/GIL_annualreport_2007_08 by Godrej

DIRECTORS Chairman

A.B. Godrej J.N. Godrej

Managing Director

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

Executive Director & President (Group Corporate Affairs)

T.A. Dubash

Executive Director & President (Marketing)

M. Eipe

Executive Director & President (Chemicals)

M.P. Pusalkar

Executive Director & President (Corporate Projects)

COMPANY SECRETARY S.K. Bhatt

AUDITORS Kalyaniwalla & Mistry, Chartered Accountants

Contents

Page Nos.

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

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

Directors’ Report along with Management Discussion and Analysis Report........................

Report on Corporate Governance.....................

Shareholders' Information..............................

Auditors’ Report..........................................

Accounts...................................................

Consolidated Accounts..................................

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

Subsidiaries Godrej Agrovet Limited.................................

Godrej Oil Plantations Limited (formerly Godrej Aquafeed Ltd.) .................... 100 Golden Feed Products Limited........................ 106 Goldmohur Foods & Feeds Limited................... 111 Cauvery Palm Oil Limited.............................. 119 Godrej Properties Limited.............................. 125 Girikandra Holiday Homes & Resorts Limited....... 135 Godrej Realty Private Limited......................... 138 Godrej Waterside Properties Private Limited....... 142 Godrej Developers Private Limited................... 146 Godrej Real Estate Private Limited................... 150 Godrej Seaview Properties Private Limited ........ 154 Happy Highrises Limited................................ 157 Ensemble Holdings & Finance Limited............... 161 Godrej International Limited.......................... 166 Godrej Hicare Limited.................................. 169 Godrej Global Solutions Limited...................... 175 Godrej Global Solutions (Cyprus) Limited........... 181 Godrej Global Solutions, Inc........................... 185

REGISTERED OFFICE

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

FACTORIES BRANCHES

Pirojshanagar, Eastern Express Highway, Vikhroli (East), 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 - 2415 4816/2414 8770 Fax : 022 - 2414 6204 4th Floor, Delite Theatre Building, 4/1, Asaf Ali Road, New Delhi 110 002 Phone : 011 - 2326 1066 Fax : 011 - 2326 1088 Block GN, Sector-V, Salt Lake City, Kolkata 700 091. Phone : 033 - 2357 3555 Fax : 033 - 2357 3945 New No. 15, (Old No. 17-A), 2nd Street, Jeevarathnam Nagar, Adyar, Chennai 600 020. Phone : 044 - 4266 6605 Fax : 044 - 4266 6609 284A, Chase Road, Southgate, London N14 - 6HF., UK Phone : (004420) - 88860145 Fax : (004420) - 88869424

BANKERS

Central Bank of India State Bank of India Bank of India HDFC Bank Ltd. Citibank N.A. Hong Kong and Shanghai Banking Corporation Limited Kotak Mahindra Bank Limited Barclays Bank Plc.

REGISTRARS & TRANSFER AGENT

Computech Sharecap Ltd. 147, Mahatma Gandhi Road, Opp. Jehangir Art Gallery, Fort, Mumbai 400 001. Phone : 022 - 2263 5000 - 01- 02 Fax : 022 - 2263 5003 E-Mail : helpdesk@computechsharecap.com

: :

Vikhroli Valia Wadala Delhi Kolkata Chennai London

GODREJ Industries LIMITED – FINANCIAL HIGHLIGHTS (Rs. Lac)

2007-08

2006-07

2005-06

2004-05

2003-04

3198 102644

2919 38143

2919 34216

2919 30618

2919 26197

24948 18619 3619 153028

33093 13677 3980 91811

24911 7803 3818 73667

22075 3557 2502 61671

16814 4235 2972 53137

27142 77548 47270 1068

28704 48567 12937 1602

28594 37135 5719 2219

25100 33577 2868 126

25656 26533 739 209

153028

91811

73667

61671

53137

Total Income Expenditure other than Interest and Depreciation Profit before Interest, Depreciation and Tax Interest (net)

83882 67119 16762 3444

78291 64078 14213 3831

80270 69661 10609 2837

82353 70117 12236 2582

73355 64243 9112 580

Profit before Depreciation and Tax Depreciation

13319 2547

10382 2426

7772 2259

9654 2148

8532 2150

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

10772 (310) 562

7956 (95) 83

5513 (3106) 545

7506 — 401

6382 — 365

Net Profit after Tax Provision for Deferred Tax

10520 (361)

7968 162

8479 1316

7105 (470)

6017 (494)

(2)

(57)

7806

7113

7577

6568

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

Adjustment in respect of prior years - expense/(income)

- 10,881

Net Profit after taxes and adjustments

Total Expenditure 2007-2008

Total Income 2007-2008 Break-up of Total Income Rs. Lac

Chemicals

Vegoils Estate Finance & Investment Medical Diagnostics Others

69238

651 2946 9802 811 433

Break-up of Total Expenditure Rs. Lac

Materials Staff Costs Depreciation Interest

40007 7958 2547 3444

Other Operating Expenses

19154

73110

83882

NOTICE TO SHAREHOLDERS NOTICE is hereby given that the TWENTIETH ANNUAL GENERAL MEETING of the members of GODREJ INDUSTRIES LIMITED will be held on Tuesday, July 29, 2008 at 4.30 p.m. at Y. B. Chavan Centre, Nariman Point, Mumbai – 400 021, to transact the following business:ORDINARY BUSINESS: 1. To consider and adopt the Audited Profit & Loss Account and Cash Flow Statement for the year ended March 31, 2008 the Balance Sheet as at that date, the Auditors’ Report thereon and the Directors’ Report along with Management Discussion and Analysis Report and the Statement of Corporate Governance. 2. To declare dividend for the financial year ended March 31, 2008. 3. To appoint a Director in place of Mr. K. K. Dastur, who retires by rotation and being eligible offers himself for re-appointment. 4. To appoint a Director in place of Mr. V. M. Crishna, who retires by rotation and being eligible, offers himself for re-appointment. 5. To appoint a Director in place of Mr. K. N. Petigara, who retires by rotation and being eligible offers himself for re-appointment. 6. To appoint a Director in place of Mr. M. P. Pusalkar, who retires by rotation and being eligible offers himself for re-appointment. 7. To appoint Auditors to hold office from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting, and to authorise the Board of Directors of the Company to fix their remuneration. M/s. Kalyaniwalla & Mistry, Chartered Accountants, the retiring Auditors are eligible for re-appointment. SPECIAL BUSINESS: 8. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: Further investment in Godrej Properties Ltd. under Section 372A of the Companies Act, 1956 "RESOLVED THAT pursuant to Section 372A and all other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modification or re-enactment thereof for the time being in force and as may be enacted from time to time) (hereinafter referred to as ‘the Act’), and/or any other approvals, as may be required, the Company be and is hereby authorised to further invest in securities of Godrej Properties Ltd. (GPL) by subscription/purchase or otherwise and/or place intercorporate deposits with and/or make loans or any other form of debt to and/or investment in GPL, in addition to the limits already sanctioned for investments/intercorporate deposits/loans, upto a sum of Rs. 25 crore (Rupees Twenty Five Crore Only), notwithstanding that the aggregate of the loans and investments so far made in or to be made in, 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/debt including the timing, the amount and other terms and conditions of such transactions and also to take all other decisions including varying any of them through recall, renewal, transfer, sale, disinvestment or otherwise, either in part or in full, as it may, in its absolute discretion, deem appropriate, subject to the limits specified above. RESOLVED FURTHER THAT this resolution be valid for a period from the date of approval of the Shareholders to March 31, 2011 and that during this period, the limits indicated hereinabove in case of divestment be restored to the original sanctioned limit of Rs.25 crore." 9. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: Further investment in Godrej Agrovet Ltd. under Section 372A of the Companies Act, 1956 "RESOLVED THAT pursuant to Section 372A and all other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modification or re-enactment thereof for the time being in force and as may be enacted from time to time) (hereinafter referred to as ‘the Act’), and/or any other approvals, as may be required, the Company be and is hereby authorised to further invest in securities of Godrej Agrovet Ltd. (GAVL) by subscription/purchase or otherwise and/or place intercorpoprate deposits with and/or make loans or any other form of debt to and/or investment in GAVL, in addition to the limits already sanctioned for investments/intercorporate deposits/loans, upto a sum of Rs. 20 crore (Rupees Twenty Crore Only), notwithstanding that the aggregate of the loans and investments so far made in or to be made in, 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/debt including the timing, the amount and other terms and conditions of such transactions and also to take all other decisions including varying any of them through recall, renewal, transfer, sale, disinvestment or otherwise, either in part or in full, as it may, in its absolute discretion, deem appropriate, subject to the limits specified above. RESOLVED FURTHER THAT this resolution be valid for a period from the date of approval of the Shareholders to March 31, 2011 and that during this period, the limits indicated hereinabove in case of divestment be restored to the original sanctioned limit of Rs. 20 crore." 10. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: Further investment in Ensemble Holdings & Finance Ltd. under Section 372A of the Companies Act, 1956 "RESOLVED THAT pursuant to Section 372A and all other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modification or re-enactment thereof for the time being in force and as may be enacted from time to time) (hereinafter referred to as ‘the Act’), and/or any other approvals, as may be required, the Company be and is hereby authorised to further invest in securities of Ensemble Holdings & Finance Ltd. (EHFL) by subscription/purchase or otherwise and/or place intercorporate deposits with and/or make loans or any other form of debt to and/or investment in EHFL, in addition to the limits already sanctioned for

investments/intercorporate deposits/loans, upto a sum of Rs.10 crore (Rupees Ten Crore Only), notwithstanding that the aggregate of the loans and investments so far made in or to be made in, 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/debt including the timing, the amount and other terms and conditions of such transactions and also to take all other decisions including varying any of them through recall, renewal, transfer, sale, disinvestment or otherwise, either in part or in full, as it may, in its absolute discretion, deem appropriate, subject to the limits specified above. RESOLVED FURTHER THAT this resolution be valid for a period from the date of approval of the Shareholders to March 31, 2011 and that during this period, the limits indicated hereinabove in case of divestment be restored to the original sanctioned limit of Rs.10 crore." 11. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: Further investment in Boston Analytics Inc. under Section 372A of the Companies Act, 1956 "RESOLVED THAT pursuant to Section 372A and all other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modification or re-enactment thereof for the time being in force and as may be enacted from time to time) (hereinafter referred to as ‘the Act’), and/or any other approvals, as may be required and subject to the approval of the Shareholders, the Company be and is hereby authorised to further invest in securities of Boston Analytics Inc. (BAI) by subscription/purchase or otherwise and/or place intercorporate deposits with and/or make loans or any other form of debt to and/or investment in BAI, in addition to the limits already sanctioned for investments/intercorporate deposits/loans, upto a sum of Rs.15 crore (Rupees Fifteen Crore Only), notwithstanding that the aggregate of the loans and investments so far made in or to be made in, 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/debt including the timing, the amount and other terms and conditions of such transactions and also to take all other decisions including varying any of them through recall, renewal, transfer, sale, disinvestment or otherwise, either in part or in full, as it may, in its absolute discretion, deem appropriate, subject to the limits specified above. RESOLVED FURTHER THAT this resolution be valid for a period from the date of approval of the Shareholders to March 31, 2011 and that during this period, the limits indicated hereinabove in case of divestment be restored to the original sanctioned limit of Rs.10 crore." 12. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: To revise the terms of appointment and remuneration of Ms. Nisa A. Godrej. "RESOLVED THAT subject to the provisions of Section 314(1B) and other applicable provisions, if any of the Companies Act, 1956, (including any statutory modification, amendment or re-enactment thereof for the time being in force and as may be enacted from time to time) (hereinafter referred to as ‘the Act’), approval of the Company be and is hereby accorded to the revision in the terms of remuneration payable to Ms. Nisa A. Godrej (daughter of Mr. A.B. Godrej, Chairman of the Company and sister of Ms. T. A. Dubash, Executive Director & President (Marketing) of the Company) currently holding an office or place of profit in the Company as Executive Vice President (Business Development) with effect from April 1, 2008 on the terms and conditions as detailed in the Explanatory Statement hereto. RESOLVED FURTHER THAT the Board of Directors of the Company and the Company Secretary be and are hereby severally authorised to make and submit applications to the Central Government or any other statutory authority as may be required, settle any question, difficulty or doubt, that may arise in giving effect to this resolution, do all such acts, deeds, matters and things and sign and execute all documents or writings as may be necessary, proper or expedient for the purpose of giving effect to this resolution and for matters concerned therewith or incidental thereto.” 13. To consider and if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION: To alter the Articles of Association of the Company. "RESOLVED THAT the following Clause be inserted as Clause 24A after Clause 24 of the existing Articles of Association of the Company: Subject to the applicable provisions of the Companies Act, 1956 and/or any other Act and in accordance with the guidelines prescribed by SEBI and/or any other regulatory authority, the Company may buyback its shares or any other securities issued by it." By Order of the Board of Directors S.K. BHATT Executive Vice-President (Corporate Services) & Company Secretary Mumbai, May 28, 2008 Registered Office: Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai 400 079.

NOTES: 1. The relative Explanatory Statement in respect of business under Item No. 8 to 13 as set out in the Notice is annexed hereto. 2. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND ON POLL, TO VOTE INSTEAD OF HIMSELF. SUCH A PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE MEETING. A PROXY SO APPOINTED SHALL NOT HAVE ANY RIGHT TO SPEAK AT THE MEETING. 3. The Register of Members and Share Transfer Books of the Company will be closed from July 22, 2008 to July 29, 2008 (both days inclusive) for ascertaining the names of the shareholders to whom the dividend which if declared at the Annual General Meeting is payable. In respect of shares held in electronic form, the dividend will be payable on the basis of beneficial ownership as per details furnished by National Securities Depository Ltd. and Central Depository Services (India) Ltd., for this purpose. 4. Those Members who have so far not encashed their dividend warrants for the below mentioned financial years, may claim or approach the Company for the payment thereof as the same will be transferred to the ‘Investor Education and Protection Fund’ of the Central Government, pursuant to Section 205C of the Companies Act, 1956 on the respective dates mentioned thereagainst. Please note that as per Section 205C of the Companies Act, 1956, no claim shall lie against the Company or the aforesaid Fund in respect of individual amounts which remain unclaimed or unpaid for a period of seven years from the date the dividend became due for payment and no payment shall be made in respect of such claims. Dividend for the Financial Year ended

Due date for transfer

31.03.2001

28.07.2008

31.03.2002

14.08.2009

31.03.2003

25.08.2010

31.03.2004

26.07.2011

31.03.2005

26.07.2012

31.03.2006

24.07.2013

31.03.2007

27.07.2014

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. Item No. 8 to 11 Particulars of the Company where investment/placement of intercorporate deposits/lending is proposed: Item Name & Regd. No. Office of the Company

Godrej Properties Ltd., Godrej Bhavan, Mumbai 400001.

Investment as on date in Rs. Crore and % of existing holding 187.92 (81.41%)

Amount of Principal Purpose of proposed business of the investment investment Company

Source of funds

Nature of concern/ interest of directors

Internal Sources/ borrowing

Mr. A. B. Godrej,

(Rs. Crore) 25

Real Estate Development

A good investment opportunity

Mr. J. N. Godrej, Mr. N. B. Godrej, Ms. T. A. Dubash Mr. F. P. Sarkari, Mr. V. N. Gogate, Mr. V. F. Banaji, Mr. M. Eipe and Mr. M.P. Pusalkar being Directors and/or shareholders may be deemed to be interested in the resolution. None of the other Directors are interested in the resolution.

Item Name & Regd. No. Office of the Company

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

Godrej Agrovet Limited Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai - 400 079

163.18 (75.20%)

Ensemble Holdings & Finance Limited Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai - 400 079.

13.19 (100%)

Boston Analytics Inc. 175, Federal Street, 14th Floor, Boston, Massachusetts – 02110

9.88 (17.10%)

Amount of Principal Purpose of proposed business of the investment investment Company

Source of funds

Nature of concern/ interest of directors

(Rs. Crore) Internal Animal feeds, To support Integrated GAVL’s growth Sources/ poultry plans. borrowing business, Agri inputs, Oil palm plantations, Plant biotech and Rural and Urban retailing

Mr. A. B. Godrej,

Investment Company

A good Investment Opportunity

Internal Sources/ borrowing

Ms. T. A. Dubash and Mr. M. Eipe being Directors and/or shareholders may be deemed to be interested in the resolution. None of the other Directors are interested in the resolution.

Business Research and Analysis (Knowledge Process Outsourcing)

A good Investment Opportunity

Internal Sources/ borrowing

Mr. N. B. Godrej being a Director may be deemed to be interested in the resolution. None of the other Directors are concerned or interested in the resolution.

Mr. J. N. Godrej, Mr. N. B. Godrej, Mr. V. M. Crishna, Mr. K. N. Petigara and Ms. T. A. Dubash, being Directors and/or shareholders may be deemed to be interested in the resolution. None of the other Directors are interested in the resolution.

The Board recommends the above resolutions for approval of the Members. Item No.12 Ms. Nisa A. Godrej was appointed as an employee of the Company with effect from October 1, 2001. The shareholders of the Company, through Postal Ballot, the results of which were announced by the Chairman on October 5, 2006, had approved payment of revised fixed compensation in the scale of Rs.1,00,000 – 2,00,000 per month and perquisites and allowances as per the scheme of the Company as admissible to similarly placed employees which was subsequently approved by the Government of India, Ministry of Finance and Company Affairs, Department of Company Affairs vide its letter dated March 15, 2007. Ms. Nisa A. Godrej is a Bachelor of Science in Economics from the Wharton School, University of Pennsylvania, USA and a Master of Business Administration from Harvard Business School, Harvard University, Boston, M.A. Ms. Nisa A. Godrej has more than 7 years of industrial and business experience. Considering the educational qualifications, experience and other relevant factors it is proposed to revise the remuneration payable to Ms. Nisa A. Godrej w.e.f. April 1, 2008 and the same is likely to exceed the limits already approved by the Central Government as mentioned above. The proposed revised terms of appointment and remuneration payable to Ms. Nisa A. Godrej w.e.f. April 1, 2008 are as follows: Appointment in the grade of Executive Vice-President 1. Fixed Compensation:

Fixed Compensation shall include Basic Salary and the Company’s contribution to Provident Fund and Gratuity Fund. The Basic Salary shall be in the range of Rs.1,78,750 – 2,98,750 per month, payable monthly. The Annual Basic Salary and increments will be decided by the Compensation Committee/Board of Directors depending on her performance, the profitability of the Company and other relevant factors. The Basic Salary approved by the Compensation Committee for the period from April 1, 2008 to March 31, 2008 is Rs.1,78,750/- per month plus Company's contribution to Provident Fund plus Gratuity Fund.

2. Performance Linked Variable Remuneration (PLVR):

Performance Linked Variable Remuneration according to the Scheme of the Company for each of the financial years as may be decided by the Compensation Committee/Board of Directors of the Company based on Economic Value Added in the business and other relevant factors and having regard to her performance for each year. For the financial year ended 31.03.2008, she was paid PLVR of Rs.16,04,012/-. Depending on the performance of the Company and her contribution, the PLVR payable can be upto Rs.38,30,338/- this financial year. 3. Flexible Compensation: In addition to the Fixed Compensation and PLVR, Ms. Nisa A. Godrej will be entitled to the following allowances, perquisites, benefits, facilities and amenities as per rules of the Company and subject to the relevant provisions of the Companies Act, 1956 (collectively called “perquisites and allowances”). These perquisites and allowances may be granted to Ms. Nisa A. Godrej in the manner as the Compensation Committee/Board of Directors of the Company may decide as per the Rules of the Company. l Housing (i.e. unfurnished residential accommodation OR House Rent Allowance at 80% of Basic Salary); l Furnishing at residence; l Supplementary Allowance; l Leave Travel Assistance; l Payment/reimbursement of domiciliary medical expenses for self and family; l Payment/reimbursement of Food Vouchers, petrol reimbursement; l Company cars with driver for official use, provision of telephone(s) at residence; l Payment/reimbursement of telephone expenses; l Housing Loan, Contingency Loan as per rules of the Company. These loans shall be subject to Central Government approval, if any; l Earned/privilege leave, on full pay and allowance, not exceeding 30 days in a financial year. Encashment/accumulation of leave will be permissible in accordance with the Rules specified by the Company. Casual/Sick leave as per the rules of the Company; l Such other perquisites and allowances as per the policy/rules of the Company in force and/or as may be approved by the Board from time to time. The maximum cost to the Company per annum for the aggregate of the allowances listed above for Ms. Nisa A. Godrej shall be in the range of Rs. 2,46,200 – 4,11,300. For the period April 1, 2008 to March 31, 2008 the maximum cost of the Company for all the heads of flexible compensation payable to Ms. Nisa A. Godrej is Rs.2,46,200. In addition to the above, Ms. Nisa A. Godrej shall be eligible to encashment of leave, club facilities, group insurance cover, group hospitalisation cover, and/or any other allowances, perquisites and facilities as per the Rules of the Company. Explanation: i) For the Leave Travel Assistance and reimbursement of medical and hospitalisation expenses, ‘family’ means the spouse, dependent children and dependent parents. ii) Perquisites shall be evaluated at actual cost or if the cost is not ascertainable the same shall be valued as per Income Tax Rules. 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. The limits specified above are the maximum limits and the Compensation Committee/Board may in its absolute discretion pay to Ms. Nisa A. Godrej lower remuneration and revise the same from time to time within the maximum limits stipulated above. III. In the event of any re-enactment or re-codification of the Companies Act, 1956 or the Income Tax Act, 1961 or amendments thereto, 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. Mr. A.B. Godrej and Ms. T. A. Dubash being relatives may be deemed to be interested in the resolution. None of the other 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.12 of the Notice. Item No13 Article 24A of the Articles of Association of the Company needs to be inserted in the Articles of Association of the Company. This Article governs the clause relating to Buyback of shares in the Company. It is proposed to alter the existing Articles of Association of the Company in order to bring it in line with the current provisions of the Companies Act, 1956 and the guidelines of Securities and Exchange Board of India, which permits Buyback. The Directors recommend the passing of this resolution. None of the Directors of the Company are concerned or interested in the resolution.

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

Mr. K. K. Dastur

Mr. V. M. Crishna

Mr. K. N. Petigara

Mr. M. P. Pusalkar

Age

Nationality

Indian

Date of appointment on the Board

May 1, 2002

January 3, 1995

January 30, 2002

Shareholding in the Company

2,106

NIL

Qualification/s

B.Com., A.C.A.

B. A. (Eco.)

B.S., M.S., Ch.E., MIT – USA

B.Tech.(Elec.) – IIT (Kanpur) & MMS – JBIMS

Expertise in specific functional area

Finance & Accounts

Economics

Chemicals

Projects & General Management

Directorships held in other companies

Godrej Infotech Ltd. Oil Field Instrumentation (India) Ltd. Cartini India Ltd. Wadala Commodities Ltd. Netel (India) Ltd.

Godrej & Boyce Mfg. Co. Ltd. Lawkim Ltd. Godrej Agrovet Ltd. Godrej Hicare Ltd. Precision Wires India Ltd. Statomat Special Machines (India) P. Ltd.

Godrej & Boyce Mfg. Co. Ltd. Godrej Agrovet Ltd. Swadeshi Detergents Ltd. Vora Soaps Ltd. Godrej Global Solutions Ltd. (resigned w.e.f. 30/06/2008)

Wadala Commodities Ltd.

Chairmanships/ Memberships of committees in other companies

Audit Committee Wadala Commodities Ltd. – Chairman Oil Field Instrumentation (India) Ltd. - Chairman, Netel (India) Ltd. - Chairman

Audit Committee Godrej & Boyce Mfg. Co. Ltd. Godrej Global Solutions Ltd. (resigned w.e.f. 30/06/2008) Godrej Agrovet Ltd. – Chairman

Audit Committee Wadala Commodities Ltd.

Compensation Committee Wadala Commodities Ltd. – Chairman

NIL

Compensation Committee Godrej & Boyce Mfg. Co. Ltd. Godrej Global Solutions Ltd. – Chairman (resigned w.e.f. 30/06/2008) Godrej Agrovet Ltd.

Remuneration Committee Wadala Commodities Ltd. Shareholders Committee Wadala Commodities Ltd. - Chairman

DIRECTORS’ REPORT

(last year 29,18,51,652 equity shares) as against a final dividend of Re.1/- per equity share of Re.1/- each aggregating to Rs.2,919 lac in the previous year.

To the Shareholders,

MANAGEMENT DISCUSSION AND ANALYSIS

Your Directors have pleasure in submitting the Annual Report along with the Audited Accounts for the year ended March 31, 2008.

There is a separate section on Management Discussion and Analysis appended as Annexure A in this Annual Report, which, includes the following:

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

•

Industry Structure and Developments

•

Discussion on financial performance with respect to operational performance

•

Segment-wise performance

•

Human Resources and Industrial Relations

•

Opportunities and Threats

•

Internal Control Systems and their adequacy

•

Risks and Concerns

•

Outlook

Rs. Lac Year ended March 31, 2008 2007 73,531 65,477 10,351 12,814 83,882 78,291 67,119 64,078

Sales of products and services Other Income Total Income Total Expenditure other than Interest and Depreciation Profit before Interest, Depreciation 16,763 and Tax Depreciation 2,547 Profit before Interest and Tax 14,216 3,444 Interest and Financial Charges (net) Profit before Tax 10,772 492 Provision for Current Tax Profit after Current Tax 10,280 (369) Provision for Deferred Tax 10,649 Profit after Current and Deferred Taxation 232 Profit on sale of undertaking, extraordinary item (Net of tax) Net Profit 10,881 – Adjustments in respect of prior years 27,321 Surplus brought forward Profit a ft e r Ta x a va ila ble for appropriation 38,202 Appropriation Your Directors recommend appropriation as under: 3,997 Dividend on Equity Shares Tax on distributed profits 679 1,089 Transfer to General Reserve 32,437 Surplus Carried Forward Total Appropriation 38,202

14,213 2,426 11,787 3,831 7,956 83 7,873 162 7,711 95 7,806 – 23,710 31,516

Your Company has interests in several industries including animal feeds, poultry and agro-products, oil plantation, property development, household insecticides, pesticides, beverages and confectionery, personal care, etc. through its subsidiary/associate/ joint venture companies. Godrej Agrovet Limited (GAVL): GAVL recorded a revenue growth of 30% over the previous year, with the turnover increasing from Rs.71,285 lac to Rs.92,617 lac. The profit after tax increased from Rs.275 lac to Rs.3,821 lac. During the year the Company restructured its business into four verticals viz. Animal Feeds, Oil Plantation, Poultry and Retail. The Oil Palm Plantation business was demerged and two separate companies were incorporated under the names of Godrej Oil Plantations Ltd. (GOPL), which will operate in the states of Andhra Pradesh, Gujarat, Orissa and Mizoram, and Godrej Gokarna Oil Palm Ltd. (GGOPL), which will operate in the states of Goa and Karnataka. In GOPL, Blessed Resources Pte. Ltd. is the JV partner with a 20% stake while in GGOPL the JV partner is IJM Plantations, Berhad with a 51% stake. The rural retailing business, which operated under the name of Aadhaar, was transferred to Aadhaar Retailing Ltd. which is now operating as a JV in which Future Group has taken a 70% stake.

2,919 496 781 27,320 31,516

The total income increased by 7.14% from Rs.78,291 lac to Rs.83,882 lac. The Net Profit for the year was Rs.10,881 lac as compared to Rs.7,806 lac in the previous year, an increase of 39.39%. DIVIDEND The Board of Directors of your Company recommends a final dividend of Rs.1.25 per equity share of Re.1/- each, aggregating to Rs.3,996.98 lac, on enlarged base of 31,97,58,602 equity shares 10

SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES

The Company is in the process of merging its 100% Subsidiary– Goldmohur Foods and Feeds Ltd. into itself. This step is expected to benefit the company in streamlining its animal feeds business. Goldmohur Foods and Feeds Limited (GFFL): The Poultry Industry was once again adversely impacted by the Avian Influenza which this time was detected in Eastern India in January 2008. This resulted in de-growth of the Industry during the year under review. Significant increases in commodity prices further impacted the profitability of GFFL’s business. By focusing on R&D initiatives and cost cutting these vertical measures, the Company tried to minimize the impact of the above factors on the profitability of the business. Despite recording an increase of 21.50% in turnover, profitability could only be maintained at similar levels as in the previous year.

Godrej Properties Limited (GPL): GPL had a good financial year with the total income rising from Rs.7,046 lac for the year ended 31.3.07 to Rs.22,750 lac for the year ended 31.3.08. The profit after tax recorded an impressive growth of 83% from Rs.4,145 lac in the financial year ended 31.3.07 to Rs.7,589 lac for the financial year ended 31.3.08. During the year GPL started operations in cities like Chandigarh, Mangalore, Chennai and Kochi. GPL also signed a large township development project in Ahmedabad. It also agreed to sell a part of Phase II in the Godrej Woodsman Estate Project in Bangalore on a “Built to Suit” basis. GPL is actively pursuing its IPO plans during the current financial year. Your Company has entered into a MoU with GPL to develop and commercially exploit the lands leased to it by Godrej and Boyce Mfg. Co. Ltd. Godrej International Limited (GINL): As a worldwide trader of vegetable oils, GINL posted turnover of US$ 10,12,07,622 as compared to US$ 6,15,73,658 in the previous year - rise of 64%. The net profit increased by 136% from US$ 6,07,280 in the previous year to US$ 14,35,899 in the current year. During the year, GINL undertook a buyback of 2,50,000 ordinary shares of ₤1 at a price of US$10 per share. The shares bought back were cancelled. Godrej Hicare Limited (GHL): GHL operates in the household insecticide sector. Total income of GHL has gone up from Rs.2,996 lac in the previous year to Rs.3,008 lac in the current year. During the year, GHL closed its bulk chemicals business to concentrate on its services business. The revenue from services business, during the year has gone up from Rs.2,377 lac to Rs.2,792 lac, an increase of 17%. GHL’s PAT during the same period went up from Rs.182 lac to Rs.265 lac, an increase of 46%. With a view to improve its services, GHL started its own service centres and expects to service about 50 % of its business through its own centres in 2008-09. This has resulted in substantial investment in manpower, which is a critical factor for success in this industry. Godrej Global Solutions Ltd. (GGSL): GGSL provides back-office transaction processing services to overseas customers in the U.S.A. and U.K. During the year the Company earned a total income of Rs.1,369.19 lac as against Rs.1,405.26 lac in the previous year. The BPO/ITES industry faced challenges last year due to the dollar depreciation and GGSL was no exception. As a response, GGSL had to rationalize its operations at Mumbai and Navi Mumbai to meet the challenges and strove to achieve higher operational efficiencies. GGSL continued to focus on business segments like Healthcare claim form processing, medical transcription, medical billing and document conversion services.

of 11%. However, during the same period GHL recorded a loss of Rs.2,988 lac as compared to a loss of Rs.1,879 lac in the previous year. This loss has been mainly on account of major restructuring initiatives undertaken during the year, the results of which are expected in the future. During the year, GHL revamped its distribution network. It has also set up a manufacturing unit at Nalagarh in Himachal Pradesh, which is likely to commence operations by end of June, 2008. In addition to its existing range of products, Hersheys Milk Mix was launched in select markets in the south of the country. Nutrine Confectionery Company Ltd. (NCCL): NCCL, a 100% subsidiary of GHL, is a major player in confectionery business in India which includes in its product portfolio strong brands such as MahaLacto, Maha MahaLacto, Koko Naka, Milk Eclairs, Honey Fab, Aam Ras, Aasay, SuperStar and Gulkand. NCCL recorded a turnover of Rs.15,768 lac during the year under review as compared to Rs.16,921 lac during the previous year - a decrease of 7%. The net profit however increased from Rs.825 lac in the previous year to Rs.864 lac. NCCL has also revamped its distribution network during the year for broader reach, more effective execution and improved administrative control. Godrej Sara Lee Limited (GSLL): The consolidated business recorded sales growth of 25% during the year 2007-08 over the previous year. The consolidated business continued to maintain its profitability focus and achieved profit growth of 32% during the year under review. GSLL continued driving business with the consumer at the centre of all its initiatives. All new innovations and product launches were built on a deeper understanding of consumer needs and aspirations. The new identity of the Good Knight brand was executed on the entire range to build a superior connect with consumers. Good Knight sequentially gained market share from 19% in Quarter 1 to 24% in Quarter 4 of 2007-08. The HIT brand maintained its leadership in the fastest growing segment (viz.: aerosols) of household insecticides which was further aided by new launches at accessible price points. Sara Lee’s Household and Body Care business in India and Sri Lanka was acquired effective July 2, 2007. This added new categories to the business viz., hair styling (Brylcreem), shoe care (Kiwi), surface care (Kiwi Kleen). Brylcreem is a pioneer in the men’s hair grooming in the country and continues to lead the category. Kiwi is a global leader in shoe care. An innovation in air care, the Odour eliminator range was launched under Ambipur.

As this is not a focus area for your Company, in May 2008, your Company entered into a Share Purchase Agreement with Tricom India Limited for sale of the entire shareholding of GGSL for a purchase consideration of Rs.1,963 lac. The transaction is expected to be completed by the end of June, 2008.

Growth of organized retail is leading to change in channel dynamics. GSLL strengthened its relationships with the emerging organized retail partners. This helped GSLL in driving growth in the new emerging retail formats. The Company continued to provide better servicing and develop stronger relationships in the traditional trade as well. Building a strong distribution infrastructure for Kiwi and Brylcreem brands became a priority for GSLL and several initiatives were taken in this direction.

Godrej Hershey Ltd. (formerly Godrej Beverages and Foods Ltd.) (GHL): GHL is a JV between the Hershey Netherlands BV and your Company. During the year under review, GHL earned a total income of Rs.19,785 lac as compared to Rs.17,795 lac, an increase

Godrej Consumer Products Limited (GCPL): On a consolidated basis, GCPL registered a net income of Rs.1,10,257 lac as compared to Rs.95,152 lac in the previous year. GCPL’s profit after tax increased by 19% from Rs.13,416 lac in the previous 11

year to Rs.15,924 lac in the current year. GCPL declared dividends aggregating to 400% in the current year as compared to 375% in the previous year. In March 2008, GCPL launched the new improved and expanded Cinthol range of soap, talc and deodorant. GCPL also re-launched its Powder Hair Dye as “Godrej Expert Powder Hair Dye”. During October 2007, the Company acquired Godrej Global Mideast FZE, a 100% subsidiary of Godrej International, which will enable GCPL to consolidate its presence in the GCC countries and in the Middle East. On April 1, 2008, GCPL completed the acquisition of 100% stake in the Kinky Group (Proprietary) Ltd. in South Africa. GCPL’s joint venture company, Godrej SCA Hygiene Limited launched “Libresse” brand of sanitary napkins, “Libero” brand of baby diapers, “Tena” adult incontinent diapers and re-launch of Snuggy brand as “Snuggy Dry”. GCPL was ranked 6th in the “Best Employers Study” conducted by Hewitt Associates and the Economic Times. In the Business Week – Asia’s Hot Growth Companies: 2007, GCPL was ranked 23rd making it the highest ranked FMCG company. The Malanpur factory won the Platinum Award in the India Manufacturing Excellence Awards (IMEA) by Frost & Suillivan, in the Chemicals category. FINANCIAL POSITION The financial position of your Company continues to be sound. In November, 2007, your Company successfully placed its equity issue of 2,79,06,950 equity shares of Re.1/- each at a premium of Rs.214/- with Qualified Institutional Buyers, raising Rs.600 crore. The issue was priced at a premium of 9% over the floor price calculated in accordance with the SEBI guidelines. The money raised has been utilised to retire debt as also for investments in subsidiary companies and in some short-term liquid assets. The loan funds at the end of the year stand at Rs.43,567 lac as compared to Rs.46,770 lac at the end of the previous year. The debt equity ratio is 0.41 as compared to 1.08 last year. Your Company continues to hold the topmost rating of A1+ from ICRA for its commercial paper program (Rs.60 crore). ICRA has also assigned an A1+ rating for its short term debt instruments (Rs.630 crore). ICRA also assigned LAA rating for long-term debt (Rs.270 crore). This rating represents high credit quality carrying low credit risk. RECOGNITION FOR CREATING SHAREHOLDER VALUE During the year, your Company was ranked the 9th Fastest Wealth Creator with a CAGR of 127% and the 65th Biggest Wealth Creator for having added over Rs.4600 crore to its market capitalization for the period 2002-2007 in the 12th Annual Wealth Creation Study Report by Motilal Oswal Securities. Your Company was also ranked 4th in delivering the greatest Total Shareholder Returns (TSR) of 146% p.a. for the period 2002-2007 in the large cap segment in a survey published by Businessworld in June 2007. MANUFACTURING FACILITIES The Chemicals Division of your Company has manufacturing facilities at Vikhroli and Valia.

Valia: In the EOU plant, fractionation capacity has been enhanced by replacing one fractionation column with a new, high efficiency column which has resulted in improvement in its ability to produce high purity finished products. This change enables better price negotiation. The Cooler in the fractionation plant has been replaced with a waste heat recovery boiler which, has resulted in cost reduction and energy conservation. Commercial production of fatty alcohol derivatives has also been streamlined. Vikhroli: The Vikhroli factory, after implementation of the Integrated Management System (ISO 9001-2000, ISO 14001 and OHSAS 18001), has successfully completed two surveillance audits by BUREAU VERITAS. Vegoils Division: The Vegoils Division continued as a contract processor of edible oils and vanaspati. RESEARCH AND DEVELOPMENT During the year under review, the R&D department developed processes for the manufacturing of premium quality fatty acids from economy grade raw materials, high value fractionated fatty acids for the polymer, oilfield and lubricant industries, specialty surfactants for oral care and personal care products and value added derivatives of glycerin so as to enter certain niche markets. INFORMATION SYSTEMS Your Company continued to leverage Information Technology (IT) across the Chemical business in the year 2007-08. SAP implementation has stabilized across all business areas and the Company has started enjoying the benefits of a centralized ERP. A Business Intelligence (BI) initiative built on SAP is under implementation and expected to provide faster and more accurate information to key decision makers. EMPLOYEE STOCK OPTION PLAN (ESOP): The shareholders at their Extraordinary General Meeting held on December 1, 2005 had approved the Godrej Industries Limited Employee Stock Option Plan (GIL ESOP) for grant of 15,00,000 (Fifteen Lac) Options convertible into 15,00,000 (Fifteen Lac) equity shares of the nominal value of Rs.6/- each to the employees/ directors of the Company and/or its subsidiaries. Consequent to the subdivision of each equity share of Rs.6/- into 6 equity shares of Re.1/- each, the number of options that can be granted stands increased from 15,00,000 to 90,00,000 convertible into 90,00,000 equity shares of Re.1/- each. During the financial year 2007-08, 220 employees of the Company and/or its subsidiaries were granted ESOP’s based on their leadership responsibility and potential. Date of Grant of ESOP April 5, 2007 April 11, 2007 October 3, 2007 January 23, 2008 March 31, 2008 TOTAL

No. of ESOP 23,20,000 3,05,000 50,000 4,35,000 22,59,500 53,69,500

No. of Employees 32 14 2 5 167 220

Disclosure in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Purchase Scheme) Guidelines, 1999 is given in Annexure B attached and forms a part of this Report. GROUP FOR INTERSE TRANSFER OF SHARES As required under Clause 3(1) (e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, persons constituting Group (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of the aforesaid SEBI Regulations are given in Annexure C attached and forms a part of this Report. HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS Your Company continues to take various initiatives for the development of its human resources and has maintained healthy and harmonious industrial relations at all locations. Your Company lays great emphasis on optimizing people performance through various people processes. It begins with best practices in recruiting people and moves through learning and development, engagement, employee feedback and rewards and recognition. The ACE (Accelerated Career for Employees) program recruits professionals from premium institutes like Indian Institute of Technology, National Institute of Technology, Birla Institute of Technology and Science and Sri Ram College of Commerce, Delhi and also through advertisements. Your Company provides the new recruits with necessary managerial skills which in turn develops them into successful managers. Your Company also provides summer training program to B-School graduates; ‘Gurukool’, provides a live project with a structured goal, workshop by senior leaders and an informal interaction with seniors and the Chairman. For the above recruits and existing employees your Company offers on the job learning initiatives like e-MBA in collaboration with renowned management institutions like IIT School of Management (Mumbai), Symbiosis Institute of Business Management (Pune) and IIM (Indore). Fostering people development and harnessing their creative potential to the maximum, identifying and grooming management talent and leadership development at all levels remains a priority. The “Total Talent Management” program has been successful in identifying and grooming Leadership Talent. Employee feedback is obtained through a Voice of the Employee (VOTE) process, informal sessions with the Executive Directors and Employee Commitment Survey. In order to manage your Company’s human resources more effectively a globally acclaimed state-of-the-art Human Resource Management System has been implemented. It helps in collating workforce data and using it for driving performance, developing talent and managing competitiveness. Inclusiveness Your Company believes in inclusiveness and hence is nurturing employment of SC/ST categories. As on March 31, 2008 your Company employed 372 employees from the SC/ST categories.

Industrial Relations The industrial relations at all our Plant locations remained harmonious. ENVIRONMENT AND SOCIAL CONCERN Your Company continues its efforts for the betterment of the environment and conservation of scarce natural resources. Your Company continued “Rain water harvesting” initiatives undertaken during the previous year at its Vikhroli Factory and in the staff quarters at Vikhroli. So far 8,500 Sq. Meter of roof area has been covered under the rain water harvesting initiative and 22,500 M3 of water has been collected at the factory and staff quarters in Vikhroli. This process has resulted in saving water and consequently, the costs thereof. Recharging of two bore wells with rain water has also been undertaken, which resulted in improvement of yield and quality. The Effluent Drainage System for carrying effluents from the chemical plants was upgraded. To prevent pollution to environment, waste from the factories is converted into an environment-friendly product and then disposed off safely. More Areas of wasteland have been converted into gardens using water from the Effluent Treatment Plant. The Vikhroli factory continues to convert the bio degradable waste into bio compost with the help of an NGO. The process of bio composting has been enhanced with the use of enzymes to reduce the frequency of decomposition. The Confederation of Indian Industry (CII) - Sohrabji Godrej Green Business Centre has evolved a Code for Ecologically Sustainable Business Growth. The Code comprises of “Ten Natural Capital Commandments”, which include, commitments to reduce specific consumption of Energy and Water, reduce Green House Gas (GHG) emissions and all kinds of waste. Your Company has been an early and enthusiastic adopter of this Code. Electricity produced by your Company’s wind mills have resulted in reduction in emission of CO2 for which your Company was granted CERs (Certified Emission Reduction). Unfortunately in the current year, the windmills have produced less electricity than expected. Your Company has started a concept of “Table For Two” under which the Company will sponsor mid-day meals to students coming from the underprivileged section of the society. Your Company is also in the process of signing an agreement with a logistics service provider for distribution of mid-day meals to a number of schools in Mumbai. FIXED DEPOSITS Your Company has stopped accepting Fixed Deposits from the public. Deposits of an aggregate amount of Rs.2.38 lac unclaimed earlier have been paid during the year on receipt of valid claims. Depository system Your Company’s equity shares are available for dematerialisation through National Securities Depository Limited and Central Depository Services (India) Limited. As of March 31, 2008, 99.63% 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, Mr. K. K. Dastur, Mr. V. M. Crishna, Mr. K. N. Petigara 13

and Mr. M. P. Pusalkar retire by rotation at the ensuing Annual General Meeting. They are eligible and offer themselves for re-appointment.

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.

The Shareholders vide Postal Ballot the results of which were declared on November 7, 2007, had appointed Mr. C. K. Vaidya as Executive Director and President (Business Excellence) for a tenure of three years from September 18, 2007 to September 17, 2010. Mr. C. K. Vaidya however has expressed his desire to step down from the Board with effect from May 28, 2008 due to personal reasons and has ceased to be a Director effective that date. The Directors place on record their appreciation for the contribution made by Mr. C. K. Vaidya during his tenure as Director of the Company.

c) that proper and sufficient care has been taken 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;

Under the amended Clause 49 of the listing agreement with the Stock Exchanges, where the Non-Executive Chairman is a promoter of the Company or is related to any promoter or person occupying management positions at the Board level or at one level below the Board, at least one-half of the Board of the Company shall consist of Independent Directors. Mr. A. B. Godrej is a promoter and a Non-Executive Chairman of the Company. The current strength of the Board is 13 members out of which 5 are Independent. Based on the amended Clause 49 of the listing agreement, at least one-half of the Board should comprise of Independent Directors. The current Articles of Association of the Company provide for a maximum of 15 directors. Hence approval of the shareholders of the Company is being sought through postal ballot (results of which shall be declared on June 25, 2008) to increase the size of the Board to 18 Directors to enable the Company to appoint such number of Independent Directors as would meet the requirements of continued listing. Based on the shareholders approval, the Company will have to apply to the Central Government for increase in the number of directors from the existing maximum of 15 Directors to a maximum of 18 Directors. AUDITORS You are requested to appoint Auditors for the current year and to authorize the Board to fix their remuneration. The retiring auditors, Kalyaniwalla and Mistry, Chartered Accountants, are eligible for re-appointment. A certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. 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, 2008. The members of the Audit Committee are Mr. F. P. Sarkari (Chairman), Mr. V. N. Gogate and Mr. S. A. Ahmadullah, all Independent Directors. 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 such accounting policies have been selected and applied consistently, and such judgements and estimates have been made that are reasonable and prudent so as to give a true and 14

d) that the annual accounts have been prepared on a going concern basis. CORPORATE GOVERNANCE As required by the existing clause 49 of the Listing Agreements with the Stock Exchanges, a detailed report on Corporate Governance is included in the Annual Report. 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 D 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. Information as per 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 forms a part of the Directors’ Report. As per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to the Shareholders of the Company, excluding the statement of particulars of employees under Section 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary at the registered office of the Company. The Notes to the Accounts referred to in the Auditors’ Report is self-explanatory. However in respect of the qualifications in the Audit Report, we state as follows: -

The shares referred to were pledged with us as security for loans given and since the loans were not being repaid, your Company enforced the securities by lodging the shares for transfer. On the refusal of the Company to transfer the shares, your Company has moved the Company Law Board, Western Bench and we expect a favourable decision shortly.

ACKNOWLEDGEMENT Your Directors thank the Union Government, the Governments of Maharashtra and Gujarat as also all the Government agencies, banks, financial institutions, shareholders, customers, employees, vendors and other related organizations, who, through their continued support and co-operation, have helped as partners in your Company’s progress. For and on behalf of the Board of Directors A.B. Godrej Chairman Mumbai, May 28, 2008

ANNEXURE “A” FORMING PART OF THE DIRECTORS’ REPORT MANAGEMENT DISCUSSIONS AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENTS The Indian economy continued to maintain a good growth momentum in 2007-08 with GDP growth of 9%. However, the rising inflation rate which is now tracking over 8%, is an area of concern. The index of industrial production at 9% for 2007-08 indicates the continued overall buoyancy in the manufacturing sector though in the recent months the index has shown a decline tracking the deterioration in the global macro economic environment and inflation. The per capita income growth of 7.50% for 2007-08 also indicates the improving condition of the economy. The fiscal stimulus provided by the recent budgetary proposals that would spur demand and the underlying strong growth story of India augurs well for the overall investment climate going forward. The overall performance of your Company has been good. All the major divisions have improved their performance compared to the previous year. The division-wise performance and outlook have been covered separately in this report. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE The highlights of overall performance are as follows: Rs. Lac Particulars

2007-08 73,530.54 83,881.74 10,771.56 10,280.00

Sales Total Income Profit Before Taxation Profit After Current Taxation Profit After Current and Deferred Taxation 10,649.36 3.45 Earnings per Equity Share (Rupees) Profitability ratios are as follows: 19.98% PBDIT/Total income 12.84% PBT/Total income 12.70% PAT/Total income 11.74% Return on Capital Employed 14.03% Return on Net Worth 3.53 Basic EPS (Rs.) The Financial risk ratios are as follows: 0.41 Debt/Equity 4.13 Interest coverage

2006-07 65,477.60 78,291.22 7,956.10 7,873.33 7,711.33 2.64 18.15% 10.16% 9.97% 14.58% 18.82% 2.64 1.08 3.08 Rs. in Lac

Segment Performance 1. Segment Revenue Chemicals Vegoils Estate Finance and Investments Others Total

2007-08 69,238.46 650.93 2,946.11 9,802.34 1,243.90 83,881.74

2006-07 57,187.42 4,990.94 2,561.87 12,145.53 1,405.46 78,291.22

Segment Performance 2007-08 2. Segment Results (PBIT) Chemicals 8,223.61 Vegoils (515.83) Estate 1,845.94 Finance and Investments 8,213.41 Others 289.91 18,057.04 Total Less: Interest (Net) (3,443.75) Less: Unallocated expenses (Net) (3,841.73) Profit Before Tax 10,771.56 3. Segment Capital Employed Chemicals 36,457.27 Vegoils 362.42 Estate 1,531.21 Finance and Investments 116,603.03 Others 2,750.59 Total 157,704.52

2006-07 642.81 (417.08) 1,756.72 12,145.53 477.76 14,605.74 (3,830.78) (2,818.85) 7,956.11 35,335.21 391.00 226.00 56,258.00 3,015.00 95,225.21

* All figures above excludes profit on sale of undertaking CHEMICALS DIVISION The Chemicals division operates in the oleo-chemical and surfactant industries. The division has a blend of domestic and international operations and continued its leadership position in the Indian market. The Chemicals business was recognized as “Exporter of the Year” in the chemicals category of International Trade Awards 2007-08 awarded by CNBC – TV18 and DHL for the second time in succession. The export turnover of the division crossed the landmark of Rs.300 crore in this fiscal, accounting for about 43% of division’s turnover. The product category-wise review follows: Fatty Alcohol Fatty alcohols accounted for 43% of the sales revenue of the Chemicals division. Revenue grew by 21% and volume by 11% over previous year. Despite aggressive competition, the division has achieved a good increase in sales volume over previous year. Through effective customer relationship management and supply chain initiatives, the division could maintain its major share with some global companies. The sale of Fatty Alcohols in Europe was improved by providing Just In Time (JIT) supplies with improved logistics management. With the expansion of its customer base, your Company has reached over 60 countries in the world through its exports. With focused manufacturing and marketing strategies, it is expected that revenues from this segment will improve further in the coming year. Fatty Acids The Fatty Acids portfolio, comprising stearic acid, oleic acid, as well as specialty fatty acids, accounted for about 38% of the turnover of the division. Continuous cost reduction and market development initiatives have helped grow this category by 15

about 26% in value terms. The new fractionation column at Valia capable of producing premium and specialty fatty acids, is working to its capacity and turning out good quality output. Surfactants Surfactants contributed 9% to the turnover of the division. Sales declined 1% in value on the back of higher proportion of processing and limited availability of the major raw material – Alpha Olefin (AO). Your Company is the pioneer, as well as market leader in the production and sales of Alpha Olefin Sulphonate (AOS) in India, a surfactant used in several well known shampoos and detergent brands in the country. Costs have increased due to a steep rise in AO prices, which is the raw material for AOS, affecting margins as well as off-take. As a forward integration and derisking strategy, the division has started the production of value added sulphonated products such as Sodium Lauryl Ethoxy Sulphate (SLES) and Sodium Lauryl Sulphate (SLS). The necessary balancing equipment and infrastructure have been created for this purpose. The division is also focusing on improving the presence in this category in the international market. Glycerin Glycerin accounted for 7.5% of the turnover of this division. Revenues increased by 23% over last year. The division was successful in converting demand for other polyols to Glycerin and grow to the volume. Other initiatives The operational efficiency initiative undertaken at the Valia factory is yielding good results. Your Company has also embarked on an initiative to improve its spend management. This initiative is expected to give strategic buying advantage and cost saving in the coming years. Your Company could realize the benefits of Certified Emission Reductions (CERs) popularly known as Carbon Credits, accrued on account of its operation of windmills under the Clean Development Mechanism (CDM) approved by United Nations Framework Convention on Climate Change. Outlook The outlook for the coming year 2008-09 is mixed at this point in time. If the new capacities for oleo-chemicals that were announced earlier go on stream, there could be an oversupply in the market. The prices of vegetable oils, the main raw material, have also moved up significantly on account of the increasing demand and attractive alternate uses. Most of the new plants are set up to produce mid chain alcohols. Your Company has a competitive advantage due to its unique strategy of offering higher chain alcohols. Producers of petroleum based alcohols continue to face soaring crude oil prices consequently it is expected that vegetable oil based alcohols will substitute petro-alcohols in some applications. Initiatives to strengthen international distribution, improve logistics and supply chain capabilities as also customer relationship management, coupled with tight cost control are expected to help grow revenue, as well as, profits of the business. 16

ESTATE MANAGEMENT The proposed infrastructure plan of the State Government and the Municipal Corporation to support vertical growth augurs well for Mumbai to continue as a preferred destination for the commercial and IT sectors. The repeal of the Urban Land Ceiling Act is expected to free up land in the city which, in turn, will give a big boost to the construction activity of residential and commercial nature. The suburbs in and around the registered office of your Company at Vikhroli have become available for development. The MMRDA proposal to develop Kanjurmarg, a close suburb, into a business district and the plan for a Metro terminal in the vicinity of your Company’s premises have spurred construction activity in the area. Your Company continues to effectively utilize available space by leasing area to reputed corporates for their business operations. The green environment and excellent infrastructure with close proximity to the CBD, airport and suburbs are major advantages making Vikhroli a preferred location. Your Company has also signed a MoU with Godrej Properties Limited to develop Vikhroli property taken on lease from Godrej and Boyce Mfg. Co. Ltd.. The total income from this business for the year was about Rs.2,876 lac as compared to Rs.2,575 lac in the previous year, an increase of about 12%. MEDICAL DIAGONISTICS Your Company sold its Medical Diagnostic division on slump sale basis to RFCL Limited, a leading life sciences and laboratory solutions company, effective close of business hours on December 31, 2007. Your Company believes that this transfer would unlock significant potential for both the merging entities and will enable the combined business to grow much faster, and is thus, in the best interests of all the stakeholders. FINANCE AND INVESTMENTS During the year, your Company continued to earn return from its investments in the form of dividend income (Rs.13.93 crore) and realized capital appreciation (Rs.67.12 crore). Your Company entered into a joint venture with Hershey Co. USA, a market leader in Chocolates in the USA. The joint venture was subsequently renamed – Godrej Hershey Limited. Your Company further invested Rs.51.6 crore in Godrej Hershey Limited to support the growth plans of the joint venture. Other major investments made by your Company during the year include Rs.150 crore in the rights issue of Godrej Properties Limited and Rs.100 crore in the rights issue of Godrej Agrovet Limited to support their growth plans. HUMAN RESOURCES, INDUSTRIAL RELATIONS Industrial Relations at all locations were cordial. The total number of persons employed in your Company as on March 31, 2008 was 1,523. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY Your Company has a proper and adequate system of Internal Controls, to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposal and that transactions are authorized, recorded and reported correctly. Your Company’s Corporate Audit and Assurance Department which issues well documented operating procedures and authorities with adequate

built-in controls at the beginning of any activity and any time there is any major change. The internal control is supplemented by an extensive programme of internal, external audits and periodic review by the management. The system is designed to adequately ensure that financial and other records are reliable for preparing financial information and other data and for maintaining accountability of assets. During the year the Corporate Audit and Assurance Department was involved in facilitating SAP implementation so as to ensure that existing processes are adequately captured with in-built control mechanisms. INFORMATION SECURITY Your Company accords great importance to the security of its information assets. To ensure that this gets desired focus and attention, a Chief Information Security Officer, who is attached to the Corporate Audit and Assurance Department, is entrusted with the task of ensuring that your Company has the requisite security posture. Your Company has in place, all the procedures and practices that are in line with the ISO Security Standards. It is in the process of getting ISO 27001 Security Certification. OPPORTUNITIES AND THREATS Increased global demand fuelled by growth in end-user industries coupled with your Company’s standing for consistent quality and product delivery customized to the needs of the clients, provides good opportunity for growth for the Chemicals division. At the same time, new capacity addition in the industry and steep increases in raw material prices are likely to increase competition and put pressure on margins. The Estate Management business has the potential to increase revenues by giving space on leave and license by optimum re-sizing of the existing operational areas as also developing new areas over the next few years. The factors that can aid further revenue growth include assured power supply, upcoming infrastructural facilities like metro rail and better connectivity that reduces travel time.

RISKS AND CONCERNS Your Company had undertaken a comprehensive review of its risk management process last year and has put a risk management framework in place. The review involved understanding the existing risk management initiatives, zero-based identification and assessment of risks in the various businesses as also the relative control measures and arriving at the desired counter measures keeping in mind the risk appetite of the organization. The Risk Committee has periodically reviewed the risks in the various businesses and recommended appropriate risk mitigating actions. Commodity based businesses are likely to be affected by vagaries of the weather, demand for edible oil, oilseed production, etc. The increase in bio-diesel manufacturing capacity is expected to impact vegetable oil prices. The business is exposed to commodity price risks relating to raw materials which account for the largest portion of the costs of both the Chemicals and Vegoils businesses. The Chemicals business growth will also depend on the growth of end user industries like polymer, detergent, cosmetics and personal care. As a significant employer and chemicals producer, to ensure occupational safety, employment standards, production safety, and environmental protection, your Company maintains strict safety, health, environment protection and quality control programs to monitor and control these operational risks. Macro economic factors including economic and political developments, natural calamities which affect the industrial sector generally would also affect the businesses of your Company. Legislative changes resulting in a change in the taxes, duties and levies, whether local or central, also impact business performance and relative competitiveness of the businesses. 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 industry, significant changes in political and economic environment in India, tax laws, import duties, litigation and labour relations.

ANNEXURE “B” FORMING PART OF THE DIRECTORS’ REPORT As per the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 following information is disclosed in respect of Godrej Industries Limited Employee Stock Option Plan: Sr. No. a b

c d e f g h i j

Heading Options granted The pricing formula

53,69,500 Market Price plus Interest at such a rate not being less than the Bank Rate then prevailing compoundable on an annual basis for the period commencing from the date of Grant of the Option and ending on the date of intimating Exercise of the Option to the Company Options vested NIL Options exercised NIL The total number of shares arising as a result of exercise of NIL option Options lapsed/revoked 1,60,000 Variation of terms of options NIL Money realized by exercise of options NIL Total number of options in force 73,09,500 equity shares of nominal value of Re.1/- each Employee wise details of options granted to: i) senior managerial personnel; Annexure 1 ii) any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year; NIL iii) identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued NIL capital (excluding outstanding warrants and conversions) of the Company at the time of grant. Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20 ‘Earnings Per Share’. Where the Company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options, shall be disclosed. The impact of this difference on profits and on EPS of the company shall also be disclosed. Weighted-average exercise prices and weighted-average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock. A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted-average information: i) risk-free interest rate, ii) expected life, iii) expected volatility, iv) expected dividends, and v)

Particulars

There is no fresh issue of shares hence, not applicable.

The company has calculated the employee compensation cost using the intrinsic value of stock options. Had the fair value method been used, in respect of stock options granted the employee compensation cost would have been higher by Rs.9.67 crore, Profit after tax lower by Rs.9.67 crore and basic EPS would have been lower by Rs.0.33

Weighted average exercise price Rs.220.06 plus interest Weighted Average fair value of option Rs.126.13

The fair value of the options granted has been calculated using Black–Scholes Options pricing formula and the significant assumptions made in this regard are as follows: 7.11% 4 years 85% 0.45% Re. 1 per share the price of the underlying share in market at the time Weighted average market price at the time of grant of option of option grant Rs. 220.06 per option.

Annexure 1: Senior Managerial Personnel Name of senior managerial person

Options granted

C.D. Wakankar A.A. Rege B.S. Mehta N.S. Nabar R.V. Jog S.K. Bhatt V. Srinivasan Mani B. Mulki D. E. Mistry Praful Bhat Arvinder Singh A. D. Padhye V. Swaminathan R. H. Khajotia K. K. Lalan B. K. Gupta

110,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 25,000 50,000 50,000 50,000 50,000 50,000 50,000

Name of senior managerial person

Options granted

K. T. Jitendran K. P. Sudheer Nishikant Shimpi S. Anand R. S. Vijan A. R. Subbarao Ashutosh Tiwari B. S. Yadav S. K. Gupta D. S. Bhullar B. N. Vyas R. R. Govindan S. Varadaraj S. S. Sindhu P. N. Narkhede TOTAL

100,000 50,000 50,000 100,000 110,000 100,000 100,000 3,00,000 1,00,000 50,000 50,000 50,000 50,000 50,000 50,000 2,145,004

ANNEXURE “C” FORMING PART OF THE DIRECTORS’ REPORT The following is the list of persons constituting Group (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of regulation 10 to 12 of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 1997 (“the said Regulations”), provided Clause 3(1)(e) of the said Regulations: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

Bahar Agrochem and Feeds Pvt. Ltd. Cauvery Palm Oil Ltd. Cartini India Ltd. Ensemble Holdings and Finance Ltd. Girikandra Holiday Homes and Resorts Ltd. Godrej (Malaysia) Sdn Bhd Godrej (Singapore) Pte Ltd. Godrej (Vietnam) Co. Ltd. Godrej Agrovet Ltd. Godrej and Boyce Mfg. Company Ltd. Godrej Foods Ltd. Godrej Oil Plantations Ltd. Godrej Consumer Products Ltd. Godrej Consumer Products (U.K.) Ltd. Godrej Consumer Products Mauritius Ltd. Godrej Developers Pvt. Ltd. Godrej Efacec Automation and Robotics Ltd. Godrej Global Mid East FZE Godrej Gokarna Oil Palm Ltd. Godrej Hicare Ltd. Godrej Holdings Pvt. Ltd. Godrej Infotech Ltd. Godrej International Ltd. Godrej Investments Pvt. Ltd. Godrej Netherlands BV Godrej Properties Ltd. Godrej Real Estate Pvt. Ltd. Godrej Realty Private Ltd. Godrej Sea View Properties Pvt. Ltd. Godrej Waterside Properties Pvt. Ltd.

31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59.

Golden Feed Products Ltd. Goldmohur Foods and Feeds Ltd. Happy Highrises Ltd. Lawkim Ltd. Mercury Mfg. Co. Ltd. Nutrine Confectionary Co. Ltd. Prashant Metal Forming Industries Pvt. Ltd. Swadeshi Detergents Ltd. Vora Soaps Ltd. Wadala Commodities Ltd. Mr. A. B. Godrej Mrs. Parmeshwar A. Godrej Ms. Nisa A. Godrej Mr. Pirojsha A. Godrej Mrs. Tanya A. Dubash Mr. J. N. Godrej Mrs. Pheroza J. Godrej Ms. Raika J. Godrej Mr. Navroze J. Godrej Mr. Nadir B. Godrej Mrs. Rati N. Godrej Mst. Burjis N. Godrej Mst. Sohrab N. Godrej Mst. Hormuzd N. Godrej Mr. Vijay M. Crishna Mrs. Smita V. Crishna Ms. Freyan V. Crishna Ms. Nyrika V. Crishna Mr. Rishad K. Naoroji

ANNEXURE “D” FORMING PART OF THE DIRECTORS’ REPORT

This Year

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

A. Conservation of Energy I. (A) Energy Conservation measures undertaken:

1. Regular Monitoring of Stacks to improve boiler efficiency.

2. Installation of Energy Efficient Metal Halide fittings in street lighting.

3. Installation of Energy Efficient Motors in plants.

4. Installation of power factor controller to improve power factor.

(B) Proposed energy conservation measures

1. Installation of Energy Efficient Metal Halide fittings in other areas.

2. Installation of Energy Efficient Motors in Boiler House.

3. Installation of High Pressure Boiler from Thermax

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

Saving in energy costs during the period under consideration.

III. Details of energy consumption

The details of energy consumption are given below. These details cover the operations of your Company’s factories at Vikhroli, Valia and Wadala.

a) Power and Fuel consumption

Electricity This Year i)

Purchased Units (KWH in lac) Total Amount (Rs. in lac) Rate per Unit (Rs.)

ii)

Previous Year

284.22

350.92

1,697.41

1,928.02

5.97

5.49

Own generated through D.G. Sets 6.21

1.73

Cost (Rs. in lac)

69.09

32.71

Rate per unit (Rs.)

11.12

18.91

Units (KWH in lac)

iii) Own generated through Steam Turbine Generator Co-generation Units (KWH in lac)

263.88

314.06

Cost (Rs. in lac)

788.11

1,331.58

2.99

3.95

Rate per Unit (Rs.) 20

Fuel Oil (LSHS, FO and LDO) Total Quantity (KL) Total Amount (Rs. in lac) Rate per unit (Rs. per litre) Natural Gas Total Quantity (SM3 lac) Total Amount (Rs. in lac) Rate per unit (Rs. per SM3) Pitches Total Quantity (MT) Total Cost (Rs. in lac) Rate per unit (Rs. per MT)

Previous Year

4,617.82 807.86 17.49

3,191.44 501.26 15.71

166.70 1,817.00 10.90

175.30 1,618.00 9.23

1,633.00 214.33 13,124.92

677.00 85.35 12,607.41

b) Consumption per unit of production

Fatty Acid Fatty Alcohol Alpha Olefin Sulphonate Glycerin Oils/Vanaspati

Pitches Natural Gas Electricity Furnace Oil (NM3/MT) (Litre/MT) (kWh/MT) 2007-08 2006-07 2007-08 2006-07 2007-08 2006-07 2007-08 2006-07 52.07 58.73 84.55 105.58 15.76 13.18 24.61 9.34 72.35 79.21 400.78 530.34 2.17 2.78 18.42 24.96 140.97 116.40 5.02 3.05 2.84 1.03 338.35 257.57 708.03 714.33 - 174.31 182.74

98.49 61.12

58.14 56.08

78.61 -

24.46 -

B. Technology Absorption, Adaptation and Innovation 1. Specific areas in which R&D carried out by the Company - During the year under review, Research and Development efforts in the following areas strengthened the Company’s operations through technology absorption, adaptation and innovation: a) Oils and Fatty Acids b) Fatty Alcohols c) Surfactants d) Glycerin e) Product Applications and Formulations 2. Benefits derived as a result of the above R&D a) Premium quality fatty acids from economy grade raw materials. b) Manufacture of high value pure cut fatty acids, specifically for the polymer, oilfield and lubricant industries. c) Manufacture of specialty surfactants for oral care and personal care products. d) Value added derivatives of glycerin so as to enter certain niche markets. e) Four new process patent applications filed. 3. Future Plan of Action a) Specialty Chemicals from Glycerin, so as to enter niche markets in the field of Pharmaceuticals, Personal Care and Industrial Lubricants. b) Understanding the toxicity profile of Jatropha Oil.

c) Specialty chemicals used in the personal care formulations â&#x20AC;&#x201C; foam boosters, conditioning agents and co-surfactants.

No technology has been imported during the year.

4. Expenditure on R & D This Year Rs. lac

Previous Year Rs. lac

13.55

Nil

C. Foreign Exchange Earnings and Outgo

The Chemicals Divisionâ&#x20AC;&#x2122;s exports were Rs.32,851 lac in the current year (including deemed exports of Rs.2,654 lac) as compared to Rs.22,043 lac in the previous year (including deemed exports Rs.3,012 lac). The Company continues to export refined glycerin, fatty alcohol and other chemicals to over 50 countries including U.S.A., U.A.E., Japan, South Africa, Germany, U.K., France, Malaysia, China, Australia, Mexico, Singapore and Srilanka.

(a)

Capital

(b)

Recurring

172.75

139.39

This Year

Previous Year

(c)

Total

186.30

139.39

Rs. lac

Rs.lac

(d)

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

0.25%

0.19%

Foreign exchange used

34,618

28,239

Foreign exchange earned

30,227

22,297

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. 1. THE COMPANY’S PHILOSOPHY

The Company is a part of the Godrej Group which has established a reputation for honesty and integrity. The Company’s philosophy of corporate governance is to achieve business excellence by enhancing the long term welfare of all its stakeholders. The Company believes that corporate governance is about creating outperforming organisations, i.e. organizations that consistently succeed in the marketplace against competition and thereby enhance the value of all its stakeholders.

THE GOVERNANCE STRUCTURE 2. BOARD OF DIRECTORS

a) Board Structure

b) Board meetings held & Directors’ attendance record

The Board of Directors of the Company comprises of thirteen Directors, which includes one Managing Director and four Whole-time Executive Directors. The remaining nine are Non-Executive Directors, with five of them being Independent Directors. The details are given in Table 1: The Board meets atleast once in a quarter to consider among other businesses, quarterly performance of the Company and financial results. To enable the Board to discharge its responsibilities effectively and take informed decisions, necessary information is made available to the Board. During the year six Board meetings were held on May 25, 2007, July 27, 2007, September 18, 2007, October 26, 2007, December 5, 2007 and January 29, 2008. 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 held during the year

A.B. Godrej

Board Whether meetings attended attended last AGM during the year

Directorships Number of Chairmanship/ held in public membership in other companies Board Committees as incorporated at the year-end. in India as at year–end $ Chairmanship Membership

Chairman – Non-Executive J.N. Godrej Non-Executive N.B. Godrej Managing Director S.A. Ahmadullah Non-ExecutiveIndependent V.M. Crishna Non-Executive K.K. Dastur Non-ExecutiveIndependent V.N. Gogate Non-ExecutiveIndependent K.N. Petigara Non-ExecutiveIndependent F.P. Sarkari Non-ExecutiveIndependent V.F. Banaji Whole-time T.A. Dubash Whole-time M. Eipe Whole-time M.P. Pusalkar Whole-time

Yes

13(3)

6 6

2 6

No Yes

12 (6) 13(4)

3 2

6 2

Yes

3(1)

6 6

2 5

No Yes

7(2) 6(2)

— 4

1 —

Yes

1(1)

—

Yes

6(1)

Yes

3(1)

6 6 6 6

6 6 6 5

Yes Yes Yes Yes

1(1) 12(1) 3(1) 2(2)

— — — 1

1 1 1 3

C.K. Vaidya*

6(1)

—

Whole-time

Notes: (i) $ Alternate directorships and directorships in private companies, foreign companies, and associations are excluded. (ii) Figures in ( ) denote listed companies. (iii) * Mr. C. K. Vaidya was appointed on September 18, 2007 and has resigned w.e.f. May 28, 2008. 22

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. c) Information supplied to the Board

Significant development in the human resources and industrial relations front, l Sale of material nature of investments, subsidiaries, assets, which is not in the normal course of business, l Quarterly details of foreign exchange exposure and the steps taken by management to limit the risks of adverse exchange rate movement, if material. l 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. The Board of the Company is presented with all information under the above heads, whenever 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. d) Directors with materially significant related party transactions, pecuniary or business relationship with the Company Except for drawing remuneration, none of the Directors have any other materially significant related party transactions, pecuniary or business relationship with the Company. Attention of members is drawn to the disclosures of transactions with related parties set out in Notes to Accounts - Schedule 21, Note No. 22, forming part of the Annual Report. e) Remuneration of Directors: sitting fees, salary, perquisites and commissions and Number of Shares held by NonExecutive Directors The details of remuneration package of Directors and their relationships with each other are given in Table 2. The number of shares held and dividend paid are given in Table 3.

Among others, this includes:

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

Quarterly results of the Company,

Minutes of meetings 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,

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,

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

Details of any joint venture or collaboration agreement,

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

Significant labour problems and their proposed solutions,

Table 2: Remuneration paid or payable to Directors for the year ended March 31, 2008 Name of Director Relationship with Directors A.B. Godrej Brother of N.B.Godrej Father of T.A. Dubash J.N. Godrej None N.B. Godrej Brother of A.B.Godrej S.A. Ahmadullah V.M. Crishna K.K. Dastur V.N. Gogate K.N. Petigara F.P. Sarkari V.F. Banaji T.A. Dubash M. Eipe M.P. Pusalkar C.K. Vaidya

None None None None None None None Daughter of A.B.Godrej None None None

Sitting Commission fees on profits 2,10,000 Nil

Amt. in Rs.

Salary

Perquisites Nil

Provident Fund Nil

Nil

Total 2,10,000

Nil Nil

Nil 54,00,000

Nil 1,21,98,042

6,48,000

Nil 1,82,46,042

1,60,000 40,000 1,00,000 1,85,000 1,65,000 1,20,000 Nil Nil Nil Nil Nil

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

Nil Nil Nil Nil Nil Nil 45,00,000 35,40,000 38,40,000 25,44,000 16,96,000

Nil Nil Nil Nil Nil Nil 80,28,264 66,08,636 63,61,729 58,60,265 30,99,851

Nil Nil Nil Nil Nil Nil 5,40,000 424,800 4,64,640 3,06,976 2,14,181

1,60,000 40,000 1,00,000 1,85,000 1,65,000 1,20,000 1,30,68,264 1,05,73,436 1,06,66,369 87,11,241 50,10,031

Notes: Salary to Mr. N.B. Godrej, Mr.V.F. Banaji, Ms. T.A. Dubash, Mr. M. Eipe, Mr. M.P. Pusalkar and Mr. C.K. Vaidya includes a performance linked variable remuneration of Rs.1,527,482/-, Rs.1,759,798/-, Rs.1,667,482/-, Rs.1,667,482/-, Rs.1,248,645/-, Rs.350,000/respectively for the year ended March 31, 2008 payable in 2008-09. 23

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

Report in terms of Clause (2AA) of Section 217 of the Companies Act, 1956.

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

 Changes, if any, in accounting policies and practices and reasons for the same.

Name of Non-Executive Shares held as on Dividend paid during Director March 31, 2008 the year (Rupees) A.B. Godrej# 11,21,226 Nil J.N. Godrej * 32,21,472 Nil S.A. Ahmadullah 6,000 6,000 V. M. Crishna Nil Nil K.K. Dastur 2,106 2,106 V.N. Gogate 1,878 1,878 K.N. Petigara Nil Nil F.P. Sarkari 20,000 19,590 # Of the above 1,85,000 equity shares were acquired post dividend and 9,36,226 equity shares are held as second holder. * Shares held as second holder Committees of the Board

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

 Significant adjustments made in the financial statements arising out of audit findings.

 Compliance with listing and other requirements relating to financial statements.

 Disclosure of any related party transactions.

 Any qualification in the draft audit report.

Reviewing with the management, the quarterly financial statement before submission to the Board for approval.

Reviewing with the management, performance of the statutory and internal auditors, and adequacy of the internal control system.

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

Discussion with internal auditors any significant findings and follow up thereon.

Reviewing the findings of any internal investigation 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.

Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussions to ascertain any area of concern.

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

Re v i e w i n g t h e f u n c t i o n i n g o f W h i s t l e B l o w e r mechanism.

3. AUDIT COMMITTEE

The Company's audit committee comprises of three Independent & Non-Executive Directors. They are Mr. F.P. Sarkari (Chairman), Mr. S.A. Ahmadullah and Mr. V.N. Gogate. Mr. F.P. Sarkari is the Chairman of the Committee. Mr. Sarkari is a qualified Chartered Accountant and is knowledgeable in finance, accounts and Company Law. All the members of the committee are eminent professionals and draw upon 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. Mr. S.K. Bhatt, Executive Vice-President (Corporate Services) & Company Secretary acts as the secretary to the audit committee. The audit committee met four times during the year i.e. on May 25, 2007, July 27, 2007, October 26, 2007 and January 29, 2008. Table 4 gives the attendance record. Table 4: Attendance record of audit committee members Name of Director

No. of meetings held 4 4 4

Meetings attended 4 4 4

Mr. F.P. Sarkari Mr. S.A. Ahmadullah Mr. V.N. Gogate The Audit Committee of the Company performs the following functions:

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/removal of external auditor, fixation of audit fees and approval for payment for any other services.

Reviewing with management the annual financial statements before submission to the board for approval with particular reference to:

Ø Matters that needs to be included in the Director’s Responsibility Statement to be included in the Board’s

4. COMPENSATION COMMITTEE

Setting up of a Compensation Committee for determining a Company’s policy on remuneration packages for Executive Directors constitutes a non-mandatory provision of Clause 49. The Company had 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. The committee discusses human resources policies such as compensation and performance of management. The Remuneration Committee was renamed as Compensation Committee by the Board of Directors at its meeting held on October 24, 2005.

The Company's compensation 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, 2008, the committee met on April 5, 2007, April 11, 2007, May 11,

2007, June 18, 2007, September 18, 2007, October 3, 2007, October 26, 2007, January 23, 2008, and March 31, 2008. The attendance details are given in Table 5.

Table 5: Attendance record of Compensation Committee members Name of Director

No. of meetings Meetings held attended Mr. S.A. Ahmadullah 9 8 Mr. V.N. Gogate 9 9 Mr. K.N. Petigara 9 9 Mr. N.B. Godrej 9 8 Mr. S.K. Bhatt, Executive Vice-President (Corporate Services) & Company Secretary acts as the secretary to the Committee. The Company has adopted EVA as a tool for driving performance, and has linked improvements in EVA to performance linked variable remuneration (PLVR) of Managing Director, Whole-time Directors, Managers and Officers of the Company.

5. SHAREHOLDERS 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. A.B. Godrej (Chairman), Mr. V.F. Banaji, Ms. T.A. Dubash, Mr. M. Eipe and Mr. M.P. Pusalkar. During the year, 12 meetings of the Committee were held.

Mr. S.K. Bhatt, Executive Vice-President (Corporate Services) & Company Secretary acts as the secretary to the Committee.

Name and designation of Compliance Officer:

Mr. S. K. Bhatt, Executive Vice-President (Corporate Services) & Company Secretary.

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

Complaints outstanding as on April 1, 2007 Nil Complaints received during the year ended March 31, 2008 46 Complaints resolved during the year ended March 31, 46 2008 Complaints outstanding as on March 31, 2008 Nil There are no pending share transfers as on March 31, 2008.

6. MANAGEMENT

a) Management discussion and analysis

b) Disclosures by management to the Board

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

7. DISCLOSURES

a) Materially significant related party transaction that may have potential conflict of interests of Company at large.

During the year 2007-08, there were no materially significant related party transactions, i.e. transactions of the Company of material nature, with its promoters, the Directors or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large. Attention of member is drawn to the disclosures of transactions with related parties set out in Notes to Accounts - Schedule 21, Note No. 22, forming part of the Annual Report. b) Whistle Blower Policy With a view to establish a mechanism for protecting the employees reporting unethical behavior, fraud, violation of Companyâ&#x20AC;&#x2122;s Code of Conduct, the Board of Directors has adopted a Whistle Blower Policy. During the year 2007-08, no personnel has been denied access to the Audit Committee. c) Policy to Prevent Sexual Harassment at the work place The Company is committed to creating and maintaining an atmosphere in which employees can work together, without fear of sexual harassment, exploitation or intimidation. Every employee is made aware that the Company is strongly opposed to sexual harassment and that such behaviour is prohibited both by law and by the Godrej group. To redress complaints of sexual harassment, a Complaints Committee has been formed which is headed by Ms. T.A. Dubash, Executive Director & President (Marketing). Members of the Committee include, among others, a representative from an NGO familiar with the issue of sexual harassment. d) Details of compliance with mandatory requirement Particulars

I. Board of Directors (A) Composition of Board (B) Non-executive Directorsâ&#x20AC;&#x2122; compensation & disclosures (C) Other provisions as to Board and Committees (D) Code of Conduct II. Audit Committee (A) Qualified & Independent Audit Committee (B) Meeting of Audit Committee (C) Powers of Audit Committee (D) Role of Audit Committee (E) Review of Information by Audit Committee III. Subsidiary Companies IV. Disclosures (A) Basis of related party transactions (B) Board disclosures (C) Proceeds from public issues, rights issues, preferential issues etc. (D) Remuneration of Directors (E) Management (F) Shareholders

Clause of Compliance Listing Status Agreement Yes/No 49 I Yes 49 (IA) Yes 49 (IB) Yes 49 (IC)

Yes

49 (ID) 49 (II) 49 (IIA)

Yes

49 (IIB) 49 (IIC) 49 (IID) 49 (IIE)

Yes Yes Yes Yes

49 (III) 49 (IV) 49 (IV A)

Yes

49 (IV B) 49 (IV C) 49 (IV D)

Yes Yes

49 (IV E) 49 (IV F) 49 (IV G)

Yes Yes Yes

Yes

Particulars

Clause of Compliance Listing Status Agreement Yes/No 49 (V) Yes 49 (VI) Yes

V. CEO/CFO Certification VI. Report on Corporate Governance VII. Compliance 49 (VII) Yes e) Details of Non-compliance There has not been any non-compliance by the Company and no penalties or strictures were imposed on the Company by the Stock Exchanges or SEBI or any statutory authority, on any matter related to capital markets. f) Declaration by Chairman & Managing Director The declaration by the Chairman and Managing Director stating that all the Board Members and senior management personnel have affirmed their compliance with the said code of conduct for the year ended March 31, 2008, is annexed to the Corporate Governance Report. 8. GENERAL BODY MEETINGS a) Details of last three AGMs Year Venue 2004-05 Y.B. Chavan Centre, Nariman Point, Mumbai 400 021. 2005-06 - do 2006-07 - do

July 24, 2006 4.30 P.M. July 27, 2007 4.30 P.M.

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

Number of Special Resolution(s) passed

Details of Special Resolution(s) Passed

July 26, 2005

1) Authorised to further invest upto Rs. 20 crore in addition to amount already invested, in securities of Godrej Consumer Products Ltd. 2) Authorised to further invest upto Rs. 5 crore in addition to amount already invested, in securities of Avestha Gengraine Technologies Pvt. Ltd. 3) Authorised to further invest upto Rs. 20 crore in addition to amount already invested, in securities of CBay Systems Ltd.

July 24, 2006

Date Time July 26, 2005 4.00 P.M.

1) Approval for re-appointment and remuneration payable to Ms. T.A. Dubash as Whole-time Director of the Company. 2) Approval for re-appointment and remuneration payable to Mr. V.F. Banaji as Whole-time Director of the Company. 3) Approval for re-appointment and remuneration payable to Mr. M. Eipe as Whole-time Director of the Company.

Date of AGM

July 27, 2007

Number of Special Resolution(s) passed

Details of Special Resolution(s) Passed

4) Approval for reappointment and remuneration payable to Mr. M.P. Pusalkar as Whole-time Director of the Company. 5) Approval for revision in remuneration payable to Mr. Pirojsha A. Godrej. 6) Amendment to the Articles of Association of the Company pursuant to increase in Authorized Share Capital. 1) Approval for reappointment and remuneration payable to Mr. N.B. Godrej as Managing Director of the Company.

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

Number Details of Special of Special Resolution(s) Passed Resolution(s) passed December 5 1) Approval given for extending 1, 2005 Employees Stock Option to Eligible Employees of the Company. 2) Approval given for extending Employees Stock Option to Eligible Employees of the Subsidiary Companies. 3) Approval given for investment in Godrej Comsumer Products Ltd. u/s.372A of the Companies Act, 1956. 4) Approval given for investment in Boston Analytics LLC u/s.372A of the Companies Act, 1956. 5) Approval given for investment in Verseon LLC, USA u/s.372A of the Companies Act, 1956.

d) Postal Ballot During the year, pursuant to the provisions of Section 192A of the Companies Act, 1956 read with the Companies (Passing of the Resolution by Postal Ballot) Rules 2001, certain resolutions were passed by shareholders by postal ballot. The Notice of postal ballot were mailed to all shareholders along with postage prepaid envelopes. Mr. Bharat Shemlani, Chartered Accountant, had been appointed as scrutinizer for the postal ballots, who submitted his report to the Chairman, Mr. A.B. Godrej. However, for the postal ballot declaration on November 7, 2007, Mr. V.F. Banaji was the Chairman in the absence of Mr. A.B. Godrej, the regular Chairman of the meeting. The details of the postal ballots are given below :-

Sr. Date of Nature of No. announcement resolution of results 1.

September 10, 2007

Special

Special 2.

November 7, 2007

Special Special Special Special Special Special Special

December 14, 2007

Special

Special 4.

March 17, 2008

Special

Item

Total no. of votes polled

No. of votes in favour %

No. of votes against %

No. of invalid votes %

1. Further issue of capital under Section 81 of the Companies Act, 1956, upto a sum of US$150 million if raised in US $ or Rs.600 Crore if raised in Indian Rupee or in a combination thereof. 2. To invest in securities of and/or place intercorporate deposits with and/or invest in debentures of and/or give guarantee(s) to and/or make loans or any other form of debt to and/or investment in Verseon LLC, under Section 372A of the Companies Act, 1956, upto a sum of Rs.5 Crore. 3. To invest in securities of and/or place intercorporate deposits with and/or invest in debentures of and/or give guarantee(s) to and/or make loans or any other form of debt to and/or investment in Ensemble Holdings & Finance Limited, under Section 372A of the Companies Act, 1956, upto a sum of Rs.5 Crore. 4. To invest in securities of and/or place intercorporate deposits with and/or invest in debentures of and/or give guarantee(s) to and/or make loans or any other form of debt to and/or investment in Avestha Gengraine Technologies Private Limited, under Section 372A of the Companies Act, 1956, upto a sum of Rs.5 Crore. 5. Change in place of keeping registers and records.

1,450

99.93

0.05

0.02

1,450

99.97

0.01

0.02

1,450

99.97

0.01

0.02

1,450

99.97

0.01

0.02

1,450

99.88

0.02

0.10

1. Appointment of Mr. C.K. Vaidya as a Director. 2. Appointment of Mr. C.K. Vaidya as a Whole-time Director and to fix his remuneration. 3. Revision in terms of remuneration of Ms. T. A. Dubash, Whole-time Director 4. Revision in terms of remuneration of Mr. V. F. Banaji, Whole-time Director. 5. Revision in terms of remuneration of Mr. M. Eipe, Whole-time Director. 6. Revision in terms of remuneration of Mr. M. P. Pusalkar, Whole-time Director 7. To further invest in securities of and/or place intercorporate deposits with and/or invest in debentures of and/or give guarantee(s) to and/or make loans or any other form of debt to and/or investment in Godrej Hershey Foods & Beverages Ltd. (formerly Godrej Beverages & Foods Limited), under Section 372A of the Companies Act, 1956, upto a sum of Rs.52 Crore.

1,065 1,065

99.72 99.71

0.26 0.27

0.02 0.02

1,065

99.71

0.27

0.02

1,065

99.71

0.27

0.02

1,065

99.71

0.27

0.02

1,065

99.71

0.27

0.02

1,065

99.71

0.27

0.02

1. To further invest in securities of and/or place intercorporate deposits with and/or invest in debentures of and/or give guarantee(s) to and/or make loans or any other form of debt to and/or investment in Godrej Consumer Products Limited, under Section 372A of the Companies Act, 1956, upto a sum of Rs.100 Crore. 2. Revision in terms of remuneration of Mr. N.B. Godrej, Managing Director.

1,284

99.91

0.08

0.01

1,284

99.94

0.02

0.04

1,998

99.98

0.01

To further invest in securities of and/or place intercorporate deposits with and/or invest in debentures of and/or give guarantee(s) to and/or make loans or any other form of debt to and/or investment in Godrej Consumer Products Limited, under Section 372A of the Companies Act, 1956, upto a sum of Rs.360 Crore.

b) Procedure adopted for Postal Ballot (i) The Board at its meeting approves the items to be passed through postal ballot and authorizes one of the functional Directors and the Company Secretary to be responsible for the entire process of postal ballot. (ii) A professional such as a Chartered Accountant/ Company Secretary, who is not in employment of the Company, is appointed as the Scrutinizer for the poll process. (iii) Notice of postal ballot along with the ballot papers are sent to the shareholders along with a self-addressed envelope addressed to the Scrutinizer. (iv) An advertisement is given in a National newspaper about the dispatch of ballot papers and notice of postal ballot. (v) The duly completed postal ballot papers are received by the Scrutinizer. (vi) Scrutinizer gives his report to the Chairman. (vii) The Chairman announces the results of the postal ballot in a meeting convened for the same. (viii)Results are intimated to the Stock Exchange and are put up on the Notice Board of the Company as well as on the Company’s Website.

SHAREHOLDERS AND MEANS OF COMMUNICAITON 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

d) e)

liable to retire by rotation. Thus, Mr. K. K. Dastur, Mr. V. M. Crishna, Mr. K. N. Petigara and Mr. M. P. Pusalkar shall retire at this Annual General Meeting of the Company and being eligible, offer themselves for re-election. Information about the Directors who are being appointed/ reappointed is given as an annexure to the Notice of the AGM. Communication to shareholders All vital information relating to the Company and its performance, including quarterly results, official press releases are posted on the web-site of the Company. The Company’s web-site address is www.godrejinds.com. The quarterly and annual results of the Company’s performance are published in leading English dailies like Economic Times, Business Standard, Business Line, etc. The Company has also posted information relating to its financial results and shareholdings pattern on electronic data information filing and retrival sustem (EDIFAR) at www.sebiedifar.nic.in Investor grievances As mentioned before, the Company has constituted a Shareholders Committee to look into and redress Shareholders and investor complaints. Mr. S.K. Bhatt, Executive VicePresident (Corporate Services) & Company Secretary is the compliance officer. 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. Details of non-compliance There has been no instance of the Company not complying with any matter related to capital markets.

Declaration by Managing Director I, N.B. Godrej, Managing Director of Godrej Industries Limited (GIL), hereby confirm pursuant to clause 49(1)(D) of the listing agreement that: The Board of Directors of GIL has laid down a code of conduct for all Board members and senior management of the Company. The said code of conduct has also been posted on the Company’s website viz. www.godrejinds.com. All the Board members and senior management personnel have affirmed their compliance with the said code of conduct for the year ended March 31, 2008. N. B. Godrej Managing Director

Mumbai, May 28, 2008

Auditors’ Certificate on Corporate Governance To the Members of, Godrej Industries Limited We have examined the compliance of conditions of Corporate Governance by Godrej Industries Limited for the year ended on March 31, 2008, as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock exchanges. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to a review of procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance stipulated in Clause 49 of the above mentioned Listing Agreement. We state that such compliance is neither an assurance as to the future viability of the Company nor of the 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, 2008 Membership No. 32083 28

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

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

High Low Volume (No. (Rs.) (Rs.) of Shares) April - 07 198.85 145.45 1937784 May - 07 194.00 147.00 2066125 June - 07 219.00 167.25 3657531 July - 07 224.90 185.00 1724300 August - 07 208.00 158.00 935384 September – 07 194.95 168.00 1281671 October - 07 223.00 157.00 2417628 November - 07 283.20 197.75 3900268 December – 07 503.00 297.40 5657767 January – 08 489.00 260.00 7805389 February – 08 334.85 235.05 3297819 March - 08 317.90 215.10 5574848 Note: High and low are in rupees per traded share. Volume is the total monthly volume of trade (in numbers) in equity shares of the Company on NSE.

ii) Financial Calendar Financial year: April 1 to March 31 For the year ended March 31, 2008, results were announced on: July 27, 2007 : First quarter October 26, 2007 : Half year January 29, 2008 : Third quarter May 28, 2008 : Fourth quarter and annual iii) Record Date/Book Closure A dividend of Rs.1.25 per share of Re. 1/- each has been recommended by the Board of Directors of the Company. For payment of dividend, the book closure is from July 22, 2008 to July 29, 2008 (both days inclusive). iv) Listing information The Company’s equity shares are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Name of the Stock Exchange

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

Stock code

The Bombay Stock Exchange Ltd. (BSE) National Stock Exchange of India Ltd. (NSE)

500164 GODREJIND

GIL Share Performance compared to the BSE Sensex for F.Y. 2007-08 23400

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

21400

v) Stock Data

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

500

19400 BSE Sensex

Tables 1 and 2 respectively give the monthly high and low prices and volumes of equity shares of the Company at BSE and NSE for the year ended March 31, 2008. Chart A compares the Company’s share price at the BSE versus the sensex.

600

400

BSE Sensex 17400

300 15400 GIL Share Price

200

13400

Date April 07 May 07 June 07 July 07 August 07 September 07 October 07 November 07 December 07 January 08 February 08 March 08

High (Rs.)

Low (Rs.)

Volume (No. of Shares)

198.20 196.00 219.00 224.90 212.00 193.50 223.55 281.90 504.50 499.00 330.00 319.30

145.70 147.60 167.50 182.60 158.10 169.00 159.00 200.00 295.95 258.00 235.00 215.30

22208 22472 30390 18585 10672 16138 25660 23832 53367 74196 30596 84362

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

11400 Apr May Jun Jul Aug Sep Oct Nov Dec BSE Sensex

GIL Share Price (Rs.)

100 Jan

Feb Mar

GIL Share Price

vi) Distribution of shareholding Tables 3 and 4 gives the distribution pattern of shareholding of the Company by size, class and ownership respectively as on March 31, 2008. Table 3: Distribution of shareholding by size class as on March 31, 2008 Number Number of of shares shareholders 1 – 500 30522 501 – 1000 2760 1001 – 2000 1215 2001 – 3000 415

Shareholders % 85.34 7.72 3.40 1.16

Number of shares held 3446127 2134437 1810664 1079575

Shareholding % 1.08 0.67 0.57 0.34 29

Number Number of of shares shareholders 3001 – 4000 154 4001 – 5000 136 5001 – 10000 241 321 10001 & above Total 35764

Shareholders % 0.43 0.38 0.67 0.90

Number of shares held 551347 635005 1751681 308349766

Shareholding % 0.17 0.20 0.55 96.43

100.00

319758602

100.00

vii) Shares held in physical and dematerialised form

As on March 31, 2008, 99.63 per cent of the Company’s shares were held in dematerialised form and the remaining 0.37 per cent in physical form. The break up is listed below:

No. of Folios No.of Folios No. of Shares No. of Shares Total in Physical in Demat in Physical in Demat Mode Folios Mode Mode Mode 3171

32593

1194274

318564328

35764

Total Shares 319758602

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

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

Category(as being reported to stock exchanges) Promoter’s holding Promoters Persons deemed to act in concert with promoters Institutional investors Mutual funds & UTI Banks, financial institutions & insurance companies Foreign institutional investors Others Private corporate bodies Indian public NRI/OCBs Total

Shares held (Nos.)

% of holding

251234174

78.57

2211066 14375759

0.69 4.49

16774711

5.25

8763972 25306652 1092268 319758602

2.74 7.92 0.34 100.00

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

ix) Share Transfer Share transfers and related operations for the Company are conducted by Computech Sharecap Limited, which is registered with SEBI as a Category 1 Registrar. Share transfer is normally effected within the maximum period of 30 days from the date of receipt, if all the required documentation is submitted.

x) Investor correspondence should be addressed to:

Computech Sharecap Limited 147, M.G. Road, Opp. Jehangir Art Gallery, Mumbai 400 001 Tel: 022-22635000/22635001 Email: helpdesk@computechsharecap.com Fax: 022-22635003

Report of the Auditors' to the Members of Godrej Industries Limited 1. We have audited the attached Balance Sheet of Godrej Industries Limited as at March 31, 2008 and also the Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companyâ&#x20AC;&#x2122;s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditorâ&#x20AC;&#x2122;s Report) Order, 2003, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

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

b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us. The Branch Auditorâ&#x20AC;&#x2122;s Report has been forwarded to us and has been appropriately dealt with.

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

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

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

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

i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008;

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

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

5. On the basis of the written representations received from the directors of the Company as on March 31, 2008 and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as on March 31, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. For and on behalf of Kalyaniwalla & Mistry Chartered Accountants V. R. Mehta Partner M. No: 32083 Mumbai, May 28, 2008

annexure to the auditors' report Referred to in Paragraph (3) of our report of even date on the accounts of Godrej Industries Limited for the year ended 31st March, 2008. 1) (a) The Company is generally maintaining proper records showing full particulars, including quantitative details and situation of fixed assets, except in case of certain continuous process plants where item-wise values are not available and in case of furniture, fittings and equipment at Vikhroli where the records maintained show quantitative details with their situation and values based on valuation by an approved valuer.

(b) The Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and physical inventory were reported for the assets verified during the year. (c) In our opinion and according to the information and explanations given to us, a substantial part of the fixed assets has not been disposed off by the Company during the year.

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

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

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

4) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit no major weakness has been noticed in the internal controls. 5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

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

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

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

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

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

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

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

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

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

6) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under in respect of the deposits accepted from the public. 7) The Company has an internal audit system, which in our opinion, is commensurate with the size of the Company and the nature of its business. 8) In our opinion and to the best of our knowledge and according to the information given to us, the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for any of the products of the Company. 9) (a) According to the records examined by us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employeesâ&#x20AC;&#x2122; State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities.

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

Name of statute Central Excise Custom Duty

Rs in Lac. 18.72 12.09 42.27 695.04 724.54 30.05

Period to which amount relates 2002-03,2006-07 1996-97,2002-03,2004-05 1982-83,1999-00 1978-79,1976-85,1995-96 1982-95,1993-97,2002-03

Forum where dispute is pending Assistant Commissioner Commissioner CESTAT High Court The Supreme Court

1978-83,2003-04

Assistant Commissioner

112.08 25.44 679.98

1987-93 1978-79,1978-84,2003-04 1978-93,1991-92

Commissioner CESTAT High Court

Sales Tax

159.32

1997-98,2002-06,2004-05

Sales Tax Officer

1996-00,2001-02,2003-05 2000-02,2002-03 1990-92,1994-96,1997-98,2003-05 2003-04

Assistant Commissioner Commissioner Tribunal High Court

2004-05

Commissioner (Appeals)

2000 1984-2002 1997-99 1997-2003 2000-01

Controlling Revenue Authority The Bombay High Court Dy. Commissioner Tribunal The Supreme Court

Income Tax Others Stamp Duty Municipal Taxes Entry Tax Total

50.15 320.39 97.56 1,063.29 35.92 182.23 1,002.79 4.26 23.56 1.03 5,280.71

10) The Company has no accumulated losses as at the end of the financial year and it has not incurred any cash losses in the current and immediately preceding financial years. 11) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders as at the balance sheet date. 12) The Company has maintained adequate documents and records in respect of loans and advances granted on the basis of security by way of pledge of shares and other securities, except for the shares referred to in note 10(b)which have not been transferred in the name of the Company. 13) In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies. 14) In our opinion, the Company has maintained proper records of the transactions and contracts in respect of investments purchased and sold during the year and timely entries have been made therein. The investments made by the Company are held in its own name except for the shares referred to in note (a) of Schedule 6. 15) According to the information and explanations given to us and the records examined by us, it is our opinion that the terms and conditions of the guarantees given by the Company for loans taken by others from banks or financial institutions are not prejudicial to the interest of the Company. 16) According to the information and explanations given to us and the records examined by us, on an overall basis, the term

loans have been applied for the purpose for which the loans were obtained. 17) On the basis on an overall examination of the balance sheet and cash flows of the Company and the information and explanations given to us, we report that the Company has not utilized the funds raised on short-term basis for long term investment. 18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. 19) The Company did not issue any debentures during the year. 20) During the year, the Company issued 2,79,06,950 equity shares of Re 1 each, at a premium of Rs. 214 per share, to Qualified Institutional Buyers (QIB) on a preferential basis as approved by the shareholders vide circular resolution dated 10th September 2007. The management has disclosed in the annual accounts, the end use of money raised by the public issue and the same has been verified by us. 21) Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year. For and on behalf of Kalyaniwalla and Mistry Chartered Accountants V. R. Mehta Mumbai Dated: May 28, 2008.

Partner M. No. 32083 33

balance sheet as at march 31, 2008 This Year Rs. lac

Previous Year Rs. lac

3,197.59 102,644.47

2,918.52 38,142.56

105,842.06 2. Loan Funds 24,948.07 (a) Secured loans 3 18,618.92 (b) Unsecured loans 4

41,061.08 33,092.48 13,677.13

3. Deferred Tax Liability

43,566.99 3,619.20

46,769.61 3,980.00

TOTAL

153,028.25

91,810.69

APPLICATION OF FUNDS 4. Fixed Assets 5 (a) Gross block (b) Less: Depreciation/Impairment

55,822.44 29,173.75

54,257.93 27,302.62

26,648.69 493.68

26,955.31 1,749.02

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

28,704.33 48,566.78 15,515.17 9,253.24 2,536.34 9,389.99

Less: Current Liabilities and Provisions (a) Liabilities 11 (b) Provisions 12

78,779.16

36,694.74

24,554.26 6,955.34

18,053.15 5,704.12

31,509.60

23,757.27

47,269.56 1,067.89

12,937.47 1,602.11

153,028.25

91,810.69

SOURCES OF FUNDS 1. Shareholders' Funds (a) Share capital (b) Reserves & surplus

Rs. lac

Schedule

1 2

Net Current Assets 7. Miscellaneous Expenditure 13 (To the extent not written off or adjusted)

TOTAL

Significant Accounting Policies Notes to Accounts

20 21

The Schedules referred to above form an integral part of the Balance Sheet. As per our Report attached

Signatures to Balance Sheet and Schedules 1 to 13, 20 and 21

For and on behalf of A.B. Godrej N.B. Godrej M. Eipe M.P. Pusalkar Kalyaniwalla & Mistry Chairman Managing Director Executive Director Executive Director Chartered Accountants & President (Chemicals) & President (Corporate Projects) V. R. Mehta S.K. Bhatt V. Srinivasan Partner Executive Vice President Executive Vice President Mumbai, May 28, 2008 (Corporate Services) & Company Secretary (Finance & Estate)

profit and loss account for the year ended march 31, 2008

Schedule

Rs. lac

This Year Rs. lac

Previous Year Rs. lac

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

Signatures to Profit & Loss Account and Schedules 14 to 21

cash flow statement for the year ended march 31, 2008 A. Cash Flow from operating activities : Profit before tax Adjustments for: Depreciation Foreign exchange Profit on sale of investments (Profit)/Loss on sale of fixed assets Dividend income Interest income Interest expense Voluntary retirement compensation paid Deferred expenditure written off Provision for diminution in value of investments/(write back) Provision for doubtful debts & 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/(used in) 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 before extraordinary item Proceeds from sale of Medical Diagnostics Division Net Cash used in investing activities after extraordinary item C. Cash Flow from financing activities: Proceeds from borrowings Repayments of borrowings Proceeds from issue of equity share capital Bank overdrafts (net) Interest paid Dividend paid Tax on distributed profits Net Cash from financing activities

This Year Rs. lac

Previous Year Rs. lac

10,771.56

7,956.10

2,547.00 233.70 (6,765.31) (46.46) (1,393.16) (1,635.01) 3,827.70 (65.07) 599.29 1,588.93 (19.35) (12.58) 9,631.24

2,426.36 (26.57) (4,491.86) (595.31) (5,781.12) (429.79) 3,901.55 (38.65) 655.90 (300.00) (410.64) 1.71 2,867.68

(4,441.59) (5,297.71) 6,709.50 6,601.44 (1,755.48) 183.88 5,029.84

(3,622.79) (1,796.22) 2,346.98 (204.35) (1,145.93) 451.03 (899.25)

(1,451.51) 159.52 (100,654.96) 76,849.70 (4,594.25) 1,436.93 1,393.16 (26,861.41) 600.00 (26,261.41)

(4,516.06) 2,271.03 (66,287.82) 59,645.59 (2,264.70) 218.70 5,781.12 (5,152.14) (5,152.14)

74,800.00 (79,981.11) 58,786.24 1,646.88 (3,700.04) (2,931.89) (496.00) 48,124.08

45,416.61 (35,435.94) 4,091.27 (3,972.09) (2,430.65) (341.10) 7,328.10

Net increase in cash and cash equivalents 26,892.51 1276.71 Cash and cash equivalents (Opening Balance) 2,536.34 1,259.63 Cash and cash equivalents (Closing Balance) 29,428.85 2,536.34 Notes: 1. Cash and Cash equivalents. Cash on hand and balances with banks 29,429.74 2,536.45 Effect of exchange rate changes (0.89) (0.11) Cash and cash equivalents 29,428.85 2,536.34 2. Cash on hand and balances with banks includes Rs. 29,000 lac, temporarily invested in bank fixed deposit, out of proceeds of Qualified Institutional Placement (QIP) done by the Company during the year. 3. To finance working capital requirements, the Companyâ&#x20AC;&#x2122;s Bankers have sanctioned a total fund-based limit of Rs. 7,500 lac. Of this, limits utilised as on March 31, 2008 is Rs. 7,256.59 lac. 4. During the year, Medical Diagnostics Division was sold at a consideration of Rs. 600 lac on the close of working hours of December 31, 2007. 5. The figures of previous year have been regrouped wherever necessary. As per our Report attached

For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants

Signatures to Cash Flow Statement

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

V. R. Mehta S.K. Bhatt Partner Executive Vice President Mumbai, May 28, 2008 (Corporate Services) & Company Secretary 36

V. Srinivasan Executive Vice President (Finance & Estate)

schedules forming part of the accounts for the year ended march 31, 2008

This Year Rs. lac

Previous Year Rs. lac

SCHEDULE 1 : SHARE CAPITAL Authorised: 800,000,000 10,00,00,000

Equity shares of Re. 1 each Unclassified Shares of Rs.10 each

8,000.00 10,000.00 18,000.00

3,197.59 3,197.59

2,918.52 2,918.52

Issued, Subscribed and Paid Up: 319,758,602 Of the above, (i) 187,202,388 (ii) 155,547,816 (iii)

95,705,718

(Previous Year 291,851,652) Equity shares of Re.1 each fully paid

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

SCHEDULE 2: RESERVES AND SURPLUS Securities Premium Account As per last balance sheet Add: Premium received on issue of shares Less: Share issue expenses adjusted Capital Investment Subsidy Reserve As per last balance sheet Capital Redemption Reserve As per last balance sheet Revaluation Reserve As per last balance sheet Less : Depreciation on revalued component and deduction due to sale/discard of fixed assets General Reserve As per last balance sheet Less: Transitional obligation for compensated absences & long service awards Add: Transferred from profit & loss account

Rs. lac

This Year Rs. lac

Previous Year Rs. lac

58,515.68

8.51 — — 8.51

25.00

3,125.00

8.51 59,720.87 (1,213.70)

1,825.71

2,291.39

(154.50) 1,671.21

(465.68) 1,825.71

5,837.80

5,057.19

(55.46) 1,088.10 6,870.44 32,437.14 102,644.47

— 780.61 5,837.80 27,320.54 38,142.56

17,691.48 7,256.59 24,948.07

27,482.77 5,609.71 33,092.48

Short term loans from banks Other loans from banks/commercial paper Inter corporate borrowing

16,518.92 2,000.00 100.00 18,618.92

Amount repayable within one year

18,618.92

11,677.13 1,000.00 1,000.00 13,677.13 13,677.13

Profit & Loss Account

SCHEDULE 3: SECURED LOANS Term loans from banks Bank overdrafts, packing credits, etc. Particulars of securities (refer note 5) SCHEDULE 4: UNSECURED LOANS

SCHEDULE 5 : FIXED ASSETS ASSETS

Tangible Assets Land — Freehold — Leasehold Buildings Plant & Machinery Research Centre Furniture & Fixtures Office & Other Equipments Vehicles Intangible Assets: Trademarks Software Assets acquired under finance lease: Vehicles TOTAL – This Year – Previous Year Capital Work-in Progress TOTAL

GROSS BLOCK As on 01.04.2007

Additions

121.58 147.97 6,772.55 42,601.32 113.51 1,152.65 1,114.22

— — 77.38 1,861.79 13.55 10.93 33.27

606.08

247.12

463.00 916.02

— 20.56

249.03 54,257.93 53,640.20

88.47 2,353.07 3,702.56

Rs. Lac NET BLOCK

DEPRECIATION/IMPAIRMENT

Deductions/ As on Upto Deductions/ Adjustments 31.3.2008 31.03.2007 Adjustments

For the Upto As on As on Year 31.3.2008 31.3.2008 31.03.2007

— 121.58 — 147.97 99.09 6,750.84 453.02 44,010.09 127.06 110.70 1,052.88 23.50 1,123.99

— 22.78 2,300.51 22,273.33 50.01 684.26 509.48

— — 117.43 501.29 75.48 11.25

75.92

777.28

323.07

53.99

67.07

336.15

441.13

283.01

— —

463.00 936.58

285.52 691.82

— —

46.30 60.96

331.82 752.78

131.18 183.80

177.48 224.20

26.33 311.17 161.84 788.56 55,822.44 27,302.62 3,084.83 54,257.93 25,568.23

— — 121.58 1.54 24.32 123.65 184.75 2,367.83 4,383.01 2,174.71 23,946.75 20,063.34 3.75 53.76 73.30 44.63 653.41 399.47 53.57 551.80 572.19

121.58 125.19 4,472.04 20,327.99 63.50 468.39 604.74

65.36 58.65 155.13 156.04 87.19 824.80 2,695.93 29,173.75 26,648.69 26,955.31 852.42 2,586.81 27,302.62 493.68 1,749.02 27,142.37 28,704.33

1. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on June 30, 1992 on the basis of a Valuation Report submitted by professional valuers. 2. Depreciation for the year includes Rs. 148.93 Lac (Previous Year Rs.160.45 Lac) being depreciation on revalued component of the fixed assets. 3. Gross block deductions includes Rs. 6.02 lac (Previous Year Rs.305.23 lac) being the revalued component of assets sold/discarded during the year. 4. Accumulated depreciation includes impairment loss of Rs. 510.36 lac (Previous Year Rs 510.36 lac) on certain plant & machinery. 5. Capital work-in-progress is net of impairment loss of Rs.204.10 lac (Previous Year Rs. 204.10 lac )provided on an infructuous asset under construction.

SCHEDULE 6 : investments Investee Company/Institutions

LONG TERM INVESTMENTS : At Cost A. TRADE INVESTMENTS Equity Shares: Fully Paid Bharuch Eco-Aqua Infrastructure Ltd. Preference Shares: Partly paid Godrej Commodities Ltd. (Formerly Godrej Foods Limited) (8% Redeemable Cumulative Preference Shares, 2012) B. OTHER INVESTMENTS Equity Shares: Fully Paid Quoted: Godrej Consumer Products Ltd. Unquoted : Avesthagen Limited (Formerly Avestha Gengraine Technologies Pvt. Ltd.) Compass BPO Ltd. (Formerly Compass Connections Ltd.) Cbay Infotech Ventures Pvt. Ltd. Gharda Chemicals Ltd. Godrej Sara Lee Ltd. Godrej Hershey Ltd. (Formerly Godrej Beverages & Foods Ltd.) Godrej Upstream Ltd. HyCa Technologies Pvt. Ltd. (Partly paid up) Swadeshi Detergents Ltd. Tahir Properties Ltd. (Partly paid)

Face value (Rs.)

Number

Amount

Qty. as on 01.04.07

Acquired during the year

Sold/ Adjusted during the year

Qty. as on 31.03.08

440,000

—

440,000

5,000,000

—

5,000,000

1 23,136,108

—

— 23,136,108

10 154,744 £0.25 13,692 10 — 100 114 4 5,107,125 10 16,499,996 10 9,000,000 10 — 10 209,370 100 25

40,833 — 32,258 — — 13,895,321 — 12,222 — —

— 195,577 — 13,692 — 32,258 — 114 — 5,107,125 2,463,564 27,931,753 9,000,000 — — 12,222 — 209,370 — 25

Notes

(b)

As on 31.03.08 Rs. lac

As on 31.3.07 Rs. lac

44.00

450.00

9,216.28

1,142.83 124.55 100.00 11.57 4,729.79 14,300.43 — 60.00 191.33 0.01

743.45 124.55 — 11.57 4,729.79 3,963.22 902.25 — 191.33 0.01

Investee Company/Institutions

Common Stock/Membership Units: Unquoted: CBay Systems Ltd., USA Boston Analytics LLC Verseon Corporation — Class A Units (Formerly Verseon LLC) Quoted: CBaySystems Holdings Ltd., UK Preference Shares: Unquoted: Tahir Properties Ltd. (Class — A) (partly paid) Godrej Hershey Ltd.(Formerly Godrej Beverages & Foods Ltd.) (Zero Coupon Compulsory Convertible Preferance Shares) Optionally convertible Loan notes: Unquoted: Compass BPO Ltd. (Formerly Compass Connections Ltd.) Verseon Corporation (Formerly Verseon LLC) (13% Convertible promissory note) Non—Convertible Debentures: Godrej Oil Plantations Limited (Formerly Godrej Aquafeed Limited) Shares in Co—operative Society : Fully Paid Unquoted: The Saraswat Co-op. Bank Ltd. Investment in the capital of Partnership Firm: View Group LP INVESTMENT IN SUBSIDIARY COMPANIES Equity Shares: Fully paid unless stated otherwise Unquoted: Ensemble Holdings & Finance Ltd. Godrej Agrovet Ltd. Godrej Global Solutions Ltd. Godrej Gokarna Oil Palm Limited (Formerly Godrej Oil Palm Limited) Godrej International Ltd. Godrej Hicare Ltd. Godrej Properties Ltd. (including 42,117,160 Bonus shares received) CURRENT INVESTMENTS Units of Mutual Fund: Unquoted Subscribed during the year: LIC MF Liquid UTI Liquid cash plan — Inst. Birla Cash plus — Inst. Premium

Less: Provision for diminution in value of Investments

Aggregate book value of Investments Quoted Unquoted Market Value of Quoted Investments

Face value (Rs.)

Number

Amount

Qty. as on 01.04.07

Acquired during the year

Sold/ Adjusted during the year

Qty. as on 31.03.08

Notes

As on 31.03.08 Rs. lac

As on 31.3.07 Rs. lac

$0.01 $1 $1.90

4,091,073 1,067,754 1,315,789

— 286,375 —

— 298,500 —

4,091,073 1,055,629 1,315,789

(e) (f)

253.52 688.09 1,142.34

4,062.82 650.48 1,142.34

$0.10

—

8,182,148

—

8,182,148

(e)

3,809.30

—

100

—

(b)

0.02

7,150,223

—

7,150,223

—

(d)

—

6,240.00

$1,000 $1,000,000

97 —

— —

97 —

(f)

83.19 397.60

83.19 —

—

175,737

—

175,737

17.57

—

1,000

—

1,000

0.10

—

0.01

10 3,770,160 10 7,112,956 10 13,602,260

4,000 2,000,000 —

— 3,774,160 — 9,112,956 — 13,602,260

1,318.94 16,317.91 3,549.29

1,318.14 6,377.34 3,549.29

2,584 — — 44,536,514

— 2,584 250,000 2,355,000 580,000 6,067,100 615,950 49,185,209

41.86 1,651.61 325.74 18,792.25

— 1,826.94 364.83 4,027.61

600.00 595.00 635.00

— — —

80,590.13

50,019.56

(3,041.70)

(1,452.78)

77,548.43

48,566.78

13,025.58 64,522.85

9,216.28 39,350.50

77,548.43

48,566.78

33,365.50

34,021.65

10 £1 10 10

— 2,605,000 6,647,100 5,264,645

— — —

108,019,581 103,941,943 1,264,034 1,219,351 135,376,611 130,459,315

4,077,638 44,683 4,917,296

(b)

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

SCHEDULE 7: INVENTORIES (at lower of cost and net realisable value) Stores and spares

This Year Rs. lac

Previous Year Rs. lac

1,618.25

1,381.64

10,380.37

5,820.54

Work-in-progress

4,324.91

4,919.84

Finished goods

3,447.66

3,393.15

19,771.19

15,515.17

219.58

201.20

15,640.35

9,253.24

15,859.93

9,454.44

219.58

201.20

15,640.35

9,253.24

19.66

64.29

290.85

464.39

29,118.34

2,007.66

29,428.85

2,536.34

SCHEDULE 10: LOANS AND ADVANCES (Unsecured and considered good unless otherwise stated) Loans and Advances (refer note 10)

2,183.65

2,772.28

Loan to GIL ESOP Trust

6,434.25

2,784.00

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

2,645.77 35.00

1,265.01 35.00

1,109.87

1,319.90

- Others

563.18

642.42

Advance payment of taxes

967.05

571.38

13,938.77

9,389.99

Raw materials

SCHEDULE 8: SUNDRY DEBTORS (Unsecured) Debts outstanding over six months Considered doubtful Other debts Considered good Less: Provision for doubtful debts

SCHEDULE 9: CASH AND BANK BALANCES Cash and cheques on hand Balances with scheduled banks â&#x20AC;&#x201C; on current account - on deposit account (refer note 9)

Deposits and balances with - Customs & excise authorities

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

This Year Rs. lac

Previous Year Rs. lac

SCHEDULE 11: CURRENT LIABILITIES (refer note 11) Sundry creditors - Outstanding dues of micro enterprises and small enterprises - Others

18.95

75.79

21,532.19

15,724.93

599.55

689.40

1,271.61

877.93

- Unclaimed dividend

34.37

47.74

- Unclaimed Matured Deposits

12.63

15.69

Other liabilities

870.00

534.38

Interest accrued but not due on loans

214.96

87.29

24,554.26

18,053.15

3,996.99

2,918.52

Advances from customers Sundry deposits Investor Education & Protection Fund *

There is no amount due and outstanding to be credited to the Investor Education and Protection Fund.

SCHEDULE 12: PROVISIONS Proposed dividend Provision for tax on distributed profits Provision for retirement benefits

679.29

496.00

2,279.06

2,289.60

6,955.34

5,704.12

1,602.11

2,219.36

SCHEDULE 13: MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) Deferred revenue expenditure Voluntary retirement compensation Balance at the beginning of the year Add: Expenditure incurred during the year Less: Amortised during the year

65.07

38.65

(599.29)

(655.90)

1,067.89

1,602.11

31.97

32.98

SCHEDULE 14: OTHER INCOME Interest - Debentures - Income tax refund - Deposits

65.69

114.78

1,486.01

232.14

94.35

3,592.11

1,298.81

2,189.01

Dividend â&#x20AC;&#x201C; from subsidiary companies - from long-term investments Profit on sale of fixed assets (Net) Profit on sale of long-term investments (refer note 18) Profit on sale of current investments Provision for diminution in investment written back (refer note 18) Bad debt recovered (refer note 18) Miscellaneous income

46.46

595.31

6,672.90

4,382.56

92.41

109.30

â&#x20AC;&#x201D;

300.00

42.64

650.00

519.96 10,351.20

615.43 12,813.62

This Year Rs. lac

Previous Year Rs. lac

SCHEDULE 15: MATERIALS CONSUMED AND PURCHASE OF GOODS Raw materials consumed: Stocks at the commencement of the year Add: Purchases (net)

5,820.54

5,300.52

43,254.25

40,987.86

49,074.79

46,288.38

Less: Stocks as at the close of the year

10,380.37

5,820.54

Raw Materials consumed during the year

38,694.42

40,467.84

772.30

5,804.22

39,466.72

46,272.06

7,045.47

5,421.36

Contribution to provident fund and other funds

357.57

324.20

Employee welfare expenses

555.40

520.11

Purchase of goods for resale

SCHEDULE 16 : EXPENSES Salaries, wages and allowances

928.17

930.87

5,868.57

4,963.01

Processing charges

154.27

98.50

Rent

402.68

247.18

Rates and taxes

516.82

496.78

- Machinery

604.22

644.50

- Buildings

365.73

614.23

- Other assets

453.26

334.47

Stores and spares consumed Power and fuel

Repairs and maintenence

145.95

156.18

3,393.75

2,371.50

Commission

315.16

250.70

Discount

281.53

453.22

Advertisement and publicity

242.37

86.91

Insurance Freight

Sales promotion Selling and distribution expenses Bad debts written off Provision for doubtful debts and advances

2.38

3.96

673.87

822.40

â&#x20AC;&#x201D;

32.38

(19.35)

5.78

Provision for depletion in value of investments

1,588.93

â&#x20AC;&#x201D;

Excise duty

1,065.51

(61.38)

159.26

243.58

Miscellaneous expenses

2,759.55

2,395.62

Less: Expenses recovered under cost sharing agreement for use of common facilities

(748.77)

(672.54)

27,112.30

20,683.52

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

This Year Rs. lac

Previous Year Rs. lac

3,393.15 4,919.84

3,474.37 1,961.02

8,312.99

5,435.39

(3,447.66) (4,324.91)

(3,393.15) (4,919.84)

(7,772.57)

(8,312.99)

SCHEDULE 17: INVENTORY CHANGE Stocks at the commencement of the year - Finished goods - Work-in-progress Less: Stocks at the close of the year: - Finished goods - Work-in-progress

Rs. lac

540.42

(Increase)/Decrease in Inventory

SCHEDULE 18: INTEREST AND FINANCIAL CHARGES (Net) Interest paid - on fixed loans 2,697.01 - on bank overdrafts 18.26 - other interest 651.69 3,366.96 Less: Interest received - on loans & deposits 42.96 - on Customer balances, etc. 8.38 51.34 Net Interest 3,315.62 Other financial charges 460.74 Foreign exchange (gain)/loss (332.62)

2,807.07 11.30 610.94 3,429.31 40.59 9.30 49.89 3,379.42 472.24 (20.88)

3,443.74

3,830.78

310.28

94.75

(70.31) (8.36)

SCHEDULE 19 : EXTRAORDINARY ITEMS Profit on sale of Medical Diagonisitics business Less: Taxation on above - current tax - deferred tax

(2,877.60)

231.61

94.75

Schedule 20: Significant Accounting Policies 1. Accounting Convention The financial statements are prepared under the historical cost convention, on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956. 2. Use of Estimates

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

8. Inventories

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

9. Provisions and Contingent Liabilities

Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

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

3. Fixed Assets

10. Foreign Exchange Transactions

Fixed Assets are stated at cost or as revalued as the case may be, less accumulated depreciation. Cost includes expenses related to acquisition and installation of the concerned assets.

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

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

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

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

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

4. Intangible Assets

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

5. Impairment of Assets

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

6. Borrowing Costs

7. Investments

Investments are classified into long-term and current investments. Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognise a decline, other than of a temporary nature. The fair value of a long-term investment is ascertained with reference to its market value, the investeeâ&#x20AC;&#x2122;s assets and results and the expected cash flows from the investment. Current investments are stated at lower of cost and fair value.

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

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

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

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

Interest income is recognised on a time proportion basis.

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

12. Research and Development Expenditure

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

Revenue expenditure on Research and Development is charged to the Profit and Loss Account of the year in which it is incurred. Capital expenditure incurred during the year on Research and Development is included under additions to fixed assets. 13. Depreciation

Depreciation on assets acquired during the year is provided for the full accounting year and no depreciation is charged on the assets sold/discarded during the year, except in case of major additions and deductions exceeding rupees one crore in which case, proportionate depreciation is provided. Depreciation on the revalued component is provided on the straight line method based on the balance useful life of the assets as certified by the valuers. Such depreciation is withdrawn from Revaluation Reserve and credited to Profit and Loss Account.

14. Employee Benefits

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

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

i. Defined Contribution Plan

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

iii. Other long-term benefits

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

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

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

17. Deferred Revenue Expenditure

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

18. Taxes on Income

Tax expense comprises both current and deferred tax. Current tax is the amount of tax payable on the assessable income for the year determined in accordance with the provisions of the Income Tax Act, 1961.

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

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

ii. Defined Benefit Plan

16. Hedging

19. Segment Reporting

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

15. Incentive Plans

The Company has a scheme of Performance Linked Variable Remuneration (PLVR) which rewards its employees based on Economic Value Addition (EVA). The PLVR amount is related to 45

Schedule 21: Notes to Accounts 1. Background

The Company was incorporated under the Companies Act, 1956 on March 7, 1988 under the name of Gujarat – Godrej Innovative Chemicals Limited. The business and undertaking of the erstwhile Godrej Soaps Limited was transferred to the Company under a scheme of amalgamation with effect from April 1, 1994 and the Company’s name was changed to Godrej Soaps Ltd. Subsequently, under a scheme of arrangement the Consumer Products division of the Company was demerged with effect from April 1, 2001 into a separate company, Godrej Consumer Products Limited (GCPL) and the vegetable oils and processed foods manufacturing business of Godrej Foods Ltd. was transferred to the Company with effect from June 30, 2001. The Foods division (except Wadala factory) was then sold to Godrej Hershey Ltd., on March 31, 2006 The Company’s name was changed to Godrej Industries Limited on April 2, 2001. The Company is engaged in the businesses of manufacture and marketing of oleo-chemicals, their precursors and derivatives, bulk edible oils, estate management and investment activities.

This Year Rs. Lac 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 subsidiary and other companies. d) Uncalled liability on partly paid shares/debentures e) Additional consideration payable for acquisition of certain shares on the occurrence of certain contingent events

Claims against the Company not acknowledged as debts: i) Excise duty demands relating to disputed classification, post manufacturing expenses, assessable values, etc. which the Company has contested and is in appeal at various levels. ii) Customs Duty demands relating to lower charge, differential duty, classification, etc. iii) Sales Tax demands relating to purchase tax on Branch Transfer/Non availability of C Forms, etc. at various levels iv) Octroi demand relating to classification issue on import of Palm Stearine and interest thereon v) Stamp duties claimed on certain properties which are under appeal by the Company vi) Income Tax demands against which the Company has preferred appeals vii) Industrial relations matters under appeal viii) Others

Previous Year Rs. Lac

1,553.45

1,544.09

856.94

1,726.08

1,716.58

1,031.64

938.05

182.23

1,773.60

1,707.97

146.99 445.18

595.11 118.76

567.46

647.62

1,729.00

3,086.00

446.57

381.57

104.13

3. Capital Commitments This Year Rs. Lac Estimated value of contracts remaining to be executed on capital account, to the extent not provided

2. Contingent Liabilities This Year Rs. Lac

Previous Year Rs. Lac

3,009.24

Previous Year Rs. Lac

356.81

4. Share Capital During the year, the Company issued 2,79,06,950 equity shares of Re. 1 each, at a premium of Rs. 214 per share, to Qualified Institutional Buyers (QIB) on a preferential basis as approved by the shareholders vide circular resolution dated September 10, 2007. The pricing was at a premium to the SEBI determined floor price of Rs. 197 per share. The share issue expenses amounting to Rs. 1213.70 lac have been adjusted against Securities Premium account. The money raised has been utilised to retire debt of Rs. 4800 lac, investment in subsidiary companies of Rs. 25000 lac and the unutilised amount is invested in short–term liquid assets. 5. Loans a) Term loans from banks are secured by first charge by way of equitable mortgage of the immovable properties including land, building and plant & machinery at Vikhroli and Valia factories. b) Working capital facilities sanctioned by banks are secured by hypothecation of stocks and book debts. c) The Company had during the year raised Rs. 10000 lac (Previous year Rs. 9000 lac) against the issue of commercial paper. The amount outstanding there against as on March 31, 2008 is Rs. 2000 lac. 6. Investments a) CBay Systems Limited, USA (CBay USA) had carried out an organisational restructuring in Oct 2005, consequent to which, all businesses of CBay group were consolidated under CBay Systems Limited, India (CBay India), a wholly owned subsidiary. Under the scheme, the stockholders of CBay USA were entitled to receive one additional share of CBay India for every two stocks in CBay USA. The shares of CBay India, pending distribution to Indian shareholders, were held in trust by CBay USA. In April 2007, CBay group decided on a further organisational restructuring, wherein CBay Systems Holdings Limited (“CBay BVI”), a company

Schedule 21: Notes to Accounts

(Contd.)

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

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

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

Sundry Debtors include the following amounts due from companies under the same management: Godrej Consumer Products Ltd. Godrej Agrovet Ltd. Godrej Hershey Ltd. Godrej Global Solutions Ltd. Godrej Properties Ltd. Godrej Saralee Ltd. Godrej Hi care Ltd. Godrej SCA Hygiene Ltd. Wadala Commodities Limited. Godrej & Boyce Mfg. Co. Ltd.

Previous Year

No. of Units

Amount No. of Units Rs. Lac

Amount Rs. Lac

Birla Cash Plus Liquid

13,04,59,315

16,178.00 8,38,75,918

9,572.00

Prudential ICICI Liquid

11,48,72,447

12,940.00 6,66,88,100

7,117.00

97,96,004

1,500.00 4,32,90,891

6,200.00

KMMF Liquid Standard Chartered Liquidity manager fund LIC MF Liquid Fund UTI Liquid fund ING Vysya Liquid SBI Magnum Liquid Deutsche Insta Cash Plus Fund JMMF Liquid Templeton Mutual Fund

10,39,41,943 12,19,351

200,052

Balances with Scheduled Banks in Deposit Accounts include: - deposits held by bank as security against guarantees issued - Unutilised money out of the issue of shares to Qualified Institutional Buyers

15,885.00

5,24,962

6,272.00 3,005.00

2,71,85,735

4,738.00 4,92,01,576

5,705.00

- 1,55,39,028

1,724.00

- 1,42,78,700

1,590.00

117,232

1,390.00

7. Events occurring after the balance sheet date In May 2008, the Company has, subject to the approval of the shareholders, agreed to sell its entire holding in its subsidiary company, Godrej Global Solutions Limited for a consideration of Rs. 1,963 lac. The consideration is receivable partly in cash and partly by way of 8% Unsecured Optionally Convertible Debentures (OCD) on a preferential basis. The anticipated loss on the transaction amounting to Rs. 1,588.93 lac has been provided for, during the year.

226.49 21.63 29.01 0.61 1.76 19.88 -

18.50

19.34

29000.00

a) Loans and Advances include an amount of Rs. nil (Previous Year Rs. 1.76 lac) due from a director. Maximum balance during the year Rs. 1.76 lac (Previous Year Rs. 2.37 lac).

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

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

2,100.00

- 2,71,67,811

201.35 21.58 46.44 2.51 3.18 22.69 10.54 0.43 0.12 2.83

10. Loans and Advances

14,844.00 7,73,93,645 10,355.00

Previous Year Rs. Lac

9. Cash and Bank Balances

Mutual Funds - Liquid Schemes - Growth Plan This Year

This Year Rs. Lac

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

8. Sundry Debtors

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

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

12.00 1600.00

- -

35.00

Schedule 21: Notes to Accounts

(Contd.)

Maximum balance This Previous during the year year Year Rs. Lac Rs. Lac Rs. Lac f) Loans and Advances where there is no repayment schedule or repayment is beyond seven years: D. Kavasmanek and Others 1,033.00 1,033.00 1,033.00 (refer (b) above). 11. Disclosure of sundry creditors under current liabilities is based on the information available with the Company regarding the status of the suppliers as defined under the “Micro, Small and Medium Enterprises Development Act, 2006”. Amount overdue as on March 31, 2008 to Micro, Small and Medium Enterprises on account of principal amount together with interest, aggregate to Rs. Nil (Previous Year – Rs. Nil). 12. Employee Stock Option Plans

In December 2005, the Company had instituted an Employee Stock Option Plan (GIL ESOP) approved by the Board of Directors and the Shareholders, which provides for the allotment of 15,00,000 options convertible into 15,00,000 equity shares of Rs. 6 each to eligible employees of participating companies. In view of the sub-division of equity shares into face value of Re. 1 each, the total number of options stands automatically increased to 90,00,000 options convertible into 90,00,000 equity shares of Re. 1 each.

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

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

This Year

No. of options

Wt. average exercise price

Options outstanding at the beginning of the year Add: Options granted on 05/04/07

21,00,000

65.39 (plus interest) 152.55 (plus interest)

Add: Options granted on 11/04/07

3,05,000

155.05 (plus interest)

Add: Options granted on 03/10/07

50,000

175.80 (plus interest)

Add: Options granted on 23/01/08

4,35,000

290.40 (plus interest)

Add: Options granted on 31/03/08

22,59,500

285.60 (plus interest)

1,60,000

152.55 (plus interest) 177.1 (plus interest) -

Less: Exercised Less: Forfeited/expired Options outstanding at the year end Option exercisable at year end

23,20,000

73,09,500 -

Previous Year No. of options 21,00,000

Previous Year Wt. average exercise price 65.39 (plus interest)

21,00,000

65.39 (plus interest)

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

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

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

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

Net Profit (as reported) Less: Stock based compensation expense determined under fair value based method (Pro Forma) Net Profit (Pro Forma) Basic & Diluted Earnings per share before Extraordinary Items (as reported) Basic & Diluted Earnings per share before Extraordinary Items (Pro Forma) Basic & Diluted Earnings per share after Extraordinary Items (as reported) Basic & Diluted Earnings per share after Extraordinary Items (Pro Forma)

This Year Previous Year Rs. Lac Rs. Lac 10,880.97 7,806.08 967.00 9,913.97 (Rs.)

204.00 7,602.08 (Rs.)

3.53

2.64

3.20

2.57

3.60

2.67

3.27

2.60

13. Incentive Plans The amount carried forward in notional bank under Performance Link Variable Remuneration scheme as on March 31, 2008, after distribution of PLVR for the year ended March 31, 2008 is Rs. 1254.59 lac (Previous Year Rs. Nil lac). The said amount is not provided in books of account as the same is held at risk and changed to EVA of future years and is payable if the future performance so warrants. 14. Leases a) The Company has entered into leave and licence agreements in respect of its commercial and residential premises. These are not non-cancellable and range between 12 months to 36 months and are renewable by mutual consent on mutually acceptable terms. Leave and licence arrangements being similar in substance to operating leases, the particulars of the premises under leave and licence arrangement are as under:

Gross carrying amount of premises Accumulated depreciation Depreciation for the period

This Year Previous Year Rs. Lac Rs. Lac 1,782.60 1,784.70 949.72 892.97 59.53 58.30

Schedule 21: Notes to Accounts

(Contd.)

b) Finance Leases:

Period

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

Total minimum lease payments outstanding as on March 31, 2008 Rs. Lac 85.22

Un-matured Interest

134.65 219.87

27.68 51.78

Rs. Lac 24.10

Present value of minimum lease payments Rs. Lac

This Year Details Purchase Sale Total number of contracts outstanding 27 16 Foreign currency value US Dollar (million) 14.69 6.70 Euro (million) 2.06

This Year Details Purchase Sale Uncovered Foreign exchange exposure as at the year end US Dollar (million) 33.67 7.49

105.79 183.36

Liabilities Depreciation Net Deferred Tax Liability

Previous Year Rs. Lac

417.00 196.00 229.00 357.00 1,199.00

351.00 204.00 156.00 82.00 793.00

4,818.20 3,619.20

4,773.00 3,980.00

i) ii) iii)

The Company uses forward exchange contracts to hedge its foreign exchange exposure relating to the underlying transactions and firm commitments. The use of the foreign exchange forward contracts reduces the risk on cost to the company. The Company also uses commodity futures contracts to hedge itâ&#x20AC;&#x2122;s exposure to vegetable oil price risk. The Company does not use the foreign exchange forward contracts or the commodity future contracts for trading or speculation purposes.

2.00 4.12

15.09

i) ii) iii)

5.54

Previous Year Purchase Sale

2,600

Previous Year Rs. Lac

1,291.24 1,101.93 2,807.00

1,124.99 345.20 2,308.97

5,200.17

3,779.16

Profit on sale of long-term investments Provision for diminution in investment Bad debt recovered

Previous Year Rs. Lac

6,672.90

4,382.56

(1,588.93) -

300.00 650.00

19. Profit & Loss Account

a) The Company has adopted Accounting Standard (AS-11) (Revised 2003) as issued by the Ministry of Corporate Affairs vide Notification dated December 7, 2006. Consequently, the effects of changes in foreign exchange rates on foreign currency loans relating to Fixed assets acquired from a country outside India amounting to Rs. 0.81 Lac have been charged off to profit and loss account as against the earlier practice of adjusting against the carrying cost of the Fixed assets.

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

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

a) Commodity futures contracts This Year Purchase Sale

Turnover includes: Processing charges Export Incentives Licence fees and service charges

This Year Rs. Lac

i. Derivative instruments outstanding:

Details Futures contracts outstanding Number of units under above contracts in mt.

19.33 -

18. Exceptional Items

16. Hedging Contracts

Previous Year Purchase Sale

This Year Rs. Lac

Major components of deferred tax arising on account of timing differences as at the year end are:

Assets Provision for retirement benefits Provision for doubtful debts/advances VRS Expenses Others

17. Turnover

This Year Rs. Lac

Previous Year Purchase Sale

ii. Un-hedged foreign currency exposures

77.57

15. Deferred Tax

b) Forward Exchange contracts

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

Schedule 21: Notes to Accounts

(Contd.)

20. Earnings per share: This Year

a. Calculation of weighted average number of equity shares Number of shares at the beginning of the year Nos. Number of equity shares outstanding at the end of the year Nos. Weighted average number of equity shares outstanding during the year Nos.

Previous Year

291,851,652 319,758,602

291,851,652 291,851,652

301,992,702

291,851,652

b. Net profit after tax excluding extraordinary items

Rs. lac

10,649.36

7,711.34

c. Net profit after tax available for equity shareholders (including extraordinary items)

Rs. lac

10,880.97

7,806.09

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

Rupees

3.53

2.64

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

Rupees

3.60

2.67

Note: There is no impact on basic as well as diluted earnings per share on account of the ESOP implemented during the year, as the scheme does not envisage any fresh issue of share capital. 21. Segment Information

Information about primary business segments

Chemicals

Rs. lac

Veg oils

Estate

Finance & Investments

Others

Total

This Year Previous Year This Year Previous Year This Year Previous Year This Year Previous Year This Year Previous Year This Year Previous Year

Revenue External Sales Inter segment sale Total Income

69238.46 –

57187.42 650.93 –

–

4990.94 2946.11 –

–

2561.87 9802.34 –

–

12145.53 1243.90 –

–

1405.46 83881.74 –

78291.22

–

– 78291.22

69238.46

57187.42 650.93

4990.94 2946.11

2561.87 9802.34

12145.53 1243.90

1405.46 83881.74

Segment result before interest and tax 8223.61

642.81 (515.83)

(417.08) 1845.94

1756.72 8213.41

12145.53 289.91

Results 477.76 18057.04

14605.74

Unallocated expenses (3841.73)

(2818.85)

Interest Expense (net) (3443.76)

(3830.78)

Profit before tax 10771.56

7956.11

Taxes (122.20)

(244.77)

Profit after taxes and before extraordinary items 10649.36

7711.34

Add: Extraordinary Items (Net of taxes)

231.61

94.75

Net Profit 10880.97

7806.09

Segment Assets

61352.33

54217.96 788.70

730.00 2775.29

1173.00 116870.93

56258.00 2750.59

3189.00 184537.84

Unallocated Assets

115567.96

Total Assets 184537.84

115567.96

174.00 26833.32

20342.75

Unallocated Liabilities 51862.47

54164.13

Total Liabilities 78695.79

74506.88

Segment Liabilities

24895.06

18882.75 426.28

339.00 1244.08

947.00

267.90

–

Total Cost incurred during the year to acquire segment assets

2338.93

3681.76

32.61

8.07

13.96

12.72

–

- 2385.50

3702.55

Segment depreciation

2254.79

2123.73

52.82

53.68

75.61

84.02

–

- 163.78

164.93 2547.00

2426.36

Schedule 21: Notes to Accounts

Chemicals

(Contd.)

Veg oils

Estate

Finance & Investments

Others

Total

This Year Previous Year This Year Previous Year This Year Previous Year This Year Previous Year This Year Previous Year This Year Previous Year

Information about Secondary Business Segments Revenue by Geographical markets India 53655.03

55994.08

Outside India 30226.71

22297.14

Total 83881.74

78291.22

Carrying Amount of Segment Assets India 184537.84

115567.96

–

Total 184537.84

115567.96

Outside India

Notes:

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.

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

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.

Schedule 21: Notes to Accounts

(Contd.)

22. Related Party Disclosures

a) Names of related parties and description of relationship

Key Management Personnel Mr. A.B. Godrej

Chairman & Managing Director

Parties where control exists

Mr. N.B. Godrej

Managing Director

Godrej & Boyce Mfg. Co. Ltd., the holding company

Ms. T.A. Dubash

Executive Director

Subsidiary companies

& President (Marketing)

Godrej Agrovet Ltd.

Mr. Mathew Eipe

Executive Director

Goldmohur Foods & Feeds Ltd.

& President (Chemicals)

Aadhar Retailing Ltd.

Mr. V. Banaji

Executive Director & President

Godrej Oil Plantations Ltd.

(Group Corporate Affairs)

Golden Feeds Products Ltd.

Mr. M.P. Pusalkar

Executive Director & President

Cauvery Palm Oil Ltd.

Mr. C.K. Vaidya

Executive Director & President

Godrej Gokarna Oil Palm Ltd.

(Business Excellence)

Godrej Properties Ltd.

Girikandra Holiday Homes & Resorts Ltd.

Relatives Key Management Personnel

Godrej Developers P. Ltd.

Ms. P.A. Godrej

Wife of Mr. A.B. Godrej

Godrej Real Estate P. Ltd.

Ms. N.A. Godrej

Daughter of Mr. A.B. Godrej

Godrej Reality P. Ltd.

Mr. P.A. Godrej

Son of Mr. A.B. Godrej

Godrej Sea View Properties P. Ltd.

Ms. R.N. Godrej

Wife of Mr. N.B. Godrej

Godrej Waterside Properties P. Ltd.

Happy Highrises Ltd.

Enterprises over which key management

Godrej Hicare Ltd.

personnel exercise significant influence

Godrej International Ltd.

Godrej Consumer Products Ltd.

Godrej Global Solutions Ltd.

Godrej SCA Hygiene Ltd.

Godrej Global Solutions Inc.

Godrej Investments Pvt. Ltd.

Godrej Global Solutions (Cyprus) Ltd.

Bahar Agrochem & Feeds Pvt. Ltd.

Ensemble Holdings & Finance Ltd.

Godrej Holdings P. Ltd.

Fellow Subsidiaries

Vora Soap Ltd.

Wadala Commodities Ltd. (Formerly Godrej Commodities Ltd.)

Godrej Upstream Ltd.

Godrej (Malaysia) Sdn Bhd

Godrej (Singapore) Pte Ltd.

Godrej Infotech Ltd.

Mercury Mfg. Co. Ltd.

J. T. Dragon Pte Ltd.

Swadeshi Detergents Ltd.

Godrej (Vietnam) Co. Ltd.

Other related parties with whom the Company had

transactions during the year

Associate/Joint Venture Companies

Godrej Sara Lee Ltd.

Godrej Hershey Ltd.

Nutrine Confectionary Co. Ltd.

Lawkim Ltd.

SCHEDULE 21 : NOTES TO ACCOUNTS (Contd.) b) Transactions with Related Parties

Nature of Transaction Sale of Goods Previous Year Sale of Fixed Assets Previous Year Purchase of goods & equipment Previous Year Purchase of flats Previous Year Processing charges received Previous Year Commission received Previous Year Recovery of establishment & other Expenses Previous Year Rent, establishment & other exps paid Previous Year Interest received Previous Year Interest paid Previous Year Dividend income Previous Year Dividend paid Previous Year Remuneration Previous Year Purchase of investments Previous Year Sale of investments Previous Year Intercorporate deposits - accepted Previous Year Intercorporate deposits repaid during the year Previous Year Intercorporate deposits - advanced Previous Year Intercorporate deposits repayment received during the year Previous Year Capital reduction under Sections 101 to 105 Previous Year Directors Fees Previous Year Balance Outstanding as on March 31, 2008 Receivables Previous Year Payables Previous Year Guarantees Outstanding Previous Year

Rs. lac

Holding Subsidiary Fellow Company Companies Subsidiaries 5.03 3.16 6.22 139.96 1.81 675.62 112.76 914.14 63.37 168.70 5.00 2.50 7.90 2.50 5.02 370.31 0.45 5.88 274.50 0.47 228.47 60.90 19.17 197.04 12.32 16.39 30.56 20.45 4.60 94.35 48.15 3,592.11 33.74 1,872.02 1,560.02 - 25,305.04 3,128.63 1,019.83 100.00 1,612.00 3,955.00 -

Associate/ Key Joint Venture Management Companies Personnel 45.23 19.07 20.73 209.34 198.46 209.68 193.68 87.47 73.22 488.42 354.24 14.23 0.40 1.88 383.03 1,174.64 54.89 135.61 662.67 320.65 5,160.00 10,142.25 -

Relative of Key Management Personnel 1,091.00 82.31 13.72 585.42 869.84 43.19 25.64 -

Enterprises over which Key Mangement Personnel exercise significant influence 841.69 982.10 21.64 712.78 719.88 40.03 31.59 15.98 1,237.72 936.66 101.31 87.26 3.50 3.91 207.66 867.60 980.60 299.90 2,000.00 1,000.00 3,000.00 -

Total 891.95 1,004.33 26.95 1,112.64 1,739.51 1,945.24 232.07 249.71 193.68 126.56 99.60 2,101.92 1,571.75 506.79 328.61 34.06 24.36 212.26 1,393.13 5,781.09 2,512.33 2,565.47 705.86 346.29 30,764.94 13,270.88 1,019.83 2,100.00 1,000.00 3,000.00 1,612.00 3,955.00

1,612.00 3,955.60 2,042.34 -

1.65 -

1,612.00 3,955.60 2,042.34 1.65 -

2.83 75.73 5.44 38.80 -

37.81 24.49 13.56 2.48 500.00 668.00

0.13 617.89 3.26 1,000.00 1,000.00

69.14 48.89 49.99 3.04 1,350.00

211.42 226.58 89.03 70.97 161.00 -

321.33 993.58 161.28 115.29 1,661.00 3,018.00

SCHEDULE 21 : NOTES TO ACCOUNTS (Contd.) c) The Significant Related Party transactions are as under Nature of Transaction

This Year Previous Year Rs. lac Rs. lac

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

981.49 1091.00 21.64 719.88 909.67 217.04 193.68 47.26 25.96 15.98 -

936.66 211.65 191.08 142.59 197.04 87.14 13.72 20.29 3.91

Nature of Transaction

This Year Previous Year Rs. lac Rs. lac

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

1000.00 3950.00 5.00

3950.00 5.00

980.60 1174.64 2712.16 727.99 1560.02

85.66 69.55 64.00 54.20 47.24 -

19.92 5.73 -

3000.00 9240.08 902.25

2042.34

SCHEDULE 21 : NOTES TO ACCOUNTS (Contd.) Rs. lac

This Year Rs. lac

Previous Year Rs. lac

23. Computation of Profits under Section 349 of the Companies Act, 1956 Profit for the year after tax as per Profit & Loss Account Add: Depreciation as per accounts Managerial Remuneration Profit/(loss) on sale of assets under Section 349 Provision for doubtful debts/advances and depletion in value of investments Provision for Tax (including tax on extraordinary items)

10,880.97 2,547.00 662.75 -

7,806.09 2,426.36 320.64

222.09

1,569.58 626.57

5.78 222.70

5,405.90

3,197.57

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

9,550.02

11,003.66 2,401.80 595.31 4,382.56 300.00 7,679.67

Net Profit for the purpose of Directorsâ&#x20AC;&#x2122; Remuneration 6,736.85 3,323.99 Managerial remuneration to Managing and Executive Directors @ 10% of the net profits 673.69 332.40

Managerial remuneration paid/payable

24.

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

662.75

320.64

TOTAL 662.75 320.64 25. Auditorsâ&#x20AC;&#x2122; Remuneration Audit fees (including Rs. 1.18 lac to branch auditors, previous year Rs.1.04 lac) 30.57 26.30 4.80 4.00 Tax audit fees Certification and other services 33.55 7.02 Tax Consultation and representation 10.40 11.93 Consultation and management services 4.00 4.40 Out of pocket expenses 0.77 1.15 TOTAL 84.09

54.80

SCHEDULE 21 : NOTES TO ACCOUNTS (Contd.) 26. Turnover (Net) Item

Unit

This Year Quantity

Previous Year Value

Quantity

Value

Rs. lac

Fatty Acids

49964

23966.77

58448

20428.32

Glycerin

10115

5017.34

11965

4066.74

Alpha Olefin and its precursors

58753

32707.10

51433

26197.14

Synthetic Detergent

18649

4960.13

37322

4721.11

Oils & Vanaspati

17835

4607.60

780.05

833.23

Others

6099.15

4623.46

TOTAL

73530.54

65477.60

Medical Diagnostic Products

27. Inventories - Finished Goods Item

Unit

MARCH 31, 2008 Quantity

MARCH 31, 2007

Value Rs. lac

1437

Quantity

667.62

1581

MARCH 31, 2006

Value Rs. lac

Quantity

676.69

Value Rs. lac

Fatty Acids

2278

817.98

Glycerin

282

197.69

397

128.59

638

236.59

Alpha Olefin and its precursors

3627

2171.95

4383

2233.20

3649

1928.84

Synthetic Detergent

1185

408.36

696

201.03

2061

371.78

Oils & Vanaspati

2.04

–

150.55

119.18

Others

2.04

1.05

TOTAL

3447.66

3393.15

3474.37

Medical Diagnostic Products

28. Raw Materials Consumed Unit

This Year Quantity

Value Rs. lac Oils & Fats MT 159531 28853.80 Chemicals and Catalysts MT 17945 6213.78 Packing Materials, etc. 3626.84 Total 38694.42 Raw Materials consumption includes consumption for production of captively consumed items.

Previous Year Value Rs. lac 161362 32253.73 19289 4910.44 3303.66 40467.83

Quantity

29. Purchase of Goods Unit

This Year Quantity

Fatty Acids Oils & Vanaspati Medical Diagnostic Products Others Total

MT MT

30 -

Value Rs. lac 11.48 540.16 220.66 772.30

Previous Year Quantity Value Rs. lac 1435 612.00 17825 4584.32 512.12 95.78 5804.22

SCHEDULE 21 : NOTES TO ACCOUNTS (Contd.) 30. Licensed, Installed and Utilised Capacity Item

SCHEDULED Fatty Acids Glycerin Alpha Olefin and its precursors Soaps Refined Oils & Vanaspati Synthetic Detergents Hydrogen (Captive consumption) Oxygen (By-Product)

Unit

Licensed Capacity

MT MT MT MT MT MT NM 3

} } } } } } } }

NM 3

}

Installed Capacity This Previous Year Year

Actual Production This Previous Year Year

73300 8280 65000 38700 29250

55800 8280 65000 26381 38700 11250

49820 9433 57997 10123 19138

59700 11041 58094 7645 10110 38638

20424000

1224000

388299

687033

612000

194150

343517

NOTES 1. The Licensed Capacities are not applicable in view of the exemption from licensing granted under Notification SO 477 (E) dated July 25, 1991, issued under the Industries (Development & Regulation Act,1951). 2. Production of Fatty Acid includes 821 MT produced under process contracts for third parties. 3. Installed capacity excludes the installed capacity for manufacture of intermediates which are intended to be used for internal consumption to manufacture A.O. and its precursors and derivatives. 4. Production of Synthetic Detergent includes 16389 MT produced under process contracts for third parties. 5. Production of Refined Oil and Vanaspati is under process contract.

This Year Previous Year Rs. lac Rs. lac

31.

Value of Imports on CIF Basis (includes only Imports directly made) 32,388.28 Raw materials 637.67 Goods for resale 305.86 Stores & spares 9.09 Capital goods

TOTAL

32. Expenditure in Foreign Currency Interest Travelling expenditure Other expenditure Expenses for Foreign Branch: - Salaries and allowance - Rent - Others TOTAL

33,340.90

25,313.10 390.48 509.60 432.86 26,646.04

194.49 168.82 744.14

587.04 104.07 740.73

125.69 23.11 21.30

126.98 15.98 18.42

1,277.55

1,593.22

Value of Consumption of Raw Materials & Spares Raw Materials Imported (including duty content) Indigenous Spares Imported (including duty content) Indigenous

This Year Rs. lac

Previous Year Rs. lac

27,941.59 72 19,366.53 48 10,752.83 28 21,101.30 52 38,694.42 100 40,467.83 100

176.22 19 751.95 81

620.27 68 310.60 32

928.17 100

930.87 100

34 Dividends Remitted in Foreign Currency (subject to deduction of tax, as applicable)

Final Dividend for Financial Year 2006-07 to 0.06 4 shareholders on 1188 shares

0.05

TOTAL

0.05

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

TOTAL

0.06

30,226.71

22,297.14

SCHEDULE 21 : NOTES TO ACCOUNTS (Contd.) 36. Employee Benefits

The amounts recognised in the Companyâ&#x20AC;&#x2122;s financial statements as at the year end are as under:

This Year Rs. lac Gratuity

This Year Rs. lac Pension

a) Change in Present Value of Obligation Present value of the obligation at the beginning of the year Current Service Cost Interest Cost Contribution by Plan Participants Actuarial (Gain)/Loss on Obligation Foreign Currency exchange rate changes Benefits Paid Past Service Cost Amalgamations Curtailments Settlements Present value of the obligation at the end of the year

1,986.25 151.11 158.90 - (56.44) - (24.86) - - - - 2,214.97

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

1,302.53 104.20 52.08 1,458.81

- - -

c) Amounts Recognised in the Balance Sheet Present value of Obligation at the end of the year Unrecognised Past Service Cost Fair value of Plan Assets at the end of the year Net Obligation at the end of the year

2,214.97 1,458.81 756.16

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

151.11 158.90 (104.20) - (41.54) - - 164.27

89.14 (10.09) (5.77) - 73.28

62.39 e) Actual return on Plan Assets f) Actuarial Assumptions i) Discount Rate 8% P.A. 8% P.A. ii) Expected Rate of Return on Plan Assets 8% P.A. 8% P.A. iii) Salary Escalation Rate 5% P.A. 5% P.A. - iv) Employee Turnover v) Mortality L.I.C 1994-96 L.I.C 1994-96 ULTIMATE ULTIMATE The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. * This being the first year of implementation of AS-15 Employee Benefits (Revised 2005) previous year figures have not been furnished. 58

SCHEDULE 21 : NOTES TO ACCOUNTS (Contd.) 37. Interest in Joint Ventures

The Company’s interests, as a venturer, in jointly controlled entities are:

Name Countries of Principal Percentage of Percentage of Incorporation activities Ownership Ownership interest as at interest as at 31st March, 2008 31st March, 2007

Godrej SaraLee Ltd.

India

Household Insectisides

20.00%

Godrej Hershey Ltd

India

Beverages & Foods

43.00%

48.00%

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

This Year

Previous Year

Rs. lac

I. ASSETS 5,346.42 4,233.86 1. Fixed Assets 16,198.00 10,444.32 2. Investments 3. Current Assets, Loans and Advances 3,138.05 2,644.75 a) Inventories 1,734.46 1,516.68 b) Sundry Debtors 1,582.10 2,260.41 c) Cash and Bank Balances - 5.16 d) Other Current Assets 2,816.73 1,280.09 e) Loans and Advances II. LIABILITIES 1. Loan Funds 6,556.13 8,274.24 a) Secured Loans 142.27 410.41 b) Unsecured Loans 2. Current Liabilities and Provisions 5,549.35 4,730.65 a) Liabilities 381.43 327.67 b) Provisions 96.41 85.86 3. Deferred Tax- Net III. INCOME 27,420.58 23,924.55 1. Turnover (net of excise) 194.32 314.69 2. Other Income IV. EXPENSES 16,326.74 14,736.03 1. Material consumed and purchase of goods 9,297.17 7,425.11 2. Expenses (500.17) 52.51 3. Inventory change 359.12 401.00 4. Depreciation 751.82 776.17 5. Interest 342.12 200.39 6. Provision for Taxation V. OTHER MATTERS 1,062.73 328.13 1. Contingent Liabilities 241.52 132.46 2. Capital Commitments

SCHEDULE 21 : NOTES TO ACCOUNTS (Contd.) 38. Figures for the previous year have been regrouped wherever necessary. 39. Additional Information as Required Under Part iv Of Schedule vi To The Companies Act, 1956 1.

Registration Details Registration No. State Code Balance Sheet Date

: : :

97781 11 31/3/2008

Capital raised during the year (Amount in Rs. lac) Public Issue Rights Issue Bonus Issue Private Placement

: : : :

Nil Nil Nil 59,999.94

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

: :

153,028.25 153,028.25

Sources of Funds Paid-up Capital Reserves & Surplus Secured Loans Unsecured Loans Defered Tax Liability

: : : : :

3,197.59 102,644.47 24,948.07 18,618.92 3,619.20

Application of Funds Net Fixed Assets Investments Net Current Assets Misc. Expenditure Accumulated Losses

: : : : :

27,142.37 77,548.43 47,269.59 1,067.89 -

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

Report of the AuditoRs To the board of directors of the godrej industries limited on consolidated financial statements 1. We have audited the attached Consolidated Balance Sheet of Godrej Industries Limited and its subsidiaries as at March 31, 2008, and also the Consolidated Profit and Loss Account and Consolidated Cash Flow Statement for the year then ended, both annexed thereto. 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.

4. We report that the consolidated financial statements have been prepared by the management of Godrej Industries Limited 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.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements 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.

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

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

(b) As stated in Note 2 of Schedule 21, the financial statements of a Jointly controlled entity, whose financial statements reflect the Group’s share of total assets of Rs. 171 lakhs as at March 31, 2008 and the Group’s share of total revenue of Rs. 1,548 lakhs and net cash inflows amounting to Rs. 281 lakhs for the year ended on that date are not audited as of the date of this report and have been included in the consolidated financial statements on the basis of unaudited management accounts. (c) As stated in Note 2 of Schedule 21, the financial statements of certain associates whose financial statements reflect the Group’s share of associates’ profit upto March 31, 2008 of Rs. 548 lakhs and the share of profit for the year of Rs. 138 lakhs has been included in the consolidated financial statements on the basis of unaudited management accounts.

6. Based on our audit and on consideration of the reports of other auditors on separate financial statements and the management’s certification of the unaudited financial statements, in our opinion, the consolidated financial statements, subject to the observations in paragraphs 3 and 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 the Godrej Industries Limited Group as March 31, 2008;

b) in case of the Consolidated Profit and Loss Account, of the consolidated results of operations for the year ended on that date; and

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

For and on behalf of Kalyaniwalla & Mistry Chartered Accountants V. R. Mehta Partner Mumbai, May 28, 2008

Membership No: 32083

balance sheet AS AT march 31, 2008

Schedule

This Year Rs. lac

Previous Year Rs. lac

3,197.59 133,444.44

2,918.52 44,353.00

136,642.03 9,942.37

47,271.52 3,139.53

51,170.50 53,798.32

50,710.32 40,652.56

Rs. lac

SOURCES OF FUNDS 1. Shareholdersâ&#x20AC;&#x2122; Funds (a) Share capital (b) Reserves & surplus 2. Minority Interest 3. Loan Funds (a) Secured loans (b) Unsecured loans

1 2

3 4

Deferred Tax Liability

104,968.82 5,197.79

91,362.88 5,117.64

TOTAL

256,751.01

146,891.57

91,262.05 41,543.07 49,718.98 1,838.97

87,729.75 39,023.23 48,706.52 2,604.42

51,557.96 53,957.18 Goodwill (on consolidation) 21,774.40 Investments 6 Current Assets, Loans and Advances (a) Inventories 7 64,360.74 (b) Sundry debtors 8 67,096.45 (c) Cash and bank balances 9 36,491.60 (d) Other Current Assets 149.19 (e) Loans and advances 10 65,987.63

51,310.93 27,631.09 19,372.51

APPLICATION OF FUNDS 5. Fixed Assets 5 (a) Gross block (b) Less: Depreciation/Impairment (c) Net block (d) Capital work-in-progress 6. 7. 8.

46,362.41 45,640.04 8,881.57 9.56 27,307.58

Less: Current Liabilities and Provisions (a) Liabilities 11 (b) Provisions 12

234,085.61

128,201.16

97,410.44 8,347.06

74,849.87 6,436.45

105,757.50

81,286.32

128,328.09

46,914.83

Net Current Assets

Miscellaneous Expenditure (To the extent not written off or adjusted)

1,133.37

1,662.20

TOTAL

256,751.01

146,891.57

Significant Accounting Policies

Notes to Accounts

The Schedules referred to above form an integral part of the Balance Sheet. As per our Report attached

Signatures to Balance Sheet and Schedules 1 to 13, 20 and 21

profit and loss account for the year ended march 31, 2008

Schedule

Rs. lac

This Year Rs. lac

Previous Year Rs. lac

INCOME 302,498.91 243,864.79 Turnover (gross) 7,727.05 5,967.69 Less: Excise duty 294,771.86 237,897.10 Turnover (net) 13,492.30 8,672.62 Other Income 14 308,264.16 246,569.71 EXPENDITURE 198,125.68 170,203.48 Materials consumed 15 8,678.57 7,583.96 Cost of sales - property development 15 69,468.31 54,980.24 Expenses 16 (1,264.28) (4,581.11) Inventory change 17 7,116.75 6,500.66 Interest and financial charges (net) 18 5,141.13 4,280.34 Depreciation (including share in jointly controlled entities Rs. 359.12 lac, Previous Year Rs. 137.11 lac) (Net of transfer from Revaluation Reserve Rs. 148.93 lac, Previous Year Rs. 160.45 lac) 287,266.16 238,967.56 Profit Before Tax & Extraordinary Items 20,998.00 7,602.15 Profit from continuing operations before tax 24,064.09 8,118.16 Income tax - current tax (5,287.63) (867.16) - fringe benefit tax (129.27) - deferred tax (162.68) (230.64) - adjustment of previous years (net) (1,337.64) 65.09 17,146.87 7,085.44 Profit from continuing operations after tax Loss from discontinuing operations before tax (3,066.09) (516.01) Income tax - current tax (8.84) - fringe benefit tax (2.68) - deferred tax - 26.00 (3,077.61) (490.01) Loss from discontinuing operations after tax Profit for the year after taxation and before Extraordinary Items 14,069.26 6,267.87 3,824.74 Extraordinary Items (Net of Tax) 19 17,894.00 6,267.87 115.34 24.56 Share of profit in Associates Profit before Minority Interest 18,009.34 6,292.43 (1,226.83) (404.37) Share of Minority Interest Profit after Minority Interest 16,782.51 5,888.06 26,391.27 18,220.27 Surplus brought forward 43,173.78 24,108.33 Profit Available for Appropriation APPROPRIATIONS: Dividend on Equity Shares - Interim â&#x20AC;&#x201C; 873.69 3,996.97 2,918.52 - Final 1,233.71 1,154.78 Tax on distributed profits 2,026.80 1,507.89 Transfer to General Reserve 35,916.32 17,653.45 Surplus carried forward 43,173.78 24,108.33 TOTAL Basic & Diluted Earnings per share before extra ordinary items 4.66 2.02 5.56 2.02 Basic & Diluted Earnings per share after extra ordinary items Significant Accounting Policies 20 Notes to Accounts 21 The Schedules referred to above form an integral part of the Profit and Loss Account. As per our Report attached Signatures to Profit & Loss Account and Schedules 14 to 21 For and on behalf of A.B. Godrej N.B. Godrej M. Eipe M.P. Pusalkar Kalyaniwalla & Mistry Chairman Managing Director Executive Director Executive Director Chartered Accountants & President (Chemicals) & President (Corporate Projects) V. R. Mehta S.K. Bhatt V. Srinivasan Partner Executive Vice President Executive Vice President Mumbai, May 28, 2008 (Corporate Services) & Company Secretary (Finance & Estate) 63

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008 A. B. C.

Cash Flow from operating activities: Profit before tax Adjustments for: Depreciation Foreign exchange Profit on sale of investments Profit on sale of fixed assets Dividend income Interest income Interest expense Voluntary retirement compensation paid Deferred expenditure written off Provision in diminution on value of investments/(written back) Provision for doubtful debts and sundry balances written off (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 used in operating activities Cash Flow from investing activities : Purchase of fixed assets Proceeds from sale of fixed assets Proceeds from transfer of business Purchase of investments Proceeds from sale of investments Intercorporate deposits/Loans (net) Interest received Dividend received Net Cash from/(used in) investing activities Proceeds from sale of Medical Diagnostics Division Net Cash from/(used in) investing activities after extraordinary item Cash Flow from financing activities: Proceeds from issue of share capital Proceeds from issue of debentures Proceeds from borrowings Repayments of borrowings Bank overdrafts (net) Interest paid Dividend paid Tax on distributed profits Net Cash from financing activities

Net increase in cash and cash equivalents

Cash and cash equivalents (Opening Balance) Add: cash and cash equivalents taken over pursuant to Business Acquisition Less: cash and cash equivalents on Demerger/Transfer/Dilution Adjusted Cash and cash equivalents Cash and cash equivalents (Closing Balance) (including share in jointly controlled entities - Rs. 1876.39 lac) Notes: 1. Cash and Cash equivalents. Cash on hand and balances with banks Effect of exchange rate changes Cash and cash equivalents 2. The above cash flow statement includes share of cash flows 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

This Year Rs. lac

Previous Year Rs. lac

20,998.00

7,602.15

5,141.13 88.65 (9,275.18) (62.07) (916.42) (4,639.11) 9,248.52 (65.07) 628.16 1,588.78 78.27 (0.90) 22,812.76

4,190.59 10.16 (4,509.98) (570.15) (1,018.61) (1,415.34) 6,668.46 (38.65) 596.46 (300.00) (418.93) 42.72 10,838.87

(20,428.15) (60,204.98) 29,063.16 (28,757.21) (6,912.92) 220.07 (35,450.06)

(18,987.18) (26,674.99) 24,663.54 (10,159.76) (2,579.66) 451.03 (12,288.39)

(10,424.15) 381.95 2,654.04 (73,119.99) 83,209.20 (5,615.92) 4,137.77 916.42 2,139.32 600.00 2,739.32

(9,640.47) 2,916.07 (71,094.70) 61,956.37 (2,366.49) 1,109.78 1,018.61 (16,100.83) (16,100.83)

58,786.24 1,421.00 86,965.66 (81,377.54) 7,092.21 (8,973.93) (2,931.91) (565.76) 60,415.97

1,322.99 171.50 55,163.74 (37,965.15) 20,606.42 (6,736.77) (3,390.20) (1,201.99) 27,970.54

27,705.23

(418.68)

8,881.57 80.07 (175.27) 8,786.37 36,491.60

9,106.59 159.46 34.20 9,300.25 8,881.57

36,492.49 (0.89) 36,491.60

8,881.68 (0.11) 8,881.57

1,045.13 (2,598.54) 1,247.65

As per our Report attached Signatures to Cash Flow Statement For and on behalf of A.B. Godrej N.B. Godrej M. Eipe M.P. Pusalkar Chairman Managing Director Executive Director Executive Director Kalyaniwalla & Mistry Chartered Accountants & President (Chemicals) & President (Corporate Projects) V. R. Mehta S.K. Bhatt Partner Executive Vice President Mumbai, May 28, 2008 (Corporate Services) & Company Secretary 64

V. Srinivasan Executive Vice President (Finance & Estate)

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2008

SCHEDULE 1 : SHARE CAPITAL Authorised: 800,000,000 Equity shares of Re.1 each 10,00,00,000 Unclassified Shares of Rs.10 each Issued, Subscribed and Paid Up: 319,758,602 (Previous year 291,851,652) Equity shares of Re.1 each fully paid Of the above,

(i) 187,202,388 (ii) 155,547,816 (iii) 95,705,718

This Year Rs. lac

Previous Year Rs. lac

8,000.00 10,000.00

18,000.00

3,197.59

2,918.52

3,197.59

2,918.52

SCHEDULE 2 : RESERVES AND SURPLUS Securities Premium Account Capital Investment Subsidy Reserve

As at Additions Deductions Adjustments on As at 1.4.2007 acquisition/dilution 31.03.2008 2,657.02 1,099.18

87,879.26 8,731.57 1,557.84

81,804.71 2,657.02

80.39 80.39

- -

28.12 -

52.27 80.39

1,825.71 2,291.39

- -

154.50 465.68

1,671.21 1,825.71

132.31 117.39

34.67 14.92

- -

166.98 132.31

Capital Redemption Reserve

3,301.34 3,301.34

- -

3,301.34 3,301.34

General Reserve

9,936.18 9,097.05

2,026.80 1,507.89

1,325.47 (321.37) 668.76

10,316.14 9,936.18

28.79 35.58

22.36 -

227.94 6.79

(176.79) 28.79

26,391.27 18,220.27

35,916.32 17,653.45

26,391.27 18,220.27

44,353.00 125,879.40 34,242.59 20,734.10

36,858.87 19,361.50

Revaluation Reserve Special Reserve u/s. 451C of RBI Act, 1934

Foreign Exchange Fluctuation Reserve Profit and Loss Account Total - This Year Total - Previous Year

392.27 8,737.81

36,308.59 26,391.26

70.90 133,444.44 8,737.81 44,353.00

SCHEDULE 3 : SECURED LOANS Term loans from financial institutions Term loans from banks Bank overdrafts Share in jointly controlled entities

2,156.00 32,480.53 9,977.84 6,556.13

735.00 30,662.20 11,038.88 8,274.24

51,170.50

50,710.32

SCHEDULE 4 : UNSECURED LOANS Fixed deposits Intercorporate borrowings Commercial Paper Short term loans from banks Other loans from banks Sales tax deferment facility Share in jointly controlled entities

190.98 150.00 2,000.00 49,590.48 1,257.85 466.74 142.27

168.98 2,443.07 1,000.00 35,532.13 470.04 627.93 410.41

53,798.32

40,652.56

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) SCHEDULE 5 : FIXED ASSETS ASSETS

Tangible Assets Land - Freehold - Leasehold Buildings Plant & Machinery Research Centre Furniture & Fixtures Office & Other Equipments Vehicles Trees Development Cost Intangible Assets Goodwill Trademarks Technical Knowhow Fees Software ASSETS ACQUIRED UNDER FINANCE LEASE Plant & Machinery Vehicles Share in jointly controlled entities TOTAL - This Year - Previous Year Capital Work in-Progress TOTAL

Rs. Lac

GROSS BLOCK DEPRECIATION/IMPAIRMENT NET BLOCK Upto Deductions/ For the Upto As on Additions Deductions/ As on As on As on 01.04.2007 Adjustments 31.03.2008 01.04.2007 Adjustments Year 31.03.2008 31.03.2008 31.03.2007 1,601.16 191.88 241.26 11,295.03 1,731.39 53,219.07 4,341.29 150.39 13.74 1,866.62 531.11 1,873.08 1,076.25 1,363.67 373.42 454.69 184.82

730.45 2,004.96 1,919.43 708.97 920.37 259.82 522.48

1,062.59 241.26 11,021.46 55,640.93 164.13 1,688.76 2,028.96 1,477.27 117.03

2.92 30.81 3,204.01 25,864.09 69.35 896.86 717.41 565.26 269.88

1.21 4.13 1,058.46 1,598.24 1.54 32.35 208.91 210.45 391.95 566.01 3,378.07 7,643.39 8,091.02 997.32 3,015.58 27,882.35 27,758.58 27,354.98 5.62 74.97 89.16 81.04 144.29 143.40 895.97 792.79 969.76 176.77 332.95 873.59 1,155.37 1,155.67 110.16 142.15 597.25 880.02 798.41 280.23 30.33 19.98 97.05 184.81

1,603.55 2,920.89 4,251.18 200.00 971.85 21.46

3,533.71 -

1,603.55 3,638.36 200.00 993.31

355.59 1,300.84 199.98 700.60

(28.69) 21.06 -

207.12 270.09 64.41

591.40 1,549.87 199.98 765.01

1,012.15 2,088.49 0.02 228.30

1,247.96 1,620.05 0.02 271.25

1,082.69 759.62 249.03 88.47 8,636.77 1,898.05

1.83 26.33 1,302.03

1,840.48 311.17 9,232.79

137.87 161.84 4,545.92

(9.27) 65.36 665.14

79.65 58.65 415.45

226.79 155.13 4,296.23

1,613.69 156.04 4,936.56

944.82 87.19 4,090.85

11,930.38 91,262.05 4,794.19 87,729.86 -

39,023.23 32,997.46 -

87,729.75 15,462.68 77,659.89 14,864.16

2,814.32 5,334.16 41,543.07 49,718.98 48,706.52 (1,585.09) 4,440.79 39,023.35 - 1,838.97 2,604.42 51,557.96 51,310.93

1. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on June 30, 1992 on the basis of a Valuation Report submitted by professional valuers. 2. Depreciation for the year includes Rs.148.93 lac (Previous Year Rs.160.45 lac) being depreciation on revalued component of the fixed assets. 3. Accumulated depreciation includes impairment loss of Rs. 707.90 lac on plant & machinery in an earlier year. 4. Capital work-in-progress is net of impairment loss of Rs. 204.10 lac provided on an infructuous asset under construction.

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) SCHEDULE 6 : INVESTMENTS

Investee Company/Institutions

Face value (Rs.) Qty. as on 01.04.07

Number Acquired Sold/adjusted during the during the year year

LONG TERM INVESTMENTS: At Cost A. TRADE INVESTMENTS Equity Shares: Fully Paid Bharuch Eco-Aqua Infrastructure Ltd. 10 440,000 Preference Shares: Partly paid Godrej Commodities Ltd. 10 5,000,000 (Formerly Godrej Foods Limited) (8% Redeemable Cumulative Preference Shares, 2012) B. OTHER INVESTMENTS: Fully paid unless stated otherwise Equity Shares Quoted: 1 26,936,108 3,800,000 Godrej Consumer Products Ltd. Others Unquoted: Associate Companies 10 9,000,000 9,000,000 Godrej Upstream Ltd. Swadeshi Detergents Ltd. 10 209,370 Creamline Diary Products Ltd. 10 2,390,911 281,082 Creamline Nutrients Ltd. 10 351,352 351,352 Polychem Hygine Laboratories Private Limited 10 455,000 Aadhar Retailing Limited 10 - 3,000,000 Personalitree Academy Ltd. 10 389,269 Compass BPO Ltd. (Formerly Compass Connections Ltd.) £0.25 13,692 Other Companies Avestha Gengraine Technologies Pvt. Ltd. 10 175,744 34,500 Cbay Infotech Ventures Pvt. Ltd. 10 32,258 Gharda Chemicals Ltd. 100 114 Tahir Properties Ltd. (Partly paid) 100 25 KaROX Technologies Ltd. 10 250,000 HyCa Technologies Pvt. Ltd. (partly paid up) 10 12,222 Common Stock/Membership Units: Unquoted: CBay Systems Ltd., USA $0.01 4,091,073 Boston Analytics LLC $1.00 781,250 286,504 Verseon LLC - Class A Units $1.90 1,315,789 Newmarket Limited 100 Quoted CBaySystems Holdings Ltd., UK $0.10 - 8,182,148 Preference Shares: Unquoted: Tahir Properties Ltd. (Class - A) (partly paid) 100 25 Optionally convertible Loan Notes: Unquoted: $1,000 97 Compass BPO Ltd. (Formerly Compass Connections Ltd.) Verseon Corporation (Formerly Verseon LLC) $1,000,000 (13% convertible promissory note) Shares in Co-operative Society: Fully Paid Unquoted: The Saraswat Co-op Bank Ltd. 10 1,000 Investment in the capital of Partnership Firm: View Group LP CURRENT INVESTMENTS Units of Mutual Fund: Unquoted LIC Mutual Fund - Growth plan 108,019,581 103,941,943 UTI Liquid cash plan - Inst. - 1,264,034 1,219,351 Birla Cash plus - Inst Premium - 135,376,611 130,459,315 Less: Provision for diminution in value of Investments Aggregate book value of Investments Quoted Unquoted Market Value of Quoted Investments NOTES: (a) The said shares have been refused for registration by the investee company.

(b) (c ) (d) (e) (f)

Qty. as on 31.03.08 Notes

440,000

Amount As on As on 31.03.08 31.3.07

44.00

5,000,000

(b)

450.00

23,136,108 -

(d)

9,216.28 -

9,216.28 0.92

1,378.50 199.30 144.64 64.17

241.06 1,162.26 120.95 174.91 159.17

980.43 100.00 11.57 0.01 100.50 60.00

883.30 11.57 0.01 100.50 4,497.62 650.48 1,142.34 883.36

209,370 2,671,993 455,000 3,000,000 389,269 13,692 210,244 32,258 114 25 250,000 12,222

4,091,073 1,067,754 1,315,789 100

(e) (f)

595.83 688.09 1,142.34 883.36

8,182,148

(e)

3,809.30

(b)

0.02

97 -

(f)

83.19 397.60

83.19 -

1,000

0.10

0.01

4,077,638 44,683 4,917,296

600.00 2.73 595.00 635.00 22,179.24 19,824.79 (404.84) (452.28) 21,774.40 19,372.51 13,025.58 9,216.28 8,748.82 10,156.22 21,774.40 19,372.51 33,365.50 34,021.65

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

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) This Year Previous Year Rs. lac Rs. lac SCHEDULE 7: INVENTORIES (at lower of cost and net realisable value) 2,670.39 1,533.89 Stores and spares 17,340.21 15,567.90 Raw materials 28,479.19 11,705.95 Construction work-in-progress 6,777.01 6,893.70 Work-in-progress 5,955.89 7,444.42 Finished Goods 3,138.05 3,216.55 Share in jointly controlled entities

SCHEDULE 8: SUNDRY DEBTORS (Unsecured) Debts outstanding over six months Considered good Considered doubtful

64,360.74

46,362.41

3,896.38

4,755.26

Sundry creditors

37,231.03

32,875.55

Advances from customers

36,971.51

22,997.39

2,039.31

2,256.61

34.37

47.74

Acceptances

Sundry deposits Investor Education & Protection Fund - Unclaimed Dividend - Unpaid Matured Deposits

3,809.74 559.73

3,787.57

4,369.47

62,180.06

40,313.62

Less: Provision for doubtful debts

65,967.63 (605.64)

44,683.09 (559.73)

Share in jointly controlled entities

65,361.99 1,734.46

44,123.36 1,516.68

67,096.45

45,640.04

185.45 4,730.65

97,410.44

74,849.87

Proposed dividend

3,996.99

2,918.52

Provision for tax on distributed profits

1,118.17

496.00

Provision for retirement benefits

2,850.47

2,694.26

SCHEDULE 12: PROVISIONS

Share in jointly controlled entities

525.58

3,880.84 30,457.95 1,582.10

3,391.39 2,704.19 2,260.41

Deferred revenue expenditure

36,491.60

8,881.57

Share in jointly controlled entities

SCHEDULE 10: LOANS AND ADVANCES (Unsecured and considered good unless otherwise stated) 6,881.04 Loans and Advances (refer note 12a) 10,162.76 Loan to GIL ESOP Trust Advances recoverable in cash or in kind or for value to be received (net of provision for doubtful advances) 35,761.27 Intercorporate deposits 1,142.00 - Associate companies - Others â&#x20AC;&#x201C; Deposits and balances with 1,182.30 - Customs & excise authorities 7,719.55 - Others 321.98 Advance payment of taxes (Net of provision for tax) 2,816.73 Share in jointly controlled entities

381.43

327.67

8,347.06

6,436.45

1,068.44

1,602.68

64.93

59.52

1,133.37

1,662.20

31.97

32.98

SCHEDULE 13: MISCELLANEOUS 570.72

15.69 6,985.54

414.68

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 Share in jointly controlled entities

25.70 11,248.11 5,549.35

Interest accrued but not due on loans 3,181.93 605.64

This Year Previous Year Rs. lac Rs. lac

SCHEDULE 11: CURRENT LIABILITIES

Other liabilities

Other debts Considered good

65,987.63

EXPENDITURE (To the extent not written off or adjusted) - Voluntary retirement compensation

SCHEDULE 14: OTHER INCOME 8,572.37 2,972.00

Interest: - Debentures - Income tax refund

10,075.63

- Deposits Dividend

35.00 100.00 1,637.30 1,736.23 893.79 1,285.25 27,307.58

Profit on sale of fixed assets (Net)

72.67

114.78

1,839.96

367.17

916.42

1,018.62

62.07

570.15

9,275.18

4,509.98

Profit on sale of long term investments (refer note 17) Bad debts recovered Miscellaneous income Share in jointly controlled entities

0.14

650.00

1,099.57

1,094.24

194.32

314.69

13,492.30

8,672.62

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) This Year Previous Year Rs. lac Rs. lac SCHEDULE 15 MATERIAL CONSUMED Raw materials consumed : Stocks at the commencement of the year 15,567.90 12,829.30 Less: Stock adjustment for subsidiaries diluted – (1,085.55) Add: Purchases (net) 163,772.73 139,523.53 179,340.62 151,267.28 Less: Stocks as at the close of the year 17,340.21 15,567.90 Raw Materials consumed during the year 162,000.41 135,699.38 Purchase of goods for resale 19,798.53 19,775.61 Share in jointly controlled entities 16,326.74 14,728.49 198,125.68 170,203.48 Cost of Sales-Property Development Stocks at the commencement of the year 11,705.89 2,316.09 Add: Construction Expenditure during the year 25,451.87 16,973.76 37,157.76 19,289.85 Less: Stocks as at the close of the year 28,479.19 11,705.89 8,678.57 7,583.96 SCHEDULE 16: EXPENSES Salaries, wages and allowances 15,154.63 11,586.17 Contribution to provident fund and other funds 821.53 704.40 Employee welfare expenses 972.89 912.27 Stores and spares consumed 1,669.83 1,596.79 Power and fuel 8,269.77 7,050.16 Processing charges 5,222.57 4,196.49 Rent 1,614.28 782.75 Rates and taxes 665.79 639.38 Repairs and maintenence - Machinery 923.48 850.61 - Buildings 461.90 654.99 - Other assets 544.81 440.79 Insurance 261.44 265.29 Freight 5,459.31 4,298.57 Commission 3,509.55 2,993.68 Discount 281.70 497.50 Advertisement and publicity 1,261.00 766.83 Sales promotion 2.38 586.61 Selling and distribution expenses 673.87 1,471.37 Bad debts written off 535.31 358.65 Provision for doubtful debts and advances 100.58 186.12 Provision for depletion in the value of long term investments 1,588.93 Loss on Sale of Fixed Assets 70.48 Excise duty on inventory change 1,065.51 (61.38) Foreign Exchange loss 175.37 274.60 Miscellaneous expenses 8,864.23 6,706.90 Share in jointly controlled entities 9,297.17 7,220.70 69,468.31 54,980.24 SCHEDULE 17: INVENTORY CHANGE Stocks at the commencement of the year Finished goods 7,229.25 7,134.83 Work-in-progress 6,893.70 3,607.67 Share in jointly controlled entities 1,498.11 638.35 15,621.06 11,380.85

This Year Previous Year Rs. lac Rs. lac Less: Stock adjustment for subsidiaries deleted 2,117.70 340.90 Less: Stocks at the close of the year: Finished goods 5,955.89 7,229.25 Work-in-progress 6,777.02 6,893.70 Share in jointly controlled entities 2,034.73 1,498.11 14,767.64 15,621.06 (Increase)/Decrease in Inventory (1,264.28) (4,581.11) SCHEDULE 18: INTEREST AND FINANCIAL CHARGES (Net) Interest paid - on debentures and fixed loans - on bank overdrafts - on Inter corporate deposits - other interest Less: Interest received - on loans & deposits - on Customer balances, etc. - projects and landlords - others Net Interest Other financial charges Foreign exchange (gain)/loss Share in jointly controlled entities SCHEDULE 19: EXTRA ORDINARY ITEMS Profit on Sale of business Less: Taxation on above - Current Tax - Deferred Tax

4,847.07 2,193.77 228.53 1,276.52 8,545.89

2,841.09 1,643.42 210.24 1,323.44 6,018.19

101.42 1,954.71 418.51 76.33 2,550.97 5,994.92 702.63 (332.62) 751.82 7,116.75

25.17 0.01 736.43 138.80 900.41 5,117.78 650.27 (20.89) 753.49 6,500.66

3,935.51

–

(102.41) (8.36) 3,824.74

– – –

SCHEDULE 20: SIGNIFICANT ACCOUTING POLICIES: a) Accounting Convention

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

b) Use of Estimates

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) c) 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 assets. Fixed Assets acquired under finance lease are capitalised at the lower of their face value and present value of the minimum lease payments.

d) Intangible Assets

The group has evaluated the useful lives of the Intangible Assets – Goodwill, Trademarks, Non compete fees, Acquisition value of contracts, etc. based on the nature of business, growth rates and estimated discounted cash flows. The intangible assets are amortised over the estimated useful lives as follows. Particulars Goodwill Trade marks Non compete fees Trees Development cost Computer software

Estimated useful lives 8 – 10 years 8 – 15 years 7 – 8 years 15 years 6 years

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.

i) Provisions and Contingent Liabilities

Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

j) Foreign Exchange Transactions

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

e) Impairment of Assets

The Group reviews the carrying values of tangible and intangible assets for any possible impairment at each Balance Sheet date. An impairment loss is recognised when the carrying amount of an asset exceed its recoverable amount. Impairment loss, if any, is recognised in the year in which impairment takes place.

f) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition/construction of the underlying fixed assets are capitalised as a part of the respective asset, upto the date of acquisition/completion of construction. Borrowing costs incurred for the development of long-term projects are included under construction WIP/Management Project Receivables at weighted average of the borrowing cost/rates as per agreement respectively.

g) Investments

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

k) Revenue Recognition Sales are recognised where goods are supplied and are recorded net of returns, trade discounts, rebates, sales taxes and excise duty.

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

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

Revenue from construction activity is recognised on “Percentage of Completion Method” of accounting. As per this method, revenue is recognised in proportion to the actual cost

h) Inventories Inventories are valued at lower of cost and net realisable value. Cost is computed on weighted average basis and is net of modvat. Finished goods and work-in-progress include

Construction Work-in-progress is valued at cost. Construction work-in-progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Group.

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) incurred for the work completed as against the total estimated cost of project under execution with the Company.

Determination of revenues under the percentage of completion method necessarily involves making estimates, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.

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

Interest income is recognised on a time proportion basis.

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

pension are considered as defined contribution plan and the contributions are charged to the Profit and Loss of the year when the contributions to the respective funds are due.

ii. Defined Benefit Plan

iii. Other long-term benefits

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

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

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

o) Incentive Plans

m) Depreciation

Leasehold land is amortised equally over the lease period. Leasehold improvements are amortised over five years. Depreciation is provided on the straight line method at the rates specified in Schedule XIV to the Companies Act, 1956, except in some subsidiary companies, where depreciation has been provided on the written down value method. The impact of the differing method of depreciation has not been ascertained but is not likely to be material. Computer hardware is depreciated over its estimated useful life of 4 years.

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. The Company has adopted the revised Accounting Standard AS 15 - Employee Benefits with effect from April 1, 2007. In accordance with the transitional provisions contained in the said standard, the transitional obligation towards Sick leave and Long service benefit is withdrawn from General Reserve.

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

i. Defined Contribution Plan

Employee benefits in the form of Provident Fund and family

The Group has a scheme of Performance Linked Variable Remuneration (PLVR) which rewards its employees based on Economic Value Addition (EVA). The PLVR amount is related to actual improvement made in EVA over the previous year when compared with expected improvements. The EVA awards flow through a notional bank whereby only the prescribed portion of the bank is distributed each year and the balance is carried forward. The amount distributed out of the notional bank is charged to Profit and Loss Account. The notional bank is held at risk and charged to EVA of future years and is payable at that time, if future performance so warrants.

p) Hedging

The Group uses commodity futures contracts to hedge the exposure to oil price risks. Gains or losses on settled contracts is recognised in the Profit and Loss Account and is included in the cost of materials consumed. Futures contracts not settled as on the Balance Sheet date are marked to market and losses, if any, are recognised in the Profit and Loss Account, whereas, the unrealised profit is ignored.

q) Deferred Revenue Expenditure

n) Employee Benefits

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

r) Taxes on Income

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

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) in one or more subsequent periods. Deferred tax assets on unabsorbed tax losses and tax depreciation are recognised only when there is virtual certainty of their realisation and on other items when there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year end and based on the tax rate and laws enacted or substantially enacted on the Balance Sheet date. s) Segment Reporting

SCHEDULE 21: NOTES TO ACCOUNTS:1. Principles of Consolidation:

The consolidated financial statements relate to Godrej Industries Limited, the holding company, its majority owned subsidiaries, Joint ventures and Associates (collectively referred to as Group). The consolidation of accounts of the Company with its subsidiaries has been prepared in accordance with 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 to the Company of its investment in the subsidiaries and/or joint ventures over its share of equity, at the respective dates on which the investments are made. Alternatively, where the share of equity as on the date of investment is in excess of cost of investment, it is recognised as ‘Capital Reserve’ in the consolidated financial statements.

Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the respective 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.

2. 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, 2008, except in respect of Personalitree Academy Ltd., an associate company whose accounts for the year ended March 31, 2008 have not been received till date. The investment not being significant and fully provided for, there is no impact on the Profit and Loss Account.

The accounts of Al Rahba International Trading Ltd. a joint venture company with Godrej Agrovet Ltd., Creamline Dairy Products Ltd., and Polychem Hygiene Laboratories Pvt. Ltd., associate companies have not been audited for the year ended March 31, 2008 as of Balance Sheet date and have been consolidated on the basis of the accounts as certified by their respective management.

3. Information on subsidiaries, joint ventures and associates: (a) The subsidiary companies considered in the consolidated financial statements are:

S. No.

Name of the Company

Country of Incorporation

Percentage of Holding This Previous Year Year

Godrej Agrovet Ltd.

India

75.20%

70.30%

Goldmohur Foods & Feeds Ltd. (100% subsidiary of Godrej Agrovet Ltd.)

India

75.20%

70.30%

Golden Feed Products Ltd. (100% subsidiary of Godrej Agrovet Ltd.)

India

75.20%

70.30%

Godrej Oil Plantation Limited (formerly known as Godrej Aquafeed Limited) (100% subsidiary of Godrej Agrovet Ltd.)

India

60.16%

70.30%

Cauvery Palm Oil Limited (100% subsidiary of Godrej Agrovet Ltd.)

India

38.35%

–

Aadhar Retailing Ltd. (up to 27.03.2008)

India

75.20%

70.30%

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) S. No.

Name of the Company

Country of Incorporation

Percentage of Holding This Previous Year Year

8 9

10 11

15 16 17 18 19

20 21

Godrej Gokarna Oil Palm Ltd. (formerly known as Godrej Oil Palm Ltd.) (up to 25.02.2008) Godrej Properties Ltd. Girikandra Holiday Homes & Resorts Ltd. (100% subsidiary of Godrej Properties Ltd.) Godrej Realty Pvt. Ltd. (51% subsidiary of Godrej Properties Ltd.) Godrej Waterside Properties Pvt. Ltd. (51% Previous year 100% subsidiary of Godrej Properties Ltd.) Godrej Developers Pvt Ltd. (100% subsidiary of Godrej Properties Ltd.) Godrej Real Estate Private Limited (100% subsidiary of Godrej Properties Ltd.) Godrej Seaview Private Limited (100% subsidiary of Godrej Properties Ltd.) Happy Highrises Ltd. (100% subsidiary of Godrej Properties Ltd.) Godrej Hicare Ltd. Ensemble Holdings & Finance Ltd. Godrej International Ltd., UK Godrej Global Mid-East FZE, UAE (100% subsidiary of Godrej International Ltd.) (up to 30.09.2007) Godrej Global Solutions Ltd. Godrej Global Solutions (Cyprus) Ltd. (100% subsidiary of Godrej Global Solutions Ltd.) Godrej Global Solutions Inc. (100% subsidiary of Godrej Global Solutions Ltd.)

India

India India

India

34.81%

81.41% 81.41%

41.51%

82.88% 82.88%

42.27%

41.51%

82.88%

India

81.41%

82.88%

India

81.41%

82.88%

India

81.41%

82.88%

India

81.41%

82.88%

India India

76.86% 100.00%

85.91% 99.95%

UAE

100.00% 100.00% â&#x20AC;&#x201C;

S. Name of the No. Company

100.00%

India

100.00% 100.00%

Greece

100.00% 100.00%

i) Godrej Sara Lee Ltd. ii) Godrej Sara Lee Bangladesh Pvt.Ltd. (100% subsidiary of Godrej Sara Lee Ltd.) iii) Godrej Sara Lee Lanka Pvt. Ltd. (100% subsidiary of Godrej Sara Lee Ltd.) iv) Sara Lee Household and Body Care India Pvt. Ltd. (100% subsidiary of Godrej Sara Lee Ltd.) v) Sara Lee Household and Body Care Lanka Pvt. Ltd. (100% subsidiary of Godrej Sara Lee Ltd.) vi) Al Rahba International Trading Limited (joint venture partner of Godrej Agrovet Ltd.) vii) ACI Godrej Agrovet Pvt. Ltd. (joint venture partner of Godrej Agrovet Ltd.) viii) Godrej Gold Coin Acqafeed Ltd. (joint venture partner of Godrej Agrovet Ltd.) ix) Godrej Gokarna Oil Palm Ltd. (formerly Godrej Oil Palm Ltd.) (joint venture partner of Godrej Agrovet Ltd.) (from 26.02.2008) x) Godrej Hershey Limited (formerly Godrej Beverages & Foods Ltd.) xi) Nutrine Confectionery Ltd. (100% subsidiary of Godrej Hershey Ltd.)

USA

Country of Incorporation

India

(b) Interests in Joint Ventures:

100.00% 100.00%

India Bangladesh

Percentage of Ownership Interest This Previous Year Year 20.00% 20.00% 20.00% 20.00%

Sri Lanka

20.00%

India

20.00%

Sri Lanka

20.00%

U.A.E.

45.00%

Bangladesh

50.00%

India

49.00%

India

46.29%

49.00%

India

43.00%

48.00%

India

43.00%

48.00%

S. No.

Name of the Company

i) Swadeshi Detergents Ltd.

Country of Incorporation

India

Percentage of Holding This Previous Year Year 41.08% 41.08% 73

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) S. No.

Name of the Company

Country of Incorporation

ii) Godrej Upstream Ltd. (associate of Godrej Global Solutions Ltd.) iii) Personalitree Academy Ltd. (associate of Ensemble Holdings & Finance Ltd.) iv) Creamline Dairy Products Ltd. (associate of Godrej Agrovet Ltd.) v) Aadhaar Retailing Limited (associate of Godrej Agrovet Ltd. from 28.03.2008) vi) Polychem Hygiene Laboratories Pvt. Ltd. (associate of Godrej Agrovet Ltd.) vii) Compass Connections Limited

India

Percentage of Holding This Previous Year Year – 40.43%

26.00%

India

30.00%

India

26.00%

U.K.

20.71%

26.00%

–

26.00%

–

4. The accounting policies of certain subsidiaries, joint ventures and associates especially regarding the method of depreciation, amortisation of technical know how and accounting for retirement benefits are not in consonance with the group accounting policies. No effect has been given in the consolidated financial statements on account of such differing accounting policies, where the impact is not expected to be material. 5. The break-up of Investment in Associates is as under: Cost of Acquisition

Goodwill included in cost of acquisition

Rs. in lac

Share in Provision Carrying profits / for cost of (loss) of diminution Investments associates in the post value of acquisition investments

(i) Swadeshi Detergents Ltd.

191.32 191.34

91.46 91.48

(136.06) (136.04)

55.26 55.30

– –

(ii) Godrej Upstream Ltd

– 902.25

– 95.27

– (661.19)

– –

– 241.06

(iiI) Personalitree Academy Ltd.

110.28 110.28

42.84 42.84

(42.04) (42.04)

68.24 68.24

– –

(iv) Compass Connection Ltd

124.54 –

80.56 –

45.10 –

105.47 –

64.17 –

1038.00 950.16

398.41 364.53

505.17 212.44

– –

1378.50 1162.60

– 87.84

– 33.89

– 33.11

– –

– 120.95

(v) Creamline Dairy Products Ltd. (vi) Creamline Nutrients Ltd.

Goodwill included in cost of acquisition

(vii) Polychem Hygiene Lab Pvt. Ltd.

162.75 162.75

88.99 88.99

44.74 12.16

– –

199.30 174.91

(viiii) Aadhaar Retailing Ltd.

191.39 –

– –

(46.76) –

– –

144.64 –

1,818.28

702.26

329.15

228.97

1,786.61

2404.62

717.00

(581.56)

123.54

1699.52

Total this year

India

Share in Provision Carrying profits / for cost of (loss) of diminution Investments associates in the post value of acquisition investments

Cost of Acquisition

Total previous year

6. Contingent Liabilities a) Claims against the Company not acknowledged as debts: i) Excise duty demands relating to disputed classification, post manufacturing expenses, assessable values, etc. which the Company has contested and is in appeal at various levels. ii) Customs Duty demands relating to less charge, differential duty, classification, etc. iii) Sales Tax demand relating to purchase tax on Branch Transfer/Non availability of C Forms, etc. at various levels. iv) Octroi demand relating to classification issue on import of Palm Stearine and interest thereon. v) Stamp duties claimed on certain properties which are under appeal by the Company vi) Income Tax demands against which the Company has preferred appeals vii) Industrial relations matters under appeal viii) Others 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 subsidiary and other companies. d) Uncalled liability on partly paid shares/debentures e) Additional consideration against acquisition of shares e) Share in Jointly Controlled Entities

This year Previous Year Rs. lac Rs. lac

1,909.20

1,544.09

856.94

2,142.59

2,154.74

1,031.64

938.05

182.23

1,991.11 146.99 1,097.16

1,777.17 595.11 886.11

8,113.18

660.03

1,729.00 446.65

14,121.10 381.64

104.13 1,062.73

– 329.11

7. Capital Commitments

Estimated value of contracts remaining to be executed on capital account, to the extent not provided Share in Jointly Controlled Entities

This year Previous Year Rs. lac Rs. lac 3,383.09 241.52

435.92 53.09

8. Investments

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

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) holding company of the Cbay Group. As per the scheme, the Company has been allotted four additional shares in Cbay BVI for every share it was entitled to in Cbay India. b) Godrej Agrovet Limited (GAVL), a subsidiary company has under a Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956, demerged/transferred its Oil Palm business and Jatropha plantation carried on in the states of Andhra Pradesh, Orissa, Mizoram, and Gujarat to Godrej Oil Plantations Limited (formerly known as Godrej Aquafeed Limited) with effect from April 1, 2007, as per the order of High Court, Mumbai dated January 11, 2008. As per the terms of the scheme, the Company has been allotted 175,737 non窶田onvertible debentures of Rs. 10 each. GAVL has, under another Scheme of Arrangement, also demerged/transferred its Oil Palm business carried on in the states of Goa and Karnataka to Godrej Gokarna Oil Palm Limited (formerly known as Godrej Oil Palm Limited) with effect from April 1, 2007 as per the order of High Court, Mumbai dated September 28, 2007. As per the terms of the scheme, the Company has been allotted 2,584 equity shares of Rs. 10 each in Godrej Gokarna Oil Palm Limited. 9. Cash and Bank Balances a) Balances with scheduled banks on deposit accounts include Rs.39,384,677/- (Previous Year Rs.36,617,677/-) received from flat buyers and held in trust on their behalf in a corpus fund. b) The auditors of a jointly controlled enterprise have reported that, Bank reconciliation statements includes credits in Bank statements not accounted Rs.96 lac, cheques deposited not cleared Rs. 72 lac and debit in bank statement not accounted by Rs. 45 lac. The Management of the Enterprise has assured that reconciliation would be completed shortly. 10. Inventories The Group has been entering into Development Agreements with landlords. Development Manager Fees amounting to Rs. 170,243,559/- (Previous Year Rs. 170,299,063/-) accrued as per terms of the Agreement are receivable by the Group based upon progress milestones specified in the respective Agreements and have been disclosed as Development Manager Fees accrued but not due in Schedule 10. 11. Deferred Tax: Major components of Deferred Tax arising on account of timing differences as at March 31, 2008 are:

Assets Provision for retirement benefits Provision for doubtful debts/advances VRS Expenses Others

This Year Rs. lac

Previous Year Rs. lac

417.00

351.00

279.75

327.44

229.00 632.23 1,557.98

156.00 549.26 1,383.70

Liabilities Depreciation Share in Jointly Controlled Entities Net Deferred Tax Liability

This Year Rs. lac

Previous Year Rs. lac

6,557.93 197.84

6,312.18 189.16

6,755.77 5,197.79

6,501.34 5,117.64

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

b) Due on Management Projects include a sum of Rs. 20,872,941/- (Previous Year Rs. 20,309,477/-) on account of a project, where the matter is sub-judice with arbitrators.

13. Employee Stock Option Plans

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

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) This year

This year

Previous Year No. of options

Wt. average exercise price Options outstanding 21,00,000 65.39 (plus 21,00,000 interest) at the beginning of the year Add: Options 23,20,000 152.55 granted on (plus – 05/04/07 interest) Add: Options 3,05,000 155.05 granted on (plus – 11/04/07 interest) Add: Options 50,000 175.80 granted on (plus – 03/10/07 interest) Add: Options 4,35,000 290.40 granted on (plus – 23/01/08 interest) Add: Options 22,59,500 285.60 granted on (plus – 31/03/08 interest) Less: Exercised – – – Less: Forfeited / 1,60,000 152.55 – expired (plus interest) Options outstanding 73,09,500 177.1 (plus 21,00,000 interest) at the year end No. of options

Option exercisable at year end

–

Previous Year Wt. average exercise price 65.39 (plus interest) – –

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

– – –

– – 65.39 (plus interest) –

The weighted average balance life of options outstanding as on 31st March 2008 is 3.98 years. The options granted shall vest after three years from the date of grant of option, provided the employee continues to be in employment and the option is exercisable within two years after vesting. The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognized since the market price of the underlying share at the grant date is the same/less than the exercise price of the option, the intrinsic value therefore being Nil. The fair value of the share options has been determined using the Black-Scholes Option Pricing Model. Had the fair value method of accounting been used, the net profit and earnings per share would have been as per the pro forma amounts indicated below. This Year Previous Year Rs. lac Rs. lac Net Profit (as reported) 16,782.51 5,888.06 Less: Stock based compensation 967.00 204.00 expense determined under fair value based method (Pro Forma) Net Profit (Pro Forma) 15,815.51 5,684.06 Basic & Diluted Earnings per share 4.66 2.02 before Extraordinary Items (as reported)

This Year Previous Year Rs. lac Rs. lac Basic & Diluted Earnings per share 4.33 2.57 before Extraordinary Items (Pro Forma) Basic & Diluted Earnings per 5.56 1.95 share after Extraordinary Items (as reported) Basic & Diluted Earnings per share 5.23 1.95 after Extraordinary Items (Pro Forma) 14. Leases:

This Year Previous Year Rs. lac Rs. lac

1782.60

1784.70

Accumulated depreciation

949.72

892.97

Depreciation for the period

59.53

58.30

Gross carrying amount of premises

b) The total of future minimum lease payments under non cancellable operating leases for each of the following periods:

Period

Minimum future Jointly controlled lease rentals entities Rs. lac Rs. lac 334.13 62.61

Within one year

Later than one year and not later than five years

Later than five years Total

736.03 – 1070.16

68.63 – 131.24

c) Finance Leases:

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

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

Total minimum lease payments outstanding as on March 31, 2008

Un-matured Interest

Rs. lac

Present value of minimum lease payments Rs. lac

85.22

24.10

77.57

134.65

27.68

105.79

219.87

51.78

183.36

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) 15. Hedging

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

i. Derivative instruments outstanding:

a. Commodity futures contracts Details

This Year

Previous Year

Purchase

Sale

Purchase

Sale

Futures contracts outstanding

–

Number of units under above contracts in mt.

2,600

–

This Year

Previous Year

Purchase

Sale

Purchase

Sale

14.69 –

6.70 2.06

19.33 –

2.00 4.12

Total number of contracts outstanding Foreign currency value US Dollar (million) Euro (million)

ii. Un-hedged foreign currency exposures Details

This Year

Previous Year

Purchase

Sale

Purchase

Sale

33.67

7.49

15.09

5.54

Uncovered Foreign exchange exposure as at the year end US Dollar (million)

16. Turnover Turnover includes:

This Year Previous Year Rs. lac Rs. lac

Processing charges

1,201.08

ii)

Export Incentives

1,101.93

345.20

iii)

Licence fees and service charges

5,094.29

3,910.14

iv)

Project/Development Management Fees

3,095.28

3,121.31

Claims

49.62

–

vi)

Share in jointly controlled entities

775.41

23,818.59

11,317.61

32,320.23

1,124.99

17. Exceptional Items This Year Previous Year Rs. lac Rs. lac i)

19 Earnings per share: This Year

Previous Year

a. Calculation of weighted average number of equity shares

b. Forward Exchange contracts Details

18. Profit and Loss Account a) The company has adopted Accounting Standard AS-11 (Revised 2003) as issued by the Ministry of Corporate Affairs vide Notification dated December 07, 2006. Consequently, the effects of changes in foreign exchange rates on foreign currency loans relating to fixed assets acquired from a country outside India amounting to Rs. 0.81 lac have been charged off to Profit & Loss Account as against the earlier practice of adjusting against the carrying cost of the fixed assets. b) The exchange difference included in the Profit and Loss Account is a gain of Rs. 173.36 lac (Previous Year loss of Rs. 114.50 lac). The exchange difference in respect of forward exchange contracts to be recognised in subsequent accounting periods is Rs. 16.57 lac (Previous Year Rs. 27.02 lac).

Number of shares at the beginning of the year

Nos. 291,851,652 291,851,652

Number of equity shares outstanding at the end of the year

Nos. 319,758,602 291,851,652

Weighted average number of equity shares outstanding during the year

Nos. 301,992,702 291,851,652

b. Net profit after tax excluding extraordinary items

Rs ‘lac

14,069.26

5,888.06

c. Net profit after tax available for equity shareholders (including extraordinary items)

Rs ‘lac

16,782.51

5,888.06

d. Basic and diluted earnings per share of Re 1 each excluding extraordinary Items

Rupees

4.66

2.02

e. Basic and diluted earnings per share of Re 1 each including extraordinary Items

Rupees

5.56

2.02

Included under Other Income - Profit on sale of long-term investments Bad debt recovered

ii)

Provision for diminution in investment

iii)

Share in jointly controlled entities

9,275.18

4,382.56

650.00

(1,588.93)

–

(86.40)

20. Related Party Disclosures a) Names of related parties and description of relationship

Parties where control exists

Relatives Key Management Personnel

Godrej & Boyce Mfg. Co. Ltd., the holding company

Ms P. A. Godrej

Wife of Mr. A. B. Godrej

Ms. N. A. Godrej

Daughter of Mr. A. B. Godrej

Fellow Subsidiaries:

Mr. P. A. Godrej

Son of Mr. A. B. Godrej

Wadala Commodities Ltd. (Formerly Godrej Commodities Ltd.) Ms. R. N. Godrej

Wife of Mr. N. B. Godrej

Godrej (Malaysia) Sdn Bhd

Mst. B. N. Godrej

Son of Mr. N. B. Godrej

Godrej (Singapore) Pte Ltd.

Mst. S. N. Godrej

Son of Mr. N. B. Godrej

Godrej Infotech Ltd.

Mst. H. N. Godrej

Son of Mr. N. B. Godrej

Mercury MfG. Co. Ltd.

Ms. M. Mahendran

Wife of Mr. A. Mahendran

J. T. Dragon Pte Ltd.

Godrej (Vietnam) Co. Ltd.

Other related parties with whom the Company had

transactions during the year

Enterprises over which key management personnel exercise significant influence

Associate/Joint Venture Companies

Godrej Consumer Products Ltd.

Godrej Sara Lee Ltd.

Godrej SCA Hygiene Ltd.

Godrej Hershey Ltd.

Godrej Global Mideast FZE

Nutrine Confectionary Co. Ltd.

Godrej Investments Pvt. Ltd.

Godrej Gold Coin Aquafeed Ltd.

Bahar Agrochem & Feeds Pvt. Ltd. Godrej Holdings P. Ltd.

Key Management Personnel

Swadeshi Detergents Ltd.

Mr. A. B. Godrej

Chairman & Managing Director

Vora Soap Ltd.

Mr. N. B. Godrej

Managing Director

Godrej Upstream Ltd.

Ms. T. A. Dubash

Executive Director & President (Marketing)

Lawkim Ltd.

Mr. Mathew Eipe

Executive Director & President (Chemicals)

Mr. V. Banaji

Executive Director & President (Group Corporate Affairs)

Mr. M. P. Pusalkar

Executive Director & President

Mr. C. K. Vaidya

Executive Director & President (Business Excellence)

Mr. A. Mahendran

Managing Director (Godrej Sara Lee Ltd.)

Mr. Ravi Venkateshwar

Director Finance & Chief Financial Officer (Godrej Sara Lee Ltd.)

Mr. M. S. Korde

Managing Director (Godrej Properties Ltd.)

Mr. B. S. Yadav

Executive Director & President (Godrej Agrovet Ltd.)

Mr. S. Tipnis

Director (Godrej Global Solutions Ltd.)

b) Transactions with Related Parties Nature of Transaction

Sale of Goods Previous Year Sale of Fixed Assets Previous Year Advance given Previous Year Loan given Previous Year Loan repaid Previous Year Purchase of goods & equipment Previous Year Purchase of flats Previous Year Processing charges received Previous Year Commission received Previous Year Recovery of establishment & other expenses Previous Year Rent, Establishment & other expenses paid Previous Year Interest received Previous Year Interest paid Previous Year Dividend income Previous Year Dividend paid Previous Year Remuneration Previous Year Purchase of Investments Previous Year Sale of Investments Previous Year Intercorporate Deposits – Accepted Previous Year Intercorporate Deposits Repaid during the year Previous Year Intercorporate Deposits – Advanced Previous Year Intercorporate Deposits Repayment received during the year Previous Year Directors Fees Previous Year Balance Outstanding as on March 31, 2008 Receivables Previous Year Payables Previous Year Guarantees Outstanding Previous Year

Rs. Lac Holding Fellow Company Subsidiaries

Associate/ Joint Venture Companies

Key Management Personnel

Relative of Key Management Personnel

Enterprises over which Key Mangement Personnel exercise significant influence

Total

10.22 110.67 – – 6.50 – – – – – 178.87 153.27 63.37 – – – – –

– – – – – – – – – – 675.62 914.14 – – – – 2.50 2.50

85.51 22.97 20.73 – – – – – – – 224.47 198.46 – – 209.68 193.68 87.47 73.22

– – 3.10 – – – 1,103.83 – 0.49 – – – – – – – – –

– – – 1,091.00 – – – – – – – – – – – – – –

842.71 982.10 – 21.64 – – – – – – 2,828.32 719.98 – – 40.03 – 31.59 15.98

938.44 1,115.74 23.83 1,112.64 6.50 – 1,103.83 – 0.49 – 3,907.28 1,985.85 63.37 – 249.71 193.68 121.56 91.70

13.77 20.60 1,305.99 1,030.67 – – – – – – 2,779.29 2,485.80 – – – – – – – –

0.45 0.47 21.43 16.39 – – 4.60 – 48.15 33.74 – – – – – – – – 100.00 –

504.88 360.22 48.76 12.27 – – – – 383.03 1,174.64 – – – – 5,160.00 10,142.25 – – – –

– – 0.40 – – – – – – 54.89 135.61 1095.23 563.72 – – – – – –

– – 88.31 19.72 – – – – – – 585.42 869.84 43.19 25.64 – – 0.06 – – –

1,238.37 937.72 105.30 139.87 54.00 3.91 207.66 – 867.60 980.60 – – – – 299.90 – – – 2,000.00 1,000.00

1,757.47 1,319.01 1,570.19 1,218.92 54.00 3.91 212.26 – 1,298.78 2,188.98 3,419.60 3,491.25 1138.42 589.36 5,459.90 10,142.25 0.06 – 2,100.00 1,000.00

– – – –

3,000.00 12.80 1,500.00 –

– – – –

– – 1.65 –

– – – –

1,500.00 – – –

1,500.00 – 1.65 –

22.55 78.71 175.38 94.85 – –

0.13 617.89 3.26 – 1,000.00 1,000.00

116.45 54.68 49.99 3.04 – 1,350.00

– – – – – –

40.00 – – – – –

241.18 226.67 89.03 70.97 161.00 –

420.31 977.95 317.66 168.86 1,161.00 2,350.00

c ) The significant Related Party transactions are as under: Nature of Transaction This Year Rs. lac Sale of goods 842.71 - Godrej Consumer Products Ltd. 78.95 - Godrej Saralee Ltd. Sale of fixed assets 20.73 - Godrej Hershey Ltd. 3.10 - Mr. A. Mahendran - - Ms. R. N. Godrej - - Godrej Consumer Products Ltd. Purchase of goods & equipment 2,000.65 - Bahar Agrochem & Feeds P. Ltd. 827.67 - Godrej Consumer Products Ltd. 670.47 - Wadala Commodities Ltd. 203.98 - Godrej Hershey Ltd. 178.86 - Godrej & Boyce Mfg. Co. Ltd. 20.49 - Godrej Saralee Ltd. 5.15 - Godrej Infotech Ltd. Purchase of flats 63.37 - Godrej & Boyce Mfg. Co. Ltd. Processing Charges received 209.68 - Godrej Hershey Ltd. 40.03 - Godrej Consumer Products Ltd. Commission received 87.47 - Godrej Hershey Ltd. 16.39 - Godrej Upstream Ltd. 13.59 - Godrej Consumer Products Ltd. Recovery of Establishment & other expenses 1,228.98 - Godrej Consumer Products Ltd. 303.96 - Godrej Saralee Ltd. 200.92 - Godrej Hershey Ltd. 13.77 - Godrej & Boyce Mfg. Co. Ltd. 9.03 - Godrej SCA Hygiene Ltd. Rent, Establishment & other expenses paid 1,305.99 - Godrej & Boyce Mfg. Co. Ltd. 105.30 - Godrej Consumer Products Ltd. 82.31 - Ms. R. N. Godrej 12.56 - Godrej Hershey Ltd. 34.41 - Godrej Saralee Ltd. 10.56 - Wadala Commodities Ltd 10.87 - Godrej Infotech Ltd. 6.00 - Ms. M. Mahendran Advance given 6.50 - Godrej & Boyce Mfg. Co. Ltd. Loan given 1,103.83 - Mr. A. Mahendran Loan repaid 0.49 - Mr. A. Mahendran

Previous Year Rs. lac 982.10 1,091.00 21.64 720.96 909.67 112.76 40.51 193.68 47.26 25.96 15.98 936.66 211.65 142.59 1,017.21 87.14 13.72 6.00 -

Nature of Transaction

This Year Rs. lac

Interest received 50.50 - Lawkim Ltd. 3.50 - Swadeshi Detergents Ltd. Interest paid 207.66 - Godrej Investments Ltd. Inter Corporate Deposits - Repaid 3,000.00 - Godrej Investments Ltd Inter Corporate Deposits - Accepted 2,000.00 - Goderj Investments Ltd. 100.00 - Wadala Commodities Ltd. Inter Corporate Deposits - Advanced 1,500.00 - Lawkim Ltd. Inter Corporate Deposits - Repayment Received 1,500.00 - Lawkim Ltd. Dividend income 867.60 - Godrej Consumer Products Ltd. 383.03 - Godrej Saralee Ltd. 48.15 - Wadala Commodities Ltd. Dividend paid 2,779.29 - Godrej & Boyce Mfg. Co. Ltd. Remuneration to Key Management Personnel - Mr. M.S. Korde 189.79 - Mr. N. B. Godrej 182.06 - Mr. V. F. Banaji 130.85 - Mr. Mathew Eipe 106.26 - Ms. T. A. Dubash 105.33 - Mr. C. K. Vaidya 90.13 - Mr. M. P. Pusalkar 87.34 - Mr. S. Tipnis 72.81 - Mr. A. Mahendran 56.82 - Mr. B.S. Yadav 51.54 - Mr. Ravi Venkateshwar 22.30 Remuneration to Relatives of Key Management Personnel 43.19 - Ms. Nisaba A. Godrej - Mr. Pirojsha Godrej - Sale of Investments - Mr. A. Mahendran 0.06 Purchase of Investments - Godrej Hershey Ltd. 5,160.00 - Godrej Investments Ltd. 299.00 - Lawkim Ltd. 0.90 - Godrej Upstream Ltd. -

Previous Year Rs. lac 3.91 1,000.00 980.60 1,174.64 33.74 2,485.80 136.58 85.66 69.55 64.00 54.20 67.14 47.24 15.05 39.36 15.05 19.92 5.73 9,240.00 902.25

540.66

54217.96 18882.75 3681.76 2123.73

61352.33

24895.06

2338.93

2254.79

57085.27 102.15 57187.42 (102.15) 57085.27

8300.06

69224.37 14.09 69238.46 (14.09) 69224.37

522.49

1182.32

19839.68

23661.25

1003.96

84262.28 777.38 85039.66 (777.38) 84262.28

138.71

206.83

9263.43

10730.67

1181.45

72767.82 1479.68 74247.50 (1479.68) 72767.82

52.82

32.61

1011.91

2154.70

382.02

42048.88 90.16 42139.04 (90.16) 42048.88

Previous Year

53.68

8.07

683.02

2448.61

47.59

33996.41 33996.41 33996.41

This Year

Previous Year

This Year

This Year Previous Year

Veg Oils

Animal Feed

Chemicals

167.61

156.87

48198.43

97201.46

13294.82

25188.70 504.21 25692.91 (504.21) 25188.70

This Year

154.06

116.02

41500.44

46498.30

6392.04

15819.47 468.54 16288.01 (468.54) 15819.47

Previous Year

Estate & Property Development

174.28

7341.23

4585.62

9139.00

2502.96

16361.28 8.36 16369.64 (8.36) 16361.28

This Year

401.48

659.13

5330.28

6619.80

1751.72

13564.51 1.78 13566.29 (1.78) 13564.51

Previous Year

Household Insecticides

218.01

457.51

2527.11

11058.66

(61.05)

14319.44 88.14 14407.58 (88.14) 14319.44

This Year

502.00

950.25

11118.72

17874.13

215.49

13564.30 104.18 13668.48 (104.18) 13564.30

Previous Year

Beverages & Foods

267.90

116870.93

6815.45

8404.38 1397.96 9802.34 (1397.96) 8404.38

This Year

39984.58

7078.78

7078.78 5066.75 12145.53 (5066.75) 7078.78

Previous Year

Finance & Investments

1751.13

10602.88

19612.54

39120.47

(281.74)

48454.83 162.40 48617.23 (162.40) 48454.83

This Year

Others

381.87

6345.57

34149.58

45581.27

1724.62

32693.15 280.24 32973.39 (280.24) 32693.15

Previous Year

6267.88 24.56 6292.44 (404.37) 5888.07 223955.32 4222.55 228177.87 120928.22 59978.15 180906.37 11967.63

17894.00 115.34 18009.34 (1226.83) 16782.51 360558.80 1949.72 362508.52 120938.25 104928.24 225866.49 22112.35

358401.85 222530.91 4106.67 5646.96 362508.52 228177.87

Previous Year 268490.80 194896.09 39773.36 51673.62 308264.16 246569.71

This Year

Total

3755.53

(4829.53) (6500.66) 7602.16 (1269.19) (65.09)

(3841.73) (7116.75) 20998.00 (6928.74) 3824.74

5141.13

18932.35

31956.48

308264.16 246569.71 3042.70 7503.32 311306.86 254073.03 (3042.70) (7503.32) 308264.16 246569.71

This Year

Total

Notes: 1. The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products, the different risks and returns, the organisational structure and the internal reporting system. 2. Chemicals segment includes the business of production and sale of Oleochemicals and surfactants such as Fatty Acids, Fatty Alcohols, refined glycerine, Alfa Olefin Sulphonates, Sodium Lauryl Sulphate and Sodium Lauryl Ether Sulphate. 3. Animal Feed segment includes the business of production and sale of compound feeds for cattle, poultry, shrimp and fish. 4. Veg oils segment includes the business of processing and bulk trading of refined vegetable oils and vanaspati and international vegetable oil trading. 5. Estate and property development segment includes the business of development and sale of real estate and leasing and leave and licensing of properties. 6. Household Insecticides segment includes the business of production and sale of household insecticides and commercial pest management services. 7. Beverages and Foods segment includes the business of processing, production and sale of fruit pulp, tomato puree, fruit juices, nectors and drinks, other beverages and confectionary products and sale of refined vegetable oils, vanaspati and tea. 8. Finance and Investments includes investments in subsidiaries, associates companies and other investments 9. Others includes Integrated Poultry, Agri Inputs and tissue culture, Oil Palm Plantations, distribution of Medical Diagnostics equipment, energy generation through windmills, business process outsourcing business for healthcare, finance and accounting sectors and the business of urban and rural retailing. 10. 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.

Information about Secondary Business Segments Revenue by Geographical markets India Outside India Total Carrying Amount of Segment assets India Outside India Total

(B) Results Segment result before interest, exceptional items and tax Unallocated expenses Interest Expense (net) Profit before tax Taxes Add: Extra Ordinary items (Net of Tax) Profit after taxes Share of profit in associates Profit before Minority Interest Share of Minority Interest Net Profit after Minority Interest Segment Assets Unallocated Assets Total Assets Segment Liabilities Unallocated Liabilities Total Liabilities Total Cost incurred during the year to acquire segment assets Segment depreciation

(A) Revenue External Sales Intersegment Sales Total Sales Less: Intersegment Sales Total Revenue

Information about primary business segments

21. Segment Information

SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)

Statement regarding Subsidiary Companies pursuant to Section 212 of the Companies Act, 1956 1. Name of the Subsidiary Company

Godrej Godrej Ensemble Agrovet Properties Holdings & Limited Limited Finance Limited

Godrej Inter– national Limited

Godrej Global Solutions Limited

Godrej Godrej Oil Hicare Plantations Limited Ltd.

Golden Feed Products Limited

9112956

49185209

3774160

2355000

13602260

6067100

(See note

12118752

60420259

3774160

2355000

13610606

7900000

5 below)

6 below)

2. The Company’s interest in the subsidiaries as on March 31, 2008 a. Number of Equity Shares

Total Number of Shares

b. Face Value c. Extent of Holding 3. 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, 2008 i. Not dealt with in the books of account of the Company ii. Dealt with in the books of account of the Company B. i. ii.

For the subsidiary company’s previous financial years since it became a subsidiary Not dealt with in the books of account of the Company Dealt with in the books of account of the Company

£1

75.20%

81.41%

100.00%

100%

99.94%

76.80%

Rs.lac

244 –

5133.79 –

78.7 94.35

1011.81 –

(346.10) –

203.99 –

– –

809.29

2095.19

(488.25)

24864.97

(351.67)

143.67

–

3112.07

4432.11

387.19

11348.28

–

Notes: 1

The Financial Year of the subsidiary companies have ended on March 31, 2008.

691,155 Equity Shares of Rs.10 each in Godrej Properties Ltd. are held by Ensemble Holdings & Finance Ltd.

8,340 Equity Shares of Rs.10 each in Godrej Global Solutions Ltd. are held by Ensemble Holdings & Finance Ltd.

4,800 Equity Shares of Rs.10 each in Godrej Hicare Ltd. are held by Ensemble Holdings & Finance Ltd.

70500 Equity Shares of Rs.10 each in Godrej Oil Plantations Ltd. (representing 100% of the share capital) are held by Godrej Agrovet Ltd.

50,000 Equity Shares of Rs.10 each in Golden Feed Products Ltd. (representing 100% of the share capital) are held by Godrej Agrovet Ltd.

1,838,170 Equity Shares of Rs.10 each in Goldmohur Foods & Feeds Ltd. (representing 100% of the share capital) are held by Godrej Agrovet Ltd.

1938310 Equity Shares of Rs. 10/- each in Cauvery Palm Oil Ltd. (representing 51% of the share capital) are held by Godrej Agrovet Ltd.

494 Equity Shares of Rs.10 each in Girikandra Holiday Homes & Resorts Ltd. (representing 98.80% of the share capital) are held by Godrej Properties Ltd.

10 49,999 Equity Shares of Rs.10 each in Godrej Developers Ltd. (representing 100% of the share capital) are held by Godrej Properties Ltd. 11 49,999 Equity Shares of Rs.10 each in Godrej Real Estate Ltd. (representing 100% of the share capital) are held by Godrej Properties Ltd. 12 509,999 Equity Shares of Rs.10 each in Godrej Realty Pvt. Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd. 82

Gold Mohur Foods & Feeds Ltd.

Cauvery Palm Oil Limited

Girikandra Godrej Godrej Holiday Developers Real Estate Homes Pvt. Ltd. Pvt. Ltd. & Resorts Pvt Ltd.

Godrej Realty Pvt.Ltd.

Godrej Seaview Propertis Limited

Godrej Waterside Properties Pvt.Ltd.

Happy Highrises Limited

Godrej Global Solutions (Cyprus) Ltd.

Godrej Global Solutions Inc.

(See note

7 below)

8 below)

9 below)

10 below)

11 below)

12 below)

13 below)

14 below)

15 below)

16 below)

17 below)

– –

–

13 49,999 Equity Shares of Rs.10 each in Godrej Sea View Properties Pvt.Ltd. (representing 100% of the share capital) are held by Godrej Properties Ltd. 14 509,999 Equity Shares of Rs.10 each in Godrej Waterside Properties Pvt.Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd. 15 49,999 Equity Shares of Rs.10 each in Happy Highrises Ltd. (representing 100% of the share capital) are held by Godrej Properties Ltd. 16 60,000 Equity Shares of face value USD 1 each in Godrej Global Solutions (Cyprus) Ltd. (representing 100% of the share capital) are held by Godrej Global Solutions Ltd. 17 150,000 Equity Shares of face value USD 1 each in Godrej Global Solutions (Inc) Ltd. (representing 100% of the share capital) are held by Godrej Global Solutions Ltd. A.B. Godrej N.B. Godrej M. Eipe M. P. Pusalkar Chairman Managing Director Executive Director & Executive Director & President (Chemicals) President (Corporate Projects) Mumbai, May 28, 2008

S.K. Bhatt Executive Vice-President (Corporate Services) & Company Secretary

V. Srinivasan Executive Vice-President (Finance & Estate)

FOR YOUR USE

Directors’ Report For The Financial Year Ended On March 31, 2008 To The Shareholders

PLANTATIONS:

Your Directors have pleasure in submitting their Report along with the audited Accounts for the financial year ended on March 31, 2008.

The Oil Palm business was de-merged effective 1st April,2007. During the year under review, your company received allotment of Tirunelveli district in Tamil Nadu. Your company expects to rapidly expand the oil palm business.

Financial Results Your Company’s performance during the year as compared with that during the previous year is summarised below:

Total Income Profit Before Taxation (PBT) Less : Provision for Taxation Profit After Taxation (PAT) Net Total Extraodinary Income Total Profit after Tax Balance Bought Forward from previous year Total Appropriations: Interim Dividend Final Dividend Tax on Dividend Transfer to General Reserve Balance Carried Forward to Balance Sheet Total

For the year ended 31/3/2008 Rs.lac 84781.09 (3922.34) 44.17 (3966.51) 7788.44 3821.93 2119.05 5940.98

For the year ended 31/3/2007 Rs. lac 68980.42 (1932.09) 97.64 2029.73 2304.75 275.02 2984.58 3259.60

121.18 20.60 5799.20 5940.98

975.27 136.78 28.50 2119.05 3259.60

FINANCE AND INFORMATION SYSTEMS: With efficient treasury operations, your Company was able to procure funds at very competitive pricing in spite of rising interest rate scenario. Your Company continues to enjoy the apex rating of A1+ from ICRA for it’s Commercial Paper Programme of Rs. 15 crore. Your company continues to leverage IT and implemented SAP in the retail businesses. OTHER INITIATIVES: Your Company’s Windmill Power Generation Project at Dhule, Maharashtra has been approved by United Nations Framework Convention on Climate Changes (UNFCCC) under the Clean Development Mechanism (CDM) program, enabling your company to obtain carbon credits for the units generated by the windmills. DIVIDEND Your Directors recommend a Final Dividend for 2007-08 amounting to Rs.1/- per share of face value of Rs. 10/- each i.e. 10% (previous year Interim Dividend 137%). FIXED DEPOSITS Your Company has not accepted any public deposits during the financial year under review. ADDITIONAL CAPITAL AND HOLDING COMPANY Your Company issued 1,00,00,000 additional shares to Godrej Industries Limited (GIL) raising GIL’s holding to 70.20%. Your Company continues to be a subsidiary of GIL as defined under Section 4(1)(b) of the Companies Act, 1956.

Review of Operations

SUBSIDIARY COMPANIES

During the year under review, the businesses of your company were restructured. The various businesses were classified into four verticals viz. : Animal Feed, Plant Group, Poultry and Retail. The Oil Palm Plantation activities were demerged through a court approved scheme of arrangement under Sections 391 and 394 of the Companies Act,1956. The oil palm business was demerged effective 1st April, 2007 into two companies viz. Godrej Oil Plantations Limited (covering oil palm activities in the States of Andhra Pradesh, Gujarat, Orissa and Mizoram) and Godrej Gokarna Oil Palm Limited (covering oil palm activities in the States of Goa and Karnataka). Your company, invited Blessed Resources Pte Limited and IJM Plantations Berhad to participate and acquire part of the shares of Godrej Oil Plantations Limited and Godrej Gokarna Oil Plantations Limited respectively. Post this acquisition, your company continues to hold 80% of the shares in Godrej Oil Plantations Limtied and 46% of the shares in Godrej Gokarana Oil Palm Limited respectively. Your Company also transferred the rural retailing business carried under the trade name of “Aadhaar” to Aadhaar Retailing Limited. Your Company invited Future group to participate and acquire 70% of the shares in Aadhaar Retailing Limited post the business transfer. Your company has also applied to the court for merger of Goldmohur Foods and Feeds Limited (100% subsidiary of your company) into your company. This merger is expected to bring in significant advantages on account of synergies in the animal feeds business. Your company also acquired 51% shareholding in Cauvery Palm Oil Limited, which operates in the palm oil business in the state of Tamil Nadu.

Your Company continues to be the holding Company of Goldmohur Foods and Feeds Limited (GFFL), Golden Feed Products Limited (GFPL) and Godrej Aquafeed Limited (GAL), the name of which has been changed to Godrej Oil Plantations Limited (GOPL). During the year under review, your company sold 70% of the shares in Aadhaar Retailing Limited to Future Group and sold 51% of the total shares in Godrej Oil Palm Limited (GOPL), the name of which has been changed to Godrej Gokarna Oil Palm Limited, to IJM Plantations Berhad. Consequent to this sale, the aforesaid companies cease to be subsidiaries of your company.

Your Company continued to face the challenges of poor output prices and high raw material prices in the Animal Feed business and Poultry business. This impacted the profitability of your Company adversely. The margins of the retail businesses continued to be under stress resulting in a significant impact on the profitability of your Company. Your Company was able to realize significant value through the various restructuring initiatives concluded during the year under review, this greatly helped in improving the profitability of your Company. The above-mentioned factors in combination resulted in the profitability growing from Rs.275.02 lacs to Rs. 3821.93 lacs. The business-wise performance is reviewed hereunder: ANIMAL FEEDS: Avian Influenza which was detected in Eastern India in Dec.'07 adversely impacted the Animal Feed Business. The industry witnessed a de-growth during the year under review. While your Company’s performance was impacted during the first half of the year under review, your Company did well to regain its volume and market share in the second half of the year under review. Commodities prices in India mirrored global trends and there was significant increase in prices. This adversely impacted the profitability of your Company. Your Company tried to mitigate this pressure on the bottom line by stepping up its R & D efforts and focusing on various cost saving opportunities/ technology upgradation and quality focus to strive for customer satisfaction. INTEGRATED POULTRY BUSINESS: Low prices for poultry products on account of detection of Avian Influenza in Eastern India, was witnessed across the country. This adversely impacted the profitability of the poultry operations. The expansion of the Bangalore Plant in the previous year helped your company to increase the sales volume in the year under review. Similarly good response was received for the “Yummiez” range of products introduced in the previous year. All this helped your company to grow the sales by 53%.

During the year, your Company has promoted Godrej Foods Limited (GFL), a wholly owned subsidiary. During the year under review, your company acquired 51% of the shares of Cauvery Palm Oil Limited (CPOL) and consequently the said company becomes a subsidiary of your company. The audited Balance Sheets of GFFL, GFPL, GOPL and CPOL as at 31st March, 2008 together with their audited Profit & Loss Accounts, Directors’ Reports and Auditors’ Reports are attached to the Balance Sheet and Profit & Loss Account of your Company. JOINT VENTURES Your company continues to have Joint Venture arrangement in ACI Godrej Agrovet Private Limited (Bangladesh), Al-Rahba International Trading LLC (UAE) and Godrej Gold Coin Aquafeed Limited. As mentioned elsewhere in the report, your company has entered into a joint venture arrangement with IJM Plantations Berhad in Godrej Gokarna Oil Palm Limited. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information in respect of these matters, required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of this Report, is annexed hereto (Annexure - A). DIRECTORS Mr. B.S.Yadav was appointed as an Additional Director of the company by the Board of Directors in its meeting held on July 20,2007. In terms of Section 260 of the Companies Act, 1956, he will hold office only till conclusion of ensuing Annual General Meeting. He is eligible for appointment as director and a notice in this respect under section 267 of the Companies Act, 1956 has been received from a member along with deposit of Rs.500/- signifying its intention to propose its candidature of Mr. B.S. Yadav for the office of the Director. Mr. J.N. Godrej, Mr. V.M. Crishna and Mr. K.N. Petigara, Directors retire by rotation at the ensuing Annual General Meeting in accordance with Article 124 of the Articles of Association of the Company and the provisions of the Companies Act, 1956 and being eligible offer themselves for reappointment. AUDITORS You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for reappointment.

AGRICULTURAL INPUTS:

ADDITIONAL INFORMATION

The Agri Inputs Division continued to return an excellent performance with 32% growth in sales and 35% growth in profit. This growth has been achieved despite a challenging year for the agriinput industry.

The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.

AADHAAR: The Aadhaar business of your company was transferred to Aadhaar Retailing Limited on 15th March,2008. Your company sold 70% of the shareholding in Aadhaar Retailing Limited to the Future group. During the year under review, your company opened 26 new outlets taking the total number of outlets to 65. NATURE’S BASKET: During the year under review your company launched the remodeled Nature's Basket store at Warden Road, Mumbai. The remodeled store offers a wide range of gourmet food. Your company received a good response for this remodeled store.

AUDIT COMMITTEE Pursuant to the provisions of Section 292-A of the Companies Act, 1956, your Company has constituted the Audit Committee of the Board of Directors. The (1) (2) (3)

following Directors are the Members of the Audit Committee: Mr. K.N. Petigara – Chairman Dr. S.L. Anaokar – Member Mr. B.S. Yadav - Member

The Audit Committee, pursuant to the terms of reference specified by the Board from time to time has made recommendations to the Board in respect of internal control systems, half-yearly & annual financial statements, standard accounting principles, Risk Management polices, etc. The Board of Directors has since accepted the recommendations of the Audit Committee. REMUNERATION COMMITTEE Pursuant to the provisions of schedule XIII to the Companies Act, 1956, your Company has constituted Remuneration Committee of the Board of Directors to approve the payment of remuneration to the Managerial Personnel. The (1) (2) (3)

following Directors are the Members of the Remuneration Committee: Mr. K.N. Petigara – Chairman Dr. S.L. Anaokar – Member Mr. Amit Choudhury - Member

RESPONSIBILITY STATEMENT Pursuant to the provisions contained in section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm :a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same ; b) that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view

ANNEXURE `A’ ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO : A) Conservation of Energy The Company continued its endeavours successfully the policy of energy conservation measures and undertook a regular review of energy consumption levels and the systems installed for effective control over the utilization of energy. Some of the measures adopted by your Company towards conservation of energy were as follows: 1. Use of CNG in Genset, Boiler, etc. as an alternative to HSD 2. Use of DG set as an alternative source of energy 3. Use of bio-mass pellets as fuel 4. Identification of idle running of motors and machinery and introduction of ‘switch off’ provision when not in use 5. Replacement of Bore well jet pump 7.5 HP by 2 HP motor 6. Strict control over Power Factor Levels B) Technology absorption, Adaptation and Innovation I. Your Company continues its constant endeavour for technological upgradation and undertakes in-house Research & Development for enhancing the quality of products manufactured at an optimum cost. II. The benefits derived as a result of various measures undertaken are as follows : 1) Improvement in quality of products manufactured 2) Enhancement in the life of machinery 3) Reduction in storage and volatile losses 4) Clean and low cost fuel

c) d)

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

HUMAN RESOURCES Your company continues to take various initiatives for the development of its human resources. The industrial relations at all units continued to be cordial. The Board would like to place on record its sincere appreciation for the unstinted support it continues to receive from all associates. PARTICULARS OF EMPLOYEES Details of the employees covered under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) (Amendment) Rules, 2002, are attached (ANNEXURE B).

For and on behalf of the Board of Directors

B.S. Yadav

Mumbai, May 21, 2008.

Executive Director & President

N.B. Godrej Chairman

5) 6)

Reduction in the level of energy consumption Installation of Auto Bagging machine resulting in improvement in the rate of bagging, reduction in the dependence on skilled labour, higher accuracy, less spillages and data logging 7) Better adherence to pollution control norms due to installation of bag filter for solid fuel boiler III. The Company’s expenditure on R&D is given below :Expenditure on R & D 2007-2008 2006-2007 Rs. lac Rs. lac. (a) Capital - (b) Recurring 208.43 100.78 (c) Total 208.43 100.78 (d) Total R & D expenditure as 0.25% 0.15% a percentage of total turnover C) Foreign Exchange earnings and outgo I. Your Company’s efforts to export agricultural inputs (Vipul – liquid, Achook, Nimin) to South Asian countries continued during the year. The efforts to export agricultural inputs to other countries are continuing. 2007-2008 2006-2007 Rs. lac Rs. lac II. Foreign exchange used 1279.66 1460.28 III. Foreign exchange earned 82.23 114.93 Mumbai, May 21, 2008.

For and on behalf of the Board of Directors B.S. Yadav N.B. Godrej Executive Director Chairman & President

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ AGROVET LIMITED 1.

We have audited the attached Balance Sheet of Godrej Agrovet Limited, as at 31st March 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

d) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of these books.

e) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

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

As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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

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

b) As referred to in Note 20 of Schedule 15, notes to accounts, the managerial remuneration paid to the managing director is in excess of the limits laid down under section 198 read with Schedule XIII of the Companies Act, 1956, by Rs. 4,884 thousands. The amount is pending approval from the Central Government.

For and on behalf of

As referred to in Note 7 of Schedule 15, notes to accounts, investments in joint ventures aggregating to Rs. 56,455 thousands, exceeds the book value of the shares of those companies. The Company has also advanced Rs. 41,903 thousands to those companies. However, in view of the benefits of future profitability of the joint ventures being nonquantifiable at this stage, we are unable to determine the quantum of the possible diminution in the value of these investments / advances.

in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008; and

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

KALYANIWALLA & MISTRY Chartered Accountants E. K. Irani Partner Membership No. 35646 Mumbai, May 21, 2008

Annexure to the Auditors’ Report Referred to in paragraph (3) of our report of even date. 1)

(a)

The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b)

As explained to us, the Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been reported on such verification.

(c)

In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

(a)

The Management has conducted physical verification of inventory at reasonable intervals.

(b)

In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c)

The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(a)

The Company has granted unsecured loans amounting to Rs. 559,094 thousands to five companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 559,094 thousands and the year end balance of loan granted to such parties was Rs. 558,356 thousands.

audit system is commensurate with the size of the Company and nature of its business. 8)

According to the information and explanation given to us, the maintenance of cost records has not been prescribed by the Central Government, under section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.

(a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues payable in respect of above as at 31st March 2008 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues outstanding of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty or cess on account of any dispute, other than the following: Name of Statute

Amount (Rs.’000)

Forum where dispute is pending

Sales Tax Act

20,851 Commissioner Appellate Tribunal and High Court

Income Tax Act

21,751 Commissioner of Income Tax (Appeals)

10)

The Company does not have accumulated losses at the end of the financial year and it has not incurred any cash loss es in the current and immediately preceding financial year.

11)

According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to banks. There are no dues to financial institutions or debenture holders.

12)

According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(b)

The Company has not charged interest on unsecured loans amounting to Rs. 68,231 thousands given to three companies which is prima facie prejudicial to the interest of the Company. The rate of interest of other unsecured loans and the other terms and conditions of the all the loans is not prima facie prejudicial to the interests of the Company.

(c)

As informed to us the receipt of principal and interest, to the extent due, has been regular.

(d)

As informed to us, there are no overdue amounts exceeding rupees one lakh and hence the question of commenting on reasonable steps taken for recovery of principal and interest does not arise.

13)

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

(e)

The Company has taken unsecured loans of Rs. 190,000 thousands from two companies covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 90,000 thousands and year-end balance of loan taken from such party was Rs. Nil.

14)

The Company does not deal in shares, securities, debentures and other investments.

15)

According to the information and explanations given to us, the Company has given a corporate guarantee for loans taken by its subsidiary/joint venture from banks. The terms and conditions are not prima facie prejudicial to the interest of the Company.

(f)

The rate of interest and the other terms and conditions of the unsecured loan taken is not prima facie prejudicial to the interest of the Company.

16)

According to the information and explanations given to us, term loans were applied for the purpose for which the loans were obtained.

(g)

The payment of principal amounts and interest was also regular.

17)

In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed a continuing failure to correct major weakness in internal controls.

According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long term investment.

18)

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

19)

The Company did not issue any debentures during the year.

20)

The Company has not raised any money through a public issue during the year.

21)

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

(a)

Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.

(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, except for certain transactions for which, there are no similar services rendered to other parties or have been entered into on an reciprocal basis and hence the prices are not comparable.

In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public and hence the provisions of section 58A, 58AA or any other provision of the Companies Act, 1956, read with the rules framed thereunder are not applicable.

In our opinion and according to the information and explanations given to us, the internal

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants E. K. Irani Partner Membership No. 35646 Mumbai, May 21, 2008

BALANCE SHEET AS AT MARCH 31, 2008

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008 This Year

Schedule

Rs. '000

Previous Year

Rs. '000

Rs.’000

SOURCES OF FUNDS SHAREHOLDERS’ FUNDS Share Capital

Reserves & Surplus

121,18 8 2,210,320

741,117

EXPENDITURE

842,305

Materials Expenses Interest and financial charges Depreciation

LOAN FUNDS Secured Loans

559,567

494,469

Unsecured Loans

1,152,999

1,216,637

TOTAL

1,712,566

1,711,107

43,056

49,139

3,965,942

2,602,551

APPLICATION OF FUNDS FIXED ASSETS

Gross Block Less:Depreciation Less:Provision for Impairment Net Block Capital work-in-progress / Advances

INCOME From Operations Other Income

Rs.’000

8,173,793 304,316

10 11

101,188

2,089,132

DEFERRED TAX LIABILITY

Schedule

1,390,861

1,530,802

437,542

433,802

19,890

953,319

1,077,110

24,809

50,176 978,128

1,127,286

12 13 14

8,870,343

5,173,711 1,735,090 124,227 58,223 7,091,251

(392,234)

(193,209)

6,424,634 2,106,833 225,935 112,941

(77,824)

Profit/(Loss) on Continuing Operations Provision for Tax

8,478,109

6,895,038 3,004 6,898,042

LOSS BEFORE TAX AND EXTRAORDINARY INCOME

This Year Previous Year Rs.’000 Rs.’000

Current Tax including Mat Credit Entitlement Fringe Benefit Tax Deferred Prior year Tax adjustment

7,841 (6,083) -

(160,667)

8,684

1,758

(1,417) 2,181 9,448 (79,582)

Profit/(Loss) on Discontinuing Operations for Oil Palm Business Provision for Tax Current Tax including Mat Credit Entitlement Fringe Benefit Tax

126,717

INVESTMENTS

CURRENT ASSETS,LOANS AND ADVANCES

1,275,515

524,060

Inventories

805,618

1,179,630

Sundry Debtors

723,804

587,791

Cash and Bank Balances

267,308

92,271

Other Current Assets Loans and Advances

9,319

1,767,678

605,799

3,573,727

2,465,583

LESS : CURRENT LIABILITIES AND PROVISIONS Liabilities

1,822,313

1,497,124

Provisions

39,115

17,254

1,861,428

1,514,378

NET CURRENT ASSETS TOTAL

NOTES TO ACCOUNTS

1,712,299

951,205

3,965,942

2,602,551

The Schedules referred to above form an integral part of the Balance Sheet. Signatures to Balance Sheet and As per our Report attached Schedules 1 to 9 and 15 For and on behalf of KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS N.B. GODREJ Chairman E.K.IRANI Partner Membership no. 35646 Mumbai, May 21, 2008

V.V.CHAUBAL Company Secretary

B.S. YADAV

Executive Director & President

Profit/(Loss) on Discontinuing Operations for Retail Business (Aadhaar) Provision for Tax Current Tax including Mat Credit Entitlement Fringe Benefit Tax

(314,410) 2,659

LOSS BEFORE EXTRAORDINARY INCOME Extraordinary Income (on transfer of Business / Demerger) of Oil Palm Business Provision for Current Tax including Mat Credit Entitlement Extraordinary Income (on transfer of Business / Demerger) of Retail Business (Aadhaar) Provision for Current Tax including Mat Credit Entitlement Extraordinary Income (on transfer of Business / Demerger) of Aquafeed Business Provision for Current Tax including Mat Credit Entitlement

(170,115)

316 316 126,401 (159,259)

2,659

(317,069) (396,651)

417,441 (4,800)

412,641

366,203 -

PROFIT AFTER TAXATION Surplus Brought Forward AMOUNT AVAILABLE FOR APPROPRIATION

366,203

1,827 1,827.00 (159,259) (202,973)

230,475

382,193 211,905 594,098

230,475 27,502 298,458 325,960

APPROPRIATION: Dividend Interim - 97,527 Final (Proposed) 12,118 12,118 97,527 Tax on Dividend 2,060 13,678 Transfer to General Reserve - 2,850 Surplus carried forward 579,920 211,905 TOTAL 594,098 325,960 Earnings per share before extraordinary items (Basic/Diluted) in Rs. (Refer Note 30) (36.89) (26.64) Earnings per share after extraordinary items (Basic/Diluted) in Rs. (Refer Note 30) 35.54 3.61 NOTES TO ACCOUNTS 15 The Schedules referred to above form an integral part of the Profit and Loss Account Signatures to Profit & Loss Account As per our Report attached Schedules 10 to 15 For and on behalf of KALYANIWALLA & MISTRY N.B. GODREJ Chairman

CHARTERED ACCOUNTANTS E.K.IRANI Partner Membership no. 35646 Mumbai, May 21, 2008

V.V.CHAUBAL Company Secretary

B.S. YADAV

Executive Director & President

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008 This Year Rs.’000

This Year

Previous Year

Rs.’000

Rs. '000

Rs.’000

SCHEDULE 1 : SHARE CAPITAL

GENERAL RESERVE 150,000

150,00,000 Equity Shares of Rs 10 each

150,000

ISSUED, SUBSCRIBED AND PAID UP

60,320

As per last Balance Sheet

121,188

PROFIT AND LOSS ACCOUNT TOTAL

(b) 52,47,600 Equity Shares of Rs.10/- each have been issued as fully paid bonus shares by capitalising Securities Premium Account

60,320

579,920

211,905

2,089,132

741,117

458,400

150,000

From Banks Term Loans (amount due within a year Rs. 183,200 thousand, Previous year Rs. 25,000 thousand )

SECURITIES PREMIUM ACCOUNT As per last Balance Sheet Add : Received during the year CAPITAL INVESTMENT SUBSIDY As per last Balance Sheet Less : Transferred to General Reserve

459,290

189,290

980,000

270,000

1,439,290

459,290

9,602

4,000

5,602

9,602

Cash Credit/Working Capital Demand Loans TOTAL

93,270 9,329 340,878 171 807,011 52,047 40,455 55,250 62,839 3,688 45,469

5,006 27,845 91,155 44,008 73,070 34,490 2,848 19 -

394 20,000 1,530,802 1,194,189

58,674

51,072

337,115 425,892

477,055 89,279

As at 31.3.2008 -

Term Loans

8,149 32,159 6,242 15,240 4,194 4,571 26,987

7,996 20,000 1,390,861 1,530,802

14 19,999 433,802 418,931

18,610

11,660

112,941 58,223

109,202 43,352

45,469

This Year Rs.’000

Upto 1.4.2007 -

DEPRECIATION For the On Upto Year Deductions 31.3.2008 -

121 10,556 3 47,231 7,304 17,826 5,474 5,629 187 -

132,236 56,416 86,149 35,748 14,040

Rs.’000

6,964 19,999 437,542 433,802

19,890

Rs.’000

LONG TERM

TRADE UNQUOTED

NON TRADE UNQUOTED

IN SUBSIDIARY COMPANIES

IN GOVERNMENT SECURITIES

(a) In Gold Mohur Foods and Feeds Limited 18,38,170 equity shares of Rs. 10 each

228

110

1 229

117

(b) In Golden Feeds Products Limited 50,000 equity shares of Rs.10/- each

1,216,637

(Rs.’000) NET BLOCK As at As at 31.3.2008 31.3.2007 84,901 8,113 251,529 126 491,068 25,751 19,559 37,967 31,687 1,585 -

93,270 8,234 268,641 129 527,330 39,221 35,224 40,505 43,936 1,754 18,482

1,032 1 953,319

380 1

24,809

1,077,109 50,176

978,128

1,127,285

This Year

Rs.’000 SCHEDULE 6 : INVESTMENTS (Cond.)

(b) Indira Vikas Patra (Face value Rs.1 thousand)

IMPAIRMENT Upto 31.3.2008

1,216 74,644 45 274,862 13,888 7,817 16,025 19,960 2,122 -

SCHEDULE 6 : INVESTMENTS

(a) National Savings Certificates (Face value Rs. 228 thousand; Previous year Rs. 110 thousand)

47,004

1,152,999

Previous Year

(All the Securities have been deposited with various Government Authorities)

1,169,633

1,095 72,237 42 259,790 12,826 5,231 14,745 18,902 1,935 26,987

42,550

1,152,999

(amount due within a year Rs. 1,136,334 thousand, Previous year Rs. 1,029,634 thousand)

84,901 9,329 326,173 171 765,930 39,639 27,376 53,992 51,647 3,707 -

13,375

494,469

From Banks

SCHEDULE 5 : FIXED ASSETS

As at 1.4.2007 -

344,469

SCHEDULE 4 : UNSECURED LOANS

TOTAL

GROSS BLOCK Additions Deductions

101,167 559,567

Note : Refer Note 5

Sales Tax Deferment facility

2,850 64,320

SCHEDULE 3 : SECURED LOANS

SCHEDULE 2 : RESERVES & SURPLUS

Tangible Assets Freehold Land Leasehold Land Buildings Staff Quarters Plant & Machinery Furniture & Fixtures Leasehold Improvements Office & Other Equipments Vehicles Research Centre Trees, Development Costs Intangible Assets Computer Software Technical Know-How Fees TOTAL Previous Year Capital Work-In-Progress / Advances

57,470

Add : Transferred from Profit & Loss Account

(a) 91,12,956 (Previous year 71,12,956) Equity shares of Rs. 10/- each are held by Godrej Industries Limited the Holding Company.

64,320

101,188

Of the above shares

57,470

4,000

Add : Transfer from Capital Investment Subsidy

1,21,18,752 (Previous Year 1,01,18,752) Equity Shares of Rs. 10/- each fully paid

Goodwill

Rs. '000

SHEDULE 2 : RESERVE & SURPLUS (Contd.)

AUTHORISED

ASSETS

Previous Year

Rs. '000

Previous Year

Rs.’000

183,398

500

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008 This Year Rs.’000

This Year

Previous Year

Rs.’000

SCHEDULE 6 : INVESTMENTS (Cond.)

Rs. '000

142,830

500

–

Cash and Cheques on hand

Balances with Scheduled Banks

i) In Current Accounts

ii) In Fixed Deposit Accounts

[(Rs. 68 thousand (Previous year Rs. 75 thousand) pledged with government authorities)]

IN COMPANIES (a) Nil (Previous year 4,000) Fully-paid Equity Shares of Rs.10/- each in Ensemble Holdings & Finance Limited (a company under the same management)

–

55,645

37,558

810

103,800

(e) 4,55,000 fully paid Equity shares of Rs.10/- each in Polchem Hygiene Laboratories Private Limited

16,275

181,089

180,528

63,542

–

129,000

500

550,161 2

AGGREGATE COST OF UNQUOTED INVESTMENTS

1,275,515

TOTAL

2 524,060

41,325

6,420 267,308

92,271

9,319

1,532,948

Considered Doubtful

(Of the above Rs. 5,45,626 thousand is receivable on account of sale of business / investments)

Inter Corporate Deposits

Other Deposits

7,561

1,542,571

516,144

9,623

7,561

1,532,948

508,583

4,425

115,700

Less: Provision for doubtful advances

Share application money pending allotment

i) Government Authorities

ii) Others

Advance payment of Taxes [including MAT Credit Entitlement Rs. 41,010 thousand (previous year Rs. 3,410 thousands)

(Net of provision for taxation Rs.108910 thousand; Previous Year Rs. 93,575 thousand)]

508,583

9,623

6,239

4,877

48,456

52,615

64,335

TOTAL

35,299 1,767,678

605,799

3,573,727

2,465,582

Acceptances Investor Education and Protection Fund Sundry Creditors Dues to Micro, Small and Medium enterprises (Refer Note - 11)

338,678

315,875

3,591

1,332,964

982,539 1,332,964

986,130

402,315

648,684

Advances from Customers

85,574

78,441

195,508

318,852

Sundry Deposits

65,097

116,677

191,753

156,262

1,822,313

1,497,124

16,042

14,708

12,118

805,618 -

1,179,630 41,124

TOTAL SCHEDULE 9 : PROVISIONS Dividend Tax on Dividend

2,060

Gratuity

6,946

Leave Encashment

123,491

188,007

32,979

28,490

156,470

216,498

600,313

399,784

SCHEDULE 10 : INCOME FROM OPERATIONS

756,783

616,281

Net Sales

32,979

28,490 723,804

[Debts amounting to Rs. 12,263 thousand (previous year Rs. 12,263/- thousand) are secured by equitable mortgage / hypothecation of assets / deposit of title deeds, Rs. 38,391/- thousand (previous year Rs. 10,891/-thousand) against Security Deposits and Rs. 26,470/- thousand (previous year Rs. 39,100/-) against Bank Guarantees]

Considered Good

Others

SCHEDULE 7 : CURRENT ASSETS, LOANS & ADVANCES

Less : Provision for doubtful debts

62,316

SCHEDULE 8 : LIABILITIES

3 Shares of Rs.500/- each in Sachin Industrial Cooperative Society Limited.

177,904

(Unsecured and considered good unless otherwise stated) Loans and Advances recoverable in cash or in kind or for value to be received. (Refer Note - 9(b))

339,050

IN CO-OPERATIVE SOCIETY

(B) SUNDRY DEBTORS (Unsecured and considered good unless otherwise stated) Debts outstanding for a period exceeding six months Considered Good Considered Doubtful Other Debts Total

103,800

16,275

(g) 62,867 fully paid Equity shares of Rs. 10/- each in Godrej Gokarna Oil Palm Limited (acquired during the year 132,125 shares, sold during the year 69,258 shares)

INVENTORIES : Raw Materials Finished Products Poultry stock Stores and Spares Stock under Cultivation

23,535

(D) OTHER CURRENT ASSETS :

(A)

48,079

(E) LOANS AND ADVANCES :

(b) 8,00,000 (previous year 5,00,000) Fully-paid Equity share of Tk. 100/- each in ACI Godrej Agrovet Private Limited (Aquired 1,00,000 shares during the year)

(h) 30,00,000 (previous year 50,000) fully paid Equity share of Rs 10 each in Aadhar Retailing Limited (Aquired during the year 99,50,000 shares sold during the year 70,00,000 shares) (The Company was a subsidiary during the previous year)

Rs. '000

SCHEDULE 7 : CURRENT ASSETS, (C) CASH AND BANK BALANCES :

398,395

(d) In Cauvery Oil Plantations Ltd 19,38,000 equity shares of Rs.10/ each ( Aquired during the year)

(f) 49,00,000 fully paid Equity shares of Rs. 10/- each in Godrej Goldcoin Aquafeed Limited (Aquired during the year)

Previous Year

LOANS & ADVANCES (Contd.)

(c) In Godrej Oil Plantations Ltd (formely known as Godrej Aquafeed Ltd) 56,400 (previous year 50,000 shares) equity shares of Rs. 10/ each ( Aquired during the year 20,500 shares, sold during the year 14,100 shares)

(d) 26,71,993 fully paid Equity shares of Rs.10/- each in Creamline Dairy Products Limited (Creamline Nutrients Limited has been merged with Creamline Dairy Products Limited pursuant to a Court Order)

Rs. '000

587,791

TOTAL

Claims and Compensations

17,991

17,254

39,115

17,254

8,128,846

6,823,658

4,958

19,012

Financial Operations 6,680

Dividend on Investments (Gross)

40,041

Interest (Gross) (Tax at Source Rs. 5,996 thousand; 33,309

Previous year Rs. 414 thousand) TOTAL

12,327 39,989

52,368

8,173,793

6,895,038

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008 Rs. '000 SCHEDULE 11 : OTHER INCOME Profit on sale of Investments Miscellaneous Income

This Year Previous Year Rs. '000 Rs. '000 282,563 21,753 304,316

TOTAL

3,004 3,004

This Year Rs.’000

Rs.’000

(a) Interest paid on fixed loans 187,934

i ) Banks

Previous Year Rs.’000

Opening stock

Add : Purchases during the year

5,361

204,573

118,480

Less: Interest capitalised

Less : Sales during the year

648,684

351,305

4,918,032

4,648,244

5,566,716

4,999,549

609

27,177

210,626

52,774

5,355,481

4,919,598

402,315

Less : Closing Stocks

b) PURCHASE FOR RESALE

648,684 4,953,166

4,270,914

1,605,197

1,086,306

c) INVENTORY CHANGE 318,852

Finished Goods

Stock under cultivation

Poultry Stock

Less : Transferred on sale / demerger of business

Less : Closing Stock

Finished Goods Stock under cultivation

Poultry Stock

201,993

41,124

24,454

156,262

106,282

516,238

332,729

262,706

195,508

4,886

ii ) Others

2,281

318,852

SCHEDULE 15 : NOTES TO ACCOUNTS 1

SIGNIFICANT ACCOUNTING POLICIES:

Fixed assets have been stated at cost and include incidental and / or installation/ development expenses incurred in putting the asset to use and interest on borrowing incurred during construction period. Pre-operative expenses for major projects are also capitalized, where appropriate.

Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.

Depreciation /Amortisation has been provided for as under :

(a)

The Company has grouped additions and disposals in appropriate time periods of a month / quarter for the purpose of charging pro rata depreciation in respect of additions and disposals of its assets keeping in view the materiality of the items involved.

(b)

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

Amortizations

4 Processing charges

(133,729)

(183,509)

6,424,634

5,173,711

474,069

341,576

23,891

18,909

33,361

34,813

396,173

313,159

69,420

66,439

6 Power and Fuel

181,533

165,740

7 Rent

100,439

49,809

11,146

8,405

5 Consumable Stores

8 Rates and Taxes

Asset type

9 Repairs & Maintenance

Other assets

2,079

3,873

13,394

11,495

4,927

3,688 20,400

10 Insurance 11 Postage, telephony and stationery 12 Auditor’s Remuneration

8,252

8,016

41,251

35,153

2,985

2,130

41,076

50,111

144,106

120,892

15 Discount, Commission and Selling Expenses

316,705

268,925

16 Advertisement and Publicity

50,193

52,016

17 Travelling Expenses

93,183

99,653

18 Bad Debts/Advances written off

34,701

18,731

19 Provision for Doubtful Debts and Advances

6,962

11,190

20 Loss on sale of Fixed Assets (Net)

5,484

2,336

77,903

74,431

2,133,233

1,761,490

21 General Expenses 22 Less: Shared Expenses recovered TOTAL

Period

(i) Leasehold Land

Primary lease period

(ii) Leasehold improvements and equipments

Primary lease period or 16 years whichever is less

(iii) Trees Development cost

15 years

(iv) Nursery / Greenhouse building

10 years

(v) Poultry Equipments / Signage

3 years

(vi) Technical Know-how of a capital nature

6 years

(vii) Computer software

6.17 years

(viii) Moulds

2 years

19,056

14 Freight, Coolie and Cartage

13 Legal & Professional Fees

124,227

516,238

Other Funds and Administration Charges

225,935

387,261

3 Employee Welfare Expenses

Plant & Machinery

8,419

41,124

2 Contribution to Provident Fund and

3,701

14,195

156,262

1 Salaries, Wages, Bonus,Gratuity and Allowances

Building

1,605 7,167

191,753

TOTAL

2,096

SCHEDULE 13 : EXPENSES

i ) Banks

Opening Stock

112,107

(b) Interest paid on other loans

Less :Transferred on sale / demerger of businesses

6,373 204,573

113,119

16,639

SCHEDULE 12 : MATERIALS a) RAW MATERIALS CONSUMED

Rs.’000

SCHEDULE 14 : INTEREST AND FINANCIAL CHARGES

ii ) Inter Corporate Deposits This Year

Previous Year

Rs.’000

(26,400)

2,106,833

1,735,090

Grants / Subsidies :

(i)

Investment Subsidy under the Central / State investment incentive scheme is credited to Capital Investment Subsidy Reserve and treated as a part of the shareholders’ funds.

(ii)

Grants / Subsidies related to specific fixed assets are shown as a deduction from the gross value of the asset concerned in arriving at its book value.

(iii) Grants / Subsidies related to revenue are presented as a credit to the profit and loss statement or are deducted in reporting the related expense.

Long Term investments are carried at cost. Provision for diminution, if any, in the value of each long term investment is made to recognise a decline, other than of a temporary nature. Current investments are stated at lower of cost and net realizable value.

Raw materials and Poultry Stock are valued at weighted average cost. Finished goods and work-in-progress are valued at lower of cost and net realisable value. These costs include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Stores and spares are valued at cost using the First-InFirst-Out method.

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008

Employee Benefits: i)

Short-term employee benefits (payable wholly within twelve months of rendering the service):

Short-term benefits such as salaries, wages, short-term compensation absences, etc., are determined on an undiscounted basis and recognised in the period in which the employee renders the related service.

Post-employment benefits:

ii)

THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000 2 CONTINGENT LIABILITY: In respect of : (a)

Defined Contribution Plans: The Company’s contributions paid/payable to provident Fund, Employees State Insurance Scheme, Employees Pension Schmes, 1995 and other funds, are determined under the relevant approved schemes and/or statutes and are recognised as expense in the Profit and Loss Account during the period in which the employee renders the related service. There are no further obligations other than the contributions payable to the approved trusts/appropriate authorities. However, the rules of Company’s Provident Fund Scheme, 1952, for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Company. The Company’s PF does not have any existing Deficit or Interest shortfall. In view of the track record of the Company’s PF Trust - its assets, return on investments and accmulated reserves - the Company does not anticipate any deficiency in the forcseeabel future. In any case making reasonable acturial assumptions for determining and measuring any probable future obligations arising due to interest shortfall, would pose a formidable challenge.

(b)

Defined Benefit Plans: The Company’s gratuity and leave encashment/long-term compensated absences schemes are defined benefit plans. The Company’s liability for the defined benefit schemes is actuarially determined based on the projected unit credit method. The Compny’s net obligations in respect of such plans is calculated by estimating the amount of future benefit that the employees have earned in return for theitr services n the current and prior periods that benefit is discounted to determine its preaesnt value and the fair value of the plan asset is deducted. Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

(c)

(d) (e)

Terminal Benefits: All terminal benefits including voluntary retirement compensation are fully written off to the Profit.

(f)

Miscellaneous expenditure :

Income Tax Matters The Income Tax Department has filed an appeal against the order of CIT (A), for A.Y.1998-99, 1999-00 & 200001and has also raised a demand for the A.Y 05-06. Sales Tax Matters The Company has filed Appeal with the Sales Tax tribunal in Tamilnadu for F.Y. 1993-94 to 1995-96, for classifying branch transfer as sales. [Against the above the Company has paid advance of Rs. 800 thousand (Previous year Rs. 800 thousand)] The Company has filed an appeal in Mumbai High Court in connection with Agricultural Produce Market Committee(APMC) in respect of poultry business. The Company has preferred an appeal before the Hon. High Court Kerala in the matter of classification of sale of Day-old-chicks. (Against the above the company has paid advance of Rs. 14,300 thousand (previous year Rs. 14,300 thousand)) Excise Matter The Company has preferred an appeal with the Excise Dept in the matter of classification of Agri Products and presently the case is pending with the Commissioner of Central Excise. Guarantee issued to Banks on behalf of the subsidiary companies Guarantee issued to Banks on behalf of the Joint venture companies Guarantees issued by the Banks and counter guaranteed by the company (other than those mentioned in (d) & (e) above)Rs.3,036 thousand (Previous year Rs.3,182 thousand) have been secured by deposit with bank.

21,751

6,920

35,951

43,816

35,575

–

600,000

109,838

88,875

40,827

54,635

39,697

39,468

6,851

4,702

Non-Compete fee is amortised over a period of five years or the period of the agreement ( wherever applicable).

ii)

Front-end fee paid on loans raised from financial institutions is amortised over the period of the loan.

Revenue is recognised when goods are despatched to external customers.Sales are inclusive of realised exchange fluctuations on export receivables but net of returns, sales tax, rebates,etc.

AMALGAMATION OF SUBSIDIARY

Revenue expenditure on Research and Development is charged to Profit and Loss Account of the year in which it is incurred. Capital Expenditure incurred during the year on Research and Development is shown as an addition to Fixed Assets under the head “Research Centre”.

Pursuant to the decision taken by the Board of Directors of Godrej Agrovet Limited (GAVL) and Goldmohur Foods & Feeds Ltd (GFFL) at their respective meetings held on October 19, 2007, the scheme of arrangement for amalgamation of GFFL with GAVL was filed with Bombay High Court on December 31, 2007.

Interest and commitment charges incurred in connection with borrowing of funds, which are directly attributable to the acquisition, construction or production of an asset that necessarily takes substantial period of time to get ready for its intended use, upto the time the said asset is put to use are capitalised, as a part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

By order dated January 11, 2008, the Company Judge dispensed with the holding of meeting of equity shareholders, secured and unsecured creditors of GFFL and GAVL with a direction to send individual notices to secured creditors having value of more than Rs. 5,00,000/- in case of GAVL and to all the secured creditors in case of GFFL.

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profit and Loss Account.

The merger petitions filed by GAVL and GFFL have been admitted by the Bombay High Court who have given direction to the Official Liquidator to submit its report on the affairs of GFFL. The petitions will be heard for order in due course once the Official Liquidator submits its report.

Subject to the final order granting approval to the amalgamation by the Bombay High Court, seperate accounts of GAVL and GFFL have been prepared for the year ended March 31, 2008. Merged accounts for the same will be prepared for the financial year after the final order is received.

SECURED LOANS:

Term Loans from Banks are secured by an equitable mortgage of specified immovable properties and hypothecation of specified movable assets of the Company.

Cash Credit and other facilities from banks are secured by hypothecation of stocks and book debts of the Company (both present and future).

FIXED ASSETS:

Legal formalities relating to the transfer of title of immovable assets situated at Chennai (acquired as a part of the take over of Agrovet business from Godrej Industries Limited and Hyderabad (as part of the merger of Godrej Plant Biotech Limited) are being complied with. Stamp duty payable thereon is not presently determinable.

INVESTMENTS IN JOINT VENTURES:

The Company has equity investment of Rs. 55,645 thousand (Previous year Rs. 37,558 thousands) in ACI Godrej Agrovet Private Limited and Rs. 810 thousand (Previous year Rs. 810 thousand) in AlRahaba International Trading LLC. The Company’s investments in Joint ventures are carried at costs, which are higher than their respective book values. The diminution in the value of these investments is considered to be of a temporary nature, in view of the Company’s long-term financial involvement in, and the future profitability projected by the two companies. No provision for diminution in the value of investments is therefore considered necessary in the accounts. Accordingly, no provision for Debtors / Loans and advance of Rs. 4,328 thousand (Previous year Rs.3,381 thousands) in ACI Godrej Agrovet Private Limited and Rs. 37,575 thousand (previous year Rs. 37,424 thousand) in Al Rahaba International Trading LLC is also considered necessary in the accounts.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year- end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date. The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive. Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

(g)

Case / Claim filed by Processors for claiming various expenses

3 CAPITAL COMMITMENTS: The estimated value of contracts remaining to be executed on Capital Account to the extent not provided for.

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008 8

INFORMATION IN RESPECT OF JOINT VENTURES (JOINTLY CONTROLLED ENTITY):

TRANSFER OF BUSINESSES:

Name

(a)

Country of Incorporation

Percentage Holding

(a)

ACI Godrej Agrovet Private Limited

Bangladesh

THIS YEAR

PREVIOUS YEAR

50%

ACI Godrej Agrovet Private Limited has its operations in the fields of Animal Feed, Poultry businesses etc.

Interest in Assets, Liablities, Income and Expense with respect of jointly controlled entity

(b)

Assets Liablities Income Expense

Al Rahaba Trading International LLC

Abu Dhabi

Rs.

32,134 32,134 281,303 557,315

2,135 2,135 81,500 107,830

70%

The company has a 45% share in the Equity capital of Al Rahaba International LLC but a 70% share in the profits and in future investments.

Al Rahaba Trading International LLC is in the Poultry business

Interest in Assets, Liablities, Income and Expense with respect of jointly controlled entity

Assets Liablities Income Expense Godrej Gold Coin Aquafeed Limited India (c)

Rs. 30,428 30,428 111,657 127,821 49%

The Company is in the Aqua Feed business.

Interest in Assets, Liablities, Income and Expense with respect of jointly controlled entity

Assets Liablities Income Expense

(d)

Godrej Gokarna Oil Palm Limited

India

Rs. 268,238 268,238 156,136 191,962

Rs. 210,712 210,712 40,958 54,894

46%

The Company is in the Oil Palm business.

Interest in Assets, Liablities, Income and Expense with respect of jointly controlled entity

Assets Liablities Income Expense

Rs. 65,029 65,029 20,467 19,958

Rs. 500 500 32

THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000

96 659 9,100 3,381 947 40,332 -

4,909 4,909 36,477 36,477 83,134 83,134 -

(c)

Effective 1st April 2007, the Company, with the approval of its share holders under Sec 391 & 394 of the Company’s Act 1956, and subsequently sanctioned by the Hon. High Court of Mumbai on 28-09-2007, has de-merged its Oil Palm Business in the states / Territories of Karnataka & Goa into the resultant Company, namely Godrej Gokarna Oil Palm Limited (GGOPL), for a consideration of Rs.113,116 thousands. Pursuant to the same the following assets & liabilties were transferred to GGOPL. Rs. '000 34,646 7,629 3,967 535 (979) 45,798

Effective 15th March 2008, the Company, has transferred its retail (Aadhar) business to Aadhar Retailing Limited (ARL) for a total consideration of Rs.800,000 thousands. Pursuant to the same the following assets & liabilties were transferred to ARL.

Fixed Assets Capital Work in Progress Inventories Other Current Assets Total

Rs. '000 189,202 4,529 223,148 16,918 433,797

CURRENT LIABILITIES:

Under the Micro, Small & Medium Enterprises Development Act 2006, which came into force from 2nd October 2006, certain disclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

DEFERRED TAX:

The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities are :

Depreciation on Fixed Assets Provision for Impairment of Fixed Assets Provision for Doubtful Debts Carry Forward unabsorbed depreciation Others Deferred Tax Liability

THIS YEAR Rs.'000 (67,154) - 6,115 - 17,983

PREVIOUS YEAR Rs.'000 (104,837) 7,310 10,585 29,130 8,674

(43,056)

(49,139)

GRANTS / SUBSIDIES FROM GOVERNMENT:

Grants / Subsidies amounitng to Rs. 55,177 thousand (Previous year Rs. 50,297 thousand) related to revenue are credited to the profit and loss statement or are deducted in reporting the related expense.

THIS YEAR PREVIOUS YEAR Unit Quantity Value Quantity Value Rs. '000 Rs. '000 14 SALES TURNOVER: MT

467,179 4,366,514

Animal Feeds

Agro Inputs

Integrated Poultry Business

- 1,901,277

- 1,169,952

Oil Palm Plantation

462,256

Retail Segment

874,197

485,306

Others TOTAL

- 174,443 - 178,277 8,128,846 6,823,658

Note: Sales Turnover includes sale of items processed by third parties, and items purchased by the Company for resale.

Rs. '000 113,494 5,319 34,261 17 34,069 3,940 (43,759) 147,341

Fixed Assets Inventories Sundry Debtors Other Current Assets Total Liabilities Total

23,939 40,393

(b)

CURRENT ASSETS, LOANS AND ADVANCES:

(a) Sundry Debtors include due from Companies under the same management (i) Godrej & Boyce Mfg Co. Ltd. 3 (ii) Godrej Industries Limited 284 (iii) Godrej Hi Care Limited 13 (iv) Goldmohur Foods and Feeds Limited - (v) Godrej Consumer Products Limited 28 (vi) ACI Godrej Agrovet Private Limited - (vii) Al Rahba International Trading LLC - (viii) Godrej Gold Coin Aqua feed Limited - (ix) Godrej Properties Limited 42 (x) Godrej Hershey Limited 43 (xi) Godrej Sara Lee Limited 5 (b) Loans and Advances include due from Companies under the same management (i) Golden Feed Products Limited 24,460 Maximum balance during the year 24,460 (ii) Krithika Agro Farm Chemicals and Engineering Industries Private Limited 4,171 Maximum balance during the year 4,909 (iii) Al Rahba International Trading Limited Liablity Company 37,575 Maximum balance during the year 37,575 (iv) ACI Godrej Agrovet Limited 4,328 Maximum balance during the year 4,328 (v) Godrej Gold Coin Aquafeed Limited 47,882 Maximum balance during the year 47,882 (vi) Aadhaar Retailing Limited 502,752 Maximum balance during the year 502,752 (vii) Cauvery Palm Oil Limited 5,000 Maximum balance during the year 5,000

Pursuant to the same the following assets & liabilties were transferred to GOPL.

Fixed Assets Capital Work in progress Inventories Investments Sundry Debtors Other Current Assets Total Liabilities Total

Rs. 33,134 33,134 121,585 139,187 49%

Effective 1st April 2007, the Company, with the approval of its share holders under Sec 391 & 394 of the Company’s Act 1956, and subsequently sanctioned by the Hon. High Court of Mumbai on 28-09-2007, has de-merged its Oil Palm Business in the states of Andhra Pradesh, Gujarat, Mizoram & Orissa into the resultant Company, namely Godrej Oil Plantations Limited (GOPL), for a consideration of Rs.497,494 thousands.

812,415

452,873 3,897,585 -

630,282

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008 THIS YEAR PREVIOUS YEAR Unit Quantity Value Quantity Value Rs. ‘000 Rs. ‘000 15 FINISHED GOODS INVENTORIES: Animal Feeds MT 6,667 53,312 8,291 68,170 (8,291) (68,170) (7,258) (62,699) Agri Inputs Synthetic pesticides KL 77 18,595 184 24,178 (184) (24,178) (168) (35,848) Natural pesticides MT 5 692 3 458 (3) (458) (4) (480) Processed Chicken 37,559 18,707 (18,707) (40,360) Retail Segment 17,822 158,998 (158,998) NA Others 67,528 48,341 (48,341) (62,606)

TOTAL

195,508 318,852

(318,852) (201,993)

(a)

COMPUTATION OF PROFIT FOR THE PURPOSE OF MANAGERIAL REMUNERATION:

Profit after tax as per Profit and Loss account

382,193

27,502

Add : Depreciation as per accounts Managerial Remuneration , including Directors sitting fees Provision for Doubtful Debts / Advances Provision for Tax (including Deffered tax) (Loss) / Profit on sale of Fixed assets (net)

112,941 9,185 6,962 0 5,484

58,223 6,714 18,751 9,764 2,336

129,089

(137,024)

112,941 - 282,563

79,582 230,475 -

Less : Depreciation as per section 350 of the Companies Act, 1956 Less : Profit on transfer of business Less : Profit on sale of Investments

395,504

77,246

Net (Loss) / Profit for the purpose of Directors remuneration

115,777

(186,768)

5% thereof

MAXIMUM REMUNERATION PERMISSIBLE UNDER THE ACT (computed on the basis of inadequacy of profits)

4,200

3,600

7,244

Note : Figures in bracket pertain to the Previous Year

Amount pending approval by Central Government

PURCHASES FOR RESALE:

(b)

Animal Feeds MT 18,865 Agri Inputs Plant Growth Promoter Spray KL 418 Granules MT 5,609 Synthetic pesticides KL 1,325 Retail Segment Others

165,487

3,256

43,231 467 94,221 5,376 166,839 1,114 859,459 275,960

70,290 37,183 80,994 129,848 614,753 153,238

TOTAL 1,605,197 1,086,306

RAW MATERIALS CONSUMED:

Cakes & Brans

168,805

1,218,156

135,397

Extractions

245,095

1,833,548

243,991 1,469,241

Others

842,107

TOTAL 4,953,166 4,270,914 DISCLOSURE IN RESPECT OF LEASES:

The Company’s leasing arrangements are in respect of operating leases for premises occupied by the Company. These leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually acceptable terms.

The total of future minimum lease payments under non - cancelable operating leases for each of the following periods :

Salaries

8,418

6,144

Contribution to Provident fund

429

356

Estimated monetary value of perquisites

237

214

9,084

6,714

Directors’ Sitting Fees

101

144

9,185

6,858

Note: (a)

All the above items have been included under respective heads under “Expenses” in Schedule 13

(b)

Performance linked variable remuneration is on the basis of provision made in the books of accounts

(c)

The remuneration paid to the Managing Director is in excess of the remuneration prescribed under Section 198 read with Schedule XIII to theCompanies Act, 1956 by Rs. 4,884 thousands (previous year Rs. 3,114 thousand). The company has made an application for the necessary approval from the Central Government for the remuneration in excess of the prescribed limits.

COMMON EXPENSES SHARED BY THE COMPANIES :

Expenses (Schedule 13) include Rs 20,570 thousand (Previous Year Rs 21,006 thousand) charged by Godrej Industries Limited, the Holding Company.

During the year, the Company shared the services of some of it’s employees and facilities with its subsidairy Company. Consequently the value of share of costs attributable to that Company calculated in accordance with the service agreement has been recovered, amounting to Rs 26,400 thousands (Previous year Rs 26,400 thousands).

THIS YEAR PREVIOUS YEAR Rs. '000 Rs. '000

MANAGERIAL REMUNERATION

1,901,462 1,959,566

THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000

Not later than one year

2,405

53,328

ii.

Later than one year and not later than five years

5,498

196,165

AUDITORS’ REMUNERATION: Audit fees

1,292

1,122

iii.

Later than five years

280,632

Audit under Other Statutes

500

337

Lease payments recognised in the statement of Profit & Loss for the period :

Tax representation before Authorities

475

411

Management Consultancy

335

Certification

140

Reimbursement of Expenses

243

TOTAL

2,985

2,130

VALUE OF IMPORTS ON CIF BASIS:

(INCLUDES DIRECT IMPORTS ONLY )

Raw Materials

61,142

86,002

Spares

1,927

2,802

Capital Goods

9,030

33,759

72,099

122,563

Minimum lease payments

100,439

41,728

LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION:

Item

a) Animal Feeds b) Processed Chicken c) Palm Oil

d) Tissue Culture Plants

For the year Ended MT 31.3.2008 31.3.2007 31.3.2008 31.3.2007 31.3.2008 31.3.2007

Capacity Per Annum Actual Third Party Production Production Registered Installed MT MT MT MT Not Applicable 268,600 145,356 386,720 Not Applicable 294,600 154,777 362,157 Not Applicable 16,876 15,685 Not Applicable 17,536 12,694 Not Applicable Not Applicable 14,850 8,806 Million Plants Million Plants Million Plants 31.3.2008 4.25 5 3 31.3.2007 4.25 5 5 -

e) Agri Inputs (i) Plant Growth Promoter Liquids (ii) Plant Growth Regulator Granules

31.3.2008 31.3.2007 31.3.2008 31.3.2007

500 KL 500 KL 5000 MT 5000 MT

497KL 465KL 4077MT 2729MT

51KL -

EXPENDITURE IN FOREIGN CURRENCY:

Travelling Expenses

4,030

5,887

Others

12,042

17,578

16,072

23,465

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008 THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000

EARNINGS IN FOREIGN EXCHANGE: F.O.B value of goods exported

Others

2,374

8,223

13,867

8,223

VALUE OF CONSUMPTION OF RAW MATERIALS, SPARES & TOOLS: (INCLUDING CAPITALIZED ITEMS ) THIS YEAR

Rs.’000

11,493

PREVIOUS YEAR

Rs.’000

RAW MATERIALS :

Imported items (including duty content)

39,795

75,080

Indigenous

4,913,371

4,195,834

4,953,166

100

4,270,914

100

741

TOTAL

SPARES & TOOLS :

Imported items

Indigenous

69,420

100

65,698

TOTAL

69,420

100

66,439

100

EMPLOYEE BENEFITS:

Defined Contribution Plans: Contribution to Defined Contribution Plan, recognised as expense for the year are as under:

Employers’ Contribution to Provident Fund

Defined Benefit Plans:

II.

Rs. '000

Contribution to Gratuity Fund

The Company makes annual contributions to the Employees’ Group Gratuity-cumLife Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on superannuation, death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company’s policy whichever is beneficial to the employees.

The following table sets out the funded status of the gratuity plan and the amounts recognised in the Company’s financial statements as at 31 March 2008:

Change in present value of obligation

Present value of obligation as at 1st April 2007 Interest Cost Service Cost 3,571 Benefits Paid Actuarial (gain)/loss on obligation

Present value of obligation, as at 31st March 2008

Change in plan assets

Fair value of plan assets as at 1st April 2007 Expected return on plan assets Contributions Benefits paid Actuarial gain/(loss) on plan assets

Fair value of plan assets as at 31st March 2008

Amount recognised in the Balance Sheet

Present value of obligation, as at 31st March 2008 Fair value of plan assets as at 31st March 2008

Rs. '000 34,568 2,765 (12,398) 8,661 37,167

Rs. '000 40,876 3,270 (12,398) (3,208) 28,539 35,486 (28,539) 6,946

Net obligation as at 31st March 2008

Net gratuity cost for the year ended 31st March 2008

Current Service Cost Interest Cost Expected return on plan assets Net Actuarial (gain)/loss to be recognised

3,571 2,765 (3,270) 11,869

Net gratuity cost

14,936

Assumptions used in accounting for the gratuity plan

Discount Rate Salary escalation rate Expected rate of return on plan assets

8 5 8

The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets.

Research & Development Expenditure of revenue nature charged to the Profit and Loss Account amounts to Rs.13,067 thousand (previous year Rs.10,078 thousand).

The amount of exchange difference included in the Profit and Loss Account, under the related heads of expenses / income, is Rs. 1,735 thousand (Previous year expense Rs.1,735 thousand). The amount of exchange difference in respect of forward exchange contracts to be recognised in the profit and loss account of subsequent accounting periods Rs. Nil (previous year Rs. nil thousand).

18,905

30 EARNINGS PER SHARE:

Profit/(Loss) after tax before extraordinary income Profit/(Loss) after tax and extraordinary income Weighted average number of equity shares outstanding EPS before extraordinary items Basic earnings per share (Rs.) Diluted earnings per share(Rs.) EPS after extraordinary items Basic earnings per share (Rs.) Diluted earnings per share(Rs.) Nominal value of shares (Rs.)

THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000 (396,651) 382,193 10,752,632

(202,973) 27,502 7,618,752

(36.89) (36.89)

(26.64) (26.64)

35.54 35.54 10.00

3.61 3.61 10.00

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008 31 SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH 2008 (i) Information about Primary business Segments Animal Revenue

Rs. '000 Agri

Aadhaar Nature’s

Retail Integrated

Other

Basket

Poultry

Business

Feeds

Unallocated

Total

For the year ended31st March, 2007 Animal

Agri

Retail Integrated

Oil

Other

Poultry

Palm

Business

Feeds

Business

Total Sales

(A)

(B)

(C)

4,444,252

839,271

736,428

Less : Inter-segment

(D) (E = (C+D) 138,554

4,366,514

820,638

736,428

Total

Business Plantations

(F)

(H)

(I) (I)+(A+B+E+F+G+H+I)

874,982 1,901,277

165,434

8,225,216

4,045,553

637,267

485,306 1,184,197

463,996

179,341

(96,371)

(147,968)

(6,985)

(14,246)

(1,740)

(1,063)

(172,002)

630,282

485,306 1,169,952

462,256

178,278

6,823,658

126,717

11,216

79,768

(77,738) (18,633)

External Sales

Unallocated

138,554

874,982 1,901,277

165,434

8,128,846

3,897,585

96,217 (314,410) (87,773)

(402,183) (111,283)

2,594

(365,989)

126,172

6,995,660

Result Segment Result

48,666

111,698 (207,198)

(88,837)

Unallocated expenditure net of unallocated income

(124,312)

(201,118)

Interest expenses

(224,486)

(124,227)

33,309

12,327

289,243

40,041

(26,245)

(392,234)

(272,977)

37,266

9,764

Interest Income Dividend Income and Profit on sale of Investments Profit before taxation and exceptional items

48,666

96,217 (314,410) (87,773)

(402,183) (111,283)

2,594

Provision for taxation

356,647

111,698 (207,198)

(88,837)

126,717

11,216

9,217

Profit after taxation and before exceptional items

48,666

96,217 (314,410) (87,773)

(402,183) (111,283)

2,594

Exceptional Items

(26,245)

(401,451)

783,644

356,647

757,399

382,193

356,647

111,698 (207,198)

(88,837)

126,717

11,216

(282,741)

27,502

230,475

Prior years adjustments Profit after taxation and exceptional items

48,666

96,217 (314,410) (87,773)

(402,183) (111,283)

2,594

111,698 (207,198)

(88,837)

126,717

11,216

(52,266)

257,977

Other Information Segment assets

925,881

505,544

81,156

969,975

40,027 3,304,786

5,827,370

1,041,358

374,885

321,226

924,150

256,265

27,086 1,171,960

4,116,929

Segment liabilities

774,434

80,604

19,645

233,969

13,619 2,494,778

3,617,050

893,661

56,049

14,480

254,561

43,955

5,258 2,006,660

3,274,623

Capital expenditure

37,627

2,440

117,692

39,042

156,733

103,258

504

16,502

317,064

20,683

29,330

101,622

96,442

49,616

859

31,101

329,654

Depreciation

18,783

2,211

25,507

10,705

36,212

38,354

1,429

15,952

112,941

13,871

(10)

9,356

21,256

9,986

1,531

2,233

58,223

India

Outside India

Total

India

Outside India

Total

8,216,993

8,223

8,225,216

6,981,794

13,866

6,995,660

(96,371)

(172,002)

8,128,846

6,809,792

Non-cash expenses other than depreciation (ii) Information about Secondary business Segments Rs.’000 Revenue by geographical segment Total Sales Less : Inter-segment

(96,371)

(172,002)

External Sales

8,120,622

Carrying amount of segment assets

5,827,370

4,250,400

317,064

329,654

Additions to fixed assets

8,223

Rs.’000

32. Information required under Schedule VI to the Companies Act, 1956 have been given to the extent applicable.

(iii) Notes

(i)

The company is organized into four main business segments,namely

(a)

Animal Feeds - comprising of compound feed for cattle, poultry, aqua etc.

(b)

Agri-business - comprising of plant growth promoters, pesticides etc.

(c)

Retail - comprises of Nature’s Basket. Aadhaar Retailing has been sold off.

(d)

Integrated Poultry business

(e)

Oil Palm Plantation business- hived off under the scheme of demerger.

Segments have been identified and reported taking into account, the nature of products and services, the differing risks a

nd returns, the organisation structure, and the internal financing reporting systems.

(ii)

The Segment revenue in each of the above business segments consists of sales (net of returns, sales tax, rebates etc.)

(iii) The Segment revenue in the geographical segments considered for disclosure are as follows :

(a)

Revenue within India includes sales to customers located within India

(b)

Revenue outside India includes sales to customers located outside India

Segment Revenue,Results,Assets and liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis

(iv)

RELATED PARTY DISCLOSURES: Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below “ 1.

Relationships :

(i)

Holding Companies: Godrej Industries Limited (GIL) holds 70.29% ( Previous year 57.69%)in the Company. GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the ultimate Holding Company.

13,866

6,823,658

(ii)

Subsidiary Companies: Goldmohur Foods and Feeds Limited Golden Feed Products Limited Cauvery Palm Oil Ltd (From 1.02.08) Godrej Oil Plantations Ltd (formely Godrej Aquafeed Ltd) Aadhar Retailing Limited (Upto 27.03.08) Godrej Gokarna Oil Palm Ltd (Upto 25.02.08) (formely Godrej Oil Palm Ltd)

(iii)

Fellow Subsidaries: Godrej Consumer Products Limited Godrej Infotech Limited Godrej Hershey Limited Godrej Sara Lee Limited Godrej Properties Limited Godrej Hicare Limited Ensemble Holdings & Finance Limited

(iv)

Joint Ventures: ACI Godrej Agrovet Private Limited Al Rahaba Trading International LLC Godrej Goldcoin Aquafeed Limited Godrej Gokarna Oil Palm Ltd (from 26.02.08) (formely Godrej Oil Palm Ltd)

(v)

Associates: Creamline Dairy Products Limited Polchem Hygiene Laboratories Private Limited Aadhar Retailing Limited (From 28.03.08)

Other related parties where persons mentioned in (viii) below exercise significant influence: Bahar Agrochem & Feeds Private Limited

(vi)

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008

Avestha Gengraine Technologies Pvt Ltd Krithika Agro Farm Chemicals and Engineering Industries Private Limited

(vii)

Key management personnel: Dr.S.L.Anaokar Mr.C.K.Vaidya Mr.B.S.Yadav

(i)

13 Expenses charged to other companies

Details relating to parties referred to in items 1(i), (ii), (iii), (iv),(v) and (vi) above

14 Expenses charged by other companies

Rs. '000 Holding Subsidiaries Fellow Joint Companies Subsidiaries Ventures (i) 1,000,000

3 Purchase / Transfer of fixed assets 4 Sales / Transfer of fixed Assets 5 Sale of Business / Investments 6 Investment in share capital 7 Advances given during the year 8 Intercorporate deposits placed during the year 9 Intercorporate deposits taken during the year 10 Sale of materials / finished goods

(ii)

(iii)

Associates

(iv)

Other related Parties

(v)

15 Interest income on loan given 16 Interest expense on intercorporate deposits taken

(vi)

300,000 -

(i) 1,778 -

12 Purchase of materials / finished goods

The following transactions were carried out with the related parties in the ordinary course of business :

2 Share application money

Holding Subsidiaries Fellow Joint Companies Subsidiaries Ventures

11 Sundry deposits placed

1 Issue of share capital (incl. Premium)

Rs. '000

Nature of Transactions

(viii) Individuals exercising control or significant influence (and their relatives): Mr. A.B. Godrej Mr. N.B. Godrej

Nature of Transactions

2.(1) Contd..

3,925 -

561

1,582 -

16 Intercorporate deposits written off -

5,696 -

39,576 80 1,410,610

1,056,111

18,648

5,000

6,743 47,100

396,425

83,134 -

4,240 -

110,700

30,000

160,000 345,000 59

291,142

17 Dividend Income 18 Dividend Paid 19 Sunday Income 20 Outstanding receivables, net of (payables) 21 Guarantees issued in favour of

705

(ii) Details relating to persons referred to in items 1 (vii) & (viii) above 1 Remuneration 2 Dividend paid 4 Outstanding loans receivable 3 Sale of investments

1,771

(iv) 19,697

336,335

2,193

48,540

16,575

200,065

1,044

213,889 36,142

169

26,168

12,843 5

134,432 69

20,608

26,412 31,449

441

701 1,236

21,159

2,224 -

2,366 -

7,798 50

3,055

1,846 -

755 -

22 Gurantees Outstanding

Other related Parties

(ii) 238,144

2,209 9,113 72,799 (1,057)

(iii)

Associates

34,006 230,475 (423,720)

(7,790) 3,000

401

3 7 27 131

89,043

9,084 586

6,714 10,381

10,300

230

397,624

6,978

527

4,909

6,680 6,031

43,714 20,963

PREVIOUS YEAR

(vi) -

603,000 600,000 THIS YEAR

(v)

109,839 88,875

Significant Related Party Transactions : Nature of Transactions 1

Issue of share capital (incl. Premium)

Share application money

Purchase / Transfer of fixed assets

Holding Companies (i)

Amount

Godrej Industries Ltd

1,000,000

Subsidiaries

Amount

(ii)

Fellow Subsidiaries (iii)

Amount

300,000 Aadhaar Retailing Limited Godrej Industries Ltd

163

Goldmohur Foods & Feeds Ltd

398

Godrej Aquafeed Limited

Godrej Oil Plantations Limited

Godrej & Boyce Mfg. Co. Ltd

3,925 5,696 39,576

Sale of Business / Investment

Godrej Industries Ltd -

Aadhar Retailing Ltd Godrej Gokarna Oil

497,494 800,000 113,116

Palm Limited 5

Investment in share capital Godrej Gokarna Oil Palm Limited Godrej Oil Plantations Limited Aadhaar Retailing Limited

Advances given during the year

Cauvery Oil Palm Limited Aadhaar Retailing Limited

7 8

Intercorporate deposits taken during the year Sale of materials / finished goods / debtors

Godrej Industries Ltd

160,000

Godrej Industries Ltd

345,000 59

133,042 497,494 425,575 5,000 83,134 Ensemble Holdings & Finance Limited

30,000 -

Goldmohur Foods & Feeds Ltd

282,071

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008 3.

Significant Related Party Transactions (continued) : Nature of Transactions

Holding Companies (i)

Amount

Subsidiaries

Godrej Oil Plantations Limited 9

Purchase of materials / finished goods

Godrej Industries Ltd

Goldmohur Foods & Feeds Ltd Golden Feed Products Limited

10 Expenses charged to other companies

Amount

(ii)

Godrej & Boyce Mfg. Co. Ltd

760 -

Goldmohur Foods & Feeds Ltd

Godrej Industries Ltd

284 -

Aadhar Retailing Ltd

162,653 9,071 72,934 336,307 202,245 28 26,400 26,400

Fellow Subsidiaries (iii)

Amount

Godrej Consumer Products Limited

2,173

Godrej Hershey Ltd

Godrej Consumer Products Ltd.

28 43 51 42 5 377 1,225 64 401

Godrej Hershey Ltd

Golden Feed Products Limited

9,088 654 -

Godrej Hi Care Ltd Godrej Properties Ltd Godrej Sara Lee Ltd

11 Expenses charged by other companies

12 Interest expense on intercorporate deposits taken 13 Dividend Income 14 Dividend paid 15 Outstanding receivables, net of (payables)

Godrej Industries Ltd Godrej & Boyce Mfg. Co. Ltd Godrej Industries Ltd

20,570 21,006 38 3,055

Godrej Industries Ltd

9,113

Godrej Industries Ltd Godrej & Boyce Mfg. Co. Ltd

72,799 (1,060) 659 3 96

Goldmohur Foods & Feeds Ltd Aadhaar Retailing Ltd.

21,149 10,300

Goldmohur Foods & Feeds Ltd

34,006

Godrej Consumer Products Ltd. Godrej Hi Care Ltd Ensemble Holdings & Finance Limited Ensemble Holdings & Finance Limited

Goldmohur Foods & Feeds Ltd Golden Feeds Products Limited Godrej Oil Plantations Limited Cauvery Palm Oil Ltd

(343,759) 9,100 24,460 23,939 (109,421) (16,891) 5,000 -

Godrej Hi Care Ltd Godrej Properties Ltd Godrej Sara Lee Ltd Godrej Consumer Products Ltd. Godrej Hershey Ltd

16 Sundry Income 17 Guarantees issued in favour of

Godrej Oil Plantations Limited Godrej Oil Plantations Limited

18 Gurantees Outstanding

Goldmohur Foods & Feeds Ltd Godrej Oil Plantations Limited

Investment in share capital

ACI Godrej Agrovet Private Limited Godrej Goldcoin Aquafeed Limtited

Advances given during the year

Intercorporate deposits taken during the year

Intercorporate Deposit placed during the year

Sale of materials / finished goods

Al Rahaba Trading International LLC Godrej Goldcoin Aquafeed Limtited

7 27 13 42 5 28 43 -

230,475 3,000 600,000 3,000 -

18,087 6,743 561 4,240

Aadhar Retailing Ltd

396,425

Aadhar Retailing Ltd

110,700 1,771

Kritika Agro Farm Chemical & Engineering Industries Pvt. Limited

705

47,100 -

Purchase of materials / finished goods

Expenses charged to other companies

Godrej Goldcoin Aquafeed Limtited Godrej Goldcoin Aquafeed Limtited Al Rahaba Trading International LLC Godrej Goldcoin Aquafeed Limtited

ACI Godrej Agrovet Private Limited 8

Expenses charged by other companies

Godrej Goldcoin Aquafeed Limtited ACI Godrej Agrovet Private Limited Al Rahaba Trading International LLC

19,697 48,540 197 701 25,025 946

Polchem Hygiene Laboratories Pvt. Limited Polchem Hygiene Laboratories Pvt. Limited Polchem Hygiene Laboratories Pvt. Limited

16,575 Bahar Agrochem & Feeds Private Limited 12,843 5 Bahar Agrochem & Feeds Private Limited Kritika Agro Farm Chemical & Engineering Industries Pvt. Limited

200,065 134,432 37 32 -

1,217 6,725 1,073 19

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008 3.

Significant Related Party Transactions (continued) : Nature of Transactions 9

Interest Income on Loans given

Holding Companies (i)

Amount

Godrej Goldcoin Aquafeed Limtited

Subsidiaries Aadhar Retailing Ltd

Dividend Income

Outstanding receivable s, net of payables

ACI Godrej Agrovet Private Limited

Al Rahaba Trading International LLC Godrej Goldcoin Aqufeed Limited Godrej Gokarna Oil Palm Limited 12

Guarantees issued in favour of Godrej Gokarna Oil Palm Limited ACI Godrej Agrovet Private Limited

Gurantees Outstanding

Al Rahaba Trading International LLC ACI Godrej Agrovet Private Limited

4,328

Polchem Hygiene Laboratories Pvt. Limited Polchem Hygiene Laboratories Pvt. Limited

3,381 37,575

Aadhar Retailing Ltd

Kritika Agro Farm Chemical & Engineering Industries Pvt. Limited

4,171

527 399,552 Bahar Agrochem & Feeds Private Limited 83,134

4,909 2,807 -

3,200 -

INFORMATION REQUIRED TO BE FURNISHED UNDER PART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956: Registration Details Registration No. State Code Balance Sheet Date

16655 11 31/3/2008

ii) Capital raised during the year Public Issue Rights Issue Bonus Issue Private Placement

(Rupees ‘000) Nil Nil Nil 20,000

Position of mobilisation and deployment of funds

Total Liabilities Total Assets Sources of Funds Paid-up Capital Reserves & Surplus Secured Loans Unsecured Loans Application of Funds Net Fixed Assets Investments Net Current Assets Misc. Expenditure Accumulated Losses

(Rupees ‘000) 5,827,370 5,827,370

iv)

Performance of Company Turnover Total Expenditure Profit before tax before extraordinary income Profit before tax after extraordinary income Profit after tax Earning Per Share before extraordinary Earning Per Share after extraordinary Dividend rate

(Rupees ‘000) 8,128,846 8,870,343 (392,234) 382,193 382,193 (36.89) 35.54 10.00%

Generic Names of three principal products services of Company Item Code No. Product Description

23099010 Animal Feeds

121,188 2,089,132 559,567 1,152,999 978,128 1,275,515 1,712,299 Nil

STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956.

230

47,057

Figures of the previous year have been regrouped & re-classified wherever necessary to conform to the current year’s classification.

1. Name of the Subsidiary

Kritika Agro Farm Chemical & Engineering Industries Pvt. Limited

59,582

iii)

10,300

3,200 17,763

Amount

(1,928)

37,424 47,882 40,332 (742)

Godrej Gokarna Oil Palm Limited

Fellow Subsidiaries (iii)

6,680 4,782 703 -

Creamline dairy Products Limited Creamline Nutrients Limited

Amount

(ii)

Goldmohur Golden Feed Cauvery Palm Foods and Feeds Products Ltd. Oil Ltd. Ltd.

Godrej Oil Plantations Ltd .

2. Date on which it became a Subsidiary 3. Financial Year ending

January 1, 2001

July 14,2003

March 1, 2008 August 18, 2006

March 31, 2008 March 31, 2008 March 31, 2008 March 31, 2008

4. The Company’s interest in the Subsidiary as on 31.3.2007 a) Number of fully paid Equity Shares held

b) Face Value

c) Extent of holding

5. Net aggregate Profit/(Loss)of the subsidiary Company

1,838,170

50,000

1,938,000

56,400

Rs. 10

Rs. 73.18

Rs. 10

100%

80%

(Rs.’000)

so far as it concerns the members of the Company :-

A) For the Financial Year ended on March 31, 2008 : i) Not dealt with in the Books of Account of the Company

18,519

ii) Dealt with in the Books of Account of the Company

47,500

40,590

81,801

B) For the subsidiary company’s previous Financial Years since it became a subsidiary i) ii)

Not dealt with in the Books of Account of the Company Dealt with in the Books of Account of the Company

V.V. CHAUBAL N.B. GODREJ Company Secretary Chairman Mumbai, May 21, 2008

B.S.YADAV Executive Director & President

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON March 31, 2008 CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008 THIS YEAR Rs. ('000s)

Rs. ('000s)

THIS YEAR

PREVIOUS YEAR Rs. ('000s)

Rs. ('000s)

391,410

Net Profit Before Taxes(after extraordinary income)

37,266

Proceeds from issue of capital Repayment of Borrowings

Adjustment for:

Proceeds from Borrowings

Depreciation Loss on sale of fixed assets

112,941

58,223

5,484

2,336

Extraordinary Income: Profit on transfer of business

(366,203)

Profit on Demerger

(417,441)

(230,475) -

300,000

(30,316)

(116,889)

308,400

150,000

Increase/(Decrease) in Cash Credit/WCDL

(243,302)

343,210

Interest Paid

(225,935)

(124,227)

Dividend Paid

Dividend Tax Paid

Net Cash used in Financing Activities

(230,475)

Dividend income

(6,680)

(40,041)

Net increase in Cash and Cash equivalents

Interest income

(33,309)

(12,327)

Cash and Cash equivalents (Opening balance)

92,271

Interest expenses

225,935

124,227

Less : Transfer on Demerger / Sale of Business

2,074

6,962

11,190

(282,563)

Operating Profit Before Working Capital Changes

Debtors and Other Receivables Creditors and Other Payables

(754,875)

(49,602)

(363,465)

(60,792)

108,975

(513,811)

(1,198,743)

(241,167)

339,297

195,486

Cash Generated from Operations Direct Taxes paid (net of refund received) Net Cash Flow from Operating Activities

(750,470)

(559,492)

(1,113,935)

(609,095)

(52,850)

(35,196)

(1,166,785)

(644,291)

Proceeds from sale of fixed assets

(321,593)

(329,653)

5,912

4,015

Intercorporate Deposits Given

(115,700)

Purchase of Investments

(185,946)

(188,269)

753,163

180,076

Proceeds from sale of investments in Subsidiaries Proceeds from sale of investments Interest Received

18,030

Dividend Received

6,680

Net Cash used in Investing Activities before extraordinary item

(17,672) 808,847

408,422

177,110

(175,141) 267,412

90,197 267,308

92,271

1 The Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting Standard (AS) 3 on “CashFlow Statements”, and presents cash flows by operating, investing and financing activities. 2 Figures in brackets are outflows/deductions. 3 Proceeds from transfer of business/ demerger is for a total consideration of Rs. 1,410,610 thousands for the three business. Out of the total consideration Rs. 374,424 thousands has been received in cash and the balance by way of allotment of equity shares in demerged / transfer of business companies. 4 Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s classification.

For and on behalf of

B. Cash Flow from Investing Activities : Acquisition of fixed assets

Cash and Cash equivalents (Closing balance)

(126,002)

NOTES:

Adjustments for: Inventories

Rs. ('000s)

1,000,000

(783,645)

Profit on sales on investments

Rs. ('000s)

C. Cash Flow from Financing Activities :

A. Cash Flow from Operating Activities :

Provision for Doubtful Debts and Advances

PREVIOUS YEAR

For and on behalf of the Board

KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS E.K.IRANI N.B.GODREJ Partner Chairman

B S. YADAV Executive Director & President

V.V.Chaubal Company Secretary

Membership no. 35646 Mumbai, May 21, 2008

12,294 40,041 160,625

(281,495)

Proceeds from transfer of business/demerger (note 3)

374,424

342,223

Net Cash used in Investing Activities after extraordinary item

535,049

60,728

Proceeds from Extraordinary Items;

BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2008 TO THE SHAREHOLDERS Your Directors have pleasure in submitting their Report along with the audited Accounts for the financial year ended on 31st March, 2008. INCORPORATION AND SHARE CAPITAL Your Company was incorporated on August 18, 2006 with an Authorized Capital of Rs.5,00,000. The Company obtained the Certificate of Commencement of Business on September 13, 2006. During the year the share capital was increased by Rs.2,05,000 pursuant to the scheme of demerger without payment being received in cash. After the restructuring Godrej Agrovet Limited (GAVL) and its nominees holds 80% of share capital and the balance 20% was transferred to Blessed Resources Pte. Limited of Singapore which is a strategic investor in the Company. CHANGE IN NAME AND BUSINESS Your Company Godrej Aquafeed Limited has been renamed as Godrej Oil Plantations Limited during the year and thereafter, the Oil Palm Business and Jatropha Plantation carried on by GAVL with all the assets and liabilities in the States of Andhra Pradesh, Orissa, Mizoram and Gujrat has been demereged from GAVL and has been transferred to Godrej Oil Plantations Limited The effective date of business transfer as per the court order was April 1, 2007. The principal activity of the Company henceforth will be to carry on the business of planters, agriculturists, agrobiologists, horticulturists, growers, cultivators, millers, crushers, expellers, solvent-extractors, seed researchers, manufacturer, refiners, processors, dealers, traders, sellers, buyers, exporters, importers, distributors, stockiest, agents, managers of plantations or estates or lands or nurseries and suppliers of seeds of all varieties including Medicinal and Aromatic Plants and all kinds of oil seeds such as but not limited to oil palm, coconuts, sunflower, rapeseeds, mustard, soybean, groundnut, safflower, cotton and all materials containing edible / non edible / industrial oils (including palm kernels) oil cakes of all varieties, rice bran and of all varieties of edible / non edible / industrial oils, their derivatives, substitutes and of all upstream products and of all down stream products including oleo chemicals, fatty acids, fatty chemicals, de-oiled meal for human consumption and to produce, process, extract, distil, purchase, import, export, sell, trade and deal in all types of oils, oil seeds and seedlings capable of usage in food, cosmetics, healthcare, bio fuel, other consumer and industrial industries. FINANCIAL RESULTS Your Company’s performance during the year as compared with that during the previous year is summarised below: Total Income Profit Before Taxation (PBT) Less : Provision for Taxation Profit After Taxation (PAT) Balance brought forward from previous year Total Balance Carried Forward to Balance Sheet

For the year ended 31/3/2008 Rs.lac

For the year ended 31/3/2007 Rs. lac

5737.87 1547.35 663.42 883.93 (15.57) 868.36 868.36

277.50 (15.23) 0.34 (15.57) (15.57) (15.57)

DIVIDEND-The Directors do not recommend any dividend for the year 2007-08. FIXED DEPOSITS-The Company has not accepted any public deposits during the financial year under review. HOLDING COMPANY- The Company is a subsidiary of Godrej Agrovet Limited as defined under Section 4(1)(b) of the Companies Act, 1956. SUBSIDIARY COMPANIES-The Company has no subsidiary companies during the year under review. DIRECTORS- Mr. C. K. Vaidya, Mr. Subbarao A. R. and Mr. R. S. Vijan were the Directors of the Company as on the date of the last Annual General Meeting. During the year, Mr. C. K. Vaidya, Mr. Subbarao A. R. and Mr. R. S. Vijan have resigned w.e.f. 31st August 2007, 21st September 2007 and 8th May 2008 respectively. Mr. S. K. Gupta who was appointed as an Additional Director w.e.f. 21st September 2007 has also resigned w.e.f. 8th May 2008. Mr. B. S. Yadav has been appointed as an Additional Director w.e.f 31st August 2007 while Mr. N. B. Godrej (Chairman), Mr. R. R. Govindan and Mr. S.Varadaraj have been appointed as Additional Directors w.e.f. 8th May 2008. All these four Directors, namely, Mr. N. B. Godrej, Mr. B. S. Yadav, Mr. R. R. Govindan and Mr.S Varadaraj hold office upto the date

of the ensuing Annual General Meeting. They are eligible for appointment as the Directors of the Company. Notices in this respect under Section 257 of the Companies Act, 1956 have been received from one of the Members along with a deposit of Rs. 500/- (Rupees Five Hundred only) for each of them signifying the intention to propose their candidature for the office of Directors of the Company. Since all the present Directors of the Company are Additional Directors, none of them is liable to retire by rotation. AUDITORS - You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment and a certificate as required u/s 224 (1-B) of the Companies Act, 1956 has been received from them. ADDITIONAL INFORMATION -The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation. STATUTORY INFORMATION A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo The information in respect of these matters, required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report. B) Particulars of Employees - None of the employees is covered under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002. C) Directors’ Responsibility Statement Pursuant to the provisions contained in section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm:- a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same ; b) that they have selected such Accounting Policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period ; c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities ; d) that they have prepared the annual accounts on a going concern basis. HUMAN RESOURCES Your Company aims to focus on development of Human Resources. The industrial relations are cordial and the Board would like to place on record its sincere appreciation for the unstinted support from all the employees. For and on behalf of the Board of Directors B.S. Yadav N.B. Godrej Mumbai, May 20, 2008. Director Chairman ANNEXURE `A’ ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO : A. Conservation of Energy-The Company endeavors to encourage the use of energy conservation measures and undertakes a regular review of the level of energy consumption and the energy-saving systems and devices. Some of the measures adopted by your Company towards conservation of energy were as follows: Provision of limit switches for tanks for automatic on and off switching of the motors. Installation of additional capacitors. Replacement of under loaded motors with optimum loaded motors. Installation of energy saving blowers to reduce the load. Switching off unwanted motive load when not in use. Replacement of 40W tubes with slim energy efficient 36W tubes. B. Technology absorption, adaptation and innovation - Your Company constantly endeavors for technological upgradation and conducts in-house Research & Development for achieving improved quality at a lower cost. The benefits derived as a result of various measures undertaken are as follows :- Improvement in quality of products manufactured. Improvement in power factor levels and reduced load on cables. Reduction in process loss Enhancement in the life of equipment. C. Foreign Exchange earnings and outgo 2007-2008 2006-2007 Rs. lac Rs. lac I. Foreign exchange used 158.56 Nil II. Foreign exchange earned Nil Nil. For and on behalf of the Board of Directors B.S. Yadav N.B. Godrej Mumbai, May 20, 2008 Director Chairman .

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ OIL PLANTATION LIMITED (formerly Godrej Aquafeed Limited)

3. 4.

We have audited the attached Balance Sheet of Godrej Oil Plantation Limited (formerly Godrej Aquafeed Limited), as at 31st March 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph (3) above we report that: a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. b) As stated in Note 5 of Schedule 12, notes to accounts, the Company has amortised Licenses / Rights, an intangible asset for oil palm plantation business over a period of 20 years which exceeds the maximum limit of 10 years as prescribed by Accounting Standard 26 “Intangible Assets” issued by Institute of Chartered Accountants of India. The Company is of the view that the oil palm plantation business operates on a command area basis with the government allotting to various companies clearly demarcated area for the development of oil palm plantation. With this responsibility for the development for oil plantation comes the exclusive rights for the procurement of Fresh Fruit Bunches produced in the allotted area. Oil Palm Plantation has relatively long productive life of 30 years. Since the allotment right is expected to yield benefits over a long period, the amount paid towards the same

is amortised over a 20 year period. c) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of these books. The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account. e) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008; and ii) in the case of the Profit and Loss Account, of the profit for the period ended on that date. iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the period ended on that date. 5. On the basis of the written representations received from the Directors as on 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2008 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. For and on behalf of KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS ERMIN K. IRANI Place: Mumbai PARTNER Dated : May 20, 2008 Membership No. 35646

Annexure to the Auditors’ Report

Referred to in paragraph (3) of our report of even date. 1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) As explained to us, the Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the periodic verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been reported on such verification. (c) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption. 2) (a) The Management has conducted physical verification of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification. 3) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 (b) Consequently, the question of commenting on the rates of interest and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and the interest and reasonable steps for recovery of principal and interest does not arise. (c) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. (d) Consequently, the question of commenting on the rates of interest and conditions of the loans being prejudicial to the interests of the Company and payment of principal and the interest does not arise. 4) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with size of the Company and the nature of its business, for the purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed a continuing failure to correct major weakness in internal controls. 5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section. (b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time. 6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable. 7) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and the nature of its business. 8) We have broadly reviewed the books of accounts maintained by the Company pursuant to the order made by the Central Government for maintenance of cost records prescribed under section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima-facie, the prescribed accounts and records have been maintained.

100

10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21)

We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete. (a) According to the information and explanations given to us and on the basis of our examination of books of accounts, during the period, the Company has no statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues incurred during the period covered. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March 2008 for a period of more than six months from the date they became payable. (b) 2According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute. As the Company has been registered for a period less than five years the question of commenting on its accumulated losses being less than fifty percent of its net worth does not arise. The Company has not incurred cash loss during the financial year but incurred cash loss in the immediately preceding financial year. According to the information and explanations given to us and on the based on documents and records produced to us, there are no dues to banks, financial institutions or debenture holders. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies. The Company does not deal in shares, securities, debentures and other investments. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. According to the information and explanations provided to us, there are no term loans, hence the question of its application for the purposes for which they were obtained is not applicable. According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not raised funds on short term or long term basis. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. The Company has not created any security in respect of debentures issued during the year. The Company has not raised any money through a public issue during the year. Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

Place: Mumbai Dated : May 20, 2008

For and on behalf of KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS ERMIN K. IRANI PARTNER Membership No. 35646

BALANCE SHEET AS AT MARCH 31, 2008 Schedule Rs.'000 SOURCES OF FUNDS SHAREHOLDERS' FUNDS Share Capital Reserves & Surplus

1 2

705 584,125

LOAN FUNDS Unsecured Loans

49,174

DEFERRED TAX LIABILITY TOTAL APPLICATION OF FUNDS FIXED ASSETS Gross Block Less: Depreciation Net Block Capital work-in-progress / Advances

THIS YEAR Rs.'000

PREVIOUS YEAR Rs.'000

584,830

500 500

49,174 31,454 665,458

500

463,887 17

4 476,549 26,943 449,606 14,281

INVESTMENTS CURRENT ASSETS, LOANS AND ADVANCES Inventories Sundry debtors Cash and Bank Balances Other current assets Loans and Advances

5 6

LESS : CURRENT LIABILITIES AND PROVISIONS Liabilities Provisions

7 8

NET CURRENT ASSETS PROFIT AND LOSS ACCOUNT TOTAL NOTES TO ACCOUNTS

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31,2008

Schedule

PREVIOUS YEAR

Rs.’000

INCOME Sales

573,787

Other income

27,750

1,460

575,247

Materials

351,037

23,626

Expenses

41,714

5,204

Depreciation

27,761

443

PROFIT/(LOSS) BEFORE TAXATION

420,512

29,273

154,735

(1,523)

Provision for Taxation

28,591 3,115 3 31,709

Current Tax

14,361 36,448 50,809

32,765 32,765 (1,057) 1,557 500

34,563

325

Fringe Benefit Tax

31,454

66,342

PROFIT / (LOSS) AFTER TAXATION

88,393

(1,557)

(Deficit) Brought Forward

(1,557)

Surplus/(Deficit) carried forward to Balance Sheet

86,836

(1,557)

1,253.80

(31.14)

Deferred tax

Earnings per share (Basic/Diluted) in Rs. (Refer Note 19) NOTES TO ACCOUNTS

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

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

As per our Report attached

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants E.K.IRANI Partner

27,750

EXPENDITURE

47,240 92,382 1,770 61 110,910 252,363

201,554 665,458

Rs.’000

THIS YEAR

Signatures to Balance Sheet and and Schedules 1 to 8 and 12 N.B.GODREJ Chairman

Signatures to Profit and Loss Account and Schedules 9 to 11 and 12

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants E.K.IRANI Partner

B.S.YADAV Director

N.B.GODREJ Chairman

B.S.YADAV Director

Membership no. 35646 Mumbai, May 20, 2008

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31,2008 Rs.’000 SCHEDULE 1 : SHARE CAPITAL AUTHORISED 1,00,00,000 Equity Shares of Rs 10 each ISSUED 70,500 (Previous year 50,000) Equity Shares of Rs 10 each fully paid. ISSUED,SUBSCRIBED AND PAID UP 70,500 (Previous year 50,000) Equity Shares of Rs 10 each fully paid. Of the above : a) 56,400 (previous year 50,000) equity shares are held by Godrej Agrovet Ltd. the holding Company. b) 20,500 equity shares have been issues pursuant to the scheme of demerger without payment being received in cash. TOTAL

THIS YEAR Rs.’000

PREVIOUS YEAR Rs.’000

100,000

705

500

705

500

705

500

SCHEDULE 2 : RESERVES & SURPLUS SECURITIES PREMIUM ACCOUNT Received during the year PROFIT AND LOSS ACCOUNT TOTAL SCHEDULE 3 : UNSECURED LOANS 2,50,000, 10% Redemeable non- convertible Debentures of Rs 10 each (previous year nil) (amount due within a year Rs.2,500 thousand, previous year Rs. nil thousand). Sales Tax Deferment facility Taken over as per the scheme of demerger Received during the year

497,289 497,289 86,836 584,125

2,500

33,322 13,352 46,674 49,174

TOTAL

SCHEDULE 4: FIXED ASSETS ASSETS As at 01.04.07 Tangible Assets Freehold Land Leasehold Land Buildings Staff Quarters Plant & Machinery Furniture & Fixtures Leasehold Improvements Office & Other Equipments Vehicles Research Centre Trees, Development Costs Intangible Assets Computer Software Grant of Licenses Technical Know-How Fees Total Previous Year Capital Work-In-Progress/Advance

GROSS BLOCK Taken Over On Additions Demerger

Deductions

As at 31.03.08

Upto 01.04.07

DEPRECIATION For the Year On Deductions

Upto 31.03.08

NET BLOCK As at As at 31.03.08 31.03.07

2,980 24,108 71,443 350 650 2,012 11,703

4,781 6,807 60 105 1,019 -

832 906 -

2,980 28,889 77,418 410 755 2,125 11,703

1,113 6,581 75 55 179 1,997

248 400 -

1,113 6,333 75 55 (221) 1,997

2,980 27,775 71,085 335 700 2,346 9,706

248 113,494 -

347 351,845 364,964 -

171 1,909 -

424 351,845 476,549 -

170 17,592 27,762 -

171 819 -

(1) 17,592 26,943 -

425 334,253 449,606 14,281 463,887

101

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31,2008 SCHEDULE 5 : INVESTMENTS LONG TERM NON TRADE UNQUOTED GOVEREMENT SECURITIES (All the Securities have been deposited with various Government Authorities) National Savings Certificates (Face value Rs.17 thousand, Previous year Rs.nil thousand) TOTAL SCHEDULE 6 : CURRENT ASSETS, LOANS & ADVANCES (A) INVENTORIES : Raw Materials Finished Products Stores and Spares Stock under Cultivation (B) SUNDRY DEBTORS (Unsecured and considered good unless otherwise stated) Debts outstanding for a period exceeding six months Considered Good Considered Doubtful Other Debts (less than six months) Total Less: Provision for doubtful debts

SCHEDULE 10 : MATERIALS a) RAW MATERIALS CONSUMED Opening stock Add : Taken over as per scheme of demerger 17

Less : Closing Stocks

1,224 4,576 1,509 39,931 47,240

(D) OTHER CURRENT ASSETS : (E) LOANS AND ADVANCES : (Unsecured and considered good unless otherwise stated) Loans and Advances recoverable in cash or in kind or for value to be received. Other Deposits i) Government Authorities. ii) Others

78,984 131 79,115 13,398 92,513 131

Investors Education and Protection Fund Advances from Customers Sundry Deposits TOTAL SCHEDULE 8 : PROVISIONS For Taxes For Gratuity For Leave Encashment TOTAL SCHEDULE 9 : OTHER INCOME Interest Income Insurance claims received Sundry Balances written back Misc other income TOTAL

102

28,591 28,591 28,591

23,627

324,585

23,627

1,224

323,361

23,627

39,547

c) INVENTORY CHANGE Opening Stock

Add : Taken over as per scheme of demerger 848

31,788

32,636

4,576

39,931

Less : Closing Stock Finished Goods Stock under cultivation

44,507 TOTAL

324,048

b) PURCHASE FOR RESALE

Stock under cultivation

(11,871)

351,037

23,627

11,295

1,515

513

1,749 1,770 61

3,115 3,115 -

SCHEDULE 11 : EXPENSES 1 Salaries, Wages, Bonus,Gratuity and Allowances 2 Contribution to Provident Fund and Other Funds and Administration Charges

256

4 Processing charges

3,813

607

5 Consumable Stores

3,151

153

6 Power and Fuel

5,894

703

7 Rent

641

8 Rates and Taxes

297

3 Employee Welfare Expenses 3

108,154 1,004 1,752 110,910 252,363

TOTAL SCHEDULE 7 : LIABILITIES Sundry Creditors Dues to Micro, Small & Medium Enterprises (refer Note - 6) Others

Finished Goods

92,382 (C) CASH AND BANK BALANCES : Cash and Cheques on hand Balances with Scheduled Banks - In Current Accounts

Add : Purchases during the year

537

3 31,709

Building Plant & Machinery 12,298 12,298 1,934 129 14,361

32,543 222 32,765

34,888 1,028 532 36,448

Other assets

330

2,015

2,411

10 Insurance

408

120

11 Postage, telephony and stationery

685

12 Auditorâ&#x20AC;&#x2122;s Remuneration

157

13 Legal & Professional Fees

982

609

766

14 Bank Charges

242 4 1,072 142 1,460

9 Repairs & Maintenance

15 Freight, Coolie and Cartage

1,671

16 Advertisement and publicity

175

171

17 Travelling expenses

789

810

18 Bad Debts/Advances written off

19 Provision for doubtful Debts and Advances

20 Loss on sale of Fixed Assets (Net)

21 Discounts, Commission & Brokerage 22 General Expenses TOTAL

2,734 4,881

202

41,714

5,204

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31,2008 1.

SIGNIFICANT ACCOUNTING POLICIES: a) The financial statements are prepared under the historical cost convention, on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India and the Accounting Standards issued by the Institute of Chartered Accountants of India. b) Fixed assets have been stated at cost and include incidental and / or installation/development expenses incurred in putting the asset to use and interest on borrowing incurred during construction period. c) Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount. d) Depreciation/Amortization has been provided for as under : (a) The Company has grouped additions and disposals in appropriate time periods of a month/ quarter for the purpose of charging pro rata depreciation in respectof additions and disposals of its assets keeping in view the materiality of the items involved. (b) (1) Depreciation is provided on the straight line method at the rates specified in schedule X IV to the Companies Act, 1956, except for computer hardware which is depreciated over its estimated useful life of four years. (2) Amortizations Asset type Period (i) Leasehold Land Primary lease period (ii) Trees Development cost 15 years (iii) Grant of Licenses/Rights 20 years e) Inventories: Raw materials and stock under cultivation are valued at weighted average cost. Finished goods are valued at lower of cost and net realisable value. These costs include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Stores and spares are valued at cost using the First-In-First-Out method. f) Employee Benefits i) Short-term employee benefits (payable wholly within twelve months of rendering the service): Short-term benefits such as salaries, wages, short-term compensation absences, etc., are determined on an undiscounted basis and recognised in the period in which the employee renders the related service. ii) Post-employment benefits: Defined Contribution Plans: The Company’s contributions paid/payable to provident Fund, Employees State Insurance Scheme, Employees Pension Schmes, 1995 and other funds, are determined under the relevant approved schemes and/or statutes and are recognised as expense in the Profit and Loss Account during the period in which the employee renders the related service. There are no further obligations other than the contributions payable to the approved trusts/appropriate authorities. However, the rules of Company’s Provident Fund Scheme, 1952, for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Company. The Company’s PF does not have any existing Deficit or Interest shortfall. In view of the track record of the Company’s PF Trust - its assets, return on investments and accmulated reserves - the Company does not anticipate any deficiency in the forcseeabel future. In any case making reasonable acturial assumptions for determining and measuring any probable future obligations arising due to interest shortfall, would pose a formidabel challenge. Defined Benefit Plans: The Company’s gratuity and leave encashment/long-term compensated absences schemes are defined benefit plans. The Company’s liability for the defined benefit schemes is actuarially determined based on the projected unit credit method. The Company’s net obligations in respect of such plans is calculated by estimating the amount of future benefit that the employees have earned in return for their services in the current and prior periods that benefit is discounted to determine its present value and the fair value of the plan asset is deducted. Actuarial gains and losses are recognised immediately in the Profit and Loss Account. Terminal Benefits: All terminal benefits including voluntary retirement compensation are fully written off to the Profit and Loss Account. g) Revenue is recognised when goods are despatched to external customers. Sales are inclusive of realised exchange fluctuations on export receivables but net of returns, sales tax, rebates, etc. h) Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates. The premium payable on foreign exchange contracts is amortized over the period of the contract. Exchange gains/losses are recognised in the Profit and Loss Account. i) Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year- end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date. j) The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive. k) Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. 2. (a) CONTINGENT LIABILITY: (b) CAPITAL COMMITMENTS: The estimated value of contracts remaining to be executed on Capital Account to the extent not provided for 3. UNSECURED LOANS: Sales Tax Deferment availed under the scheme floated by the Directorate of Industries , Government of Andhra Pradesh is classified under Unsecured Loans.

ACQUISITION OF OIL PALM BUSINESS: (a) Pursuant to the scheme of arrangement with the Shareholders of Godrej Agrovet Limited (the transferor) under section 391 & 394 of the Companies Act 1956, and subsequently sanctioned by the Honourable High Court of Mumbai on 28.09.2007, the Oil Palm business of the transferor in the states of Andhra Pradesh , Orissa , Gujarat & Mizoram is demerged, with effect from 01.04.2007, into the Company. The scheme has accordingly, been given effect to in these accounts and following Assets and Liabilities were taken over at their fair values: Fixed Assets: Net Value Capital Work in Progress Rights/ Grants Investments Current Assets, Loans & Advances: Inventories 1) Raw Material 2) Stock under cultivation 3) Finished Goods 4) Stores & Spares

Rs ‘ 000

113,494 5,319 351,845

470,658 17

537 31,789 848 1,087 34,261 34,069 1,009 52 2,909

Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances

72,300 (9,659) (33,322) 499,994

Current Liabilities Unsecured Loans TOTAL (b) In consideration for transfer of business following was issued: 1) 20,500 equity shares of Rs. 10/- each at a premiumof Rs. 24,258/- 497,494 2) 2,50,000, 10% Unsecured Redeemable Non-convertible Debentures of Rs. 10/- each. 2,500 499,994 5.

AMORTIZING GRANT OF LICENSES /RIGHTS OVER 20 YEARS: The oil palm plantation business operates on a command area basis with the government allotting to various companies clearly demarcated area for the development of oil palm plantation. With this responsibility for development for oil palm plantations, comes the exclusive rights for the procurement of Fresh Fruit Bunches produced in the allotted area. Oil Palm Plantation has a relatively long productive life of 30 years. Since the allotment right is expected to yield benefits over a long period, the amount paid towards the same is amortized over a 20 year period. CURRENT LIABILITIES: Under the Micro, Small & Medium Enterprises Development Act 2006, which came into force from 2nd October, 2006, certain disclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available , no disclosures have been made in the accounts. DEFERRED TAX : Major components of deferred tax arising on account of timing differences as on M arch 31, 2008 are: THIS YEAR Rs.’000

PREVIOUS YEAR Rs.’000

Asset Provision for Doubtful Debts Others

530

562

32,016

(31,454)

Liabilities Depreciation on Fixed Assets Net Deferred Tax Liability 8.

SALES TURNOVER: THIS YEAR Quantity

Value Rs. ‘000

Quantity

Value Rs. ‘000

Crude Palm Oil

8,675

366,333

Palm Kernel Oil

1,778

95,484

Palm Kernel Cake

2,781

9,071

Seedlings

Nos

807,180

59,892

Agri Inputs

38,389

Others

4,618

27,750

TOTAL

PREVIOUS YEAR

Unit

573,787

27,750

Note: Sales Turnover includes sale of items purchased by the Company for resale.

103

10.

11.

12.

FINISHED GOODS INVENTORIES: Crude Palm Oil

19.92

562

Palm Kernel Oil

19.38

673

Palm Kernel Cake

22.89

Agri Inputs

3,255

TOTAL

4,576

Agri Inputs

39,547

TOTAL

39,547

PURCHASES FOR RESALE:

RAW MATERIALS CONSUMED: Fresh Fruit Bunches

46,801.14

240,561

Palm Nuts

7,465.57

16,063

Palm Kernel

1,146.14

21,609

Palm sprouts

Nos

807,180

37,893

Others

7,235

23,626

TOTAL

323,361

23,626

LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION: Item

For the year Ended

a) Crude Palm Oil

b) Palm Kernel Oil

Registered MT

Capacity Per Annum Installed MT

Actual Production MT

31.3.2008

Not Applicable

66,000

46,800

31.3.2007

Not Applicable

31.3.2008

Not Applicable

12,000

8,612

31.3.2007

Not Applicable

Installed capacity and actual production is stated in quantity of Fresh Fruit Bunches, Palm Nuts and Palm Kernel crushed.

13.

DISCLOSURE IN RESPECT OF LEASES: The Companyâ&#x20AC;&#x2122;s leasing arrangements are in respect of operating leases for premises occupied by the Company. These leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually acceptable terms.

The total of future minimum lease payments under non - cancelable operating leases for each of the following periods :

b. 14.

THIS YEAR Rs. '000

PREVIOUS YEAR Rs. '000

Not later than one year

415

ii.

Later than one year and not later than five years

iii.

Later than five years

Lease payments recognised in the statement of Profit & Loss for the period :

415 THIS YEAR

PREVIOUS YEAR

Rs.'000

112

157

Raw Materials

21,178

TOTAL EXPENDITURE IN FOREIGN CURRENCY:

21,178

Travelling Expenses

TOTAL

Audit fees Audit under Other Statutes TOTAL 15.

16.

17.

AUDITORS' REMUNERATION:

The following table sets out the funded status of the gratuity plan and the amounts recognised in the Company's financial statements as at 31 March 2008: Rs.'000 Change in present value of obligation Present value of obligation as at 1st April 2007 - Interest Cost - Service Cost - Benefits Paid - Actuarial (gain)/loss on obligation - Present value of obligation, as at 31st March 2008 - Change in plan assets Fair value of plan assets as at 1st April 2007 - Expected return on plan assets - Contributions - Benefits paid - Actuarial gain/(loss) on plan assets - Fair value of plan assets as at 31st March 2008 - Amount recognised in the Balance Sheet Present value of obligation, as at 31st March 2008 1,028 Fair value of plan assets as at 31st March 2008 - Net obligation as at 31st March 2008 - 1,028 Net gratuity cost for the year ended 31st March 2008 Current Service Cost - Interest Cost - Expected return on plan assets - Net Actuarial (gain)/loss to be recognised - Net gratuity cost - Assumptions used in accounting for the gratuity plan Discount Rate Salary escalation rate Expected rate of return on plan assets

VALUE OF CONSUMPTION OF RAW MATERIALS, SPARES & TOOLS: THIS YEAR

PREVIOUS YEAR %

Rs.'000

RAW MATERIALS : Imported items

15,757

(including duty content) Indigenous TOTAL

307,604

23,626

100

323,361

100

23,626

100

SPARES & TOOLS : Imported items Indigenous TOTAL

3,151

100

153

100

3,151

100

153

100

% 8 5 8

19.

EARNINGS PER SHARE: THIS YEAR (Rs.'000) 88,393 70,500 1,253.80 1,253.80 10

Profit after tax and prior period expenses Weighted average number of equity shares outstanding Basic earnings per share (Rs.) Diluted earnings per share (Rs.) Nominal value of shares (Rs.)

VALUE OF IMPORTS ON CIF BASIS: (INCLUDES DIRECT IMPORTS ONLY)

Rs.'000

104

18. EMPLOYEE BENEFITS: I. Defined Contribution Plans: Contribution to Defined Contribution Plan, recognised as expense for the year are as under: Rs.'000 Employers' Contribution to Provident Fund 495 II. Defined Benefit Plans: a. Contribution to Gratuity Fund The Company makes annual contributions to the Employees' Group Gratuity-cum-Life Assurance Scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on superannuation, death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company's policy whichever is beneficial to the employees.

20.

PREVIOUS YEAR (Rs.'000) (1,557) 50,000 (31.14) (31.14) 10

SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH 2008 (i) Information about Primary business Segments

Revenue Total Sales Less : Inter-segment External Sales Result Segment Result Unallocated expenditure net of unallocated income Interest expenses Interest Income Dividend Income and Profit on sale of Investments Profit before taxation and exceptional items Provision for taxation Profit after taxation and before exceptional items Exceptional Items Prior years adjustments Profit after taxation and exceptional items Other Information Segment assets Segment liabilities Capital expenditure Depreciation Non-cash expenses other than depreciation

Rs.'000

Oil Palm Plantations (A) 535,398

Agri Unallocated Inputs (B) 38,389

535,398

38,389

151,177

2,097

1,218 242 151,177

2,097

151,177

2,097

151,177

2,097

713,013 131,437 364,901 27,761

3,255

Total

66,342

153,274 1,218 242 154,735 66,342 88,393 88,393 716,268 131,437 364,901 27,761 -

(ii)

Information about Secondary business Segments

Revenue by geographical segment Total Sales Less : Inter-segment External Sales Carrying amount of segment assets Additions to fixed assets

India 573,787 573,787 716,268 364,901

Outside India -

Total 573,787 573,787 716,268 364,901

(iii) Notes (i)

The company is organized into four main business segments,namely (a) Oil Palm Plantation business (b) Agri-business - comprising of plant growth promoters, pesticides etc. Segments have been identified and reported taking into account, the nature of products and services, the differing risks and returns, the organisation structure, and the internal financing reporting systems. (ii) The Segment revenue in each of the above business segments consists of sales (net of returns, sales tax, rebates etc.) (iii) The Segment revenue in the geographical segments considered for disclosure are as follows : (a) Revenue within India includes sales to customers located within India (b) Revenue outside India includes sales to customers located outside India (iv) Segment Revenue,Results,Assets and liabilities include the respective amounts identifiable to each of the segments and amounts allocated on a reasonable basis.

21. RELATED PARTY DISCLOSURES: Related party disclosures as required by AS - 18, "Related Party Disclosures", are given below ": 1. Relationships : (i) Holding Companies : Godrej Agrovet Limited (GAVL) holds 80% in the Company. GAVL is the subsidiary of Godrej Industries Limited (GIL) & GIL is the subsidiary of Godrej & Boyce Mfg Co Ltd, the ultimate Holding Company. (ii) Fellow Subsidiaries Goldmohur Foods and Feeds Limited Golden Feed Products Limited Godrej Foods Limited Cauvery Palm Oil Limited. (iii) Associate Companies : Blessed Resources Pte Limited, the second partner in the Company has 20% stake in the Company (iv) Other related parties where persons mentioned (v) below exercise significant influence Godrej Gokarna Oil Palm Limited Godrej Gold Coin Aquafeed Limited Aadhaar Retailing Limited (v) Key management person Mr. B S Yadav 2. The following transactions were carried out with the related parties in the ordinary course of business : Rs.'000 Holding ompanies (i) 497,494 2,500 415

Nature of Transactions I II III IV V VI VII VIII IX

Issue of share capital ( incl. Premium) Issue of Debentures Expenses charged by other companies Sale of materials / finished goods Purchase of Material Sale / Transfer of Fixed Asset Transfer of Business Outstanding receivables Outstanding Payables

9,071 497,494 109,421 415

Fellow Subsidiaries (ii)

Other Related Parties (iii)

1,639

1,803

1,960 584 625

3. Significant Related Party Transactions : Nature of Transactions

Holding Companies

Amount

(i) Godrej Agrovet Ltd

Fellow Subsidiaries

Amount

(ii)

Issue of share capital ( incl. Premium)

Issue of Debentures

Godrej Industries Ltd

2,500

Expenses Charged by other Companies

Godrej Industries Ltd

415

Purchase of Material

Godrej Agrovet Ltd

Other Related Parties

23.

Information required to be furnished under Part IV of Schedule VI of the Companies Act, 1956

i) Registration Details Application of Funds Registration No. 0 Net Fixed Assets 463,887 State Code 0 Investments 17 Balance Sheet Date 31/3/2008 Net Current Assets 201,554 ii) Capital raised during the year Misc. Expenditure - (Rupees '000) Accumulated Losses Nil Public Issue Nil iv) Performance of Company Rights Issue Nil (Rupees '000) Bonus Issue Nil Turnover 573,787 Private Placement 0 Total Expenditure 420,512 iii) Position of mobilisation and deployment of funds Profit before tax 154,735 (Rupees '000) Profit after tax 88,393 Total Liabilities 716,267 Earning Per Share in Rs. 1,253.80 Total Assets 716,267 Dividend rate - Sources of Funds Paid-up Capital 705 v) Generic Names of three principal Reserves & Surplus 584,125 products services of Company Secured Loans - Item Code No. Unsecured Loans 49,174 Product Description Crude Palm Oil and Palm Kernel Oil Mumbai, May 20, 2008 Company Secretary Director

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008

A. Cash Flow from Operating Activities: Profit before Tax and Operational Items Adjustments for: Depreciation Loss / (Profit) on sale of Fixed Assets Provision for Doubtful Debts & Advances Interest Income Operating Profit before Working Capital Changes Adjustments For : Inventories Debtors and Other receivables Creditors and Other payables

Godrej Gokarna Oil 1,960

Gold Mohur Foods

Net Increase/(Decrease) in Cash and Cash Equivalents Cash and Cash equivalents (Opening Balance) Add: Cash & Bank Balances Taken over from Godrej Agrovet Limited Cash and Cash equivalents (Closing Balance)

& Feeds Ltd 6

Sale / Transfer of Fixed Asset

Outstanding Payables

Godrej Industries Ltd

Outstanding receivables

Godrej Agrovet Ltd

109,421

Transfer of Business

Godrej Agrovet Ltd

497,494

PREVIOUS YEAR Rs (000â&#x20AC;&#x2122;s)

154,735

(1,472)

27,761 64 93 (242)

442

27,676 182,411 (12,980) (137,826) (26,488) (177,295) 5,117 5,117

Cash Generated from Operations Direct taxes Paid Net Cash Generated from Operating Activities

C. Cash from Financing Activities: Proceeds from Borrowings Increase in Share Capital Net Cash used in Financing Activities

9,071

THIS YEAR Rs (000â&#x20AC;&#x2122;s)

B. Cash from Investing Activities: Acquisition of Fixed Assets Proceeds from sales of Fixed Assets Interest Income Net Cash used in Investing Activities

497,494

Sale of materials / finished goods

Figures of the previous year have been regrouped & re-classified wherever necessary to conform to the current year's classification.

442 (1,030) (28,593) 32,681 4,088 3,058 3,058

Amount

(iii)

Palm Limited 5

22.

(22,083) 1,026 233 (20,824)

(39,576) 39,133 (443)

13,352

500 500

13,352 -

(2,355) 3,115 1,009 4,124 1,769

3,115 3,115

1,639 Godrej Gokarna Oil Palm Limited

415

584

Godrej Gokarna Oil Palm Limited

As per our Report attached For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants E.K.IRANI Partner Membership no. 35646 Mumbai, May 20, 2008

For and on behalf of Board N.B.GODREJ B.S.YADAV Chairman Director

625

Gold Mohur Foods & Feeds Ltd

1,803

105

Golden Feed Products Limited DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2008 To The Shareholders Your Directors have pleasure in submitting their Report along with the audited Accounts for the financial year ended on 31st March, 2008. Financial Results Your Company's performance during the year as compared with that during the previous year is summarised below: Rs. Lac For the year ended For the year ended 31/3/2008 31/3/2007 Total Income – 940.83 Loss before Taxation 3.04 14.12 – 01.45 Add: Provision for Taxation Loss after Taxation 3.0z4 15.57 Balance Brought Forward from previous year 155.64 140.07 Balance Carried Forward to Balance Sheet 158.68 155.64 REVIEW OF OPERATIONS During the year prior to review, your Company transferred the shrimp feed marketing business to Godrej Aquafeed Limited effective September 30, 2006. Consequently, the results reflected the operations for the six months period from April ’06 to September ’06. In the current year there is no business income. DIVIDEND Your Directors do not recommend any dividend for the year 2007-08. FIXED DEPOSITS Your Company has not accepted any public deposits during the financial year under review. HOLDING COMPANY Your Company continues to be a subsidiary of Godrej Agrovet Limited as defined under Section 4(1)(b) of the Companies Act, 1956. SUBSIDIARY COMPANIES The Company has no subsidiary company during the year under review. DIRECTORS Mr. B. S. YADAV and Dr. P.N. Narkhede are appointed as Directors, in accordance with the provisions of the Companies Act, 1956. AUDITORS You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment and a certificate as required under Section 224 (1-B) of the Companies Act, 1956 has been received from them.

QUALIFICATIONS BY AUDITORS The auditors have qualified in the Auditors report that the accumulated losses as at March 31, 2008 exceeds its paid up capital, resulting in the erosion of its net worth. Your Company still remains a “Going Concern” as the finance will continue to be available to the Company for its working capital requirements from its holding company Godrej Agrovet Limited. ADDITIONAL INFORMATION The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation. STATUTORY INFORMATION A. Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo The information in respect of these matters, required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report. B. Particulars of Employees None of the employees is covered under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002. C. Directors’ Responsibility Statement Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm : a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same; b that they have selected such Accounting Policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities; d) that they have prepared the annual accounts on a going concern basis. HUMAN RESOURCES There are no employees in the Company.

For and on behalf of the Board of Directors

Mumbai, May 20, 2008.

Dr. S.S. Sindhu Director

Dr. P.N. Narkhede Director

ANNEXURE ‘A’ ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO : A. Conservation of Energy The Company has not established any manufacturing facility this year.

B. C.

Technology absorption, adaptation and innovation Not Applicable since the Company does not have any manufacturing facility at present. Foreign Exchange earnings and outgo Your Company had no foreign exchange earning as well as outgo. For and on behalf of the Board of Directors

Mumbai, May 20, 2008.

Dr. S.S. Sindhu Director

Dr. P.N. Narkhede Director

REPORT OF THE AUDITORS TO THE MEMBERS OF GOLDEN FEED PRODUCTS LIMITED 1.

3. 4.

106

We have audited the attached Balance Sheet of Golden Feeds Products Limited, as at 31st March 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: a) The accumulated losses of the Company as at March 31, 2008 exceed its paid up capital resulting in the erosion of its net worth. The accounts for the year have been prepared on the ‘Going Concern’ basis on the understanding that finance will continue to be available to the Company for working capital requirements. b) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. c) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of these books. d) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read with the notes thereon, subject to (a) above, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008; and ii) in the case of the Profit and Loss Account, of the loss for the year ended on that date. 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 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2008 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants

Mumbai, May 20, 2008

E. K. IRANI Partner Membership No. 35646

Annexure to the Auditors’ Report Annexure to the Auditors’ Report Referred to in paragraph (3) of our report of even date. 1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, the Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been reported on such verification.

2. The Company does not have any inventories. 3. (a) The Company has not granted any loans, secured or unsecured to companies, firms or parties covered in the register maintained under section 301 of the Companies Act, 1956.

9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues payable in respect of above as at 31st March 2008 for a period of more than six months from the date they became payable.

10. As the Company has been registered for a period less than five years the question of commenting on its accumulated losses being less than fifty percent of its net worth does not arise. The Company has incurred cash loss during the financial year but has incurred cash loss in immediately preceding financial year.

(b) Consequently, the question of commenting whether the rates of interest and other terms and conditions are not prejudicial to the interest of the Company does not arise.

11. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to banks. There are no dues to financial institutions or debenture holders.

(c) The Company has taken unsecured loans of Rs. 24,460 thousands from a Company covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 24,460 thousands and year-end balance of loan taken from such party was Rs. 24,460 thousands.

12. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(d) The rate of interest and the other terms and conditions of the unsecured loan taken is not prima facie prejudicial to the interest of the Company.

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

(e) The payment of principal amounts and interest was also regular.

14. The Company does not deal in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the Company has given a corporate guarantee for loans taken by its subsidiary/joint venture from banks. The terms and conditions are not prima facie prejudicial to the interest of the Company.

5. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long term investment.

In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business.

16. According to the information and explanations given to us, term loans were applied for the purpose for which the loans were obtained.

18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. 19. The Company did not issue any debentures during the year. 20. The Company has not raised any money through a public issue during the year. 21. Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants

Mumbai, May 20, 2008

E. K. IRANI Partner Membership No. 35646

107

BALANCE SHEET AS AT MARCH 31, 2008 As at As at 31/03/2008 31/03/2008 Schedule Rs.'000 Rs.'000 SOURCES OF FUNDS SHAREHOLDERS’ FUNDS Share Capital 1 500 Reserves and Surplus – 500 LOAN FUNDS Secured Loans – 24,460 Unsecured Loans 2 24,460 TOTAL 24,460 APPLICATION OF FUNDS 3 FIXED ASSETS Gross Block – Less: Depreciation – Net Block INVESTMENTS 4 25 CURRENT ASSETS,LOANS 5 AND ADVANCES Inventories Sundry Debtors 19,658 Cash and Bank Balances 45 Other Current Assets 43 Loans and Advances 18

As at 31/03/2007 Rs.'000 500 – 500 – 23,939 23,939 24,439 47 12 35 25

19,658 248 43 –

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH 31, 2008 Schedule

As at 31/03/2008 Rs.'000

As at 31/03/2007 Rs.'000

INCOME Sales

–

Other income

92,301 1,782

94,083

EXPENDITURE Materials

64,580

Expenses

155

26,363

Interest and financial charges

150

2,290

Depreciation/Amortisation

2,261

309

95,494

PROFIT BEFORE TAXATION

(304)

(1,412)

Provision for Taxation

Current

–

Fringe Benefit

–

145

–

145

19,949

Deferred

10,696 –

11,153 –

PROFIT AFTER TAXATION

(304)

(1,557)

Surplus/Deficit Brought Forward

(15,564)

(14,007)

10,696 NET CURRENT ASSETS 9,067 PROFIT & LOSS ACCOUNT 15,868

11,153 8,797 15,564

AMOUNT AVAILABLE FOR APPROPRIATION

(15,868)

(15,564)

Earnings per share (Basic/Diluted) in Rs.

(31.74)

(31.13)

24,960

24,421

LESS : CURRENT LIABILITIES 6 AND PROVISIONS Liabilities Provisions

19,764

TOTAL NOTES TO ACCOUNTS 10

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 9 and 10 For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants Dr. S. S. Sindhu Director Dr. P.N. Narkhede Director E. K. IRANI Partner Membership No. 35646 Mumbai, May 20, 2008

NOTES TO ACCOUNTS

The Schedules referred to above form an integral part of the Profit and Loss Account As per our Report attached Signatures to Profit and Loss Account Schedules 7 to 9 and 10 For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants Dr. S. S. Sindhu Director Dr. P.N. Narkhede Director E.K. IRANI Partner Membership No. 35646 Mumbai, May 20, 2008

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008 Schedule 1 : Share Capital Authorised 1,00,000 Equity Shares of Rs.10 each

This Year Rs.'000

This Year Previous Year Rs.'000 Rs.'000

Issued, Subscribed and Paid up 50,000 Equity Shares of Rs.10 each fully paid

1,000

500

All the above shares are held by Godrej Agrovet Ltd. the (Holding Company) and its nominees SCHEDULE 2 : UNSECURED LOANS From Holding Company (Amount due within a year Rs. 24,460 thousands; Previous year Rs. 23,939 thousands)

Total

24,460

23,939

24,460

23,939

This Year This Year Previous Year Rs.'000 Rs.'000 Rs.'000 SCHEDULE 4 : INVESTMENTS LONG TERM TRADE QUOTED (AT COST) UNQUOTED GOVERNMENT SECURITIES National Savings Certificates 25 25 (All the Securities have been deposited with various Government Authorities) 25 25 TOTAL 25 25 SCHEDULE 5 : CURRENT ASSETS, LOANS & ADVANCES (A) INVENTORIES : – (B) SUNDRY DEBTORS: Debts outstanding for a period exceeding six months Considered Good 19,658 Considered Doubtful – 19,658 Other Debts – Total 19,658 Less: Provision for doubtful debts – 19,658

–

4,526 539 5,065 15,132 20,197 539 19,658 (Rs.)

SCHEDULE 3 : FIXED ASSETS ASSETS

GROSS BLOCK As at 1-Apr-07

Land - Freehold Leasehold improvements Buildings Plant & Machinery Power Generating Wind Mill Furniture, fittings & fixtures Computers Motor Vehicles Trade Marks TOTAL Previous Year

108

Additions

47 45,047

DEPRECIATION

Deductions

As at 31 Mar-08

47 45,000

Up to 1-Apr-07

For the Year

NET BLOCK

On Deductions

12 1,875

3 2,262

15 4,125

UP to 31 Mar-08

As at 31-Mar-08

As at 31-Mar-07

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008 This Year This Year Previous Year Rs.'000 Rs.'000 Rs.'000 SCHEDULE 5 : CURRENT ASSETS, LOANS & ADVANCES (C) CASH AND BANK BALANCES : Cash and Cheques on hand – – Balances with Scheduled Banks In current account 45 248 45 248 (D) OTHER CURRENT ASSETS : 43 43 (E) LOANS AND ADVANCES : (Unsecured and considered good) Loans and Advances recoverable in cash or in kind or for value to be received 18 – –

TOTAL

SCHEDULE 6 : CURRENT LIABILITIES AND PROVISIONS Sundry Creditors (Note 5) Other Liabilities Advances from Customers

TOTAL

19,746

5,462 2,411 2,823

10,696

SCHEDULE 7 : MATERIALS a) RAW MATERIALS CONSUMED Opening stock – Add : Purchases during the year – – Less : Transferred to Godrej Aquafeed Limited – Less : Sales during the year – Less: Closing Stock – b) PURCHASE FOR RESALE – c) INVENTORY CHANGE Opening Stock Finished Goods – Less : Closing Stock of Finished Goods – – TOTAL – SCHEDULE 8 : EXPENSES – 1. Salaries, Wages, Bonus - 2. Provident and other funds – 3. Workmen and staff welfare expenses - 4. Processing charges - 5. Power, light, fuel and water - 6. Rent 2 7. Rates and taxes 8. Repairs and maintenance - Buildings 1 Plant - Other Assets 1 - 10. Insurance - 11. Postage, telephone and stationery 118 12. Auditors' Remuneration 45 13. Legal and Professional charges 2 14. Carriage and freight - 15. Advertisement and Sales Promotion (12) 16. Travelling and motor car expenses - 17. Provision for Doubtful Debts & Advances(Written back) - 18. Miscellaneous Expenses

155

19,949

5,462 2,868 2,823 11,153

25,445 44,256 69,701 7,973 856 60,872 60,872 1,321 2,388 – 2,388 64,581 3,153 343 469 10,573 11 56 9 6 15 21 118 153 115 357 3,353 5,373 1,633 539 87 26,363

SCHEDULE 9 : INTEREST AND FINANCIAL CHARGES (a) Interest paid on fixed loans i ) Banks ii ) Others (b) Other Financial Charges

– 14 136

204 1,870 216

150

2290

TOTAL

SCHEDULE 10 : NOTES TO ACCOUNTS 1.

recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount. d) Depreciation/Amortisation has been provided for as under : (a) The Company has grouped additions and disposals in appropriate time periods of a month/quarter for the purpose of charging pro rata depreciation in respect of additions and disposals of its assets keeping in view the materiality of the items involved. (b) 1) Depreciation is provided on the straight line method at the rates specified in Schedule IV to the Companies Act, 1956, except for computer hardware which is depreciated over its estimated useful life of four years. 2) Amortizations Asset type Period (i) Leasehold Land Primary lease period (ii) Leasehold improvements and equipments Primary lease period or whichever is less (iii) Signages 3 years (iv) Technical knowhow, technical knowhow fees of a capital nature 10 years (v) Computer software 6.17 years e) Raw materials are valued at weighted average cost. Finished goods and work-in-progress are valued at lower of cost and net realisable value. These costs include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. f) Retirement benefits to employees comprise payments under defined contribution plans like provident fund and family pension. Payments under defined contribution plans are charged to the Profit and Loss Account. The liability in respect of defined benefit schemes like gratuity and leave encashment benefit on retirement is provided on the actual basis. g) Revenue is recognised when goods are despatched to external customers. h) Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such Deferred tax liability is recognised, if material. Deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year-end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date. i) The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive. j) Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. 2.

Transfer of shrimp feed business

Effective 30th September, 2006, the Company has transferred its aqua feed business to Godrej Aquafeed Limited for a total consideration of Rs. 6,46,68,396. Pursuant to the same the following assets were transferred to Godrej Aquafeed Limited. Rs. ‘000

Fixed Assets Inventories : (a) Raw material 7,971,627 (b) Finished goods 1,207,980 Sundry Debtors Less: Current liabilities Total

40,875,000

9,179,607 24,407,181 74,461,788 9,793,392 64,668,396

This Year Previous Year Unit Quantity Value Quantity Value Rs. Rs. 3. SALES TURNOVER Aqua Feed MT – – 2903 92,301,242 Note: Sales Turnover includes sale of items processed by third parties, and items purchased by the Company for resale. 4. FINISHED GOODS INVENTORIES Aqua Feed MT – – – – 5. PURCHASE FOR RESALE Aqua Feed MT – – 40 1,320,842 6. RAW MATERIALS CONSUMED Animal Proteins MT – – 601 15,759,194 Others - – - 45,112,993 7.

–

TOTAL

–

60,872,187

LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION Item

Aqua Feed

For the Year ended

Registered Production (MT)

Installed Production (MT)

Actual Production (MT)

Third party Production (MT)

31.03.2008 31.03.2007

–

2,918.4

109

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008 This Year Previous Year Rs. '000s Rs. '000s 8. AUDITORS' REMUNERATION 89,532 86,520 Audit fees 28,840 28,840 Audit under other statutes TOTAL 118,372 115,360 9. VALUE OF CONSUMPTION OF RAW MATERIALS This Year SPARES AND TOOLS Rs. % Raw Materials : Indigeneous – – 10.

TOTAL

–

Previous Year Rs.

60,872,187

100

60,872,187

100

SEGMENT INFORMATION The Company is in the business of manufacturing and distribution of Aqua Feed, which is its single primary business segment. All its operations are located in India & so no secondary segment disclosures arte required under AS - 17 segment Reporting 11. RELATED PARTY DISCLOSURES Related party disclosures as required by AS - 18, "Related Party Disclosures", are given below " 1 Relationships : (i) Holding Companies : Godrej Agrovet Limited (GAVL) holds 100% in the Company. GAVL is the subsidiary of Godrej Industries Limited(GIL). GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the ultimate holding company. (ii) Fellow subsidiaries: GAVL also holds 100% stake in GoldMohur Foods & Feeds Limited (GFFL), Godrej Aquafeed Limited(GAL) and Aadhaar Retailing Limted (ARL). 2. The following transactions were carried out with the related parties in the ordinary course of business : (i) Details relating to parties referred to in 1 above Rs. '000s Rs. '000s Holding Follow Company Subsidiary 1 Sale of materials / finished goods/ Debtors - 4,524,000 33,586,788 2 Purchase of Fixed Assets - - 3 Sale of Fixed Assets - - 40,875,000 4 Purchase of materials / finished goods - 2,558,000 5 Loan taken 521,000 - 5 Loan repaid - - 6 Interest expense on loan taken - 1,846,000 7 Expenses charged to other companies - 257,816 8 Transfer of current liabilities - - 9,793,392 9 Outstanding payables, net of (receivables) - 23,938,744 10 Guarantees issued by - - 11 Gurantees outstanding - - * All transaction are with Godrej Agrovet Limited. ** All transactions are with Godrej Aquafeed Limited This Year Previous Year 12. EARNINGS PER SHARE (303,915) (1,557,155) Profit after tax as per Profit and Loss Account ( Rs.) 50,000 50,000 Weighted average number of equity shares outstanding (32) (31) Basic earnings per share (32) (31) Diluted earnings per share Nominal value of shares 10.00 10.00

13.

Information required to be furnished under Part iv of Schedule vi of the Companies Act, 1956

i) Registration Details Registration No State Code Balance Sheet ii) Capital raised during the period Public Issue Rights Issue Bonus Issue Private Placement iii) Position of mobilisation and deployment of funds Total Liabilities Total Assets Source of Funds Paid up Capital Reserve & Surplus Secured Loans Unsecured Loans Application of funds Net Fixed Assets Investments Net Current Assets Misc. Expenditure iv) Performance of the Company Turnover Total Expenditure Profit Before Tax Profit After Tax Earnings Per Share in Rs. Dividend Rate v) Generic Names of three Principal products services of the Company Item Code No. Product Description Mumbai, May 20, 2008

500,000 24,459,936 25,000 9,066,965 – Nil (Rupees) 0 308,920 -303,915 -303,915 -31.74 – 23099010 Animal Feeds DR. P.N. NARKHEDE Director

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008 Rs. (000's)

A. Cash Flow from Operating Activities : Profit before Tax and Operational Items Adjustments for : Depreciation Finace Charges Interest Expense

Cash Generated from Operations Direct Taxes paid Net Cash Generated from Operating Activities Cash from Investing Activities : Proceeds from Disposal of Fixed Assets Net Cash used in Investing Activities Cash from Financing Activities : Proceeds from Borrowings Repayment of Borrowings Interest Paid Other Financial Charges Net Cash used in Financing Activities Net Increase/(Decrease) in Cash and Cash equivalents Cash and Cash equivalents (Opening Balance) Cash and Cash equivalents (Closing Balance)

Current Year Rs. (000's)

Previous Year Rs. (000's)

(304)

(1,410)

3 136 14

Operating Profit before Working Capital Changes Adjustments For : Inventories Debtors and Other receivables Creditors and Other payables

2,262

153 (151)

2,290 4,551 3,141

(457) (608) (608)

27,832 11,118 (36,432) 2,518 5,659 (145) 5,514

40,875 40,875

370

– (46,454) (2,290) – (48,744)

(203)

(2,355)

248

2,604

249

– – (457)

521 – (14) (136)

As per our Report attached

For and on behalf of Board

For and on behalf of KALYANIWALLA & MISTRY

Dr. S. S. Sindhu Director DR. P.N. NARKHEDE Director

E. K. IRANI Partner Mumbai, May 20, 2008

110

Dr. S. S. Sindhu Director

140599 11 31/3/2008 (Rupees) Nil Nil Nil Nil (Rupees) 35,156,186 35,156,186

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2008 To The Shareholders

Directors’ Responsibility Statement

Your Directors have pleasure in submitting their Report along with the audited Accounts for the financial year ended on March 31, 2008.

Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm :-

Financial Results

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 ;

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;

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 ;

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

Your Company’s performance during the year as compared with that during the previous year is summarised below: Rs. Lac

Total Income

For the year ended 31/3/2008 39458.27

For the year ended 31/3/2007 32635.13

443.8

443.40

382.63 61.17 127.44 188.60

123.00 320.40 226.82 547.22

Interim Dividend

340.06

Final Dividend

Tax on Dividend

47.69

Profit before Taxation (PBT) Less: Provision for Taxation Profit after Taxation Balance Brought Forward from previous year TOTAL Appropriations:

HUMAN RESOURCES In a aggressive business environment, a competent and motivated team of employees is a key ingredient for the success of an organization. We are pleased to report that during the year under review industrial relations at all units continued to be cordial. The Management thanks all the employees and workers for their continued contribution and efforts towards the Company’s progress.

For and on behalf of the Board of Directors

N.B. GODREJ Chairman Mumbai, May 21, 2008

32.04

Balance Carried Forward to Balance Sheet

188.60

127.44

ANNEXURE `A’

TOTAL

188.60

547.22

ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT

General Reserve

REVIEW OF OPERATIONS The Poultry Feed comprises a significant portion of your Company’s business. The Poultry Industry was adversely impacted by the Avian Influenza which was detected in Eastern India in January ’08. This resulted in a de-growth of the Industry during the year under review. Commodity prices in India followed the global trend and saw a significant increase in prices. This adversely impacted the profitability of your Business. Your Company tried to minimize the impact of these factors by focusing on R & D initiatives and other cost saving methods to contain the raw material cost increase. The year under review saw the turnover of your Company grow by 21.5% while the profitability being maintained at similar levels as the previous year.

B.S. Yadav Director

Conservation of Energy

The Company continues to successfully operate its policy of encouraging energy conservation measures and undertakes a regular review of energy consumption levels and the systems installed for effective control over the utilization of energy. Some of the measures adopted by your Company towards conservation of energy were as follows:-

DIVIDEND

Control over unwanted lighting

Your Directors have not paid any dividend for the year 2007-08 (for the previous year an interim dividend of Rs.18.50 per share on 18,38,170 shares). Your directors do not recommend any final dividend.

Use of diesel generators and gensets as alternative sources of energy

DIRECTORS Mr. V. Srinivasan, Director, retires by rotation at the ensuing Annual General Meeting in accordance with the provisions of the Companies Act, 1956 and being eligible, offers himself for re-appointment.

Recycling of boiler waste water

Installation of furnace oil boiler

Bypass of molasses blender

Installation of capacitors

Technology absorption, adaptation and innovation

AUDITORS

You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment and a certificate as required u/s 224 of the Companies Act, 1956 has been received from them.

II.

ADDITIONAL INFORMATION

Enhancement in the quality of products manufactured

The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.

Decline in per ton cost of production

Reduction in process loss

Decrease in the level of energy consumption and power cost

STATUTORY INFORMATION A)

Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo

The information in respect of these matters, required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report.

Particulars of Employees

None of the employees is covered under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002.

Your Company continues its constant endeavour for technological upgradation and undertakes in-house Research & Development for enhancing the quality of products manufactured at a reduced cost. The benefits derived as a result of various measures undertaken are as follows :

Foreign Exchange earnings and outgo

Your Company did not have any foreign exchange earning Foreign Exchange expenditure during the year under consideration was Rs. 6305 lac (Previous year Rs. 2679 lac).

For and on behalf of the Board of Directors

N.B. GODREJ Chairman Mumbai, May 21, 2008

B.S. Yadav Director

111

REPORT THE AUDITORS TO THE MEMBERS OF GOLDMOHUR FOODS & FEEDS LIMITED 1.

We have audited the attached Balance Sheet of Goldmohur Foods and Feeds Limited, as at 31st March 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

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

In our opinion, proper books of account as required by law, have been kept by the Company so far as appears from our examination of these books.

The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

Without qualifying our opinion, we draw attention to Note 4 of Schedule 12 Notes to Accounts, in respect of amortization of Trademarks. The same are amortized over a period of 15 years as compared to the recommended period of 10 years mentioned in Accounting Standards 26 Intangible Assets since, in the opinion of the management the Trademarks will have a useful life matching the amortization period. Being a technical matter, we have relied upon the management’s estimates stated in Note 4, which forms the basis of this assumption.

(a)

The Company has granted loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(b)

The rates of interest and the other terms and conditions of the loans granted are not prejudicial to the interest of the company and receipt of principal and interest is regular.

(c)

The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act.

(d)

Consequently, the question of commenting on the rates of interest and the other terms and conditions of the loans taken being prejudicial to the interests of the Company and payment of regular principal and interest does not arise.

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

(a)

(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, except for service transactions for which, there are no similar services received from other parties and hence the prices are not comparable.

In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public and hence the provisions of Section 58A, 58AA or any other provision of the Companies Act, 1956, read with the rules framed thereunder are not applicable.

In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business.

(a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues payable in respect of above as at 31st March, 2008 for a period of more than six months from the date they became payable.

In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.

in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008; and

ii)

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

iii)

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

(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty or cess on account of any dispute.

10)

The Company does not have accumulated losses at the end of the financial year and it has not incurred any cash losses in the current and immediately preceding financial year.

11)

12)

KALYANIWALLA & MISTRY Chartered Accountants

13)

ERMIN K. IRANI Partner Membership No. 35646

14)

The Company does not deal in shares, securities, debentures and other investments.

15)

Mumbai, May 21, 2008

According to the information and explanations given to us, the Company has not given guarantee for loans taken by others from banks and financial institutions.

16)

The company has not taken any term loan during the year.

17)

According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that no funds raised on shortterm basis have been used for long-term investment.

18)

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

The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

19)

The Company did not issue any debentures during the year.

20)

The Company has not raised any money through a public issue during the year.

21)

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

For and on behalf of

Annexure to the Auditors’ Report Referred to in paragraph (3) of our report of even date. 1)

(a)

(b)

(c)

In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

For and on behalf of

(a)

The Management has conducted physical verification of inventory at reasonable intervals.

KALYANIWALLA & MISTRY Chartered Accountants

(b)

In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

ERMIN K. IRANI Partner Membership No. 35646

(c)

The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

112

Mumbai, May 21, 2008

BALANCE SHEET AS AT MARCH 31, 2008

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008

As at As at As at Schedule 31/03/2008 31/03/2008 31/03/2007 No. Rs.’000 Rs.’000 Rs.’000 SOURCES OF FUNDS SHAREHOLDERS’ FUNDS SHAREHOLDERS’ FUNDS Share Capital Reserves and Surplus LOAN FUNDS Secured loans Unsecured loans

Schedule 1 2

18,382 188,563 206,945

18,382 182,447 200,829

For the year ended 31/03/08

For the year ended 31/03/07

Rs. ‘000

INCOME 3,929,003

Sales Other Income

3,233,489

16,824

30,025 3,945,827

500,000

DEFFERED TAX LIABILITY TOTAL APPLICATION OF FUNDS FIXED ASSETS 4 Gross block Less: Depreciation Net Block Capital work-in-progress Fixed Assets Held for Disposal at Net Realisable Value INVESTMENTS CURRENT ASSETS, LOANS AND ADVANCES Inventories

LESS : CURRENT LIABILITIES AND PROVISIONS Liabilities Provisions

777,659

343,229

EXPENDITURE Materials

3,435,283

2,791,578

Expenses

429,667

391,066

Interest and Financial Charges

6,213

5,728

30,284

30,802

Depreciation/Amortisation

3,901,447

3,219,174

44,380

44,340

PROFIT BEFORE TAXATION 485,833 182,200 303,633 598 -

459,402 153,062 306,340 10,108 7 316,455 -

Provision for Taxation

330,934 190,874 31,857 385,118 938,783

304,231 642

5 6

Sundry Debtors Cash and Bank Balances Loans and Advances

500,000 70,714

90,000 90,000 52,400

18,300

Current Fringe Benefit Deferred

13,500

1,650

1,300

18,313

(2,500) 38,263

12,300

6,117

32,040

Profit Brought Forward

12,743

22,682

378,835

AMOUNT AVAILABLE FOR APPROPRIATION

18,860

54,722

238,502 42,862 88,839 749,038

APPROPRIATION -

34,006

7 434,648 31,349 465,997

3,263,514

NET CURRENT ASSETS

472,786

705,130 17,134 722,264 26,774

TOTAL Notes to Accounts

777,659

343,229

PROFIT AFTER TAXATION

Interim Dividend Tax on Dividend

4,769

Transfer to General Reserve Surplus Carried Forward

Earnings per share (Basic/Diluted ) in Rs. (Refer Note 22) Notes to Accounts

3,204

18,860

12,743

18,860

54,722

3.33

17.43

The Schedules referred to above from an intergral part of the Balance Sheet

The Schedules referred to above from an intergral part of the Profit and Loss Account

As per our Report attached

Signatures to Balance Sheet and Schedules 1 to 7 and 12

For and on behalf of

KALYANIWALLA & MISTRY Chartered Accountants

E. K. IRANI MAKARAND KARNATAKI N.B. GODREJ Partner Company Secretary Chairman Membership No. 35646 Mumbai, May 21, 2008

B.S. YADAV Director

Signatures to Profit & Loss Accounts and Schedules 8 to 11 and 12

E. K. IRANI MAKARAND KARNATAKI N.B. GODREJ Partner Company Secretary Chairman Membership No. 35646 Mumbai, May 21, 2008

B.S. YADAV Director

SCHEDULES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2008 As at

As at

March 31, 2008

March 31, 2007

Rs.’000

50,000

SCHEDULE 1 : SHARE CAPITAL AUTHORISED 5,000,000 Equity Shares of Rs 10 each ISSUED, SUBSCRIBED AND PAID UP 1,838,170 Equity shares of Rs.10 each fully paid All the above shares are held by Godrej Agrovet Ltd (Holding Company) & its nominees 558,170 shares have been issued pursuant to a contract without payment being received in cash.

18,382

As at March 31, 2008 Rs.’000 SCHEDULE 2 : RESERVES AND SURPLUS SECURITY PREMIUM ACCOUNT As per last Balance Sheet GENERAL RESERVE ACCOUNT As per last Balance Sheet Add: Transfer from Profit & Loss Account

As at March 31, 2008 Rs.’000

As at March 31, 2007 Rs.’000

136,233

33,470 18,860 188,563

30,266 3,204 33,470 12,744 182,447

500,000 500,000

90,000 90,000

33,470 -

PROFIT AND LOSS ACCOUNT TOTAL SCHEDULE 3 : UNSECURED LOANS Short Term Loans from Banks TOTAL Repayable at call or within a year Rs.500,000 thosusands (Previous Year Rs.90,000 )

113

SCHEDULES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2008 SCHEDULE 4 : FIXED ASSETS ASSETS

GROSS BLOCK

DEPRECIATION

NET BLOCK

As at

Up to

For the

UP to

As at

1-Apr-07

31-Mar-08

1-Apr-07

Year

Deductions

31-Mar-08

31-Mar-07

Land - Freehold

5,191

Leasehold improvements

2,563

1,791

1,860

703

772

Buildings

6,105

1,585

162

1,747

4,358

4,520

As at

Plant & Machinery Power Generating Wind Mill Furniture, fittings & fixtures Computers Motor Vehicles

64,907

Additions

28,005

Deductions

123,491

92,840

26,625

5,932

123,491

11,987

6,520

32,488

60,352

38,283

18,508

104,983

111,504

3,172

3,118

1,309

191

1,448

1,670

1,863

11,249

311

710

10,850

9,065

1,077

701

9,441

1,409

2,185

5,935

1,098

4,886

2,038

546

325

2,260

2,626

3,897

236,789

98,662

15,786

114,448

122,341

138,127 306,341

Trade Marks

236,789

TOTAL

459,402

28,399

1,967

485,833

153,062

30,284

1,145

182,200

303,633

Previous Year

460,281

2,269

3,148

459,402

123,968

30,802

1,708

153,061

306,341

Capital Work-In-Progress/Advances

598

10,108

Assets Held For Disposal at Net

Realisable Value As at March 31st, 2008 Rs.’000

As at March 31st,2008 Rs.’000

As at March 31st, 2007 Rs.’000

SCHEDULE 5 : INVESTMENTS LONG TERM :TRADE QUOTED (AT COST) IN COMPANIES (a) 1207 Fully-Paid Equity Shares of 10 each in Castrol India Limited (b) 840 Fully -Paid Equity Shares of 10 each in Colgate Palmolive (India) Limited (Market value of Investments as at 31st March,2008 was Rs.613 thousands) TOTAL SCHEDULE 6 : CURRENT ASSETS , LOANS & ADVANCES (A) INVENTORIES : Raw Materials and Packing Material Stores & Spares Finished Goods Raw Material in Transit (B) SUNDRY DEBTORS : Debts outstanding for a period exceeding six months Considered Good Considered Doubtful

Other Debts Total Less: Provisions for doubtful debts

[Debts amounting to Rs.98,659 thousands (Previous Year Rs.1,37,857 thousands) are secured against Bank Guarantees. Debtors Rs.13,017 thousands (Previous Year Rs.15,012 thousands) are secured against Collateral Land and shares (C) CASH AND BANK BALANCES : Cash and cheques on hand Balances with Scheduled Banks In Current Accounts

316

326

642

330,934

281,859 517 58,632 37,827 378,835

190,874

30,362 4,105 34,467 208,138 242,605 4,105 238,500

264,640 520 40,322 25,452

37,948 37,948 152,926 190,874 -

6,690

7,512

25,167 31,857

(D) LOANS & ADVANCES : (Unsecured and considered good unless otherwise stated) Loans and Advances recoverable in cash or in kind or for value to be received : Considered good Considered Doubtful

Less: Provision for doubtful advances

Deposits TOTAL

114

35,350 42,863

Acceptances

Sundry Creditors (Note 5) Deposits

PROVISIONS For Taxation (Net of Advance Tax Rs.64,721 thousand; Previous Year Rs.55,285 thousand) For Gratuity For Leave Encashment

8,957 385,118 938,784

32,404 88,839 749,036

As at

March 31, 2008 Rs.’000

March 31, 2007 Rs.’000

50,960

159,651

380,894 2,794 434,648

539,862 5,617 705,129

18,447

5,828

12,902 31,349 465,997

8,884 2,422 11,306 17,134 722,264

10,030 2,872

TOTAL

For the year ended March 31, 2008 Rs. ‘000 SCHEDULE 8: OTHER INCOME Interest Income Income from wind mill Insurance Claim Received Miscellaneous Income (Tax Deducted at source Rs.nil thousand; Previous year Rs.4 thousand) Dividend SCHEDULE 9 : MATERIALS Raw Materials Consumed Opening Stock Add: Purchases during the year

Less:Closing stocks 56,435 1,070 57,504 1,070 56,435

7 316,456

SCHEDULE 7 :CURRENT LIABILITIES AND PROVISIONS A) CURRENT LIABILITIES

Less:Sales during the year

376,161 1,059 377,220 1,059 376,161

304,231

Purchase For Resale Inventory Change Opening Stock of Finished Goods Less: Closing Stock of Finished Goods

For the year For the year ended March ended March 31, 31, 2008 2007 Rs. ‘000 Rs. ‘000 85 12,606 9 4,098

97 18,545 87 11,289

16,824

30,024

3,206,305 210,668

247,215 2,840,213 3,087,428 257,081 2,830,347 281,859 2,548,488 236,646

18,310 3,435,283

65,076 58,632 6,444 2,791,579

281,859 3,477,395 3,759,254 288,309 3,470,945 264,640

58,632 40,322

SCHEDULES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2008

SCHEDULE 10 : EXPENSES 1 Salaries, Wages, Bonus 2 Provident and other funds 3 Workmen and staff welfare expenses 4 Processing charges 5 Power, light, fuel and water 6 Rent 7 Rates and taxes 8 Repairs and maintenance - Buildings - Plant - Other Assets 9 10 11 12 13 14 15 16

Insurance Postage, telephone and stationery Auditors’ Remuneration Legal and Professional charges Carriage and freight Advertisement and Sales Promotion Travelling and motor car expenses Provision for Doubtful Debts & Advances / (Written back) 17 Bad Debts Written Off 18 Loss on Sale of Fixed Assets (Net) 19 Miscellaneous Expenses

For the year ended March 31, 2008 Rs. ‘000

89,583 3,390 2,870 103,740 43,052 18,794 3,282

95,662 3,369 2,751 79,117 34,717 11,447 1,790 196 8,863 191

16,525 889 6,859 1,504 2,826 54,891 984 22,197 (4,105)

9,250 1,442 7,169 1,447 8,070 64,064 1,460 23,223 4,505

18,638 94 43,654

10,422 254 30,907

429,667

391,065

4,564 629 1,020 6,213

2,921 628 2,179 5,728

816 15,594 114

wages, performance incentives, etc. are recognised at actual amounts due in the period in which the employee renders the related service. b) Post-employment benefits: (i) Defined Contribution Plans: Payments made to defined contribution plans such as Provident Fund are charged as an expense as they fall due. (ii) Defined Benefit Plans: The cost of providing benefits i.e. gratuity is determined using the Projected Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial gains and losses are recognised immediately in the Profit & Loss Account. The fair value of the plan assets is reduced from the gross obligation under the defined benefit plan, to recognise the obligation on net basis. Past service cost is recognised as expense on a straight-line basis over the average period until the benefits become vested. (iii) Other long-term employee benefits: Other long-term employee benefits viz., leave encashment is recognised as an expense in the profit and loss account as and when they accrue. The Company determines the liability using the Projected Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial gains and losses in respect such benefits are charged to the profit and loss account. h) Revenue is recognised on despatch of goods to external customers. Sales are net of returns, trade discounts, rebates and sales tax. i) Revenue expenditure on Research and Development is charged to Profit and Loss Account of the year in which it is incurred. Capital Expenditure incurred during the year on Research and Development is shown as an addition to Fixed Assets.

Interest & Commitment Charges incurred in connection with borrowings of funds which are directly attributable to the acquisition, construction or production of an asset that necessarily takes substantial period of time to get ready for its intended use, upto the time the said asset is put to use are capitalised, as a part of the cost of that asset. Other borrowing cost are recognised as an expense in the period in which they are incurred.

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.

SCHEDULE 12 : NOTES TO ACCOUNTS

Deferred Tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainity that sufficent future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year end, based on the tax rates and laws enacted or substantially enacted on the Balance Sheet date.

The basic earnings per share is computed using the weighted average number of common share outstanding during the period. Diluted earning per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.

Miscellaneous Expenditure:

SCHEDULE 11 : INTEREST AND FINANCIAL CHARGES (a) Interest paid on fixed loans i) Banks (b) Interest on other Loans - Banks (c) Other Financial Charges

SIGNIFICANT ACCOUNTING POLICIES a) The accounts have been prepared on historical cost convention. The Company follows mercantile system of accounting and recognises income and expenditure on accrual basis b) Fixed assets have been stated at cost and include incidental and/or installation/ development expenses incurred in putting the asset to use and interest on borrowing incurred during construction period. Pre-operative expenses for major projects are also capitalised, where appropriate. c) Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount. d) Depreciation/Amortisation has been provided for as under : (a) Depreciation has been provided on Straight Line Method at rates specified in Schedule XIV of the Companies Act, 1956. Except Computers which are depreciated at the rate of 25% on straight line method. The Company has grouped additions and disposals in appropriate time periods of a month/quarter for the purpose of charging prorata depreciation in respect of additions and disposals of its assets keeping in view the materiality of the items involved. (b) 1) Leasehold Improvements: At a rate which will reduce the principal value of each asset to “Nil” over the primary lease period. 2) Trademarks are amortised over the period of 15 years. e) Long Term investments are carried at cost. Provision for diminution, if any, in the value of each long term investment is made to recognise a decline, other than of a temporary nature. Current investments are stated at lower of cost and net realizable value. f) Raw materials are valued at moving weighted average cost. Finished goods are valued at lower of cost and net realisable value after providing for cost of obsolescence and other anticipated losses, wherever considered necessary. Cost is computed on weighted average basis. Finished goods include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Stores and spares are valued at cost using the First-In-First-Out method g) Employee Benefits: a) Short-term employee benefits: All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries,

Front-end fee paid on loans raised is amortised over the period of loan.

Provisions and Contingent Liabilities

Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

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

2) CAPITAL COMMITMENTS Gross value of Capital commitments made during the year is Rs Nil thousands of which the company has incurred a sum of Rs.Nil thousands and Estimated value of contracts remaining to be executed to the extent not provided for is Rs. Nil thousands (Previous Year Rs. 13,119 thousands). 3) SECURED LOANS\UNSECURED LOANS Cash Credit from Banks are secured by way of hypothecation of the entire Inventory, Book Debts (both present & future) and also by Corporate Guarantee from the Holding Company, Godrej Agrovet Limited. 4) TRADEMARKS The Trade Marks of the Company have a huge market potential, strong market position and Research & development set-up, which constantly refurbishes the products to avoid technological obsolescence. The management is of the opinion that the useful life of the brands is much beyond 15 years. On a conservative basis the management has decided to amortize the brand acquisition cost over a 15 year period.

115

SCHEDULES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2008 5)

MICRO, SMALL AND MEDIUM ENTERPRISES Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 2, 2006, the company is required to make certain disclosures relating to Micro, Small and Medium Enterprises. The company is in the process to compiling and assimilating the relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosures have been made in the Accounts. For the Year For the Year 31/03/08 31/03/07 Unit Quantity Value Quantity Value Rs. '000

SALES TURNOVER

MT 12,997

369,457

8,948

244,317

Cattle Feed

25,989

187,772

37,006

232,624

243,331 3,226,254

Lab Feeds Others TOTAL

2,629

222

2,617

4,372

142,891

1,596

296,097

FINISHED GOODS INVENTORIES Cattle Feed Poultry Feed Lab Feeds Others TOTAL

PURCHASE FOR RESALE Aqua Feed Cattle Feed Poultry Feed Others TOTAL

RAW MATERIALS CONSUMED DLM Maize Rice Bran Extraction Rice Bran Soya Others TOTAL

For the Year

Aqua, Cattle and Poultry Feed

31.03.08

Aqua, Cattle and Poultry Feed

31.03.07

31/03/07 Rs. '000

Rs. '000

312

8,929

759

22,794

18. Disclosure Under AS – 15 ( Revised 2005):

439 2,039 3 15 2,808

3,190 27,709 81 413 40,322

567 2,954 4 29 4,313

3,686 30,991 30 1,131 58,632

32 9,952 11,778 258 22,020

231 68,366 138,727 3,344 210,668

188 14,315 14,664 168 29,335

1,074 90,999 143,183 1,389 236,646

333 58,896 84,945 714,376 25,311 105,089 7,377 55,009 64,022 666,352 948,766 181,988 2,548,488

Capacity Per Annum Registered Installed MT MT Not 232,000 Applicable 232,000

Actual Capacity Per Annum Production*MT Registered MT 263,339

Not Applicable

246,794

Not Applicable

COMMON EXPENSES ALLOCATED BY THE HOLDING COMPANY: Expenses (Schedule 12) include amounts charged by Godrej Agrovet Limited, the Holding Company

116

AUDITORS’ REMUNERATION Statutory Audit Audit under other statutes Certification Taxation Representation Before Authorities TOTAL

For the Year 31/03/08 Rs. '000s

For the Year 31/03/07 Rs. '000s

26,400

26400

1,504 1,447

898 393 44 112 1,447

338,054 338,054

152,837 152,837

29 6,276 6,305

312 2,367 2,679

For the Year 31/03/08 % Value Rs. '000 7 93 100

2,15,388 29,90,917 32,06,305

For the Year 31/03/07 % Value Rs. '000 6 94 100

1,58,912 23,89,576 25,48,488

17. The amount of exchange difference included in the profit and loss account under the related heads of income\expenses is Rs.15,980 thousands (net income) (Previous Year Rs 3,281 thousands, net expenses). The amount of exchange difference in respect of forward exchange contracts to be recognized in the Profit or Loss account of subsequent accounting periods is Rs Nil thousands (Previous Year Rs.140 thousands).

Rs. '000

* Actual Production Includes Production at thiurd party processing locations

Raw Materials : Imported Items (Including Duty Content) Indigeneous TOTAL

Value

405 68,994 88,544 701,732 32,094 137,304 7,256 58,713 64,877 895,315 - 1,344,248 193,176 3,206,305

Not Applicable

VALUE OF CONSUMPTION OF RAW MATERIALS

Quantity

LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION Item

For the Year 31/03/07 Rs. '000s

EXPENDITURE IN FOREIGN CURRENCY Travelling Expenses Bank Charges TOTAL

Value

Aqua Feed

For the Year

31/03/08 Quantity

VALUES OF IMPORTS ON CIF BASIS Raw Materials TOTAL

276,981 3,233,490

For the Year Unit

229,209 2,457,835

176

286,864 3,929,003

Revenue expenditure on scientific research debited to respective expense heads Rs.2529 thousands (Previous Year Rs.2,657 thousands)

Rs. '000

Aqua Feed Poultry Feed

For the Year 31/03/08 Rs. '000s

Effective from 1st April 2007, the company has adopted the revised accounting standard on Employee Benefits: I. Defined Contribution Plans: Contribution to Defined Contribution Plan, recognised as expense for the year are as under: Rs.’000 Employers’ Contribution to Provident Fund 2,095 II. Defined Benefit Plan a. Contribution to Gratuity Fund

The Company makes provision for gratuity in the books of accounts for qualifying employees. Gratuity is payable to all eligible employees on superannuation, death or on separation/ termination in terms of the provisions of the Payment of Gratuity Act or as per the Company’s policy whichever is beneficial to the employees.

Reconciliation of the projected benefit obligations Change in projected benefit obligation Obligations at period beginning Service Cost Interest Cost Benefits Paid Actuarial (Gain)/ Loss Obligations at period end Reconciliation of present value of obligation and fair value of plan assets. Fair Value of plan assets at the end of the year Present Value of defined benefit obligation a the end of the year Liability recognised at the balance sheet Gratuity cost for the period Service cost Interest cost Expected return on plan assets Actuarial Gain/ (Loss)

2007-08 Rs.’000 8,884 665 655 -1391 1217 10,030 10,030 (10,030) 665 655 1217

Net Gratuity cost

Assumptions

2537

Discount Rate

8.00%

Salary Escalation Rate

7.00%

Note:

ii.

SCHEDULES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2008 19. SEGMENT REPORTING

The company is primarily engaged in the business of manufacturing and distribution of Animal Feeds like Aqua Feed, Poultry Feed, Cattle Feed, Lab Feed etc., Accordingly, in the opinion of the management, it has only one primary segment and no further disclosure is deemed necessary to pursuant to Accounting Standard 17 on Segment Reporting, issued by the Institute of Chartered Accountants of India.

DEFERRED TAX

In accordance with the Accounting Standard 22 on Accounting for Taxes on Income, the Company has made adjustments in its accounts for deffered tax liabilities/assets.

The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities are :

Depreciation on Fixed Assets Carried forward loss Provision for Doubtful Debts Provision for Doubtful Advances Others

For the Year 31/03/08 Rs. '000 (75,459) 360 4,385 (70,713)

For the Year 31/03/07 Rs. '000 (57,986) 1,759 3,827 3,827 (52,385)

70,714

(52,400)

21. RELATED PARTY DISCLOUSERE Related party disclosure as required by AS-18 “Related Party Disclosure” are given below 1. Relationships: i. Holding Company Godrej Agrovet Limited (GAVL) holds 100% in the Company. GAVL is the subsidiary of Godrej Industries Limited (GIL). GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the ultimate Holding Company. ii. Associate Company: Godrej Gold Coin Aqua Feed Private Limited. GAVL has acquired 49% stake in company during the year. 2. The following transactions were carried out with the related parties in the ordinary course of business: (i) Details relating to parties referred to in 1 above Rs.’000’s Rs.’000’s Holding Associate Company Company 1) Sale of Materials / Finished Goods 3,36,121 1,32,548 595 2) Sale of Services – – 180 – 3) Purchase of Materials/Finished Goods 1,78,170 – 1,98,469 2,820 4) Expenses charged to other companies 19,920 – (Inclusive of sale of services) 8,400 – 5) Expenses charged by other companies 38,655 – 39,152 – 6) Dividend Paid – – 34,006 – 7) Outstanding receivables, net of payables 8,88,756 – 5,497 (2,225) 8) Guarantees taken – – 5,900 – 9) Loans Given 3,40,000 – – – Note: Figures in italics pertains to the previous year 3. Significant Related Party Transactions All the transactions with holding company mentioned above are with Godrej Agrovet Ltd. and all the transactions with Associate Company mentioned above are with Godrej Gold Coin Aqua Feed Pvt. Ltd.

Particulars For the Year For the Year 31.3.08 31.3.07 Rs. 000 Rs. 000 Lease rental paid during the year 13,153 10,640 Future Lease Obligations Due within one year of balance sheet date 7,504 6,061 Due after one year and within five years of balance sheet date 15,892 8,832 Due after five years of balance sheet date 9,360 24. Information required under Schedule VI to the Companies Act, 1956 has been given to the extent applicable. 25. Figures for the previous financial year have been regrouped wherever necessary. 26 Information required to be furnished under the Part IV of Schedule VI of the Companies Act , 1956 Balance Sheet Abstract and Company’s General Business Profile i) Registration Details Registration No 17887 State Code 11 Balance Sheet 31-Mar-2008 ii) Capital raised during the period (Rupees '000) Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement Nil iii) Position of mobilisation and deployment of funds (Rupees ‘000) Total Liabilities 777,659 Total Assets 777,659 Source of Funds Paid up Capital 18,382 Reserve & Surplus 188,563 Secured Loans Unsecured Loans 500,000 Deferred Tax Liability 70,714 Application of Funds Net Fixed Assets 304,230 Investments Net Current Assets 472,787 Misc. Expenditure iv) Performance of the Company (Rupees ‘000) Turnover 3,945,827 Total Expenditure 3,901,447 Profit Before Tax 44,380 Profit After Tax 6,117 Earnings Per Share in Rs. 3.33 Dividend Rate 0% v) Generic Names of three Principal Products Services of the Company Item Code No 23099001 Product Description Animal Feeds

22. EARNINGS PER SHARE: Profit after tax and prior period items (Rs.‘000) Weighted average number of equity shares outstanding Basic & Diluted earnings per share Nominal value of shares 23. DISCLOSURES IN RESPECT OF LEASES:

For the Year 31.3.08 6,117 18,38,200 3.33 10.00

For the Year 31.3.07 32,040 18,38,200 17.43 10.00

The Company’s leasing arrangements are in respect of operating leases for premises occupied by the Company. These leasing arrangements are cancelable, and are renewable on a periodic basis by mutual consent on mutually accepted terms.

The aggregate lease rental payable by the Company and charged to Profit and Loss Account (Schedule 10) is as follows:

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CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008

Rs. (000’s) A. Cash Flow from Operating Activities: Profit before Tax and Operational Items Adjustment for: Depreciation Loss/(Profit) on sale of Fixed Assets Exchange Difference Dividend Income Finance Charges Interest Income Interest Expense Operating Profit before Working Capital Changes Adjustments for : Inventories Debtors and Other receivables Creditors and Other payables

44,380 30,284 94 (15,980) (26) 1,020 (85) 5,193

C. Cash from Financing Activities: Proceeds from Borrowings Repayment of Borrowings (Decrease)/Increase in Cash Credit/WCDL from Banks (net) Interest Paid Dividend Paid Tax on distributed profits Other Financial Charges Net Cash used in Financing Activities Net Increase/(Decrease) in Cash and Cash Equivalents Cash and Cash equivalents (Opening Balance) Cash and Cash equivalents (Closing Balance) As per our Report attached For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants

20,500 64,880

(453,659) (388,779) (7,332) (396,111)

(55,215) (88,599) 174,084 30,270 113,067 (6,681) 106,386

(18,681)

(12,377) 1,200 – 6 97 (11,074)

(18,885) 735 (642) 26 85

410,000 -

(10,000) (8,453)

(5,193) (1,020) 403,787

(3,631) (34,006) (4,769) (60,858)

(11,005)

34,454

42,863 31,857

8,410 42,864

For and on behalf of Board

E. K. IRANI MAKARAND KARNATAKI N. B. GODREJ Chairman Partner Company Secretary B.S.YADAV Director Mumbai, May 21, 2008

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44,340 30,802 254 3,956 (6) (97) 3,549 38,457 82,797

47,901 (248,654) (252,906)

Cash Generated from Operations Direct taxes Paid Net Cash Generated from Operating Activities B. Cash from Investing Activities: Acquisition of Fixed Assets Proceeds from sales of Fixed Assets Investments Dividend Income Interest Income Net Cash used in Investing Activities

For the For the Year Ended Year Ended 31/03/2008 31/03/2007 Rs. (000’s) Rs. (000’s)

DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31, 2008 To The Shareholders Your Directors have pleasure in submitting their Report along with the audited Accounts for the financial year ended on March 31, 2008. CHANGE IN SHAREHOLDING AND CONTROL: The total paid-up share capital of the Company is Rs.3,80,00,000/- (i.e. 38,00,000 equity shares of Rs. 10/- each) out of which during the year under review 51% shareholding (i.e. 19,38,000 shares) was transferred to Godrej Agrovet Ltd. and the balance shall continued to be held by the promoter shareholder. FINANCIAL RESULTS: Your Company’s performance during the year as compared with that during the previous year is summarized below:Rs.lac For the year ended 31/3/2008 130.49 (27.97) (2.68) (30.64) (70.35) (101) (101)

For the year ended 31/3/2007 105.41 (17.86) (1.95) (19.81) (50.54) (70.35) (70.35)

Total Income Profit Before Taxation (PBT) Less : Provision for Taxation Profit After Taxation (PAT) Balance brought forward from previous year Total Balance Carried Forward to Balance Sheet DIVIDEND The Directors do not recommend any dividend for the year 2007-08. FIXED DEPOSITS The Company has not accepted any public deposits during the financial year under review. HOLDING COMPANY The Company is a subsidiary of Godrej Agrovet Limited as defined under Section 4(1)(b) of the Companies Act, 1956. SUBSIDIARY COMPANIES The Company has no subsidiary companies during the year under review. DIRECTORS: Mr. Krishnamurthy Venkatraman (Chairman), Mr. Jayakar Krishnamurthy, Mr. Rangaguduru Rao, Mr. Vaidyanathan Venkatraman and Mr. Krishnaswami Ramamurthy were the Directors of the Company as on the date of the last Annual General Meeting. During the year under reveiw, Mr. Rangaguduru Rao, Mr. Vaidyanathan Venkatraman and Mr. Krishnaswami Ramamurthy have resigned from directorship while Mr. N. B. Godrej, Mr. B. S. Yadav and Mr. R. R. Govindan have been appointed as Additional Directors. Mr. Krishnamurthy Venkatraman (Chairman) and Mr. Jayakar Krishnamurthy are liable to retire by rotation at the ensuing Annual General Meeting of your Company. Mr. N. B. Godrej, Mr. B. S. Yadav and Mr. R. R. Govindan being Additional Directors hold office upto the date of the ensuing Annual General Meeting. They are eligible for appointment as the Directors of the Company. Notices in this respect under Section 257 of the Companies Act, 1956 have been received from one of the Members along with a deposit of Rs. 500/- (Rupees Five Hundred only) for each of them signifying the intention to propose their candidatures for the office of Directors of the Company.

AUDITORS: You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors M/s. R. Thiagarajan, Chartered Accountants, Chennai have expressed their unwillingness to be re-appointed and hence it is proposed to appoint M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai as the auditors of the Company. M/s. Kalyaniwalla & Mistry have confirmed that they are eligible for re-appointment and a certificate as required under Section 224 (1-B) of the Companies Act, 1956 has been received from them. ADDITIONAL INFORMATION The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation. STATUTORY INFORMATION A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo The information in respect of these matters, required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report. B) Particulars of Employees None of the employees is covered under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002. C) Directors’ Responsibility Statement Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm : a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same; b) that they have selected such Accounting Policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities; d) that they have prepared the annual accounts on a going concern basis. HUMAN RESOURCES Your Company aims to focus on development of Human Resources. The industrial relations are cordial and the Board would like to place on record its sincere appreciation for the unstinted support from all the employees.

For and on behalf of the Board of Directors

Chennai, May 20, 2008.

R. R. Govindan Director

V. Krishnamurthy Chairman

Conservation of Energy

The Company had taken adequate measures to conserve energy. The mill was operated with generated power from the Diesel Generator unit during the entire year.

Technology absorption, adaptation and innovation

Your Company constantly endeavours for technological upgradation and conducts in-house Research and Development for achieving improved quality at a lower cost.

Chennai, May 20, 2008.

AUDITOR’S REPORT To The Members of Cauvery Palm Oil Limited 1. I have audited the attached Balance Sheet of Cauvery Palm Oil Limited as at March 31, 2008 and the Profit and Loss Account for the year ended on that date annexed thereto. These Financial Statements are the responsibility of the Company’s Management. My responsibility is to express an opinion on these Financial Statements based on my audit. 2. I have conducted the audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that I plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free from material misstatement. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the Accounting Principles used and significant estimates made by management, as well as evaluating the overall Financial Statement presentation. I believe that my audit provides a reasonable basis for my opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies, (Auditor’s Report) (Amendment) Order 2004 issued by the Government of India in terms of

The benefits derived as a result of various measures undertaken are as follows :1. Improvement in quality of products manufactured 2. Improvement in power factor levels and reduced load on cables 3. Reduction in process loss 4. Enhancement in the life of equipment Foreign Exchange earnings and outgo Earnings NIL Outflow Rs.13678/For and on behalf of the Board of Directors

R.R. Govindan Director

V. Krishnamurthy Chairman

sub-section (4A) of Section 227 of ‘The Companies Act, 1956’ of India (the ‘Act’) and on basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to me, I give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order to the extent applicable. Further to my comments in the Annexure referred to in paragraph 3 above, and Note No. 1 (d) in Schedule 20 Notes to the Accounts with regard to inclusion of Certain items of Cost in the Valuation of Closing Stock, I report that :

I have obtained all the information and explanations, which to the best of my knowledge and belief, were necessary for the purposes of my audit.

In my opinion, proper books of account, as required by law, have been kept by the Company so far as appears from my examination of such books.

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

In my opinion, the Balance Sheet and Profit and Loss Account dealt with by this report is in conformity with the Mandatory Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent it is applicable.

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On the basis of the written representations received from the Directors as on March 31, 2008 and taken on record by the Board of Directors, I report that none of the Directors is disqualified as on March 31, 2008 from being appointed as Director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956. In my opinion and to the best of my information and according to the explanations given to me, the said accounts read together with the Significant Accounting Policies and other notes thereon and attached thereto give in the prescribed manner the information required by the Companies Act, 1956 and also give a true and fair view, in conformity with the accounting principles generally accepted in India:

ii.

in case of the Balance Sheet, of the state of affairs of the C ompany as at March 31, 2008. in case of the Profit and Loss Account, of the Loss for the year ended on that date. R. Thiagarajan Chartered Accountant

Chennai, May 20, 2008

ANNEXURE TO THE AUDITORSâ&#x20AC;&#x2122; REPORT REFERRED TO IN PARA 4 OF MY REPORT OF EVEN DATE i.

The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. b) The Company has a phased programme of physical verification of Fixed Assets which in my opinion is reasonable having regard to the size of the Company and nature of its business. No material discrepancies were noticed on such verification. c) The Company has not disposed of substantial part of its Fixed Assets, which will affect the going concern status of the Company. ii. a) The Stocks of Seedlings at various age groups in the Nurseries of the Company and Stores and Spares have been physically verified at reasonable intervals during the year by the Management. In my opinion the frequency of such verification is adequate. b) In my opinion and according to the information and explanations given to me, the procedures for physical verification of Seedlings at various age groups in the Nurseries of the Company and Stores and Spares followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. c) In my opinion, the Company has maintained proper records of Seedlings at various age groups in the Nurseries of the Company and Stores and Spares. The discrepancies between the physical stocks were not material and have been properly dealt with in the books of account. iii. a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Accordingly, clauses 4 (iii) (b) (c) and (d) of the Order are not applicable to the Company. b) The Company had taken unsecured loans from a Company covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 25 Lacs and the year-end balances of these loans taken from such companies are Rs. 25 Lacs. c) In my opinion the rate of interest and other terms and conditions of such loan taken by the Company is not prima facie prejudicial to the interest of the Company. d) The payment of principal amount and interest thereon were regular. iv. In my opinion and according to the information and explanations given to me, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of FFBs, Stock of Seedlings, Stores and Spares, Fixed Assets and for the sale of goods. During the course of my audit, I have not observed any continuing failure to correct the weaknesses in the internal control. v. a) In my opinion and according to the information and explanations given to me, the transactions that need to be entered in the register maintained in pursuance of Section 301 of the Act have been so entered in the register, required to be maintained under that section. b) In my opinion and according to the information and explanations given to me, there are no transactions made in pursuance or arrangements entered in the register in pursuance of Section 301 of the Act and exceeding the value of Rupees Five Lakhs in respect of any party during the year, which have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. vi. The Company has not accepted deposits from the public and therefore the provisions of Sections 58A and 58AA and any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 does not apply and hence no order under

120

the aforesaid sections has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal. vii. The Company has an internal audit system, commensurate with its size and nature of its business. viii. To the best of my knowledge and belief, the Central Government has not prescribed under Section 209 (1) (d) of the Companies Act, the Accounts and Records required to be maintained. ix. a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to the Company with the appropriate authorities. b) According to the information and explanations given to me, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess were in arrears, as at March 31, 2008 for a period of more than six months from the date they became payable. c) According to the information and explanation given to me, there are no dues of Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Cess, which have not been deposited on account of any dispute. x. There company has the accumulated losses as on March 31, 2008, which is less than 50% of its net worth as on that date. The Company has not incurred cash losses during the financial year under audit and for the immediately preceding financial year. xi. The Company has not defaulted in repayment of dues to the Bank. The Company has not issued any debentures and the Company has no borrowings from any Financial Institutions. xii. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. xiii. The Company is not a Chit Fund or a Nidhi or a Mutual Benefit Fund or a Society. xiv. The Company is not dealing in or trading in shares, securities, debentures and other investments. xv. The Company has not given any guarantee for loans taken by others from banks or financial institutions. xvi. The term loans availed by the Company were utilised for the purpose for which the loans were obtained. xvii. According to the information and explanations given to me and on overall examination of the Balance Sheet of the company, I report that no funds raised on short-term basis have been used for long-term investments and no long-term funds have been used to finance short-term assets. xviii. The Company has not allotted any shares to any party during the year under review. xix. The Company has not issued any debentures during the year under review. xx. The Company has not raised any money by Public issue during the year under review. xxi. No frauds on or by the Company has been noticed or reported during the year under review.

Chennai, May 20, 2008

R. Thiagarajan Chartered Accountant

BALANCE SHEET AS AT MARCH 31, 2008 As at As at Sch No. March 31, 2008 March 31, 2007 Rs. Rs. Rs. Rs. SOURCES OF FUNDS Shareholders’ Funds Share Capital 1 38,000,000 38,000,000 Reserves & Surplus 2 32,000,018 95,000,018 Loan Funds Secured Loans 3 24,853,982 20,656,806 Unsecured Loans 4 7,500,000 1,000,000 TOTAL 102,354,000 154,656,824 APPLICATION OF FUNDS Fixed Assets Gross Block 5 48,080,249 48,301,209 Less : Depreciation 8,237,977 6,433,013 Net Block 39,842,272 41,868,196 Project Development Cost 6 16,100,000 86,000,000 Current Assets, Loans & Advances Sundry Debtors 7 7,330,260 7,346,000 214,744 275,850 Cash and Bank Balances 8 Inventories 9 13,956,022 10,549,208 Loans & Advances 10 733,447 835,091 22,234,473 19,006,149 Less: Current Liabilities Current Liabilities 11 1,975,713 2,979,119 Provisions 12 3,320,945 2,380,598 Net Current Assets 16,937,815 13,646,432 Miscellaneous Expenditure 13 19,373,765 6,106,918 (to the extent not written off or adjusted) Profit and Loss Account 10,100,148 7,035,278 TOTAL 102,354,000 154,656,824 Notes to Accounts 20

Profit and Loss Account for the year ended March 31, 2008 Sch No. As at As at March 31, 2008 March 31, 2007 Rs. Rs. 13,049,217 10,541,224 Sales 14 22,376,015 16,121,190 Revenue from Nursery Operations 664 626 Other Income 3,434,558 1,287,230 Increase/(Decrease) in Stock 38,860,454 27,950,270 TOTAL 5,818,875 2,794,352 11,734,504 5,727,755 4,196,274 2,011,511 314,308 1,150,000 2,159,664 35,907,243

Raw Material Manufacturing Expenses 15 Expenses for Nursery Operations 16 Salaries, Wages and Bonus 17 Selling, General and Administration Expenses 18 Interest & Finance Charges 19 Pre-Operative Expenses Written Off Amortisation of Proj. Dev. Cost Depreciation TOTAL Profit before Prior Period Item Prior Period item (See Note No. 1 (n) (ii) in Notes to Accounts) Profit/(Loss) before tax Provision for Taxation - Current - Defered - Fringe Benefit Tax Profit/(Loss) after Tax Balance brought forward from previous year Balance carried to Balance Sheet

5,478,034 2,574,428 7,557,121 4,851,294 5,189,382 1,706,297 314,309 – 2,065,284 29,736,149

2,953,211 5,750,000

(1,785,879) –

(2,796,789) – – 268,081 (3,064,870) (7,035,278) (10,100,148)

(1,785,879) – – 195,359 (1,981,238) (5,054,040) (7,035,278)

Notes to Accounts 20 Schedules 1 to 20 annexed are an integral part of this Balance Sheet. As per my report of even date attached

The Schedules referred to above form an integral part of the Balance Sheet As per our Report attached For and on behalf of

Signatures to Balance Sheet and Schedules 1 to 13 and 20

The Schedules referred to above form an integral part of the Balance Sheet As per our Report attached For and on behalf of

Signatures to Balance Sheet and Schedules 14 to 20

R.THIAGARAJAN Membership No. 026558 Chartered Accountants

V. Krishnamurthy Chairman

R.THIAGARAJAN Membership No. 026558 Chartered Accountants

V. Krishnamurthy Chairman

R. R. Govindan Director

U.R.Pathak Company Secretary Chennai, May 20, 2008

R. R. Govindan Director

U.R.Pathak Company Secretary Chennai, May 20, 2008

SCHEDULES TO ACCOUNTS

SCHEDULE 1: SHARE CAPITAL Authorised 50,00,000 (Previous Year - 50,00,000) Equity Shares of Rs.10/- each. TOTAL Issued, Subscribed and Paid up 38,00,000 (Previous Year - 38,00,000) Equity Shares of Rs.10/- each. (includes 23,00,000 Equity Shares of Rs.10/- each Issued as Fully paid Bonus Shares by capitilising the revaluation reserve) TOTAL SCHEDULE 2 : RESERVES & SURPLUS Asset Revaluation Reserve Less: Adjustment against Project Development Cost Capital Reserve Share Premium Account TOTAL

Year Ended Year Ended March 31, 2008 March 31, 2007 Rs. Rs. 50,000,000

50,000,000

38,000,000

SCHEDULE 3 : SECURED LOANS Term Loan including Interest Accured and Due From a Bank Repayable within One Year : (Rs.15,13,200/- Previous Year : Rs. 15,04,800) Overdraft Facility From a Bank

38,000,000

SCHEDULE 4 : UNSECURED LOANS Inter Corporate Deposit

7,500,000

1,000,000

TOTAL

7,500,000

1,000,000

63,000,000 63,000,000 22,000,018 10,000,000 32,000,018

Year Ended Year Ended March 31, 2008 March 31, 2007 Rs. Rs.

TOTAL

3,899,531

5,288,937

20,954,451

15,367,869

24,853,982

20,656,806

63,000,000 63,000,000 22,000,018 10,000,000 95,000,018

SCHEDULE 5 : FIXED ASSETS

(Rs.)

Particulars As at 01.04.2007 Lands – Freehold Lands – Leasehold Buildings Plant and Machinery Office Equipment Furniture and Fixtures Computers Vehicles TOTAL Previous Year

Gross Block Additions Deletions

As at 31.03.2008

As at 01.04.2007

Depreciation For the Deductions Year

As at 31.03.2008

Net Block As at As at 31.03.2008 31.03.2007

– – – 289,069 125 2,813 14,800 –

– – – – – – – 527,767

396,544 54,000 14,475,707 29,194,780 73,506 86,735 447,015 3,351,962

– – 1,057,068 4,101,238 28,796 38,830 205,443 1,001,638

– – 351,797 1,386,985 2,882 6,780 64,369 346,851

– – – – – – – 354,700

– – 1,408,865 5,488,223 31,678 45,610 269,812 993,789

396,544 54,000 13,066,842 23,706,557 41,828 41,125 177,203 2,358,173

396,544 54,000 13,418,639 24,804,473 44,585 45,092 226,772 2,878,091

48,301,209

306,807

527,767

48,080,249

6,433,013

2,159,664

354,700

8,237,977

39,842,272

41,868,196

47,068,343

1,240,581

7,715

48,301,209

4,369,928

2,065,284

2,199

6,433,013

41,868,196

42,698,415

396,544 54,000 14,475,707 28,905,711 73,381 83,922 432,215 3,879,729

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SCHEDULES TO ACCOUNTS SCHEDULE 6 : PROJECT DEVELOPMENT COST As per the last Balance Sheet Less : Adjusted against Revaluation Reserve Less : Written Off as Prior Period Item Less : Written Off for the year TOTAL

As at As at March 31, 2008 March 31, 2007 Rs. Rs. 86,000,000 63,000,000 5,750,000 1,150,000 16,100,000

86,000,000 86,000,000

1,000 7,329,260 7,330,260

7,346,000 7,346,000

9,376 200,368 5,000

82,467 188,383 5,000

214,744

275,850

193,036 236,213 13,526,773 13,956,022

220,780 302,379 10,026,049 10,549,208

1,145 181,338 27,437 356,168 167,359 733,447

833 406,820 26,084 401,354 835,091

Current Assets, Loans & Advances Current Assets SCHEDULE 7 : SUNDRY DEBTORS (Unsecured, Considered Good) Debts outstanding for more than six months Other Debts TOTAL SCHEDULE 8 : CASH AND BANK BALANCES Cash on hand Balance with Scheduled Banks in Current Accounts Fixed Deposit with Bank (FD Receiept lodged with Commercial Tax Dept.) TOTAL SCHEDULE 9 : INVENTORIES (As Valued and Certified by the Management) Stock of Stores and Spares Stock of Crude Palm Oil Stock of Seedlings TOTAL SCHEDULE 10 : LOANS AND ADVANCES (Unsecured, but considered good-recoverable in cash or in kind for value to be received) Interest Accrued but not Due Advances Deposits Prepaid Expenses Fringe Benefit Tax Paid TOTAL Current Liabilities and Provisions SCHEDULE 11 : CURRENT LIABILITIES Sundry Creditors Small Scale Industrial Undertakings Other than Small Scale Industrial Undertakings Advance from Customers TDS Payable Other Liabilities TOTAL

- 1,286,443 115,685 75,545 498,040 1,975,713

2,289,102 17,517 18,956 653,543 2,979,119

SCHEDULE 12 : Provisions - For Gratuity - For Super Annuation - For Leave Encashment - For Fringe Benefit Tax TOTAL

576,398 1,030,582 1,445,884 268,081 3,320,945

296,729 913,582 966,158 204,129 2,380,598

12,138 6,071 6,067

18,209 6,071 12,138

Pre-Operative Expenses - Nursery Operations As per the Last Balance Sheet Less : Written off during the year Total (B)

942,925 314,309 628,616

1,257,234 314,309 942,925

“Area Development Expenses - Capitalised - Cuddalore and Villupuram Districts (Refer Note No. 4 in the Notes to Accounts)” As per the Last Balance Sheet Incurred during the year Total (C)

5,151,855 13,587,227 18,739,082

5,151,855 5,151,855

Total (A), (B) and (C)

19,373,765

6,106,918

SCHEDULE 14 : Income Sale of Crude Palmoil Sale of Oil Palm Nuts Total

11,528,851 1,520,366 13,049,217

9,455,300 1,085,924 10,541,224

SCHEDULE 13 : MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) Preliminary Expenses As per the Last Balance Sheet Less : Written off during the year Total (A)

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As at As at March 31, 2008 March 31, 2007 Rs. Rs. SCHEDULE 15 : Manufacturing Expenses - Palm Oil Mill Raw Materials Logistics Expenses 875,162 773,118 Factory Electricity Charges and Fuel 681,887 643,052 Stores and Spares Consumed 38,081 11,945 Factory Insurance 149,080 179,076 Factory Rates and Taxes 29,015 25,271 Repairs and Maintenance - Buildings 14,597 8,666 - Plant and Machinery 152,600 78,601 - Others 58,080 134,377 Factory Running Expenses 201,220 224,273 Factory Security Charges 236,051 200,398 Compost Development Expenses 65,683 9,468 Other Factory Administrative Expenses 292,896 286,183 2,794,352 2,574,428 Total SCHEDULE 16 : Expenses for Nursery Operations 4,734,000 1,806,000 Sprouted Seed Material 3,305,447 2,507,025 Nursery Daily Expenses (Watering, Weeding Etc.,) 398,304 929,871 Nursery - Development/Maintenance 273,105 182,901 Fertilizers 1,509,029 964,544 Poly Bags 959,700 830,650 Pot Mixture 554,919 336,129 Lease Rentals for Nursery Lands 11,734,504 7,557,121 Total SCHEDULE 17 : Salaries, Wages AND Bonus - Palm Oil Mill Salaries, Wages and Bonus Contribution to Provident Funds etc. Staff Welfare Expenses Total (A) Salaries, Wages and Bonus - Nursery Operations Salaries, Wages and Bonus Contribution to Provident Funds etc. Staff Welfare Expenses Total (B) Total (A+B)

2,399,517 317,145 58,365 2,775,027

1,711,102 232,363 12,447 1,955,912

2,485,536 411,498 55,694 2,952,728 5,727,755

2,342,393 440,670 112,319 2,895,381 4,851,294

SCHEDULE 18 : Selling, General and Administration Expenses - POM Rent Rates and Taxes Repairs and Maintenance Insurance Electricity Charges Travelling Expenses Telephone Expenses Vehicle Maintenance Selling Expenses Other Administrative Expenses Total (A)

37,370 11,639 53,833 69,345 24,547 158,605 37,562 531,698 106,176 345,651 1,376,426

29,180 7,893 42,678 53,462 27,360 96,662 42,005 564,710 94,206 353,804 1,311,960

Selling, General and Admn. Expenses - Nursery Operations Nursery Expenses Seedlings Distribution Expenses Thanjavur Zonal Office Expenses Technical Consultancy Fees Propaganda, Publicity, Training & Seminar Other Expenses Total (B) Total (A+B)

931,134 521,901 132,666 506,256 35,661 692,230 2,819,848 4,196,274

1,644,305 699,753 106,453 190,724 67,827 1,168,360 3,877,422 5,189,382

58,270 72,707 1,008,375 302,481 1,441,833

27,903 27,485 646,516 372,680 1,074,584

29,135 36,354 452,611 51,578 569,678 2,011,511

25,113 24,736 526,087 55,777 631,714 1,706,297

SCHEDULE 19 : Interest and Finance Charges - Palm Oil Mill Bank Charges Interest on ICD’s Interest on Working Capital Interest on Term Loans Total (A) Interest and Finance Charges - Nursery Operations Bank Charges Interest on ICD’s Interest on Working Capital Interest on Term Loans Total (B) Total (A+B)

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE: I. Registration Details: Registration No. State Code Balance Sheet Date II. Capital Raised during the year: Public Issue Rights Issue Bonus Issue Private Placement III. Position of Mobilisation and Deployment of Funds: Total Liabilities Total Assets Source of Funds: Paid up Capital Reserves & Surplus Secured Loans Unsecured Loans Application of Funds: Net Fixed Assets Investments Net Current Assets Miscellaneous Expenditure Accumulated Losses IV. Performance of Company: Turnover Total Expenditure Profit/(Loss) Before Tax Profit/(Loss) After Tax Earnings Per Share (Rs.) Dividend Rate V. Generic names of three Principal Products/Services of Company (as per monetary terms) Item Code No. (ITC Code) Product Description

36551 18 31-03-08 Rs. – – – – 102,354,000 102,354,000 38,000,000 32,000,018 24,853,982 7,500,000 55,942,272 16,937,815 19,373,765 10,100,148 38,860,454 35,907,243 2,953,211 (3,064,870) – – – Crude Palm Oil Oil Palm Nuts

As per our Report attached For and on behalf of R. Thiagarajan Membership No. 026558 Chartered Accountants

V. Krishnamurthy Chairman

R.R. Govindan Director

U.R. Pathak Company Secretary Chennai, May 20, 2008 CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008 As at As at March 31, 2008 March 31, 2007 Rs. Rs. A. Cash Flow from Operating Activities : Profit before Tax and Operational Items (2,796,789) Adjustment for: Depreciation 2,159,664 Loss/(Profit) on sale of Fixed Assets 173,067 Pre-operative expenses 320,378 Prior period item 5,750,000 Finance Charges 2,011,509 Miscellaneous Expenditure Amortisation of Project Development Cost 1,150,000 Interest Expense 11,564,619 Operating Profit before Working Capital Changes 8,767,830 Adjustments for : Inventories (3,406,814) Debtors and Other receivables 284,743 Creditors and Other payables (127,011) (3,249,081) 5,518,749 Cash Generated from Operations Direct taxes Paid (371,488) Net Cash Generated from Operating Activities 5,147,261 B. Cash from Investing Activities : (306,807) Acquisition of Fixed Assets Area Development expenses (13,587,227) Investments Dividend Income Interest Income Net Cash used in Investing Activities (13,894,034) C. Cash from Financing Activities : Proceeds from Borrowings 10,697,176 Others (Decrease)/Increase in Cash Credit/WCDL from Banks (net) Interest Paid Dividend Paid Tax on distributed profits Other Financial Charges (2,011,509) Net Cash used in Financing Activities 8,685,667 Net Increase/(Decrease) in Cash and Cash Equivalents (61,106) Cash and Cash equivalents (Opening Balance) 275,850 Cash and Cash equivalents (Closing Balance) 214,744

SCHEDULE 20 : NOTES TO ACCOUNTS 1. Significant Accounting Policies a. Cost Convention The Financial Statements have been prepared under the historical Cost Convention in accordance with the generally accepted Accounting Principles and the provisions of the Companies Act, 1956, as adopted consistently by the company. b. Revenue Recognition All receivables and expenditures are accounted on accrual basis except where stated otherwise. c. Sales Sales are exclusive of Sales Tax/VAT. d. Valuation of Stock of Seedlings The Valuation of stock of seedlings is at actual cost. The Valuation of Stores, Tools and Spares are valued at cost or net realizable value whichever is lower. There is a Change in the Method of Valuation of Stock of Seedlings by inclusion of certain items of Cost in the Valuation. Consequently, the valuation of Stock of Seedlings has increased by Rs. 12,35,431/- compared with the basis of the calculation for the previous year. e. Investments There are no investments made by the company. f. Fixed Assets Fixed Assets are stated at cost, which include all direct expenses incurred to bring the assets to the working condition for its intended use. g. Depreciation The Depreciation on Fixed Assets is calculated on Straight Line Method at rates specified in the Schedule XIV of the Companies Act, 1956. Depreciation is charged on a pro rata basis for assets purchased/sold during the year. Individual assets costing Rs.5,000/- or less are depreciated in full in the year of purchase. h. Employee Benefits i. Leave Encashment The company allows Encashment of Leave only at the time of resignation/ retirement/death. Leave due to employees at each year-end has been treated as Encashable and a liability has been provided in the books of account. ii. Gratuity The Company makes annual contributions to Group Gratuity Fund managed by the Life Insurance Corporation of India in accordance with the scheme framed by the Corporation. iii. Superannuation The Company has created a provision for contribution towards Superannuation Fund equivalent to 15% of the salaries to only one employee. However, as the total number of such employees is less than the minimum required for the Constitution of a Superannuation Fund to be administered by Life Insurance Corporation of India/Other Approved Agency, the contribution is retained by the Company. iv. Other Benefits All other benefits are either paid or provision is created in the Accounts. i. Government Grants Grants in terms of Capital/Investment Subsidy are treated as Capital Reserve. j. Borrowing Cost The Company had availed Term Loan from a Bank and the funds were utilized for the purchase of Assets in the regular course of the business of the Company. The Company also availed Working Capital facility from the said Bank. The interest cost on these loans are included in the finance charges. The interest cost of this Term Loan and the Working Capital facility is apportioned between Nursery Operations and Palm Oil Mill in the ratio of 60 : 40, which is the ratio of Income of these activities. k. Income Tax. Prudently, no recognition is given in the accounts for the Deferred Tax Assets. l. Intangible Assets. The Company did not acquire any Intangible Asset during the year. m. Miscellaneous Expenditure i. The Miscellaneous Expenditure is amortized over a period of 5 years commencing from the year 2004-05, as allowed under Section 35D of the Income-Tax Act. ii. Pre-operative Expenses of Rs.15,71,543/- representing the net of expenditure over the income upto 31.03.2005, after considering stock of seedlings as on that date for the Nursery Operations, is being written off in 5 years commencing from the financial year 2005-2006. n. Revaluation Reserve and Project Development Cost. i. The outstanding Revaluation Reserve of Rs.630 lacs is adjusted against Project Development Cost in full. ii. The Company proposed to write off the balance Project Development Cost of Rs. 230 lacs (after netting of the Revaluation Reserve of Rs. 630 lacs) over a period of twenty years commencing from the Financial Year, succeeding the Financial Year in which it was created. i.e. to write off from the Financial Year 2002-03, as the creation was done in the Financial Year 2001-02. Accordingly, one-twentieth of the amount i.e. Rs. 11.50 lacs is written off in the accounts of the year under Audit. The amounts for the year 2002-03 to 2006-07 i.e. for five years aggregating to Rs. 57.50 lacs is also written off during the year under Audit under the head ‘Prior Period Item’. 2. Contingent Liabilities a) There are no outstanding guarantees issued by or on behalf of the Company as at the end of the year. (Previous year Rs. Nil).

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3. 4.

The estimated amount of contracts remaining to be executed on Capital Account and not provided for is Rs. Nil. (Previous year Rs. Nil). The common expenses of Nursery Operations and Palm Oil Mill is apportioned in the ratio of 60 : 40, which is the ratio of income of these activities. The Company commenced Area Development Activity in Cuddalore and Villupuram Districts during the Previous Year based on a Temporary Allotment Letter issued by Government of Tamil Nadu, for which districts the Company received the Permanent Allotment Letter during the year under audit. This is in addition to the existing districts viz. Tiruchirapalli, Karur, Perambalur, Thanjavur, Thiruvarur and Nagapattinam where the Company’s operations are presently carried on. In the new districts i.e. Cuddalore and Villupuram, the Company may have to incur substantial expenses in the initial years, the benefit of which shall accrue in the years to come. Consequently, the total expenses of Nursery Operations are apportioned in the ratio of 2:1 between the new districts i.e. Cuddalore and Villupuram and other districts, which the ratio of the area covered between these districts. Such apportioned expenses pertaining to new districts i.e. Cuddalore and Villupuram and expenses directly identifiable for development activities for these districts totally amounting to Rs.187.39 lacs are Capitalised and is added to the Capitalised amount of Rs. 51.52 lacs as on 31.03.2007. On reaching the optimum level of area expansion in these districts, such capitalised amounts shall be written off in the subsequent years.

The Term Loan and Bank Overdraft Facility from City Union Bank is secured by Equitable Mortgage of Palm Oil Mill Land, Buildings and Hypothecation of Plant and Machinery and other equipments, present and future, situated at the Palm Oil Mill and stock of oil palm seedlings at company’s Nurseries and the said loans are further guaranteed by personal guarantee of Shri. V. R. Jayamani, Chief Executive of the Company.

The Company has been granted Financial Assistance in the form of Grant-in-aid by the Government of India of Rs. 240 lacs for establishment of demonstration unit of oil palm processing mill of 2.5 tonnes per hour capacity at a total cost of Rs.400 lacs. Against this Financial Assistance, during the financial years 2002-03 and 2003-04, the Company received a total financial assistance of Rs. 2,20,00,018/-. This amount is credited to the ‘Capital Reserve’ and shown under the Head ‘Reserves and Surplus’.

During the financial year 2001-2002, based on the valuation carried out by a ‘Farm Expert and Consultant Agro Industrial Projects’, the Company has valued the then present status of the project at Rs.860 lacs. The Company has created an Asset Account called ‘Project Development Cost’ and correspondingly created a ‘Revaluation Reserve Account’ for the said sum of Rs. 860 lacs. Both the Revaluation Reserve and Project Development Cost have been dealt in the accounts as given in Note 1 ‘n’ above.

The Company has capitalised a sum of Rs. 230 lacs out of the Revaluation Reserve Account by Issue of Bonus Shares in the ratio of 23 : 5 and the Bonus Shares were allotted in the Board Meeting held on 27.02.2002.

Selling, General and Administration Expenses includes Audit Fee of Rs. 22,472/- (Previous year Rs. 22,448/-) and Tax Audit Fee of Rs. 5,618/- (Previous year Rs. 5,612/-).

10. The Company has no financial leases. Operating leases are in the nature of lease of Nursery Lands with no restrictions and renewable at mutual consent. 11. As per the information available with the Company, there is no overdue outstanding payable to Small Scale Industrial Units as at March 31, 2008. 12. As per the information available with the Company, there is no overdue outstanding payable to companies covered under by Micro, Small and Medium Enterprises Development Act, 2006. Hence, the question of payment of interest or provision there for towards belated payments does not arise. 13. The additional informations pursuant to the provisions of paragraphs 3 and 4 of Part II of Schedule VI of the Companies Act, 1956.

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Description of Capacities, Production, Turnover, etc., Sl. Palm Oil Mill 2007 - 08 No. (in MT) 12,500 a) Licensed Capacity (Fresh Fruit Bunches) 12,500 b) Installed Capacity (Fresh Fruit Bunches of Oil Palm) 9.425 c) Opening Stock 272.700 d) Production (Crude Palm Oil) 274.465 e) Sales 7.660 f) Closing Stock

2006 - 07 (in MT) 12,500 12,500 14.300 248.923 253.798 9.425

B. Turnover Sl. Particulars 2007–08 2006-07 No. 274.465 252.258 a) Crude Palm Oil MT 94,55,300 Rs. 1,13,41,864 206.635 181.662 b) Oil Palm Nuts MT 15,20,366 10,85,924 Rs. C. Break-up of Raw Material Consumed Sl. Particulars 2007–08 2006-07 MT No. MT a) Fresh Fruit Bunches of Oil Palm (FFBs) 1734.407 1584.024 D. C.I.F. Value of Imports Sl. Particulars 2007–08 2006-07 MT No. MT a) Raw Materials NIL NIL b) Stores and Spares NIL NIL E. Expenditure in Foreign Currency Sl. Particulars 2007–08 2006-07 No. Rs. Rs. a) Travelling Expenses 13,678 NIL b) Others NIL NIL F. Value of Raw Material Consumed Sl. Particulars 2007-08 2006-07 No. Rs. Rs. a) Imports 0% NIL NIL b) Indigenous 100% 58,18,875 54,78,034 G. Earnings in Foreign Exchange Sl. Particulars 2007-08 2006-07 No. Rs. Rs. a) Exports NIL NIL b) Others NIL NIL 14. Information as required under Part IV, Schedule VI of the Companies Act, 1956 is given in the Annexure. 15. The previous year figures have been regrouped and reclassified wherever necessary. On behalf of the Board

R. Thiagarajan Membership No. 026558 Chartered Accountants Chennai, May 20, 2008

V. Krishnamurthy Chairman

R.R. Govindan Director

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2008 TO THE SHAREHOLDERS Your Directors have pleasure in submitting their Report alongwith the Audited Accounts for the year ended March 31, 2008. 1. OPERATING RESULTS : Your Company’s performance during the year as compared to the previous period is summarized below:

Profit before Taxation Provision for Taxation Provision for Fringe Benefit Tax Provision for deferred tax Provision for MAT credit entitlement Profit after taxation Add: Surplus brought forward

11531.84 (3928.00) (12.45) (2.59) -

4609.76 (517.42) (7.67) 14.71 45.84

7588.80 1914.91

4145.22 1263.41

(1864.63)

Prior year tax adjustments

(1344.17)

(0.52)

6294.91

5408.11

2461.24 418.28 760.00

2700.00 378.67 414.53

2655.39 6294.91

1914.91 5408.11

TOTAL APPROPRIATIONS

2006-2007 (Rs. in lacs)

Less: Utilized for issue of Bonus Shares during the year AMOUNT AVAILABLE FOR APPROPRIATION Appropriations: Your Directors recommend appropriations as under: Interim Dividend Proposed Dividend Dividend Distribution Tax Transfer to General Reserve Surplus carried forward 2.

2007-2008 (Rs. in lacs)

DIVIDEND : Your Directors recommend for approval of the members at the ensuing Annual General Meeting payment of dividend of 100% (Rs.10/- per share) for the year ended 31st March, 2008. For the Right and Bonus Issue made during the year, the dividend will be payable on pro-rata basis to the shareholders from the date of allotment. REVIEW OF OPERATIONS: Your company has had a good financial year, posting total income of Rs.22,749.99 lacs during the year ended March 31, 2008. The highlights of the year have been that we have entered into new cities like Chandigarh, Mangalore, Kochi and Chennai and signed up for large township development projects in Ahmedabad. During the year, your Company has also, signed an agreement to sell part of Phase –II in Godrej Woodsman Estate Project, at Bangalore on a built-to-suit basis for a total consideration of Rs.8,155 lacs. The total income of Rs.22,749.99 lacs, includes an amount of Rs.6,442.45 lacs, being the Company’s share of revenue from the said transaction. FUTURE PROSPECTS AND OUTLOOK OF THE COMPANY: Your company has a well diversified portfolio spread across established Tier–I cities and emerging Tier – II & III locations. Infrastructure improvements, increasing urbanization, expansion of organized retail, continued shortage of affordable and quality housing and demand from IT/ ITES and other commercial establishments like Banking and Insurance is expected to drive growth in the Industry. Large scale township development, mix of commercial and residential projects, along with continued focus on Joint Development with land owners for sourcing land provides the Company a de-risked pipeline of projects for development. CHANGE IN CAPITAL Authorised Capital During the year the Company has increased its Authorised Capital from Rs.1,000 lacs to Rs. 10,000 lacs. Bonus Issue During the year your Company had issued Bonus Shares to the equity shareholders of the Company, whose names appeared on the Register of Members of the Company on November 19, 2007 (Record date) by allotting 5,15,56,360 equity shares of Rs. 10/- each credited as fully paid in the proportion of 8 new equity shares for every 1 equity share held by them on the said record date. Rights Issue During the year the Company had made a Rights Issue of 29,61,575 Equity Shares of Rs.10/- each at a premium of Rs.610/- per share in the ratio of 1 equity share for every 19.58 (approx) equity shares held by equity shareholders on the record date. The Company received only one application along with the Subscription money from Godrej Industries Limited. Based on this, your Company has allotted 24,19,354 equity shares of Rs.10/- each fully paid at a premium of Rs.610/- per share to Godrej Industries Ltd. The unsubscribed portion of the Issued capital that is 5,42,221 was cancelled by the Board of Directors of the Company. SUBSIDIARY COMPANIES : During the year your company has taken over a new Company – Happy Highrises Ltd. The project at B.T. Road, Kolkata will be developed exclusively by this new Company. During the year, Godrej Waterside Properties Private Limited issued 1,42,10,000 10% Secured Redeemable Optionally Convertible Debentures of Rs.10/- each to HDFC Venture Trustee Company Limited and 1,47,90,000 10% Secured Redeemable Optionally Convertible Debentures of Rs.10/- each to your Company. Godrej Developers Pvt. Ltd., subsidiary of the Company, also issued 10,000 10% Non-Convertible Cumulative Redeemable Preference Shares of Rs.10/- each at par to the Company. The audited Balance Sheet as at 31st March, 2008 and Profit & Loss account ended on that date together with the Reports of Directors and Auditors thereon of our Subsidiary Companies namely Girikandra Holiday Homes & Resorts Limited, Godrej Realty Private Limited, Godrej Waterside Properties Private Limited, Godrej Real Estate Private Limited, Godrej Developers Private Limited, Godrej Sea View Properties Private Limited and Happy Highrises Ltd. alongwith Statement as required under Section 212 of the Companies Act, 1956, is included in the Annual Report. DIRECTORS : During the financial year Ms. Pheroza Jamshyd Godrej, Mr. Rishad K. Naoroji and Ms. Smita Vijay Crishna resigned as Directors of the Company with effect from January 16, 2008. The Board desires to place on record its appreciation of the valuable services rendered by them during their tenure as Directors of the Company. The Board of Directors at its meeting held on January 16, 2008 has appointed Mrs. Lalita D. Gupte, Mr. K. B. Dadiseth, Mr. Pranay Vakil and Dr. Pritam Singh as Additional Directors of the Company. They will hold office up to the date of the ensuing Annual General Meeting. In accordance with the provision of the Articles of Association of the Company and the provisions

of the Companies Act, 1956, Mr. Adi B. Godrej, Mr. J. N. Godrej and Mr. Amit Choudhury, retire by rotation and being eligible, offer themselves for re-appointment. The Board of Directors in their meeting held on January 16, 2008 recommended to the shareholders, commission amounting to Rs.5 lacs excluding out of pocket and travelling expenses, to be paid to each of the Non-Executive Directors of the Company, for the approval of the Shareholders. APPOINTMENT OF AUDITORS: 8. The statutory auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants will retire at the ensuing Annual General Meeting and are eligible for re-appointment. You are requested to consider their re-appointment. COMMITTEES OF DIRECTORS 9. The Board of Directors in their meeting held on January 16, 2008 re-constituted the following committees comprising of the following Directors for a) Audit Committee 1) Mr. K.B. Dadiseth - Chairman 2) Mrs. Lalita D. Gupte 3) Mr. Pranay Vakil 4) Dr. Pritam Singh 5) Mr. Amit Choudhury b) Remuneration Committee 1) Mrs. Lalita D. Gupte - Chairperson 2) Mr. K.B. Dadiseth 3) Mr. Pranay Vakil 4) Dr. Pritam Singh 5) Mr. Amit Choudhury The terms of reference of the Audit as well as the Remuneration Committee are as per Clause 49 of Listing Agreement and the provisions of the Companies Act, 1956. The Board of Directors also constituted Investors’ Grievance Cum Share Transfer Committee in the said meeting comprising of the following Directors for redressal of shareholders’ and investors’ complaints and for approval of transfer and transmission of shares 1. Mr. Adi B. Godrej – Chairman 2. Mr. Milind Korde The Company Secretary is the secretary for all the aforesaid committees. 10. EMPLOYEE STOCK OPTION SCHEME

The shareholders, vide a Special Resolution passed at the extra-ordinary meeting held on December 24, 2007, had approved Godrej Properties Limited Employee Stock Option Plan (GPL ESOP) for grant of such number of Options convertible into 4,42,700 equity shares of the nominal value of Re.10/- each, to eligible employees/directors of the Company and of the Company’s subsidiaries. The GPL ESOP will be administered by a trust set up for this purpose viz. Godrej Properties Limited Employee Stock Option Plan Trust (GPL ESOP Trust).

Pursuant to the resolution passed by the Remuneration Committee on December 24, 2007, the trust has purchased 4,42,700 equity shares of the Company from Godrej Industries Limited by using the Loan funds given by the Company. The Remuneration Committee vide its meeting held on December 24, 2007, has granted 4,42,700 Options convertible into 4,42,700 equity shares of Rs.10/- each to the eligible employees with effect from December 28, 2007. The options will vest in the concerned employees at the end of three years from the date of granting of the options.

11.

FIXED DEPOSITS:

The Company has accepted Fixed Deposits to the extent of Rs.35,00,000/- during the year.

12.

CHANGE IN THE ARTICLES OF ASSOCIATION

Your Company has pursuant to a resolution passed in the Extra-ordinary General Meeting held on April 15, 2008, adopted a new set of articles in substitution for and to the exclusion of all the existing Articles of the Company.

13.

ADDITIONAL INFORMATION :

(a)

In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 and the rules framed thereunder, the names and other particulars of employees are required to be set out in the annexure to the Director’s Report. In terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors Report and Accounts are being sent to the all the shareholders of the Company excluding the statement of particulars of the employee under Section 217 (2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the annexure may write to the Company Secretary at the Registered Office of the Company.

(b)

Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:

(i)

Conservation of Energy : Expenses on account of Energy are negligible.

(ii)

Technology Absorption: It is an on going process.

Foreign Exchange Earnings & Outgo :

(iii)

During 2006-07, expenditure in foreign currencies amounted to Rs. 2,06,42,240/- on account of travelling and other expenses incurred for business promotion.

The Company has not earned any Foreign Exchange during the year.

14.

DIRECTORS’ RESPONSIBILITY STATEMENT:

Your Directors confirm:

(i)

that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii)

that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2008 and of the profit of the Company for that year;

(iii)

that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv)

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

15.

ACKNOWLEDGEMENT:

Your Directors wish to place on record, sincere thanks to the Union Government, State Government and also to all the Government agencies, banks, financial institutions, customers, shareholders, employees, fixed deposit holders, vendors and other related organizations who through their continued support and co-operation, have helped, as partners, in your Company’s progress. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

Mumbai, April 30, 2008

A. B. GODREJ CHAIRMAN

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REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ PROPERTIES LIMITED We have audited the attached Balance Sheet of GODREJ PROPERTIES LIMITED, as at 31st March 2008, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books. c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account. d) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in subsection (3C) of section 211 of the Companies Act, 1956. e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(f) of Schedule 19-Notes to Accounts, in respect of projects under long term contracts undertaken and/or financed by the Company, we have relied upon the management’s estimates of the percentage of completion, costs to completion and on the projections of revenues expected from projects owing to the technical nature of such estimates, on the basis of which profits/losses have been accounted, interest income accrued and realizability of the construction work in progress and project advances determined. f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008; ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date and iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the directors as on 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. 1.

7) 8)

10) 11)

12)

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants

13)

ERMIN K. IRANI Partner Membership No. 35646

14)

Place: Mumbai Dated: April 30, 2008

15)

16)

ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph (3) of our report of even date. 1)

126

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) As explained to us, the Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of its assets. (c) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption. (a) The Management has conducted physical verification of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification. (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956

17)

18) 19) 20) 21)

(b) Consequently, the question of commenting on the rates of interest and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and the interest and reasonable steps for recovery of principal and interest does not arise. (c) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 (d) Consequently, the question of commenting on the rates of interest and other terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section. (b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist. In our opinion and according to the information and explanations given to us, the Company has complied with directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Companies Act, 1956, and the rules framed there under. In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business. The maintenance of cost records has not been prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March, 2008 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues outstanding of Income Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty, Wealth Tax, Excise Duty or Cess on account of any dispute. The Company does not have accumulated losses at the end of the financial year and has not incurred any cash losses in the current and immediately preceding financial year. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to banks. The Company does not have dues to financial institutions or debenture holders. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies. In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and other financial institutions. In our opinion and according to the information and explanations given to us, the Company has utilized the term loan for the purpose it was taken. According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investment. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. The Company did not issue any debentures during the year. The Company has not raised any money through a public issue during the year. Based on the audit procedures performed and information and explanations given by the Management, we report that no fraud on or by the Company has been noticed or reported during the year.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Membership No. 35646 Place: Mumbai Dated: April 30, 2008.

BALANCE SHEET AS AT 31ST MARCH, 2008 Schedule

As at 31.03.2008

As at 31.03.2007

Rupees

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008 Schedule For the year For the year

SOURCES OF FUNDS Share Capital

604,202,590

64,445,450

Reserves & Surplus

1,817,344,904

520,592,130

LOAN FUNDS Secured Loans

985,755,408

173,899,130

Unsecured Loans

1,529,844,710

1,137,065,294

4,937,147,612

1,896,002,004

APPLICATION OF FUNDS FIXED ASSETS

Gross Block

54,138,926

44,391,084

Less: Depreciation

27,357,996

20,339,609

Net Block

26,780,930

24,051,475

2,141,192

28,922,122

26,192,667

556,949,053

83,614,447

3,798,000

4,057,000

Capital Work-In-Progress / Advances INVESTMENTS

DEFERRED TAX ASSET CURRENT ASSETS, LOANS & ADVANCES

Rupees

1,964,843,693

1,172,466,094

Operating Income

309,528,280

199,775,722

Other Income

627,561

375,370

2,274,999,534

1,372,617,186

Sales

TOTAL INCOME EXPENDITURE Cost of sales

867,857,303

758,398,853

Employee Remumeration & Benefits

97,955,758

69,482,325

Administration Expenses

109,332,227

35,359,665

Interest & Finance Charges (Net)

38,180,332

41,519,933

Depreciation Profit for the year

115,552,452

787,897,598

Sundry Debtors

4,057,123,512

2,197,881,754

for Current Tax for Fringe Benefit Tax for MAT Credit Entitlement for Deferred Tax Prior years tax adjustments Surplus brought forward

Cash & Bank Balances

63,954,075

133,678,881

Loans & Advances

4,911,652,525

1,035,145,413

Less : Utilised for issue of Bonus Shares during the year

9,148,282,564

4,154,603,646

Amount Available for Appropriation

LESS: CURRENT LIABILITIES & PROVISIONS Current Liabilities

4,398,857,726

2,366,583,011

Provisions

401,946,401

5,882,745

4,800,804,127

2,372,465,756

4,347,478,437

1,782,137,890

4,937,147,612

1,896,002,004

NET CURRENT ASSETS NOTES TO ACCOUNTS & ACCOUNTING POLICIES

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

A. B. GODREJ Chairman

MILIND S. KORDE Managing Director

SHODHAN KEMBHAVI Company Secretary

Interim Dividend Proposed Dividend Dividend Distribution Tax Transfer to General Reserve Surplus carried forward to Balance Sheet Earnings per share Basic/ Diluted in Rs. (Refer Note 9)

911,640,382

1,153,184,151

460,976,804

(392,800,000)

(51,742,000)

(1,245,000)

(767,000)

4,584,000

(259,000)

1,471,000

758,880,151

414,522,804

(134,416,774)

(51,571)

191,491,250

126,340,517

(186,462,720)

629,491,907

540,811,750

270,000,000

246,124,143

41,828,800

37,867,500

76,000,000

41,453,000

265,538,964

191,491,250

10.64

7.15

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

Signatures to the Balance Sheet and Schedules 1 to 12 and 19

As per our Report of even date. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants

ERMIN K. IRANI Partner

Mumbai, Dated : April 30, 2008

6,879,606

1,121,815,383

Less :

NOTES TO ACCOUNTS & ACCOUNTING POLICIES Signatures to the Balance Sheet and Schedules 1 to 12 and 19

8,489,763

Provision for Taxation

Profit After Tax

Inventories

ERMIN K. IRANI Partner

ended

31.03.2007

INCOME

SHAREHOLDERSâ&#x20AC;&#x2122; FUNDS

As per our Report of even date. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants

ended

31.03.2008

A. B. GODREJ Chairman

MILIND S. KORDE Managing Director

SHODHAN KEMBHAVI Company Secretary

Mumbai, Dated : April 30, 2008

SCHEDULES FORMING PART OF THE ACCOUNTS

SCHEDULE 1 SHARE CAPITAL AUTHORISED 100,000,000 Equity Shares of Rs. 10/- each

ISSUED, SUBSCRIBED & PAID UP 60,420,259 Equity Shares of Rs. 10/- each fully paid up.

As at 31.03.08 Rupees

As at 31.03.07 Rupees

1,000,000,000 1,000,000,000

100,000,000 100,000,000

604,202,590

64,445,450

As at 31.03.08 Rupees

As at 31.03.07 Rupees

245,172,265 1,475,805,940 (245,172,265)

245,172,265 -

1,475,805,940

245,172,265

Add : Transfer from Profit & Loss Account

83,928,615 (83,928,615) 76,000,000

42,475,615 41,453,000

Profit and Loss Account

76,000,000 265,538,964

83,928,615 191,491,250

1,817,344,904

520,592,130

SCHEDULE 2 RESERVES & SURPLUS Share Premium As per last Balance Sheet Add : Received during the year Less : Utilised for issue of Bonus Shares during the year General Reserve - As per last Balance Sheet Less : Utilised for issue of Bonus Shares during the year

a) Of the above 49,358,459 (previous year 5,264,645) shares are held by Godrej Industries Ltd, the Holding Company b) Of the above 54,203,845 (previous year 2,647,485) shares issued as Bonus shares by capitalising Share Premium, General Reserve & Profit & Loss Account 604,202,590

64,445,450

127

SCHEDULES FORMING PART OF THE ACCOUNTS

SCHEDULE 3 SECURED LOANS 1) Cash Credit / Working Capital Demand Loan (Secured by equitable mortgage of immovable property of the Companyâ&#x20AC;&#x2122;s Project at Juhu, Mumbai)

As at 31.03.08 Rupees

As at 31.03.07 Rupees

985,755,408

173,899,130

985,75 5,408

173,899,130

As at 31.03.08 Rupees SCHEDULE 4 UNSECURED LOANS Banks Companies Fixed Deposits

As at 31.03.07 Rupees

1,510,746,710 1,110,167,294 10,000,000 19,098,000 16,898,000 1,529,844,710 1,137,065,294

Of the above, Repayable within a year

1,529,844,710 1,137,065,294

SCHEDULE 5 : FIXED ASSETS

ASSETS

Tangible Assets Leasehold Improvement Office Equipment Site Equipments Furniture & Fixtures Computer Motor Vehicle Intangible Assets Licenses & Software

As at 1st April 2007 Rs. 9,089,529 5,781,014 2,072,120 9,025,285 10,570,295 4,724,392

GROSS BLOCK Additions Deductions

Rs.

As at 31st March 2008 Rs.

682,716 1,408,787 1,850,266 4,628,412 -

46,480 287,217 1,630,538

9,772,245 7,143,321 2,072,120 10,875,551 14,911,490 3,093,854

Upto 1st April 2007 Rs. 3,940,760 1,802,182 1,425,959 3,499,688 6,227,176 3,095,633

DEPRECIATION For the Deductions Year Rs.

Rs.

Upto 31st March 2008 Rs.

2,311,323 656,083 89,881 1,214,433 2,963,194 376,522

1,955 270,388 1,199,039

6,252,083 2,456,310 1,515,840 4,714,121 8,919,982 2,273,116

NET BLOCK As at As at 31st March 31st March 2008 2007 Rs. Rs. 3,520,162 4,687,011 556,280 6,161,430 5,991,508 820,738

5,148,769 3,978,832 646,161 5,525,597 4,343,118 1,628,759

3,128,449

3,141,896

6,270,345

348,217

878,327

1,226,544

5,043,801

2,780,232

Total

44,391,084

11,712,077

1,964,235

54,138,926

20,339,615

8,489,763

1,471,382

27,357,996

26,780,930

24,051,468

Previous Year Capital Work-in-progress

36,381,748

9,461,808

1,452,472

44,391,084

14,673,626

6,879,606

1,213,616

20,339,615 2,141,192 28,922,122

2,141,192 26,192,660

TOTAL As at 31.03.08 Rupees SCHEDULE 6 : INVESTMENTS Long Term Quoted Investments 100 Equity Shares of Rs.10/- each of Alacrity Housing Limited 100 Equity Shares of Rs.10/- each of Alsa Construction & Housing Limited 100 Equity Shares of Rs.10/- each of Ansal Buildwell Limited 100 Equity Shares of Rs.10/- each of Ansal Housing & Construction Limited 600 Equity Shares of Rs.5/- each of Ansal Properties & Infrastructure Limited (300 shares received as bonus shares during the year) (Previous year 300 Equity shares of Rs. 5/- each) 100 Equity Shares of Rs.10/- each of Lok Housing & Construction Limited 100 Equity Shares of Rs.10/- each of Mantri Housing & Construction Limited 100 Equity Shares of Rs.10/- each of Premier Hsg & Industrial Ent Limited 100 Equity Shares of Rs.10/- each of D.S. Kulkarni Developers 13,000 Equity Shares of Rs.2/- each of Unitech Limited (6,500 shares received as bonus shares during the year) (Previous year 6,500 Equity shares of Rs. 2/- each) Total Carried Forward Total brought forward 72 Equity Shares of Rs.10/- each of The Great Eastern Shipping Company Limited 18 Equity Shares of Rs.10/- each of The Great Offshore Limited 100 Equity Shares of Rs.10/- each of Radhe Developers Limited 23,700 Equity Shares of Rs.10/- each of United Textiles Limited Less : Provision for Dimunition in Value Unquoted Investments 1,000 Equity Shares of Rs.10/- each of Saraswat Co-operative Bank Limited

128

As at 31.03.07 Rupees

As at 31.03.08 Rupees

As at 31.03.07 Rupees

2,500

SCHEDULE 6 : INVESTMENTS (Contd.) 25,000 Equity Shares of Rs.10/- each of 742

742

616

1,066

Amitabh Bachchan Corporation Limited Investments In Subsidiary Companies 510,000 Equity Shares of Rs.10/- each of Godrej Realty Pvt. Ltd.

5,100,000

76,500,000

5,100,000

500,000

147,900,000

Total Carried Forward

234,629,003

82,114,447

Total brought forward

234,629,003

82,114,447

500,000

100,000

320,720,050

556,949,053

83,614,447

10% Secured redeemable optionally convertible debentures 1,366

1,366

3,081

Godrej Realty Pvt. Ltd. 510,000 Equity Shares of Rs.10/- each of Godrej Waterside Properties Pvt. Ltd. (460,000 Equity Shares of Rs. 10/- each purchased during the year)

1,241

10% Secured redeemable optionally convertible debentures of

1,641

Godrej Waterside Properties Pvt. Ltd. (Purchased during the year)

1,516

891

6,366

50,000 Equity Shares of Rs.10/- each of Godrej Seaview Properties Pvt. Ltd. 50,000 Equity Shares of Rs.10/- each of Godrej Real Estate Pvt. Ltd.

18,526 18,526 2,485

621

266

2,370

24,268 7,765 16,503

24,268 22,321 1,947

10,000

50,000 Equity Shares of Rs.10/- each of Godrej Developers Pvt. Ltd. 10,000 - 10% non convertible cumulative redeemable preference shares of Rs.10/- each of Godrej Developers Pvt. Ltd. (Purchased during the year) 203,120 Equity Shares of Rs. 10/- each of Happy Highrises Limited (Purchased during the year) 1. Cost of Quoted Investments 2. Market Value of Quoted Investments

24,268

3,906,889

2,677,624

SCHEDULES FORMING PART OF THE ACCOUNTS

SCHEDULE 7 : INVENTORIES Stock in trade (Refer Note 3) Construction Work in progress SCHEDULE 8 : SUNDRY DEBTORS (UNSECURED, CONSIDERED GOOD) Due over Six months Others

As at 31.03.08 Rupees

As at 31.03.07 Rupees

24,274,569 91,277,883

19,328,216 768,569,382

115,552,452

787,897,598

11,914,947 14,209,863 4,045,208,565 2,183,671,891 4,057,123,512 2,197,881,754

SCHEDULE 9 : CASH & BANK BALANCES Cash & Cheques-in-Hand Balance with Scheduled Banks - on Current Accounts - on Fixed Deposit Accounts (Refer Note 4) SCHEDULE 10 : LOANS & ADVANCES (UNSECURED, CONSIDERED GOOD) Loans & Advances recoverable in cash or in kind or for value to be received (Refer Note 5(a)) Loan to GIL ESOP Trust Loan to GPL ESOP Trust Due on Management Projects (Refer Note 5(b)) Less: Transfer to Cost of Sales - Development Projects Development Manager Fees Accrued but not due (Refer Note 6 (b)) Interest Accrued Deposits Advance Tax & Tax deducted at source ( Pr e v i o u s Ye a r I n c l u d i n g M AT c r e d i t e n t i t l e m e n t o f Rs. 4,584,000/- & Net of Provision for Tax of Rs. 153,155,245/-)

175,568 20,720,225 43,058,282 63,954,075

10,826,454 82,797,016 40,055,411 133,678,881

2,532,802,308 77,425,000 275,160,185 1,216,407,750 (32,943,636) 1,183,464,114 170,243,559

387,941,887 62,800,000 448,079,279 (88,368,864) 359,710,415 170,299,063

33,877,676 638,679,683 -

9,492,175 31,740,447 13,162,936

4,911,652,525 1,035,145,413 SCHEDULE 11 : CURRENT LIABILITIES Sundry Creditors (Refer Note 10) Investor Education and Protection Fund Advances received against sale of flats Deposits Unclaimed Fixed Deposits Other liabilities Due to Management Projects SCHEDULE 12 : PROVISIONS Gratuity Leave Encashment Proposed Dividend Tax on Dividend For Taxation (Net of Advance Tax & Tax of deducted at source of Rs. 571,998,138/-) SCHEDULE 13 : OPERATING INCOME (GROSS) Income From Development Projects Compensation Received from Project Project Management fees Other Income from Customers Lease Rent Licence Fees Tax Deducted at source SCHEDULE 14 : OTHER INCOME Dividends Profit on sale of Fixed Assets (Net) Miscellaneous Income SCHEDULE 15 : COST OF SALES Own Projects Opening Stock: Add : Expenditure/ Transfers from Advances during the year Development Rights Land Construction, Material & Labour Infrastructure Architect Fees Advertisement Expenses Overheads Interest

145,415,525 57,487,977 3,375,118,599 1,880,540,792 410,590 410,590 1,199,000 1,689,000 687,134,887 307,135,995 189,579,125 119,318,657 4,398,857,726 2,366,583,011

As at 31.03.08 Rupees (641,677,572) (115,552,452) 834,913,667 32,943,636

As at 31.03.07 Rupees (787,897,597) 670,029,989 88,368,864

867,857,303

758,398,853

92,856,235 4,300,118 799,405 97,955,758

65,887,735 2,951,360 643,230 69,482,325

1,233,107 67,205,659 130,110 750,000 289,087 1,160,399 11,445,408 878,708 48,441 126,908 26,078,956 (14,556) 109,332,227

530,087 11,163,268 111,734 1,052,240 9,421,234 841,480 23,100 474,780 11,741,742 35,359,665

SCHEDULE 18 : INTEREST AND FINANCE CHARGES (NET) Interest Paid - Banks - Inter Corporate Deposits - Projects and landlords - Others

211,828,551 3,193,383 44,473,685 3,446,006

48,569,967 15,813,507 53,165,598 590,762

Total Interest Paid

262,941,625

118,139,834

Less : Project transferred to Subsidiary Company Less : Closing Stock: Development Projects Cost

SCHEDULE 16 : EMPLOYEE REMUNERATION & BENEFITS Salaries, Bonus, Gratuity & Allowances Contribution to Provident & other funds Other Employee Benefits SCHEDULE 17 : ADMINISTRATION EXPENSES Cost of Project Management Consultancy Charges Service Charges Compensation Claims Loss on sale of Fixed Assets (Net) Power & Fuel Rent Insurance Rates & Taxes Repairs & Maintenance Other Operating Expenses Provision for diminution in value of investments written back

Add : Brokerage & other Financial charges Total Interest/ Finance Charges Paid Less: Interest Received (Gross) - Customers - Projects and landlords - Others Total Interest Received

7,097,841

6,414,436

270,039,466

124,554,270

191,699,669 40,159,465 231,859,134

1,480 73,643,137 9,389,720 83,034,337

4,211,619 4,766,476 246,124,143 41,828,800 105,015,363

3,076,578 2,806,167 -

NET INTEREST

38,180,332

41,519,933

Tax Deducted at source

41,114,503

6,943,577

Accounting Policies

401,946,401

5,882,745

289,039,919 10,000,000 25,612 10,436,349 14,400 12,000

71,065,851 120,000,000 12,769 3,512,026 5,173,076 12,000

309,528,280

199,775,722

33,100,597

995,854

32,102 595,459 627,561

4,529 43,908 326,933 375,370

787,897,597

204,751,392

6,612,000 570,000,000 639,547,457 532,541,579 466,940 3,501,892 10,133,714 12,378,669 10,991,867 16,461,721 98,303,279 68,852,935 44,802,837 42,827,398 804,246,094 1,253,176,194

SCHEDULE 19 : NOTES ACCOUNTS & ACCOUNTING POLICIES General

The financial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.

Fixed Assets

Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.

Depreciation / Amortization

Depreciation has been provided on Written Down Value basis, at the rates specified in Schedule XIV of the Companies Act, 1956.

Assets acquired on lease are depreciated over the period of the lease.

Leasehold improvements are amortized over a period of five years.

Intangible Assets are amortized over a period of six years.

Investments

Investments are classified into long term and current investments.

Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognize a decline, other than of a temporary nature.

Current investments are carried individually at lower of cost and fair value and the resultant decline, if any, is charged to revenue.

129

SCHEDULES FORMING PART OF THE ACCOUNTS

Inventories Inventories are valued as under : a) Completed Flats

Construction Work-in-Progress

- At lower of Cost or Market value - At cost

Construction Work-in-Progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company. f) Revenue Recognition The Company is following the â&#x20AC;&#x153;Percentage of Completion Methodâ&#x20AC;? of accounting. As per this method, revenue in Profit & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company. Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project / activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors. Income from operation of commercial complexes is recognized over the tenure of the lease / service agreement. Interest income is accounted on an accrual basis at contracted rates. Dividend income is recognized when the right to receive the same is established. g) Development Manager Fees The company has been entering into Development & Project Management agreements with landlords. Accounting for income from such projects is done on accrual basis on percentage of completion or as per the terms of the agreement. h) Employee Benefits a) Short-term employee benefits: All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, performance incentives, etc. are recognized at actual amounts due in the period in which the employee renders the related service. b) Post-employment benefits: (i) Defined Contribution Plans: Payments made to defined contribution plans such as Provident Fund are charged as an expense as they fall due. (ii) Defined Benefit Plans: The cost of providing benefits i.e. gratuity is determined using the Projected Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Profit & Loss Account. The fair value of the plan assets is reduced from the gross obligation under the defined benefit plan, to recognize the obligation on net basis. Past service cost is recognized as expense on a straight-line basis over the average period until the benefits become vested. (iii) Other long-term employee benefits: Other long-term employee benefits viz., leave encashment is recognized as an expense in the profit and loss account as and when they accrue. The Company determines the liability using the Projected Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial gains and losses in respect such benefits are charged to the profit and loss account. i) Borrowing Cost Interest and finance charges incurred in connection with borrowing of funds, which are incurred for the development of long term projects are transferred to Construction Work in Progress / Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost / rates as per Agreements respectively. Other borrowing costs are recognized as an expense in the period in which they are incurred. j) Earnings Per Share The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive. k) Provision For Taxation Tax expense comprises both current, deferred & fringe benefit tax. Current and fringe benefit tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date. l) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions,

130

remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profit and Loss Account. Allocation of Expenses

Corporate Employee Remuneration and Administration expenses are allocated to various projects on a reasonable basis as estimated by the management.

Provisions and Contingent Liabilities

Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

Contingent Liabilities: Matters

As at 31st March 2008

As at 31st March 2007

(Rs.)

Uncalled amount of Rs. 80/- & Rs. 30/- on 70 & 75 partly paid shares respectively of Tahir Properties Limited

7,850/-

Consideration payable for acquisition of shares in Girikandra Holiday Homes & Resorts Limited (a subsidiary company) for purchase of land.

Nil

9,473,750/-

Claims against the company not acknowledged as debts represents cases filed by parties in the Consumer forum and High Court and disputed by the Company as advised by our advocates. In the opinion of the management the claims are not sustainable.

7,876,293

9,476,293/-

Claims against the Company under the Labour Laws for disputed cases

1,989,240/-

1,500,000/-

Guarantees given by Bank, counter guaranteed by the Company

6,000,000/- 101,000,000/-

Letters of credit issued by banks on behalf of the Company

1,912,746/-

Guarantee given on behalf of project owner (The Simplex Mills Company Limited). The Company is entitled to create a corresponding mortgage against project assets as considered necessary.

Claim against the Company under Bombay Stamp 14,850,000/Act,1958

14,850,000/-

Other claims against the Company not acknowledged as debts

3,925,000/-

Nil

Nil 360,000,000/-

Inventories

Stock - in - Trade includes shares in the following Companies - at cost or market value (whichever is lower) : Particulars

Current Year

Previous Year

(Rs.)

Nil

40,000

1,400

5,250

22,580,200

17,880,000

Tahir Properties Limited a) Nil (Previous Year 400) Equity shares of Rs. 100/- each, fully paid up b) 70 Equity shares of Rs. 100/- each, Rs. 20/- paid up c) 75 Redeemable Preference Class A shares of Rs.100/- each, Rs.70/- paid Girikandra Holiday Homes & Resorts Limited (a subsidiary company) 500 Equity shares of Rs.1,000/- each, fully paid up 4)

Cash & Bank Balances

Balances with scheduled banks on deposit accounts include Rs.39,384,677/- (Previous year Rs.36,617,677/-) received from flat buyers and held in trust on their behalf in a corpus fund.

SCHEDULES FORMING PART OF THE ACCOUNTS 5)

Loans and Advances

Amounts due from companies under the same management. Balance as on March

Maximum Balance as Debit on March 31, Balance 2007 during the period

Maximum Debit Balance during previous year

24,136 1,350,000

412,303 1,350,000

19,736 1,350,000

493,706 1,350,000

Girikandra Holiday Homes & Resorts Limited - Advances

28,730,564

28,511,433

Godrej Realty Private Limited - Advances

22,655,305

4,824,156

16,639,964

166,055,935 280,091,794 567,094,306 567,094,306

278,077,328 Nil

342,031,262 Nil

21,230

18,420

668,621,952 668,621,952 54,270,225 54,270,225

18,420 Nil

Particulars

31, 2008

Godrej Industries Limited - Advances - Deposits

Godrej Waterside Properties Private Limited - Advances - Deposit Godrej Sea View Properties Private Limited - Advances Godrej Real Estate Private Limited - Advances - Deposit Godrej Developers Private Limited - Advances - Deposit Happy Highrises Limited - Advances - Deposit

21,230

150,734,687 150,734,687 85,500,000 85,500,000

18,420 Nil

70,247,423 70,247,423 689,950,000 689,950,000

Nil Nil

Due on Management Projects include a sum of Rs. 20,872,941/- (Previous Year Rs. 20,309,477/-) on account of a project, where the matter is sub-judice with arbitrators.

Inventories, Current Assets, Loans and Advances:

Construction Work in Progress and Due on Management projects represents materials at site and unbilled cost on the projects based on projections and estimates by the Company of the expected revenues and costs to completion. In the opinion of the management, the net realizable value of the construction work in progress will not be lower than the costs so included. The company has been entering into Development Agreements with landlords. Development Manager Fees amounting to Rs. 170,243,559/- (Previous Year Rs. 170,299,063/- ) accrued as per terms of the Agreement are receivable by the Company based upon progress milestones specified in the respective Agreements and have been disclosed as Development Manager Fees accrued but not due in Schedule 10.

Leases

The Companyâ&#x20AC;&#x2122;s significant leasing arrangements are in respect of operating leases for Residential premises. Lease income from operating leases is recognized on a straightline basis over the period of lease. The particulars of the premises given under operating leases are as under: Particulars

Current Year Rs.

Previous Year Rs.

26,400

105,600

Future minimum lease receipts under noncancelable operating leases

Not later than 1 year

Later than 1 year and not later than 5 years

The Companyâ&#x20AC;&#x2122;s significant leasing arrangements are in respect of operating leases for Commercial premises. Lease expenditure for operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises taken on operating leases are as under: Particulars

Current Year Rs.

Previous Year Rs.

Future minimum lease payments under noncancelable operating leases

The Scheme is administered by an Independent ESOP Trust which has purchased shares from Godrej Industries Limited (The holding Company), equivalent to the number of options granted to the participating companies. During the current year finance is provided by Godrej Properties Limited to the ESOP Trust and the trust has purchased 442,700 shares of Godrej Properties Limited. Particulars Options Outstanding at the beginning of the year Options granted Options exercised Less : Forfeited / Expired Options Outstanding at the year end

Not later than 1 year

9,686,988

12,311,988

Later than 1 year and not later than 5 years

2,290,348

11,977,336

Weighted Average Exercise Price 620.00 (plus interest) -

442,700

620.00 (plus interest)

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

The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognized since, the price of the underlying equity shares on the grant date is same /less than exercise price of the option, the intrinsic value of option, therefore being determined as nil.

Earnings Per Share Particulars Profit after tax and prior years tax adjustments as per Profit & Loss Account Weighted average no. of equity shares outstanding Basic/Diluted earnings per share Nominal value of shares

Current Year

Previous Year

Rs. 624,463,377

Rs. 414,471,232

58,714,813

58,000,905

Rs. 10.64 Rs. 10 /-

Rs. 7.15 Rs. 10 /-

Previous years figures have been recomputed due to issue of bonus shares during the year.

10) Dues To Micro, Small And Medium Industries

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2nd October, 2006, certain disclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

11)

The amount of exchange difference included in the Profit and Loss Account, under the related heads of expenses is Rs 129,169/-. (Previous Year Rs. Nil/-).

12) Expenditure in Foreign Currency : Particulars Traveling Expenses Other Expenditure Total

Current Year Rs. 1,924,257

Previous Year Rs. 681,041

18,717,983

38,816,571

20,642,240

39,497,612

13) Deferred Tax

The tax effect of significant temporary differences that resulted in deferred tax assets are: Particulars Depreciation on Fixed Assets Others Deferred Tax Asset

Current Year Rs.

Previous Year Rs.

746,000

2,058,000

3,052,000

1,999,000

3,798,000

4,057,000

14) Computation of Net Profit under Section 349 of the Companies Act, 1956. Particulars Profit before Tax as per Profit and Loss Account

Current Year Rs.

Previous Year Rs.

1,153,184,151

460,976,804

20,093,562

14,008,095

8,489,763

6,879,606

Add :Managerial Remuneration

No. of Options 442,700

Add : Depreciation Loss on sale of Fixed Asset

Employee Stock Option Plan :

Less :- Profit on sale of asset as per accounts

In December 2007, the Company has instituted an employee Stock Option Plan (GPL ESOP) approved by the Board of Directors, shareholder and the Remuneration Committee , which provides for the allotment of 442,700 options convertible into 442,700 Equity Shares of Rs. 10/- each to eligible employee of Godrej Properties Limited and its subsidiary Companies (the participating companies)

Depreciation Net Profit for the purpose of Directors Remuneration

289,087 -

43,908

8,489,763

6,879,606

1,173,566,800

474,940,991

131

SCHEDULES FORMING PART OF THE ACCOUNTS

Managerial Remuneration:Particulars A

Salaries

Contribution to Provident Fund

Estimated Monetary Value of Perquisites

Performance Linked Variable Remuneration

E F

Sitting Fees to Non-Executive Directors Commission to Non-Executive Directors Total

Current Year Rs.

The following transactions were carried out with the related parties in the ordinary course of business.

(i)

Previous Year

8,286,772

Rs. 4,910,678

471,040

353,280

280,577

432,856

9,940,748

8,311,281

180,000 934,425

20,093,562

14,008,095

Notes:

In case of the Managing Director, Performance Linked Variable Remuneration of Rs. 9,940,748/(Previous Year Rs. 8,311,281/-) is on the basis of provision made in the accounts.

15) Amounts paid to Auditors: Particulars

Current Year Rs.

Previous Year Rs.

Audit Fees

1,579,288

1,487,180

Audit & Other Statutes

623,598

589,260

Certification

205,051

30,866

Consultancy Charges Reimbursement of Expenses

377,540 5,002

Sr.

Details relating to parties referred to in items 1 (i), (ii) and (iii) above Description

Godrej & Boyce Mfg Co Ltd

(i) 1.

Issue of equity share capital

Investment in equity/ preference share capital

Investment in debentures

Purchase of fixed assets

Advances given

Godrej Industries Ltd

Subsidiaries

(ii) - 1,499,999,480

Other Related Parties In Godrej Group

(iii)

(iv) -

325,420,050 1,500,000

147,900,000

690,391

17,850,000 -

2,892,016

650,000

84,000

- 1,396,814,531

16,870,120

4,200,000 -

Advance received against sale of flats

516,304 601

Deposit given

675,000

16) Segment Information : As the company has only one business segment, disclosure under Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.

1,000,000

Deposit repaid

675,000-

Inter-Corporate Deposit given

150,000,000

10.

Inter-Corporate Deposit repaid

150,000,000

11.

Interest received on InterCorporate Deposit

5,049,862

12.

Construction & other expenses incurred on behalf of other companies

422,073

985,494,069

502,278

358,970,202

17) Related Party Disclosures. 1.

Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below: (i) Relationships: Shareholders (Holding Company) Godrej Industries Limited (GIL) holds 81.69% shares in the Company. GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the Ultimate Holding Company. (ii) Subsidiaries : Girikandra Holiday Homes & Resorts Limited (100%) Godrej Realty Private Limited (51%) Godrej Waterside Properties Private Limited (51%) Godrej Real Estate Private Limited (100%) Godrej Developers Private Limited (100%) Godrej Sea View Properties Private Limited (100%) Happy Highrises Limited (100%) (iii) Other Related Parties in Godrej Group, where common control exists : Vora Soaps Limited Bahar Agrochem & Feeds Private Limited Ensemble Holdings & Finance Limited Godrej Appliances Limited Godrej Agrovet Limited Godrej Consumer Products Limited Godrej Hicare Limited Godrej Hershey Limited Godrej Infotech Limited Lawkim Limited (iv) Key Management Personnel : Mr. Milind Surendra Korde (v) Individuals exercising Significant Influence : Mr. A. B. Godrej Mr. N. B. Godrej

13.

1,471,819

Expenses charged by other companies (net)

14.

Dividend Paid

15.

Outstanding receivables, net of (payables)

16.

107,368,412

3,230,536

82,017,012

2,035,464

2,656,006

759,799

220,567,029-

9,160,538-

24,136 2,512,226,169

3,565

311,468,178

(48,965)

1,350,000

(16,993,766) (5,605,348)

Deposits Receivable

458,309

Figures in italics are for previous year (ii) Details relating to persons referred to in items 1 (iv) & (v) above Key Management Personnel: 1.

Remuneration

Reimbursement of Travel Expenses

Individuals exercising significant Influence :

(Amt in Rupees)

Current Year Rs.

Previous Year Rs.

18,979,137

13,657,985

194,400

Dividend paid – Mr.N.B.Godrej 3.

194,400 8,054,487

Nil

Significant Related Party Transactions.

Nature of Transactions

Subsidiaries & Other Related Parties in the Godrej Group

Issue of equity share capital

Godrej Industries Limited

Investment in equity share capital

Happy Highrises Limited

320,720,050

Investment in debentures

Godrej Waterside Properties Private Limited

147,900,000

Godrej Realty Private Limited Purchase of fixed assets

Godrej & Boyce Mfg Co. Limited

Amount Rs. 1,499,999,480

17,850,000 690,391 2,892,016

132

SCHEDULES FORMING PART OF THE ACCOUNTS Advances given

Godrej Waterside Properties Private Limited

567,094,306

Happy Highrises Limited

689,950,000

Advance received against sale of Godrej Industries Limited flats Inter-Corporate Deposits given during Lawkim Limited the year Inter-Corporate Deposits repaid Lawkim Limited during the year Construction & other expenses Godrej Real Estate Private Limited incurred on behalf of other companies Godrej Developers Limited E x p e n s e s c h a r g e d b y o t h e r Godrej & Boyce Mfg. Co. Limite companies. (net) Interest Income on Inter-Corporate Lawkim Limited Deposits given Outstanding receivables, net of Godrej Waterside Properties Private (payables) Limited

Jointly Controlled Operations - Development of the following Residential/Commercial Projects:

Coliseum, Mumbai

Woodsman Estate, Bangalore

Gold County, Bangalore

Planet Godrej, Mumbai

La Vista, Mumbai

Glenelg, Mumbai

Edenwoods, Mumbai

Shivajinagar, Pune

NLM, Kalyan

GVD, Kalyan

MPM, Kalyan

RSM/HKB, Kalyan

82,017,012

Mangalore Project

5,049,862

Sanjay Khan, Bangalore

741,494,783

Grenville Park, Mumbai

Walkeshwar, Mumbai

Waldorf, Oshiwara

Castlemaine, Pune

Chandigarh Project

20)

21)

Previous year figures have been regrouped/rearranged where ever necessary to confirm to current year’s classification.

22)

Additional information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.

16,870,120 NIL 150,000,000 150,000,000 675,246,973 18,420 152,029,966 18,420 107,368,412

278,077,329 Godrej Real Estate Private Limited Happy Highrises Limited

19) Information in respect of Joint Ventures

722,892,177 18,420 760,197,423

18) Employee Benefits

(i)

Defined Contribution Plans: Contribution to Defined Contribution Plan, recognized as expense for the year are as under: Particulars Employers’ Contribution to Provident Fund

Current year (Rs.) 4,259,561

23) Statement Pursuant to Part IV of Schedule VI of the Companies Act, 1956

Balance Sheet Abstract for the Year Ended 31st March 2008 And Company’s General Business Profile a)

Registration Details

(ii)

Defined Benefit Plans:

Contribution to Gratuity Fund

Registration No.

Gratuity is payable to all eligible employees on death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company’s policy whichever is beneficial to the employees.

State Code

Balance Sheet Date

The following table sets out the funded status of the gratuity plan and the amounts recognized in the Company’s financial statements as at 31 March 2008:

(Amount in Rs. Thousands)

Public Issue

Rights Issue (Including Premium)

3,076,578

Bonus Issue

Private Placement Position of mobilisation and deployment of funds (Amount in Rs. Thousands)

Total Liabilities

97,37,952

Total Assets

97,37,952

Sources of Funds

Paid-up Capital

Reserves & Surplus

Secured Loans

Unsecured Loans

Application of Funds Net Fixed Assets

Change in present value of obligation Present value of obligation as at 1st April 2007 Interest Cost

246,126

Service Cost Benefits Paid Actuarial (gain)/loss on obligation

621,752 267,163

Present value of obligation, as at 31st March 2008 Amount recognized in the Balance Sheet

4,211,619

Present value of obligation, as at 31st March 2008 Fair value of plan assets as at 31st March 2008 Net obligation as at 31st March 2008

4,211,619 4,211,619

Net gratuity cost for the year ended 31st March 2008 Interest Cost Expected return on plan assets

246,126 -

Investments

Net Current Assets

267,163 1,135,041

Misc. Expenditure

Deferred Tax Asset

11 31st March, 2008

Capital raised during the year

621,752

Assumptions used in accounting for the gratuity plan

Nil 1,499,999 515,564 Nil

604,203 1,817,345 985,755 1,529,845 28,922 556,949 Nil 3,798

Accumulated Losses Performance of Company (Amount in Rs. thousands)

Turnover

2,274,999

Salary escalation rate

Total Expenditure (Net of other income)

1,121,815

Expected rate of return on plan assets

Profit before tax Profit after tax

1,153,184 758,880

Earning per Share in Rs. (on an annualized basis)

Dividend rate % Generic Name of three principal products/services of Company

The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market Since, this is the first year of AS – 15 (Revised 2005) being applicable, previous year’s figures have not been provided.

4,347,478

(In %) 8

Discount Rate

Current Service Cost

Net Actuarial (gain)/loss to be recognized Net gratuity cost

U74120MH1985PLC035308

Nil

10.64 100 N.A.

133

Schedule forming paert of Accounts STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 1. Name of the Company : Girikandra Holiday Homes & Resorts Limited 2. Financial Year ending : 31st March, 2008 3. The Company’s interest in the : 500 Equity Shares of Rs. 1000/- each, fully paid-up subsidiary as on above date. (representing 100% of the share Capital) 4. Net Profit / (Loss) of the subsidiary : (Rs. 2,500/-) company (Not dealt with in the accounts of the Company) A. B. GODREJ CHAIRMAN Mumbai, Dated : April 30, 2008

MILIND S. KORDE MANAGING DIRECTOR

SHODHAN KEMBHAVI COMPANY SECRETARY

STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 1. Name of the Company : Godrej Realty Private Limited 2. Financial Year ending : 31st March, 2008 3. The Company’s interest in the : 510,000 Equity Shares of Rs. 10/- each, fully paid subsidiary as on above date. up (representing 51% of the share Capital) 4. Net Profit / (Loss) of the subsidiary : Rs.610, 096/-) company (Not dealt with in the accounts of the Company) A. B. GODREJ CHAIRMAN Mumbai, Dated : April 30, 2008

MILIND S. KORDE MANAGING DIRECTOR

SHODHAN KEMBHAVI COMPANY SECRETARY

STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 1. Name of the Company : Godrej Waterside Properties Private Limited 2. Financial Year ending : 31st March, 2008 3. The Company’s interest in the : 510,000 Equity Shares of Rs. 10/- each, fully paid subsidiary as on above date. up (representing 51% of the share Capital) 4. Net Profit / (Loss) of the subsidiary : (Rs.1,556,636/-) company (Not dealt with in the accounts of the Company) A. B. GODREJ CHAIRMAN Mumbai, Dated : April 30, 2008

MILIND S. KORDE MANAGING DIRECTOR

SHODHAN KEMBHAVI COMPANY SECRETARY

STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 1. Name of the Company : Godrej Real Estate Private Limited 2. Financial Year ending : 31st March, 2008 3. The Company’s interest in the : 50,000 Equity Shares of Rs. 10/- each, fully paid subsidiary as on above date. Up (representing 100% of the share Capital) 4. Net Profit / (Loss) of the subsidiary : (Rs.15,626/-) company (Not dealt with in the accounts of the Company) A. B. GODREJ CHAIRMAN Mumbai, Dated : April 30, 2008

MILIND S. KORDE MANAGING DIRECTOR

SHODHAN KEMBHAVI COMPANY SECRETARY

STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 1. Name of the Company : Godrej Developers Private Limited 2. Financial Year ending : 31st March, 2008 3. The Company’s interest in the : 50,000 Equity Shares of Rs. 10/- each, fully paidsubsidiary as on above date. up (representing 100% of the share Capital) 4. Net Profit / (Loss) of the subsidiary : (Rs.1,842 /-) company (Not dealt with in the accounts of the Company) A. B. GODREJ CHAIRMAN Mumbai, Dated : April 30, 2008

MILIND S. KORDE MANAGING DIRECTOR

SHODHAN KEMBHAVI COMPANY SECRETARY

STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 1. Name of the Company : Godrej Sea View Properties Private Limited 2. Financial Year ending : 31st March, 2008 3. The Company’s interest in the : 50,000 Equity Shares of Rs. 10/- each, fully paid subsidiary as on above date. up (representing 100% of the share Capital) 4. Net Profit / (Loss) of the subsidiary : (Rs.40,179/-) company (Not dealt with in the accounts of the Company) A. B. GODREJ CHAIRMAN Mumbai, Dated : April 30, 2008

MILIND S. KORDE MANAGING DIRECTOR

SHODHAN KEMBHAVI COMPANY SECRETARY

STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 1. Name of the Company : Happy Highrises Limited. 2. Financial Year ending : 31st March, 2008 3. The Company’s interest in the : 203,120 Equity Shares of Rs. 1000/- each, fully subsidiary as on above date. paid-up (representing 100% of the share Capital) 4. Net Profit / (Loss) of the subsidiary : Rs. 14,913 / company (Not dealt with in the accounts of the Company) A. B. GODREJ CHAIRMAN Mumbai, Dated : April 30, 2008

134

MILIND S. KORDE MANAGING DIRECTOR

SHODHAN KEMBHAVI COMPANY SECRETARY

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008 Current year

Previous year

Rupees

1,153,184,151

460,976,804

Cash Flow from Operating Activities Profit for the Year before Taxation Adjustment for: Depreciation

8,489,763

6,879,606

Interest Paid

270,039,466

124,554,270

(Profit) /Loss on sale of Fixed Asset (Net)

289,087

(43,908)

Provision for Dimunition in value of Investment written back

(14,556)

(231,859,134)

(83,034,336)

Interest Income Dividend Received Operating Profit before working capital changes

(32,102)

(4,529)

1,200,096,675

509,327,906

Adjustment for: 672,345,146

(583,146,207)

Change in Sundry Debtors

(1,859,241,757)

(1,369,774,201)

Change in Loans & Advances

(3,865,284,547)

(343,377,450)

2,035,370,065

1,060,980,303

(1,816,714,418)

(725,989,649)

Change in Inventory

Change in Current Liabilities / Provisions Taxes Paid (Net) Net Cash Flow from Operating activities

410,283,474

65,000,599

(2,226,997,892)

(790,990,248)

(11,712,077)

(11,603,000)

Cash Flow from Investing Activities Purchase of Fixed Assets Sale of Fixed Assets Purchase of Investments Interest Received Dividend Received Net Cash Flow from Investing Activities

203,770

282,764

(473,320,050)

(19,350,000)

207,473,633

74,036,734

32,102

4,529

(277,322,622)

43,371,027

Cash Flow from Financing Activities Proceeds from Issue of Equity Share Capital Change in Cash Credit

1,499,999,480

811,856,278

158,595,840

(250,000)

Proceeds from Borrowings

400,579,416

1,065,167,294

(Repayment)/ Proceeds from Inter Company Deposit

(10,000,000)

10,000,000

(Repayment)/ Proceeds from Term Loan

2,200,000

1,039,000

(270,039,466)

(124,554,270)

Payment of Dividend

(332,000,000)

Tax on Distributed Profits

(46,563,000)

2,434,595,708

731,434,864

Net Increase/ (Decrease) in Cash & Cash Equivalent

(69,724,806)

(16,184,357)

Cash & Cash Equivalent -Opening Balance

133,678,881

149,863,239

Cash & Cash Equivalent -Closing Balance

63,954,075

133,678,881

Acceptance of Fixed Deposits Interest Paid

Net Cash Flow from Financing Activities

Notes : 1.

The cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash flows by operating, investing and financing activities.

Figures for the previous year have been regrouped / restated wherever necessary to conform to this year’s classification.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Mumbai, Dated : April 30, 2008

A. B. GODREJ Chairman

MILIND S. KORDE Managing Director

SHODHAN KEMBHAVI Company Secretary

BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008 TO THE SHAREHOLDERS Your Directors have pleasure in submitting their Report alongwith the Audited Accounts for the year ended 31st March, 2008. 1. FINANCIAL HIGHLIGHTS : The accounting results for the year ended 31st March, 2008 reveal that there is a deficit at the end of the year. 2. REVIEW OF OPERATIONS : The Company has not commenced any activities during the year. 3. DIVIDEND : As there are no profits, the Directors regret that no dividend can be recommended. 4. DIRECTORS : In accordance with the provision of the Articles of Association of the Company, Ms. Tanya A. Dubash retires by rotation and being eligible offers herself for reappointment. 5. APPOINTMENT OF AUDITORS : M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent. 6. DIRECTORS’ RESPONSIBILITY STATEMENT: Your Directors confirm: (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed; (ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2008 and of the loss of the Company for that year; (iii) that the Directors had taken proper and sufficient care for the maintenance of adequate

accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) that the Directors have prepared the annual accounts on a going concern basis. 7. ADDITIONAL INFORMATION : (a) Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, are not given. (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder: (i) Conservation of Energy : Expenses on account of Energy are negligible. (ii) Technology Absorption : It is an on going process. (iii) Foreign Exchange Earning & Outgo : The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure during the year. 8. ACKNOWLEDGEMENT: Your Directors take this opportunity to thank all the associates for their co-operation.

REPORT OF THE AUDITORS

TO THE MEMBERS OF GIRIKANDRA HOLIDAY HOMES & RESORTS LIMITED 1. We have audited the attached Balance Sheet of GIRIKANDRA HOLIDAY HOMES & RESORTS LIMITED, as at 31st March 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. 2.

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

As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

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

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.

The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS Mumbai, Dated : April 30, 2008

in the case of the Balance Sheet, the state of affairs of the Company as at 31st March, 2008;

ii)

in the case of the Profit and Loss Account, the loss 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 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. For and on behalf of KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS

Place: Mumbai Dated : April 30, 2008

ANNEXURE TO THE AUDITORS’ REPORT Referred to in paragraph (3) of our report of even date. 1) The Company does not have any fixed assets. 2) The Company does not have any inventories. 3) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 (b) Consequently, the question of commenting on the rates of interest and other terms and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and the interest and reasonable steps for recovery of principal and interest does not arise. (c) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 (d) Consequently, the question of commenting on the rates of interest and other terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise. 4) As there are no inventories and assets, nor are there any sales during the year, the question of adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services does not arise. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls. 5) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that there are no transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956. 6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable. 7) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business. 8) The maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products. 9) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has no statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues incurred during the year. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March 2008 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues outstanding of

TANYA A. DUBASH MILIND S. KORDE DIRECTORS

10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21)

ERMIN K. IRANI PARTNER Membership No. 35646

Sales Tax, Value Added Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty, cess on account of any dispute. The Company’s accumulated losses at the end of the financial year are less than fifty percent of its net worth. The Company has not incurred any cash losses in the current year and in the immediately preceding financial year. According to the information and explanations given to us and on the based on documents and records produced to us, the Company does not have dues to banks, financial institutions or debenture holders. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies. In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Based on our examination and according to the information and explanations given to us, there were no term laons during the year. According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short term basis for long term investments. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956. The Company did not issue any debentures during the year. The Company has not raised any money through a public issue during the year. Based on the audit procedures performed and information and explanations given by the Management, we report that no fraud on or by the Company has been noticed or reported during the year. For and on behalf of KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS

Place: Mumbai Dated : April 30, 2008

ERMIN K. IRANI PARTNER Membership No. 35646

135

BALANCE SHEET AS AT 31ST MARCH, 2008 Schedule SOURCES OF FUNDS Shareholders' Funds Share Capital Loan Funds Unsecured Loans

APPLICATION OF FUNDS Fixed Assets Investments Current Assets, Loans & Advances Projects in Progress Cash Balance Tax Deducted at Source (Net of provision for tax of Rs 4,239/- (Previous year Rs.Nil)) LESS : CURRENT LIABILITIES & PROVISIONS Current Liabilities

As at 31.03.07 Rupees

500,000

28,730,564 29,230,564

28,511,433 29,011,433

29,288,622 190 -

29,028,243 4,239

29,288,812

29,032,482

82,561 82,561 29,206,251

41,123 41,123 28,991,359

NET CURRENT ASSETS MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) Preliminary Expenditure Profit & Loss Account

5,000 19,313 29,230,564

7,500 12,574 29,011,433

Schedule

For the Year ended 31.03.08 Rupees

For the Year ended 31.03.07 Rupees

260,379

231,391

INCOME EXPENDITURE Administration Expenses

Preliminary Expenses Written Off Less : Amount Transferred to Project In Progress

2,500

262,879

233,891

(260,379)

(231,391)

Loss for the year

(2,500)

Prior years tax adjustments

(4,239)

Amount available for appropriation

(6,739)

(2,500)

(Deficit) brought forward

(12,574)

(10,074)

(Deficit) carried forward to Balance Sheet

(19,313)

(12,574)

(13.48)

(5.00)

NOTES TO ACCOUNTS & ACCOUNTING POLICIES

5 Signatures to the Balance Sheet and Schedules 1 to 3 and 5

The Schedules referred to above form an integral part of the Balance Sheet. As per our Report of even date

As per our Report of even date For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Mumbai, Dated : April 30, 2008

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008

Earning per share Basic/Diluted in Rs. (Refer Note 3)

NOTES TO ACCOUNTS & ACCOUNTING POLICIES The Schedules referred to above form an integral part of the Balance Sheet.

As at 31.03.08 Rupees

Signatures to the Balance Sheet and Schedules 4 and 5

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants TANYA A. DUBASH Director

MILIND S. KORDE Director

ERMIN K. IRANI Partner Mumbai, Dated : April 30, 2008

TANYA A. DUBASH Director

MILIND S. KORDE Director

SCHEDULES FORMING PART OF THE ACCOUNTS As at 31.03.2008 Rupees

As at 31.03.2007 Rupees

1,000,000

500,000

29,028,243

28,796,852

260,379

231,391

29,288,622

29,028,243

82,561

41,123

SCHEDULE 5 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES

SCHEDULE 1 : SHARE CAPITAL AUTHORISED 1000 Equity Shares of Rs.1,000/- each

ISSUED, SUBSCRIBED & PAID UP 500 Equity Shares of Rs.1,000/- each

Profit / (Loss) after as per Profit & Loss Account Weighted average no. of Equity Shares outstanding

SCHEDULE 2 : PROJECT IN PROGRESS As per last Balance Sheet Add : Expenses transferred from Profit & Loss Account SCHEDULE 3 : CURRENT LIABILITIES Sundry Creditors (Refer Note 2)

82,561

41,123

Rent,Rates & Taxes

32,600

46,000

Audit Fees

28,120

28,060

199,659

157,331

260,379

231,391

Investor Education & Protection Fund SCHEDULE 4 : ADMINISTRATION EXPENSES

Other Operating Expenses

SCHEDULE 5 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES 1)

ACCOUNTING POLICIES a) GENERAL The financial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956. b) MISCELLANEOUS EXPENDITURE Miscellaneous expenditure is amortised over a period of 10 years.

136

The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive. Due to Micro, Small and Medium Enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2nd October,2006, certain disclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts. Earnings per share Particulars

[The entire share capital is held by Godrej Properties Ltd., the Holding Company & its nominees]

Basic / Diluted Earnings Per Share (Rs.) Nominal value of shares (Rs.)

Current Year Rs. (6739) 500

Previous Year Rs. (2500) 500

(13.48) 1,000

(5.00) 1,000

4) Related Party Disclosure Related party disclosures as required by AS-18,” Related Party Disclosures”, are given below: 1. Relationships: (i) Shareholders (the Godrej Group Shareholding) in the Company : Godrej Properties Limited (GPL) holds 100% in the Company. (ii) Key Management Personnel : Mr. Milind Surendra Korde 2. The following transactions were carried out with the related parties in the ordinary course of the business

Sr. No.

Particulars

Advances given

Outstanding payables

GPL Amount Rs. 2,19,131 2,43,716 2,87,30,564 2,85,11,433

Figures initalics are for previous year

Previous year figures have been regrouped / rearranged where ever necessary to confirm to current year’s classification.

Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.

Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956.

Balance Sheet abstract for the Year ended 31st March, 2008 And Company's General Business Profile

Registration Details Registration No. State Code Balance Sheet Date Capital raised during the year (Amount in Rs. thousands) Public Issue Rights Issue Bonus Issue Private Placement - Capital - Premium

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008 Current Year Rupees

Previous Year Rupees

(2,500)

2,500

(260,379)

(231,391)

Cash from Operating Activities : : :

U55101MH1995PLC091582 11 31st March, 2008

: : : : :

Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities : Total Assets : Sources of Funds Paid-up capital : Reserves & Surplus : Secured Loans : Unsecured Loans : Application of Funds Net Fixed Assets : Investments : Net Current Assets : Misc. Expenditure : Accumulated Losses :

Nil Nil Nil Nil Nil

29,313 29,313 500 28,731 29,206 5 19

Performance of Company (Amount in Rs. thousands) Turnover Total Expenditure Profit / (Loss) before Tax Profit / (Loss) after Tax Earning per Share in Rs. Dividend Rate %

: : : : : :

263 (3) (7) (13.48) -

Generic Names of three principal products/services of Company

N.A.

Loss for the year Adjustment for: Preliminary Expenses Operating Loss before working capital changes Adjustment for: Change in Inventory Change in Current Liabilities

41,438

(12,325)

(218,941)

(243,716)

Net Cash from Investing Activities

–

Cash from Financing Activities

–

Increase in Unsecured Loan

219,131

243,716

Net Cash from Financing Activities

219,131

243,716

190

Net Cash from Operating Activities

Net Increase/ (Decrease) in Cash & Cash Equivalent Cash & Cash Equivalent -Opening Balance Cash & Cash Equivalent -Closing Balance

NOTES: 1) The Cash Flow Statement has been prepared under the "Indirect Method" as set out in the Accounting Standard (AS) 3 on "Cash Flow Statements", and presents cash flows by operating, investing and financing activities. 2)

Figures for the previous year have been regrouped/restated wherever necessary to conform to this year's classification.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Mumbai, Dated : April 30, 2008

TANYA A. DUBASH Director

MILIND S. KORDE Director

137

BOARD OF DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON 31st MARCH, 2008 To The Shareholders Your Directors have pleasure in submitting their Report alongwith the Audited Accounts for the year ended 31st March, 2008. 1. FINANCIAL HIGHLIGHTS : The accounting results for the year ended 31st March, 2008 reveal that there is deficit at the end of the year. 2. REVIEW OF OPERATIONS : The Company has conceptualised the project and finalised the design and are awaiting further approvals. 3. DIVIDEND : As there are no profits, the Directors regret that no dividend can be recommended. 4. DIRECTORS : In accordance with the provisions of the Articles of Association, Mr. Pirojsha Adi Godrej, retire by rotation and being eligible, offer himself for re-appointment. 5. APPOINTMENT OF AUDITORS : M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent. 6. DIRECTORS’ RESPONSIBILITY STATEMENT : Your Directors confirm: (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed; (ii) that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2008 and of the loss of the Company for that year;

(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) that the Directors have prepared the annual accounts on a going concern basis. 7. ADDITIONAL INFORMATION : (a) Since the Company has no employees, the particulars of the employees to be disclosed under Section 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given. (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder : (i) Conservation of Energy : Expenses on account of Energy are negligible. (ii) Technology Absorption : It is an on going process. (iii) Foreign Exchange Earning and Outgo : The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure during the year. 8. ACKNOWLEDGEMENT : Your Directors take this opportunity to thank all the associates for their co-operation. Mumbai, April 30, 2008

For and on behalf of the board of directors Milind S. Korde Director

NARESH NADKARNI Director

Report of the Auditors TO THE MEMBERS OF GODREJ REALTY PRIVATE LIMITED 1.

3. 4.

We have audited the attached Balance Sheet of GODREJ REALTY PRIVATE LIMITED, as at 31st March, 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph (3) above, we report that : a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books. c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India : i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008; ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date; and iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956. For and on behalf of Kalyaniwalla and Mistry Chartered Accountants ERMIN K. IRANI Partner Mumbai, April 30, 2008 Membership No. 35646 9.

(a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has no statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess. According to the information and explanations given to us, there are no undisputed dues, payable in respect of the above as at 31st March, 2008 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty, Cess on account of any dispute. The Company’s accumulated losses at the end of the financial year are less than fifty percent of its net worth. During the year, the Company has not incurred cash losses. However, it has incurred cash losses in the immediately preceding financial year. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in dues to debenture holders. There are no dues to banks and financial institutions. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fun/ societies. In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Based on our examination and according to the information and explanations given to us, there were no term loans during the year. According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investments. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956. The Company did not issue any debentures during the year. The Company has not raised any money through a public issue during the year. Based on the audit procedures performed and information and explanations given by the Management, we report that no fraud on or by the Company has been noticed or reported during the year. For and on behalf of Kalyaniwalla and Mistry Chartered Accountants

Annexure to the Auditors' report Referred to in paragraph (3) of our report of even date. 1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) As explained to us, the Company has a program for physical verification of fixed assets at periodicals intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of is assets. (c) There is no disposal of fixed assets during the year. 2. (a) The management has conducted physical verification of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification. 3. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. (b) Consequently, the question of commenting on the rate of interest and terms and conditions of the loans granted being prejudicial to the interest of the Company, receipt of regular principal and interest and reasonable steps for recovery of principal and interest does not arise. (c) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. (d) Consequently, the question of commenting on the rate of interest and other terms and conditions of the loans taken being prejudicial to the interest of the Company, payment of regular principal and interest does not arise. 4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. There is no sale of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls. 5. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section. (b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist. 6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable. 7. In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business. 8. The maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.

138

10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

Mumbai, April 30, 2008

ERMIN K. IRANI Partner Membership No. 35646

BALANCE SHEET AS AT 31st MARCH, 2008 Schedule SOURCES OF FUNDS Shareholders’ Funds Share Capital 1 Loan Funds Secured Loans 2 APPLICATION OF FUNDS Fixed Assets Gross Block 3 Less : Depreciation Net Block Investments Deferred Tax Assets Current Assets, Loans and Advances Inventory 4 Cash and Bank Balances 5 Loans and Advances 6 Less : Current Liabilities and Provisions Current Liabilities 7 Net Current Assets Profit And Loss Account 11 Notes to Accounts and Accounting Policies The Schedules referred to above form an integral part of the Balance Sheet. As per our Report of even date.

As at 31.03.08 Rupees

As at 31.03.07 Rupees

10,000,000

150,000,000 160,000,000

115,000,000 160,000,000

Schedule

For the period For the year ended 31.03.08 ended 31.03.07 Rupees Rupees

INCOME

1,525,091

Interest Income (Tax deducted at Source Rs. 302,103/(Previous Year Rs. 229,765/-)

1026852

EXPENDITURE 347,608 63,850 283,758 – 3,000

347,608 39,754 307,854 – 589,000

88,563,479 19,023,983 88,292,586 195,880,048

61,819,484 20,571,060 8,823,5917 170,626,462

38,267,045 38,267,045 157,613,003 2,100,239 160,000,000

12,665,849 12,665,849 157,960,613 1,142,533 160,000,000

Signatures to the Balance Sheet and Schedules 1 to 7 and 11

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Mumbai, April 30, 2008

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st mARCH, 2008

Milind S. Korde Naresh Nadkarni

Cost of Sales

–

Administration Expenses

–

2,721,400

Interest and Finance Charges

1,525,091

–

Depreciation

24,096

36,985

Loss for the Year

(24,096)

(1,731,533)

Provision for Taxation For Deferred Tax

(586,000)

589,000

Loss After Tax

(610,096)

(1,142,533) –

Prior Year Tax Adjustment

(347,610)

Brought Forward Loss

(1,142,533)

–

Loss Carried Forward

(2,100,239)

(1,142,533)

Earning Per Share Basic/Diluted in Rs. (Refer Note 5)

(0.96)

(1.14)

Notes to Accounts and Accounting Policies

The Schedules referred to above form an Signatures to the Profit and Loss integral part of the Profit and Loss Account Schedules 8 to 11 As per our Report of even date.

Director Director

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner

Milind S. Korde Naresh Nadkarni

Director Director

Mumbai, April 30, 2008

SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS AS AT 31st MARCH, 2008 Schedule 1 : Share Capital Authorised 1,000,000 Equity Shares of Rs.10 each Issued, Subscribed and Paid up 1,000,000 Equity Shares of Rs.10 each, fully paid-up (Out of the above 510,000 equity shares are held by Godrej Properties Limited, the Holding Company and its nominee) Schedule 2 : Secured Loans 10% Secured Redeemable optionally Convertible Debentures (Refer Note 2)

As at 31.03.08 Rupees

As at 31.03.07 Rupees

10,000,000

150,000,000

Schedule 3 : Fixed assets

Gross Block

Depreciation

As at 1st April Addition Deduction 2007 Rs. Rs. Rs. Land (Refer Note 1b)

As at As at 31st 1st For the March April year 2008 2007 Rs. Rs. Rs.

222,175

–

– 222,175

25,350

–

– 25,350 11,790

Motor Vehicle

100,083

–

Total

347,608

–

Previous Year

100,083 247,525

– 347,608 2,769

36,985

Computers

–

Net Block As at 31st March 2008 Rs.

As at As at 31st 31st March March 2007 2008 Rs. Rs.

– 222,175

5,424 17,214

222,175

8,136

13,560

– 100,083 27,964

18,672 46,636 53,447

72,119

– 347,608 39,754

24,096 63,850 283,758 307,854 39,754 307,854

97,314

SCHEDULE 4 : INVENTORY Construction work in progress

As at 31.03.08 Rupees

As at 31.03.07 Rupees

88,563,479 88,563,479

61,819,484 61,819,484

SCHEDULE 5 : CASH AND BANK BALANCE Cash & Cheques in Hand Balance with Scheduled Bank - on Current Account - on Fixed Deposit Account

667 1,336,817 17,686,499 19,023,983

2,657,347 413,713 17,500,000 20,571,060

SCHEDULE 6 : LOANS AND ADVANCES (Unsecured and considered good unless otherwise stated) Advances recoverable in cash or kind or for value to be received Secured (Secured against Bank Guarantee) Others Interest Accrued Advance Tax and Tax Deducted at Source (Net of provision for Tax Rs. 3,47,610)

– 87,983,906 – 308,680

11,753,493 76,230,000 13,386 239,038

88,292,586

88,235,917

SCHEDULE 7 : CURRENT LIABILITIES Sundry Creditors (Refer Note 3) Investor Education and Protection Fund Other Liabilities Interest Accrued but not due

541,746 – 15,324,156 22,401,143 38,267,045

392,530 – 2,758,758 9,514,561 12,665,849

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SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON 31st MARCH, 2008 SCHEDULE 8 : COST OF SALES Opening Stock Add: Expenditure/Transfers from Advances during the year Construction Material & Labour Advertisement Expenses Overheads Interest Less: Closing Stock

Year ended 31.03.08 Rupees

Year ended 31.03.07 Rupees

61,819,484

15,941,553

– – 13,267,624 13,476,371

17,960,338 281,427 15,597,553 12,038,615

88,563,479 88,563,479

61,819,486 61,819,486

Cost of Sales

–

SCHEDULE 9 : ADMINISTRATION EXPENSES Professional Charges

–

2,721,400

–

2,721,400

15,001,462 15,001,462 – 15,001,462 13,476,371 1,525,091

12,038,466 12,038,466 149 12,038,615 12,038,615 –

SCHEDULE 10 : INTEREST AND FINANCE CHARGES (NET) Interest Paid Others Total Interest paid Add : Brokerage and Other Financial Charges Gross Interest Less : Transferred to Cost of Sale NET INTEREST

SCHEDULE 11 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES 1. ACCOUNTING POLICIES a) General The financial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956. b) Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction. Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount. c) Depreciation/Amortization Depreciation has been provided on Written Down Value basis, at the rates specified in Schedule XIV of the Companies Act, 1956. d) Inventories Inventories are valued as under : a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At cost Construction Work in Progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company. e) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As per this method, revenue in Profit and Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company. Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors. Income from operation of commercial complexes is recognized over the tenure of the lease/service agreement. Interest income is accounted on an accrual basis at contracted rates. f) Borrowing Cost Interest and finance charges incurred in connection with borrowing of funds, which are incurred for the development of long-term projects are transferred to Construction Work in Progress/Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost/rates as per Agreements respectively. Other borrowing costs are recognized as an expense in the period in which they are incurred. g) Provision For Taxation Tax expense comprises both current, deferred and fringe benefit tax. Current and fringe benefit tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available

140

against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date. h) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortized over the period of the contract. Exchange gains/losses are recognized in the Profit and Loss Account. i) Earnings Per Share The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive. j) Provisions and Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. 2. Secured Loans 11,500,000 and 3,500,000 10% secured optionally convertible debentures of Rs. 10 each are redeemable at the end of the 7 years from the deemed date of allotment 16th March, 2006 and 12th March, 2007 respectively and are secured to the extent of specific immovable assets of the Company disclosed under the head “Fixed Assets”. The Company shall create a Debenture Redemption Reserve as required under Section 117 (C) of the Companies Act, 1956 from the year in which profits are available for creation. 3. Due to Micro, Small and Medium Enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2 October 2006, certain disclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts. 4. Deferred Tax The Tax effect of significant temporary difference that resulted in deferred tax assets are : Particulars Current Year (Rs.) Previous Year (Rs.) Loss Carried forward – 586,319 Depreciation on Fixed Assets 3,000 2,681 Deferred Tax Asset 3,000 589,000 5. Earnings Per Share Previous Year (Rs.) Particulars Current Year (Rs.) Loss for the year as per 957,706 1,142,533 Profit and Loss Account Weighted average no. of equity shares outstanding 1,000,000 1,000,000 Basic/Diluted Earnings Per Share (Rs.) (0.96) (1.14) Nominal value of shares (Rs.) 10 10 6. Amounts paid to Auditors: Particulars Current Year (Rs.) Previous Year (Rs.) Audit Fees 89,984 89,792 Consultancy charges 28,060 – Total 118,044 89,792 7. Segment Information : As the company has only one business segment, disclosure under Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable. 8. Related Party Disclosures. 1. Relationships : (i) Shareholders (the Godrej Group Shareholding ) in the Company Godrej Properties Limited (GPL) holds 51% in the Company. GPL is the subsidiary of Godrej Industries Limited (GIL).GIL is a subsidiary of Godrej & Boyce Manufacturing Company Limited (G & B), the Ultimate Holding Company. (ii) Investing party in respect of which the reporting enterprise is an associate :HDFC Venture Trustee Company Limited. 2. The following transactions were carried out with the related parties in the ordinary course of business. Sr. No.

Particular

G&B

Issue of debentures

Expenses Charged to other Companies Expenses Charged by other Companies Debenture Interest

Loans/Advances taken

Outstanding receivables, net of (payables) Debentures Outstanding

2,351,113 (703) (703) -

figures in italics are for previous year

GPL 17,850,000 2,656,006 11,914,971 10,677,156 7,650,000 5,962,808 4,200,000 (22,655,305) (4,824,156) 76,500,000 76,500,000

HDFC Venture Trustee Company Limited

17,150,000 7,350,000 5,728,973 (11,660,477) (4,690,405) 73,500,000 73,500,000

Prior period financial statements have been audited by a firm of Chartered Accountants other than Kalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts, which have been re-grouped and re-classified wherever necessary to conform to current year’s classification 10. Previous year figures have been rearranged/regrouped wherever necessary to confirm to current year’s classification. 11. Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.

Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956 Balance Sheet Abstract for the year ended 31st March, 2008 and Company’s General Business Profile 1. Registration Details Registration No. U70100MH2005PTC154268 State Code: 11 Balance Sheet Date 31st March, 2008 2. Capital raised during the year (Amount in Rs. thousands) Public Issue Rights Issue Bonus Issue Private Placement - Capital - Premium 3. Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities Total Assets Sources of Funds Paid-up capital Reserves and Surplus Secured Loans Unsecured Loans Application of Funds Net Fixed Assets Investments Net Current Assets Deferred Tax Assets Miscellaneous Expenditure Accumulated Losses 4.

Performance of Company (Amount in Rs. thousands) Turnover Total Expenditure Profit/(Loss) before Tax Profit/(Loss) after Tax Earning per Share in Rs. Dividend Rate %

Generic Names of three principal products/services of Company

Cash Flow Statement for the year ended 31st March 2008 Particulars

198,267 198,267 10,000 Nil 150,000 – 284 – 157,613 39 – 2,100 – 1,549 (24) (958) (0.96) – N.A.

Previous Year Rupees

(24,096)

(1,731,533)

Cash Flow from Operating Activities Loss for the Year Adjustment for : Depreciation

24,096

36,985

Interest Paid

15,001,462

12,038,615

Interest Income

(1,525,091)

(1,026,852)

Operating Profit before working capital changes

13,476,371

9,317,214

Adjustment for : Change in Inventory

(26,743,995)

(45,877,932)

(413)

(11,734,760)

Change in Loans and Advances

12,714,614

Change in Current Liabilities/Provisions Nil Nil Nil Nil Nil

Current Year Rupees

(553,423)

1,620,678 (46,674,800)

417,252

Taxes Paid (Net) Net Cash Flow from Operating activities

(970,675)

239,038 (46,913,838)

Cash Flow from Investing Activities —

(247,525)

Interest Received

1,538,477

1,013,466

Net Cash Flow from Investing Activities

1,538,477

765,941

Purchase of Fixed Assets

Cash Flow from Financing Activities —

Issue of Debentures

(2,114,880)

Interest Paid

35,000,000 (2,970,471)

Cash Flow from Financing Activities

(2,114,880)

32,029,529

Net Increase/(Decrease) in Cash and Cash Equivalent

(1,547,077)

(14,118,367)

Cash and Cash Equivalent - Opening Balance

20,571,060

34,689,427

Cash and Cash Equivalent - Closing Balance

19,023,983

20,571,060

Notes : 1. The cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash flows by operating, investing and financing activities. 2. Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s classification. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner

Milind S. Korde Naresh Nadkarni

Director Director

Mumbai, April 30, 2008

141

Board of Directors' Report for the year ended 31st march, 2008 TO THE SHAREHOLDERS Your Directors have pleasure in submitting their Report along with the audited Accounts for the year ended 31st March, 2008. 1. FINANCIAL HIGHLIGHTS : The accounting results for the year ended 31st March, 2008 reveal that there is deficit at the end of the year. 2. REVIEW OF OPERATIONS : This project will have a total Developable Area of 2.16 million sq. ft. spanning two towers with parking facilities for approximately 1,400 cars. This project is expected to be completed by 2009. 3. DIVIDEND : As there are no profits, the Directors regret that no dividend can be recommended. 4. CHANGE OF AUTHORISED CAPITAL : During the year the Company has increased its Authorised Capital from Rs.5 lac to Rs.1 crore. 5. ISSUE OF SHARES : During the year the Company has issued 4,60,000 Equity Shares to Godrej Properties Limited and 4,90,000 Equity Shares to HDFC Venture Trustee Company Limited. 6. ISSUE OF DEBENTURE : During the year the Company issued 1,42,10,000 10% Secured, Optionally Convertible Debentures of Rs.10/- each to HDFC Venture Trustee Company Limited and 1,47,90,000 10% Secured Redeemable Optionally Convertible Debentures of Rs.10/- each to Godrej Properties Limited. 7. DIRECTORS : In accordance with the provisions of the Articles of Association, Mr. Pirojsha Adi Godrej and Mr. K.T. Jithendran retire by rotation and being eligible, offer themselves for re-appointment. Mr. Naresh Nadkarni was appointed as an Additional Director of the Company with effect from July 30, 2007. He holds office till the ensuing Annual General Meeting. 8. APPOINTMENT OF AUDITORS : M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent. 9. DIRECTORS’ RESPONSIBILITY STATEMENT : Your Directors confirm : (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2008 and of the loss of the Company for that year; (iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) that the Directors have prepared the annual accounts on a going concern basis. 10. ADDITIONAL INFORMATION : (a) Since the Company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given. (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder: (i) Conservation of Energy : Expenses on account of Energy are negligible. (ii) Technology Absorption : It is an on going process. (iii) Foreign Exchange Earning and Outgo : The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure during the year. 11. ACKNOWLEDGEMENT : Your Directors take this opportunity to thank all the associates for their co-operation.

For And On Behalf Of The Board Of Directors MILIND S. KORDE K.T. JITHENDRAN Directors Mumbai, Dated : April 30,2008.

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ WATERSIDE PROPERTIES PRIVATE LIMITED 1.

We have audited the attached Balance Sheet of GODREJ WATERSIDE PROPERTIES PRIVATE LIMITED, as at 31st March, 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books. c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account. d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

142

In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008; ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and, iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the directors as on March 31, 2008, and taken on record by the Board of Directors, we report that, none of the directors is disqualified as on March 31, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Membership No. 35646 Place: Mumbai Dated: April 30,2008.

Annexure to the Auditors’ Report Referred to in paragraph (3) of our report of even date. 1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) As explained to us, the Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company (c) There is no disposal of fixed assets during the year. 2. (a) The management has conducted physical verification of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification. 3. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 (b) Consequently, the question of commenting on the rates of interest and terms and conditions of the loans granted being prejudicial to the interest of the Company, receipt of regular principal and interest and reasonable steps for recovery of principal and interest does not arise. (c) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. (d) Consequently, the question of commenting on the rates of interest and other terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and interest does not arise. 4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls. 5. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section. (b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist. 6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable. 7. In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business. 8. The maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products. 9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has no statutory

BALANCE SHEET AS AT 31st MARCH, 2008 Schedule As at 31.03.08 Rupees SOURCES OF FUNDS Shareholders’ Funds Share Capital 1 10000000 Loan Funds Secured Loans 2 290000000 Deferred Tax Liability 19000 300019000 Application Of Funds Fixed Assets Gross Block 3 3098290 Less : Depreciation 758044 2340246 Net Block - Investments Deferred Tax Asset - Current Assets, Loans & Advances Inventory 4 992961241 Cash & Bank Balances 5 523797 Loans & Advances 6 264402568 1257887606 Less: Current Liabilities andProvisions Current Liabilities 7 963617296 963617296 294270310 Net Current Assets/(Liabilities) Profit And Loss Account 3408444 300019000 Notes To Accounts & Accounting Policies 12

As at 31.03.07 Rupees

10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess. According to the information and explanations given to us, there are no undisputed dues, payable in respect of the above as at 31st March, 2008 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty, Cess on account of any dispute. The Company’s accumulated losses at the end of the financial year are less than fifty percent of its net worth. During the current year the Company has not incurred cash losses. However, it has incurred cash losses in the immediately preceding financial year. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in dues to debenture holders. There are no dues to banks and financial institutions. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies. In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. Based on our examination and according to the information and explanations given to us, there were no term loans during the year. According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short term basis for long term investments. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956. Based on our examination and according to the information and explanations given to us, during the current year, the Company has issued 29,000,000 debentures of Rs. 10/- each. The securities as required by the Debenture Trust Deed have been created. The Company has not raised any money through a public issue during the year. Based on the audit procedures performed and information and explanations given by the Management, we report that no fraud on or by the Company has been noticed or reported during the year.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Membership No. 35646 Place: Mumbai Dated: April 30,2008.

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON 31st MARCH, 2008

500000

Schedule For the For the year ended year ended 31.03.08 31.03.07 Rupees Rupees

500000

income (Tax Deducted at Source Rs. 664797/[Previous year Rs. 88473/-])

622259 88408 533851 953000 311178675 5346124 105286436 421811235 424649894 424649894 (2838659) 1,851808 500000

3018792

394262

EXPENDITURE Code of Sales

Administration Expenses

2721400

Interest and Finance Charges

2933792

389262

Depreciation

669636

88408

Loss for the year

584636

2804808

Provision for Deferred Tax

(972000)

953000

Loss After Tax

1556636

1851808

Brought Forward Loss

(1,851,808)

Loss Carried Forward

(3,408,444)

(1,851,808)

Earning per share (basic/diluted) in Rs. (Refer Note No. 5)

(2.40)

(37.00)

Notes to Accounts and Accounting Policies

The Schedules referred to above form an integral Signatures to the Balance Sheet part of the Balance Sheet and Schedules 1 to 7 and 12 As per our Report of even date For and on behalf of Kalyaniwalla & Mistry Chartered Accountants Ermin K. Irani Milind S. Korde Naresh Nadkarni Partner Directors

The Schedules referred to above form an integral Signatures to Profit and Loss Account part of the Profit and Loss Account and Schedules 8 to 12 As per our Report of even date For and on behalf of Kalyaniwalla & Mistry Chartered Accountants Ermin K. Irani Milind S. Korde Naresh Nadkarni Partner Directors

Mumbai, Dated : April 30,2008.

143

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON 31st MARCH, 2008

As at 31.03.08 Rupees Schedule 1 : Share Capital Authorised 10000000 1000000 Equity shares of Rs. 10/- each 10000000 Issued & Subscribed and Paid Up 10000000 1000000 Equity shares of Rs. 10/- each, fully paid-up (510000 equity shares (Previous year 50000) are held by Godrej Properties Limited the Holding Company & its nominee) 10000000 Schedule 2 : Secured Loans 10% Secured Redeemable Optionally Convertible Debentures 290000000 (Refer Note 2) 290000000 Schedule 3 : FIXED ASSETS Particulars

Gross Block As at 1st April, Deduc2007 Additions tions Rs. Rs. Rs. 356380 80591 356172 59331 368612 482337 558375 836492 622259 2476031 622259 -

Land (Refer Note 2) Furniture & Fixtures Office Equipments Computers Motor Car Total Previous Year

Depreciation As at 31st Upto March, 1st April, 2008 2007 Rs. Rs. 356380 436763 65526 427943 701 1040712 22181 836492 3098290 88408 622259 -

For the Year Rs. 55424 50949 365038 198225 669636 -

Upto 31st March, 2008 Rs. 120950 51650 387219 198225 758044 88408

As at 31.03.07 Rupees 500000 500000 500000 500000 -

Net Block As at As at 31st 31st March, March, 2008 2007 Rs. Rs. 356380 315813 15065 376293 58630 653493 460156 638267 2340246 533851 533851 -

As at As at 31.03.08 31.03.07 Rupees Rupees SCHEDULE 4 : INVENTORY Construction work in progress 992961241 311178675 SCHEDULE 5 : CASH & BANK BALANCE Cash Balance with Scheduled Bank - On current Account SCHEDULE 6 : LOANS & ADVANCES (Unsecured & considered good) Advances recoverable in cash or kind or for value to be received - Secured (Secured against Bank/Corporate Guarantee) - Others Interest accrued Advance Tax and Tax Deducted at Source SCHEDULE 7 : CURRENT LIABILITIES Sundry Creditors (Refer Note 3) Investor Education & Protection Fund Advances received against Sale Other Liabilities Interest Accrued but not due SCHEDULE 8 : INCOME Interest received Other Income Tax deducted at source

992961241 311178675 35381 488416

16530 5329594

523797

5346124

209799643 51273387 2574785 754753

35273927 69616764 305789 89956

264402568 105286436 63133655 1609144 - 134464000 94892000 749657795 328148750 16361846 963617296 424649894 2933792 85000

394262 -

3018792

394262

664797

88473

311178675

SCHEDULE 9 : COST OF SALES Opening Stock Add : Expenditure during the year Construction Material & Labour Architect Fees Advertisment Expenses Over heads Interest

555196734 235956947 4383667 7631073 3605860 3774807 63672897 44568084 54923409 19247765

992961241 311178675

Less: Closing Stock

992961241 311178675 -

Cost of Sales

SCHEDULE 10 : ADMINISTRATION EXPENSES Professional Charges

2721400

SCHEDULE 11 : INTEREST AND FINANCIAL CHARGES Interest Paid Other Loans

57857201

16126997

Total Interest Paid

57857201

16126997

82781

Total Interest/Finance Charges Paid

57857201

16209778

Less: Transferred to Cost of Sales

54923409

15820516

2933792

389262

Add: Brokerage & other Financial Charges

Net Interest

144

Schedule 12 : Notes to accounts and Accounting Policies 1) Accounting Policies a) General The financial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956. b) Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction. Carrying amount of cash generating units/assets are reviewed at Balance Sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount. c) Depreciation/Amortization Depreciation has been provided on Written Down Value basis, at the rates specified in Schedule XIV of the Companies Act, 1956. d) Inventories Inventories are valued as under : a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At cost Construction Work-in-Progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company. e) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As per this method, revenue in Profit & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company. Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors. Income from operation of commercial complexes is recognized over the tenure of the lease/ service agreement. Interest income is accounted on an accrual basis at contracted rates. f) Borrowing cost Interest and Finance charges incurred in connection with borrowing of funds, which are incurred for the development of long term projects are transferred to Construction Work in Progress/Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost/rates as per Agreements respectively. Other borrowing costs are recognized as an expense in the period in which they are incurred. g) Earnings Per Share The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive. h) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year-end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year-end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains/losses are recognised in the Profit and Loss Account. i) Provision for taxation Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the Balance Sheet date. j) Provisions and Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from the past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. 2) Secured Loans 29,000,000 10% Secured optionally Convertible Debentures of Rs. 10 each are redeemable at the end of the 7 years from the deemed date of allotment July 4, 2007 and are secured to the extent of specific immovable assets of the Company disclosed under the head “Fixed Assets”. The Company shall create a Debenture Redemption Reserve as required under Section 117 (C) of the Companies Act, 1956 from the year in which profits are available for creation. 3) Due to Micro, Small and Medium Enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro,

Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts. 4) Deferred Tax The Tax effect of significant temporary differences that resulted in the deferred tax assets and liabilities are : Particulars

Current Year (Rs.)

Assets Losses Carried Forward Liabilities Depreciation on Fixed Assets Deferred Tax Asset / (Liability)

Previous Year (Rs.) -

975016

(19000) (19000)

(22016) 953000

5) Earnings per share Particulars Loss for the Year as per Profit & Loss Account Weighted average no. of Equity Shares outstanding Basic/Diluted earnings per share (Rs.) Nominal value of shares (Rs.) 6)

Current Year Rs. (1556636) 649590 (2.40) 10

Previous Year Rs. (1851808) 50000 Rs. (37.00) 10

Lease The Company’s significant leasing arrangements are in respect of operating leases for Commercial premises. Lease expenditure for operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises given under operating leases are as under : Particulars

Current Year (Rs.)

Future minimum lease payments under non-cancelable operating leases - Not later than 1 year

Previous Year (Rs.)

470156

Current Year (Rs.) 89984 28060 118044

Previous Year (Rs.) 89792 Nil 89792

7) Amounts paid to Auditors Particulars Audit Fees Consultancy charges Total

8) Segment Information As the company has only one business segment, disclosure under Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable. 9) Related Party Disclosure 1. Relationships: (i) Shareholders in the Company : Godrej Properties Limited (GPL) holds 51% of the share capital of the Company. GPL is the Subsidiary of Godrej Industries Limited (GIL). GIL is subsidiary of Godrej & Boyce Manufacturing Company Limited (G&B), the ultimate holding company. (ii) Investing party in respect of which the reporting enterprise is an associate. – HDFC Venture Trustee Company Limited. 2. The following transactions were carried out with the related party in the ordinary course of the business: S r. No.

Particulars

G&B

GPL

HDFC Venture Trustee Company Limited

Issue of Equity Share Capital

4600000 -

4900000 -

Issue of Debentures

147900000 -

142100000 -

552872 -

Purchase of Fixed Assets

Expenses charged by other company

56345158 342031262

Interest on Debentures

10789426 -

10366311 -

Advances Received

567094306 -

Outstanding payables

741494783 278077329

8017304 -

Debentures Outstanding

147900000 -

142100000 -

10) Prior period financial statements have been audited by a firm of Chartered Accountants other than Kalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts, which have been re-grouped and re-classified wherever necessary to conform to current year’s classification. 11) Previous year figures have been regrouped/rearranged whereever necessary to confirm to current year’s classification. 12) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.

13) Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956 Balance Sheet Abstract for the year ended 31st March, 2008 and Company’s General Business Profile 1 Registration Details Registration No. U70100MH2005PTC154255 State Code 11 Balance Sheet Date 31st March, 2008 2 Capital raised during the year (Amount in Rs. thousands) Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement - Capital 9,500 - Premium Nil 3 Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities 1263636 Total Assets 1263636 Sources of Funds Paid-up capital 10000 Reserves & Surplus Secured Loans 290000 Unsecured Loans Deferred Tax Liability 19 Application of Funds Net Fixed Assets 2340 Investments Net Current Assets 294270 Deferrred Tax Asset Misc. Expenditure Accumulated Losses 3408 4 Performance of Company (Amount in Rs. thousands) Turnover Total Expenditure 3603 Profit/(Loss) before Tax (585) Profit/(Loss) after Tax (1557) Earning per Share in Rs. (2.40) Dividend Rate % 5 Generic Names of three principal products/services of Company N.A. Cash Flow Statement For the year Ended 31st March, 2008 Particulars Current Year Rupees Cash Flow from Operating Activities Loss for the Year Adjustment for: Depreciation Interest paid Interest income

Previous Year Rupees

(584636)

(2804808)

669636 57857201 (2933792)

88408 16209778 (394262)

Operating Profit before working capital changes Adjustment for: Change in Inventory Change in Loans & Advances Change in Current Liabilities/Provisions

55008409

13099116

(681782566) (156182340) 522605556

(311178675) (104890691) 424649894

Taxes Paid (Net)

(260350941) 664797

21679644 89956

Net Cash Flow from Operating Activities Cash Flow from Investing Activities Purchase of Fixed Assets Interest Received

(261015739)

21589688

(2476031) 664796

(622259) 88473

(1811235)

(533786)

Net Cash Flow from Investing Activities Cash Flow from Financing Activities Issue of Share Capital Increase in Secured Loan Interest paid

9500000 290000000 (41495355)

(16209778)

Net Cash Flow from Financing Activities Net Increase/(Decrease) in Cash & Cash Equivalent Cash & Cash Equivalent -Opening Balance

258004645 (4822328) 5346124

(16209778) 4846124 500000

523797

5346124

Cash & Cash Equivalent - Closing Balance

Notes : 1. The Cash flow statement has been prepared under the 'Indirect Method' as set out in the Accounting Standard (AS) 3 on 'Cash Flow Statement' and presents cash flows by operating, investing and financing activities. 2. Figures for the previous year have been regrouped/restated wherever necessary to confirm to this year's classification For and on behalf of Kalyaniwalla & Mistry Chartered Accountants Ermin K. Irani Milind S. Korde Naresh Nadkarni Partner Directors Mumbai, Dated : April 30, 2008

145

DIRECTORS’ REPORT FOR THE YEAR ENDED ON MARCH 31, 2008 To The Shareholders Your Directors have pleasure in submitting their Report together with the Audited Accounts for the year ended March 31, 2008. 1.

FINANCIAL HIGHLIGHTS :

The accounting results for the period ended March 31, 2008 reveal that there is deficit at the end of the period.

REVIEW OF OPERATIONS :

During the year the Company has commenced the construction activities in the project.

DIVIDEND :

As there are no profits, the Directors regret that no dividend can be recommended.

CHANGE OF AUTHORISED CAPITAL :

AUTHORISED CAPITAL :

During the year the Company has increased its Authorised Capital from Rs.5 Lac to Rs.10 Lac.

ISSUE OF CUMULATIVE REDEEMABLE PREFERENCE SHARES :

During the year the Company issued 10,000 10% Non-Convertible Cumulative Redeemable Preference Shares of Rs.10/- each to Godrej Properties Limited.

DIRECTORS :

In accordance with the provisions of the Articles of Association, Mr. Milind S. Korde, retires by rotation and being eligible, offers himself for re-appointment.

APPOINTMENT OF AUDITORS :

M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent.

DIRECTORS’ RESPONSIBILITY STATEMENT :

Your Directors confirm:

(i)

that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a

true and fair view of the state of affairs of the Company at the end of the financial year ended March 31, 2008 and of the loss of the Company for that year;

(iv) that the Directors have prepared the annual accounts on a going concern basis.

ADDITIONAL INFORMATION :

(a) Since the Company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.

(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:

(i)

Expenses on account of Energy are negligible.

(ii) Technology Absorption :

Conservation of Energy :

It is an on going process.

(iii) Foreign Exchange Earning and Outgo :

The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure during the year.

ACKNOWLEDGEMENT:

Your Directors take this opportunity to thank all the associates for their co-operation.

For and on behalf of the Board of Directors

MILIND S. KORDE

K.T. JITHENDRAN

Director

Mumbai, Dated : April 30, 2008

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ DEVELOPERS PRIVATE LIMITED 1.

146

We have audited the attached Balance Sheet of GODREJ DEVLOPERS PRIVATE LIMITED, as at March 31, 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. This report does not include a statement on the matters specified in paragraph 4 of the Companies (Auditor’s Report) Order, 2003, issued by the Department of Company Affairs, in terms of Section 227(4A) of the Companies Act, 1956, since in our opinion and according to the information and explanations given to us, the said Order is not applicable to the Company. Further we report that: a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books. c) The Balance Sheet, Profit and loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account. d) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008;

ii)

in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date; 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, 2008, and taken on record by the Board of Directors, we report that, none of the directors is disqualified as on March 31, 2008 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Membership No. 35646 Place: Mumbai Dated: April 30, 2008.

BALANCE SHEET AS AT MARCH 31, 2008 As at 31.03.08 Rupees

As at 31.03.07 Rupees

600,000 -

500,000 -

600,000

500,000

- -

141,768,467 205,989 100,428,010

500,000 -

Less: Current Liabilities and Provisions Current Liabilities 5

242,402,466

500,000

241,844,975

42,509

241,844,975

42,509

Net Current Assets Miscellaneous Expenditure (to the extent not written off or adjusted) Preliminary Expenditure Profit and Loss Account

557,491

457,491

14,736 27,773

16,578 25,931

600,000

500,000

Schedule SOURCES OF FUNDS : Shareholders’ Funds Share Capital 1 Loan Funds APPLICATION OF FUNDS Fixed Assets Investments Current Assets, Loans and Advances Inventory 2 Cash & Bank Balances 3 Loans & Advances 4

Notes to Accounts and Accounting Policies

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

Signatures to the Balance Sheet and Schedules 1 to 5 and 9

Profit and Loss Account for the year ended March 31, 2008 Schedule For the Period Ended 31.03.08 Rupees INCOME

Cost of Sales

–

Administration Expenses

–

24,089

Interest and Finance Charges

–

Preliminary Expenses written off

1,842

1,842 (25,931)

Loss for the year

(1,842)

Brought Forward Loss

(25,931)

–

Loss Carried Forward

(27,773)

(25,931)

Earning per share Basic/Diluted in Rs. (Refer Note 6)

(0.04)

(0.52)

NOTES TO ACCOUNTS and ACCOUNTING POLICIES

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

Signatures to Profit and Loss Account and Schedules 6 to 9

As per our Report of even date.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants MILIND S. KORDE Director

K.T. JITHENDRAN Director

Mumbai, Dated: April 30, 2008.

–

EXPENDITURE

As per our Report of even date.

ERMIN K. IRANI Partner

–

For the Year Ended 31.03.07 Rupees

ERMIN K. IRANI Partner

MILIND S. KORDE Director

K.T. JITHENDRAN Director

Mumbai, Dated: April 30, 2008.

SCHEDULES FORMING PART OF THE ACCOUNT SCHEDULE 1 : SHARE CAPITAL Authorised 90,000 Equity shares of Rs. 10/- each 10,000 10% Non-Convertible Cumulative Redeemable Preference Share of Rs. 10/- each Issued, Subscribed and Paid-up 50,000 Equity shares of Rs. 10/- each, fully paid-up (All the above Shares are held by Godrej Properties Limited, the Holding company and its nominee) 10,000 10% Non-Convertible Cumulative Redeemable Preference Shares of Rs. 10/- each., fully paid-up (All the above Shares are held by Godrej Properties Limited, the Holding company)

As at 31.03.08 Rupees

As at 31.03.07 Rupees

900,000 100,000

500,000 -

1,000,000

500,000

100,000

Opening Stock: Add: Expenditure/ Transfers from Advances/ Taken over during the year Construction, Material and Labour Architect Fees Advertisement Expenses Overheads Interest

600,000

500,000

141,768,467

11,439 194,550

500,000 -

205,989 SCHEDULE 4 : LOANS AND ADVANCES (Unsecured and considered good unless otherwise stated) Advances recoverable in cash or kind or for value to be received 52,590 - Secured (Secured against Bank Guarantee) 100,375,420 - Others

500,000

100,428,010

SCHEDULE 5 : CURRENT LIABILITIES Sundry Creditors (Refer Note 5 ) Investors Education and Protection Fund Other Liabilities

810,511 241,034,464 241,844,975

17,355 25,154 42,509

For the Period Ended 31.03.2007 Rupees

–

93,226,136 15,714,857 537,602 20,302,141 11,987,731

– – – – –

141,768,467 141,768,467

– –

Cost of Sales

–

SCHEDULE 7 : ADMINISTRATION EXPENSES Other Admistrative expenses

–

24,089

–

24,089

SCHEDULE 8 : INTEREST AND FINANCIAL CHARGES Interest Paid - Others

11,987,731

Total Interest/Finance Charges Paid Less: Transferred to Cost of Sales

11,987,731 11,987,731

– –

–

Net Interest

For the Year Ended 31.03.2008 Rupees

Less: Closing Stock:

SCHEDULE 2 : INVENTORY Construction work-in-progress SCHEDULE 3 : CASH and BANK BALANCE Cash and Cheques in hand Balances with Scheduled Bank - on Current Accounts

SCHEDULE 6 : COST OF SALES

SCHEDULE 9 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES 1. Accounting Policies a) General The accounts are prepared under the Historical Cost Convention, using the accrual method of accounting, the accounting standard issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956. b) Inventories Inventories are valued as under: a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At Cost

147

Construction Work in Progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company. c) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As per this method, revenue in Profit and Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company. Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors. Interest income is accounted on an accrual basis at contracted rates. d) Borrowing Cost Interest and Finance charges incurred in connection with borrowing of funds, which are incurred for the development of long-term projects, are transferred to Construction Work-in-Progress as a part of the cost of the projects at weighted average of the borrowing cost. Other borrowing costs are recognized as an expense in the period in which they are incurred. e) Earnings Per Share The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive. f) Provision for Taxation Tax expense comprises both current, deferred and fringe benefit tax. Current and fringe benefit tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date. g) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates. The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains/losses are recognised in the Profit and Loss Account. h) Provisions and Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from the past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. There is no contingent liability as on the balance sheet date. 2. Miscellaneous Expenditure Miscellaneous expenditure is amortized over a period of 10 years. 3. 10,000 10% Non-Convertible Cumulative Redeemable Preference shares of Rs.10/- each issued on 24th March, 2008 are redeemable at any time at the option of holder or as per the provision of Companies Act ,1956. 4. Preference dividend Particulars Arrears of Cumulative Preference Dividend 5.

148

Current Year Rs.

Previous Period Rs.

191

N.A

Due to Micro, Small and Medium Enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force

from October 2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts. Earnings Per Share Particulars

Current Year Rs.

Previous Period Rs.

1,842 50,000 (0.04) 10 /-

25,931 50,000 (0.52) 10 /-

Particulars

Current Year (Rs.)

Previous Period (Rs.)

Audit Fees

89,896

6,734

Certification

33,708

Nil

123,604

6,734

Loss for the year as per Profit and Loss Account Weighted average no. of equity shares outstanding Basic Earnings Per Share (Rs.) Nominal value of shares (Rs.) 7.

Amounts paid to Auditors

Total 8)

Segment Information As the Company has only one business segment, disclosure under Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable. Related Party Disclosure Related party disclosures as required by AS-18, “Related Party Disclosures”, are given below: 1. Relationships: Shareholders: Godrej Properties Limited (GPL) holds 100% of the Share Capital of the Company. 2. The following transactions were carried out with the related party in the ordinary course of the business: Sr. Particulars No. 1

Issue of Equity/ Preference share Shares

Expenses Charged

Advances received

Outstanding payables

Current Year Rs. GPL 100,000 500,000 152,029,966 18,420 85,500,000 NIL 236,234,687 18,420

Figures not bold are for previous year 10. Lease The Company’s significant leasing arrangements are in respect of operating leases for Commercial premises. Lease expenditure for operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises given under operating leases are as under: Particulars Future minimum lease payments under noncancellable operating leases - Not later than 1 year

Current Year (Rs.)

Previous Period (Rs.)

470,156

–

11. Prior period financial statements have been audited by a firm of Chartered Accountants other than Kalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts, which have been re-grouped and re-classified wherever necessary to conform to current year’s classification. 12. Previous year figures have been re-grouped/re-arranged where ever necessary to confirm to current year’s classification. 13. Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.

14. Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956

Balance Sheet Abstract for the Year ended March 31, 2008 And Company’s General Business Profile

Registration Details Registration No. State Code Balance Sheet Date

Capital raised during the year (Amount in Rs. thousands) Public Issue : Rights Issue : Bonus Issue : Private Placement - Capital : - Premium :

: U45200MH2007PTC168783 : 11 : March 31, 2008 Nil Nil Nil 100 Nil

Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities : 242,445 Total Assets : 242,445 Sources of Funds Paid-up capital : 600 Reserves & Surplus : Secured Loans : Unsecured Loans : Application of Funds Net Fixed Assets : Investments : Net Current Assets : 557 Miscellaneous Expenditure : 15 Accumulated Losses : 28

Performance of Company (Amount in Rs. thousands) Turnover Total Expenditure Profit/(Loss) before Tax Profit/(Loss) after Tax Earning per Share in Rs. Dividend Rate %

: : : : : :

2 (2) (2) (0.04) -

Generic Names of three principal products/services of Company

N.A.

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008 Current Year Previous Period Rupees Rupees Cash Flow from Operating Activities Loss for the year

(1,842)

(25,931)

Interest Paid Preliminary Expenses

11,987,731 1,842

– 1,842

Operating Loss before working capital changes

11,987,731

(24,089)

(141,768,467) (100,428,010) 241,802,466 –

– – 42,509 (18,420)

Adjustment for:

Adjustment for: Change in Inventory Change in Loans and Advances Change in Current Liabilities/Provisions Preliminary Expenses incurred Net Cash Flow from Operating activities

11,593,720

–

Cash Flow from Investing Activities

–

Cash Flow from Financing Activities Issue of Share Capital Interest Paid

100,000 (11,987,731)

500,000 –

Net Cash Flow from Financing Activities

(11,887,731)

500,000

(294,011)

500,000

Net Increase/(Decrease) in Cash and Cash Equivalent Cash and Cash Equivalent - Opening Balance

500,000

–

Cash and Cash Equivalent - Closing Balance

205,989

500,000

Notes : 1.

The cash flow statement has been prepared under the 'Indirect Method' as set out in the Accounting Standard (AS) 3 on 'Cash Flow Statement', and presents cash flows by operating, investing and financing activities.

Figures for the previous year have been regrouped/restated wherever necessary to confirm to this year's classification.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner

MILIND S. KORDE Director

K.T. JITHENDRAN Director

Mumbai, Dated: April 30, 2008.

149

BOARD OF DIRECTORS’ REPORT FOR THE PERIOD ENDED 31ST MARCH, 2008 TO THE SHAREHOLDERS Your Directors have pleasure in submitting their Report together with the Audited Accounts for the year ended 31ST March, 2008.

true and fair view of the state of affairs of the Company at the end of the financial year ended 31ST March, 2008 and of the loss of the Company for that year;

1. FINANCIAL HIGHLIGHTS : The accounting results for the period ended 31st March, 2008 reveal that there is deficit at the end of the period.

2. REVIEW OF OPERATIONS :

During the year the Company has entered into Development Agreement for developing the property at Patancheru, Hyderabad with Rallis India Ltd.

The Company has made an application for approval to set up a Sector Specific Economic Zone for Information Technology (IT) and IT Enabled Services (ITES) at its project at Patancheru, Hyderabad.

(iv)

ADDITIONAL INFORMATION :

(a) Since the Company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, are not given.

(b)

3. DIVIDEND :

As there are no profits, the Directors regret that no dividend can be recommended.

4. DIRECTORS :

In accordance with the provisions of the Articles of Association, Mr. Milind S. Korde, retires by rotation and being eligible, offers himself for re-appointment.

5. APPOINTMENT OF AUDITORS :

M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent.

6. DIRECTORS’ RESPONSIBILITY STATEMENT:

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

Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder :

(i)

Conservation of Energy : Expenses on account of Energy are negligible.

(ii) Technology Absorption : It is an on going process.

(iii) Foreign Exchange Earning & Outgo : The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure during the year. 8.

ACKNOWLEDGEMENT :

Your Directors take this opportunity to thank all the associates for their co-operation.

Your Directors confirm:

(i)

that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii)

that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a

For and on behalf of the Board of Directors

Milind S. Korde K.T. Jithendran Directors Mumbai, Dated : April 30, 2008.

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ REAL ESTATE PRIVATE LIMITED 1.

We have audited the attached Balance Sheet of GODREJ REAL ESTATE PRIVATE LIMITED, as at 31st March 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

This report does not include a statement on the matters specified in paragraph 4 of the Companies (Auditor’s Report) Order, 2003, issued by the Department of Company Affairs, in terms of Section 227(4A) of the Companies Act, 1956, since in our opinion and according to the information and explanations given to us, the said Order is not applicable to the Company.

Further we report that:

in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008;

ii)

in the case of the Profit and Loss Account, of the loss 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.

For and on behalf of

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

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.

The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

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

150

KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Membership No. 35646 Place: Mumbai Dated: April 30, 2008

BALANCE SHEET AS AT 31ST MARCH, 2008

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008 As at

As at

For the

31.03.2008

31.03.2007

Year Ended

Period Ended

Rupees

31.03.2008

31.03.2007

Rupees

Schedule

SOURCES OF FUNDS Shareholdersâ&#x20AC;&#x2122; Funds Share Capital

INCOME 500,000

500,000

Loan Funds APPLICATION OF FUNDS Fixed Assets

EXPENDITURE 7

Administration Expenses

24,089

Interest & Finance Charges

Cost of sales

Depreciation

13,784

1,842

1,842 (25,931)

Gross Block

99,990

Preliminary Expenses written off

Less : Depreciation

13,784

Loss for the Year

(15,626)

Net Block

86,206

Brought Forward Loss

(25,931)

INVESTMENTS

Loss Carried Forward

(41,557)

(25,931)

728,176,550

(0.31)

(0.52)

500,000

CURRENT ASSETS, LOANS & ADVANCES

Earning per share Basic/Diluted in Rs. (Refer Note 3)

Inventory

Cash & Bank Balances

128,957

Loans and advances

1,677,500

729,983,007

500,000

729,625,506

42,509

NOTES TO ACCOUNTS & ACCOUNTING POLICIES

LESS : CURRENT LIABILITIES & PROVISIONS Current Liabilities

729,625,506

42,509

357,501

457,491

14,736

16,578

NET CURRENT ASSETS MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) Preliminary Expenditure PROFIT & LOSS ACCOUNT NOTES TO ACCOUNTS & ACCOUNTING POLICIES

41,557

25,931

500,000

The Schedules referred to above form an Signatures to the Balance Sheet integral part of the Balance Sheet. and Schedules 1 to 6 and 10 As per our Report of even date. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI MILIND S. KORDE Directors Partner K.T. JITHENDRAN Directors Mumbai, Dated : April 30, 2008.

The Schedules referred to above form an Signatures to the Profit & Loss Account integral part of the Balance Sheet. and Schedules 7 to10 As per our Report of even date. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants

SCHEDULES FORMING PART OF THE ACCOUNTS

ERMIN K. IRANI MILIND S. KORDE Partner K.T. JITHENDRAN Mumbai, Dated : April 30, 2008.

As at

31.03.2008

31.03.2007

Rupees

500,000

SCHEDULE 2 FIXED ASSETS Particulars As at 1st April 2007

SCHEDULE 1 SHARE CAPITAL

ISSUED, SUBSCRIBED & PAID UP 50,000 Equity shares of Rs. 10/- each, fully paid up (All the above Shares are held by Godrej Properties Limited, the Holding Company and its nominee) 500,000

Gross Block Additions Deductions

As at 31st March 2008

Depreciation Upto For the Year 1st April 2008

Upto 31st March 2008

Net Block As at As at 31st March 2008

31st March 2007

Rs.

Office Equipment

7,990

462

7,528

AUTHORISED 50,000 Equity shares of Rs. 10/- each

Directors Directors

Computer

92,000

13,322

78,678

TOTAL

99,990

13,784

86,206

Previous Year

500,000 As at

As at

31.03.2008

31.03.2007

Rupees

728,176,550

SCHEDULE 3 INVENTORY Construction Work in Progress

151

SCHEDULES FORMING PART OF THE ACCOUNTS As at

As at

31.03.2008

31.03.2007

Rupees

SCHEDULE 4 CASH & BANK BALANCE Cash & Cheques In hand Balances with Scheduled Bank - On Current Accounts

500,000

128,957

500,000

SCHEDULE 5 LOANS & ADVANCES

recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.

Depreciation has been provided on Written Down Value basis, at the rates specified in Schedule XIV of the Companies Act, 1956.

Inventories

1,677,500

Completed Flats - At lower of Cost or Market value

Construction Work-in-Progress - At Cost

Construction Work in Progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.

Revenue Recognition

17,355

The Company is following the â&#x20AC;&#x153;Percentage of Completion Methodâ&#x20AC;? of accounting. As per this method, revenue in Profit and Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.

Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.

Borrowing Cost

SCHEDULE 6 CURRENT LIABILITIES Sundry Creditors (Refer Note No 2) Investor Education & Protection Fund Other Liabilities

729,625,506

25,154

729,625,506

42,509

SCHEDULE 7

Interest and Finance charges incurred in connection with borrowing of funds, which are incurred for the development of long-term projects, are transferred to Construction Work in Progress as a part of the cost of the projects at weighted average of the borrowing cost.

Other borrowing costs are recognized as an expense in the period in which they are incurred.

Provision for Taxation

COST OF SALES Opening Stock

621,654,630

Tax expense comprises both current, deferred & fringe benefit tax.

Current and fringe benefit tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws.

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

Add : Expenditure/Transfers from Advances/Taken over during the year Development Rights Advertisement Expenses Overheads

69,663

14,038,359

92,413,898

728,176,550

24,089

91,572,098 91,572,098 841,800

Total Interest/Finance Charges Paid

92,413,898

Less: Transferred to Cost of Sales

92,413,898 -

Interest Less : Closing Stock: Cost of Sales

SCHEDULE 8

ADMINISTRATION EXPENSES Other Operating Expenses

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains/losses are recognised in the Profit and Loss Account.

Earnings Per Share

Provisions and Contingent Liabilities

Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

Contingent liabilities are disclosed in respect of possible obligations that arise from the past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. There is no contingent liability as on the balance sheet date.

INTEREST AND FINANCIAL CHARGES Interest Paid Other loans Add: Brokerage & other Financial Charges

NET INTEREST SCHEDULE 10

NOTES TO ACCOUNTS AND ACCOUNTING POLICIES 1)

Accounting Policies

General

Fixed Assets

Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the

152

Foreign Currency Transactions

SCHEDULE 9

Total Interest Paid

Inventories are valued as under :

(Unsecured Considered good unless otherwise stated) Advances recoverable in cash or kind or for value to be received

Depreciation/Amortization

Miscellaneous Expenditure Miscellaneous expenditure is amortized over a period of 10 years.

Due to Micro, Small and Medium Enterprises

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2 October, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

SCHEDULES FORMING PART OF THE ACCOUNTS 3)

Earnings per share Particulars

Current Year

Previous Period

Loss for the year as per Profit & Loss Account (Rs.)

(15,626)

(25,931)

Weighted average no. of equity shares outstanding

50,000

(0.31)

(0.52)

10 /-

Basic/Diluted earnings per share (Rs.)

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008

Nominal value of shares (Rs.) Amounts paid to Auditors: Particulars

Current Year (Rs.)

(Rs.)

Audit Fees

89,896

6,734

Certification Total

Previous Period

2,248

Nil

92,144

6,734

Segment Information

As the company has only one business segment, disclosure under Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.

Related Party Disclosure

Related party disclosures as required by AS-18, "Related Party Disclosures", are given below: 1. Relationships: Shareholders Godrej Properties Limited (GPL) holds 100% of the Share Capital of the Company. 2. The following transactions were carried out with the related parties in the ordinary course of the business: Sr. No

Particulars

Issue of equity share capital

Expenses charged by other companies

Advances received

Outstanding payables

Current Year Rs. GPL NIL 5,00,000 675,246,973 18,420 54,270,225 NIL 722,892,177 18,420

Figures in italics are for previous year 7)

Previous year figures have been rearranged/regrouped wherever necessary to confirm to current year’s classification.

Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.

Current Year

Previous Year

Rupees

(15,626)

(25,931)

Depreciation

13,784

Interest Paid

92,413,898

1,842

92,413,898

(24,089)

(728,176,550)

Cash Flow from Operating Activities Loss for the year Adjustment for:

Preliminary expenses Operating Loss before working capital changes Adjustment for: Change in Inventory Change in Loans & Advances Change in Current Liabilities/Provisions

(1,677,500)

729,582,997

42,509

(18,420)

92,142,845

Purchase of Fixed Assets

(99,990)

Net Cash Flow from Investing Activities

(99,990)

Preliminary Expenses Net Cash Flow from Operating Activities Cash Flow from Investing Activities

Cash Flow from Financing Activities -

500,000

Interest Paid

(92,413,898)

Net Cash Flow from Financing Activities

(92,413,898)

(371,043)

500,000

Issue of Share Capital

Net Increase/(Decrease) in Cash & Cash Equivalent Cash & Cash Equivalent - Opening Balance

500,000

Cash & Cash Equivalent - Closing Balance

128,957

500,000

Notes : 1.

Figures for the previous year have been regrouped/ restated wherever necessary to conform to this year’s classification.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI MILIND S. KORDE Partner K.T. JITHENDRAN Mumbai, Dated : April 30, 2008.

Directors Directors

Balance Sheet abstract for the Year ended 31st March, 2008 And Company’s General

Business Profile 1 Registration Details Registration No. : U45200MH2007PTC168818 State Code : 11 Balance Sheet Date : 31st March, 2008 2 Capital raised during the year (Amount in Rs. thousands) Public Issue : Nil Rights Issue : Nil Bonus Issue : Nil Private Placement - Capital : Nil - Premium : Nil 3 Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities : 730,126 Total Assets : 730,126 Sources of Funds Paid-up capital : 500 Reserves & Surplus : -

Secured Loans : Unsecured Loans : Application of Funds Net Fixed Assets : Investments : Net Current Assets : Misc. Expenditure : Accumulated Losses : 4 Performance of Company (Amount in Rs. thousands) Turnover : Total Expenditure : Profit / (Loss) before Tax : Profit / (Loss) after Tax : Earning per Share in Rs. : Dividend Rate % : 5 Generic Names of three principal products / services of Company :

86 358 15 42

16 (16) (16) (0.31) N.A.

153

DIRECTORS’ REPORT FOR THE YEAR ENDED ON MARCH 31, 2008 TO THE SHAREHOLDERS Your Directors have pleasure in submitting their Report together with the Audited Accounts for the year ended 31st March, 2008. 1. FINANCIAL HIGHLIGHTS : The accounting results for the period ended 31st March, 2008 reveal that there is deficit at the end of the period. 2. REVIEW OF OPERATIONS : The Company has not commenced any activities during the year. 3. DIVIDEND : As there are no profits, the Directors regret that no dividend can be recommended. 4. DIRECTORS : In accordance with the provisions of the Articles of Association, Mr. Milind S. Korde, retires by rotation and being eligible, offers himself for re-appointment. 5. APPOINTMENT OF AUDITORS : M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent. 6. DIRECTORS’ RESPONSIBILITY STATEMENT: Your Directors confirm: (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed; (ii) that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2008 and of the loss of the Company for that year; (iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) that the Directors have prepared the annual accounts on a going concern basis.

ADDITIONAL INFORMATION :

(a) Since the Company has no employees, the particulars of the employees to be disclosed under Section 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.

(i)

Expenses on account of Energy are negligible.

(ii) Technology Absorption :

Conservation of Energy :

It is an on going process.

(iii) Foreign Exchange Earning and Outgo :

The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure during the year.

ACKNOWLEDGEMENT:

Your Directors take this opportunity to thank all the associates for their co-operation.

For and on Behalf of the Board of Directors

Milind S. Korde Director

K.T. Jithendran Director

Mumbai, April 30, 2008

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ SEA VIEW PROPERTIES PRIVATE LIMITED 1.

We have audited the attached Balance Sheet of GODREJ SEA VIEW PROPERTIES PRIVATE LIMITED, as at 31st March, 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. This report does not include a statement on the matters specified in paragraph 4 of the Companies (Auditor’s Report) Order, 2003, issued by the Department of Company Affairs, in terms of Section 227(4A) of the Companies Act, 1956, since in our opinion and according to the information and explanations given to us, the said Order is not applicable to the Company.

Further we report that :

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

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.

The Balance Sheet, Profit and loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

154

in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008;

ii)

in the case of the Profit and Loss Account, of the loss 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 31st March, 2008, and taken on record by the Board of Directors, we report that, none of the directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Membership No. 35646 Mumbai, April 30, 2008.

BALANCE SHEET AS AT MARCH 31, 2008

Profit and Loss Account for the year ended March 31, 2008

Schedule As at 31.03.2008 Rupees SOURCES OF FUNDS Shareholders’ Funds 500,000 Share Capital 1 Loan Funds -

As at 31.03.2007 Rupees

500,000

APPLICATION OF FUNDS Fixed Assets

- -

Administration Expenses

INVESTMENTS

468,324

500,000

468,324

500,000

Current Assets, Loans and Advances Cash and Bank Balances Less: Current Liabilities and Provisions Current Liabilities

500,000 -

Schedule For the Year Ended 31.03.2008 Rupees INCOME

38,337

24,239

Preliminary Expenses written off

1,842

(40,179)

(26,081)

Loss for the period

(40,179)

(26,081)

Loss brought forward to the Balance sheet

(26,081)

(66,260)

(26,081)

(0.80)

(0.52)

EXPENDITURE

49,320

42,659

Earning per share Basic/Diluted in Rs. (Refer Note 3)

49,320

42,659

NOTES TO ACCOUNTS AND ACCOUNTING POLICIES

Net Current Assets

419,004

457,341

Miscellaneous Expenditure (to the extent not written off or adjusted) Preliminary Expenditure

14,736

16,578

Profit and Loss Account

66,260

26,081

500,000

Notes to Accounts and Accounting Policies

For the Period Ended 31.03.2007 Rupees

The Schedules referred to above form an integral part of the Balance Sheet. As per our Report of even date. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants

Signatures to the Balance Sheet and Schedules 1 to 3 and 5

The Schedules referred to above form an integral part of the Profit and Loss Account. As per our Report of even date For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants

Signatures to Profit and Loss Account and Schedules 4 and 5

ERMIN K. IRANI Partner

MILIND S. KORDE Director

ERMIN K. IRANI Partner

MILIND S. KORDE Director

K.T. JITHENDRAN Director

Mumbai, April 30, 2008

K.T. JITHENDRAN Director

Mumbai, April 30, 2008

SCHEDULES FORMING PART OF THE ACCOUNT As at 31.03.2008 Rupees

As at 31.03.2007 Rupees

SCHEDULE 1 : SHARE CAPITAL AUTHORISED 50,000 Equity shares of Rs. 10/- each

500,000

500,000 500,000

500,000

SCHEDULE 2 : CASH & BANK BALANCE Balance with Scheduled Bank - on Current Account

468,324

500,000

468,324

500,000

Issued, Subscribed and Paid-up 50,000 Equity shares of Rs. 10/- each, fully paid-up (All the above Shares are held by Godrej Properties Limited, the Holding company and its nominee)

Earning Per Share

500,000

Due to Micro, Small and Medium Enterprises

500,000

Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2nd October, 2006, certain disclosures are required to be made relating to Micro, Small and Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.

Earnings per share Particulars Loss for the Year as per Profit and Loss Account Weighted average no. of equity shares outstanding

SCHEDULE 3 : CURRENT LIABILITIES Sundry Creditors (Refer Note 2) Other Liabilities

– 49,320

17,505 25,154

49,320

42,659

SCHEDULE 4 : ADMINISTRATION EXPENSES Audit fees Professional fees Other Operating Expenses

28,098 – 10,239

6,734 17,505 –

38,337

24,239

Basic/Diluted earnings per share (Rs.) Nominal value of shares (Rs.) 4.

SCHEDULE 5 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES 1. Accounting Policies a) General The financial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956. b) Miscellaneous Expenditure Miscellaneous expenditure is amortized over a period of 10 years.

Current Year Rs.

Previous Year Rs.

(40,179)

(26,081)

50,000

(0.80)

(0.52)

10 /-

Current Year (Rs.)

Previous Year (Rs.)

Amounts paid to Auditors:

Audit Fees

28,098

6,734

Total

28,098

6,734

Related Party Disclosure

Related party disclosures as required by AS-18, “Related Party Disclosures”, are given below :

Relationships: Shareholders (the Godrej Group Shareholding) in the Company Godrej Properties Limited (GPL) holds 100% in the Company. GPL is the Subsidiary of Godrej Industries Limited (GIL). GIL is subsidiary of Godrej & Boyce Manufacturing Company Limited (G&B), the ultimate holding company

155

The following transactions were carried out with the related party in the ordinary course of the business: Sr. No.

Particulars

Current Year (Rs.) GPL

Issue of Equity Share Capital

– 5,00,000

Re-imbursement of Expenses

2,810 18,420

Outstanding payables

Balance Sheet Abstract for the Year ended 31st March, 2008 and Company’s General Business Profile

Registration Details Registration No. State Code Balance Sheet Date

Capital raised during the year (Amount in Rs. thousands) Public Issue : Rights Issue : Bonus Issue : Private Placement - Capital : - Premium :

156

Previous year figures have been re-grouped/re-arranged where ever necessary to confirm to current year’s classification.

Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.

(Figures in italics are for previous year)

Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956

21,230 18,420

: : :

U45200MH2007PTC168730 11 31st March, 2008

Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities : Total Assets : Sources of Funds Paid-up capital : Reserves and Surplus : Secured Loans : Unsecured Loans : Application of Funds Net Fixed Assets : Investments : Net Current Assets : Miscellaneous Expenditure : Accumulated Losses : Performance of Company (Amount in Rs. thousands) Turnover : Total Expenditure : Profit/(Loss) before Tax : Profit/(Loss) after Tax : Earning per Share in Rs. : Dividend Rate % : Generic Names of three principal products/services of Company

Nil Nil Nil Nil Nil 549 549 500 – – – – – 419 15 66 – (40) (40) (40) (0.80) – N.A.

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008 Current Year Previous Period Rupees Rupees Cash Flow from Operating Activities Loss for the Year Adjustment for : Preliminary Expenses

(40,179)

(26,081)

1,842

Operating Loss before working capital changes Adjustment for : Changes in Current Liabilities and Provisions Preliminary Expenses Incurred

(38,337)

(24,239)

6,661 -

42,659 (18,420)

Net Cash Flow from Operating Activities

(31,676)

–

Net Cash Flow from Investing Activities Cash Flow from Financing Activities Issue of Share Capital

–

500,000

Net Cash Flow from Financing Activities

500,000

Net Increase/(Decrease) in Cash and Cash Equivalent

(31,676)

500,000

Cash and Cash Equivalent - Opening Balance

500,000

Cash and Cash Equivalent - Closing Balance

468,324

500,000

Notes: 1.

Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s classification.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Mumbai, April 30, 2008

MILIND S. KORDE Director

K.T. JITHENDRAN Director

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2008 TO THE SHAREHOLDERS

APPOINTMENT OF AUDITORS :

Your Directors have pleasure in submitting their Report alongwith the Audited Accounts for the period ended 31st March, 2008.

M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent.

FINANCIAL HIGHLIGHTS :

DIRECTORS’ RESPONSIBILITY STATEMENT:

The accounting results for the period ended 31st March, 2008 reveal that there is profit at the end of the period.

Your Directors confirm:

(i)

that in the preparation of the annual accounts, the applicable accounting standards have been followed;

(ii)

DIVIDEND :

There is no Dividend declared for the year ended 31st March, 2008.

REVIEW OF OPERATIONS:

During the year the Company was taken over by Godrej Properties Limited.

Godrej Properties Limited has purchased all the shares of the Company from Gulmohar Trading Pvt. Ltd. and Others.

CHANGE IN ARTICLES OF ASSOCIATION :

Your Company has pursuant to a resolution passed in the Extra-ordinary General Meeting held on Jan 11, 2008, adopted a new set of articles in substitution for and to the exclusion of all the existing Articles of the Company.

(iv)

ADDITIONAL INFORMATION :

CHANGE OF REGISTERED OFFICE OF THE COMPANY :

The Company has received confirmation from the Company Law Board for shifting of the Registered office of the Company from the State of West Bengal to the State of Maharashtra.

(a) Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.

(b)

DIRECTORS :

Mr. Milind Korde was appointed as an Additional Director of the Company, pursuant to Section 260 of the Companies Act 1956 with effect from 16th July, 2007 and holds office till the ensuing Annual General Meeting.

(i)

Mr. K.T. Jithendran was appointed as an Additional Director of the Company, pursuant to Section 260 of the Companies Act 1956 with effect from 16th July, 2007 and holds office till the ensuing Annual General Meeting.

Mr. Rajendra Khetawat was appointed as an Additional Director of the Company, pursuant to Section 260 of the Companies Act 1956 with effect from 18th July, 2007 and holds office till the ensuing Annual General Meeting. Mr. Ram Ratan Modi, Director of the Company resigned on 19th July, 2007. The Board desires to place on record the valuable services rendered by Mr. Ram Ratan Modi during his tenure as a Director of the Company. Mr. Hemant Jain, Director of the Company resigned on 19th July, 2007. The Board desires to place on record the valuable services rendered by Mr. Hemant Jain during his tenure as a Director of the Company. Mr. Arun Dutta, Director of the Company resigned on 19th July, 2007. The Board desires to place on record the valuable services rendered by Mr. Arun Dutta during his tenure as a Director of the Company

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

Expenses on account of Energy are negligible.

Technology Absorption :

(ii)

(iii)

It is an on going process. Foreign Exchange Earning & Outgo : The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure during the year.

10.

ACKNOWLEDGEMENT:

Your Directors take this opportunity to thank all the associates for their co-operation. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

MILIND S. KORDE

K.T. JITHENDRAN

DIRECTORS

Place : Mumbai Dated : April 30, 2008

REPORT OF THE AUDITORS TO THE MEMBERS OF happy Highrises LIMITED 1.

We have audited the attached Balance Sheet of HAPPY HIGHRISES LIMITED, as at 31st March 2008 and also the Profit and Loss Account, and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

section (3C) of section 211 of the Companies Act, 1956.

in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008;

ii)

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

iii)

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

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

For and on behalf of

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

KALYANIWALLA & MISTRY

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.

ERMIN K. IRANI

The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.

Membership No. 35646

In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-

CHARTERED ACCOUNTANTS PARTNER Place: Mumbai Dated: April 30, 2008

157

ANNEXURE TO THE AUDITORS’ REPORT Referred to in paragraph (3) of our report of even date. 1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) As explained to us, the Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of is assets. (c) There is no disposal of fixed assets during the year. 2) (a) The management has conducted physical verification of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification. 3) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 (b) Consequently, the question of commenting on the rates of interest and terms and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and the interest and reasonable steps for recovery of principal and interest does not arise. (c) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 (d) Consequently, the question of commenting on the rates of interest and other terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise. 4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls. 5) Based on the audit procedures applied by us and according to the information and explanations provided by the Management, we are of the opinion that there are no transactions that need to be entered in the register maintained under section 301 of the Companies Act, 1956. 6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable. 7) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business. 8) The maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products. 9) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has no statutory

dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues incurred during the year. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March 2008 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues outstanding of Income Tax, Sales Tax, Value Added Tax, Service Tax, Custom Duty, Wealth Tax, Excise Duty, Cess on account of any dispute. 10) The Company’s accumulated losses at the end of the financial year are less than fifty percent of its net worth. During the current year the Company has not incurred cash losses. However, it has incurred cash losses in the immediately preceding financial year. 11) The Company does not have any dues to financial institution, bank or debenture holders. 12) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13) In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies. 14) In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments. 15) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions. 16) Based on our examination and according to the information and explanations given to us, the company has not taken any term loans during the year. 17) According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investment. 18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956. 19) The Company did not issue any debentures during the year. 20) The Company has not raised any money through a public issue during the year. 21) Based on the audit procedures performed and information and explanations given by the Management, we report that no fraud on or by the Company has been noticed or reported during the year. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Membership No. 35646 Place: Mumbai Dated: April 30, 2008.

BALANCE SHEET AS AT 31ST MARCH, 2008

PROFIT and LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2008

Schedule SOURCES OF FUNDS SHAREHOLDERS’ FUNDS Share Capital LOAN FUNDS APPLICATION OF FUNDS FIXED ASSETS Gross Block Less : Depreciation Net Block INVESTMENTS CURRENT ASSETS, LOANS & ADVANCES Inventory Cash & Bank Balances Loans & Advances

LESS : CURRENT LIABILITIES & PROVISIONS Current Liabilities

As at 31.03.07 Rupees

2,031,200 2,031,200

3,200 3,200 -

3 4 5

774,188,736 1,995,940 449,894 776,634,570

8,144,103 5,408,730 13,552,833

774,659,031 774,659,031 1,975,539

11,593,933 11,593,933 1,958,900

15,534 40,127 2,031,200

17,260 55,040 2,031,200

The Schedules referred to above form an integral part of the Balance Sheet. As per our Report of even date. Signatures to the Balance Sheet and Schedules 1 to 6 and 9 For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner DIRECTORS Mumbai, Dated : April 30, 2008

158

Schedule

INTEREST INCOME

For the Year ended 31.03.08 Rupees 146,443

For the Year ended 31.03.07 Rupees 4,800

(Tax Deducted at Source Rs.41,970/-[ Previous year Rs. Nil] ) EXPENDITURE

NET CURRENT ASSETS MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) Preliminary Expenditure PROFIT & LOSS ACCOUNT NOTES TO ACCOUNTS & ACCOUNTING POLICIES

As at 31.03.08 Rupees

Cost of Sales

Administration Expenses

9,936

Interest & Finance Charges

146,443

Depreciation

3,200

Preliminary Expenses written off

1,726

Loss for the Year

(4,926)

(5,136)

Interest Income of Previous year

19,839

Profit /(Loss) for the Year

14,913

(5,136)

Brought Forward Loss

(55,040)

(49,904)

Loss Carried Forward

(40,127)

(55,040)

0.07

(0.03)

Earning per share Basic/Diluted in Rs. (Refer Note 3) NOTES TO ACCOUNTS & ACCOUNTING POLICIES

The Schedules referred to above form an integral part of the Profit & Loss Account As per our Report of even date. Signatures to Profit & Loss Account and Schedules 7 to 9 For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner DIRECTORS Mumbai, Dated : April 30, 2008

SCHEDULES FORMING PART OF THE ACCOUNTS As at 31.03.08 Rupees

As at 31.03.07 Rupees

2,500, 000

2,500,000

2,031,200

SCHEDULE 1: SHARE CAPITAL AUTHORISED 250,000 Equity shares of Rs. 10/- each ISSUED, SUBSCRIBED & PAID UP 203,120 Equity shares of Rs. 10/- each, fully paid-up (All of the above shares are held by Godrej Properties Limited, the Holding Company and its nominee)

SCHEDULE 2: FIXED ASSETS Particulars

Office Equipments Total PreviousYear

As at 1st April 2007 Rs. -

Gross Block Additions Deductions Rs. 3,200 3,200 -

SCHEDULE 5 LOANS & ADVANCES (Unsecured & considered good unless otherwise stated) Advances recoverable in cash or kind or for value to be received Advance Tax and Tax Deducted at Source

SCHEDULE 6 CURRENT LIABILITIES Sundry Creditors (Refer Note 2) Investor Education & Protection Fund Other liabilities

SCHEDULE 7 COST OF SALES Opening Stock Add : Expenditure during the year Land Construction, Material & Labour Architect Fees Advertisment Expenses Over heads Interest Less : Closing Stock Cost of Sales SCHEDULE 8 INTEREST AND FINANCIAL CHARGES Interest Paid Other loans Total Interest Paid Less: Transferred to Cost of Sales NET INTEREST

As at 31st Mar. 2008 Rs. 3,200 3,200 -

Rs. -

SCHEDULE 3 INVENTORY Construction work in progress SCHEDULE 4 CASH & BANK BALANCE Cash & Cheques-in-Hand Balances with Scheduled Bank

Upto 1st April 2007 Rs.

403,472

5,408,730

46,422 449,894

5,408,730

644,437 774,014,594 774,659,031

11,593,933 11,593,933

672,965,851 1,924,303 3,822,978 2,779,434 34,043,864 58,652,306 774,188,736 774,188,736 -

j) 58,798,749 58,798,749 58,652,306 146,443

SCHEDULE 9: NOTES TO ACCOUNTS AND ACCOUNTING POLICIES 1. Accounting Policies a) General The financial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956. b) Miscellaneous Expenditure Preliminary expenditure is amortised over a period of 10 years. c) Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Cost includes all incidental expenses related to acquisition and installation, other preoperation expenses and interest in case of construction. Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount. d) Depreciation / Amortization Depreciation has been provided on Written Down Value basis, at the rates specified in Schedule XIV of the Companies Act, 1956. e) Inventories Inventories are valued as under: a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At cost

k) 2)

Depreciation For the Year Rs. 3,200 3,200 -

Upto 31st Mar. 2008 Rs. 3,200 3,200 -

As at 31.03.08 Rupees

As at 31.03.07 Rupees

774,188,736 774,188,736

10,115

74,307

1,985,825 1,995,940

69,796 8,000,000 8,144,103

Net Block As at As at 31st Mar. 2008 31st March, 2007 Rs. Rs. -

Construction Work in Progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company. Revenue Recognition The Company is following the â&#x20AC;&#x153;Percentage of Completion Methodâ&#x20AC;? of accounting. As per this method, revenue in Profit & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company. Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors. Interest income is accounted on an accrual basis at contracted rates. Borrowing Cost Interest and finance charges incurred in connection with borrowing of funds, which are incurred for the development of long term projects, are transferred to Construction Work in Progress / Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost / rates as per Agreements respectively. Other borrowing costs are recognized as an expense in the period in which they are incurred. Earnings Per Share The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive. Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profit and Loss Account. Provision For Taxation Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date. Provisions And Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from the past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Due to Micro, Small and Medium Enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from 2 October 2006, certain disclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is in the process of compiling relevant information from its suppliers about their coverage under the said Act. Since the relevant information is not readily available, no disclosures have been made in the accounts. Earnings per share

Particulars

Current Year Rs. 14,913 203,120

Previous Year Rs. (5,136) 203,120

Earnings per share Basic / Diluted (Rs.)

0.07

(0.03)

Nominal value of shares (Rs.)

10 /-

Profit / (Loss) as per Profit & Loss Account Weighted average no. of equity shares outstanding

159

SCHEDULES FORMING PART OF THE ACCOUNTS

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008

4) Amounts paid to Auditors: Current Year (Rs.)

Particulars

Previous Year (Rs.) 3,933 Nil 3,933

Audit Fees 89,888 Certification 393,260 Total 483,148 5) Segment Information As the company has only one business segment, disclosure under Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable. 6) Related Party Disclosure Related party disclosures as required by AS-18, “Related Party Disclosures’, are given below: 1. Relationships: Shareholders (the Godrej Group Shareholding) in the Company Godrej Properties Limited (GPL) holds 100% in the Company. GPL is the Subsidiary of Godrej Industries Limited (GIL). GIL is a subsidiary of Godrej & Boyce Manufacturing Company Limited (G&B), the ultimate holding Company. 2. The following transactions were carried out with the related party in the ordinary course of the business: Sr. No

Particulars

Expenses Charged

Advances Received

Outstanding payables

GPL Amount Rs. 82,085,060 NIL 689,950,000 NIL 760,197,423 NIL

160

Capital raised during the year (Amount in Rs. thousands) Public Issue Rights Issue Bonus Issue Private Placement - Capital - Premium Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities Total Assets Sources of Funds Paid-up capital Reserves & Surplus Secured Loans Unsecured Loans Deferred Tax Liability Application of Funds Net Fixed Assets Investments Net Current Assets Misc. Expenditure Accumulated Losses

Adjustment for: Change in Inventory Change in Loans & Advances Change in Current Liabilities / Provisions Taxes Paid (Net) Net Cash Flow from Operating Activities Cash Flow from Investing Activities Purchase of Fixed Assets Interest Received Net Cash Flow from Investing Activities Cash Flow from Financing Activities Interest Paid Net Cash Flow from Financing Activities

Figures in italics are for previous year. 7) Prior period financial statements have been audited by a firm of Chartered Accountants other than Kalyaniwalla & Mistry. The opening balances are being taken as per the last year accounts, which have been re-grouped & re-classified wherever necessary to conform to current year’s classification. 8) Previous year figures have been rearranged/regrouped wherever necessary to confirm to current year’s classification. 9) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given. 10) Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956 Balance Sheet Abstract for the Year ended 31st March, 2008 And Company’s General Business Profile 1 Registration Details Registration No. U51909MH1993PLC180464 State Code 11 31st March, 2008 Balance Sheet Date 2

Cash Flow from Operating Activities Loss for the year Adjustment for: Depreciation Interest Paid Preliminary Expenses Interest Income Operating Profit /(Loss) before working capital changes

Nil Nil Nil Nil Nil

776,690 776,690 2,031 1,976 16 40

Performance of Company (Amount in Rs. thousands) Turnover Total Expenditure Profit / (Loss) before Tax Profit / (Loss) after Tax Earning per Share in Rs. Dividend Rate %

151 (5) 15 0.07 -

Generic Names of three principal products /services of Company

N.A.

Net Increase/ (Decrease) in Cash & Cash Equivalent Cash & Cash Equivalent -Opening Balance Cash & Cash Equivalent -Closing Balance

Current Year Rupees

Previous Year Rupees

(4,926)

(5,136)

3,200 58,798,749 1,726 (146,443) 58,652,306

(5,136)

(774,188,736) 5,005,258 763,065,098 52,533,926 46,422 52,487,504

(167,128) 7,907,791 7,735,527 7,735,527

(3,200) 166,282 163,082

(58,798,749) (58,798,749)

(6,148,163)

8,144,103 1,995,940

408,576 8,144,103

Notes : 1. The cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash flows by operating, investing and financing activities. 2. Figures for the previous year have been regrouped/ restated wherever necessary to conform to this year’s classification For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Place : Mumbai Dated : April 30, 2008

MILIND S. KORDE K.T. JITHENDRAN DIRECTORS

DIRECTORS’ REPORT FOR THE YEAR ENDED ON MARCH 31, 2008 To The Shareholders, Your Directors submit their Report along with the audited Accounts for the year ended on March 31, 2008. Review of operations Your Company’s performance during the year as compared with that of the previous year is summarised below: This Year Previous Year (Rs.’000) (Rs.’000) Gross Revenue earned 19737 8062 Profit/(Loss) for the year 19426 7896 Provision for Taxation 2205 438 Adjustment in respect of prior years - Loss brought forward (80250) (80521) Loss carried forward (79270) (80250) Dividend The Board of Directors have declared and paid interim dividend for year 2007-08 of Rs.2.50 per share. The same is recommended as the final dividend for the year. Compliance with guidelines issued by the Reserve Bank of India Your Company has been granted a Certificate of Registration by Reserve Bank of India to carry on the business as Non-Banking Financial Institution. Your Company has not accepted any public deposits during the year under review, nor does it propose to accept the same. As such, pursuant to Non-Banking Financial Companies (Reserve Bank) Directions, 1998, issued by Reserve Bank of India vide notification No.DFC.114/DG (SPT) dated January 2, 1998, your Company is not required to obtain rating from a rating agency in this regard. Hence, rating for Fixed Deposit obtained from CRISIL in 1996-97 has not been renewed. In view of the above, there are no overdue or unclaimed deposits. Directors During the year under review, Mr. C. K. Vaidya resigned from the Board of the Company w.e.f. May 21, 2008 The Board wishes to place on record its appreciation for his contribution during his tenure with the Company. In accordance with Article 124 of the Articles of Association of your Company, Mr. M. Eipe retires by rotation and being eligible offers himself for re-appointment

Auditors You are requested to appoint Auditors for the current year and fix their remuneration. The retiring auditors, M/s. Kalyaniwalla Mistry & Associates, Chartered Accountants are eligible for re-appointment. Directors’ Responsibility 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 loss of the Company for that period; c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguard of the assets of the Company and for preventing and detecting fraud and other irregularities; d) that they have prepared the annual accounts on a going concern basis. Additional Information The additional information required to be given under the Companies Act, 1956, has been laid out in the Accounts to the extent applicable. The notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation. The information in respect of Conservation of energy, Technology Absorption and Foreign Exchange earnings and outgo, required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 has not been given, since such requirement is not applicable to the Company. The particulars, required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, have not been given, since the Company did not employ any person during the year under review.

REPORT OF the AUDITORS

To The Members of ENSEMBLE HOLDINGS & FINANCE LIMITED 1.

We have audited the attached Balance Sheet of Ensemble Holdings and Finance Limited as at March 31, 2008 and also the Profit and Loss Account and Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditors' Report) (Amendment) Order 2004, issued by the Central Government in terms of section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to above, we report that: a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; b. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books; c. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

Annexure to the Auditors’ Report Referred to in Paragraph 3 of our report of even date on the accounts of Ensemble Holdings & Finance Limited for the year ended March 31, 2008: 1. a) The Company, during the current year, has not granted any loans, secured or unsecured, to any companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and the outstanding from one company covered in the register maintained under section 301 of the Companies Act, 1956 is Rs. 23,110,000/ b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions of unsecured loans given by the Company, are prima facie not prejudicial to the interest of the Company except for unsecured loan given to Godrej Hicare Limited which has been adequately provided for. c) All parties except for Godrej Hicare Limited have repaid the principal amounts as stipulated and have been regular in the payment of interest. d) In our opinion, the Company has taken reasonable steps for the recovery of principal and interest in respect of overdue balance of Rs.23,110,000/- due from Godrej Hicare Limited. e) The Company had taken unsecured loans from a company covered in the register maintained under section 301 of the Companies Act, 1956. The amount involved during the year was Rs. 12,00,000/- and the same was repaid during the year. f) According to information and explanations given to us, we are of the opinion that the rate of interest and other terms and conditions on which loans have been taken from the company covered in the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company. g) The company is regular in repaying the principal amounts as stipulated and has been regular in the payment of interest. 2. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all transactions that need to be entered into the register in pursuance of section 301 of the Companies Act, 1956, have been so entered. b) These transactions have been made at reasonable prices having regard to the prevailing market prices at the relevant time. 3. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed thereunder. 4. The Company has an internal audit system, which in our opinion, is commensurate with the size and nature of its business. 5. a) According to the records examined by us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Income Tax and other statutory dues as applicable to it. According to the information and explanation given to us, no undisputed amounts payable in respect of statutory dues were outstanding, at the year end for a period of more than six months from the date they became payable.

Mumbai, May 28, 2008

For and on behalf of the Board of Directors M. EIPE Director

H. K. PRESS Director

In our opinion, the Profit and Loss Account and Balance Sheet dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; e. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008, (ii) in the case of the Profit and Loss Account, of the Profit of the Company for the year ended on that date (iii) in the case of Cash Flow Statement, of the cash flow for the year ended on that date. 5. On the basis of the written representations received from the Directors as on March 31, 2008, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2008, from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. For and on behalf of KALYANIWALLA MISTRY AND ASSOCIATES Chartered Accountants V. M. PADWAL Partner Membership No.: 49639 Mumbai, May 28, 2008 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

According to the information and explanation given to us there are no dues of sales tax, income tax, wealth tax, service tax, excise duty or cess, which have not been deposited on account of any dispute. The accumulated losses of the Company as at end of the financial year are more than fifty percent of its net worth. The company has not incurred cash losses during the current financial year and in the immediate preceding financial year. According to the information and explanations given to us and the records examined by us, we observed that the company has not borrowed any money from financial institutions or banks or debenture holders. According to the information and explanations given to us the Company has not granted loans and advances on the basis of security by way of pledge of shares and other securities. In our opinion and according to the information and explanation given to us, the nature of the activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies. In our opinion, the Company has maintained proper records of the transactions and contracts of the investments dealt in by the Company and timely entries have been made therein. The investments made by the Company are held in its own name. According to the information and explanations given to us and the records examined by us, the Company has not given any guarantees for loans taken by others from banks or financial institutions. According to the information and explanations given to us and the records examined by us we observed that the Company has not taken any term loan. On the basis of an overall examination of the balance sheet and cash flows of the Company and the information and explanation given to us, we report that the company has not utilised any funds raised on short-term basis for long-term investments. The Company has not made any preferential allotment of shares to parties or companies covered under section 301 of the Companies Act, 1956. The Company did not issue any debentures during the financial year. The Company has not raised any money through a public issue during the year. Based upon the audit procedures performed and the information and explanation given by the management, we report that no fraud on or by the Company has been noticed or reported during the year. In our opinion, clauses (i), (ii), (iv) and (viii) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 are not applicable.

For and on behalf of KALYANIWALLA MISTRY AND ASSOCIATES Chartered Accountants V.M. PADWAL Partner Membership No.: 49639 Mumbai, May 28,2008

161

BALANCE SHEET AS AT MARCH 31, 2008 Schedule

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008 This Year Rupees

Previous Year Rupees

Schedule

This Year Rupees

Previous Year Rupees

INCOME Interest Income 8 Dividend Profit on sale of investments (Net) Profit on sale of Mutual Funds Miscellaneous Income

3363815 6828 16240125 125964 -

2114248 3992965 1809937 135160 9558

19736732

8061868

142215 888 167293

150302 15904 -

SOURCE OF FUNDS 1.

SHAREHOLDERS' FUNDS

(a) Share Capital

37741600

(b) Reserves & Surplus

109745512

104594668

147487112

142336268

25925566

31202440

EXPENDITURE Expenses 9 Interest 10 Provision for dimunition on investments

(a) Cash and Bank Balances

20079916

1461530

310396

166206

(b) Other Current Assets

1930989

440110

20441208

29114660

PROFIT/(LOSS) BEFORE TAX Provision for Taxation

19426336 2205000

7895662 438000

42452113

31016300

PROFIT/(LOSS) AFTER TAX Adjustments for Income tax of prior years

17221336 (51854)

7457662 7457662

132215

PROFIT AVAILABLE FOR APPROPRIATION Appropriation Dividend 1st Interim 9435400 Final - Dividend Distribution Tax Transfer to Special Reserve Fund u/s 45IC of RBI Act, 1934 Transfer to General Reserves

17169482

160622

9435400 1603550 3433896 1716948

4340284 608730 1491532 745766

Balance available for set off against b/f deficit in P & L A/c Loss brought forward

16189794 979688 (80249743)

7186312 271350 (80521093)

Loss Carried Forward

(79270055)

(80249743)

4.55

1.98

APPLICATION OF FUNDS

Investments

Current Assets, Loans and Advances

LESS: Current Liabilities and Provisions

Current Liabilities

Provisions

–

160622

132215

NET CURRENT ASSETS

42291491

30884085

Profit and Loss Account

79270055

80249743

Total

147487112

142336268

NOTES TO ACCOUNTS

Earnings Per Share NOTES TO ACCOUNTS

11 (6) 11

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

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

As per our Report of even date attached. For and on behalf of kalyaniwalla mistry and associates Chartered Accountants V. M. PADWAL Partner

Signatures to Balance Sheet and Schedules 1 to 7 and 11 M. EIPE H.K. Press S. srinivasan

Director Director Company Secretary

Mumbai, May 28, 2008

Signatures to Profit & Loss Account and Schedules 8 to 11 M. EIPE H. K. Press S. srinivasan

Director Director Company Secretary

Mumbai, May 28, 2008

SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008 SCHEDULE 1 : SHARE CAPITAL

This Year Rupees

Previous Year Rupees

50000000

AUTHORISED 5000000 Equity Shares of Rs. 10/- each

37741600

(100% Shares are held by Godrej Industries Ltd., the Holding Company)

As per last Balance Sheet

Previous Year Rupees

84945040

Special Reserves u/s 45IC of RBI Act, 1934 Opening Balance 13236752 Add Transferred from Profit and Loss Account 3433896 16670648 General Reserve Opening Balance 6412876 Add: Transferred from Profit and Loss Account 1716948 8129824

162

This Year Rupees

Share Premium

ISSUED, SUBSCRIBED AND PAID UP 3774160 Equity Shares of Rs. 10/- each fully paid up

SCHEDULE 2 : RESERVES & SURPLUS

109745512

– 13236752

6412876 104594668

SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008 SCHEDULE 3 : INVESTMENTS Quantity Acquired Sold during during the year the year

Investee Company/Institution

Face Quantity as on Value 01.04.07

Amount Quantity as on 31.03.08

Long Term Investments (At Cost) Equity shares - Quoted Other Companies Agro Tech Foods Ltd. 10 1 - - 1 Colgate Palmolive India Ltd. 10 1 - - 1 Dabur India Ltd. 1 3 - - 3 Henkel India Ltd. 10 1 - - 1 Hindustan Unilever Ltd. 1 751 - - 751 Gillette India Ltd. 10 1 - - 1 Marico Industries Ltd. 1 40 - - 40 Nirma Ltd. 5 2 - - 2 Procter & Gamble Hygiene & Health Care Ltd. 10 1 - - 1 Venkys India Ltd. 10 1 - - 1 Unquoted Companies under the Same Management: Godrej Properties Ltd.(bonus acquired during the year) 10 76795 614360 - 691155 Godrej Agrovet Ltd. 10 6500 800 - 7300 Godrej Hicare Ltd. 10 4800 - - 4800 Godrej Global Solutions Ltd. 10 8340 - - 8340 Godrej Gokarna Oil Palm Limited 10 - 2 - 2 (Formerly Godrej Oil Palm Ltd) Other Companies: karROX Technologies Ltd. 10 250000 - - 250000 Personalitree Academy Ltd. 10 389269 - - 389269 Avesthagen Limited (Formerly Avestha Gengraine 10 31000 - 31000 - Technologies Pvt. Ltd.) Unquoted : Non-Convertible Debentures Companies under the Same Management : Godrej Oil Plantations Limited 10 - 160 - 160 (Formerly Godrej Aquafeed Ltd.) Current Investments Mutual Funds - Unquoted LIC Mutual Fund - Growth Plan Less : Provision for diminution in value of Investments Aggregate Book Value of Investments : Quoted Investments Unquoted Investments Market Value of quoted investments SCHEDULE 4 : CASH AND BANK BALANCES Cash on hand Balances with Scheduled Banks in Current Accounts in FD with Banks

1131

2852

78785 20000000

1458678 -

20079916

1461530

1930989

440110

1930989

440110

20266637 300000 - 23110000 23410000 (23410000) - 174571

18800000 300000 10000000 23110000 33410000 (23410000) 10000000 314660

20441208

29114660

160622

132215

1977521

1547125

816370

567123

551853 18071 3363815

2114248

60000 2500 500 44944 30000 4271 142215

60000 2500 1500 44944 30000 11358 150302

888 888

15904 15904

SCHEDULE 5 : OTHER CURRENT ASSETS Accrued Interest SCHEDULE 6 : LOANS AND ADVANCES (Unsecured, considered good, unless stated otherwise) ESOP Loans Share Application Money (considered doubtful) Intercorporate Deposits (considered good) Intercorporate Deposits (considered doubtful) Less : Provision for Doubtful Loans and Advances Advance Payment of Taxes (Net of provision for tax Rs.3163000/- previous year Rs.958000) SCHEDULE 7: CURRENT LIABILITIES & PROVISIONS Current Liabilities Sundry Creditors SCHEDULE 8 : INTEREST INCOME (Gross) On Loans (TDS Rs.448106/- previous year Rs.344292/-) On Intercorporate Deposits (TDS Rs.184990/-, previous year Rs.127013/-) On Fixed Deposits with Bank (TDS Rs.125009/- previous year Rs.Nil-) On Refund recd from Income-tax TOTAL SCHEDULE 9 : EXPENSES Salary Profession Tax Directors’ sitting fees Auditors’ Remuneration Professional Charges Miscellaneous Expenses TOTAL SCHEDULE 10 : INTEREST On Inter Corporate Borrowings TOTAL

This Year Previous Year Rupees Rupees

As on 31.03.08 Rupees

As on 31.03.07 Rupees

53 151 59 31 90589 400 271 255 490 37

5488688 1407697 48000 302290 3240

5488688 1011402 48000 302290 -

10050000 11027991 -

10050000 11027991 13984875

1,600

8747196 37169038 11243472

273037 42278619 11076179

25925566

31202440

92336 25833230 25925566 177314

92336 31110104 31202440 159342

SCHEDULE 11: 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) Income recognition : (i) Dividend income is recognised when the right to receive the same is established. (ii) Interest income is recognised on time proportion basis. (iii) Profit/loss on sale of investments is accounted on the trade dates. c) Investments : Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognise decline, other than that of a temporary nature. The fair value of a long-term investment is ascertained with reference to its market value, the investee’s assets and results and the expected cash flows from the investments. d) Taxes on Income Current Tax is the amount of tax payable on the taxable income for the year determined in accordance with the provisions of the Income Tax Act, 1961 Deferred tax is recognised on timing differences, being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets subject to the consideration of prudence are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year end based on the tax rate and laws enacted or substantially enacted on the Balance Sheet date. 2. Investments : i) The Company has acquired and sold the following investments during the year: LIC Mutual Fund

ii)

This Year Previous Year No.of units/ Purchase No.of units/ Purchase shares Cost (Rs.) shares Cost (Rs.) 1826882 25552804 1169380 15426963

Godrej Agrovet Limited (GAVL), a Company under same management, as per the scheme of arrangement under Section 391 to 394 of Companies Act, 1956, has demerged/ transferred its Oil Palm business and Jatropha plantation carried on in the states of Andhra Pradesh, Orissa, Mizoram, and Gujarat to Godrej Oil Plantations Limited (Formerly known as Godrej Aquafeed Limited) with effect from April 1, 2007 as per the order of High Court, Mumbai dated January 11, 2008. As per the terms of the aforesaid scheme, the Company has been allotted 160 debentures.

163

SCHEDULES ANNEXED TO AND FORMING PART OF ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008

iii) GAVL has, under the aforesaid scheme, also demerged/transferred its Oil Palm business carried on in the states of Goa and Karnataka to Godrej Gokarna Oil Palm Limited (Formerly known as Godrej Oil Palm Limited) with effect from April 1, 2007 as per the order of High Court, Mumbai dated September 28, 2007. As per the terms of the aforesaid scheme, the Company has been allotted 2 equity shares. iv) Events occurring after the balance sheet date In May 2008, the Company has, subject to the approval of the shareholders, agreed to sell its entire holding in Godrej Global Solutions Limited for a consideration of Rs. 1.34 lac. The anticipated loss on the transaction has been provided for, during the year. 3. Amount due from a Company under the same management This Year Previous Year Rupees Rupees Godrej Hicare Ltd 23110000 23110000 23110000

4. Auditors’ Remuneration: (includes service tax wherever applicable) Audit Fees Tax Audit Fees

This Year Rupees 28090 16854

Earnings per share

Net Profit/(Loss) after Tax available for shareholders

Weighted Average Number of Equity Shares

Basic and Diluted Earnings per Share of Rs.10 each

23110000 Previous Year Rupees 28090 16854

44944

17169482

7457662

3774160

4.55

1.98

Related Party Disclosures a) Related Parties with whom transactions have taken place during the quarter, with the name and description of relationship. Parties where control exists. Godrej Industries Limited, the holding company Godrej & Boyce Mfg. Co. Ltd., the ultimate holding company Related Parties with whom transactions have taken place during the year Holding Company Fellow Subsidiaries Godrej Industries Limited Godrej Properties Limited Godrej Agrovet Limited Individual exercising significant influence over the enterprise Ms. T. A. Dubash Mr. C. K. Vaidya Mr. M. Eipe Mr. H. K. Press b) Transactions with Related Parties (Rs. in Lac) Sr. Nature of Transaction No.

Acceptance of ICB Previous Year ii) Refund of ICB Previous Year iii) Interest paid on ICB Previous Year iv) Dividend Received Previous Year v) Refund of VRS Loan Previous Year vi) Interest Received on VRS Loan Previous Year vii) Sale of Investments Previous Year viii) Dividend Paid Previous Year ix) Remuneration Previous Year

Holding Company

Subsidiary Company

Fellow Subsidiary

Associate/ Joint Venture

Key Mang Personnel

Relatives of Key Mangement Personnel -

12.00 5.00 12.00 5.00 0.01 0.16 0.81 -

39.91 -

0.14 302.25 128.63 94.35 80.14 -

0.09 -

12.00 5.00 12.00 5.00 0.01 0.16 39.91 0.81 -

0.60 0.60

0.14 302.25 128.63 94.35 80.23 0.60 0.60

The significant Related Party Transactions are as under

Nature of Transaction Acceptance of ICB Godrej Industries Limited Refund of ICB Godrej Industries Limited Interest paid on ICB Godrej Industries Limited Sale of Investments Godrej Industries Limited Dividend Paid Godrej Industries Limited Godrej Agrovet Limited Remunertion Mr. H. K. Press

Total

(Rs. in Lac) Amount 12.00 12.00 0.01 302.25 94.35 – 0.60

Additional information required under Schedule VI, Part II of the Companies Act, 1956 to the extent not applicable has not been given.

Previous year’s figures have been regrouped/reclassified whereever necessary.

164

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008 This Year Rupees Cash flow from Operating Activities 19,426,336 Profit before tax Adjustments for : (16,240,125) Profit on sale of long-term investments (125,964) Profit on sale of Mutual Fund 167,293 Provision for Dimunition in value of long-term Investments 888 Interest Expense - GIL 3,228,428 Operating Profit before working capital changes

(1,809,937) (135,160) 15,904 5,964,969

Adjustments for : Accrued Interest Sundry Debtors Trade Payables

(1,490,879) - 28,407

(439,306) 453,350 (4,170,068)

Cash generated from operations Direct Taxes paid Direct Taxes refund recd Net Cash from operating activities

1,765,956 (2,233,354) 116,589 (350,809)

1,808,945 (480,305) 1,328,640

56,176,805 (34,701,135) 8,533,363 30,009,033

30,921,733 (16,150,000) (10,178,883) 4,592,850

(888) (9,435,400) (1,603,550)

(15,904) (4,340,284) (608,730)

(11,039,838) 18,618,386 1,461,530 20,079,916

(4,964,918) 956,572 504,958 1,461,530

Cash flow from Investing Activities Proceeds from sale of investments New investments made Loans Net cash generated/(used) from investing activities Cash flow from Financing Activities Intercorporate Borrowings (Net) Interest Paid on Borrowings Dividend Paid Tax on Distributed Profits Net cash generated/(used) from financing activities Net increase/(decrease) in cash and cash equivalents Cash in and cash equivalents (opening balance) Cash in and cash equivalents (closing balance) As per our Report attached For and on behalf of kalyaniwalla mistry and associates Chartered Accountants V.M. PADWAL Partner Mumbai, May 28, 2008 9.

Previous Rupees 7,894,162

Signatures to Cash Flow Statement

M. EIPE H.K. Press S. srinivasan

Director Director Company Secretary

ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE 1. Registration details Registration No. : 11-65457 State Code : 11 Balance Sheet Date : 31.03.2008 2. Capital raised during the year (Amount in Rs. Thousands) Public Issue : Rights Issue : Bonus Issue : Private Placement : 3. Position of mobilisation and deployment of funds (Amount in Rs. Thousands) Total Liabilities : 147487 Total Assets : 147487 Sources of funds : Paid-up Capital : 37742 Reserves & Surplus : 109746 Secured Loans : Unsecured Loans : Application of funds : Net Fixed Assets : Investments : 25926 Net Current Assets : 42291 Miscellaneous Expenditure : Accumulated Losses : 79270 4. Performance of Company (Amount in Rs. Thousands) Turnover (Total Income) : 19737 Total Expenditure : 310 Profit before tax : 19426 Profit after tax : 17221 Earnings per share in Rs. : Rs.4.55 Dividend rate (%) : 25% : The Company is a Loan 5. Generic names of three principal products/services of the Company and Investment Company

Schedule to Balance Sheet of a Non-Banking Financial Company (as required in terms of Paragraph 9BB of Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998) (Rs. in lacs) Particulars LIABILITIES SIDE : 1. Loans and advances availed by the NBFCs inclusive of Amount Amount interest accrued thereon but not paid: Outstanding overdue (a) Debentures : Secured Nil Nil : Unsecured Nil Nil (other than falling within the meaning of public deposits*) Nil Nil (b) Deferred Credits Nil Nil (c) Term Loans Nil Nil (d) Inter-corporate loans and borrowing Nil Nil (e) Commercial Paper Nil Nil (f) Public Deposits* Nil Nil (g) Other Loans (specify nature) Nil Nil * Please see Note 1 below 2. Break-up of (1)(f) above (Outstanding public deposits inclusive of interest accrued thereon but not paid): (a) In the form of Unsecured debentures Nil Nil (b) In the form of partly secured debentures Nil Nil i.e. debentures where there is a shortfall in the value of security (c) Other public deposits Nil Nil * Please see Note 1 below ASSETS SIDE : 3. Break-up of Loans and Advances including bills receivables Amount outstanding [other than those included in (4) below] : (a) Secured Nil (b) Unsecured i) Loans/Advances 202.67 ii) Inter Corporate Deposits 231.10 iii) Advance Payment of Taxes 1.74 4. Break up of Leased Assets and stock on hire and hypothecation loans counting towards EL/HP activities (i) Lease assets including lease rentals under sundry debtors : (a) Financial lease Nil (b) Operating lease Nil (ii) Stock on hire including hire charges under sundry debtors : (a) Assets on hire Nil (b) Repossessed Assets Nil (iii) Hypothecation loans counting towards EL/HP activities (a) Loans where assets have been repossessed Nil (b) Loans other than (a) above Nil 5. Break-up of Investments : Current Investments : 1. Quoted : (i) Shares : (a) Equity Nil (b) Preference Nil (ii) Debentures and Bonds Nil (iii) Units of mutual funds Nil (iv) Government Securities Nil (v) Others (please specify) Nil 2. Unquoted : (i) Shares : (a) Equity Nil (b) Preference Nil (ii) Debentures and Bonds Nil (iii) Units of mutual funds 87.47 (iv) Government Securities Nil (v) Others (Please specify) Nil

Long Term investments : 1. Quoted : (i) Share : (a) Equity 0.92 (b) Preference (ii) Debentures and Bonds Nil (iii) Units of mutual funds Nil (iv) Government Securities Nil (v) Others (Please specify) Nil 2. Unquoted : (i) Shares : (a) Equity 283.30 (b) Preference (ii) Debentures and Bonds Nil (iii) Units of mutual funds Nil (iv) Government Securities Nil (v) Others (Please specify) Nil 6. Borrower group-wise classification of all leased assets, stock-on-hire and loans and advances : Please see Note 2 below Category Amount net of provisions Secured Unsecured Total 1. Related Parties ** (a) Subsidiaries Nil Nil Nil (b) Companies in the same group : Loans Godrej Industries Ltd. Nil Nil Nil (c) Other related parties Inter Corporate Deposits Godrej Photo-Me Ltd. Nil Nil Nil 2. Other than related parties a) Advance Tax Payment Nil 1.74 1.74 Total Nil 1.74 1.74 7. Investor group-wise classification of all investments (current and long term) in shares and securities (both quoted and unquoted): Please see note 3 below Category Market Value/Break up or fair Book Value (Net value or NAV of Provisions) 1. Related Parties ** (a) Subsidiaries Nil Nil (b) Companies in the same group : Quoted Nil Nil Unquoted 4323.01 72.52 (c) Other related parties Nil Nil 2. Other than related parties Quoted : 1.77 0.92 Unquoted : 187.43 185.82 Total 4510.44 259.26 ** As per Accounting Standard of ICAI (Please see Note 3) # Start up Company hence fair value considered at face value. 8. Other information Particulars Amount (i) Gross Non-Performing Assets (a) Related parties Nil (b) Other than related parties Nil (ii) Net Non-Performing Assets (a) Related parties Nil (b) Other than related parties Nil (iii) Assets acquired in satisfaction of debt Nil

Notes : 1. As defined in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998. 2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998. 3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classified as long-term or current in column (5) above.

165

Godrej International Limited Directors’ Report The directors present their report and accounts for the year ended 31 March 2008. Principal activities and review of the business The company trades worldwide in vegetable oils. The commodity boom has continued and the company has been able to benefit from these conditions. The company’s assessment of market behaviour proved to be quite accurate and this resulted in record turnover and profits. Turnover for the year increased 63% at $100,139,390 while profits increased 124% to $ 1,360,464 Results and dividends The Company does not propsoe to distribute a dividend this year. During the year, the company undertook a Buy back of 250,000 ordinary shares of £1 at a price of US$ 10 per share. The shares bought back were cancelled. The outlook for the year 2008 continues to be favourable Future developments The directors aim to maintain the management policies which have resulted in the company’s substantial growth in recent years. They consider that the next year will show a further significant growth in sales. Directors The directors who served during the year and their intersts in the share capital of the company were as follows : £1 Ordinary shares 2008 2007 Adi B Godrej (Indian) 1 1 Nadir B Godrej (Indian) - - Aspi K Bardy (Indian) - Dorab E Mistry (British) - Andrew B Byers (British) (Appointed 28 February 2007) - Lynsey Elliott (British) (Appointed 28 February 2007) - -

Political and charitable donations The company made no political or chartiable contributions during the year. Directors’ responsibilities Company law requires the directors to prepare accounts for each financial year which give a true and fair view of the state of affairs of the company and of the profit or loss for that period. In preparing those accounts, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; and - prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for maintaining proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the accounts comply with the Companies Acts 1931 to 2004. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Auditors A resolution to reappoint Keith W Woods & Co LLC as auditors will be put to the members at the Annual General Meeting. This report was approved by the board on 16 May 2008. L Elliott ACCA Secretary

Date : May 16, 2008

Independent auditors’ report to the shareholders of Godrej International Limited We have audited the accounts of Godrej International Limited for the year ended 31 March 2008 which comprise pages 5 to 15. These accounts have been prepared under the historical cost convention and the accounting policies set out therein. Respective responsibilities of directors and auditors As described in the Statement of Directors’ Responsibilities the company’s directors are responsible for the preparation of the accounts in accordance with applicable law. In the absence of comparable accounting standards in the Isle of Man, the Directors have chosen to apply United Kingdom Accounting Standards where they do not conflict with Isle of Man Statute. Our responsibility is to audit the accounts in accordance with relevant legal and regulatory requirements together with our own professional ethical guidance. We report to you our opinion as to whether the accounts give a true and fair view and are properly prepared in accordance with the Companies Acts 1931 to 2004. We also report to you if, in our opinion, the Directors’ Report is not consistent with the accounts, if the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and transactions with the company is not disclosed. We read the Directors’ Report and consider the implications for our report if we become aware of any apparent misstatements within it. Basis of audit opinion We conducted our audit in accordance with United Kingdom Auditing Standards issued by the

Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the accounts, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the accounts are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the accounts. Opinion In our opinion the accounts give a true and fair view of the state of the company’s affairs as at 31 March 2008 and of its profit for the year then ended and have been properly prepared in accordance with the Companies Acts 1931 to 2004. Keith W Woods & Co LLC Chartered Certified Accountants

BALANCE SHEET AS AT 31 MARCH, 2008

PROFIT AND LOSS aCCOUNT FOR THE YEAR ENDED 31 MARCH, 2008

Notes Fixed assets Investments Current assets Debtors Cash at bank and in hand

3,055,000

2,207,993 2,263,178 4,471,171 (1,459,697)

Creditors: amounts falling due within one year Net current assets Total assets less current liabilities

Creditors: amounts falling due after more than one year

Capital and reserves Called up share capital Capital redemption reserve Profit and loss account A B Byers ACA Director Approved by the board on 16 May 2008

166

2,008 $ Rs. Lac

10 11 12 13

4,312,060

1,875

886 3,218,170 908 1,179,505 1,794 4,397,675 (586) (1,554,592)

1,421 513 1,934 (676)

3,011,474 6,066,474

1,208 2,434

2,843,083 7,155,143

1,258 3,133

6,066,474

2,434

7,155,156

3,133

3,805,361 2,261,113 6,066,474

1,527 907 2,434

4,209,327 2,945,829 7,155,156

1,830 1,303 3,133

D E Mistry Director

1,226

2,007 $ Rs. Lac

14 Douglas Street Peel Isle of Man 16 May 2008

Notes Turnover Cost of sales Gross profit Distribution costs Administrative expenses Other operating income Operating profit Exceptional items: Profit on the disposal of investments

3 3

2008 $ 100,139,390 (98,632,450) 1,506,940 (407,656) 1,099,284 182,240 182,240 1,281,524 129,404 (50,464) 1,380,464

Interest receivable Interest payable 4 Profit on ordinary activities before taxation Tax on profit on ordinary activities 5 Profit for the financial year 1,360,464 Dividends: ordinary dividend on equity 10 shares Retained profit for the financial 12 1,360,464 year Continuing operations None of the company's activities were acquired or discontinued during the above two financial years

2007 Rs. Lac $ 40,176 61,573,658 (39,571) (60,726,793) 605 846,865 (164) (165,480) (14,745) 441 666,640

Rs. Lac 26,772 (26,410) 362 (50) 312

73 73 514 52 (20) 546

666,640 15,807 (75,167) 607,280

312 7 (33) 286

546

607,280

286

546

607,280

286

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31 MARCH 2008 Notes Profit for the financial year Unrealised surplus on revaluation of properties Total recognised gains and losses related to the year Total recognised gains and losses since last accounts

2,008 $ Rs. Lac 1,360,464 546 1,360,464

546

1,360,464

546

2,007 $ Rs. Lac 607,280 286 607,280

NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2008 6

Investment in Subsidiary Undertaking $ Rs. Lac Cost At 1 April 2007 Additions Disposals

286

2,008 Rs. Lac

Operating profit

1,099,284

441

66,640

312

(Decrease)/Increase in debtors

1,010,177

405

(828,826)

(382)

(Decrease)/Increase in creditors

(330,827)

(133)

309,256

134

Net cash outflow from operating activities

1,778,834

713

147,070

Rs. Lac

Reconciliation of operating profit to net cash inflow from operating activities

Returns on investments and servicing of finance

1,778,834

714

147,070

78,940

(59,360)

(26)

1,439,300

577

3,297,074

1,323

87,710

(156,300)

(68)

3,297,074

1,323

(68,580)

(30)

Taxation Capital expenditure Equity dividends paid Management of liquid resources

Financing

(2,254,256)

(908)

54,744

1,032,818

415

(13,846)

(6)

Increase/(decrease) in cash

1,083,672

435

(13,845)

(6)

Increase in debt and lease financing

(235,743)

(95)

(54,744)

(24)

847,929

340

(68,588)

(30)

(Net debt ) / Net funds at 1 April

(44,239)

(18)

24,349

Net funds/(net debt) at 31 March

803,690

322

(44,239)

(19)

Change in net debt

Accounting policies Accounting Convention The accounts have been prepared under the historical cost convention and in accordance with applicable accounting standards. Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. All differences are taken to the profit and loss account. Turnover Turnover represents the invoiced value of goods supplied by the company, net of value added tax and trade discounts. Turnover is attributable to one continuing activity, the trading of vegetable oils. Exceptional items 2008 2007 $ Rs. Lac $ Rs. Lac Profit on disposal of investments 182,240 73 182,240 73 Interest payable 2008 2007 $ Rs. Lac $ Rs. Lac Bank loans and overdrafts Other loans

50464 50464

20 20

75,167 75167

33 33

Debtors Trade debtors Amount owed by group undertakings and undertakings in which the company has a participating in which Other debtors Prepayments and accrued income Amounts recoverable on long term contracts

Rs. Lac

3,055,000 1225.67 4,312,060 - (1,257,060)

1728 504.33

3,055,000 1225.67

2008 $ Rs. Lac 3,137,151 1,259 108,964 44 (1,043,534) 5,412 2,207,993

Bank loans and overdrafts Trade Creditors Amount owed by group undertakings and undertakings in which the company has a participating in which Other creditors Accruals and deferred income

(419) 2 886

Creditors: amounts falling due within one year

3,055,000 1225.67

Rs. Lac

1,191 5 1,420 2007

Rs. Lac

586 -

1,223,757 1,825 300,000

532 1 130

235 2 1,459,697

586

235 28,775 1,554,592

13 676

2008 $ -

Bank loans

10 Share capital

Rs. Lac -

2008 $ Rs. Lac

Authorised: Ordinary shares of ÂŁ1 each

4,000,000 4,000,000

2007 $ (13) (13)

Rs. Lac -

2007 $ Rs. Lac 4,000,000 4,000,000

1,605 1,605 2008 Rs. Lac

2,605,000 3,805,361

1,527

4,209,327

1,830

3,805,361

1,527 2008 Rs. Lac 1,689 (162) 1,527

4,209,327

1,830 2007 Rs. Lac 1,830 1,830

2007

Movement in share capital At 1 April Shares redeemed At 31 March

2,688,816 12,412 3,218,170

1,459,488 (28)

Creditors: amounts falling due after one year

2008 Allotted, called up and fully paid: Ordinary shares of ÂŁ1 2,355,000 each

2007 $ Rs. Lac 416,927 181 100,014 43

2008 $

NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2008 1

On 8 March 2004, the company Invested US$ 2,055,000 in equity shares of New Market Limited, a company incorporated in the isle of Man. This represente approximately 18% of the issued share capital of Newmarket Limited.

Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash in the period

Total

On 4 April 2001, the company invested US$1 million in 496,000 C Bay Systems Ltd (C Bay) 8% Series E Cumulative Convertible Redeemable Preferred Stock of US$ 0.1 per share at a price of US$ 0.2 per share. This representes approximately 6% of the issued share capital of C Bay. C Bay is incorporated in Delaware, U.S.A.

CASH FLOW STATEMENT Net cash outflow from operating activities

504.33 504.33

Other Investments $ Rs. Lac

On 11 December 1997 the company acquired the entire issued share capital (UD$507,060) of Godrej Global ME, a company incorporated in the United Arab Emirates on 1 November 1997. On 10 March 2003 the company invested a further sum of US$750,000 in the equity share capital of GGME. On 3rd October 2007, the company dispossed off its investment in Godrej Global ME for $ 1,439,300. Other investments 2008 2007 $ Rs. Lac $ Rs. Lac Unlisted investments 3,055,000 1,328 3,055,000 1,328 3,055,000 1,328 3,055,000 1,328

2,007

1,257,060 (1,257,060)

At 31 March 2008

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008 Notes

Investments

$ 4,209,327 (403,966) 3,805,361

1,739 1,739 2007 $ Rs. Lac

$ 4,209,327 4,209,327

Taxation The company qualifies as a Non Resident Company incorporated in the Isle of Man. Non Resident Companies do not suffer taxation in the Isle of Man.

167

NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2008 11 Capital redemption reserve At 1 April Shares Redeemed Transfer from the profit and loss account At 31 March 12 Profit and loss account At 1 April Retained Profit Transfer to capital redemption reserve At 31 March 13 Reconciliation of movement in shareholdersâ&#x20AC;&#x2122; funds At 1 April Profit for the financial yer Shares redeemed Net capital redemption reserve transfer (should be nil) At 31 March

2008 $ Rs. Lac 2,096,034 841 (2,096,034) (841) 2008 $ Rs. Lac 2,996,683 1,202 1,360,464 546 (2,096,034) (841) 2,261,113 907

2007 $ Rs. Lac 2007 $ Rs. Lac 2,338,549 1,017 607,280 286 2,945,829 1,303

2008 Rs. Lac 2,891 546 (162)

$ 6,547,876 607,280 -

2007 Rs. Lac 2,847 286 -

(4,192,068) (1,682) 3,970,440 1,593

7,155,156

3,133

$ 7,206,010 1,360,464 (403,966)

14 Gross cash flows $

2008 Rs. Lac

2007 $ Rs. Lac

Returns on investments and servicing of finance Interest received

129,404

15,807

Interest paid

(50,464)

(20)

(75,167)

(33)

78,940

(59,360)

(26)

1,439,300

577

1,439,300

577

Capital Expenditure Receipts from sale of investments Financing Redemption of share capital Loan advance

168

(2,500,000) (1,003)

235,744

54,744

(2,264,256)

(908)

54,744

15 Analysis of changes in net debt At 31 March 2007 $ Rs. Lac Cash at bank and in hand Debt due within 1 year Debt due within 1 year Total

Cash Flows $ Rs. Lac

Non-cash Changes $ Rs. Lac

At 31 March 2008 $ Rs. Lac

1,179,505

473.21

1,083,673

434.77

2,263,178

907.99

(1,223,757)

490.97

(235,731)

94.58

(1,459,488)

585.55

(13)

(44,239)

17.75

847,929

340.19

803,690

322.45

16 Ultimate Parent Company In April 2001 Godrej Soaps Limited, the owner of all the companyâ&#x20AC;&#x2122;s share capital, was demerged into two separate entities: Godrej Consumer Products Limited and Godrej Industries Limited. The assets and liabilities of Godrej Soaps Limited were divided between the two new companies. The entire share capital of Godrej International Limited is now held by Godrej Industries Limited. Godrej Industries Limited is currently listed on the Bombay Stock Exchange and the National Stock Exchange. The financial statements of Godrej Industries Limited are available from : The Secretary, Godrej Industries Limited, Eastern Express Highway, Vikhroli, Mumbai 400079, India.

DIRECTORS’ REPORT FOR THE YEAR ENDED ON MARCH 31, 2008 To the Members, Your Directors submit their Report along with the Audited Accounts of your Company for the year ended March 31, 2008. Operating Results Your Company’s performance during the year as compared with the previous year is summarized below: March 31, 2008 March 31, 2007 (Rs. Lacs) (Rs. Lacs) Total Income 3007.60 2995.53 Profit/(Loss) for the year 200.40 182.35 before extraordinary items (After tax) Profit/(Loss) After Extraordinary Items 265.41 182.35 Add: Balance brought Forward (1158.26) (1340.60) Deficit Carried Forward (892.85) (1158.26) Operations Review : Total income of your Company has gone up from Rs. 2996 lacs in the previous year to Rs. 3008 lacs in the current year. During the year the Company has closed its bulk chemical business to concentrate on its service business. During the year your Company migrated and started company managed service centers to enhance the quality of services to its customers. This transition had temporary set back on company’s top line however would have phenomenal long-term advantage to the Company. Company is looking at handling about 50% of its business through its own service center in 2009. During the year revenue from services has gone up from Rs. 2377 lacs in previous year to Rs. 2792 lacs in current year which is a growth of 17%. The Company’s profit after tax of Rs. 265 lacs for the year as compared to Rs. 182 lacs in the previous year shows an impressive growth of 46%. The Company has invested substantially in manpower resources which is critical for the success for service industry. The Company expects good revenue in the coming year from new customer acquisition and deepening relation with current ones. Dividend : In view of the accumulated losses, your Directors do not recommend any dividend for the year. Directors : There are no changes in the Directorship in the Company. In accordance with Article 150 of the Articles of Association of your Company, one of the Directors of the Company, Mr. A.B. Godrej retires by rotation in the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Auditors : You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors, M/s Kalyaniwalla & Mistry (KMA) & Chartered Accountants, are eligible for reappointment. Audit Committee : The Audit Committee which was appointed pursuant to the provision of Sec 292A of the Companies Act, 1956 has reviewed the accounts for the year ended Mar 31st 2008. Note on Auditors Report : Erosion of Net worth (Note 4(i) of Auditors report and (note 10 of Annexure to Auditors report) Though the accumulated losses of the Company exceed its paid up capital, the shareholders are very supportive of the Pest management business and are committed to infuse funds as and when required to for working capital and other requirements. Fixed Assets Register (Note 1 (b) of Annexure to Auditors report) Your Company is in process of conducting physical verifications of fixed assets. Repayment of Loans from Group Companies (Note 3(e) of Annexure to Auditors report) Due to the accumulated losses, the repayment of the loans of the group companies is not being made. Your Company is regular in repayment of loans taken from other Corporate in the form of Inter Corporate Deposits.

Directors Responsibility Statement : Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confirm: a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same; b) that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; 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. Conservation of Energy, Technology Absorption: The information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo, required under Section 217(1)(e) of the Companies Act,1956, read with the Company’s (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 has not been given, since such requirement is not applicable to the Company. Particulars of Employees: Statement under Section 217(2A) of the Companies Act, 1956 read with the Company’s (Particulars of Employees) Rules, 1975. A) Persons employed for a part of the financial year under review and each of whom was in receipt of remuneration for that part which, in the aggregate, was not less than Rs. 2,00,000/- per month. Sr. No.

Name

Designation

Gross Remuneration (Rs. ‘000)

Qualification

Years of Experience in GHCL

Date of Commencement of employment

Age (Years)

Particulars of previous Employment

Previous Experience (Years)

Vikas Hajela

Chief Operating Officer

3,122

PGDMM

18.01.05

GSLL

S. Anand

Exe. Vice President

4,458

CA, ICWAI

21.01.04

GSLL

Note: The Gross remuneration include the Gratuity and Leave encashment for the current year on accrual basis. Foreign Exchange earnings and Outgo: Expenditure in Foreign Currency Current Year PreviousYear March 2008 March 2007 (Rs. Lacs) (Rs. Lacs) License Fees Nil Nil Training Expenses Nil Nil Travelling Expenses Nil Nil Nil 16.35 Consultancy Charges Additional Information The additional information as required to be given under the Companies Act, 1956 has been laid out in the schedules attached to and forming part of the Balance Sheet and Profit and Loss Account, including the Notes to Accounts which are self explanatory Acknowledgement Your Board wishes to thank all its members, Bankers, Franchisees, Employees, Suppliers and customers for their continued support and help for the growth of the Company. For and on behalf of the Board of Directors A.B. Godrej Chairman Mumbai : April 9, 2008

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ HICARE LIMITED 1.

3. 4.

We have audited the attached Balance Sheet of GODREJ HICARE LIMITED, as at March 31, 2008 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in para (3) above, we report that: i) The accumulated losses of the Company as at March 31, 2008 exceed its paid up capital resulting in the erosion of its net worth. The accounts for the year have been prepared on the ‘Going Concern’ basis on the understanding that finance will continue to be available to the Company for working capital requirements from the promoters. ii) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. iii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of these books. iv) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with, by this report are in agreement with the books of account.

In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956. vi) In our opinion and to the best of our information and according to the explanations given to us, subject to paragraph (i) above, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view: i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2008; ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. 5. On the basis of the written representations received from the Directors as on March 31, 2008, and taken on record by the Board of Directors, we report that, none of the Directors are disqualified as on March 31, 2008 from being appointed as a Director in terms of Clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Membership No. 35646 Place: Mumbai Dated: April 9, 2008

169

Annexure to the Auditors’ Report

Referred to in paragraph (3) of our report of even date. 1. (a) As per the information and explanations given to us, the Company is in the process of updating its records showing full particulars, including quantitative details and situation of fixed assets. (b) The Company has not conducted a physical verification of fixed assets during the year, in view of which we are unable to comment on discrepancies, if any. (c) The disposal of fixed assets during the year does not affect the going concern assumption. 2. (a) The management has conducted physical verification of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification. 3. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. (b) Consequently, the question of commenting on the rate of interest and the other terms and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and interest and reasonable steps taken for recovery of principal and interest due does not arise (c) The Company has taken unsecured loans of Rs. 97,810,000/- from five companies listed in the register maintained under Section 301 of the Companies Act, 1956. (d) In case of these loans, interest has been waived by the respective companies. In our opinion, the other terms and conditions of these loans are not prima facie prejudicial to the interests of the Company. (e) The payment of principal for above amounts has not been regular. 4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls. 5. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. (b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to the prevailing market prices at the relevant time. 6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from public and the provisions of Section 58A, 58AA or any other provision of the Companies Act, 1956, read with the rules framed there under are not applicable. 7. In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business. 8. The maintenance of cost records has not been prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, in respect of the Company’s products. 9. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally

BALANCE SHEET AS AT MARCH 31, 2008 Schedule SOURCES OF FUNDS : 1. SHAREHOLDERS FUNDS Share Capital 1 2. LOAN FUNDS Secured Loans 2 Unsecured Loans 3 APPLICATION OF FUNDS : 1. FIXED ASSETS 4 Gross Block Less : Depreciation Net Block 2. INVESTMENTS 5 3. DEFERRED TAX ASSET 4. CURRENT ASSETS, LOANS AND ADVANCES Inventory 6 Sundry Debtors 7 Cash and Bank Balances 8 Loans and Advances 9 LESS : CURRENT LIABILITIES AND PROVISIONS Current liabilities 10 Provisions 11 NET CURRENT ASSETS 5. PROFIT and LOSS ACCOUNT NOTES TO ACCOUNTS 17 The Schedules referred to above form an integral part of the Balance Sheet

Previous Year Rs.

56,200,000

29,759,249 143,410,000 229,369,249

19,114,088 134,310,000 209,624,088

32,908,388 11,223,829 21,684,559 68,905 3,530,000

20,453,140 8,230,125 12,223,015 68,905 1,535,000

30,780,742 87,290,735 16,361,057 98,631,633 233,064,166

26,864,719 77,064,818 11,654,782 81,565,959 197,150,278

115,286,190 2,977,270 118,263,460 114,800,706 89,285,079 229,369,249

115,403,281 1,775,725 117,179,006 79,971,272 115,825,895 209,624,088

Signatures to Balance Sheet and Schedules 1 to 11 and 17

Period to which the amount relates 2000-2001 2000-2001

Forum where the dispute is pending Maharashtra Sales Tax Tribunal Maharashtra Sales Tax Tribunal

10. The Company’s accumulated losses at the end of the financial year are in excess of fifty percent of its net worth. There are no cash losses in the current and the immediately preceding financial year. 11. According to the information and explanations given to us and based on the documents and records produced before us, there are no dues to banks, financial institutions or debenture holders. 12. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies. 14. The Company does not deal in shares, securities, debentures and other investments. 15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions. 16. The Company did not have any term loans during the year. 17. According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investment. 18. The Company has not made a preferential allotment of shares during the year to parties covered in the register maintained under Section 301 of the Companies Act, 1956. 19. The Company did not issue any debentures during the year. 20. The Company has not raised any money through a public issue during the year. 21. Based on the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year. For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants ERMIN K. IRANI Partner Membership No. 35646 Place: Mumbai Dated: April 9, 2008

Schedule Current Year Rs. INCOME : Gross Sales 13,656,651 Less : Excise Duty - 13,656,651 Net Sales Service Income 279,150,481 (Tax Deducted at Source Rs. 1,147,264/-, Previous year - Rs. 632,558) Other Income 12 7,953,129 300,760,261 EXPENDITURE : Raw Materials Consumed 13 41,927,361 Purchase of Traded Goods 10,746,793 Inventory Change 14 (4,054,977) Expenses 15 228,421,287 Interest and Finance Expense 16 1,219,044 3,316,818 Depreciation 281,576,326 Profit for the Year before Extra Ordinary Item 19,183,935 6,500,000 Remission of Deposits Profit for the Year after Extra Ordinary Item 25,683,935 Less : Current Tax - MAT 3,225,000 Fringe Benefit Tax 1,138,119 MAT Credit Entitlement (3,225,000) Deferred Tax (1,995,000) Profit for the Year after Tax 26,540,816 Deficit Brought Forward (115,825,895) Deficit carried to Balance Sheet (89,285,079) Basic/Diluted Earnings per Share before Extraordinary Items (Refer Note 15) 3.57 Basic/Diluted Earnings per Share after Extraordinary Items (Refer Note 15) 4.72 NOTES TO ACCOUNTS 17 The Schedules referred to above form an integral part of the Profit and Loss Account

Previous Year Rs. 50,485,610 1,908,583 48,577,027 237,733,236 13,242,305 299,552,568 61,163,839 9,862,569 (954,916) 205,971,039 2,257,479 2,219,041 280,519,050 19,033,518 19,033,518 2,060,000 675,000 (1,936,000) 18,234,518 (134,060,413) (115,825,895)

Signatures to Profit & Loss Account Schedules 12 to 17

As per our Report of even date For and on behalf of

KALYANIWALLA & MISTRY Chartered Accountants

A.B.GODREJ Chairman

ERMIN K. IRANI Partner

RAMESH IYER Company Secretary

170

Name of the Statute Nature Amount of Dues (Rs.) Bombay Sales Tax Act, 1959 Sales Tax 700,000 Central Sales Tax Act, 1956 Central Sales Tax 5,000,000

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008 Current Year Rs.

As per our Report of even date. For and on behalf of

Mumbai : April 9, 2008

regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Service Tax, Cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues payable in respect of the above as at March 31, 2008 for a period of more than six months from the date they became payable. (b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Income Tax, Customs Duty, Service tax, Wealth Tax, Excise Duty or cess on account of any dispute, other than the following:

A MAHENDRAN Managing Director

KALYANIWALLA & MISTRY Chartered Accountants

A.B.GODREJ Chairman

ERMIN K. IRANI Partner

RAMESH IYER Company Secretary

Mumbai : April 9, 2008

A MAHENDRAN Managing Director

3.24 3.24

SCHEDULES forming part of the balance sheet as at MARCH 31, 2008 Current Year Previous Year Rupees Rupees SCHEDULE 1 : SHARE CAPITAL Authorised: 8000000 Equity Shares of Rs.10/- each 80000000 80000000 Issued and Subscribed 7900000 Equity Shares of Rs. 10/- each 79000000 79000000 Paid-up 4100000 Equity Shares of Rs. 10/- each fully paid 41000000 41000000 15200000 15200000 3800000 Equity Shares of Rs. 10/- each, Rs. 4/- paid. 56200000 56200000 Of the above: 6647100 shares are held by Godrej Industries Ltd., the Holding Company

SCHEDULE 2 : SECURED LOANS Cash Credit (Secured against hypothecation of stock & book debts)

Current Year Previous Year Rupees Rupees

SCHEDULE 3 : UNSECURED LOANS Intercorporate deposits (due within a year, or at call)

SCHEDULE 4 : FIXED ASSETS

29759249

19114088

29759249

19114088

143410000

134310000

143410000

134310000

(Amount in Rs.)

ASSETS As at April 1, 2007

GROSS BLOCK Additions

Deductions

As at March 31, 2008

Upto April 1, 2007

DEPRECIATION For the Year

Deductions

Upto March 31, 2008

NET BLOCK As at As at March 31, 2008 Marcb 31, 2007

Tangibles -

2186693

182224

2004469

82400

97800

180200

22364

6912

29276

150924

60036

Improvements to Lease Hold Premises Factory Building

5956306

2649002

826570

7778738

3868779

587714

180697

4275796

3502942

2087527

Office Equipment

226868

3106798

108027

3225639

51289

289643

28190

312742

2912897

175578

Furniture and Fixture

610253

3687807

152271

4145789

91121

416015

43625

463511

3682278

519132

Spray and Service Kit

59000

1961559

186128

261307

1886380

710471

477974

70602

1117843

768537

1251089

495694

1799195

2294889

40426

111323

151749

2143140

455268 6129863

Plant and Machinery

Computer Hardware Vehicles Intangibles Trade Marks

9000000

2870137

900000

3770137

5229863

Computer Software

2061060

90000

2151060

516538

345013

861551

1289509

1544522

20453140

13803423

1348175

32908388

8230125

3316818

323114

11223829

21684559

12223015

17353167

3099973

20453140

6011084

2219041

8230125

12223015

TOTAL Previous Year Total

Current Year Rupees SCHEDULE 5 : INVESTMENTS LONG TERM In Mutual Funds, Unquoted 43.19 units of Templeton India Treasury Management Account Regular Plan - Growth Net Asset Value SCHEDULE 6: INVENTORY Raw material Packing Material Finished Goods Service Stock Photographic equipment Less : Provision for Stock obsolesence

SCHEDULE 7: SUNDRY DEBTORS (Unsecured and considered good unless otherwise stated) Due for more than six months Considered good Considered doubtful Other debts Considered good Less : Provision for doubtful debts SCHEDULE 8: CASH AND BANK BALANCES Cash on hand Balances with scheduled banks In Current Accounts In Fixed Deposit Account In Margin Deposit Account

SCHEDULE 9 : LOANS AND ADVANCES (Unsecured and considered good unless otherwise stated) Advances recoverable in cash or in kind or for value to be received Advance to Suppliers Deposits Advance Tax and Tax Deducted at Source (Net of Provision for Taxation Rs. 7903119 and MAT Credit Receivable Rs. 3225000/-, Previous Year Rs. 3540000/-)

814057 407028

Previous Year Rupees

68905 68905 86705

68905 68905 80438

1765802 586977 9773825 18247108

385444 284863 5718849 20068533 814057 407028 407029 26864719

407029 30780742

45497236 5495884 50993120

31400811 2718884 34119695

41793499 92786619 5495884 87290735

45664007 79783702 2718884

09331

01610

7800142 4644420 3907164 16361057

6148343 4263620 1241209 11654782

77064818

77946881

71711757

9416884 7328667 3939201

3480385 4610669 1763148

98631633

11342083

Current Year Rupees SCHEDULE 10 : CURRENT LIABILITIES Current Liabilities: Sundry Creditors (Refer Note 4) 11741984 Investor Education and Protection Fund - Security Deposits 12149661 Advance from Customers 56859341 Other Liabilities 34241034 Interest accrued but not due 294170

Previous Year Rupees

115286190

115403281

SCHEDULE 11 : PROVISIONS Leave Encashment

2977270 2977270

1775725 1775725

26965355 13474661 40630979 34029889 302397

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008 SCHEDULE 12 : OTHER INCOME Publicity and Information Support Sundry Credit balance written back Technical Know - How Fees Miscellaneous Income

4719998 - 3000000 233131 7953129

10988057 554063 1700185 13242305

SCHEDULE 13 : MATERIALS a) Raw Material and Packing Material Consumed Opening stock Add : Purchases during the year

670308 6155644

4853009 17605232

Less : Closing stocks

6825952 2352780

22458241 670308

b) Service Stock Consumed

4473172 37454189

21787933 39375906

41927361

61163839

407029 5718849

814057 4356905

6125878 Less : Closing Stock 407029 Photographic equipments Finished goods 9773826

5170962

SCHEDULE 14 : INVENTORY CHANGE Opening stock Photographic equipments Finished goods

407029 5718849

10180855

6125878

(4054977)

(954916)

81565959

171

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2008 Current Year Rupees SCHEDULE 15 : EXPENSES Salaries, Bonus and Allowances 60833525 Contribution to Provident Fund and Other Funds 4547265 Staff Welfare Expenses 1012129 Processing Charges 791596 Electricity Expenses 762849 Rent, Rates and Taxes 9180409 Repairs and Maintenance Machinery and Equipment 19345 Others 338223 357568 Insurance 637752 Freight and Transportation Expenses 3499185 Service Center Expenses 69365112 Advertising, Publicity and Sales Promotion Expenses 43276854 Discount 16990 Travelling and Conveyance 9178727 Legal and Professional Charges 5514019 Provision for Doubtful debts 2777000 Customer Settlememts - Postage, Telephone and Stationary 6201688 Fixed Asset written off due to fire (Net off Insurance claim received Rs. 330710/-) 379187 IT Expenses 3365765 General Expenses 6723667 228421287 SCHEDULE 16 : INTEREST AND FINANCE EXPENSES Interest Paid - Bank - Inter Corporate deposits - Others Other Financial Charges Less : Interest Received - Bank Deposits - Others (Tax deducted at source Rs.536,658/-, Previous year Rs. 449,499/-)

Previous Year Rupees 37198224 2178292 477423 2318094 481151 4445016 46596 170671 217267 601890 4226884 68244802 58264824 4427575 6384052 6453210 2339283 1210153 3341253 1752748 1307898 205870039

598120 6052999 1305237 7956356 1432284 9388640

4200 1878888 1190067 3073155 1334072 4407227

536233 7633363 8169596

207387 1942361 2149748

1219044

2257479

SCHEDULE 17 : Notes to Accounts 1. Significant Accounting Policies a) Accounting Conventions The accounts have been prepared on historical cost convention. The Company follows mercantile system of accounting and recognises income and expenditure on accrual basis. b) Fixed Assets Fixed assets have been stated at cost and include incidental and/or installation/ development expenses incurred in putting the asset to use and interest on borrowing incurred during the construction period. Pre-operative expenses for major projects are also capitalised, where appropriate. c) Depreciation/Amortization 1) Spray and Service Kits and Vehicles : On Straight Line Method basis at the rates prescribed by Schedule XIV to the Companies Act, 1956. 2) Computers and Other Assets: On Written down Value basis at the rates prescribed by Schedule XIV to the Companies Act, 1956. 3) Improvements to lease hold premises are amortized over a period of 5 years. 4) Following tangible assets are amortized as follows: Asset Type Period (a) Trademarks 10 years (b) Computer Software 6 years d) Impairment Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized wherever carrying amount exceeds the recoverable amount. e) Inventories Raw materials and Service Stock are valued at weighted average cost. Finished goods are valued at lower of cost and net realisable value.These costs include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Stores and spares are valued at weighted average cost. f) Employee Benefits Short-term Employee Benefits All employees benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries and wages, bonus etc. are recognised at actual amounts due in the period in which the employee renders the related sevice. Performance incentives are recognised only when its declared and is due to employee. Post employment Benefits Defined Contribution Plan Payments made to defined contribution plans such as Providend Fund are charged to profit and loss account as they fall due.

172

Defined Benefit Plans The Cost of providing benefits i.e. gratuity is determened using the projected Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Acturial gains and losses are recognised immidiately in the Profit & Loss Account The Fair Value of the plan assets is reduced from the gross obligation under the defined benefit plan, to recognise the obligation on net basis. Past service cost is recognised as expense on straight line basis over the average period until the benefits becomes vested. Other long-term employee benefits Other long-term employee benefits viz. leave encashment is recognised as an expense in the profit and loss account as, and when they accrue. The Company determines the liability using the Projected Unit Credit Method, with acturial valuations carried out as at the balance sheet date. Actuarial Gain and losses in respect such benefis are charged to the profit and loss account. g) Research and Development Revenue expenditure on Research and Development is charged to Profit and Loss Account of the year in which it is incurred. Capital expenditure incurred during the year on Research and Development is shown as addition to Fixed Assets. h) Revenue Recognition Revenue from Pest Management services is recognized as and when the services are rendered. Sales are net of returns, rebates, sales tax, etc. i) Foreign Exchange Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains/losses are recognised in the Profit and Loss Account. j) Earnings Per Share The basic earning per share is computed using the weighted average number of common shares outstanding during the period. Diluted earning per share is computed using the weighted average number of the common and dilutive common equivalent shares outstanding during the period except where the results would be anti dilutive. 2. Contingent Liabilities a) Claims against company not acknowledged as debts Current Year Previous Year i) Sales Tax demand for Financial Year 2000-01 700,000 for which the Company is in appeal ii) Central Sales Tax demand for Financial Year 5,000,000 2000-01 for which the Company is in appeal i) Customer Claims 17,625,000 18,318,000 b) Bank Guarantee given by the Company amounting to Rs. 3907164 (Previous year Rs. 1241209) 3. Capital Commitments The estimated value of contracts remaining to be executed on capital account to the extent not provided for is Rs. 897983 (Previous Year Rs. 3208634) 4. Micro, Small and Medium Enterprise The Company is in the process of compiling relevant information from its supplier about their coverage under the Micro, Small and Medium Enterprises Development Act, 2006. As the Company has not received any intimation from its suppliers as on date regarding their status under the above said Act, no disclosure has been made. 5. The Company has not provided for interest for the year on certain Inter Corporate Deposits received, as the same has been waived by the concerned companies in view of the financial position of the Company. 6. Expenditure in Foreign Currency Current Year Previous Year Consultancy Charges Nil 1635556 7. Accounting for Leases The lease rentals in respect of office and factory space charged during the period and maximum obligations on non-cancellable operating leases payable as per the rentals stated in the lease agreement are given in accordance with the Accounting Standard (AS-19) on “Leases” issued by the Institute of Chartered Accountants of India. (Amounts in Rupees)

Lease Rentals paid during the year

b) − − −

Future Lease Obligations Due within one year of the Balance Sheet date Due between one year and five years Due after five years

Current Year

Previous Year

6056715

1777514

6,672,263 4,737,899 -

2051984 3704898 -

Item

Units

Current Year Value Quantity (Rs.)

Inventories of Finished goods Traded goods Print Leader Nos. Imager Nos. Insecticides

Fly Catcher Manufactured goods Insecticides

3 5

Ltrs. Nos. Kgs. Nos.

313 100 16 4,429

Ltrs. Kgs.

2,521 11,064

176,143 230,886 407,029 173,078 32,011 17,243 8,420,138 9,049,500

Previous Year Value Quantity (Rs.)

3 5 367 100 814

176,143 230,886 407,029 216,038 32,012 3,872,400 4,527,479

16. Related Party disclosure as required by AS - 18 â&#x20AC;&#x153;Related Party Disclosuresâ&#x20AC;? are given below: Relationships (i) Shareholders (the Godrej Group shareholding) in the Company - Godrej Industries Limited (GIL) - 84.1% - GIL is a subsidiary of Godrej & Boyce (Mfg.) Co. Limited, the ultimate holding co. (ii) Other related parties in the Godrej Group where common control exist. Godrej Agrovet Ltd. Godrej Sara Lee Ltd. Godrej Properties Ltd. Godrej Hershey Food & Beverages Ltd. Godrej Consumer Products Ltd. (iii) Key Management Personnel Mr. A. Mahendran (Managing Director) The following transactions were carried out with the related parties in the ordinary course of business: Details relating to parties referred to in items (i) and (ii) above:

1,078,534 52,820 1,131,354 10,180,854

2,759 24,142

Quantity

Value (Rs.)

Quantity

Value (Rs.)

(i)

(ii)

Nos. Kgs. Ltrs.

1,975 400 674

8,114,239 519,232 237,597

316 1,774 13,058

2,258,240 527,028 5,852,907

Purchase of Fixed Assets

2,023,965 (403,600)

NIL (NIL)

Sales and Other Income

1,021,595 (266,568)

202,857 (774,438)

4,638,075 (2,400,342)

Ltrs. Kgs.

16,018 46,172

4,457,783 327,800 13,656,651

83,086 130,400

38,581,541 1,357,310 48,577,027

Purchases (net of returns)

11,442 (NIL)

23,995 (NIL)

117,133 (NIL)

4 Expenses charged by other Companies

94,002 (228)

4,288,886 (1,699574)

1,935,869 (1,284,333)

Quantity

Value (Rs.)

Quantity

Value (Rs.)

5 Expenses charged to other Companies

114,639 (NIL)

NIL (NIL)

74,117 (49,486)

Ltrs Kgs. Nos.

620 435 5,590

130,194 357,062 10,259,537 10,746,793

12,058 1,524 1,130

4,366,993 109,696 5,385,880 9,862,569

6 Sundry Deposit with other Companies

NIL (1,450)

NIL (355,500)

NIL (6,000)

1,968,609 (183,020)

(189,600) (423,926)

8,831,485 (2,314,375)

11. Raw Material Consumed Item Units

Quantity

Value (Rs.)

Quantity

Value (Rs.)

41,734

4,160,069 37,454,189 313,103 41,927,361

140,167

20,276,018 39,375,906 1,511,916 61,163,839

Total 9.

Sales (Net of Excise duty) Item Units Traded goods Fly Catcher Insecticides Manufactured goods Insecticides Total

10. Purchases for Resale Item Units Insecticides Fly Catcher Total

Basic Chemicals Service Stock Others

1,185,064 413,335 1,598,399 6,125,878

12. Value of consumption of Raw Materials, Spares and Consumables Item % Value (Rs.) % Value (Rs.) Raw Materials Indiginious 91 38,260,390 73 44,682,320 Imported (including 9 3,666,971 27 16,481,519 custom duty) 41,927,361 61,163,839 13. Installed Capacity and actual production Item Units Installed Capacity Production Current Previous Current Previous Year Year Year Year Insecticides Ltrs. 240,000 240,000 4,755 43,950 Insectisides (Processed Kgs. 33,094 Outside) Ltrs. 11,025 32,535 Total 240,000 240,000 48,874 43,950

Insecticide Fly Catcher Total

Kgs Nos.

Quantity

Value (Rs.)

Quantity

Value (Rs.)

30,760 5,100

4,053,547 10,322,281 14,375,828

57,300 1,130

15,375,964 5,385,880 20,761,844

15. Earning Per Share

Godrej Group Other Related Shareholders parties Ultimate Holding in the Holding Co. Co. Godrej Group

7 Outstanding Receivables, (net of Payables) Significant Related Party Transactions

Kgs. Kgs. Nos. Total

14. CIF Value of Imports Item Units

Sr. Particulars No.

Particulars Profit after tax as per profit and loss account before Extraordinary Income. Rs. Profit after tax as per Profit and Loss account after Extraordinary Income Rs. Weighted average number of equity shares of Rs. 10 each Basic/Diluted Earnings Per Share before Extraordinary Income Rs. Basic/Diluted Earnings Per Share after Extraordinary Income Rs.

Current Year

Previous Year

20,040,816

18,234,518

26,540,816

18,234,518

5,620,000

3.57

3.24

4.72

3.24

a) Sales and Other Income Godrej Agrovet Ltd. Godrej Sara Lee Ltd. Godrej Properties Ltd. Godrej Consumer Products Ltd Godrej Hersheys Foods & Beverages Ltd.

b) Purchases (Net of Returns) Godrej Sara Lee Ltd.

c) Expenses charged by other Companies Godrej Agrovet Ltd. Godrej Hersheys Food & Beverages Ltd. Godrej Sara Lee Ltd. d) Expenses charged to Godrej Agrovet Ltd. other Companies Godrej Hersheys Food & Beverages Ltd. Godrej Sara Lee Ltd. e)

Outstanding Receivables Godrej Agrovet Ltd. (Net of Payables)

Godrej Sara Lee Ltd.

Godrej Properties Ltd.

Godrej Hersheys Food & Beverages Ltd. Godrej Consumer Products Ltd. Note : Figures in Italics represents previous year figures.

325,053 (457,173) 3,378,300 (487,347) 183,266 (1,455,822) 101,900 (NIL) 649,556 (NIL) 117,133 (NIL) 49,569 (NIL) 678,786 (1,227,467) 1,207,514 (56,867) 2,054 (NIL) 72,063 (8,686) NIL (40,800) 72,957 (NIL) 4,133,677 (723,827) 4,020,222 (1,441,559) 463,321 (NIL) 141,308 (NIL)

173

17. Deferred Tax The Tax effects of significant temporary differences that resulted in deferred tax assets and liabilities are: Current Year Previous Year Provision for Stock - 137,000 Provision for Doubtful debts 1,868,051 787,000 Others 1,662,382 611,000 Deferred Tax Asset/(Liability) 3,530,433 1,535,000 18. Auditors Remuneration Current Year Previous Year Statutory Audit 134,832 134,688 Audit under other Statutes 33,708 33,672 Total 168,540 168,360 19. The amount of exchange difference included in the Profit and Loss Account, under the related heads of expenses/(income), is Rs. (232,778/-) (Previous year expense Rs. 57,419). 20. The Company is engaged in the business of rendering pest management services and sale of related insecticides which is its only primary business segment. The Company operates in economic environments which are subject to same risks and returns and hence no disclosure is required under AS 17 - Accounting Standard on Segment Reporting. 21. Disclosure under AS –15 (Revised 2005) Employee Benefits : Defined Contribution plans : Contributions to Defined Contribution Plan, recognized as expense for the year are as under : Employer’s Contribution to Provident Fund Rs.1,621,659/ Defined Benefit Plan: Gratuity Change in present value of obligation Liability at the beginning of the period 2,543,360 Interest cost 203,469 Current Service Cost 440,765 Benefit Paid (1,771,644) Actuarial (gain)/loss on obligation 1,710,527 Liability at the end of the year 3,126,477 Change in Plan Asset Fair value of Plan Assets as the beginning of the period 2,507,907 Expected Return on Plan Asset 200,633 Contributions 476,686 Benefit Paid (1,771,644) Actuarial gain/(loss) on obligation 8,678 Fair Value of Plan Assets at the end of the Period 1,422,260 Total Actuarial Gain/(Loss) to be recognized (1,701 848) Actual Return on Plan Assets Expected Return on Plan Assets 200,633 Actuarial gain/(loss) on Plan Assets 8,678 Actual Return on Plan Assets 209,311 Amount recognised in the Balance sheet Liability at the end of the period 3,126,477 Fair value of Plan Assets at the end of the Period 1,422,260 Difference 1,704,217 Amount Recognized in the Balance Sheet 1,704,217 Expenses Recognized in the Income Statement Current Service cost 440,765 Interest Cost 203,469 Expected Return on Plan Assets (200,633) Net Actuarial (gain)/ loss to be recognized 1,701,848 Expense recognized in P&L 2,145,450 Balance Sheet Reconciliation Opening net Liability 35,453 Expense as above 2,145,450 Employers Contribution paid (476,686) Closing net Liability 1,704,217 Assumption used in accounting for the gratuity plan Discount Rate 8.00 % Salary escalation rate 5.00 % Expected Rate of Return on Plan Assets 8.00 % General Descriptions of significant defined plans Gratuity Plan Gratuity is payable to all eligible employees on retirement, death or on separation/ termination in terms of the Payment of Gratuity Act or as per the Company’s policy which ever is beneficial to the employees. 22. Prior period financial statements have been audited by a firm of Chartered Accountants other than Kalyaniwalla & Mistry. The opening balances are being taken as per the previous year’s accounts, which have been regrouped and reclassified wherever necessary to conform to the current year’s presentation. 23. Information required under Schedule VI to the Companies Act 1956, have been given to the extent applicable.

174

Cash Flow Statement For the Year Ended March 31, 2008 A.

Cash Flow from Operating Activities : Profit for the Year before Extra Ordinary Item Adjustments for : Depreciation Interest expense Interest Income Fixed Asset written off due to fire Operating Profit/(Loss) before working capital changes Adjustments for : (Increase)/Decrease Inventories (Increase)/Decrease Trade and Other receivables Increase/(Decerase) Trade and Other payables Direct and Fringe Benefit Taxes paid Net Cash Flow from Operating activities Cash Flow from Investing Activities : Purchase of Assets Insurance Claim Received for Asset Lost due to fire Interest Income Net Cash used in investing activities Cash Flow from Financing Activities : Increase/(Decrease) in Cash CreditsTerm Loans Increase/(Decrease) in Inter Corporate Deposits Interest paid Net Cash from financing activities Net Increase in Cash and Cash Equivalents Add : Cash and Cash equivalents (Opening Balance) Cash and Cash equivalents (Closing Balance)

Current Year Rs.

Previous Year Rs.

19,183,935

19,033,518

3,316,818 9,388,640 379,187 32,268,580

2,219,041 4,407,227 (2,149,748) 23,510,037

(3,916,024) (25,115,538) 1,092,684 4,329,702 (3,314,172) 1,015,530

(4,587,767) (78,120,422) 47,485,979 (11,712,173) (3,609,154) (15,321,327)

(13,803,423) 645,874 (13,157,549)

(3,099,973) 2,149,748 (950,225)

10,645,161 15,600,000 (9,396,867) 16,848,294 4,706,274 11,654,782 16,361,057

19,114,088 (5,000,000) (4,104,830) 10,009,258 (6,262,294) 17,917,076 11,654,782

Notes 1. Cash flow statement has been prepared under the Indirect method as set out in the acounting standsrds AS-3 on Cash Flow Statement as present cash flows by operating, investing and financing activities. 2. Previous year figures are regrouped/restated whereever necessary to confirm to this year’s classification. KALYANIWALLA & MISTRY A. B. GODREJ A. MAHENDRAN Chartered Accountants Chairman Managing Director ERMIN K. IRANI RAMESH IYER Partner Company Secretary BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE 1. Registration details Registration No. : U29294MH1993PTC072222 State Code : 11 Balance Sheet Date : March 31,2008 2.

Capital raised during the year Public Issue Rights Issue Bonus Issue Private Placement

3. Position of mobilisation and deployment of funds Total Liabilities Total Assets Sources of funds Paid up Capital Reserves & Surplus Secured Loans Unsecured Loans Deferred Tax Liability Application of funds Net Fixed Assets Investments Deferred Tax Asset Net Current Assets Miscellaneous Expenditure Accumulated Losses 4.

Performance of Company Turnover (Total Income) Total Expenditure Profit/(Loss) before tax Profit/(Loss) after tax Earnings per share in Rs. Dividend rate (%)

: : : :

: :

347,632,709 347,632,709

: : : : :

56,200,000 29,759,249 143,410,000 -

: : : : : :

21,684,559 68,905 3,530,000 114,800,706 89,285,079

: : : : : :

300,760,261 281,576,326 25,683,935 26,540,816 4.72 -

5. Generic names of three principal products/services of the Company Item Code No. Nil Product Description Pest Control Services Item Code No. 3808.1* Product Description Insecticides Item Code No. 90.10* Product Description Photographic Equipment and Spares (* Represents Heading No. of the Harmonized Commodity Description and Coding System)

Godrej Global Solution Limited DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH,2008.

Particulars of Employees:

The particulars required under Section 217(2A) of the Companies Act, 1956 read with the Companies ( Particulars of Employees)Rules 1975:-

To, The Members of GODREJ GLOBAL SOLUTIONS LIMITED

Name

Your Directors present their Sixth Annual Report together with the Audited Accounts of the Company for the year ended 31st March 2008.

Sanjay Managing Tipnis Director

FINANCIAL RESULTS: Particulars Income from Services Other Income Total Income Less: Total Expenditure Profit/[Loss] Before Tax Less: Fringe Benefit Tax Profit [Loss] After Tax Profit /(Loss) brought forward Profit/(Loss) carried forward

Year ended 31.3.08 [Rupees]

Year ended 31.3.07 [Rupees]

134,154,730 2,763,995 136,918,724 161,626,947 (24,708,222) (429,386) (25,137,608) (20,982,522) (46,120,130)

140,031,074 494,690 140,525,764 160,038,116 (19,512,352) (851,931) (20,364,283) (618,240) (20,982,523)

DIVIDEND: In view of the loss sustained by the Company, your Directors do not recommend any dividend for the year under review.

DIRECTORS: In accordance with the provisions of the Companies Act, 1956, read with the Articles of Association of the Company, Mr. N.B. Godrej and Mr. S. Ahmadulla Directors of the Company, will retire by rotation at the ensuing Annual General Meeting. However, being eligible, they have offered themselves for re-appointment. Your Directors recommend their re-appointment for your approval. STATUTORY INFORMATION: a.

Conservation of Energy, Foreign Exchange Earnings & Outgo and Technology Absorption:

As required under Section 217[1][e] of the Companies Act, 1956, the necessary details are given hereunder:

The activities of the Company being service oriented, the particulars required to be furnished in respect of conservation of energy are not applicable. However, all efforts are being made by the Company to conserve energy at all the stages of its activities.

During the year under review, the Company has earned Rs. 134,154,730/- in foreign currency. However, it has spent Rs. 960,965/- in foreign currency, the details of which are available in points 10 and 11 of the Notes to the Accounts (Schedule 16) for the year. Further, the Company has not imported any foreign technology and hence the requisite particulars in this regard are not applicable.

REPORT OF THE AUDITORS We have audited the attached Balance Sheet of Godrej Global Solutions Limited as at March 31, 2008 and also the Profit and Loss Account and Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditors’ Report) (Amendment) Order 2004, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

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

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;

The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of account;

72,81,382 /-

Qualification

Experience Date of (yrs) commencement of employment

Age Particulars of previous employment

B.com, ACA

1-09-2004

Godrej Remote Services Ltd.

Audit Committee:

As required under Section 292A of the Companies Act, 1956, the Audit Committee of Directors of the Company consisted of Mr. N.B. Godrej, Mr. F.P. Sarkari and Mr. K.N. Petigara. The said Committee met four times during the year and has performed the functions as prescribed under the said Section and its terms of reference.

Fixed Deposits:

The Company has not accepted any deposits from the public during the year under review.

Directors’ Responsibility Statement:

In accordance with the requirement under Section 217[2AA] of the Companies Act, 1956, the Directors hereby confirm:

that in the preparation of the accounts for the financial year ended 31st March 2008, the applicable accounting standards have been followed along with proper explanation relating to material departures;

that the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year under review and also of the Loss of the Company for that period;

that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

that the Directors have prepared the accounts for the financial year ended 31st March 2008 on a going concern basis.

INSURANCE: All the assets of the Company are adequately insured. AUDITORS REPORT: The present Auditors of the Company, M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai, holds their office until the conclusion of the ensuing Annual General Meeting. The Company has received an eligibility Certificate from them pursuant to Section 224[1B] of the Companies Act, 1956. Your Directors recommend their re-appointment at the ensuing Annual General Meeting for your approval. ACKNOWLEDGEMENTS: Your Directors place on record their sincere thanks to all the Government Departments concerned with the operations of the Company, the Bankers and employees of the Company, and to Godrej Industries Limited, for their continued support and co-operation. FOR AND ON BEHALF OF THE BOARD

Place: Mumbai Date: May 02, 2008 Regd. Office: Pirojshanagar, Eastern Express Highway, Vikhroli [East], Mumbai-400 079.

Sanjay S. Tipnis Managing Director

C.K. Vaidya Director

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

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

TO THE MEMBERS OF GODREJ GLOBAL SOLUTIONS LIMITED 1.

Gross remuneration (Rs)

OPERATIONS & FUTURE OUTLOOK: The year ended March 31, 2008 has been a challenging year for your company. Given that the revenues of your company are predominantly from the US, the dollar depreciation against the rupee impacted the revenues and consequently revenues for the year stand reduced at Rs. 134,154,730 as compared to the previous year revenues of Rs. 140,031,074. Your company responded to this challenge by rationalizing the capacity of its delivery centre at Belapur, Navi Mumbai as well as downsized the corporate office at Vikhroli. Your company continued to operate with constraints on growth funding and presently your company is exploring various strategic options for funding its growth plans. During the year, Your Company continued to focus on its core business segments such as healthcare insurance claims form processing, rebate and survey forms processing, medical transcription, medical billing and document conversion services and strived towards improving operational efficiencies. Labour attrition did pose some challenge and your company continuously evaluates and implements innovative options to attract and retain talent.

Designation

(i)

in the case of the Balance Sheet, of the state of affairs of the Company as at March 31. 2008.

(ii)

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

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

On the basis of the written representations received from the Directors as on March 31, 2008, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 3!, 2008, from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants V. M. PADWAL Partner Membership No: (F) 49639 Mumbai, May 2. 2008.

175

ANNEXURE TO THE AUDITOR’S REPORT

Referred to in Paragraph 3 of our report of even date on the accounts of Godrej Global Solutions Limited for the year ended March 31, 2008:

The accumulated losses of the Company as at end of the financial year do not exceed fifty percent of its net worth. The company has incurred cash losses during the current financial year and has not incurred cash losses in the immediate preceding financial year.

According to the information and explanations given to us and the records examined by us, we observed that the company has not defaulted in repayment of dues to financial institutions or banks or debenture holders.

According to the information and explanation given to us and the records examined by us there are no dues of income tax or cess outstanding on account of any dispute.

The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

The Company has a program for physical verification of fixed assets at periodic intervals. In our opinion, the frequency of verification is reasonable having regards to the size of the Company and nature of its assets. The discrepancies reported on such verification were not material and have been properly dealt with in the books accounts.

10.

In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption.

According to the information and explanations given to us the Company has not granted loans and advances on the basis of security by way of pledge of shares and other securities.

11.

The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

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

12.

The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Conipanies Act, 1956.

In our opinion, the Company has maintained proper records of’ the transactions and contracts of the investments dealt in by the Company and timely entries have been made therein. The investments made by the Company are held in its own name.

13.

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

According to the information and explanations given to us and the records examined by us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

14.

According to the information and explanations given to us and the records examined by us on an overall basis, the term loans were applied for the purpose for which they were obtained.

15.

On the basis of an overall examination of the balance sheet of the Company and the information and explanation given to us, we report that the company has not utilized any funds raised on short-term basis for long-term investments.

16.

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

17.

According to the information and explanation given to us and the records examined by us, the Company did not issue any debentures during the financial year.

18.

The Company has not raised any money through a public issue during the year.

19.

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

20.

In our opinion, clauses (ii) and (viii) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 are not applicable.

Based on the audit procedures applied by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956, have been entered in the register required to be maintained under that section.

In our Opinion and according to the information and explanations given to us, having regards to the explanation that many of the items are of special nature and their prices cannot be compared with alternative quotations, the transactions made in the pursuance of contracts or arrangement entered in the register maintained under 301 of the Companies Act, 1956 in respect of any party during the period have been made at the prices which are reasonable having regards to prevailing market prices at the relevant time.

In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed there under.

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

According to the records examined by us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Cess and other statutory dues as applicable to it. According to the information and explanation given to us, no undisputed amounts payable in respect of statutory dues were outstanding at the year end for a period of more than six months from the date they became payable.

BALANCE SHEET AS AT MARCH 31, 2008 Schedule SOURCE OF FUNDS 1 SHAREHOLDERS’ FUNDS (a) Share capital (b) Reserves & surplus 2

BORROWED FUNDS (a) Secured loans

APPLICATION OF FUNDS 1 FIXED ASSETS (a) Gross block (b) Less:Accumulated depreciation (c) Net block 2 3 4

INVESTMENTS DEFERRED TAX ASSET CURRENT ASSETS, LOANS AND ADVANCES (a) Cash & bank balances (b) Debtors (c) Loans and advances

LESS: CURRENT LIABILITIES AND PROVISIONS (a) Current liabilities (b) Provisions

NET CURRENT ASSETS PROFIT AND LOSS ACCOUNT

Year Ended March 31, 2008 (Amount Rs)

Year Ended March 31, 2007 (Amount Rs)

For and on behalf of KALYA NIWALLA & MISTRY Chartered Accountants V. M. PADWAL Partner Membership No: (F) 49639 Mumbai, May 2. 2008

PROFIT & LOSS ACCOUNT FOR THE PERIOD ENDED MARCH 31, 2008 Schedule

1 2

121,371,773 51,374,134 172,745,907

38,394,938 38,394,938 211,140,845

42,034,821 42,034,821 214,780,728

4 59,208,580 42,284,972 16,923,608

57,533,801 29,113,787 28,420,014

95,936,300 288,313

91,840,800 288,313

6 7 8

5,403,357 51,904,737 15,410,090 72,718,184

8,747,767 56,313,073 24,474,861 89,535,701

17,602,451 3,243,234 20,845,685 51,872,499 46,120,130 211,140,845

14,429,874 1,856,749 16,286,623 73,249,078 20,982,523 214,780,728

9 10

Year Ended March 31, 2008 (Amount Rs)

Year Ended March 31, 2007 (Amount Rs)

134,154,730

140,031,074

INCOME Income from services Other income

2,763,995

494,690

136,918,724

140,525,764

EXPENDITURE Staff expenses

75,851,516

71,290,277

Establishment expenses

35,866,421

39,383,921

Other operating expenses

24,125,670

28,043,151

Interest & finance charges

5,918,546

3,889,350

Depreciation

19,864,794

17,431,417

PROFIT / (LOSS) FOR THE YEAR -Before Tax

161,626,947

160,038,116

(24,708,222)

(19,512,352)

(429,386)

(851,931)

PROFIT / (LOSS) FOR THE YEAR -After Tax

(25,137,608)

(20,364,283)

Profit / (Loss) brought forward

(20,982,522)

(681,240)

Profit / (Loss) carried forward

(46,120,130)

(20,982,523)

(1.85)

(0.47)

Fringe benefit tax

Basic earning per share (face value of Rs 10 per share) NOTES TO ACCOUNTS

NOTES TO ACCOUNTS 16 The schedules referred to above form an integral part of the balance sheet.

The schedules referred to above form an integral part of the profit & loss account.

As per our report attached. For and on behalf of the board For and on behalf of KALYANIWALLA & MISTRY Chartered Accountants V M Padwal S. S. Tipnis Managing Director Partner C. K. Vaidya Director Mumbai, May 2, 2008 A.K.Singla Company Secretary

176

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2008

SCHEDULE 1 : SHARE CAPITAL AUTHORISED 59,900,000 (Previous year 59,900,000) equity shares of Rs 10/- each 100,000 (Previous year 100,000) preference shares of Rs 10/- each

Year Ended March 31, 2008 (Amount Rs)

Year Ended March 31, 2007 (Amount Rs)

599,000,000 1,000,000 600,000,000

477,140,380 180,000 477,320,380

Year Ended March 31, 2008 (Amount Rs)

Year Ended March 31, 2007 (Amount Rs)

1,554,134

SCHEDULE 2 : RESERVES & SURPLUS

ISSUED AND SUBSCRIBED 47,714,038 (Previous year 47,714,038) equity shares of Rs.10/- each 18,000 (Previous year 18,000) preference shares of Rs.10/- each PAID UP Fully paid up equity shares 8,639,177 (Previous year 8,639,177) equity shares of Rs 10/- each fully paid up 4,971,429 (Previous year 4,971,429 ) equity shares of Rs 10/- each Rs 7.00 paid up (P.Y. Rs 7.00 paid up) Fully paid up preference shares 18,000 (Previous year 18,000) preference shares of Rs.10/- each

Capital reserve Opening balance

1,554,134

49,820,000

Additions during the year Securities premium account Opening balance

49,820,000

51,374,134

30,849,979

42,034,821

Add: Additions during the year 86,391,770

86,391,770

34,800,003

180,000 121,371,773

SCHEDULE 3 : SECURED LOANS Term loan from bank Cash Credit from bank

180,000 121,371,773

7,544,959

38,394,938

42,034,821

SCHEDULE 4 : FIXED ASSETS Asset

Gross Block Additions for the year

Deletions for the year

6,436,853

7,864,037

5,129,260

9,171,630

41,656,808

594,521

1,496,526

40,754,803

Leasehold Improvements Computers

Depreciation As On 31-Mar-08

As On 1-Apr-07

Net Block As On 31-Mar-08

As On 31-Mar-08

4,341,541

5,927,920

3,243,710

1,604,875

1,407,308

32,552,075

8,202,728

19,922,295 4,545,706

For the year ended

Reductions for the year ended

4,831,978

5,437,483

21,734,514

12,224,871

As On 31-Mar-07

Office Equipments

6,340,081

945,667

1,389,586

5,896,163

1,794,375

1,265,670

441,841

2,618,204

3,277,958

Furniture & Fixtures

1,435,911

1,160,634

874,708

1,721,837

639,185

603,024

502,912

739,296

982,541

796,726

Vehicle

1,664,148

113,735

333,741

447,476

1,216,672

1,550,413

57,533,801

10,564,859

8,890,080

59,208,580

29,113,787

19,864,789

6,693,602

42,284,972

16,923,608

28,420,015

37,589,594

20,367,566

423,358

57,533,802

11,900,449

17,431,416

218,078

29,113,787

28,420,015

25,689,145

Total Previous Year SCHEDULE 5 : INVESTMENTS Investee Company / Institutions

Face Value (Rs)

Quantity As On 1-Apr-07

Acquired upto 31-Mar-08

Sold upto 31-Mar-08

Quantity As On 31-Mar-08

Amount (Rs) As On 31-Mar-08

Amount (Rs) As On 31-Mar-07

600,000

26,240,228

26,240,229

1,500,000

100,000 -

1,600,000 -

69,696,072 -

65,340,068 -

95,936,300

91,580,297

LONG TERM INVESTMENTS Unquoted Equity Shares-Fully Paid Godrej Upstream Limited Verseon LLC - Class A preferred units (US$ 1.90) Investment in Subsidiary Company Equity Shares in Godrej Global Solutions (Cyprus) Ltd face value of US$ 1.00 each Preference Shares in Godrej Global Solutions (Cyprus) Ltd face value of US$ 1.00 each Investment in the capital of Partnership firm View Group LP CURRENT ASSETS Unquoted Units of Mutual Fund Templeton India Treasury Management Prudential ICICI Liquid Plan Institutional Plus TOTAL

Year Ended March 31, 2008 (Amount Rs)

Year Ended March 31, 2007 (Amount Rs)

63,065

59,257

In Current Account

2,005,292

8,515,760

In Fixed Deposit

3,335,000

172,750

5,403,357

8,747,767

Balances with bank

(Unsecured and considered good) Outstanding for less than six months

Advances recoverable in cash or in kind or for value to be received

1,166,755

1,016,189

Security deposits

9,996,884

13,608,084 180,542

Other deposit

439,291

Accrued interest

124,785

10,509

Staff loan

833,615

1,190,811

Advance payment of taxes

SCHEDULE 7 : DEBTORS Outstanding for more than six months

Year Ended March 31, 2007 (Amount Rs)

SCHEDULE 8 : LOANS AND ADVANCES

SCHEDULE 6 : CASH & BANK BALANCES Cash on hand

Year Ended March 31, 2008 (Amount Rs)

698,849

1,282,425

51,205,888

55,030,648

51,904,737

56,313,073

2,848,760

8,468,726

15,410,090

24,474,861

SCHEDULE 9 : CURRENT LIABILITIES Sundry creditors Others

1,937,268

1,155,594

15,665,183

13,274,280

17,602,451

14,429,874

177

SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2008 Year Ended March 31, 2008 (Amount Rs)

Year Ended March 31, 2007 (Amount Rs)

3,243,234 3,243,234

1,856,749 1,856,749

147,185 129,545 680,180 – 1,289,809 517,276 2,763,995

11,697 53,159 – 418,483 2,437 6,801 2,113 494,690

65,465,714 7,361,868 3,023,934 75,851,516

60,477,186 7,502,485 3,310,606 71,290,277

17,240,478 6,389,572 6,919,866 4,827,530 488,976 35,866,421

17,652,556 7,713,353 7,423,059 6,381,913 213,039 39,383,921

10,119,260 135,969 1,201,879 82,300 2,312,476 4,059,659 6,000 1,083,509 5,124,616 24,125,670

10,030,360 212,744 4,795,494 3,997,393 3,648,042 1,462,636 – 24,080 3,872,403 28,043,151

5,125,396 793,150 5,918,546

3,226,056 663,294 3,889,350

SCHEDULE 10 : PROVISIONS Provision for employee retirement benefit SCHEDULE 11 : OTHER INCOME Interest (gross) - Bank - Staff loan Interest on IT Refund for the Asst Year 05-06 Dividend Profit on sale of investment Profit on sale of fixed assets Miscellaneous income SCHEDULE 12 : STAFF EXPENSES Salary, bonus, exgratia Contribution to providend fund and other funds Staff welfare SCHEDULE 13 : ESTABLISHMENT EXPENSES Rent Office maintenance Electricity Communication expenses Repairs and maintenance SCHEDULE 14 : OTHER OPERATING EXPENSES Legal & professional expenses Insurance Conveyance and travelling Recruitment & training Processing cost Exchange difference - loss (net) Donation Sundry Assets W/off General expenses SCHEDULE 15 : INTEREST & FINANCE CHARGES Interest on bank loan Other bank/financial charges

Employee Benefits

Obligations pertaining to short term employee benefits are recognized as cost in the period in which the employee renders the related service.

The cost of non accumulating compensated absences is recognized in the period in which such absences occur. The cost of accumulating compensated absences is recognized in the period in which the employee renders the service that increase his entitlement to future compensated absences.

The amount of contributions payable to a defined contribution plan in exchange for service rendered by an employee is recognized as a cost, in the period in which such service was rendered. However if the said contribution falls due twelve months after the period in which the employee has rendered the related service, the amount of contribution to be recognized as above is discounted at appropriate rates.

In case of defined benefit plans actuarial techniques are used to make a reliable estimate of the amount of benefits that the employee has earned in return for the services in the current and past period. These estimates are based on certain actuarial assumptions about demographic and financial variables, which influence the cost of benefits. Projected Unit Cost Method is used to discount the aforesaid amount of benefit in order to determine the present value of defined benefit obligation and current service cost.

The rates used to discount post employment benefit obligation are determined by reference to market yields at balance sheet date on government bonds of appropriate currency and term.

Taxes on Income

Provision for current tax is ascertained on the basis of the taxable income for the year determined in accordance with the provision of Income Tax Act. 1961.

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

Foreign Currency Transactions

Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Monetary Assets and Liabilities denominated in foreign currency are translated at the period end exchange rates. Exchange gain/losses are recognised in the profit and loss account except for exchange differences related to fixed assets, which are adjusted in the cost of the assets. Non Monetary foreign currency items like investments in foreign subsidiaries are carried at cost and expressed in Indian currency at the rate of exchange prevailing at the time of making the original investment.

Redemption of Preference shares

Due to inadequacy of divisible profits, the Company has not redeemed 18,000 preference shares of Rs 10/- each at par, due for redemption on May 31, 2007.

Secured loan

SCHEDULE 16 : NOTES TO ACCOUNTS

Term loan from bank are secured by

Background

Charge by way of hypothecation of assets on movable fixed assets of the Company

Godrej Global Solutions Limited (“the Company”) was incorporated on February 28, 2003 as a limited liability company. The main business of the company is to carry out IT enabled services and back office support functions.

Hypothecation of the entire current assets of the Company.

Irrevocable and unconditional Corporate Guarantee from Godrej Industries limited.

Operating Lease

The company’s significant leasing agreements are in respect of operating lease for office premises. These leasing agreements are cancelable and renewable by mutual consent on mutually acceptable terms. The aggregate lease rentals payable by the company are charged to profit and loss account as a rent amounting to Rs. 204.68 Lacs (Previous year Rs. 217.66 Lacs). The future minimum lease payments under non-cancelable operating leases due within a period of one year are estimated at Rs. 136.82 Lacs (Previous year. Rs. 216.16 Lacs) and due within a period of one year but less than five years are estimated at Rs. 609.71 Lac (Previous year Rs. 392.24 Lacs).

Retirement benefits

Significant Accounting Policies.

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.

Fixed Asset

Fixed Assets are stated at cost less accumulated depreciation. Cost includes all expenses related to acquisition and installation of the concerned asset.

Asset Impairment

The Company reviews the carrying values of tangible and intangible assets for any possible impairment at each balance sheet date. An Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value at appropriate discount rate.

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

Provisions and Contingent Liabilities

Amount of Rs. 41.77 lacs is recognized as an expense and included in “Contribution to provident and other funds” (Schedule 12) in the profit and loss account.

ii.

Defined Benefit Plans:

General Descriptions of defined plans (Gratuity Plan)

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service, or retirement, whichever is earlier. The benefit vests after five years of continuous service.

The amounts recognized in Balance Sheet are as follows:

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

Defined Contribution Plans:

31-3-2006

31-3-2007

31-3-2008

Present Value of obligation 31March

–

1,041,858

1,286,822

Present Value of Assets

–

381,978

1,041,858

1,286,822

Period Beginning

Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.

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

Revenue Recognition

Current service Cost

Income from services is recognized on completion of service as per terms of the contract. Interest income is recognized on a time proportion basis. Dividend income is recognised when the right to receive the same is established.

Interest Cost

The amounts recognized in Profit and Loss Account are as follows: Period Beginning

31-3-2007

31-3-2008

559,289

474,819

28,648

78,139

Expected Return on

Depreciation

Plan Assets

–

Leasehold Improvements are amortized equally over the lease period. Depreciation is provided pro-rata to the period of use on the Straight Line Method over the estimated useful life of assets which is as under:

Net Actuarial gain

71,943

(307,994)

Net Periodic Cost

659,880

244,964

Computers Office Equipment Furniture & Fixture Motor Vehicle

178

Liability recognized in Balance Sheet

3 Years 5 Years 5 Years 5 Years

SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2008

The reconciliation of opening and closing balances of present value of the defined benefit obligation showing the effects during the period: 31-3-2006

Key Management

Total

Investment in Pref Shares

4,095,500

Previous Year

----------

Investment in Equity Shares

1,286,822

Previous Year

381,978

1,041,858

Service Cost

559,289

474,819

Interest cost

28,648

78,139

----------

71,943

(307,994)

---------1,041,858

Projected Benefit obligation, end of the period

381,978

(Amount Rs) Associate Company Personnel

Projected benefit obligations, at beginning of period

Benefit Paid

Transactions with Related Parties – Subsidiaries and Others Wholly Owned Subsidiary Companies GGSCL

31-3-2008

Actuarial (gain ) loss On obligation

Wholly Owned Subsidiary Companies GGSI

31-3-2007

Past service Cost

Nature of Transaction

Movement in net liability recognized in Balance Sheet

Export of Services

99,618,890

Previous Year

96,196,640

Interest Income

Previous Year

Inter Corporate Deposit -

Given

Previous Year

Actuarial Assumptions

Inter Corporate Deposit

ECONOMIC ASSUMPTIONS:

Repaid

•

Interest (Discount Rate)

Previous Year

The discount rate of 7.5% has been used for the purpose of Actuarial valuation of the Liability.

Managerial Remuneration

7,281,382

Salary Increment Rate

Previous Year

5,901,912

Period beginning

31-3-2006

31-3-2007

31-3-2008

Opening net liability

–

381,978

1,041,858

Expenses as above

–

659,880

244,964

Contributions Paid Closing net liability f)

•

–

381,978

1,041,858

1,286,822

Keeping in view the long term nature of the liability and increasing trend of inflation; the salary incremental rate of 5% would be appropriate to project the future salary Growth.

DEMOGRAPHIC ASSUMPTIONS:

•

Managerial Remuneration Particulars

Current Year

Previous Year

Mortality

Salaries and allowances paid

4,939,938

4,106,613

The latest compiled Table LIC a (1994-96) is used for the purpose of valuation:

Provision for Bonus and Incentives

2,038,480

1,525,000

Retirement Age

Contribution to Provident Fund

302,964

270,299

Sitting Fees

110,000

115,000

7,391,382

6,016,912

900,000

•

The employees in all cadre retire at 58 years

Withdrawal:

•

Total

The Attrition rate is related to completion of service. Nearly 20 % of employees will leave without claiming Gratuity.

Auditors Remuneration included in General Expenses

(Excluding service tax)

Related Party Disclosures

Audit Fees

900,000

Tax Audit Fees

100,000

10,00,000

134,154,730

140,031,074

Related Parties with whom transactions have taken place during the year, with the name and description of relationship.

Parties with whom control exists:

Godrej Industries Limited; the Holding company. Godrej & Boyce Manufacturing Co Ltd; the Ultimate Holding Company

Wholly Owned Subsidiaries:

Godrej Global Solutions Inc. Godrej Global Solutions (Cyprus) Ltd

Key Management Personnel

Mr. N.B.Godrej Mr. Sanjay Tipnis

Transactions with Related Parties – Parent and Fellow Subsidiaries

Total 10.

Income from services 1 1. Expenditure in Foreign Currency

Leave & License

Nil

Traveling Expenses

569,581

855,602

Books & Periodicals

18,958

19,692

Marketing Expenses

(Amount Rs) Nature of Transaction

Earning in Foreign Currency

Holding Company 573,220

Previous Year

1,123,440

Service Charges

2,514,793

Previous Year

3,516,282

Professional Fees

Nil

9,406

Training

Nil

3,860,970

Liability Insurance

18,295

25,765

Software Development & Maintenance

17,956

44,429

336,175

Nil

Business Development 12.

Earning Per Share Net profit / (loss) after tax available to shareholders

Other Expenses

872,896

Number of Equity Shares:

Previous Year

373,549

(25,137,608) (20,364,283)

As at commencement of the year

13,610,606

47,714,038

Call Money Received

As at the end of the year

13,610,606

Previous Year

Weighted Average Number of Equity Shares

13,610,606

43,517,624

(1.85)

(0.47)

Repayment of equity shares Previous Year Sale of Investments Previous Year

204,234,258 204,234,258

Balance Outstanding as of 31-3-2007

Receivable

Basic Earning per Share of Rs 10/- each 13.

Additional information required under Schedule VI Part II of the Companies Act 1956, to the extent not applicable has not been given.

14.

Figures of the previous year have been regrouped wherever necessary.

179

Cash Flow Statement for the year ended March 31, 2008.

Disclosure as required vide Part IV of Schedule VI of the Companies Act, 1956. Balance Sheet Abstract and Company’s General Business Profile

March 31, 2008

March 31, 2007

(Amount Rs)

(24,708,222)

(19,512,352)

Depreciation

19,864,794

17,431,417

Interest Paid

5,918,546

3,889,350

(1,289,809)

(6,801)

Particulars

Amount in Rs. Thousands I

Registration Details Registration No State Code Balance Sheet date

III

Cash flow from operating activities 11-139431 11 March 31, 2008

Capital raised during the year -

(Profit)/loss on fixed assets scrapped / sold

Rights Issue

(Profit)/loss on investments sold

–

(2,437)

Bonus Issue

Dividend income

–

(418,483)

Private Placement

Interest income

Position of mobilisation and deployment of funds

Operating profit before working capital changes

Total Assets

211,140 59,209

Sources of funds: Paid-up capital

(956,910)

(64,856)

(1,171,601)

1,315,838

Trade and other receivables

7,853,140

(31,208,241)

Trade payables

4,559,062

5,653,057

11,240,601

(24,239,346) (851,931)

Adjustment for:

121,372

Cash generated from operations

Reserves and surplus

51,374

Direct taxes FBT (paid) / refund

(429,386)

Secured loans

38,395

Direct taxes (paid) / refund

5,619,966

(2,058)

Total cash generated from operating activites

16,431,181

(25,093,335)

Net cash from/(used) in operating activities

16,431,181

(25,093,335)

(10,564,859)

(20,367,566)

3,486,287

212,081

Unsecured loans Application of funds Net fixed assets

16,924

Cash flow from investing activities

Investments

95,936

Purchase of fixed assets

Deferred Tax Asset

288

Net current assets

51,872

Miscellaneous expenditure Accumulated losses

20,983

Performance of the Company

Sale of fixed assets

(4,095,500)

Sale of long term investments

204,234,258

Downward revision of investments

136,800,570

Purchase of current investments

(10,420,921)

32,942,373

Investment in Subsidiary Company

Total Income

136,919

Sale of current investments

Total expenditure

161,626

Interest income

Profit / (loss) before tax

(24,708)

Dividend income

Profit / (loss) after tax

(25,138)

Net cash from/(used) in investing activities

Earning per share (in Rs) Dividend rate % V

Adjustment for:

Public Issue

Total Liabilities

Net loss before tax

(1.85) -

Generic names of principle products / services of company (as per monetary terms) Item code Product description

NA IT Service

956,910

64,856

418,483

(10,217,163)

343,884,135

Repayment of equity share capital

(204,233,750)

Reduction in equity share capital

(136,800,570)

Cash flow from financing activities

Proceeds from long term borrowings Repayment of long term borrowing

(3,639,883)

32,072,639

(29,992,203)

Interest paid

(5,918,546)

(3,889,350)

Net cash from financing activities

(9,558,429)

(342,843,234)

Net increase in cash and cash equivalents

(3,344,410)

(24,052,434)

Cash and cash equivalents as at beginning of the year

8,747,767

32,800,201

Cash and cash equivalents as at end of March 31, 2008

5,403,357

8,747,767

(Note: To finance working capital requirements, the Company’s Bankers have sanctioned a total fund based limit of Rs 450 lacs. Of this, limits utilized as on March 31, 2008 is Rs 75.45 lacs)

180

DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008 The Board of Directors presents its report and audited financial statements of the Company for the year ended 31 March 2008. Principal activity The principal activity of the Company, which is unchanged from last year, is that of holding of investments and financing. Results and Dividends The Company’s results for the year are set out below. The Board of Directors does not recommend the payment of a dividend and the net profit for the year is retained. Share capital Authorised capital On 24 March 2008, the authorised share capital of the Company was increased by an additional issue of 100.000 Preference shares at US$1 each. Issued capital On 24 March 2008, the Company made an additional cash issue of 100,000 Preference shares of US$1 each fully paid.

Independent Auditors’ Report

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

To the Members of GODREJ GLOBAL SOLUTIONS (CYPRUS) LIMITED

Opinion

Report on the Financial Statements We have audited the financial statements of GODREJ GLOBAL SOLUTIONS (CYPRUS) LIMITED, which comprise the balance sheet as at 31 March, 2008 and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. Board of Directors’ Responsibility for the Financial Statements The Company’s Board of Directors is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap 113. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies: and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors as well as evaluating the overall presentation of the financial statements.

BALANCE SHEET AS MARCH 31, 2008 ASSETS Non-current assets Investments Trade and other receivables Current assets Trade and other receivables Cash at bank and in hand Total assets EQUITY AND LIABILITIES Equity and reserves Share capital Retained earnings

Current liabilities Trade and other payables Current tax liabilities Total equity and liabilities

Note

01.04.2007 31.03.2008 US$

01.04.2007 31.03.2008 Rs in Lacs

01.04.2006 31.03.2007 US$

01.04.2006 31.03.2007 Rs in Lacs

1,500,000 755,000 2,255,000

595.50 299.74 895.24

1,000,000 1,055,000 2,055,000

430.50 454.18 884.68

2,498 64,497 66,995 2,321,995

0.99 25.61 26.60 921.83

66,465 62,960 129,425 2,184,425

28.61 27.10 55.72 940.39

2,200,000 112,384 2,312,384

873.40 44.62 918.02

2,100,000 74,183 2,174,183

904.05 31.94 935.99

10 11

8,778 833 9,611 2,321,995

3.48 0.33 3.82 921.83

5,567 4,675 10,242 2,184,425

2.40 2.01 4.41 940.39

7 8

Board of Directors The members of the Board of Directors of the Company as at 31 March 2008 as at the date of this report are Stellos Sawides, Eva Agathangelou, Rohinton Homi Khajotia - (Resigned on 15.4.2008) Dorab Erach Mistry - (Resigned on 15.4.2008) and Sanjay Tipnis, all of them were members of the board throughout the year ended 31 March 2008. In accordance with the Company’s Articles of Association all directors presently members of the Board continue in office. There were no significant changes in the assignment of responsibilities and remuneration of the Board of Directors. Independent Auditors The independent auditors, PKF Savvides & co Ltd, have expressed their willingness to continue in office and a resolution giving authority to the Board of Directors to fix their remuneration will be proposed at the Annual General Meeting. By order of the Board of Directors, Hive Management Services Limited Secretary Limassol – Cyprus 22 April 2008

In our opinion, the financial statements give a true and fair view of the financial position of the Company GODREJ GLOBAL SOLUTIONS (CYPRUS) LIMITED as of 31 March 2008 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU and the requirements of Cyprus Companies Law, Cap. 113. Report on other legal requirements Pursuant to the requirements of the Companies Law, Cap. 113, we report the following: • We have obtained all the information and explanations we considered necessary for the purposes of our audit. • In our opinion, proper books of account have been kept by the Company. • The Company’s financial statements are in agreement with the books of account. • In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Companies Law, Cap. 113, in the manner so required. • In our opinion, the information given in the report of the Board of Directors on page 2 is consistent with the financial statements. Other Matter This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with section 156 of Companies Law, Cap.113 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to. PKF Savvides & Co Ltd Certified Public Accountants 229, Arch Makarios III Avenue Meliza Court (Tel.00357-25868000) 4th,5th & 6th Floor 3105 Limassol: - Cyprus 22 April, 2008

STATEMENT OF CHANGES IN EQUITY YEAR ENDED 31ST MARCH, 2008

Balance - 01 April 2006 Net profit for the year At 31 March 2007 Net profit for the year Issue of share capital At 31 March 2008

Share capital US $ Rs. in Lacs 2,100,000 904.05

Retained earnings Total US $ Rs. in Lacs US $ Rs. in Lacs 25,702 11.06 2,125,702 915.11

48,481

20.87

48,481

20.87

2,100,000

904.05

74,183

31.94 2,174,183

935.99

100,000

43.05

38,201 -

16.45 -

2,200,000

947.10

112,384

38,201 100,000

16.45 43.05

48.38 2,312,384

995.48

Companies which do not distribute 70% of their profits after tax, as defined by the relevant tax law, within two years after the end of the relevant tax year, will be deemed to have distributed as dividends 70% of these profits. Special contribution for defence at 15% will be payable on such deemed dividends to the extent that the shareholders are Cyprus tax residents. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time. This special contribution for defence is payable for the account of the shareholders.

On 22 April 2008 the Board of Directors of GODREJ GLOBAL SOLUTIONS (CYPRUS) LIMITED authorised these financial statements for issue.

181

INCOME STATEMENT YEAR ENDED 31ST MARCH, 2008 01.04.2007 to 31.03.2008 3

01.04.2006 to 31.03.2007

US $

Rs. in lacs

US $

Rs. in lacs

52,351

22.54

73,850

31.79 (2.57)

Note Revenue

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2008

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The financial statements have been prepared under the historical cost convention.

(9,748)

(4.20)

(5,971)

Operating Profit

42,603

18.34

67,879

29.22

Adoption of new and revised IFRSs

Net fianance costs

(1,051)

(0.45)

(532)

(0.23)

41,552

1.79

67,347

28.99

(3,351)

(1.44)

(18,866)

(8.12)

During the current year the Company adopted all the new and revised IFRSs and International Accounting Standards (IAS), which are relevant to its operations and are effective for accounting periods commencing on 01 April 2007.

38,201

16.45

48,481

20.87

The adoption of these Standards did not have a material effect on the financial statements.

At the date of authorization of these financial statements some Standards were in issue but not yet effective. The Board of Directors expects that the adoption of these Standards in future periods will not have a material effect on the financial statements of the Company.

Administration Expenses

Profit before tax Tax

Net profit for the year

CASH FLOW STATEMENT YEAR ENDED 31ST MARCH, 2008 01.04.2007 to 31.03.2008 Note

01.04.2006 to 31.03.2007

US$

Rs. in lacs

US$

Rs. in lcas

41,552

17.89

67,347

28.99

Subsidiary companies

Investment in subsidiary companies are stated at cost less provision for impairment in value, which is recognized as an expense in the period in which the impairment is identified. Investments held for trading are classified as current assets and are stated at fair value, with any resultant gain or loss recognized in the income statement. When the company has the positive intent and ability to hold bonds maturity, these are stated at amortised cost less impairment losses. Other investments held by the company are classified as being availablefor-sale and are stated at fair value, with any resultant gain or loss recognized directly to equity. When an investment is sold collected or otherwise disposed of or when the carrying amount of the investments is impaired, the cumulative gain or loss recognized in equity is transferred to the income statement.

The fair value of investments held for trading and investments available-for-sale is their quoted price, excluding disposal costs, at the balance sheet date. Where a quoted price is not available and other methods of determining fair value inappropriate, the investment is stated at cost. Any sale of investment is recognized when the actual transfer of shares from the registrar takes place.

CASH FLOWS FROM OPERATINGE ACTIVITIES Profit before tax Adjustments for: (52,351)

(22.54)

(73,850)

(31.79)

Cash flows used in operations before working capital changes

(10,799)

(4.65)

(6,503)

(2.80)

Decrease / (increase) in trade and other receivables

363,967

156.69

(5,796)

(2.50)

Increase / (decrease) in trade and other payables

3,211

1.38

(19,503)

(8.40)

Interest income

Cash flows from / (used in) operations

356,379

153.42

(31,802)

(13.69)

Revenue recognition

Interest received

52,351

22.54

73,850

31.79

(3.10)

Revenues earned by the Company are recognised on the following bases:

Tax paid

(7,193)

(6,806)

(2.93)

401,537

172.86

35,242

15.17

•

Interest income is recognized on a time-proportion basis using the effective interest method.

(500,000)

(215.25)

Foreign currency translation

(500,000)

(215.25)

(1)

Proceeds from issue of share capital

100,000

43.05

Net cash from financing activities

100,000

43.05

1,537

0.66

35,242

15.17

At beginning of the year

62,960

27.10

27,718

11.93

At end of the year

64,497

27.77

62,960

27.10

Net cash from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payment for purchase of investment

Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES

Net increase in cash and cash equivalents

Cash at bank and in hand Bank overdrafts

64,497

27.77

62,960

Items included in the Company’s financial statements are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in United States Dollars (US$), which is the Company’s functional and presentation currency.

Transaction and balances

(2)

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement.

Tax

Current tax liabilities and assets for the current and prior periods are measured at the amount expected to be paid to or recovered from the taxation authorities, using the tax rates and laws that have been enacted, or substantively enacted, by the balance sheet date.

27.10

64,497

27.77

62,960

27.10

Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.

Revenue

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2008 1.

Incorporation and principal activities

Country of incorporation

The Company GODREJ GLOBAL SOLUTIONS (CYPRUS) LIMITED was incorporated in Cyprus on 19 January, 2005 as a private company with limited liability under the Companies Law, Cap. 113. Its registered office is at 229, Arch. Makarios III Avenue, Meliza Court, 4th floor,, 3105 Limassol – Cyprus.

Principal activity

The principal activity of the company, which is unchanged from last year, is that of holding of investments and financing.

Accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented in these financial statements unless otherwise stated.

Basis of preparation

The Company has prepared these parent’s separate financial statements for compliance with the requirements of the Cyprus Income Tax Law.

182

Functional and presentation currency

Cash and cash equivalents:

The cash and cash equivalents include the following:

Interest income

01.04.2007 to 31.03.2008 Interest receivable

01.04.2006 to 31.03.2007

US $

Rs. in lacs

US $

Rs. in lcas

52,351

22.54

73,850

31.79

52,351

22.54

73,850

31.79

Operating Profit 01.04.2007 to 31.03.2008

01.04.2006 to 31.03.2007

US $

Rs. in lacs

US $

Rs. in lcas

6,495

2.80

5,567

2.40

Operating profit is stated after changing the following items: Auditors’ remuneration

NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March, 2008 5.

Finance costs

9. 01.04.2007 to 31.03.2008

Net forieng exchange transaction losses Interest expense Other finance expenses

01.04.2006 to 31.03.2007

US $

Rs. in lacs

US $

Rs. in lacs

212

0.08

189

0.08

804

0.35

343

0.15

1,051

0.45

532

0.01

Authorised Ordinary shares of US$1 each Preference shares of US$1 each Current portion Issued and fully paid On 01 April 2007 Issue of shares As at 31 March, 2008

Tax 01.04.2007 to 31.03.2008

01.04.2006 to 31.03.2007

US $ Rs. in lacs

US $

Rs. in lcas

Corporation tax - current year

4,101

1.76

3,000

1.29

Corporation tax - prior years

(750)

(0.32)

1,675

0.72

Defence contribution - current year

7,385

3.18

Defence contribution - prior years

6,806

2.93

3,351

1.44

18,866

8.12

Charge for the year

Share capital

The company is liable to pay corporation tax at the rate of 10% on its chargeable profits.

Under certain conditions interest may be subject to defence contribution at the rate of 10%. In such cases 50% of the same interest will be exempt from corporation tax, thus having an effective tax rate burden of approximately 15%.

Investments

At 31 March 2008

600,000 1,500,000 2,100,000

2,100,000 100,000 2,200,000

2,100,000 2,100,000

Authorised capital On 24 March 2008, the authorized share capital of the Company was increased by an additional issue of 100,000 Preference shares at US$1 each.

Issued capital

On 24 March 2008, the Company made an additional cash issue of 100,000 Preference shares of US$1 each fully paid.

10. Trade and other payables 01.04.2007 to 31.03.2008

01.04.2006 to 31.03.2007

US $

Rs. in lcas

US $

Rs. in lcas

8,778

3.78

5,567

2.40

8,778

3.78

5,567

2.40

The fair values of trade and other payables due within one year approximate to their carrying amounts as presented above.

11. Current tax liabilities US $ Rs. in lacs

Acquisition of new shares issued

600,000 1,600,000 2,200,000

01.04.2007 to 31.03.2008 01.04.2006 to 31.03.2007 On 01 April 2007

01.04.2006 31.03.2007 Number of Shares

Accruals

01.04.2007 31.03.2008 Number of Shares

US $

Rs. lcas

1,000,000

430.50

1,000,000

430.50

500,000

215.25

1,500,000

645.75

1,000,000

430.50

01.04.2007 to 31.03.2008 Corporation tax

01.04.2006 to 31.03.2007

US $

Rs. in lcas

US $

Rs. in lcas

833

0.36

4,675

2.01

833

0.36

4,675

2.01

12. Related party transactions The details of the subsidiaries are as follows: Name

Country of incorporation

Godrej Global Solutions INC

USA

Class of shares held

Holding

Ordinary

100

The company, in the normal course of business, trades with other businesses that fall within the definition of related party contained in International Accounting Standard 24.

13. Parent company

The parent company is Godrej Global Solutions Ltd, a company registered in India.

14. Contingent liabilities

The Company had no contingent liabilities as at 31 March 2008.

15. Commitments 8.

Trade and other receivables

01.04.2007 to 31.03.2008

Trade receivables Loan Receivable Deposits and prepayments Less non-current receivables Current portion

01.04.2006 to 31.03.2007

US $

Rs. in lcas

US $

Rs. in lcas

66,465

28.61

755,000

325.02

1,055,000

454.18

2,498

1.08

757,498

326.10

1,121,465

482.79

(755,000)

(325.03)

(1,055,000)

(454.18)

2,498

1.08

66,465.00

28.61

755,000

325.03

1,055,000

454.18

755,000

325.03

1,055,000

454.18

The Company had no capital or other commitments as at 31 March 2008.

16. Fair value of assets and liabilities

The fair value of an assets or liability represents the replacement cost or an obligation to be settled at an arms length transaction. The fair value of all the assets and liabilities of the company approaches their accounting value as stated in the financial statements.

17. Post balance sheet events

Current assets and liabilities of the company are adjusted to reflect any post balance sheet events and include additional information for amounts calculated on the basis ruling at the balance sheet date.

DETAILED INCOME STATEMENT YEAR ENDED 31ST MARCH, 2008

Godrej Global Solutions INC (Subsidiary Company registered in USA)

01.04.2007 to 31.03.2008 Page Interest receivable

01.04.2006 to 31.03.2007

US $

Rs. in lcas

US $

Rs. in lcas

52,351

22.54

73,850

31.79

(9,748)

(4.20)

(5,971)

(2.57)

42,603

18.34

67,879

29.22

(1,051)

(0.45)

(532)

(0.23)

41,552

17.89

67,347

2.77

Operating expenses

The above loan carries interest at the rate of 7% per annum on the outstanding amount and it is receivable by the end of 31 March, 2010. The interest receivable is accounted for on an accrual basis. The interest income was US$52,351 for the period ended 31 March, 2008.

Administration Expenses

Operating Profit Finance costs Net profit for the year before tax

183

OPERATING EXPENSES YEAR ENDED 31ST MARCH, 2008 01.04.2007 to 31.03.2008

01.04.2006 to 31.03.2007

US $

Rs. in lcas

US $

Rs. in lcas

6,495

2.80

5,567

2.40

833

0.36

2,899

1.25

2,420

1.04

(3,147)

1.35

652

0.28

9,748

4.20

5,971

2.57

Administration expenses Auditorsâ&#x20AC;&#x2122; remuneration Professional fees Issuing cost of additional equity Consultancy fees

FINANCE COSTS YEAR ENDED 31ST MARCH, 2008 01.04.2007

01.04.2006

31.03.2008

31.03.2007

US $

Rs in Lacs

804

0.35

212

0.08

1,051

0.43

Fianance costs Interest expense Interest on taxes Other finance expenses Bank charges Net foreign exchange transation losses Realised exchange loss/(gain)

184

DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2008 We are pleased to submit the report for the period from APRIL 1, 2007 TO MARCH 31, 2008

EVENTS SINCE BALANCE SHEET DATE

PRINCIPAL ACTIVITIES

There have been no events since the balance sheet date which affect the company’s results or performance.

The Company’s principal activity during the period under review was that of providing Healthcare - related Business Process Outsourcing Services COMPANYS’ RESULTS

POLITICAL OR CHARITABLE CONTRIBUTIONS The company made no political or charitable contributions during the year.

Net Profit / (loss) for the period

$ (9,383)

For GODREJ Global Solutions, Inc

Retained earnings as of March 31, 2008

$ 168,436

Sanjay Tipnis Director

DIVIDENDS

April 18, 2008

No dividend is recommended to be paid for the period ended March 31, 2008

INDEPENDENT AUDITORS’ REPORT to the members of Godrej Global Solutions, Inc. To the Board of Directors and Stockholder

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.

Godrej Global Solutions, Inc. Boston, Massachusetts We have audited the accompanying balance sheet of Godrej Global Solutions, Inc. (a Delaware corporation) as of March 31, 2008, and the related statements of operations, changes in stockholder’s equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An Audit

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Godrej Global Solutions, Inc. as of March 31, 2008, and the result of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. Newton, Massachusetts April 18, 2008

Balance Sheet as at March 31, 2008

statement of operations for the year ended March 31, 2008

US $

Rs in Lacs

Assets

Sales

3,164,223

1,256.20

Cost of Goods sold

US$

Rs in Lakhs

Current Assets Cash and Cash Equivalents Accounts receivable - trade Deferred tax asset Prepaid and other assets

2,490,365

988.67

165,291 366,549 12,061 75,232

65.62 145.52 4.79 29.87

Gross Profit

673,858

267.52

Operating Expenses

460,546

182.84

Total Current Assets

619,133

245.80

Operating Income

213,312

84.68

65,923

26.17

Goodwill

2,981,564

1183.68

Other Income (Expenses)

Total Non- Current Assets

3,047,487

1209.85

Interest Income

Total Assets

3,666,620

1455.65

Impairmnent of goodwill

Intangible assets, net of accumalated amortization of $584912

Liabilities and stockholder’s equity

Amortization of Intangible Assets

Current Liabilities

Interest Expenses

Account payable Accrued expenses Total Current Liabilities

1,194,763

474.32

26,735

10.61

1,221,498

484.93

755,000

299.74

Deffered Tax Liability Total Long term liabilities

5.19 (11.53)

(161,757)

(64.22)

(52,351)

(20.78)

(230,070)

(91.34)

(16,758)

(6.65)

Net (loss) before provision for Income Taxes

Long Term Liabilities Note Payable

13,070 (29,032)

21,686

8.61

776,686

308.34

Benefit from income taxes Net (loss)

7,375

2.93

(9,383)

(3.73)

Stockhoder’s equity Common Stock, 0.01 par value, 51,000 shares authorized, 510

0.20

1,499,490

595.30

issued and outstanding Additional paid in capital

168,436

66.87

Total Stockholder's equity

1,668,436

662.37

Total liabilities and stockholder's equity

3,666,620

1455.65

Retained earnings

The accompanying notes are in integral part of these financial statements.

The accompanying notes are integral part of these financial statements.

Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on 31st March 2008 (US$ 1.00 = Rs 39.70)

For Godrej Global Solutions, Inc. Sanjay Tipnis Director

Date : April 18, 2008

185

STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY FOR THE YEAR ENDED March 31, 2008 Common Stock Number $0.01 of Shares Par Value Balance at April 1, 2007 Issuance of common stock Net loss Balance at March 31, 2008

Additional Paid-in Capital US $

Retained Earnings US $

Total US $

1,000

999,990

177,819

1,177,819

50,000

500

499,500

500,000

(9,383)

51,000

510

1,499,490

168,436

1,668,436

Notes Accompanying the Financial Statements For the Year Ended March 31, 2008 Note 1 - Nature of the Business Godrej Global Solutions, Inc. (the “Company” or “GGSI”) was incorporated on January 21, 2005, under the laws of the state of Delaware; The Company began its operations on April 8, 2005, the day it acquired the assets of another company. The Company’s principal activity is to provide information technology services consisting of business process outsourcing services. Presently, the principal areas of industry it services are claims processing for insurance companies and healthcare third party administrators. Note 2 - Summary of Significant Accounting Policies Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, which include accounts receivable, accounts payable and other accrued expenses, approximate their fair values due to their short maturities. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current events and actions, actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly-liquid financial instruments purchased with original maturity of three months or less at the date of purchase to be cash equivalents for financial statement purposes. Cash equivalents are stated at cost plus accrued interest, which approximates fair value. At March 31, 2008, cash equivalents consist of bank deposits and short term investments. Accounts Receivable Accounts receivable are stated at the amount the Company expects to collect from customers. An allowance for doubtful accounts is provided for that portion of accounts receivable considered to be uncollectible, based upon historical experience and management’s evaluation of outstanding accounts receivable at the end of the year. Accounts receivable is presented net of an allowance for doubtful accounts of $13,394 at March 31, 2008. Note 2 -Summary of Significant Accounting Policies (Continued) Long-Lived Assets The Company reviews long-lived assets for impairment whenever an event or changes in circumstances indicates that the carrying amount of such assets may not be recoverable. The carrying values of long- lived assets are assessed for recoverability based on estimated future undiscounted cash flows associated with them. Where this assessment indicates a deficit, the assets are written down to market value. For assets which do not have a readily determinable market value, the assets are written down to their estimated market value calculated based on estimated future discounted cash flows. Assets to be disposed of are reported at the lower of the carrying value or fair value, less the cost to sell. Goodwill and Intangible Assets The Company evaluates the carrying value of goodwill at least annually to determine whether impairment may exist. The evaluation of whether goodwill is impaired consists of a comparison of the fair value of the reporting unit, to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill, and a comparison of the implied fair value of the reporting unit’s goodwill to the carrying amount of that goodwill. If the carrying amount exceeds fair value an impairment loss is recognized equal to that excess. Intangible assets are initially measured based on their fair values. Intangible assets are being amortized on a straight-line basis over a period of four years. Revenue Recognition Revenues generated from providing services to customers are recognized at the time the services are provided. Revenue earned from fixed-price engagements is recognized on a straight-line basis over the service period. Note 2 - Summary of Significant Accounting Policies (Continued) Income Taxes Income tax expense consists of current tax expense and the net change in tax deferred tax assets or liability during the year. The current income tax expense from operations consists of India income taxes payable in connection with earnings generated n India. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to

186

taxable income in the years in which the temporary differences are expected to be received or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the income statement in the period of enactment of the change. Concentration of Credit Risk Concentration of credit risk exists when changes in economic, industry or geographic factors occur. Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable. To minimize customer credit risk, ongoing credit evaluations of customers’ financial condition are performed, although collateral generally is not required. The Company maintains its cash in bank deposit accounts in several institutions which at times may exceed the federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. At March 31, 2008, the Company has approximately $29,000 in excess of the FDIC insured limits. The Company has not experienced any losses in such accounts. During the year ended March 31, 2008 the Company provided services to four customers that constituted approximately 92% of sales. The Company anticipates the growth of the business will overcome any loss of future revenue from these customers. The Company currently uses only one vendor, an affiliate, for the outsourcing of data processing. Management believes the vendor can be replaced with other outsourcing vendors if necessary. Note 3 - Goodwill During the year ended March 31, 2008, the company identified an impairment related to goodwill as one customer on the customer list did not renew their contract. The amount of the impairment was determined based on the amounts allocated to customers within the overall list of customers at acquisition, and amounted to $29,032. Goodwill is comprised of the following: Expertise of employees

Goodwill March 31, 2007 $ 302,420

Goodwill

Impairment

120.06 lacs (Rs.)

–

Customer list

893,653

–

(29,032)

Entry into U.S. markets

1,814,523

–

Total goodwill

$ 3,010,596

1196.2 lacs (Rs.)

(29,032)

March 31, 2008 $ 302,420

120.06 lacs (Rs.)

864,621

–

1,814,523

–

$ 2,981,564 1183.68 lacs (Rs.)

Note 4 - Stockholder’s Equity Common Shares As of April 1, 2007, there were 1,000 Common Shares, which have a $0.01 par value, issued to Godrej Global Solutions (Cyprus) Limited (“GGSC”). On September 5, 2007, the Company issued an additional 50,000 common shares of $0.01 par for $500,000 to GGSC. Each share of common stock is entitled to one vote. The holders of common stock are entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors. Note 5 - Note Payable During the fiscal year ended March 31, 2008, the Company issued an additional unsecured note amounting to $200,000 in favor of GGSC. Further $500,000 of the principal amount of another note payable was converted into common stock. All the notes payable bear interest at the rate of 7% per annum. The entire amount of the principal is due on May 31, 2010. Total interest expense was $52,351 for the year ended March 31, 2008. The outstanding notes payable as of March 31, 2008 is $755,000. Note 6 - Income Taxes As of March 31, 2008, the Company’s deferred taxes are as follows: US $ Deferred tax asset – current Accounts receivable Net operating loss carry forward Total deferred tax asset – current Deferred tax asset (liability) – long-term Amortization of goodwill Amortization of intangible assets Total deferred tax asset (liability) – long-term The Company’s provision for income taxes for the year ended March 31, 2008, is as follows: Deferred tax benefit

Rs. in lacs

5,358 6,703 12,061

2.13 2.66 4.79

(69,033) 47,347 (21,686)

2.74 1.88 8.60

7,375

2.93

Note 7 - Employee Benefit Plans The Company sponsors a defined contribution plan (individual retirement account) covering substantially all its employees. Company contributions are at the discretion of the Board of Directors. Defined contribution pension expense for the Company was $55,000 for the year ended March 31, 2008. Note 8 - Related Party Transactions The Company’s data entry and related services are provided by Godrej Global Solutions Limited, an affiliate wholly owned by the Company’s parent, for servicing the Company’s clients. During the period ended March 31, 2008, the Company’s expenses include $2,490,365 for the services provided by Godrej Global Solutions Limited. As of March 31, 2008, the amount in accounts payable due to Godrej Global Solutions Limited is $1,194,763. Note 9 - Intangible Assets In connection with acquisition of the assets of Outsource Offshore Inc. (“OOI”), the assets acquired included $650,835 of intangible assets other than goodwill. All of these intangible assets is attributable to the value of the contracts purchased from OOI. The Company estimates the useful lives of the contracts remaining at March 31, 2008, to extend over a period of up to one year. Amortization in the amount of $161,757 was recorded in the fiscal year ended March 31, 2008. Estimated amortization expense for the year ending March 31, 2009 amounts to $65,923 after which the intangible assets will be fully amortized. Note 10 - Commitments and Contingencies The Company extended the lease for its office space located in Newton, Massachusetts from November 2007 to April 2008 with base rental payments increasing to $1,700 a month. Rent expense for the year ended March 31, 2008, was $20,457.

STATEMENT OF CASH FLOW FOR THE YEAR ENDED March 31, 2008 US $

Rs in Lacs

$(9,383)

(3.73)

161,757

64.22

Cash Flows from Operating activities Net loss Adjustments to reconcile net income to net cash provided by operating activities Amortization of intangible assets Bad debts expense

13,394

5.32

Impairment of Goodwill

29,032

11.53

Deferred tax benefit

(7,375)

(2.93)

Changes in operating assets and liabilities Decrease in Accounts receivable

19,656

7.80

(64,273)

(25.52)

Increase in accounts payable

77,565

30.79

Increase in accrued expenses

3,493

1.39

223,866

88.87

(1,132,483)

(449.60)

Increase in prepaid and other assets

Net Cash provided by operating activities Cash flows from investing activities Purchase of goodwill Cash flows from financing activities Proceeds from note payable Net decrease in cash annd cash equivalents Cash and Cash equivalents- April 1, 2007

200,000

79.40

(708,617)

(281.32)

873,908

346.94

$165,291

65.62

$500,000

198.50

Cash Paid during the year for interest

$52,351

20.78

Cash paid during the year for income taxes

$63,367

25.16

Cash and Cash equivalents- March 31, 2008 Supplemental disclosure of non- cash investing and financing activities Decrease in note payable Supplemental disclosure of cash flow information

The accompanying notes are an integral part of this financial statements

187

FOR YOUR USE

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

ATTENDANCE SLIP

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

I hereby record my presence at the TWENTIETH ANNUAL GENERAL MEETING of the Company to be held at Y.B. Chavan Centre, Nariman Point, Mumbai - 400 021 on Tuesday, July 29, 2008 at 4.30 p.m.

..................................................................................................... Name of attending Member/Proxy

. ......................................................................... Member’s/Proxy’s Signature (To be signed at the time of handing over this slip)

Notes : 1. Shareholder/Proxyholder wishing to attend the Meeting must bring the Attendance Slip to the Meeting and hand-over at the entrance duly signed. 2. Shareholder/Proxyholder should bring his/her copy of the Annual Report for reference at the Meeting.

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

Proxy Form

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

I/We..................................................................................................................................................... of.................................................................................................................................. being a member/ members of the abovementioned Company, hereby appoint................................................................................. or failing him....................................................................... as my/our proxy to vote for me/us on my/our behalf at the TWENTIETH ANNUAL GENERAL MEETING of the Company to be held on Tuesday, July 29, 2008 at 4.30 p.m. and at any adjournment thereof. This form is to be used in favour of the resolution(s)............................................................. ............ /against the resolution/s..................................................................................................... Unless otherwise instructed the proxy will act as he thinks fit. Signed this.................. day of.......................... 2008. Affix Re 1/Revenue Stamp Signature............................................................ Note : Proxy Forms must reach the Company’s Registered Office not less than 48 hours before the Meeting.