/GIL_annualreport_2002_03

Annual Report 2002-2003

GODREJ INDUSTRIES LIMITED DIRECTORS

Chairman

A.B. Godrej J.N. Godrej

Managing Director

N.B. Godrej S.A. Ahmadullah V.M. Crishna K.K. Dastur N.C. Gawankar V.N. Gogate K.N. Naoroji K.N. Petigara F.P. Sarkari V.F. Banaji

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

T.A. Dubash

Director (Marketing)

M. Eipe

Executive Director & President (Chemicals)

M.P. Pusalkar

Executive Director & President (Foods Div.)

C.K. Vaidya

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

COMPANY SECRETARY S.K. Bhatt

AUDITORS Kalyaniwalla & Mistry, Chartered Accountants

1

Industries Limited REGISTERED OFFICE

FACTORIES

:

:

Vikhroli

Valia

Wadala

Mandideep

BRANCHES

CONTENTS

:

Delhi

Page Nos.

Financial Highlights ........................................................

3

Notice ..............................................................................

4-10

Kolkata

Directors’ Report along with Management Discussion and Analysis Report .................................. 11-16

Chennai

Report on Corporate Governance ............................... 17-19 Shareholders' Information ............................................ 20-21 Auditors’ Report ............................................................. 22-23 Accounts ......................................................................... 24-40 Consolidated Accounts .................................................. 41-54 Statement Pursuant to Section 212 ............................

London

55

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

BANKERS

:

REGISTRARS

:

Goldmohur Foods & Feeds Limited ............................ 65-70 Godrej Properties & Investments Limited ................... 71-75 Girikandra Holiday Homes & Resorts Ltd. ................. 76-77 Godrej Remote Services Limited .................................. 78-81 Godrej Global Solutions Limited .................................. 82-83 Ensemble Holdings & Finance Limited ....................... 84-87 Godrej International Limited ......................................... 88-89 Godrej Global Mid East FZE ......................................... 90-93 Proxy Form ....................................................................

2

95

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

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

Phone : 022 - 2518 8010, 2518 8020, 2518 8030 Fax : 022 - 2518 8068/2518 8074 Burjorjinagar, Plot No. 3, Village Kanerao, Taluka - Valia, District Bharuch, Gujarat 393 135.

Phone : 02643 - 270756 to 270760 Fax : 02643 - 270018 L.M.Nadkarni Marg Near M.P. T. Hospital Wadala (East), Mumbai - 400 037 Phone : 022 - 2412 6320/23, 2414 6296 Fax : 022 - 2412 6204, 2416 4599 Plot No. 5, New Industrial Area No. 1 Mandideep, District Raisen Bhopal - 462 046, MP Phone : 07480 - 233405 - 6 Fax : 07480 - 233409 Laxmi Insurance Building 2/2-A, Asaf Ali Road, New Delhi 110 002.

Phone : 011 - 2323 3775, 2323 3777, 2323 6776 Fax : 011 - 2323 3778 Block GN, Sector-V, Salt Lake City, Kolkata 700 091.

Phone : 033 - 2357 3556, 2357 3555 Fax : 033 - 2357 3945 "Kings Cross" New # 102, (Old # 81) Pasum Pon Muthuramalinga Thevar Road (Chamiers Road) Chennai - 600 028.

Phone : 044 - 24315721, 24315722 Fax : 044 - 24315723 284A, Chase Road, Southgate London N14 - 6HF Phone : (004420) - 88860145 Fax : (004420) - 88869424 Central Bank of India Bank of India State Bank of India HDFC Bank Ltd. Citibank N.A. Computech Sharecap Ltd. 147, Mahatma Gandhi Road Opp. Jehangir Art Gallery Fort, Mumbai 400 023.

Phone: 022 - 2267 1824-26 Fax : 022 - 2267 0380 E-Mail : helpdesk@computechsharecap.com

Annual Report 2002-2003 GODREJ INDUSTRIES LIMITED – FINANCIAL HIGHLIGHTS (Rs. lac) 2002-03

2001-02

2000-01

1999-00

1998-99

2919 21511

3699 21030

5979 27559

5979 25679

6313 22051

14815 7432 3466 50143

15051 13456 1347 54583

16701 9547 — 59786

22375 11881 — 65914

33312 13131 — 74807

28130 18646 2944 423

29099 14619 9987 878

33799 17075 8076 836

32815 19043 12666 1390

32309 24081 17489 928

50143

54583

59786

65914

74807

Total Income Expenditure other than Interest and Depreciation

67780 57737

53465 43408

79786 65935

71620 57218

90981 85894

Profit before Interest, Depreciation and Tax Interest (net)

10043 2024

10057 3218

13851 3711

14402 4774

5087 5976

Profit/(Loss) before Depreciation and Tax Depreciation

8019 2211

6839 2154

10140 2531

9628 2342

(889) 2104

Profit/(Loss) before Tax and exceptional items Exceptional items - expense Provision for Current Tax

5808 — 421

4685 624 150

7609 3194 350

7286 547 641

(2993) — —

Net Profit/(Loss) after Tax Provision for Deferred Tax

5387 2119

3911 923

4065 —

6098 ––

(2993) ––

Adjustment in respect of prior years -(Income)/Expense

(153)

(121)

(25)

(90)

383

Net Profit/(Loss) after taxes and adjustments

3421

3109

4090

6188

(3376)

BALANCE SHEET SOURCES OF FUNDS : Shareholders’ Funds Share Capital Reserves & Surplus Loan Funds Secured Loans Unsecured Loans Deferred Tax Liability APPLICATION OF FUNDS : Fixed Assets Investments Net Working Capital Miscellaneous Expenditure INCOME AND PROFIT FIGURES :

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

Total Expenditure 2002-2003

Total Income 2002-2003

Break-up of Total Expenditure Rs. Lac

Break-up of Total Income Rs. Lac Chemicals

41258

Foods

16520

Estate Management

2172

Processing Charges

3914

Medical Diagnostics Income from Mfg. & Other Business Operations Income from Financial Operations Others Total

714 673 2240 289 67780

Materials

40866

Staff Costs

6251

Depreciation

2211

Interest

2024

Other Operating Expenses

10620

Total

61972

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Industries Limited NOTICE TO SHAREHOLDERS NOTICE is hereby given that the FIFTEENTH ANNUAL GENERAL MEETING of the members of GODREJ INDUSTRIES LIMITED will be held on Monday, August 25, 2003 at 3.00 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 Profit & Loss Account for the year ended March 31, 2003, the Balance Sheet as at that date, the Auditors’ Report thereon and the Directors’ Report.

2.

To declare dividend for the financial year ended March 31, 2003.

3.

To appoint a Director in place of Ms. Tanya A. Dubash, who retires by rotation and being eligible, offers herself for re-appointment.

4.

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

5.

To appoint Auditors to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting, and to authorize the Board of Directors of the Company to fix their remuneration. M/s. Kalyaniwalla & Mistry, Chartered Accountants, the retiring Auditors are eligible for re-appointment.

SPECIAL BUSINESS : 6.

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

7.

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

8.

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

9.

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

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

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

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

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13.

14.

15.

16.

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

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

To consider and if thought fit, to pass with or without modification, the following resolution 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 modification or reenactment thereof for the time being in force and as may be enacted from time to time (hereinafter referred to as ‘the Act’), the Company be and is hereby authorised to further invest upto Rs.60 crore (Rupees Sixty Crore only) in addition to the amount already invested, by way of subscription, purchase or otherwise in securities of Godrej Consumer Products Limited, 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, exceeds the limits laid down by the Act. RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorised to take from time to time all decisions and steps necessary or expedient or proper in respect of the above investment including the timing, the type, the amount and other terms and conditions of such investment and varying the same through transfer, sale, disinvestment or otherwise, either in part or in full, as it may, in its absolute discretion, deem appropriate.

To consider and if thought fit, to pass with or without modification, the following resolution as a SPECIAL RESOLUTION :RESOLVED pursuant to the provisions of Section 61 of the Companies Act, 1956, (including any statutory modification(s) or re-enactment thereof for the time being in force and as may be enacted hereafter), the Securities and Exchange Board of India (Delisting of Securities) Guidelines, 2003 ("the Guidelines") and subject to such approvals, permissions and sanctions as may be necessary and subject to such considitions and modifications as may be prescribed or imposed while granting such approvals, permissions and sanctions, consent of the Company be and is hereby accorded for voluntary delisting of the equity shares of the Company, from all Stock Exchanges other than from The Stock Exchange, Mumbai and The National Stock Exchange of India Ltd., i.e. delisting from The Stock Exchange, Ahmedabad, The Delhi Stock Exchange Association Limited, Madras Stock Exchange Limited and The Calcutta Stock Exchange Association Limited, in terms of Clause 5 and 5.2 of the Guidelines, to enable the Company to save listing fees and other administrative costs.

FURTHER RESOLVED that the Board of Directors of the Company be and is hereby authorised to do all such acts as may be necessary to give effect to the above.

To consider and, if thought fit, to pass with or without modification, the following resolution as an ORDINARY RESOLUTION :RESOLVED THAT in supersession of the resolution passed at the General Meeting of the Company held on August 22, 1994, consent of the Company be and is hereby accorded to the Board of Directors of the Company to contribute to charitable, benevolent and other funds not directly relating to the business of the Company or the welfare of its employees, such amounts from time to time, as the Board of Directors of the Company may, in their discretion, deem fit, not exceeding Rs. 2.00 crore (Rupees Two Crore only) in any financial year commencing April 1, 2003 notwithstanding that the aggregate of such contributions are in excess of the limits laid down in Section 293(1)(e) or any other sections of the Companies Act, 1956.

By Order of the Board of Directors S. K. BHATT General Manager (Corporate Services) & Company Secretary

Mumbai, May 28, 2003 Registered Office : Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai 400 079.

Annual Report 2002-2003 NOTES :

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

1.

The relative Explanatory Statement in respect of business under Item Nos. 6 to 16 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.

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

The Register of Members and Share Transfer Books of the Company will be closed from August 19, 2003 to August 25, 2003 for ascertaining the names of the shareholders to whom the dividend which shall be declared at the AGM is payable.

In respect of shares held in electronic form, the dividend will be payable on the basis of beneficial ownership as per details furnished by National Securities Depository Ltd. and Central Depository Services (India) Ltd., for this purpose.

3.

4.

1.

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

2.

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

3.

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

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

Pursuant to Section 205A (5) of the Companies Act, 1956, as amended, any money transferred to the Unpaid Dividend Account of the Company which remains unpaid or unclaimed for a period of seven years from the date the dividend became due for payment shall be transferred by the Company to the Investor Education and Protection Fund of the Central Government and the Shareholders shall not be able to claim any unpaid dividend from the said fund or from the Company thereafter.

Members who have not encashed the dividend warrant(s) so far, Final Dividend 1996 and 1997 or any subsequent dividend payment(s) are requested to make their claims to the Company immediately. Please note that as per Section 205C of the Companies Act, 1956, no claim shall lie against the Company or the said Fund in respect of individual amounts which remain unclaimed or unpaid for a period of seven years from the date dividend became due for payment and no payment shall be made in respect of any such claims.

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 Office of the Company to facilitate clarifications during the meeting.

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

II.

III.

In accordance with Article 127 of the Articles of association of the Company, Mr. N.C. Gawankar retires by rotation at the ensuing Annual General Meeting. In view of his advanced age, Mr. N.C. Gawankar, has not offered himself for re-appointment. The Board proposes that the vacancy caused by his retirement shall not be filled up.

Mr. N.C. Gawankar has been on the Board of the company since 1995 and the Board records its appreciation for the contribution made by him during his tenure with the Company.

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

Classified into four categories A, B, C and D as detailed below : (1)

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

Housing : A.

Unfurnished residential accommodation, and House Rent Allowance equivalent to 30% of Basic salary.

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

B. (2)

Furnishing at residence subject to a ceiling of Rs.2,00,000/- for a period of 5 years in accordance with the Company’s Scheme.

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

(3)

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

(4)

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

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

Category B (1)

Company’s contributions towards Provident Fund, Superannuation Fund or Annuity Fund as per the Rules framed under the Company’s relevant Scheme. These shall be subject to a ceiling of the amount upto which the said contributions are either singly or put together not taxable, under the Income Tax Act, 1961.

(2)

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

(3)

Earned/privilege leave, on full pay and allowance, not exceeding 30 days in a financial year. Encashment of leave will be permissible in accordance with the Rules specified by the Company. Casual/Sick leave as per the rules of the Company.

Item No. 8 and 9 Mr. V.F. Banaji joined the Company on February 10, 2003 as Executive Director – Designate (Corporate HR). He has taken over the Corporate HR function from Mr. C.K. Vaidya.

Perquisites and other matters :

Category A

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

Item No. 7

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

Item No. 6 In accordance with Article 127 of the Articles of Association of the Company, Mr. K.N. Naoroji retires by rotation at the ensuing Annual General Meeting. In view of his advanced age, Mr. K.N. Naoroji, has not offered himself for re-appointment. The Board proposes that the vacancy caused by his retirement shall not be filled up.

Mr. K.N. Naoroji has been on the Board of the Company since 1995 and the Board records its appreciation for the contribution made by him during his tenure with the Company.

Basic Salary :

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Industries Limited Category C The following shall not be included in the computation of perquisites :(1)

Provision for use of Company’s cars.

(2)

Provision of free telephone facilities or reimbursement of telephone expenses at residence, including payment of local calls and long distance official calls.

Category D - Loans (a)

Granting of housing loans according to Company’s Scheme subject to Central Government’s approval, if applicable.

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

1.

2.

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

3.

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

Notes : I.

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

II.

Notwithstanding the foregoing, where in any Financial Year during the currency of the tenure of the Whole-time Director, the Company has no profits or its profits 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 specified above are the maximum limits and the Remuneration Committee/ Board may in its absolute discretion pay to Whole-time 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-codification 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 notifications issued thereunder.

V.

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

VI.

The Whole-time Director is appointed by virtue of his employment in the Company and his appointment is subject to the provisions of Section 283(1) of the Act, while at the same time the Whole-time Director is liable to retire by rotation.

The appointment is terminable by giving three months’ notice in writing on either side.

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

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

I.

Basic Salary : In the scale of Rs.1,40,000/- to Rs.3,00,000/- per month. The Remuneration Committee of the Board of Directors will determine the amount of salary payable to Ms. T.A. Dubash depending on her performance, profitability of the Company and other relevant factors.

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

II.

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

III.

Perquisites and other matters : Classified into four categories A, B, C and D:

Category A (1)

Housing : A.

Unfurnished residential accommodation, the perquisite value of which, shall be calculated in accordance with the Income-tax Rules, 1961, and House Rent Allowance equivalent to 30% of Basic salary.

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

B. (2)

Furnishing at residence subject to a ceiling of Rs.2,00,000/- for a period of 5 years in accordance with the Company’s Scheme.

Medical Reimbursement :

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

a)

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

b)

Reimbursement of hospitalisation, nursing home and surgical charges for the Whole-time Director and her family subject to a limit of Rs.1 lac per financial year which can be accumulated according to the Company’s Rules.

Since Mr. V.F. Banaji was appointed as Additional Director, he holds office upto the date of this Annual General Meeting, in terms of the provisions contained in Section 260 of the Companies Act, 1956. Notice under Section 257 of the Companies Act, 1956 has been received from a member signifying intention to propose the appointment of the aforesaid person as Director retiring by rotation at this Annual General Meeting. Resolution 8 is sought to be passed for approval of appointment of Mr. V.F. Banaji as director retiring by rotation.

c)

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

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

(3)

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

(4)

Club :

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

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

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

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

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

Category B

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

(1)

Company’s contributions towards Provident Fund, Superannuation Fund or Annuity Fund as per the Rules framed under the Company’s relevant Scheme. These shall be subject to a ceiling of the amount upto which the said contributions are either singly or put together not taxable, under the Income Tax Act, 1961.

(2)

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

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

Item No. 11 Ms. T.A. Dubash was appointed as a whole-time director designated as Director (Marketing) and her term expires on March 31, 2004. It is proposed to re-appoint Ms. T.A. Dubash

6

Annual Report 2002-2003 rules of the Company. If the Whole-time Director is reappointed, gratuity will be paid at the end of her tenure with the Company.

(3)

3.

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

Earned/privilege leave, on full pay and allowance, not exceeding 30 days in a financial year. Encashment of leave will be permissible in accordance with the Rules specified by the Company. Casual/Sick leave as per the rules of the Company.

Basic Salary :

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

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

(1)

Provision for use of Company’s cars for official use.

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

(2)

Provision of free telephone facilities or reimbursement of telephone expenses at residence, including payment of local calls and long distance official calls.

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

Category C

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

Category D - Loans

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

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

II.

Notes : I.

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

II.

Notwithstanding the foregoing, where in any Financial Year during the currency of the tenure of the Whole-time Director, the Company has no profits or its profits 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.

IV.

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

In the event of any re-enactment or re-codification 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 notifications issued thereunder.

V.

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

VI.

The appointment is terminable by giving three months’ notice in writing on either side.

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

III.

Category A (1)

Housing : A.

Unfurnished residential accommodation, and House Rent Allowance equivalent to 30% of Basic salary.

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

B. (2)

Furnishing at residence subject to a ceiling of Rs.2,00,000/- for a period of 5 years in accordance with the Company’s Scheme.

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

(3)

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

(4)

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

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

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

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

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

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

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

(5)

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

Item Nos.10, 12 and 13

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

The tenure of the following Whole-time Directors with the Company expires on March 31, 2004.

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

Category B

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

(1)

Company’s contributions towards Provident Fund, Superannuation Fund or Annuity Fund as per the Rules framed under the Company’s relevant Scheme. These shall be subject to a ceiling of the amount upto which the said contributions are either singly or put together not taxable, under the Income Tax Act, 1961.

(2)

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

(3)

Earned/privilege leave, on full pay and allowance, not exceeding 30 days in a financial year. Encashment of leave will be permissible in accordance with the Rules specified by the Company. Casual/Sick leave as per the rules of the Company.

Mr. M.P. Pusalkar – Executive Director & President (Foods Division) It is also proposed to seek approval of shareholders for re-appointment and remuneration of Mr. V.F. Banaji, Mr. M. Eipe and Mr. M.P. Pusalkar for a further period of three years from April 1, 2004 to March 31, 2007, on the remuneration, terms and conditions given below:1.

2.

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

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

7

Industries Limited Category C The following shall not be included in the computation of perquisites :(1) Provision for use of Company’s cars for official use.

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

Category D - Loans (a) Granting of loans according to Company’s Scheme subject to Central Government’s approval, if applicable. (b) Continuation of Loans already availed : Housing Loan to Mr. M.P. Pusalkar as on 28.05.03 – Rs.5,69,290/Contingency Loan to Mr. M.P. Pusalkar as 28.05.03 – Rs.81,663/Notes : I. Unless otherwise stipulated, for the purpose of the above, the perquisites shall be evaluated as per Income Tax Rules wherever actual cost cannot be determined.

II. Notwithstanding the foregoing, where in any Financial Year during the currency of the tenure of the Whole-time Directors, the Company has no profits or its profits 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 specified above are the maximum limits and the Remuneration Committee/ Board may in its absolute discretion pay to Whole-time Directors 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-codification 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 notifications issued thereunder.

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

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

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

Your Board is of the opinion that considering the qualifications and experience of Mr. V.F. Banaji, Mr. M. Eipe and Mr. M.P. Pusalkar, their re-appointment as Whole-time Directors of the Company will be beneficial to the Company.

The particulars given above constitute the abstract of the terms of the agreements which is required to be given to every member under the provisions of Section 302 of the Companies Act, 1956.

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

The Board of Directors of the Company recommends the passing of the resolutions as set out at Item nos. 10, 12 and 13 of the Notice.

Mr. V.F. Banaji, Mr. M. Eipe and Mr. M.P. Pusalkar may be deemed to be interested in the resolution. None of the other Directors of the Company are concerned or interested in the resolution.

Item No.14 Particulars of the company where investment is proposed to be made : Name of the Company & address of Regd. Office

Principal business of the Company

Purpose of investment

Source of funds

Nature of concern or interest of directors

Godrej Consumer Products Limited Pirojshanagar, Eastern Express Highway, Vikhroli, Mumbai 400 079

Manufacturing and marketing of fast moving consumer products such as soaps, detergents, toiletries personal care products, etc.

A good investment opportunity

Internal generation of funds/ borrowings.

Mr A.B. Godrej, Mr. J.N. Godrej, Mr. N.B. Godrej, Mr. K.K. Dastur, Mr.M. Eipe, Ms. T.A.Dubash, Mr. V.N. Gogate, Mr. V.M. Crishna, Mr. M.P. Pusalkar, Mr. K.N. Petigara. Mr. F.P. Sarkari and Mr. S.A. Ahmadullah may be deemed to be interested in this resolution on account of their being directors and/or shareholders in Godrej Consumer Products Ltd. None of the other Directors of the Company are concerned or interested in the resolution.

8

The Board of Directors of the Company recommends the passing of the resolution as set out at Item no. 14 of the Notice.

Item No. 15 The Company is at present listed on the Stock Exchange, Mumbai, The National Stock Exchange of India Ltd., The Stock Exchange, Ahmedabad, The Delhi Stock Exchange Association Limited, Madras Stock Exchange Limited and The Calcutta Stock Exchange Association Limited.

There has been negligible trading in equity shares of the Company on The Stock Exchange, Ahmedabad, The Delhi Stock Exchange Association Limited, Madras Stock Exchange Limited and The Calcutta Stock Exchange Association Limited. It is, therefore, proposed to voluntarily delist the equity shares of the Company from these Stock Exchanges, pursuant to the provisions contained in Securities and Exchange Board of India (Delisting of Securities) Guidelines, 2003 ("the Guidelines") so as to enable saving of listing fees and other administratrive costs. The Guidelines require that prior approval of shareholders by special resolution should be taken.

The Company shall continue to be listed on the Stock Exchange, Mumbai and the National Stock Exchange, which have nationwide trading terminals. In terms of Clause 5.2 of the Guidelines, the Company is not required to offer exit opportunity to the shareholders situated in the regions of the Stock Exchanges from where the equity shares of the Company are proposed to be delisted and hence the same is not being made.

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

The Board of Directors of the Company recommends the passing of the resolution as set out at Item No. 15 of the Notice.

Item No. 16 Section 293(1)(e) of the Companies Act, 1956 provides that no Company shall contribute to charitable and other funds not directly relating to the business of the Company or the welfare of the employees, any amounts the aggregate of which will, in any financial year, exceed Rs. 50,000/- or 5% of average net profits as determined in accordance with the provisions of Section 349 & 350 during the three financial years immediately preceding, whichever is greater. The Company's accumulated loss u/s. 349 of the Companies Act, 1956 as on March 31, 2003 is Rs. 22.00 crore.

The shareholders of the Company had, in their meeting held on August 22, 1994 approved a limit of Rs. 50.00 lac p.a., u/s. 293(1)(e) of the Companies Act, 1956 for giving donations to charitable trusts, etc. It is proposed to increase this limit to Rs. 2.00 crore p.a. w.e.f. April 1, 2003. The Board of Directors of the Company recommends the passing of the resolution as set out at Item No. 16 of the Notice.

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

By Order of the Board of Directors S. K. BHATT General Manager (Corporate Services) & Company Secretary Mumbai, May 28, 2003.

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

Statement In Terms of Schedule XIII of the Companies Act, 1956 relating To Remuneration Payable to the Whole-Time Directors I.

General Information 1.

Nature of Industry – Oleo-Chemicals, Edible oils, Fats, and Processed Foods 2.

Date or expected date of commencement of commercial production – The Company was incorporated on March 7, 1988 as a Public Limited Company.

3.

Financial performance based on given indicators – as per the audited financial results for the year ended March 31, 2003 (Rs. lac) Sales of products and services 65250 Other Income 2530 Total income 67780 Total expenditure other than interest & depreciation 57737 Profit Before Depreciation, Interest and Tax 10043 Depreciation 2211 Profit Before Interest and Tax 7832 Interest and financial charges (net) 2024 Profit Before Tax 5808 Provision for Current Tax 421 Profit after Current Tax 5387 Provision for Deferred Tax 2119 Adjustments in respect of prior years – net income 153 Profit After Tax 3421

Annual Report 2002-2003 4.

5.

II.

Rupees

Export performance and net foreign exchange earned for the year ended March 31, 2003 (Rs. lac) FOB value of Exports 9719 Interest income 28

Description Limits Basic salary range per month In the range of Rs.1,10,000/- to Rs.3,00,000/p.m. The present monthly basic salaries are given below : Mr. V.F. Banaji – Rs.1,40,000/Ms. T.A. Dubash – Rs.1,40,000/Mr. M. Eipe – Rs.1,70,000/Mr. M.P. Pusalkar – Rs.1,12,000/-

Foreign investments as on March 31, 2003 In shares of Godrej International Ltd., the Company’s wholly owned subsidiary

961

In equity shares of Compass Connections Ltd.

124

In Optionally Convertible Subordinated Notes of CBay Systems Ltd.

390

Performance linked bonus

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

HRA

Unfurnished residential accommodation and House Rent Allowance equivalent to 30% of basic salary Or House Rent Allowance equivalent to 55% of basic salary As per rules of the Company

Information about the appointee 1.

Background details : l

l

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

l

Mr. Mathew Eipe is B.Tech. (Chem.) from IIT, Mumbai, PGDM from IIM, Kolkata and has been with the Company for over 25 years.

Before taking over the Chemicals Division, he handled various responsibilities in Sales, Marketing and Operations of the Company.

l

2.

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

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

Past remuneration :

Perquisites 5.

Comparative remuneration profile with respect to industry, size of the company, profile of the position and person : Taking into consideration the size of the Company, the profile of the Appointees, the responsibilities shouldered by them and the industry benchmarks, the aforesaid remuneration is commensurate with the remuneration package paid to similar senior level appointees in other companies.

6.

Pecuniary relationship directly or indirectly with the Company, or relationship with the managerial personnel, if any : Besides the remuneration proposed, Executive Directors do not have any other pecuniary relationship with the Company and its managerial personnel.

However, certain amounts are outstanding in respect of housing loans / contingency loans, availed earlier by the Appointees for which, monthly deductions are being made in accordance with the rules applicable to the employees of the Company.

III.

Other information 1.

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

Mr. V.F. Banaji* Ms. T.A. Dubash Mr. M. Eipe Mr. M.P. Pusalkar

Salary (Rs.)

Perquisites (Rs.)

Total (Rs.)

204000 3958820 3991220 2904640

89429 722077 625580 308494

293429 4680897 4616800 3213134

The Company was incorporated in March 1988 as Gujarat Godrej Innovative Chemicals Ltd. (GGICL), which was engaged in the manufacture of industrial chemicals like Alpha Olefin (AO), Alpha Olefin Sulphonate (AOS), Fatty Alcohols, Fatty Acids, Glycerin etc. This company was incurring losses since its inception due to the fact that the project was capital intensive in nature and the manufacture of AO and AOS was not having much industrial application in our country then. This resulted in heavy accumulated losses u/s 349 of the Companies Act, 1956.

Also, the Company is depreciating its assets on the straight line method at the rates provided in Schedule XIV. But for the purpose of managerial remuneration, as per section 350, the depreciation is considered on the written down value method, at the rates specified in Schedule XIV, and these rates are higher and therefore there is higher depreciation charge and lower profits.

*Mr. V.F. Banaji joined the Company w.e.f February 10, 2003 3.

4.

Job profile and suitability : l

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

l

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

l

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

l

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

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

Brief particulars of the remuneration are given below :

Reasons of loss or inadequate profits :

2.

Steps taken or proposed to be taken for improvement : The Company has been concentrating its efforts on expanding both domestic and export markets. The Company has also taken steps for better working capital management, and lowering borrowing costs. These have contributed to reduction of interest cost and improved the operating profits. This is evident with the turnaround of the Company achieved after the loss it posted for the year ended March 31,1999. The Company earned a PAT of Rs.3421 lac during the year ended March 31, 2003 and the accumulated loss under section 349 of the Companies Act, 1956 as at the year end reduced to Rs.2042 lac from Rs.8210 lac as on March 31, 2002. The progressive improvement in the performance of the Company and reduction in the accumulated losses under section 349 is evident from the following table.

9

Industries Limited Details of the Directors seeking appointment/reappointment at the forthcoming Annual General Meeting (In pursuance of Clause 49 of the Listing Agreement)

(Rs. lac) Financial Year 1998-99 1999-00 2000-01 2001-02 2002-03 3.

Accumulated losses u/s 349 -20,124 -18,515 -12,219 -8,210 -2,042

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

Expected increase in productivity and profits in measurable terms The total income and PBIT of each of our segments for the year ended March 31, 2003 as compared to the previous year are given below : Total Income Sr. No. 1.

2.

3.

4.

(Rs. lac)

Segment Chemicals Foods Estate Management Others Total

2002-03 44882 17590 2177 2864 67513

2001-02 38930 9652 2178 2650 53410

2002-03 5649 87 1537 1798 9071 (2024)

2001-02 4612 1219 1649 679 8159 (3218)

(1086) 5961

(759) 4182

Profit Before Interest and Tax Sr. No. 1.

2.

3.

4.

(Rs. lac)

Segment Chemicals Foods Estate Management Others Total Profit Before Interest & Tax Less: interest Unallocated expenses (net), prior period items Profit Before Tax

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

By Order of the Board of Directors S. K. BHATT General Manager (Corporate Services) & Company Secretary Mumbai, May 28, 2003.

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

10

Directorship in other companies : None Chairman/Member of other committees of Companies : None Ms. T. A. Dubash (34) is A.B. with Economics & Political Science from Brown University, Rhode Island, USA and has been with the Company since 1994.

Directorship in other companies : Chairperson in: Godrej Remote Services Ltd., Ensemble Holdings & Finance Ltd. Director in Tahir Properties Ltd., Girikandra Holiday Homes and Resorts Ltd., Godrej Global Mideast FZE, Godrej Holdings Pvt. Ltd. Chairman/Member of other committees of Companies : Member- Shareholders’ Committee: Godrej Industries Ltd. Mr. Mathew Eipe (50) is B.Tech. (Chem.) from IIT, Mumbai, PGDM from IIM, Kolkata and has been with the Company for over 25 years. Before taking over the Chemicals Division, he handled various responsibilities in Sales, Marketing and Operations of the Company.

Directorship in other companies : Director in Ensemble Holdings & Finance Ltd. Chairman/Member of other committees of Companies : None M.P. Pusalkar (54) is B.Tech (Elec) from Indian Institute of Technology (Kanpur) and MMS from JBIMS, Mumbai and has been in the Godrej group for over 26 years. Earlier he was the Managing Director of Godrej Foods Ltd. (GFL). He has handled various functions in manufacturing, marketing, etc. Upon the demerger of the Foods division of GFL into the Company Mr. Pusalkar became President & Executive Director (Foods Division) of the Company with effect from 1st April 2002.

Directorship in other companies : Godrej Foods Ltd. Chairman/Member of other committees of Companies : Member- Audit Committee : Godrej Foods Ltd. Member- Shareholders’ Grievance Committee: Godrej Foods Ltd.

Annual Report 2002-2003 DIRECTORS' REPORT FOR THE YEAR ENDED MARCH 31, 2003 Dear Shareholders, Your Directors have pleasure in submitting the Annual Report along with the Audited Accounts for the year ended March 31, 2003.

During the year, Godrej Tea Ltd., a new company co-promoted by the Godrej group in the branded Tea/coffee business commenced operations. It has launched ‘Godrej Noble House’ & ‘Godrej Chai House’ brands of tea during the year.

REVIEW OF OPERATIONS Your Company’s performance during the year as compared with that during the previous year is summarized below.

(Rs. lac) Year ended March, 31 2003 2002

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

Sale of products and services Other Income

65250 2530

51195 2270

Total Income Total expenditure other than Interest and Depreciation

67780 57737

53465 43408

Profit before Interest, Depreciation and Taxation Depreciation

10043 2211

10057 2154

Profit before Interest and Taxation Interest and Financial Charges (net)

7832 2024

7903 3218

Profit before Tax before Exceptional items Exceptional items - net expense

5808 –

4685 624

Profit before Taxation Provision for Current Tax

5808 421

4061 150

Profit after Current Tax Provision for Deferred Tax

5387 2119

3911 923

Profit after Current and Deferred Taxation Adjustments in respect of prior years – net income Surplus brought forward

3268 153 9234

2988 121 6745

Profit after Tax available for appropriation Appropriation Your Directors recommend appropriation as under: Dividend on Equity Shares Tax on distributed profits Transfer to General Reserve Surplus Carried Forward

12655

9854

973 125 342 11215

370 – 250 9234

Total Appropriation

12655

9854

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

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

MANAGEMENT DISCUSSION & ANALYSIS There is a separate section on Management Discussion and Analysis in this Annual Report, which, inter alia, covers the following : • • • • • • • •

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

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

SUBSIDIARY AND ASSOCIATE COMPANIES Your Company has interests in several industries including animal feeds, poultry and agro-products, property development, household insecticides, tea, infotech, etc. through its subsidiary/associate companies.

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

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

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

Godrej International Limited (GINL) has posted a net profit of US$ 219771 as compared to US$ 70331 in the previous year. GINL has proposed a final dividend of 7 US cents per ordinary share of £1 aggregating to US$ 105350, as against ‘nil’ in the previous year.

During the year, your Company infused equity of US$ 300000 in GINL. Godrej Global MidEast FZE (GGME) has posted a loss of AED 2480513 as against a loss of AED 2580710 in the previous year. During the year GINL infused further equity of US$ 750000 in GGME, out of which US$ 100000 was by conversion of loan.

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

SHARE CAPITAL The Board of Directors had, at its meeting held on February 22, 2002, approved a Scheme of Arrangement under Section 391 of the Companies Act, 1956, for the purchase of equity shares of your Company up to a maximum of 40% of its paid up equity capital, at a price of Rs.18/- per share, and the subsequent cancellation of the shares so purchased. Subsequently, the shareholders and creditors of the Company approved the Scheme at their Meeting held on April 6, 2002, and the High Court, Mumbai approved the Scheme vide its order dated June 6, 2002. Trading in equity shares of the Company had been stopped from July 17, 2002 to January 15, 2003 and from July 18, 2002 to February 24, 2003 by The Stock Exchange, Mumbai and National Stock Exchange respectively, while the Scheme was in progress, in terms of the Court Order.

Your Company has completed the purchase of the shares pursuant to the Scheme. The Non-promoter shareholding after the aforesaid purchase is 11.39% of the total capital.

The paid-up share capital of your Company stands reduced to Rs. 2919 lac (4,86,41,942 equity shares of the Face Value of Rs. 6/- each) from Rs. 3698 lac (6,17,10,218 equity shares of the Face Value of Rs. 6/- each).

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

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

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

11

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

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

RESEARCH AND DEVELOPMENT

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

During the year under review, the R&D efforts of the Company focused on improving quality of the products and setting new benchmarks on cost per unit and purity. This resulted in development of new processes for the manufacture of surfactants, pure unsaturated fatty acids, treatment of sweet water and de-poisoning oils for premium fatty acids.

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

INFORMATION SYSTEMS Your Company has launched its ambitious e-CRM initiative for the Chemical business whereby Customers would be able to get proactive information on the status of their dispatches, order details etc. directly on the net. This initiative is a clear manifestation of the importance your Company attaches to Customer service and is expected to significantly reduce the time the customer currently spends with GIL in conducting business transactions.

The ultimate aim of this initiative is to retain existing Customers and get a greater share of their business.

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

AUDITORS

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

AUDIT COMMITTEE The Audit Committee, which was constituted pursuant to the provisions of Section 292A of the Companies Act, 1956 and the listing agreement, has reviewed the Accounts for the year ended March 31, 2003.

DIRECTORS’ RESPONSIBILITY STATEMENT Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm : a.

that in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same;

b.

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

c.

that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company, for preventing and detecting fraud and other irregularities;

d.

that they have prepared the annual accounts on a going concern basis.

ENVIRONMENT AND SOCIAL CONCERN Your Company continues its efforts for the betterment of the environment. Your Company’s factory at Valia has completed the initial audit for ISO 14001 certification and final audit is scheduled in the month of May 2003. Your Company has been actively engaged in promoting education of school children in Kanerao Village. As a part of its social commitment, Valia Factory continued with provision of medical facilities and drinking water to the Village, and contributed towards the development of a sports complex at Ankleshwar.

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

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

FIXED DEPOSITS Your Company has stopped accepting Fixed Deposits from the public during the year.

Public Deposits of an aggregate amount of Rs. 2242 lac which have matured during the year have been paid.

DEPOSITORY SYSTEM Your Company’s equity shares have been made available for dematerialisation through National Securities Depository Limited & Central Depository Services (India) Limited. As of March 31, 2003, 98.05% of the equity shares of your Company were held in demat form.

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

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

12

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

ADDITIONAL INFORMATION Annexure B to this Report gives information in respect of conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo, required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forms a part of the Directors’ Report.

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

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

ACKNOWLEDGEMENT Your Directors thank the Union Government, the Government of Maharashtra, Madhya Pradesh, Karnataka, Gujarat as also all the Government agencies, banks, financial institutions, shareholders, customers, employees, fixed deposit holders, vendors and other related organisations, who, through their continued support and co-operation, have helped as partners in your Company’s progress.

Mumbai, May 28, 2003

For and on behalf of the Board of Directors A.B. Godrej Chairman

Annual Report 2002-2003 ANNEXURE "A" FORMING PART OF DIRECTORS' REPORT MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENTS

CHEMICALS DIVISION

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

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

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

The Chemicals division operates in the oleo-chemical and surfactants industry with a balanced blend of domestic and international operations. The division continued its de-bottlenecking, quality improvement and cost cutting initiatives with vigour during the year to improve throughput and profitability. These initiatives coupled with efficient sourcing, coverage of raw materials provides competitive advantage to the operations of this division.

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

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE GIL’s total income for 2002-03 was Rs. 67780 lac as compared to Rs. 53465 lac in the previous year. Your Company recorded a Profit before Tax of Rs. 5808 lac and a Profit after Tax of Rs. 3268 lac in 2002-03, as compared to Rs. 4061 lac and Rs. 2988 lac, respectively in 2001-02.

•

•

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

15.39% 8.90% 5.01% 21.06% 12.85% 5.87 5.87

19.64% 7.93% 5.84% 18.02% 12.53% 5.08 5.08

Glycerin

Debt/Equity

0.87

1.20

Interest coverage

3.87

2.26

Financial risk ratios

The segment-wise break-up of sales, PBIT (including prior period income) and capital employed for the year under review is as follows: (Amounts in Rs. lac) Segment Revenue (Income from Operations)

2002-03

2001-02

Chemicals Foods Estate Management Others

44882 17590 2177 2864

38930 9652 2178 2650

Total

67513

53410

5649 87 1537 1798 9071 (2024) (1086)

4612 1219 1649 679 8159 (3218) (759)

5961

4182

Chemicals Foods Estate Others

20618 4340 3100 21920

27897 6160 2438 18458

Total

49978

54953

Segment Results (Profit before interest & tax) Chemicals Foods Estate Others Profit Before Interest and Tax Less: Interest (Net) Unallocated expenses (Net), Prior period items Profit Before Tax

3.

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

2001-02

SEGMENTAL PERFORMANCE

2.

Fatty Acids

2002-03 Profitability ratios (%) PBDIT/Sales PBT/Sales PAT/Sales Return on Capital Employed Return on Net Worth Basic EPS (Rs.) Diluted EPS (Rs.)

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

1.

Product category-wise performance is reviewed below:

Segment Capital Employed

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

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

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

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

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

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

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

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

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

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

Edible Oils & Fats The turnover during the year under review was Rs. 14091 lac. Intense competition from local players impacted the majority in this business. The division continued to focus on increasing margins and selling only in profitable areas. At the end of the year, unbranded products were introduced to effectively counter the impact of excise duty imposition on branded packs.

13

Industries Limited Blended oils were introduced by your company during the year to offer competitively priced edible oil to the consumer.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

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

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

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

The Corporate Audit & Assurance Dept. issues well documented Operating Procedures and Authorisations, which have adequate built-in controls, right at the beginning of any activity. Adequate checks are built in to cover all monetary transactions with proper delineation of authority.

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

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

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

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

Processed Foods

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

ESTATE MANAGEMENT The total income from this business was Rs. 2172 lac as compared to Rs. 2178 lac in the previous year.

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

MEDICAL DIAGNOSTICS The medical diagnostics division achieved a turnover of Rs. 714 lac for the year, recording a growth of 39% in value terms over the last year. The focus of the division was on efficient working capital management and expansion in the product portfolio to include rapid test kits, to improve profitability. New rapid test kits for HIV were launched successfully. The division plans to consolidate the turnaround achieved this year, and improve profitability further by introducing more rapid test kits and equipment.

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

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

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

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

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

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

14

OPPORTUNITIES AND THREATS The continuing addition of new capacity in the Chemicals industry is likely to bring in challenges by creating a situation of supply possibly overtaking demand over the medium term. The effort of the joint product application group in developing customized and value added products and identifying newer applications for existing products is expected to help converting this into a potential opportunity.

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

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

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

Macro-economic factors like natural calamities, unexpected political developments, economic slow down, etc., are likely to affect the industry as also the businesses of your Company.

Apart from the above, legislative changes (e.g. tax, duty and levy structures - both local and central) could also have their impact on the business performance.

OUTLOOK FOR 2003-04 The outlook for the various product categories of the Chemicals division remains positive.

The falling vegetable oil prices, tightness in the supply position of some of the finished products augurs well for the business and also opens up opportunities for growth in niche markets.

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

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

Annual Report 2002-2003 ANNEXURE "B" FORMING PART OF THE DIRECTORS’ REPORT INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO A.

Conservation of Energy

I.

(A)

(B)

(i)

Installation of bigger capacity air compressor in replacement of two compressors, to enable saving of power.

(ii)

Installation of bigger capacity I D fan in hydrogen plant in place of two fans, to save power.

(iii)

Modification of chilling units in flakers to get power savings.

(iv)

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

(v)

Installation of heat exchangers in FSP to recover the heat from the Fat Splitting Process.

(vi)

Substitution of LDO by Piped Natural Gas as a measure of Fuel Cost Reduction and also as an initiative under ISO-14001 to reduce the pollution in the atmosphere.

(vii)

Reduction in Self consumption of Steam in Co-Generation plant.

(viii)

Study on Heat Recovery from the steam distribution system.

(ix)

Use of Fatty acid Pitch as fuel Boilers.

(x)

Replacement of old motors by energy efficient motors.

iii)

Own generated through Steam Turbine Generator Co-generation Units (kWh in lac) KWH per SM3 of N. Gas Cost (Rs. in lac) Rate per Unit (Rs.) Fuel Oil (LSHS, FO, SKO and LDO) Total Quantity (KL) Total Amount (Rs. in lac) Rate per unit (Rs. per litre) Natural Gas Total Quantity (NM3 lac) Total Amount (Rs. in lac) Rate per unit (Rs. per NM3) Pitches Total Quantity (MT) Total Cost (Rs. in lac) Rate per unit (Rs. per MT)

b)

This Year

Previous Year

344.37 2.15 1249.28 3.63

327.52 2.60 944.87 2.88

12475.32 1423.4 11.41

8907.68 1060.79 11.83

98.50 979.20 9.94

89.40 673.60 7.53

1736.00 91.43 5266.49

1322.00 60.89 4606.09

Consumption per unit of production Natural Gas (NM3/MT) 2002-03 2001-02

Electricity (kWh/MT) 2002-03 2001-02

Furnace Oil (Litre/MT) 2002-03 2001-02

Proposed energy conservation measures

(ii)

Installation of Plate Heat Exchangers in dirty water services with dedicated pumping arrangements to enable power saving, and a cleaner environment.

Further conversion of DG set to LDO-Natural Gas operation to enable fuel cost saving.

Fatty Acid

31.92

22.41

91.37

100.86

48.13

50.05

Fatty Alcohol

87.72

54.66

427.88

435.34

21.47

4.03

Alpha Olefin Sulphonate

5.86

97.78

71.13

127.00

144.63

16.47

Fruit Juice/ Pulp

–

–

138.35

513.95

–

–

Oils/Vanaspati

–

–

199.06

186.96

121.75

73.54

820.796

479.67

624.86

595.06

214.64

89.58

(iii)

Installation of Steam turbine to get full utilisation of pressure energy and get saving of cost.

(iv)

Recovery of heat from the exhaust of D G set.

(v)

Automation of saving.

(vi)

Installation of separate cooling towers for plants to get power saving and reduction of Shut Down time.

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

(vii)

Review use of bore well water.

•

Oils, Fats, Fatty Acids & Fatty Alcohols

(viii)

Reduce the steam consumption in Soap Making and Soap Drying Process.

•

Glycerin & Surfactants

•

Packaging

(ix)

III.

Power and Fuel consumption (Contd.)

Energy conservation measures undertaken:

(i)

II.

a)

Glycerin B.

H.P boiler to increase its efficiency and power

Changing over from LSHS / FO to piped Natural Gas in boilers to reduce the fuel cost and to further improve the stack emissions in the atmosphere.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION 1.

2.

Benefits derived as a result of the above R&D •

Development of a new process for the manufacture of surfactants.

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

•

Development of a new process for manufacture of pure unsaturated fatty acids.

Saving in energy cost during the period under consideration.

•

Development of a new mixed surfactant system.

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

•

Development of a new process for treatment of sweet water.

This Year i)

ii)

Electricity Purchased Units (kWh in lac) Total Amount (Rs. in lac) Rate per Unit (Rs.) Own generated through D.G. Sets Units (kWh in lac) KWH per litre of Fuel Oil Cost (Rs. in lac) Rate per unit (Rs.)

Previous Year

139.07 731.58 5.26

152.14 799.03 5.25

6.48 2.75 42.46 6.55

12.78 2.55 81.88 6.41

3.

•

Process for depoisoning oils fit for premium fatty acids.

•

New processes led to savings in energy as well as lower capital expenditure for future products.

•

Opened avenues to new markets / customers.

•

Ensured the sale of existing products due to synergy in the new system.

•

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

Future Plan of Action •

Continue to support Marketing and Manufacturing.

•

Find new applications for the existing products.

•

Develop new products and processes.

•

Assist Sales team to effectively satisfy customer demands.

15

Industries Limited 4.

5.

Expenditure on R&D This Year Rs. lac

Previous Year Rs. lac

(a)

Capital

Nil

Nil

(b)

Recurring

94.79

111

(c)

Total

94.79

111

(d)

Total R&D expenditure as a percentage of total sales turnover

0.16%

0.36%

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

This Year Previous Year Rs. lac Rs. lac Foreign exchange used Foreign exchange earned

19625

14867

9746

10492

ANNEXURE "C" FORMING PART OF DIRECTORS' REPORT STATEMENT UNDER SECTION 217(2A) READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31, 2003.

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

B. Persons employed for a part of the year under review and each of whom was in receipt of remuneration for that part which, in the aggregate, was not less than Rs. 200,000/- per month.

Sr Name No.

Designation

Gross Qualification Remuneration (Rs.)

Experience Date of Age Particulars of Previous (Years) commence- (Years) Employment ment of employment 12

21-Jan-91

34

First Job

26

1-Jun-77

50

First Job

A. 1

Persons employed throughout the Financial Year.

Ms. T.A. Dubash Director (Marketing)

4,856,577

2

M. Eipe

4,819,012

3

N.B. Godrej

Executive Director & President (Chemicals) Managing Director

4 5 6

R.H. Khajotia D.E. Mistry M.P. Pusalkar

7

V.J. Soares

8

C.K. Vaidya

General Manager (London Branch) Vice-President (London Branch) Executive Director and President (Foods Div.) Vice-President (Comm. Imports & Med. Diag.)

Executive Director (Corporate HR)

9

C.D. Wakankar

Vice-President (Corporate Audit & Assurance)

2,518,220

B. 1

Persons employed for a part of the Financial Year N.T. Bamji Dy. General Manager (Chemicals-Mktg.)

2,816,611 A.S. Chavan Worker 696,618 S.B. Chavan Worker 636,910 K.K. Dastur Executive Director (Finance) 5,627,929 Ms. H.A. Gharat Clerk 339,233 B. Venkatrao Officer (Engg Services) 423,988

2 3 4 5 6

27

24-Dec-76

51

First Job

3,131,229 5,134,910 3,360,014

A.B. with Economics and Political Science B.Tech. (Chems.), IIT, Mumbai, PGDM, IIM, Kolkata B.S., Chem. Engg. (M.I.T., U.S.A.) M.S., Chem. Engg. (Stanford, U.S.A.) M.B.A., Harvard Business School, U.S.A. B.Com. (Hons), LLB(II), MMS B.Com. (Hons), LLB(II) A.C.A, PGDMS B.Tech (Elec), IIT-Kanpur, MMS, JBIMS

23 25 30

1-Jun-79 18-Oct-77 1-Apr-02

49 50 54

ICICI Ltd. First Job Godrej Foods Ltd.

4,655,353

B.Sc. (Hons)., P.G.D.M.

34

2-Jun-69

57

First Job

4,668,886

B.Tech (Mech)., IIT Mumbai, PGDM, IIM., Kolkata B.Com. (Hons)., ACA, ICWA

29

1-Jan-73

53

33

20-Feb-81

53

Godrej Agrovet Ltd. for 5 Years Johnson & Johnson Ltd. for 3&1/2 Years

B.Sc., D.M.M., DBM IX STD S.S.L.C B.Com. A.C.A. S.S.C. S.S.L.C.

39 22 24 38 38 39

1-Oct-64 1-Jan-81 1-Oct-79 1-Jul-65 1-Apr-65

59 45 47 61 61 61

7,075,903

1-Apr-64

First Job First Job First Job First Job First Job Weston Vegetable Oil Ltd.

NOTES : 1.

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

2.

Other terms and conditions : (a) In case of Managing Director and Executive Directors, gross remuneration as shown above, includes salary, performance bonus pertaining to FY 01-02 received by them in the current financial year, house rent allowances, Company’s contribution to Provident Fund, Gratuity, Leave encashment and monetary value of perquisites which are given in terms of the agreement entered into with them. (b) In case of all other employees, gross remuneration shown above, includes salary, performance bonus (wherever applicable) pertaining to FY 01-02 received by them in the current financial year, house rent allowance (wherever applicable), reimbursement of medical expenses, gratuity , compensation on voluntary retirement (wherever applicable), monetary value of perquisites (wherever applicable) as per Income Tax Rules, leave travel assistance, company’s contribution to Provident Fund and other Funds, as per the Company’s Rules. (c) The designations represent the nature of duties performed by them. (d) In the case of all the employees, the ages shown are as of last birth date and the particulars of previous employment pertain to the immediate past employment.

3.

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

4.

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

16

Annual Report 2002-2003 REPORT ON CORPORATE GOVERNANCE Clause 49 of the listing agreement with the Indian Stock Exchanges stipulates the norms and disclosure standards that have to be followed on the corporate governance front by listed Indian companies.

•

Any materially significant effluent or pollution problems,

•

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

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

•

Any issue which involves possible public or product liability claims of a substantial nature,

BOARD OF DIRECTORS

•

Details of any joint venture or collaboration agreement,

a)

•

Transactions that involve substantial payment towards goodwill, brand equity or intellectual property,

•

Significant labour problems and their proposed solutions,

•

Significant development in the human resources and industrial relations front,

•

Sale of material nature, of investments, subsidiaries, assets, which is not in the normal course of business,

•

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

•

Non-compliance of any regulatory, statutory nature or listing requirements as well as shareholder services such as non-payment of dividend and delays in share transfer.

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

b)

Board meetings held & Directors’ attendance record The Board meets atleast once in a quarter to consider among other business, quarterly performance of the company and financial results. During the year eight Board meetings were held on 30th April, 2002, 30th July, 2002, 14th August, 2002, 3rd September, 2002, 28th September, 2002, 23rd October, 2002, 8th November, 2002 and 17th January, 2003. The details are given in Table 1 : Table 1: Details about GIL’s Board of Directors & meetings attended by the Directors during the year Name of Director Category

Board Meetings attended during the year

8

8

Whether Directorships attended held in public last AGM companies incorporated in India as at year-end

d)

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

Chairman

J.N. Godrej

Non-Executive Director

8

4

No

12 (6)

N.B. Godrej

Managing Director

8

5

No

14 (4)

S.A. Ahmadullah

Non-Executive and Independent Director

8

7

Yes

1(1)

V.M. Crishna

Non-Executive Director

8

5

Yes

6(3)

K.K. Dastur

Non-Executive Director

8

7

Yes

3(1)

N.C. Gawankar

Non-Executive and Independent Director

8

8

Yes

2(1)

V.N. Gogate

Non-Executive and Independent Director

8

8

Yes

3(1)

Table 2: Remuneration paid or payable to Directors for the year ended March 31, 2003

K.N. Naoroji

Non-Executive Director

8

0

No

2(1)

Name of Director

Relationship with other Directors

K.N. Petigara

Non-Executive and Independent Director

8

8

Yes

5(1) A.B. Godrej

Brother of N.B. Godrej

Nil

Nil

Non-Executive and Independent Director

8

J.N. Godrej

None

Nil

N.B. Godrej

Brother of A.B. Godrej

7

Yes

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

A.B. Godrej

F.P. Sarkari

12(4)

Yes

2(1)

e)

Remuneration of Directors: sitting fees, salary, perquisites and commissions The details of remuneration package of Directors and their relationships with each other are given in Table 2.

Sitting Commission fees on profits (Rs.) (Rs.)

Salary

Perquisites

Total

(Rs.)

(Rs.)

(Rs.)

Nil

Nil

Nil

NA

NA

NA

Nil

Nil

NA

6009620

742283

6751903

S.A. Ahmadullah None

52000

NA

NA

NA

52000

V.M. Crishna

None

51000

NA

NA

NA

51000

2(2)

K.K. Dastur

None

60000

Nil

2177640

115132

2292772

7(1)

T.A. Dubash

Whole-time Director

8

6

Yes

5(1)

M. Eipe

Whole-time Director

8

6

Yes

2(1)

M.P. Pusalkar

Whole-time Director

8

8

Yes

C.K. Vaidya

Whole-time Director

8

8

Yes

N.C. Gawankar

None

40000

NA

NA

NA

40000

Notes:

V.N. Gogate

None

62000

NA

NA

NA

62000

1)

Figures in ( ) denote listed companies.

K.N. Naoroji

None

Nil

NA

NA

NA

Nil

2)

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

K.N. Petigara

None

62000

NA

NA

NA

62000

F.P. Sarkari

None

55000

NA

NA

NA

55000

T.A. Dubash

Daughter of A.B. Godrej Nil

Nil

3958820

722077

4680897

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

M. Eipe

None

Nil

Nil

3991220

625580

4616800

M.P. Pusalkar

None

Nil

Nil

2904640

308494

3213134

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

C.K. Vaidya

None

Nil

Nil

4441606

336700

4778306

3) 4)

c)

Board Meetings held during the year

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

Notes :

Information supplied to the Board

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

Among others, this includes: •

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

•

Quarterly results of the Company,

•

Minutes of meeting of audit committee and other committees,

•

Information on recruitment and remuneration of senior officers just below the Board level,

•

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

•

Fatal or serious accidents or dangerous occurrences,

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

Performance linked variable remuneration based on Economic Value Added in the business and other relevant factors for Mr. N.B. Godrej, Ms. T.A. Dubash, Mr. V. Banaji, Mr. K.K. Dastur, Mr. M. Eipe, Mr. C.K. Vaidya and Mr. M.P. Pusalkar for 2002-03, is payable in 2003-04 based on the Company’s performance in 2002-03, for which necessary applications shall be made to Central Government for approval.

The service contracts of the Whole-Time Directors are for a period of three years with a notice period of three months.

17

Industries Limited f)

Committees of the Board

Remuneration Committee

Audit Committee

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

GIL’s audit committee comprises of three Independent & Non-Executive Directors.

They are Mr. V.N. Gogate (Chairman), Mr. S.A. Ahmadullah and Mr. F.P. Sarkari.

Mr. V.N. Gogate, the Chairman of the audit committee is a qualified Chartered Accountant and Company Secretary and is knowledgeable in finance, accounts and company law. All the members of the committee are eminent professionals and draw upon their experience and expertise across a wide spectrum of functional areas such as finance and corporate strategy. Minutes of each of the audit committee meetings are placed before the Board meetings. The Company Secretary acts as secretary to the audit committee. The audit committee met four times during the year. Table 3 gives the attendance record.

GIL’s remuneration committee consists of the following directors: Mr. S.A. Ahmadullah (Chairman and Independent Director); Mr. N.B. Godrej (Managing Director); Mr. V.N. Gogate (Independent Director) and Mr. K.N. Petigara (Independent Director).

During the year ended March 31, 2003, resolutions were passed by the Committee in circulation on May 22, 2002 for approval of remuneration payable in 2002-03, and the committee also met once on August 14, 2002 where all the members of the Committee attended.

Table 3 : Attendance record of audit committee members Name of Director Mr. V.N. Gogate

No. of meetings held

Meetings attended

4

4

Mr. S.A. Ahmadullah

4

3

Mr. F.P. Sarkari

4

4

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

Shareholders Committee

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

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

The Audit Committee of GIL performs the following functions :

18

•

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

•

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

•

Reviewing with management the annual financial statements before submission to the board, focusing primarily on Ø

Any changes in accounting policies and practices.

Ø

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

Ø

Qualifications in draft audit report.

Ø

Significant adjustments arising out of audit.

Ø

The going concern assumption.

Ø

Compliance with accounting standards.

Ø

Compliance with stock exchanges and legal requirements concerning financial statements.

Ø

Any related party transactions, i.e. transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interests of Company at large.

•

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

•

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

•

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

•

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

•

Discussing with external auditors before the audit commences, nature and scope of audit as well as conducting post-audit discussion to ascertain any area of concern.

•

Reviewing the Company’s financial and risk management policies.

•

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

MANAGEMENT a)

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

b)

Disclosures by management to the Board All details relating to financial and commercial transactions where Directors may have a potential interest are provided to the Board, and the interested Directors neither participate in the discussion, nor do they vote on such matters.

SHAREHOLDERS a)

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

b)

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

c)

Investor grievances As mentioned before, the Company has constituted a Shareholders Committee to look into and redress Shareholder and investor complaints. Mr. S.K. Bhatt, General Manager (Corporate Services) & Company Secretary is the compliance officer.

d)

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

Annual Report 2002-2003 e)

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

f)

General body meetings Year

Venue

1998-99

Udayachal Primary School Hall, Pirojshanagar, Vikhroli (East),

Date

Time

September 24, 1999

10.30 A.M.

Mumbai 400 079

g)

1999-00

- do -

July 1, 2000

3.30 P.M.

2000-01

- do -

July 28, 2001

3.30 P.M.

2001-02

- do -

September 28, 2002

3.00 P.M.

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

Sr. Date of No. Resolution

Nature of Item Resolution

1.

Ordinary

2.

October 23, 2002 October 23, 2002

Special

Total No. of votes polled

Percentage of votes in favour

Percentage of votes against

Percentage of votes invalid

Sale of Mysore Unit of the Company in terms of Section 293(1)(a) of the Companies Act, 1956.

44386476

99.89

0.06

0.05

Giving guarantee to Godrej Tea Pvt. Ltd. under Section 372 A of the Companies Act, 1956.

44386476

99.54

0.40

0.06

3.

October 23, 2002

Special

Alteration of main objects of the Memorandum of Association of the Company.

44386476

99.76

0.17

0.07

4.

October 23, 2002

Special

Alteration of other objects of the Memorandum of Association of the Company.

44386476

99.67

0.27

0.06

5.

March 19, 2003

Special

Approval to invest in equity shares of and/or place intercorporate deposits with and/or invest in debentures of and/or make loans to and/or give guarantee(s) to Godrej Tea Ltd. under Section 372A of the Companies Act, 1956.

43329684

99.81

0.17

0.02

Approval to invest in equity shares of and/or place intercorporate deposits with and/or invest in debentures of and/or make loans to and/or give guarantee(s) to Godrej Global Solutions Ltd. under Section 372A of the Companies Act, 1956.

43329684

99.80

0.17

0.03

6.

March 19, 2003

Special

Auditors' Certificate on Corporate Governance To the Members of Godrej Industries Limited, Mumbai.

We have examined the compliance of conditions of Corporate Governance by Godrej Industries Limited (the Company) for the year ended on March 31, 2003 as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock exchanges.

The compliance of the conditions of Corporate Governance is the responsibility of the management. Our review was limited to the procedures and implementation thereof, 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 financial statements.

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

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

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

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants V.R. Mehta Partner Mumbai, May 28, 2003

19

Industries Limited SHAREHOLDERS' INFORMATION Annual General Meeting

Note:

Date

:

August 25, 2003

Time

:

3.00 P.M.

Venue

:

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

Financial Calendar

*

Trading stopped from July 17, 2002 due to scheme of arrangement u/s 391 for purchase of equity shares.

**

Trading recommenced on January 16, 2003.

Ø

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

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

Financial year: April 1 to March 31 For the year ended March 31, 2003, results were announced on:

Date

High (Rs.)

: First quarter

Low (Rs.)

Volume (No. of Shares)

●

July 30, 2002

●

October 23, 2002

: Half yearly

April-02

16.85

15.90

858741

●

January 17, 2003

: Third quarter

May -02

17.20

16.00

914299

●

May 28, 2003

: Fourth quarter and annual

June -02

18.00

16.55

967297

Record Date/Book Closure

July -02 *

24.45

17.30

3879905

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

February -03 **

17.50

13.50

3304

March-03

15.60

13.85

88257

Listing information

Note :

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

*

Trading stopped from July 18, 2002 due to scheme of arrangement u/s 391 for purchase of equity shares.

Stock code

**

Trading recommenced on February 25, 2003.

500164 GODREJIND 20840 07124 GODREJSOAP 17038 (for physical)

Ø

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

Name of the Stock Exchange Stock Exchange Mumbai National Stock Exchange Ahmedabad Stock Exchange Delhi Stock Exchange Madras Stock Exchange Calcutta Stock Exchange

10017038 (for demat)

Chart A - GIL share performance compared to the BSE Sensex for FY 02-03 Distribution of shareholding GIL Share Performance compared to the BSE Sensex for FY 02-03 5000

Trading of GIL Shares re-commenced on 16-1-2003

GIL Share Price Trading of GIL Shares stopped from 17-7-2002 on a/c of share purchase scheme

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

There has been negligible trading in equity shares of the Company on Ahmedabad Stock Exchange, Delhi Stock Exchange, Madras Stock Exchange and Calcutta Stock Exchange.

The Board of Directors of the Company has passed a resolution for voluntarily delisting the equity shares of the Company from these Stock Exchanges, pursuant to the provisions contained in the Securities and Exchange Board of India (Delisting of Securities) Guidelines, 2003. It is proposed to take the approval of shareholders for the above, in the forthcoming Annual General Meeting. The Company shall continue to be listed on the Stock Exchange, Mumbai, and on National Stock Exchange.

4000 3000

15

BSE Sensex

10

1000

5 0

0 Sensex

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

20

2000

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

25

GIL

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

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

Shareholders Number % of shares held

Shareholding %

14687

93.11

1321635

2.72

501 - 1000

551

3.49

450524

0.93

291812

1001 - 2000

244

1.55

374242

0.77

13.30

220757

2001 - 3000

88

0.56

224466

0.46

17.95

16.60

350199

3001 - 4000

28

0.18

100443

0.21

July - 02 *

24.35

17.30

1200276

4001 - 5000

35

0.22

170657

0.35

January - 03 **

22.00

16.00

224354

5001 - 10000

54

0.34

422499

0.87

February - 03

17.10

13.00

135352

10001 & above

87

0.55

45577476

93.70

March - 03

17.80

14.05

169868

Total

15774

100.00

48641942

100.00

Date

High (Rs.)

Low (Rs.)

Volume (No. of Shares)

April - 02

16.80

15.80

May - 02

17.25

June - 02

20

1 - 500

Number of shareholders

Annual Report 2002-2003 Compliance Officer

Table 4: Distribution of shareholding by ownership as on March 31, 2003 Category (as being reported to stock exchanges)

Shares held % of holding (nos.)

Mr. S. K. Bhatt, General Manager (Corporate Services) & Company Secretary.

Promoter’s holding Promoters Persons deemed to act in concert with promoters

43099770

88.61

0

0.00

Institutional investors Mutual funds & UTI Banks, financial institutions & insurance companies Foreign institutional investors

1007

0.00

666555

1.37

1100

0.00

Ph : 25188010

Fax : 25188074

Number and nature of complaints regarding shares for the year ended March 31, 2003 Nature of complaint

Others

Non-receipt of dividend

Private corporate bodies

1.46

Non-receipt of shares lodged for transfer Complaints on scheme of arrangement for purchase of shares

710078

Indian public

3972265

8.17

NRI / OCBs

191167

0.39

48641942

100.00

Total Shares held in physical and dematerialised form

As on March 31,2003, 98.06 per cent of GIL’s shares were held in dematerialised form and the remaining 1.94 per cent in physical form. The break up is listed below: No. of Folios No. of Folios No. of Shares No. of in Physical in Demat in Physical shares Mode Mode Mode in Demat Mode

Total Folios

Total Shares

7760

15774

48641942

8014

943987

47697955

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

Investor correspondence should be addressed to: Computech Sharecap Ltd. 147, M.G. Road, Opp. Jehangir Art Gallery Mumbai 400023 Tel: 022-22671824/22671825 Email: helpdesk@computechsharecap.com Fax: 022-22670380

E-mail : sk.bhatt@godrejinds.com

Number of complaints

Number redressed

332

332

77

77

572

572

Others Total

7

7

988

988

Exchange of old certificates of equity shares of GSL for equity shares of GIL and GCPL. With effect from April 1, 2001, the consumer products business of erstwhile Godrej Soaps Ltd. (GSL) was demerged into a separate company called Godrej Consumer Products Ltd. (GCPL), and the name of the company was changed to Godrej Industries Ltd. (GIL). Equity shares of the face value of Rs. 6/- and Rs. 4/- each were allotted in GIL and GCPL respectively in lieu of the equity shares of the face value of Rs. 10/- in GSL. Any shareholder who has not yet exchanged his/her old certificates of GSL shares for share certificates of GIL and GCPL can do so by surrendering the old certificate(s) to the Registrar, after cancelling the certificate(s) and defacing them with the words “ submitted for exchange “.

Allotment of equity shares of GIL to shareholders of Godrej Foods Ltd. (GFL) In terms of the scheme of arrangement between GFL and GIL, the shareholders of GFL were allotted 1 equity share of Rs. 6/- each in GIL against every 15 equity shares of Rs. 10/- each held by them in GFL on March 13, 2002.

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

21

Industries Limited REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ INDUSTRIES LIMITED 1.

2.

3.

4.

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

e)

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

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-statement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

f)

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

Further to our comments in the Annexure referred to in paragraph 3 above, we report that: a)

We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

b)

In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books and proper returns adequate for the purpose of our audit have been received from the branches not visited by us. The Branch Auditor’s Report has been forwarded to us and has been appropriately dealt with.

c)

The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account and with the audited returns from the branches.

d)

In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in subsection (3C) of Section 211 of the Companies Act, 1956.

Reference is invited to: note 9 (b) of Schedule 22- Notes to Accounts, regarding the recoverability of advances given to certain individuals amounting to Rs. 1033 lac being contingent upon the transfer and/or disposal of the shares pledged against the loan; and

5.

In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to paragraph (e) above, and read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i)

in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2003;

ii)

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

iii)

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

On the basis of the written representations received from the Directors as on March 31, 2003, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2003, from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For and on behalf of

22

KALYANIWALLA & MISTRY Chartered Accountants V.R. Mehta Partner M. No.: 32083 Mumbai, May 28, 2003

Annual Report 2002-2003 Annexure to the Auditors' Report (Referred to in paragraph (3) of our report of even date) 1.

The Company has maintained adequate records showing particulars including quantitative details and situation of fixed assets. Some fixed assets have been verified by the management during the year in accordance with a phased programme of verification adopted by the Company. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and nature of its assets.

No material discrepancies between the book records and the physical inventory were noticed in respect of the assets physically verified during the year.

2.

The fixed assets have not been revalued during the year.

3.

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

4.

In our opinion and according to the information and explanations given to us, the procedures of physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

5.

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

6.

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

7.

In our opinion, the rate of interest and other terms and conditions of deposits accepted by the Company from companies listed in the register maintained under Section 301 of the Companies Act, 1956 and from companies under the same management as defined under Section 370 (IB) of the Companies Act, 1956 are not prima facie prejudicial to the interest of the Company.

8.

9.

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

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

10.

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

11.

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

12.

As explained to us, the Company has a regular procedure for the determination of unserviceable or damaged stores, raw materials and finished goods. Adequate provision has been made in the accounts for the loss arising on the items so determined.

13.

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

14.

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

15.

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

16.

We have broadly reviewed the books of account maintained by the Company in respect of the manufacture of vanaspati pursuant to the order passed by the Central Government for maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956, and are of the opinion that prima facie the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete. To the best of our knowledge and according to the information given to us, the Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 for any other products of the Company.

17.

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

18.

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

19.

In our opinion and according to the information and explanations given to us, no personal expenses have been charged to revenue accounts other than those payable under contractual obligations or in accordance with the generally accepted business practice.

20.

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

21.

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

22.

In respect of the investment activities, the Company has maintained proper records and registers of transactions and contracts in respect of the investments purchased and sold during the year and timely entries have been made therein. The investments made by the Company are held in its own name except for the shares of Gharda Chemicals Ltd. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants V.R. Mehta Partner M. No. : 32083

Mumbai, May 28, 2003

23

Industries Limited BALANCE SHEET AS AT MARCH 31, 2003 Schedule

Rs. lac

This Year Rs. lac

Previous Year Rs. lac

SOURCES OF FUNDS 1.

Shareholders’ Funds (a)

Share capital

1

2918.52

3698.30

(b)

Reserves & surplus

2

21510.77

21029.98 24429.29

2.

3.

24728.28

Loan Funds (a)

Secured loans

3

14815.48

(b)

Unsecured loans

4

7432.16

Deferred Tax Liability TOTAL

15051.15 13456.31 22247.64

28507.46

3466.00

1347.00

50142.93

54582.74

APPLICATION OF FUNDS 4.

Fixed Assets

5

(a)

Gross block

49699.03

48611.88

(b)

Less: Depreciation

21974.28

19770.26

(c)

Net block

27724.75

28841.62

(d)

Capital work-in-progress

5.

Investments

6.

Current Assets, Loans and Advances

404.75

6

257.73 28129.50

29099.35

18646.01

14618.46

(a)

Inventories

7

10879.01

8064.03

(b)

Sundry debtors

8

7660.12

7368.70

9

1877.20

1543.32

(c)

Cash and bank balances

(d)

Accrued intreest

(e)

Loans and advances

10

10.49

52.55

3146.36

5436.28

23573.18

22464.88 10266.50

Less : Current Liabilities and Provisions (a)

Liabilities

11

17372.06

(b)

Provisions

12

3256.61

2211.29

20628.67

12477.79

Net Current Assets 7.

Miscellaneous Expenditure

13

2944.51

9987.09

422.91

877.84

50142.93

54582.74

(To the extent not written off or adjusted) TOTAL Notes to Accounts

22

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

As per our Report attached

Signatures to Balance Sheet and Schedules 1 to 13 and 22

For and on behalf of Kalyaniwalla & Mistry Chartered Accountants

V. R. Mehta Partner Mumbai, May 28, 2003

24

A. B. Godrej Chairman

S. K. Bhatt Company Secretary

N. B. Godrej Managing Director

Annual Report 2002-2003 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 0N MARCH 31, 2003 Schedule

This Year Rs. lac

Previous Year Rs. lac

Sale of Products & Services

14

65250.60

51194.66

Other Income

15

2529.64

2270.55

67780.24

53465.21

INCOME

EXPENDITURE Materials consumed and purchase of goods

16

42387.22

29218.49

Expenses

17

16870.83

13587.68

Inventory change

18

(1520.83)

602.10

Interest and financial charges (net)

19

2024.26

3217.50

2210.98

2154.04

61972.46

48779.81

5807.78

4685.40

–

(624.47)

5807.78

4060.93

Depreciation (Net of transfer from Revaluation Reserve Rs. 235.58 lac, Previous year Rs. 237.33 lac) Profit Before Tax & Exceptional items Exceptional items

20

Profit Before Tax Provision for taxation —

Current Tax

421.00

150.00

—

Deferred Tax

2119.00

923.00

Profit for the year after taxation

3267.78

2987.93

Prior Period adjustments (net)

21

Surplus brought forward Profit After Tax Available For Appropriation

152.85

121.65

3420.63

3109.58

9234.20

6744.88

12654.83

9854.46

APPROPRIATIONS Proposed Dividend —

Interim

—

Final

–

370.26

972.84

–

Tax on distributed profits

124.64

–

Transfer to General Reserve

342.10

250.00

11215.25

9234.20

12654.83

9854.46

5.87

5.08

Surplus carried forward TOTAL Basic & Diluted EPS Rs. 6 per share NOTES TO ACCOUNTS

22

The Schedules referred to above form an integral part of the Profit and Loss Account As per our Report attached

Signatures to Profit & Loss Account and Schedules 14 to 22

For and on behalf of Kalyaniwalla & Mistry Chartered Accountants

V. R. Mehta Partner Mumbai, May 28, 2003

A. B. Godrej Chairman

N. B. Godrej Managing Director

S. K. Bhatt Company Secretary

25

Industries Limited SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2003 This Year Rs. lac

Previous Year Rs. lac

8000.00

8000.00

10000.00

10000.00

18000.00

18000.00

2918.52

3702.61

SCHEDULE 1 : SHARE CAPITAL AUTHORISED : 13,33,33,333 Equity Shares of Rs. 6 each 10,00,00,000 Unclassified Shares of Rs.10 each ISSUED, SUBSCRIBED AND PAID-UP : 4,86,41,942 (Previous year 6,17,10,218) Equity Shares of Rs.6 each fully paid Less : Calls in Arrears

—

4.31

2918.52

3698.30

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

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

(ii)

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

(iii)

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

Rs. lac

This Year Rs. lac

Previous Year Rs. lac

SCHEDULE 2 : RESERVES AND SURPLUS Securities Premium Account As per last balance sheet Less : Premium paid on shares purchased and cancelled as per scheme of arrangement Less : Reduction consequent to scheme of arrangement with GFL Add: : Premium received during the year

469.90

6903.67

(469.90)

–

– 8.51

(6433.77) – 8.51

Capital Investment Subsidy Reserve As per last balance sheet Less : Transferred to GCPL consequent to scheme of arrangement

25.00 –

40.00 15.00 25.00

Revaluation Reserve As per last balance sheet Less : Depreciation on revalutation component and deduction due to sale/discard of fixed assets

3775.17

General Reserve As per last balance sheet Add : Transferred from Profit & Loss Account Less : Deferred tax liability as on April 1, 2001 Less : Reduction consequent to scheme of arrangement Less : Premium paid on shares purchased and cancelled as per scheme of arrangement Profit & Loss Account

26

25.00 4012.50

(282.69)

Capital Redemption Reserve As per last balance sheet

469.90

(237.33) 3492.48

3775.17

3125.00

3125.00

4400.71 342.10 – –

5950.70 250.00 (424.00) (1375.99)

(1098.28)

– 3644.53

4400.71

11215.25

9234.20

21510.77

21029.98

Annual Report 2002-2003 This Year Rs. lac

Previous Year Rs. lac

–

682.80

11619.20

10151.40

3196.28

4216.95

14815.48

15051.15

4726.05

7056.65

500.00

2240.00

SCHEDULE 3 : SECURED LOANS Term loans from financial institutions Term loans from banks Bank overdrafts

Particulars of securities (refer note 6 of schedule 22) SCHEDULE 4 : UNSECURED LOANS Fixed deposits Intercorporate deposits Short term loans from banks

Amount repayable within one year

2206.11

4159.66

7432.16

13456.31

4089.52

8868.41

SCHEDULE 5 : FIXED ASSETS

(Rs. lac) ASSETS

GROSS BLOCK Assets transferred consequent to scheme of As at arrangement on 01.04.2002 1.4.2001

Assets taken over consequent to scheme of arrangement on 30.6.2001

DEPRECIATION

Deductions/ Additions Adjustments

NET BLOCK

As on 31.3.2003

Upto 31.03.2002

Depreciation upto 1-4-2001 transferred consequent to scheme of arrangement

Depreciation upto 30-6-2001 taken over consequent to scheme of arrangement

Deductions/ Adjustments

For the Year

Upto 31.3.2003

As on 31.3.2003

As on 31.03.2002

16.56 1678.70 16809.85 38.72 511.35

– – – – –

– – – – –

– 6.72 153.46 3.06 1.21

1.64 210.30 1962.17 3.38 74.90

18.20 1882.28 18618.56 39.04 585.04

240.81 7062.78 18182.36 75.65 545.42

254.78 7061.97 19275.85 81.32 535.91

LAND BUILDINGS PLANT & MACHINERY RESEARCH CENTRE FURNITURE & FIXTURES OFFICE & OTHER EQUIPMENTS VEHICLES TRADEMARKS Assets Acquired Under Finance Lease VEHICLES

271.33 8740.67 36085.97 120.04 1047.26

– – – – –

– – – – –

– 236.53 958.82 – 86.55

12.32 259.01 32.14 8945.06 243.87 36800.92 5.35 114.69 3.35 1130.46

810.00 782.61 754.00

– – –

– – –

135.28 63.05 –

29.98 120.27 –

915.30 725.39 754.00

367.48 259.63 87.97

– – –

– – –

13.32 64.77 –

46.38 69.30 75.40

400.54 264.16 163.37

514.76 461.23 590.63

442.78 522.98 666.03

–

–

–

54.20

–

54.20

–

–

–

–

3.09

3.09

51.11

–

TOTAL

– This Year

48611.88

–

–

1534.43

447.28 49699.03

19770.26

–

–

242.54

2446.56

21974.28

27724.75

28841.62

- Previous Year

53211.75

14,347.32

6263.30

3700.94

216.79 48611.88

19879.83

4445.27

2021.18

76.85

2391.37

19770.26 404.75

257.73

28129.50

29099.35

CAPITAL WORK-IN-PROGRESS TOTAL

NOTES : 1.

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

2.

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

3.

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

4.

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

5.

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

6.

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

27

Industries Limited SCHEDULE 6 : INVESTMENTS

Investee Company / Institutions

Face Value

Number

Amount

(Rs.)

Qty. as on 01.04.02

Acquired during Year

Sold during Year

Qty. as on 31.03.03

As on 31.03.03 Rs. lac

As on 31.03.02 Rs. lac

4

–

22,00,000

–

22,00,000

2404.11

–

£0.25 100 10 4 10 10 10 100

10,029 114 9,71,100 65,01,750 – – 2,09,370 25

3,663 – – 1,27,687 13,86,496 50,000 – –

– – – – – 25,000 – –

13,692 114 9,71,100 66,29,437 13,86,496 25,000 2,09,370 25

(b)

124.55 11.57 97.11 5881.63 138.65 2.50 191.33 0.01

97.01 11.57 97.11 5479.63 – – 191.33 0.01

10

–

50,00,000

–

50,00,000

(c)

425.00

–

100

25

–

–

25

(d)

0.02

0.02

$800,000

–

–

–

–

(e)

390.50

–

10 10 10 £1 10 10 100

37,70,160 41,06,956 – 13,20,000 50,73,965 27,79,562 3,202

– – 6,00,000 1,85,000 – 20,16,086 –

– – – – – – 3,202

37,70,160 41,06,956 6,00,000 15,05,000 50,73,965 47,95,648 –

1318.14 3367.11 20.70 960.83 3836.46 479.56 –

1318.14 3367.11 – 817.91 3836.46 277.95 2.15

10 10 10

– 9,376 86

9 – –

– – –

9 9,376 86

– 30.00 0.01

– 30.00 0.01

10

4,40,000

–

–

4,40,000

17.60

17.60

31,600 2,000 – – –

– – – – –

– – – – –

– – – – –

– – – – –

0.32 0.02 – – –

0.32 0.02 51.78 5.22 71.09

Units of Mutual Funds Unquoted : Unit Trust of India – Unit Scheme 1964

10

25,66,703

–

–

25,66,703

383.00

383.00

Shares in Co-operative Societies – Fully Paid Unquoted : The Saraswat Co-op. Bank Ltd.

10

1,000

–

–

1,000

Notes

LONG TERM INVESTMENTS - At Cost A.

TRADE INVESTMENTS : Quoted : Equity Shares : Fully Paid Godrej Consumer Products Ltd. Unquoted : Equity Shares : Fully Paid Compass Connections Ltd. Gharda Chemicals Ltd. Godrej Photo–Me Ltd. Godrej Sara Lee Ltd. Godrej Tea Ltd. Hybrigene Biotechnology Ltd. Swadeshi Detergents Ltd. Tahir Properties Ltd. (Partly Paid) Preference Shares : Partly Paid Godrej Foods Ltd. (8% 10 year Redeemable Cumulative Preference Shares) Tahir Properties Ltd. (Class-A) Optionally Convertible Subordinated Notes C Bay Systems Ltd.

B.

C.

INVESTMENT IN SUBSIDIARY COMPANIES : Unquoted : Equity Shares : Fully Paid Ensemble Holdings & Finance Ltd. Godrej Agrovet Ltd. Godrej Global Solutions Ltd. (Partly Paid) Godrej International Ltd. Godrej Properties & Investments Ltd. Godrej Remote Services Ltd. Sahyadri Aerosols Ltd. (voluntary liquidated) OTHER INVESTMENTS : Quoted : Equity Shares : Fully Paid Gesco Corporation Ltd. Tata Engineering & Locomotive Co. Ltd. The Great Eastern Shipping Co. Ltd. Unquoted : Bharuch Eco-Aqua Infrastructure Ltd. - (Partly Paid) Government Securities Unquoted : National Plan Certificate Kisan Vikas Patra 11.99% Govt. Stock 2009 14% Govt. Stock 2005 10.25% Govt Stock 2012 (sold during the year)

Less : Provision for diminution in value of Investments

28

(a)

(f)

(g) (h)

(i)

0.10

0.10

20080.83 (1434.82)

16055.54 (1437.08)

18646.01

14618.46

Annual Report 2002-2003

Investee Company / Institutions

Face Value (Rs.)

Number Qty. as on 01.04.02

Acquired during Year

Sold during Year

Amount Qty. as on 31.03.03

Notes

Aggregate Book Value of Investments Quoted Unquoted

Market Value of Quoted Investments NOTES :

As on 31.03.03 Rs. lac

As on 31.03.02 Rs. lac

2434.12 16211.89

30.01 14588.45

18646.01

14618.46

2310.33

14.55

(a) (b) (c) (d) (e)

The said shares have been refused for registration by the investee company.

Rs. 80 per share is payable in one or more calls on these shares.

Rs. 1.50 per share is payable in one or more calls on these shares.

Rs. 30 per share is payable in one or more calls on these shares.

Optionally Convertible Subordinated Notes are convertible into 8% Series E Cumulative Redeemable Preferred Stock of US $0.01 par value at the conversion price of US $ 2.60 per share upto 15th July, 2003, at the option of the investor. (f) Rs.6.55 per share is payable in one or more calls on these shares. (g) Right shares subscribed during the year. (h) The Company’s wholly owned subsidiary Sahyadri Aerosols Ltd. has been wound up on March 10, 2003. The assets received on distribution have been adjusted towards the cost of the investment and the surplus on final distribution credited to the profit and loss account. (i) Rs.6 per share is payable in one or more calls on these shares.

This Year Previous Year Rs. lac Rs. lac SCHEDULE 7 : INVENTORIES (at lower of cost and net realisable value) Stores and spares 488.27 399.13 Raw materials 5861.21 4656.23 Work–in–progress 1180.36 1094.43 Finished goods 3349.14 1914.24 10879.01 8064.03 SCHEDULE 8 : SUNDRY DEBTORS (UNSECURED) Debts outstanding over six months Considered good Considered doubtful Other debt, considered good Less : Provision for doubtful debts SCHEDULE 9 : CASH AND BANK BALANCES Cash and cheques on hand Balances with scheduled banks : – on current accounts – on deposit accounts (refer note 8 of schedule 22) SCHEDULE 10 : LOANS AND ADVANCES (Unsecured and considered good unless otherwise stated) Loans and Advances (refer note 9 of schedule 22) Advances recoverable in cash or in kind or for value to be received (net of provision for doubtful advances Rs. 594.31 lac, Previous year Rs. 665.31 lac) Intercorporate deposits – Subsidiary companies – Others Deposits and balances with – Customs & excise authorities – Others Advance payment of taxes (Net of provision for tax, Previous year Rs. 1301 lac)

66.50 296.29 362.79 7593.62 7956.41 296.29 7660.12

1.63 323.05 324.68 7367.07 7691.75 323.05 7368.70

25.64

16.13

1070.58 780.98 1877.20

817.28 709.91 1543.32

1418.16

1762.36

510.82

807.38

232.50 89.40

546.40 277.38

172.14 723.34 –

800.94 669.65 572.17

3146.36

5436.28

29

Industries Limited SCHEDULE 11 : CURRENT LIABILITIES Sundry creditors – due to small scale industrial undertakings – others

Rs. lac 80.38 14205.06

Advances from customers Sundry deposits Investor Education & Protection Fund * – Unclaimed dividend – Unpaid Application Money – Unpaid Matured Deposits – Unpaid Matured Debentures – Interest accrued on above Other liabilities Interest accrued but not due *

This Year Rs. lac

Previous Year Rs. lac 66.00 7119.75

14285.44 31.08 1114.70

7185.75 158.30 1061.74

79.28 3.43 122.46 133.60 66.60 1343.01 192.46

78.42 10.91 124.03 66.60 1231.59 349.16

17372.06

10266.50

– 972.84 124.64 36.52 2122.61

370.26 – – – 1841.03

3256.61

2211.29

There is no amount due and outstanding to be credited to investor Education and Protectioin Fund. except for Rs. 3.73 lac.

SCHEDULE 12 : PROVISIONS Proposed dividend – Interim – Final Provision for tax on distributed profits Provision for Taxation (net of advance tax Rs. 1045.42 lac) Provision for retirement benefits SCHEDULE 13 : MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) Deferred revenue expenditure – Gratuity Balance at the beginning of the year Less : Amortised during the year

51.00 (40.00)

Balance at the end of the year –

Voluntary retirement compensation Balance at the beginning of the year Add : Deferred during the year Less : Amortised during the year

11.00 599.76 27.31 (215.16)

Balance at the end of the year –

91.00 (40.00) 51.00 744.94 67.18 (212.36) 411.91

599.76

Deferred revenue expenditure Balance at the beginning of the year

227.08

–

Add : Deferred during the year Less : Amortised during the year

– 227.08

227.08 –

Balance at the end of the year

–

227.08

422.91

877.84

58922.47 3914.09 – 242.42 2171.62

49825.63 3934.44 45891.19 2736.82 83.53 304.70 2178.42

65250.60

51194.66

36.00 266.62

13.65 4.80

534.30 1363.35

538.86 1552.11

286.58

161.13

1.27

–

39.26

–

SCHEDULE 14 : SALE OF PRODUCTS AND SERVICES Sales (gross) Less : Excise duty Sales (net) Processing charges Storage charges Export incentives Licence fees and service charges

63714.28 4791.81

SCHEDULE 15 : OTHER INCOME Interest : – –

Government Securities Income tax refund

Dividend – from subsidiary companies – from long term trade investments Miscellaneous income Profit on sale of fixed assets (net) Profit on sale of long term investments Provision for depletion in value of long term investments written back

30

2.26

–

2529.64

2270.55

Annual Report 2002-2003 Rs. lac SCHEDULE 16 : MATERIALS CONSUMED AND PURCHASE OF GOODS Raw Materials Consumed : Stocks at the commencement of the year Less : Stocks transferred to GCPL consequent to scheme of arrangement

This Year Rs. lac

Previous Year Rs. lac

4656.23 –

5995.95 1689.62

Add : Purchases (net)

4656.23 39439.35

4306.33 28730.99

Less : Stocks as at the close of the year

44095.58 5861.24

33037.32 4656.23

Raw Materials consumed during the year Purchase of goods for resale SCHEDULE 17: EXPENSES Salaries, wages and allowances Contribution to provident fund and other funds Employee welfare expenses Stores and spares consumed Power and fuel Processing charges Rent Rates and taxes Repairs and maintenance - Machinery - Buildings - Other assets Insurance Freight Commission Discount Advertisement and publicity Sales promotion Selling and distribution expenses Bad debts written off Provision for doubtful debts and advances written back Loss on sale of fixed assets Miscellaneous expenses Less: Expenses recovered for shared services SCHEDULE 18 : INVENTORY CHANGE Stocks at the commencement of the year Finished goods Work-in-progress Less:

Less:

Stocks transferred to GCPL consequent to scheme of arrangement Finished goods Work-in-progress Stocks at the close of the year : Finished goods Work-in-progress

Less: Interest received - on loans & deposits - on Customer balances, etc.

Net Interest Brokerage and other financial charges SCHEDULE 20 : EXCEPTIONAL ITEMS Loss on Sale of long term investments Provision for depletion in value of long term investments written back SCHEDULE 21 : PRIOR PERIOD ADJUSTMENTS Excess provision for Income -tax Depreciation Excess provision for expenses (net)

28381.09 837.40

42387.22

29218.49

5460.20 337.32 453.39 865.96 4021.28 34.91 128.99 432.33

4943.85 306.64 376.61 767.27 3124.87 31.78 107.47 420.39

761.03 260.07 27.48 118.56 1166.41 357.01 158.50 174.04 300.22 494.84 45.90 (35.60) – 2043.96 (735.97) 16870.83

695.02 198.18 26.00 133.76 1118.24 317.21 80.11 48.96 264.98 445.71 321.38 (1110.54) 34.12 1675.53 (739.86) 13587.68

3008.67

4592.08 1744.35 6336.43

–

2,451.58 274.08 2,725.66

4529.50 (1520.83)

1914.24 1094.43 3008.67 602.10

1531.45

1110.74 268.14 1468.12 2847.00

141.79 1389.66 634.60 2024.26

121.89 54.52 176.41 2670.59 546.91 3217.50

– – –

1174.31 (549.84) 624.47

152.85 – – 152.85

31.50 7.03 83.12 121.65

1914.24 1094.43

– – 3349.14 1180.36

(Increase) / Decrease in Inventory SCHEDULE 19 : INTEREST AND FINANCIAL CHARGES (Net) Interest paid - on debentures and fixed loans - on bank overdrafts - other interest

38234.34 4152.88

1280.22 212.05 39.18 95.22 46.57

31

Industries Limited SCHEDULE 22 : NOTES TO ACCOUNTS 1.

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

2.

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

Background h)

i)

Depreciation Leasehold land is amortised equally over the lease period.

Trademarks are amortised over a period of ten years.

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

Depreciation is provided on the straight line method at the rates specified in Schedule XIV to the Companies Act, 1956, except for computer hardware.

Computer hardware is depreciated over its estimated useful life of 4 years.

Significant Accounting Policies

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

a)

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

b)

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

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

j)

c)

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

d)

k)

Investments

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

f)

g)

l)

Revenue Recognition

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

Foreign Exchange Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are stated at the contracted rates, when covered under forward foreign exchange contracts and at year-end rates in other cases. The premium payable on forward foreign exchange contracts is amortised over the period of the contract. Exchange gains and losses are recognised in the Profit and Loss Account except in respect of liabilities incurred to acquire fixed assets in which case they are adjusted to the carrying amount of such fixed assets.

Incentive Plans The Company has a scheme of Performance Linked Variable Remuneration (PLVR) which rewards its employees based on Economic Value Addition (EVA).

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

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

Retirement Benefits Retirement benefits to employees comprise payments under approved provident fund plans, leave encashment and gratuity to eligible employees. Payments under approved provident fund plans are charged to revenue. The liability in respect of future payment of gratuity to retiring employees and leave encashment benefit on retirement is provided on the basis of an actuarial valuation at the end of each financial year.

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

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

The compensation payable under the Voluntary Retirement Schemes, the benefit of which is expected to accrue in future is deferred over its payback period. The compensation is generally amortised over three to five years depending on the pay back period. n)

Taxes on Income

Sales are recognised when goods are supplied and are recorded net of returns, trade discounts, rebates, sales taxes and excise duties.

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

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

Deferred tax is recognised on timing differences, being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets subject to the consideration of prudence are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year end and based on the tax rate and laws enacted or substantially enacted on the balance sheet date.

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

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

Interest income is recognised on a time proportion basis.

32

Research and Development Expenditure Revenue expenditure on Research & Development is charged to the Profit and Loss Account of the year in which it is incurred. Capital expenditure incurred during the year on Research & Development is shown as addition to fixed assets.

Annual Report 2002-2003 Schedule 22 : Notes to Accounts (contd.) o)

Segment Reporting

7.

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

3.

a)

Claims for excise duties, taxes and other matters not acknowledged by the Company : i) excise duty - Rs. 3736.80 lac (Previous Year Rs. 3615.53 lac) - net of tax ii) lease rent claimed by Mumbai Port Trust in respect of land leased to the Foods division. The lease has not been renewed since 1990 - Rs. 1150.00 lac (Previous Year Rs. 1862.97 lac) - net of tax iii) other matters - Rs. 3861.50 lac (Previous Year Rs. 3313.87lac) - net of tax

2363.53

2487.25

727.38

1197.89

2676.27

2123.42

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

590.79

354.67

c)

Guarantees given by the Company in respect of credit/ guarantee limits sanctioned by banks to subsidiary and other companies.

3560.00

207.00

Uncalled liability on partly paid shares/debentures

Sundry Debtors include amount due from a company under the same management : Godrej Consumer Products Ltd.

140.73

95.73

This year Rs. lac

Previous Year Rs. lac

b)

Loans and Advances include Rs. 1033 lac (Previous Year Rs. 1033 lac) advanced by the Company to certain individuals against the pledge by way of deposit of equity share of Gharda Chemicals Ltd. The Company is in the process of enforcing the security and getting the shares transferred in its name. Interest on the aforesaid loans and advances amounting to Rs. 315 lac was accrued upto March 31, 2000 and has been fully provided for, no interest is being accrued thereafter. The recoverability of the loans and advances is contingent upon the transfer and / or disposal of said shares. In the opinion of the management, the value of the said shares is greater than the amount of the loans and advances.

c)

Loans & Advances to subsidiary Companies Maximum balance Balance at year end outstanding This Year Previous Year during the year Rs. lac Rs. lac Rs. lac i)

227.31

iii)

Secured Loans

b)

first charge by way of equitable mortgage of the immovable properties at Vikhroli factory,

-

hypothecation of specified movable assets of the Company at Vikhroli and Valia factories,

-

first charge by way of equitable mortgage of the immovable properties at Valia factory.

Working capital facilities sanctioned by banks are secured by : -

hypothecation of stocks and book debts, and

-

second charge by way of equitable mortgage of the immovable properties at Wadala.

289.00

232.50

44.00

200.00 450.00

Nil Nil

Nil 250.00

252.40

89.40

252.40

Loans & Advances to associate Companies i) Swadeshi Detergents Ltd.

e)

Ensemble Holdings & Finance Ltd, to whom Godrej Industries Ltd. has given a loan, has made investments in Godrej Industries Ltd. and its subsidiaries.

f)

Term loans from banks are secured by :

Ensemble Holdings & Finance Ltd. Godrej Properties & Investments Ltd. Godrej Foods Ltd.

d)

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

-

113.41

Loans and Advances a) Loans and Advances include an amount of Rs. 6.69 lac (Previous Year Rs. 66.66 lac) due from directors and Rs. 0.20 lac (Previous Year Rs. 7.10 lac) from an Officer of the Company under the contingency and housing loan scheme of the Company. Maximum balance during the year Rs. 14.60 lac (Previous Year Rs. 7.98 lac).

Share Capital

a)

17.11

9.

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

6.

439.78

Cash and Bank Balances Balances with Scheduled Banks in Deposit Accounts include deposits held by bank as security against guarantees issued on behalf of suppliers of the Company

ii) 51.60

195.80

8.

Capital Commitments

Estimated value of contracts remaining to be executed on capital account, to the extent not provided 5.

Previous Year Rs. lac

b)

d) 4.

This year Previous Year Rs. lac Rs. lac

Contingent Liabilities This year Rs. lac

Sundry Debtors

i)

Godrej Industries Ltd. (shares received pursuant to scheme of arrangement with Godrej Foods Ltd.)

ii)

Godrej Tea Ltd.

iii)

Godrej Global Solutions Ltd.

iv)

Hybrigene Biotechnology Pvt. Ltd.

v)

Godrej Photo-me Ltd.

vi)

Godrej Remote Services Ltd.

Loans and Advances where there is no repayment schedule or repayment is beyond seven years: This Year Previous Year Rs. lac Rs. lac i)

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

1033.00

1033.00

10. Liabilities a)

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

33

Industries Limited Schedule 22 : Notes to Accounts (contd.) b) c)

b)

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

Finance Leases : The Company has acquired vehicles under Finance Lease. Liability for minimum lease payment is secured by hypothecation of vehicle acquired under the lease.

The minimum lease payments outstanding as on March 31, 2003, in respect of vehicle leased are as under:

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

Akshay Inorganics Ambica Chemicals Industries

Total minimum lease payments outstanding as on March 31, 2003

Un-matured Interest

Present value of minimum lease payments

Rs. Lac

Rs. Lac

Rs. Lac

14.96

2.33

14.43

Anupam Enterprise

Within one year Later than one year and not later than five years

41.45

2.89

36.36

Aristoplast Industries

Total

56.41

5.22

50.79

Amelon Synthetics Corporation Amrapali Foods

B. Brothers Decoraters

13. Deferred Tax

Cummins Diesel S&S (Ind.) Ltd. Doshi Heaters Pvt. Ltd.

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

Jalaram Box Makers (P) Ltd.

Assets

Jay Gaskets Pvt. Ltd.

This Year

Previous Year

Rs. Lac

Rs. lac

1,481

4,227

Jayant Packing Industry

Business Losses

Krishna Barrels Pvt. Ltd.

Provision for retirement benefits

586

538

Provision for doubtful debts / advances

317

361

Kumar Dharia ID Services

Others

Mevada Engineering Works MIL Controls Ltd.

40

36

2,424

5,162

5,751

6,234

134

191

Liabilities

Multi-Tech Engineers Pvt. Ltd.

Depreciation

N. R. Packaging Industries

VRS Expenses

Neo Fab

Deferred Revenue Expenditure

Nirmal Industries

5

84

5,890

6,509

3,466

1,347

Sanjoo Printers Net Deferred Tax Liability

Snowtech Process Eqpt. Pvt. Ltd.

14. Hedging

Suneeta Chemicals Sungrace Agro Process Pvt. Ltd. d)

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

Details

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

12. Leases a)

This Year

Accumulated depreciation Depreciation for the period

34

Total number of contracts entered during the year Number of units under above contracts Futures contracts not settled as on March 31, 2003 Number of units under above contracts

The Company has entered into leave and licence agreements in respect of its commercial and residential premises. These are not non-cancelable and range between 11 months to 35 months and are renewable by mutual consent on mutually acceptable terms. The particulars of the premises under leave and licence arrangement are as under :

Gross carrying amount of premises

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

Rs. Lac

3732.82

3524.63

743.52

652.93

90.59

102.72

Sale

66

56

326

206

10

–

120

–

15. Profit & Loss Account a)

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

b)

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

Previous Year

Rs. Lac

Purchase

Annual Report 2002-2003 Schedule 22 : Notes to Accounts (contd.)

16. Segment Information Information about Primary Business Segment

Rs. lac

Chemicals This Year Previous Year

Foods This Year Previous Year

Estate This Year Previous Year

Others This Year Previous Year

Total This Year Previous Year

44882.04

38930.25

17590.02

9651.96

2177.39

2178.42

2864.17

2649.71

67513.62

53410.34

5649.28

4612.01

87.17

1219.03

1536.84

1649.40

1798.08

1303.42

9071.37

8783.86

–

–

–

–

–

–

–

(624.47)

–

(624.47)

5649.28

4612.01

87.17

1219.03

1536.84

1649.40

1798.08

678.95

9071.37

8159.39

Revenue External Sales Results Segment result before interest, exceptional items and tax Exceptional items - Loss on sale of long term investment, net of provision written back Segment result before interest and tax Unallocated expenses net of unallocated income

(1086.48)

(759.31)

Interest Expense (net)

(2024.26)

(3217.50)

Profit before tax Taxes Profit after taxes Segment Assets

36476.81

36814.24

8326.34

7838.50

3978.27

2664.62

21990.18

19019.23

Unallocated Assets Total Assets Segment Liabilities

15858.42

15019.21

3986.08

1998.55

878.09

798.20

70.18

561.00

5960.63

4182.58

(2540.00)

(1073.00)

3420.63

3109.58

70771.60

66336.59

–

572.00

70771.60

66908.59

20792.77

18376.96

Unallocated Liabilities

24452.06

23433.18

Total Liabilities

45244.83

41810.14

Total Cost incurred during the year to acquire segment assets

1102.62

1179.00

183.00

17.00

248.81

1756.00

0.00

749.00

1534.43

3701.00

Segment depreciation

1778.46

1866.28

300.00

232.72

98.95

53.02

33.57

2.02

2210.98

2154.04

Information about Secondary Business Segments Revenue by Geographical Markets India

57053.09

42961.87

Outside India

10460.53

10448.47

Total

67513.62

53410.34

70771.60

66908.59

Carrying Amount of Segment Assets India Outside India Total

–

–

70771.60

66908.59

Notes : 1.

2.

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

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

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

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

Others includes medical diagnostics business and finance operations.

3.

The geographical segments are as follows : – Sales in India represent sales to customers located in India – Sales outside India represent sales to customers located outside India.

35

Industries Limited Schedule 22 : Notes to Accounts (contd.)

17.

Related Party Disclosures a) Related Parties with whom transactions have taken place during the year, with the names and description of relationship.

Party where control exists : Godrej & Boyce Mfg. Co. Ltd., the holding company.

Subsidiary companies : Ensemble Holdings & Finance Ltd. Girikandra Holiday Homes & Resorts Ltd. Godrej Agrovet Ltd. Godrej Global Mid-East FZE Godrej Global Solutions Ltd. Godrej International Ltd. Godrej Properties & Investments Ltd. Godrej Remote Services Ltd. Godrej Tea Ltd. Goldmohur Foods & Feeds Ltd. Hybrigene Biotechnology Ltd. Sahyadri Aerosols Ltd. Tahir Properties Ltd. b)

Fellow Subsidiaries : Godrej Appliances Ltd. Godrej Consumer Products Ltd. Godrej Foods Ltd. Godrej Infotech Ltd. Associate / Joint Venture Companies : Godrej SaraLee Ltd. Godrej Photo-Me Ltd. Swadeshi Detergents Ltd. Compass Connections Ltd. Key Management Personnel : Mr. N.B. Godrej Ms. T.A. Dubash Mr. Mathew Eipe Mr. C.K. Vaidya Mr. M.P. Pusalkar Relative of Key Management Personnel : Ms. Nisa A. Godrej Enterprises over which key management personnel exercise significant influence Bahar Agrochem & Feeds Pvt. Ltd.

Transactions with Related Parties Rs. lac

Nature of Transaction Sale of Goods Previous Year Purchase of goods & equipment Previous Year Processing charges received Previous Year Commission received Previous Year Recovery of establishment & other expenses Previous Year Establishment & other expenses paid Previous Year Refund of Deposit Previous Year Interest received Previous Year Interest paid Previous Year Finance provided including loans & equity contributions Previous Year Finance received during the year Previous Year Finance repaid during the year Previous Year Guarantees & collaterals given Previous Year Dividend income Previous Year Dividend paid Previous Year Provision for diminution in value of investments Previous Year Balances Written Off Previous Year Remuneration Previous Year Balance Outstanding as on March 31, 2003 Receivables Previous Year Payables Previous Year

36

Key Management Personnel

Relative of Key Management Personnel

Enterprises over which Key Management Personnel exercise significant influence

Holding Company

Subsidiary Companies

Fellow Subsidiaries

Associate/ Joint Venture Companies

17.95 13.42 56.86 89.11 – – – – 4.49 – 151.34 107.77 – – – – – –

0.47 0.90 6.24 – – – – – 244.70 281.72 211.32 64.91 12.71 – 18.05 34.40 – 15.67

2930.84 1433.07 1173.27 1290.08 1931.99 1786.03 33.00 20.49 1121.73 2015.78 55.60 54.32 2.00 – 24.39 27.31 4.16 7.65

3.25 37.84 43.24 7.57 – – – – 229.35 261.44 1.82 28.59 23.20 – – – – –

– – – – – – – – – – – – – – 0.35 3.03 – –

– – – – – – – – – – – – – – – – – –

0.44 1.26 – – – – – – 0.06 0.05 – – – – – – – –

2952.95 1486.49 1279.61 1386.76 1931.99 1786.03 33.00 20.49 1600.33 2558.99 420.08 255.59 37.91 – 42.79 64.74 4.16 23.32

23.02 – – – – – – – – – 246.36 1203.29 – – – – – –

1149.09 2921.18 0.70 800.00 – – 3500.00 – 534.30 538.86 0.59 2.88 – 901.34 – – – –

3029.00 817.32 200.00 1765.00 500.00 – – 5000.00 88.00 – – – – – – – – –

429.58 – – – – – 60.00 – 1275.33 1526.61 – – – 97.11 – 76.61 – –

– 1.20 1.98 – – – – – – – 3.25 12.68 – – – – 255.28 242.36

– – – – – – – – – – – – – – – – 6.40 1.88

– – – – – – – – – – – – – 191.32 – – – –

4630.69 3739.70 202.68 2565.00 500.00 – 3560.00 5000.00 1897.63 2065.47 250.20 1218.85 – 1189.77 – 76.61 261.68 244.24

1.94 0.85 1.23 5.82

279.31 69.54 73.53 –

195.80 967.46 85.36 568.80

8.93 7.45 4.65 17.08

6.69 73.37 – –

– – – –

89.42 252.40 0.11 –

582.09 1371.07 164.88 591.70

Total

Annual Report 2002-2003 Schedule 22 : Notes to Accounts (contd.)

18.

Earnings per Share a.

19.

This Year

Previous Year

Calculation of weighted average number of equity shares Number of shares at the beginning of the year

Nos.

6,17,10,218

5,98,28,780

Shares issued pursuant to the scheme of arrangement

Nos.

–

18,81,438

Shares bought back pursuant to the scheme of arrangement for buyback

Nos.

1,30,68,276

–

Number of equity shares outstanding at the end of the year

Nos.

4,86,41,942

6,17,10,218

Weighted average number of equity shares outstanding during the year

Nos.

5,82,37,279

6,12,39,858

b.

Net profit after tax available for equity shareholders

Rs. lac

3420.63

3109.58

c.

Basic and diluted earnings per share of Rs. 6 each

Rupees

5.87

5.08

This Year Rs. lac

Previous Year Rs. lac

3267.78

2987.93

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

Rs. lac Profit for the year after tax as per Profit & Loss Account Add : Depreciation as per accounts Managerial Remuneration (Profit)/loss on sale of assets as per books Prior period adjustments (Income) Provision for doubtful debts / advances and depletion in value of investments Provision for Tax

2210.98

2154.04

311.37

225.42

(1.27)

34.12

152.85

121.65

(37.86)

(1660.38)

2540.00

1073.00 5176.07

1947.85

8443.85 Less : Losses of the earlier year Depreciation under Section 350 of the Companies Act, 1956

12219.97

2197.26

2066.79

Profit on sale of assets under Section 349

38.66

34.12

Profit/( loss ) on sale of investments

39.26

(1174.31)

Net Profit / (Loss) for the purpose of Directors’ Remuneration 20. Managerial Remuneration

Salaries and allowances

This Year Rs. lac

Previous Year Rs. lac

268.62

196.78

Contribution to Provident Fund

10.43

8.41

Estimated Monetary value of perquisites

28.50

18.58

Directors’ Fees TOTAL

4935.78

8210.79

3.82

1.65

311.37

225.42

13146.57 (8210.79)

PLVR as remuneration for the year 2002-03. The Company proposes to obtain the approval of Central Government for PLVR for financial year 2002-03 (Managing Director – Rs. 20.96 lac and Executive Directors – Rs. 77.30 lac) as provided in the accounts for the year 2002-03 along with the approval for managerial remuneration for financial year 2003-04.

21.

Auditors’ Remuneration (Excluding Service Tax)

Audit fees (including Rs. 0.75 lac to branch auditors, Previous Year Rs. 0.64 lac) Tax audit fees

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

10485.97 (2042.12)

Certification and other services

This Year Rs. lac

Previous Year Rs. lac

21.55

21.46

3.75

3.81

11.28

5.24

Tax Consultation and representation

4.92

7.90

Consultation and management services

3.80

10.07

Out of pocket expenses TOTAL

0.62

1.42

45.92

49.90

37

Industries Limited Schedule 22 : Notes to Accounts (contd.)

22.

Sales This Year Item

Unit

Fatty Acids Glycerin Alpha Olefin and its precursors and derivatives Oils & Vanaspati Fruit & Vegetable Puree, Pulp & Juices Fruit beverages and fruit based products Medical Diagnostic Products Others TOTAL 23.

Value Rs. lac

53591 7955 58603 30286 2843 5487 – –

15744.58 4306.97 21206.52 14091.43 945.25 1483.14 714.11 430.47 58922.47

Quantity 40940 7831 57951 17635 3254 2946 – –

Previous Year Value Rs. lac 10067.22 4051.57 21816.04 7689.98 585.00 820.00 515.05 346.33 45891.19

Inventories - Finished Goods Item Fatty Acids Glycerin Alpha Olefin and its precursors and derivatives Oils & Vanaspati Fruit & Vegetable Puree, Pulp & Juices Fruit beverages and fruit based products Medical Diagnostic Products Others TOTAL

24.

MT MT MT MT MT KL

Quantity

Unit MT MT MT MT MT KL

March 31, 2003 Quantity Value Rs. lac 1959 309 3256 786 1751 944 –

731.61 180.19 1190.39 396.00 388.07 262.10 177.60 23.18 3349.14

March 31, 2002 Quantity Value Rs. lac 949 37 2066 1127 220 652 –

318.65 19.54 732.63 455.15 52.00 149.00 187.27 – 1914.24

March 31, 2001 Quantity Value Rs. lac 1052 23 1658 – – – –

323.05 12.83 750.58 – – – 353.10 – 1439.56

Raw Materials Consumed This Year Unit Oils & Fats Chemicals and Catalysts Fruit Pulp & Concentrates Packing Materials, etc.

TOTAL

MT MT KL

Quantity 138129 13500 10496

Value Rs. lac 30145.40 3799.78 947.97 3341.19 38234.34

Quantity 127812 12720 4291

Previous Year Value Rs. lac 23070.45 2372.03 210.00 2728.61 28381.09

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

25.

Purchase of Goods This Year Unit Fatty Acids Oils & Vanaspati Medical Diagnostic Products Others TOTAL

26.

MT MT

Quantity 191 8872

Value Rs. lac 55.00 3454.93 531.55 111.40 4152.88

Quantity 142 1462

Previous Year Value Rs. lac 38.08 510.00 224.58 64.74 837.40

Licensed, Installed and Utilised Capacity Item

Unit

Licensed Capacity

Installed Capacity

Actual Production

This Year

Previous Year

This Year

Previous Year

32000 8280

32000 8280

49201 8139

40397 7909

35000 26381 1200 30000 5000 38700 250

35000 26381 1200 30000 5000 38700 250

63579 20729 – 5834 4860 20358 41

51624 19075 – 3392 1561 16046 28

1800 11250 1224000 612000

1800 11250 1224000 612000

– 13384 569748 284874

– 11492 543602 271801

SCHEDULED Fatty Acids Glycerin Alpha Olefin and its precursors and derivatives Soaps Cosmetics Fruit Beverages & Fruit based products Fruit & Vegetable Puree, Pulp & Juices Refined Oils & Vanaspati Dietetic & Geriatic foods U.H.T./Sweetend Flavoured Milk Synthetic Detergents Hydrogen (Captive consumption) Oxygen (By-Product)

38

MT MT MT MT MT KL MT MT MT KL MT NM3 NM3

} } } } } } } } } } } } } } }

N.A.

Annual Report 2002-2003 Schedule 22 : Notes to Accounts (contd.)

Notes : a. The Licensed capacities are not applicable in view of the exemption from licensing granted under Notification SO 477(E) dated 25th July 1991, issued under the Industries (Development & Regulation) Act, 1951. b. Alpha Olefin and its precursors and derivatives includes Fatty Alcohols and A.O. Sulphonates. c. Installed capacity excludes the installed capacity for manufacture of intermediates which are intended to be used for internal consumption to manufacture A.O. and its precursors and derivatives.

This Year Previous Year Rs. lac Rs. lac 27. Value of Imports on CIF Basis (includes only Imports directly made) Raw materials 18372.53 12797.81 Goods for resale 163.72 166.14 Stores & spares 119.50 402.01 Capital goods 51.12 40.95 TOTAL 18706.87 13406.91 28. Expenditure in Foreign Currency Consultancy Fee Interest Travelling expenditure Other expenditure Expenses for Foreign Branch: - Salaries and allowance - Rent - Others TOTAL This Year Rs. lac 29. Value of Consumption of Raw Materials & Spares Raw Materials Imported (including duty content) Indigenous Spares Imported (including duty content) Indigenous

30. Dividends Remitted in Foreign Currency (subject to deduction of tax, as applicable) Interim Dividend for Financial Year 2001-02 to 141 shareholders on 9,854 shares TOTAL 31. Earnings in Foreign Exchange Export of goods (F.O.B. : this year Rs. 9202.81 lac Previous Year Rs. 9833.41 lac) Dividend Interest TOTAL 32.

– 509.21 76.08 206.18

44.67 621.36 78.32 299.73

80.24 20.14 26.14 917.99

70.77 17.01 26.83 1158.69

33.

1.

2.

3.

Registration No.

:

State Code

:

97781 11

Balance Sheet Date

:

31/3/2003

Public Issue

:

Nil

Rights Issue

:

Nil

Bonus Issue

:

Nil

Private Placement (Preference)

:

Nil

Total Liabilities

:

50142.93

Total Assets

:

50142.93

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

Position of mobilisation and deployment of funds (Amount in Rs. lac)

Sources of Funds

Previous Year Rs. lac %

Additional Information as required Under Part IV of Schedule VI to the Companies Act, 1956 Registration Details

Paid-up Capital

:

2918.52

Reserves & Surplus

:

21510.77

Secured Loans

:

14815.48

Unsecured Loans

:

7432.16

Deferred Tax Liability

:

3466.00

Application of Funds %

Net Fixed Assets

:

28129.50

24552.99 13681.35

64 36

17939.75 10441.34

63 37

Investments

:

18646.01

Net Current Assets

:

2944.51

38234.34

100

28381.09

100

Misc. Expenditure

:

422.91

335.50 530.46

39 61

323.15 444.12

42 58

Accumulated Losses

:

Nil

865.96

100

767.27

100

4.

Performance of Company (Amount in Rs. lac) Turnover (Income from Operations)

:

65250.60

Total Expenditure (Net of Other Income)

:

59442.82

Profit/(Loss) before tax

:

5807.78

Profit/(Loss) after tax

:

3420.63

0.05

0.30

Earning per Share in Rs.

0.05

0.30

(on an annualised basis)

:

5.87

Dividend rate %

:

33.33%

9719.01

10428.17

– 27.62

63.56 –

9746.63

10491.73

Figures for the previous year have been regrouped wherever necessary. Figures for the Previous Year include the figures for the manufacturing business of Godrej Foods Limited from June 30, 2001. The current year's figures are accordingly not comparable to those of the Previous Year.

Generic Names of the three principal products/services of Company Item Code No.

:

38.23*

Product description Item Code No.

: :

Fatty Acids/Fatty Alcohols 15.16*

Product description Item Code No.

: :

Vanaspati/Refined Oils 22.02*

Product description

:

Fruit Drinks

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

39

Industries Limited CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2003 A.

B.

C.

Cash Flow from Operating Activities : Profit before tax and exceptional items Adjustments for : Depreciation Foreign exchange Loss/(Profit) on sale of investments Loss/(Profit) on sale of fixed assets Dividend income Interest income Interest expense Voluntary retirement compensation and other expenses deferred Deferred expenditure written off Provision for doubtful debts and sundry balances written back (net) Others Operating profit before working capital changes Adjustments for : Inventories Trade and other receivables Trade payables Cash generated from operations Direct taxes paid Direct taxes refund received Net Cash from operating activities Cash Flow from Investing Activities : Purchase of fixed assets Proceeds from sale of fixed assets Purchase of investments Proceeds from sale of investments Intercorporate deposits/Loans (net) Interest received Dividend received Net Cash generated/(used) from investing activities Cash Flow from Financing Activities : Purchase of shares under a scheme of arrangement Proceeds from share capital Proceeds from borrowings Repayments of borrowings Bank overdrafts (net) Repayment of finance lease liabilities Interest paid Dividend paid Tax on distributed profits Net Cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents (Opening Balance) Add : Cash and cash equivalents taken over from Godrej Foods Limited Less : Cash and cash equivalents transferred to Godrej Consumer Products Limited

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

Cash and Cash equivalents.

Cash on hand and balances with banks Effect of exchange rate changes Cash and cash equivalents 2.

3.

4.

This Year Rs. lac

Previous Year Rs. lac

5807.78

4060.93

2210.98 (27.82) (39.26) (1.27) (1897.65) (444.41) 2166.05 (27.31) 482.24 (65.90) 8.15 8171.58

2154.04 103.49 1174.31 34.12 (2090.97) (194.86) 3393.91 (294.26) 252.36 (1339.00) 111.17 7365.24

(2814.98) 835.98 7597.55 13790.13 (499.00) 828.38 14119.51

286.59 1743.49 (2243.64) 7151.68 (571.24) 64.51 6644.95

(1869.88) 139.74 (4158.05) 172.02 611.24 476.98 1897.65 (2730.30)

(1036.86) 106.02 (1656.87) 1764.03 (166.96) 158.15 2090.97 1258.48

(2341.40) 1.26 14023.28 (19021.26) (1028.76) (1.47) (2322.75) (364.23) – (11055.33)

– – 26124.46 (29636.44) 1333.14 (1.63) (3737.14) (1765.20) (182.94) (7865.75)

333.88 1543.32 – – 1543.32

37.68 2266.91 447.00 (1208.27) 1505.64

1877.20

1543.32

1877.53 (0.33) 1877.20

1540.33 2.99 1543.32

Repayments of borrowings are net of Intercorporate borrowings aggregating Rs. 2375.00 lac (Previous Year Rs. 19060.59 lac).

To finance working capital requirements, the Company’s Bankers have sanctioned a total fund-based limit of Rs. 5800 lac. Of this, limits utilised as on March 31, 2003 is Rs. 3196.28 lac.

The figures of previous year have been regrouped wherever necessary.

Mumbai, May 28, 2003

S.K. BHATT Company Secretary

A.B. GODREJ N.B. GODREJ

Chairman Managing Director

AUDITORS’ CERTIFICATE We have verified the above Cash Flow Statement of Godrej Industries Limited derived from the Audited Financial Statements for the year ended March 31, 2003 and found the same to be drawn in accordance therewith and also with the requirements of Clause 32 of the listing agreements with stock exchanges.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants V.R. MEHTA Partner Mumbai, May 28, 2003

40

Annual Report 2002-2003 CONSOLIDATED ACCOUNTS REPORT OF THE AUDITORS TO THE BOARD OF DIRECTORS OF GODREJ INDUSTRIES LIMITED 1.

2.

3.

4.

5.

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

We have examined the attached Consolidated Balance Sheet of Godrej Industries Limited, its subsidiaries, joint ventures and associates as at March 31, 2003, the Consolidated Profit and Loss Account for the year ended on that date annexed thereto and the Consolidated Cash Flow Statement for the year then ended. These consolidated financial statements are the responsibility of Godrej Industries Limited’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material aspects, in accordance with an identified financial reporting framework and are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

We did not audit the financial statements of certain subsidiaries, joint ventures and associates, whose financial statements reflect total assets of Rs. 6603.77 lac as at March 31, 2003 and total revenues of Rs. 48251.66 lac for the year then ended.

These financial statements have been audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to the amounts included in respect of the subsidiaries, joint ventures and associates is based solely on the report of the other auditors.

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

6.

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

in case of the Consolidated Balance Sheet, of the consolidated state of affairs of Godrej Industries Limited, its subsidiaries and its interests in joint ventures and associates as on March 31, 2003;

b)

in case of the Consolidated Profit and Loss Account, of the consolidated results of operations of Godrej Industries Limited, its subsidiaries and its interests in joint ventures and associates for the year then ended; and

c)

in case of the Consolidated Cash Flow Statement, of the consolidated cash flows of Godrej Industries Limited, its subsidiaries and its interests in joint ventures and associates for the year then ended.

For and on behalf of

We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS) 21 Consolidated Financial Statements, Accounting Standard (AS) 23 – Accounting for Investments in Associates in Consolidated Financial Statements and Accounting Standard (AS) 27 – Financial Reporting of Interests in Joint Ventures, issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of Godrej Industries Limited, its subsidiaries, joint ventures and associates included in the consolidated financial statements.

KALYANIWALLA & MISTRY Chartered Accountants V. R. MEHTA Partner M. No.: 32083

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

Mumbai: May 28, 2003.

41

Industries Limited – Consolidated Accounts CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2003 This Year Rs. lac

Schedule

Previous Year Rs. lac

SOURCES OF FUNDS 1.

Shareholders’ Funds (a) Share capital

1

2912.58

3692.36

(b) Reserves & Surplus

2

24988.62

24018.09

2.

Minority Interest

3.

Loan Funds

4.

27901.20 4753.64

27710.45 2668.11

(a) Secured loans

3

26791.60

25618.83

(b) Unsecured loans

4

13770.42

19798.20

Deferred Tax Liability TOTAL

40562.02 3841.67

45417.03 1663.50

77058.53

77459.09

APPLICATION OF FUNDS 5.

Fixed Assets

5

(a) Gross block

64723.53

59847.59

(b) Less: Depreciation

26165.93

22566.10

(c) Net block

38557.61

37281.49

481.65

274.13

(d) Capital work-in-progress 6.

Goodwill (on Consolidation)

7.

Investments

8.

Current Assets, Loans and Advances

6

39039.26 11602.23

37555.62 6927.70

4085.71

5697.01

(a) Inventories

7

24148.25

19145.45

(b) Sundry debtors

8

15192.34

16887.27

(c) Cash and bank balances

9

3764.71

3271.77

(d) Other Current Assets (e) Loans and advances

10

12.15

59.14

13428.88

14184.53

56546.33

53548.16

Less : Current Liabilities and Provisions (a) Liabilities

11

32303.71

24634.08

(b) Provisions

12

3702.14

2547.52

36005.85

27181.60

Net Current Assets 9.

Miscellaneous Expenditure (To the extent not written off or adjusted) TOTAL Notes to Accounts

13

20540.48

26366.56

1790.85

912.20

77058.53

77459.09

22

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

As per our Report attached

Signatures to Balance Sheet and Schedules 1 to 13 and 22

For and on behalf of Kalyaniwalla & Mistry Chartered Accountants

V. R. Mehta Partner Mumbai, May 28, 2003

42

A. B. Godrej Chairman

S. K. Bhatt Company Secretary

N. B. Godrej Managing Director

Annual Report 2002-2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2003 Schedule

This Year Rs. lac

Previous Year Rs. lac

14 15

166163.18 2405.52

127820.85 1944.52

168568.70

129765.37

122919.46 34705.01 (2693.55) 3525.35 3249.55

89834.47 26482.31 681.55 4845.74 2981.21

(9.02)

(97.72)

161696.80

124727.56

6871.90 —

5037.81 (673.71)

6871.90

4364.10

772.38 1902.59

449.21 1129.00

4196.93 82.13

2785.89 136.52

Share of Loss in Associates

4279.05 (125.45)

2922.41 —

Profit before Minority Interest Share of Minority Interest

4153.60 (744.14)

2,922.41 (282.44)

Profit after Minority Interest Transfer from Debenture Redemption Reserve Surplus brought forward Adjustment for subsidiaries added/deleted Share in jointly controlled entities

3409.46 — 10606.04 1276.35 (209.68)

2639.97 112.50 8783.21 — —

Profit After Tax Available For Appropriation

15082.16

11535.67

APPROPRIATIONS : Dividend on Equity shares - Interim - Final Tax on distributed profits Transfer to General Reserve Surplus carried forward

1091.57 1021.03 139.23 607.32 12223.01

369.66 — 54.97 505.00 10606.04

15082.16

11535.67

5.86

4.32

INCOME Sale of Products & Services Other Income EXPENDITURE Materials consumed and purchase of goods Expenses Inventory change Interest and financial charges (net) Depreciation (including share in jointly controlled entities Rs. 135.74 lac) (Net of transfer from Revaluation Reserve Rs. 235.24 lac, Previous year Rs. 237.33 lac) Amount transferred to project in progress

16 17 18 19

Profit Before Tax & Exceptional items Exceptional items

20

Profit Before Tax Provision for taxation - Current Tax - Deferred Tax Profit for the year after taxation Prior Period adjustments (net)

21

TOTAL Basic & Diluted EPS of Rs. 6 per share Notes to Accounts

22

The Schedules referred to above form an integral part of the Profit and Loss Account As per our Report attached

Signatures to Profit & Loss Account and Schedules 14 to 22

For and on behalf of Kalyaniwalla & Mistry Chartered Accountants

V. R. Mehta Partner Mumbai, May 28, 2003

A. B. Godrej Chairman

N. B. Godrej Managing Director

S. K. Bhatt Company Secretary

43

Industries Limited – Consolidated Accounts SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2003 SCHEDULE 1 : SHARE CAPITAL Authorised: 13,33,33,333 Equity shares of Rs.6 each 10,00,00,000 Unclassified Shares of Rs.10 each

This Year Rs. lac

Previous Year Rs. lac

8000.00 10000.00 18000.00

8000.00 10000.00 18000.00

2912.58 — 2912.58

3696.67 4.31 3692.36

Issued, Subscribed and Paid Up: 4,85,42,952 (Previous year 6,16,11,228) Equity shares of Rs. 6 each fully paid Less : Calls in arrears

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

SCHEDULE 2 : RESERVES AND SURPLUS

Capital Reserves Securities Premium Account Capital Investment Subsidy Reserve Revaluation Reserve Capital Redemption Reserve Total Capital Reserve Revenue Reserves General Reserve Profit and Loss Account Total Revenue Reserves Total Reserves - 31st March, 2003 Total Reserves - 31st March, 2002

SCHEDULE 3 : SECURED LOANS Term loans from financial institutions Term loans from banks Bank overdrafts From State Industrial Corporation of Maharashtra Ltd.

As at 1st April, 2002

Share in jointly controlled entities

Additions

Deductions

Rs. lac As at 31st March, 2003

1560.55 40.01 3775.17 3125.00 8500.73

– – – 228.89 228.89

8.51 11.54 – – 20.05

(469.90) – (282.69) – (752.59)

1099.16 51.55 3492.48 3353.89 7997.08

4911.31 10606.05 15517.36 24018.09 29764.86

348.18 (153.22) 194.96 423.85 –

607.32 1770.18 2377.50 2397.55 2739.32

(1098.28) – (1098.28) (1850.87) (8486.09)

4768.53 12223.01 16991.54 24988.62 24018.09

This Year Rs. lac

Previous Year Rs. lac

950.00 19364.91 6476.69 — 26791.60

2682.80 15738.12 6447.91 750.00 25618.83

SCHEDULE 4 : UNSECURED LOANS Fixed deposits Intercorporate deposits Commercial paper Short term loans from banks Loan from financial institutions Sales tax deferment facility Share in jointly controlled entities

This Year Rs. lac

Previous Year Rs. lac

5518.74 1436.83 1000.00 800.00 4331.11 259.61 424.13 13770.42

8011.32 3714.77 1000.00 5829.66 1020.25 222.20 — 19798.20

SCHEDULE 5 : FIXED ASSETS

(Rs. lac)

ASSETS

GROSS BLOCK

As on 01.04.2002

GOODWILL

Share Assets in Transferred jointly consequent to controlled scheme of entities arrangement on added 1.4.2001

Assets taken over consequent to scheme of arrangement on 30.6.2001

DEPRECIATION

Additions

Deductions/ Adjustments

As on 31.3.2003

Upto 31.03.2002

Share in Jointly entities added

upto 1.4.2001 transferred consequent to scheme of arrangement

Depreciation upto 30.6.2001 taken over consequent to scheme of arrangement

-

-

1.29

-

5.15

-

4.34

45.49

1418.99

1413.79

-

-

88.86

286.77

2284.13

9256.51

7842.15

-

184.36

2332.03

20309.67

6.44

-

-

-

-

6.44

1.29

-

LAND

1454.94

-

-

-

25.65

16.11

1464.48

41.15

-

BUILDINGS

9928.37

-

-

-

1680.52

68.25

11540.64

2086.22

-

1731.73

302.92

42083.44

18162.00

PLANT & MACHINERY

-

NET BLOCK

-

Upto 31.03.2003

-

As on As on 31.03.2003 31.03.2002

-

-

-

21773.77

22492.62

155.69

-

-

-

-

5.35

150.34

49.38

-

-

-

3.06

5.07

51.39

98.95

106.31

1357.41

-

-

-

144.23

10.19

1491.45

678.59

-

-

-

6.72

111.29

783.16

708.29

678.82

1092.10

-

-

-

185.70

44.23

1233.57

504.15

-

-

-

24.41

138.47

618.21

615.36

587.95

1412.04

-

-

-

221.70

263.92

1369.82

538.92

-

-

-

150.11

176.25

565.06

804.76

873.12

TREES DEVELOPMENT COST

464.09

-

-

-

-

-

464.09

123.41

-

-

-

-

25.15

148.56

315.53

TECHNICAL KNOWHOW FEES

200.00

-

-

-

-

-

200.00

95.70

-

-

-

-

33.33

129.03

70.97

104.30

3121.89

-

-

-

0.10

-

3121.99

285.29

-

-

-

-

233.27

518.56

2603.43

2836.60

-

-

-

-

54.20

-

54.20

-

-

-

-

-

3.09

3.09

51.11

-

-

1,528.18

-

-

106.23

84.90

1549.51

-

622.13

-

-

48.28

135.73

709.58

839.93

-

TOTAL - This Year

59847.60

1,528.18

-

-

4,150.06

802.31

64723.53

22566.10

622.13

-

-

507.09

3484.79

26165.93

38557.61

37281.49

- Previous Year

65024.63

-

14,347.32

6493.96

3155.40

479.08

59847.59

21889.95

-

4445.27

2120.03

217.15

3218.54

22566.10

OFFICE & OTHER EQUIPMENTS VEHICLES

TRADEMARKS

-

For the Year

40654.63

RESEARCH CENTRE FURNITURE & FIXTURES

-

Deductions/ Adjustments

340.68

Assets Under Finance Lease - Vehicles Share in Jointly controlled entities

Capital Work-in-progress TOTAL

1.

2.

3.

4.

5.

44

37281.49 481.65

274.13

39039.26

37555.62

Land includes leasehold land of Rs. 240.87 Lac (Previous Year Rs. 281.61 Lac) which is being amortised over the period of lease.

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.

Depreciation for the year includes Rs. 235.24 Lac (Previous Year Rs. 237.33 Lac) being depreciation on revalued component of the fixed assets.

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

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

Annual Report 2002-2003 SCHEDULES FORMING PART OF THE CONSOLIDATED .. (contd.)

SCHEDULE 6 : INVESTMENTS FACE VALUE

Number as on 31.03.03

Notes

(Rs.)

—— Amount —— As on As on 31.03.03 31.03.02 Rs. lac Rs. lac

LONG TERM INVESTMENTS - At cost A.

TRADE INVESTMENTS : Equity Shares : Fully Paid Quoted : Godrej Consumer Products Ltd. Alacrity Housing Ltd. Alsa Construction & Housing Ltd. Ansal Buildwell Ltd. Ansal Properties & Construction Ltd. Ansal Properties & Industries Ltd. D. S. Kulkarni Developers Ltd. Godrej Foods Ltd. Golden Agro-tech Industries Ltd. Lok Housing & Construction Ltd. Mantri Housing & Construction Ltd. Premier Housing & Industrial Ent. Ltd. Radhe Developers Ltd.

4 10 10 10 10 10 10 10 10 10 10 10 10

22,00,000 100 100 100 100 100 100 14,84,864 100 100 100 100

2404.11 0.01 0.01 0.01 0.01 0.03 0.01 13.64 — 0.01 0.02 0.02 0.01

— 0.01 0.01 0.01 0.01 0.03 0.01 13.64 0.02 0.01 0.02 0.02 0.01

Unquoted : Joint Venture : Godrej Photo-Me Ltd. Godrej Sara Lee Ltd.

10 4

— —

— —

97.59 5479.63

£0.25 10 10

13,692 389,269 209,370

117.21 92.00 91.48

97.01 110.28 191.33

100 10

114 250,000

11.57 100.50

11.57 100.50

$0.10

495,050

465.30

465.30

10

5,000,000

(b)

425.00

—

(c)

314.52

—

(d)

30.00 0.04 0.03 — 0.06 0.02 0.12

30.00 0.04 0.03 6.30 0.06 0.02 0.03

17.60

17.60

Associates : Compass Connections Ltd. Personalitree Academy Ltd. Swadeshi Detergents Ltd. Others : Gharda Chemicals Ltd. karROX Technologies Ltd. Preference Shares : Fully Paid C Bay Systems Ltd. Preference Shares : Partly Paid Godrej Foods Ltd. (8% 10 year Redeemable Cumulative Preference Shares) Optionally Convertible Subordinated Notes C ‘Bay Systems Ltd. B.

$800,000

OTHER INVESTMENTS : Equity Shares: Fully Paid Quoted Tata Engineering & Locomotive Co. Ltd. The Great Eastern Shipping Co. Ltd. A. B. Corp. Ltd. Sandesh Ltd. Unitech Ltd. United Textiles Ltd. Others

10 10 10 10 10 10 10

9,376 186 25,000 — 100 23,700 1

Unquoted Bharuch Eco-Aqua Infrastructure Ltd. - Partly paid

10

440,000

(a)

Government Securities Unquoted : National Plan Certificate National Savings Certificates Indira Vikas Patra Kisan Vikas Patra

31600 142000 13000 2000

0.32 0.77 0.21 0.02

0.04 1.42 0.13 0.30

11.99% Govt. Stock 2009*

5000000

—

51.78

45

Industries Limited – Consolidated Accounts SCHEDULES FORMING PART OF THE CONSOLIDATED .. (contd.)

FACE VALUE

Number as on 31.03.03

Notes

(Rs.) 14% Govt. Stock 2005 * 10.25% Govt. Stock 2012* * (sold during the year)

450000 7120000

Units of Mutual Funds Unquoted Unit Trust Of India - Unit Scheme 1964 Shares in Co-operative Societies - Fully Paid Unquoted : The Saraswat Co-op. Bank Ltd. Sachin Industrial Co-op. Bank Ltd.

—— Amount —— As on As on 31.03.03 31.03.02 Rs. lac Rs. lac — —

5.22 71.09

10

2,566,703

383.00

383.00

10 500

2,000 3

0.20 0.02

0.20 0.02

Share in Jointly controlled entities Less: Provision for diminution in value of Investments Aggregate Book Value of Investments Quoted Unquoted

Market Value of Quoted Investments

45.33

—

4513.21 (427.50)

7134.29 (1437.28)

4085.71

5697.01

2448.16 1637.55

50.28 5646.73

4085.71

5697.01

2339.53

21.64

NOTES : (a) The said shares have been refused for registration by the investee company (b) Rs. 1.50 per share is payable in one or more calls on these shares. (c) Optional Convertible Subordinated Notes are convertible into 8% Series E Cumulative Redeemable Preferred Stock of US $0.01 at par value at the conversion price of US$ 2.60 per share upto 15th July, 2003, at the option of the investor. (d) Others represents investments in Companies where the number of shares held and amount is insignificant.

SCHEDULE 7 : INVENTORIES (at lower of cost and net realisable value) Stores and spares Raw materials Work-in-progress Finished goods Stock-in-trade Projects-in-progress Share in jointly controlled entities

SCHEDULE 8 : SUNDRY DEBTORS (Unsecured) Debts outstanding over six months Considered good Considered doubtful Other debts, considered good Less: Provision for doubtful debts Share in jointly controlled entities

SCHEDULE 9 : CASH AND BANK BALANCES Cash and cheques on hand Balances with scheduled banks - on current accounts - on deposit accounts (refer note 8) Share in jointly controlled entities

This Year Rs. lac

Previous Year Rs. lac

611.18 12142.98 1525.41 6110.49 1437.86 963.44 1356.89 24148.25

527.37 8849.43 1198.36 4184.08 — 4386.21 — 19145.45

1232.49 961.51 2194.00 13424.20 15618.20 (961.51) 14656.69 535.65 15192.34

978.70 1084.74 2063.44 15908.57 17972.01 (1084.74) 16887.27 — 16887.27

147.97

212.59

2363.05 996.44 257.25

2211.90 847.27 –

3764.71

3271.77

SCHEDULE 10 : LOANS AND ADVANCES (Unsecured and considered good unless otherwise stated) Loans & Advances Advances recoverable in cash or in kind or for value to be received (net of provision for doubtful advances Rs. 830.63 lac, previous year Rs. 891.91 lac) Intercorporate deposits - Associate companies - Others Deposits and balances with - Customs & excise authorities - Others Advance payment of taxes (net of Provision for tax Rs. 4586.34 lac, previous year Rs. 4551.94 lac) Share in jointly controlled entities SCHEDULE 11 : CURRENT LIABILITIES Acceptances Sundry creditors Advances from customers Sundry deposits Investor Education & Protection Fund* - Unclaimed dividend - Unpaid Application Money - Unpaid Matured Deposits - Unpaid Matured Debentures - Interest accrued on above Other liabilities Interest accrued but not due Share in jointly controlled entities

This Year Rs. lac

Previous Year Rs. lac

2468.47

1682.30

8865.54

9129.52

89.40 239.10

546.40 377.38

185.60 1109.54 110.90

804.56 998.13 646.24

360.33 13428.88

— 14184.53

686.49 23600.65 421.74 2275.88

271.05 14706.65 5544.47 1924.38

79.28 3.43 122.46 133.60 66.60 2408.51 222.53 2282.54 32303.71

78.42 — 10.91 124.03 66.60 1475.23 432.33 – 24634.08

* There is no amount due and outstanding to be credited to Investor Education & Protection Fund, except for Rs. 3.73 lac.

46

Annual Report 2002-2003 SCHEDULES FORMING PART OF THE CONSOLIDATED .. (contd.)

This Year Rs. lac SCHEDULE 12 : PROVISIONS Proposed dividend - Interim - Final Provision for tax on distributed profits Provision for retirement benefits Share in Jointly controlled entities

SCHEDULE 13 : MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) Deferred revenue expenditure - Gratuity - Voluntary retirement compensation - Preliminary Expenses - Brand Promotion Expenses - Software Development Expenses - Others Share in jointly controlled entities

Previous Year Rs. lac SCHEDULE 17 : EXPENSES Salaries, wages and allowances

— 1021.03 139.23 2490.19 51.69 3702.14

369.66 — — 2177.86 — 2547.52

SCHEDULE 15 : OTHER INCOME Interest : - Government Securities - Income tax refund - Others Provision for depletion in value of long investments written back Dividend - from other investments - from long term trade investments Miscellaneous income Profit on sale of fixed assets Profit / (loss) on sale of long term investment Share in jointly controlled entities

Previous Year Rs. lac

8170.86

7169.75

Contribution to provident fund and other funds

498.23

445.77

Employee welfare expenses

762.64

619.15

Stores and spares consumed

1217.51

1050.05

Power and fuel

5211.13

4128.41

Processing charges

2809.83

2873.70

Rent

422.56

365.61

Rates and taxes

506.40

487.22

Repairs and maintenence 11.00 411.91 104.07 620.56 121.75 39.05 482.51 1790.85

51.00 612.46 — — — 248.74 — 912.20

SCHEDULE 14 : SALE OF PRODUCTS AND SERVICES Sales (gross) Less: Excise duty Sales (net) Processing charges Storage charges Export incentives Licence fees and service charges Consultancy & Other charges Project / Development Management Fees Share in jointly controlled entities

This Year Rs. lac

154144.30 4791.81 149352.49 3914.09 12.18 242.42 2054.56 — 796.47 9790.97 166163.18

125526.99 3934.44 121592.55 2736.82 103.27 304.70 2024.92 52.52 1006.07 — 127820.85

36.00 277.91 69.75

13.65 4.80 29.19

2.26

—

- Machinery

878.03

681.08

- Buildings

286.03

231.78

- Other assets Insurance

SCHEDULE 16 : MATERIALS CONSUMED AND PURCHASE OF GOODS Raw materials consumed : Stocks at the commencement of the year 13472.31 Less : Stocks transferred to GCPL consequent to the scheme of arrangement — 13472.31 Add : Purchases (net) 110129.43 123601.74 Less : Stocks as at the close of the year 14041.97 Raw Materials consumed during the year 109559.77 Purchase of goods for resale 8295.03 Share in jointly controlled entities 5064.66 122919.46

25.50 1527.56 343.82 — — — 1944.52

51.06 180.74

Freight

2282.35

2109.73

Commission

2024.20

1910.94

Discount

163.78

80.11

Advertisement and publicity

680.90

284.54

Sales promotion

434.34

264.98

Selling and distribution expenses

520.12

445.71

45.90

321.38

273.85

(282.07)

Bad debts written off Provisions / (write back of provision) for doubtful debts and advances Provision for depletion in value of long term investment Loss on sale of fixed assets Cost of Project Management

0.59

—

—

16.73

5.99

64.53

3573.42

2981.41

3712.71 34705.01

— 26482.31

Finished goods

4055.92

6674.59

Work-in-progress

1198.36

1939.18

—

47.72

Miscellaneous expenses Share in jointly controlled entities

SCHEDULE 18 : INVENTORY CHANGE Stocks at the commencement of the year

Shares, securities, etc.

— 1363.38 583.72 11.65 23.71 37.14 2405.52

50.87 172.77

Share in jointly controlled entities

663.76

—

5918.04

8661.49

Finished goods

—

2451.58

Work-in-progress

—

274.08

—

2725.66

Finished goods

6044.91

4055.92

Work-in-progress

1621.81

1198.36

Less : Stocks transferred to GCPL consequent to scheme of arrangement

Less : Stocks at the close of the year : 12467.01 1689.62 10777.39 86015.64 96793.03 11206.01 85587.02 4247.44 — 89834.47

Share in jointly controlled entities (Increase) / Decrease in Inventory

944.87

–

8611.59

5254.28

(2693.55)

681.55

47

Industries Limited – Consolidated Accounts SCHEDULES FORMING PART OF THE CONSOLIDATED .. (contd.)

This Year

Previous Year

Rs. lac

Rs. lac Net Interest

SCHEDULE 19 : INTEREST AND FINANCIAL CHARGES (Net)

Brokerage and other financial charges

Interest paid - on debentures and fixed loans

1293.10

1880.60

- on bank overdrafts

Share in jointly controlled entities

1292.64

806.05

- to Financial Institutions

289.72

367.97

SCHEDULE 20 : EXCEPTIONAL ITEMS

- on Inter Corporate deposits

331.93

310.61

Loss on Sale of long term investments

- other interest

160.83

1533.40

Provision for depletion in value

3368.22

4898.63

of long term investments written back

Less: Interest received - on loans & deposits

86.13

82.27

- on customer balances, etc.

46.99

64.27

Income-tax

549.14

617.77

Depreciation

14.55

26.99

- projects and landlords - others

696.81

791.30

This Year Rs. lac

Previous Year Rs. lac

2671.41

4107.33

795.52

738.41

58.42

–

3525.35

4845.74

—

1174.31

—

(500.60)

—

673.71

136.94

31.50

—

7.03

(55.89)

97.99

1.08

—

82.13

136.52

SCHEDULE 21 : PRIOR PERIOD ADJUSTMENTS

Excess provision for expenses (net) Share in jointly controlled entities

SCHEDULE 22 : NOTES TO ACCOUNTS 1.

Significant Accounting Policies : a)

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

b)

Construction Work-in-progress is valued at cost. f)

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are stated at the contracted rates, when covered under forward foreign exchange contracts and at year-end rates in other cases. The premium payable on forward foreign exchange contracts is amortised over the period of the contract. Exchange gains/losses are recognised in the Profit and Loss Account except in respect of liabilities incurred to acquire fixed assets in which case they are adjusted to the carrying amount of such fixed assets.

Fixed Assets Fixed Assets are stated at cost or as revalued as the case may be, less accumulated depreciation. Cost includes all expenses related to acquisition and installation, of the concerned asset. Exchange differences arising on account of repayment and year end translation of foreign currency liabilities relating to acquisition of fixed assets are adjusted to the carrying cost of the respective assets.

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

c)

d)

g)

Sales are recognised where goods are supplied and are recorded net of returns, trade discounts, rebates, sales taxes and excise duty.

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

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

Investments

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

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

Interest income is recognised on a time proportion basis.

Inventories Inventories are valued at lower of cost and net realisable value. Cost is computed on weighted average basis and is net of modvat. Finished goods and work-inprogress include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Obsolescence and other anticipated losses are provided for wherever considered necessary.

48

Revenue Recognition

Borrowing Costs

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

Foreign Exchange Transactions

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

Research and Development Expenditure Revenue expenditure on Research & Development is charged to the Profit and Loss Account of the year in which it is incurred. Capital expenditure incurred

Annual Report 2002-2003 during the year on Research & Development is shown as addition to fixed assets. i)

only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year end and based on the tax rate and laws enacted or substantially enacted on the Balance Sheet date.

Depreciation Leasehold land is amortised equally over the lease period. n)

Trademarks are amortised over a period of four to fifteen years depending on the expected utilisation.

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

Depreciation is provided on the straight line method at the rates specified in Schedule XIV to the Companies Act, 1956, except in some subsidiary companies, the impact of which is not material. Computer hardware is depreciated over its estimated useful life of 4 years.

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

2.

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

Retirement Benefits Retirement benefits to employees comprise payments under approved provident fund plans, leave encashment and gratuity to eligible employees. Payments under approved provident fund plans are charged to revenue. The liability in respect of future payment of gratuity to retiring employees and leave encashment benefit on retirement is provided on the basis of an actuarial valuation at the end of each financial year.

k)

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

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

Preliminary Expenses and Share issue expenses are amortised in ten equal instalments.

Software development expenses and Brand promotion expenses, Technical Know-how fees paid for training of personnel are being amortised over a period of 3 years.

l)

Hedging Import of crude palm oil by the Company are being hedged by futures contract on offshore Commodities Exchange. Gains or losses on settled contracts is recognised in the Profit and Loss Account and is included in the cost of materials consumed. Futures contracts not settled as on the Balance Sheet date are marked to market and losses, if any, are recognised in the Profit and Loss Account, whereas, the unrealised profit is ignored.

m) Taxes on Income Current tax is the amount of tax payable on the taxable income for the year determined in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognised on timing differences, being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets subject to the consideration of prudence are recognised and carried forward

Segment Reporting

Basis of Consolidation : (a) Principles of Consolidation : The consolidated financial statements relate to Godrej Industries Limited, the holding company, its majority owned subsidiaries, Joint ventures and Associates.

The consolidation of accounts of the Company with its subsidiaries has been prepared in accordance with the requirements of Accounting Standard (AS) 21 ‘Consolidated Financial Statements’. The financial statements of the parent and its subsidiaries are combined on a line by line basis and intra group balances, intra group transactions and unrealised profits or losses are fully eliminated.

In the consolidated financial statements, ‘Goodwill’ represents the excess of the cost of investments in the subsidiaries and/or joint ventures over its share of equity, at the dates on which the investments are made. Alternatively, where the share of equity as on the date of investment is in excess of cost of investment, it is recognised as ‘Capital Reserve’ in the consolidated financial statements.

Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made by the Company in the subsidiary companies and further movements in their share in the equity, subsequent to the dates of investment as stated above.

Investments in Joint Ventures are dealt with in accordance with Accounting Standard (AS) 27 ‘Financial Reporting of Interests in Joint Ventures’. The Company’s interest in jointly controlled entities are reported using proportionate consolidation, whereby the Company’s share of jointly controlled assets and liabilities and the share of income and expenses of the jointly controlled entities are reported as separate line items.

Investments in Associates are dealt with in accordance with Accounting Standard (AS) 23 ‘Accounting for Investments in Associates in Consolidated Financial Statements’ issued by the Institute of Chartered Accountants of India. Effect has been given to the carrying amount of investments in associates using the ‘Equity method’. The Company’s share of the post acquisition profits or losses is included in the carrying cost of investments.

The financial statements of the subsidiaries, joint ventures and associates used in the consolidation are drawn upto the same reporting date as of the Company i.e. year ended March 31, 2003.

The figures for the earlier year have not been re-computed for Joint Venture and Associate Companies which in the earlier year were accounted for as investments under Accounting Standard (AS) 13 ‘Accounting for Investments’ and which in this year have been accounted for as Joint Venture Companies under Accounting Standard (AS) 27 and as Associate Companies under Accounting Standard (AS) 23.

49

Industries Limited – Consolidated Accounts b)

Information on subsidiaries, joint ventures and associates :

3.

Contingent Liabilities :

The subsidiary companies considered in the consolidated financial statements are: S.No. Name of the company

Country of Incorporation

Percentage of Holding

This year Rs. lac

Previous Year Rs. lac

2367.33

2491.05

727.38

1197.89

2990.85

2374.84

716.61

466.73

9260.00

4007.00

a) Claims for excise duties, taxes and other matters not acknowledged by the Company :

1.

Godrej Agrovet Ltd.

India

57.69%

2.

Goldmohur Foods & Feeds Ltd.

India

57.69%

i)

excise duty - Rs. 3742.80 lac (Previous Year Rs. 3621.53 lac) - net of tax :

(100% subsidiary of Godrej Agrovet Ltd.) 3.

Godrej Properties & Investments Ltd.

India

82.85%

ii) lease rent claimed by Mumbai Port Trust

4.

Tahir Properties Ltd.

India

62.86%

in respect of land leased to the Foods division. The lease has not been renewed

(30.47% holding by Godrej Industries Ltd. and

since 1990 - Rs. 1150.00 lac (Previous Year

39.10% held by Godrej Properties & Investments Ltd.)

5.

Girikandra Holiday Homes & Resorts Ltd.

India

Rs. 1862.97 lac) – net of tax:

82.85%

(100% subsidiary of Godrej Properties &

iii) other matters - Rs.4096.78 lac (Previous

Investments Ltd.)

Year Rs. 3693.37 lac) - net of tax :

6.

Godrej Remote Services Ltd.

India

99.99%

7.

Ensemble Holdings & Finance Ltd.

India

99.95%

8.

Sahyadri Aerosols Ltd.

India

100.00%

9.

Godrej International Ltd., UK

U.K.

100.00%

10.

Godrej Global Mid-East FZE, UAE

U.A.E.

100.00%

b)

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

c)

Guarantees given by the Company in respect of credit/guarantee limits sanctioned by banks to

(100% subsidiary of Godrej International Ltd.)

subsidiary and other companies.

11.

Godrej Tea Ltd.

India

53.08%

12.

Godrej Global Solutions Ltd.

India

99.98%

d)

Uncalled liability on partly paid shares/debentures

140.81

95.73

13.

Hybrigene Biotechnology Ltd.

India

99.92%

e)

Consideration payable for acquisition of shares in subsidiary company.

—

76.00

296.88

—

81.98

276.01

The Joint Ventures considered in the consolidated financial statements are : S.No. Name of the company

Country of Incorporation

Percentage of Holding

i)

Godrej SaraLee Ltd.

India

25.96%

ii)

Godrej Photo-Me Ltd.

India

40.46%

Interest in Assets, Liabilities, Income and Expenses of jointly controlled entities :

f) 4.

Share in jointly controlled entities

Capital Commitments : Estimated value of contracts remaining to be executed on capital account, to the extent not provided

5.

Deferred Tax : Major components of Deferred Tax arising on account of timing differences as at March 31, 2003 are:

Rs. lac Assets

3877.80

Liabilities

2797.63

Income

9828.11

Business Losses

2069.40

4226.83

8690.42

Provision for retirement benefits

586.00

543.25

Provision for doubtful debts / advances

562.44

437.61

Others

198.80

145.57

Expenses

Assets

The Associates considered in the consolidated financial statements are : S.No. Name of the company

Country of Incorporation

Percentage of Holding

Share in Jointly Controlled Entities

i)

Swadeshi Detergents Ltd.

India

46.44%

ii)

Compass Connections Ltd.

U.K.

21.16%

Liabilities

Iii)

Personalitree Academy Ltd.

India

26.00%

Depreciation

(held by Ensemble Holdings & Finance Ltd.) Investment in Associates :

Rs. lac

Goodwill included in cost of acquisition

124.54

110.28

91.48

79.66

80.38

Share in profits / (loss) of associates post acquisition (b) Carrying cost of Investments (a) – (b)

50

(99.86)

(7.33)

(18.28)

91.48

117.21

92.00

6.

5353.36

6791.17

6741.73

134.00

191.31

Deferred Revenue Expenditure

293.86

83.82

Share in Jointly Controlled Entities

119.75

—

7338.78

7016.86

3841.67

1663.50

Net Deferred Tax Liability 191.34

—

3497.11

VRS Expenses

Swadeshi Compass Personalitree Detergents Ltd. Connections Ltd. Academy Ltd. Cost of Acquisition (a)

80.47

Loans and Advances Loans and Advances include Rs. 1033 lac (Previous Year Rs. 1033 lac) advanced by the Company to certain individuals against the pledge by way of deposit of equity share of Gharda Chemicals Ltd. The Company is in the process of enforcing the security and getting the shares transferred in its name. Interest on the aforesaid

Annual Report 2002-2003 loans and advances amounting to Rs. 315 lac was accrued upto March 31, 2000 and has been fully provided for, no interest is being accrued thereafter. The recoverability of the loans and advances is contingent upon the transfer and/or disposal of said shares. In the opinion of the management, the value of the said shares is greater than the amount of the loans and advances.

7.

Leases a)

The Company has entered into leave and licence agreements in respect of its commercial and residential premises. These are not non-cancelable and range between 11 months to 35 months and are renewable by mutual consent on mutually acceptable terms. The particulars of the premises under leave and licence arrangement are as under :

Gross carrying amount of premises Accumulated depreciation Depreciation for the period b)

This Year

Previous Year

Rs. lac

Rs. lac

3732.82

3524.63

743.52

652.93

90.59

102.72

Rs. 123.50 lac). The exchange difference included in the Profit and Loss Account is a loss of Rs. 413.86 lac (Previous year Rs. 277.86 lac). The exchange difference in respect of forward exchange contracts to be recognised in subsequent accounting periods is Rs. 208.34 lac (Previous year Rs. 242.99 lac).

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

The Company proposes to obtain the approval of Central Government for PLVR for financial year 2002-03 (Managing Director - Rs. 20.96 lac and Executive Directors Rs. 77.30 lac) as provided in the accounts for the year 2002-03 along with the approval for managerial remuneration for financial year 2003-04.

11. Related Party Disclosures : a)

Finance Leases

Godrej & Boyce Mfg. Co. Ltd. the holding company.

The Company has acquired vehicles under Finance Lease. Liability for minimum lease payment is secured by hypothecation of vehicle acquired under the lease.

The minimum lease payments outstanding as on March 31, 2003, in respect of vehicle leased are as under : Total minimum lease Period

Party where control exists

Present value

payments outstanding Un-matured of minimum as on March 31, 2003 Interest lease payments Rs. lac

Rs. lac

Rs. lac

14.96

2.33

14.43

b)

Related Parties with whom transactions have taken place during the year : Fellow Subsidiaries Godrej Appliances Ltd. Godrej Consumer Products Ltd. Godrej Foods Ltd. Godrej Infotech Ltd.

Within one year

Associate / Joint Venture Companies Later than one year and Compass Connections Ltd.

8.

not later than five years

41.45

2.89

36.36

Total

56.41

5.22

50.79

Godrej SaraLee Ltd.

Hedging Reserve Bank of India has permitted the Company to hedge its exposure on Crude Palm Oil on offshore exchanges to the extent of its imports. Accordingly, the Company is hedging import of crude palm oil on the Malaysian Commodities Exchange by way of futures contracts. The particulars of the futures contracts for the year are as under : Details Total number of contracts entered during the year Number of units under above contracts Futures contracts not settled as on March 31, 2003 Number of units under above contracts

9.

Godrej Photo-Me Ltd.

Purchase

Sale

66

56

326

206

10

–

120

–

Profit and Loss Account The amount of exchange loss on account of fluctuation of the rupee against foreign currencies and the net charges for forward foreign exchange contracts added to the carrying amount of fixed assets during the year is Rs. 85.62 lac (Previous year

Swadeshi Detergents Ltd. Key Management Personnel Mr. N.B. Godrej Ms. T.A. Dubash Mr. Mathew Eipe Mr. C.K. Vaidya Mr. M.P. Pusalkar Relative of Key Management Personnel Ms. Nisa A. Godrej Enterprises over which Key Management Personnel exercise significant influence Bahar Agrochem & Feeds Pvt. Ltd.

51

Industries Limited – Consolidated Accounts c)

Rs. lac

Transactions with Related Parties

Nature of Transaction

Sale of Goods Previous Year Purchase of goods & equipment Previous Year Processing charges received Previous Year Commission received Previous Year Recovery of establishment & other expenses Previous Year Establishment & other expenses paid Previous Year Refund of deposit Previous Year Interest received Previous Year Interest paid Previous Year Finance provided including loans & equity contributions Previous Year Finance received during the year Previous Year Finance repaid during the year Previous Year Guarantees & collaterals given Previous Year Dividend income Previous Year Dividend paid Previous Year Balances Written Off Previous Year Remuneration Previous Year Balance Outstanding as on March 31, 2003 Receivables Previous Year Payables Previous Year

Holding Fellow Company Subsidiaries

Key Management Personnel

Relative of Key Management Personnel

Enterprises over which Key Mgmt.

Personnel exercise significant influence

Total

17.95 13.42 65.79 106.63 – – – – 4.49 – 155.99 111.18 – – – – – –

2940.15 1433.07 1342.13 1290.22 1931.99 1786.03 33.00 20.49 1121.73 2017.16 78.59 64.34 2.00 – 24.58 20.73 4.64 7.78

3.25 37.84 43.24 7.57 – – – – 229.35 261.44 25.04 28.59 23.20 – – – – –

– – – – – – – – – 0.27 – – – – 0.35 – – –

– – – – – – – – – – – – – – – – – –

0.44 1.26 – – – – – – 0.06 0.05 – – – – 0.03 3.03 – –

2961.79 1485.59 1451.16 1404.42 1931.99 1786.03 33.00 20.49 1355.63 2278.92 259.62 204.11 25.20 – 24.96 23.76 4.64 7.78

23.02 – – – – – – – – – 246.36 1203.29 – – – –

3066.00 1995.29 300.00 1785.00 500.00 – – – 88.00 0.76 – – – 65.00 – 65.00

448.68 514.36 – – – – 60.00 – 1275.33 – – – – – – –

– – 1.98 – – – – – – – 6.23 12.68 – – 255.28 242.36

– – – – – – – – – – – – – – 6.40 1.88

8.00 1.20 – – – – – – – – 2.18 5.58 – – – –

3545.70 2510.85 301.98 1785.00 500.00 – 60.00 – 1363.33 0.76 254.77 1221.55 – 65.00 261.68 309.24

25.83 23.85 1.23 7.23

204.34 967.46 85.45 568.83

8.93 7.45 4.74 17.08

6.69 73.37 – –

– – – –

89.42 252.40 0.11 –

335.21 1324.53 91.53 593.14

12. Earning Per Share : This Year a. Calculation of weighted average number of equity shares Number of shares at the beginning of the year Nos. 6,16,11,228 Shares issued pursuant to the scheme of arrangement Nos. — Less : Shares of the Company held by Ensemble Holdings & Finance Ltd. a subsidiary company Nos. — Shares bought back pursuant to the scheme of arrangement for buyback Nos. 1,30,68,276

52

Associate/ Joint Venture Companies

Previous Year

12. Earning Per Share (Contd.)

5,98,28,780 18,81,438 b.

(98,990) c.

—

This Year

Previous Year

Number of equity shares outstanding at the end of the year

Nos. 4,85,42,952

6,16,11,228

Weighted average number of equity shares outstanding during the year

Nos. 5,81,38,289

6,11,65,616

Net profit after tax available for equity shareholders

Rs. lac

3409.47

2639.98

Basic and diluted earnings per share of Rs. 6 each

Rupees

5.86

4.32

232.72

126.81

1679.41

85.00

26.00

13545.10

133.60

106.23

2313.47

249.17

—

—

—

431.62

779.03

8490.19

— 24836.97

—

— 22797.82 — 576.98 — 23374.80 (576.98) — 22797.82

(1432.91) (4845.74) 4500.62 (1578.21) 2922.41 – 2922.41 (282.44) 2639.97

(1307.76) (3525.35) 6954.04 (2674.98) 4279.06 (125.45) 4153.61 (744.14) 3409.47

330.21

3249.55

3.

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

2.

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.

Others includes Medical Diagnostics, Agri Inputs, Integrated Poultry, Oil Palm, Medical Transcription, tea and Finance operations.

Household Insecticides segment includes the business of household & environmental pest control solutions.

Estate segment comprises the business of developing commercial & residential property and giving premises on lease or leave and licence basis.

Foods segment includes refined vegetable oils and vanasapti, fruit and vegetable puree, pulp, juices and fruit beverages.

Animal Feed segment includes the business of compound feed for cattle, poultry, acquatic animals, etc.

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

104640.69

1.

Notes :

102749.09 1891.60

129710.51

112203.86 17506.65

2981.21

97288.79 7351.90 104640.69 51162.59 25767.65 76930.24 3155.00

11452.98 (673.71)

129710.50 763.37 130473.87 (763.37) 129710.50

11787.15 —

18254.19 113022.81 41.59 113064.40 13881.73 42680.64 42482.54 85163.18 1448.00 4150.06

(476.92) (673.71)

22321.96 167903.00 9.87 2293.31 22331.83 170196.31 (9.87) (2293.31) 22321.96 167903.00

113064.40

300.00

17.00

3968.56

9190.10

1190.92

9805.98 – 9805.98 – 9805.98

Total

467.00

183.00

1998.55

18276.86

2397.81

2981.33 723.15 3704.48 (723.15) 2981.33

111384.11 1680.29

479.06

485.00

3986.08

1761.43

7838.50 19182.24

1219.03

6204.45 177.80 6382.25 (177.80) 6204.45

This Year Previous Year

Total

Carrying Amount of Segment Assets India Outside India

1866.28

1778.46

299.77

6718.00

8326.34

87.18

9651.96 29.02 9680.98 (29.02) 9651.96

Estate & Property Household Insecticides Others Development This Year Previous Year This Year Previous Year This Year Previous Year

167903.00

1179.00

1102.62

8063.92

16105.00

3701.05

55825.00 17590.02 — — 55825.00 17590.02 — — 55825.00 17590.02

This Year Previous Year

Foods

Total

15019.21

15858.42

15010.35

2853.67

66627.19 1534.03 68161.22 (1534.03) 66627.19

This Year Previous Year

Animal Feed

148384.76 19518.24

36814.24

4612.01

38930.25 1.33 38931.58 (1.33) 38930.25

36476.81

5644.78

44877.54 4.50 44882.04 (4.50) 44877.54

This Year Previous Year

Chemicals

Information about Secondary Business Segments Revenue by Geographical Markets India Outside India

Segment Assets Unallocated Assets Total Assets Segment Liabilities Unallocated Liabilities Total Liabilities Total Cost incurred during the year to acquire segment assets Segment depreciation

(B) Results Segment result before interest, exceptional items and tax Exceptional items Unallocated expenses net of unallocated income Interest Expense (net) Profit before tax (including prior period adjustments) Taxes Profit after taxes Share of loss in associates Profit before Minority Interest Share of Minority Interest Net Profit after Minority Interest

(A) Revenue External Sales Intersegment Sales Total Sales Less: Intersegment Sales Total Revenue

Information about primary business segments

13. Segment Information :

Annual Report 2002-2003

53

Industries Limited – Consolidated Accounts 14. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2003

A. Cash Flow from Operating Activities : Profit before tax and exceptional items Adjustments for : Depreciation Foreign exchange Loss / (Profit) on sale of investments Loss / (Profit) on sale of fixed assets Dividend income Interest income Interest expense Voluntary retirement compensation and other expenses deferred Deferred expenditure written off Provision for doubtful debts and sundry balances written off (net) Others

Previous year Rs. lac

6871.91

4364.11

3249.55 (25.42) (23.71) (12.90) (1363.38) (1094.88) 4222.15 (880.64) 581.91 (83.78) (55.91)

2981.21 136.79 1174.31 16.73 (1553.06) (838.94) 5637.04 (261.08) 265.34 (461.29) 163.03

Operating profit before working capital changes Adjustments for : Inventories Trade and other receivables Trade payables

11384.90

11624.19

(2955.08) 2483.37 5736.57

(206.15) 9405.71 (9449.41)

Cash generated from operations Direct taxes paid Direct taxes refund received

16649.76 (1061.13) 964.83

11374.34 (914.94) 64.51

16553.46

10523.91

(3123.57) 312.09 (3691.49) 180.16 799.74 1696.27 1363.38

(2539.61) 208.32 (2034.12) 1754.69 (5.46) 804.37 1553.06

(2463.42)

(258.75)

(2341.40) 376.25 21971.69 (25915.14) (1473.66) (1.47) (5015.21) (1844.93) (51.28)

– – 38823.23 (40875.57) (4.42) (1.63) (6017.09) (2010.32) (282.78)

(14295.15)

(10368.58)

(205.11) 3271.77 698.05 – – –

(103.42) 4132.44 – 447.00 4.02 (1208.27)

3969.82

3375.19

3764.71

3271.77

3765.74 (1.03)

3268.78 2.99

3764.71

3271.77

1250.32 (95.83) (1595.36)

– – –

Net Cash from Operating Activities B. Cash Flow from Investing Activities : Purchase of fixed assets Proceeds from sale of fixed assets Purchase of investments Proceeds from sale of investments Intercorporate deposits / Loans (net) Interest received Dividend received Net Cash used in Investing Activities C. Cash Flow from Financing Activities : Purchase of shares under a scheme of arrangement Proceeds from share capital Proceeds from borrowings Repayments of borrowings Bank overdrafts (net) Repayment of finance lease liabilities Interest paid Dividend paid Tax on distributed profits Net Cash used in Financing Activities Net decrease in cash and cash equivalents Cash and cash equivalents (Opening Balance) Add : Share in opening cash & cash equivalents of jointly controlled entities Add : Cash & cash equivalents taken over from Godrej Foods Limited Add : Cash & cash equivalents taken over from Godrej Plant Biotech Limited Less : Cash & cash equivalents transferred to Godrej Consumer Products Limited Cash and cash equivalents (Closing Balance) (including share in jointly controlled entities - Rs. 257.18 lac) Notes : 1. Cash and Cash equivalents Cash on hand and balances with banks Effect of exchange rate changes 2.

3.

54

This year Rs. lac

Cash and cash equivalents The above cashflow statement includes share of cashflows from jointly controlled entities as under: a. Net cash from operating activities b. Net cash used in investing activities c. Net cash used in financing activities Repayments of borrowings are net of Intercorporate borrowings aggregating Rs. 5575.00 lac (Previous year 25034.41 lac)

Annual Report 2002-2003 STATEMENT REGARDING SUBSIDIARY COMPANIES PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 1.

2.

Name of the Company

Godrej Agrovet Limited

Godrej Properties & Investments Limited

Godrej Remote Services Limited

Ensemble Holdings & Finance Limited

Godrej International Limited

Godrej Global Solutions Ltd.

Godrej Global MidEast FZE

Goldmohur Foods & Feeds Ltd.

Girikandra Holiday Homes & Resorts Pvt. Ltd.

The Company’s interest in the subsidiaries as on March 31, 2003 a.

3.

Number of Equity Shares

4106956

5073965

4795648

3770160

1505000

600000

(See note

(see note

(see note

Total Number of Shares

7118752

6444545

4806531

3774160

1505000

650000

6 below)

7 below)

8 below)

10

10

10

10

£1 (US$1.52)

10

57.69%

78.73%

99.77%

99.89%

100%

92.31%

Rs. Lac

Rs. Lac

Rs. Lac

Rs. Lac

US$

Rs. Lac

_

_

–

252.73

23.71

(120.85)

(15.42)

219,771

Nil

–

_

_

258.74

78.73

Nil

Nil

Nil

Nil

–

_

_

1,302.31

552.89

(181.22)

(644.46)

1,440,522

Nil

_

_

–

1,225.06

768.80

Nil

Nil

736.605

Nil

–

_

–

b.

Face Value

c.

Extent of Holding

Net aggregate Profit/(Loss) of the subsidiary company so far it concerns the members of the Company A.

For the financial year ended on March 31, 2003 i.

Not dealt with in the books of

ii.

Dealt with in the books of Account

Account of the Company of the Company B.

For the subsidiary company’s previous financial years since it became a subsidiary i.

Not dealt with in the books of Account of the Company

ii.

Dealt with in the books of Account of the Company

Notes : 1.

The Financial Year of all subsidiary companies have ended on March 31, 2003.

2.

2,65,680 Equity Shares of Rs. 10 each fully paid up in Godrej Properties & Investments Ltd. are held by Ensemble Holdings & Finance Ltd. which is a subsidiary of the Company.

3.

10833 Equity Shares of Rs. 10 each fully paid up in Godrej Remote Services Ltd. are held by Ensemble Holdings & Finance Ltd. a subsidiary of the Company.

4.

4,000 Equity Shares of Rs. 10 each fully paid up in Ensemble Holdings & Finance Ltd., are held by Godrej Agrovet Ltd., a subsidiary of the Company.

5.

49940 Equity Shares of Rs. 10 each fully paid up in Godrej Global Solutions Ltd. are held by Ensemble Holdings & Finance Ltd., a subsidiary of the Company.

6.

5 Ordinary Shares of US$ 2,50,000 each fully paid up in Godrej Global MidEast FZE. (representing 100% of the Share Capital) are held by Godrej International Ltd., a subsidiary of the Company.

7.

21,58,170 equity shares of the face value of Rs.10 each fully paid in Goldmohur Foods & Feeds Ltd. (representing 100% of the share capital) is held by Godrej Agrovet Ltd., a subsidiary of the Company.

8.

495 equity shares of the face value of Rs.1000 each fully paid up in Girikandra Holiday Homes and Resorts Pvt. Ltd. (representing 99% of the share capital) are held by Godrej Properties & Investment Ltd., a subsidiary of the Company.

Mumbai, May 28, 2003

A. B. GODREJ

Chairman

N. B. GODREJ

Managing Director

S.K. BHATT Company Secretary

55