies Act, 1956, read with the rules framed thereunder are not applicable. CHARTERED ACCOUNTANTS 7) In our opinion and according to the information and explanations given to us, the internal Firm Registration No.: 104607W audit system is commensurate with the size of the Company and nature of its business. 8) According to the information and explanation given to us, the maintenance of cost records has E. K. IRANI not been prescribed by the Central Government, under section 209(1)(d) of the Companies PARTNER Act, 1956, for any of the Company’s products. Membership No. 35646 9) (a) According to the information and explanations given to us and on the basis of our Place: Mumbai examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Dated: May 17, 2010.

94 Annual Report 2009–2010

BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010 THIS YEAR PREVIOUS YEAR THIS YEAR PREVIOUS YEAR Schedule Rs.’000 Rs.’000 Rs.’000 Rs.’000 Schedule Rs.’000 Rs.’000 Rs.’000 INCOME SOURCES OF FUNDS From Operations 10 14,077,595 12,935,470 SHAREHOLDERS’ FUNDS Other Income 11 53,042 271,418 Share Capital 1 121,188 121,188 14,130,637 13,206,888 Reserves & Surplus 2 2,751,104 2,562,393 EXPENDITURE Materials 12 11,418,404 10,512,600 2,872,292 2,683,580 Expenses 13 2,248,445 2,093,989 LOAN FUNDS Interest and Financial Charges 14 151,082 259,668 Secured Loans 3 580,675 290,294 Depreciation 63,384 72,185 Unsecured Loans 4 400,263 2,036,165 13,881,315 12,938,442 980,938 2,326,459 PROFIT BEFORE TAX AND EXTRAORDINARY INCOME 249,322 268,446 DEFERRED TAX LIABILITY 102,004 124,050 Profi t on Continuing Operations 250,623 310,155 TOTAL 3,955,234 5,134,089 Provision for Tax APPLICATION OF FUNDS Current Tax 54,300 115,603 FIXED ASSETS 5 Fringe Benefi t Tax — 9,112 Gross Block 1,200,117 1,094,958 Deferred Tax (22,046) 10,280 32,254 134,995 Less: Depreciation 445,810 423,515 218,369 175,160 Net Block 754,307 671,443 Profi t/(Loss) on Discontinuing Operations for (1,301) — Capital work-in-progress/ Advances 76,054 41,523 Live Bird Business 830,361 712,966 Provision for Tax INVESTMENTS 6 1,949,717 1,663,714 Current Tax — — (1,301) - CURRENT ASSETS, LOANS AND ADVANCES 7 Profi t/(Loss) on Discontinuing Operations for Processed — (19,800) Inventories 1,334,991 1,198,601 Chicken Sundry Debtors 935,349 868,572 Provision for Tax Cash and Bank Balances 92,384 311,922 Current Tax —— Fringe Benefi t Tax — 195 Other Current Assets 55 60 — (19,995) Loans and Advances 1,490,590 1,890,640 Profit/(Loss) on Discontinuing Operations for Retail — (21,910) 3,853,369 4,269,796 Business LESS : CURRENT LIABILITIES AND Provision for Tax PROVISIONS Fringe Benefi t Tax — 91 Liabilities 8 2,619,376 1,471,616 — (22,001) PROFIT BEFORE EXTRAORDINARY INCOME/EXPENSE 217,068 133,165 Provisions 9 58,837 40,770 Extraordinary Income (on transfer of) Part of — 476,654 2,678,213 1,512,386 Processed Chicken Business NET CURRENT ASSETS 1,175,156 2,757,409 Provision for Current Tax — - TOTAL 3,955,234 5,134,089 — 476,654 Extraordinary Income (on transfer of) of Retail Business — 7,376 NOTES TO ACCOUNTS 15 Provision for Current Tax — - — 7,376 Extraordinary Expenditure for Employee Benefi ts — (17,568) Extraordinary Expenditure on stamp charges — (1,795) Extraordinary Expenditure for Advisory Services — (14,099) for Business Transfer — (33,462) PROFIT AFTER TAX AND EXTRAORDINARY INCOME 217,068 583,732 Surplus Brought Forward 1,153,509 598,782 AMOUNT AVAILABLE FOR APPROPRIATION 1,370,577 1,182,514 APPROPRIATION: Dividend Proposed Dividend 24,236 12,118 Tax on Dividend 4,120 2,060 Transfer to General Reserve 21,707 14,828 Surplus carried forward 1,320,514 1,153,509 TOTAL 1,370,577 1,182,514 Earnings per share before extraordinary items (Basic/Diluted) in Rs. (Refer Note 28) 17.91 10.99 Earnings per share after extraordinary items (Basic/Diluted) in Rs. (Refer Note 28) 17.91 48.17 NOTES TO ACCOUNTS 15

The Schedules referred to above form an integral part of the Balance Sheet. The Schedules referred to above form an integral part of the Profi t and Loss Account. Signatures to Balance Sheet and Signatures to Profi t & Loss Account and As per our Report attached Schedules 1 to 9 and 15 As per our Report attached Schedules 10 to 15 For and on behalf of For and on behalf of the Board For and on behalf of For and on behalf of the Board KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS ERMIN K. IRANI V. V. CHAUBAL N. B. GODREJ B. S. YADAV ERMIN K. IRANI V. V. CHAUBAL N. B. GODREJ B. S. YADAV Partner Company Secretary Chairman Managing Director Partner Company Secretary Chairman Managing Director Membership no. 35646 Membership no. 35646 Mumbai, May 17, 2010 Mumbai, May 17, 2010

95 Godrej Agrovet Limited

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010

THIS YEAR PREVIOUS YEAR THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 SCHEDULE 1 : SHARE CAPITAL SCHEDULE 3 : SECURED LOANS AUTHORISED 150,00,000 Equity Shares of Rs. 10 each 150,000 150,000 From Banks ISSUED, SUBSCRIBED AND PAID UP Term Loans 280,000 200,200 1,21,18,752 Equity Shares of Rs. 10/- each fully paid 121,188 121,188 Of the above shares (amount due within a year Rs. 280,000 thousand, (a) 91,12,956 Equity Shares of Rs. 10/- each fully Previous year Rs. 133,200 thousand) paid up are held by Godrej Industries Limited the Cash Credit/Working Capital Demand Loans 300,675 90,094 Holding Company. (b) 52,47,600 Equity Shares of Rs. 10/- each have been (Refer Note 4) issued as fully paid bonus shares by capitalising Securities Premium Account TOTAL 580,675 290,294 SCHEDULE 2 : RESERVES & SURPLUS SCHEDULE 4 : UNSECURED LOANS SECURITIES PREMIUM ACCOUNT As per last Balance Sheet 1,269,782 1,392,125 From Banks Less : Trade Marks adjusted as per court order — 122,343 Term Loans 400,000 2,036,165 1,269,782 1,269,782 (Amount due within a year Rs. Nil, Previous year Rs. CAPITAL INVESTMENT SUBSIDY 2,036,165 thousand) As per last Balance Sheet 8,102 5,602 Add : Received during the year — 2,500 Interest Accrued and due 263 — 8,102 8,102 TOTAL 400,263 2,036,165 GENERAL RESERVE As per last Balance Sheet 131,000 116,172 Add : Transferred from Profi t & Loss Account 21,707 14,828 152,707 131,000 PROFIT AND LOSS ACCOUNT 1,320,514 1,153,509 TOTAL 2,751,104 2,562,393

SCHEDULE 5 : FIXED ASSETS (Rs.’000) GROSS BLOCK DEPRECIATION NET BLOCK ASSETS As at Additions Deletions As at Upto For the Year Deductions/ Upto As at As at 1.4.2009 31.3.10 1.4.2009 Adjustments 31.3.10 31.3.10 31.3.2009 Tangible Assets Freehold Land 83,498 39,594 — 123,092 — — 123,092 83,498 Leasehold Land 2,287 18,889 — 21,176 570 233 — 803 20,373 1,717 Buildings 175,122 5,287 958 179,451 66,080 5,975 439 71,616 107,835 109,042 Plant & Machinery 676,887 60,663 27,119 710,431 281,875 46,574 24,236 304,213 406,218 395,012 Furniture & Fixtures 36,875 594 6,999 30,470 16,054 1,594 3,772 13,876 16,594 20,821 Leasehold Improvements 3,863 - 252 3,611 2,133 454 252 2,335 1,276 1,730 Offi ce & Other Equipments 39,454 5,683 8,375 36,762 14,767 2,400 3,709 13,458 23,304 24,687 Vehicles 53,265 5,121 12,400 45,986 19,739 4,925 7,520 17,144 28,842 33,526 Research Centre 3,707 20 1,821 1,906 2,298 125 1,161 1,262 644 1,409 Intangible Assets —— SAP Software — 27,232 — 27,232 — 1,104 1,104 26,128 — Technical Know-How Fees 20,000 — 20,000 19,999 19,999 1 1 TOTAL 1,094,958 163,083 57,924 1,200,117 423,515 63,384 41,089 445,810 754,307 671,443 Previous Year 1,876,695 79,734 861,471 1,094,958 619,743 72,185 268,413 423,515 76,054 41,523 Capital Work-In-Progress/Advances 830,361 712,966

THIS YEAR PREVIOUS YEAR THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 SCHEDULE 6 : INVESTMENTS SCHEDULE 6 : INVESTMENTS (Contd.) TRADE UNQUOTED (c) Creamline Dairy Products Limited IN SUBSIDIARY COMPANIES 26,71,993 Equity shares of Rs. 10/- each 103,800 103,800 (a) Golden Feed Products Limited (d) Polchem Hygiene Laboratories Private Limited 50,000 Equity Shares of Rs.10/- each 500 500 4,55,000 Equity shares of Rs. 10/- each 16,275 16,275 (b) Godrej Oil Palm Ltd. (e) Godrej Gold Coin Aquafeed Limited 56,400 Equity Shares of Rs. 10/- each 398,395 398,395 53,80,916 Equity shares of Rs. 10/- each 198,729 198,729 (c) Natures Basket Ltd. (f) Godrej IJM Palm Oil Limited Nil (Previous year 705,000) Equity Shares of — 70,500 Rs. 10 each(Sold during the year) 62,867 Equity shares of Rs. 10/- each 63,542 63,542 (d) Cauvery Palm Oil Ltd. (g) Aadhaar Retailing Limited 34,20,000 (Previous year 19,38,000) Equity 44,65,000 (Previous year 19,00,000) Equity shares shares of Rs. 10/- each, of Rs. 10/- each 209,950 81,700 (Acquired 14,82,000 shares during the year) 311,510 142,830 (Acquired 25,65,000 shares during the year) 710,405 612,225 (h) Godrej Tyson Foods Limited IN OTHER COMPANIES 85,880 (Previous year 80,409) Equity shares of 555,521 506,035 (a) ACI Godrej Agrovet Private Limited Rs. 10/- each 13,50,000 (Previous year 12,00,000) Equity share (Acquired 5,471 shares during the year) 1,238,669 1,050,845 of Tk. 100/- each 90,042 79,954 IN CO-OPERATIVE SOCIETY (Acquired 1,50,000 shares during the year) Sachin Industrial Co-operative Society Limited (b) Al Rahba International Trading Limited Liability Company 3 Shares of Rs. 500/- each 2 2 '45 Equity share of AED. 1500/- each 810 810 1,949,076 1,663,072

96 Annual Report 2009–2010

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010

THIS YEAR PREVIOUS YEAR THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 SCHEDULE 6 : INVESTMENTS (Contd.) SCHEDULE 8 : LIABILITIES NON TRADE QUOTED Acceptances 1,235,930 213,181 IN COMPANIES Investor Education and Protection Fund — — (a) Castrol India Limited Inter Corporate Deposits — 11,700 1,207 Equity Shares of Rs. 10/- each 316 316 Sundry Creditors (b) Colgate Palmolive (India) Limited Dues to Micro, Small and Medium enterprises (Refer 57 — 840 Equity Shares of Re. 1/- each 326 326 Note - 9) AGGREGATE COST OF QUOTED INVESTMENTS 642 642 Others 1,177,742 1,062,442 TOTAL 1,949,717 1,663,714 1,177,799 1,074,142 Advances from Customers 111,962 107,820 SCHEDULE 7 : CURRENT ASSETS, LOANS & ADVANCES Sundry Deposits 93,685 76,473 (A) INVENTORIES : TOTAL 2,619,376 1,471,616 Raw Materials including in Transit & Packing material 849,783 748,521 Finished Products 254,101 226,965 SCHEDULE 9 : PROVISIONS Poultry stock 170,398 205,576 Proposed Dividend 24,236 12,118 Stock under cultivation 16,989 7,192 Tax on Dividend 4,120 2,060 Stores and Spares 43,720 10,347 Gratuity 10,826 6,444 1,334,991 1,198,601 Leave Encashment 19,655 20,148 (B) SUNDRY DEBTORS : TOTAL 58,837 40,770 (Unsecured and considered good unless otherwise stated) SCHEDULE 10 : INCOME FROM OPERATIONS Debts outstanding for a period exceeding six months Sales 13,916,059 12,834,626 Considered Good 218,078 204,216 Less : Excise Duty recovered on Sales - - Considered Doubtful 35,597 59,970 Net Sales 13,916,059 12,834,626 253,675 264,186 Claims and Compensations 1,784 610 Other Debts 717,271 664,356 Financial Operations TOTAL 970,946 928,542 Dividend on Investments (Gross) 7,226 6,964 Less: Provision for doubtful debts 35,597 59,970 Interest (Gross) (Tax at Source Rs. 22,245 thousand; 935,349 868,572 Previous year Rs. 19,533 thousand) 152,526 93,270 [Debts amounting to Rs. 12,263 thousand (Previous year Rs. 12,263/- thousand) are secured by equitable 159,752 100,234 mortgage/ hypothecation of assets/ deposit of title TOTAL 14,077,595 12,935,470 deeds, Rs. 78,231/- thousand (Previous year Rs. 60,575/-thousand) against Security Deposits, Rs. SCHEDULE 11 : OTHER INCOME 189,362/- thousand (previous year Rs. 117,310/-) Profi t on sale of Investments - 235,376 against Bank Guarantees] Miscellaneous Income 53,042 36,042 (C) CASH AND BANK BALANCES : TOTAL 53,042 271,418 Cash and Cheques on hand 65,783 33,350 Balances with Scheduled Banks SCHEDULE 12 : MATERIALS i) In Current Accounts 20,475 236,586 a) RAW MATERIALS CONSUMED ii) In Fixed Deposit Accounts Opening stock 748,521 666,955 [(Rs. 40 thousand (Previous year Rs. 40 thousand) Add : Purchases during the year 10,915,477 10,117,700 pledged with government authorities)] 6,126 41,986 11,663,998 10,784,655 92,384 311,922 Less : Sales during the year 58,578 187,507 (D) OTHER CURRENT ASSETS : 55 60 (E) LOANS AND ADVANCES : 11,605,420 10,597,148 (Unsecured and considered good unless otherwise Less : Closing Stocks 849,783 748,521 stated) 10,755,637 9,848,627 Loans and Advances recoverable in cash or in kind b) PURCHASE FOR RESALE 664,522 706,766 or for value to be received (Refer Note - 8(b)) c) INVENTORY CHANGE Considered Good 1,213,990 1,456,629 Considered Doubtful 27,109 66,452 Opening Stock 1,241,099 1,523,081 Finished Goods 226,965 224,847 Less: Provision for doubtful advances 27,109 66,452 Stock under cultivation 7,192 10,983 1,213,990 1,456,629 Poultry Stock 205,576 191,753 (Of the above Rs. 156,684 (Previous year 439,733 427,583 Rs. 470,000) thousand is receivable on account of sale of business/investments) Less : Transferred on sale/demerger of business - 30,643 Share application money pending allotment 25,060 93,190 439,733 396,940 Inter Corporate Deposits 122,100 201,600 Less : Closing Stock Other Deposits Finished Goods 254,101 226,965 i) Government Authorities 397 419 Stock under cultivation 16,989 7,192 ii) Others 57,700 64,366 Poultry Stock 170,398 205,576 Advance payment of Taxes 441,488 439,733 (Net of provision for taxation Rs. 361,945 thousand; Previous year Rs. 302,042 thousand) 71,343 74,436 (1,755) (42,793) 1,490,590 1,890,640 11,418,404 10,512,600 TOTAL 3,853,369 4,269,796

97 Godrej Agrovet Limited

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010

THIS YEAR PREVIOUS YEAR SCHEDULE 15 : NOTES TO ACCOUNTS Rs.'000 Rs.'000 Rs.'000 1 SIGNIFICANT ACCOUNTING POLICIES: SCHEDULE 13 : EXPENSES a) The fi nancial statements are prepared under the historical cost convention and on the 1. Salaries, Wages, Bonus, Gratuity and Allowances 478,404 378,758 'going concern basis', with revenues recognised and expenses accounted on their accrual in accordance with the generally accepted accounting principles, and in compliance 2. Contribution to Provident Fund and Other Funds 27,002 20,078 with the applicable Accounting Standards and other requirements of the Companies and Administration Charges Act, 1956. 3. Employee Welfare Expenses 38,317 35,355 b) Fixed assets have been stated at cost and include incidental and/or installation 4. Processing charges 441,761 446,636 development expenses incurred in putting the asset to use and interest on borrowing 5. Consumable Stores 41,331 36,843 incurred during construction period. Pre-operative expenses for major projects are also capitalized, where appropriate. 6. Power and Fuel 165,748 164,528 c) Carrying amount of cash generating units/assets are reviewed at balance sheet date to 7. Rent 42,272 39,533 determine whether there is any indication of impairment. If such indication exists, the 8. Rates and Taxes 12,118 7,275 recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the 9. Repairs & Maintenance recoverable amount. Building 2,755 3,633 d) Depreciation/Amortisation has been provided for as under: Plant & Machinery 13,985 22,646 (a) The Company has grouped additions and disposals in appropriate time periods of Other assets 5,562 3,570 a month/quarter for the purpose of charging pro rata depreciation in respect of 22,302 29,849 additions and disposals of its assets keeping in view the materiality of the items involved. 10. Insurance 8,571 5,701 (b) 1) Depreciation is provided on the straight line method at the rates specifi ed 11. Postage, telephony and stationery 27,727 29,667 in schedule XIV to the Companies Act, 1956, except for computer hardware 12. Auditor's Remuneration 4,956 4,440 which is depreciated over its estimated useful life of four years. 13. Legal & Professional Fees 18,496 28,552 2) Amortizations 14. Freight, Coolie and Cartage 95,563 102,263 Asset type Period (i) Leasehold Land Primary lease period 15. Discount, Commission and Selling Expenses 635,678 524,249 (ii) Leasehold improvements and equipments Primary lease period or 16 years 16. Advertisement and Publicity 4,893 11,710 whichever is less (iii) Trees Development cost 15 years 17. Travelling Expenses 81,948 74,825 (iv) Nursery/Greenhouse building 10 years 18. Bad Debts/Advances written off 39,212 24,072 (v) Poultry Equipments/Signage 3 years 19. (Write Back)/Provision for Doubtful Debts and (43,412) 67,286 (vi) Technical Know-how of a capital nature 6 years Advances (vii) Computer software 6.17 years (viii) Moulds 2 years 20. Loss on Sale of Investments 20,500 — e) Grants/Subsidies : 21. Loss on Sale of Fixed Assets/Write off 14,077 1,747 (i) Investment Subsidy under the Central/State investment incentive scheme is 22. Research Expenses 5,976 1,065 credited to Capital Investment Subsidy Reserve and treated as part of the 23. General Expenses 80,603 75,531 shareholders' funds. 2,264,045 2,109,964 (ii) Grants/Subsidies related to specifi c fi xed assets are shown as a deduction from the gross value of the asset concerned in arriving at its book value. 24. Less: Shared Expenses recovered (15,600) (15,975) (iii) Grants/Subsidies related to revenue are presented as a credit to the profi t and TOTAL 2,248,445 2,093,989 loss statement or are deducted in reporting the related expense. f) Long-term investments are carried at cost. Provision for diminution, if any, in the SCHEDULE 14 : INTEREST AND FINANCIAL CHARGES value of each long-term investment is made to recognise a decline, other than of a (a) Interest paid on fi xed loans temporary nature. Current investments are stated at lower of cost and net realizable value. i) Banks 130,340 236,909 g) Raw materials/Stores & Spares and Poultry Stock are valued at weighted average cost. ii) Inter Corporate Deposits — 9,582 Finished goods and work-in-progress are valued at lower of cost and net realizable 130,340 246,491 value. These costs include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. h) Employee Benefi ts: (b) Interest paid on other loans i) Short-term employee benefi ts (payable wholly within twelve months of rendering i) Banks 597 3,915 the service): ii) Others 5,157 3,131 Short-term benefi ts such as salaries, wages, short-term compensation absences, 5,754 7,046 etc., are determined on an undiscounted basis and recognized in the period in (c) Other Financial Charges 14,988 6,131 which the employee renders the related service. TOTAL 151,082 259,668 ii) Post-employment benefi ts: Defi ned Contribution Plans: The Company's contributions paid/payable to provident Fund, Employees State Insurance Scheme, Employees Pension Schemes, 1995 and other funds, are determined under the relevant approved schemes and/or statutes and are recognized as expense in the Profi t and Loss Account during the period in which the employee renders the related service. There are no further obligations other than the contributions payable to the approved trusts/appropriate authorities. However, the rules of Company's Provident Fund Scheme, 1952, for the reason that the return on investment is less or for any other reason, then the defi ciency shall be made good by the Company. The Company's PF does not have any existing Defi cit or Interest shortfall. In view of the track record of the Company's PF Trust - its assets, return on investments and acumulated reserves - the Company does not anticipate any defi ciency in the foreseeable future. In any case making reasonable actuarial assumptions for determining and measuring any probable future obligations arising due to interest shortfall, would pose a formidable challenge. Defi ned Benefi t Plans: The Company's gratuity and leave encashment/long- term compensated absences schemes are defi ned benefi t plans. The Company's liability for the defi ned benefi t schemes is actuarially determined based on the projected unit credit method. The Company's net obligations in respect of such plans is calculated by estimating the amount of future benefi t that the employees

98 Annual Report 2009–2010

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010

have earned in return for their services and the current and prior periods that THIS YEAR PREVIOUS YEAR benefi t is discounted to determine its present value and the fair value of the Rs.'000 Rs.'000 plan asset is deducted. Actuarial gains and losses are recognized immediately in the Profi t and Loss Account. 3 CAPITAL COMMITMENTS: Terminal Benefits: All terminal benefits including voluntary retirement The estimated value of contracts remaining to be executed on 29,030 17,357 compensation are fully written off to the Profi t and Loss Account. Capital Account to the extent not provided for. 4 SECURED LOANS: i) Miscellaneous expenditure: a) Term Loans from Banks are secured by an equitable mortgage of specifi ed immovable i) Non-Compete fee is amortised over a period of fi ve years or the period of the properties and hypothecation of specifi ed movable assets of the Company. agreement (wherever applicable). b) Cash Credit and other facilities from banks are secured by hypothecation of stocks and ii) Front-end fee paid on loans raised from fi nancial institutions is amortized over book debts of the Company (both present and future). the period of the loan. c) During the year, the Company had raised Rs. 600,000 thousand (Previous year Rs. Nil) j) Revenue is recognized when goods are despatched to external customers. Sales are as Commercial Papers. Outstanding balance as at year end of such Commercial Papers inclusive of realized exchange fl uctuations on export receivables but net of returns, is Rs. Nil (Previous year Rs. Nil). sales tax, rebates, etc. 5 FIXED ASSETS: k) Revenue expenditure on Research and Development is charged to Profi t and Loss Account of the year in which it is incurred. Capital Expenditure incurred during the a) Legal formalities relating to the transfer of title of immovable assets situated at year on Research and Development is shown as an addition to Fixed Assets under the Chennai (acquired as a part of the takeover of Agrovet business from Godrej Industries head "Research Centre". Limited) and Hyderabad (as part of the merger of Godrej Plant Biotech Limited) are being complied with. Stamp duty payable thereon is not presently determinable. l) Interest and commitment charges incurred in connection with borrowing of funds, which are directly attributable to the acquisition, construction or production of an b) Pursuant to provisions of Section 78 of the Companies Act , 1956 and Article 8 of the asset that necessarily takes substantial period of time to get ready for its intended Articles of Association of the Company and based on the confi rmation of the Honourable use, upto the time the said asset is put to use are capitalized, as a part of the cost of High Court of Judicature at Bombay, an amount of Rs. 114,448 thousand standing in that asset. Other borrowing costs are recognized as an expense in the period in which the Securities Premium Account of the Company has been utilized for adjustment of they are incurred. amount standing in Trade Marks as of March 31, 2009. 6 INVESTMENTS IN JOINT VENTURES/ASSOCIATES: m) Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, The Company has equity investment of Rs. 90,042 thousand (Previous year Rs. 79,954 remaining unsettled at the year end, are translated at the year end exchange rates. thousand) in ACI Godrej Agrovet Private Limited and Rs. 810 thousand (Previous year Forward exchange contracts, remaining unsettled at the year end, backed by underlying Rs. 810 thousand) in Al Rahaba International Trading LLC. The Company’s investments in Joint assets or liabilities are also translated at year end exchange rates.The premium payable Ventures/Associates are carried at costs, which are higher than their respective book values. on foreign exchange contracts is amortized over the period of the contract. Exchange The diminution in the value of these investments is considered to be of a temporary nature, gains/losses are recognized in the Profi t and Loss Account. in view of the Company’s long-term fi nancial involvement in, and the future profi tability projected by the two companies. No provision for diminution in the value of investments is n) Deferred tax is recognised on timing differences, being the differences between therefore considered necessary in the accounts. Similarly, no provision for Debtors/Loans the taxable income and the accounting income that originate in one period and are and advance of Rs. 5,073 thousand (Previous year Rs. 4,558 thousands) in ACI Godrej Agrovet capable of reversal in one or more subsequent periods. Deferred tax assets, subject to Private Limited has been made.In view of dilution of Godrej Agrovet Limited's stake in Al consideration of prudence, are recognized and carried forward only to the extent that Rahba, from 70% to 33% in the previous years, and it no longer being GAVL's subsidiary it there is a reasonable certainty that suffi cient future taxable income will be available was considered necessary to provide for Debtors/Loans to the tune of Rs 19,700 thousand. against which such deferred tax assets can be realized. The tax effect is calculated on The same has been reprovided in the current year out of the total of Rs. 65,370 thousand the accumulated timing difference at the year end, based on the tax rates and laws (Previous year Rs. 37,605 thousand). enacted or substantially enacted on the balance sheet date. o) The basic earnings per share is computed using the weighted average number of 7 INFORMATION IN RESPECT OF JOINT VENTURES (JOINTLY CONTROLLED ENTITY): common shares outstanding during the period. Diluted earnings per share is computed Name Country of Incorporation Percentage Holding using the weighted average number of common and dilutive common equivalent shares THIS YEAR PREVIOUS YEAR outstanding during the period, except where the results would be anti-dilutive. Rs. in '000 Rs. in '000 p) Provisions are recognized in the accounts in respect of present probable obligations, (a) ACI Godrej Agrovet Private Limited Bangladesh 50% 50% the amount of which can be reliably estimated. Contingent liabilities are disclosed ACI Godrej Agrovet Private Limited has its operations in the fi elds of Animal Feed, in respect of possible obligations that arise from past events but their existence is Poultry businesses etc. confi rmed by the occurrence or non-occurrence of one or more uncertain future events Interest in Assets, Liabilities, Income and Expense with respect of jointly controlled not wholly within the control of the Company. entity THIS YEAR PREVIOUS YEAR Assets 119,015 193,407 Rs.'000 Rs.'000 Liablities 119,015 193,407 2 CONTINGENT LIABILITY: Income 768,555 466,613 In respect of: Expense 747,342 450,434 (a) Income Tax Matters 2,929 5,922 (b) Godrej Tyson Foods Limited India 49% 49% Demand raised by the Deputy Commissioner The company is in the Poultry Business of Income Tax after the completion of scrutiny assessment for the A.Y. 2007-2008. Interest in Assets, Liablities, Income and Expense with respect of jointly controlled (b) Sales Tax Matters 34,151 35,674 entity The Company has fi led Appeal with the Sales Tax Assets 575,082 579,594 tribunal in Tamilnadu for F.Y. 1993-94 to 1995-96, Liabilities 575,082 579,594 for classifying branch transfer as sales. [Against the Income 909,862 772,601 above the Company has paid advance of Rs. 800 Expense 950,988 852,483 thousand (Previous year Rs. 800 thousand)] (c) Godrej Gold Coin Aquafeed Limited India 49% 49% The Company has fi led an appeal in Bombay High Court against an order of the Director of Marketing, The Company is in the Aqua feed business. Pune in connection with Agricultural Produce Market Interest in Assets, Liablities, Income and Expense with respect of jointly controlled Committee (APMC) in respect of poultry business. entity (Against the above the Company has paid advance Assets 292,076 289,712 of Rs. 14,300 thousand (Previous year Rs. 14,300 Liabilities 292,076 289,712 thousand) Income 117,553 79,811 (c) Excise Matter 119,648 83,112 Expense 145,094 115,547 The Company has preferred an appeal with the Excise Dept in the matter of classifi cation of Agri (d) Godrej IJM Palm Oil Limited India 48.22% 48.22% Products and presently the case is pending with the The Company is in the Oil Palm business. Commissioner of Central Excise. Interest in Assets, Liabilities, Income and Expense with respect of jointly controlled (d) Guarantee issued to Banks on behalf of the Joint 448,706 125,839 entity venture/Associates companies. Assets 67,265 74,296 (e) Guarantees issued by the Banks and counter 55,187 61,927 Liabilities 67,265 74,296 guaranteed by the company (other than those Income 11,490 17,371 mentioned in (d) above) have been secured by Expense 16,751 20,722 deposit with bank. (f) Case/Claim fi led by Processors for claiming various 4,170 4,170 expenses

99 Godrej Agrovet Limited

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010

THIS YEAR PREVIOUS YEAR THIS YEAR PREVIOUS YEAR Rs. in '000 Rs. in '000 Unit Quantity Value Quantity Value 8 CURRENT ASSETS, LOANS AND ADVANCES: Rs. '000 Rs. '000 (a) Sundry Debtors include due from Companies 13 PURCHASES FOR RESALE: under the same management Animal Feeds MT 39 477 5,151 63,292 (i) Godrej Industries Limited - 317 Agri Inputs (ii) Godrej International Limited 70 70 Plant Growth Promoter (iii) Godrej Consumer Products Limited 378 - (iv) Polchem Hygiene Laboratories - 5 Spray KL 535 51,993 406 43,902 (v) Godrej Properties Limited 64 15 Granules MT 6,390 97,193 6,041 98,598 (b) Loans and Advances include due from Synthetic pesticides KL 2,536 418,483 1,535 231,550 Companies under the same management Retail Segment - - - - (i) Golden Feed Products Limited 11,906 9,376 Others 96,376 332,716 Maximum balance during the year 11,906 9,376 TOTAL 664,522 706,766 (ii) Krithika Agro Farm Chemicals - 4,197 and Engineering Industries Private Limited 14 RAW MATERIALS CONSUMED: Maximum balance during the year 4,197 4,197 Cakes & Brans MT 221,422 1,721,242 248,483 2,027,835 (iii) Al Rahaba International Trading 65,370 37,605 Extractions MT 268,286 4,437,535 400,129 4,404,741 Limited Liability Company Others 4,596,860 3,416,051 Maximum balance during the year 65,370 37,605 (iv) ACI Godrej Agrovet Limited 5,073 4,558 Maximum balance during the year 5,073 4,558 TOTAL 10,755,637 9,848,627 (v) Godrej Gold Coin Aquafeed Limited 95,751 90,672 Maximum balance during the year 95,751 90,672 15 DISCLOSURE IN RESPECT OF LEASES: (vi) Aadhaar Retailing Limited 156,684 535,681 The Company’s leasing arrangements are in respect of operating leases for premises occupied Maximum balance during the year 156,684 535,681 by the Company. These leasing arrangements are cancellable, and are renewable on a periodic (vii) Cauvery Palm Oil Limited 6,700 3,311 basis by mutual consent on mutually acceptable terms. Maximum balance during the year 6,700 3,311 (viii) Godrej Oil Plantations Limited - 13,195 a. The total of future minimum lease payments under cancellable operating leases for Maximum balance during the year 13,195 13,967 each of the following periods: (ix) Godrej Tyson Foods Limited - 15,698 THIS YEAR PREVIOUS Maximum balance during the year 15,698 15,698 YEAR (x) Natures Basket Limited 18,742 63,051 Rs. '000 Rs. '000 Maximum balance during the year 63,051 63,051 (xi) Godrej IJM Palm Oil Limited 917 - i. Not later than one year 4,550 8,604 Maximum balance during the year 12,676 - ii. Later than one year and not later than fi ve 10,658 16,273 years iii. Later than fi ve years 10,112 6,006 9 CURRENT LIABILITIES: Disclosure of sundry creditors under current liabilities is based on the information available b. Lease payments recognised in the statement with the Company regarding the status of the suppliers as defi ned under the "Micro,Small & of Profi t & Loss for the period : Medium Enterprises Development Act, 2006". Accordingly the amount overdue as on March Minimum lease payments 466 3,252 31, 2010 on account of principal amount together with interest, aggregate to Rs 70 thousand ( Previous year - Rs Nil.). The amount payable to Simple Package is Rs. 70 thousand. 16 LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION: Item For the year Capacity Per Annum Actual Third Party 10 DEFERRED TAX: Ended Registered Installed Production Production The tax effects of signifi cant temporary differences that resulted in deferred tax assets and liabilities a) Animal Feeds 31.3.2010 Not Applicable 350,000 MT 233,991 MT 494193 MT are : 31.3.2009 Not Applicable 359,974 MT 383,496 MT 442283 MT Million Plants Million Plants THIS YEAR PREVIOUS YEAR b) Tissue Culture Plants 31.3.2010 4.25 5 3 - Rs.'000 Rs.'000 31.3.2009 4.25 5 3 - Depreciation on Fixed Assets (130,769) (137,722) c) Agri Inputs Provision for Doubtful Debts 20,943 42,971 (i) Plant Growth Promoter Liquids 31.3.2010 500 KL 500 KL 500 KL 95 KL Others 7,822 (29,299) 31.3.2009 500 KL 500 KL 467 KL - (ii) Plant Growth Regulator Granules 31.3.2010 5000 MT 5000 MT 4063 MT - Deferred Tax Liability (102,004) (124,050) 31.3.2009 5000 MT 5000 MT 3384 MT THIS YEAR PREVIOUS YEAR Unit Quantity Value Quantity Value 17 (a) COMPUTATION OF PROFIT FOR THE PURPOSE OF MANAGERIAL REMUNERATION: Rs. '000 Rs. '000 THIS YEAR PREVIOUS YEAR Rs.'000 Rs.'000 11 SALES TURNOVER: Profi t after tax as per Profi t and Loss Account 217,068 583,732 Animal Feeds MT 727,790 11,110,947 726,724 9,739,745 Add : Depreciation as per accounts 63,384 72,185 Agro Inputs - 1,284,274 - 1,066,690 Add : Extraordinary expenses 0 33,462 Integrated Poultry Business - 1,363,809 - 1,733,834 Managerial Remuneration, including Directors sitting fees 13,048 9,250 Retail Segment -0 - 43,462 Provision for Doubtful Debts/Advances (43,412) 67,286 Parent Chicks - 46,221 - Provision for Tax (including Deferred tax) 32,254 56,723 Others - 110,808 - 250,894 (Loss)/Profi t on sale of Fixed Assets (net) 14,077 1,747 (Loss)/Profi t on sale of Investments 20,500 - TOTAL 13,916,059 12,834,625 99,851 240,653 Note: Sales Turnover includes sale of items processed by third parties, and items purchased by the Less : Depreciation as per Section 350 of the Company for resale. Companies Act, 1956 63,384 72,185 12 FINISHED GOODS INVENTORIES: Less : Profi t on transfer of business - 484,029 Animal Feeds MT 8,046 117,344 7,613 107,439 Less : Profi t on sale of Investments - 235,376 Agri Inputs 63,384 791,591 Synthetic pesticides KL 353 76,427 278 32,607 Net Profi t / (Loss) for the purpose of Directors' remuneration 253,535 32,794 Natural pesticides MT 5 653 94 19,114 5% thereof 12,677 1,640 Others 59,677 67,805 MAXIMUM REMUNERATION PERMISSIBLE UNDER THE ACT 12,677 4,200 TOTAL 254,101 226,965 (Computed on the basis of inadequacy of profi ts as per Schedule XIII- Part II)

100 Annual Report 2009–2010

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010

THIS YEAR PREVIOUS YEAR THIS YEAR PREVIOUS YEAR Rs.'000 Rs.'000 Rs '000 Rs '000 (b) MANAGERIAL REMUNERATION Change in plan assets a) Salaries 12,320 8,760 Fair value of plan assets as at 1st April 2009 27,760 28,539 b) Contribution to Provident Fund 527 412 Expected return on plan assets 2,220 2,283 c) Estimated monetary value of perquisites 110 3 Contributions 6,450 7,000 12,957 9,175 Benefi ts paid (9,824) (8,424) d) Directors' Sitting Fees 91 75 Actuarial gain/(loss) on plan assets 2,718 (1,639) 13,048 9,250 Fair value of plan assets as at 31st March 2010 29,324 27,760 Amount recognised in the Balance Sheet 18 COMMON EXPENSES SHARED BY THE COMPANIES : Present value of obligation, as at 1st April 2009 40,405 34,203 Expenses (Schedule 13) include Rs. 25,180 thousand (Previous year Rs. 21,344 thousand) Fair value of plan assets as at 31st March 2010 29,324 27,759 charged by Godrej Industries Limited, the Holding Company. Net obligation as at 31st March 2010 11,081 6,444 Net gratuity cost for the year ended 31st March 2010 19 AUDITORS' REMUNERATION: Current Service Cost 2,475 3,704 Audit fees 2,698 2,565 Interest Cost 2,736 2,973 Audit under Other Statutes 852 806 Expected return on plan assets (2,221) (2,283) Tax representation before Authorities 896 713 Net Actuarial (gain)/loss to be recognised 8,097 422 Management Consultancy 55 88 Net gratuity cost 11,087 4,816 Certifi cation 278 15 Assumptions used in accounting for the gratuity plan Reimbursement of Expenses 177 112 % % TOTAL 4,956 4,300 Discount Rate 8 8 Salary escalation rate 5 4 20 VALUE OF IMPORTS ON CIF BASIS: Expected rate of return on plan assets 8 8 (INCLUDES DIRECT IMPORTS ONLY) The estimates of future salary increases, considered in actuarial valuation, take into account Raw Materials 295,178 326,518 infl ation, seniority, promotion and other relevant factors, such as supply and demand in the Spares 18,832 4,804 employment market. Capital Goods - 940 The expected return on plan assets is determined considering several applicable factors 314,010 332,262 mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets. 21 EXPENDITURE IN FOREIGN CURRENCY: Travelling Expenses 742 5,928 25 Research & Development Expenditure of revenue nature charged to the Profi t and Loss Account Others 806 1,679 amounts to Rs.21,222 thousand (previous year Rs.12,999 thousand). 1,548 7,607 26 The amount of exchange difference included in the Profi t and Loss Account, under the related heads of expenses /(income), is Rs. 11328 thousand (Previous year expense Rs.366 thousand). 22 EARNINGS IN FOREIGN EXCHANGE: The amount of exchange difference in respect of forward exchange contracts to be recognised F.O.B value of goods exported 7,320 15,173 in the profi t and loss account of subsequent accounting periods Rs. 450 thousand (Previous Others - - Year Rs. Nil thousand). 7,320 15,173 27 The Company has provided loan to Godrej Industries Limited Employee Stock Option Scheme (GIL ESOP), which is administered by an independent ESOP Trust which purchases shares of 23 VALUE OF CONSUMPTION OF RAW MATERIALS, SPARES & TOOLS: GIL from the market equivalent to the number of stock options granted from time to time to (INCLUDING CAPITALIZED ITEMS ) eligible employees. The repayment of the loans granted to the ESOP trust is dependent on the THIS YEAR PREVIOUS YEAR exercise of the options by the employees and the market price of the underlying shares of Rs.'000 % Rs.'000 % the unexercised options at the end of the exercise period. The fall in value of the underlying RAW MATERIALS : equity shares is on account of current market volatility and the loss, if any, can be determined Imported items (including duty content) 300,442 3% 129,865 1% only at the end of the exercise period. In view of the aforesaid, provision for diminution of Indigenous 10,455,195 97% 9,718,762 99% Rs. 325,404 thousand is not considered necessary in the fi nancial statements. TOTAL 10,755,637 100 9,848,627 100 SPARES & TOOLS : 28 EARNINGS PER SHARE: THIS YEAR PREVIOUS YEAR Imported items 2,283 0 – – Rs.'000 Rs.'000 Indigenous 941 100 36,843 100 Profi t / (Loss) after tax before extraordinary income 217,068 133,165 TOTAL 41,331 100 36,843 100 Profi t/ (Loss) after tax and extraordinary income 217,068 583,732 Weighted average number of equity shares outstanding 12,118,752 12,118,752 24 EMPLOYEE BENEFITS: EPS before extraordinary items I. Defi ned Contribution Plans: THIS YEAR PREVIOUS YEAR Basic earnings per share (Rs.) 17.91 10.99 Rs '000 Rs '000 Diluted earnings per share(Rs.) 17.91 10.99 Contribution to Defi ned Contribution Plan, recognised as EPS after extraordinary items expense for the year are as under: Basic earnings per share (Rs.) 17.91 48.17 Employers' Contribution to Provident Fund 19,503 9,827 Diluted earnings per share(Rs.) 17.91 48.17 II. Defi ned Benefi t Plans: Nominal value of shares (Rs.) 10.00 10.00 Contribution to Gratuity Fund The Company makes annual contributions to the Employees' Group Gratuity-cum-Life Assurance Scheme of ICICI Prudential Ltd, a funded defi ned benefi t plan for qualifying employees. Gratuity is payable to all eligible employees on superannuation, death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company's policy whichever is benefi cial to the employees. The following table sets out the funded status of the gratuity plan and the amounts recognised in the Company's fi nancial statements as at 31 March 2010 THIS YEAR PREVIOUS YEAR Rs '000 Rs '000 Change in present value of obligation Present value of obligation as at 1st April 2009 34,203 37,167 Interest Cost 2,736 2,973 Service Cost 2,475 3,704 Benefi ts Paid (9,824) (8,424) Actuarial (gain)/loss on obligation 10,815 (1,218) Present value of obligation, as at 31st March 2010 40,405 34,203

101 Godrej Agrovet Limited

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010

29. SEGMENT INFORMATION (i) Information about Primary business Segments For the year ended 31st March 2010 Rs.'000 For the year ended 31st March 2009 Rs.'000 Animal Agri Integrated Other Unallocated Total Animal Agri Nature's Integrated Other Unallocated Total Revenue Feeds Poultry Business Revenue Feeds Basket Poultry Business Business Retail Business (A) (B) (C) (D) (E) (A+B+C+D+E+F) (A) (B) (C) (D) (E) (F) (A+B+C+D+E+F) Total Sales 11,462,048 1,292,906 1,410,030 67,222 14,232,206 Total Sales 9,995,075 1,082,950 43,462 1,733,834 234,635 13,089,956 Less : Inter-segment (158,553) - (157,594) - (316,147) Less : Inter-segment -255331 - - (255,331) External Sales 9,739,745 1,082,950 43,462 1,733,834 234,635 - 12,834,626 External Sales 11,303,495 1,292,906 1,252,437 67,222 - 13,916,059 Result Result Segment Result 300,245 156,870 (21,910) 7,044 5,747 447,996 Segment Result 393,671 191,791 26,137 7,715 611,180 Unallocated expenditure net of (255,492) (255,492) Unallocated expenditure net of (378,661) (370,528) unallocated income unallocated income Interest expenses (259,668) (259,668) Interest expenses (151,082) (151,082) Interest Income 93,270 93,270 Interest Income 152,526 152,526 Dividend Income and Profi t on sale 242,340 242,340 Dividend Income and Profi t on 7,226 7,226 of Investments sale of Investments Profi t before taxation and 300,245 156,870 (21,910) 7,044 5,747 (179,551) 268,446 Profi t before taxation and 393,671 191,791 26,137 7,715 (369,991) 249,322 exceptional items exceptional items Provision for taxation 135,281 135,281 Provision for taxation 32,254 32,254 Profi t after taxation and before 300,245 156,870 (21,910) 7,044 5,747 (314,832) 133,165 Profi t after taxation and before 393,671 191,791 26,137 7,715 (402,245) 217,068 exceptional items exceptional items Exceptional Items 450,567 450,567 Profi t after taxation and 393,671 191,791 26,137 7,715 (402,245) 217,068 Exceptional item (net of Tax) 450,567 450,567 exceptional items Prior years adjustments - Other Information Profi t after taxation and 300,245 156,870 (21,910) 7,044 5,747 135,736 583,732 Segment assets 1,813,979 718,509 406,672 223,743 3,470,543 6,633,448 exceptional items Segment liabilities 2,048,229 89,198 61,148 13,990 1,534,413 3,746,977 Other Information Capital expenditure 120,611 1,579 6,173 - 34,721 163,084 Segment assets 1,650,011 599,008 - 479,197 235,457 3,682,803 6,646,476 Depreciation 35,043 1,957 8,399 14,295 3,689 63,384 Segment liabilities 963,693 72,036 - 69,177 11,545 2,846,450 3,962,901 Capital expenditure 42,638 1,353 6,317 11,180 282 17,963 79,734 (ii) Information about Secondary business Segments Depreciation 27,334 2,215 3,567 13,508 14,544 11,016 72,185 THIS YEAR Rs.'000 (ii) Information about Secondary business Segments Revenue by geographical India Outside Total segment India PREVIOUS YEAR Rs.'000 Total Sales 14,223,574 8,632 14,232,206 Revenue by geographical India Outside Total segment India Less : Inter-segment (316,147) - (316,147) Total Sales 13,073,696 16,260 13,089,956 External Sales 13,907,428 8,632 13,916,059 Less : Inter-segment (255,331) - (255,331) External Sales 12,818,365 16,260 12,834,626 Carrying amount of segment 6,646,476 - 6,646,476 assets Additions to fi xed assets 79,734 - 79,734 30 RELATED PARTY DISCLOSURES: 2. The following transactions were carried out with the related parties in the ordinary course of business : Related party disclosures as required by AS - 18, "Related Party Disclosures", are given below (i) Details relating to parties referred to in items 1(i), (ii), (iii), (iv),(v) and (vi) above 1. Relationships : Rs.'000 (i) Holding Companies: Nature of Transactions Holding Subsidiaries Fellow Joint Associates Other Companies Subsidiaries Ventures related Godrej Industries Ltd. (GIL) holds 75.19% (Previous year 75.19%)in the Company. Parties GIL is the subsidiary of Godrej & Boyce Mfg. Co. Ltd., the ultimate Holding (i) (ii) (iii) (iv) (v) (vi) Company. 1 Purchase / Transfer of fi xed assets 843 252 633 (ii) Subsidiary Companies: 2 Sale of Business / Investments - 50,000 70,000 464,832 30,100 Golden Feed Products Ltd. 3 Investment in share capital 168,681 73,943 Cauvery Palm Oil Ltd. 500 93,462 19,825 4 Advances given during the year 27,764 Godrej Oil Palm Ltd. Natures Basket Ltd. (upto June 30, 2009) 5 Intercorporate deposits placed during - the year (iii) Fellow Subsidaries: 230,000 86,600 580,000 53,932 40,000 6 Intercorporate deposits taken during Godrej Consumer Products Ltd. the year Godrej Infotech Ltd. 45,500 7 Loan Given Natures Basket Ltd. (from July 1, 2009) 125,000 Godrej International Ltd. 8 Sale of materials / fi nished goods - 1,241,709 12,916 Godrej Properties Ltd. 24,222 1,264,135 38,959 9 Sundry deposits placed 6,811 Ensemble Holdings & Finance Ltd. 3,154 10 Purchase of materials / fi nished goods 4,875 10,865 19,829 121,872 (iv) Joint Ventures: 369 8,636 1,008 12,086 53,547 124,656 ACI Godrej Agrovet Private Ltd. 11 Expenses charged to other companies 318 55,418 7,617 92,577 25 11 1,856 55,892 282 21,504 17,599 26 Godrej Tyson Foods Ltd. 12 Expenses charged by other companies 22,692 8,135 8,243 18,854 Godrej Gold Coin Aquafeed Ltd. 21,627 (636) 7,373 (3,056) 232 Godrej IJM Palm Oil Ltd. 13 Interest income on loan given 9,252 1,955 (v) Associates: 14 Interest expense on intercorporate deposits taken Creamline Dairy Products Ltd. 1,722 15 Interest income on intercorporate 3,140 2,016 Polchem Hygiene Laboratories Private Ltd. deposits placed Al Rahaba International Trading LLC 5,022 3,888 2,057 16 Intercorporate deposits written off (vi) Other related parties where persons mentioned in (viii) below exercise 17 Dividend Income 7,226 signifi cant infl uence: 6,680 - 18 Dividend paid 9,113 Avesthagen Ltd. 9,113 19 Outstanding Loans Receivable 71,575 Krithika Agro Farm Chemicals and Engineering Industries Private Ltd. 20 Outstanding receivables, net of (541) 15,906 19,255 169,607 4,355 (3,246) (payables) (vii) Key management personnel: (1,360) 115,245 343 146,498 49,796 33,213 21 Guarantees issued in favour of 19,200 Mr. B.S.Yadav 19,200 Dr. S.L. Anaokar 22 Gurantees Outstanding 125,843 129,039 (viii) Individuals exercising control or signifi cant infl uence (and their relatives): (ii) Details relating to persons referred to in items 1 (vii) & (viii) above Mr. A.B. Godrej THIS YEAR PREVIOUS Mr. N.B. Godrej YEAR 1 Remuneration 12,957 9,175 2 Dividend Paid 586 586 3 Director's Sitting Fees 15 20

102 Annual Report 2009–2010

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010

3. Signifi cant Related Party Transactions

Nature of Transactions Holding Amount Subsidiaries Amount Fellow Amount Joint Ventures Amount Associate Amount Other related Amount Companies Subsidiaries Companies Parties (i) (ii) (iii) (iv) (v) (vi) 1 Issue of share capital (incl. Godrej Industries Premium) Ltd. 2 Sale of Investments Godrej Industries Natures Basket Natures 50,000 Bahar Ltd. Ltd. Basket Ltd. Agrochem & Feeds Private Ltd. - 70,000 30,100 Investment in Share Capital Cauvery Palm 168,681 Godrej Tyson 49,485 Bahar Oil Ltd. Foods Ltd. Agrochem & Feeds Private Ltd. Natures Basket 40,832 19,825 Ltd. 500 ACI Godrej 24,458 Agrovet Pvt. Ltd. 34,990 Godrej Gold Coin Aquafeed Ltd. 17,640 Loan Given Al Rahba 27,764 International Trading LLC Godrej Gold Coin Aquafeed Ltd. 125,000 Sale of Business Godrej Tyson Foods Ltd. 464,832 1 Purchase/Transfer of fi xed Godrej & Boyce 843 Godrej IJM Palm 27 assets Mfg. Co. Ltd. Oil Ltd. 633 Godrej Tyson 226 Foods Ltd. 2 Intercorporate deposits Godrej Industries Ensemble Godrej Tyson taken during the year Ltd. Holdings & Foods Ltd. Finance Ltd. 230,000 45,500 2 Intercorporate deposits Cauvery Palm Godrej — Godrej Tyson Aadhar Retailing placed during the year Oil Ltd. Hershey Ltd. Foods Ltd. Ltd. 25,500 200,000 53,932 40,000 Natures Basket Godrej Hi Ltd. Care Ltd. 61,600 30,000 Godrej Properties Ltd. 350,000 2 Sale of materials/fi nished Godrej Industries Godrej Oil Godrej Gold Coin 230 Aadhaar goods/debtors Ltd. Palm Ltd. Aqua Feed Ltd. Retailing Ltd. 24,222 6,856 36,454 Golden Feed — Godrej IJM Palm 150 Creamline Dairy 7,984 Products Ltd. Oil Ltd. Products Ltd. 2,505 Godrej Tyson 1,240,831 Polchem 4,933 Foods Ltd. Hygiene Laboratories Pvt. Ltd. 1,257,279 — ACI Godrej 498 Agrovet Pvt. Ltd. 3 Sundry Deposits Placed Godrej & Boyce 3 Mfg. Co. Ltd. 2,100 Godrej Industries 6,808 Ltd. 1,054 4 Interest Income on Godrej Oil 2,709 Godrej — Godrej Tyson Aadhaar Intercorporate Deposits Palm Ltd. Hershey Ltd. Foods Ltd. Retailing Ltd. 2,082 2,057 Cauvery Palm 431 Godrej Hi Oil Ltd. Care Ltd. 2,555 842 Natures Basket Godrej Ltd. Properties Ltd. 2,467 964 Natures 2,016 Basket Ltd. 5 Purchase of materials/ Godrej & Boyce Godrej Oil 4,462 Godrej Godrej Gold Coin 334 Polchem 19,829 Bahar 121,872 fi nished goods Mfg. Co. Ltd. Palm Limited Consumer Aquafeed Limited Hygiene Agrochem & Products Ltd. Laboratories Feeds Pvt. Ltd. Pvt. Ltd. 369 8,378 898 42 52,723 124,656

103 Godrej Agrovet Limited

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010

3. Signifi cant Related Party Transactions (Contd.)

Nature of Transactions Holding Amount Subsidiaries Amount Fellow Amount Joint Ventures Amount Associate Amount Other related Amount Companies Subsidiaries Companies Parties (i) (ii) (iii) (iv) (v) (vi) Cauvery Palm Godrej Godrej Tyson 10,531 Aadhaar Oil Ltd. Hershey Ltd. Foods Ltd. Retailing Ltd. 258 15 7,776 823 Golden Feed 413 Godrej IJM Palm Products Ltd. Oil Ltd. 4,268 6 Expenses charged to other Golden Feed — Godrej — Godrej Gold Coin 11,080 Aadhaar Bahar 11 companies Products Ltd. Hershey Ltd Aquafeed Ltd. Retailing Ltd. Agrochem & Feeds Pvt. Ltd. 107 28 6,371 17,599 Godrej Oil 52,459 Godrej 2,992 Godrej IJM Palm 8,265 Creamline Dairy 25 Kritika Agro Palm Ltd. Consumer Oil Ltd. Products Ltd. Farm Chemical Products Ltd. & Engineering Industries Pvt. Ltd. 52,475 16 13,267 26 Cauvery Palm 2,959 Godrej Tyson 72,686 1,283 Oil Ltd. Foods Ltd. 3,311 1,606 Godrej Industries 318 Godrej Hi — ACI Godrej 545 Ltd. Care Ltd. Agrovet Pvt. Ltd. 1,856 229 230 AL Rahba International Trading LLC Godrej 49 31 Properties Ltd. 8 Godrej Sara — Lee Ltd. Natures 4,576 Basket Ltd. 7 Expenses charged by other Godrej Industries 18,372 Godrej Oil 8,135 Godrej 2,826 Godrej Gold Coin 16,369 Aadhaar companies Ltd. Palm Ltd. Consumer Aquafeed Ltd. Retailing Ltd. Products Ltd. 21,344 (636) 643 924 232 Natures 900 Godrej IJM Palm 177 Basket Ltd. Oil Ltd. Godrej & Boyce 4,319 Godrej Hi — (3,980) Mfg. Co. Ltd. Care Ltd. 94 283 Godrej 4,517 Godrej Tyson 2,309 Infotech Ltd. Foods Ltd. 6,730 8 Interest income on loan — Godrej Gold Coin 9,252 given Aquafeed Ltd. 1,955 9 Interest expense on Godrej Industries Ensemble intercorporate deposits Ltd. Holdings & taken Finance Ltd. 1,722 10 Dividend paid Godrej Industries 9,113 Ensemble Ltd. Holdings & Finance Ltd. 9,113 8 Dividend Income Creamline Dairy 6,680 Products Ltd. 6,680 Polchem 546 Hygiene Laboratories Pvt. Ltd. Outstanding Loans Godrej Gold Coin 72,100 Receivable Aquafeed Ltd. Godrej Tyson (525) Foods Ltd. 11 Outstanding intercorporate — deposits receivable 9 Outstanding receivables, net Godrej Industries (323) Golden Feed 11,906 Godrej Hi - Godrej Gold Coin 95,891 Creamline Dairy 4,068 Bahar (3,246) of (payables) Ltd. Products Ltd. Care Ltd. Aquafeed Ltd. Products Ltd. Agrochem & Feeds Pvt. Ltd. (1,360) 9,376 81,869 1,738 29,017 Godrej Oil (769) Godrej IJM Palm 949 Kritika Agro PalmLtd. Oil Ltd. Farm Chemical & Engineering Industries Pvt. Ltd. Godrej & Boyce (219) 14,008 Godrej 64 (13,132) Aadhaar 4,197 Mfg. Co. Ltd. Properties Retailing Ltd. Ltd.

104 Annual Report 2009–2010

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010

3. Signifi cant Related Party Transactions (contd.) :

Nature of Transactions Holding Amount Subsidiaries Amount Fellow Amount Joint Ventures Amount Associate Amount Other related Amount Companies Subsidiaries Companies Parties (i) (ii) (iii) (iv) (v) (vi) (1) Cauvery Palm 4,769 15 51,754 Oil Ltd. 28,811 Godrej Tyson 2,324 Polchem 287 Foods Ltd. Hygiene Laboratories Pvt. Ltd. Natures — Godrej Sara — 35,597 (3,695) Basket Ltd. Lee Ltd 63,051 5 ACI Godrej 5,073 Agrovet Pvt. Ltd. 4,558 Godrej 378 AL Rahba 65,370 Consumer International Products Ltd. Trading LLC 16 37,605 Godrej — Hershey Ltd. 65 Godrej 70 International Ltd. Guraantees Issued Natures 18,742 ACI Godrej 19,200 Basket Ltd. Agrovet Pvt. Ltd. 19,200 Guarantees outstanding Godrej IJM Palm 3 Oil Ltd. 3 ACI Godrej 66,257 Agrovet Ltd. 66,257 AL Rahba 59,582 International 59,582

105 Godrej Agrovet Limited

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010

31. Figures of the previous year have been regrouped & re-classifi ed wherever necessary to STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES conform to the current year's classifi cation. ACT, 1956. 32. INFORMATION REQUIRED TO BE FURNISHED UNDER PART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956: 1. Name of the Subsidiary Golden Feed Cauvery Palm Godrej Oil i) Registration Details Products Oil Limited Palm Limited Registration No. 16655 Limited State Code 11 Balance Sheet Date 31/3/2010 2. Date on which it became a Subsidiary July 14, 2003 March 1, 2008 August 18, 2006 ii) Capital raised during the year (Rupees ’000) 3. Financial Year ending March 31, 2010 March 31, 2010 March 31, 2010 Public Issue Nil 4. The Company's interest in the Subsidiary Rights Issue Nil as on 31.3.2010 Bonus Issue Nil Private Placement Nil

iii) Position of mobilisation and deployment of funds a) Number of fully paid Equity Shares held 50,000 34,20,000 56,400 b) Face Value Rs. 10 Rs. 10 Rs. 10 (Rupees ’000) Total Liabilities 6,633,447 c) Extent of holding 100% 90% 80% Total Assets 6,633,447 (Rs.’000) (Rs.’000) (Rs.’000) Sources of Funds 5. Net aggregate Profit/(Loss) of the Subsidiary Paid-up Capital 121,188 Company so far as it concerns the members of Reserves & Surplus 2,751,104 the Company :- Secured Loans 580,675 A) For the Financial Year ended on March 31, 2010 : Unsecured Loans 400,263 Application of Funds i) Not dealt with in the Books of Account of - - - Net Fixed Assets 830,361 the Company Investments 1,949,717 ii) Dealt with in the Books of Account of the - - - Net Current Assets 1,175,156 Company Misc. Expenditure - Accumulated Losses Nil B) For the subsidiary company's previous Financial Years since it became a Subsidiary iv) Performance of Company (Rupees ’000) i) Not dealt with in the Books of Account of - - - Turnover 14,130,637 the Company Total Expenditure 13,881,315 Profi t before tax before extraordinary income 249,322 ii) Dealt with in the Books of Account of the - - - Profi t before tax after extraordinary income 249,322 Company Profi t after tax 217,068 For and on behalf of the Board Earning Per Share before extraordinary 17.91 Earning Per Share after extraordinary 17.91 Dividend rate 20.00% V. V. CHAUBAL N. B. GODREJ B. S. YADAV v) Generic Names of three principal Company Secretary Chairman Managing Director products/services of Company Item Code No. 23099010 Mumbai, May 17, 2010 Product Description Animal Feeds

106 Annual Report 2009–2010

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010

THIS YEAR PREVIOUS THIS YEAR PREVIOUS YEAR YEAR Rs. (’000) Rs. (’000) Rs. (’000) Rs. (’000) Rs. (’000) Rs. (’000) Rs. (’000) Rs. (’000) C. Cash Flow from Financing Activities : A. Cash Flow from Operating Activities : other fi nancial charges - (6,131) Net Profi t Before Taxes(after extraordinary 249,322 718,733 Repayment of Borrowings (2,326,460) (258,200) income) Proceeds from Secured Borrowings 580,675 - Adjustment for: Proceeds from Unsecured Borrowings 400,263 372,093 Depreciation 63,384 72,185 Interest Paid (151,082) (253,538) Loss on sale of fi xed assets 14,077 1,747 Dividend Paid (12,118) (12,118) Extraordinary Income: Dividend Tax Paid (2,060) (2,060) Profi t on transfer of business — (484,029) Net Cash used in Financing Activities (159,952) Profi t on Demerger (1,510,781) — (484,029) Net increase in Cash and Cash equivalents (219,539) 12,757 Exchange difference 450 (152) Cash and Cash equivalents (Opening 311,922 299,165 Dividend income (7,226) (6,964) balance) Finance charges — 6,131 Cash and Cash equivalents (Closing 92,384 311,922 balance) Interest income (152,526) (93,270) Interest expenses 151,082 253,538 NOTES: Provision for Doubtful Debts and Advances (43,412) 67,286 Loss on sales on investments 20,500 (235,376) 1 The Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Bad Debts Written off 39,212 — Accounting Standard (AS) 3 on “Cash Flow Statements”, and presents cash fl ows by operating, 85,542 (418,905) investing and fi nancing activities. Operating Profi t Before Working Capital 334,864 299,828 Changes 2 Figures in brackets are outfl ows/deductions. Adjustments for: 3 Proceeds from transfer of business/demerger is for a total consideration of Rs. Nil (Previous year Inventories (136,389) (97,382) Rs. 1,410,610 thousands) for the three business. Out of the total consideration Rs. Nil (Previous year Rs. 374,424 thousands) has been received in cash and the balance by way of allotment of Debtors and Other Receivables 257,978 (120,038) equity shares in demerged/transfer of business companies. Creditors and Other Payables 1,128,742 (463,541) 1,250,331 (680,962) 4 Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s classifi cation.

Cash Generated from Operations 1,585,194 (381,134) Direct Taxes paid (net of refund received) (31,845) (134,800) For and on behalf of For and on behalf of the Board Net Cash Flow from Operating 1,553,349 (515,934) KALYANIWALLA & MISTRY Activities CHARTERED ACCOUNTANTS B. Cash Flow from Investing Activities : ERMIN K. IRANI V. V. CHAUBAL N. B. GODREJ B. S. YADAV Capital subsidy received — 2,500 Partner Company Secretary Chairman Managing Director Acquisition of fi xed assets (197,614) (95,850) Membership no. 35646 Proceeds from sale of fi xed assets 2,759 6,408 Mumbai, May 17, 2010 Intercorporate Deposits Given 79,500 (85,900) Purchase of Investments (356,503) (138,721) Proceeds from sale of investments in 50,000 subsidiaries Proceeds from sale of investments in ARL — 30,100 Interest Received 152,526 73,737 Dividend Received 7,226 6,964 Net Cash used in Investing Activities before (262,107) (200,762) extraordinary item Proceeds from Extraordinary Items; Proceeds from transfer of business/ demerger (Note 3) — 889,405 Net Cash used in Investing Activities after (262,107) 688,643 extraordinary item

107 Golden Feed Products Limited

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010 To The Shareholders STATUTORY INFORMATION Your Directors have pleasure in submitting their Report along with the audited Accounts for the A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and fi nancial year ended on March 31, 2010. outgo FINANCIAL RESULTS The information in respect of these matters, required under Section 217 (1)(e) of the Your Company’s performance during the year as compared with that during the previous year is Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of summarized below: the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report. (Rs. Lac) B) Particulars of Employees This Year Previous Year None of the employees is covered under the provisions of Section 217 (2A) of the Companies Total Income - - Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002. Loss before Taxation 1.61 (2.22) C) Directors’ Responsibility Statement Add: Provision for Taxation - - Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Loss after Taxation 1.61 (2.22) Directors of your Company confi rm: Balance Brought Forward from previous year (160.90) (158.68) a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same; Balance Carried Forward to Balance Sheet (159.29) (160.90) b) that they have selected such Accounting Policies and applied them consistently and REVIEW OF OPERATIONS made judgments and estimates that are reasonable and prudent so as to give a true In the current year, your Company initiated trading activities. and fair view of the state of affairs of the Company at the end of the fi nancial year DIVIDEND and of the profi t or loss of the Company for that period; Your Directors do not recommend any dividend for the year 2009-10. c) that they have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the FIXED DEPOSITS assets of the Company for preventing and detecting fraud and other irregularities; Your Company has not accepted any public deposits during the fi nancial year under review. d) that they have prepared the annual accounts on a going concern basis. HOLDING COMPANY HUMAN RESOURCES Your Company continues to be a subsidiary of Godrej Agrovet Limited as defi ned under Section There are no employees in the Company. 4(1)(b) of the Companies Act, 1956. SUBSIDIARY COMPANIES For and on behalf of the Board The Company has no subsidiary companies during the year under review. B. S. Yadav P. N. Narkhede DIRECTORS Director Director The Board of Directors of the Company presently comprises of the following Directors: Mumbai, May 14, 2010 1. Mr. B. S. Yadav 2. Dr. P. N. Narkhede 3. Dr. S. L. Anaokar During the year under review (i.e., from April 1, 2009 upto March 31, 2010), there have been no changes in the directorship of the Company. Dr. S. S. Sindhu has resigned from directorship of the ANNEXURE ‘A’ Company w.e.f. May 14, 2010. ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT Dr. P. N. Narkhede retires by rotation at the ensuing Annual General Meeting of the Company INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH in accordance with Section 256 of the Companies Act, 1956 and Article 15 of the Articles of THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) Association of the Company and being eligible offers himself for reappointment. RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN AUDITORS EXCHANGE EARNINGS & OUTGO : You are requested to appoint Auditors for the current year and fi x their remuneration. The A. Conservation of Energy retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai, are eligible for The Company has not established any manufacturing facility this year. re-appointment and a certifi cate as required u/s 224 (1 B) of the Companies Act, 1956, has been B. Technology absorption, adaptation and innovation received from them. Not Applicable since the Company does not have any manufacturing facility at present. QUALIFICATIONS BY AUDITORS C. Foreign Exchange earnings and outgo The auditors of the Company have qualifi ed in the Auditors' Report that the accumulated losses as at March 31, 2010 exceed its paid up capital, resulting in the erosion of its net worth. Your Your Company had no foreign exchange earning as well as outgo. Company still remains a “Going Concern” as the fi nance will continue to be available to the Company for its working capital requirements from its holding company Godrej Agrovet Limited. ADDITIONAL INFORMATION For and on behalf of the Board The additional information required to be given under the Companies Act, 1956, has been laid B. S. Yadav P. N. Narkhede out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts Director Director referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further Mumbai, May 14, 2010 explanation.

108 Annual Report 2009–2010

REPORT OF THE AUDITORS TO THE MEMBERS OF GOLDEN FEED PRODUCTS LIMITED

1. We have audited the attached Balance Sheet of Golden Feed Products Limited, as at e) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow 31st March 2010 and also the Profi t and Loss Account and the Cash Flow Statement of the Statement dealt with by this report comply with the Accounting Standards referred Company for the year ended on that date annexed thereto. These fi nancial statements to in sub-section (3C) of section 211 of the Companies Act, 1956. are the responsibility of the Company’s management. Our responsibility is to express an f) In our opinion and to the best of our information and according to the explanations opinion on these fi nancial statements based on our audit. given to us, the said fi nancial statements read with the notes thereon, subject 2. We conducted our audit in accordance with auditing standards generally accepted in to (a) above, give the information required by the Companies Act, 1956, in the India. Those Standards require that we plan and perform the audit to obtain reasonable manner so required and give a true and fair view in conformity with the accounting assurance about whether the fi nancial statements are free of material misstatement. An principles generally accepted in India: audit includes examining, on a test basis, evidence supporting the amounts and disclosures i) in the case of the Balance Sheet, of the state of affairs of the Company as in the fi nancial statements. An audit also includes assessing the accounting principles used at 31st March, 2010; and and signifi cant estimates made by management, as well as evaluating the overall fi nancial ii) in the case of the Profi t and Loss Account, of the loss for the year ended on statement presentation. We believe that our audit provides a reasonable basis for our that date. opinion. iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central for the year ended on that date. Government in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order. 5. On the basis of the written representations received from the Directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that, none of the Directors 4. Further to our comments in the Annexure referred to in paragraph (3) above, we report is disqualifi ed as on 31st March, 2010 from being appointed as a Director in terms of clause that: (g) of sub-section (1) of section 274 of the Companies Act, 1956. a) The accumulated losses of the Company as at March 31, 2010 exceed its paid up capital resulting in the erosion of its net worth. The accounts for the year have been prepared on the ‘Going Concern’ basis on the understanding that fi nance will continue to be available to the Company for working capital requirements. For and on behalf of KALYANIWALLA & MISTRY b) We have obtained all the information and explanations, which to the best of our Chartered Accountants knowledge and belief were necessary for the purposes of our audit. Firm Registration No.: 104607W c) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of these books. ERMIN K. IRANI Partner d) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt Mumbai, May 14, 2010 Membership No. 35646 with by this report are in agreement with the books of account.

ANNEXURE TO THE AUDITORS’ REPORT

Referred to in paragraph (3) of our report of even date. statutory dues applicable to it with the appropriate authorities. According to the 1) The Company does not have any Fixed Assets and hence maintenance of records, physical information and explanations given to us, there are no undisputed dues payable in verifi cation and disposal of fi xed assets does not arise. respect of above as at 31st March 2010 for a period of more than six months from the date they became payable. 2) The Company does not have any inventories. (b) According to the information and explanations given to us, there are no dues 3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms outstanding of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, or parties covered in the register maintained under section 301 of the Companies Excise Duty or cess on account of any dispute. Act, 1956. 10) The accumulated losses of the Company at the end of the 31st March 2010 are more than (b) Consequently, the question of commenting whether the rates of interest and other 50% of its net worth. The Company has incurred cash loss during the fi nancial year and also terms and conditions are not prejudicial to the interest of the Company does not in the immediately preceding fi nancial year. arise. 11) According to the information and explanations given to us and based on the documents and (c) The Company has taken unsecured loans of Rs. 2,840 thousand from a Company records produced to us, the Company does not have dues to banks, fi nancial institutions covered in the register maintained under section 301 of the Act. The maximum or debenture holders. amount involved during the year was Rs. 12,216 thousand and year-end balance of loan taken from such party was Rs. 12,216 thousand. 12) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of (d) The Loan as aforesaid is interest free and the other terms and conditions are not security by way of pledge of shares, debentures and other securities. prejudicial to the interest of the company. 13) In our opinion and according to the information and explanations given to us, the nature (e) There is no schedule of repayment and hence the question of regular repayment of activities of the Company does not attract any special statute applicable to chit fund does not arise. and nidhi/ mutual benefi t fund/ societies. 4) In our opinion and according to the information and explanations given to us, there are 14) The Company does not deal in shares, securities, debentures and other investments. adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods 15) According to the information and explanations given to us, the Company has not given any and services. During the course of our audit, we have not observed a continuing failure to guarantee for loans taken by others from banks or fi nancial institutions. correct major weakness in internal controls. 16) The Company has not taken any term loans during the year. 5) (a) Based on the audit procedures applied by us and according to the information 17) According to the information and explanations given to us and on an overall examination and explanations provided by the management, we are of the opinion that the of the Balance Sheet and Cash Flows of the Company, we report that the Company has not particulars of contracts and arrangements referred to in section 301 of the utilized funds raised on short-term basis for long term investment. Companies Act, 1956 have been entered into the register required to be maintained under that section. 18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. (b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to the prevailing market prices at the 19) The Company did not have outstanding debentures during the year. relevant time, where comparable market price exists. 20) The Company has not raised any money through a public issue during the year. 6) In our opinion and according to the information and explanations given to us, the Company 21) Based on the audit procedures performed and information and explanations given by the has not accepted any deposits from the public and hence the provisions of section 58A, management, we report that no fraud on or by the Company has been noticed or reported 58AA or any other provision of the Companies Act, 1956, read with the rules framed during the year. thereunder are not applicable. 7) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business. 8) According to the information and explanation given to us, the maintenance of cost records For and on behalf of has not been prescribed by the Central Government, under section 209(1)(d) of the KALYANIWALLA & MISTRY Companies Act, 1956, for any of the Company’s products. Chartered Accountants 9) (a) According to the information and explanations given to us and on the basis of Firm Registration No.: 104607W our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, ERMIN K. IRANI Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Partner Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other Mumbai, May 14, 2010 Membership No. 35646

109 Golden Feed Products Limited

BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010 This Year Previous Year Schedule Rs.’000 Rs.’000 Rs.’000 This Year Previous Year SOURCES OF FUNDS Schedule Rs. ’000 Rs. ’000 SHAREHOLDERS’ FUNDS Share Capital 1 500 500 INCOME Reserves and Surplus - - Sales 413 - 500 500 Credit Balances Written Back - 4,417 LOAN FUNDS 413 4,417 Secured loans - - Unsecured loans from EXPENDITURE Holding Company 11,906 9,376 Purchase for Resale 405 - TOTAL 12,406 9,876 APPLICATION OF FUNDS Auditors’ Remuneration 55 55 FIXED ASSETS - - Legal and Professional Charges 2 - INVESTMENTS 25 25 Dr Balances in Current Assets/Loans and CURRENT ASSETS, LOANS AND ADVANCES advances written off 61 - Inventories Provision for Doubtful Debts & Advances (310) 4,467 Sundry Debtors 2 413 - Bank Charges 39 54 Cash and Bank Balances - 6 Sundry Expenses - 63 Other Current Assets - 43 252 4,639 Loans and Advances - 18 PROFIT/(LOSS) BEFORE TAXATION 161 (222) 413 67 Provision for Taxation - - LESS : CURRENT LIABILITIES PROFIT/(LOSS) AFTER TAXATION 161 (222) AND PROVISIONS Liabilities 3 3,961 6,305 (Defi cit) Brought Forward (16,090) (15,868) Provisions - - DEFICIT CARRIED OVER TO BALANCE SHEET (15,929) (16,090) 3,961 6,305 Earnings per share (Basic/Diluted ) in Rs. NET CURRENT ASSETS (3,548) (6,239) (Refer Note 4) 3.22 (4.45) PROFIT & LOSS ACCOUNT 15,929 16,090 NOTES TO ACCOUNTS 4 TOTAL 12,406 9,876 NOTES TO ACCOUNTS 4

The Schedules referred to above form an integral part of the Balance Sheet The Schedules referred to above form an integral part of the Profi t and Loss Account As per our Report of even date attached Signatures to Balance Sheet and As per our Report of even date attached Signatures to Profi t and Loss Account Schedules 1 to 4 Schedule 4 For and on behalf of For and on behalf of the Board For and on behalf of For and on behalf of the Board KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY Chartered Accountants Chartered Accountants

ERMIN K. IRANI B. S. YADAV P. N. NARKHEDE ERMIN K. IRANI B. S. YADAV P. N. NARKHEDE Partner Director Director Partner Director Director Membership No. 35646 Membership No. 35646 Mumbai, May 14, 2010 Mumbai, May 14, 2010

SCHEDULES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010

This Year This Year Previous Year SCHEDULE 4 : NOTES TO ACCOUNTS Rs.’000 Rs.’000 Rs.’000 1. SIGNIFICANT ACCOUNTING POLICIES SCHEDULE 1 : SHARE CAPITAL a) The fi nancial statements have been prepared on historical cost convention and on AUTHORISED the 'going concern basis', with revenues recognised and expenses accounted on their accrual in accordance with the generally accepted accounting principles, and in 100,000 Equity Shares of Rs. 10 each 1,000 1,000 compliance with the applicable Accounting Standards and other requirements of the ISSUED, SUBSCRIBED AND PAID UP Companies Act, 1956. 50,000 Equity Shares of Rs.10 each fully paid 500 500 b) Fixed assets have been stated at cost and include incidental and/or installation/ development expenses incurred in putting the asset to use and interest on borrowing All the above shares are held by Godrej Agrovet Ltd. incurred during construction period. Pre-operative expenses for major projects are (Holding Company) & its nominees also capitalised, where appropriate. SCHEDULE 2 : SUNDRY DEBTORS c) Carrying amount of cash generating units/assets are reviewed at balance sheet Debts outstanding for a period exceeding six months date to determine whether there is any indication of impairment. If such indication Considered Good - 4,467 exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognised whenever carrying amount Considered Doubtful 4,157 - exceeds the recoverable amount. 4,157 4,467 d) Depreciation/Amortisation has been provided for as under : Other Debts 413 - (a) The Company has grouped additions and disposals in appropriate time periods TOTAL 4,570 4,467 of a month/quarter for the purpose of charging pro rata depreciation in respect of additions and disposals of its assets keeping in view the materiality Less: Provisions for doubtful debts 4,157 4,467 of the items involved. 413 - (b) 1) Depreciation is provided on the straight line method at the rates specifi ed SCHEDULE 3 : CURRENT LIABILITIES AND in Schedule IV to the Companies Act, 1956, except for computer hardware PROVISIONS which is depreciated over its estimated useful life of four years. A) CURRENT LIABILITIES 2) Amortisations Investor Education and Protection Fund - - Asset type Period Sundry Creditors 1,450 1,045 (i) Leasehold Land Primary lease period Bank Overdraft as per books 3 - (ii) Leasehold improvements Primary lease period or 16 years and equipments whichever is less Other Liabilities 2,427 2,437 (iii) Signages 3 years Advance from Customers 81 2,823 (iv) Technical Knowhow, technical TOTAL 3,961 6,305 knowhow fees of a capital nature 10 years (v) Computer software 6.17 years

110 Annual Report 2009–2010

SCHEDULES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010

e) Raw materials are valued at weighted average cost. 5. Information required to be furnished under Part IV of Schedule VI of the Companies Finished goods and work-in-progress are valued at lower of cost and net realisable Act, 1956 value. i) Registration Details Application of Funds These costs include cost of conversion and other costs incurred in bringing the Registration No. 140599 Net Fixed Assets - inventories to their present location and condition. State Code 11 Investments 25 Balance Sheet Date 31/3/2010 Net Current Assets (3,548) f) Retirement benefi ts to employees comprise payments under defi ned contribution ii) Capital raised during the year Misc. Expenditure - plans like provident fund and family pension. Payments under defi ned contribution (Rupees ’000) Accumulated Losses 15,929 plans are charged to the profi t and loss account. Public Issue Nil iv) Performance of Company The liability in respect of defi ned benefi t schemes like gratuity and leave encashment Rights Issue Nil (Rupees ’000) benefi t on retirement is provided on the actual basis. Bonus Issue Nil Turnover 413 g) Revenue is recognised when goods are despatched to external customers. Private Placement Nil Total Expenditure 252 h) Deferred tax is recognised on timing differences, being the differences between iii) Position of mobilisation and Profi t before tax 161 the taxable income and the accounting income that originate in one period and are deployment of funds capable of reversal in one or more subsequent periods. Deferred tax assets, subject (Rupees ’000) Profi t after tax 161 to consideration of prudence, are recognised and carried forward only to the extent Total Liabilities 16,367 Earning Per Share in Rs. 3.22 that there is a reasonable certainty that suffi cient future taxable income will be Total Assets 16,367 Dividend rate - available against which such Deferred tax liability is recognised, if material. Deferred Sources of Funds tax assets can be realised. The tax effect is calculated on the accumulated timing Paid-up Capital 500 v) Generic names of three principal difference at the year-end, based on the tax rates and laws enacted on the balance Reserves & Surplus - products/services of Company sheet date. Secured Loans - Item Code No. 23099010 i) The basic earnings per share is computed using the weighted average number Unsecured Loans 11,906 Product Description Animal of common shares outstanding during the period. Diluted earnings per share is Feeds computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be For and on behalf of the Board anti-dilutive. B. S. YADAV P. N. NARKHEDE j) Provisions are recognised in the accounts in respect of present probable obligations, Director Director the amount of which can be reliably estimated. Mumbai, May 14, 2010 2. AUDITORS’ REMUNERATION This Year Previous Year Rs. Rs. CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010 Audit fees 55,150 55,150 This Year Previous Year Reimbursement of Expenses - - Rs. ’000 Rs. ’000 Rs. ’000 TOTAL 55,150 55,150 A. Cash Flow from Operating Activities : 3. RELATED PARTY DISCLOSURES Net Profi t Before Taxes (after extraordinary income) 161 (222) Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below: Adjustment for: 1. Relationships : Provision for Doubtful Debts written (back)/off (310) 4,467 (i) Holding Companies: Advances written off 61 - Godrej Agrovet Limited (GAVL) holds 100% in the Company. GAVL is the (250) 4,467 subsidiary of Godrej Industries Limited (GIL). GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the ultimate holding company. Operating Profi t Before Working Capital Changes (89) 4,245 (ii) Fellow subsidiaries: Adjustments for: Cauvery Palm Oil Ltd. Debtors and Other Receivables (103) 15,191 Godrej Oil Palm Ltd. (formerly Godrej Oil Plantations Ltd.) Creditors and Other Payables (2,347) (4,391) 2. The following transactions were carried out with the related parties in the (2,450) 10,800 ordinary course of business : Cash Generated from Operations (2,539) 15,045 (Rs. in Thousands) Direct Taxes paid (net of refund received) - - Holding Net Cash Flow from Operating Activities (2,539) 15,045 Nature of Transactions Company* B. Cash Flow from Investing Activities: - - 1. Loan taken 2,530 C. Cash Flow from Financing Activities: 521 Proceeds from Unsecured Borrowings 2,530 (15,084) 2. Loan repaid - Net Cash used in Financing Activities 2,530 (15,084) (2,530) Net increase in Cash and Cash Equivalents (9) (39) 3. Expenses charged to other companies - Cash and Cash equivalents (Opening Balance) 6 45 107 Cash and Cash equivalents (Closing Balance) (3) 6 - NOTES: 4. Sale of Material/Finished Goods 413 1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in - the Accounting Standard (AS) 3 on “Cash Flow Statements”, and presents cash fl ows by 5. Outstanding payables, net of (receivables) 11,906 operating, investing and fi nancing activities. 9,376 2. Figures in brackets are outfl ows/deductions. * All transactions are with Godrej Agrovet Limited. 3. Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s classifi cation. 4. EARNINGS PER SHARE This Year Previous Year Rs. Rs. As per our Report of even date attached Profi t after tax and prior period expenses 161 (222) For and on behalf of For and on behalf of the Board Weighted average number of equity shares outstanding 50,000 50,000 KALYANIWALLA & MISTRY Chartered Accountants Basic earnings per share 3.22 (4.45) ERMIN K. IRANI B. S. YADAV P. N. NARKHEDE Diluted earnings per share 3 (4.45) Partner Director Director Nominal value of shares 10.00 10.00 Membership No. 35646 Mumbai, May 14, 2010

111 Godrej Oil Palm Limited

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010 TO THE SHAREHOLDERS Mr. R. R. Govindan and Mr. S. Varadaraj retire by rotation at the ensuing Annual General Meeting of Your Directors have pleasure in submitting their Report along with the audited Accounts for the the Company in accordance with Section 256 of the Companies Act, 1956 and Article 124 of Articles fi nancial year ended on March 31, 2010. of Association of the Company and being eligible offer themselves for reappointment. FINANCIAL RESULTS AUDITORS Your Company’s performance during the year as compared with that during the previous year is You are requested to appoint Auditors for the current year and fi x their remuneration. The summarised below: - retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re- appointment and a certifi cate as required u/s 224 (1 B) of the Companies Act, 1956, has been THIS YEAR PREVIOUS YEAR received from them. (Rs. lac) (Rs. lac) ADDITIONAL INFORMATION Total Income 6465.82 7431.68 The additional information required to be given under the Companies Act, 1956, has been laid Profi t Before Taxation (PBT) 1068.20 975.35 out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts Less : Provision for Taxation 387.91 385.29 referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further Profi t After Taxation (PAT) 680.29 590.05 explanation. Balance brought forward from previous year 1426.96 868.36 STATUTORY INFORMATION Total 2107.25 1426.96 A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo Balance Carried Forward to Balance Sheet 2107.25 1426.96 The information in respect of these matters, required under Section 217 (1)(e) of the OPERATIONAL HIGHLIGHTS Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Your Company operated under highly adverse conditions during the year which witnessed a severe the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the drought resulting in a major drop in the FFB yield per hectare. The drop in targets approved by the Annexure “A” to this report. Government constrained area coverage and sales from the nursery. CPO prices were substantially B) Particulars of Employees below the average levels of 2008-09. Improvement in operational effi ciencies and additional arrivals from newly emerging areas helped the Company face the adversity and post improved None of the employees is covered under the provisions of Section 217 (2A) of the Companies results for the year. Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002. During the year, the Company successfully completed a capital expenditure programme including C) Directors’ Responsibility Statement augmentation of capacity from 20 TPH to 30 TPH, installation of a COGEN plant and an EFB press Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the station. The setting up of a COGEN plant not only ensured self suffi ciency in power but also savings Directors of your Company confi rm:- in power cost. It is proposed to further augment the capacity to 40 TPH during 2010-11 and also increase the capacity of the Palm Kernel Oil Mill. a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same; DIVIDEND b) that they have selected such Accounting Policies and applied them consistently and The Directors do not recommend any dividend for the year 2009-10. made judgements and estimates that are reasonable and prudent so as to give a true FIXED DEPOSITS and fair view of the state of affairs of the Company at the end of the fi nancial year The Company has not accepted any public deposits during the fi nancial year under review. and of the profi t or loss of the Company for that period; HOLDING COMPANY c) that they have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the The Company is a subsidiary of Godrej Agrovet Limited as defi ned under Section 4(1)(b) of the assets of the Company for preventing and detecting fraud and other irregularities; Companies Act, 1956. SUBSIDIARY COMPANIES d) that they have prepared the annual accounts on a going concern basis. The Company has no subsidiary companies during the year under review. HUMAN RESOURCES DIRECTORS: Your Company continues to focus on development of Human Resources. The industrial relations are cordial and the Board would like to place on record its sincere appreciation for the unstinted The following are the current Directors of the Company:- support from all the employees. 1. Mr. N. B. Godrej (Chairman) 2. Mr. B. S. Yadav (Director) For and on behalf of the Board of Directors 3. Mr. R. R. Govindan (Director) 4. Mr. S. Varadaraj (Director) N. B. Godrej 5. Mr. Velayuthan Tan (Director) Mumbai, May 17, 2010 Chairman ANNEXURE ‘A’ c) Substantial saving in terms of cost of energy d) Increase in the life of equipment ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT B] Technology absorption, adaptation and innovation INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH I. The Company constantly endeavours for technological upgradation in order to have THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) improved quality at a lower cost and a Leaf and Soil Analysis Laboratory is being set RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO: up for the same. A] Conservation of Energy II. The Company’s expenditure on R&D is given below: The Company continues its policy of implementation of various measures for energy THIS YEAR PREVIOUS YEAR conservation recognizing the same as a necessary means of saving cost and a social Rs. lac Rs. lac responsibility. A regular review of various systems installed to conserve energy is (a) Capital 6 Nil undertaken. (b) Recurring 1 Nil The measures adopted by the Company during the year under review for conservation of (c) Total 7 Nil energy include the following:- (d) Total R & D expenditure as a percentage 0.1% Nil 1) Provision of limit switches for tanks for automatic switching on & off the motors of total turnover 2) Switching off unwanted motive load when not in use 3) Installation of energy saving blowers to reduce the load C] Foreign Exchange earnings and outgo 4) Installation of additional capacitors at MCCs THIS YEAR PREVIOUS YEAR 5) Replacement of 40W tubes with slim energy effi cient tube-36W Rs. lac Rs. lac 6) Installation of Gensets of capacity of 160 KVA and 500 KVA I. Foreign exchange used Nil 0.66 7) Installation of Co-Generation Plant (a captive power generation plant) of Capacity of II. Foreign exchange earned Nil Nil 1.6 MW per hour at Pothepally Factory. The adoption of above energy conservation measures has resulted in accrual of the following For and on behalf of the Board of Directors benefi ts to the Company:- a) Reduction of load on cables N. B. Godrej b) Improvement in power factor level Mumbai, May 17, 2010 Chairman

112 Annual Report 2009–2010

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ OIL PALM LIMITED 1. We have audited the attached Balance Sheet of Godrej Oil Palm Limited, as at March 31, 2010 c) In our opinion, proper books of account as required by law have been kept by the and also the Profi t and Loss Account and the Cash Flow Statement of the Company for the Company so far as appears from our examination of these books. year ended on that date annexed thereto. These fi nancial statements are the responsibility d) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt of the Company’s management. Our responsibility is to express an opinion on these fi nancial with by this report are in agreement with the books of account. statements based on our audit. e) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow 2. We conducted our audit in accordance with auditing standards generally accepted in India. Statement dealt with by this report comply with the Accounting Standards referred Those Standards require that we plan and perform the audit to obtain reasonable assurance to in sub-section (3C) of section 211 of the Companies Act, 1956. about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial f) In our opinion and to the best of our information and according to the explanations statements. An audit also includes assessing the accounting principles used and signifi cant given to us, the said fi nancial statements read with the notes thereon, subject to (b) estimates made by management, as well as evaluating the overall fi nancial statement above give the information required by the Companies Act, 1956, in the manner so presentation. We believe that our audit provides a reasonable basis for our opinion. required and give a true and fair view in conformity with the accounting principles generally accepted in India: 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex i) in the case of the Balance Sheet, the state of affairs of the Company as at March hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order. 31, 2010; and 4. Further to our comments in the Annexure referred to in paragraph (3) above we report ii) in the case of the Profi t and Loss Account, of the profi t for the period ended on that: that date. a) We have obtained all the information and explanations, which to the best of our iii) in the case of the Cash Flow Statement, the cash fl ows of the Company for the knowledge and belief were necessary for the purposes of our audit. period ended on that date. b) As stated in Note 4 of Schedule 10, notes to accounts, the Company has amortised 5. On the basis of the written representations received from the Directors as on March 31, Licenses/Rights, an intangible asset for oil palm plantation business over a period of 20 2010, and taken on record by the Board of Directors, we report that, none of the Directors years which exceeds the maximum limit of 10 years as prescribed by Accounting Standard is disqualifi ed as on March 31, 2010 from being appointed as a Director in terms of clause (g) 26 “Intangible Assets” issued by the Institute of Chartered Accountants of India. The of sub-section (1) of section 274 of the Companies Act, 1956. Company is of the view that the oil palm plantation business operates on a command area For and on behalf of basis with the government allotting to various companies clearly demarcated area for the KALYANIWALLA & MISTRY development of the oil palm plantation. With this responsibility for the development of Chartered Accountants the oil plantation comes the exclusive rights for the procurement of Fresh Fruit Bunches produced in the allotted area. Oil Palm Plantation has relatively long productive life of ERMIN K. IRANI 30 years. Since the allotment right is expected to yield benefi ts over a long period, the Partner amount paid towards the same is amortised over a 20-year period. Mumbai, May 17, 2010 Membership No. 35646 ANNEXURE TO THE AUDITORS' REPORT Referred to in paragraph (3) of our report of even date. under Section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima 1) (a) The Company has maintained proper records showing full particulars, including facie, the prescribed accounts and records have been maintained. We have not, however, quantitative details and situation of fi xed assets. made a detailed examination of the records with a view to determine whether they are accurate or complete. (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodic intervals. In our opinion, the periodic verifi cation is reasonable 9) (a) According to the information and explanations given to us and on the basis of our having regard to the size of the Company and the nature of its assets. No material examination of books of accounts, during the period, the Company has no statutory discrepancies have been reported on such verifi cation. dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, (c) In our opinion, the disposal of fi xed assets during the year does not affect the going Custom Duty, Excise Duty, Cess and other statutory dues incurred during the period concern assumption. covered. According to the information and explanations given to us, there are no 2) (a) The Management has conducted physical verifi cation of inventory at reasonable undisputed dues, payable in respect of above as at March 31, 2010 for a period of intervals. more than six months from the date they became payable. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the (b) According to the information and explanations given to us, there are no dues management are reasonable and adequate in relation to the size of the Company and outstanding of Sales Tax, Income Tax, Wealth Tax, Excise Duty, Cess on account of any the nature of its business. dispute. (c) The Company is maintaining proper records of inventory and no material discrepancies 10) As the Company has been registered for a period less than fi ve years the question of were noticed on physical verifi cation. commenting on its accumulated losses being less than fi fty percent of its net worth does not 3) (a) The Company has granted unsecured loans amounting to Rs. 65,500 thousands to two arise. The Company has not incurred cash loss during the fi nancial year or in the immediately companies covered in the register maintained under Section 301 of the Companies preceding fi nancial year. Act, 1956. The maximum amount involved during the year was Rs. 65,500 thousands 11) According to the information and explanations given to us and based on the documents and the year end balance of loan granted to such parties was Rs. 65,500 thousands. and records produced to us, there are no dues to banks, fi nancial institutions or debenture (b) The rate of interest and the other terms and conditions of the loan is not prima facie holders. prejudicial to the interests of the Company. 12) According to the information and explanations given to us and based on the documents and (c) As informed to us the receipt of principal and interest, to the extent due, has been records produced to us, the Company has not granted loans and advances on the basis of regular. security by way of pledge of shares, debentures and other securities. (d) As informed to us, there are no overdue amounts exceeding rupees one lakh and 13) In our opinion and according to the information and explanations given to us, the nature of hence the question of commenting on reasonable steps taken for recovery of principal activities of the Company does not attract any special statute applicable to chit fund and and interest does not arise. nidhi/ mutual benefi t fund/ societies. (e) The Company has taken unsecured loans of Rs. 10,500 thousands from a company 14) The Company does not deal in shares, securities, debentures and other investments. covered in the register maintained under Section 301 of the Act. The maximum 15) According to the information and explanations given to us, the Company has not given any amount involved during the year was Rs. 25,540 thousands and year-end balance of guarantee for loans taken by others from banks or fi nancial institutions. loan taken from such party is Rs. Nil. 16) According to the information and explanations provided to us, there are no term loans, hence (f) The rate of interest and the other terms and conditions of the unsecured loan taken the question of its application for the purposes for which they were obtained is not applicable. is not prima facie prejudicial to the interest of the Company. (g) The payment of principal amounts and interest was also regular. 17) According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not raised 4) In our opinion and according to the information and explanation given to us, there are funds on short term or long term basis. adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods 18) The Company has not made any preferential allotment of shares to parties or companies and services. During the course of our audit, we have not observed a continuing failure to covered in the register maintained under Section 301 of the Companies Act, 1956. correct major weakness in internal controls. 19) During the year, the Company has not issued any debentures. However, in respect of private 5) (a) Based on the audit procedures applied by us and according to the information and placement of Debentures in an earlier year, we have been informed that the security was explanations provided by the management, we are of the opinion that the particulars not created, but these debentures have since been redeemed. of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 20) The Company has not raised any money through a public issue during the year. have been entered into the register required to be maintained under that section. 21) Based on the audit procedures performed and information and explanations given by the (b) The transactions made in pursuance of such contracts or arrangements, were made at management, we report that no fraud on or by the Company has been noticed or reported prices which are reasonable having regard to prevailing market prices at the relevant during the year. time. For and on behalf of 6) In our opinion and according to the information and explanations given to us, the Company KALYANIWALLA & MISTRY has not accepted any deposits from the public hence the provisions of section 58A and 58AA Chartered Accountants or any other provisions of the Companies Act, 1956, are not applicable. Firm Registration Number : 104607W 7) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and the nature of its business. ERMIN K. IRANI 8) We have broadly reviewed the books of accounts maintained by the Company pursuant to Partner the order made by the Central Government for maintenance of cost records prescribed Mumbai, May 17, 2010 Membership No. 35646

113 Godrej Oil Palm Limited

BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED THIS YEAR PREVIOUS YEAR MARCH 31, 2010 Schedule Rs.’000 Rs.’000 Rs.’000 SOURCES OF FUNDS THIS YEAR PREVIOUS YEAR SHAREHOLDERS’ FUNDS Schedule Rs.’000 Rs.’000 Rs.’000 Share Capital 1 705 705 Reserves & Surplus 2 708,014 639,985 INCOME 708,719 640,690 Sales 638,769 742,805 LOAN FUNDS Other income 7 7,813 364 Unsecured Loans 3 46,674 49,376 646,582 743,168 DEFERRED TAX LIABILITY 91,779 52,988 EXPENDITURE TOTAL 847,172 743,054 Materials 8 408,392 539,492 APPLICATION OF FUNDS Expenses 9 89,245 75,950 FIXED ASSETS 4 Gross Block 679,950 497,842 Interest 10 1,560 250 Less: Depreciation 97,352 56,882 Depreciation 40,565 29,941 Net Block 582,598 440,960 539,762 645,633 Capital work-in-progress/ PROFIT BEFORE TAXATION 106,820 97,535 Advances 6,778 29,625 Provision for Taxation 589,376 470,585 Current Tax including MAT CURRENT ASSETS, LOANS AND ADVANCES 5 credit entitlement 18,200 16,281 Inventories 68,378 50,425 Fringe Benefi t Tax - 714 Sundry Debtors 108,614 131,690 Cash and Bank Balances 20,796 84,392 MAT Credit entitlement (18,200) - Other Current Assets 139 60 Deferred Tax 38,791 21,534 Loans and Advances 87,663 32,160 38,791 38,529 285,590 298,727 PROFIT AFTER TAXATION 68,029 59,005 LESS : CURRENT LIABILITIES AND 6 Prior years adjustments - 3,145 PROVISIONS Profi t after Tax and prior period item 68,029 55,860 Liabilities 25,649 18,753 Surplus Brought Forward 142,696 86,836 Provisions 2,145 7,505 Surplus carried to Balance Sheet 210,725 142,696 27,794 26,258 NET CURRENT ASSETS 257,796 272,469 Earnings per share (Basic/Diluted) in TOTAL 847,172 743,054 Rs. (Refer Note 20) 964.95 792.34 NOTES TO ACCOUNTS 11 NOTES TO ACCOUNTS 11

The Schedules referred to above form an Signatures to Balance Sheet and The Schedules referred to above form an Signatures to Profi t and Loss Account & integral part of the Balance Sheet. Schedules 1 to 6 and 11 integral part of the Profi t & Loss Account Schedules 7 to 11 As per our Report of even date attached As per our Report of even date attached For and on behalf of For and on behalf of the Board For and on behalf of For and on behalf of the Board KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY Chartered Accountants Chartered Accountants ERMIN K. IRANI N. B. GODREJ R. R. GOVINDAN ERMIN K. IRANI N. B. GODREJ R. R. GOVINDAN Partner Chairman Director Partner Chairman Director Membership No. 35646 Membership No. 35646 Mumbai, May 17, 2010 Mumbai, May 17, 2010 SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010 THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000 Rs.’000 THIS YEAR PREVIOUS YEAR SCHEDULE 1 : SHARE CAPITAL Rs.’000 Rs.’000 Rs.’000 AUTHORISED SCHEDULE 3 : UNSECURED LOANS 1,00,00,000 Equity Shares of Rs. 10 each 100,000 100,000 2,50,000, 10% Redeemable non-convertible ISSUED, SUBSCRIBED AND PAID UP Debentures of Rs. 10 each (amount due within a year Rs. 2,500 thousand, previous 70,500 Equity Shares of Rs. 10 each fully 705 705 paid. year Rs. 2,500 thousand) - 2,500 Of the above : Add: Interest accured and due --202 a) 56,400 equity shares are held by Godrej Agrovet Ltd. the holding Company. - 2,702 b) 20,500 equity shares have been issued Sales Tax Deferment facility (Refer Note 3) 46,674 46,674 pursuant to the scheme of demerger without payment being received in cash. TOTAL 46,674 49,376 SCHEDULE 2 : RESERVES & SURPLUS Securities Premium Account 497,289 497,289 Profi t and Loss Account 210,725 142,696 TOTAL 708,014 639,985

SCHEDULE 4: FIXED ASSETS (Rs.’000) ASSETS GROSS BLOCK DEPRECIATION NET BLOCK As on Additions Deductions As on As on For the Year On Upto As on As on 01.04.09 31.03.10 01.04.09 Deductions 31.03.10 31.03.10 31.03.09 Tangible Assets Freehold Land 2,980 - - 2,980 - - - - 2,980 2,980 Buildings 39,382 22,471 - 61,853 2,550 1,939 - 4,489 57,364 36,832 Plant & Machinery 87,748 159,231 181 246,798 14,677 18,408 55 33,030 213,768 73,070 Furniture & Fixtures 422 117 14 525 122 67 7 182 343 301 Offi ce & Other Equipments 812 323 60 1,075 98 57 17 138 937 713 Vehicles 2,271 - - 2,271 73 297 - 370 1,901 2,198 Tree Development Cost 11,703 - - 11,703 3,994 1,997 - 5,991 5,712 7,709 Computer 679 259 38 900 183 207 15 375 525 496 Intangible Assets - Grant of Licenses 351,845 - - 351,845 35,184 17,593 - 52,777 299,068 316,661 Total 497,842 182,401 293 679,950 56,881 40,565 94 97,352 582,598 - Previous Year 476,549 21,307 14 497,842 26,943 29,941 3 56,882 - 440,960 Capital Work-In-Progress/Advance 6,778 29,625 589,376 470,585

114 Annual Report 2009–2010

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31,2010 THIS YEAR PREVIOUS YEAR THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 SCHEDULE 5 : CURRENT ASSETS, LOANS & SCHEDULE 7 : OTHER INCOME ADVANCES Interest Income (Gross) (Tax at Sources Rs.740 7,486 303 (A) INVENTORIES : thousands previous year Rs. 1 thousand) Raw Materials 217 547 Sundry Balances written back 47 54 Finished Products 5,177 3,242 Sundry income 280 7 Stores and Spares 2,120 2,127 TOTAL 7,813 364

Stock under Cultivation 60,864 44,509 SCHEDULE 8 : MATERIALS 68,378 50,425 a) RAW MATERIALS CONSUMED (B) SUNDRY DEBTORS Opening stock 547 1,224 (Unsecured and considered good unless otherwise stated) Add : Purchases during the year 392,087 498,826 Debts outstanding for a period 392,634 500,050 exceeding six months Less : Closing Stocks 217 547 Considered Good 30,542 40,476 392,417 499,503 Considered Doubtful 36 - b) PURCHASE FOR RESALE 34,265 43,233 30,578 40,476 c) INVENTORY CHANGE Other Debts (less than six months) 78,072 91,214 Opening Stock TOTAL 108,650 131,690 Finished Goods 3,242 4,576 Less: Provision for doubtful debts 36 - Stock under Cultivation 44,509 39,931 108,614 131,690 47,751 44,507 (C) CASH AND BANK BALANCES : Less : Closing Stock Cash and Cheques on hand 168 181 Finished Goods 5,177 3,242 Balances with Scheduled Banks Stock under Cultivation 60,864 44,509 i) In Current Accounts 11,128 4,211 66,041 47,751 ii) In Fixed Deposit Accounts 9,500 80,000 (18,290) (3,244) 20,796 84,392 TOTAL 408,392 539,492 (D) OTHER CURRENT ASSETS : Interest Accrued 139 60 SCHEDULE 9 : EXPENSES ` (E) LOANS AND ADVANCES : Salaries, Wages, Bonus,Gratuity and 1. Allowances 27,423 20,365 (Unsecured and considered good) 2. Contribution to Provident Fund and Advances recoverable in cash or in Other Funds and Administration Charges 1,269 852 kind or for value to be received 4,251 29,374 3. Employee Welfare Expenses 458 339 Inter Corporate Deposits 67,915 - 4. Processing Charges 8,397 5,459 Advance Income Tax Paid (net of Provision Rs. 51,883 thousand Previous 5. Consumable Stores 4,460 4,659 year Rs. Nil) 12,570 - 6. Power and Fuel 9,742 8,701 Deposits 7. Rent 944 824 i) Government Authorities 1,506 1,004 8. Rates and Taxes 391 2,249 ii) Others 1,421 1,782 9. Repairs & Maintenance 87,663 32,160 Building 180 211 TOTAL 285,590 298,727 Plant & Machinery 4,202 2,080

SCHEDULE 6 : LIABILITIES & PROVISIONS Other Assets 12 76 LIABILITIES 4,394 2,367 Sundry Creditors 10. Insurance 522 235 Dues to Micro, Small & Medium Enteriprises - - 11. Postage, Telephony and Stationery 844 786 (refer Note 6) 12. Auditor’s Remuneration 217 210 Others 24,898 17,263 13. Legal & Professional Fees 2,232 2,267 24,898 17,263 14. Bank Charges 223 560 Investors Education and Protection Fund - - 15. Freight, Coolie and Cartage 3,336 2,201 Advances from Customers 481 853 16. Advertisement and Publicity 142 154 Sundry Deposits 270 637 17. Travelling Expenses 1,820 1,138 TOTAL 25,649 18,753 Provision for Doubtful Debts and PROVISIONS 18. Advances/(Writeback) 36 (131) For Taxes (net of advance tax paid Rs. Nil 19. Loss on sale of Fixed Assets/Write off 174 8 previous year Rs. 45,960 thousand) - 5,923 20. Discounts, Commission & Brokerage 3,320 3,675 For Gratuity 1,542 1,167 21. General Expenses 18,901 19,031 For Leave Encashment 603 415 TOTAL 89,245 75,950

2,145 7,505 SCHEDULE 10 : INTEREST TOTAL 27,794 26,258 1. On Debenture 63 250 2. On Inter Corporate Deposit 1,497 - 1,560 250

115 Godrej Oil Palm Limited

SCHEDULE ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010 SCHEDULE 11: NOTES TO ACCOUNTS 1. SIGNIFICANT ACCOUNTING POLICIES: calculated on the accumulated timing difference at the year-end, based on the tax a) The fi nancial statements are prepared under the historical cost convention and on rates and laws enacted or substantially enacted on the balance sheet date. the ‘going concern basis’, with revenues recognised and expenses accounted on their j) The basic earnings per share is computed using the weighted average number of accrual in accordance with the generally accepted accounting principles, and in common shares outstanding during the period. Diluted earnings per share is computed compliance with the applicable Accounting Standards and other requirements of the using the weighted average number of common and dilutive common equivalent shares Companies Act, 1956. outstanding during the period, except where the results would be anti-dilutive. b) Fixed assets have been stated at cost and include incidental and/or installation/ k) Provisions are recognised in the accounts in respect of present probable obligations, development expenses incurred in putting the asset to use and interest on borrowing the amount of which can be reliably estimated. Contingent liabilities are disclosed incurred during construction period. in respect of possible obligations that arise from past events but their existence c) Carrying amount of cash generating units/assets are reviewed at balance sheet is confi rmed by the occurrence or non-occurrence of one or more uncertain future date to determine whether there is any indication of impairment. If such indication events not wholly within the control of the Company. exists, the recoverable amount is estimated as the net selling price or value in use, 2. CAPITAL COMMITMENTS: whichever is higher. Impairment loss, if any, is recognised whenever carrying amount exceeds the recoverable amount. THIS YEAR PREVIOUS YEAR d) Depreciation/Amortization has been provided for as under : Rs.’000 Rs.’000 The estimated value of contracts remaining to (a) The Company has grouped additions and disposals in appropriate time periods be executed on Capital Account to the extent of a month/quarter for the purpose of charging pro rata depreciation in respect not provided for 35,522 786 of additions and disposals of its assets keeping in view the materiality of the items involved. 3. UNSECURED LOANS: (b) 1) Depreciation on asset purchased/acquired other than acquired under the Sales Tax Deferment availed under the scheme fl oated by the Directorate of Industries, scheme of demerger are provided on the straight line method at the Government of Andhra Pradesh is classifi ed under Unsecured Loans. rates specifi ed in Schedule XIV to the Companies Act, 1956, except for 4. AMORTIZING GRANT OF LICENSES/RIGHTS OVER 20 YEARS: computer hardware which is depreciated over its estimated useful life of The oil palm plantation business operates on a command area basis with the government four years. allotting to various companies clearly demarcated area for the development of oil palm 2) Assets acquired under the scheme of demerger are depreciated on plantation. With this responsibility for development for oil palm plantations, comes the straight line basis over the remaining useful life of the asset. exclusive rights for the procurement of Fresh Fruit Bunches produced in the allotted area. 3) Amortizations Oil Palm Plantation has a relatively long productive life of 30 years. Since the allotment right is expected to yield benefi ts over a long period, the amount paid towards the same is Asset type Period amortized over a 20 year period. (i) Leasehold Land Primary lease period 5. CURRENT ASSETS, LOANS & ADVANCES: (ii) Trees Development cost 15 years (iii) Grant of Licenses/Rights 20 years (a) Loans & Advances and other Current Assets include dues from Companies under the e) Inventories: same Management Raw materials and stock under cultivation are valued at weighted average cost. THIS YEAR PREVIOUS YEAR Finished goods are valued at lower of cost and net realisable value. These costs Rs. ‘000 Rs. ‘000 include cost of conversion and other costs incurred in bringing the inventories to (i) Godrej Agrovet Limited 449 - their present location and condition. Stores and spares are valued at cost using the Maximum Balance during the year 4,957 - First-In-First-Out method. (ii) Cauvery Palm Oil Limited 27,872 - f) Employee Benefi ts: Maximum Balance during the year 27,872 - i) Short-term employee benefi ts (payable wholly within twelve months of 6. CURRENT LIABILITIES: rendering the service): Under the Micro, Small & Medium Enterprises Development Act, 2006, which came into force Short-term benefi ts such as salaries, wages, short-term compensation absences, from October 2, 2006, certain disclosures are required to be made relating to Micro, Small etc., are determined on an undiscounted basis and recognised in the period in & Medium Enterprises. The Company is still in the process of compiling relevant information which the employee renders the related service. from its suppliers about their coverage under the Act. Since the relevant information is not ii) Post-employment benefi ts: readily available, no disclosures have been made in the accounts. Defi ned Contribution Plans: The Company’s contributions paid/payable to 7. SALES TURNOVER: Provident Fund, Employees State Insurance Scheme, Employees Pension Schemes, 1995 and other funds, are determined under the relevant approved THIS YEAR PREVIOUS YEAR schemes and/or statutes and are recognised as expense in the Profi t and Loss Unit Quantity Value Quantity Value Account during the period in which the employee renders the related service. Rs. ’000 Rs. ’000 There are no further obligations other than the contributions payable to the Crude Palm Oil MT 14,519 486,691 13,051 508,655 approved trusts/appropriate authorities. However, the rules of Company’s Palm Kernel Oil MT 1,536 53,393 1,832 91,023 Provident Fund Scheme, 1952, for the reason that the return on investment Palm Kernel Cake MT 2,670 14,219 3,217 14,605 is less or for any other reason, then the defi ciency shall be made good by Seedlings Nos 556,740 44,023 1,009,078 73,783 the Company. The Company’s PF does not have any existing Defi cit or Interest Agri Inputs 33,360 47,847 shortfall. In view of the track record of the Company’s PF Trust - its assets, Others 7,083 6,892 return on investments and accumulated reserves - the Company does not TOTAL 638,769 742,805 anticipate any defi ciency in the foreseeable future. In any case making reasonable actuarial assumptions for determining and measuring any probable Note: Sales Turnover includes sale of items purchased by the Company for resale. future obligations arising due to interest shortfall, would pose a formidable 8. FINISHED GOODS INVENTORIES: challenge. Crude Palm Oil MT 30.72 823 70.66 1,544 Defi ned Benefi t Plans: The Company’s gratuity and leave encashment/long- term compensated absences schemes are defi ned benefi t plans. The Company’s Palm Kernel Oil MT 3.05 99 6.07 176 liability for the defi ned benefi t schemes is actuarially determined based on Palm Kernel Cake MT 4.70 28 57.54 247 the projected unit credit method. The Company’s net obligations in respect of Agri Inputs 4,227 1,275 such plans is calculated by estimating the amount of future benefi t that the TOTAL 5,177 3,242 employees have earned in return for their services in the current and prior 9. PURCHASES FOR RESALE: periods that benefi t is discounted to determine its present value and the fair Agri Inputs 34,265 43,233 value of the plan asset is deducted. Actuarial gains and losses are recognised immediately in the Profi t and Loss Account. TOTAL 34,265 43,233 Terminal Benefi ts: All terminal benefi ts including voluntary retirement 10. RAW MATERIALS CONSUMED: compensation are fully written off to the Profi t and Loss Account. Fresh Fruit Bunches MT 78,873.81 344,800 73,833.02 429,740 g) Revenue is recognised when goods are dispatched to external customers. Sales are Palm Nuts MT 9,144.98 4,947 9,300.17 11,441 inclusive of realised exchange fl uctuations on export receivables but net of returns, Palm Kernel MT - - 399.91 8,868 sales tax, rebates, etc. Palm Sprouts Nos 556,740 42,573 1,009,078 45,524 h) Transactions in foreign currency are recorded at the exchange rates prevailing on the Others 97 3,931 date of the transaction. Assets and liabilities related to foreign currency transactions, TOTAL 392,417 499,504 remaining unsettled at the year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by 11. LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION: underlying assets or liabilities are also translated at year end exchange rates. The Item For the Capacity Per Annum Actual Third Party premium payable on foreign exchange contracts is amortised over the period of the year ended Registered Installed Production Processing contract. Exchange gains/losses are recognised in the Profi t and Loss Account. MT MT MT MT i) Deferred tax is recognised on timing differences, being the differences between a) Crude Palm Oil 31.3.2010 Not Applicable 18,000 14,349 130 the taxable income and the accounting income that originate in one period and are 31.3.2009 Not Applicable 11,880 13,102 - capable of reversal in one or more subsequent periods. Deferred tax assets, subject b) Palm Kernel Oil 31.3.2010 Not Applicable 2,160 1,533 - to consideration of prudence, are recognised and carried forward only to the extent 31.3.2009 Not Applicable 2,160 1,819 - that there is a reasonable certainty that suffi cient future taxable income will be Installed capacity is calculatd at 18% Oil Extraction Rate of the input capacity of the FFB available against which such deferred tax assets can be realised. The tax effect is Crushed in case of Crude Palm Oil and Palm Kernel Nut crushed in case of Palm Kernel Oil.

116 Annual Report 2009–2010

SCHEDULE ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010 SCHEDULE 11: NOTES TO ACCOUNTS (Contd.) 12. (a) COMPUTATION OF PROFIT FOR THE PURPOSE OF MANAGERIAL REMUNERATION: THIS YEAR PREVIOUS YEAR THIS YEAR Rs.’000 Rs.’000 Rs.’000 Amount recognised in the Balance Sheet Profi t after Tax as per Profi t & Loss Account 68,029 Present value of obligation, as at March 1,542 1,167 Add : Depreciation as per Accounts 40,565 31, 2010 Add : Managerial Remuneration 4,025 Fair value of plan assets as at March 31, 2009 - - Add : Provision for Taxation (Including Deferred Tax) 38,791 Net obligation as at March 31, 2010 1,542 1,167 Add : Loss on sales of Fixed Assets/Write off 174 Net gratuity cost for the year ended March 151,584 31, 2010 Current Service Cost 148 - Less : Depreciation as per Section 350 of the Companies Act, 1956 40,565 Interest Cost 65 - 40,565 Expected return on plan assets - - Net Actuarial (gain)/loss to be recognised 242 139 Net profi t/(Loss) for the purpose of Director's Remuneration 111,019 Net gratuity cost 455 139 5% thereof 5,551 Assumptions used in accounting for the MAXIMUM REMUNERATION PERMISSIBLE UNDER THE ACT 5,551 gratuity plan (b) MANAGERIAL REMUNERATION % % a) Salaries 3,811 Discount Rate 8 8 b) Contribution to Providend Fund 186 Salary escalation rate 5 4 c) Estimated monetary value of Perquisites 28 The estimates of future salary increases, considered in actuarial valuation, 4,025 take into account infl ation, seniority, promotion and other relevant factors, Note : Previous year Managerial Remunerations are Rs. Nil. such as supply and demand in the employment market. 13. DISCLOSURE IN RESPECT OF LEASES: 19. DEFERRED TAX : The Company’s leasing arrangements are in respect of operating leases for premises Major components of deferred tax arising on account of timing differences as on March 31, occupied by the Company. These leasing arrangements are cancellable, and are renewable 2010 are: on a periodic basis by mutual consent on mutually acceptable terms. THIS YEAR PREVIOUS YEAR a. The total of future minimum lease payments under non-cancelable operating leases for each of the following periods : Rs.’000 Rs.’000 Asset THIS YEAR PREVIOUS YEAR Provision for Doubtful Debts 12 - Rs. ’000 Rs. ’000 Others 6,188 538 i. Not later than one year 458 509 6,200 538 ii. Later than one year and not later than fi ve Liabilities years - - Depreciation on Fixed Assets (97,979) (53,526) iii. Later than fi ve years - - (97,979) (53,526) b. Lease payments recognised in the statement of Net Deferred Tax Liability 91,779 52,988 Profi t & Loss for the period : 458 509 20. EARNINGS PER SHARE: 14. AUDITORS’ REMUNERATION: THIS YEAR PREVIOUS YEAR THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000 Rs.’000 Rs.’000 Profi t after tax and prior period expenses 68,029 55,860 Audit fees 165 138 Weighted average number of equity shares outstanding 70,500 70,500 Audit under Other Statutes 50 44 Basic earnings per share (Rs.) 964.95 792.34 Taxation Services - 28 Diluted earnings per share (Rs.) 964.95 792.34 TOTAL 215 210 Nominal value of shares (Rs.) 10 10 15. EXPENDITURE IN FOREIGN CURRENCY: 21. SEGMENT INFORMATION FOR THE YEAR ENDED MARCH 31, 2010 Travelling Expenses - 66 (i) Information about Primary Business Segments TOTAL - 66 Current Year Rs.’000 Revenue Oil Agri Unallocated Total 16. VALUE OF CONSUMPTION OF RAW MATERIALS, SPARES & TOOLS: Palm Inputs Plantations THIS YEAR PREVIOUS YEAR (A) (B) (C) (A)+(B)+(C) Rs.’000 % Rs.’000 % Total Sales 605,409 33,360 638,769 RAW MATERIALS : Less : Inter-segment Imported items - - - - External Sales 605,409 33,360 638,769 Result (including duty content) Segment Result 98,367 967 99,334 Indigenous 392,417 100 499,504 100 Unallocated expenditure net of unallocated income - TOTAL 392,417 100 499,504 100 Interest expenses Interest Income 7,486 7,486 SPARES & TOOLS : Dividend Income and Profi t on sale of Investments Imported items - - - - Profi t before taxation and exceptional items 98,367 967 7,486 106,820 Indigenous 4,460 100 4,659 100 Provision for taxation 38,791 38,791 Profi t after taxation and before exceptional items 98,367 967 (31,305) 68,029 TOTAL 4,460 100 4,659 100 Exceptional Items - 17. Schedule 9, item No. 21 - General Expenses includes, share of corporate overhead charged Prior years adjustments - - Profi t after taxation and exceptional items 68,029 by Group Company for Rs.12,000 thousand (previous year Rs. 9,600 thousand) Other Information 18. EMPLOYEE BENEFITS: Segment assets 737,629 4,968 132,368 874,966 I. Defi ned Contribution Plans: Segment liabilities 74,428 40 91,779 166,247 Contribution to Defi ned Contribution Plan, recognised as expense for the year are as Capital expenditure 159,554 159,554 Depreciation 40,565 40,565 under: Non-cash expenses other than depreciation Last Year THIS YEAR PREVIOUS YEAR Revenue Oil Agri Unallocated Total Rs.’000 Rs.’000 Palm Inputs Employers’ Contribution to Provident Fund 1,269 852 Plantations II. Defi ned Benefi t Plans: (A) (B) (C) (A)+(B)+(C) Total Sales 694,958 47,847 742,805 a. Contribution to Gratuity Fund Less : Inter-segment The Company makes provision for Gratuity in the books of accounts for qualifying External Sales 694,958 47,847 - 742,805 employees. Gratuity is payable to all eligible employees on superannuation, death Result Segment Result 105,457 1,928 107,385 or on separation/termination in terms of the provisions of the Payment of Gratuity Unallocated expenditure net of unallocated income 9,600 9,600 Act or as per the Company's policy whichever is benefi cial to the employees. Interest expenses - - The following table sets out the funded status of the gratuity plan and the Interest Income 250 250 Dividend Income and Profi t on sale of Investments - - amounts recognised in the Company's fi nancial statements as at March 31, 2010: Profi t before taxation and exceptional items 105,457 1,928 9,850 97,535 Provision for taxation 38,529 38,529 THIS YEAR PREVIOUS YEAR Profi t after taxation and before exceptional items 105,457 1,928 59,006 Rs.’000 Rs.’000 Exceptional Items - Change in present value of obligation Prior years adjustments 3,145 3,145 Profi t after taxation and exceptional items 55,861 Present value of obligation as at April 1, 2009 1,167 1,028 Other Information Interest Cost 65 - Segment assets 768,038 1,274 769,312 Service Cost 148 - Segment liabilities 128,622 128,622 Benefi ts Paid (80) - Capital expenditure 21,307 21,307 Depreciation 29,941 29,941 Actuarial (gain)/loss on obligation 242 139 Impairment Loss Present value of obligation, as at March 31, 2010 1,542 1,167 Non-cash expenses other than depreciation

117 Godrej Oil Palm Limited

SCHEDULE ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010 SCHEDULE 11: NOTES TO ACCOUNTS (Contd.) (ii) Information about Secondary business Segments 10 Recoveries by other Group Godrej Agrovet Ltd. 35,771 Godrej IJM Oil Palm 206 The Company operates only within India and hence the information related to Companies Ltd. Secondary Business Segment is not furnished. - (875) 11 Outstanding Payables Godrej Agrovet Ltd. - Godrej IJM Oil Palm 103 (iii) Notes Ltd. (i) The Company is organised into two main business segments,Namely (14,008) - (a) Oil Palm Plantation business 12 Outstanding receivables Godrej Agrovet Ltd. 769 Cauvery Palm Oil Ltd. 27,872 Godrej & Boyce Mfg. 68 (b) Agri-business - comprising of plant growth promoters, pesticides etc. Co. Ltd. Segments have been identifi ed and reported taking into account, the 13 Inter Corporate Deposit taken Godrej Agrovet Ltd. 10,500 nature of products and services, the differing risks and returns, the 14 Inter Corporate Deposit repaid Godrej Agrovet Ltd. 25,540 organisation structure, and the internal fi nancing reporting systems. Transactions with Fellow Subsidiaries and key management persons are Rs. Nil. (ii) The Segment revenue in each of the above business segments consists of sales 23. Figures of the previous year have been regrouped and re-classifi ed wherever necessary to conform (net of returns, sales tax, rebates etc.) to the current year’s classifi cation. (iii) Segment Revenue, Results, Assets and liabilities include the respective amounts 24. Information required to be furnished under Part IV of Schedule VI of the Companies Act, 1956. identifi able to each of the segments and amounts allocated on a reasonable i) Registration Details Application of Funds basis Registration No. U15122MH2006TLC163857 Net Fixed Assets 589,376 22. RELATED PARTY DISCLOSURES: State Code 11 Investments - Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below : Balance Sheet Date 31/3/2010 Net Current Assets 257,796 ii) Capital raised during the year Misc. Expenditure - 1. Relationships : (Rupees ’000) Accumulated Losses Nil (i) Holding Companies: Public Issue Nil iv) Performance of Company Godrej Agrovet Limited (GAVL) holds 80% in the Company. GAVL is the subsidiary of Rights Issue Nil (Rupees ’000) Godrej Industries Limited (GIL) & GIL is the subsidiary of Godrej & Boyce Mfg Co Ltd, Bonus Issue Nil Turnover 646,582 the ultimate Holding Company. Private Placement Nil Total Expenditure 539,762 iii) Position of mobilisation and deployment of funds Profi t before tax 106,820 (ii) Fellow Subsidiaries: (Rupees ’000) Profi t after tax 68,029 Golden Feed Products Limited Total Liabilities 874,966 Earning Per Share in Rs. 964.95 Cauvery Palm Oil Limited. Total Assets 874,966 Dividend rate - (iii) Other related parties where persons mentioned (iv) below exercise signifi cant Sources of Funds infl uence: Paid-up Capital 705 v) Generic Names of three principal Reserves & Surplus 708,014 products services of Company Godrej IJM Palm Oil Limited Secured Loans Item Code No. 151110 and Godrej Gold Coin Aquafeed Limited 151321 Godrej Tyson Foods Ltd. Unsecured Loans 46,674 Product Description Crude Palm Nature Basket Limited. Oil and Palm (iv) Key management persons Kernel Oil Mr. B. S. Yadav For and on behalf of Board Mr. R. R. Govindan N. B. GODREJ R. R. GOVINDAN 2. The following transactions were carried out with the related parties in the ordinary course Chairman Director of business : Mumbai, May 17, 2010 Rs.’000 Holding Other Related CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010 Nature of Transactions Companies Parties THIS YEAR PREVIOUS YEAR (i) (iii) Rs.’000 Rs.’000 Rs.’000 I Expenses charged by other companies 3,926 447 A. Cash Flow from Operating Activities: (52,475) (875) Profi t before Tax and Operational Items 106,820 97,535 Adjustments for: II Expenses charged to other companies - 2,683 Depreciation 40,565 29,941 III Sale of materials/fi nished goods 6,249 405 Loss on sale of Fixed Assets/Write off 174 8 (8,378) - Interest Income (7,486) (303) IV Purchase of Material - 1,680 Interest paid 1,560 250 (24,222) (2,044) Provision for Doubtful Debts and Advance 36 - V Inter Corporate Deposit placed - 65,500 Sundry Balances written back (47) VI Fixed Assets Purchased 825 - Prior Period Adjustment - (3,145) VII Advance paid for Fixed Assets 68 - 34,802 26,751 VIII Debenture redumption with interest repayment 1,931 - Operating Profi t before Working Capital Changes 141,622 124,286 IX Recoveries from other Group Companies 2,415 63 Adjustments for: (636) (846) Inventories (17,953) (3,185) X Recoveries by other Group Companies 35,771 206 Debtors increase/decrease 23,040 (39,308) Other receivable increase/decrease (79) (330) XI Outstanding Payables - 103 Loans and advances increase/decrease 24,982 79,098 (14,008) - Creditors and Other payables 7,303 4,413 XII Outstanding receivables 837 27,872 37,293 40,688 XIII Inter Corporate Deposit taken 10,500 - Cash Generated from Operations 178,915 164,974 XIV Inter Corporate Deposit repaid 25,540 - Direct taxes Paid (18,493) (45,960) Transactions with Fellow Subsidiaries and key management persons are Rs. Nil Net Cash Generated from Operating Activities 160,422 119,014 B. Cash from Investing Activities: 3. Signifi cant Related Party Transactions : Acquisition of Fixed Assets (159,554) (36,651) Nature of Transactions Holding Companies Other Related Proceeds from sales of Fixed Assets 25 3 Parties Interest Income 7,486 303 (i) Amount Amount Net Cash used in Investing Activities (152,043) (36,344) 1 Expenses Charged by other Godrej Agrovet Ltd. 3,414 Cauvery Palm Oil Ltd. 447 C. Cash from Financing Activities: Companies Debenture (2,500) - (52,475) - Godrej Industries Ltd. 512 Interest on Debenture (63) 202 2 Expenses Charged to other Cauveri Palm Oil Ltd. 2683 Inter Corporate Deposits (67,915) Companies Interest paid (1,497) (250) 3 Sale of materials/fi nished goods Godrej Agrovet Ltd. 4,462 Godrej IJM Oil Palm 322 Net Cash used in Financing Activities (71,975) (48) Ltd. Net Increase/(Decrease) in Cash and Cash (8,378) - Equivalents (63,596) 82,622 Godrej Industries Ltd. 1,787 Cauvery Palm Oil Ltd. 83 Cash and Cash equivalents at beginning of 4 Purchase of Material Godrej Agrovet Ltd. - Godrej IJM Oil Palm 1,296 Ltd. period 84,392 1,769 (24,222) (2,044) Cash and Cash equivalents at end of period 20,796 84,392 Cauvery Palm Oil Ltd. 384 5 Inter Corporate Deposit placed Cauvery Palm Oil Ltd. 25,500 Nature Basket Limited 40,000 As per our Report of even date attached 6 Fixed Assets Purchased Godrej Agrovet Ltd. 230 For and on behalf of For and on behalf of Board Godrej & Boyce Mfg. 595 KALYANIWALLA & MISTRY Co.Ltd. 7 Advance paid for Fixed Assets Godrej & Boyce Mfg. 68 Chartered Accountants Co.Ltd. ERMIN K. IRANI N. B. GODREJ R. R. GOVINDAN 8 Debenture redumption with Godrej Industries Ltd. 1,931 interest repayment Partner Chairman Director 9 Recoveries from other Group 2,415 Godrej IJM Oil Palm 63 Membership No. 35646 Companies Ltd. Mumbai, May 17, 2010 (636) (846)

118 Annual Report 2009–2010 Cauvery Palm Oil Limited

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010 To The Shareholders Dr. V. Krishnamurthy and Mr. Jayakar Krishnamurthy retire by rotation at the ensuing Annual Your Directors have pleasure in submitting their Report along with the audited Accounts for the General Meeting of the Company in accordance with Section 256 of Companies Act, 1956 and fi nancial year ended on March 31, 2010. provisions of Articles of Association of the Company and being eligible offer themselves for FINANCIAL RESULTS reappointment. Your Company’s performance during the year as compared with that during the previous year is AUDITORS summarized below:- You are requested to appoint Auditors for the current year and fi x their remuneration. The Rs. in Lac retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re- This Year Previous Year appointment and a certifi cate as required u/s 224 (1-B) of the Companies Act, 1956, has been Total Income 219.02 385.85 received from them. Profi t Before Taxation (PBT) (329.19) (190.52) ADDITIONAL INFORMATION Less : Provision for Taxation 0.00 (2.83) The additional information required to be given under the Companies Act, 1956, has been laid Profi t After Taxation (PAT) (329.19) (193.36) out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts Adjustment to Capital Reserve for previous year depreciation 0.00 41.80 referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further Balance brought forward from previous year (252.56) (101.00) explanation. Total (581.75) (252.56) STATUTORY INFORMATION Balance Carried Forward to Balance Sheet (581.75) (252.56) A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo OPERATIONAL HIGHLIGHTS Your Company operated under highly adverse conditions during the year which witnessed a severe The information in respect of these matters, required under Section 217 (1)(e) of the drought leading to a major drop in the FFB yield per hectare. The area coverage was extremely Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of constrained due to fall in the prices of fresh fruit bunches coupled with highly attractive the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the economics of competing crops such as sugar. Annexure “A” to this report. FINANCIAL POSITION B) Particulars of Employees The Accumulated los of your company exceeds 50% of its networth. Your Directors propose to None of the employees is covered under the provisions of Section 217 (2A) of the Companies infuse further share capital into the Company to strengthen its fi nancial position. The accounts Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002. have been prepared on a goind concern basis on the assumption that requisite funds will be available to Your Company. Your Company operates in the Oil Palm Plantation business, which C) Directors’ Responsibility Statement is a long gestation business. Your Company is strongly placed in view of allotment of potentially Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the high yielding area in the Cauvery delta. Your Company has made a major area expansion of Oil Directors of your Company confi rm:- Plam Plantation during 2006-07 to 2009-10, the benefi t of which is goint to be fl own in the coming a) that in the preparation of the annual accounts, the applicable Accounting Standards years. have been followed and no material departures have been made from the same; Shares issued out of Revaluation Reserve have been capitalized by issue of Bonus Shares during 2001-02, which, presently your company is not in a position to rectify. b) that they have selected such Accounting Policies and applied them consistently and DIVIDEND made judgements and estimates that are reasonable and prudent so as to give a true The Directors do not recommend any dividend for the year 2009-10. and fair view of the state of affairs of the Company at the end of the fi nancial year and FIXED DEPOSITS of the profi t or loss of the Company for that period; The Company has not accepted any public deposits during the fi nancial year under review. c) that they have taken proper and suffi cient care for the maintenance of adequate HOLDING COMPANY accounting records in accordance with the provisions of this Act for safeguarding the The Company is a subsidiary of Godrej Agrovet Limited as defi ned under Section 4(1)(b) of the assets of the Company for preventing and detecting fraud and other irregularities; Companies Act, 1956. d) that they have prepared the annual accounts on a going concern basis. SUBSIDIARY COMPANIES HUMAN RESOURCES The Company has no subsidiary companies during the year under review. Your Company continues to focus on development of Human Resources. The industrial relations DIRECTORS are cordial and the Board would like to place on record its sincere appreciation for the unstinted The following are the present Directors of the Company: support from all the employees. 1. Dr. V. Krishnamurthy (Chairman) 2. Mr. Jayakar Krishnamurthy (Director) For and on behalf of the Board of Directors 3. Mr. N. B. Godrej (Director) 4. Mr. B. S. Yadav (Director) V. Krishnamurthy 5. Mr. R. R. Govindan (Director) Mumbai, May 17, 2010 Chairman

ANNEXURE 'A' ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT

INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH B] Technology Absorption, Adaptation and Innovation THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) I. Your Company continues its endeavours for technological upgradation. RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN II. The Company’s expenditure on R&D is given below:- EXCHANGE EARNINGS & OUTGO: This Year Previous Year A] Conservation of Energy Rs. in Lac Rs. in Lac Your Company continues its policy of implementing various energy conservation measures (a) Capital Nil Nil considering the same as an effective means of saving cost and also a corporate social (b) Recurring Nil Nil responsibility. The systems installed to conserve energy are regularly reviewed. (c) Total Nil Nil Some measures adopted by the Company during the year under review for conservation of (d) Total R & D expenditure as a percentage of total turnover Nil Nil energy were as follows:- C] Foreign Exchange earnings and outgo 1) HT connection proposed to be obtained. This Year Previous Year 2) Installation of 250 KVA transformer. Rs. in Lac Rs. in Lac 3) Use of DG set for running of the factory. I. Foreign exchange used Nil Nil The adoption of above energy conservation measures will result in the following benefi ts to II. Foreign exchange earned Nil Nil the Company:- For and on behalf of the Board of Directors a) Considerable saving on energy cost. V. Krishnamurthy b) Increase in the life of plant & machinery. Mumbai, May 17, 2010 Chairman

119 Cauvery Palm Oil Limited

AUDITORS’ REPORT e) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with To by this report are in agreement with the books of account. The Members of Cauvery Palm Oil Limited f) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to 1. We have audited the attached Balance Sheet of Cauvery Palm Oil Limited, as at in sub-section (3C) of section 211 of the Companies Act, 1956. 31st March 2010 and also the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are g) In our opinion and to the best of our information and according to the explanations the responsibility of the Company’s management. Our responsibility is to express an opinion given to us, the said fi nancial statements subject to b) & c) above and read with on these fi nancial statements based on our audit. the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting 2. We conducted our audit in accordance with auditing standards generally accepted in India. principles generally accepted in India: Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes i) in the case of the Balance Sheet, of the state of affairs of the Company as at examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial March 31, 2010; and statements. An audit also includes assessing the accounting principles used and signifi cant ii) in the case of the Profi t and Loss Account, of the loss for the period ended on that date. estimates made by management, as well as evaluating the overall fi nancial statement iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the presentation. We believe that our audit provides a reasonable basis for our opinion. period ended on that date. 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central 5. On the basis of the written representations received from the Directors as on Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we March 31, 2010, and taken on record by the Board of Directors, we report that, none of the annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order. Directors is disqualifi ed as on March 31, 2010 from being appointed as a Director in terms of 4. Further to our comments in the Annexure referred to in paragraph (3) above we report clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. that: a) The accounts have been prepared on a going concern basis on the assumption that For and on behalf of funds will be available for working capital as the net worth of the Company has been KALYANIWALLA & MISTRY eroded. Chartered Accountants b) Shares issued out of Revaluation Reserve have been capitalised by issue of Bonus Firm Registration No: 104607W Shares. c) We have obtained all the information and explanations, which to the best of our ERMIN K. IRANI knowledge and belief were necessary for the purposes of our audit. Partner d) In our opinion, proper books of account as required by law have been kept by the Membership No. 35646 Company so far as appears from our examination of these books. Mumbai, May 17, 2010

ANNEXURE TO THE AUDITORS’ REPORT Referred to in paragraph (3) of our report of even date 1) (a) The Company has maintained proper records showing full particulars, including 9) (a) According to the information and explanations given to us and on the basis of our quantitative details and situation of fi xed assets. examination of books of accounts, during the period, the Company has no statutory (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at dues including Provident Fund, Investor Education and Protection Fund, Employees’ periodic intervals. In our opinion, the periodic verifi cation is reasonable having regard State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, to the size of the Company and the nature of its assets. No material discrepancies have Custom Duty, Excise Duty, Cess and other statutory dues incurred during the period been reported on such verifi cation. covered. According to the information and explanations given to us, there are no (c) In our opinion, the disposal of fi xed assets during the year does not affect the going undisputed dues, payable in respect of above as at March 31, 2010 for a period of more concern assumption. than six months from the date they became payable. 2) (a) The Management has conducted physical verifi cation of inventory at reasonable intervals. (b) According to the information and explanations given to us, there are no dues outstanding (b) In our opinion, the procedures of physical verifi cation of inventory followed by the of Sales Tax, Income Tax, Wealth Tax, Excise Duty, Cess on account of any dispute. management are reasonable and adequate in relation to the size of the Company and 10) The accumulated losses of the Company at the end of the fi nancial year exceed fi fty percent the nature of its business. of its net worth. The Company has incurred cash losses in the current fi nancial year and also (c) The Company is maintaining proper records of inventory and no material discrepancies in the immediately preceding fi nancial year. were noticed on physical verifi cation. 11) According to the information and explanations given to us and based on the documents 3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other and records produced to us, there are no dues to banks, fi nancial institutions or debenture parties covered in the register maintained under Section 301 of the Companies Act, 1956. holders. (b) Consequently, the question of commenting on the rates of interest and conditions of 12) According to the information and explanations given to us and based on the documents and the loans granted being prejudicial to the interests of the Company, receipt of regular records produced to us, the Company has not granted loans and advances on the basis of principal and the interest and reasonable steps for recovery of principal and interest security by way of pledge of shares, debentures and other securities. does not arise. 13) In our opinion and according to the information and explanations given to us, the nature of (c) The Company has taken unsecured loans of Rs. 25,500 thousand from a company activities of the Company does not attract any special statute applicable to chit fund and covered in the register maintained under Section 301 of the Act. The maximum amount nidhi/mutual benefi t fund/societies. involved during the year was Rs. 25,500 thousand and year-end balance of loan taken 14) The Company does not deal in shares, securities, debentures and other investments. from such party was Rs. 25,500 thousand. (d) The rate of interest and the other terms and conditions of the unsecured loan taken is 15) According to the information and explanations given to us, the Company has not given any not prima facie prejudicial to the interest of the Company. guarantee for loans taken by others from banks or fi nancial institutions. (e) As informed to us the payment of principal and interest, to the extent due, has been 16) According to the information and explanations provided to us, there are no term loans, regular. hence the question of its application for the purposes for which they were obtained is not applicable. 4) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the Company and the 17) According to the information and explanations given to us and an overall examination of the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods Balance Sheet and Cash Flows of the Company, we report that the Company has not raised and services. During the course of our audit, we have not observed a continuing failure to funds on short-term or long-term basis. correct major weakness in internal controls. 18) The Company has not made any preferential allotment of shares to parties or companies 5) (a) Based on the audit procedures applied by us and according to the information and covered in the register maintained under Section 301 of the Companies Act, 1956. explanations provided by the management, we are of the opinion that the particulars 19) The Company did not issue any debentures during the year. of contracts and arrangements referred to in Section 301 of the Companies Act, 1956, 20) The Company has not raised any money through a public issue during the year. have been entered into the register required to be maintained under that section. 21) Based on the audit procedures performed and information and explanations given by the (b) The transactions made in pursuance of such contracts or arrangements, were made at management, we report that no fraud on or by the Company has been noticed or reported prices which are reasonable having regard to prevailing market prices at the relevant time. during the year. For and on behalf of 6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA KALYANIWALLA & MISTRY or any other provisions of the Companies Act, 1956, are not applicable. Chartered Accountants 7) In our opinion and according to the information and explanations given to us, the internal Firm Registration No: 104607W audit system is commensurate with the size of the Company and the nature of its business. ERMIN K. IRANI 8) According to the information and explanation given to us, the maintenance of cost records Partner has not been prescribed by the Central Government, under Section 209(1)(d) of the Membership No. 35646 Companies Act, 1956, for any of the Company’s products. Mumbai, May 17, 2010

120 Annual Report 2009–2010

BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR This Year Previous Year Schedule Rs. Rs. ENDED MARCH 31, 2010 SOURCES OF FUNDS This Year Previous Year Shareholders’ Funds Schedule Rs. Rs. Share Capital 1 38,000,000 38,000,000 Income 10 Reserves & Surplus 2 25,730,017 26,775,013 Sales - Palm Oil Mill 13,348,807 15,067,287 Loan Funds Revenue from Nursery Operations 8,268,540 23,454,055 Secured Loans 3 59,409,919 35,568,732 Other Income 284,197 64,243 Unsecured Loans 4 28,302,594 27,033,896 21,901,544 38,585,585 151,442,530 127,377,641 Expenditure APPLICATION OF FUNDS Materials 11 8,951,082 10,511,104 Fixed Assets Payroll Cost 12 15,748,526 14,419,336 Gross Block 48,869,150 49,640,849 Expenses 13 18,467,199 24,026,248 Less : Depreciation 5 12,177,091 10,632,189 Interest & Finance Charges 14 9,063,453 5,841,271 Net Block 36,692,059 39,008,660 Depreciation 2,171,308 2,415,124 Project Development Cost 6 13,800,000 14,950,000 Less: Adjustment of Capital Reserve for Current Assets, Loans & Advances 7 Current Year 1,044,996 1,126,312 1,045,001 1,370,123 Inventories 19,818,322 21,257,643 Project Development Cost Written Off 1,150,000 1,150,000 Sundry Debtors 14,523,850 14,578,807 Misc Expenditure Written Off 314,312 320,371 Cash and Bank Balances 303,694 982,743 54,820,884 57,638,453 Loans & Advances 717,995 835,598 (Loss) before tax (32,919,340) (19,052,868) Provision for Taxation - Current – - 35,363,861 37,654,791 - Deferred (Note 13 of Schedule 15) – - Less: Current Liabilities & Provisions 8 - Fringe Benefi t Tax – 283,000 Current Liabilities 10,377,242 5,929,276 (Loss) after Tax (32,919,340) (19,335,868) Provisions 950,582 2,615,940 Adjustment of Capital Reserve for Previous 11,327,824 8,545,216 Years to Depreciation - 4,180,004 Net Current Assets 24,036,037 29,109,575 Defi cit brought forward from previous year (25,256,012) (10,100,148) Miscellaneous Expenditure 9 18,739,082 19,053,394 Defi cit carried to Balance Sheet (58,175,352) (25,256,012) (to the extent not written off or adjusted) Earnings Per Share (Basic/Diluted) in Rs. Profi t & Loss Account 58,175,352 25,256,012 (Refer Note 8 Schedule 15) (8.66) (5.09) TOTAL 151,442,530 127,377,641 Notes to Accounts & Signifi cant Accounting Notes to Accounts & Signifi cant Accounting Policies 15 Policies 15

The Schedules referred to above form an Signatures to Balance Sheet and The Schedules referred to above form an Signatures to Profi t and Loss and integral part of the Balance Sheet Schedules 1 to 9 and 15 integral part of the Profi t and Loss Account Schedules 10 to 15 As per our Report of even date attached As per our Report of even date attached For and on behalf of For and on behalf of the Board For and on behalf of For and on behalf of the Board KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY Chartered Accountants Chartered Accountants ERMIN K. IRANI Nilesh N. Pingale V. Krishnamurthy R. R. Govindan ERMIN K. IRANI Nilesh N. Pingale V. Krishnamurthy R. R. Govindan Partner Company Secretary Chairman Director Partner Company Secretary Chairman Director Membership No. 35646 Membership No. 35646 Mumbai, May 17, 2010 Mumbai, May 17, 2010 SCHEDULES TO ACCOUNTS This Year Previous Year This Year Previous Year Rs. Rs. Rs. Rs. SCHEDULE 1: SHARE CAPITAL SCHEDULE 3: SECURED LOANS Authorised 50,00,000 Equity Shares of Rs. 10/- each 50,000,000 50,000,000 From Bank TOTAL 50,000,000 50,000,000 - Term Loan (including Interest Accrued and 39,176,936 19,970,687 Issued, Subscribed and Paid up Due Rs.24,15,243) 38,00,000 Equity Shares of Rs.10/- each fully 38,000,000 38,000,000 Repayable within One Year: Rs.33,58,596 paid. - Of the above 34,20,000 shares is held by Godrej (Previous Year: Rs.18,14,594) Agrovet Limited, the Holding Company. - Overdraft (Refer Note 5 of Schedule 15) 20,232,983 15,598,045 - Includes 23,00,000 Equity Shares of TOTAL 59,409,919 35,568,732 Rs. 10/- each Issued as Fully paid Bonus Shares by capitalising the Revaluation Reserve SCHEDULE 4: UNSECURED LOANS TOTAL 38,000,000 38,000,000 Inter Corporate Deposit 25,500,000 25,500,000 SCHEDULE 2: RESERVES & SURPLUS Interest accrued and due on Inter Corporate 2,802,594 1,533,896 Capital Reserve As per last Balance Sheet 16,775,013 22,000,018 Deposits Less : Adjustment to Depreciation for Previous Year - 4,180,004 Less : Adjustment to Depreciation for Current Year 1,044,996 1,045,001 TOTAL 28,302,594 27,033,896 15,730,017 16,775,013 Share Premium Account 10,000,000 10,000,000 TOTAL 25,730,017 26,775,013

SCHEDULE 5: FIXED ASSETS Rs. Particulars Gross Block Depreciation Net Block As at Additions Deletions As at Upto Additions Deletions Upto As at As at 01.04.2009 31.03.2010 01.04.2009 31.03.2010 31.03.2010 31.03.2009 Lands - Freehold 396,544 - - 396,544 - - - - 396,544 396,544 Lands - Leasehold 54,000 - - 54,000 - - - - 54,000 54,000 Buildings 14,475,707 - - 14,475,707 1,760,662 351,797 - 2,112,459 12,363,248 12,715,045 Plant & Machinery 30,477,564 29,255 - 30,506,819 6,876,481 1,452,797 - 8,329,278 22,177,541 23,601,083 Offi ce Equipment 330,222 911 - 331,133 291,146 3,668 - 294,814 36,319 39,076 Furniture & Fixtures 107,835 1,395 - 109,230 70,676 5,362 - 76,038 33,192 37,159 Computers 447,015 37,533 16,445 468,103 320,999 51,150 14,885 357,264 110,839 126,016 Vehicles 3,351,962 - 824,348 2,527,614 1,312,225 306,534 611,521 1,007,238 1,520,376 2,039,737 TOTAL 49,640,849 69,094 840,793 48,869,150 10,632,189 2,171,308 626,406 12,177,091 36,692,059 39,008,660 PREVIOUS YEAR 48,080,249 1,622,462 61,862 49,640,849 8,237,977 2,415,124 20,912 10,632,189 39,008,660 -

121 Cauvery Palm Oil Limited

SCHEDULES TO ACCOUNTS This Year Previous Year This Year Previous Year Rs. Rs. Rs. Rs. SCHEDULE 12: PAYROLL COST SCHEDULE 6: PROJECT DEVELOPMENT COST Salaries, Wages, Bonus 14,582,810 13,195,851 As per last Balance Sheet 14,950,000 16,100,000 Contribution to Provident and other Funds 886,575 967,378 Less : Written Off for the year 1,150,000 1,150,000 Staff Welfare Expenses 279,141 256,107 TOTAL 13,800,000 14,950,000 15,748,526 14,419,336 SCHEDULE 7: CURRENT ASSETS, LOANS & ADVANCES SCHEDULE 13: EXPENSES INVENTORIES Advertisement and Sales Promotion 251,339 382,142 (At Cost) Auditors' Remuneration 354,972 245,000 Stock of Stores & Spares 657,197 1,146,019 Carriage and Freight 240,637 1,686,112 Stock of Crude Palm Oil 230,480 469,937 Insurance 237,270 305,653 Stock of Seedlings 18,930,645 19,641,687 Legal and Professional Charges 1,349,144 1,634,435 19,818,322 21,257,643 Miscellaneous Expenses 876,852 755,619 SUNDRY DEBTORS Nursery Daily Expenses 6,616,850 9,891,028 (Unsecured, considered good) Postage, Telephone and Stationery 454,415 736,744 Debts outstanding for more than six months 8,803,530 4,123,100 Power, Light and Fuel 659,964 917,290 Other Debts 5,720,320 10,455,707 Loss on Sale of Assets - 40,950 14,523,850 14,578,807 Bad Debts Written Off 1,166,730 - CASH & BANK BALANCES Rates and Taxes 102,320 127,871 Cash on hand 5,976 37,562 Rent 1,138,816 964,870 Balance with Scheduled Banks in Current Accounts 175,170 238,736 Repairs and Maintenance Fixed Deposit with Bank 122,548 706,445 - Building 13,600 49,495 303,694 982,743 - Machinery 427,591 510,293 LOANS & ADVANCES - Others 52,360 28,408 (Unsecured and considered good) Travelling and Motor Car Expenses 4,524,339 5,750,338 Advances recoverable in cash or in kind or for value to be received 652,837 725,220 18,467,199 24,026,248 Interest Receivable - 13,117 SCHEDULE 14: INTEREST & FINANCE CHARGES Deposits 65,158 97,261 On Fixed Loans TOTAL 717,995 835,598 - Banks 4,316,240 705,775 SCHEDULE 8: CURRENT LIABILITIES & PROVISIONS - Others 3,113,993 2,539,603 CURRENT LIABILITIES On Other Loans Sundry Creditors - Banks 1,399,805 2,297,210 - Total outstanding dues of Micro Enterprises and Small Enterprises - - - Bank Charges 233,415 298,683 - Others 624,066 2,366,667 9,063,453 5,841,271 - Investor Education & Protection Fund - - Advance from Customers 19,377 168,025 SCHEDULE 15 : NOTES TO ACCOUNTS Other Liabilities 9,733,799 3,394,584 1. Signifi cant Accounting Policies 10,377,242 5,929,276 a. Cost Convention PROVISIONS The fi nancial statements have been prepared and presented under the historical - For Bonus 327,347 607,711 cost convention, on the accrual basis of accounting and comply with the Accounting - For Super Annuation - 1,147,582 Standards prescribed in the Companies (Accounting Standards) Rules, 2006 and the - For Leave Encashment 623,235 845,647 relevant provisions of the Companies Act, 1956 (‘the Act’), to the extent applicable. - For Fringe Benefi t Tax - 15,000 b. Revenue Recognition TOTAL 950,582 2,615,940 SCHEDULE 9: MISCELLANEOUS EXPENDITURE All receivables and expenditures are accounted on accrual basis except where stated (To the extent not written off or adjusted) otherwise. Preliminary Expenses c. Sales As per the Last Balance Sheet - 6,067 Sales are exclusive of Sales Tax/VAT. Less : Written off during the year - 6,067 d. Valuation of Stock of Seedlings TOTAL (A) - - The Valuation of stock of seedlings is at actual cost. The Valuation of Stores, Tools and Pre-Operative Expenses - Nursery Operations 314,312 628,616 Spares, Crude Palm Oil and Nuts are valued at cost or net realisable value whichever is Less : Written off during the year 314,312 314,304 lower. TOTAL (B) - 314,312 Pre-Project Activities - Cuddalore & Villupuram Districts 18,739,082 18,739,082 e. Fixed Assets Incurred during the year - Fixed Assets are stated at cost, which include all direct expenses incurred to bring the TOTAL (C) 18,739,082 18,739,082 assets to the working condition for its intended use. TOTAL (A+B+C) 18,739,082 19,053,394 f. Depreciation SCHEDULE 10: INCOME The Depreciation on Fixed Assets is calculated on Straight Line Method at rates specifi ed Sales - Palm Oil Mill in the Schedule XIV of the Companies Act, 1956. Depreciation is charged on a pro-rata Sale of Crude Palm Oil 12,274,765 13,204,369 basis for assets purchased/sold during the year. Individual assets costing Rs. 5,000/- or Sale of Oil Palm Nuts 1,074,042 1,862,918 less are depreciated in full in the year of purchase. Depreciation on assets purchased 13,348,807 15,067,287 against grant in aid is adjusted against capital reserve. Revenue from Nursery Operations g. Employee Benefi ts Sprouts Revenue - 9,420,000 a) Short-term employee benefi ts: Seedlings Revenue 8,268,540 14,034,055 8,268,540 23,454,055 All employee benefi ts payable wholly within twelve months of rendering the Other Income service are classifi ed as short-term employee benefi ts. Benefi ts such as salaries, Interest Received on Deposits 21,504 14,293 wages, performance incentives, etc. are recognised at actual amounts due in the Gain on Fluctuation of Foreign Exchange - 49,950 period in which the employee renders the related service. Profi t on sale of Fixed Assets 66,082 - b) Post-employment benefi ts: Miscellaneous Income 196,611 - (i) Defi ned Contribution Plans: 284,197 64,243 Payments made to defi ned contribution plans such as Provident Fund are SCHEDULE 11: MATERIALS charged as an expense as they fall due. Raw Materials Consumed (ii) Defi ned Benefi t Plans: Opening Stock - - Add: Purchases during the year 8,711,625 10,744,828 Gratuity: The Company accounts its liability for future gratuity benefi ts Less: Closing Stock - - based on actuarial valuation as at the Balance Sheet date, determined 8,711,625 10,744,828 using the Projected Unit Credit method. Gratuity benefi t is funded with Life Inventory Change Insurance Corporation of India. Actuarial gains and losses are recognised Opening Stock of Finished Goods 469,937 236,213 immediately in the Profi t & Loss Account. Less: Closing Stock of Finished Goods 230,480 469,937 Leave Encashment: Liability for Leave encashment payable at the time of 239,457 (233,724) retirement/resignation determined as on the Balance Sheet date, based on 8,951,082 10,511,104 actuarial valuation using the Projected Unit Credit Method, is provided for. Actuarial gains and losses in respect of such benefi ts are charged to the Profi t and Loss Account. Other Benefi ts: All other benefi ts are either paid or provision is created in the Accounts.

122 Annual Report 2009–2010

h. Government Grants 10. As per the information available with the Company, there is no overdue outstanding payable Grants in terms of Capital/Investment Subsidy are treated as Capital Reserve. to Small Scale Industrial Units as at March 31, 2010. i. Foreign Exchange Fluctuations 11. Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force Transactions in foreign currency are recorded at the exchange rates prevailing on the on October 2, 2006, the Company is required to make certain disclosures relating to Micro, date of the transaction. Assets and liabilities related to foreign currency transactions, Small and Medium Enterprises. The Company is in the process to compiling and assimilating the remaining unsettled at the year-end, are stated at year-end rates. Exchange gains/ relevant information from its suppliers about their coverage under the Act. Since the relevant losses are recognised in the Profi t and Loss Account. information is not readily available, no disclosures have been made in the Accounts. j. Borrowing Cost 12. Disclosure Under AS – 15 : The Company had availed Term Loan from a Bank and the funds were utilised for the I. Defi ned Contribution Plans: purchase of Assets in the regular course of the business of the Company. The Company Contribution to Defi ned Contribution Plan, recognised as expense for the year are as also availed Working Capital facility from the said Bank. The interest cost on these under: This Year loans is included in the fi nance charges. The interest cost of this Term Loan and the Rs. Working Capital facility is apportioned between Nursery Operations and Palm Oil Mill in Employers’ Contribution to Provident Fund 886,575 the ratio of 60 : 40, which is the ratio of Income of these activities. k. Income Tax II. Defi ned Benefi t Plan: Deferred tax is recognised on timing differences, being the differences between a. Contribution to Gratuity Fund the taxable income and the accounting income that originate in one period and are The Company makes provision for gratuity in the books of accounts for qualifying capable of reversal in one or more subsequent periods. Deferred Tax assets, subject to employees. Gratuity is payable to all eligible employees on superannuation, death or consideration of prudence, are recognised and carried forward only to the extent that on separation/termination in terms of the provisions of the Payment of Gratuity Act. there is a reasonable certainty that suffi cient future taxable income will be available Reconciliation of the projected benefi t obligations against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year-end, based on the tax rates and laws This Year enacted or substantially enacted on the balance sheet date. Rs. l. Earnings Per Share Change in projected benefi t obligation Obligations at period beginning 807,305 The basic earnings per share are computed using the weighted average number of Service Cost 187,535 common share outstanding during the period. Diluted earning per share is computed Interest Cost 64,584 using the weighted average number of common and dilutive common equivalent shares outstanding during the period, expcept where the results would be anti-dilutive. Benefi ts Paid (371,202) Actuarial (Gain)/Loss (29,356) m. Intangible Assets Obligations at period end 658,866 The Company did not acquire any Intangible Asset during the year. n. Miscellaneous Expenditure This Year i. The Miscellaneous Expenditure is amortised over a period of 5 years commencing Rs. from the year 2004-05, as allowed under Section 35D of the Income-Tax Act. Reconciliation of present value of obligation and fair value of plan assets ii. Pre-operative Expenses of Rs. 15,71,543/- representing the net of expenditure Fair Value of plan assets at the end of the year 710,341 over the income upto 31.03.2005, after considering stock of seedlings as on that Present Value of defi ned benefi t obligation at the end of the year 658,866 date for the Nursery Operations, is being written off in 5 years commencing from Liability recognised at the balance sheet 51,475 the fi nancial year 2005-2006. iii. Pre Project Expenses are written off in the year the expenses are incurred. This Year o. Project Development Cost Rs. Gratuity cost for the period The Company writes off the balance Project Development Cost of Rs. 230 Lacs (after netting of the Revaluation Reserve of Rs. 630 Lacs) over a period of twenty years. Service cost 187,535 Interest cost 64,584 From the fi nancial year 2008-09 Company has changed the accounting policy for Expected return on plan assets (80,300) treatment of project development cost, as per the new policy the expenses incurred Actuarial (Gain)/Loss (26,851) towards the project development cost will be charged off in the same year. Net Gratuity Cost 144,968 2. Contingent Liabilities. The Company has given a Bank Guarantee of Rs. 10 Lacs (Previous Year: Rs.10 Lacs) to Assumptions Government of Tamil Nadu, through the Commissioner of Agriculture. Discount Rate 8% 3. The common expenses of Nursery Operations and Palm Oil Mill are apportioned in the Salary Escalation Rate 5% appropriate working ratios. 4. The Company commenced Area Development Activity in Cuddalore and Villupuram Districts 13. Deferred Tax during 2006-2007 based on the Allotment Letter issued by Government of Tamil Nadu. The This Year expenses capitalised upto March 2008 totalling to Rs. 187.39 Lacs shall be written off in the In Rs. subsequent years. A. Deferred Tax Liabilities arising from: 5. The Term Loan and Bank Overdraft Facility from City Union Bank is secured by Equitable Differences between carrying amount of fi xed 5,102,587 Mortgage of Palm Oil Mill Land, Buildings and Hypothecation of Plant and Machinery and Assets in fi nancial statements & the Income Tax Return other equipments, present and future, situated at the Palm Oil Mill and stock of oil palm seedlings at Company’s Nurseries and the said loans are further guaranteed by a comfort 5,102,587 letter from Godrej Agrovet Limited. B. Deferred Tax Assets arising from: Provision for Gratuity – 6. The Company has been granted Financial Assistance in the form of Grant-in-aid by the Provision for Bonus 97,355 Government of India of Rs. 240 Lacs for establishment of demonstration unit of oil palm Provision for Leave Encashment 77,685 processing mill of 2.5 Tonnes per hour capacity at a total cost of Rs. 400 Lacs. Against this Financial Assistance, during the fi nancial years 2002-03 and 2003-04, the Company received Unabsorbed depreciation allowance carried forward as per Income 4,927,547 a total fi nancial assistance of Rs. 2,20,00,018/-. This amount is credited to the ‘Capital Tax Act, 1961 Reserve’ and shown under the Head ‘Reserves and Surplus’. 5,102,587 7. Leasehold Land is not amortised over the period of the Lease. The deferred tax asset as at March 31, 2010 computed on unabsorbed depreciation amounts 8. Earnings Per Share: to Rs. 8,603,305 (Previous Year Rs. 8,647,054). However, the same is restricted to the amount of deferred tax liability on timing differences amounting to Rs. 4,927,547. The difference This Year Previous Year amounting to Rs. 3,675,758 has not been recognised in the absence of virtual certainty of Profi t/(loss) after tax and prior period items (Rs.) (32,919,338) (19,335,868) future taxable income in accordance with Accounting Standards Interpretation (ASI) 9, on Weighted average number of equity shares outstanding 3,800,000 3,800,000 “Virtual certainty supported by convincing evidence”, issued by the Institute of Chartered Basic & Diluted earnings per share - (8.66) (5.09) Accountants of India. Nominal value of shares – Rs. 10.00 10.00 9. The Company has no fi nancial leases. Operating leases are in the nature of lease of Nursery The tax impact for the above purpose has been arrived by applying tax rate of 30.99% being Lands with no restrictions and renewable at mutual consent. prevailing tax rate for Indian Companies under Income Tax Act, 1961. The Company’s leasing arrangements are in respect of operating leases for premises 14. The additional information pursuant to the provisions of paragraphs 3 and 4 of Part II of occupied by the Company. These leasing arrangements are cancellable, and are renewable Schedule VI of Companies Act, 1956. on a periodic basis by mutual consent on mutually accepted terms. A. Description of Capacities, Production, Turnover, etc. The aggregate lease rental payable by the Company and charged to Profi t and Loss Account Sl. No. Palm Oil Mill This Year Previous Year (Schedule 13) is as follows: (in MT) (in MT) Particulars This Year Previous Year a. Licensed Capacity (Fresh Fruit Bunches) 12500 12500 Rs. Rs. b. Installed Capacity (Fresh Fruit Bunches of Oil Palm) 12500 12500 Lease rental paid during the year 1,138,816 938,720 c. Opening Stock 14.337 7.660 Future Lease Obligations d. Production (Crude Palm Oil) 364.624 365.510 Due within one year of balance sheet date 1,100,438 1,088,475 e. Sales 370.236 358.833 Due after one year and within fi ve years of balance sheet date 1,829,982 2,428,348 f. Closing Stock 8.725 14.337 Due after fi ve years of balance sheet date - -

123 Cauvery Palm Oil Limited

B. Turnover (iii) Other related parties where persons mentioned (v) below exercise signifi cant infl uence : Sl. No. Particulars This Year Previous Year Godrej IJM Palm Oil Limited a. Crude Palm Oil MT 370.236 358.833 Rs. 12,274,765 13,204,369 Godrej Gold Coin Aquafeed Limited b. Oil Palm Nuts MT 247.635 251.558 Godrej Tyson Foods Ltd. Rs. 1,074,042 1,862,918 (iv) Key management person C. Break-up of Raw Material Consumed Mr. B. S. Yadav Sl. No. Particulars This Year Previous Year Mr. R. R. Govindan MT MT 2. The following transactions were carried out with the related parties in the ordinary a. Fresh Fruit Bunches of Oil Palm (FFBs) 2079.570 1987.573 course of business : Rs. '000 D. C.I.F. Value of Imports Nature of Transactions Holding Fellow Other Related Companies Subsidiaries Parties Sl. No. Particulars This Year Previous Year (i) (ii) (iii) Rs Rs 1 Expenses Charged by other Companies 431 2,683 a. Oil Palm Sprouts NIL 3,427,481 3,311 - E. Value of Raw Material Consumed 2 Expenses Charged to other Companies 29 1,208 52 Sl. No. Particulars This Year Previous Year -- - Rs. Rs. 3 Purchase of materials/fi nished goods 83 a. Imports 0% NIL NIL - b. Indigenous 100% 8,951,082 10,511,104 4 Sale of materials/fi nished goods 1,691 384 15. Information as required under Part IV, Schedule VI of the Companies Act, 1956 is given in the 258 - Annexure. 5 Inter Corporate Deposit Accepted - 25,500 28,055 - 16. The previous year fi gures have been regrouped and reclassifi ed wherever necessary. 6 Inter Corporate Deposit Repaid 25,500 17. Segment Information for Tthe Year ended March 31, 2010 - (i) Information about Primary business Segments Rs.'000 7 Recoveries made by other Companies 2,970 2 This Year Previous year -- Revenue Area Area 8 Fixed Assets Purchased 32 Oil Palm Expansion Oil Palm Expansion - Plantations & Nursery Unallocated Total Plantations & Nursery Unallocated Total 9 Fixed Assets Sold 211 (A) (B) (A)+(B) (A) (B) (A)+(B) Total Sales 13,349 8,269 263 21,881 15,067 23,454 50 38,571 - Less : Inter-segment 10 Outstanding Payables 4,769 27,872 External Sales 13,349 8,269 263 21,881 15,067 23,454 50 38,571 3,311 - Result 11 Outstanding Receivable 50 Segment Result (3,211) (20,929) 263 (23,877) (1,884) (11,391) 50 (13,225) 3. Signifi cant Related Party Transactions : Unallocated expenditure net of unallocated income Nature of Holding Amount Fellow Amount Other Amount Interest expenses 9,063 9,063 5,841 5,841 Transactions Companies Subsidiaries Related Interest Income 21 21 14 14 Parties Dividend Income and Profi t on sale of Investments (i) (ii) (iii) Profi t before taxation and (3,211) (20,929) (8,779) (32,919) (1,884) (11,391) (5,777) (19,052) 1 Expenses Charged by Godrej 431 Godrej Oil 2,683 exceptional items other Companies Agrovet Palm Ltd. Provision for taxation (283) (283) Ltd. Profi t after taxation and (3,211) (20,929) (8,779) (32,919) (2,167) (11,391) (5,777) (19,335) 3,311 - before exceptional items 2 Expenses Charged to Godrej 29 Godrej Oil 1,208 Godrej IJM 52 Exceptional Items other Companies Agrovet Palm Ltd. Palm Oil Prior years adjustments Ltd. Ltd. Profi t after taxation and (3,211) (20,929) (8,779) (32,919) (2,167) (11,391) (5,777) (19,335) exceptional items - - - Other Information 3 purchase of Godrej Oil 83 Segment assets 162,770 162,770 135,923 135,923 materials/fi nished Palm Ltd. Segment liabilities 162,770 162,770 135,923 135,923 goods Capital expenditure 5 64 69 1,623 - 1,623 - Depreciation 10,036 2,141 12,177 8,360 2,272 10,632 4 Sale of materials/ Godrej 1,691 Godrej Oil 384 Non-cash expenses other - fi nished goods Agrovet Palm Ltd. than depreciation Ltd. (ii) Information about Secondary business Segments 258 - The Company operates only within India and hence the information related to Secondary 5 Inter Corporate Godrej - Godrej Oil 25,500 Business Segment is not furnished. Deposit Accepted Agrovet Palm Ltd. Ltd. (iii) Notes 28,055 - (i) The Company is organized into two business segments, namely 6 Inter Corporate Godrej 25,500 (a) Oil Palm Plantation business Deposit Repaid Agrovet Ltd. (b) Agri-business - comprising of plant growth promoters, pesticides etc. - Segments have been identifi ed and reported taking into account, the nature of 7 Recoveries made by Godrej 2,970 Godrej IJM 2 products and services, the differing risks and returns, the organisation structure, other Companies Agrovet Palm Oil and the internal fi nancing reporting systems. Ltd. Ltd. (ii) The Segment revenue in each of the above business segments consists of sales (net of - - returns, sales tax, rebates etc.) 8 Fixed Assets Godrej 32 Purchased Agrovet (iii) The Segment revenue in the geographical segments considered for disclosure are as Ltd. follows : - (a) Revenue within India includes sales to customers located within India 9 Fixed Assets Sold Godrej 211 (b) Revenue outside India includes sales to customers located outside India Agrovet (iv) Segment Revenue, Results, Assets and liabilities include the respective amounts Ltd. - identifi able to each of the segments and amounts allocated on a reasonable basis. 10 Outstanding Payables Godrej 4,769 Godrej Oil 27,872 18. RELATED PARTY DISCLOSURES: Agrovet Palm Ltd. Related party disclosures as required by AS - 18, "Related Party Disclosures", are given below: Ltd. 1. Relationships : 3,311 - 11 Outstanding Godrej IJM 50 (i) Holding Companies : Receivable Palm Oil Godrej Agrovet Limited (GAVL) holds 90% in the Company. GAVL is the subsidiary Ltd. of Godrej Industries Limited (GIL) & GIL is the subsidiary of Godrej & Boyce Mfg. - Co. Ltd., the ultimate Holding Company. (ii) Fellow Subsidiaries : Golden Feed Products Limited Godrej Oil Palm Limited

124 Annual Report 2009–2010

19. Additional information as required under part iv of schedule vi of the companies act, 1956 Balance Sheet Abstract and Company's General Business Profi le: CASH FLOW STATEMENT FOR THE PERIOD ENDED I. Registration Details: MARCH 31, 2010 Registration No. 36551 This Year Previous Year State Code 18 Rs. Rs. Balance Sheet Date A. Cash Flow from Operating Activities: II. Capital Raised during the year: Rs. Profi t before Tax and Operational Items (32,919,340) (19,052,868) Public Issue - Adjustment for: Rights Issue - Depreciation 1,126,312 1,370,123 Bonus Issue - Loss/(Profi t) on sale of Fixed Assets (66,082) 40,950 Private Placement - Interest Expense 9,063,453 5,841,271 III. Position of Mobilisation and Deployment of Funds: Project Development Cost/Miscellaneous Expenditure written off 1,464,312 1,470,371 Total Liabilities 162,770,354 11,587,995 8,722,715 Total Assets 162,770,354 Operating Profi t before Working Capital Changes (21,331,345) (10,330,153) Source of Funds: Adjustments for: Paid up Capital 38,000,000 Inventories 1,439,321 (7,301,621) Reserves & Surplus 25,730,017 Debtors and Other receivables 172,560 (7,519,819) Secured Loans 59,409,919 Creditors and Other payables 2,782,608 4,951,576 Unsecured Loans 28,302,594 4,394,490 (9,869,864) Application of Funds: Cash Generated from Operations (16,936,856) (20,200,017) Direct taxes Paid - (283,000) Net Fixed Assets 50,492,059 Net Cash Generated from Operating Activities (16,936,856) (20,483,017) Investments - B. Cash from Investing Activities: Net Current Assets 24,036,037 Acquisition of Fixed Assets (69,094) (1,622,462) Misc. Expenditure 18,739,082 Proceeds from sales of Fixed Assets 280,469 - Accumulated Losses 58,175,352 Net Cash used in Investing Activities 211,375 (1,622,462) IV. Performance of Company: C. Cash from Financing Activities: Turnover 21,901,544 ICD received from GAVL - 27,500,000 Total Expenditure 54,820,884 ICD Repaid to Sujo Lands and Properties - (2,500,000) Profi t/(Loss) Before Tax (32,919,340) ICD Repaid to Godrej Agrovet Limited - (7,000,000) (Decrease)/ Increase in Cash Credit/ Loan Profi t/(Loss) After Tax (32,919,340) from Banks (net) 25,109,885 10,714,750 Earnings Per Share (Rs.) (8.66) Interest Paid (9,063,453) (5,841,271) Dividend Rate - Net Cash used in Financing Activities 16,046,432 22,873,479 V. Generic names of three Principal Products/Services of Company Net Increase/(Decrease) in Cash and Cash (as per monetary terms) Equivalents (679,049) 768,000 Item Code No. (ITC Code) - Cash and Cash equivalents (Opening Balance) 982,743 214,743 Product Description Crude Palm Oil Cash and Cash equivalents (Closing Balance) 303,694 982,743 Oil Palm Nuts

For and on behalf of the Board For and on behalf of For and on behalf of the Board KALYANIWALLA & MISTRY Nilesh N. Pingale V. Krishnamurthy R. R. Govindan Chartered Accountants Company Secretary Chairman Director ERMIN K. IRANI Nilesh N. Pingale V. Krishnamurthy R. R. Govindan

Partner Company Secretary Chairman Director Membership No. 35646 Mumbai, May 17, 2010 Mumbai, May 17, 2010

125 Natures Basket Limited

DIRECTORS’ REPORT FOR THE PERIOD ENDED MARCH 31, 2010

To, DIRECTORS’ RESPONSIBILITY STATEMENT: The Members As required under the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors Your Directors hereby present the Second Annual Report on the business and operations of the hereby confi rm: Company together with the Statements of Audited Accounts of the Company for the year ended i) that in the preparation of the Annual Accounts for the year ended March 31, 2010, the applicable March 31, 2010. accounting standards have been followed along with proper explanation relating to material FINANCIAL RESULTS AND PERFORMANCE: departures, if any; (Rs in Lac) ii) that the Directors had selected such accounting policies and applied consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view Particulars THIS YEAR PREVIOUS YEAR of the state of affairs of the Company at the end of the fi nancial year ended March 31, 2010 Total Income 3391.23 1553.00 and the loss of the Company for the year under review; Loss before taxation 852.64 702.14 iii) that proper and suffi cient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the Loss after taxation 825.39 699.64 assets of the Company and for preventing and detecting fraud and other irregularities; Balance brought forward from previous year 699.64 0.00 iv) that the Annual Accounts for the year ended March 31, 2010, have been prepared on a ‘going Balance carried forward to Balance sheet 1525.03 699.64 concern’ basis. DIVIDEND: AUDITORS: In view of the losses incurred, your Directors have not recommended any Dividend for the year You are requested to appoint Auditors for the current year and fi x their remuneration. The 2009-2010. retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re- appointment. REVIEW OF OPERATIONS AND FUTURE OUTLOOK: ADDITIONAL INFORMATION: During the year under review business responded very well to several operational improvement initiatives. The Overall growth level of approx 70% in a diffi cult business year established that the The additional information required to be given under the Companies Act, 1956, has been laid business proposition amongst core target consumers is well accepted. out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further In store, layouts were altered to make it more consumer friendly and to enable consumers to explanation. spend more time browsing through products. Several initiatives on greater customer interaction and service orientation helped the business extract greater revenues through increase in average STATUTORY INFORMATION: bill values by at least Rs 125 per store per transaction from the same customer. Inventories were A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo: controlled and stock rotation was improved by nearly 50%. Control of inventory also enabled the business to limit its losses through expiry, damages and wastage of food products to signifi cantly The information in respect of these matters, required under Section 217 (1)(e) of the reduced levels as compared to the previous fi nancial year. Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Renegotiation with suppliers helped the business improve its operating margins substantially. Annexure “A” to this report. Several initiatives were undertaken on the cost front to limit or minimize the fi xed expenses including renegotiation of rentals, measures to control electricity costs as well as actions to B) Particulars of Employees: control the cost of consumables inside the stores. This was also the fi rst year in which the business Mr. Mohit Khattar is the only employee covered under the provisions of Section 217 (2A) of expanded from Mumbai into another city - Delhi. The initial response to the stores and to our the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) service levels in Delhi has been very positive. Rules, 2002. The future outlook for the business appears bright with most Mumbai stores poised to break even ACKNOWLEDGEMENT: (at store level). Also the business is set to expand its foot print further into atleast one more metro Your Board of Directors takes this opportunity to express its gratitude for the assistance and city besides planning expansion within Mumbai and Delhi. co-operation received, especially in such tough times and diffi cult circumstances faced by the FIXED DEPOSIT: Company, from bankers, Government authorities, customers and vendors all of whom have Your Company has not accepted any deposit from public as contemplated under Section 58A of contributed to the Company’s working. the Companies Act, 1956 read with the Companies (Acceptance of Deposit) Rules, 1975, during Your Company also places on record its appreciation for the dedicated services of all its the year under review. employees. HOLDING COMPANY: FOR AND ON BEHALF OF THE BOARD Your Company is subsidiary of Godrej Industries Limited as defi ned under Section 4(1) (b) of the Companies Act, 1956. MOHIT KHATTAR A. MAHENDRAN SUBSIDIARIES: Mumbai, May 21,2010 Managing Director Director The Company has no subsidiary companies during the year under review. DIRECTORS: ANNEXURE 'A' The following are the current Directors of the Company: ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT: Mr. Mohit Khattar INFORMATION PURSUANT TO SECTION 217(1) (e) OF THE COMPANIES ACT, 1956, READ WITH Ms. Tanya Dubash THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) Mr. A. Mahendran RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO: Mr. Mohit Khattar who was appointed as Additional Director of the Company in the Board Meeting dated August 25, 2009 to hold offi ce upto the date of Annual General Meeting has been confi rmed A. Conservation of Energy, Technology absorption, adaptation and innovation as Director in the Annual General Meeting held on September 22, 2009. These provisions are Not Applicable the Company during the year under review. Mr. Mohit Khattar has been appointed as Managing Director of the Company for the period of three B. Foreign Exchange earnings and outgo: years w.e.f. August 25, 2009 who is not liable to retire by rotation. Foreign Exchange earnings : NIL Ms. Tanya Dubash and Mr. A. Mahendran who were appointed as Additional Director to hold offi ce upto last Annual General Meeting have been confi rmed as Directors of the Company in the Annual Foreign Exchange outgo : NIL General Meeting of the Company held on September 22, 2009. FOR AND ON BEHALF OF THE BOARD Ms. Tanya Dubash retires by rotation at the ensuing Annual General Meeting of the Company in accordance with Section 256 of the Companies Act, 1956 and Article 124 of the Articles of the MOHIT KHATTAR A. MAHENDRAN Association of the Company and being eligible offers herself for reappointment. Mumbai, May 21,2010 Managing Director Director

126 Annual Report 2009–2010

REPORT OF THE AUDITORS TO THE MEMBERS OF NATURES BASKET LIMITED

1. We have audited the attached Balance Sheet of Natures Basket Limited, as at March 31, 2010 e) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow and also the Profi t and Loss Account and the Cash Flow Statement of the Company for the Statement dealt with by this report comply with the Accounting Standards referred year ended on that date annexed thereto. These fi nancial statements are the responsibility to in sub-section (3C) of Section 211 of the Companies Act, 1956. of the Company’s management. Our responsibility is to express an opinion on these fi nancial f) In our opinion and to the best of our information and according to the explanations statements based on our audit. given to us, the said fi nancial statements read with the notes thereon, give the 2. We conducted our audit in accordance with auditing standards generally accepted in India. information required by the Companies Act, 1956, in the manner so required and give Those Standards require that we plan and perform the audit to obtain reasonable assurance a true and fair view in conformity with the accounting principles generally accepted about whether the fi nancial statements are free of material misstatement. An audit includes in India: examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial i) in the case of the Balance Sheet, of the state of affairs of the Company as at statements. An audit also includes assessing the accounting principles used and signifi cant March 31, 2010; and estimates made by management, as well as evaluating the overall fi nancial statement ii) in the case of the Profi t and Loss Account, of the loss for the year ended on that presentation. We believe that our audit provides a reasonable basis for our opinion. date. 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we the year ended on that date. annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order. 5. On the basis of the written representations received from the Directors as on 31st March, 4. Further to our comments in the Annexure referred to in paragraph (3) above we report that: 2010, and taken on record by the Board of Directors, we report that, none of the Directors a) We have obtained all the information and explanations, which to the best of our is disqualifi ed as on March 31, 2010 from being appointed as a Director in terms of clause (g) knowledge and belief were necessary for the purposes of our audit. of sub-section (1) of Section 274 of the Companies Act, 1956. b) As referred to in Note 6 of Schedule 11, Notes to Accounts, the managerial For and on behalf of remuneration paid to the Managing Director is in excess of the limits laid down KALYANIWALLA AND MISTRY under Section 198 read with Schedule XIII of the Companies Act, 1956 by Rs.1,016 Chartered Accountants thousands. The amount is pending approval from the Central Government. Firm Registration No. 104607W c) In our opinion, proper books of account as required by law have been kept by the ERMIN K IRANI Company so far as appears from our examination of these books. Partner d) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt Membership No. 35646 with by this report are in agreement with the books of account. Mumbai, May 21, 2010

Annexure to the Auditors' Report

Referred to in paragraph (3) of our report of even date. 7) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and the nature of its business. 1) (a) The Company has maintained proper records showing full particulars, including 8) According to the information and explanations given to us, the maintenance of cost quantitative details and situation of fi xed assets purchased after April 01, 2009. In respect records has not been prescribed by the Central Government, under Section 209(1)(d) of the of fi xed assets acquired / purchased prior to April 01, 2009, the register is not complete Companies Act, 1956, for any of the Company’s products. in respect of particulars such as quantitative details and situation of fi xed assets. 9) (a) According to the information and explanations given to us and on the basis of our (b) As explained to us, the Company has a program for physical verifi cation of fi xed examination of the books of account, the Company has been generally regular in assets at periodic intervals. In our opinion, the period of verifi cation is reasonable depositing undisputed statutory dues including Provident Fund, Investor Education having regard to the size of the Company and the nature of its assets. No material and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added discrepancies have been reported on such verifi cation. Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues (c) In our opinion the disposal of fi xed assets during the year does not affect the going as applicable, with the appropriate authorities. According to the information and concern assumption. explanations given to us, there are no undisputed dues, payable in respect of above 2) (a) The Management has conducted physical verifi cation of inventory at reasonable as at March 31, 2010 for a period of more than six months from the date they became intervals. payable. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the (b) According to the information and explanations given to us, there are no dues outstanding management are reasonable and adequate in relation to the size of the Company and of Sales Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute. the nature of its business. 10) As the Company has been registered for a period of less than fi ve years the question of (c) The Company is maintaining proper records of inventory. The discrepancies noticed commenting on its accumulated losses being less than fi fty percent of its net worth and on physical verifi cation of inventory as compared to book records were not material whether the Company has incurred cash losses in the current fi nancial year and in the in relation to the operations of the Company and the same have been properly dealt immediately preceding fi nancial year does not arise. with in the books of account. 11) According to the information and explanations given to us and based on the documents 3) (a) The Company has not granted any loans, secured or unsecured, to companies, fi rms or and records produced to us, there are no dues to banks, fi nancial institutions or debenture other parties covered in the register maintained under Section 301 of the Companies holders. Act, 1956. Accordingly, clauses (iii)(b) to (iii)(d) of paragraph 4 of the Order are not 12) According to the information and explanations given to us and based on the documents and applicable to the Company for the current year. records produced to us, the Company has not granted loans and advances on the basis of (b) Consequently, the question of commenting on the rates of interest and other terms security by way of pledge of shares, debentures and other securities. and conditions of the loans granted being prejudicial to the interests of the Company, 13) In our opinion and according to the information and explanations given to us, the nature of receipt of regular principal and the interest and reasonable steps taken for recovery activities of the Company does not attract any special statute applicable to chit fund and of principal and interest does not arise. nidhi/ mutual benefi t fund/ societies. (c) The Company has taken unsecured loans from two companies covered in the register 14) The Company does not deal in shares, securities, debentures and other investments. maintained under Section 301 of the Act. The balance outstanding is Rs. 60,568 15) According to the information and explanations given to us, the Company has not given any thousand and the maximum balance during the year is Rs.108,578 thousand. The guarantee for loans taken by others from banks or fi nancial institutions. Company has not taken any loans, secured or unsecured, from fi rms or other parties covered in the register maintained under Section 301. 16) According to the information and explanations given to us, the term loan was applied for the purpose for which the loan was obtained. (d) In our opinion, the rate of interest and the other terms and conditions of the aforesaid unsecured loans taken by the Company, are not prima facie prejudicial to the interest 17) According to the information and explanations given to us, and on an overall examination of the Company. of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short term basis for long term investment. (e) As per the information and explanations given to us, there are no fi xed terms of repayment of the principal and hence the question of the regular payment of the 18) The Company has not made any preferential allotment of shares to parties and companies principal amount does not arise. The repayment of interest on the aforesaid loans covered in the register maintained under Section 301 of the Companies Act, 1956. was regular. 19) The Company did not have outstanding debentures during the year. 4) In our opinion and according to the information and explanations given to us, there are 20) The Company has not raised any money through a public issue during the year. adequate internal control systems commensurate with size of the Company and the nature 21) During the course of our examination of the book of account and records of the Company, of its business, for the purchase of inventory and fi xed assets and for the sale of goods and carried out in accordance with the generally accepted auditing practices in India, and services. During the course of our audit, no major weaknesses have been noticed in internal according to the information and explanations given and representations made by the controls. management, we report that no major fraud on or by the Company, has been noticed or 5) (a) Based on the audit procedures applied by us and according to the information and reported during the year. explanations provided by the management, we are of the opinion that the particulars For and on behalf of of contracts and arrangements referred to in Section 301 of the Companies Act, 1956, KALYANIWALLA AND MISTRY have been entered into the register required to be maintained under that section. Chartered Accountants (b) The transactions made in pursuance of such contracts or arrangements, were made at Firm Registration No. 104607W prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market prices exist. ERMIN K. IRANI 6) In our opinion, and according to the information and explanations given to us, the Company Partner has not accepted any deposits from the public hence the provisions of Sections 58A and 58AA Membership No. 35646 or any other provisions of the Companies Act, 1956, read with the rules framed thereunder are not applicable. Mumbai, May 21, 2010

127 Natures Basket Limited

BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED As at As at MARCH 31, 2010 31.03.2010 31.03.2009 Schedule Rs. ‘000 Rs. ‘000 Rs. ‘000 For the Year For the Period SOURCES OF FUNDS Ended Ended 31.03.2010 31.03.2009 SHAREHOLDERS’ FUNDS Schedule Rs. ‘000 Rs. ‘000 Rs. ‘000 Share Capital 1 70,500 70,500 INCOME Reserves & Surplus - - Sales 333,853 154,515 70,500 70,500 Other Income 5,270 785 LOAN FUNDS Secured Loans 2 42,763 - 339,123 155,300 Unsecured Loan 3 110,572 63,008 EXPENDITURE 153,335 63,008 Purchase of Traded Goods 274,093 133,724 Acquisition of Traded goods on - 16,484 TOTAL 223,835 133,508 Business Transfer APPLICATION OF FUNDS Inventory Change 8 (5,697) (19,672) FIXED ASSETS 4 Expenses 9 127,327 80,768 Gross Block 107,282 74,775 Interest & Financial Charges 10 13,101 3,586 Less: Depreciation 41,853 26,299 Depreciation/Amortisation 15,564 10,624 Net Block 65,429 48,476 424,388 225,514 INVESTMENT 5 25 - DEFERRED TAX ASSET 3,268 431 (LOSS) BEFORE TAX (85,265) (70,214) CURRENT ASSETS, LOANS AND 6 Less: Provision For Tax ADVANCES Current Tax - - Inventories 25,936 19,672 Deferred Tax (2,837) (431) Sundry Debtors 4,548 2,781 Fringe Benefi t Tax - 181 Cash and Bank Balances 5,046 661 Fringe Benefi t Tax of previous year 112 - Loans and Advances 29,299 14,759 Other Current Asset 9 - (2,725) (250) 64,838 37,873 (LOSS) AFTER TAX (82,540) (69,964) LESS: CURRENT LIABILITIES & 7 (Defi cit) Brought Forward (69,964) - PROVISIONS (DEFICIT) CARRIED TO BALANCE SHEET (152,504) (69,964) Liabilities 61,128 22,585 Earnings Per Share (Basic/Diluted) in (11.71) (13.23) Provisions 1,101 650 Rs. (Refer Note 9) 62,229 23,235 NOTES TO ACCOUNTS 11 NET CURRENT ASSETS 2,609 14,638 PROFIT & LOSS ACCOUNT 152,504 69,964 TOTAL 223,835 133,508 NOTES TO ACCOUNTS 11

The Schedules referred to above form an Signatures to the Balance Sheet The Schedules referred to above form an Signatures to the Profi t & Loss Account integral part of the Balance Sheet. and Schedules 1 to 7 and 11 integral part of the Profi t & Loss Account. and Schedules 8 to 11 As per our Report attached. As per our Report attached. For and on behalf of For and on behalf of the Board For and on behalf of For and on behalf of the Board KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY Chartered Accountants Chartered Accountants

ERMIN K. IRANI MOHIT KHATTAR A. MAHENDRAN ERMIN K. IRANI MOHIT KHATTAR A. MAHENDRAN Partner Managing Director Director Partner Managing Director Director Membership No. 35646 Membership No. 35646 Mumbai, May 21, 2010 Mumbai, May 21, 2010 SCHEDULES ATTACHED AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010 As at As at SCHEDULE 4: FIXED ASSETS Rs. ‘000 31.03.2010 31.03.2009 Rs. ‘000 Rs. ‘000 Rs. ‘000 ASSETS GROSS BLOCK DEPRECIATION NET BLOCK SCHEDULE 1: SHARE CAPITAL As At Assets Addi- Deduc- As At Upto Accum For the On Upto As At As At 01.04.09 Taken tions tions 31.12.09 01.04.09 Depn On period Deduc- 31.03.10 31.03.10 31.03.09 AUTHORISED Over Assets tions 100,000,000 Equity Shares of Rs.10/- each 1,000,000 1,000,000 Taken Over ISSUED, SUBSCRIBED AND PAID UP 7,050,000 Equity Shares of Rs.10/- each fully paid 70,500 70,500 Tangible Assets All the above shares are held by Godrej Industries Computers 7,376 - 2,475 - 9,851 3,893 - 1,885 - 5,778 4,073 3,483 Limited, the Holding Company and its nominees Furniture & 5,792 - 1,878 - 7,670 1,307 - 585 - 1,892 5,778 4,486 (Previous year all the above shares were held by Fixtures Godrej Agrovet Limited, the then Holding Company Equipments 6,200 - 2,358 - 8,558 687 - 629 - 1,316 7,242 5,513 and its nominees) Air Conditioners/ 11,799 - 7,217 47 18,969 1,164 - 650 5 1,809 17,160 10,634 SCHEDULE 2: SECURED LOANS Water Coolers Term Loan 42,400 - Motor Cars 435 - - 11 424 143 - 41 5 180 244 291 (Secured by hypothecation of tangible fi xed assets of Leasehold 35,797 - 18,637 - 54,434 18,551 - 11,036 - 29,587 24,847 17,246 the Company, present and future (except motor cars) Improvements and Inventory and Debtors.) (Amount due within a Intangible year Rs.Nil) Assets

Interest accrued and due on Term Loan 363 - Goodwill 7,376 - - - 7,376 553 - 738 - 1,291 6,085 6,823 42,763 - Total 74,775 - 32,565 58 107,282 26,299 - 15,564 10 41,853 65,429 48,476 SCHEDULE 3: UNSECURED LOANS Intercorporate Deposits 110,568 61,100 Previous Year - 62,607 12,169 - 74,775 - 15,675 10,624 - 26,299 48,476 - (Amount due within a year Rs.110,568 thousand, Previous Year Rs.61,100 thousand) Interest accrued and due 4 1,908 110,572 63,008

128 Annual Report 2009–2010

SCHEDULES ATTACHED AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010

SCHEDULE 5: INVESTMENTS For the Year For the Period As at As at Ended Ended 31.03.2010 31.03.2009 31.03.2010 to 31.03.2009 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 SCHEDULE 8: INVENTORY CHANGE LONG TERM - TRADE Opening Stock of Traded Goods EQUITY SHARES AT COST Traded Goods 19,671 - 2500 Equity Shares of Rs.10/- each fully paid in 25 - Less : Closing Stock The Saraswat Co-operative Bank Limited Traded Goods 25,368 19,672 (Purchased during the year) (5,697) (19,672) 25 - SCHEDULE 9: EXPENSES SCHEDULE 6: CURRENT ASSETS, LOANS AND ADVANCES Salaries, Wages, Gratuity & Allowances 34,656 17,498 (A) INVENTORIES Contribution to Provident Fund and other Funds Traded Goods 25,368 19,672 and Administration Charges 1,635 670 Packing Materials 568 - Employee Welfare Expenses 1,886 1,075 25,936 19,672 Labour Charges 11,350 8,650 (B) SUNDRY DEBTORS Consumption of Packing Material 3,437 (Unsecured and considered good unless Rent 30,930 21,032 otherwise stated) Rates & Taxes 233 378 Debts outstanding for a period exceeding six - - Repairs & Maintenance months - Others 880 1,662 Other Debts 4,548 2,781 Insurance 153 78 4,548 2,781 Postage, Telephone and Stationery 2,209 977 (C) CASH AND BANK BALANCES Computer Expenses 3,065 2,639 Cash in Hand 1,544 423 Electricity Charges 14,783 9,413 Balances with Scheduled Banks Licence Fees 582 114 (a) In Current Accounts 2,852 238 Auditors’ Remuneration 513 469 (b) In Fixed Deposit Accounts 650 - Legal & Professional Fees 2,441 1,750 (Rs.650 thousand (Previous Year Rs.Nil) pledged Freight, Coolie and Cartage 5,222 7,078 with Government Authorities) Discount and Selling Expenses 3,341 613 5,046 661 Advertisement and Publicity 3,148 3,156 (D) OTHER CURRENT ASSET Travelling Expenses 1,954 620 Interest Accrued 9 - Loss on Sale of Fixed Assets 29 - (E) LOANS AND ADVANCES General Expenses 4,880 2,896 (Unsecured and considered good unless 127,327 80,768 otherwise stated) Advances recoverable in cash or in kind or for 6,598 975 SCHEDULE 10: INTEREST AND FINANCIAL CHARGES value to be received (a) Interest paid on fi xed loans Advances to Creditors 744 - Term Loan 1,076 - Deposits Inter Corporate Deposits 9,569 2,467 (a) Government Authorities 261 186 10,645 2,467 (b) Others 21,696 13,569 (b) Other Financial Charges 2,456 1,119 Advance Payment of Taxes (Net of provision for taxation 13,101 3,586 Rs.292 thousand, Previous Year Rs.181 - 29 thousand) SCHEDULE 11 : NOTES TO ACCOUNTS 29,299 14,759 1. Signifi cant Accounting Policies 64,838 37,873 a) The fi nancial statements have been prepared on historical cost convention. The Company follows mercantile system of accounting and recognises income and SCHEDULE 7: CURRENT LIABILITIES AND PROVISIONS expenditure on accrual basis (A) CURRENT LIABILITIES b) Fixed assets have been stated at cost and include incidental and/or installation/ development expenses incurred in putting the asset to use and interest on borrowing Investor Education and Protection Fund - - incurred during construction period. Pre-operative expenses for major projects are Sundry Creditors also capitalised, where appropriate. (a) Dues to Micro, Small and Medium - - c) Carrying amount of cash generating units/assets are reviewed at balance sheet enterprises (Refer Note 2) date to determine whether there is any indication of impairment. If such indication (b) Others 44,314 16,345 exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount 44,314 16,345 exceeds the recoverable amount. Other Liabilities - 16,814 6,240 d) Depreciation /Amortisation has been provided for as under : 61,128 22,585 (a) The Company charges depreciation in respect of additions from the date of (B) PROVISIONS addition and upto the date of disposals in respect of disposals. (b) i) Depreciation is provided on the straight line method at the rates specifi ed Gratuity 581 413 in schedule XIV to the Companies Act, 1956, except for Computers, which Leave Encashment 520 237 are depreciated over its estimated useful life of four years. 1,101 650 ii) Amortisations 62,229 23,235 (i) Leasehold improvements and equipments-Primary lease period (ii) Goodwill is amortised over a period of 10 years e) Trading inventories are valued at lower of cost and net realisable value. These costs include costs incurred in bringing the inventories to their present location and condition. f) Retirement benefi ts to employees comprise payments under defi ned contribution plans like provident fund and family pension. Payments under defi ned contribution plans are charged to the profi t and loss account. The liability in respect of defi ned benefi t schemes like gratuity and leave encashment benefi t on retirement is provided on the basis of actuarial valuation at the end of each year.

129 Natures Basket Limited

SCHEDULES ATTACHED AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010 g) Revenue is recognised when goods are despatched to external customers. Sales are 7. Auditors Remuneration net of returns, sales tax rebates, etc. THIS YEAR PREVIOUS YEAR h) Deferred tax is recognised on timing differences, being the differences between Rs.’000 Rs.’000 the taxable income and the accounting income that originate in one period and are Audit fees 403 358 capable of reversal in one or more subsequent periods. Deferred tax assets, subject Audit under Other Statutes 110 110 to consideration of prudence, are recognised and carried forward only to the extent TOTAL 513 469 that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is 8. Employee Benefi ts calculated on the accumulated timing difference at the year-end, based on the tax I. Defi ned Contribution Plans: rates and laws enacted or substantially enacted on the balance sheet date. Contribution to Defi ned Contribution Plan, recognised as i) The basic earnings per share is computed using the weighted average number of expense for the period are as under: common shares outstanding during the period. Diluted earnings per share is computed Employers’ Contribution to Provident Fund 1,429 670 using the weighted average number of common and dilutive common equivalent shares II. Defi ned Benefi t Plans: outstanding during the period, except where the results would be anti-dilutive. Contribution to Gratuity Fund j) Provisions are recognized in the accounts in respect of present probable obligations, The Company makes provision for Grauity in the books of accounts for qualifying employees. the amount of which can be reliably estimated. Gratuity is payable to all eligible employees on superannuation, death or on separation/ Contingent liabilities are disclosed in respect of possible obligations that arise from termination in terms of the provisions of the Payment of Gratuity Act or as per the Company’s past events but their existence is confi rmed by the occurrence or non-occurrence of policy whichever is benefi cial to the employees. one or more uncertain future events not wholly within the control of the Company. The following table sets out the funded status of the gratuity plan and the amounts 2. Current Liabilities recognised in the Company’s fi nancial statements as at March 31, 2010: Disclosure of sundry creditors under current liabilities is based on the information available Change in present value of obligation with the Company regarding the status of the suppliers as defi ned under the “ Micro,Small Present value of obligation as at April 1, 2009 413 - & Medium Enterprises Development Act 2006”. Interest Cost 33 - 3. Deferred Tax Service Cost 210 - The Deferred Tax Asset as at March 31, 2010 computed on unabsorbed depreciation amounts Benefi ts Paid - - to Rs.26,188 thousands (Previous Year - Rs. 23,434 thousands). The above amount has not Actuarial (gain)/loss on obligation (75) - been recognised in the absence of virtual certainity of future taxable income in accordance Present value of obligation, as at March 31, 2010 581 413 with Accounting Standard Interpretation (ASI) 9, on “virtual certainity supported by Change in plan assets convincing evidence”, issued by the Insitute of Chartered Accountants of India. Fair value of plan assets as at April 1, 2009 - - THIS YEAR PREVIOUS YEAR Expected Return on plan assets - - Rs.’000 Rs.’000 Contributions 413 - The tax effects of signifi cant temporary differences that Benefi ts Paid - - resulted in deferred tax assets and liabilities are : Actuarial gain/(loss) on plan assets 2 - Depreciation on Fixed Assets 2,904 210 Fair Value of plan assets, as at March 31, 2010 415 - Provision for Gratuity 192 140 Amount recognised in the Balance Sheet Provision for Leave Encashment 172 81 Present value of obligation, as at March 31, 2010 581 - Deferred Tax Asset 3,268 431 Fair value of plan assets as at March 31, 2010 415 413 4. Quantitative Details for Sales/Inventories & Purchases Net obligation as at March 31, 2010 166 413 Since the Company operates in the gourmet food retailing business, it deals with Net gratuity cost for the year ended March 31, 2010 heterogenous range of products. In view of the same quantitative details have not been Current Service Cost 210 - disclosed. Interest Cost 33 - 5. Disclosure in respect of leases Expected return on plan assets - - The Company’s leasing arrangements are in respect of operating leases for premises Net Actuarial (gain)/loss to be recognised 77 413 occupied by the Company. Net gratuity cost 319 413 These leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually acceptable terms. Assumptions used in accounting for the gratuity plan a. The total of future minimum lease payments under cancelable operating leases for % each of the following periods : Discount Rate 8 8 Salary escalation rate 4 4 i. Not later than one year 44,521 25,550 Expected rate of return on plan assets 8 - ii. Later than one year and not later than fi ve 108,606 44,278 The estimates of future salary increases, considered in actuarial valuation, take into years account infl ation, seniority, promotion and other relevant factors, such as supply and iii. Later than fi ve years - - demand in the employment market. b. Lease payments recognised in the statement of Profi t The expected return on plan assets is determined considering several applicable factors & Loss for the period : 30,930 21,032 mainly the composition of the plan assets held, assessed risks of asset management, 6. Managerial Remuneration historical results of the return on plan assets. a) Computation of Profi t for the purpose of Managerial Remuneration 9. Earnings Per Share (Loss) After Tax as per Profi t & Loss Account (82,540) (69,964) THIS YEAR PREVIOUS YEAR Add: Depreciation as per Accounts 15,564 10,624 Rs.’000 Rs.’000 Managerial Remuneration 2,766 - Profi t after tax and before extraordinary items (Rs.’000) (82,540) (69,964) Provision for Tax (including Deferred Tax) 2,725 250 Profi t after tax and after extraordinary items (Rs.’000) (82,540) (69,964) Loss on Sale of Fixed Assets 29 - Weighted average number of equity shares outstanding 7,050 5,288 (61,455) (59,090) Basic and Diluted earnings per share before extraordinary (11.71) (13.23) Less: Depreciation as per Section 350 of the 15,564 10,624 items(Rs.) Companies Act, 1956 Basic and Diluted earnings per share after extraordinary (11.71) (13.23) Net (Loss) for the purpose of Director’s (77,019) (69,714) items(Rs.) Remuneration Nominal value of shares (Rs.) 10 10 5% thereof - - 10. Related Party Transactions Maximum Remuneration permissible under Schedule 1,750 - Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below’’ XIII Part II Section II 1(B) of the Companies Act, 1956 1. Relationships : (computed on the basis of inadequacy of profi ts) (i) Holding Company b) Managerial Remuneration Godrej Industries Ltd. the Holding Company (From 25.08.2009) i. Salaries 2,753 - Godrej Agrovet Limited, the Holding Company (Upto 24.08.2009) ii. Contribution to Provident Fund 13 - Godrej & Boyce Mfg Co. Ltd., the ultimate Holding Company 2,766 - (ii) Fellow Subsidaries Note: Godrej Agrovet Ltd. (From 25.08.2009) a) All the above items have been included under respective heads under “Expenses” in Ensemble Holdings & Finance Ltd. (From 25.08.2009) Schedule 9. Godrej Properties Ltd. (From 25.08.2009) b) Performance linked variable remuneration is on the basis of provision made in the Godrej International Ltd. (From 25.08.2009) books of accounts. Provision for Gratuity has not been considered in the above Golden Feed Products Ltd. (Upto 24.08.2009) computation. Cauvery Palm Oil Ltd. (Upto 24.08.2009) c) The remuneration paid to the Managing Director is in excess of the remuneration Godrej Oil Palm Ltd. (Upto 24.08.2009) prescribed under Section 198 read with Schedule XIII to the Companies Act, 1956 by (iii) Key management personnel Rs.1,016 thousands (previous year Rs.Nil). The Company has made an application for Mr. Mohit Khattar (From 25.08.2009) the necessary approval from the Central Government for the remuneration in excess (iv) Individuals exercising control or signifi cant infl uence (and their relatives) of the prescribed limits. Mrs. T. Dubash Mr. A. Mahendran

130 Annual Report 2009–2010

SCHEDULES ATTACHED AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010

2. The following transactions were carried out with the related parties in the ordinary Rs.’000 course of business : Nature of Holding Amount Fellow Amount Other Related Amount (i) Details relating to parties referred to in items 1(i), to (iv) above Transactions Company Subsidiaries Parties (i) (ii) (iii) Rs.’000 11 Outstanding receivables, Godrej (28) Other net of (payables) Industries Ltd. Holding Fellow Related - Company Subsidiaries Parties Godrej Agrovet - Nature of Transactions (i) (ii) (iii) & (iv) Ltd. 1 Issue of share capital (incl. Premium) - (43) 70,500 12 Interest Accrued and Godrej 4 2 Business acquired during the year - due on Intercorporate Industries Ltd. 72,556 deposits 3 Intercorporate deposits taken during the 20,753 41,764 - year Godrej Agrovet - 61,100 - Ltd. 4 Intercorporate deposits repaid during the 50,000 1,908 13 Sale of Traded Goods Mrs. T. Dubash 448 year 14 Remuneration Mr. Mohit 2,766 5 Interest expense on intercorporate deposits 2,922 2,277 Khattar taken - 1,908 - 11. The previous year’s fi gures are for a period of nine months and hence are not strictly 6 Outstanding Intercorporate deposits 45,500 comparable with those of the current year. 63,051 12. Previous period amounts have been reclassifi ed wherever necessary to confi rm with 7 Intercorporate deposits placed during the 10,000 current year’s classifi cation. year 8 Recovery of Intercorporate deposit placed 10,000 - 9 Interest income on intercorporate deposit placed 31 - 10 Expenses charged by other companies 1,724 619 11 Outstanding receivables, net of (payables) (28) (43) 12 Interest Accrued and due on Intercorporate 4 deposits 1,908 13 Sale of Traded Goods 448 - 14 Remuneration 2,766 - 3. Signifi cant Related Party Transactions : Rs.’000 Nature of Holding Amount Fellow Amount Other Related Amount Transactions Company Subsidiaries Parties (i) (ii) (iii) 1 Issue of share capital Godrej Agrovet - (incl. Premium) Ltd. 70,500 2 Business acquired during Godrej Agrovet - the year Ltd. 72,556 3 Intercorporate deposits Godrej 20,500 Godrej 1,764 taken during the year Industries Ltd. Agrovet Ltd. - - Godrej Agrovet 253 Godrej Oil 40,000 Ltd. Palm Ltd. 61,100 - 4 Intercorporate deposits Godrej 50,000 repaid during the year Industries Ltd. - 5 Interest expense on Godrej 1,928 Godrej 758 intercorporate deposits Industries Ltd. Agrovet Ltd. taken - - Godrej Agrovet 994 Godrej Oil 1,519 Ltd. Palm Ltd. 1,908 - 6 Outstanding Godrej 45,500 Intercorporate deposits Industries Ltd. - Godrej Agrovet - Ltd. 63,051

7 Intercorporate deposits Godrej 10,000 placed during the year Properties Ltd. - 8 Recovery of Godrej 10,000 Intercorporate deposit Properties placed Ltd. - 9 Interest income on Godrej 31 intercorporate deposit Properties placed Ltd. - 10 Expenses charged by Godrej 1,724 other companies Industries Ltd. - Godrej Agrovet - Ltd. 619

131 Natures Basket Limited

ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV TO THE COMPANIES ACT, 1956 CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE 31, 2010 I Registration Details For the Year For the Period Registration No. U15310MH2008PLC182816 Ended Ended State Code. 11 31.03.2010 31.03.2009 Rs. ‘000 Rs. ‘000 Rs. ‘000 Balance Sheet Date. 31.03.2010 A. Cash Flow from Operating Activities : II Capital Raised during the period (Amounts in Rs. ‘000) (Loss)/Profi t Before Taxes (85,265) (70,214) Public Issue NIL Adjustments for: Depreciation 15,564 10,624 Rights Issue NIL Loss On Sale Of Assets 29 - Bonus Issue NIL Interest expenses 10,645 2,467 Private Placement NIL Interest income (41) - 26,197 13,091 III Position of mobilisation and deployment of funds (Amounts in Rs. ‘000) Operating Profi t Before Working Capital (59,068) (57,123) Total Liabilities 286,064 Changes Total Assets 286,064 Adjustments for: Inventories (6,264) (5,744) Sources of Funds Debtors and Other Receivables (16,337) (3,922) Paid-up Capital 70,500 Creditors and Other Payables 38,994 10,769 Reserves and Surplus - 16,393 1,102 Cash Generated from Operations (42,675) (56,021) Secured Loans 42,763 Direct Taxes Paid 83 210 Unsecured Loans 110,572 Net Cash Flow from Operating Activities (42,758) (56,231) Application of Funds B. Cash Flow from Investing Activities : Acquisition of Fixed Assets (32,565) (12,169) Net Fixed Assets 65,429 Proceeds from Sale of Fixed Assets 19 - Investments 25 Purchase of Investments (25) - Net Current Assets 2,609 Intercorporate Deposit Placed (10,000) - Recovery of Intercorporate Deposit Placed 10,000 - Misc Expenditure - Interest Received 31 - Accumulated Losses 152,504 Net Cash used in Investing Activities (32,540) (12,169) IV Performance of Company C. Cash Flow from Financing Activites : Proceeds from issue of capital - 70,500 Turnover 333,853 Proceeds from Borrowings 141,868 384 Total Expenditure 424,388 Repayment of Borrowings (50,000) - (Loss) / Profi t before tax (85,265) Interest Paid (12,185) (2,467) Net Cash used in Financing Activities 79,683 68,417 (Loss) / Profi t after tax (82,540) Net increase in Cash and Cash equivalents 4,385 17 Earnings per share Rs. (11.71) Cash and Cash equivalents (Opening Balance) 661 - (on an annualised basis) Add: Cash Balance Taken over from Godrej Agrovet Limited - 644 Dividend rate % - Cash and Cash equivalents (Closing Balance) 5,046 661 V Generic Names of principal products/services of the Company NOTES: Item code no 651 1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in Product description Retail Trade in Vegetables the Accounting Standard (AS) 3 on “Cash Flow Statements”, and presents cash fl ows by and Fruits together operating, investing and fi nancing activities. 659 2. Figures in brackets are outfl ows/deductions. Retail trade in food and For and on behalf of For and on behalf of the Board food articles, beverages, KALYANIWALLA & MISTRY tobacco and intoxicants Chartered Accountants not elsewhere classifi ed. ( * represents Heading no of the Harmonised Commodity Description and coding system) ERMIN K. IRANI MOHIT KHATTAR A. MAHENDRAN Partner Managing Director Director For and on behalf of the Board Membership no. 35646 Mumbai, May 21, 2010 MOHIT KHATTAR A. MAHENDRAN Managing Director Director Mumbai, May 21, 2010

132 Annual Report 2009–2010 Ensemble Holdings & Finance Limited

DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31, 2010 TO THE SHAREHOLDERS, During the year under review, Mr. H. K. Press resigned from the Board of the Company w.e.f. May 1, 2010. Your Directors submit their Report along with the audited Accounts for the year ended March 31, 2010. Mr. B. S. Yadav has been appointed as an Additional Director w.e.f. May 1, 2010. He is being appointed as REVIEW OF OPERATIONS Diretor, liable to retire by rotation at the forthcoming Annual General Meeting. Mr. Yadav is a Bachelor Your Company’s performance during the year as compared with that of the previous year is summarised of Science (Agricultural Sciences) and has done his PGDBM from IIM, Ahmedabad. He has 19 years of below:- experience. Presently he is the Managing Director of Godrej Agrovet Limited. THIS YEAR PREVIOUS YEAR AUDITORS (Rs.’000) (Rs.’000) You are requested to appoint Auditors for the current year and to authorise the Board of Directors to fi x Gross Revenue earned 33,240 15,710 their remuneration. The retiring auditors, M/s Kalyaniwalla Mistry And Associates, Chartered Accountants are eligible for reappointment. Total Expenditure 166 167 Profi t / (Loss) for the year before Tax 33,074 15,543 DIRECTORS’ RESPONSIBILITY STATEMENT Pursuant to the provisions contained in Section 217 (2AA) of the Companies Act, 1956, the Directors of Provision for Taxation 1,300 1,416 your Company confi rm: Profi t / (Loss) after Tax 31,774 14,127 a) that in the preparation of the annual accounts, the applicable accounting standards have been Adjustment in respect of prior years 244 (13) Profi t available for appropriation 32,018 14,114 followed and no material departures have been made from the same; Proposed Dividend 18,871 - b) that they have selected such accounting policies and applied them consistently and made judgements Interim Dividend - 79,26 and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs Dividend Distribution Tax 31,34 13,47 of the Company at the end of the fi nancial year and of the profi t of the Company for that year; Transfer to Special Reserve Fund u/s 45IC of RBI Act, 1934 64,04 28,23 c) that they have taken proper and suffi cient care for the maintenance of adequate accounting records Transfer to General Reserve 32,02 14,11 in accordance with the provisions of this Act for safeguard of the assets of the Company and for Balance available for set off against b/f defi cit in P&L A/c 4,07 6,07 preventing and detecting fraud and other irregularities; Loss brought forward (78,663) (79,270) d) that they have prepared the annual accounts on a going concern basis. Loss carried forward (78,255) (78,663) ADDITIONAL INFORMATION DIVIDEND The additional information required to be given under the Companies Act, 1956, has been laid out in the The Board of Directors of your Company recommends a fi nal dividend of Rs. 5/- per equity share (Previous Accounts to the extent applicable. The notes to the Accounts referred to in the Auditors’ Report are self- year Rs. 2.10 per share) of Rs. 10/- each aggregating to Rs. 188.71 lac. explanatory and therefore do not call for any further explanation. COMPLIANCE WITH GUIDELINES ISSUED BY THE RESERVE BANK OF INDIA The information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Your Company has been granted a Certifi cate of Registration by Reserve Bank of India to carry on the earnings and outgo, required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies business as Non-Banking Financial Institution. (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 has not been given, since such Your Company has not accepted any public deposits during the year under review, nor does it propose requirement is not applicable to the Company. to accept the same. As such, pursuant to Non-Banking Financial Companies (Reserve Bank) Directions, During the year under review, the Company did not have any employee attracting the provisions of Section 1998, issued by Reserve Bank of India vide notifi cation No.DFC.114/DG (SPT) dated January 2, 1998, your 217(2A) of Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 requiring Company is not required to obtain rating from a rating agency in this regard. Hence, rating for Fixed disclosure in the Report. Deposit obtained from CRISIL in 1996-97 has not been renewed. For and on behalf of the Board of Directors In view of the above, there are no overdue or unclaimed deposits. M. EIPE DIRECTORS Director Ms. T.A. Dubash retires by rotation at the ensuing Annual General Meeting and being eligible offer herself for reappointment Mumbai, May 26, 2010

d. In our opinion, the Profi t and Loss Account and Balance Sheet dealt with by this report comply REPORT OF THE AUDITORS with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies To The Members of ENSEMBLE HOLDINGS & FINANCE LIMITED Act, 1956; e. In our opinion and to the best of our information and according to the explanations given 1. We have audited the attached Balance Sheet of Ensemble Holdings and Finance Limited as at to us, the said accounts, read with the notes thereon, give the information required by the March 31, 2010 and also the Profi t and Loss Account and Cash Flow Statement for the year ended Companies Act, 1956, in the manner so required and give a true and fair view in conformity on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s with the accounting principles generally accepted in India: management. Our responsibility is to express an opinion on these fi nancial statements based on (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, our audit. 2010, 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those (ii) in the case of the Profi t and Loss Account, of the Profi t of the Company for the year ended Standards require that we plan and perform the audit to obtain reasonable assurance about whether on that date the fi nancial statements are free of material misstatement. An audit includes examining, on a test (iii) in the case of Cash Flow Statement, of the cash fl ow for the year ended on that date. basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also 5. On the basis of the written representations received from the Directors as on March 31, 2010, and includes assessing the accounting principles used and signifi cant estimates made by management, as taken on record by the Board of Directors, we report that none of the Directors is disqualifi ed as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a on March 31, 2010, from being appointed as a Director in terms of clause (g) of sub-section (1) of reasonable basis for our opinion. Section 274 of the Companies Act, 1956. 3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditors’ Report) (Amendment) Order 2004, issued by the Central Government in terms of Section For and on behalf of 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in KALYANIWALLA MISTRY & ASSOCIATES paragraphs 4 and 5 of the said Order. Chartered Accountants 4. Further to our comments in the Annexure referred to above, we report that: a. We have obtained all the information and explanations which to the best of our knowledge and V. M. PADWAL belief were necessary for the purpose of our audit; Partner b. In our opinion, proper books of account as required by law have been kept by the Company so Membership No. 49639 far as appears from our examination of such books; Firm Regn. No. 121157W c. The Balance Sheet and Profi t and Loss Account dealt with by this report are in agreement with the books of account; Mumbai, May 26, 2010 ANNEXURE TO THE AUDITORS’ REPORT 7. According to the information and explanations given to us and the records examined by us, we observed that Referred to in Paragraph 3 of our report of even date on the accounts of Ensemble Holdings & Finance Limited for the company has not borrowed any money from fi nancial institutions or banks or debenture holders. the year ended March 31, 2010: 8. According to the information and explanations given to us the Company has not granted loans and advances on 1. a) The Company had granted unsecured loans to a company listed in the register maintained under section the basis of security by way of pledge of shares and other securities. 301 of the Companies Act, 1956. The maximum amount of loan granted to the said company during the 9. In our opinion and according to the information and explanation given to us, the nature of the activities of year was Rs. 2,25,00,000. No amount is outstanding at the year end. the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefi t fund/ b) In our opinion and according to information and explanations given to us, the rate of interest and other societies. terms and conditions of unsecured loan given by the Company, are prima facie not prejudicial to the 10. In our opinion, the Company has maintained proper records of the transactions and contracts of the investments interest of the Company. dealt in by the Company and timely entries have been made therein. The investments made by the Company c) All parties have repaid the principal amounts as stipulated and have been regular in the payment of are held in its own name. interest. 11. According to the information and explanations given to us and the records examined by us, the Company has d) The Company had not taken unsecured loans from a Company covered in the register maintained under not given any guarantees for loans taken by others from banks or fi nancial institutions. section 301 of the Companies Act, 1956. 12. According to the information and explanations given to us and the records examined by us we observed that 2. a) Based on the audit procedures applied by us and according to the information and explanations provided the Company has not taken any term loan. by the management, we are of the opinion that all transactions that need to be entered into the register 13. On the basis of an overall examination of the balance sheet and cash fl ows of the Company and the information in pursuance of Section 301 of the Companies Act, 1956, have been so entered. and explanation given to us, we report that the company has not utilized any funds raised on short-term basis b) These transactions have been made at reasonable prices having regard to the prevailing market prices at for long-term investments. the relevant time. 14. The Company has not made any preferential allotment of shares to parties or companies covered under 3. In our opinion and according to the information and explanations given to us, the Company has not accepted Section 301 of the Companies Act, 1956. any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant provisions of 15. The Company did not issue any debentures during the fi nancial year. the Companies Act, 1956, and the rules framed thereunder. 16. The Company has not raised any money through a public issue during the year. 4. The Company has an internal audit system, which in our opinion, is commensurate with the size and nature of 17. Based upon the audit procedures performed and the information and explanation given by the management, its business. we report that no fraud on or by the Company has been noticed or reported during the year. 5. a) According to the records examined by us, the Company is generally regular in depositing with appropriate 18. In our opinion, clauses (i), (ii), (iii) (d), (iii) (f), iii(g), (iv) and (viii) of paragraph 4 of the Companies (Auditor’s authorities undisputed statutory dues including Income Tax and other statutory dues as applicable to it. Report) Order, 2003 are not applicable. According to the information and explanation given to us, no undisputed amounts payable in respect of For and on behalf of statutory dues were outstanding, at the year end for a period of more than six months from the date they KALYANIWALLA MISTRY & ASSOCIATES became payable. Chartered Accountants b) According to the information and explanation given to us there are no dues of sales tax, income tax, V. M. PADWAL wealth tax, service tax, excise duty or cess, which have not been deposited on account of any dispute. Partner 6. The accumulated losses of the Company as at end of the fi nancial year are more than fi fty percent of its Membership No. 49639 net worth. The company has not incurred cash losses during the current fi nancial year and in the immediate Firm Regn. No. 121157W preceding fi nancial year. Mumbai, May 26, 2010

133 Ensemble Holdings & Finance Limited

BALANCE SHEET AS AT MARCH 31, 2010 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010

AS AT AS AT YEAR ENDED YEAR ENDED 31.03.10 31.03.09 31.03.10 31.03.09 Schedule Rupees Rupees Schedule Rupees Rupees SOURCE OF FUNDS INCOME Interest Income 8 5,503,538 5,533,647 1 SHAREHOLDERS’ FUNDS Dividend 1,811,748 3,045,473 Profi t on sale of investments (Net) 2,567,195 5,973,980 (a) Share Capital 1 37,741,600 37,741,600 Profi t on sale of Mutual Funds 173,359 942,121 (b) Reserves & Surplus 2 123,585,245 113,979,815 Sundry Income 74,141 Reversal of Prov. for depletion in Investment 23,110,000 215,293 161,326,845 151,721,415 33,239,981 15,710,514 EXPENDITURE APPLICATION OF FUNDS Expenses 9 166,242 167,252 1 INVESTMENTS 3 73,951,817 17,366,029 166,242 167,252 PROFIT/(LOSS) BEFORE TAX 33,073,739 15,543,262 2 CURRENT ASSETS, LOANS AND ADVANCES Provision for Taxation 1,300,000 1,416,000 (a) Cash & Bank Balances 4 168,114 1,840,175 PROFIT/(LOSS) AFTER TAX 31,773,739 14,127,262 Adjustments for prior years 244,360 (12,917) (b) Other Current Assets 5 386,137 1,104,004 PROFIT AVAILABLE FOR APPROPRIATION 32,018,099 14,114,345 APPROPRIATION (c) Loans and Advances 6 30,711,660 48,765,882 Dividend 31,265,911 51,710,061 Proposed Dividend 18,870,800 – Interim Dividend - 7,925,736 LESS: CURRENT LIABILITIES AND PROVISIONS 7 Dividend Distribution Tax 3,134,204 1,346,980 Transfer to Special Reserve Fund u/s 45IC of RBI Act, 1934 6,403,620 2,822,869 Current Liabilities 140,943 159,112 Transfer to General Reserves 3,201,810 1,411,434 Provisions 22,005,004 1,346,980 31,610,434 13,507,019 Balance available for set off against b/f defi cit in 22,145,947 1,506,092 P&L A/c 407,665 607,326 Loss brought forward (78,662,729) (79,270,055) NET CURRENT ASSETS 9,119,964 50,203,969 Loss Carried Forward (78,255,064) (78,662,729) 3 PROFIT AND LOSS ACCOUNT 78,255,064 78,662,729 Earnings Per Share 10 (5) 8.48 3.74 NOTES TO ACCOUNTS 10 TOTAL 161,326,845 146,232,727

NOTES TO ACCOUNTS 10

The Schedules referred to above form an integral part of the Balance Sheet The Schedules referred to above form an integral part of the Profi t and Loss Account

As per our Report of even date attached Signatures to Balance Sheet and As per our Report of even date attached Signatures to Profi t & Loss Schedules 1 to 7 and 10 Account and Schedules 8 to 10 For and on behalf of For and on behalf of the Board For and on behalf of For and on behalf of the Board KALYANIWALLA MISTRY & ASSOCIATES KALYANIWALLA MISTRY & ASSOCIATES Chartered Accountants Chartered Accountants

V.M. PADWAL M.G. SUBRAMANIAM M. EIPE B.S. YADAV V.M. PADWAL M.G. SUBRAMANIAM M. EIPE B.S. YADAV Partner Company Secretary Director Director Partner Company Secretary Director Director Mumbai, May 26, 2010 Mumbai, May 26, 2010

SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010

AS AT AS AT AS AT AS AT 31.03.10 31.03.09 31.03.10 31.03.09 SCHEDULE 1 : SHARE CAPITAL Rupees Rupees SCHEDULE 2 : RESERVES & SURPLUS AUTHORISED SHARE PREMIUM 5,000,000 Equity Shares of Rs.10/- each 50,000,000 50,000,000 As per last Balance Sheet 84,945,040 84,945,040 ISSUED, SUBSCRIBED AND PAID UP Special Reserves u/s 45IC of RBI Act, 1934 3,774,160 Equity Shares of Rs.10/- each fully 37,741,600 37,741,600 Opening Balance 19,493,517 paid up. (100% shares are held by Godrej Industries Ltd., the Holding Company) Add : Transferred from Profi t & Loss A/c 6,403,620 - 37,741,600 37,741,600 25,897,137 19,493,517 General Reserve Opening Balance 9,541,258 Add : Transferred from Profi t & Loss A/c 3,201,810 12,743,068 9,541,258 123,585,245 113,979,815

134 Annual Report 2009–2010

SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010 SCHEDULE 3 : INVESTMENTS Quantity Amount Investee Company/Institution Fac Value Quantity Acquired Sold Quantity As on As on as on 01.04.09 during the year during the year as on 31.03.10 31/03/10 Rupees 31.03.09 (Rupees) Long Term Investments (At Cost) Equity shares - Quoted Companies under Same Management: Godrej Properties Ltd. 10 691,155 - - 691,155 5,488,688 5,488,688 Other Companies: Agro Tech Foods Ltd. 10 1 - - 1 53 53 Colgate Palmolive India Ltd. 10 1 - - 1 151 151 Dabur India Ltd. 1 3 - - 3 59 59 Henkel India Ltd. 10 1 - - 1 31 31 Hindustan Unilever Ltd. 1 751 - - 751 90,589 90,589 Gillette India Ltd. 10 1 - - 1 400 400 Marico Industries Ltd. 1 40 - - 40 271 271 Nirma Ltd. 5 2 - - 2 255 255 Procter & Gamble Hygiene & Health Care Ltd. 10 1 - - 1 490 490 Venkys India Ltd. 10 1 - - 1 37 37 Amrutanjan Health Care Ltd. 10 15,423 - 15,423 - – 5,410,332 Mafatlal Industries Ltd. 10 – 122,050 7,716 114,334 8,734,664 - Unquoted Companies under the Same Management : Godrej Agrovet Ltd. 10 8,100 - - 8,100 1,809,717 1,808,707 Godrej Gokarna Oil Palm Limited 10 2 - - 2 3,240 3,240 Other Companies : karROX Technologies Ltd. 10 250,000 - - 250,000 10,050,000 10,050,000 Personalitree Academy Ltd. 10 389,269 - - 389,269 11,027,991 11,027,991 Unquoted : Non-Convertible Debentures Companies under the Same Management : Godrej Oil Plantations Limited 10 160 - 160 - - 1,600 Current Investments Mutual Funds - Unquoted SBI Mutual Fund - Cash option 47,773,359 - 84,979,995 28,394,207 Less : Provision for diminution in value of Investments 11,028,178 11,028,178 73,951,817 17,366,029 Aggregate Book Value of Investments : Quoted Investments 14,315,688 5,502,668 Unquoted Investments 59,636,129 17,352,049 73,951,817 22,854,717 Market Value of quoted investments 370,078,667 5,458,501

AS AT AS AT SCHEDULE 10 : NOTES TO ACCOUNTS 31.03.10 31.03.09 1. Signifi cant Accounting Policies Rupees Rupees a. Accounting Convention: SCHEDULE 4 : CASH AND BANK BALANCES The fi nancial statements are prepared under the historical cost convention, on Cash on hand 1,561 1,301 accrual basis in accordance with the generally accepted accounting principles in India, Balances with Scheduled Banks the Accounting Standards issued by the Institute of Chartered Accountants of India and in Current Accounts 166,553 1,838,874 the provisions of the Companics Act, 1956. 168,114 1,840,175 b. Income recognition: SCHEDULE 5 : OTHER CURRENT ASSETS (i) Dividend income is recognised when the right to receive the same is Outstanding Income 386,137 1,104,004 established. 386,137 1,104,004 (ii) Interest income is recognised on time proportion basis. SCHEDULE 6 : LOANS AND ADVANCES (iii) Profi t/loss on sale of investments is accounted on the trade dates. (Unsecured, considered good, unless stated otherwise) c. Investments: ESOP Loans – 24,691,000 Share Application Money (considered doubtful) 300,000 300,000 Long term investments are carried at cost. Provision for diminution, if any, in the Intercorporate Deposits (considered good) 29,000,000 24,000,000 value of each long-term investment is made to recognise decline, other than that of a temporary nature. The fair value of a long Term investment is ascertained with Intercorporate Deposits (considered doubtful) - 23,110,000 reference to its market value, the investee's assets and results and the expected cash 29,300,000 47,410,000 fl ows from the investments. Less : Provision for Doubtful Loans and Advances (300,000) (23,410,000) 29,000,000 24,000,000 d. Taxes on Income: Advance Payment of Taxes 1,711,660 74,882 Current Tax is the amount of tax payable on the taxable income for the year 30,711,660 48,765,882 determined in accordance with the provisions of the Income Tax Act, 1961. SCHEDULE 7: CURRENT LIABILITIES & PROVISIONS Deferred tax is recognised on timing differences, being the differences between the Current Liabilities taxable income and accounting income that originate in one period and are capable Sundry Creditors 140,943 159,112 of reversal in one or more subsequent periods. Deferred tax assets subject to the Provisions : consideration of prudence are recognised and carried forward only to the extent that Proposed Dividend 18,870,800 – there is a reasonable certainty that suffi cient future taxable income will be available Tax on Distributed Profi ts 3,134,204 1,346,980 against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year end based on the tax rate and laws 22,145,947 1,506,092 enacted or substantially enacted on the Balance Sheet date. SCHEDULE 8 : INTEREST INCOME (Gross) On Loans (TDS Rs. 292,440/-, previous year Rs. 554,712/-) 1,290,555 2,447,977 2. Investments: On Intercorporate Deposits (TDS Rs. 668,134/-, previous year i) The Company has acquired and sold the following investments during the year: Rs. 688,933/-) 4,212,823 3,040,300 This Year Previous Year On Fixed Deposits with Bank (TDS Rs. Nil, previous year Rs. Nil) - 45,370 No.of Purchase No.of Purchase On Investment (Non-convertible Debentures) 160 – units/ Cost units/ Cost 5,503,538 5,533,647 shares (Rs.) shares (Rs.) SCHEDULE 9 : EXPENSES LIC Mutual Fund -- 2,996,333 44,600,000 Salary 60,000 60,000 SBI Mutual Fund 1,958,697 38,826,641 128,507 2,500,000 Profession Tax 2,500 2,500 Fem Care Pharma --15,242 4,189,265 Auditors’ Remuneration 25,120 49,635 Mafatlal Industries 7,716 589,472 -- Professional Charges 60,665 44,944 Godrej Global Solutions Ltd. --18,000 180,000 Miscellaneous Expenses 17,957 10,173 (Pref. shares) 166,242 167,252

135 Ensemble Holdings & Finance Limited

SCHEDULE 10: NOTES TO ACCOUNTS (Contd.) 9. ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956 THIS YEAR PREVIOUS YEAR BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE Rupees Rupees 1. Registration details 3. Amount due from a Company under the same Registration No : 11-65457 management State Code : 11 Godrej Hicare Ltd. - 23,110,000 Balance Sheet Date : 31.03.2010 Godrej Industries Ltd. - 5,000,000 2. Capital raised during the year (Amount in Rs. Thousands) - 28,110,000 Public Issue : - 4. Auditors’ Remuneration: Rights Issue : - (includes service tax wherever applicable) Bonus Issue : - Audit Fees 33,090 33,090 Private Placement : - Tax Audit Fees 16,545 16,545 3. Position of mobilisation and deployment of funds (Amount in Rs. Thousands) 49,635 49,635 Total Liabilities : 161,327 5. Earnings per share Total Assets : 161,327 a. Net Profi t/(Loss) after Tax available for shareholders 32,018,099 4,110,101 Sources of funds: b. Weighted Average Number of Equity Shares 3,774,160 3,774,160 Paid up Capital : 37,742 Reserves & Surplus : 123,585 c. Basic and Diluted Earnings per Share of Rs.10 each 8.48 3.74 Secured Loans : - 6. Related Party Disclosures: Unsecured Loans : - a) Related Parties with whom transactions have taken place during the year, with the Application of funds: name and description of relationship. Net Fixed Assets : - Parties where control exists Investments : 73,952 Godrej Industries Limited, the holding company Net Current Assets : 9,120 Godrej & Boyce Mfg. Co. Ltd., the ultimate holding company Miscellaneous Expenditure : - Accumulated Losses : 78,255 Related Parties with whom transactions have taken place during the year 4. Performance of Company (Amount in Rs. Thousands) Holding Company Fellow Subsidiaries Turnover (Total Income) : 33,240 Godrej Industries Limited Godrej Properties Limited Total Expenditure : 166 Godrej Agrovet Limited Profi t before tax : 33,074 Individual exercising signifi cant infl uence over the enterprise Profi t after tax : 31,774 Ms. T. A. Dubash Mr. H. K. Press Earnings per share in Rs. : 8.48 Mr. M. Eipe Dividend rate (%) : 50% 5. Generic names of three principal : The Company is a Loan b) Transactions with Related Parties products/services of the Company and Investment Company (Rs. in Lac) As per our Report attached Signatures to Balance sheet Statement Sr. Nature of Transaction Holding Subsidiary Fellow Associate/ Key Relatives Total For and on behalf of For and on behalf of Board No. Company Company Subsidiary Joint Management of Key KALYANIWALLA MISTRY & ASSOCIATES Venture Personnel Mangement Chartered Accountants Personnel V.M. PADWAL M.G. SUBRAMANIAM M. EIPE B.S. YADAV i) Dividend Received - - 17.36 - - - 17.36 Partner Company Secretary Director Director Previous year - - 28.57 - - - 28.57 Mumbai, May 26, 2010 ii) ICD Placed 525.00 - - - - - 525.00 Previous year 250.00 - - - - - 250.00 CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010 iii) ICD Refunded 575.00 - - - - - 575.00 YEAR ENDED YEAR ENDED Previous year 200.00 - - - - - 200.00 31.03.10 31.03.09 iv) Interest Received on ICD 12.51 - - - - - 12.51 Rupees Rupees Cash fl ow from Operating Activities Previous year 6.54 - - - - - 6.54 Profi t before tax 33,073,739 15,543,262 v) Dividend Paid ------Adjustments for : Dividend Income (1,811,748) - Previous year 79.26 - - - - - 79.26 Profi t on sale of long term investments (2,567,195) (5,973,980) vi) Remuneration - - - - 0.60 - 0.60 Profi t on sale of Mutual Funds (173,359) (942,121) Reversal of Provision for Dimunition in value of Investments/Loan (23,110,000) (215,293) Previous year - - - - 0.60 - 0.60 Interest Income (1,250,959) (653,589) Operating Profi t before working capital changes 4,160,478 7,758,279 c) The signifi cant Related Party Transactions are as under Adjustments for : Accrued Interest 717,867 826,985 (Rs. in Lac) Trade Payables (18,169) 1,345,470 Nature of Transaction Amount Nature of Transaction Amount Cash generated from operations 4,860,176 9,930,734 Direct Taxes paid (2,936,778) (1,387,216) Placement of ICD Interest recd on ICD placed Direct Taxes refund received - 57,988 Net Cash from operating activities 1,923,398 8,601,506 Godrej Industries Limited 525.00 Godrej Industries Limited 12.51 Cash fl ow from Investing Activities Refund of ICD Remunertion Proceeds from sale of investments 47,812,960 67,482,850 Godrej Industries Limited 575.00 Mr. H. K. Press 0.60 Dividend Income 1,811,748 - New investments made (95,925,146) (57,280,607) 7. Additional information required under Schedule VI, Part IV of the Companies Act, 1956 Interest Income 1,250,959 653,589 Interest Income - - to the extent not applicable has not been given. Loans 42,801,000 (28,424,363) 8. Previous year’s fi gures have been regrouped/reclassifi ed wherever necessary. Net cash generated / (used) from investing activities (2,248,479) (17,568,531) Cash fl ow from Financing Activities Dividend Paid - (7,925,736) Tax on Distributed Profi ts (1,346,980) (1,346,980) Net cash generated / (used) from fi nancing activities (1,346,980) (9,272,716) Net increase / (decrease) in cash and cash equivalents (1,672,061) (18,239,741) Cash in and cash equivalents (opening balance) 1,840,175 20,079,916 Cash in and cash equivalents (closing balance) 168,114 1,840,175 Notes: Since the Company is a loan and investment company, changes in inter-corporate loans and deposits given are considered as working capital changes.

As per our Report attached Signatures to Cash Flow Statement For and on behalf of For and on behalf of Board KALYANIWALLA MISTRY & ASSOCIATES Chartered Accountants V.M. PADWAL M.G. SUBRAMANIAM M. EIPE B.S. YADAV Partner Company Secretary Director Director Mumbai, May 26, 2010

136 Annual Report 2009–2010

Schedule to Balance Sheet of a Non-Banking Financial Company (as required in terms of Paragraph 9BB of Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 (Rs. in lakhs) Particulars LIABILITIES SIDE : (1) Loans and advances availed by the NBFCs inclusive of interest accrued thereon but not paid: Amount outstanding Amount overdue (a) Debentures : Secured NIL NIL : Unsecured NIL NIL (other than falling within the meaning of public deposits*) NIL NIL (b) Deferred Credits NIL NIL (c) Term Loans NIL NIL (d) Inter-corporate loans and borrowing NIL NIL (e) Commercial Paper NIL NIL (f) Public Deposits* NIL NIL (g) Other Loans (specify nature) NIL NIL * Please see Note 1 below (2) Break-up of (1)(f) above (Outstanding public deposits inclusive of interest accrued thereon but not paid): (a) In the form of Unsecured debentures NIL NIL (b) In the form of partly secured debentures i.e. debentures where there is a shortfall in the value of security NIL NIL (c) Other public deposits NIL NIL

* Please see Note 1 below

ASSETS SIDE :

Amount outstanding (3) Break-up of Loans and Advances including bills receivables [other than those included in (4) below] : (a) Secured NIL (b) Unsecured i) Loans /Advances NIL ii) Inter Corporate Deposits 290.00 iii) Advance Payment of Taxes 17.12 (4) Break up of Leased Assets and stock on hire and hypothecation loans counting towards EL/HP activities (i) Lease assets including lease rentals under sundry debtors : (a) Financial lease NIL (b) Operating lease NIL (ii) Stock on hire including hire charges under sundry debtors: (a) Assets on hire NIL (b) Repossessed Assets NIL (iii) Hypothecation loans counting towards EL/HP activities (a) Loans where assets have been repossessed NIL (b) Loans other than (a) above NIL (5) Break-up of Investments : Current Investments : 1. Quoted : (i) Shares : (a) Equity NIL (b) Preference NIL (ii) Debentures and Bonds NIL (iii) Units of mutual funds NIL (iv) Government Securities NIL (v) Others (please specify) NIL 2. Unquoted : (i) Shares : (a) Equity NIL (b) Preference NIL (ii) Debentures and Bonds NIL (iii) Units of mutual funds 477.73 (iv) Government Securities NIL (v) Others (Please specify) NIL Long Term investments : 1. Quoted : (i) Share : (a) Equity 143.16 (b) Preference NIL (ii) Debentures and Bonds NIL (iii) Units of mutual funds NIL (iv) Government Securities NIL (v) Others (Please specify) NIL 2. Unquoted : (i) Shares : (a) Equity 228.91 (b) Preference NIL (ii) Debentures and Bonds NIL (iii) Units of mutual funds NIL (iv) Government Securities NIL (v) Others (Please specify) NIL

137 Ensemble Holdings & Finance Limited

(6) Borrower group-wise classifi cation of all leased assets, stock-on-hire and loans and advances : Please see Note 2 below Category Amount net of provisions Secured Unsecured Total 1. Related Parties ** (a) Subsidiaries NIL NIL NIL (b) Companies in the same group : Loans NIL NIL NIL (c) Other related parties Inter Corporate Deposits - NIL NIL NIL 2. Other than related parties a) Advance Tax Payment NIL 17.12 17.12 b) Inter Corporate Deposits NIL 290.00 290.00 Total NIL 307.12 307.12

(7) Investor group-wise classifi cation of all investments (current and long term) in shares and securities (both quoted and unquoted): Please see note 3 below Market Value / Break up Book Value (Net of Provi- Category for fair value or NAV sions) 1. Related Parties ** (a) Subsidiaries NIL NIL (b) Companies in the same group : Quoted 3546.32 54.89 Unquoted 18.13 18.13 (c) Other related parties NIL NIL 2. Other than related parties Quoted : 154.47 88.27 Unquoted : 787.63 578.23 Total 4506.55 739.52

** As per Accounting Standard of ICAI (Please see Note 3) # Start up Company hence fair value considered at face value.

(8) Other information Particulars Amount (i) Gross Non-Performing Assets

(a) Related parties NIL

(b) Other than related parties NIL

(ii) Net Non-Performing Assets

(a) Related parties NIL

(b) Other than related parties NIL

(iii) Assets acquired in satisfaction of debt NIL

Notes: 1. As defi ned in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998.

3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classifi ed as long term or current in column (5) above.

138 Annual Report 2009–2010 Godrej Properties Limited

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010

TO THE SHAREHOLDERS 7. DEPOSITORY SYSTEM: Your Directors have pleasure in submitting their 25th Annual Report along with the Audited Accounts Your Company’s equity shares are available for dematerialization through National for the year ended March 31, 2010. Securities Depository Limited and Central Depository Services (India) Limited. 16.09% of 1. OPERATING RESULTS: the equity shares of your Company were held in demat form as on March 31, 2010. Your Company’s performance during the year as compared to the previous period is 8. CORPORATE GOVERNANCE: summarised below: As required by the existing Clause 49 of the Listing Agreements with the Stock Exchanges, a detailed report on Corporate Governance together with Management Discussion and Analysis 2009 – 2010 2008-2009 Report are included in the Annual Report. The Auditors have certifi ed the Company’s (Rs. In Lacs) (Rs. in Lacs) compliance of the requirements of Corporate Governance in terms of Clause 49 of the Profi t before Taxation 15,874.60 10,603.42 Listing Agreement and the same is annexed to the Report on Corporate Governance. Provision for Taxation (3,669.83) (3,124.00) 9. AWARDS & RECOGNITIONS: Provision for Fringe Benefi t Tax - (16.50) Your directors take pleasure in informing you that the Company was acknowledged with the following Awards during the year:- Provision for deferred tax (20.65) 10.61 “Best Business Practices Award by Accommodation” times. Profi t after taxation 12,184.12 7,473.53 “CNBC AWAAZ CRISIL CREDAI Real Estate Awards 09” for the best residential project Add: Surplus brought forward 7,510.69 2,655.39 in the western India for Planet Godrej. Prior year tax adjustments (21.37) (101.01) Ranked 1st in the Construction and Real Estate Category in India’s Best Companies to AMOUNT AVAILABLE FOR APPROPRIATION 19,673.44 10,027.91 Work for 2009 awarded by The Great Place to Work® Institute, India, in partnership with The Economic Times. Appropriations: Ranked one of India’s Top 10 Builders by the Construction World Architect and Your Directors recommend appropriations as under: Builder Awards, 2009. Proposed Dividend 2,794.00 1,510.51 10. MODIFICATION OF EMPLOYEES STOCK OPTION SCHEME: Dividend Distribution Tax 464.05 256.71 The Shareholders had vide special resolution passed by the Postal Ballot on March 10, 2010 Transfer to General Reserve 1,220.00 750.00 approved the amendments to the Employees Stock Option Plan (ESOP) of the Company inter alia to increase the limit of shares from 442,700 upto 1,500,000, which may be Surplus carried forward 15195.39 7,510.69 purchased by GPL ESOP Trust for granting options to the employees. TOTAL APPROPRIATIONS 19,673.44 10,027.91 The disclosure relating to ESOP is given in Annexure A. 11. SUBSIDIARY COMPANIES: 2. INITIAL PUBLIC OFFER: A. Subsidiaries Accounts During the year 2009-2010 your Company has entered the capital market with the Initial The audited Balance Sheet as at March 31, 2010 and Profi t & Loss account ended Public Offer (IPO) of 9,429,750 equity shares of Rs.10/- each, through 100% Book Building on that date together with the Reports of Directors and Auditors thereon of our Process wherein 7,732,405 equity shares were allotted to the Shareholders at a premium Subsidiaries along with Statement as required under Section 212 of the Companies of Rs.480/- per share and 1,697,345 equity shares were allotted to certain Anchor Investors Act, 1956, forms part of the Annual Report . at a premium of Rs.520/- per share. B. Transfer of Stake Your Company’s shares were listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited on January 5, 2010. The Company has diluted its stake in the following Subsidiaries:- Your Directors take this opportunity to thank all the investor for their overwhelming 1) Happy Highrises Limited by transferring 49% of equity share capital to IL&FS response and the confi dence reposed by them. Trust Company Ltd. A/C Milestone Real Estate Fund for a consideration of Rs.8,610 Lakhs. 3. DIVIDEND: 2) Godrej Estate Developers Private Limited (“GEDPL”) by transferring 49% Your Directors recommend for approval of the members at the ensuing Annual General of the equity share capital to HDFC PMS (under HDFC Asset Management Meeting payment of dividend of 40% (Rs. 4.00 per share) for the year ended March 31, Company Limited Portfolio Management Services Real Estate Portfolio-I, 2010. through its Portfolio Manager HDFC Asset Management Company Limited), 4. REVIEW OF OPERATIONS: for a consideration of Rs. 4,500 Lakhs. Your Company posted a total income of Rs. 35,701.18 lacs during the year ended March 31, 3) Godrej Sea View Properties Private Limited (GSVPPL) by transferring 49% 2010. (22.27% before March 31, 2010) of the equity share capital to HDFC PMS During the year, the company successfully completed several projects, most notably the 1st (under HDFC Asset Management Company Limited Portfolio Management Phase of Godrej Waterside - commercial project in Kolkata, Godrej Woodsman Estate - a Services Real Estate Portfolio-I, through its Portfolio Manager HDFC Asset residential project in Bangalore and Godrej Coliseum in Mumbai. At the end of 2009-10, Management Company Limited), for a consideration of Rs.5,500 Lakhs in the completed developed area for the company stands at 7.55 mn sq.ft compared to 3.63 two tranches. mn sq.ft in 2008-09. Now the Company holds 51% of the paid up capital of the above mentioned The highlight of the year has been successful launch of mid-income residential projects in subsidiaries. Ahmedabad and Kolkata. The company commenced operations in Chandigarh, Chennai and C. Material Non Listed Indian Subsidiary Mangalore. Pursuant to Clause 49 of the Listing Agreement, if the turnover or net worth (i.e. Your company signed MOU for development of project at Pune, where due diligence is paid-up capital and free reserves) of any unlisted Indian Subsidiary Company currently underway. Your Company also signed an MOU with Godrej Industries Limited and exceeds 20% of the consolidated turnover or net worth respectively, of the Listed Godrej and Boyce Mfg. Company Limited for undertaking the development of a 35 acre Holding Company and its subsidiaries in the immediately preceding Accounting project at Vikhroli, Mumbai. year; that subsidiary is termed as Material Non Listed Indian Subsidiary. Accordingly, HDFC PMS, a real estate private equity fund, invested 49% each in subsidiaries, Godrej Godrej Waterside Properties Private Limited (GWPPL) has become the Material Estate Developers Private Limited and Godrej Sea View Properties Private Limited, for Non Listed Indian subsidiary of Godrej Properties Limited. As per Clause 49 of the development of a commercial project, Godrej Eternia in Chandigarh and a residential Listing Agreement the Company has appointed Mr. Amit B. Choudhury, Independent project, Godrej Palm Grove in Chennai respectively. In Godrej Sea View Properties Private Director on the Board of GWPPL. Limited, 22.27% of the equity share capital out of 49% was transferred before March 12. OBJECTS OF THE INITIAL PUBLIC OFFERING 31, 2010. Also, Milestone Real Estate Fund invested 49% in Happy Highrises Limited, a Certain deviations/amendments to the objects of the initial public offering as disclosed subsidiary for development of Godrej Prakriti, a mix-use project in Kolkata. on page 43 of the Prospectus of the Company dated December 16, 2009 (the “Prospectus”) Continuing with the commitment towards customer delight, your company had set up a have taken place details of which are set forth below: dedicated team for Customer Centricity initiatives led by Chief Customer Offi cer. 1. Schedule of deployment 5. FUTURE PROSPECTS AND OUTLOOK OF THE COMPANY: The schedule of deployment of net proceeds as disclosed on page 43 of the Your Company has a well diversifi ed portfolio spread across established Tier-1 and Prospectus has undergone change due to the following reasons: emerging Tier-II and III locations. The strategy of partnering with leading fi rms like L&T for a) Acquisition of land development rights for our Forthcoming Projects construction services and P.G. Patki for architectural services is likely to be a key driver in scaling up the projects across regions. The strategy of Joint Venture for sourcing land In relation to the property located at Ahmedabad, the Company was required continues to help in minimizing capital requirement during the initial stages of project to utilise an amount of Rs. 132.00 crores in fi scal year 2010. The Company development. has already utilised an amount of Rs. 25 crores in fi scal year 2010 out of the sum of Rs. 132.00 crores. The Company had entered into an agreement 6. FIXED DEPOSITS: to grant development rights dated April 15, 2008 for the said project and Your Company has accepted Fixed Deposits for 12, 24 and 36 Months tenure. During the thereafter the Company has entered into development agreements for part year ended March 31, 2010 deposits aggregating to Rs.7489.43 Lacs have been mobilized. of the area. It is proposed to enter into a development agreement for the

139 Godrej Properties Limited

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010

remaining area by March 2011. Accordingly, the Company shall utilise the Rs. 15.00 crores was to be utilised in fi scal year 2012. However, there has balance amount of Rs. 107 Crores in fi scal year 2011 as compared to utilizing been delay in implementation of the project at Chandigarh as construction this amount in fi scal year 2010 as stated in the Prospectus. was delayed due to certain approvals not being received in a timely manner In relation to the property located at Kalyan, the Company was required to and now the activities have been accelerated to complete the project pay an amount of Rs. 20.00 crores in fi scal year 2010. However, due to the on time. Accordingly, the Company now proposes to utilise an amount of aggregation of the entire 160 acres of land at Kalyan not being completed Rs. 60.00 crores in fi scal year 2011 and Rs. 15.00 crores in fi scal year 2012 till date, the Company shall pay the amount of Rs. 20.00 crores in fi scal year towards construction of the project. 2011 when the aggregation of land is completed. Further the Company has now assigned the development rights of this In relation to the property located at Pune, the Company was required to project to its subsidiary, Godrej Estate Developers Private Limited pay an amount of Rs. 51.00 crores in fi scal year 2010. However, the owners (“GEDPL”) and has transferred 49% of the equity share capital of GEDPL of the property at Pune did not receive a certifi cate of conversion of land to to HDFC PMS (under HDFC Asset Management Company Limited Portfolio non-agricultural use in fi scal year 2010. Accordingly, the Company shall pay Management Services Real Estate Portfolio-I, through its Portfolio Manager the amount of Rs. 51.00 crores in fi scal year 2011. HDFC Asset Management Company Limited), for a consideration of Rs. 45 Crores. It is now proposed to invest a sum of Rs. 60.00 crores in fi scal year b) Construction of our Forthcoming project 2011 and Rs. 15.00 crores in fi scal year 2012 in this project through the In relation to construction of the project located at Chandigarh, the subsidiary, GEDPL. Company was required to utilise an amount of Rs. 75.00 crores from the In light of the abovementioned changes to the Objects of the Issue it is Net Proceeds. An amount of Rs. 20.00 crores was proposed to be utilised in proposed to amend the utilisation of the Net Proceeds of the IPO as under: fi scal year 2010, Rs. 40.00 crores was to be utilised in fi scal year 2011 and (Rs. in Crores)

S. Expenditure Items Total Amount deployed till Balance Payable Proposed to be Amount upto which Estimated schedule of deployment of Net Proceeds for No. Estimated November 15, 2009 as on funded by inter- will be fi nanced from FY 2010 FY 2011 FY 2012 Cost November 15, 2009 nal accruals Net Proceeds 1. Acquisition of land development 444.82 152.50 292.32 Nil 203.00 25.00* 178.00** - rights for our Forthcoming Projects 2. Construction of our Forthcoming 100.84 22.82 78.02 Nil 75.00 -# 60.00#3 15.00 project 3. Repayment of loans 172.00 Nil 172.00 Nil 150.17 150.17 - - Total 717.66 175.32 542.34 Nil 428.17 175.17 238.00 15.00 * The Prospectus stated that an amount of Rs. 203.00 crores was proposed to be utilised in fi scal year 2010. Now amended to state that Rs. 25.00 crores was utilised in fi scal year 2010. ** The Prospectus stated that no amount was proposed to be utilised in fi scal year 2011. Now amended to state that Rs. 178.00 crores is proposed to be utilised in fi scal year 2011. # The Prospectus stated that an amount of Rs. 20.00 crores was proposed to be utilised in fi scal year 2010, Now amended to state that no amount was utilised in fi scal year 2010 #3 The Prospectus stated that an amount of Rs. 40.00 crores was proposed to be utilised in fi scal year 2011, Now amended to state that the amount of Rs. 60..00 crores is proposed to be utilised in fi scal year 2011.

13. DIRECTORS: Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the In accordance with the Articles of Association of the Company and the provisions of Board of Directors) Rules, 1988 is provided hereunder: the Companies Act, 1956, Mr. Adi B Godrej, Mr. Jamshyd N Godrej, Mr.Pranay Vakil and (i) Conservation of Energy: Dr. Pritam Singh, retire by rotation and being eligible, offer themselves for re- Expenses on account of Energy are negligible. appointment. (ii) Technology Absorption: It is an on going process. The Board of Directors in their meeting held on May 17, 2010, has appointed Mr.K.T. (iii) Foreign Exchange Earnings & Outgo: Jithendran and Mr. Amitava Mukherjee as Additional Directors of the Company. They will hold offi ce up to the ensuing Annual General Meeting of the Company. Mr. K. T.Jithendran, During 2009-10, expenditure in foreign currencies amounted to Rs. 667.52 Lakhs/- was appointed as an Executive Director subject to the approval of the shareholders and (Previous Year Rs. 482.52 Lakhs) on account of travelling and expenses incurred for business Mr. Amitava Mukherjee was appointed as an Independent Director. promotion. 14. APPOINTMENT OF AUDITORS: The Company has not earned any Foreign Exchange during the year. M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General 17. GROUP FOR INTERSE TRANSFER OF SHARES: Meeting and are eligible for re-appointment for which they have given their consent. As required under Clause 3(1) (e) of the Securities and Exchange Board of India (Substantial 15. COMMITTEES OF DIRECTORS: Acquisition of Shares and Takeovers) Regulations, 1997, persons constituting Group (within the meaning as defi ned in the Monopolies and Restrictive Trade Practices Act, 1969) for the a) Audit Committee: purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of The Audit Committee which was constituted pursuant to the provisions of Section the aforesaid SEBI Regulations are given in Annexure B attached herewith and forms a part 292A of the Companies Act, 1956 and the Listing Agreement has reviewed the of this Report. Accounts for the year ended March 31, 2010. The members of the Audit Committee 18. DIRECTORS’ RESPONSIBILITY STATEMENT: are Mr. Keki B. Dadiseth - Chairman, Mrs. Lalita D. Gupte, Mr. Amit B. Choudhury, Mr. Pranay D. Vakil, Dr. Pritam Singh and Mr. S. Narayan, all Independent Directors. Pursuant to Section 217(2A) of the Companies Act, 1956, Your Directors based on The Scope of the Audit Committee has been revised at the meeting of the Board of the representation received from the Operation Management, and after due enquiry Directors held on October 24, 2009 to include review and monitoring of the issue confi rms : proceeds of the public or rights issue. (i) that in the preparation of the annual accounts, the applicable accounting standards b) Investor Grievance cum Share Transfer Committee: have been followed; The Board of Directors in their meeting held on October 24, 2009 re-constituted (ii) that the Directors have selected such accounting policies and applied them the Investor Grievance Cum Share Transfer Committee by appointing Mr. Amit B. consistently and made judgments and estimates that are reasonable and prudent Choudhury as a member of the Committee. so as to give a true and fair view of the state of affairs of the Company at the end c) Management Committee: of the fi nancial year ended March 31, 2010 and of the profi t of the Company for that year; The Board of Directors in their meeting held on January 22, 2010 has formed the Management Committee for administrative convenience and for handling day to day (iii) that the Directors had taken proper and suffi cient care for the maintenance of affairs of the Company. The Committee comprises of Mr. Adi B. Godrej, Chairman, adequate accounting records in accordance with the provisions of the Companies Mr. Milind S. Korde, Managing Director and Mr. Pirojsha A. Godrej, Executive Act, 1956, for safeguarding the assets of the Company and for preventing and Director. detecting fraud and other irregularities; (iv) that the Directors have prepared the annual accounts on a going concern basis. 16. ADDITIONAL INFORMATION: 19. ACKNOWLEDGEMENT: (a) In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 and the rules framed there under, the names and other particulars of employees Your Directors wish to place on record, sincere thanks to the Government, Government are required to be set out in the annexure to the Director’s Report. In terms of the agencies, Banks, Financial Institutions, Joint Venture Partners, Customers, Shareholders, provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors Report Fixed Deposit Holders, Vendors, and other related organizations who through their continued and Accounts are being sent to all the members of the Company excluding the support and co-operation, have helped, as partners, in your Company’s progress. statement of particulars of the employee under Section 217 (2A) of the Companies For and on behalf of the Board of Directors Act, 1956. Any member interested in obtaining a copy of the annexure may write to Adi. B. Godrej the Company Secretary at the Registered Offi ce of the Company. Chairman (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Mumbai, Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Date: June 4, 2010

140 Annual Report 2009–2010

ANNEXURE A Disclosure Relating To Employees Stock Option Plan

Particulars Details Options granted 442,700

Exercise price of options Rs. 620 per share plus interest at a compounding rate of 10 % per annum or at such other rate as may be defi ned by the Remuneration Committee and intimated to the option grantees. In addition to it, such other amount as intimated by the Remuneration Committee from time to time viz. amount of stamp duty and trusteeship fees will be recoverable from the employees. Total options vested Nil Options exercised Nil Total number of Equity Shares that would arise as a result of full exercise of options already granted 442,700 Options forfeited/ lapsed/ cancelled 39,000 Variations in terms of options Nil Money realised by exercise of options Nil Options outstanding (in force) 403,700 Vesting schedule Options shall vest in the eligible employees under the ESOP within such period as may be prescribed by the Remuneration Committee, which period shall not be less than one year and may extend upto three years from the date of grant of options. The Remuneration Committee of the Company at its meeting held on December 24, 2007 has decided that the above mentioned options would be vested in the employees on December 27, 2010. Further there is a change in the vesting schedule for the grants made on or after March 10, 2010, the said vesting schedule is provided herein after. Person wise details of options granted to i) Directors and key management employees Please see Note 1 below ii) Any other employee who received a grant in any one year of options amounting to 5% or more of Nil the options granted during the year iii) Identifi ed employees who are granted options, during any one year equal to or exceeding 1% of Nil the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of There is no fresh issue of shares on exercise of option therefore the same is not applicable. option calculated in accordance with Accounting Standard (AS) 20 ‘Earnings Per Share’. Difference between employee compensation cost using the intrinsic value method and the employee Nil compensation cost that shall have been recognised if the Company has used fair value of options and impact of this difference on profi ts and EPS of the Company Weighted average exercise prices and weighted average fair values of options whose exercise price either equals or exceeds or is less than the market price of the stock Weighted average exercise price is Rs. 620 per share plus interest Description of the method and signifi cant assumptions used during the year to estimate the fair values N.A. of options, including weighted-average information, namely, risk-free interest rate, expected life, expected volatility, expected dividends and the price of the underlying share in market at the time of grant of the option Lock-in Three years from the date of grant i.e., December 28, 2007 Impact on profi ts of the last three years and on the EPS of the last three years if the issuer had followed Nil the accounting policies specifi ed in clause 13 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 in respect of options granted in the last three years

Details regarding options granted to our Directors and our Key Management Personnel are set forth below:

Name Position Number of options granted under ESOP Mr. Milind S. Korde Managing Director 60,000 Mr. K. T. Jithendran Executive Director 30,000 Mr. Nishikant Shimpi Executive Vice President (Bangalore region) 20,000 Mr. K. P. Sudheer Vice President (Mumbai region) 20,000 Mr. Nitin Wagle Vice President (Operations) 10,000 Mr. Shodhan A. Kembhavi Vice President (Legal) and Company Secretary 10,000 Mr. Rajendra Khetawat Vice President (Finance and Accounts) 10,000 Mr. Santosh Tamhane Vice President (Projects) 10,000 Ms. Krishnakoli S. Kumar Vice President (Marketing and Sales) 10,000 Ms. Aylona D’Souza Vice President (Human Resources and Administration) 7,000

Amendments to the Employee Stock Option Scheme: The Shareholders had vide special resolution passed by Postal Ballot on March 10, 2010 approved the following amendments to the Godrej Properties Limited Employees Stock Option Plan (GPL ESOP). The following amendments would be effective for the grants made on or after March 10, 2010. 1. Grant additional options to the extent of 50% to the employees who have been granted options in December 2007. 2. Grant options to new employees and additional options to the old employees on account of promotions. 3. Allot options in 3 tranches for new employees (who have joined after December 2007) fi rst on the date of joining, second on completion of one year and third on completion of two years. 4. Curtail the vesting period proportionately for employees who have joined or who have been promoted between December 2007 to December 2009, and for additional allotments to existing employees. 5. Change the defi nition of exercise price from: ‘‘The Market Price plus Interest at such a rate not being less than the Bank Rate then prevailing compoundable on an annual basis for the period commencing from the date of Granting of the Option and ending on the date of intimating Exercise of the Option to the Company" to “Grant price plus interest at such rate as may be decided from time to time compoundable on an annual basis, for the period commencing from the date of granting of the options and ending on the date of intimating exercise of the option to the Company plus all other expenses as may be incurred by the Company to give effect to the GPL ESOP ” where “Grant Price” means higher of market price or average cost of shares purchased by the Trust for that specifi c grant, including any unalloted shares lying with the Trust if utilized for that specifi c grant, plus interest on the loan taken to purchase the said shares at such rate as may be decided from time to time and compoundable on annual basis till the date of grant.” 6. The GPL ESOP Trust shall purchase not more than 4,30,000 equity shares at any one point of time. 7. The maximum equity shares that can be purchased by GPL ESOP Trust for grant of options under the scheme will be 15,00,000 equity shares including 4,42,700 equity shares already purchased by the trust.

141 Godrej Properties Limited

ANNEXURE B

“Group” for interse transfer of shares under clause 3(1) (e) of the Securities & Exchange 33) Godrej Global Mid East FZE Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. 34) Godrej Consumer Products Mauritius Ltd.

35) Godrej Kinky Holding Ltd. 1) Godrej Industries Limited 36) Kinky Group Pty. Ltd. 2) Godrej & Boyce Manufacturing Co. Ltd. 37) Godrej Hygiene Products Ltd. 3) Ensemble holdings & Finance Ltd. 38) Cartini India Ltd. 4) Godrej Investments Private Ltd. 39) Godrej Holdings Pvt. Ltd. 5) Godrej Efacec Automation & Robotics Ltd. 40) Godrej (Vietnam) Co.Ltd. 6) Veromatic International BV 41) ABG Venture LLP 7) Water Wonder Benelux BV 42) NBG Enterprise LLP 8) Wadala Commodities Ltd. 43) JNG Enterprise LLP 9) Swadeshi Detergents Ltd. 44) SVC Enterprise LLP 10) Natures’s Basket Ltd. 45) RKN Enterprise LLP 11) Godrej Hershey Ltd. 46) Godrej & Boyce Enterprise LLP 12) Godrej Consumer Products Ltd. 47) Mr. Adi B. Godrej 13) Godrej Agrovet Ltd. 48) Mr. Jamshyd N. Godrej 14) Golden Feed Products Ltd. 49) Mr. Nadir B. Godrej 15) Godrej Oil Palm Ltd. 50) Mr. Pirojsha A. Godrej 16) Cauvery Palm Oil Ltd. 51) Mr. Rishad K. Naoroji 17) Godrej Infotech Ltd. 52) Ms. Freyan V. Crishna 18) Geometric Ltd. 53) Mr. Navroze J. Godrej 19) Mercury Mfg. Co. Ltd. 54) Ms. Nyrika V. Crishna 20) Godrej (Malaysia) Sdn. Bhd. 55) Ms. Raika J. Godrej 21) Godrej (Singapore) Pte. Ltd. 56) Ms. Tanya Arvind Dubash 22) Godrej International Ltd. 57) Ms. Nisaba A. Godrej 23) Veromatic Services BV 58) Master Burjis Nadir Godrej 24) Boston Analytics Inc., USA 59) Mst. Hormuzd N. Godrej 25) CBay Systems Limited, USA 60) Mrs. Rati Nadir Godrej 26) HyCa Technologies Pvt. Ltd. 61) Mr. Sohrab Nadir Godrej 27) Bahar Agrochem & Feeds Pvt. Ltd. 62) Ms. Parmeshwar A. Godrej 28) Vora Soaps Ltd. 63) Mrs. Smita V. Crishna 29) Godrej Sara Lee Ltd. 64) Mrs. Pheroza Godrej 30) Godrej Consumer Products (UK) Ltd. 65) Mr. V. M. Crishna 31) Keyline Brands Ltd. 32) Rapidol (Pty) Ltd.

142 Annual Report 2009–2010

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ PROPERTIES LIMITED 1. We have audited the attached Balance Sheet of GODREJ PROPERTIES LIMITED, as at 31st March, 2010, the market volatility and the loss, if any, can be determined only at the end of the exercise period, in view Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed of which provision for the diminution is not considered necessary in the fi nancial statements. thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is b) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 9b of Schedule to express an opinion on these fi nancial statements based on our audit. 19-Notes to Accounts, regarding a loan of Rs.709.74 lakh to GIL ESOP Trust for purchase of the Holding 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards Company’s shares from the market equivalent to options granted under an Employee Stock Option require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements Plan. As at 31st March, 2010, the market value of the shares held by the GIL ESOP Trust is lower than are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts the cost of acquisition of the shares by Rs.290.16 lakh. The repayment of the loans granted to the GIL and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and ESOP Trust is dependant on the exercise of the options by the employees and the market price of the signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. underlying equity shares of the unexercised options at the end of the exercise period. In the opinion We believe that our audit provides a reasonable basis for our opinion. of the management, the fall in value of the underlying equity shares is on account of current market 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of volatility and the loss, if any , can be determined only at the end of the exercise period, in view of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters which provision for the diminution is not considered necessary in the fi nancial statements. specifi ed in paragraphs 4 and 5 of the said Order. 6. In our opinion and to the best of our information and according to the explanations given to us, the said 4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in a) We have obtained all the information and explanations, which to the best of our knowledge and belief India: were necessary for the purpose of our audit. i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books. ii) in the case of the Profi t and Loss Account, of the profi t of the Company for the year ended on that date and c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account. iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date. d) In our opinion, the Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the 7. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on Companies Act, 1956. record by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(f) of Schedule 19-Notes to Accounts, in respect of projects under long term contracts undertaken and/or fi nanced Act, 1956. by the Company, we have relied upon the management’s estimates of the percentage of completion, For and on behalf of costs to completion and on the projections of revenues expected from projects owing to the technical KALYANIWALLA & MISTRY nature of such estimates, on the basis of which profi ts/losses have been accounted, interest income accrued and realizability of the construction work in progress and project advances determined. CHARTERED ACCOUNTANTS 5. a) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 9a of Schedule Firm Registration No. 104607W 19-Notes to Accounts, regarding a loan of Rs.3751.19 lakh to the GPL ESOP Trust for purchase of the Company’s shares from Godrej Industries Ltd. equivalent to options granted under an Employee Stock ERMIN K. IRANI Option Plan. As at 31st March, 2010, the market value of the shares held by the GPL ESOP Trust is lower PARTNER than the cost of acquisition of the shares by Rs.1177.50 lakh. The repayment of the loans granted to Membership No. 35646 the GPL ESOP Trust is dependant on the exercise of the options by the employees and the market price of the underlying equity shares of the unexercised options at the end of the exercise period. In the Place: Mumbai opinion of the management, the fall in value of the underlying equity shares is on account of current Dated: May 17, 2010

ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph (3) of our report of even date. 1) (a) The Company has maintained proper records showing full particulars, including information and explanations given to us, there are no undisputed dues, payable in quantitative details and situation of fi xed assets. respect of above as at 31st March, 2010 for a period of more than six months from the (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets date they became payable. at periodic intervals. In our opinion, the period of verifi cation is reasonable having (b) According to the information and explanations given to us, there are no dues outstanding regard to the size of the Company and the nature of its assets. of Income Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty, Wealth Tax, (c) In our opinion, the disposal of fi xed assets during the year does not affect the going Excise Duty or Cess on account of any dispute other than the following: concern assumption. Sr. No. Name of the Statute Amount Forum where dispute is pending 2) (a) The Management has conducted physical verifi cation of inventory at reasonable 1 Income Tax Act, 1961 3,369,812/- Commissioner of Income Tax (Appeals) intervals. 10) The Company does not have accumulated losses at the end of the fi nancial year and has not (b) In our opinion, the procedures of physical verifi cation of inventory followed by the incurred any cash losses in the current and immediately preceding fi nancial years. management are reasonable and adequate in relation to the size of the Company and the nature of its business. 11) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to banks. The (c) The Company is maintaining proper records of inventory and no material discrepancies Company does not have dues to fi nancial institutions or outstanding debentures. were noticed on physical verifi cation. 12) According to the information and explanations given to us and based on the documents and 3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or records produced to us, the Company has not granted loans and advances on the basis of other parties covered in the register maintained under Section 301 of the Companies security by way of pledge of shares, debentures and other securities. Act, 1956. 13) In our opinion and according to the information and explanations given to us, the nature of (b) Consequently, the question of commenting on the rates of interest, terms and conditions activities of the Company does not attract any special statute applicable to chit fund and of the loans granted being prejudicial to the interests of the Company, receipt of regular nidhi/ mutual benefi t fund/ societies. principal and interest and reasonable steps for recovery of the same does not arise. 14) In our opinion and according to the information and explanations given to us, the Company (c) The Company has taken unsecured loans amounting to of Rs. 650 lakh from two has maintained proper records of the transactions and contracts in respect of investments companies covered in the register maintained under Section 301 of the Companies Act, purchased and sold during the year and timely entries have been made therein .The 1956. The maximum amount involved during the year was Rs. 550 lakh and year-end investments made by the Company are held in its own name. balance of loans taken from such parties is Rs. Nil. 15) In our opinion and according to the information and explanations given to us, the Company (d) The rate of interest and the other terms and conditions of the unsecured loans taken has not given any guarantee for loans taken by others from banks and other fi nancial were not prima facie prejudicial to the interest of the Company. institutions. 4) In our opinion and according to the information and explanations given to us, there are 16) According to the information and explanations given to us and based on the documents and adequate internal control procedures commensurate with the size of the Company records examined by us, on an overall basis, the term loan has been applied for the purpose and the nature of its business, for the purchase of inventory, fi xed assets and for the for which the loan were obtained. sale of goods. There are no sales of service. During the course of our audit, we have 17) According to the information and explanations given to us and on an overall examination not observed a continuing failure to correct major weaknesses in internal controls. of the Balance Sheet and Cash Flows of the Company, we report that the Company has not 5) (a) Based on the audit procedures applied by us and according to the information and utilized funds raised on short-term basis for long-term investment. explanations provided by the management, we are of the opinion that the particulars 18) The Company has not made any preferential allotment of shares to parties or companies of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 covered in the register maintained under section 301 of the Companies Act, 1956. have been entered into the register required to be maintained under that section. 19) The Company did not issue any debentures during the year. (b) The transactions made in pursuance of such contracts or arrangements, were made at 20) We have verifi ed the end use of money raised by public issue as disclosed in Note 2 of Schedule prices which are reasonable having regard to prevailing market prices at the relevant 19. Pending utilization of the funds raised through public issue, a sum of Rs. 25,559.01 lakh time, where comparable market price exist. has been temporarily invested in Mutual Funds and Bank Deposits. 6) In our opinion and according to the information and explanations given to us, the Company 21) Based on the audit procedures performed and information and explanations given by the has complied with directives issued by the Reserve Bank of India and the provisions of Section Management, we report that no fraud on or by the Company has been noticed or reported 58A and 58AA of the Companies Act, 1956, and the rules framed there under, in respect of during the year. the deposit accepted from the public. 7) The Company has an internal audit system which in our opinion is commensurate with the For and on behalf of size of the Company and nature of its business. KALYANIWALLA & MISTRY 8) In our opinion and according to the information and explanation given to us the Central CHARTERED ACCOUNTANTS Government has not prescribed maintenance of cost records under Section 209(1) (d) of the Firm Registration No. 104607W Companies Act, 1956, in respect of the activities carried on by the Company. 9) (a) According to the information and explanations given to us and on the basis of our ERMIN K. IRANI examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor PARTNER Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Membership No. 35646 Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other Place: Mumbai statutory dues applicable to it with the appropriate authorities. According to the Dated: May 17, 2010

143 Godrej Properties Limited

BALANCE SHEET AS AT 31ST MARCH, 2010 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST

Schedule As at As at MARCH, 2010 31.03.2010 31.03.2009 Schedule For the year For the year ended ended Rupees Rupees 31.03.2010 31.03.2009 SOURCES OF FUNDS Rupees Rupees SHAREHOLDERS' FUNDS INCOME Share Capital 1 698,500,090 604,202,590 Sales 1,123,900,693 1,259,401,567 Reserves & Surplus 2 7,455,718,586 2,377,875,458 Operating Income 13 1,019,813,958 685,207,029 LOAN FUNDS Other Income 14 1,426,460,639 421,112,992 Secured Loans 3 1,284,680,753 2,566,929,456 TOTAL INCOME 3,570,175,290 2,365,721,588 Unsecured Loans 4 3,264,337,035 1,903,589,895 EXPENDITURE 12,703,236,464 7,452,597,399 Cost of sales 15 1,038,528,297 644,528,613 APPLICATION OF FUNDS Employee Remumeration & Benefi ts 16 106,851,547 37,508,060 FIXED ASSETS 5 Gross Block 165,480,100 75,040,934 Administration Expenses 17 141,490,427 99,708,180 Less: Depreciation 60,419,981 37,313,275 Interest & Finance Charges 18 671,317,930 512,956,238 Net Block 105,060,119 37,727,659 Depreciation 24,528,123 10,677,865 Capital Work-In-Progress / Advances - 32,536,657 1,982,716,324 1,305,378,956 105,060,119 70,264,316 Profi t for the year 1,587,458,966 1,060,342,632 INVESTMENTS 6 2,477,723,964 557,189,373 Provision for Taxation DEFERRED TAX ASSET 2,794,500 4,859,000 for Current Tax (366,983,000) (312,400,000) CURRENT ASSETS, LOANS & ADVANCES for Fringe Benefi t Tax - (1,650,000) Inventories 7 1,435,939,077 525,039,067 for Deferred Tax (2,064,500) 1,061,000 Sundry Debtors 8 1,377,092,002 1,140,203,131 Profi t After Tax 1,218,411,466 747,353,632 Cash & Bank Balances 9 723,493,415 147,337,283 Less : Prior years tax adjustments (2,137,248) (10,101,372) Loans & Advances 10 8,214,075,359 5,886,785,733 Surplus brought forward 751,069,518 265,538,964 11,750,599,853 7,699,365,214 Amount Available for Appropriation 1,967,343,736 1,002,791,224 LESS: CURRENT LIABILITIES & PROVISIONS Less : Current Liabilities 11 1,268,608,022 682,915,473 Proposed Dividend 279,400,036 151,050,648 Provisions 12 364,333,950 196,165,031 Dividend Distribution Tax 46,404,854 25,671,058 1,632,941,972 879,080,504 Transfer to General Reserve 122,000,000 75,000,000 NET CURRENT ASSETS 10,117,657,881 6,820,284,710 Surplus carried forward to Balance Sheet 1,519,538,846 751,069,518 12,703,236,464 7,452,597,399 Earnings per share Basic/ Diluted in Rs. (Refer Note 10) 19.31 12.20 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 19 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 19

The Schedules referred to above form an integral Signatures to the Balance Sheet The Schedules referred to above form an integral Signatures to the Profi t and Loss Account part of the Balance Sheet and Schedules 1 to 12 and 19 part of the Profi t and Loss Account and Schedules 13 and 19 As per our Report of even date. As per our Report of even date. For and on behalf of For and on behalf of KALYANIWALLA & MISTRY Adi. B. GODREJ MILIND S. KORDE KALYANIWALLA & MISTRY Adi. B. GODREJ MILIND S. KORDE Chartered Accountants Chairman Managing Director Chartered Accountants Chairman Managing Director ERMIN K. IRANI SHODHAN A. KEMBHAVI ERMIN K. IRANI SHODHAN A. KEMBHAVI Partner Company Secretary Partner Company Secretary Mumbai, Dated : May 17, 2010 Mumbai, Dated : May 17, 2010 SCHEDULES FORMING PART OF THE ACCOUNTS

As at As at As at As at 31.03.2010 31.03.2009 31.03.2010 31.03.2009 Rupees Rupees Rupees Rupees SCHEDULE 1 SCHEDULE 2 SHARE CAPITAL RESERVES & SURPLUS AUTHORISED Share Premium As per last Balance Sheet 1,475,805,940 1,475,805,940 100,000,000 Equity Shares of Rs. 10/- each 1,000,000,000 1,000,000,000 Add : Received during the year 4,594,173,800 - 1,000,000,000 1,000,000,000 Less : Utilised for Initial Public Issue expenses 406,800,000 - ISSUED, SUBSCRIBED & PAID UP 69,850,009 Equity Shares of Rs. 10/- each fully paid up. 698,500,090 604,202,590 5,663,179,740 1,475,805,940 (Of the above 48,495,209 (previous year 48,495,209) shares General Reserve - As per last Balance Sheet 151,000,000 76,000,000 are held Add : Transfer from Profi t & Loss Account 122,000,000 75,000,000 by Godrej Industries Ltd., the Holding Company) 273,000,000 151,000,000 Of the above 54,239,845 (previous year 54,239,845) shares issued as Profi t and Loss Account 1,519,538,846 751,069,518 Bonus shares by capitalising Share Premium, General Reserve & 7,455,718,586 2,377,875,458 Profi t & Loss Account 698,500,090 604,202,590

144 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE ACCOUNTS

As at As at As at As at 31.03.2010 31.03.2009 31.03.2010 31.03.2009 Rupees Rupees Rupees Rupees SCHEDULE 3 SCHEDULE 4 SECURED LOANS UNSECURED LOANS 1) Cash Credit / Working Capital Demand Loan 1,284,680,753 1,966,929,456 Fixed Deposits 748,943,000 - (Secured by equitable mortgage of immovable property Banks 2,515,394,035 1,883,589,895 of the Company's Project at Juhu, Mumbai) Companies - 20,000,000 2) Short Term Loan from Banks (Secured by way of equitable mortgage of its interest, - 600,000,000 3,264,337,035 1,903,589,895 in the immovable property of the project undertaken Of the above, by the Company at Chandigarh Repayable within a year (other than cash credit accounts) 2,440,193,000 1,903,589,895 1,284,680,753 2,566,929,456 Of the above, Repayable within a year (Other than cash credit accounts) - 600,000,000

SCHEDULE 5 : FIXED ASSETS GROSS BLOCK DEPRECIATION NET BLOCK ASSETS As at Additions Deductions As at As at For the Year Deductions As at As at As at 1st April, 2009 31st March, 1st April, 2009 31st March 31st March 31st April, 2009 2010 2010 2010 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Tangible Assets Building - 17,031,600 - 17,031,600 - - - - 17,031,600 - Leasehold Improvement 12,844,708 15,981,411 - 28,826,119 8,667,024 6,809,838 - 15,476,862 13,349,257 4,177,684 Offi ce Equipment 10,799,115 7,158,788 461,606 17,496,297 3,369,810 1,754,256 88,171 5,035,895 12,460,402 7,429,305 Site Equipments 2,072,120 - - 2,072,120 1,593,219 66,615 - 1,659,834 412,286 478,901 Furniture & Fixtures 13,237,691 3,816,383 217,574 16,836,500 6,375,541 1,693,702 132,554 7,936,689 8,899,811 6,862,150 Computer 20,871,953 3,486,202 424,622 23,933,533 12,672,051 4,036,212 125,607 16,582,656 7,350,877 8,199,902 Motor Vehicle 6,654,645 6,526,978 1,888,069 11,293,554 2,421,065 2,117,664 1,075,088 3,463,641 7,829,913 4,233,580 Intangible Assets Licenses & Software 8,560,702 39,429,675 - 47,990,377 2,214,568 8,049,836 - 10,264,404 37,725,973 6,346,134 Total 75,040,934 93,431,037 2,991,871 165,480,100 37,313,278 24,528,123 1,421,420 60,419,981 105,060,119 37,727,657 Previous Year 54,138,926 22,141,833 1,239,825 75,040,934 27,357,996 10,677,865 722,584 37,313,278 37,727,657 Capital Work-in-progress - 32,536,657 TOTAL 105,060,119 70,264,314

As at As at As at As at 31.03.2010 31.03.2009 31.03.2010 31.03.2009 Rupees Rupees Rupees Rupees SCHEDULE 6 : INVESTMENTS 1,000 Equity Shares of Re.1/- each of 266 266 At Cost Radhe Developers Limited Long Term (900 Shares are received on Split of Face Value Per Share from Quoted Investments Rs. 10/- to Re. 1/-) 100 Equity Shares of Rs.10/- each of 742 742 23,700 Equity Shares of Rs.10/- each of 2,370 2,370 Alacrity Housing Limited United Textiles Limited 100 Equity Shares of Rs.10/- each of - 616 23,652 24,268 Alsa Construction & Housing Limited Less : Provision for Dimunition in Value 7,564 7,765 (Written off during the year) 16,088 16,503 100 Equity Shares of Rs.10/- each of 1,066 1,066 Unquoted Investments Ansal Buildwell Limited 1,000 Equity Shares of Rs.10/- each of 10,000 10,000 100 Equity Shares of Rs.10/- each of 1,366 1,366 Saraswat Co-operative Bank Limited Ansal Housing & Construction Limited 25,000 Equity Shares of Rs.10/- each of 2,500 2,500 600 Equity Shares of Rs.5/- each of 3,081 3,081 Amitabh Bachchan Corporation Limited Ansal Properties & Infrastructure Limited Investments In Subsidiary Companies 100 Equity Shares of Rs.10/- each of 1,241 1,241 510,000 Equity Shares of Rs.10/- each of Lok Housing & Construction Limited Godrej Realty Pvt. Ltd. 5,100,000 5,100,000 100 Equity Shares of Rs.10/- each of 1,641 1,641 1% Secured Redeemable optionally Convertible Debentures 76,500,000 76,500,000 Global Infrastructure & Technologies Limited Godrej Realty Pvt. Ltd. (Formerly Known as Mantri Housing & Construction Limited) 510,000 Equity Shares of Rs.10/- each of 100 Equity Shares of Rs.10/- each of 1,516 1,516 Godrej Waterside Properties Pvt. Ltd. 5,100,000 5,100,000 Premier Energy & Infrastructure Limited 1% Secured Redeemable optionally Convertible Debentures of (Formerly Known as Premier Hsg & Industrial Ent Limited) Godrej Waterside Properties Pvt. Ltd. 147,900,000 147,900,000 100 Equity Shares of Rs.10/- each of 891 891 388,636 (Previous Year 50,000 Equity Shares of Rs. 10 Each) Equity D.S. Kulkarni Developers Shares of Re.1/- each of 13,000 Equity Shares of Rs.2/- each of 6,366 6,366 Godrej Seaview Properties Pvt. Ltd. 388,636 500,000 Unitech Limited 50,000 Equity Shares of Rs.10/- each of SCHEDULE 6 : INVESTMENTS (Contd.) Godrej Real Estate Pvt. Ltd. 500,000 500,000 72 Equity Shares of Rs.10/- each of 2,485 2,485 34,032 (Previous Year 50,000) Equity Shares of Rs.10/- each of The Great Eastern Shipping Company Limited Godrej Developers Pvt. Ltd. 340,320 340,320 18 Equity Shares of Rs.10/- each of 621 621 103,592 (Previous Year 203,120) Equity Shares of Rs. 10/- each of The Great Offshore Limited Happy Highrises Limited 163,568,489 320,720,050 25,500 (Previous Year 50,000) Equity Shares of Rs.10/- each of

145 Godrej Properties Limited

SCHEDULES FORMING PART OF THE ACCOUNTS For the For the period ended period ended As at As at 31.03.2010 31.03.2009 31.03.2010 31.03.2009 Rupees Rupees Rupees Rupees SCHEDULE 13 : OPERATING INCOME (GROSS) SCHEDULE 6 : INVESTMENTS (Contd.) Income From Development Projects 227,228,811 188,348,882 Godrej Estate Developers Pvt. Ltd. 255,000 500,000 Compensation Received from Project 70,000,000 3,900,000 Total Long Term Investments 399,681,033 557,189,373 Project Management fees 3,888 31,676 Current Investments Other Income from Customers 14,552,183 8,486,786 (In Debt Mutual Funds) - Refer Note 2 35050618.61 Units Lease Rent 14,400 14,400 Kotak Floater - LT - Daily Dividend Reinvest 353,303,226 - Licence Fees 12,000 12,000 19468215.87 Units Interest Income JPMorgan India Treasury Fund - Super IP - Daily Dividend Reinvest 194,855,426 - - Customers 2,250 82,879 (Purchased 3,52,85,408.57 Units and Sold 1,58,17,192.70 Units) 192892.196 Units - Projects and landlords 659,090,950 425,219,562 Reliance Money Manager Fund - IP - Dly Dividend Reinvest 193,111,414 - - Others 48,909,476 59,110,844 (Purchased 3,52,702.278 Units and Sold 1,59,810.082 Units) 1,019,813,958 685,207,029 3341176.86 Units Tax Deducted at source 61,459,829 94,282,458 ICICI Prudential Flexible Income Plan - Premium - Daily Dividend 353,279,335 - SCHEDULE 14 : OTHER INCOME Reinvest 35351542.24 Units Dividends 24,417,754 7,469 LIC MF Savings Plus Fund - Dly Dividend Reinvest 353,515,422 - Profi t on sale of Fixed Assets (Net) 5,932 - 35217481.74 Units Profi t on sale of Long Term Investments 1,398,581,955 419,903,138 HDFC Cash Mgmt Fund - Treasury Advantage - WP - Dly Div Reinvest 353,284,168 - Miscellaneous Income 3,454,998 1,202,385 25230374.17 Units IDFC Money Manager - Treasury Plan - Plan C - Dly Dividend Reinvest 252,341,587 - 1,426,460,639 421,112,992 2434480.63 Units SCHEDULE 15 : COST OF SALES FORTIS Money Plus Fund - IP - Daily Dividend Reinvest 24,352,353 - Own Projects Total Current Investments 2,078,042,931 - Opening Stock: 525,039,070 115,552,452 Total Investments 2,477,723,964 557,189,373 Add : Expenditure/ Transfers from Advances during the period 1. Cost of Quoted Investments 23,652 24,268 Stock-In-Trade Acquired during the year 317,741,314 - 2. Market Value of Quoted Investments 1,142,410 611,739 Development Rights 115,882,000 100,000,000 SCHEDULE 7 : INVENTORIES Construction, Material & Labour 974,292,348 474,430,413 Stock in trade (Refer Note 4) 4,816,919 3,628,193 Architect Fees 75,974,660 52,628,095 Construction Work in progress 1,431,122,158 521,410,874 1,435,939,077 525,039,067 Advertisement Expenses 41,859,043 7,481,511 SCHEDULE 8 : SUNDRY DEBTORS (UNSECURED, CONSIDERED Overheads 377,376,685 270,052,154 GOOD) Interest 305,833,636 149,423,052 2,208,959,686 1,054,015,225 Due over Six months 822,054,523 834,666,553 Less : Project transferred to Subsidiary Company (259,531,382) - Others (includes unbilled revenue of Rs. 348,931,645/- 555,037,479 305,536,578 Less : Closing Stock: (1,435,939,077) (525,039,070) Previous year Rs. 13,349,711/-) 1,377,092,002 1,140,203,131 SCHEDULE 9 : CASH & BANK BALANCES 1,038,528,297 644,528,613 Cash & Cheques-in-Hand 6,381,985 66,444,003 1,038,528,297 644,528,613 Balance with Scheduled Banks - on Current Accounts 178,010,937 42,959,442 SCHEDULE 16 : EMPLOYEE REMUNERATION & BENEFITS - on Fixed Deposit Accounts 539,100,493 37,933,838 Salaries, Bonus, Gratuity & Allowances 98,665,676 30,994,798 (Refer Note 2 & 5) 723,493,415 147,337,283 Contribution to Provident & other funds 8,185,871 6,489,379 SCHEDULE 10 : LOANS & ADVANCES (UNSECURED, CONSIDERED Other Employee Benefi ts - 23,883 GOOD) Advances recoverable in cash or in kind 106,851,547 37,508,060 or for value to be received (Refer Note 6(a), 6(b)) 4,178,949,152 2,501,432,277 SCHEDULE 17 : ADMINISTRATION EXPENSES Loan to GIL ESOP Trust 70,974,033 89,091,768 Cost of Project Management 187,177 1,321,416 Loan to GPL ESOP Trust 375,119,478 282,842,884 Consultancy Charges 7,094,890 7,861,766 Due on Management Projects (Refer Note 6(c)) 677,718,723 870,480,333 Service Charges 135,478 98,139 Development Manager Fees Accrued but not due (Refer Note 7 (b) 60,230,839 60,230,839 Loss on sale of Fixed Assets (Net) - 17,548 Interest Accrued 75,236,194 67,412,273 Power & Fuel 4,445,260 3,516,734 Deposits 2,775,846,940 2,015,295,359 Rent 28,094,016 10,971,849 8,214,075,359 5,886,785,733 Insurance 234,543 263,030 SCHEDULE 11 : CURRENT LIABILITIES Sundry Creditors (Refer Note 11) 485,786,105 103,978,759 Rates & Taxes 119,371 21,284 Investor Education and Protection Fund - - Repairs & Maintenance 19,472,695 235,645 Advances received against sale of fl ats 220,256,051 5,707,812 Other Operating Expenses 81,706,582 75,400,769 Deposits 250,590 250,590 Dimunition in value of investments written back 415 - Unclaimed Fixed Deposits 183,000 761,000 141,490,427 99,708,180 Other liabilities 433,284,414 529,652,976 SCHEDULE 18 : INTEREST AND FINANCE CHARGES Due to Management Projects 128,847,862 42,564,336 Interest Paid 1,268,608,022 682,915,473 SCHEDULE 12 : PROVISIONS - Banks 526,978,921 406,638,640 For Taxation 18,907,926 7,093,175 - Inter Corporate Deposits 8,234,384 1,566,422 (Net of Advance Tax & Tax of deducted at source of - Projects and landlords 76,841,766 64,905,596 Rs. 1,351,335,693/-, Previous Year Rs. 994,065,196/-) - Others 32,952,168 2,142,981 Proposed Dividend 279,400,036 151,050,648 Total Interest Paid 645,007,239 475,253,639 Tax on Dividend 46,404,854 25,671,058 Add : Brokerage & other Financial charges 26,310,691 37,702,599 Gratuity 7,625,984 6,450,060 Leave Encashment 11,995,150 5,900,090 Total Interest/ Finance Charges Paid 671,317,930 512,956,238 364,333,950 196,165,031

146 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE ACCOUNTS The fair value of the plan assets is reduced from the gross obligation under the defi ned benefi t plan, to recognize the obligation on net basis. SCHEDULE 19 : NOTES TO ACCOUNTS & ACCOUNTING POLICIES Past service cost is recognized as expense on a straight-line basis over the 1) Accounting Policies: average period until the benefi ts become vested. a) General (iii) Other long-term employee benefi ts: The fi nancial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued Other long-term employee benefi ts viz., leave encashment is recognized by The Institute of Chartered Accountants of India and the provisions of the Companies as an expense in the profi t and loss account as and when they accrue. The Act, 1956. Company determines the liability using the Projected Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial b) Fixed Assets gains and losses in respect of such benefi ts are charged to the profi t and Fixed assets are stated at cost of acquisition or construction less accumulated loss account. depreciation. Cost includes all incidental expenses related to acquisition and i) Borrowing Cost installation, other pre-operation expenses and interest in case of construction. Carrying amount of cash generating units / assets are reviewed at balance sheet date Interest and fi nance charges incurred in connection with borrowing of funds, which are to determine whether there is any indication of impairment. If such indication exists, incurred for the development of long term projects are transferred to Construction the recoverable amount is estimated as the net selling price or value in use, whichever Work in Progress / Due on Management Project, as a part of the cost of the projects is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the at weighted average of the borrowing cost / rates as per Agreements respectively. recoverable amount. Other borrowing costs are recognized as an expense in the period in which they are c) Depreciation/Amortization incurred. Depreciation has been provided on Written Down Value basis, at the rates specifi ed in j) Earnings Per Share Schedule XIV of the Companies Act, 1956. The basic earnings per share is computed using the weighted average number of Assets acquired on lease are depreciated over the period of the lease. common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares Leasehold improvements are amortized over a period of lease or fi ve years whichever is outstanding during the period, except where the results would be anti-dilutive. less. k) Provision For Taxation Intangible Assets are amortized over a period of six years. Tax expense comprises both current and deferred tax. d) Investments Current tax is measured at the amount expected to be paid to the tax authorities, Investments are classifi ed into long term and current investments. using the applicable tax rates and tax laws. Long-term investments are carried at cost. Provision for diminution, if any, in the Deferred tax is recognized on timing differences, being the differences between value of each long-term investment is made to recognize a decline, other than of a the taxable income and the accounting income that originate in one period and are temporary nature. capable of reversal in one or more subsequent periods. Deferred tax assets, subject to Current investments are carried individually at lower of cost and fair value and the consideration of prudence, are recognized and carried forward only to the extent that resultant decline, if any, is charged to revenue. there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated e) Inventories on the accumulated timing difference at the year-end based on the tax rates and laws Inventories are valued as under: enacted or substantially enacted on the balance sheet date. l) Foreign Currency Transactions Completed Flats - At lower of Cost or Market value Transactions in foreign currency are recorded at the exchange rates prevailing on the Construction Work-in-Progress - At cost date of the transaction. Assets and liabilities related to foreign currency transactions, Construction Work-in-Progress includes cost of land, premium for development remaining unsettled at the year end, are translated at the year end exchange rates. rights, construction costs, allocated interest and expenses incidental to the projects Forward exchange contracts, remaining unsettled at the year end, backed by underlying undertaken by the Company. assets or liabilities are also translated at year end exchange rates.The premium payable f) Revenue Recognition on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profi t and Loss Account. The Company is following the “Percentage of Completion Method” of accounting. As m) Allocation of Expenses per this method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated Corporate Employee Remuneration and Administration expenses are allocated to various cost of projects under execution with the Company. projects on a reasonable basis as estimated by the management. Determination of revenues under the percentage of completion method necessarily n) Provisions and Contingent Liabilities involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the Provisions are recognized in the accounts in respect of present probable obligations, expected revenues from the project / activity and the foreseeable losses to completion. the amount of which can be reliably estimated. Such estimates have been relied upon by the auditors. Contingent liabilities are disclosed in respect of possible obligations that arise from Revenue on bulk deals on sale of its properties is recognized on execution of past events but their existence is confi rmed by the occurrence or non-occurrence of documents. one or more uncertain future events not wholly within the control of the Company. Income from operation of commercial complexes is recognized over the tenure of the 2) The Initial Public Offer (IPO) proceeds have been utilized as per objects of the issue as lease/service agreement. stated in the prospectus as under: Interest income is accounted on an accrual basis at contracted rates. Particulars (Rs. in Lacs) Dividend income is recognized when the right to receive the same is established. Amount Received from IPO 46,884.71 g) Development Manager Fees Utilization of Funds upto March 31, 2010 The Company has been entering into Development & Project Management agreements Funding to part fi nance the acquisition of land developments rights and 2,500.00 with landlords. Accounting for income from such projects is done on accrual basis on construction costs percentage of completion or as per the terms of the agreement. Repayment of Loans 15,017.00 h) Employee Benefi ts Issue Expenses 3,808.70 a) Short-term employee benefi ts: Balance unutilised Amount temporarily invested in All employee benefi ts payable wholly within twelve months of rendering the Mutual Funds 20,559.01 service are classifi ed as short term employee benefi ts. Benefi ts such as salaries, wages, performance incentives, etc. are recognized at actual amounts due in Fixed Deposit / Bank Balance 5,000.00 the period in which the employee renders the related service. TOTAL 46,884.71 b) Post-employment benefi ts: As on 31st March 2010, unutilized funds have been temporarily invested in mutual funds schemes and fi xed deposit / balance with banks as mentioned in the prospectus of the (i) Defi ned Contribution Plans: Company. Payments made to defi ned contribution plans such as Provident Fund are charged as an expense as they fall due. (ii) Defi ned Benefi t Plans: The cost of providing benefi ts i.e. gratuity is determined using the Projected Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Profi t & Loss Account.

147 Godrej Properties Limited

SCHEDULES FORMING PART OF THE ACCOUNTS b) The company has been entering into Development Agreements with landlords. Development Manager Fees amounting to Rs. 60,230,839/- (Previous Year Rs. 60,230,839/- ) accrued as per terms of the Agreement are receivable by the Company 3) Contingent Liabilities: based upon progress milestones specifi ed in the respective Agreements and have been disclosed as Development Manager Fees accrued but not due in Schedule 10. Matters As at 3 As at 1st March 2010 31st March 2009 8) Leases (Rs.) (Rs.) a) The Company’s signifi cant leasing arrangements are in respect of operating leases for a) Uncalled amount of Rs. 80/- & Rs. 30/- on 70 7,850/- 7,850/- Residential premises. Lease income from operating leases is recognized on a straight- & 75 partly paid shares respectively of Tahir line basis over the period of lease. The particulars of the premises given under operating Properties Limited leases are as under: b) Claims against the company not acknowledged 798,647/- 6,523,647/- as debts represents cases fi led by parties in the Particulars Current Year Previous Year Consumer forum and High Court and disputed by Rs. Rs. the Company as advised by our advocates. In the Future minimum lease receipts under non- opinion of the management the claims are not cancelable operating leases sustainable Not later than 1 year 26,400 26,400 c) Claims against the Company under the Labour 1,989,240/- 2,989,240/- Later than 1 year and not later than 5 years 105,600 105,600 Laws for disputed cases b) The Company’s signifi cant leasing arrangements are in respect of operating leases for d) Guarantees given by Bank, counter guaranteed 30,500,000/- 20,100,000/- Commercial/Residential premises. Lease expenditure for operating leases is recognized by the Company on a straight-line basis over the period of lease. The particulars of the premises taken e) Claims against the Company under Bombay 14,850,000/- 14,850,000/- on operating leases are as under: Stamp Act, 1958 f) Other Claims against the Company not 9,925,000/- NIL Particulars Current Year Previous Year acknowledged as debts Rs. Rs. g) Claims against the Company under Income 3,369,812/- 101,798,275/- Future minimum lease payments under non- Tax Act, Appeal preferred to Commissioner of cancelable operating leases Income Tax (Appeals) Not later than 1 year 28,603,511 23,191,357 Capital Commitment outstanding for the year ended March 31, 2010 (Net of Advance) is Later than 1 year and not later than 5 years 33,332,065 30,558,198 amounting to Rs. NIL (Previous Year Rs. 6,227,909/-) Later than 5 years 6,047,901 7,061,962 4) Inventories 9) Employee Stock Option Plan : Stock - in - Trade includes shares in the following Companies - at cost or market value a) During the fi nancial year ended 31st March, 2008, the Company instituted an employee (whichever is lower): Stock Option Plan (GPL ESOP) approved by the Board of Directors, shareholders and the Remuneration Committee, which provided allotment of 442,700 options convertible Particulars Current Year Previous Year into 442,700 Equity Shares of Rs. 10/- each to eligible employees of Godrej Properties (Rs.) (Rs.) Limited and its Subsidiary Companies (the Participating Companies) with effect from Tahir Properties Limited 28th December, 2007. The Scheme is administered by an Independent ESOP Trust which has purchased shares a) 70 Equity shares of Rs. 100/- each, 1,400 1,400 from Godrej Industries Limited (The holding Company), equivalent to the number of Rs. 20/- paid up options granted to the eligible employees of the Participating Companies. b) 75 Redeemable Preference Class A shares of 5,250 5,250 Rs.100/- each, Rs.70/- paid Particulars No. of Options Weighted 5) Cash & Bank Balances: Current Previous Average Year Year Exercise Price Balances with scheduled banks on deposit accounts include Rs.34,422,705/- (Previous year Rs. 34,014,876/-) received from fl at buyers and held in trust on their behalf in a corpus fund. Options Outstanding at the beginning 412,700 442,700 620.00 of the year (plus interest) 6) Loans and Advances: Options granted - -- a) Amounts due from companies under the same management: Options exercised - -- Less : Forfeited / Expired / Lapsed / Idle 9,000 30,000 - Particulars Maximum Balance as Balance as / Available for re-issue Debit Balance on March 31, 2010 on March 31, 2009 Options Outstanding at the year end 403,700 412,700 620.00 during the year (plus interest) Godrej Industries Ltd. 3,249,136 3,249,136 1,649,136 The Option granted shall vest after three years from the date of grant of option, b) Loan & Advance to Subsidiary Companies: provided the employee continues to be in employment and the option is exercisable within two years after vesting. Particulars Maximum Balance as Balance as The employee share based payment plans have been accounted based on the intrinsic Debit Balance on March 31, on March 31, value method and no compensation expense has been recognized since, the price of during the year 2010 2009 the underlying equity shares on the grant date is same /less than exercise price of the Godrej Realty Private Limited 16,032,697 16,032,697 15,344,207 option, the intrinsic value of option, therefore being determined as nil. The Company has provided loan of Rs. 375,119,478/- (Previous Year Rs. 282,842,884/-) Godrej Waterside Properties 768,962,487 556,396,071 203,194,595 to GPL ESOP, which is administered by an independent ESOP Trust which has purchased Private Limited shares of GPL from Godrej Industries Limited equivalent to the number of stock options Godrej Sea View Properties 141,219,295 141,085,481 22,379 granted from time to time to eligible employees. The repayment of the loans granted Private Limited by the Company to ESOP Trust is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options Godrej Real Estate Private 983,867,205 983,867,205 845,998,414 at the end of the exercise period. The fall in value of the underlying equity shares Limited is on account of market volatility and the loss, if any, can be determined only at the Godrej Developers Private 768,328,450 501,260,304 392,825,438 end of the exercise period. In view of the aforesaid, provision for diminution of Rs. Limited 117,750,174/- (Previous Year N.A. as equity shares were not listed) is not considered Happy Highrises Limited 1,227,097,105 1,227,097,105 885,915,640 necessary in the fi nancial statements. The Company has provided loan of Rs. 70,974,033/- (Previous Year Rs. 89,091,768/-) Godrej Estate Developers 590,977,587 590,596,924 18,000 to Godrej Industries Limited Employee Stock Option Scheme (GIL ESOP), which is Private Limited administered by an independent ESOP Trust which purchases shares of GIL from the market equivalent to the number of stock options granted from time to time to eligible c) Due on Management Projects include a sum of Rs. 21,564,700/- (Previous Year Rs. employees. The repayment of the loans granted by the Company to ESOP trust is 21,479,389/-) on account of a project, where the matter is sub-judice with arbitrators. dependent on the exercise of the options by the employees and the market price of 7) Inventories, Current Assets, Loans and Advances: the underlying shares of the unexercised options at the end of the exercise period. a) Construction Work in Progress and Due on Management projects represents materials b) The fall in value of the underlying equity shares is on account of market volatility and at site and unbilled cost on the projects based on projections and estimates by the the loss, if any, can be determined only at the end of the exercise period. In view of the Company of the expected revenues and costs to completion. In the opinion of the aforesaid, provision for diminution of Rs. 29,016,289/- (Previous Year Rs. 63,591,019/-) management, the net realizable value of the construction work in progress will not is not considered necessary in the fi nancial statements. be lower than the costs so included.

148 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE ACCOUNTS 17) Segment Information: As the company has only one business segment, disclosure under Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered 10) Earnings Per Share Accountants of India is not applicable. 18) Related Party Disclosures: Particulars Current Year Previous Year Profi t after tax and prior years tax adjustments Rs. 1,216,274,218 Rs. 737,252,260 1. Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given as per Profi t & Loss Account below: Weighted average No. of equity shares 62,977,917 60,420,259 (i) Relationships: outstanding Shareholders (Holding Company) Basic earnings per share Rs. 19.31 Rs. 12.20 Godrej Industries Limited (GIL) holds 69.43% (Previous Year 80.26%) shares in the Company. GIL Nominal value of shares Rs.10 /- Rs. 10 /- is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the Ultimate Holding Company. (ii) Subsidiaries : 11) Dues to Micro, Small and Medium Industries Godrej Realty Private Limited (51%) Disclosure of sundry creditors under current liabilities is based on the information available Godrej Waterside Properties Private Limited (51%) with the Company regarding the status of the suppliers as defi ned under the “Micro, Small & Godrej Real Estate Private Limited (100%) Medium Enterprises Development Act 2006”. There is no amount overdue as on 31st March, 2010 to Micro, Small & Medium Enterprises on account of principal amount together with Godrej Developers Private Limited (51%) interest and also during the previous year. Godrej Sea View Properties Private Limited (77.73%) (100% upto 30th March, 2010) 12) The amount of exchange difference included in the Profi t and Loss Account, under the related Happy Highrises Limited (51%) (100% upto 13th September, 2009) heads of expenses is Rs. (25,624/-). (Previous Year Rs. 13,971,672/-). Godrej Estate Developers Private Limited (51%) (100% upto 19th March, 2010) 13) Expenditure in Foreign Currency (iii) Other Related Parties in Godrej Group, where common control exists : Vora Soaps Limited Particulars Current Year Previous Year Bahar Agrochem & Feeds Private Limited Rs. Rs. Ensemble Holdings & Finance Limited Travelling Expenses 1,788,397 1,663,605 Godrej Appliances Limited Other Expenditure 64,963,887 46,588,039 Godrej Agrovet Limited Total 66,752,284 48,251,644 Godrej Consumer Products Limited 14) Deferred Tax Godrej Saralee Limited The tax effect of signifi cant temporary differences that resulted in deferred tax assets are: Godrej SCA Hygiene Limited Godrej Hershey Limited Particulars Current Year Previous Year Rs. Rs. Godrej Infotech Limited Lawkim Limited Depreciation on Fixed Assets (3,523,000) 661,000 Natures Basket Limited Others 6,317,500 4,198,000 (iv) Key Management Personnel : Deferred Tax Asset 2,794,500 4,859,000 Mr. Milind Surendra Korde 15) Computation of Net Profi t under Section 349 of the Companies Act, 1956 Mr. Pirojsha A. Godrej (v) Individuals exercising Signifi cant Infl uence : Particulars Current Year Previous Year Mr. A. B. Godrej Rs. Rs. Mr. N. B. Godrej Profi t before Tax as per Profi t and Loss Account 1,587,458,966 1,060,342,632 2. The following transactions were carried out with the related parties in the ordinary Add :- course of business. Managerial Remuneration 39,754,731 29,267,596 (i) Details relating to parties referred to in items 1 (i), (ii) and (iii) above Depreciation 24,528,123 10,677,865 Sr. Description Godrej & Godrej Subsidiaries Other Related Loss on sale of Fixed Asset - 17,548 No. Boyce Mfg. Industries Parties In Less :- Co. Ltd. Ltd. Godrej Group Depreciation 24,528,123 10,677,865 (i) (ii) (iii) (iv) 1. Investment in equity/ - - - - Profi t on sale of Fixed Asset 5,932 - preference share capital - - 500,000 - Net Profi t for the purpose of Directors Remuneration 1,627,207,765 1,089,627,776 2. Sale of Investments - - - - (a) 11% (Previous Year 11%) of Net Profi t as computed 178,992,854 119,859,055 (Preference Shares) - - 214,944,318 - above 3. Purchase of fi xed assets 16,358,085 - - - Managerial Remuneration:- 2,977,879 555,627 - - 4. Advances given - - 2,042,546,970 - Particulars Current Year Previous Year 8,822,568 - 1,697,797,318 - Rs. Rs. 5. Advance received against - 86,284,840 - - A Salaries 20,196,168 15,609,280 sale of fl ats - 135,484,520 - - B Contribution to Provident Fund 1,048,608 823,552 6. Loans & Advances repaid - - 1,092,756,863 - - - 1,876,301,328 - C Estimated Monetary Value of Perquisites 1,474,955 1,123,358 7. Deposit given - 1,600,000 - - D Performance Linked Variable Remuneration 11,030,000 6,139,346 - 625,000 - - E Director Sitting Fees to Non-Executive Director 1,005,000 772,060 8. Deposit repaid - - - - F Commission to Non-Executive Director 5,000,000 4,800,000 - 350,000 - - Total 39,754,731 29,267,596 9. Inter-Corporate Deposit - 55,000,000 - 10,000,000 taken - - - 350,000,000 Notes: 10. Inter-Corporate Deposit - 55,000,000 - 10,000,000 In case of the Managing Director and Executive Director, Performance Linked Variable repaid - - - 350,000,000 Remuneration of Rs. 11,030,000/- (Previous Year Rs. 6,139,346/-) is on the basis of provision 11. Interest (Paid)/Received on - (3,571,233) - (39,041) made in the accounts. Inter-Corporate Deposit - - - (964,383) 16) Amounts paid to Auditors: 12. Construction & other - 2,286,799 735,552,192 228,393 expenses incurred on behalf - 1,108,550 406,168,736 - Particulars Current Year Previous Year of other companies Rs. Rs. 13. Expenses charged by 94,505,898 26,706,213 9,604,511 10,864 Audit Fees 1,963,340 2,525,870 other companies (net) 107,880,517 5,323,036 7,178,648 353,686 Audit under other Statutes 1,036,820 904,460 14. Dividend paid 1,725,000 121,238,023 - 4,919,625 - 196,185,842 - 8,112,751 Certifi cation under other Statutes 1,384,265 3,418,553 15. Outstanding receivables, (14,470,248) (7,838,443) 4,016,335,787 - Other Certifi cations 118,703 108,995 net of (payables) (9,005,774) 24,136 2,347,580,672 - Consultancy Charges 4,412 495,788 16. Deposits receivable - 3,225,000 - - Reimbursement of Expenses 8,553 2,121 - 1,625,000 - -

149 Godrej Properties Limited

SCHEDULES FORMING PART OF THE ACCOUNTS 19) Employee Benefi ts (i) Defi ned Contribution Plans: Figures in italics are for previous year. (ii) Details relating to persons referred to in items 1 (iv) & (v) above Contribution to Defi ned Contribution Plan, recognized as expense for the year are as under: Sr. Key Management Personnel Current Year Previous Year Particulars Current Year Previous Year No. Rs. Rs. (Rs.) (Rs.) 1. Remuneration 33,749,731 23,695,536 Employers’ Contribution to Provident Fund 8,144,688 6,444,909 2. Reimbursement of Travel Expenses 240,000 217,200 Employers’ Contribution to ESIC 41,183 44,470 3. Dividend Paid 1,466,868 2,477,724 4. Individuals exercising signifi cant Infl uence : (ii) Defi ned Benefi t Plans: Dividend paid – Mr. N.B. Godrej 4,325,625 7,133,210 a. Contribution to Gratuity Fund 3. Signifi cant Related Party Transactions Gratuity is payable to all eligible employees on death or on separation/ termination in terms of the provisions of the Payment of Gratuity Act or as per Nature of Transactions Subsidiaries & Other Related Parties Amount the Company’s policy whichever is benefi cial to the employees. in the Godrej Group Rs. Investment in equity share capital Godrej Estate Developers Pvt. Ltd. - The following table sets out the funded status of the gratuity plan and the 500,000 amounts recognized in the Company’s fi nancial statements: Sale of Investments (Preference Shares) Godrej Developers Private Limited - 214,944,318 Particulars Current Year Previous Year Purchase of fi xed assets Godrej & Boyce Mfg. Co. Limited 16,358,085 (Rs.) (Rs.) 2,977,879 Change in present value of obligation Godrej Industries Limited - Present value of obligation as at beginning of the year 6,450,060 4,211,619 555,627 Advances given Godrej Waterside Properties Private 763,850,000 Interest Cost 499,880 336,929 Limited 1,186,033,000 Service Cost 1,231,678 727,433 Godrej Developers Private Limited 501,687,500 Benefi ts Paid (1,224,663) (392,197) 333,644,318 Effect of Liability Transfer in 238,552 841,500 Godrej Estate Developers Private 329,645,356 Actuarial (gain)/loss on obligation 430,477 724,776 Limited - Present value of obligation, as at end of the year 7,625,984 6,450,060 Advances repaid Godrej Waterside Properties Private 500,752,038 Amount recognized in the Balance Sheet Limited 1,674,651,328 Present value of obligation, as at end of the year (430,477) (724,776) Godrej Developers Private Limited 453,900,000 Fair value of plan assets as at end of the year - - 88,250,000 Advance received against sale of fl ats Godrej Industries Limited 86,284,840 Net obligation as at end of the year (430,477) (724,776) 135,484,520 Net gratuity cost for the year ended Inter-Corporate Deposits taken during Godrej Agrovet Ltd. - Current Service Cost 1,231,678 727,433 the year 350,000,000 Interest Cost 499,880 336,929 Godrej Industries Limited 55,000,000 Expected return on plan assets - - - Net Actuarial (gain)/loss to be recognized 430,477 724,776 Natures basket Limited 10,000,000 Net gratuity cost 2,162,035 1,789,138 - Inter-Corporate Deposits repaid during Godrej Agrovet Ltd. - Assumptions used in accounting for the gratuity plan the year 350,000,000 (In %) (In %) Godrej Industries Limited 55,000,000 Discount Rate 7.75 7.75 - Salary escalation rate 4.75 4.75 Natures basket Limited 10,000,000 The estimates of future salary increases, considered in actuarial valuation, take into - account infl ation, seniority, promotion and other relevant factors, such as supply and Deposit given Godrej Industries Limited 1,600,000 demand in the employment market. 625,000 20) Information in respect of Joint Ventures Deposit repaid Godrej Industries Limited - 350,000 Jointly Controlled Operations - Development of the following Residential/ Construction & other expenses incurred Happy Highrises Ltd. 181,214,018 Commercial Projects: on behalf of other companies 114,240,742 Coliseum, Mumbai - Profi t sharing Godrej Waterside Properties Private Ltd. 77,778,258 Woodsman Estate, Bengaluru - Revenue Sharing 136,308,667 Godrej Real Estate Private Limited 118,101,621 Gold County, Bengaluru - Profi t Sharing 108,151,756 Planet Godrej, Mumbai - Profi t Sharing Godrej Developers Private Limited 61,571,202 47,353,570 Glenelg, Mumbai - Profi t Sharing Godrej Estate Developers Pvt. Ltd. 264,496,384 Edenwoods, Mumbai - Revenue / Profi t Sharing 18,000 Expenses charged by other companies Godrej & Boyce Mfg. Co. Limited 94,505,898 Shivajinagar, Pune - Profi t Sharing (net) 107,880,517 Bhugaon, Pune Godrej Industries Limited 26,706,213 5,323,036 Avalon Project - Area Sharing/Revenue Sharing Interest (Paid)/Received on Inter- Godrej Industries Limited (3,571,233) Corporate Deposits given - Sanjay Khan, Bengaluru - Revenue Sharing Godrej Agrovet Ltd. - Grenville Park, Mumbai - Profi t Sharing (964,384) Outstanding receivables, net of Godrej Real Estate Private Limited 983,867,205 Godrej Garden City, Ahmedabad - Area Sharing (payables) 845,998,414 K. Syama Raju, Bengaluru - Area Sharing Happy Highrises Limited 1,227,097,105 885,915,639 Vikhroli - Profi t Sharing Godrej Developers Private Limited 501,260,304 397,087,438 Kochi - Revenue Sharing Godrej Waterside Properties Private Ltd. 556,396,071 Umbarde, Kalyan - Revenue Sharing 203,194,595 Godrej Estate Developers Private 590,596,924 21) Previous year's fi gures have been regrouped/rearranged wherever necessary to confi rm to Limited 18,000 current year’s classifi cation. Dividend paid Godrej Industries Limited 121,238,023 22) Additional information as required under Part IV of Schedule VI of the Companies Act, 1956 196,185,842 to the extent not applicable has not been given. Deposit receivable Godrej Industries Limited 3,225,000 1,625,000

150 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE ACCOUNTS CASH FLOW STATEMENT FOR THE YEAR ENDED 23) Statement Pursuant to Part IV of Schedule VI of the Companies Act, 1956 31ST MARCH, 2010 Balance Sheet Abstract for the Year Ended March 31, 2010 And Company’s General Business Current year Previous year Profi le Rupees Rupees a) Registration Details Registration No. U74120MH1985PLC035308 Cash Flow from Operating Activities State Code 11 Profi t for the Year before Taxation 1,587,458,966 1,060,342,632 Balance Sheet Date March 31, 2010 Adjustment for: b) Capital raised during the year Depreciation 24,528,123 10,677,865 (Amount in Rs. Thousands) Interest Paid 671,317,930 512,956,238 Public Issue (Including Premium) 4,688,471 (Profi t) /Loss on sale of Fixed Asset (Net) (5,932) 17,548 Rights Issue Nil Provision for Dimunition in value of Investment written back (201) - Bonus Issue Nil Investment Written Off 616 - Private Placement Nil Interest Income (708,002,676) (484,413,285) c) Position of mobilisation and deployment of funds Dividend Received (24,417,754) (7,469) (Amount in Rs. Thousands) Profi t on Sale of Long Term & Current Investment (1,398,590,265) (419,903,138) Total Liabilities 14,336,178 Operating Profi t before working capital changes 152,288,807 679,670,391 Total Assets 14,336,178 Sources of Funds Adjustment for: Paid-up Capital 698,500 Change in Inventory (910,900,009) (409,486,615) Reserves & Surplus 7,455,719 Change in Sundry Debtors (236,888,871) (400,673,167) Secured Loans 1,284,681 Change in Loans & Advances (2,319,465,704) (941,598,612) Unsecured Loans 3,264,337 Change in Current Liabilities / Provisions 588,980,038 (394,976,650) Application of Funds (2,725,985,739) (1,467,064,653) Net Fixed Assets 105,060 Taxes Paid (Net) (357,305,497) (422,073,561) Investments 2,477,724 Net Cash Flow from Operating activities (3,083,291,236) (1,889,138,213) Net Current Assets 10,117,658 Misc. Expenditure Nil Cash Flow from Investing Activities Deferred Tax Asset 2,795 Purchase of Fixed Assets (60,894,380) (52,537,298) Accumulated Losses Nil Sale of Fixed Assets 1,576,383 499,693 Purchase of Investments (2,978,561,060) (500,000) d) Performance of Company (Amount in Rs. thousands) Sale of Investments 2,456,616,320 420,162,818 Turnover 3,570,175 Total Expenditure (Net of other income) 1,982,716 Interest Received 700,178,755 450,878,689 Profi t before tax 1,587,459 Dividend Received 24,417,754 7,469 Profi t after tax 1,218,411 Net Cash Flow from Investing Activities 143,333,772 818,511,371 Earning per Share in Rs. (on an annualized basis) 19.31 Cash Flow from Financing Activities Dividend rate % 40% Proceeds from Issue of Equity Share Capital (Net of Issue Expenses) 4,285,654,795 - e) Generic Name of three principal products/services of Company N.A Change in Cash Credit (682,248,703) 981,174,047 STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES (Repayment)/ Proceeds from Term Loan (600,000,000) 600,000,000 ACT, 1956 Proceeds from Unsecured Borrowings 631,804,140 372,843,185 1 Name of the Subsidiary Godrej Godrej Godrej Godrej Godrej Godrej Happy (Repayment)/ Proceeds from Inter Company Deposit (20,000,000) 20,000,000 Company Developers Estate Real Estate Realty Sea View Waterside Highrises Private Developers Private Private Properties Properties Limited (Repayment)/ Acceptance of Fixed Deposits 748,943,000 (19,098,000) Limited Private Limited Limited Private Private Interest Paid (671,317,930) (512,956,239) Limited Limited Limited 2 The Company’s interest Payment of Dividend (151,050,648) (246,124,143) in the subsidiaries as on Tax on Distributed Profi ts (25,671,058) (41,828,800) 31st March, 2010 a. Number of Equity 34,032 25,500 50,000 510,000 388,636 510,000 103,592 Net Cash Flow from Financing Activities 3,516,113,596 1,154,010,050 Shares Net Increase in Cash & Cash Equivalent 576,156,132 83,383,208 Total Number of Shares 66,730 50,000 50,000 1,000,000 500,000 1,000,000 203,120 b. Face Value (Rs.) 10 10 10 10 1 10 10 Cash & Cash Equivalent -Opening Balance 147,337,283 63,954,075 c. Extent of Holding 51.00% 51.00% 100.00% 51.00% 77.73% 51.00% 51.00% Cash & Cash Equivalent -Closing Balance 723,493,415 147,337,283 3 Net aggregate profi t/ (loss) of the subsidiary Notes :- company so far it concerns the members of 1. The cash fl ow statement has been prepared under the 'Indirect Method' as set out in the the Company Accounting Standard (AS) 3 on 'Cash Flow Statement', and presents cash fl ows by A. For the fi nancial year operating, investing and fi nancing activities. ended on 31st March, 2010 2. Figures for the previous year have been regrouped / restated wherever necessary to i. Not dealt with in the (35,678) (29,397) (388,913) 2,824,096 (25,239) 2,005,492 10,659,915 conform to this year's classifi cation. books of Accounts of For and on behalf of the Company ii. Dealt with in the ------KALYANIWALLA & MISTRY Adi. B. GODREJ MILIND S. KORDE books of account of Chartered Accountants Chairman Managing Director the Company B. For the subsidiary ERMIN K. IRANI company’s previous Partner SHODHAN A. KEMBHAVI fi nancial years since it Mumbai, Dated : May 17, 2010 Company Secretary became a subsidiary i. Not dealt with in the (56,438) (45,095) (75,917) 343,981 (145,288) 5,412,437 (13,606) books of Accounts of the Company ii. Dealt with in the ------books of account of the Company

151 Godrej Realty Private Limited

BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31, 2010

TO THE SHAREHOLDERS 7. ADDITIONAL INFORMATION: Your Directors have pleasure in submitting their Report along with the Audited Accounts for the year ended March (a) Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) 31, 2010. of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not 1. FINANCIAL HIGHLIGHTS: given. The accounting results for the period ended March 31, 2010 reveal that there is surplus at the end of the (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange period. Earnings and Outgo, required under section 217(1)(e) of the Companies Act, 1956 read with the During the year the Company has created Debenture Redemption Reserve as required under Section 117(C) Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided of the Companies Act, 1956. hereunder: 2. REVIEW OF OPERATIONS: (i) Conservation of Energy : The Company has conceptualized and fi nalized the design for the First Phase of the Project and is awaiting Expenses on account of Energy are negligible. further approvals for the same. (ii) Technology Absorption: 3. DIVIDEND : It is an on going process. There is no Dividend declared for the year ended March 31, 2010. (iii) Foreign Exchange Earning & Outgo: 4. DIRECTORS : The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Mr. Expenditure during the year. Naresh Nadkarni, retires by rotation and being eligible, offers himself for re-appointment. 8. ACKNOWLEDGEMENT: 5. APPOINTMENT OF AUDITORS: Your Directors take this opportunity to thank all the associates for their co-operation. M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent. For and on behalf of the board of directors 6. DIRECTORS’ RESPONSIBILITY STATEMENT: Milind S. Korde NARESH NADKARNI Your Director’s confi rm: Place : Mumbai Director Director (i) that in the preparation of the annual accounts, the applicable accounting standards have been Dated : May 14, 2010 followed; (ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year ended March 31, 2010 and of the profi t of the Company for that year; (iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) that the Directors have prepared the annual accounts on a going concern basis. REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ REALTY PRIVATE LIMITED 1. We have audited the attached Balance Sheet of GODREJ REALTY PRIVATE LIMITED, as at 31st March, 2010, the nature of such estimates, on the basis of which profi ts/losses have been accounted, interest income Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed accrued and realizability of the construction work in progress and project advances determined. thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility f) In our opinion and to the best of our information and according to the explanations given to us, the is to express an opinion on these fi nancial statements based on our audit. said accounts read with the notes thereon, give the information required by the Companies Act, 1956, 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those in the manner so required and give a true and fair view in conformity with the accounting principles Standards require that we plan and perform the audit to obtain reasonable assurance about whether the generally accepted in India: fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the 2010; accounting principles used and signifi cant estimates made by management, as well as evaluating the overall ii) in the case of the Profi t and Loss Account, of the profi t of the Company for the year ended on fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. that date and 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters on that date. specifi ed in paragraphs 4 and 5 of the said Order. 5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on 4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: record by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 a) We have obtained all the information and explanations, which to the best of our knowledge and belief from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies were necessary for the purpose of our audit. Act, 1956. b) In our opinion, proper books of account as required by law have been kept by the Company so far as For and on behalf of appears from our examination of such books. c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are KALYANIWALLA AND MISTRY in agreement with the books of account. Chartered Accountants d) In our opinion, the Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by Firm Registration No. 104607W this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the ERMIN K. IRANI Companies Act, 1956. Partner e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(e) of Schedule Membership No. 35646 12-Notes to Accounts, in respect of projects under long term contracts undertaken and/or fi nanced by the Company, we have relied upon the management’s estimates of the percentage of completion, Place : Mumbai, costs to completion and on the projections of revenues expected from projects owing to the technical Dated : May 14, 2010 ANNEXURE TO THE AUDITORS' REPORT Referred to in paragraph (3) of our report of even date. dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, 1) (a) The Company is maintaining proper records showing full particulars, including quantitative details and Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and situation of fi xed assets. other statutory dues incurred during the year. According to the information and explanations given to (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodic intervals. us, there are no undisputed dues, payable in respect of above as at 31st March 2010 for a period of In our opinion, the period of verifi cation is reasonable having regard to the size of the Company. more than six months from the date they became payable. (c) There is no disposal of fi xed assets during the year. (b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, 2) (a) The management has conducted physical verifi cation of inventory at reasonable intervals. Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are 10) The Company does not have accumulated losses at the end of the fi nancial year and has not incurred any cash reasonable and adequate in relation to the size of the company and the nature of its business. losses in the current and immediately preceding fi nancial year. (c) The company is maintaining proper records of inventory and no material discrepancies were noticed 11) According to the information and explanations given to us and based on documents and records produced to on physical verifi cation. us, the Company has not defaulted in repayment of dues to banks and debenture holders. There are no dues 3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties to fi nancial institutions. covered in the register maintained under Section 301 of the Companies Act, 1956. 12) According to the information and explanations given to us and based on the documents and records produced (b) Consequently, the question of commenting on the rates of interest, terms and conditions of the loans to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, granted being prejudicial to the interests of the Company, receipt of regular principal and interest and debentures and other securities. reasonable steps for recovery of the same does not arise. 13) In our opinion and according to the information and explanations given to us, the nature of activities of the Company (c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties does not attract any special statute applicable to chit fund and nidhi/ mutual benefi t fund/ societies. covered in the Register maintained under Section 301 of the Companies Act, 1956. 14) In our opinion and according to the information and explanations given to us, the Company does not deal in (d) Consequently, the question of commenting on the rates of interest and others terms and conditions of shares, securities, debentures and other investments. the loans taken being prejudicial to the interests of the Company, payment of regular principal and 15) According to the information and explanations given to us, the Company has not given any guarantee for loans the interest does not arise. taken by others from banks or fi nancial institutions. 4) In our opinion and according to the information and explanations given to us, there are adequate internal control 16) Based on our examination and according to the information and explanations given to us, there were no term procedures commensurate with the size of the Company and the nature of its business, for the purchases of taken during the year. inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course of our audit, 17) According to the information and explanations given to us and an overall examination of the Balance Sheet we have not observed a continuing failure to correct major weaknesses in internal controls. and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis 5) (a) Based on the audit procedures applied by us and according to the information and explanations for long-term investments. provided by the management, we are of the opinion that the particulars of contracts and arrangements 18) The Company has not made any preferential allotment of shares to parties or companies covered in the register referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to maintained under Section 301 of the Companies Act, 1956. be maintained under that section. 19) The Company did not issue any debentures during the year. (b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are 20) The Company has not raised any money through a public issue during the year. reasonable having regard to prevailing market prices at the relevant time, where comparable market 21) Based on the audit procedures performed and information and explanations given by the management, we price exist. report that no fraud on or by the Company has been noticed or reported during the year. 6) In our opinion and according to the information and explanations given to us, the Company has not accepted For and on behalf of any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the KALYANIWALLA AND MISTRY Companies Act, 1956, are not applicable. Chartered Accountants 7) The Company has an internal audit system, which in our opinion is commensurate with the size of the Company Firm Registration No. 104607W and nature of its business. 8) In our opinion and according to the information and explanations given to us, The Central Government has not been prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect ERMIN K. IRANI of the activities carried on by the Company. Partner 9) (a) According to the information and explanations given to us and on the basis of our examination of books Membership No. 35646 of accounts, during the year, the Company has been generally regular in depositing undisputed statutory Mumbai, May 14, 2010 152 Annual Report 2009–2010

BALANCE SHEET AS AT 31ST MARCH, 2010 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED Schedule As at As at 31.03.2010 31.03.2009 31ST MARCH, 2010 Schedule For the For the Rupees Rupees Year ended Year ended SOURCES OF FUNDS 31.03.2010 31.03.2009 Shareholders’ Funds Rupees Rupees Share Capital 1 10,000,000 10,000,000 INCOME Reserves & Surplus 2 6,211,915 674,472 Interest Income 9,654,565 28,785,599 Loan Funds (Tax deducted at Source Rs.9,70,762/- [Previous Secured Loans 3 150,000,000 150,000,000 Year Rs. 6,507,756/-]) Deferred Tax Liability 1,000 1,000 EXPENDITURE 166,212,915 160,675,472 Cost of Sales 9 - - APPLICATION OF FUNDS Administration Expenses 10 - 23,451 Fixed Assets Interest & Finance Charges 11 1,500,150 24,727,520 Gross Block 4 247,525 247,525 Depreciation 1,953 7,917 Less : Depreciation 22,421 20,468 Profi t/ (Loss) for the Year 8,152,462 4,026,711 Net Block 225,104 227,057 Provision for Taxation Investments - - For Current Tax (2,614,000) (1,248,000) Current Assets, Loans & Advances For Deferred Tax - (4,000) Inventory 5 90,702,935 84,163,008 Cash & Bank Balances 6 105,396,053 101,915,567 Profi t/ (Loss) After Tax 5,538,462 2,774,711 Loans & Advances 7 3,925,054 9,490,264 Prior Year Tax Adjustment (1,019) - 200,024,042 195,568,839 Defi cit Brought Forward - (2,100,239) Less : Current Liabilities & Provisions Amount available for appropriation 5,537,443 674,472 Current Liabilities 8 34,036,231 35,120,424 Transfer to Debenture Redemmption Reserve 5,537,443 674,472 34,036,231 35,120,424 Balance Carried Forward - - Net Current Assets 165,987,811 160,448,415 Earning per share Basic in Rs. (Refer Note 5) 5.54 2.77 166,212,915 160,675,472 Earning per share Diluted in Rs. (Refer Note 5) 0.41 0.65 Notes To Accounts & Accounting Policies 12 Notes to Accounts & Accounting Policies 12

The Schedules referred to above form an Signatures to Balance sheet The Schedules referred to above form an Signatures to Profi t and Loss Account integral part of the Balance sheet and Schedules 1 to 8 and 12 integral part of the Profi t and Loss Account and Schedules 9 to 12

As per our Report of even date. As per our Report of even date.

For and on behalf of For and on behalf of KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY Chartered Accountants Chartered Accountants ERMIN K. IRANI MILIND S. KORDE NARESH NADKARNI ERMIN K. IRANI MILIND S. KORDE NARESH NADKARNI Partner Directors Partner Directors Mumbai, Dated: May 14, 2010 Mumbai, Dated: May 14, 2010 SCHEDULES FORMING PART OF THE ACCOUNTS

As at As at As at As at 31.03.2010 31.03.2009 31.03.2010 31.03.2009 Rupees Rupees Rupees Rupees SCHEDULE 1 : SHARE CAPITAL SCHEDULE 5 : INVENTORY Authorised Construction Work in Progress 90,702,935 84,163,008 1,000,000 Equity shares of Rs.10/- each 10,000,000 10,000,000 90,702,935 84,163,008 10,000,000 10,000,000 SCHEDULE 6 : CASH & BANK BALANCE Issued & Subscribed & Paid Up Cash in Hand 667 667 1,000,000 Equity Shares of Rs.10/- each, fully paid-up 10,000,000 10,000,000 Balance with Scheduled Bank - on Current Account 105,395,386 410,413 (Out of the above 510,000 equity shares are held by - on Fixed Deposit Account - 101,504,487 Godrej Properties Limited, the Holding Company and its nominee) 105,396,053 101,915,567 10,000,000 10,000,000 SCHEDULE 7 : LOANS & ADVANCES SCHEDULE 2 : RESERVES & SURPLUS (Unsecured & considered good unless otherwise stated) DEBENTURE REDEMPRION RESERVE Advances recoverable in cash or kind or for value to be Balance as per last Balance Sheet 674,472 - received Transferred from Profi t & Loss Account 5,537,443 674,472 Others 412 3,922,385 Less : Utilised during the year - - Advance Tax and Tax Deducted at Source 3,924,642 5,567,879 Balance at the end of the year 6,211,915 674,472 (Net of provision for Tax of Rs. 38,62,000/- previous year PROFIT & LOSS ACCOUNT - - Rs. 15,82,610/- ) Balance at the end of the year 6,211,915 674,472 3,925,054 9,490,264 SCHEDULE 8 : CURRENT LIABILITIES SCHEDULE 3 : SECURED LOANS Sundry Creditors ( Refer Note 3) 888,634 809,480 1% Secured Redeemable optionally Convertible Debentures 150,000,000 150,000,000 Other Liabilities 369,923 2,883,271 (Refer Note 2) Interest Accrued but not due 32,777,674 31,427,673 150,000,000 150,000,000 SCHEDULE 4 : FIXED ASSET 34,036,231 35,120,424

Particulars Gross Block Depreciation Net Block As at Additions Deductions As at Upto For the Deductions Upto As at As at 1st April 31st March 1st April Year 31st March 31st March 31st March 2009 2010 2009 2010 2010 2009 Rs. Rs Rs Rs Rs Rs Rs Rs Rs Rs Land (Refer Note 2) 222,175 - - 222,175 - - - - 222,175 222,175 Computers 25,350 - - 25,350 20,468 - - 20,468 4,882 4,882 Motor Vehicle ------Total 247,525 - - 247,525 20,468 - - 20,468 227,057 227,057 Previous Year 347,608 - 100,083 247,525 63,850 7,917 51,299 20,468 227,057

153 Godrej Realty Private Limited

SCHEDULES FORMING PART OF THE ACCOUNTS that there is a reasonable certainty that suffi cient future taxable income will be For the year For the year available against which such deferred tax assets can be realized. The tax effect is ended ended calculated on the accumulated timing difference at the year-end based on the tax 31.03.2010 31.03.2009 rates and loss exacted on substantially exacted on the balance sheet date. Rupees Rupees i) Foreign Currency Transactions SCHEDULE 9 : COST OF SALES Transactions in foreign currency are recorded at the exchange rates prevailing Opening Stock: 84,163,009 88,563,479 on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end Add : Expenditure/ Transfers from Advances during the period exchange rates. Forward exchange contracts, remaining unsetteled at the year end, Construction Material & Labour 150,724 7,809,660 backed by underlying assets or liabilities are also translated at year end exchange Architect Fees 5,027,474 - rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profi t and Loss Overheads 1,361,728 756,159 Account. Interest - 4,527,861 j) Provisions and Contingent Liabilities 90,702,935 101,657,159 Provisions are recognized in the accounts in respect of present probable obligations, Less : Transferred to Interest & Finance Charges - 17,494,151 the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from Less : Closing Stock: 90,702,935 84,163,008 the past events but their existence is confi rmed by the occurrence or non-occurrence Cost of Sales - - of one or more uncertain future events not wholly within the control of the Company. SCHEDULE 10 : ADMINISTRATION EXPENSES As on the balance sheet date there is no contingent liability. 2) Secured Loans Loss on sale of Fixed Assets - 23,451 The 1% secured optionally convertible debentures are redeemable at the end of the 7 years - 23,451 from the deed date of allotment and are secured to the extent of specifi c immovable assets SCHEDULE 11 : INTEREST AND FINANCE CHARGES (NET) of the Company disclosed under the head “Fixed Assets”. The Company has created a Debenture Redemption Reserve as required under Section 117 Interest Paid ( C ) of the Companies Act, 1956 to the extent of Profi t available for distribution. Others 1,500,000 11,761,030 3) Micro, Small and Medium Enterprises Development Act, 2006: Total Interest paid 1,500,000 11,761,030 Disclosure of sundry creditors under current liabilities is based on the information available Add : Trfd from Cost of Sales - 17,494,151 with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, Add : Brokerage & Other Financial Charges 150 200 2010 to Micro, Small and Medium Enterprises on account of principal amount together with GROSS INTEREST 1,500,150 29,255,381 interest and also during the previous year. Less : Transferred to Cost of Sales - 4,527,861 4) Deferred Tax NET INTEREST 1,500,150 24,727,520 The Tax effect of signifi cant temporary differences that resulted in deferred tax liabilities are : SCHEDULE 12 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES Particulars Current Year(Rs.) Previous Year (Rs.) 1) Accounting Policies Liabilities a) General -Depreciation on Fixed Assets (1,000) (1,000) The fi nancial statements are prepared under the historical cost convention in Deferred Tax Liabilities (1,000) (1,000) accordance with Generally Accepted Accounting Principles in India, the Accounting 5) Earnings per share Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956. Particulars Current Year(Rs.) Previous Year (Rs.) b) Fixed Assets Profi t for the year as per Profi t & Loss Account 55,37,443 2,774,711 Fixed assets are stated at cost of acquisition or construction less accumulated Weighted average no. of Equity Shares outstanding 1,000,000 1,000,000 depreciation. Cost includes all incidental expenses related to acquisition and Weighted average no. of Potential Equity Shares outstanding 16,000,000 16,000,000 installation, other pre-operation expenses and interest in case of construction. Basic Earnings Per Share (Rs.) 5.54 2.77 Carrying amount of cash generating units / assets are reviewed at balance sheet Diluted Earnings Per Share (Rs.) 0.41 0.65 date to determine whether there is any indication of impairment. If such indication Nominal value of shares 10 10 exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount 6) Amounts paid to Auditors: exceeds the recoverable amount. Particulars Current Year(Rs.) Previous Year (Rs.) c) Depreciation / Amortization Audit Fees 159,935 159,935 Depreciation has been provided on Written Down Value basis, at the rates specifi ed Audit & Other Statutes 55,150 55,150 in Schedule XIV of the Companies Act, 1956. Certifi cation - 1,124 d) Inventories Consultancy charges 67,293 33,708 Inventories are valued as under : Total 282,378 249,917 a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At cost 7) Segment Information Construction Work in Progress includes cost of land, premium for development As the company has only one business segment, disclosure under Accounting Standard 17 rights, construction costs, allocated interest and expenses incidental to the projects on “ Segment Reporting” issued by the Institute of Chartered Accountants of India is not undertaken by the Company. applicable. e) Revenue Recognition 8) AS 18 – Related Party Disclosure The Company is following the “Percentage of Completion Method” of accounting. 1. Relationships: As per this method, revenue in Profi t & Loss Account at the end of the accounting (i) Shareholders (`the Godrej Group Shareholding) in the Company Godrej year is recognized in proportion to the actual cost incurred as against the total Properties Limited (GPL) holds 51% in the Company. GPL is the Subsidiary estimated cost of projects under execution with the Company. of Godrej Industries Limited (GIL). GIL is subsidiary of Godrej & Boyce Determination of revenues under the percentage of completion method necessarily Manufacturing Company Limited (G&B), the ultimate holding company. (ii) Investing party in respect of which the reporting enterprise is an associate. involves making estimates by the Company, some of which are of a technical nature, – HDFC Venture Trustee Company Limited concerning, where relevant, the percentages of completion, costs to completion, 2. The following transactions were carried out with the related parties in the ordinary the expected revenues from the project/activity and the foreseeable losses to course of the business: completion. Such estimates have been relied upon by the auditors. Interest income is accounted on an accrual basis at contracted rates. Sr. G&B GPL HDFC Venture f) Borrowing Cost No Trustee Interest and fi nance charges incurred in connection with borrowing of funds, Company which are incurred for the development of long term projects are transferred to Limited Construction Work in Progress / Due on Management Project, as a part of the cost 1 Expenses Charged to other Companies - 9,604,511 - of the projects at weighted average of the borrowing cost / rates as per Agreements - 4,612,506 - respectively. 2 Expenses Charged by other Companies - 150 - Other borrowing costs are recognized as an expense in the period in which they are - 94,852 - incurred. 3 Debenture Interest - 765,000 735,000 g) Earnings Per Share - 5,952,329 5,718,904 The basic earnings per share is computed using the weighted average number 4 Loans / Advances taken - 105,400,000 - of common shares outstanding during the period. Diluted earnings per share is - 112,400,000 - computed using the weighted average number of common and dilutive common 5 Advances repaid - 105,400,000 - equivalent shares outstanding during the period, except where the results would - 112,400,000 - be anti-dilutive. 6 Outstanding receivables, net of (payables) (703) (16,032,697) (16,744,977) h) Provision for Taxation (703) (15,344,207) (16,083,477) Tax expense comprises both current and deferred tax. 7 Debentures Outstanding - 76,500,000 73,500,000 Current tax is measured at the amount expected to be paid to the tax authorities, - 76,500,000 73,500,000 using the applicable tax rates and tax laws. (Figures in italics are for previous year) Deferred tax is recognized on timing differences, being the differences between 9) Previous year fi gures have been rearranged / regrouped wherever necessary to confi rm to the taxable income and the accounting income that originate in one period and are current year’s classifi cation. capable of reversal in one or more subsequent periods. Deferred tax assets, subject 10) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to consideration of prudence, are recognized and carried forward only to the extent to the extent not applicable has not been given. 154 Annual Report 2009–2010

ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST OF THE SCHEDULE VI TO THE COMPANIES ACT, 1956 MARCH 2010 Balance Sheet Abstract for the year ended 31st March, 2010 and Company’s General Business Particulars Current Year Previous Year Profi le Rupees Rupees

1 Registration Details Cash Flow from Operating Activities Profi t / (Loss) for the Year 8,152,462 4,026,711 Registration No. U70100MH2005PTC154268 Adjustment for: State Code 11 Depreciation 1,953 7,917 Balance Sheet Date 31st March, 2010 Interest Paid 1,500,000 29,255,181 2 Capital raised during the year (Amount in Rs. thousands) (Profi t) /Loss on sale of Fixed Asset (Net) - 23,451 Public Issue Nil Interest Income (9,654,565) (28,785,599) Rights Issue Nil Operating Profi t / (Loss) before working capital changes (150) 4,527,661 Bonus Issue Nil Private Placement - Capital Nil Adjustment for: - Premium Nil Change in Inventory (6,539,927) 4,400,471 Change in Loans & Advances 3 Position of mobilisation and deployment of funds (Amount in Rs. thousands) 3,921,973 84,061,521 Change in Current Liabilities / Provisions (2,584,192) (32,401,802) Total Liabilities 200,249 (5,202,296) 60,587,851 Total Assets 200,249 Taxes Paid (Net) (971,783) (6,507,199) Sources of Funds Net Cash Flow from Operating activities (6,174,079) 54,080,652 Paid-up capital 10,000 Reserves & Surplus 6,212 Cash Flow from Investing Activities Secured Loans 150,000 Sale of Fixed Assets - 25,333 Unsecured Loans - Interest Received 9,654,565 28,785,599 Deferred Tax Liability 1 Net Cash Flow from Investing Activities 9,654,565 28,810,932 Application of Funds Net Fixed Assets 225 Cash Flow from Financing Activities - - Investments - Net Increase/ (Decrease) in Cash & Cash Equivalent Net Current Assets 165,988 3,480,486 82,891,584 Misc. Expenditure - Cash & Cash Equivalent -Opening Balance 101,915,567 19,023,983 Accumulated Losses - 4 Performance of Company (Amount in Rs. thousands) Cash & Cash Equivalent -Closing Balance 105,396,053 101,915,567 Total Expenditure 1,502 Profi t / (Loss) before Tax 8,152 Notes : Profi t / (Loss) after Tax 5,537 1. The cash fl ow statement has been prepared under the ‘Indirect Method’ as set out in the Earning per Share (Basic) in Rs. 5.54 Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows by Earning per Share (Diluted) in Rs. 0.41 operating, investing and fi nancing activities. Dividend Rate % - 2. Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s classifi cation. 5 Generic Names of three principal For and on behalf of products / services of Company N.A. KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI MILIND S. KORDE NARESH NADKARNI Partner Directors Mumbai, Dated: May 14, 2010

155 Godrej Real Estate Private Limited

BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2010

TO THE SHAREHOLDERS safeguarding the assets of the Company and for preventing and detecting fraud and other Your Directors have pleasure in submitting their Report together with the Audited Accounts for the year irregularities; ended March 31, 2010. (iv) that the Directors have prepared the annual accounts on a going concern basis. 1. FINANCIAL HIGHLIGHTS : 7. ADDITIONAL INFORMATION: The accounting results for the period ended March 31, 2010 reveal that there is a defi cit at the end (a) Since the company has no employees, the particulars of the employees to be disclosed u/s of the period. 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 2. REVIEW OF OPERATIONS : 1975, are not given. During the year the Company has made an application to the authorities for conversion of land use from IT to mixed use and is awaiting approval. (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange 3. DIVIDEND : Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with As there are no profi ts, the Directors regret that no dividend can be recommended. the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 4. DIRECTORS : is provided hereunder: In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, (i) Conservation of Energy : Mr. Milind S Korde, retires by rotation and being eligible, offers himself for re-appointment. Expenses on account of Energy are negligible. 5. APPOINTMENT OF AUDITORS: (ii) Technology Absorption : M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and It is an on going process. are eligible for re-appointment for which they have given their consent. (iii) Foreign Exchange Earning & Outgo : 6. DIRECTORS’ RESPONSIBILITY STATEMENT: The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Your Director’s confi rm: Expenditure during the year. (i) that in the preparation of the annual accounts, the applicable accounting standards have been 8. ACKNOWLEDGEMENT: followed; Your Directors take this opportunity to thank all the associates for their co-operation. (ii) that the Directors have selected such accounting policies and applied them consistently and FOR AND ON BEHALF OF THE BOARD made judgments and estimates that are reasonable and prudent so as to give a true and fair Milind S. Korde K.T. Jithendran view of the state of affairs of the Company at the end of the fi nancial year ended 31st March, Director 2010 and of the loss of the Company for that year; (iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate Mumbai, accounting records in accordance with the provisions of the Companies Act, 1956, for Dated : May 14, 2010 REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ REAL ESTATE PRIVATE LIMITED

1. We have audited the attached Balance Sheet of GODREJ REAL ESTATE PRIVATE LIMITED, as at 31st March 2010, the to completion and on the projections of revenues expected from projects owing to the technical nature Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed of such estimates, on the basis of which profi ts/losses have been accounted, interest income accrued thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is and realizability of the construction work in progress and project advances determined. to express an opinion on these fi nancial statements based on our audit. f) In our opinion and to the best of our information and according to the explanations given to us, the 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards said accounts read with the notes thereon, give the information required by the Companies Act, 1956, require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements in the manner so required and give a true and fair view in conformity with the accounting principles are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts generally accepted in India: and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. ii) in the case of the Profi t and Loss Account, of the loss of the Company for the year ended on We believe that our audit provides a reasonable basis for our opinion. that date and 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters on that date. specifi ed in paragraphs 4 and 5 of the said Order. 5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on 4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: record by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 a) We have obtained all the information and explanations, which to the best of our knowledge and belief from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies were necessary for the purpose of our audit. Act, 1956. b) In our opinion, proper books of account as required by law have been kept by the Company so far as For and on behalf of appears from our examination of such books. KALYANIWALLA & MISTRY c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are CHARTERED ACCOUNTANTS in agreement with the books of account. Firm Registration No. 104607W d) In our opinion, the Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the ERMIN K. IRANI Companies Act, 1956. PARTNER e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(e) of Schedule Membership No. 35646 9-Notes to Accounts, in respect of projects under long term contracts undertaken and/or fi nanced by Place: Mumbai the Company, we have relied upon the management’s estimates of the percentage of completion, costs Dated: May 14, 2010 Annexure to the Auditors’ Report 9. (a) According to the information and explanations given to us and on the basis of our examination of books Referred to in paragraph (3) of our report of even date. of accounts, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, 1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and situation of fi xed assets. other statutory dues incurred during the year. According to the information and explanations given to (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodic intervals. us, there are no undisputed dues, payable in respect of above as at 31st March 2010 for a period of In our opinion, the period of verifi cation is reasonable having regard to the size of the Company. more than six months from the date they became payable. (c) There is no disposal of fi xed assets during the year. (b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, 2. (a) The management has conducted physical verifi cation of inventory at reasonable intervals. Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are 10. The Company’s accumulated losses at the end of the fi nancial year are more than fi fty percent of its net worth. reasonable and adequate in relation to the size of the company and the nature of its business. The Company has not incurred any Cash losses during the current and immediately preceding fi nancial year. 11. According to the information and explanations given to us and based on documents and records produced to (c) The company is maintaining proper records of inventory and no material discrepancies were noticed us, the Company has not defaulted in repayment of dues to debenture holders. There are no dues to banks on physical verifi cation. and fi nancial institutions. 3. (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties 12. According to the information and explanations given to us and based on the documents and records produced covered in the register maintained under Section 301 of the Companies Act, 1956. to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, (b) Consequently, the question of commenting on the rates of interest and conditions of the loans granted debentures and other securities. being prejudicial to the interests of the Company, receipt of regular principal and the interest and 13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company reasonable steps for recovery of principal and interest does not arise. does not attract any special statute applicable to chit fund and nidhi/ mutual benefi t fund/ societies. (c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties 14. The Company does not deal in shares, securities, debentures and other investments. covered in the Register maintained under Section 301 of the Companies Act, 1956. 15. According to the information and explanations given to us, the Company has not given any guarantee for loans (d) Consequently, the question of commenting on the rates of interest and others terms and conditions of taken by others from banks or fi nancial institutions. the loans taken being prejudicial to the interests of the Company, payment of regular principal and the 16. Based on our examination and according to the information and explanations given to us, there were no term interest does not arise. loans taken during the year. 4. In our opinion and according to the information and explanations given to us, there are adequate internal control 17. According to the information and explanations given to us and an overall examination of the Balance Sheet procedures commensurate with the size of the Company and the nature of its business, for the purchases of and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course of our audit, for long-term investments. we have not observed a continuing failure to correct major weaknesses in internal controls. 18. The Company has not made any preferential allotment of shares to parties or companies covered in the register 5. (a) Based on the audit procedures applied by us and according to the information and explanations provided maintained under Section 301 of the Companies Act, 1956. by the management, we are of the opinion that the particulars of contracts and arrangements referred to 19. The company did not issue any debentures during the year. in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained 20. The Company has not raised any money through a public issue during the year. under that section. 21. Based on the audit procedures performed and information and explanations given by the management, we (b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are report that no fraud on or by the Company has been noticed or reported during the year. reasonable having regard to prevailing market prices at the relevant time, where comparable market For and on behalf of price exist. KALYANIWALLA & MISTRY 6. In our opinion and according to the information and explanations given to us, the Company has not accepted any Chartered Accountants deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Firm Registration No. 104607W Act, 1956, are not applicable. ERMIN K. IRANI 7. In our opinion and according to the information and explanations given to us, the internal audit system is Partner commensurate with the size of the Company and nature of its business. Membership No. 35646 8. The maintenance of cost records has not been prescribed by the Central Government under section 209(1)(d) Place: Mumbai of the Companies Act, 1956, in respect of the activities carried on by the Company. Dated : May 14, 2010

156 Annual Report 2009–2010

BALANCE SHEET AS AT 31ST MARCH, 2010 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010

Schedule As at As at Schedule For the For the 31.03.2010 31.03.2009 Year Ended Year Ended Rupees Rupees 31.03.2010 31.03.2009 SOURCES OF FUNDS Rupees Rupees Shareholders’ Funds INCOME - - Share Capital 1 500,000 500,000 EXPENDITURE Loan Funds - - 500,000 500,000 Cost of sales 7 - - APPLICATION OF FUNDS Interest & Finance Charges 8 - - Fixed Assets 2 Depreciation 400,071 32,518 Gross Block 2,272,694 99,990 Less : Depreciation 446,373 46,302 Preliminary Expenses written off 1,842 1,842 Net Block 1,826,321 53,688 Defi cit for the Year (401,913) (34,360) INVESTMENTS - - Deferred Tax 13,000 - DEFERRED TAX ASSETS 13,000 - (Loss) / Profi t for the Year (388,913) (34,360) CURRENT ASSETS, LOANS & ADVANCES Defi cit Brought Forward (75,917) (41,557) Inventory 3 985,846,618 857,517,086 Defi cit Carried Forward to Balance Sheet (464,830) (75,917) Cash & Bank Balances 4 68,345 218,014 Earning per share Basic/Diluted in Rs. (Refer Note 4) (7.78) (0.69) Loans and advances 5 7,303,998 8,830,043 993,218,961 866,565,143 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 9 LESS : CURRENT LIABILITIES & PROVISIONS Current Liabilities 6 995,034,164 866,207,642 995,034,164 866,207,642 NET CURRENT ASSETS (1,815,203) 357,501 MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) Preliminary Expenditure 11,052 12,894 PROFIT & LOSS ACCOUNT 464,830 75,917 500,000 500,000 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 9

The Schedules referred to above form an Signatures to the Balance Sheet The Schedules referred to above form an Signatures to the Profi t & Loss Account integral part of the Balance Sheet. and Schedules 1 to 6 and 9 integral part of the Profi t & Loss Account. and Schedules 7 to 9 As per our Report of even date. As per our Report of even date. For and on behalf of For and on behalf of KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner Directors Partner Directors

Mumbai, Dated : May 14, 2010 Mumbai, Dated : May 14, 2010

SCHEDULES FORMING PART OF THE ACCOUNTS

As at As at As at As at 31.03.2010 31.03.2009 31.03.2010 31.03.2009 Rupees Rupees Rupees Rupees SCHEDULE 1 SCHEDULE 3 SHARE CAPITAL INVENTORY AUTHORISED Construction Work in Progress 985,846,618 857,517,086 50,000 Equity shares of Rs. 10/- each 500,000 500,000 985,846,618 857,517,086 500,000 500,000 SCHEDULE 4 ISSUED, SUBSCRIBED & PAID UP CASH & BANK BALANCE 50,000 Equity shares of Rs. 10/- each, fully paid up 500,000 500,000 Cash & Cheques In hand 5,224 131 (All the above Shares are held by Godrej Properties Limited, the Holding company and its nominee) Balances with Scheduled Bank - On Current Accounts 63,121 217,883 500,000 500,000 68,345 218,014 SCHEDULE 5 SCHEDULE 2: FIXED ASSETS LOANS & ADVANCES (Unsecured Considered good unless otherwise stated) Particulars Gross Block Depreciation Net Block Advances recoverable in cash or kind or for 7,303,998 8,830,043 As at Additions Deductions As at Upto For the Upto As at As at value to be received 1st 31st 1st April Year 31st 31st 31st March April March 2009 March March 2009 7,303,998 8,830,043 2009 2010 2010 2010 SCHEDULE 6 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. CURRENT LIABILITIES Offi ce 7,990 565,017 - 573,007 1,509 67,233 68,742 504,265 6,481 Equipment Sundry Creditors (Refer Note No 3) 1,410,886 557,318 Furniture & - - - 263,159 - Investor Education & Protection Fund - - Fixtures 1,455,099 1,455,099 263,159 1,191,940 Computer 92,000 152,588 - 244,588 44,793 69,679 114,472 130,116 47,207 Other Liabilities 993,623,278 865,650,324 TOTAL 99,990 - 46,302 446,373 53,688 995,034,164 866,207,642 2,172,704 2,272,694 400,071 1,826,321 Previous 99,990 - - 99,990 13,784 32,518 46,302 53,688 – Year

157 Godrej Real Estate Private Limited

SCHEDULES FORMING PART OF THE ACCOUNTS rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The For the year For the year premium payable on foreign exchange contracts is amortised over the period of the ended ended contract. Exchange gains / losses are recognised in the Profi t and Loss Account. 31.03.2010 31.03.2009 i) Provision for taxation Rupees Rupees Tax expense comprises both current and deferred tax. Opening Stock 857,517,086 728,176,550 Current tax is measured at the amount expected to be paid to the tax authorities, Add : Expenditure/Transfers from Advances/Taken over using the applicable tax rates and tax laws. during the year Deferred tax is recognized on timing differences, being the differences between Construction 2,060,605 6,321,935 the taxable income and the accounting income that originate in one period and are Architect Fees 3,441,360 - capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that Advertisement Expenses 138,096 - there is a reasonable certainty that suffi cient future taxable income will be available Overheads 32,111,180 41,396,718 against which such deferred tax assets can be realized. The tax effect is calculated Interest 90,578,291 81,621,882 on the accumulated timing difference at the year-end based on the tax rates and laws 985,846,618 857,517,086 enacted or substantially enacted on the balance sheet date. Less : Closing Stock: 985,846,618 857,517,086 j) Provisions And Contingent Liabilities Cost of Sales - - Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from SCHEDULE 8 the past events but their existence is confi rmed by the occurrence or non-occurrence INTEREST AND FINANCIAL CHARGES of one or more uncertain future events not wholly within the control of the Company. Interest Paid There is no contingent liability as on the balance sheet date. Other loans 90,578,291 81,621,882 k) Miscellaneous Expenditure Total Interest Paid 90,578,291 81,621,882 Miscellaneous expenditure is amortized over a period of 10 years. Add: Brokerage & other Financial Charges - - 2) Leases Total Interest/Finance Charges Paid 90,578,291 81,621,882 The Company’s signifi cant leasing arrangements are in respect of operating leases for Less: Transferred to Cost of Sales 90,578,291 81,621,882 commercial premises. Lease expenditure from operating leases is recognized on a straight- line basis over the period of lease. The particulars of the premises taken under operating NET INTEREST - - leases are as under:

SCHEDULE 9 Particulars Current Year Previous Year 1) Accounting Policies Rs. Rs. a) General Future minimum lease Payment under non-cancelable The fi nancial statements are prepared under the historical cost convention in accordance operating leases with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Not later than 1 year 1,384,320 1,384,320 Act, 1956. b) Fixed Assets Later than 1 year and not later than 5 years 3,918,395 5,299,117 Fixed assets are stated at cost of acquisition or construction less accumulated 3) Micro, Small and Medium Enterprises Development Act, 2006: depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction. Disclosure of sundry creditors under current liabilities is based on the information available with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, the recoverable amount is estimated as the net selling price or value in use, whichever 2010 to Micro, Small and Medium Enterprises on account of principal amount together with is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the interest and also during the previous year. recoverable amount. 4) Earnings per share c) Depreciation / Amortization Particulars Current Year Previous Year Depreciation has been provided on Written Down Value basis, at the rates specifi ed in Schedule XIV of the Companies Act, 1956. Profi t / (Loss) as per Profi t & Loss Account (Rs.) (388,913) (34,360) d) Inventories Weighted average no. of equity shares outstanding 50,000 50,000 Inventories are valued as under : Basic / Diluted earnings per share (Rs.) (7.78) (0.69) Completed Flats - At lower of Cost or Market value Nominal value of shares (Rs.) 10 /- 10 /- Construction Work-in-Progress - At Cost 5) Deferred Tax Construction Work in Progress includes cost of land, premium for development The Tax effect of signifi cant temporary differences that resulted in the deferred tax assets rights, construction costs, allocated interest and expenses incidental to the projects are: undertaken by the Company. e) Revenue Recognition Particulars Current Year Previous Year (Rs.) (Rs.) The Company is following the “Percentage of Completion Method” of accounting. As per this method, revenue in Profi t & Loss Account at the end of the accounting year Assets - Depreciation on Fixed Assets is recognized in proportion to the actual cost incurred as against the total estimated 13,000 - cost of projects under execution with the Company. Deferred Tax Assets 13,000 - Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, 6) Amounts paid to Auditors concerning, where relevant, the percentages of completion, costs to completion, the Particulars Current Year Previous Year expected revenues from the project/activity and the foreseeable losses to completion. (Rs.) (Rs.) Such estimates have been relied upon by the auditors. Audit Fees 159,935 159,935 f) Borrowing Cost Consultancy Charges 40,388 33,708 Interest and Finance charges incurred in connection with borrowing of funds, which are incurred for the development of long term projects are transferred to Construction Work Total 200,323 1,93,643 in Progress as a part of the cost of the projects at weighted average of the borrowing 7) Segment Information cost. As the company has only one business segment, disclosure under Accounting Standard 17 g) Earnings Per Share on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not The basic earnings per share is computed using the weighted average number of applicable. common shares outstanding during the period. Diluted earnings per share is computed 8) AS 18 – Related Party Disclosure using the weighted average number of common and dilutive common equivalent shares Related party disclosures as required by AS-18, “Related Party Disclosures’, are given outstanding during the period, except where the results would be anti-dilutive. below: h) Foreign Currency Transactions 1. Relationships: Transactions in foreign currency are recorded at the exchange rates prevailing on the Shareholders: Godrej Properties Limited (GPL) holds 100% of the Share Capital of the date of the transaction. Assets and liabilities related to foreign currency transactions, Company. GPL is the Subsidiary of Godrej Industries Limited (GIL). GIL is subsidiary remaining unsettled at the year end, are transalated at the year end exchange of Godrej & Boyce Manufacturing Company Limited (G&B), the ultimate holding company.

158 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE ACCOUNTS CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010 2. The following transactions were carried out with the related parties in the ordinary course of the business: Current Year Previous Year Sr. No Particulars GPL G&B Rupees Rupees

1. Expenses charged by other companies 118,101,621 - Cash Flow from Operating Activities 108,151,756 - 2. Purchase of Fixed Assets - 14,86,527 Loss for the Year (401,913) (34,360) - - 3. Advances received 29,625,000 - Adjustment for: 34,450,000 - Depreciation 400,071 32,518 4. Advances repaid 800,000 - 10,00,000 - Interest Paid 90,578,291 81,621,882 5. Outstanding payables 983,867,205 - 845,998,414 - Preliminary expenses 1,842 1,842 Figures in italics are for previous year Operating Loss before working capital changes 90,578,291 81,621,882 9) Previous year fi gures have been rearranged / regrouped wherever necessary to confi rm to Adjustment for: current year’s classifi cation. Change in Inventory (128,329,532) (129,340,535) 10) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given. Change in Loans & Advances 1,526,045 (7,152,543) 11) Additional Information as required under Part IV of the Schedule VI to the Companies Act, Change in Current Liabilities / Provisions 38,248,231 54,960,253 1956 Net Cash Flow from Operating activities 2,023,035 89,057 Balance Sheet Abstract for the Year ended 31st March, 2010 Cash Flow from Investing Activities

And Company’s General Business Profi le Purchase of Fixed Assets (2,172,704) -

Net Cash Flow from Investing Activities (2,172,704) - 1 Registration Details Cash Flow from Financing Activities - - Registration No. : U45200MH2007PTC168818 Net Increase/ (Decrease) in Cash & Cash Equivalent (149,669) 89,057 State Code : 11 Cash & Cash Equivalent -Opening Balance 218,014 128,957 Balance Sheet Date : 31st March, 2010 2 Capital raised during the year (Amount in Rs. thousands) Cash & Cash Equivalent -Closing Balance 68,345 218,014 Public Issue : Nil Notes : Rights Issue : Nil Bonus Issue : Nil 1. The cash fl ow statement has been prepared under the Private Placement - Capital : Nil ‘Indirect Method’ as set out in the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows - Premium : Nil by operating, investing and fi nancing activities. 3 Position of mobilisation and deployment of funds (Amount in Rs. thousands) 2. Figures for the previous year have been regrouped/ Total Liabilities : 995,534 restated wherever necessary to conform to this year’s Total Assets : 995,534 classifi cation.

Sources of Funds For and on behalf of Paid-up capital : 500 KALYANIWALLA & MISTRY Reserves & Surplus : - CHARTERED ACCOUNTANTS Secured Loans : - ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Unsecured Loans : - Partner Directors Application of Funds Mumbai, Dated : May 14, 2010 Net Fixed Assets : 1,826 Investments : - Deferred Tax Assets : 13 Net Current Assets : (1,815) Misc. Expenditure : 11 Accumulated Losses : 465

4 Performance of Company (Amount in Rs. thousands) Turnover : - Total Expenditure : (402) Profi t/(Loss) before Tax : (402) Profi t/(Loss) after Tax : (389) Earning per Share in Rs. : (7.78) Dividend Rate % : - 5 Generic Names of three principal products/services of Company : N.A.

159 Godrej Developers Private Limited

DIRECTORS’ REPORT FOR THE PERIOD ENDED ON MARCH 31, 2010 TO THE SHAREHOLDERS judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state Your Directors have pleasure in submitting their Report together with the Audited Accounts for the year ended March of affairs of the Company at the end of the fi nancial year ended March 31, 2010 and of the loss of the 31, 2010. Company for that year; 1. FINANCIAL HIGHLIGHTS: (iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate accounting The accounting results for the year ended March 31, 2010 reveal that there is a defi cit at the end of the year. records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 2. REVIEW OF OPERATIONS: During the year the Company has completed piling work for Phase - I. Structural work up to 12th level have also (iv) that the Directors have prepared the annual accounts on a going concern basis. been completed for Phase-I. Contracting for MEP service & Elevators are in process. Shifting of existing Simoco 7. ADDITIONAL INFORMATION: offi ce to the new building has been initiated. (a) Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of 3. DIVIDEND: the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given. As there are no profi ts, Directors regret their inability to recommend any dividend for the year under (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings consideration. and Outgo, required under section 217(1)(e) of the Companies Act, 1956 read with the Companies 4. DIRECTORS: (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder: In accordance with the provisions of the Articles of Association, Mr. Milind Korde and Mr. K. T. Jithendran, retire (i) Conservation of Energy: by rotation and being eligible, offers themselves for re-appointment. Expenses on account of Energy are negligible. Mr. G.B. Singh resigned as Director from the Board of Directors with effect from March 15, 2010. The Board (ii) Technology Absorption: wishes to place on record its appreciation for the valuable guidance extended by him during his association It is an on going process. with the Company. (iii) Foreign Exchange Earning & Outgo: During the year Mr.Y. Kalyan Chakrabarti has been appointed as an Additional Director on March 15, 2010, who The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure will hold offi ce till the conclusion of the ensuing Annual General Meeting of the Company. It is proposed to during the year. appoint him as a Director liable to retire by rotation in this Annual General Meeting. 8. ACKNOWLEDGEMENT: 5. APPOINTMENT OF AUDITORS: Your Directors take this opportunity to thank all the associates for their co-operation. M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are FOR AND ON BEHALF OF THE BOARD OF DIRECTORS eligible for re-appointment for which they have given their consent. 6. DIRECTORS’ RESPONSIBILITY STATEMENT: MILIND S. KORDE Your Directors confi rm: Chairman (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed; Mumbai, (ii) that the Directors have selected such accounting policies and applied them consistently and made Dated: May 05, 2010

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ DEVELOPERS PRIVATE LIMITED 1. We have audited the attached Balance Sheet of GODREJ DEVELOPERS PRIVATE LIMITED, as at 31st March 2010, the of such estimates, on the basis of which profi ts/losses have been accounted, interest income accrued and Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed realizability of the construction work in progress and project advances determined. thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to f) In our opinion and to the best of our information and according to the explanations given to us, the said express an opinion on these fi nancial statements based on our audit. accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards manner so required and give a true and fair view in conformity with the accounting principles generally require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements accepted in India: are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and ii) in the case of the Profi t and Loss Account, of the loss of the Company for the year ended on that date signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. and We believe that our audit provides a reasonable basis for our opinion. iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub- date. section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in 5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on record paragraphs 4 and 5 of the said Order. by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 from being 4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit. For and on behalf of b) In our opinion, proper books of account as required by law have been kept by the Company so far as KALYANIWALLA & MISTRY appears from our examination of such books. CHARTERED ACCOUNTANTS c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in Firm Registration No. 104607W agreement with the books of account. d) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the ERMIN K. IRANI Companies Act, 1956. partner e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(e) of Schedule Membership No. 35646 11-Notes to Accounts, in respect of projects under long term contracts undertaken and/or fi nanced by the Company, we have relied upon the management’s estimates of the percentage of completion, costs Place: Mumbai to completion and on the projections of revenues expected from projects owing to the technical nature Dated: May 05, 2010

Annexure to the Auditors' Report Referred to in paragraph (3) of our report of even date. dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, 1) (a) The Company has maintained proper records showing full particulars, including quantitative details and Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and situation of fi xed assets. other statutory dues incurred during the year. According to the information and explanations given to us, (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodical there are no undisputed dues, payable in respect of above as at 31st March 2010 for a period of more intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the than six months from the date they became payable. Company. (b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, (c) There is no disposal of fi xed assets during the year. Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute. 2) (a) The management has conducted physical verifi cation of inventory at reasonable intervals. 10) The Company’s accumulated losses at the end of the fi nancial year are less than fi fty percent of its networth. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are Further, the company has not incurred any cash losses in the current and immediately preceding fi nancial years. reasonable and adequate in relation to the size of the company and the nature of its business. 11) According to the information and explanations given to us and based on documents and records produced to (c) The company is maintaining proper records of inventory and no material discrepancies were noticed on us, the Company has not defaulted in repayment of dues to bank and fi nancial institutions. The Company does physical verifi cation. not have any outstanding debentures. 3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties 12) According to the information and explanations given to us and based on the documents and records produced covered in the register maintained under Section 301 of the Companies Act, 1956. to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, (b) Consequently, the question of commenting on the rates of interest, terms and conditions of the loans debentures and other securities. granted being prejudicial to the interests of the Company, receipt of regular principal and interest and 13) In our opinion and according to the information and explanations given to us, the nature of activities of reasonable steps for recovery of the same does not arise. the Company does not attract any special statute applicable to chit fund and nidhi/mutual benefi t fund/ (c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties societies. covered in the Register maintained under Section 301 of the Companies Act, 1956 14) In our opinion and according to the information and explanations given to us, the Company does not deal in (d) Consequently, the question of commenting on the rates of interest and others terms and conditions of shares, securities, debentures and other investments. the loans taken being prejudicial to the interests of the Company, payment of regular principal and the 15) In our opinion and according to the information and explanations given to us, the Company has not given any interest does not arise. guarantee for loans taken by others from banks or fi nancial institutions. 4) In our opinion and according to the information and explanations given to us, there are adequate internal 16) According to the information and explanations given to us and based on the documents and records examined control procedures commensurate with the size of the Company and the nature of its business, for the by us, on an overall basis, the term loan has been applied for the purpose for which the loan was obtained. purchases of inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course 17) According to the information and explanations given to us and an overall examination of the Balance Sheet and of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls. Cash Flows of the Company, we report that the Company has not utilized funds raised on short term basis for 5) (a) Based on the audit procedures applied by us and according to the information and explanations provided long term investments. by the management, we are of the opinion that the particulars of contracts and arrangements referred to 18) The Company has not made any preferential allotment of shares to parties or companies covered in the register in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained maintained under Section 301 of the Companies Act, 1956. under that section. 19) The Company did not issue any debentures during the year. (b) In our opinion and according to the information and explanations given to us ,the transactions made in 20) The Company has not raised any money through a public issue during the year. pursuance of such contracts or arrangements, were made at prices which are reasonable having regard 21) Based on the audit procedures performed and information and explanations given by the management, we to prevailing market prices at the relevant time, where comparable market price exist. report that no fraud on or by the Company has been noticed or reported during the year. 6) In our opinion and according to the information and explanations given to us, the Company has not accepted For and on behalf of any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the KALYANIWALLA & MISTRY Companies Act, 1956, are not applicable. CHARTERED ACCOUNTANTS 7) The Company has an internal audit system, which in our opinion is commensurate with the size of the Company Firm Registration No. 104607W and nature of its business. 8) In our opinion and according to the information and explanations given to us, The Central Government has not ERMIN K. IRANI been prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect Partner of the activities carried on by the Company. Membership No. 35646 9) (a) According to the information and explanations given to us and on the basis of our examination of books Place : Mumbai of accounts, during the year, the Company has been generally regular in depositing undisputed statutory Dated : May 05, 2010

160 Annual Report 2009—2010

BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED

Schedule As at As at MARCH 31, 2010 31.03.2010 31.03.2009 Rupees Rupees Schedule For the For the SOURCES OF FUNDS year ended year ended Shareholders’ Funds 31.03.2010 31.03.2009 Share Capital 1 667,300 667,300 Rupees Rupees Reserves & Surplus 2 - - INCOME - - Loan Funds 3 453,900,000 - Deferred Tax Liability 13,000 - EXPENDITURE 454,580,300 667,300 Cost of Sales 9 - - APPLICATION OF FUNDS Interest & Finance Charges 10 - - Fixed Assets Gross Block 4 173,585 139,464 Depreciation 55,115 43,406 Less : Depreciation 98,521 43,406 Preliminary Expenses written off 1,842 1,842 Net Block 75,064 96,058 Defi cit for the year (56,957) (45,248) INVESTMENTS - - Current Assets, Loans & Advances Provision for Deferred Tax (13,000) - Inventory 5 808,334,259 313,882,169 Defi cit After Tax (69,957) (45,248) Cash & Bank Balances 6 5,585,346 102,229 Loans & Advances 7 197,458,358 100,272,825 Defi cit Brought Forward (73,021) (27,773) 1,011,377,963 414,257,223 Defi cit Carried Forward to Balance Sheet (142,978) (73,021) Less : Current Liabilities & Provisions Earning per share Basic/Diluted in Rs. (Refer Note 6) (1.05) (0.72) Current Liabilities 8 557,026,757 413,771,896 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 11 557,026,757 413,771,896 Net Current Assets 454,351,206 485,327 Miscellaneous Expenditure (to the extent not written off or adjusted) Preliminary Expenditure 11,052 12,894 Profi t & Loss Account 142,978 73,021 454,580,300 667,300 Notes To Accounts & Accounting Policies 11

The Schedules referred to above form an integral Signatures to the Balance Sheet The Schedules referred to above form an integral Signatures to Profi t & Loss Account part of the Balance Sheet. and Schedules 1 to 8 and 11 part of the Profi t & Loss Account. and Schedules 9 to 11 As per our Report of even date. As per our Report of even date. For and on behalf of For and on behalf of KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY Chartered Accountants Chartered Accountants ERMIN K. IRANI MILIND S. KORDE K T JITHENDRAN ERMIN K. IRANI MILIND S. KORDE K T JITHENDRAN Partner Directors Partner Directors Mumbai, Dated: May 05, 2010 Mumbai, Dated: May 05, 2010 SCHEDULES FORMING PART OF THE ACCOUNTS As at As at As at As at 31.03.2010 31.03.2009 31.03.2010 31.03.2009 Rupees Rupees Rupees Rupees SCHEDULE 1: SHARE CAPITAL SCHEDULE 5: INVENTORY Authorised Construction work-in-progress 808,334,259 313,882,169 90,000 Equity shares of Rs. 10/- each 900,000 900,000 808,334,259 313,882,169 10,000 10% Non Convertible Cumulative Redeemable Preference 100,000 100,000 Shares of Rs. 10/- each SCHEDULE 6: CASH & BANK BALANCE 1,000,000 1,000,000 Cash & Cheques in hand 54,119 10,622 Issued, Subscribed & Paid Up Balances with Scheduled Bank - on Current Accounts 5,531,227 91,607 66,730 Equity shares of Rs. 10/- each, fully paid-up 667,300 667,300 5,585,346 102,229 (Out of which 34,032 Equity Shares are held by Godrej Properties Limited, the Holding company and its nominee) SCHEDULE 7: LOANS & ADVANCES 667,300 667,300 (Unsecured & considered good unless otherwise stated) SCHEDULE 2: RESERVE & SURPLUS Advances recoverable in cash or kind or for value to be Received During the Year - 214,844,318 received Less : Utilised for Redemption of Preference Shares during the - (214,844,318) - Secured (Secured against Bank / Corporate Guarantee) 97,062,129 - year - Others 100,396,229 100,272,825 - - 197,458,358 100,272,825 SCHEDULE 3: SECURED LOANS Term Loan from State Bank of India 453,900,000 - SCHEDULE 8: CURRENT LIABILITIES (Secured against Company’s share of undivided interest in the Sundry Creditors (Refer Note 4) 42,034,294 13,435,028 project Godrej Genesis at Kolkata) Investors Education & Protection Fund - - 453,900,000 - Other Liabilities 514,992,463 400,336,868 557,026,757 413,771,896 SCHEDULE 4 : FIXED ASSETS

Particulars Gross Block Depreciation Net Block As at Additions Deductions As at 31st As at For the As at As at 31st As at 1st March 1st Year 31st March 31st April 2010 April March 2010 March 2009 2009 2010 2009 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Offi ce Equipment - 5,063 - 5,063 - 546 546 4,517 - Computer 139,464 29,058 - 168,522 43,406 54,569 97,975 70,547 96,058 Total 139,464 34,121 - 173,585 43,406 55,115 98,521 75,064 96,058 Previous Year - 139,464 - 139,464 - 43,406 43,406 96,058 –

161 Godrej Developers Private Limited

SCHEDULE 9: COST OF SALES rates. Forward exchange contracts, remaining unsetteled at the year end, backed Opening Stock: 313,882,169 141,768,467 by underlying assets or liabilities are also translated at year end exchange rates.The Add : Expenditure/Transfers from Advances/Taken over premium payable on foreign exchange contracts is amortised over the period of the during the year contract. Exchange gains / losses are recognised in the Profi t and Loss Account. Construction, Material & Labour 379,990,860 42,400,487 j) Provisions and Contingent Liabilities Architect Fees 6,563,741 10,112,400 Provisions are recognized in the accounts in respect of present probable obligations, Overheads 39,387,620 108,714,649 the amount of which can be reliably estimated. Interest 68,509,869 10,886,166 Contingent liabilities are disclosed in respect of possible obligations that arise from 808,334,259 313,882,169 the past events but their existence is confi rmed by the occurrence or non-occurrence Less : Closing Stock: 808,334,259 313,882,169 of one or more uncertain future events not wholly within the control of the Company. Cost of Sales - - There is no contingent liability as on the balance sheet date. k) Miscellaneous Expenditure SCHEDULE 10: INTEREST AND FINANCIAL CHARGES Miscellaneous expenditure is amortized over a period of 10 years. Interest Paid - Banks 16,651,505 38 2) 10,000 10% Non Convertible Cumulative Redeemable Preference shares of Rs.10/- each - Others 51,858,364 10,886,128 issued on 24th March 2008 are redeemed on 31st March 2009 @ premium of Rs. 21,484.43/- Total Interest Paid 68,509,869 10,886,166 Per Share as per the provision of Companies Act ,1956. Less: Transferred to Cost of Sales 68,509,869 10,886,166 3) Preference dividend NET INTEREST - - Particulars Current Year (Rs.) Previous Year (Rs.) SCHEDULE 11 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES Arrears of Cumulative Preference Dividend 10,163 10,163 1) Accounting Policies 4) Due to Micro, Small and Medium Enterprises a) General Disclosure of sundry creditors under current liabilities is based on the information available The accounts are prepared under the Historical Cost Convention, using the accrual with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & method of accounting, the accounting standard issued by the Institute of Chartered Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, Accountants of India and the provisions of the Companies Act, 1956. 2010 to Micro, Small and Medium Enterprises on account of principal amount together with b) Fixed Assets interest and also during the previous year. Fixed assets are stated at cost of acquisition or construction less accumulated 5) Deferred Tax depreciation. Cost includes all incidental expenses related to acquisition and The Tax effect of signifi cant temporary differences that resulted in the deferred tax installation, other pre-operation expenses and interest in case of construction. liabilities are : Carrying amount of cash generating units / assets are reviewed at balance sheet date Particulars Current Year Previous Year to determine whether there is any indication of impairment. If such indication exists, (Rs.) (Rs.) the recoverable amount is estimated as the net selling price or value in use, whichever Liabilities is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount. - Depreciation on Fixed Assets 13,000 - c) Depreciation / Amortization Deferred Tax Liabilities 13,000 - Depreciation has been provided on Written Down Value basis, at the rates specifi ed in 6) Earnings Per Share Schedule XIV of the Companies Act, 1956. d) Inventories Particulars Current Year Previous Year Inventories are valued as under: Loss for the year as per Profi t & Loss Account(Rs.) (69,957) (45,248) a) Completed Flats - At lower of Cost or Market value Weighted average no. of equity shares outstanding 66,730 62,513 b) Construction Work-in-Progress - At Cost Basic Earnings Per Share (Rs.) (1.05) (0.72) Construction Work in Progress includes cost of land, premium for development Nominal value of shares (Rs.) 10 /- 10 /- rights, construction costs, allocated interest and expenses incidental to the 7) Amounts paid to Auditors projects undertaken by the Company. e) Revenue Recognition Particulars Current Year Previous Year (Rs.) (Rs.) The Company is following the “Percentage of Completion Method” of accounting. As Audit Fees 159,935 159,935 per this method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost Certifi cation 33,092 11,236 of projects under execution with the Company. Consultancy Charges 40,388 - Determination of revenues under the percentage of completion method necessarily Total 233,415 171,171 involves making estimates by the Company, some of which are of a technical nature, 8) Segment Information concerning, where relevant, the percentages of completion, costs to completion, the As the company has only one business segment, disclosure under Accounting Standard 17 expected revenues from the project/activity and the foreseeable losses to completion. on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not Such estimates have been relied upon by the auditors. applicable. Interest income is accounted on an accrual basis at contracted rates. 9) Related Party Disclosure f) Borrowing Cost Related party disclosures as required by AS-18, “Related Party Disclosures”, are given Interest and Finance charges incurred in connection with borrowing of funds, which are below: incurred for the development of long term projects, are transferred to Construction 1. Relationships: Work-in-Progress as a part of the cost of the projects at weighted average of the Shareholders: Godrej Properties Limited (GPL) holds 51% of the Share Capital of the borrowing cost. Company. Red Fort India Real Estate Babur (RFIREB) holds 49% of the Share Capital of Other borrowing costs are recognized as an expense in the period in which they are the Company. incurred. 2. The following transactions were carried out with the related party in the ordinary g) Earnings Per Share course of the business: The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed Sr. No Particulars GPL RFIREB using the weighted average number of common and dilutive common equivalent shares 1 Issue of Equity/Preference Shares - - outstanding during the period, except where the results would be anti-dilutive. - 215,011,618 h) Provision For Taxation 2 Redemption of Preference Shares - - Tax expense comprises both current and deferred tax. 214,944,318 - Current tax is measured at the amount expected to be paid to the tax authorities, using 3 Expenses Charged by other companies 61,571,202 - the applicable tax rates and tax laws. 47,353,570 - Deferred tax is recognized on timing differences, being the differences between 4 Expenses Charged to other companies - - the taxable income and the accounting income that originate in one period and are 2,566,142 - capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that 5 Advances received 501,687,500 - there is a reasonable certainty that suffi cient future taxable income will be available 333,644,318 - against which such deferred tax assets can be realized. The tax effect is calculated on 6 Advances paid 453,900,000 - the accumulated timing difference at the year-end based on the tax rates and laws 88,250,000 - enacted or substantially enacted on the balance sheet date. 7 Outstanding payables 501,260,304 - i) Foreign Currency Transactions 397,087,438 - Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, Figures in italics are for previous year remaining unsettled at the year end, are transalated at the year end exchange

162 Annual Report 2009—2010

10) Previous year fi gures have been regrouped / rearranged where ever necessary to confi rm to current year’s classifi cation. CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010 11) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 Current Year Previous Year to the extent not applicable has not been given. Rupees Rupees Cash Flow from Operating Activities 12) Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956 Loss For the period (56,957) (45,248) Balance Sheet abstract for the Year ended 31st March, 2010 And Company’s General Business Profi le Adjustment for: 1. Registration Details Depreciation 55,115 43,406 Registration No. : U45200MH2007PTC168783 Interest Paid 68,509,869 10,886,166 State Code : 11 Balance Sheet Date : 31st March, 2010 Preliminary Expenses 1,842 1,842 2. Capital raised during the year (Amount in Rs. thousands) Operating Profi t before working capital changes 68,509,869 10,886,166 Public Issue : Nil Adjustment for: Rights Issue : Nil Bonus Issue : Nil Change in Inventory (494,452,090) (172,113,702) Private Placement - Capital : Nil Change in Loans & Advances (97,185,533) 155,185 - Premium : Nil Change in Current Liabilities/Provisions 86,481,320 161,040,793 3. Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities : 1,011,607 Net Cash Flow from Operating activities (436,646,434) (31,558) Total Assets : 1,011,607 Cash Flow from Investing Activities Sources of Funds Paid-up capital : 667 Purchase of Fixed Assets (34,121) (139,464) Reserves & Surplus : - (34,121) (139,464) Secured Loans : 453,900 Cash Flow from Financing Activities Unsecured Loans : - Deferred Tax Liability : 13 Proceeds from Issue of Equity Share Capital including Share - 215,011,618 Application of Funds Premium Amount Net Fixed Assets : 75 Increase in Secured Loan 453,900,000 - Investments : - Net Current Assets : 454,351 Redemption of Preference Shares - (214,944,318) Misc. Expenditure : 11 Interest Paid (11,736,328) (38) Accumulated Losses : 143 Net Cash Flow from Financing Activities 442,163,672 67,262 4. Performance of Company (Amount in Rs. thousands) Turnover : - Net Increase/ (Decrease) in Cash & Cash Equivalent 5,483,117 (103,760) Total Expenditure : (57) Cash & Cash Equivalent -Opening Balance 102,229 205,989 Profi t / (Loss) before Tax : (57) Profi t / (Loss) after Tax : (70) Cash & Cash Equivalent -Closing Balance 5,585,346 102,229 Earning per Share in Rs. : (1.05) Notes : Dividend Rate % : - 5. Generic Names of three principal 1. The cash fl ow statement has been prepared under the ‘Indirect Method’ as set out in the products / services of Company : N.A. Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows by operating, investing and fi nancing activities. 2. Figures for the previous year have been regrouped/ restated wherever necessary to conform to this year’s classifi cation.

For and on behalf of KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS

ERMIN K. IRANI MILIND S. KORDE K. T. JITHENDRAN Partner Director Mumbai, Dated: May 05, 2010

163 Godrej Sea View Properties Private Limited

DIRECTORS’ REPORT FOR THE PERIOD ENDED MARCH 31, 2010

TO THE SHAREHOLDERS (ii) that the Directors have selected such accounting policies and applied them consistently and made Your Directors have pleasure in submitting their Report together with the Audited Accounts for the year ended judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state March 31, 2010. of affairs of the Company at the end of the fi nancial year ended 31st March, 2010 and of the loss of the 1. FINANCIAL HIGHLIGHTS: Company for that year; The accounting results for the period ended March 31, 2010 reveal that there is a defi cit at the end of the (iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate accounting period. records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the 2. REVIEW OF OPERATIONS: Company and for preventing and detecting fraud and other irregularities; The Company has executed an assignment agreement with Godrej Properties Limited for undertaking (iv) that the Directors have prepared the annual accounts on a going concern basis. development of their project called ‘Godrej Palm Grove’ at Chennai. Further HDFC PMS (under HDFC Asset 8. ADDITIONAL INFORMATION: Management Company Limited Portfolio Management Services Real Estate Portfolio-I, through its Portfolio a. Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of Manager HDFC Asset Management Company Limited) has purchased a 49% equity in the Company. Post transfer the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given. of shares to HDFC PMS, Godrej Properties Limited now holds 51% stake in the Company. The Company is developing a residential project and has conceptualized and fi nalized the design for the First b. Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings Phase of the Project. and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder: 3. DIVIDEND: i. Conservation of Energy : As there are no profi ts, the Directors regret that no dividend can be recommended. Expenses on account of Energy are negligible. 4. SUBDIVISION OF SHARES: During the year your Company has sub-divided the equity share capital from Rs.10/- each to Re.1/- each, ii. Technology Absorption : consequently the total number of equity shares of the Company has increased from 50,000 to 5,00,000. It is an on going process. 5. DIRECTORS: iii. Foreign Exchange Earning & Outgo : During the year Mr. Vipul Roongta was appointed as a nominee Director of HDFC Asset Management Company The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure Limited w.e.f March 31, 2010. during the year. In accordance with the provisions of the Articles of Association, Mr. Milind S. Korde retires by rotation and being eligible, offers himself for re-appointment. 9. ACKNOWLEDGEMENT: 6. APPOINTMENT OF AUDITORS: Your Directors take this opportunity to thank all the associates for their co-operation. M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are For and on Behalf of the Board of Directors eligible for re-appointment for which they have given their consent. 7. DIRECTORS’ RESPONSIBILITY STATEMENT: MILIND S. KORDE K.T. JITHENDRAN Your Director’s confi rm: Directors (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed Mumbai, Dated: May 14, 2010 and no material departures have been made from the same; REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ SEA VIEW PROPERTIES PRIVATE LIMITED 1. We have audited the attached Balance Sheet of GODREJ SEA VIEW PROPERTIES PRIVATE LIMITED, as at 31st to completion and on the projections of revenues expected from projects owing to the technical nature March, 2010, the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on of such estimates, on the basis of which profi ts/losses have been accounted, interest income accrued that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. and realizability of the construction work-in-progress and project advances determined. Our responsibility is to express an opinion on these fi nancial statements based on our audit. f) In our opinion and to the best of our information and according to the explanations given to us, the said 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial manner so required and give a true and fair view in conformity with the accounting principles generally statements are free of material misstatement. An audit includes examining, on a test basis, evidence accepted in India: supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; accounting principles used and signifi cant estimates made by management, as well as evaluating the overall ii) in the case of the Profi t and Loss Account, of the loss of the Company for the year ended on that fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion. date and, 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub- iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed that date. in paragraphs 4 and 5 of the said Order. 5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on 4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: record by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 a) We have obtained all the information and explanations, which to the best of our knowledge and belief from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies were necessary for the purposes of our audit. Act, 1956. b) In our opinion, proper books of account as required by law have been kept by the Company so far as For and on behalf of appears from our examination of such books. KALYANIWALLA & MISTRY c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account. CHARTERED ACCOUNTANTS Firm Registration No.: 104607W d) In our opinion, the Balance Sheet and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. ERMIN K. IRANI e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(e) of Schedule Partner 11-Notes to Accounts, in respect of projects under long term contracts undertaken and/or fi nanced by Membership No. 35646 the Company, we have relied upon the management’s estimates of the percentage of completion, costs Place : Mumbai, Date : May 14, 2010 Annexure to the Auditors' Report Referred to in paragraph (3) of our report of even date. 1) (a) The Company has maintained proper records showing full particulars, including quantitative details and Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and situation of fi xed assets. other statutory dues incurred during the year. According to the information and explanations given to us, (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodical there are no undisputed dues, payable in respect of above as at 31st March, 2010 for a period of more intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the than six months from the date they became payable. Company. (b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, (c) There is no disposal of fi xed assets during the year. Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute. 2) (a) The management has conducted physical verifi cation of inventory at reasonable intervals. 10) The Company’s accumulated losses at the end of the fi nancial yearare less than fi fty percent of its networth. In (b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are Current year the Company has not incurred cash losses, however, it has incurred cash losses in the immediately reasonable and adequate in relation to the size of the company and the nature of its business. preceding fi nancial year (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on 11) According to the information and explanations given to us and based on documents and records produced to physical verifi cation. us, the Company has not defaulted in repayment of dues to bank. The Company does not have any outstanding debentures or dues to fi nancial institutions. 3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. 12) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, (b) Consequently, the question of commenting on the rates of interest, terms and conditions of the loans debentures and other securities. granted being prejudicial to the interests of the Company, receipt of regular principal and interest and reasonable steps for recovery of the same does not arise. 13) In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/mutual benefi t fund/ (c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties societies. covered in the Register maintained under Section 301 of the Companies Act, 1956. 14) In our opinion and according to the information and explanations given to us, the Company does not deal in (d) Consequently, the question of commenting on the rates of interest and others terms and conditions of shares, securities, debentures and other investments. the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise. 15) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or fi nancial institutions. 4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the 16) Based on our examination and according to the information and explanations given to us, there were no term purchases of inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course loans taken during the year. of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls. 17) According to the information and explanations given to us and an overall examination of the Balance Sheet and 5) (a) Based on the audit procedures applied by us and according to the information and explanations provided cash fl ows of the Company, we report that the Company has not utilized funds raised on short term basis for by the management, we are of the opinion that the particulars of contracts and arrangements referred to long term investments. in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained 18) The Company has not made any preferential allotment of shares to parties or companies covered in the register under that section. maintained under section 301 of the Companies Act, 1956. (b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are 19) The Company did not issue any debentures during the year. reasonable having regard to prevailing market prices at the relevant time, where comparable market 20) The Company has not raised any money through a public issue during the year. price exist. 21) Based on the audit procedures performed and information and explanations given by the management, we 6) In our opinion and according to the information and explanations given to us, the Company has not accepted report that no fraud on or by the Company has been noticed or reported during the year. any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable. For and on behalf of 7) The Company has an internal audit system, which in our opinion is commensurate with the size of the Company KALYANIWALLA & MISTRY and nature of its business. CHARTERED ACCOUNTANTS 8) In our opinion and according to the information and explanations given to us, The Central Government has not Firm Registration No.: 104607W been prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company. ERMIN K. IRANI 9) (a) According to the information and explanations given to us and on the basis of our examination of books Partner of accounts, during the year, the Company has been generally regular in depositing undisputed statutory Membership No. 35646 dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Place : Mumbai, Date : May 14, 2010

164 Annual Report 2009–2010

BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED

Schedule As at As at MARCH 31, 2010 31.03.2010 31.03.2009 Rupees Rupees Schedule For the For the year ended year ended SOURCES OF FUNDS 31.03.2010 31.03.2009 SHAREHOLDERS' FUNDS Rupees Rupees Share Capital 1 500,000 500,000 LOAN FUNDS — — INCOME DEFERRED TAX LIABILITY 31,000 — Interest Income 15,554 — 531,000 500,000 EXPENDITURE APPLICATION OF FUNDS Cost of Sales 8 — — FIXED ASSETS 2 Administration Expenses 9 — 77,186 Gross Block 587,902 — Interest & Finance Charges 10 — — Less : Depreciation 7,967 — Depreciation 7,967 — Net Block 579,935 — Preliminary Expenses written off 1,842 1,842 Capital Work-In-Progress / Advances 2,182,485 — 2,762,420 — Profi t / (Defecit) for the Year 5,745 (79,028) INVESTMENTS — — Provision for Taxation CURRENT ASSETS, LOANS & ADVANCES For Current Tax (1,000) — Inventory 3 36,331,024 — For MAT Credit Entitlement 1,000 — Cash & Bank Balances 4 19,926,791 392,781 For Deferred Tax (31,000) — Loans & Advances 5 82,945,430 — Defi cit After Tax (25,255) (79,028) 139,203,245 392,781 LESS : CURRENT LIABILITIES & PROVISIONS Defi cit Brought Forward (145,288) (66,260) Current Liabilities 6 141,616,260 50,963 Defi cit carried to the Balance sheet (170,543) (145,288) Provisions 7 — — Earning per share - Basic in Rs. (Refer Note 3) (0.05) (0.16) 141,616,260 50,963 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 11 NET CURRENT ASSETS (2,413,015) 341,818

MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) Preliminary Expenditure 11,052 12,894

PROFIT AND LOSS ACCOUNT 170,543 145,288 531,000 500,000 Notes To Accounts & Accounting Policies 11

The Schedules referred to above form an integral Signatures to the Balance Sheet The Schedules referred to above form an integral Signatures to Profi t & Loss Account part of the Balance Sheet. and Schedules 1 to 7 and 11 part of the Profi t & Loss Account. and Schedules 8 to 11 As per our Report of even date. As per our Report of even date. For and on behalf of For and on behalf of KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner Directors Partner Directors Mumbai, Dated: May 14, 2010 Mumbai, Dated: May 14, 2010 SCHEDULES FORMING PART OF THE ACCOUNTS As at As at SCHEDULE 2 : FIXED ASSETS 31.03.2010 31.03.2009 Particulars Gross Block Depreciation Net Block Rupees Rupees As at As at Upto Upto As at As at SCHEDULE 1 : SHARE CAPITAL For the 1st Additions Deductions 31st 1st 31st 31st 31st Authorised April, March, April, Year March, March, March, 500,000 Equity shares of Re. 1/- each 500,000 500,000 2009 2010 2009 2010 2010 2009 (Previous Year 50,000 Equity shares of Rs. 10/- each) Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. 500,000 500,000 Offi ce — 135,000 — 135,000 — 848 848 134,152 — Equipment Issued, Subscribed and Paid-up Furniture 500,000 Equity shares of Re. 1/- each, fully paid-up 500,000 500,000 — 152,061 — 152,061 — 528 528 151,533 — (Of the above 388,636 (Previous year 50,000 Equity shares & Fixtures of Rs. 10/- each) Shares are held by Godrej Properties Limited, Computer — 300,841 — 300,841 — 6,591 6,591 294,250 — the Holding company and its nominee) TOTAL — 587,902 — 587,902 — 7,967 7,967 579,935

Previous 500,000 500,000 —— ——————— Year Capital

Work-in- —— ————— — 2,182,485 Progress TOTAL 2,762,420 —

165 Godrej Sea View Properties Private Limited

As at As at Carrying amount of cash generating units / assets are reviewed at balance sheet date 31.03.2010 31.03.2009 to determine whether there is any indication of impairment. If such indication exists, Rupees Rupees the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the SCHEDULE 3 recoverable amount. INVENTORY c. Depreciation / Amortization Construction Work-in-Progress 36,331,024 — Depreciation has been provided on Written Down Value basis, at the rates specifi ed in 36,331,024 — Schedule XIV of the Companies Act, 1956. d. Inventories SCHEDULE 4 Inventories are valued as under : CASH & BANK BALANCE Completed Flats - At lower of Cost or Market value Cash & Cheques-in-Hand 1,960 — Construction Work-in-Progress - At Cost Balance with Scheduled Bank - on Current Account 674,831 392,781 Construction Work in Progress includes cost of land, premium for development - on Fixed Deposit Accounts 19,250,000 - rights, construction costs, allocated interest and expenses incidental to the projects 19,926,791 392,781 undertaken by the Company. e. Revenue Recognition SCHEDULE 5 The Company is following the “Percentage of Completion Method” of accounting. As LOANS & ADVANCES per this method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost (Unsecured & considered good unless otherwise stated) of projects under execution with the Company. Advances recoverable in cash or kind or for value to be 2,929,876 — Determination of revenues under the percentage of completion method necessarily received involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the Interest accrued 15,554 — expected revenues from the project/activity and the foreseeable losses to completion. Deposits 80,000,000 — Such estimates have been relied upon by the auditors. 82,945,430 — f. Borrowing Cost Interest and Finance charges incurred in connection with borrowing of funds, which SCHEDULE 6 are incurred for the development of long term projects are transferred to Construction CURRENT LIABILITIES Work in Progress as a part of the cost of the projects at weighted average of the Sundry Creditors (Refer Note 2) 1,009 23,388 borrowing cost. Other Liabilities 141,615,251 27,575 g. Earnings Per Share 141,616,260 50,963 The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares SCHEDULE 7 outstanding during the period, except where the results would be anti-dilutive. PROVISIONS —— h. Provision for Taxation Provision for Income Tax (Net of MAT Credit entitlement — — Tax expense comprises both current and deferred tax. of Rs. 1,000/-) Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws. SCHEDULE 8 Deferred tax is recognized on timing differences, being the differences between COST OF SALES the taxable income and the accounting income that originate in one period and are Opening Stock — — capable of reversal in one or more subsequent periods. Deferred tax assets, subject to Add : Stock-In-Trade Acquired during the year 27,403,964 — consideration of prudence, are recognized and carried forward only to the extent that Construction, Material & Labour 10,000 — there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on Over heads 8,677,327 — the accumulated timing difference at the year-end based on the tax rates and laws Interest 239,733 — enacted or substantially enacted on the balance sheet date. 36,331,024 — i. Foreign Currency Transactions Less : Closing Stock 36,331,024 — Transactions in foreign currency are recorded at the exchange rates prevailing on the Cost of Sales — — date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. SCHEDULE 9 Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable ADMINISTRATION EXPENSES on foreign exchange contracts is amortised over the period of the contract. Exchange Audit fees — 27,575 gains / losses are recognised in the Profi t and Loss Account. Other Expenses — 49,611 j. Provisions And Contingent Liabilities — 77,186 Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. SCHEDULE 10 Contingent liabilities are disclosed in respect of possible obligations that arise from INTEREST AND FINANCE CHARGES (NET) the past events but their existence is confi rmed by the occurrence or non-occurrence INTEREST PAID of one or more uncertain future events not wholly within the control of the Company. Interest Paid - Others 239,733 — There is no contingent liability as on the balance sheet date. TOTAL INTEREST PAID 239,733 — k. Miscellaneous Expenditure Less: Transferred to Cost of Sales 239,733 — Miscellaneous expenditure is amortized over a period of 10 years. NET INTEREST — — 2) Contingent Liabilities Capital Commitment outstanding for the year ended 2009-10 (Net of Advance) is amounting to Rs. 2,322,203/- (Previous Year Rs. NIL). SCHEDULE 11 3) Due to Micro, Small and Medium Enterprises NOTES TO ACCOUNTS AND ACCOUNTING POLICIES Disclosure of sundry creditors under current liabilities is based on the information available 1) Accounting Policies with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & a. General Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, The fi nancial statements are prepared under the historical cost convention in 2010 to Micro, Small and Medium Enterprises on account of principal amount together with accordance with Generally Accepted Accounting Principles in India, the Accounting interest and also during the previous year. Standards issued by The Institute of Chartered Accountants of India and the provisions 4) Earnings per Share of the Companies Act, 1956. Particulars Current Year Previous Year b. Fixed Assets (Rs.) (Rs.) Fixed assets are stated at cost of acquisition or construction less accumulated Loss for the Year as per Profi t & Loss Account (25,255) (79,028) depreciation. Cost includes all incidental expenses related to acquisition and Weighted average no. of equity shares outstanding 500,000 500,000 installation, other pre-operation expenses and interest in case of construction. Basic / Diluted earnings per share (Rs.) (0.05) (0.16)* Nominal value of shares (Rs.) 1/- 1/-

* Earning per share of previous year has been recomputed based on the no of shares outstanding after split of shares during the year.

166 Annual Report 2009–2010

5) Deferred Tax 9. Additional information as required under Part IV of the Schedule VI to the Companies The Tax effect of signifi cant temporary differences that resulted in the deferred tax Act, 1956 liabilities are : Balance Sheet Abstract for the period ended 31st March, 2010 and Company’s General Business Profi le. Particulars Current Year Previous Year (Rs.) (Rs.) 1. Registration Details Registration No. : U45200MH2007PTC168730 Liabilities State Code : 11 - Depreciation on Fixed Assets 31,000 - Balance Sheet Date : 31st March, 2010 Deferred Tax Liabilities 31,000 - 2. Capital raised during the year (Amount in Rs. thousands) 6) Lease Public Issue : Nil The Company’s signifi cant leasing arrangements are in respect of operating leases for Rights Issue : Nil Commercial premises. Lease expenditure for operating leases is recognized on a straight- Bonus Issue : Nil line basis over the period of lease. The particulars of the premises taken under operating Private Placement - Capital : Nil leases are as under : - Premium : Nil 3. Position of mobilisation and deployment of funds (Amount in Rs. thousands) Particulars Current Year Previous Year Total Liabilities : 142,147 (Rs.) (Rs.) Total Assets : 142,147 Future minimum lease payments under non-cancelable Sources of Funds operating leases Paid-up capital : 500 - Not later than 1 year 2,241,396 NIL Reserves and Surplus : — - Later than 1 year and not later than 5 years 9,709,390 NIL Secured Loans : — Unsecured Loans : — - Later than 5 years 2,030,206 NIL Deferred Tax Liability : 31 7) Amounts paid to Auditors: Application of Funds Net Fixed Assets : 2,762 Current Year Previous Year Investments : — (Rs.) (Rs.) Deferred Tax Assets : — Audit Fees 159,935 27,575 Net Current Assets : (2,413) Consultancy Charges 40,388 33,708 Miscellaneous Expenditure : 11 Accumulated Losses : 171 Total 200,323 61,283 4. Performance of Company (Amount in Rs. thousands) 8) Segment Information Turnover : — As the company has only one business segment, disclosure under Accounting Standard 17 Total Expenditure : 10 on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not Profi t/(Loss) before Tax : 6 applicable. Profi t/(Loss) after Tax : (25) Earning per Share in Rs. : (0.05) 9) Related Party Disclosure Dividend Rate % : — 5. Generic Names of three principal Related party disclosures as required by AS-18, “Related Party Disclosures”, are given products/services of Company : N.A. below: 1. Relationships: CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010 (i) Shareholders: (the Godrej Group Shareholding) in the Company Godrej Properties Limited (GPL) holds 77.73% in the Company. GPL is the subsidiary of Godrej Current Year Previous Year Industries Limited (GIL). GIL is subsidiary of Godrej & Boyce Manufacturing Rupees Rupees Company Limited (G&B), the ultimate holding company Cash Flow from Operating Activities (ii) Investing party in respect of which the reporting enterprise is an associate. – HDFC Profi t/(Loss) for the Year 5,745 (79,028) PMS. Adjustment for: 2. The following transactions were carried out with the related party in the ordinary course of the business: Depreciation 7,967 – Interest Paid 239,733 – Sr. No. Particulars GPL G&B Preliminary Expenses 1,842 1,842 1 Reimbursement of Expenses 29,170,686 – Ineterst Received (15,554) – 1,149 – Operating Profi t before working capital changes 239,733 (77,186) 2. Advance Received/(Given) 109,839,114 (304,284) Adjustment for: – - Change in Inventory (36,331,024) – 3. Purchase of Fixed Assets 2,454,873 - Change in Loans & Advances (82,929,876) – – - Changes in Current Liabilities & Provisions 141,325,564 1,643 4. Outstanding payables/(Receivable) 141,085,481 (304,284) Net Cash Flow from Operating Activities 22,304,397 (75,543) 22,379 - Purchase of Fixed Assets (2,770,387) - Figures in italics are for previous year. Net Cash Flow from Investing Activities (2,770,387) – 10) Previous year fi gures have been regrouped / rearranged whereever necessary to confi rm to Net Cash Flow from Financing Activities – – current year’s classifi cation. Net Increase/ (Decrease) in Cash & Cash Equivalent 19,534,010 (75,543) 11) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given. Cash & Cash Equivalent -Opening Balance 392,781 468,324 Cash & Cash Equivalent -Closing Balance 19,926,791 392,781 Notes : 1. The cash fl ow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows by operating, investing and fi nancing activities. 2. Figures for the previous year have been regrouped/ restated wherever necessary to conform to this year’s classifi cation.

As per our Report of even date. For and on behalf of KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner Directors Mumbai, Dated: May 14, 2010

167 Happy Highrises Limited

DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31, 2010

TO THE SHAREHOLDERS (ii) that the Directors have selected such accounting policies and applied them consistently Your Directors have pleasure in submitting their Report alongwith the Audited Accounts for the and made judgments and estimates that are reasonable and prudent so as to give a year ended March 31, 2010. true and fair view of the state of affairs of the Company at the end of the fi nancial year ended March 31, 2010 and of the profi t of the Company for that year; 1. FINANCIAL HIGHLIGHTS: (iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate The accounting results for the year ended March 31, 2010 reveal that there is profi t at the accounting records in accordance with the provisions of the Companies Act, 1956, for end of the period. safeguarding the assets of the Company and for preventing and detecting fraud and 2. REVIEW OF OPERATIONS: other irregularities; The project will have a total developable area of 3.2 million sq.ft in two phases, Phase 1 will (iv) that the Directors have prepared the annual accounts on a going concern basis. have a total developable area of 0.54 million sq ft and Phase 2 would have a total developable 8. ADDITIONAL INFORMATION: area of 2.66 million sq.ft. (a) Since the company has no employees, the particulars of the employees to be disclosed The Company has obtained approvals for Phase 1 and it is expected to receive approval for u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Phase 2 by end of September 2010. Phase 1 was launched by the Company in October 2009, Rules, 1975, are not given. wherein the Company had sold 214117 sq.ft. out of total of 514046 sq.ft. (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign 3. DIVIDEND: Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, There is no Dividend declared for the year ended March 31, 2010. 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder: 4. CHANGE IN SHAREHOLDING PATTERN: (i) Conservation of Energy : During the year Godrej Properties Limited, the holding Company has diluted its 49% stake in the Company to IL&FS Trust Company Limited A/C Milestone India Real Estate Fund. Expenses on account of Energy are negligible. Post transfer of shares to Milestone India Real Estate Fund Godrej Properties Limited now (ii) Technology Absorption: holds 51% stake in the Company. It is an on going process. 5. DIRECTORS: (iii) Foreign Exchange Earning & Outgo: During the year Mr. Paritosh Kakkad and Mr. Ashish Joshi were appointed as nominee Directors The Company has not earned any Foreign Exchange nor incurred any Foreign of Milestone India Real Estate Fund w.e.f September 14, 2009. Exchange Expenditure during the year. In accordance with the Provisions of the Companies Act, 1956 and the Articles of Association of 9. ACKNOWLEDGEMENT: the Company Mr. K.T.Jithendran retire by rotation and offers himself for reappointment. Your Directors take this opportunity to thank all the associates for their co-operation. 6. APPOINTMENT OF AUDITORS: M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS 7. DIRECTORS’ RESPONSIBILITY STATEMENT: MILIND S. KORDE K.T. JITHENDRAN Your Director’s confi rm: DIRECTORS (i) that in the preparation of the annual accounts, the applicable accounting standards Place : Mumbai have been followed; Dated : May 14, 2010

REPORT OF THE AUDITORS TO THE MEMBERS OF HAPPY HIGHRISES LIMITED

1. We have audited the attached Balance Sheet of HAPPY HIGHRISES LIMITED, as at 31st March, e) In our opinion and to the best of our information and according to the explanations given 2010, the Profi t and Loss Account and the Cash Flow Statement of the Company for the year to us, the said accounts read with the notes thereon, give the information required ended on that date annexed thereto. These fi nancial statements are the responsibility of by the Companies Act, 1956, in the manner so required and give a true and fair view the Company’s management. Our responsibility is to express an opinion on these fi nancial in conformity with the accounting principles generally accepted in India: statements based on our audit. i) in the case of the Balance Sheet, of the state of affairs of the Company as at 2. We have conducted our audit in accordance with auditing standards generally accepted in 31st March, 2010; India. Those Standards require that we plan and perform the audit to obtain reasonable ii) in the case of the Profi t and Loss Account, of the profi t of the Company for the assurance about whether the fi nancial statements are free of material misstatement. An year ended on that date and audit includes examining, on a test basis, evidence supporting the amounts and disclosures iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for in the fi nancial statements. An audit also includes assessing the accounting principles used the year ended on that date. and signifi cant estimates made by management, as well as evaluating the overall fi nancial 5. On the basis of the written representations received from the directors as on 31st March, statement presentation. We believe that our audit provides a reasonable basis for our 2010, and taken on record by the Board of Directors, we report that, none of the directors opinion. is disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government (g) of sub-section (1) of section 274 of the Companies Act, 1956. in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph (3) above, we report For and on behalf of that: KALYANIWALLA & MISTRY a) We have obtained all the information and explanations, which to the best of our Chartered Accountants knowledge and belief were necessary for the purpose of our audit. Firm Registration No.: 104607W b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books. c) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt ERMIN K. IRANI with by this report are in agreement with the books of account. Partner d) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow Membership No. 35646 Statement dealt with by this report comply with the accounting standards referred Place: Mumbai to in sub-section (3C) of Section 211 of the Companies Act, 1956. Dated : May 14, 2010

168 Annual Report 2009–2010

ANNEXURE TO THE AUDITORS’ REPORT

Referred to in paragraph (3) of our report of even date. examination of books of accounts, during the year, the Company has no statutory dues 1) (a) The Company is maintaining proper records showing full particulars, including including Provident Fund, Investor Education and Protection Fund, Employees’ State quantitative details and situation of fi xed assets. Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets Duty, Excise Duty, cess and other statutory dues incurred during the year. According to at periodicals intervals. In our opinion, the period of verifi cation is reasonable having the information and explanations given to us, there are no undisputed dues, payable regard to the size of the Company. in respect of above as at 31st March 2010 for a period of more than six months from (c) There is no disposal of fi xed assets during the year. the date they became payable. 2) (a) The management has conducted physical verifi cation of inventory at reasonable (b) According to the information and explanations given to us, there are no dues outstanding intervals. of Sales Tax, Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account (b) In our opinion, the procedures of physical verifi cation of inventory followed by the of any dispute. management are reasonable and adequate in relation to the size of the company and 10) The Company does not have accumulated losses at the end of the fi nancial year and has not the nature of its business. incurred any cash losses in the current and immediately preceding fi nancial year. (c) The company is maintaining proper records of inventory and no material discrepancies 11) According to the information and explanations given to us and based on documents and were noticed on physical verifi cation. records produced to us, the Company has not defaulted in repayment of dues to bank. The Company does not have any outstanding debentures or dues to fi nancial institutions. 3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or 12) According to the information and explanations given to us and based on the documents and other parties covered in the register maintained under Section 301 of the Companies records produced to us, the Company has not granted loans and advances on the basis of Act, 1956 security by way of pledge of shares, debentures and other securities. (b) Consequently, the question of commenting on the rates of interest, terms and conditions 13) In our opinion and according to the information and explanations given to us, the nature of of the loans granted being prejudicial to the interests of the Company, receipt of regular activities of the Company does not attract any special statute applicable to chit fund and principal and interest and reasonable steps for recovery of the same does not arise. nidhi/ mutual benefi t fund/ societies. (c) The Company has not taken any loan, secured or unsecured from companies, fi rms or 14) In our opinion and according to the information and explanations given to us, the Company other parties covered in the Register maintained under Section 301 of the Companies does not deal in shares, securities, debentures and other investments. Act, 1956 15) According to the information and explanations given to us, the Company has not given any (d) Consequently, the question of commenting on the rates of interest and other terms guarantee for loans taken by others from banks or fi nancial institutions. and conditions of the loans taken being prejudicial to the interests of the Company, 16) Based on our examination and according to the information and explanations given to us, payment of regular principal and the interest does not arise. there were no term loans taken during the year. 4) In our opinion and according to the information and explanations given to us, there are 17) According to the information and explanations given to us and an overall examination of the adequate internal control procedures commensurate with the size of the Company and Balance Sheet and cash fl ows of the Company, we report that the Company has not utilized the nature of its business, for the purchases of inventory, fi xed assets and for the sale of funds raised on short-term basis for long-term investments. goods. There are no sales of service. During the course of our audit, we have not observed 18) The Company has not made any preferential allotment of shares to parties or companies a continuing failure to correct major weaknesses in internal controls. covered in the register maintained under section 301 of the Companies Act, 1956. 5) (a) Based on the audit procedures applied by us and according to the information and 19) The Company did not issue any debentures during the year. explanations provided by the management, we are of the opinion that the particulars 20) The Company has not raised any money through a public issue during the year. of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 21) Based on the audit procedures performed and information and explanations given by the have been entered into the register required to be maintained under that section. management, we report that no fraud on or by the Company has been noticed or reported (b) The transactions made in pursuance of such contracts or arrangements, were made during the year. at prices which are reasonable having regard to prevailing marketing prices at the For and on behalf of relevant time, where comparable market price exist. KALYANIWALLA & MISTRY 6) In our opinion and according to the information and explanations given to us, the Company CHARTERED ACCOUNTANTS has not accepted any deposits from the public hence the provisions of section 58A and 58AA Firm Registration No.: 104607W or any other provisions of the Companies Act, 1956, are not applicable. 7) The Company has an internal audit system, which in our opinion is commensurate with the ERMIN K. IRANI size of the Company and nature of its business. Partner 8) In our opinion and according to the information and explanations given to us, The Central Membership No. 35646 Government has not been prescribed maintenance of cost records under section 209(1) (d) Place: Mumbai of the Companies Act, 1956, in respect of the activities carried on by the Company. Dated: May 14, 2010 9) (a) According to the information and explanations given to us and on the basis of our

BALANCE SHEET AS AT 31ST MARCH, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, Schedule As at As at 2010 31.03.2010 31.03.2009 Rupees Rupees Schedule For the For the SOURCES OF FUNDS Year ended Year ended SHAREHOLDERS’ FUNDS 31.03.2010 31.03.2009 Share Capital 1 2,031,200 2,031,200 Rupees Rupees Reserve & Surplus 2 14,472,024 - LOAN FUNDS - - INCOME DEFERRED TAX LIABILITY 12,000 - Sales 121,057,106 - 16,515,224 2,031,200 APPLICATION OF FUNDS EXPENDITURE FIXED ASSETS Cost of Sales 10 97,971,803 - Gross Block 3 2,618,114 137,360 Less : Depreciation 392,900 33,445 Interest & Finance Charges 11 - - Net Block 2,225,214 103,915 Depreciation 359,455 30,245 INVESTMENTS - - Preliminary Expenses written off 1,726 1,726 CURRENT ASSETS, LOANS & ADVANCES Inventory 4 1,256,666,886 907,618,712 Profi t / (Defecit) for the Year 22,724,122 (31,971) Debtors 5 67,616,112 - Provision for Tax Cash & Bank Balances 6 14,481,093 87,980 Loans & Advances 7 19,898,842 1,155,172 for Current Tax (8,168,000) - 1,358,662,933 908,861,864 for Deferred Tax (12,000) - LESS : CURRENT LIABILITIES & PROVISIONS Current Liabilities 8 1,336,263,427 907,020,485 Profi t / (Defecit) after tax 14,544,122 (31,971) Provisions 9 8,121,578 - Defi cit Brought Forward (72,098) (40,127) 1,344,385,005 907,020,485 NET CURRENT ASSETS 14,277,928 1,841,379 Profi t Carried Forward to Balance Sheet 14,472,024 (72,098) MISCELLANEOUS EXPENDITURE Earning per share Basic/Diluted in Rs. 71.60 (0.16) (to the extent not written off or adjusted) (Refer Note 3) Preliminary Expenditure 12,082 13,808 PROFIT & LOSS ACCOUNT - 72,098 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 12 16,515,224 2,031,200 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 12

The Schedules referred to above form an integral The Schedules referred to above form an integral part of the Balance Sheet. Signatures to the Balance Sheet and part of the Profi t & Loss Account. Signatures to Profi t & Loss Account and As per our Report of even date. Schedules 1 to 9 and 12 As per our Report of even date. Schedules 10 to 12 For and on behalf of For and on behalf of KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANTS ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner DIRECTORS Partner DIRECTORS Mumbai, Dated : May 14, 2010 Mumbai, Dated : May 14, 2010

169 Happy Highrises Limited

SCHEDULES FORMING PART OF THE ACCOUNTS As at As at For the For the 31.03.10 31.03.00 Year ended Year ended Rupees Rupees 31.03.2010 31.03.2009 SCHEDULE 1: SHARE CAPITAL Rupees Rupees AUTHORISED SCHEDULE 10 250,000 Equity shares of Rs. 10/- each 2,500,000 2,500,000 COST OF SALES Opening Stock 907,618,712 774,188,736 2,500,000 2,500,000 Add : Expenditure during the period ISSUED, SUBSCRIBED & PAID UP Construction, Material & Labour 123,579,224 5,662,615 203,120 Equity shares of Rs. 10/- each, fully paid-up 2,031,200 2,031,200 Architect Fees 1,416,852 - (Of the above 1,03,592 (previous year 2,03,120) shares are Advertisment Expenses 32,826,545 545,093 held by Godrej Properties Limited, the Holding Company Overheads 182,866,518 39,873,381 and its nominee) Interest 106,330,838 87,348,887 2,031,200 2,031,200 1,354,638,689 907,618,712 SCHEDULE 2 Less : Closing Stock 1,256,666,886 907,618,712 RESERVES & SURPLUS Cost of Sales 97,971,803 - PROFIT AND LOSS ACCOUNT 14,472,024 – SCHEDULE 11 14,472,024 – INTEREST AND FINANCIAL CHARGES Interest Paid SCHEDULE 3: FIXED ASSETS Interest Paid - Others 106,325,525 87,345,656 Particulars Gross Block Depreciation Net Block Total Interest Paid 106,325,525 87,345,656 As at Additions Deductions As at Upto For the Upto As at As at Add: Brokerage & other Financial Charges 5,313 3,231 1st 31st 1st April, Year 31st 31st 31st April, March, 2009 March, March, March, Total Interest/Finance Charges Paid 106,330,838 87,348,887 2009 2010 2010 2010 2009 Less: Transferred to Cost of Sales 106,330,838 87,348,887 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. NET INTEREST - - Furniture & Fixtures - 1,369,693 - 1,369,693 - 156,032 156,032 1,213,661 - SCHEDULE 12 : NOTES TO ACCOUNT AND ACCOUNTING POLICIES Offi ce 1) Accounting Policies Equipments 3,200 386,246 - 389,446 3,200 38,151 41,351 348,095 - a) General Computers 134,160 724,815 - 858,975 30,245 165,272 195,517 663,458 103,915 The fi nancial statements are prepared under the historical cost convention in accordance Total with Generally Accepted Accounting Principles in India, the Accounting Standards issued by 137,360 2,480,754 - 2,618,114 33,445 359,455 392,900 2,225,214 103,915 The Institute of Chartered Accountants of India and the provisions of the Companies Act, Previous 1956. Year 3,200 134,160 - 137,360 3,200 30,245 33,445 103,915 - b) Miscellaneous Expenditure Miscellaneous expenditure is amortized over a period of 10 years. As at As at c) Fixed Assets 31.03.2010 31.03.2009 Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Rupees Rupees Cost includes all incidental expenses related to acquisition and installation, other pre- SCHEDULE 4 operation expenses and interest in case of construction. INVENTORY Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the Construction work in progress 1,256,666,886 907,618,712 recoverable amount is estimated as the net selling price or value in use, whichever is higher. 1,256,666,886 907,618,712 Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable SCHEDULE 5 amount. d) Depreciation / Amortization SUNDRY DEBTORS (UNSECURED, CONSIDERED GOOD) Depreciation has been provided on Written Down Value basis, at the rates specifi ed in Schedule Others 67,616,112 - XIV of the Companies Act, 1956. (Includes unbilled revenue of Rs. 57,999,721/- (Previous year 67,616,112 - e) Inventories Rs. NIL)) Inventories are valued as under: a) Completed Flats - At lower of Cost or Market value SCHEDULE 6 b) Construction Work-in-Progress - At cost Construction Work in Progress includes cost of land, premium for development rights, CASH & BANK BALANCE construction costs, allocated interest and expenses incidental to the projects undertaken Cash & Cheques-in-Hand 54,110 14,085 by the Company. Balances with Scheduled Bank 14,426,983 73,895 f) Revenue Recognition 14,481,093 87,980 The Company is following the “Percentage of Completion Method” of accounting. As per this method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in SCHEDULE 7 proportion to the actual cost incurred as against the total estimated cost of projects under LOANS & ADVANCES execution with the Company. (Unsecured & considered good unless otherwise stated) Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, - Secured (Secured against Bank Guarantee) 16,212,613 - where relevant, the percentages of completion, costs to completion, the expected revenues Advances recoverable in cash or kind or for value to be 3,686,229 1,108,750 from the project/activity and the foreseeable losses to completion. Such estimates have received been relied upon by the auditors. Advance Tax and Tax Deducted at Source - 46,422 Interest income is accounted on an accrual basis at contracted rates. 19,898,842 1,155,172 g) Borrowing Cost SCHEDULE 8 Interest and fi nance charges incurred in connection with borrowing of funds, which are incurred for the development of long term projects, are transferred to Construction Work CURRENT LIABILITIES in Progress / Due on Management Project, as a part of the cost of the projects at weighted Sundry Creditors (Refer Note 2) 90,373,592 1,087,650 average of the borrowing cost / rates as per Agreements respectively. Investor Education & Protection Fund - - Other borrowing costs are recognized as an expense in the period in which they are incurred. Advances received against Sale 1,278,797 - h) Earnings Per Share Other liabilities 1,244,611,038 905,932,835 The basic earnings per share is computed using the weighted average number of common 1,336,263,427 907,020,485 shares outstanding during the period. Diluted earnings per share are computed using the SCHEDULE 9 weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive. PROVISIONS i) Provision For Taxation Provision for Income Tax 8,121,578 - Tax expense comprises both current and deferred tax. (Net of Advance Tax & Tax of deducted at source of Rs. 46,422/-, Current tax is measured at the amount expected to be paid to the tax authorities, using the Previous Year Rs. 46,422/-) applicable tax rates and tax laws. 8,121,578 - Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in

170 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE ACCOUNTS one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, 10. Additional information as required under Part IV of the Schedule VI to the Companies are recognized and carried forward only to the extent that there is a reasonable certainty Act, 1956 that suffi cient future taxable income will be available against which such deferred tax assets Balance Sheet Abstract for the Year ended 31st March, 2010 And Company’s General can be realized. The tax effect is calculated on the accumulated timing difference at the Business Profi le year-end based on the tax rates and laws enacted or substantially enacted on the balance 1 Registration Details : sheet date. Registration No. : U51909MH1993PLC180464 j) Foreign Currency Transactions State Code : 11 Balance Sheet Date : 31st March, 2010 Transactions in foreign currency are recorded at the exchange rates prevailing on the date 2 Capital raised during the year (Amount in Rs. of the transaction. Assets and liabilities related to foreign currency transactions, remaining thousands) unsettled at the year end, are transalated at the year end exchange rates. Forward exchange Public Issue : Nil contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities Rights Issue : Nil are also translated at year end exchange rates.The premium payable on foreign exchange Bonus Issue : Nil contracts is amortised over the period of the contract. Exchange gains / losses are recognised Private Placement - Capital : Nil in the Profi t and Loss Account. - Premium : Nil k) Provisions And Contigent Liabilities 3 Position of mobilisation and deployment of funds (Amount : Provisions are recognized in the accounts in respect of present probable obligations, the in Rs. thousands) amount of which can be reliably estimated. Total Liabilities : 1,360,900 Total Assets : 1,360,900 Contingent liabilities are disclosed in respect of possible obligations that arise from the past Sources of Funds : events but their existence is confi rmed by the occurrence or non-occurrence of one or more Paid-up capital : 2,031 uncertain future events not wholly within the control of the Company. Reserves & Surplus : 14,472 2. Micro, Small and Medium Enterprises Development Act, 2006: Secured Loans : - Disclosure of sundry creditors under current liabilities is based on the information available Unsecured Loans : - with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Deferred Tax Liability : 12 Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, Application of Funds : 2010 to Micro, Small and Medium Enterprises on account of principal amount together with Net Fixed Assets : 2,225 Investments : - interest and also during the previous year. Net Current Assets : 14,278 3. Earnings per share Misc. Expenditure : 12 Current Year Previous Year Accumulated Losses : – 4 Performance of Company (Amount in Rs. thousands) : Profi t / (Loss) for the period as per Profi t & Loss 14,544,122 (31,971) Turnover : 121,057 Account (Rs.) Total Expenditure : 98,333 Weighted average no. of equity shares outstanding 203,120 203,120 Profi t/(Loss) before Tax : 22,724 Earnings Per Share (Basic /Diluted) (Rs.) 71.60 (0.16) Profi t/(Loss) after Tax : 14,544 Nominal value of shares (Rs.) 10/- 10/- Earning per Share in Rs. : 71.60 4. Deferred Tax Dividend Rate % : - The Tax effect of signifi cant temporary differences that resulted in deferred tax liabilities 5 Generic Names of three principal products/services of are : Company : N.A. Particulars Current Year Previous Year (Rs.) (Rs.) CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010 Liabilities Current Year Previous Year - Depreciation on Fixed Assets 12,000 - Rupees Rupees Deferred Tax Liabilities 12,000 - Cash Flow from Operating Activities 5. Amounts paid to Auditors Profi t / (Loss) before taxation 22,724,122 (31,971) Current Year Previous Year Adjustment for: (Rs.) (Rs.) Audit Fees 1,59,935 1,59,935 Depreciation 359,455 30,245 Audit Under Other Statutes 55,150 - Interest Paid 106,330,838 87,348,887 Consultancy Charges 40,388 - Preliminary Expenses 1,726 1,726 Total 255,473 159,935 Operating Profi t /(Loss) before working capital changes 129,416,141 87,348,887 6. Segment Information As the company has only one business segment, disclosure under Accounting Standard 17 Adjustment for: on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable. Change in Inventory (349,048,174) (133,429,976) 7. Related Party Disclosure Increase in Sundry Debtors (67,616,112) - Related party disclosures as required by AS-18, “Related Party Disclosures”, are given Change in Loans & Advances (18,790,092) (705,278) below: Change in Current Liabilities / Provisions 322,912,104 45,012,567 (i) Relationships: Net Cash Flow from Operating Activities 16,873,867 (1,773,800) Shareholders (the Godrej Group Shareholding) in the Company Godrej Properties Limited (GPL) hold 51% in the Company. GPL is the Subsidiary of Godrej Industries Limited (GIL). GIL is a subsidiary of Godrej & Boyce Manufacturing Company Limited Cash Flow from Investing Activities (G&B), the ultimate holding Company. Purchase of Fixed Assets (2,480,754) (134,160) (ii) Investing party in respect of which the reporting enterprise is an associate. - Milestone Net Cash Flow from Investing Activities (2,480,754) (134,160) Real Estate Fund. 2. The following transactions were carried out with the related party in the ordinary course of Cash Flow from Financing Activities - - the business: Net Increase/ (Decrease) in Cash & Cash Equivalent 14,393,113 (1,907,960) Sr. No Particulars GPL Amount G&B Cash & Cash Equivalent -Opening Balance 87,980 1,995,940 Rs. Rs. Cash & Cash Equivalent -Closing Balance 14,481,093 87,980 1. Expenses incurred by other company towards 181,214,018 - Notes : Construction work in progress and Revenue 114,240,742 - 1. The cash fl ow statement has been prepared under the 'Indirect Method' as set out in the expenditure Accounting Standard (AS) 3 on 'Cash Flow Statement', and presents cash fl ows by operating, 2. Advances Received 202,500,000 - investing and fi nancing activities. 31,270,000 - 2. Figures for the previous year have been regrouped/ restated wherever necessary to conform 3. Advances Repaid 31,900,000 - to this year's classifi cation. - - For and on behalf of 4. Outstanding payables 1,227,097,105 - KALYANIWALLA & MISTRY 885,915,639 - 5. Purchase of Fixed Assets - 81,702 CHARTERED ACCOUNTANTS - - Figures in italics are for previous year ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN 8. Previous year fi gures have been rearranged / regrouped wherever necessary to confi rm to Partner DIRECTORS current year’s classifi cation. Place : Mumbai 9. Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 Dated : May 14, 2010 to the extent not applicable has not been given.

171 Godrej Waterside Properties Private Limited

BOARD OF DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2010 TO THE SHAREHOLDERS and made judgments and estimates that are reasonable and prudent so as to give a true Your Directors have pleasure in submitting their Report along with the Audited Accounts for the and fair view of the state of affairs of the Company at the end of the fi nancial year year ended March 31, 2010. ended March 31, 2010 and of the profi t of the Company for that year; 1. FINANCIAL HIGHLIGHTS: (iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate The accounting results for the year ended March 31, 2010 reveal that there is a surplus at accounting records in accordance with the provisions of the Companies Act, 1956, for the end of the year. safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; During the year the Company has created Debenture Redemption Reserve as required under Section 117(C) of the Companies Act, 1956. (iv) that the Directors have prepared the annual accounts on a going concern basis. 2. REVIEW OF OPERATIONS : 8. ADDITIONAL INFORMATION: The project has a total Developable area of 2.16 million sq.ft spanning two towers with (a) Since the Company has no employees, the particulars of the employees to be disclosed parking facility for approximately 1400 car parks. u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given. The Project comprises of two towers, Tower 1 having a developable area of 0.72 million sq.ft. and Tower 2 having a developable area of 1 .44 million sq.ft. Tower I is fully complete (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign and the Company has sold 3,31,772 sq.ft. Tower II is under construction. Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of 3. DIVIDEND: Directors) Rules, 1988 is provided hereunder: There is no Dividend declared for the year ended March 31, 2010. i) Conservation of Energy : 4. DIRECTORS: Expenses on account of Energy are negligible. During the year Mr. Amit B. Choudhury has been appointed as an Additional Director w.e.f ii) Technology Absorption: February 1, 2010 who will hold offi ce till the conclusion of the ensuing Annual General Meeting of the Company. It is an on going process. In accordance with the provisions of the Articles of Association, Mr. Pirojsha A Godrej and Mr. iii) Foreign Exchange Earning & Outgo: K. T. Jithendran retire by rotation and being eligible, offer themselves for re-appointment. The Company has not earned any Foreign Exchange nor incurred any Foreign 5. MATERIAL SUBSIDIARY: Exchange Expenditure during the year. During the year your Company has become the Material Non Listed Indian Subsidiary of 9. ACKNOWLEDGEMENT: Godrej Properties Limited as per Clause 49 of listing agreement. Your Directors take this opportunity to thank all the associates for their co-operation. 6. APPOINTMENT OF AUDITORS: M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General For And On Behalf Of The Board Of Directors Meeting and are eligible for re-appointment for which they have given their consent. MILIND S. KORDE NARESH NADKARNI 7. DIRECTORS’ RESPONSIBILITY STATEMENT: Directors Your Director’s Confi rm: Mumbai, Dated : May 14, 2010 (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed; (ii) that the Directors have selected such accounting policies and applied them consistently

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ WATERSIDE PROPERTIES PRIVATE LIMITED 1. We have audited the attached Balance Sheet of GODREJ WATERSIDE PROPERTIES PRIVATE estimates of the percentage of completion, costs to completion and on the projections LIMITED, as at 31st March 2010, the Profi t and Loss Account and the Cash Flow Statement of of revenues expected from projects owing to the technical nature of such estimates, the Company for the year ended on that date annexed thereto. These fi nancial statements on the basis of which profi ts/losses have been accounted, interest income accrued and are the responsibility of the Company’s management. Our responsibility is to express an realizability of the construction work in progress and project advances determined. opinion on these fi nancial statements based on our audit. f) In our opinion and to the best of our information and according to the explanations 2. We have conducted our audit in accordance with auditing standards generally accepted in given to us, the said accounts read with the notes thereon, give the information India. Those Standards require that we plan and perform the audit to obtain reasonable required by the Companies Act, 1956, in the manner so required and give a true and assurance about whether the fi nancial statements are free of material misstatement. An fair view in conformity with the accounting principles generally accepted in India: audit includes examining, on a test basis, evidence supporting the amounts and disclosures i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st in the fi nancial statements. An audit also includes assessing the accounting principles used March, 2010; and signifi cant estimates made by management, as well as evaluating the overall fi nancial ii) in the case of the Profi t and Loss Account, of the profi t of the Company for the statement presentation. We believe that our audit provides a reasonable basis for our year ended on that date and opinion. iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central year ended on that date. Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we 5. On the basis of the written representations received from the directors as on 31st March, annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order. 2010, and taken on record by the Board of Directors, we report that, none of the directors is 4. Further to our comments in the Annexure referred to in paragraph (3) above, we report disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause (g) that: of sub-section (1) of Section 274 of the Companies Act, 1956. a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit. For and on behalf of b) In our opinion, proper books of account as required by law have been kept by the KALYANIWALLA & MISTRY Company so far as appears from our examination of such books. Chartered Accountants c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by Firm Registration No.: 104607W this report are in agreement with the books of account. d) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow ERMIN K. IRANI Statement dealt with by this report comply with the accounting standards referred to Partner in sub-section (3C) of Section 211 of the Companies Act, 1956. Membership No. 35646 e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(e) of Schedule 14-Notes to Accounts, in respect of projects under long term contracts Place: Mumbai undertaken and/or fi nanced by the Company, we have relied upon the management’s Dated: May 14, 2010

172 Annual Report 2009–2010

ANNEXURE TO THE AUDITORS’ REPORT Referred to in paragraph (3) of our report of even date. regular in depositing undisputed statutory dues including Provident Fund, Investor 1. (a) The Company has maintained proper records showing full particulars, including Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added quantitative details and situation of fi xed assets. Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and other (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets statutory dues incurred during the year. According to the information and explanations at periodical intervals. In our opinion, the period of verifi cation is reasonable having given to us, there are no undisputed dues, payable in respect of above as at 31st March regard to the size of the Company. 2010 for a period of more than six months from the date they became payable. (c) There is no disposal of fi xed assets during the year. (b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of 2. (a) The management has conducted physical verifi cation of inventory at reasonable any dispute. intervals. 10. The Company’s does not have accumulated losses at the end of the fi nancial year and has not (b) In our opinion, the procedures of physical verifi cation of inventory followed by the incurred any cash losses in the current and immediately preceding fi nancial year. management are reasonable and adequate in relation to the size of the company and the nature of its business. 11. According to the information and explanations given to us and based on documents and records produced to us, the Company has not defaulted in repayment of dues to debenture (c) The company is maintaining proper records of inventory and no material discrepancies holders, banks and fi nancial institutions. were noticed on physical verifi cation. 12. According to the information and explanations given to us and based on the documents and 3. (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies records produced to us, the Company has not granted loans and advances on the basis of Act, 1956. security by way of pledge of shares, debentures and other securities. (b) Consequently, the question of commenting on the rates of interest, terms and 13. In our opinion and according to the information and explanations given to us, the nature of conditions of the loans granted being prejudicial to the interests of the Company, activities of the Company does not attract any special statute applicable to chit fund and receipt of regular principal and interest and reasonable steps for recovery of the same nidhi/ mutual benefi t fund/ societies. does not arise. 14. In our opinion and according to the information and explanations given to us, the Company (c) The Company has not taken any loan, secured or unsecured from companies, fi rms or does not deal in shares, securities, debentures and other investments. other parties covered in the Register maintained under Section 301 of the Companies 15. In our opinion and according to the information and explanations given to us, the Company Act, 1956. has not given any guarantee for loans taken by others from banks or fi nancial institutions. (d) Consequently, the question of commenting on the rates of interest and others terms 16. According to the information and explanations given to us and based on the documents and and conditions of the loans taken being prejudicial to the interests of the Company, records examined by us, on an overall basis, the term loan has been applied for the purpose payment of regular principal and the interest does not arise. for which the loan was obtained. 4. In our opinion and according to the information and explanations given to us, there are 17. According to the information and explanations given to us and an overall examination of the adequate internal control procedures commensurate with the size of the Company and the Balance Sheet and cash fl ows of the Company, we report that the Company has not utilized nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods. funds raised on short term basis for long term investments. There are no sales of service. During the course of our audit, we have not observed a 18. The Company has not made any preferential allotment of shares to parties or companies continuing failure to correct major weaknesses in internal controls. covered in the register maintained under Section 301 of the Companies Act, 1956. 5. (a) Based on the audit procedures applied by us and according to the information and 19. The Company did not issue any debentures during the year. explanations provided by the management, we are of the opinion that the particulars 20. The Company has not raised any money through a public issue during the year. of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section. 21. Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported (b) The transactions made in pursuance of such contracts or arrangements, were made at during the year. prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist. 6. In our opinion and according to the information and explanations given to us, the Company For and on behalf of has not accepted any deposits from the public hence the provisions of Section 58A and 58AA KALYANIWALLA & MISTRY or any other provisions of the Companies Act, 1956, are not applicable. Chartered Accountants 7. The Company has an internal audit system, which in our opinion is commensurate with the Firm Registration No.: 104607W size of the Company and nature of its business. ERMIN K. IRANI 8. In our opinion and according to the information and explanations given to us, the Central Partner Government has not been prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company. Membership No. 35646 9. (a) According to the information and explanations given to us and on the basis of our Place: Mumbai examination of books of accounts, during the year, the Company has been generally Dated: May 14, 2010 BALANCE SHEET AS AT 31ST MARCH, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON Schedule As at As at 31.03.2010 31.03.2009 31ST MARCH, 2010 Rupees Rupees Schedule For the For the SOURCES OF FUNDS year ended year ended Shareholders’ Funds 31.03.2010 31.03.2009 Share Capital 1 10,000,000 10,000,000 Rupees Rupees Reserve & Surplus 2 16,875,800 12,943,462 INCOME Loan Funds Sales 870,207,675 592,449,300 Secured Loans 3 2,167,300,000 2,167,300,000 Other Income 11 3,662,561 3,169,314 2,194,175,800 2,190,243,462 (Tax Deducted at Source Rs.361,270 /- [Previous year Application Of Funds Rs. 718,167/-]) Fixed Assets 873,870,236 595,618,614 Gross Block 4 4,218,878 3,958,506 EXPENDITURE Less : Depreciation 2,065,890 1,449,504 Cost of Sales 12 863,770,951 566,538,934 Net Block 2,152,988 2,509,002 Interest & Finance Charges 13 3,662,561 3,169,314 Investments - - Depreciation 616,386 691,460 Deferred Tax Asset 30,000 4,000 868,049,898 570,399,708 Current Assets, Loans & Advances Profi t for the Year 5,820,338 25,218,906 Inventory 5 2,371,895,669 2,070,421,912 Provision for Taxation Debtors 6 353,254,319 245,317,300 for Current Tax (1,914,000) (8,890,000) Cash & Bank Balances 7 40,233,572 18,190,356 Loans & Advances 8 139,307,911 326,307,823 for Deferred Tax 26,000 23,000 2,904,691,471 2,660,237,391 Profi t / (Loss) After Tax 3,932,338 16,351,906 Less : Current Liabilities & Provisions Defi cit Brought Forward - (3,408,444) Current Liabilities 9 711,233,052 465,089,851 Amount available for appropriation 3,932,338 12,943,462 Provisions 10 1,465,607 7,417,080 Transfer to Debenture Redemption Reserve 3,932,338 12,943,462 712,698,659 472,506,931 Balance Carried Forward to Balance Sheet - - Net Current Assets 2,191,992,812 2,187,730,460 Earning per share Basic in Rs. (Refer Note 7) 3.93 16.35 2,194,175,800 2,190,243,462 Earning per share Diluted in Rs. (Refer Note 7) 0.13 0.55 Notes To Accounts & Accounting Policies 14 Notes To Accounts & Accounting Policies 14 The Schedules referred to above form an integral Signatures to the Balance Sheet The Schedules referred to above form an integral Signatures to Profi t and Loss Account part of the Balance Sheet and Schedules 1 to 10 and 14 part of the Profi t and Loss Account and Schedules 11 to 14 As per our Report of even date As per our Report of even date For and on behalf of For and on behalf of Kalyaniwalla & Mistry Kalyaniwalla & Mistry Chartered Accountants Chartered Accountants

Ermin K. Irani Milind S. Korde Naresh Nadkarni Ermin K. Irani Milind S. Korde Naresh Nadkarni Partner Directors Partner Directors Mumbai, Dated : May 14, 2010 Mumbai, Dated : May 14, 2010

173 Godrej Waterside Properties Private Limited

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE SCHEDULE 14 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES 1) Accounting Policies YEAR ENDED ON 31st MARCH, 2010 a) General As at As at The fi nancial statements are prepared under the historical cost convention in 31.03.2010 31.03.2009 accordance with Generally Accepted Accounting Principles in India, the Accounting Rupees Rupees Standards issued by The Institute of Chartered Accountants of India and the provisions SCHEDULE 1 : SHARE CAPITAL of the Companies Act, 1956. Authorised b) Fixed Assets 1.000,000 Equity shares of Rs. 10/- each 10,000,000 10,000,000 10,000,000 10,000,000 Fixed assets are stated at cost of acquisition or construction less accumulated Issued, Subscribed & Paid Up depreciation. Cost includes all incidental expenses related to acquisition and 1,000,000 Equity shares of Rs. 10/- each, fully paid -up 10,000,000 10,000,000 installation, other pre-operation expenses and interest in case of construction. (510,000 equity shares are held by Godrej Properties Carrying amount of cash generating units / assets are reviewed at balance sheet Limited the Holding Company & its nominee) date to determine whether there is any indication of impairment. If such indication 10,000,000 10,000,000 exists, the recoverable amount is estimated as the net selling price or value in use, SCHEDULE 2 : RESERVES & SURPLUS whichever is higher. Impairment loss, if any, is recognized whenever carrying amount DEBENTURE REDEMPTION RESERVE Balance as per last Balance Sheet 12,943,462 12,943,462 exceeds the recoverable amount. Transferred from Profi t & Loss Account 3,932,338 - c) Depreciation / Amortization Less : Utilised during the year - - Depreciation has been provided on Written Down Value basis, at the rates specifi ed Balance at the end of the year 16,875,800 12,943,462 in Schedule XIV of the Companies Act, 1956. Profi t & Loss Account - - 16,875,800 12,943,462 d) Inventories SCHEDULE 3 : SECURED LOANS Inventories are valued as under : 1% Secured Redeemable Optionally Convertible Debentures 290,000,000 290,000,000 a) Completed Flats - At lower of Cost or Market value (Refer Note 3) Term Loan from State Bank of India 1,877,300,000 1,877,300,000 b) Construction Work-in-Progress - At cost (Secured by charge of development rights of company's 2,167,300,000 2,167,300,000 Construction Work in Progress includes cost of land, premium for development project Godrej Waterside IT Park at Kolkata) rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company. SCHEDULE 4 : FIXED ASSETS e) Revenue Recognition Particulars Gross Block Depreciation Net Block The Company is following the “Percentage of Completion Method” of accounting. As As at Upto As at As at per this method, revenue in Profi t & Loss Account at the end of the accounting year As at 31st Upto 31st 31st 31st is recognized in proportion to the actual cost incurred as against the total estimated 1st April Deduc- March 1st April For the March March March cost of projects under execution with the Company. 2009 Additions tions 2010 2009 Year 2010 2010 2009 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Determination of revenues under the percentage of completion method necessarily Land (Refer Note 2) 356,380 - - 356,380 - - - 356,380 356,380 involves making estimates by the Company, some of which are of a technical nature, Offi ce Equipments 427,943 197,462 - 625,405 103,993 66,651 170,644 454,761 323,950 concerning, where relevant, the percentages of completion, costs to completion, Furniture & Fixtures 948,920 - - 948,920 294,721 118,410 413,131 535,789 654,199 the expected revenues from the project/activity and the foreseeable losses to Computers 1,388,771 62,910 - 1,451,681 687,318 308,860 996,178 455,503 701,453 completion. Such estimates have been relied upon by the auditors. Motor Car 836,492 - - 836,492 363,472 122,465 485,937 350,555 473,020 Income from operation of commercial complexes is recognized over the tenure of the Total 3,958,506 260,372 - 4,218,878 1,449,504 616,386 2,065,890 2,152,988 2,509,002 lease/ service agreement. Previous Year 3,098,290 860,216 - 3,958,506 758,044 691,460 1,449,504 2,509,002 - Interest income is accounted on an accrual basis at contracted rates. As at As at f) Borrowing cost 31.03.2010 31.03.2009 Interest and Finance charges incurred in connection with borrowing of funds, Rupees Rupees which are incurred for the development of long term projects are transferred to SCHEDULE 5 : INVENTORY Construction Work in Progress / Due on Management Project, as a part of the cost of Construction work in progress 2,371,895,669 2,070,421,912 the projects at weighted average of the borrowing cost / rates as per Agreements 2,371,895,669 2,070,421,912 respectively. SCHEDULE 6 : SUNDRY DEBTORS Other borrowing costs are recognized as an expense in the period in which they are (UNSECURED, CONSIDERED GOOD) Due over Six months - - incurred. Others 353,254,319 245,317,300 g) Earnings Per Share (Includes unbilled revenue of Rs. 343,305,025/- (Previous 353,254,319 245,317,300 The basic earnings per share is computed using the weighted average number Year Rs. 206,398,200/-)) of common shares outstanding during the period. Diluted earnings per share is SCHEDULE 7 : CASH & BANK BALANCE computed using the weighted average number of common and dilutive common Cash 53,799 55,700 Balance with Scheduled Bank - On current Account 32,079,773 18,134,656 equivalent shares outstanding during the period, except where the results would be - On Fixed Deposit Accounts (Refer Note 2) 8,100,000 - anti-dilutive. 40,233,572 18,190,356 h) Foreign Currency Transactions SCHEDULE 8 : LOANS & ADVANCES Transactions in foreign currency are recorded at the exchange rates prevailing on the (Unsecured & considered good) date of the transaction. Assets and liabilities related to foreign currency transactions, Advances recoverable in cash or kind or for value to be received remaining unsettled at the year end, are transalated at the year end exchange - Secured (Secured against Bank / Corporate Guarantee) - 182,218,588 - Others 128,072,448 139,063,304 rates. Forward exchange contracts, remaining unsetteled at the year end, backed Interest accrued 11,235,463 5,025,931 by underlying assets or liabilities are also translated at year end exchange rates.The 139,307,911 326,307,823 premium payable on foreign exchange contracts is amortized over the period of the SCHEDULE 9 : CURRENT LIABILITIES contract. Exchange gains / losses are recognised in the Profi t and Loss Account. Sundry Creditors (Refer Note 4) 107,553,132 185,152,842 i) Provision for taxation Investor Education & Protection Fund - - Tax expense comprises both current and deferred tax. Advances received against Sale 4,602,544 - Other liabilities 562,654,237 246,123,870 Current tax is measured at the amount expected to be paid to the tax authorities, Interest Accrued but not due 36,423,139 33,813,139 using the applicable tax rates and tax laws. 711,233,052 465,089,851 Deferred tax is recognized on timing differences, being the differences between SCHEDULE 10 : PROVISIONS the taxable income and the accounting income that originate in one period and are Provision for Income Tax (Net of Advance Tax and TDS Rs. 1,465,607 7,417,080 capable of reversal in one or more subsequent periods. Deferred tax assets, subject 9,338,393/- (Previous Year 1,418,920/-)) to consideration of prudence, are recognized and carried forward only to the extent 1,465,607 7,417,080 that there is a reasonable certainty that suffi cient future taxable income will be SCHEDULE 11 : INCOME Interest received 3,662,561 3,169,314 available against which such deferred tax assets can be realized. The tax effect is 3,662,561 3,169,314 calculated on the accumulated timing difference at the year-end based on the tax Tax deducted at source 361,270 718,167 rates and laws enacted or substantially enacted on the balance sheet date. j) Provisions and Contingent Liabilities SCHEDULE 12 : COST OF SALES Opening Stock 2,070,421,912 992,961,241 Provisions are recognized in the accounts in respect of present probable obligations, Add : Expenditure during the period the amount of which can be reliably estimated. Construction Material & Labour 801,220,508 1,347,051,271 Contingent liabilities are disclosed in respect of possible obligations that arise Architect Fees 3,351,975 33,324,612 from the past events but their existence is confi rmed by the occurrence or non- Advertisment Expenses 3,656,835 15,713,436 occurrence of one or more uncertain future events not wholly within the control of Over heads 98,870,978 95,011,311 the Company. Interest 258,144,412 152,898,975 3,235,666,620 2,636,960,846 2) Contingent Liabilities: Less: Closing Stock 2,371,895,669 2,070,421,912 Cost of Sales 863,770,951 566,538,934 Matters As at 31st As at 31st March 2010 March 2009 SCHEDULE 13 : INTEREST AND FINANCIAL CHARGES (Rs.) (Rs.) Interest Paid - Bank 211,191,523 97,990,609 a) Guarantees given by Bank, counter guaranteed 81,00,000/- NIL Interest Paid - Others 50,615,450 58,077,680 by the Company (The said bank guarantee is Total Interest/Finance Charges Paid 261,806,973 156,068,289 issued by marking a lien on Fixed Deposit of Less: Transferred to Cost of Sales 258,144,412 152,898,975 Net Interest 3,662,561 3,169,314 Rs. 81,00,000/- held with State Bank of India)

174 Annual Report 2009–2010

3) Secured Loans 14) ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF THE SCHEDULE VI TO THE 29,000,000 1% Secured redeemable optionally Convertible Debentures of Rs. 10 each are COMPANIES ACT, 1956 redeemable at the end of the 7 years from the deemed date of allotment 4th July 2007 and Balance Sheet Abstract for the year ended 31st March, 2010 and Company’s General are secured to the extent of specifi c immovable assets of the Company disclosed under the Business Profi le head “Fixed Assets”. 1 Registration Details The Company has created a Debenture Redemption Reserve as required under Section 117 Registration No. U70100MH2005PTC154255 (C) of the Companies Act, 1956 to the extent of Profi t available for distribution. State Code 11 4) Due to Micro, Small and Medium Enterprises Balance Sheet Date 31st March, 2010 Disclosure of sundry creditors under current liabilities is based on the information available 2 Capital raised during the year (Amount in Rs. thousands) with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Public Issue Nil Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, 2010 to Micro, Small and Medium Enterprises on account of principal amount together with Rights Issue Nil interest and also during the previous year. Bonus Issue Nil 5) Expenditure in Foreign Currency: Private Placement - Capital Nil - Premium Nil Particulars Current Year Previous Year 3 Position of mobilisation and deployment of funds (Amount in Rs. thousands) Rs. Rs. Total Liabilities 2,906,874 Travelling Expenses - 9,244 Total Assets 2,906,874 Other Expenditure - 68,510,943 Sources of Funds Total - 68,520,187 Paid-up capital 10,000 6) Deferred Tax Reserves & Surplus 16,876 The Tax effect of signifi cant temporary differences that resulted in the deferred tax assets are : Secured Loans 2,167,300 Unsecured Loans - Particulars Current Year Previous Year Deferred Tax Liability - (Rs.) (Rs.) Application of Funds Assets Net Fixed Assets 2,153 - Depreciation on Fixed Assets 30,000 4,000 Investments - Deferred Tax Asset 30,000 4,000 Net Current Assets 2,191,993 7) Earnings per share Deferrred Tax Asset 30 Particulars Current Year Previous Year Misc. Expenditure - Rs. Rs. Accumulated Losses - Profi t / (Loss) for the Year as per Profi t & Loss Account 3,932,339 16,351,906 4 Performance of Company (Amount in Rs. thousands) Weighted average no. of Equity Shares outstanding 1,000,000 1,000,000 Turnover 873,870 Weighted average no. of Potential Equity Shares 30,000,000 30,000,000 Total Expenditure 868,050 outstanding Profi t/(Loss) before Tax 5,820 Basic Earnings Per Share Rs. 3.93 Rs.16.35 Profi t/(Loss) after Tax 3,932 Diluted Earnings Per Share Rs. 0.13 Rs. 0.55 Earning per Share (Basic) in Rs. 3.93 Nominal value of shares 10/- 10/- Earning per Share (Diluted) in Rs. 0.13 8) Lease Dividend Rate % - The Company’s signifi cant leasing arrangements are in respect of operating leases for 5 Generic Names of three principal products/services of Commercial premises. Lease expenditure for operating leases is recognized on a straight- Company N.A. line basis over the period of lease. The particulars of the premises taken under operating leases are as under : CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010 Particulars Current Year Previous Year Current Year Previous Year (Rs.) (Rs.) Rupees Rupees Future minimum lease payments under non-cancelable Cash Flow from Operating Activities operating leases Profi t for the Year 5,820,338 25,218,906 - Not later than 1 year 4,18,192 NIL Adjustment for: 9) Amounts paid to Auditors Depreciation 616,386 691,460 Particulars Current Year Previous Year Interest Paid 261,806,973 156,068,289 (Rs.) (Rs.) Interest Income (3,662,561) (3,169,314) Audit Fees 159,935 159,935 Operating Profi t before working capital changes 264,581,136 178,809,341 Audit under other Statutes 55,150 55,150 Adjustment for: Certifi cation 33,092 28,635 Change in Inventory (301,473,757) (1,077,460,671) Consultancy charges 40,388 33,708 Increase in Sundry Debtors (107,937,019) (245,317,300) Total 288,565 277,446 10) Segment Information Change in Loans & Advances 193,209,444 (60,208,861) As the company has only one business segment, disclosure under Accounting Standard 17 on Change in Current Liabilities / Provisions 195,527,751 (573,653,234) “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable. 243,907,555 (1,777,830,725) 11) Related Party Disclosure Taxes Paid (Net) (7,865,473) (718,167) 1. Relationships: Net Cash Flow from Operating activities 236,042,082 (1,778,548,892) (i) Shareholders in the Company : Godrej Properties Limited (GPL) holds 51% of Cash Flow from Investing Activities the share capital of the Company. GPL is the Subsidiary of Godrej Industries Purchase of Fixed Assets (260,372) (860,216) Limited (GIL). GIL is subsidiary of Godrej & Boyce Manufacturing Company Limited (G&B), the ultimate holding company. Interest Received (2,546,971) 718,167 (ii) Investing party in respect of which the reporting enterprise is an associate. Net Cash Flow from Investing Activities (2,807,343) (142,049) – HDFC Venture Trustee Company Limited Cash Flow from Financing Activities 2. The following transactions were carried out with the related party in the ordinary Increase in Secured Loan - 1,877,300,000 course of the business: Interest Paid (211,191,523) (80,942,500) Sr. Particulars G&B GPL HDFC Venture Trustee Net Cash Flow from Financing Activities (211,191,523) 1,796,357,500 No Company Limited Net Increase/ (Decrease) in Cash & Cash Equivalent 22,043,216 17,666,559 Cash & Cash Equivalent -Opening Balance 18,190,356 523,797 1. Expenses charged by other company 36,319,950 76,299,258 - Cash & Cash Equivalent -Closing Balance 40,233,572 18,190,356 21,457,218 136,308,667 - 2. Interest on Debentures - 1,479,000 1,421,000 Notes : - 11,507,835 11,056,548 1. The cash fl ow statement has been prepared under the ‘Indirect Method’ as set out in the 3. Advances Received - 763,850,000 - Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows by - 1,186,033,000 - operating, investing and fi nancing activities. 4. Advances repaid/given 13,708,809 500,752,038 - 2. Figures for the previous year have been regrouped/ restated wherever necessary to 5,440,871 1,674,651,328 - conform to this year’s classifi cation. 5. Outstanding payables (4,599,669) (556,396,071) (17,847,337) - (220,439,297) (16,568,438) For and on behalf of 6. Debentures Outstanding - 147,900,000 142,100,000 Kalyaniwalla & Mistry - 147,900,000 142,100,000 Chartered Accountants Figures in italics are for previous year 12) Previous year fi gures have been regrouped / rearranged where ever necessary to confi rm to Ermin K. Irani Milind S. Korde Naresh Nadkarni current year’s classifi cation. Partner Directors 13) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 Mumbai, Dated : May 14, 2010 to the extent not applicable has not been given.

175 Godrej Estate Developers Private Limited

BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2010

TO THE SHAREHOLDERS (iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate Your Directors have pleasure in submitting their Report together with the Audited Accounts for the accounting records in accordance with the provisions of the Companies Act, 1956, for period ended 31st March, 2010. safeguarding the assets of the Company and for preventing and detecting fraud and 1. FINANCIAL HIGHLIGHTS: other irregularities; The accounting results for the period ended 31st March, 2010 reveal that there is a defi cit (iv) that the Directors have prepared the annual accounts on a going concern basis. at the end of the period. 7. ADDITIONAL INFORMATION: 2. REVIEW OF OPERATIONS: (a) Since the company has no employees, the particulars of the employees to be disclosed The Company has executed an assignment agreement with Godrej Properties Limited for u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) undertaking development of their project called ‘Godrej Eternia’ at Chandigarh. Further HDFC Rules, 1975, are not given. PMS (under HDFC Asset Management Company Limited Portfolio Management Services Real (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Estate Portfolio-I, through its Portfolio Manager HDFC Asset Management Company Limited) Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, has purchased 49% equity shares in the Company. Post transfer of shares to HDFC PMS, Godrej 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Properties Limited now holds 51% stake in the Company. Directors) Rules, 1988 is provided hereunder: The Company is developing a commercial cum retail project and has commenced construction (i) Conservation of Energy: on site. Expenses on account of Energy are negligible. 3. DIVIDEND: (ii) Technology Absorption: As there are no profi ts, the Directors regret that no dividend can be recommended. It is an on going process. 4. DIRECTORS: (iii) Foreign Exchange Earning & Outgo: During the year Mr. Vipul Roongta was appointed as a nominee Director of HDFC Asset Management Company Limited w.e.f. March 20, 2010. The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure during the year. Mr. K. T. Jithendran retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. 8. ACKNOWLEDGEMENT: 5. APPOINTMENT OF AUDITORS: Your Directors take this opportunity to thank all the associates and authorities for their M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General co-operation. Meeting and are eligible for re-appointment for which they have given their consent. 6. DIRECTORS’ RESPONSIBILITY STATEMENT: For and on Behalf of the Board of Directors Your Directors confi rm: (i) that in the preparation of the annual accounts, the applicable accounting standards MILIND S. KORDE K.T. JITHENDRAN have been followed; Directors (ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year ended 31st March, 2010 and of the loss of the Company for that year; Mumbai, Dated: May 14, 2010 REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ ESTATE DEVELOPERS PRIVATE LIMITED 1. We have audited the attached Balance Sheet of GODREJ ESTATE DEVELOPERS PRIVATE term contracts undertaken and/or fi nanced by the Company, we have relied upon the LIMITED, as at 31st March, 2010, the Profi t and Loss Account and the Cash Flow Statement of management’s estimates of the percentage of completion, costs to completion and the Company for the year ended on that date annexed thereto. These fi nancial statements on the projections of revenues expected from projects owing to the technical nature are the responsibility of the Company’s management. Our responsibility is to express an of such estimates, on the basis of which profi ts/losses have been accounted, interest opinion on these fi nancial statements based on our audit. income accrued and realizability of the construction work-in-progress and project advances determined. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable f) In our opinion and to the best of our information and according to the explanations assurance about whether the fi nancial statements are free of material misstatement. An given to us, the said accounts read with the notes thereon, give the information audit includes examining, on a test basis, evidence supporting the amounts and disclosures required by the Companies Act, 1956, in the manner so required and give a true and in the fi nancial statements. An audit also includes assessing the accounting principles used fair view in conformity with the accounting principles generally accepted in India: and signifi cant estimates made by management, as well as evaluating the overall fi nancial i) in the case of the Balance Sheet, of the state of affairs of the Company as at statement presentation. We believe that our audit provides a reasonable basis for our 31st March, 2010; opinion. ii) in the case of the Profi t and Loss Account, of the loss of the Company for the 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central year ended on that date and, Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order. iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date. 4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: 5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that, none of the directors a) We have obtained all the information and explanations, which to the best of our is disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause knowledge and belief were necessary for the purposes of our audit. (g) of sub-section (1) of Section 274 of the Companies Act, 1956. b) In our opinion, proper books of account as required by law have been kept by the For and on behalf of Company so far as appears from our examination of such books. KALYANIWALLA & MISTRY c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with Chartered Accountants by this report are in agreement with the books of account. Firm Registration No. : 104607W

d) In our opinion, the Balance Sheet and the Cash Flow Statement dealt with by this ERMIN K. IRANI report comply with the accounting standards referred to in sub-section (3C) of section Partner 211 of the Companies Act, 1956. Membership No. 35646 e) Without qualifying our opinion, we draw attention to the fact that as referred to Place: Mumbai in Note 1(e) of Schedule 10-Notes to Accounts, in respect of projects under long Dated: May 14, 2010

176 Annual Report 2009–2010

ANNEXURE TO THE AUDITORS’ REPORT REFERRED TO IN PARAGRAPH (3) OF OUR REPORT OF EVEN DATE.

1) (a) The Company has maintained proper records showing full particulars, including quantitative Added Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and details and situation of fi xed assets. other statutory dues incurred during the year. According to the information and (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at explanations given to us, there are no undisputed dues, payable in respect of above as at periodical intervals. In our opinion, the period of verifi cation is reasonable having regard to 31st March, 2010 for a period of more than six months from the date they became payable. the size of the Company. (b) According to the information and explanations given to us, there are no dues outstanding of Sales (c) There is no disposal of fi xed assets during the year. Tax, Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute. 2) (a) The management has conducted physical verifi cation of inventory at reasonable intervals. 10) The Company’s accumulated losses at the end of the fi nancial year are less than fi fty percent of its net worth. In Current year the Company has not incurred cash losses, however, it has incurred cash (b) In our opinion, the procedures of physical verifi cation of inventory followed by the losses in the immediately preceding fi nancial year. management are reasonable and adequate in relation to the size of the company and the nature of its business. 11) According to the information and explanations given to us and based on documents and records produced to us, the Company has not defaulted in repayment of dues to bank. The Company does (c) The Company is maintaining proper records of inventory and no material discrepancies were not have any outstanding debentures or dues to fi nancial institutions. noticed on physical verifi cation. 12) According to the information and explanations given to us and based on the documents and records 3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other produced to us, the Company has not granted loans and advances on the basis of security by way of parties covered in the register maintained under Section 301 of the Companies Act, 1956. pledge of shares, debentures and other securities. (b) Consequently, the question of commenting on the rates of interest, terms and conditions 13) In our opinion and according to the information and explanations given to us, the nature of activities of the loans granted being prejudicial to the interests of the Company, receipt of regular of the Company does not attract any special statute applicable to chit fund and nidhi/mutual benefi t principal and interest and reasonable steps for recovery of the same does not arise. fund/societies. (c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other 14) In our opinion and according to the information and explanations given to us, the Company does not parties covered in the Register maintained under Section 301 of the Companies Act, 1956. deal in shares, securities, debentures and other investments. (d) Consequently, the question of commenting on the rates of interest and others terms and 15) In our opinion and according to the information and explanations given to us, the Company has not conditions of the loans taken being prejudicial to the interests of the Company, payment of given any guarantee for loans taken by others from banks or fi nancial institutions. regular principal and the interest does not arise. 16) Based on our examination and according to the information and explanations given to us, there were 4) In our opinion and according to the information and explanations given to us, there are adequate no term loans taken during the year. internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods. There are no sales of 17) According to the information and explanations given to us and an overall examination of the Balance service. During the course of our audit, we have not observed a continuing failure to correct major Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on weaknesses in internal controls. short term basis for long term investments. 5) (a) Based on the audit procedures applied by us and according to the information and explanations 18) The Company has not made any preferential allotment of shares to parties or companies covered in provided by the management, we are of the opinion that the particulars of contracts and the register maintained under Section 301 of the Companies Act, 1956. arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into 19) The Company did not issue any debentures during the year. the register required to be maintained under that section. 20) The Company has not raised any money through a public issue during the year. (b) The transactions made in pursuance of such contracts or arrangements, were made at prices 21) Based on the audit procedures performed and information and explanations given by the which are reasonable having regard to prevailing market prices at the relevant time, where management, we report that no fraud on or by the Company has been noticed or reported during comparable market price exist. the year. 6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other For and on behalf of provisions of the Companies Act, 1956, are not applicable. KALYANIWALLA & MISTRY 7) The Company has an internal audit system, which in our opinion is commensurate with the size of Chartered Accountants the Company and nature of its business. Firm Registration No. : 104607W 8) In our opinion and according to the information and explanations given to us, The Central Government has not been prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, ERMIN K. IRANI 1956, in respect of the activities carried on by the Company. Partner 9) (a) According to the information and explanations given to us and on the basis of our Membership No. 35646 examination of books of accounts, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Place: Mumbai Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Dated: May 14, 2010

BALANCE SHEET AS AT 31ST MARCH, 2010 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED Schedule As at As at 31ST MARCH, 2010 31.03.2010 31.03.2009 Schedule For the For the Period Rupees Rupees year ended 11.07.2008 to SOURCES OF FUNDS 31.03.2010 31.03.2009 SHAREHOLDERS’ FUNDS Rupees Rupees Share Capital 1 500,000 500,000 INCOME LOAN FUNDS — — Interest Income 37,849 — DEFERRED TAX LIABILITY 49,000 — (Tax deducted at Source Rs.2,090/- 549,000 500,000 [Previous Year Nil]) APPLICATION OF FUNDS EXPENDITURE Fixed Assets Cost of Sales 7 — — Gross Block 2 1,425,010 — Administration Expenses 8 — 43,375 Less : Depreciation 17,008 — Net Block 1,408,002 — Interest & Finance Charges 9 — — INVESTMENTS — — Depreciation 17,008 — Current Assets, Loans & Advances Preliminary Expenses written off 1,720 1,720 Inventory 3 265,201,213 — Profi t / (Defecit) for the Year 19,121 (45,095) Cash & Bank Balances 4 45,817,082 500,000 Provision for Taxation Loans & Advances 5 279,637,849 — 590,656,144 500,000 For Current Tax (3,000) — Less : Current Liabilities & Provisions For MAT Credit Entitlement 3,000 — Current Liabilities 6 591,603,880 60,575 For Deferred Tax (49,000) — 591,603,880 60,575 Profi t/ (Loss) After Tax (29,879) (45,095) Net Current Assets (947,736) 439,425 Defi cit Brought Forward (45,095) — Miscellaneous Expenditure (to the extent not written off or adjusted) (74,974) (45,095) Preliminary Expenditure 13,760 15,480 Earning per share Basic in Rs. (Refer Note 3) (0.60) (0.90) Profi t and Loss Account 74,974 45,095 549,000 500,000 Notes to Accounts & Accounting Policies 10 Notes to Accounts & Accounting Policies 10

The Schedules referred to above form an Signatures to the Balance Sheet The Schedules referred to above form an Signatures to the Profi t & Loss Account integral part of the Balance Sheet. and Schedules 1 to 6 and 10 integral part of the Profi t & Loss Account. and Schedules 7 and 10 As per our Report of even date. As per our Report of even date. For and on behalf of For and on behalf of KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY Chartered Accountants Chartered Accountants ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner Directors Partner Directors Mumbai, May 14, 2010 Mumbai, May 14, 2010

177 Godrej Estate Developers Private Limited

SCHEDULES FORMING PART OF THE ACCOUNTS As at As at For the For the Period 31.03.2010 31.03.2009 Year ended 11.07.2008 to Rupees Rupees 31.03.2010 31.03.2009 SCHEDULE 1 Rupees Rupees SHARE CAPITAL SCHEDULE 8 AUTHORISED ADMINISTRATION EXPENSES 50,000 Equity shares of Rs. 10/- each 500,000 500,000 Audit fees — 27,575 500,000 500,000 Other Operating Expenses — 15,800 ISSUED, SUBSCRIBED & PAID UP — 43,375 50,000 Equity shares of Rs. 10/- each, fully paid-up 500,000 500,000 SCHEDULE 9 (Of the above 25,500 (Previous year 50,000) shares are held INTEREST AND FINANCE CHARGES (NET) by Godrej Properties Limited, the Holding Company and its INTEREST PAID nominee) Interest Paid - Others 3,225,620 — 500,000 500,000 TOTAL INTEREST PAID 3,225,620 — Less: Transferred to Cost of Sales 3,225,620 — SCHEDULE 2 NET INTEREST — — FIXED ASSETS Particulars Gross Block Depreciation Net Block SCHEDULE 10 As at Additions Deduc- As at As at For As at As at As at NOTES TO ACCOUNTS AND ACCOUNTING POLICIES 1st tions 31st 1st the 31st 31st 31st 1) Accounting Policies April, March, April, Year March, March, March, 2009 2010 2009 2010 2010 2009 a. General Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. The fi nancial statements are prepared under the historical cost convention in Offi ce Equipment — 358,017 — 358,017 — 1,774 1,774 356,243 — accordance with Generally Accepted Accounting Principles in India, the Accounting Furniture & Fixtures — 58,213 — 58,213 — 376 376 57,837 — Standards issued by The Institute of Chartered Accountants of India and the provisions Computer — 299,015 — 299,015 — 8,313 8,313 290,702 — of the Companies Act, 1956. Motor Vehicle — 709,765 — 709,765 — 6,545 6,545 703,220 — b. Fixed Assets TOTAL — 1,425,010 — 1,425,010 — 17,008 17,008 1,408,002 Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Cost includes all incidental expenses related to acquisition and Previous Year — — — — — — — — — installation, other pre-operation expenses and interest in case of construction. As at As at Carrying amount of cash generating units/assets are reviewed at balance sheet 31.03.2010 31.03.2009 date to determine whether there is any indication of impairment. If such indication Rupees Rupees exists, the recoverable amount is estimated as the net selling price or value in use, SCHEDULE 3 whichever is higher. Impairment loss, if any, is recognized whenever carrying amount INVENTORY exceeds the recoverable amount. Construction Work-in-Progress 265,201,213 — c. Depreciation/Amortization 265,201,213 — Depreciation has been provided on Written Down Value basis, at the rates specifi ed in SCHEDULE 4 Schedule XIV of the Companies Act, 1956. CASH & BANK BALANCE d. Inventories Cash & Cheques-in-Hand 31,038 — Inventories are valued as under : Balance with Scheduled Bank a) Completed Flats - At lower of Cost or Market value - On Current Account 386,044 500,000 b) Construction Work-in-Progress - At Cost - On Fixed Deposit Accounts 45,400,000 — Construction Work in Progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects 45,817,082 500,000 undertaken by the Company. SCHEDULE 5 e. Revenue Recognition LOANS & ADVANCES The Company is following the “Percentage of Completion Method” of accounting. As (Unsecured & considered good unless otherwise stated) per this method, revenue in Profi t & Loss Account at the end of the accounting year Advances recoverable in cash or kind or for value to be 29,600,000 — is recognized in proportion to the actual cost incurred as against the total estimated received cost of projects under execution with the Company. Interest accrued 35,759 — Determination of revenues under the percentage of completion method necessarily Advance Tax and Tax Deducted at Source (Net of Provision for 2,090 — involves making estimates by the Company, some of which are of a technical nature, Tax and MAT Credit Entitlement of Rs. 3,000/-) concerning, where relevant, the percentages of completion, costs to completion, Deposits 250,000,000 — the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors. 279,637,849 — f. Borrowing Cost SCHEDULE 6 Interest and Finance charges incurred in connection with borrowing of funds, which CURRENT LIABILITIES are incurred for the development of long term projects are transferred to Construction Sundry Creditors (Refer Note 2) 514,348 13,300 Work in Progress as a part of the cost of the projects at weighted average of the Investor Education and Protection Fund — — borrowing cost. Other Liabilities 591,089,532 47,275 g. Provision for taxation 591,603,880 60,575 Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, For the For the Period using the applicable tax rates and tax laws. Year ended 11.07.2008 to Deferred tax is recognized on timing differences, being the differences between 31.03.2010 31.03.2009 the taxable income and the accounting income that originate in one period and are Rupees Rupees capable of reversal in one or more subsequent periods. Deferred tax assets, subject SCHEDULE 7 to consideration of prudence, are recognized and carried forward only to the extent COST OF SALES that there is a reasonable certainty that suffi cient future taxable income will be Opening Stock — — available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax Add : Stock-In-Trade Acquired during the year 259,531,383 — rates and laws enacted or substantially enacted on the balance sheet date. Advertisment Expenses 505,541 — h. Earning Per Share Overheads 1,938,669 — The basic earnings per share is computed using the weighted average number of Interest 3,225,620 — common shares outstanding during the period. Diluted earnings per share is computed 265,201,213 — using the weighted average number of common and dilutive common equivalent shares Less : Closing Stock 265,201,213 — outstanding during the period, except where the results would be anti-dilutive. Cost of Sales — —

178 Annual Report 2009–2010

SCHEDULES FORMING PART OF THE ACCOUNTS ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF i. Foreign Currency Transactions THE SCHEDULE VI TO THE COMPANIES ACT, 1956 Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, Balance Sheet Abstract for the Year ended 31st March, 2010 and remaining unsettled at the year end, are transalated at the year end exchange rates. Company’s General Business Profi le Forward exchange contracts, remaining unsetteled at the year end, backed by 1. Registration Details underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortized over the period of the Registration No. U70102MH2008PTC184595 contract. Exchange gains/losses are recognised in the Profi t and Loss Account. State Code 11 Balance Sheet Date 31st March, 2010 j. Provisions And Contingent Liabilities 2. Capital raised during the year (Amount in Rs. Thousands) Provisions are recognized in the accounts in respect of present probable obligations, Public Issue Nil the amount of which can be reliably estimated. Rights Issue Nil Contingent liabilities are disclosed in respect of possible obligations that arise from Bonus Issue Nil the past events but their existence is confi rmed by the occurrence or non-occurrence Private Placement - Capital Nil of one or more uncertain future events not wholly within the control of the Company. - Premium Nil There is no contingent liability as on the balance sheet date. 3. Position of mobilisation and deployment of funds (Amount in Rs. Thousands) k. Miscellaneous Expenditure Total Liabilities 592,153 Miscellaneous expenditure is amortized over a period of 10 years. Total Assets 592,153 2) Due to Micro, Small and Medium Enterprises Sources of Funds Disclosure of sundry creditors under current liabilities is based on the information available Paid-up Capital 500 with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Reserves & Surplus — Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, Secured Loans — 2010 to Micro, Small and Medium Enterprises on account of principal amount together with Unsecured Loans — interest and also during the previous year. Deferred Tax Liability 49 3) Earnings per share Application of Funds Net Fixed Assets 1,408 Particulars Current Year Previous Year Investments — (Rs.) (Rs.) Net Current Assets (948) Loss for the Year as per Profi t & Loss Account (Rs.) (29,879) (45,095) Misc. Expenditure 14 Accumulated Losses 75 Weighted average no. of equity shares outstanding 50,000 50,000 4. Performance of Company (Amount in Rs. Thousands) Basic/Diluted earnings per share (Rs.) (0.60) (0.90) Turnover — Nominal value of shares (Rs.) 10/- 10/- Total Expenditure 19 Profi t/(Loss) before Tax 19 4) Deferred Tax Profi t/(Loss) after Tax (30) The Tax effect of signifi cant temporary differences that resulted in the deferred tax Earning per Share in Rs. (0.60) liabilities are: Dividend Rate % — 5. Generic Names of three principal Particulars Current Year Previous Year products/services of Company N.A. (Rs.) (Rs.) Liabilities CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010 - Depreciation on Fixed Assets (49,000) — Current Period Previous Year Deferred Tax Liabilities (49,000) — Rupees Rupees Cash Flow from Operating Activities 5) Amounts paid to Auditors: Profi t/(Loss) for the Year 19,121 (45,095) Particulars Current Year Previous Year Adjustment for: (Rs.) (Rs.) Depreciation 17,008 — Audit Fees 159,935 27,575 Interest Paid 3,225,620 — Preliminary Expenses 1,720 1,720 Total 159,935 27,575 Interest Received (37,849) — 6) Segment Information Operating Profi t/(Loss) before working capital changes 3,225,620 (43,375) As the company has only one business segment, disclosure under Accounting Standard 17 Adjustment for: on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not Change in Inventory (265,201,213) — applicable. Change in Loans & Advances (279,600,000) — 7) Related Party Disclosure Changes in Current Liabilities & Provisions 588,317,685 60,575 Related party disclosures as required by AS-18, “Related Party Disclosures”, are given Preliminary Expenses Incurred — (17,200) below: Net Cash Flow from Operating Activities 46,742,092 — 1. Relationships: Taxes Paid (Net) 2,090 — (i) Shareholders (the Godrej Group Shareholding) in the Company Godrej Properties Net Cash Flow from Operating Activities 46,740,002 — Limited (GPL) holds 51% in the Company. GPL is the Subsidiary of Godrej Cash Flow (used) from Financing Activities Industries Limited (GIL). GIL is subsidiary of Godrej & Boyce Manufacturing Purchase of Fixed Assets (1,425,010) — Company Limited (G&B), the ultimate holding company. Issue of Share Capital — 500,000 (ii) Investing party in respect of which the reporting enterprise is an associate. – Interest Received 2,090 — HDFC PMS. Net Cash Flow from Financing Activities (1,422,920) 500,000 2. The following transactions were carried out with the related party in the ordinary Net Increase in Cash & Cash Equivalent 45,317,082 500,000 course of the business: Cash & Cash Equivalent - Opening Balance 500,000 — Sr. Particulars Current Year Previous Year Cash & Cash Equivalent - Closing Balance 45,817,082 500,000 No (Rs.) (Rs.) Notes : GPL GPL 1. The cash fl ow statement has been prepared under the ‘Indirect Method’ as set out in 1 Issue of Equity Share Capital — 500,000 the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows by 2 Expenses charged by other companies 264,496,384 18,000 operating, investing and fi nancing activities. 3 Advances received 329,645,356 — 2. Figures for the previous year have been regrouped / restated wherever necessary to conform to this year's classifi cation. 4 Advances repaid 4,825 — 5 Repayment of Expenses Charged 4,660,439 — 6 Purchase of Fixed Assets 1,425,010 — For and on behalf of 7 Outstanding payables 590,596,924 18,000 KALYANIWALLA & MISTRY 8) Previous year fi gures have been regrouped/rearranged where ever necessary to confi rm to Chartered Accountants current year’s classifi cation. ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN 9) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 Partner Directors to the extent not applicable has not been given. Mumbai, Dated : May 14, 2010

179 Godrej International Limited

DIRECTORS’ REPORT The directors aim to maintain the management policies which have resulted in the company’s and of the profi t or loss of the company for that period. In preparing these accounts, the directors substantial growth in recent years. They consider that the next year will show a further signifi cant are required to: growth in sales. – select suitable accounting policies and then apply them consistently; Principal activities – make judgements and estimates that are reasonable and prudent; The company’s principal activity during the year continued to be trading worldwide in vegetable – prepare the accounts on the going concern basis unless it is inappropriate to presume that oils. The recovery in commodity prices improved the market outlook through the year. The company the company will continue in business. has reported higher sales by 4.06% and higher profi ts of 9.08%. The directors are responsible for keeping adequate accounting records that disclose with reasonable Directors accuracy at any time the fi nancial position of the company and enable them to ensure that the accounts comply with the Isle of Man Companies Acts 1931 to 2004. They are also responsible for The following persons served as directors during the year: safeguarding the assets of the company and hence for taking reasonable steps for the prevention 2010 2009 and detection of fraud and other irregularities. Adi B Godrej (Indian) 1 1 Disclosure of information to auditors Nadir B Godrej (Indian) - - Each person who was a director at the time this report was approved confi rms that: Aspi K Bardy (Indian) (Deceased December 27, 2009) - - – so far as he is aware, there is no relevant audit information of which the company’s auditor Dorab E Mistry (British) - - is unaware; and Andrew B Byers - - – he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company’s auditor is aware Lynsey Elliott (British) - - of that information. Small company provisions The Directors acknowledge the contribution made by the late Mr Aspi K Bardy right from the This report has been prepared in accordance with the provisions of the Isle of Man Companies Acts establishment of the company, who sadly passed away during the year. 1931 to 2004 applicable to companies subject to the small companies regime. Directors’ responsibilities This report was approved by the board on April 28, 2010. The directors are responsible for preparing the report and accounts in accordance with applicable law and regulations. Mr D Mistry Company law requires the directors to prepare accounts for each fi nancial year. Under that law Director the directors have elected to prepare the accounts in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The Date : April 28, 2010 accounts are required by law to give a true and fair view of the state of affairs of the company

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF GODREJ INTERNATIONAL LIMITED

We have audited the accounts of Godrej International Limited for the year ended March 31, 2010 – give a true and fair view of the state of the company’s affairs as at March 31, 2010 and of which comprise the Profi t and Loss Account, the Balance Sheet, the Cash Flow Statement, the its profi t for the year then ended; Statement of Total Recognised Gains and Losses and the related notes. The fi nancial reporting – have been properly prepared in accordance with United Kingdom Generally Accepted framework that has been applied in their preparation is applicable law and the Financial Reporting Accounting Practice applicable to Smaller Entities; and Standard For Smaller Entities (effective April 2008) (United Kingdom Generally Accepted Accounting – have been prepared in accordance with the requirements of the Isle of Man Companies Acts Practice applicable to Smaller Entities). 1931 to 2004. This report is made solely to the company’s members, as a body, in accordance with the Isle of Man Opinion on other matters prescribed by the Isle of Man Companies Acts 1931 to 2004 Companies Acts 1931 to 2004. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors’ report and for In our opinion the information given in the Directors’ Report for the fi nancial year for which the no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility accounts are prepared is consistent with the accounts. to anyone other than the company and the company’s members as a body, for our audit work, for Matters on which we are required to report by exception this report, or for the opinions we have formed. We have nothing to report in respect of the following matters where the Isle of Man Companies Respective responsibilities of directors and auditors Acts 1931 to 2004 requires us to report to you if, in our opinion: As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible - adequate accounting records have not been kept, or returns adequate for our audit have not for the preparation of the accounts and for being satisfi ed that they give a true and fair view. Our been received from branches not visited by us; or responsibility is to audit the accounts in accordance with applicable law and International Standards - the accounts are not in agreement with the accounting records and returns; or on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices - certain disclosures of directors’ remuneration specifi ed by law are not made; or Board’s (APB’s) Ethical Standards for Auditors. - we have not received all the information and explanations we require for our audit; or the Scope of the audit opinion directors were not entitled to prepare the accounts and the Directors’ Report in accordance An audit involves obtaining evidence about the amounts and disclosures in the accounts suffi cient with the small companies regime. to give reasonable assurance that the accounts are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are (Senior Statutory Auditor) Heritage House appropriate to the company’s circumstances and have been consistently applied and adequately for and on behalf of Keith Woods & Co.LLC Ramsey Road disclosed; the reasonableness of signifi cant accounting estimates made by the directors; and the Accountants and Statutory Auditors Peel overall presentation of the accounts. April 28, 2010 Isle of Man Opinion on the accounts IM5 1RH In our opinion the accounts: BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010

2010 2009 2010 2009 Notes US $ Rs. Lac US $ Rs. Lac Notes US $ Rs. Lac US $ Rs. Lac Fixed assets Investments 3 3,055,000 1,371.70 3,055,000 1,549.50 Turnover 120,267,513 54,000.11 115,504,010 58,583.63 Current assets Cost of sales (118,446,906) (53,182.66) (113,823,249) (57,731.15) Debtors 4 3,301,638 1,482.44 3,225,756 1,636.10 Cash at bank and in hand 2,635,139 1,183.18 2,651,558 1,344.87 Gross profi t 1,820,607 817.45 1,680,761 852.48 5,936,777 2,665.61 5,877,314 2,980.97 Administrative expenses (283,324) (127.21) (277,280) (140.64) Creditors: amounts falling due within one year 5 (15,000) (6.74) (7,574) (3.84) Operating profi t 1,537,283 690.24 1,403,481 711.85 Net current assets 5,921,777 2,658.88 5,869,740 2,977.13 Total assets less current Interest receivable 7,000 3.14 31,561 16.01 liabilities 8,976,777 4,030.57 8,924,740 4,526.63 Interest payable 2 (13,592) (6.10) (55,431) (28.11) Creditors: amounts falling due after more than one year ——(1,478,655) (749.97) Profi t on ordinary activities before Net assets 8,976,777 4,030.57 7,446,085 3,776.65 taxation 1,530,691 687.28 1,379,611 699.74 Capital and reserves Tax on profi t on ordinary activities —— —— Called up share capital 6 3,805,361 1,708.61 3,805,361 1,930.08 Profi t and Loss Account 7 5,171,416 2,321.97 3,640,724 1,846.58 Profi t for the fi nancial year 1,530,691 687.28 1,379,611 699.74 Shareholders’ funds 8,976,777 4,030.57 7,446,085 3,776.65 Note: The Rupee equivalent of US $ have been given at the closing exchange rates as on March 31, Note: The Rupee equivalent of US $ have been given at the closing exchange rates as on March 31, 2010 (US $ 1 = Rupees 44.90) and March, 2009 (US $ 1 = Rupees 50.72) 2010 (US $ 1 = Rupees 44.90) and March, 2009 (US $ 1 = Rupees 50.72) Mr. D Mistry Director Approved by the board on April 28, 2010

180 Annual Report 2009–2010

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED MARCH 31, 2010

2010 2009 On April 4, 2001, the company invested US$1million in 495,000 C Bay Systems Ltd. (C Bay) Notes US $ Rs. Lac US $ Rs. Lac 8% Series E Cumulative Convertible Redeemable Preferred Stock of US$ 0.1 per share at a Profi t for the fi nancial year 1,530,691 687.28 1,379,611 699.74 price of US$ 0.2 per share. As a result of organisational restructuring of C Bay, the company now holds 721,195 common stock in C Bay Systems USA Ltd. and 1,422,392 shares in C Bay Total recognised gains and losses Systems Holdings Limited BVI. related to the year 1,530,691 687.28 1,379,611 699.74 On March 8, 2004, the company invested US$2,055,000 in equity shares of Newmarket Limited, Note: The Rupee equivalent of US $ have been given at the closing exchange rates as on March 31, a company incorporated in the Isle of Man. This represents approximately 18% of the issued 2010 (US $ 1 = Rupees 44.90) and March, 2009 (US $ 1 = Rupees 50.72) share capital of Newmarket Limited.

4. Debtors 2010 2009 CASH FLOW STATEMENT FOR THE YEAR ENDED US $ Rs. Lac US $ Rs. Lac MARCH 31, 2010 Trade debtors (106,340) (47.75) 3,322,526 1,685.19 2010 2009 Amounts owed by US $ Rs. Lac US $ Rs. Lac group undertakings Cash generated from operations and undertakings in which the company Operating profi t 1,537,283 690.24 1,403,481 711.85 has a participating Reconciliation to cash generated from interest 108,203 48.58 108,764 55.17 operations: Other debtors 3,299,775 1,481.60 (210,946) (106.99) Increase in debtors (3,301,638) (1,482.44) (1,017,763) (516.21) Prepayments and accrued income ——5,412 2.74 Increase in creditors 15,000 6.74 7,365 3.74 3,301,638 1,482 3,225,756 1,636.10 (1,749,355) (785.46) 393,083 199.37 Cash from other sources 2010 2009 Interest received 7,000 3.14 (23,870) (12.11) 5. Creditors: amounts falling due within US $ Rs. Lac US $ Rs. Lac one year 7,000 3.14 (23,870) (12.11) Trade creditors ——(2,425) (1.23) Application of cash Accruals and Interest paid (13,592) (6.10) 19,167 9.72 deferred income ——9,999 5.07 Other creditors 15,000 — — (13,592) (6.10) 19,167 9.72 15,000 — 7,574 3.84 Net decrease in cash (1,755,947) (788.42) 388,380 187.26 6. Share capital 2010 2009 2010 2009 Cash at bank and in hand less overdrafts No. No. US $ Rs. Lac US $ Rs. Lac at April 1 ———— Allotted, called up Cash at bank and in hand less and fully paid: overdrafts at March 31 (1,755,947) (788.42) 388,380 187.26 Ordinary shares of Consisting of: £1 each 2,355,000 2,355,000 3,805,361 1,708.61 3,805,361 1,930.08

Cash at bank and in hand 2,635,139 1,183.18 2,651,558 1,344.87 7. Profi t and Loss Account 2010 2009 Note: The Rupee equivalent of US $ have been given at the closing exchange rates as on March 31, US $ Rs. Lac US $ Rs. Lac 2010 (US $ 1 = Rupees 44.90) and March, 2009 (US $ 1 = Rupees 50.72) At April 1, 2009 3,640,725 1,634.69 2,261,113 1,146.84 Profi t for the year 1,530,691 687.28 1,379,612 699.74 NOTES TO THE ACCOUNTS FOR THE YEAR ENDED At March 31, 2010 5,171,416 2,321.97 3,640,725 1,846.58 MARCH 31, 2010 8. Controlling party In April 2001 Godrej Soaps Limited, the owner of all the company's share capital, was 1. Accounting policies demerged into two separate entities: Godrej Consumer Products Limited and Godrej Industries Basis of preparation Limited. The assets and liabilities of Godrej Soaps Limited were divided between the two new companies. The entire share capital of Godrej International Limited is now held by Godrej The accounts have been prepared under the historical cost convention and in accordance Industries Limited. with the Financial Reporting Standard for Smaller Entities (effective April 2008). Godrej Industries Limited is currently listed on the Mumbai Stock Exchange as well as the Turnover National Stock Exchange of India. Turnover represents the invoiced value of goods supplied by the company, net of value added The fi nancial statements of Godrej Industries Limited are available from : The Secretary, tax and trade discounts. Godrej Industries Limited, Eastern Express Highway, Vikhroli, Mumbai 400079, India. Turnover is attributable to one continuing activity, the trading of vegetable oils. Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the Balance Sheet date. All differences are taken to the Profi t and Loss Account.

2. Interest payable 2010 2009 US $ Rs. Lac US $ Rs. Lac Interest payable 13,592 6.10 55,431 28.11 3. Investments Other investments US $ Rs. Lac Cost At April 1, 2009 3,055,000 At March 31, 2010 3,055,000

Other investments 2010 2009 US $ Rs. Lac US $ Rs. Lac Unlisted investments 3,055,000 1,371.70 3,055,000 1,549.50

181 Godrej International Limited

NOTES

182 Godrej Industries Limited Registered Offi ce : Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai – 400 079. ATTENDANCE SLIP

Folio No...... Client ID No...... DP ID No......

I hereby record my presence at the TWENTY-SECOND ANNUAL GENERAL MEETING of the Company to be held at Y.B. Chavan Centre, Nariman Point, Mumbai - 400 021 on Tuesday, July 27, 2010 at 4.30 p.m.

...... Name of attending Member/Proxy Member’s/Proxy’s Signature (To be signed at the time of handing over this slip) Notes : 1. Shareholder/Proxyholder wishing to attend the Meeting must bring the Attendance Slip to the Meeting and hand-over at the entrance duly signed. 2. Shareholder/Proxyholder should bring his/her copy of the Annual Report for reference at the Meeting.

Godrej Industries Limited Registered Offi ce : Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai – 400 079. PROXY FORM Folio No...... Client ID No...... DP ID No...... I/We ...... of ...... being a member/ members of the abovementioned Company, hereby appoint ...... or failing him ...... as my/our proxy to vote for me/us on my/our behalf at the TWENTY-SECOND ANNUAL GENERAL MEETING of the Company to be held on Tuesday, July 27, 2010 at 4.30 p.m. and at any adjournment thereof. This form is to be used in favour of the resolution(s)...... /against the resolution/s...... Unless otherwise instructed the proxy will act as he thinks fi t. Signed this ...... day of ...... 2010. Affi x Re 1/- Revenue Signature ...... Stamp Note : Proxy Forms must reach the Company’s Registered Offi ce not less than 48 hours before the Meeting.

INNOVATING FOR A BRIGHTER FUTURE. www.godrejinds.com GODREJ INDUSTRIES LT D. GODREJ INDUSTRIES LIMITED

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