GIL Annualreport 2005 06

Annual Report 2005 -2006
GODREJ INDUSTRIES LIMITED
DIRECTORS
A.B. Godrej Chairman
J.N. Godrej
N.B. Godrej Managing Director
S.A. Ahmadullah
V.M. Crishna
K.K. Dastur
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
1
Godrej Industries Limited
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 : Vikhroli Pirojshanagar, Eastern Express Highway,
Vikhroli, Mumbai 400 079.
Phone : 022 - 2518 8010, 2518 8020, 2518 8030
Fax : 022 - 2518 8068/2518 8074
Valia Burjorjinagar,
Plot No. 3, Village Kanerao,
Taluka - Valia, District Bharuch,
Gujarat 393 135.
Phone : 02643 - 270756 to 270760
Fax : 02643 - 270018
Wadala L.M. Nadkarni Marg
Near M.P. T. Hospital
Wadala (East), Mumbai 400 037.
Phone : 022 - 2412 6320/23, 2414 6296
Fax : 022 - 2412 6204/2416 4599
CONTENTS Page Nos. Mandideep Plot No. 5, New Industrial Area No. 1
Mandideep, District Raisen,
Financial Highlights ............................................... 03 Bhopal - 462 046, MP
Notice ..................................................................... 04 Phone : 07480 - 233405-6
Fax : 07480 - 233409
Directors’ Report along with Management
Discussion and Analysis Report ............................ 11 BRANCHES : Delhi 4th Floor, Delite Theatre Building,
Report on Corporate Governance ........................ 21 4/1, Asaf Ali Road, New Delhi 110 002
Shareholders' Information ...................................... 25 Phone : 011 - 2326 1069/76
Fax : 011 - 2326 1088
Auditors’ Report ...................................................... 27
Kolkata Block GN, Sector-V,
Accounts ................................................................. 30 Salt Lake City, Kolkata 700 091.
Consolidated Accounts ........................................... 53 Phone : 033 - 2357 3556, 2357 3555
Fax : 033 - 2357 3945
Statement Pursuant to Section 212 ....................... 68
Chennai New No. 102, (Old No. 81),
SUBSIDIARIES Chamiers Road,
Godrej Agrovet Limited ......................................... 69 Chennai 600 028.
Phone : 044 - 2431 5721/2431 5722
Goldmohur Foods & Feeds Limited ...................... 79
Fax : 044 - 2431 5723
Golden Feed Products Limited ............................. 85 London 284A, Chase Road, Southgate,
Krithika Agro Farm Chemicals and Engineering London N14 - 6HF., UK
Industries Private Limited ...................................... 90 Phone : (004420) - 88860145
Godrej Beverages & Foods Limited ..................... 93 Fax : (004420) - 88869424
Godrej Properties Limited ..................................... 100 BANKERS : Central Bank of India

Girikandra Holiday Homes & Resorts Limited .... 107 State Bank of India
Bank of India
Godrej Realty Private Limited .............................. 110
HDFC Bank Ltd.
Godrej Waterside Properties Private Limited ...... 113 Citibank N.A.
Godrej Hicare Limited. ......................................... 115 REGISTRARS : Computech Sharecap Ltd.
Ensemble Holdings & Finance Limited ................ 121 147, Mahatma Gandhi Road,
Godrej International Limited ................................. 126 Opp. Jehangir Art Gallery, Fort,
Mumbai 400 023.
Godrej Global Mid East FZE ................................ 128
Phone : 022 - 2267 1824-26
Godrej Global Solutions Limited .......................... 132 Fax : 022 - 2267 0380
Godrej Global Solutions (Cyprus) Limited ............ 137 E-Mail : helpdesk@computechsharecap.com
Godrej Global Solutions, Inc ................................ 141
2
Annual Report 2005 -2006
GODREJ INDUSTRIES LIMITED – FINANCIAL HIGHLIGHTS

(Rs. Lac)
2005-06 2004-05 2003-04 2002-03 2001-02
BALANCE SHEET
SOURCES OF FUNDS :
Shareholders’ Funds
Share Capital 2919 2919 2919 2919 3699
Reserves & Surplus 34216 30618 26197 21511 21030
Loan Funds
Secured Loans 24911 22075 16814 14815 15051
Unsecured Loans 7803 3557 4235 7432 13456
Deferred Tax Liability 3818 2502 2972 3466 1347
73667 61671 53137 50143 54583
APPLICATION OF FUNDS :
Fixed Assets 28594 25100 25656 28130 29099
Investments 37135 33577 26533 18646 14619
Net Working Capital 5719 2868 739 2944 9987
Miscellaneous Expenditure 2219 126 209 423 878
73667 61671 53137 50143 54583
INCOME AND PROFIT
Total Income 80270 82353 73355 67780 53465
Expenditure other than Interest and Depreciation 69660 70117 64243 57737 43408
Profit before Interest, Depreciation and Tax 10610 12236 9112 10043 10057
Interest (net) 2837 2582 580 2024 3218
Profit before Depreciation and Tax 7773 9654 8532 8019 6839
Depreciation 2260 2148 2150 2211 2154
Profit before Tax and exceptional items 5513 7506 6382 5808 4685
Exceptional items - expense/(income) (3106) — — — 624
Provision for Current Tax 82 401 365 421 150
Net Profit after Tax 8537 7105 6017 5387 3911
Provision for Deferred Tax 1417 (470) (494) 2119 923
Adjustment in respect of prior years - (income) 8 (2) (57) (153) (121)
Net Profit after taxes and adjustments 7112 7577 6568 3421 3109
Note : The figures for FY 2002-03 are not comparable with the previous year in view of the Schemes of Arrangement with Godrej Consumer
Products Limited and Godrej Foods Limited, in FY 2001-02.
Total Income 2005-2006 Total Expenditure 2005-2006

Break-up of Total Income Break-up of Total Expenditure
Rs. Lac Rs. Lac
3
NOTICE TO SHAREHOLDERS
NOTICE is hereby given that the EIGHTEENTH ANNUAL GENERAL MEETING of the members of GODREJ INDUSTRIES LIMITED will be
held on Monday, July 24, 2006 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, 2006, the Balance Sheet
as at that date, the Auditors’ Report thereon and the Directors’ Report along with Management Discussion and Analysis Report and
Statement of Corporate Governance.
2. To declare dividend for the financial year ended March 31, 2006.
3. To appoint a Director in place of Mr. J.N. Godrej, who retires by rotation and being eligible offers himself for re-appointment.
4. To appoint a Director in place of Ms. T.A. Dubash, who retires by rotation and being eligible, offers herself for re-appointment.
5. To appoint a Director in place of Mr. V.F. Banaji, who retires by rotation and being eligible offers himself for re-appointment.
6. To appoint a Director in place of Mr. M. Eipe, 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 authorize the Board of Directors of the Company to fix their remuneration. M/s. Kalyaniwalla & Mistry, Chartered
Accountants, the retiring Auditors are eligible for re-appointment.
SPECIAL BUSINESS :
8. To consider and, if thought fit, to pass with or without modification(s), the following resolution as a SPECIAL RESOLUTION :-
RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIII and other applicable provisions, if any, of the Companies
Act, 1956, approval of the Company be and is hereby accorded for the re-appointment and remuneration payable to Ms. T.A. Dubash as
a Whole-Time Director of the Company designated as Executive Director & President (Marketing), for a period of three years from
April 1, 2007 to March 31, 2010 on the terms and conditions as contained in the Agreement to be entered into between the Company
and Ms. T.A. Dubash, a draft of which is placed before the meeting and for the purpose of identification, initialed by the Chairman.
Act, 1956, approval of the Company be and is hereby accorded for the re-appointment and remuneration payable to Mr. V. F. Banaji as
a Whole-Time Director of the Company designated as Executive Director & President (Group Corporate Affairs) for a period of three
years from April 1, 2007 to March 31, 2010, on the terms and conditions as contained in the Agreement to be entered into between the
Company and Mr. V. F. Banaji, a draft of which is placed before the meeting and for the purpose of identification, initialed by the
Chairman.
Act, 1956, approval of the Company be and is hereby accorded for the re-appointment and remuneration payable to Mr. M. Eipe as a
Whole-Time Director of the Company designated as Executive Director & President (Chemicals), for a period of three years from April 1,
2007 to March 31, 2010 on the terms and conditions as contained in the Agreement to be entered into between the Company and
Mr. M. Eipe, a draft of which is placed before the meeting and for the purpose of identification, initialed by the Chairman.
Act, 1956, approval of the Company be and is hereby accorded for the remuneration payable to Mr. M. P. Pusalkar as a Whole-Time
Director of the Company designated as Executive Director & President (Corporate Projects), for a period of three years from April 1, 2007
to March 31, 2010 on the terms and conditions as contained in the Agreement to be entered into between the Company and Mr. M. P.
Pusalkar, a draft of which is placed before the meeting and for the purpose of identification, initialed by the Chairman.
RESOLVED THAT subject to the provisions of Section 314 and other applicable provisions, if any of the Companies Act, 1956, approval
of the Company be and is hereby accorded to the revision in remuneration payable to Mr. Pirojsha A. Godrej, son of Mr. A.B. Godrej,
Chairman of the Company, with effect from April 1, 2006 on the terms and conditions as detailed in the Explanatory Statement hereto.
13. To consider and if deemed fit, to pass, with or without modification(s), the following resolution as an ORDINARY RESOLUTION:
RESOLVED THAT pursuant to Section 13, 16 and 94 and any other applicable provisions of the Companies Act, 1956, the provisions
contained in Articles of Association of the Company and any other applicable law for the time being in force and as may be amended from
time to time and subject to such conditions and modifications, if any, as may be prescribed or imposed while granting such approvals,
permissions and sanctions, if any, which may be agreed to, by the Board of Directors of the Company (which term shall be deemed to
include any Committee which the Board may constitute, to exercise its powers including the powers conferred by this resolution), the
existing Equity Shares of the face value of Rs.6/- (Rupees Six) each in the Share Capital of the Company be sub-divided into 6 (Six) Equity
Shares of the face value Re.1 (Rupee one) each and consequently, the Equity Share Capital of the Company of Rs. 80,00,00,000/- (Rupees
Eighty Crore only) comprising of 13,33,33,333 (Thirteen Crore Thirty Three Lac Thirty Three Thousand Three Hundred Thirty Three) equity
shares of Rs.6/- (Rupees Six) each be divided into 80,00,00,000 (Eighty crore) equity shares of the face value of Re.1 (Rupee one) each, with
effect from the ‘Record Date’ to be determined by the Board of Directors of the Company for the purpose.
4
Annual Report 2005-2006
RESOLVED FURTHER THAT the issued, subscribed and fully paid–up Equity Share Capital of the Company, as on the Record Date that
may be fixed by the Board of Directors of the Company (hereinafter referred to as “the Board” which expression shall be deemed to
include any duly authorized committee thereof), be sub-divided from 4,86,41,942 equity shares of the face value of Rs. 6/- each into
29,18,51,652 (Twenty nine crore eighteen lac fifty one thousand six hundred fifty two) equity shares of the face value of Re.1/- (Rupee
one) each.
RESOLVED FURTHER THAT the Board be and is hereby authorised to inform the Registrar and Transfer Agents of the Company and the
depositories to take necessary action to give effect to the above and also to issue new share certificates representing the sub-divided shares
with new distinctive numbers (except in case of shares held in the demat form), in the aforesaid proportion subject to the rules as laid down
in the Companies (Issue of Share Certificates) Rules 1960 with an option to either exchange the new share certificates in lieu of cancellation
of the old share certificates or without physically exchanging the share certificates, by treating the old share certificates, as deemed to be
cancelled or by credit of sub-divided equity shares in shareholders’ demat accounts in exchange of old share certificate/s.
RESOLVED FURTHER THAT the Board be and is hereby severally authorised to do all such acts, deeds, matters and things and execute
all such documents, instruments and writings as may be required in the said connection and to delegate all or any of the powers herein
vested in them to give effect to the above.
14. To consider and if deemed fit, to pass, with or without modification(s), the following resolution as an ORDINARY RESOLUTION:
RESOLVED THAT pursuant to the provisions of Section 16 of the Companies Act, 1956 and any other provisions as may be applicable the
existing Memorandum of Association of the Company be altered by deleting the existing Clause V and substituting in place thereof the
following Clause as Clause V:
The Authorised Capital of the Company is Rs.180,00,00,000/- (Rupees One Hundred Eighty Crore) divided into 80,00,00,000 (Eighty
crore) Equity Shares of Re.1/- (Rupee one) each, and 10,00,00,000 (Ten Crore) Unclassified Shares of Rs.10/-each.
15. To consider and if deemed fit, to pass, with or without modification(s), the following as SPECIAL RESOLUTION:
RESOLVED THAT pursuant to the provisions of Section 31 and other applicable provisions, if any, of the Companies Act, 1956 and the
provisions of any other law as may be applicable for the time being in force, the Articles of Association of the Company be altered by
deleting the existing Article 3 and substituting in place thereof the following as Article 3:
3. The Authorised share capital of the company is Rs.180,00,00,000/- (Rupees One Hundred Eighty Crore) divided into 80,00,00,000
(Eighty crore) Equity Shares of Re.1/- (Rupee one) each, and 10,00,00,000 (Ten Crore) Unclassified Shares of Rs.10/- each with power
to the Board of Directors of the Company to divide the shares in the capital of the Company for the time being into several classes
therein and to make such modifications therein as the Board may deem fit, and with power to increase or reduce the capital of the
Company and to divide the shares in the capital for the time being into several classes and to attach thereto respectively such
preferential, deferred qualified or special rights, privileges or conditions as may be determined by or in accordance with the Articles
of Association of the Company and to vary modify, amalgamate or abrogate any such rights, privileges or conditions in such manner
as may for the time being be provided by the Articles of Association of the Company and as may be thought expedient.
Notwithstanding anything contained herein, the Company shall be entitled to dematerialise its shares, debentures and other securities
pursuant to the Depositories Act, 1996 and to offer its shares, debentures and other securities for subscription in a dematerialised form.
By Order of the Board of Directors
S. K. BHATT
Executive Vice-President
(Corporate Services)
& Company Secretary
Mumbai, May 26, 2006
Registered Office :
Pirojshanagar, Eastern Express Highway,
NOTES :
1. The relative Explanatory Statement in respect of business under Item Nos. 8 to 15 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 17, 2006 to July 24, 2006 (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
5
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
31.03.2000 01.07.2007
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
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 nos.8 to 11
The tenure of the following Whole-time Directors with the Company will expire on March 31, 2007.
Ms. T.A. Dubash – Executive Director & President (Marketing)
Mr. V.F.Banaji – Executive Director & President (Group Corporate Affairs)
Mr. M. Eipe – Executive Director & President (Chemicals)
It is proposed to re-appoint Ms. T.A. Dubash, Mr. V.F. Banaji, and Mr. M. Eipe for a further period of three years from April 1, 2007 to
March 31, 2010.
Mr. M.P. Pusalkar was reappointed by the Shareholders at their Meeting held on July 26, 2005, as a director liable to retire by rotation pursuant
to Section 255 of the Companies Act, 1956. However, the approval of shareholders to the remuneration payable to him as a Whole-time
Director will expire on March 31, 2007. Hence, it is proposed to approve his remuneration as a Whole-time Director for a period of three
years from April 1, 2007 to March 31, 2010 along with the other Whole-time Directors.
The proposed remuneration and terms and conditions of appointment of each of the aforementioned Whole-time Directors are given below :-
1. Ms. T.A. Dubash, Mr. V.F.Banaji, Mr. M. Eipe and Mr. M.P. Pusalkar (hereinafter individually referred to as the Whole-time Director) shall
perform their duties subject to the superintendence, control and direction of the Board of Directors of the Company.
2. Period of appointment of
Ms. T.A. Dubash – from 1/4/2007 to 31/3/2010
Mr. V.F. Banaji - from 1/4/2007 to 31/3/2010
Mr. M. Eipe – from 1/4/2007 to 31/3/2010
Mr. M.P. Pusalkar – from 1/4/2007 to 31/03/2010
3. In consideration of the performance of their duties, the Whole-time Directors, viz. Ms. T.A. Dubash, Mr. V.F. Banaji, Mr. M. Eipe and
Mr. M.P. Pusalkar shall be entitled to receive remuneration as stated hereinbelow:-
1. Fixed Compensation:
Fixed Compensation shall include Basic Salary and the Company’s Contribution to Provident Fund and Gratuity Fund.
The Basic Salary shall be in the range of Rs.1,70,000/- to Rs. 5,00,000/- per month, payable monthly. The Annual increments will be
decided by the Compensation Committee/Board of Directors depending on the performance of the Whole-time Director, the profitability
of the Company and other relevant factors.
The Basic Salary approved for the year 2006-07 for each of the above Whole- time Director is within the range of Rs.1,70,000 –
Rs.3,00,000 per month.
2. Performance Linked Variable Remuneration
Performance Linked Variable Remuneration according to the Scheme of the Company for each of the financial years as may be decided
by the Compensation Committee/Board of Directors of the Company based on Economic Value Added in the business and other relevant
factors and having regard to the performance of each of the Whole-time Director for each year.
3. Flexible Compensation:
In addition to the Fixed Compensation and PLVR, each Whole-time Director 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 each Whole-time Director in the manner as the Board may decide.
6
Housing as per rules of the Company (i.e. unfurnished residential accomodation and House Rent Allowance at applicable rate as per
Company’s rules OR House Rent Allowance as per Company’s rules);
Furnishing at residence as per rules of the Company;
Supplementary Allowance;
Leave Travel Assistance in accordance with the rules of the Company;
Payment/reimbursement of medical expenses for self and family in accordance with the rules of the Company.
Payment/reimbursement of Food Vouchers, petrol reimbursement;
Company cars with driver for official use, provision of telephone(s) at residence;
Payment/reimbursement of telephone expenses;
Housing Loan as per rules of the company, Contingency Loan as per rules of the company. These loans shall be subject to Central
Government approval, if any;
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;
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 each of the Whole-time Director shall
be Rs.25,00,000/- plus 63.33% of the annual basic salary. For the year 2006-07 the cost to the Company for all the heads of flexible
compensation payable to each of the Whole-time Director is Rs.13,20,000/- plus 63.33% of annual basic salary. In addition to the above,
the Whole-time Director will 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 and dependent
children and dependent parents.
ii) Perquisites shall be evaluated at actual cost or if the cost is not ascertainable the same shall be valued as per Income Tax Rules.
4. Overall Remuneration
The aggregate of salary and perquisites as specified above or paid additionally in accordance with the rules of the Company in any
financial year, which the Board in its absolute discretion pay to the Whole-time Director from time to time, shall not exceed the limits
prescribed from time to time under Sections 198, 309 and other applicable provisions of the Companies Act, 1956 read with Schedule
XIII to the said Act as may for the time being, be in force.
5. Loans
(a) Granting of loans according to Company’s Scheme subject to Central Government’s approval, if applicable.
(b) Continuation of Loans already availed:
Contingency Loan to Mr. M.P. Pusalkar as on March 31, 2006 – Rs.24,999/-.
Notes :
I. Unless otherwise stipulated, for the purpose of the above, the perquisites shall be evaluated as per Income Tax Rules wherever actual
cost cannot be determined.
II. Notwithstanding the foregoing, where in any Financial Year during the currency of the tenure of the Whole-time Director, the Company
has no profits or its profits are inadequate, the remuneration by way of salary, commission and perquisites shall not exceed, the maximum
limits prescribed in Schedule XIII to the Companies Act, 1956 except with the approval of the Central Government.
III. The limits specified above are the maximum limits and the Compensation Committee / Board may in its absolute discretion pay to Whole-
time Directors lower remuneration and revise the same from time to time within the maximum limits stipulated above.
IV. In the event of any re-enactment or re-codification of the Companies Act, 1956 or the Income Tax Act, 1961 or amendments thereto, the
foregoing shall continue to remain in force and the reference to various provisions of the Companies Act, 1956 or the Income Tax Act,
1961 shall be deemed to be substituted by the corresponding provisions of the new Act or the amendments thereto or the Rules and
notifications issued thereunder.
V. If at any time the Whole-time Director ceases to be in the employment of the Company for any cause whatsoever, she/he shall cease to
be Whole-time Director of the Company.
VI. Whole-time Directors are appointed by virtue of their employment in the Company and their appointment is subject to the provisions of
Section 283(1) of the Companies Act, 1956 while at the same time the Whole-time Directors are liable to retire by rotation. The appointment
is terminable by giving three months’ notice in writing on either side.
Draft of the agreements to be entered into with each of the above referred Whole-time Directors is available for inspection at the Registered
Office of the Company from 10.00 A.M. to 12.00 Noon, Monday to Friday (except public holidays) upto the date of the Annual General
Meeting.
7
The particulars given above constitute the abstract of the terms of the agreement which is required to be given to every member under the
provisions of Section 302 of the Companies Act, 1956.
The Board of Directors of the Company recommends passing of the resolution as set out at Item no.8 to 11 of the Notice.
Ms. T.A. Dubash, Mr. V.F. Banaji, Mr. M. Eipe and Mr. M.P. Pusalkar may be deemed to be interested in the resolutions at Item no.8 to 11
respectively. Mr. A.B. Godrej, being relative of Ms. T.A. Dubash, may be deemed to be interested in the resolution at item no.8. None of the
other Directors of the Company are concerned or interested in the resolutions.
Item no.12
Mr. Pirojsha A. Godrej was appointed as an employee of the Company with effect from June 1, 2004. It is proposed to revise the remuneration
payable to Mr. Pirojsha A. Godrej with effect from April 1, 2006 on the following terms and conditions :-
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. 20,000 to 75,000 per month, payable monthly. The Basic Salary as on April 1, 2006 is
Rs.25,000/- p.m.
2. Performance Linked Variable Remuneration
Performance Linked Variable Remuneration according to the Scheme of the Company.
3. Flexible Compensation:
In addition to the Fixed Compensation and PLVR, Mr. Pirojsha 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 Mr. Pirojsha A. Godrej in the manner as the Board may decide.
Housing as per rules of the Company (i.e. unfurnished residential accomodation and House Rent Allowance at applicable rate as per
Company’s rules OR House Rent Allowance as per Company’s rules);
Furnishing at residence as per rules of the Company;
Supplementary Allowance;
Leave Travel Assistance in accordance with the rules of the Company;
Payment/reimbursement of medical expenses for self and family in accordance with the rules of the Company.
Payment/reimbursement of Food Vouchers, petrol reimbursement;
Company car with driver for official use, provision of telephone(s) at residence;
Payment/reimbursement of telephone expenses;
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;
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 limit of cost to the Company per annum for all the heads of flexible compensation payable to Mr. Pirojsha A. Godrej shall
be Rs.50,000/- plus 55% of the annual basic salary. For the year 2006-07 the cost to the Company under all the heads of flexible
compensation payable to Mr. Pirojsha A. Godrej shall be Rs.3,06,000/- plus 55% of annual basic salary. In addition to the above, Mr.
Pirojsha A. Godrej will be eligible to encashment of leave, group insurance cover, group mediclaim cover, and/or any other allowances,
perquisites and facilities as per the Rules of the Company.
Notes:
1. 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.
2. The following shall not be included in the computation of perquisites :
(a) Provision for use of Company’s car with driver for official use.
(b) Provision of free telephone facilities or reimbursement of telephone expenses at residence including payment of local calls and
long distance official calls.
3. The Board in its absolute discretion can decide the designation/cadre of Mr. Pirojsha A. Godrej within the above salary range.
4. The limits specified above are the maximum limits and the Board may in its absolute discretion pay to Mr. Pirojsha A. Godrej, lower
remuneration and revise the same from time to time within the maximum limits stipulated above.
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.
8
Item nos.13 to 15
At present the Company’s paid up and listed equity Share Capital is Rs. 29,18,51,652/- which is divided into 4,86,41,942 equity shares of
Rs.6/- each. The Board is of the view that the liquidity of the equity shares of the Company in the stock markets should be increased. Towards
this end, it is proposed to reduce the nominal value of equity shares of the Company by sub-dividing the equity shares to make it more
affordable to the retail investors. Therefore, it is proposed that the nominal value of equity shares of the Company be reduced from Rs. 6/- each
to Rs. 1/- each.
Consequent to the sub-division of shares, it is necessary to alter the Capital Clause of the Memorandum and Articles of Association of the
Company. The Ordinary Resolution in Item No. 14 and Special Resolution in Item No. 15 seek to make corresponding amendments in Clause
V of the Memorandum of Association and Article 3 of the Articles of Association of the Company to give effect to the above.
The Board of Directors believes that such issue is in the interest of the Company and therefore recommends the resolutions for your approval.
The Directors of the Company may be deemed to be interested in this Resolution to the extent of their respective shareholdings in the
Company.
The Board of Directors of the Company recommends the passing of the resolutions as set out at Items no. 13 to 15 of the Notice.
By Order of the Board of Directors
S. K. BHATT
Executive Vice-President
(Corporate Services)
& Company Secretary
Registered Office :
Pirojshanagar, Eastern Express Highway,
Details of the Directors seeking appointment/reappointment at the forthcoming Annual General Meeting (in pursuance of Clause 49 of the
Listing Agreement)
Mr. J.N. Godrej (57) : Mr. J.N. Godrej holds a bachelor’s degree in Mechanical Engineering and a masters’ degree in Business Administration
from the Illinois Institute of Technology, USA. He is a Director on the Board of the Company from 7-3-1988. He joined the Board of Directors
of Godrej & Boyce Mfg Co Ltd. (G&B) in 1974. He was appointed Managing Director of G&B in 1990 and became Chairman of the Board of
G&B in 2000. Mr. Godrej is President of World Wide Fund for Nature, India, Vice President of World Wide Fund for Nature-International, past
President of Confederation of Indian Industry and past President of the Indian Machine Tool Manufacturer’s Association.
Directorship in other Companies :
Chairman & Managing Director: Godrej & Boyce Mfg Co Ltd.
Chairman: Geometric Software Solutions Co. Ltd., 3D PLM Software Solutions Ltd., Lawkim Ltd.
Director: Bajaj Auto Ltd., Godrej Agrovet Ltd., Godrej Foods Ltd., Godrej Sara Lee Ltd., Godrej Properties Ltd., Godrej Consumer Products
Ltd., Godrej Beverages & Foods Ltd., Godrej Upstream Ltd., Haldia Petrochemicals Ltd., Breach Candy Hospital Trust, Antrix Corporation Ltd.,
Godrej Investments Pvt. Ltd., Tata Trustee Company Pvt. Ltd., Illinois Institute of Technology (India) Pvt. Ltd., Godrej (Malayasia) Sdn. Bhd.,
Godrej (Singapore) Pte. Ltd., Godrej (Vietnam) Company Ltd., Godrej & Khimji (Middle East) LLC.
Committee position held:
Chairman – Investor Grievances & Redressal Committee, Compensation Committee-Geometric Software Solutions Ltd.
Member – Audit Committee, Shareholders/Investors Grievances Committee-Bajaj Auto Ltd.
Member – Compensation Committee-Haldia Petrochemicals ltd.
Trustee – General Committee-Breach Candy Hospital Trust.
Ms. T.A. Dubash (37): Ms. T.A. Dubash, Executive Director & President (Marketing), is a graduate in Economics & Political Science from Brown
University, USA and has completed an Advanced Management Program from the Harvard Business School. She looks after the Group wide
marketing function which involves:
A supervisory role in all marketing initiatives, including being in charge of marketing of new initiatives of the Group.
Heading a Marketing Council comprising of heads of marketing of all Group companies to capitalize on synergies such as sharing of best
practices and development of standardized processes through training and knowledge management.
Chairperson: Ensemble Holdings & Finance Ltd.,
Director: Tahir Properties Ltd., Girikandra Holiday Homes & Resorts Ltd.
Godrej Global Mideast FZE, Godrej Agrovet Ltd., Keyline Brands Ltd., Godrej Holdings Pvt. Ltd.
Member: Shareholders Committee-Godrej Industries Ltd.
9
V. F. Banaji (52): Mr. V.F. Banaji is B.A. from Nagpur University. His responsibilities as ED & President (Group Corporate Affairs) include
leadership of the Group HR function for Godrej Industries and Associate Companies as well as Corporate Strategy and Corporate
Communications.
Before joining the Company he was based in Paris as leader of ALSTOM’s global project for re-engineering key HR processes and supporting
them through the deployment of a state-of-the-art HR Management System. Prior to his international assignment, he worked as Executive
Director (HR) for ALSTOM in India. His earlier career was with the Tatas, where his last assignment was as Head of the Corporate HR function
for Telco (now Tata Motors).
Directorship in other Companies : Nil
Member – Shareholders Committee-Godrej Industries Ltd.
Mr. Mathew Eipe (53) : Mr. Mathew Eipe graduated in Chemical Engineering from the Indian Institute of Technology, Mumbai, in 1975. He is
a Management graduate from the Indian Institute of Management, Kolkata. He joined the erstwhile Godrej Soaps Limited, as a Management
Trainee in 1977. Currently, he heads the Chemicals, Medical Diagnostics and Estate businesses of the Company and is designated as Executive
Director & President (Chemicals).
Mr. Eipe has been a member of the Committee of Administration of Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council
(CHEMEXCIL) for the last two years.
Director: Godrej Hicare Ltd., Ensemble Holdings & Finance Ltd.
Member – Shareholders Committee-Godrej Industries Ltd.
10
DIRECTORS’ REPORT
To the Shareholders, SUBSIDIARY AND ASSOCIATE COMPANIES
Your Directors have pleasure in submitting the Annual Report along Your Company has interests in several industries including animal feeds,
with the Audited Accounts for the year ended March 31, 2006. poultry and agro-products, property development, household insecticides,
pesticides, tea, infotech, etc. through its subsidiary/associate companies.
REVIEW OF OPERATIONS
Godrej Agrovet Limited (GAVL) : The Operations of the Company was
Your Company’s performance during the year as compared with that impacted due to the detection of Avian influenza in some parts of the
during the previous year is summarized below. country and unfavourable raw material prices due to delayed monsoon.
(Rs. lac) The cumulative effect was a marginal increase of 7% in total income
from Rs.56852 lac in the previous year to Rs.60556 for the year ended
Year ended March 31,
31.03.06. The Profit after Tax however declined sharply from Rs.1417
2006 2005
lac to Rs.683 lac, a fall of 52%. As against a total dividend payment of
Sales of products and services 74542 76335 88% last year GAVL declared a dividend of 40%.
Other Income 5728 6018
GAVL has the following businesses viz. Animal feeds, Integrated poultry
Total Income 80270 82353 business, Agri inputs, Oil palm plantations and Plant biotech. The
Total Expenditure other than Interest and prolonged monsoon and detection of Avian influenza had its effect on
Depreciation 69660 70117 the operations of the Animal Feeds and Integrated poultry business of the
Profit before Interest, Depreciation and Tax 10610 12236 Company. As against this, the Agri Input business recorded a 40% growth
in top line and a 49% growth in the bottom line. The ‘Aadhaar’ initiative
Depreciation 2260 2148
to provide a complete solution to Agri Sector opened 7 new centres
Profit before Interest and Tax 8350 10088 taking the total number of Aadhaars to 23. The Division also undertook
Interest and Financial Charges (net) 2837 2582 a new initiative ‘Nature’s Basket’ in providing gourmet fresh fruits and
Profit before Tax 5513 7506 vegetables through this retail chain. This initiative has also received a
Provision for Current Tax 82 401 good response.
Profit after Current Tax 5431 7105 GAVL acquired a majority stake in Krithika Agro Farm Chemicals &
Provision for Deferred Tax 1417 (470) Engineering Industries Pvt. Ltd., Orissa during the year. GAVL has also
formed a Joint Venture in UAE in the poultry business with a 70% stake
Profit after Current and Deferred Taxation 4014 7575
in the company which operates under the name of Al-Rahba International
Profit on sale of undertaking, extraordinary
Trading LLC which has commenced production in the second half of
item (Net of tax) 3106 – 2005-06.
Net Profit 7120 7575
Adjustments in respect of prior years (8) 2 Goldmohur Foods and Feeds Limited (GFFL), a wholly owned subsidiary
Surplus brought forward 20082 15481 of GAVL was also impacted by the prolonged monsoon and Avian
influenza detected in some parts of the country. The Total Income was
Profit after Tax available for appropriation 27194 23058
marginally lower at Rs.29,588 lac as against Rs.30,860 lac in the previous
Appropriation
year. The Profit after Tax however was Rs.538 lac as against Rs. 345 lac
Your Directors recommend appropriation as under: in the previous year. GFFL declared an interim dividend of 168% in the
Dividend on Equity Shares 2432 1946 current year as compared to interim dividend of 163% in the previous
Tax on distributed profits 341 273 year.
Transfer to General Reserve 711 758
Golden Feed Products Limited (GFPL) commenced operations during
Surplus Carried Forward 23710 20082
the year. It acquired the shrimp feed marketing business of Higashimaru
Total Appropriation 27194 23058 Feeds India Ltd. effective 31st October, 2005. The postponement of the
shrimp farming season affected the business and GFPL reported a revenue
The total income reduced by 1.8% from Rs. 82353 lac to Rs. 80270 lac. of Rs. 346 lac and a loss of Rs. 140 lac for 2005-06.
The Net Profit for the year was Rs.7120 lac as compared to
Rs. 7575 lac, in the previous year, a decrease of 5.95%. Godrej Properties Limited (GPL) recorded an increase in Total Income
of Rs. 2,862 lac from Rs. 4,185 lac in the previous year to Rs.7,046 lac
DIVIDEND
in the current year. The Profit after Tax increased from Rs. 583 lac in the
The Board of Directors of your Company recommends a final dividend previous year to Rs.1,339 lac, an increase of 130%. GPL has declared
of Rs. 5/- per equity share of Rs. 6/- each, aggregating to Rs.2432 lac, as an interim dividend of 96% as compared to 39.56% in the previous
against final dividend of Rs. 4/- per equity share of Rs. 6/- each aggregating year.
to Rs. 1,945 lac in the previous year.
During the year, two commercial projects undertaken in Pune-Godrej
MANAGEMENT DISCUSSION & ANALYSIS Eternia C & Godrej Castlemaine were completely sold out. Phase-I of
There is a separate section on Management Discussion and Analysis in Godrej Collesium in Mumbai was also sold out. Commencement of Phase
this Annual Report, which, inter alia, covers the following: II is in full swing and is expected to be completed by December, 2006.
The Company also commenced a residential complex in Bangalore
Industry Structure and Developments which was well received. The projects in Thane and Kalyan are
Discussion on financial performance with respect to operational progressing as per schedule. The Company also acquired two private
performance companies viz., Casablanca Properties Pvt. Ltd. and Bridgestone
Segment-wise performance Properties Pvt. Ltd. during the year and has changed their names to
Human Resources and Industrial Relations Godrej Realty Pvt. Ltd. and Godrej Waterside Properties Pvt. Ltd.
Opportunities and Threats respectively.
Internal Control Systems and their adequacy Godrej International Limited (GINL) has posted a net profit of
Risks and Concerns US$ 382,566 in the current year as compared to US$ 399,262 in the
Outlook previous year. GINL has proposed a final ordinary dividend of 6 US
The same is appended as Annexure A to the Directors’ Report. cents per ordinary share of £1 aggregating to US$ 156,300 on the entire
11
share capital including the increased share capital of about US$ 1.9 On a consolidated basis GCPL earned a Total Income of Rs.70849 lac
million raised during the year, as against a final dividend aggregating and PAT of Rs.12080 lac for the year ended March 31, 2006
US$ 150,500 in the previous year.
GCPL is aggressively pursuing organic and inorganic growth opportunities
Godrej Global MidEast FZE (GGME), a 100% subsidiary of GINL consistent with EVA focus. The macro environment too is encouraging
registered a Net Profit of AED 191167 as compared to AED 190379 in with increasing spend being witnessed by both urban and rural consumers.
the previous year. GGME has started exporting to Sudan and hopes to GCPL is expected to continue delivering strong growth and stakeholder
enter Pakistan soon. value.
Godrej Hicare Limited (GHL), a service company in the Pest FINANCIAL POSITION
Management business earned Total Income of Rs. 2112 lac as compared
to Rs. 1206 lac in the previous year recording growth of 75%. GHL The financial position of your Company continues to be sound. The loan
recorded a Profit after Tax of Rs. 104 lac as compared to loss of Rs.113 funds as at the end of the year is at Rs.32638 lac as compared to
lac in the previous year. During the year GHL acquired reticulation Rs. 25575 lac as at the end of the previous year. Your Company continues
technology (for pre-construction anti-termite treatment) from Termguard, to hold the topmost rating of A1+ from ICRA for its commercial paper
Australia and Thermal imaging camera for termite detection from FLIR, programme. The rating indicates that the prospect of timely repayment
Sweden. The Company undertook a major quality initiative to enhance of debt/obligation is the best.
service delivery to customers. The Company has aggressive plans for MANUFACTURING FACILITIES
geographical expansion in the forthcoming year while continuing to
grow in current markets by increasing service centers. Chemicals Division :
Godrej Global Solutions Ltd. (GGSL), a back-office transaction The Chemicals Division of your Company has manufacturing facilities at
processing service company earned Total Income of Rs. 966.30 lac as Vikhroli and Valia.
against Rs. 290.57 lac in the previous year. During the year under Valia :
review, GGSL acquired through its US subsidiary Godrej Global During the year under review, Export Oriented Unit (EOU) at Valia
Solutions, Inc, the business of Outsource Offshore Inc. a US based started commercial production. The factory has commissioned a
healthcare forms processing service provider. GGSL also acquired the “Pastillation plant” to cater to the domestic and international demand for
data conversion business of Softpage Data Conversion Private Ltd. During
long chain fatty alcohol in pastille form. The Pastillation plant is a fully
the year GGSL has set up a state of the art service delivery capability at
automated plant.
Chennai and Navi Mumbai which can support customers in areas of
Healthcare such as Medical transcription, medical billing, claims The factory won the National Award for Excellence in Water
processing and document management services. Management in Excellent Category in a competition organised by CII at
Godrej Beverages & Foods Ltd. (Formerly Godrej Tea Limited) (GBFL) Hyderabad for effecting water recycling mechanism and conservation
earned a Total Income of Rs. 783 lac as compared to Rs. 1579 lac in the of natural resources.
previous year. GTL recorded loss of Rs. 1717 lac as compared to loss of Vikhroli :
Rs. 2142 lac in the previous year. W.e.f. the close of business hours on Various initiatives for de-bottlenecking, reducing costs and quality
March 31, 2006 GBFL acquired Foods Division (excluding Wadala improvement has improved the throughput in the various plants.
factory) from Godrej Industries Ltd. under a slump sale agreement for a Considering the increasing demand for fractionated fatty acids, your
total consideration of Rs.70 crore. Further, IL&FS Investment Managers Company has decided to increase the fractionation capacity at Vikhroli.
Ltd. invested Rs.60 crore in the equity share capital of GBFL for a 40% During the year, the Vikhroli factory offered Voluntary Retirement Scheme
stake in the Company. Post this acquisition, GTL changed its name to (VRS) to the workers. 322 workers opted for VRS and as a result the
GBFL. Post the acquisition, GBFL is expected to perform better in the workers strength has reduced to 678.
coming years as its activities will broaden through both organic and
inorganic growth and synergy. The factories of the Chemicals Division at Vikhroli and Valia are already
ISO 9001 certified for their quality management systems. Both factories
Godrej Sara Lee Limited (GSLL) experienced a good year both in terms have also been certified to be ISO 14001 compliant by BVQI for their
of sales & profits. The Total Income increased by 12% and Profit after Tax environment management system. Vikhroli factory has also been certified
registered an increase of 41% as compared to the previous year. The
for OHSAS 18001 standards by BVQI.
Company’s continuous focus on value engineering and cost reduction
has shown good results. The exports business of the company has more Foods Division :
than doubled during the year. The Company has launched Mini Jumbo Foods Division had two manufacturing facilities; viz Wadala (Mumbai),
coils under the brand “Good Knight” and Home fresheners under the and Mandideep near Bhopal.
brand “Ambipur” during the year. The Company has remained a dominant
player in household insecticide market with mat market share of 35%. On 14th March, 2006, your Company signed a slump sale agreement for
the Foods division with Godrej Tea Ltd. (Now known as Godrej Beverages
Godrej Consumer Products Limited (GCPL), a Company in which your & Foods Ltd.). As per the agreement, the foods division (except the Edible
company holds 11.93% has declared dividends aggregating to 350% in fats Wadala factory) has been sold to Godrej Tea Ltd. with effect from the
the current year as compared to 300% in the previous year. GCPL is a close of working hours on 31st March, 2006. Post the restructuring Wadala
focused FMCG company. On a standalone basis GCPL earned a Total factory is renamed as the Veg Oils Division of Godrej Industries Ltd.
Income of Rs.66598 lac in the current year as compared to Rs. 56908
lac in the previous year. GCPL’s PAT in the current year increased to The factory at Mandideep is certified under ISO-14001 standards.
Rs.12070 lac as compared to Rs. 8606 lac in the previous year. The Mandideep Factory was awarded the ‘Best Outsourced Manufacturer
Award’ in culinary category for the year 2005 by Hindustan Lever Ltd.
In October 2005, GCPL acquired 100% ownership interest in Keyline
Brands Ltd. (UK) through a 100% subsidiary SPV structure. Keyline is RESEARCH AND DEVELOPMENT
one of U.K.’s admired FMCG companies engaged in the manufacture, During the year under review, amongst the achievements of R & D of
marketing, sales and distribution of cosmetics and toiletries with a strong
your Company the notable ones include collaborative research approach
portfolio of brands and a well developed customer base in numerous
with detergent manufacturers to develop new generation detergent
supermarket chains and discount stores. This transaction gives GCPL
blends, developing the technology for the manufacture, transportation
ownership of several international brands and trademarks including
and storage of high active surfactant products and value addition to
‘CUTICURA’, ‘ERASMIC’ and ‘AAPRI’ in many countries. The Acquisition
enables GCPL to widen geographical presence and access trade channels some by-products manufactured by your Company so as to enter certain
in key developed markets including Europe, Australia and Canada. niche markets. R & D efforts of your Company also focused on increasing
intellectual property by filing four new patent applications.
12
INFORMATION SYSTEMS Company will be entitled to the benefits of CDM in the form of Certified
Emission Reduction units (CERs) on the basis of power units generated
The e-CRM (electronic customer relationship management) module is
through windmills.
being extended to cover International Customers which reinforces the
organization’s commitment to provide top quality service to all its FIXED DEPOSITS
stakeholders. The Chemicals Division has also put in place a knowledge
Your Company has stopped accepting Fixed Deposits from the public.
portal ensuring that important tacit knowledge amongst key employees
Public Deposits of an aggregate amount of Rs. 180.09 lac which matured,
is retained and reused by the organization. have been repaid during the year.
A number of new initiatives/modules have been added to the employee
DEPOSITORY SYSTEM
portal ‘Godrejite’ for the benefit of employees. These include the online
access for GOLD (Godrej Organisation for Learning & Development) Your Company’s equity shares are available for dematerialisation through
and Legal Online, etc. National Securities Depository Limited & Central Depository Services
(India) Limited. As of 31st March, 2006, 99.39% of the equity shares of
EMPLOYEE STOCK OPTION PLAN
your Company were held in demat form.
The shareholders at their Extraordinary General Meeting held on
SUB-DIVISION OF EQUITY SHARES
1st December, 2005 had approved Godrej Industries Limited Employee
Stock Option Plan (GIL ESOP) for grant of 15,00,000 (Fifteen Lac) Options With a view to improve liquidity of Equity Shares of the Company on
convertible into 15,00,000 (Fifteen Lac) equity shares of the nominal Stock Markets, the Board of Directors of your Company has, subject to
value of Rs.6/- each to the employees/directors of the Company and/or approval of the Members in the forthcoming Annual General Meeting,
its subsidiaries. To start with the Compensation Committee of the Company recommended Sub-Division of Equity Shares of Rs.6/- each into Equity
in its meeting held on 14th February, 2006 approved the grant of Options Shares of Rs.1/- each. The Company will separately announce the record
to the members of the Group Management Committee (GMC) which date for sub-division in due course.
currently consists of Managing, Executive and Whole-Time Directors of DIRECTORS
the Company and/or its subsidiary companies. Details of the Options
allotted under GIL ESOP, as also the disclosures in compliance with In accordance with Article 127 of the Articles of Association of the
clause 12 of the Securities and Exchange Board of India (Employee Company, Mr. J.N. Godrej, Ms. T.A. Dubash, Mr. M. Eipe and
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, Mr. V.F. Banaji retire by rotation at the ensuing Annual General Meeting.
1999 are set out in the Annexure B to this Report. They are eligible and offer themselves for re-appointment.
GROUP FOR INTERSE TRANSFER OF SHARES AUDITORS
As required under Clause 3(1)(e) of the Securities and Exchange Board You are requested to appoint Auditors for the current year and fix their
of India (Substantial Acquisition of Shares and Takeovers) Regulations, remuneration. The retiring auditors, Kalyaniwalla & Mistry, Chartered
1997, persons constituting Group (within the meaning as defined in the Accountants, are eligible for re-appointment. A certificate from the
Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of Auditors has been received to the effect that their re-appointment, if
availing exemption from applicability of the provisions of Regulation 10 made, would be within the limits prescribed under Section 224(1B) of
to 12 of the aforesaid SEBI Regulations are given in Annexure C attached the Companies Act, 1956.
herewith and the said Annexure C forms part of this Annual Report. Pursuant to directions from the Department of Company Affairs, P. M.
ENVIRONMENT AND SOCIAL CONCERN Nanabhoy & Co., Cost Accountants, have been appointed as Cost Auditors
for the year 2005-06. They are required to submit their report to the
Your Company continues its efforts for the betterment of the environment Central Government within 180 days from the end of the accounting
and conservation of scarce natural resources. year.
Your Company continued “Rain water harvesting” initiatives undertaken AUDIT COMMITTEE
during the previous year at its factories at Vikhroli and Valia and in the
staff quarters at Vikhroli. “Rain water harvesting” is a process by which The Audit Committee which was constituted pursuant to the provisions of
rain water is collected and channelised into tanks for domestic Section 292A of the Companies Act, 1956 and the listing agreement, has
consumption. So far 7655 Sq.Meter of roof area has been covered under reviewed the Accounts for the year ended 31st March, 2006. The
the rain water harvesting initiative and 13,300 M3 of water has been members of the Audit Committee are Mr. F.P. Sarkari (Chairman),
collected at Vikhroli factory and staff quarters. This process has resulted Mr. V. N.Gogate and Mr. S.A. Ahmadullah.
in saving water and consequently, the costs, thereof. DIRECTORS’ RESPONSIBILITY STATEMENT
To prevent pollution to environment, efforts are made to convert waste Pursuant to the provisions contained in Section 217(2AA) of the
from the factories into an environment-friendly product and then dispose Companies Act, 1956, the Directors of your Company confirm:
off the same safely. Your Company continued its arrangement with Trans
Thane Creek Waste Management Association for the treatment of solid a. that in the preparation of the annual accounts, the applicable
waste being generated at the Company’s factories at Vikhroli and Wadala. accounting standards have been followed and no material departures
The Vikhroli factory has undertaken a project to convert the bio have been made from the same;
degradable waste into bio compost with the help of an NGO. b. that such accounting policies have been selected and applied
The factories focused on waste elimination and also continued their consistently, and such judgements and estimates have been made
energy conservation measures. 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
Your Company also commissioned 5 windmills of 1.25 MW each in July- and of the profit or loss of the Company for that period.
August, 2005 at Dhule in Maharashtra. Windmills generate electricity
from wind energy and are encouraged for augmenting the power c. that proper and sufficient care has been taken for the maintenance
generation in the country on account of their non-polluting nature. Wind of adequate accounting records in accordance with the provisions
power producing clean energy is a potential candidate for Clean of this Act for safeguarding the assets of the Company, for preventing
Development Mechanism (CDM) benefits under the Kyoto Protocol of and detecting fraud and other irregularities;
United Nations Framework Convention on Climate Change (UNFCCC). d. that the annual accounts have been prepared on a going concern
Your Company has already got approval from the Ministry of Environment basis.
and Forest for the project. Once approved by the UNFCCC, your
13
CORPORATE GOVERNANCE Companies Act, 1956. Any shareholder interested in obtaining a copy of
the same may write to the Company Secretary at the Registered office
As required by the existing Clause 49 of the Listing Agreements with the
of the Company.
Stock Exchanges, a detailed report on Corporate Governance is included
in the Annual Report. The Auditors have certified the Company’s The Notes to the Accounts referred to in the Auditors’ Report is self-
compliance of the requirements of Corporate Governance in terms of explanatory and therefore does not call for any further explanation.
Clause 49 of the Listing Agreement and the same is annexed to the
ACKNOWLEDGEMENT
Report on Corporate Governance.
Your Directors thank the Union Government, the Governments of
ADDITIONAL INFORMATION
Maharashtra, Madhya Pradesh, Gujarat as also all the Government
Annexure D to this Report gives information in respect of Conservation agencies, banks, financial institutions, shareholders, customers,
of Energy, Technology absorption and Foreign Exchange earnings and employees, fixed deposit holders, vendors and other related organizations,
outgo, required under Section 217(1)(e) of the Companies Act, 1956, who, through their continued support and co-operation, have helped as
read with the Companies (Disclosure of Particulars in the Report of the partners in your Company’s progress.
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
For and on behalf of the Board of Directors
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 A.B. Godrej
the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Chairman
Report and Accounts are being sent to the Shareholders of the Company, Mumbai, May 26, 2006
excluding the statement of particulars of employees u/s 217(2A) of the
14
ANNEXURE "A" FORMING PART OF THE DIRECTORS’ REPORT

MANAGEMENT DISCUSSION AND ANALYSIS
INDUSTRY STRUCTURE AND DEVELOPMENTS CHEMICALS DIVISION
The Indian economy maintained its growth momentum in F.Y 2005-06 The Chemicals division operates in the oleo-chemicals and surfactants
thanks to industrial resurgence, moderate inflation, growth in international industries. The division has a blend of domestic and international
trade, as well as, improving physical infrastructure. The index of industrial operations and continued its leadership position in the Indian market.
production and the growth trend for the last 2-3 years indicates an With its strong manufacturing base and integrated systems, the division
upswing in the economy and a steady growth of industry and services has been able to manufacture quality products and offer them at
sector. The positive investor sentiment, evidenced by rise in stock market competitive prices. The sales of the division dropped about 6% in value
indices will also induce investment inflow into the country and augurs terms during the year largely on account of a significant drop in the
well for the economy. selling prices internationally, coupled with reduction in customs duty,
The overall performance of your Company has been satisfactory. Except which affected the domestic prices.
the Chemicals division, most of the businesses performed better than the The products category-wise review follows:
previous year. The division-wise performance and outlook have been
covered separately in this report. Fatty Alcohol
FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL Fatty Alcohol accounted for 47% of the turnover of the division. The
PERFORMANCE category declined 8% in value, both on account of lower selling prices
and lower volumes. Effective pricing strategies, customer relationships
The highlights of overall performance excluding extraordinary items are and initiatives in the areas of product development, packaging and
as follows: logistics, helped maintain good share in the domestic and international
Rs. Lac market, despite increased competition.
Particulars 2005-06 2004-05
Sales 74548 76335 The division is now working with major multi nationals to become their
Total Income 80270 82353 preferred global supplier. The capacity expansion through an Export
Profit Before Taxation 5513 7506 Oriented Unit (EOU) was achieved in late March 2006, which will
Profit After Current Taxation 5431 7105 increase the capacity in this product category by about 60% and is
Profit After Current & Deferred Taxation 4014 7575 expected to increase the revenue in the coming year.
Earnings per Equity Share (Rupees) 8.24 15.58
Profitability ratios are as follows: Glycerin
PBDIT/Total Income 13.22% 14.86% Glycerin accounted for 7% of the turnover of this division. Revenue
PBT/ Total Income 6.87% 9.11% declined 8% over last year, owing to the sharp decline in the international
PAT/ Total Income 8.87% 9.20% price of refined glycerin, though there was a volume growth of over
Return on Capital Employed 11.76% 17.58%
7%. Prices having bottomed out, the opportunity now lies in market
Return on Net Worth 12.31% 24.31%
Basic EPS (Rs.) 8.24 15.58 expansion as glycerin could possibly substitute other polyols on account
The Financial risk ratios are as follows: of its competitive price.
Debt/Equity 0.94 0.77 Surfactants
Interest coverage 2.94 3.91
Your Company is the pioneer, as well as, market leader in the production
SEGMENT PERFORMANCE (Rs. Lac)
of Alpha Olefin Sulphonate (AOS) in India, a surfactant used in several
2005-06 2004-05
1. Segment Revenue well-known shampoos and detergent brands in the country. Surfactants
Chemicals 51178 54307 contributed 10% to the turnover of Chemicals division. Sales of surfactant
Foods 21117 19197 category declined 23% in volume and 20% in value terms on account
Estate 2282 2158 of the steep increase in the price and paucity of Alpha Olefin (AO)
Finance & Investments 4575 5823 which is petroleum based raw material. The increased cost of AOS has
Others 1118 868 affected the margin, as also the off-take.
Total 80,270 82,353 The division is looking at alternative uses of the sulphonation capacity
2. Segment Results (PBIT) available and is exploring other value added products in this segment.
Chemicals 4,760 6,230
Foods (341) (857) High AO prices have now made manufacture of oleo chemical AO
Estate 1472 1361 viable and the division is planning to produce AO - C16 from vegetable
Finance & Investments 4575 5373 oils in the coming year.
Others (112) 115
Fatty Acids
Total 10354 12222
Less: Interest (Net) (2837) (2582) The fatty acids portfolio comprising stearic acid, oleic acid, as well as,
Less: Unallocated expenses (Net) (2004) (2134) specialty fatty acids accounted for about 35% of the turnover of the division.
Profit Before Tax 5513 7506 Continuous cost reduction and market development initiatives have helped
grow this category by about 9% in volume and 3% in value terms. The
3. Segment Capital Employed division is taking necessary steps to strengthen its position in this category
Chemicals 24448 17732
Foods 3277 4733 and counter competition from imports, as well as, small players.
Estate 2331 2750 Other initiatives
Finance & Investments 40239 36123
Others 3413 304 The division has engaged Goldratt Consulting, well-known for their
‘Theory of Constraints’, to apply these principles for business improvement.
Unallocated (41) 30
This is expected to benefit the division in terms of improved plant
Total 73667 61672 throughput, better supply chain and project management.
15
Outlook tight control on working capital usage and engaging the National
Productivity Council for productivity improvements at the Mandideep
The outlook for the coming year 2006-07 is mixed at this point in time.
factory. This division too is applying the relevant principles of Theory of
Internationally, new capacities have been announced for oleo chemical
Constraints to improve its business.
fatty alcohols, which is likely to increase the availability. At the same
time, steep increase in the price of mineral oil is impacting petrochemical Restructuring
fatty alcohol plants which are expected to be under cost and margin
On 14th March, 2006, your company signed an agreement with Godrej
pressure, which may curtail output. The increase in bio-diesel
Tea Ltd. (now known as Godrej Beverages & Foods Ltd.) for the sale of
manufacturing capacity is expected to impact vegetable oil prices. The
the Foods division. As per the agreement, the foods division (except the
strong growth in demand for fast moving consumer goods (FMCG) and
Edible fats Wadala factory) has been sold to Godrej Tea Ltd. for a
the other industry segments that the division caters to, augurs well for
consideration of Rs 70 crore with effect from close of working hours of
the products of the Chemicals division.
31st March, 2006. Post the restructuring, Wadala factory is renamed as
The business initiatives to strengthen distribution, improve supply chain the Veg Oils Division of Godrej Industries Ltd.
and customer relationship management, backed by expansion in capacity
are expected to help grow revenue, as well as, profits of the business. Future Outlook
FOODS DIVISION As per the above restructuring, the Vegoils division of Godrej Industries
Ltd is expected to sell oil in bulk and also carry out processing for third
The Foods Division recorded sales of Rs. 21,117 lac during the year parties.
under review as compared to Rs.19197 lac in the previous year clocking
a growth of about 10%. Estate Management
Industry Outlook Mumbai continues to be perceived as a suitable location with good infra
structure and availability of skilled manpower by the BPO sector. Increase
The Prices of Edible oils continued to show a bearish trend in view of in real estate prices and the rentals has made the CBD area less affordable
higher domestic production and in spite of a growing demand for bio and the suburbs are now more in demand. Your Company continues to
diesel in the international markets. Intense competition in the category effectively utilize the available space by giving the unutilized space on
and underutilization of plant capacities prevented a rise in selling prices. leave and licence basis to reputed corporates for their back office
Heavy imports of cheap Sri Lankan Vanaspati impacted the domestic operations. The green environment and good infrastructure with close
industry adversely. proximity to the CBD, airport and surburbs are major advantages making
The Processed Foods Division saw the Fruit Juice category register good Vikhroli a preferred location. The total income from this business for the
growth rates in light of increasing consumer preference over carbonated year was about Rs. 2,280 lac as compared to Rs.2,166 lac previous year
soft drinks. In spite of a good mango crop, higher prices of pulp led to an increase of 5%.
lower off takes and a pressure on margins.
Medical Diagnostics
There are two categories in this Division, viz., Edible Fats and Processed
The Medical Diagnostics Division is in the business of distribution of
Foods.
diagnostic equipment and consumables to the medical community. This
Edible Fats Division division achieved a turnover of Rs.958 lac for the year, recording a
The turnover during the year under review was Rs. 14,228 lac. Intense growth of 19% in value terms over the previous year. The focus of the
competition by large players impacted this business. The division Division was on implementation of rigorous sales and operation planning
continued to focus on increasing margins and selling only in profitable (S&OP) process and reduction in Net Working Capital.
areas. As a result, the growth in sales of edible oils and Vanaspati during The division plans to increase its product portfolio by introduction of a
the year was marginal. new range of Biochemistry Analysers. The Division also plans to extend
Processed Foods Division its sales activities to SAARC countries, particularly Sri Lanka and
Bangladesh.
The turnover of products in this category was Rs. 5,985 lac as compared
to Rs. 4,223 lac during the previous year, recording a growth of 41%. FINANCE AND INVESTMENTS
The Division produces and markets fruit drinks, fruit nectars and juices Dividend income for the year was Rs. 2,275 lac (previous year Rs.2,236
in Tetrapak, undertakes processing for third parties and also sells fruit lac) and profit on sale of investment Rs. 2120 lac (mainly arising out of
pulp. The fruit drinks category in Tetrapak saw intense competitive 1% stake sold in Godrej Consumer Products Limited).
pressures with a number of new players launching their brands this Your Company invested Rs.866 lac in its 100% subsidiary Godrej
year. In this scenario, the division focused on the trade sales segment to International Limited which is into international trading to strengthen its
improve the sale of “Jumpin” fruit drink. base. Your Company also invested in Boston Analytics LLC (a KPO in
This year the division invested in brand building activities (e.g. media research and analysis) for a stake of 18.5%.
advertising) on Xs and Sofit which was essential to improve sales in the
Your Company sold its stake in Godrej Remote Services Ltd. which was
highly competitive segment of the beverages market. This helped in
into medical transcription business to CBay Systems Ltd. and also
growing the sales value of Xs by 39% and of “Sofit” by 18%. The
consolidated its stake in CBay systems Ltd. Your Company now holds
division launched two new flavours under its ‘SOFIT’ brand viz., Kesar
16.63% stake in CBay Systems Ltd.
Pista and Malt Chocolate, for which the response has been good.
HUMAN RESOURCES, INDUSTRIAL RELATIONS
The division saw a good growth over last year in third party processing
of pulp/squash/jam at the Mandideep Factory. The factory was also Industrial Relations at all locations were cordial. At the Chemicals’ plant
adjudged ‘Best Outsourced Manufacturer- Culinary category’ by in Vikhroli a restructuring exercise was initiated and as a result workers
Hindustan Lever Limited. strength has reduced by 32%. Following restructuring exercise, long
Over all, the focus of the Division continued to be predominantly on term settlement was signed with the workers amicably settling all the
improving profitability in both the above categories during the year by pending industrial disputes. Similar long term settlement was also signed
focusing on high margin products, restricting sale to profitable areas, with the Valia unit.
16
Your Company formed the Godrej Industries Limited Employees’ Group RISKS AND CONCERNS
Gratuity Trust to manage the gratuity funds. Rs. 12 crore of the gratuity
Your Company had undertaken a comprehensive review of its risk
liability of the company has been funded and has been invested in the
management process and has put a risk management framework in
group gratuity schemes of reputed insurance companies. The investments
place. The review involved understanding the existing risk management
have yielded an average return of 11.8% p.a. for the period ended
initiatives, zero-based identification and assessment of risks in the various
March 31, 2006.
businesses as also the relative control measures and developing
The total number of persons employed in your Company as on appropriate risk response strategy for various risks identified while
March 31, 2006 was 1711. keeping in mind the risk appetite of the organization. A risk committee
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY has been constituted to periodically review the risks and develop
appropriate response strategies to ensure achievement of company’s
Your Company has a proper and adequate system of Internal Controls, to
objectives.
ensure that all assets are safeguarded and protected against loss from
unauthorised use or disposition and that transactions are authorised, The commodity based businesses are likely to be affected by vagaries of
recorded and reported correctly. the weather, demand for edible oil, oilseed production, etc. The business
is exposed to commodity price risks relating to raw materials which
Recently, the Corporate Audit and Assurance Department of your
account for the largest portion of the costs of both these businesses. The
Company got certified under ISO 9001: 2000. It issues well documented
operating procedures and authorities with adequate built-in controls at Chemicals business growth will also depend on the growth of end user
the beginning of any activity and any time there is a major change. industries like polymer, detergent, cosmetics and personal care.
The internal control is supplemented by an extensive programme of As a significant employer and chemical producer, to ensure occupational
internal, external audits and periodic review by the management. safety, employment standards, production safety, and environmental
Consequent to the amendment in Clause 49 of the Listing Agreement by protection, your Company maintains strict safety, health, environmental
SEBI, the Corp Audit and Assurance Dept. facilitated formal protection and quality control programs to monitor and control these
documentation, implementation and review of Internal Controls at all operational risks.
locations. Macro economic factors including economic and political developments,
The system is designed to adequately ensure that financial and other natural calamities which affect the industrial sector generally would
records are reliable for preparing financial information and other data also affect the businesses of your Company. Legislative changes resulting
and for maintaining accountability of assets. in a change in the taxes, duties and levies, whether local or central,
also impact business performance and relative competitiveness of the
OPPORTUNITIES AND THREATS
businesses.
Increased global demand fuelled by growth in end-user industries coupled
CAUTIONARY STATEMENT
with your Company’s standing for consistent quality and product delivery
customized to the needs of the clients, provides good opportunity for Some of the statements in this management discussion and analysis
growth for the Chemicals division. At the same time, new capacity describing the Company’s objectives, projections, estimates and
addition in the industry is likely to increase competition from the supply expectations may be ‘forward looking statements’ within the meaning of
side. applicable laws and regulations. Actual results might differ substantially
In the Medical Diagnostics Division, the opportunity is the large growing or materially from those expressed or implied. Important developments
middle class medically aware consumer and the increasing focus on that could affect the Company’s operations include a downtrend in industry,
medical insurance. Threat could be obsolescence of technology / products significant changes in political and economic environment in India, tax
which are more than 10 years old. laws, import duties, litigation and labour relations.
17
ANNEXURE B FORMING PART OF THE DIRECTORS’ REPORT

As per the Securities & Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 following
information is disclosed in respect of Godrej Industries Limited Employee Stock Option Plan :
Sr. No. Heading Particulars
a. Options granted 3,50,000
b. The pricing formula Market Price plus Interest at such 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
c. Options vested NIL
d. Options exercised NIL
e. The total number of shares arising as a result of exercise of option 3,50,000 equity shares of nominal value of Rs.6/- each
f. Options lapsed NIL
g. Variation of terms of options NIL
h. Money realized by exercise of options NIL
i. Total number of options in force 3,50,000
j. Employee wise details of options granted to:
i)
ii)
senior managerial personnel
any other employee who receives a grant in any one year of option
amounting to 5% or more of option granted during that year.
iii) identified employees who were granted option, during any one year,
}
NIL
As per attached statement
equal to or exceeding 1% of the issued capital (excluding outstanding

warrants and conversions) of the company at the time of grant
k. Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of There is no fresh issue of shares hence, not applicable.
option calculated in accordance with Accounting Standard (AS) 20
‘Earnings Per Share’.
l. Where the company has calculated the employee compensation cost using the The company has calculated the employee compensation
intrinsic value of the stock options, the difference between the employee cost using the intrinsic value of stock options. Had the fair
compensation cost so computed and the employee compensation cost that shall value method been used, in respect of stock options granted
have been recognized if it had used the fair value of the options, shall be disclosed. the employee compensation cost would have been higher
The impact of this difference on profits and on EPS of the company shall by Rs. 2.06 crore, Profit after tax lower by Rs. 2.06 crore
also be disclosed. and basic EPS would have been lower by Rs. 0.42
m. Weighted-average exercise prices and weighted-average fair values of Exercise price Rs. 392.35 plus interest as mentioned in
options shall be disclosed separately for options whose exercise price either pricing formula
equals or exceeds or is less than the market price of the stock. Fair Value Rs. 175.99
n. A description of the method and significant assumptions used during the year The fair value of the options granted on 14th Feb 2006 has
to estimate the fair values of options, including the following weighted-average been calculated using Black–Scholes Options pricing
information: formula and the significant assumptions made in this regard
are as follows:
i) risk-free interest rate 7.11%
ii) expected life 4 years
iii) expected volatility 65%
iv) expected dividends 1.27%
Rs. 5 per share
v) the price of the underlying share in market at the time of option grant Rs. 392.35
Statement attached to Annexure B to the Directors’ Report for the year ended 31st March, 2006.
Name of senior managerial persons to whom stock options have been granted Number of options granted
Mr. Mathew Eipe 50,000
Mr. Visty Banaji 50,000
Mr. Mohan Pusalkar 50,000
Mr. C. K. Vaidya 50,000
Mr. Hoshedar Press 50,000
Mr. Milind Korde 50,000
Mr. A. Mahendran 50,000
18
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) Regulations, 1997 (“the said Regulations”), as provided in Clause 3(1)(e) of the said Regulations:
1 Godrej & Boyce Mfg. Co. Ltd. 30 Krithika Agro Farm Chemicals & Engineering Industries Pvt. Ltd.
2 Godrej Consumer Products Ltd. 31 Aadhaar Retailing Ltd.
3 Ensemble Holdings & Finance Ltd. 32 Mercury Mfg. Co. Ltd.
4 Godrej Hicare Ltd. 33 Godrej Efacec Automation & Robotics Ltd.
5 Godrej Agrovet Ltd. 34 Godrej Upstream Ltd.
6 Goldmohur Foods & Feeds Ltd. 35 Godrej Holdings Pvt. Ltd.
7 Golden Feed Products Ltd. 36 Cartini India Ltd.
8 Godrej Properties Ltd. 37 Godrej (Vietnam) Co. Ltd.
9 Girikandra Holiday Homes & Resorts Ltd. 38 J T Dragon Pte Ltd.
10 Godrej Beverages & Foods Ltd. 39 Mr Adi B Godrej
11 Godrej Global Solutions Ltd. 40 Mrs Parmeshwar A Godrej
12 Godrej Global Solutions (Cyprus) Limited
41 Ms Nisa A Godrej
13 Godrej Global Solutions, Inc.
42 Mr Pirojsha A Godrej
14 Godrej International Ltd.
43 Mrs Tanya A Dubash
15 Godrej Global Mid East FZE
44 Mr Jamshyd N Godrej
16 Swadeshi Detergents Ltd.
45 Mrs Pheroza J Godrej
17 Vora Soaps Ltd.
46 Ms Raika J Godrej
18 Godrej Foods Ltd.
47 Mr Navroze J Godrej
19 Tahir Properties Ltd.
48 Mr Nadir B Godrej
20 Bahar Agrochem & Feeds Pvt. Ltd.
49 Mrs Rati N Godrej
21 Prashant Metal Forming Industries Pvt. Ltd.
50 Mst. Burjis N Godrej
22 Godrej Investments Pvt. Ltd.
23 Godrej Infotech Ltd. 51 Mst. Sohrab N Godrej
24 Godrej (Malaysia) Sdn Bhd 52 Mst. Hormuzd N Godrej
25 Godrej (Singapore) Pte Ltd. 53 Mr Vijay M Crishna
26 Godrej Appliances Ltd. 54 Mrs Smita V Crishna
27 Lawkim Ltd. 55 Ms Freyan V Crishna
28 Godrej Realty Pvt. Ltd. 56 Ms Nyrika V Crishna
29 Godrej Waterside Properties Pvt. Ltd. 57 Mr Rishad K Naoroji
ANNEXURE 'D' FORMING PART OF THE DIRECTORS’ REPORT

INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES Installation of UP FLOW Anaerobic Sludge Blanket reactor to
ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF reduce COD load on affluent water without surface aerators.
PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, Energy Audit by CII and implementation of 32 projects suggested
1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY thereat
ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO Installation of Suzlon make 5 wind mills of 1.25 MW capacity &
A. Conservation of Energy commissioning of power generation at Dhulia.
I. (A) Energy Conservation measures undertaken: Installation of 15 variable frequency drives (VFD) on Cooling
Tower Fans.
Installation of Vapor Absorption Chilling System at Flakers
Installation of power factor correction Panel to improve power
replacing mechanical chillers to get power saving.
factor (PF) to 0.99
Installation of Vapor Absorption Chilling System in AOS plant in Installation of energy-efficient motors in Plants.
place of conventional mechanical chilling system to get power
Installation of 400 KVA UPS to maximize use of MPSEB power to
saving.
reduce run of DG Set.
Automation of High Pressure Boiler by installing PLC based controls Installation of power factor correct (PF) panel to improve power
along with Variable Frequency drive in pump and blowers to factor.
increase efficiency as well as power saving.
Energy audit by National Productivity Council
19
(B) Proposed energy conservation measures B. Technology Absorption, Adaptation and Innovation
Recovery of flash steam from Co-generation Plant Blow down.
I. Specific areas in which R&D carried out by the Company -
This steam will be used to heat Boiler feed water in deaerator.
Scheduled monitoring of stacks of all furnaces to further improve During the year under review, Research & Development efforts in
efficiency. the following areas strengthened the Company’s operations through
Improvement in heat recovery of steam condensate collection technology absorption, adaptation and innovation :
from tank farms. a. Oils & Fatty Acids
Energy saving light fixtures b. Fatty Alcohols
Energy efficient motors
VFD for process Pumps in Plants c. Surfactants
II. Impact of measures on reduction of energy consumption and d. Glycerin

consequent impact on the cost of production of goods:- e. Product Application Group
Saving in energy costs during the period under consideration. f. Fruit Juices/ Soymilk
III. Details of energy consumption 2. Benefits derived as a result of the above R&D -
The details of energy consumption are given below. These details a. Collaborative research with detergent manufacturers to
cover the operations of your Company’s factories at Vikhroli, Valia,
develop new generation detergent blends.
Wadala and Mandideep.
b. Developing the technology for the manufacture, transportation
a) Power and Fuel consumption
& storage of high active surfactant products.
This Year Previous Year
Electricity c. Expansion of Odour Profiling capabilities by incorporating/
i) Purchased outsourcing the use of instrumental analytical tools.
Units (kWh in lac) 198.78 166.45
d. Focus on adding value to some of the by-products, in order to
Total Amount (Rs. in lac) 1037.53 849.27
enter niche markets – Fatty Acid Esters.
Rate per Unit (Rs.) 5.22 5.10
e. Patent applications for four processes
ii) Own generated through D.G. Sets
Units (kWh in lac) 19.83 47.10 3. Future Plan of Action -
Cost (Rs. in lac) 131.65 239.83 a. Developing different variants of surfactant products.
Rate per unit (Rs.) 6.64 5.09
b. Developing speciality surfactants for niche markets.
iii) Own generated through Steam
Turbine Generator - c. Developing cost effective, mixed active detergent
Co-generation formulations.
Units (KWh in lac) 277.91 269.91 d. Focus on adding value to some of our existing products –
Cost (Rs. in lac) 988.29 900.87 Glycerol Derivatives.
Rate per Unit (Rs.) 3.56 3.34
No technology has been imported during the year.
Fuel Oil (LSHS, FO and LDO)
Total Quantity (KL) 4510.42 3994.67 4. Expenditure on R&D ThisYear Previous Year
Total Amount (Rs. in lac) 802.68 565.67 Rs. lac Rs. lac
Rate per unit (Rs. per litre) 17.80 14.16
(a) Capital Nil Nil
Natural Gas
(b) Recurring 139.39 108.38
Total Quantity (SM3 lac) 401.30 341.50
(c) Total 139.39 108.38
Total Amount (Rs. in lac) 3460.90 2738.6
Rate per unit (Rs. per SM3) 8.62 8.02 (d) Total R & D expenditure as a
Pitches percentage of total sales turnover 0.19% 0.14%
Total Quantity (MT) 650.09 294.00 C. Foreign Exchange earnings and outgo:
Total Cost (Rs. in lac) 44.67 21.40
Rate per unit (Rs. per MT) 6870.67 7278.91 The Chemicals Division’s exports were Rs. 17561 lac in the current
year (including deemed exports of Rs. 2889 lac) as compared to Rs.
b) Consumption per unit of production
17570 lac in the previous year (including deemed exports Rs. 2716
Natural Gas Electricity Furnace Oil Pitches
3
lac) to. The Company continues to export refined glycerin, fatty alcohol
(SM /MT) (kWh/MT) (Litre/MT)
and other chemicals to over 50 countries including U.S.A., U.A.E.,
2005-06 2004-05 2005-06 2004-05 2005-06 2004-05 2005-06 2004-05
Japan, South Africa, Germany, U.K., France, Malaysia, China,
Fatty Acid 77.78 78.12 93.41 86.88 10.04 5.34 8.79 4.931
Australia, Mexico, Singapore and Srilanka.
Fatty Alcohol 94.77 79.88 408.29 369.11 6.86 3.93 – –
Alpha Olefin ThisYear Previous Year
Sulphonate 49.33 47.92 104.61 90.82 8.99 5.86 1.14 0.45 Rs. lac Rs. lac
Fruit Juice/ Pulp – – 149.42 70.49 36.20 15.27 – –
Foreign exchange used 26049 18091
Oils/Vanaspati – – 182.49 160.36 77.52 74.00 6.64 –
Glycerin 458.40 524.18 588.72 610.02 53.01 32.37 25.85 13.56 Foreign exchange earned 15150 15373
20
REPORT ON CORPORATE GOVERNANCE

Clause 49 of the listing agreement with the Indian Stock Exchanges Quarterly results of the Company,
stipulates the norms and disclosure standards that have to be followed Minutes of meetings of audit committee and other committees,
on the corporate governance front by listed Indian companies.
Information on recruitment and remuneration of senior officers
The Company is a part of the Godrej Group which has established a just below the Board level,
reputation for honesty and integrity. The Company’s philosophy of
Materially important show cause, demand, prosecution and
corporate governance is to achieve business excellence by enhancing
penalty notices,
the long term welfare of all its stakeholders. We believe that corporate
governance is much more than Rules, Boards, Committees. It is about Fatal or serious accidents or dangerous occurrences,
creating outperforming organisations, i.e. organizations that consistently Any materially significant effluent or pollution problems,
succeed in the marketplace against competition and thereby enhance Any materially relevant default in financial obligations to and
the value of all its stakeholders. by the Company or substantial non-payment for goods sold by
BOARD OF DIRECTORS the Company,
a) Board Structure Any issue which involves possible public or product liability
The Board of Directors of Godrej Industries Limited (GIL) comprises claims of a substantial nature,
thirteen Directors, which include one Managing Director and four Details of any joint venture or collaboration agreement,
Whole-Time Executive Directors. The remaining eight are Non- Transactions that involve substantial payment towards goodwill,
Executive Directors, with five of them being Independent Directors. brand equity or intellectual property,
The details are given in Table 1.
Significant labour problems and their proposed solutions,
b) Board meetings held & Directors’ attendance record
Significant development in the human resources and industrial
The Board meets atleast once in a quarter to consider among other
relations front,
business, quarterly performance of the company and financial results.
To enable the Board to discharge its responsibilities effectively and Sale of material nature of investments, subsidiaries, assets, which
take informed decisions, the necessary information is made available is not in the normal course of business,
to the Board. During the year six Board meetings were held on Quarterly details of foreign exchange exposure and the steps
May 30, 2005, July 26, 2005 October 24, 2005, December 13, taken by management to limit the risks of adverse exchange
2005, January 31, 2006 and March 7, 2006. The details are given rate movement,
below. Risk assessment and minimization procedures, and
Table 1: Details about GIL’s Board of Directors & meetings attended Non-compliance of any regulatory, statutory nature or listing
by the Directors during the year requirements as well as shareholder services such as non-
Name of Category Board Board Whether Director- Number payment of dividend and delays in share transfer.
Director meet- meetings attended ships of Chair-
ings attended last AGM held in manship/
held during public member- The Board of GIL is regularly presented with all information under
during
the
the
year
comp-
anies
ship in
other
the above heads, whenever applicable. These are submitted either
year incorpo- Board as part of the agenda papers well in advance of the Board meetings
rated Commit-
in India tees as at or are tabled in the course of the Board meetings.
as at the year
year end end d) Directors with materially significant related party transactions,
Chairm- Mem-
anship bership pecuniary or business relationship with the Company
A.B. Godrej Chairman – Non-Executive 6 6 Yes 12(3) 3 1 Except for drawing remuneration, none of the Directors have any
J.N. Godrej Non-Executive 6 4 Yes 14 (5) 1 3
N.B. Godrej Managing Director 6 6 Yes 13(4) 4 3 other materially significant related party transactions, pecuniary or
S.A. Ahmadullah Non-Executive - business relationship with the Company.
Independent 6 6 Yes 3(1) Nil 1
V.M. Crishna Non-Executive 6 2 No 7(2) Nil Nil
K.K. Dastur Non-Executive -
e) Remuneration of Directors: sitting fees, salary, perquisites and
Independent 6 5 Yes 6(2) 2 Nil commissions and Number of Shares held by Non-Executive Directors
V.N. Gogate Non-Executive -
Independent 6 6 Yes 1(1) Nil 1 The details of remuneration package of Directors and their
K.N. Petigara Non-Executive -
Independent 6 6 Yes 6(1) Nil 2 relationships with each other are given in Table 2. The number of
F.P. Sarkari Non-Executive - shares held and dividend paid are given in Table 3.
Independent 6 5 Yes 3(1) 2 1
V.F. Banaji Whole-time 6 5 No 1(1) 1 1
T.A. Dubash Whole-time 6 5 Yes 5(1) Nil 1
Table 2 : Remuneration in Rupees paid or payable to Directors for
M. Eipe Whole-time 6 4 Yes 3(1) Nil 1 the year ended March 31, 2006
M.P. Pusalkar Whole-time 6 6 Yes 2(2) 1 2
Name of Director Relationship with Sitting Commission Salary Perquisites Provident Total
Notes : Directors fees on profits Fund
A. B. Godrej Brother of N.B.Godrej
1. Figures in ( ) denote listed companies. Father of T.A. Dubash 240000 Nil Nil Nil Nil 240000
2. Board Meetings held during the year represent the no. of J. N. Godrej None Nil Nil Nil Nil Nil Nil
N. B. Godrej Brother of A.B.Godrej Nil Nil 7381877 340000 489600 8211477
meetings held during the tenure of that Director. S. A. Ahmadullah None 160000 Nil Nil Nil Nil 160000
None of the Directors is a member of more than 10 Board-level V. M. Crishna None 40000 Nil Nil Nil Nil 40000
K. K. Dastur None 100000 Nil Nil Nil Nil 100000
committees, or a Chairman of more than five such committees, as
V . N. Gogate None 160000 Nil Nil Nil Nil 160000
required under Clause 49 of the listing agreement. K. N. Petigara None 140000 Nil Nil Nil Nil 140000
c) Information supplied to the Board F. P. Sarkari None 120000 Nil Nil Nil Nil 120000
V. F. Banaji None Nil Nil 6990186 414432 302400 7707018
Among others, this includes: T. A. Dubash Daughter of A.B.Godrej Nil Nil 4666877 94467 295200 5056544
M. Eipe None Nil Nil 5498193 383957 374400 6256550
Annual operating plans and budgets, capital budgets, and any M. P. Pusalkar None Nil Nil 4374888 313727 204480 4893095
updates thereon,
21
Notes : Reviewing with the management, external and internal auditors, the
Salary to Mr. N.B. Godrej, Mr. V.F. Banaji, Ms. T. A. Dubash, adequacy of internal control systems.
Mr. M. Eipe and Mr. M.P. Pusalkar includes a performance Reviewing the adequacy of internal audit function including the
linked variable remuneration of Rs. 853877, Rs. 3390210, structure of internal audit department, staffing and seniority of the
Rs. 853877 and Rs. 846693 and Rs. 1475000 respectively for the official heading the department, reporting structure coverage and
year ended March 31, 2006 payable in 2006-07. frequency of internal audit.
The service contracts of the Whole-Time Directors are for a period Discussing with internal auditors any significant findings and following
of three years with a notice period of three months. it up.
Table 3: Number of shares held by Non-Executive Directors and Reviewing the findings of any internal investigations by the internal
dividend paid auditors into matters where there is suspected fraud or irregularity or
Name of Shares held as on Dividend paid during failure of internal control systems of a material nature and reporting
Non-Executive Director March 31, 2006 the year (Rupees) the matter to the Board.
F.P. Sarkari 3265 13060 Discussing with external auditors before the audit commences, nature
S.A. Ahmadullah 1000 4000 and scope of audit as well as conducting post-audit discussion to
V.M. Crishna 75013 300052 ascertain any area of concern.
V.N. Gogate 313 1252 Reviewing the Company’s financial and risk management policies.
K.K. Dastur 351 1404 Looking into the reasons for substantial defaults in payment to
depositors, debenture holders, shareholders (in case of non-payment
f) Committees of the Board
of declared dividend) and creditors.
Audit Committee
Reviewing the functioning of Whistle Blower mechanism.
GIL’s audit committee comprises of three Independent & Non-Executive
Compensation Committee
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. Setting up of a Compensation Committee for determining a company’s
Sarkari is a qualified Chartered Accountant and is knowledgeable in policy on remuneration packages for Executive Directors constitutes a
finance, accounts and Company Law. All the members of the committee non-mandatory provision of Clause 49. GIL set up its Remuneration
are eminent professionals and draw upon their experience and expertise Committee on February 22, 2002 to review the human resources policies
across a wide spectrum of functional areas such as finance and corporate and practices of the Company and, in particular, policies regarding
strategy. Minutes of each of the audit committee meetings are placed remuneration of Whole-Time Directors. The committee discusses human
before the Board meetings. Mr. S.K. Bhatt, Executive Vice-President resources policies such as compensation and performance of management.
(Corporate Services) & Company Secretary acts as secretary to the audit The Remuneration Committee was renamed as Compensation Committee
committee. The audit committee met four times during the year. Table 4 by the Board of Directors at its meeting held on October 24, 2005.
gives the attendance record. GIL’s Compensation Committee consists of the following directors: Mr. S.A.
Table 4: Attendance record of audit committee members Ahmadullah (Chairman and Independent Director); Mr. N.B. Godrej
(Managing Director); Mr. V.N. Gogate (Independent Director) and Mr. K.N.
Name of Director No. of meetings held Meetings attended
Petigara (Independent Director). During the year ended March 31, 2006,
Mr. F.P. Sarkari 4 4 the committee met four times. The attendance details are given in Table 5.
Mr. S.A. Ahmadullah 4 4 Table 5: Attendance record of Compensation Committee members
Mr. V.N. Gogate 4 4
Name of Director No. of meetings held Meetings attended
The Audit Committee of GIL performs the following functions :
Mr. S.A. Ahmadullah 4 4
Overview of the Company’s financial reporting process and the
Mr. V.N. Gogate 4 4
disclosure of its financial information to ensure that the financial
statement is correct, sufficient and credible. Mr. K.N. Petigara 4 4
Mr. N.B. Godrej 4 2
Recommending the appointment and removal of external auditor,
fixation of audit fee and approval for payment for any other services. Mr. S.K. Bhatt, Executive Vice-President (Corporate Services) & Company
Secretary acts as the secretary to the Committee.
Reviewing with management the annual financial statements before
submission to the board, focusing primarily on GIL has adopted EVA as a tool for driving performance, and has linked
Matters required to be included in the Directors Responsibility improvements in EVA to performance linked variable remuneration (PLVR)
Statement to be included in the Boards Report in terms of Clause of Managing Director, Whole-Time Directors, managers and officers of
(2AA) of Section 217 of the Companies Act, 1956. the company.
Any changes in accounting policies and practices. Shareholders Committee
Major accounting entries based on exercise of judgement by the Among other functions, this committee looks into redressal of shareholder
management. complaints regarding transfer of shares, non-receipt of balance sheet and
Qualifications in draft audit report. non-receipt of declared dividends, as required in clause 49 of the Listing
Significant adjustments arising out of audit. Agreement. The committee consists of the following members:
The going concern assumption. Mr. A.B. Godrej (Chairman), Mr. V.F. Banaji, Ms. T.A. Dubash, Mr. M. Eipe and
Compliance with accounting standards. Mr. M.P. Pusalkar. During the year, 18 meetings of the Committee were held.
Compliance with stock exchanges and legal requirements
Mr. S.K. Bhatt, Executive Vice-President (Corporate Services) & Company
concerning financial statements.
Secretary acts as secretary to the Committee.
Any related party transactions, i.e. transactions of the Company
of material nature, with promoters or the management, their Name and designation of Compliance Officer
subsidiaries or relatives, etc. that may have potential conflict Mr. S. K. Bhatt, Executive Vice-President (Corporate Services) & Company
with the interests of Company at large. Secretary.
22
Number of complaints regarding shares for the year ended and Mr. M. Eipe shall retire at this Annual General Meeting of the
March 31, 2006 Company and being eligible, offer themselves for re-election.
Complaints outstanding as on April 1, 2005 Nil Information about the Directors who are being appointed/ re-appointed
Complaints received during the year ended March 31, 2006 94 is given as an annexure to the Notice of the AGM.
Complaints resolved during the year ended March 31, 2006 94 b) Communication to shareholders
Complaints outstanding as on March 31, 2006 Nil All vital information relating to the Company and its performance,
including quarterly results, official press releases are posted on the
There are no pending share transfers as on March 31, 2006. web-site of the Company. The Company’s web-site address is
MANAGEMENT www.godrejinds.com. The quarterly and annual results of the
Company’s performance are published in leading English dailies like
a) Management discussion and analysis Economic Times, Business Standard, Business Line, etc.
This annual report has a detailed chapter on management discussion c) Investor grievances
and analysis.
As mentioned before, the Company has constituted a Shareholders
b) Disclosures by management to the Board Committee to look into and redress Shareholders and investor
All details relating to financial and commercial transactions where complaints. Mr. S.K. Bhatt, Executive Vice-President (Corporate
Directors may have a potential interest are provided to the Board, Services) & Company Secretary is the compliance officer.
and the interested Directors neither participate in the discussion, nor d) Share transfer
do they vote on such matters.
GIL has outsourced its share transfer function to M/s. Computech
DISCLOSURES Sharecap Ltd., which is registered with the SEBI as a Category 1
Whistle Blower Policy Registrar and Transfer Agent.
With a view to establish a mechanism for protecting the employees reporting e) Details of non-compliance
unethical behaviors, frauds, violation of Company’s Code of Conduct, the There has been no instance of GIL not complying with any matter
Board of Directors has adopted a Whistle Blower Policy. During the year related to capital markets.
2005-06, no personnel has been denied access to the Audit Committee.
f) General body meetings
Details of compliance with mandatory requirement
Year Venue Date Time
Particulars Clause of Compliance Status
Listing Agreement Yes / No 2002-03 Y.B. Chavan Centre, August 25, 2003 3.00 P.M.
I. Board of Directors 49 I Nariman Point,
(A) Composition of Board 49 (IA) Yes Mumbai 400 021.
(B) Non-executive Directors’ compensation & disclosures 49 (IB) Yes 2003-04 - do - July 26, 2004 4.00 P.M.
(C) Other provisions as to Board and Committees 49 (IC) Yes
2004-05 - do - July 26, 2005 4.00 P.M.
(D) Code of Conduct 49 (ID) Yes
II. Audit Committee 49 (II) g) Postal Ballot
(A) Qualified & Independent Audit Committee 49 (IIA) Yes
(B) Meeting of Audit Committee 49 (IIB) Yes
During the year, pursuant to the provisions of Section 192A of the
(C) Powers of Audit Committee 49 (IIC) Yes Companies Act, 1956 read with the Companies (Passing of the
(D) Role of Audit Committee 49 II(D) Yes Resolution by Postal Ballot) Rules 2001, certain resolutions were passed
(E) Review of Information by Audit Committee 49 (IIE) Yes by shareholders by postal ballot results of which were announced on
III. Subsidiary Companies 49 (III) Yes February 2, 2006. The Notice of postal ballot was mailed to all
IV. Disclosures 49 (IV)
shareholders along with postage prepaid envelopes. Mr. Bharat
(A) Basis of related party transactions 49 (IV A) Yes
(B) Board disclosures 49 (IV C) Yes
Shemlani, Chartered Accountant, had been appointed as scrutinizer
(C) Proceeds from public issues, rights issues, 49 (IV D) Not Applicable for the postal ballots, who submitted his report to the Chairman,
preferential issues etc. at present Mr. A.B. Godrej. The details of the postal ballots are given below :-
(D) Remuneration of Directors 49 (IV E) Yes Sr. Date of Nature Item Total no. No. of No. of No. of
(E) Management 49 (IV F) Yes No. announcement of of votes votes in votes invalid
(F) Shareholders 49 (IV G) Yes of results resolution polled favour against votes
V. CEO/CFO Certification 49 (V) Yes % %
VI. Report on Corporate Governance 49 (VI) Yes 1. February 2, 2006 Ordinary To sell, lease or otherwise 1080 99.96 0.02 0.02
VII. Compliance 49 (VII) Yes dispose of the whole,
or substantially the whole
Details of Non-compliance of the Foods Division
of the Company;
There has not been any non-compliance by the Company and no penalties 2. February 2, 2006 Special To invest in securities of 1107 99.98 0.01 0.01
or strictures were imposed on the Company by the Stock Exchanges or and/or place intercorporate
SEBI or any statutory authority, on any matter related to capital markets. deposits with and/or invest in
debentures of and/or give
Declaration by Managing Director guarantee(s) to and/or make
loans or any other form of debt
The declaration by the Managing Director stating that all the Board to Godrej Upstream Limited
under Section 372A of the
Members and senior management personnel have affirmed their Companies Act, 1956, in
compliance with the said code of conduct for the year ended addition to the current limits,
March 31, 2006, is annexed to the Corporate Governance Report. a further sum of Rs.10 crore;
3 February 2, 2006 Special To invest in securities of and/or 1074 99.96 0.02 0.02
SHAREHOLDERS place intercorporate deposits
with and/or invest in debentures
a) Disclosures regarding appointment or re-appointment of Directors of and/or give guarantee(s) to
and/or make loans or any other
According to the Articles of Association of GIL, at every annual general form of debt to View Group LP
meeting of the Company one-third of the Directors are liable to retire under Section 372A of the
Companies Act, 1956, a sum
by rotation. Thus, Mr. J.N. Godrej, Mr. V.F. Banaji, Ms. T.A. Dubash of Rs.14 crore.
23
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, 2006.
N.B. Godrej
Managing Director
Mumbai,
May 26, 2006
Auditors’ Certificate on Corporate Governance

To the Members of,
We have examined the compliance of conditions of Corporate Governance by Godrej Industries Limited for the year ended on March 31, 2006, 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 26, 2006. Membership No. 32083
24
SHAREHOLDERS’ INFORMATION
Annual General Meeting Note :
Date : July 24, 2006 High and low are in rupees per traded share. Volume is the total monthly
Time : 4.30 P.M. volume of trade (in numbers) in equity shares of GIL on the BSE.
Venue : Y.B. Chavan Centre, General Jagannath Bhosale Marg, Table 2 : Monthly high and low prices and trading volumes of equity
Nariman Point, Mumbai 400 021. shares of GIL at NSE for the year ended March 31, 2006
Financial Calendar
Month High Low Volume traded
Financial year: April 1 to March 31 (Rs.) (Rs.) (No. of Shares)
For the year ended March 31, 2006, results were announced on: April-05 123.30 106.60 984844
July 26, 2005 : First quarter May-05 267.95 123.60 26359665
October 24, 2005 : Half year June-05 238.80 205.45 7658630
January 31, 2006 : Third quarter July-05 249.40 225.40 1981097
May 26, 2006 : Fourth quarter and annual August-05 247.45 229.50 713266
September-05 272.75 232.35 1120630
Record Date/Book Closure
October-05 273.85 219.45 376538
A dividend of Rs. 5/- per share of Rs. 6/- each has been recommended
November-05 260.35 225.10 243094
by the Board of Directors of the Company. For payment of dividend, the
book closure is from July 17, 2006 to July 24, 2006 (both days inclusive). December–05 399.05 258.95 11921783
January–06 384.85 365.75 751313
Listing information
February-06 415.30 365.95 853984
The Company’s equity shares are listed on The Bombay Stock Exchange
March-06 643.05 442.45 1713153
Ltd., The National Stock Exchange of India Ltd. and the Calcutta Stock
Exchange Association Ltd. High and low are in rupees per traded share. Volume is the total monthly
Name of the Stock Exchange Stock code volume of trade (in numbers) in equity shares of GIL on the NSE.
The Bombay Stock Exchange Ltd. (BSE) 500164 Chart A - GIL share performance compared to the BSE Sensex for
FY 2005-2006
The National Stock Exchange of India Ltd. (NSE) GODREJIND
The Calcutta Stock Exchange Association Ltd. 17038 (for physical)
10017038 (for demat)
The ISIN Number of GIL on both NSDL and CDSL is INE233A01027.
The Company had applied to the Calcutta Stock Exchange Association
Ltd. for voluntary delisting of equity shares under the Securities and
Exchange Board of India (Delisting of Securities) Guidelines, 2003. The
permission for delisting is awaited.
Stock Data
Tables 1 and 2 respectively give the monthly high and low prices and
volumes of equity shares of GIL at BSE and the NSE for the year ended
March 31, 2006. Chart A compares GIL’s share price at the BSE versus
the sensex.
Table 1 : Monthly high and low prices and trading volumes of equity
shares of GIL at BSE for the year ended March 31, 2006
Distribution of shareholding
Month High Low Volume traded
(Rs.) (Rs.) (No. of Shares) Tables 3 and 4 give the distribution pattern of shareholding of GIL by
size class and ownership respectively as on March 31, 2006.
April-05 126.00 104.00 606612
Table 3 : Distribution of shareholding by size class as on March 31, 2006
May-05 278.80 116.10 9150145 Number of Number of Shareholders Number of Shareholding
June-05 248.90 201.50 2567483 shares shareholders % shares held %
July-05 262.00 225.00 893303 1 - 500 12754 91.87% 1065043 2.19%
August-05 253.00 215.15 292735 501 - 1000 523 3.77% 385558 0.79%
1001 - 2000 290 2.09% 390640 0.80%
September-05 284.00 225.00 594544
2001 - 3000 113 0.81% 278064 0.57%
October-05 279.90 214.15 241317
3001 - 4000 33 0.24% 116544 0.24%
November-05 271.00 220.00 128074
4001 - 5000 24 0.17% 109414 0.22%
December-05 417.00 250.50 5336337
5001 - 10000 56 0.40% 393088 0.81%
January-06 397.00 344.65 346736 10001 & above 89 0.64% 45903591 94.37%
February-06 434.00 360.05 497743 Total 13882 100.00% 48641942 100.0 0%
March-06 674.00 396.65 979933
25
Table 4 : Distribution of shareholding by ownership as on Shares held in physical and dematerialised form
March 31, 2006 As on March 31, 2006, 99.39 per cent of GIL’s shares were held in
Category (as being reported to stock Shares held % of holding dematerialised form and the remaining 0.61 per cent in physical form.
exchanges) (Nos.) The break up is listed below:
Promoter’s holding No. of Folios No. of Folios No. of Shares No. of Total Total
in Physical in Demat in Physical shares Folios Shares
Promoters 4300780 88.40%
Mode Mode Mode in Demat
Persons deemed to act in concert Mode
with promoters – –% 4605 9277 297791 48344151 13882 48641942
Institutional investors
Share Transfer
Mutual funds & UTI 148505 0.31%
Share transfers and related operations for GIL are conducted by
Banks, financial institutions & Computech Sharecap Ltd., which is registered with the SEBI as a Category
insurance companies 77929 0.16% 1 Registrar.
Foreign institutional investors 590024 1.21% Investor correspondence should be addressed to:
Others Computech Sharecap Ltd.
Private corporate bodies 1182751 2.43% 147, M.G. Road, Opp. Jehangir Art Gallery,
Indian public 3501471 7.20% Mumbai 400 023.
Tel : 022-22671824/22671825
NRI/OCBs 140482 0.29% E-mail : helpdesk@computechsharecap.com
Total 48641942 100.00% Fax : 022-22670380
26
REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ INDUSTRIES LIMITED

1. We have audited the attached Balance Sheet of Godrej Industries e) Reference is invited to Note 8 (b) of Schedule 22- Notes to
Limited as at March 31, 2006 and also the Profit and Loss Account Accounts, regarding the recoverability of advances given to
and Cash Flow Statement of the Company for the year ended on certain individuals amounting to Rs. 1,033 lac being contingent
that date, both annexed thereto. These financial statements are the upon the transfer and/or disposal of the shares pledged against
responsibility of the Company’s management. Our responsibility is the loan. The said shares were lodged for transfer which
to express an opinion on these financial statements based on our application was rejected and the Company has preferred an
audit. appeal to the Company Law Board. The impact thereof on the
profit for the year could not be ascertained.
2. We conducted our audit in accordance with the Auditing Standards
generally accepted in India. Those Standards require that we plan f) In our opinion and to the best of our information and according
and perform the audit to obtain reasonable assurance about whether to the explanations given to us, the said accounts subject to
the financial statements are free of material misstatement. An audit paragraph (e) above, and read with the notes thereon, give the
includes examining, on a test basis, evidence supporting the amounts information required by the Companies Act, 1956, in the manner
and disclosures in the financial statements. An audit also includes so required and give a true and fair view in conformity with
assessing the accounting principles used and significant estimates the accounting principles generally accepted in India:
made by management, as well as evaluating the overall financial
i) in the case of the Balance Sheet, of the state of affairs of
statement presentation. We believe that our audit provides a
the Company as at March 31, 2006;
reasonable basis for our opinion.
ii) in the case of the Profit and Loss Account, of the profit of
3. As required by the Companies (Auditor’s Report) Order, 2003, issued
the Company for the year ended on that date; and
by the Central Government in terms of Section 227(4A) of the
Companies Act, 1956, we give in the Annexure a statement on the iii) in the case of the Cash Flow Statement, of the cash flows
matters specified in paragraphs 4 and 5 of the said Order. for the year ended on that date.
4. Further to our comments in the Annexure referred to in paragraph 5. On the basis of the written representations received from the directors
3 above, we report that: of the Company as on March 31, 2006 and taken on record by the
Board of Directors, we report that none of the directors of the
a) We have obtained all the information and explanations, which
Company is disqualified as on March 31, 2006 from being appointed
to the best of our knowledge and belief were necessary for the
as a director in terms of clause (g) of sub-section (1) of Section 274
purpose of our audit.
of the Companies Act, 1956.
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 these books and proper returns adequate for
the purposes of our audit have been received from the branches
not visited by us. The Branch Auditor’s Report has been For and on behalf of
forwarded to us and has been appropriately dealt with. Kalyaniwalla & Mistry
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 V.R. Mehta
Cash Flow Statement dealt with by this report comply with the Partner
Accounting Standards referred to in sub-section (3C) of Section M. No.: 32083
211 of the Companies Act, 1956. Mumbai, May 26, 2006
27
ANNEXURE TO THE AUDITOR’S REPORT
Referred to in Paragraph (3) of our report of even date on the accounts of Godrej Industries Limited for the year ended March 31, 2006.
1. (a) The Company is generally maintaining proper records showing an adequate internal control system commensurate with the size of
full particulars, including quantitative details and situation of the Company and the nature of its business, for the purchase of
fixed assets, except in case of certain continuous process plants inventory and fixed assets and for the sale of goods and services. In
where item-wise values are not available and in case of our opinion and according to the information & explanation given
furniture, fittings and equipment at Vikhroli where the records to us, there is no continuing failure to correct major weaknesses in
maintained show quantitative details with their situation and the internal control system.
values based on valuation by an approved valuer.
5. (a) Based on the audit procedures applied by us and according to
(b) The Company has a program for physical verification of fixed the information and explanations provided by the management,
assets at periodic intervals. In our opinion, the period of we are of the opinion that the particulars of contracts or
verification is reasonable having regard to the size of the arrangements referred to in Section 301 of the Act have been
Company and the nature of its assets. No material discrepancies entered in the register required to be maintained under that
between the book records and physical inventory were reported section.
for the assets verified during the year.
(b) In our opinion and according to the information and explanations
(c) In our opinion, the fixed assets disposed off during the year given to us, having regard to the explanation that some of the
were not substantial and do not effect the going concern items are of a special nature and their prices cannot be compared
assumption. with alternative quotations, the transactions made in pursuance
of contracts or arrangements entered in the register maintained
2. (a) The management has conducted physical verification of
under Section 301 of the Companies Act, 1956 and exceeding
inventory at reasonable intervals during the year.
the value of Rs. 5 Lac in respect any party during the year, have
(b) In our opinion, the procedures of physical verification of been made at prices which are reasonable having regard to the
inventory followed by the management are reasonable and prevailing market prices at the relevant time.
adequate in relation to the size of the Company and the nature
6. In our opinion and according to the information and explanations
of its business.
given to us, the Company has complied with the directives issued by
(c) The Company is maintaining proper records of inventory. The the Reserve Bank of India and the provisions of Section 58A and
discrepancies noticed on verification between physical 58AA or any other relevant provisions of the Act and the rules framed
inventories and book records were not material in relation to there under in respect of the deposits accepted from the public.
the operations of the Company and the same have been properly
7. The Company has an internal audit system, which in our opinion, is
dealt with in the books of account.
commensurate with the size of the Company and the nature of its business.
3. (a) The Company had granted unsecured loans to three companies
8. We have broadly reviewed the books of account maintained by the
listed in the register maintained under Section 301 of the
Company in respect of manufacture of vanaspati pursuant to the
Companies Act, 1956, of which one loan of Rs. 47.80 lac were
order passed by the Central Government for maintenance of cost
outstanding at the year end. The maximum amount of loans
records under Section 209(1) (d) of the Companies Act, 1956, and are
granted to the said companies during the year was Rs. 128.28
of the opinion that prima facie the prescribed accounts and records
lac.
have been maintained. We have not, however, made a detailed
(b) In our opinion and according to the information and explanations examination of the records with a view to determine whether they
given to us, the rate of interest and other terms and conditions are accurate or complete. To the best of our knowledge and according
of loans given are, prima facie, not prejudicial to the interest of to the information given to us, the Central Government has not
the Company. prescribed maintenance of cost records under Section 209 (1) (d) of
the Companies Act, 1956 for any other products 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 9. (a) According to the records examined by us, the Company is
regular in payment of interest. generally regular in depositing undisputed statutory dues including
Provident Fund, Investor Education and Protection Fund,
(d) There are no overdue amounts exceeding Rs. one lac.
Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax,
(e) The Company has not taken any loans, secured or unsecured, Service Tax, Customs Duty, Excise Duty, cess and other statutory
from companies, firms or other parties listed in the register dues applicable to it with the appropriate authorities.
maintained under Section 301 of the Companies Act, 1956.
(b) According to the information and explanations given to us and
4. In our opinion and according to the information and explanations the records examined by us, there are no dues of Income Tax,
given to us, having rearded to the explanation that some of the Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty
items purchased are of a special nature and suitable alternative or cess which have not been deposited on account of any
sources do not exist for obtaining comparable quotations, there is dispute, other than those stated hereunder:
28
Name of statute Amount Rs. in lac Period to which the Forum where dispute
amount relates is pending
Central Excise Act, 1944 43.32 1999 – 2000 Assistant Commissioner
0.87 2003 – 2005 Assistant Commissioner
393.40 1992 – 1997 Commissioner (Appeals)
0.09 1994 – 1999 CEGAT
241.20 1978 – 1983 High Courts
87.39 1997 – 1999 High Courts
683.33 1986 – 1998 The Supreme Court of India
Customs Act, 1962 8.77 1978 – 1983 Assistant Commissioner
111.88 1987 – 1993 Commissioner of Customs
26.28 2003 – 2004 Dy. Commissioner
109.12 1978 – 1993 High Court
570.86 1991 – 1992 High Court
8.23 1978 – 1979 CESTAT
Income Tax Act, 1961 50.53 1992 – 1995 ITAT
518.53 1996 – 2001 ITAT
70.62 1985 – 1991 High Court
1084.95 1995 – 1996 High Court
Central Sales Tax Act, 1956 0.16 1997 – 1998 Appellate Tribunal
Sales Tax 19.60 1998 – 2005 Sales Tax Officer
68.19 2003 – 2004 Commissioner (Appeals)
14.15 1996 – 2002 Dy. Commissioner
1.83 1998 – 1989 Sales Tax Tribunal
Others
Stamp Duty 182.23 2000 Controlling Revenue Authority
Municipal Taxes 815.61 1984 – 2005 The Bombay High Court
Entry Tax 28.85 1997 – 2003 Tribunal
5,232.96
10. The Company has no accumulated losses as at the end of the financial 16. According to the information and explanations given to us and the
year and it has not incurred any cash losses in the current and records examined by us, on an overall basis, the term loans have
immediately preceding financial years. been applied for the purpose for which the loans were obtained.
11. According to the information and explanations given to us and based 17. On the basis on an overall examination of the balance sheet and
on the documents and records produced to us, the Company has not cash flows of the Company and the information and explanations
defaulted in repayment of dues to a financial institution, bank or given to us, we report that the Company has not utilized the funds
debenture holders as at the balance sheet date. raised on short-term basis for long-term investment.
12. The Company has maintained adequate documents and records in 18. The Company has not made any preferential allotment of shares to
respect of loans and advances granted on the basis of security by parties or companies covered in the register maintained under section
way of pledge of shares and other securities, except that the shares 301 of the Companies Act, 1956.
in question have not been transferred in the name of the Company
as stated in note 8(b) of Schedule 22- Notes to Accounts. 19. The Company did not issue any debentures during the year.
13. In our opinion and according to the information and explanations 20. The Company has not raised any money through a public issue
given to us, the nature of activities of the Company does not attract during the year.
any special statute applicable to chit fund and nidhi/ mutual benefit
21. Based on the audit procedures performed and information and
fund/ societies.
explanations given by the management, we report that no fraud on
14. In our opinion, the Company has maintained proper records of the or by the Company has been noticed or reported during the year.
transactions and contracts in respect of investments purchased and
sold during the year and timely entries have been made therein. For and on behalf of
The investments made by the Company are held in its own name Kalyaniwalla & Mistry
except for the shares referred to in note (a) of Schedule 6. Chartered Accountants
15. According to the information and explanations given to us and the

records examined by us, it is our opinion that the terms and V.R. Mehta
conditions of the guarantees given by the Company for loans taken Partner
by others from banks or financial institutions are not prejudicial to M. No.: 32083
the interest of the Company. Mumbai, May 26, 2006
29
BALANCE SHEET AS AT MARCH 31, 2006

Schedule Rs. lac Rs. lac Rs. lac
SOURCES OF FUNDS
1. Shareholders’ Funds
(a) Share capital 1 2918.52 2918.52
(b) Reserves & surplus 2 34216.68 30617.83
37135.20 33536.35
2. Loan Funds
(a) Secured loans 3 24910.89 22075.67
(b) Unsecured loans 4 7803.24 3557.13
32714.13 25632.80
3. Deferred Tax Liability 3818.00 2502.00
TOTAL 73667.33 61671.15
APPLICATION OF FUNDS
4. Fixed Assets 5
(a) Gross block 53640.20 49728.83
(b) Less : Depreciation/Impairment 25568.23 26192.14
(c) Net block 28071.97 23536.69
(d) Capital work-in-progress 522.38 1563.09
28594.35 25099.78
5. Investments 6 37134.67 33577.28
6. Current Assets, Loans and Advances
(a) Inventories 7 11892.38 10751.76
(b) Sundry debtors 8 5806.56 8604.44
(c) Cash and bank balances 9 1259.63 1377.88
(d) Loans and advances 10 7688.73 4132.23
26647.30 24866.31
Less : Current Liabilities and Provisions
(a) Liabilities 11 15726.32 17050.24
(b) Provisions 12 5202.03 4948.28
20928.35 21998.52
Net Current Assets 5718.95 2867.79
7. Miscellaneous Expenditure 13 2219.36 126.30
(To the extent not written off or adjusted)
TOTAL 73667.33 61671.15
Significant Accounting Policies 21
Notes to Accounts 22
The Schedules referred to above form an integral part of the Balance Sheet.
As per our Report attached Signatures to Balance Sheet and Schedules 1 to 13, 21 and 22
For and on behalf of A.B. Godrej N.B. Godrej 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 (Corporate Executive Vice President
Mumbai, May 26, 2006 Services) & Company Secretary (Finance & Estate)
30
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2006
INCOME
Turnover (gross) 80054.20 82198.93
Less: Excise duty 5505.94 5863.69
Turnover (net) 74548.26 76335.24
Other Income 14 5721.62 6017.78
80269.88 82353.02
EXPENDITURE
Materials consumed and purchase of goods 15 50228.83 50794.93
Expenses 16 20627.41 20204.43
Inventory change 17 (1196.08) (882.46)
Interest and financial charges (net) 18 2837.43 2581.67
Depreciation 2259.43 2148.43
(Net of transfer from Revaluation Reserve
Rs. 168.43 lac, Previous year Rs. 223.80 lac) 74757.02 74847.00
Profit before Taxation and Extraordinary Items 5512.86 7506.02
Profit from continuing operations before tax 5813.39 8022.03
Income tax – current tax — (401.00)
– fringe benefit tax (67.44) —
– deferred tax (1479.00) 444.00
Profit from continuing operations after tax 4266.95 8065.03
Loss from discontinuing operations before tax (300.53) (516.01)
Income tax – current tax — —
– fringe benefit tax (14.24) —
– deferred tax 62.00 26.00
Loss from discontinuing operations after tax (252.77) (490.01)
Profit after Taxation and before Extraordinary Items 4014.18 7575.02
Extraordinary Items (Net of Tax) 19 3105.80 —
Prior Period adjustments (net) 20 (7.56) 2.20
Net Profit 7112.42 7577.22
Surplus brought forward 20081.61 15480.67
Amount Available For Appropriation 27194.03 23057.89
APPROPRIATIONS
Proposed Dividend - Final 2432.10 1945.68
Tax on distributed profits 341.10 272.88
Transfer to General Reserve 711.24 757.72
Surplus carried forward 23709.59 20081.61
TOTAL 27194.03 23057.89
Basic & Diluted Earnings per share before Extraordinary Items 8.24 15.58
Basic & Diluted Earnings per share after Extraordinary Items 14.62 15.58
(refer note 19)
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 and Schedules 14 to 22

31
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2006
Rs. lac Rs. lac
A. Cash Flow from operating Activities :
Profit before tax 5512.86 7506.02
Adjustments for :
Foreign exchange 294.21 939.30
Profit on sale of investments (2155.37) (3491.26)
(Profit) / Loss on sale of fixed assets (309.13) 123.78
Dividend income (2212.91) (2236.06)
Interest income (508.39) (115.87)
Interest expense 2430.95 1745.16
Voluntary retirement compensation paid (2685.07) (100.42)
Deferred expenditure written off 592.01 182.75
Provision for diminution in value of investments — 450.02
Provision for doubtful debts and sundry balances written back (net) (2.87) (87.96)
Others (0.42) 2.99
Operating profit before working capital changes 3215.30 7066.88
Adjustments for :
Inventories (2693.82) 192.59
Trade and other receivables 1463.87 (1443.92)
Trade payables 23.70 (807.91)
Cash generated from operations 2009.05 5007.64
Direct taxes paid (604.30) (547.32)
Direct taxes refund received 124.08 139.70
Net Cash from operating activities 1528.83 4600.02
B. Cash Flow from investing activities :
Purchase of fixed assets (9503.94) (2799.64)
Proceeds from sale of fixed assets 1339.31 197.25
Purchase of investments (51582.27) (57714.35)
Proceeds from sale of investments 50167.75 53425.24
Intercorporate deposits / Loans (net) (500.02) 456.50
Interest received 497.56 138.25
Dividend received 2275.33 2236.06
Net Cash used in investing activities before
extraordinary item (7306.28) (4060.69)
Proceeds from sale of Undertaking (Refer Note 3) 4000.00 —
Net Cash used in investing activities after
extraordinary item (3306.28) (4060.69)
32

Rs. lac Rs. lac
C. Cash Flow from financing activities :
Proceeds from borrowings 39331.95 23560.07
Repayments of borrowings (32515.29) (17995.22)
Bank overdrafts (net) (62.36) (1920.40)
Interest paid (2631.58) (1703.81)
Dividend paid (1951.09) (1473.49)
Tax on distributed profits (272.88) (186.97)
Net Cash from financing activities 1898.75 280.18
Net increase in cash and cash equivalents 121.30 819.51
Cash and cash equivalents (Opening Balance) 1377.88 558.37
Less : Cash and cash equivalents transferred to
Godrej Beverages & Foods Limited 239.55 —
Cash and cash equivalents (Closing Balance) 1259.63 1377.88
Notes:
1. Cash and Cash equivalents
Cash on hand and balances with banks 1266.79 1384.97
Effect of exchange rate changes (7.16) (7.09)
Cash and cash equivalents 1259.63 1377.88
2. To finance working capital requirements, the Company’s Bankers have sanctioned a total fund-based limit of Rs. 5,800 lac. Of this, limits
utilised as on March 31, 2006 is Rs. 1,518.44 lac.
3. The Foods Division (except Wadala Factory) was sold for a consideration of Rs. 7,000 lac. Out of the total consideration, Rs. 4,000 lac has
been received in cash and the balance receivable by way of allotment of equity shares in Godrej Beverages & Foods Ltd.
4. The figures of previous year have been regrouped wherever necessary.
As per our Report attached Signatures to Cash Flow Statement

33
SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2006
Rs. lac Rs. lac
SCHEDULE 1 : SHARE CAPITAL
AUTHORISED:
13,33,33,333 Equity shares of Rs.6 each 8000.00 8000.00
10,00,00,000 Unclassified Shares of Rs.10 each 10000.00 10000.00
18000.00 18000.00
ISSUED, SUBSCRIBED AND PAID UP:
4,86,41,942 Equity shares of Rs.6 each fully paid 2918.52 2918.52
2918.52 2918.52
Of the above,
(i) 3,12,00,398 shares are held by Godrej & Boyce Mfg. Co. Limited, the holding Company
(ii) 2,59,24,636 shares are alloted for consideration other than cash pursuant to schemes of amalgamation/arrangement
(iii) 1,59,50,953 shares are alloted as fully paid bonus shares by way of capitalisation of Securities premium account.

Rs. lac Rs. lac Rs. lac
SCHEDULE 2 : RESERVES AND SURPLUS
Securities Premium Account
As per last balance sheet 8.51 8.51
Capital Investment Subsidy Reserve
Revaluation Reserve
Less : Depreciation on revalued component and
deduction due to sale/discard of fixed assets (740.37) (224.83)
2291.39 3031.76
Capital Redemption Reserve
General Reserve
Add : Transferred from profit & loss account 711.24 757.72
Less : Accumulated impairment loss as on April 1, 2004 — (713.10)
5057.19 4345.95
Profit & Loss Account 23709.59 20081.61
34216.68 30617.83
SCHEDULE 3 : SECURED LOANS

Term loans from banks 23392.45 20494.87
Bank overdrafts, packing credit, etc. 1518.44 1580.80
24910.89 22075.67
Particulars of securities (refer note 4)
SCHEDULE 4 : UNSECURED LOANS

Fixed deposits — 101.72
Short term loans from banks 5803.24 3455.41
Other loans from banks 2000.00 —
7803.24 3557.13
Amount repayable within one year 7803.24 3557.13
34
SCHEDULE 5 : FIXED ASSETS

Rs. lac
ASSETS GROSS BLOCK DEPRECIATION/IMPAIRMENT NET BLOCK

As on Deductions/ As on Upto Deductions/ For the Upto As on As on
01.04.2005 Additions Adjustments 31.03.2006 31.03.2005 Adjustments Year 31.03.2006 31.03.2006 31.03.2005
Tangible Assets
Land 252.90 50.00 33.35 269.55 21.48 1.88 1.64 21.24 248.31 231.42
Buildings 8961.76 952.82 1683.12 8231.46 2307.80 263.28 241.26 2285.78 5945.68 6653.96
Plant & Machinery 36588.54 9516.74 4563.09 41542.19 21985.58 2511.33 1869.98 21344.23 20197.96 14602.96
Research Centre 113.51 — — 113.51 43.41 — 3.30 46.71 66.80 70.10
Furniture & Fixtures 1117.84 52.62 57.63 1112.83 635.49 21.71 61.86 675.64 437.19 482.35
Office & Other Equipments 1034.34 46.58 83.41 997.51 472.24 55.53 51.96 468.67 528.84 562.10
Vehicles 631.69 61.13 83.77 609.05 294.88 35.03 50.33 310.18 298.87 336.81
Intangible Assets
Trademarks 754.00 — 291.00 463.00 314.17 150.35 75.40 239.22 223.78 439.83
Assets acquired under
Finance Lease
Vehicles 274.25 58.80 31.95 301.10 117.09 12.66 72.13 176.56 124.54 157.16
TOTAL - This Year 49728.83 10738.69 6827.32 53640.20 26192.14 3051.77 2427.86 25568.23 28071.97 23536.69
- Previous Year 48949.68 1402.49 623.34 49728.83 24117.03 297.12 2372.23 26192.14
Capital Work-in-Progress 522.38 1563.09
TOTAL 28594.35 25099.78
1. Land includes leasehold land of Rs.126.72 lac (Previous Year Rs.136.18 Lac) which is being amortised over the period of lease.
2. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on 30th June, 1992 on the basis of a Valuation Report submitted by professional valuers.
3. Depreciation for the year includes Rs.168.43 Lac (Previous Year Rs.223.80 Lac) being depreciation on revalued component of the fixed assets.
4. Gross block deductions includes Rs. 571.94 lac (Previous Year Rs.1.03 lac) being the revalued component of assets sold/discarded during the year.
5. Buildings include Rs.0.01 lac (previous year Rs.0.01 lac) being the value of investment in shares of Co-operative Housing Society.
6. Buildings include Rs. 1701.74 lac (previous year Rs. 2651.08 lac) being the cost of equity shares in Tahir Properties Ltd., representing the right of the Company to
three (previous year five) flats in the property.
7. Accumulated depreciation includes impairment loss of Rs. 509 lac on plant & machinery in an earlier year.
8. Capital work-in-progress is net of impairment loss of Rs. 204.10 lac provided on an infructuous asset under construction.
SCHEDULE 6 : INVESTMENTS
Investee Company/Institutions Face Number Amount
Value Qty. Acquired Sold Qty. As on As on
as on during during as on Notes 31.03.06 31.03.05
(Rs.) 01.04.05 Year Year 31.03.06 Rs. lac Rs. lac
LONG TERM INVESTMENTS - At Cost
A. TRADE INVESTMENTS
Equity Shares : Fully Paid
Bharuch Eco-Aqua Infrastructure Ltd. 10 4,40,000 — — 4,40,000 44.00 44.00
Preference Shares : Partly Paid
Godrej Foods Ltd. 10 50,00,000 — — 50,00,000 (b) 450.00 450.00
(8% Redeemable Cumulative, 2012)
Tahir Properties Ltd. (Class-A) 100 25 — — 25 (b) 0.02 0.02
B. OTHER INVESTMENTS :
Quoted :
Godrej Consumer Products Ltd. 4 73,24,027 — 5,90,000 67,34,027 10,730.01 11670.12
Unquoted :
Compass Connections Ltd. £0.25 13,692 — — 13,692 124.55 124.55
Gharda Chemicals Ltd. 100 114 — — 114 (a) 11.57 11.57
Godrej Sara Lee Ltd. 4 51,07,125 — — 51,07,125 4,729.79 4729.79
Swadeshi Detergents Ltd 10 2,09,370 — — 2,09,370 191.33 191.33
Avestha Gengraine Technologies Pvt. Ltd. 10 1,05,500 14,744 — 1,20,244 516.76 450.25
Tahir Properties Ltd. (Partly Paid) 100 25 — — 25 (b) 0.01 0.01
Boston Analytics LLC (Partly Paid) $1 — 78,250 — 7,81,250 (b) 258.76 —
Common Stock :
Unquoted :
C Bay Systems Ltd. $0.01 9,03,798 31,87,275 — 40,91,073 (c) 4,062.82 845.70
Convertible Debentures :
Unquoted :
Avestha Gengraine Technologies Pvt. Ltd. 10000000 — 3 — 3 300.00 —
Government Securities
Unquoted :
Kisan Vikas Patra — — — — — — 0.32
Shares in Co-operative Societies - Fully Paid
Unquoted :
The Saraswat Co-op Bank Ltd 10 1,000 — — 1,000 0.10 0.10
Balance carried forward 21419.72 18517.76
35
Investee Company/Institutions Face Number Amount

Value Qty. Acquired Sold Qty. As on As on
as on during during as on Notes 31.03.06 31.03.05
Balance brought forward 21419.72 18517.76
C. INVESTMENTS IN SUBSIDIARY COMPANIES :
Equity Shares: Fully Paid
Unquoted:
Ensemble Holdings & Finance Ltd. 10 37,70,160 — — 37,70,160 1318.14 1318.14
Godrej Agrovet Ltd. 10 41,12,956 — — 41,12,956 3377.34 3377.34
Godrej Global Solutions Ltd. 10 5,76,96,500 — 1,00,23,761 4,76,72,739 (b),(d) 5589.65 5379.65
Godrej International Ltd. £1 15,05,000 11,00,000 — 26,05,000 1826.94 960.83
Godrej Beverages & Foods Ltd. 10 97,49,996 — 1,25,000 96,24,996 963.22 975.72
(formerly Godrej Tea Ltd.)
Godrej Hicare Ltd. 10 31,07,100 35,40,000 — 66,47,100 (b) 364.83 193.23
Godrej Properties Ltd. 10 50,73,965 1,90,680 — 52,64,645 4027.61 3836.46
Godrej Remote Services Ltd. 10 77,12,642 — 77,12,642 — — 771.25
38887.45 35330.38
Less : Provision for diminution in value of Investments (1752.78) (1753.10)
37134.67 33577.28
Aggregate Book Value of Investments
Quoted 10730.01 11670.12
Unquoted 26404.66 21907.16
37134.67 33577.28
Market Value of Quoted Investments 48875.57 22708.15
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
- Boston Analytics LLC - Equity - USD 440,000
- Godrej Foods Ltd. - Preference - Re. 1 per share
- Tahir Properties Ltd. - Preference - Rs. 30 per share
- Godrej Global Solutions - Equity - Rs. 3 per share on 60 lac shares
- Godrej Hicare Ltd. - Equity - Rs. 6 per share on 30.4 lac shares.
(c) Preferred Stock - series E & F has been converted into Common Stock during the year.
(d) Reduction of shares held pursuant to Capital Reduction under a Scheme of Arrangement.
Rs. lac Rs. lac
SCHEDULE 7 : INVENTORIES
(at lower of cost and net realisable value)
Stores and spares 1156.47 526.57
Raw materials 5300.52 5192.87
Work-in-progress 1961.02 1126.27
Finished goods 3474.37 3906.05
11892.38 10751.76
SCHEDULE 8 : SUNDRY DEBTORS

(Unsecured)
Debts outstanding over six months
Considered good — 1.67
Considered doubtful 233.99 262.05
233.99 263.72
Other debts
Considered good 5806.56 8602.77
Considered doubtful — 33.53
5806.56 8636.30
Less : Provision for doubtful debts 233.99 295.58
5806.56 8604.44
36

Rs. lac Rs. lac
SCHEDULE 9 : CASH AND BANK BALANCES
Cash and cheques on hand 19.37 19.62
Balance with Scheduled banks
– on current accounts 386.71 621.10
– on deposit accounts (refer note 7) 853.55 737.16
1259.63 1377.88
SCHEDULE 10 : LOANS AND ADVANCES

(Unsecured and considered good unless
otherwise stated)
Loans and Advances (refer note 8) 1091.34 1127.86
Loans to GIL ESOP Trust 556.50 —
Advances recoverable in cash or in kind or for value
to be received (net of provision for doubtful advances
Rs. 382.41 lac, previous year Rs.656.49 lac) 1663.15 1302.54
Consideration Receivable from Godrej Beverage & Foods Ltd. for sale of Foods Division 3000.00 —
Intercorporate deposits
– Subsidiary companies — 46.48
– Others 41.80 51.80
Deposits and balances with
– Customs & excise authorities 849.59 1008.60
– Others 486.35 564.76
Advance payment of taxes — 30.19
(Net of Provision for tax, Previous year Rs. 1220 lac)
7688.73 4132.23
SCHEDULE 11 : CURRENT LIABILITIES
(refer note 9)
Acceptances — 1429.49
Sundry creditors
– due to small scale industrial undertakings 56.82 72.05
– others 13750.58 12101.83
13807.40 12173.88
Advances from customers 305.13 964.05
Sundry deposits 555.64 951.76
Investor Education & Protection Fund *
– Unclaimed dividend 46.29 51.70
– Unpaid Matured Deposits 24.80 103.17
– Interest accrued on above 0.20 58.70
Other liabilities 829.03 1224.50
Interest accrued but not due on loans 157.83 92.99
15726.32 17050.24
* There is no amount due and outstanding to be credited to the Investor
Education and Protection Fund.
SCHEDULE 12 : PROVISIONS
Proposed dividend 2432.10 1945.68
Provision for tax on distributed profits 341.10 272.88
Provision for retirement benefits 2388.08 2729.72
Provision for taxation 40.75 —
(Net of Advance Tax Rs. 1270.25 lac)
5202.03 4948.28
SCHEDULE 13 : MISCELLANEOUS EXPENDITURE
Deferred revenue expenditure
Voluntary retirement compensation
Balance at the beginning of the year 126.30 208.63
Add : Expenditure Incurred during the year 2685.07 100.42
Less : Amortised during the year (592.01) (182.75)
2219.36 126.30
37

Rs. lac Rs. lac
SCHEDULE 14 : OTHER INCOME

Interest :
– Government Securities — 16.90
– Debentures 9.62 —
– Income tax refund 140.56 8.10
– Deposits (refer Note 17) 307.00 —
Dividend
– from subsidiary companies 508.20 646.66
– from long term investments 1704.71 1589.40
Profit on sale of fixed assets (Net) 309.13 —
Profit on sale of long term investments 2120.35 3422.22
(refer Note 17)
Profit on sale of current investments 35.02 69.04
Miscellaneous income (refer Note 17) 587.03 265.46
5721.62 6017.78
SCHEDULE 15 : MATERIALS CONSUMED AND PURCHASE OF GOODS
Raw materials consumed :
Stocks at the commencement of the year 5192.87 6096.76
Add : Purchases (net) 40385.71 44007.83
45578.58 50104.59
Less : Stocks as at the close of the year 5300.52 5192.87
Raw Materials consumed during the year 40278.06 44911.72
Purchase of goods for resale 9950.77 5883.21
50228.83 50794.93
SCHEDULE 16 : EXPENSES
Salaries, wages and allowances 5772.39 6004.11
Contribution to provident fund and other funds 326.13 354.20
Employee welfare expenses 636.19 513.37
Stores and spares consumed 631.87 814.31
Power and fuel 4164.79 3569.68
Processing charges 80.85 456.75
Rent 295.90 236.69
(refer Note 16)
Rates and taxes 389.57 447.83
Repairs and maintenence
– Machinery 882.25 1200.36
– Buildings 263.65 247.19
– Other assets 402.36 431.63
Insurance 133.90 135.89
Freight 2012.54 1606.78
Commission 282.86 383.90
Discount 456.93 203.06
Advertisement and publicity 250. 96 154.04
Sales promotion 47.93 97.55
Selling and distribution expenses 1108.67 772.78
Bad debts written off 170.79 0.57
Provision for doubtful debts and advances 10.87 7.00
Provision for depletion in value of investments — 450.02
Loss on sale of fixed assets — 123.78
Excise duty on inventory change 284.99 (50.70)
Foreign exchange loss 182.62 809.09
Miscellaneous expenses 2376.48 1812.28
Less : Expenses recovered under cost sharing agreement for use of common facilities (538.08) (577.73)
20627.41 20204.43
38

SCHEDULE 17 : INVENTORY CHANGE

Stocks at the commencement of the year
– Finished goods 3906.05 3113.51
– Work-in-progress 1126.27 1036.35
5032.32 4149.86
Stock adjustment on sale of Foods Division (793.01) —
Less : Stocks at the close of the year :
– Finished goods (3474.37) (3906.05)
– Work-in-progress (1961.02) (1126.27)
(5435.39) (5032.32)
(Increase)/Decrease in Inventory (1196.08) (882.46)
SCHEDULE 18 : INTEREST AND FINANCIAL CHARGES (Net)

Interest paid
– on fixed loans 1702.34 817.65
– on bank overdrafts 114.71 121.46
– other interest 485.72 497.72
2302.77 1436.83
Less : Interest during construction period capitalised 265.47 14.25
Less : Interest received
– on loans & deposits 33.13 56.41
– on Customer balances, etc. 18.08 34.46
51.21 90.87
Net Interest 1986.09 1331.71
Brokerage and other financial charges 393.65 322.58
Foreign exchange loss 457.69 927.38
2837.43 2581.67
SCHEDULE 19 : EXTRAORDINARY ITEMS

Profit on sale of Foods division 3510.80 —
Less : Taxation on above
– current tax (506.00) —
– deferred tax 101.00 —
3105.80 —
SCHEDULE 20 : PRIOR PERIOD ADJUSTMENTS

Excess provision for Income-tax 42.52 2.20
Dividend for previous year 62.42 —
Provision for pension payments (112.50) —
(7.56) 2.20
39
SCHEDULE 21 : SIGNIFICANT ACCOUNTING POLICIES are also translated at period end exchange rates. Premium or
1. Accounting Convention discount on forward exchange contracts is amortised over the period
of the contract and recognized as income or expense for the period.
The financial statements are prepared under the historical cost Exchange gains / losses are recognised in the Profit and Loss Account
convention, on the accrual basis of accounting, in accordance with except for exchange differences relating to fixed assets acquired
the generally accepted accounting principles in India, and the from a country outside India, which are adjusted in the cost of the
Accounting Standards issued by the Institute of Chartered Accountants asset. Non Monetary foreign currency items like investments in
of India. foreign subsidiaries are carried at cost and expressed in Indian
2. Fixed Assets currency at the rate of exchange prevailing at the time of making
Fixed Assets are stated at cost or as revalued as the case may be, the original investment.
less accumulated depreciation. Cost includes expenses related to 10. Revenue Recognition
acquisition and installation of the concerned assets. Exchange Sales are recognised when goods are supplied and are recorded
differences arising on account of repayment and year end translation net of returns, trade discounts, rebates, sales taxes and excise duties.
of foreign currency liabilities relating to acquisition of fixed assets Income from processing operations is recognised on completion of
from a country outside India is adjusted to the carrying cost of the production / dispatch of the goods, as per the terms of contract.
respective assets.
Export incentives receivable under the Duty Entitlement Pass Book
Fixed Assets acquired under finance lease are capitalised at the Scheme and Duty Drawback Scheme are accounted on accrual
lower of their face value and present value of the minimum lease basis.
payments.
Dividend income is recognised when the right to receive the same
3. Intangible Assets is established.
The cost of acquisition of trade marks is amortised equally over a Interest income is recognised on a time proportion basis.
period of ten years.
Income on assets given on operating lease is recognised on a straight
4. Asset Impairment line basis over the lease term.
The Company reviews the carrying values of tangible and intangible 11. Research and Development Expenditure
assets for any possible impairment at each balance sheet date. An
Revenue expenditure on Research and Development is charged to
impairment loss is recognized when the carrying amount of an
the Profit and Loss Account of the year in which it is incurred.
asset exceeds its recoverable amount. In assessing the recoverable
Capital expenditure incurred during the year on Research and
amount, the estimated future cash flows are discounted to their
Development is included under as additions to fixed assets.
present value at appropriate discount rate.
12. Depreciation
5. Borrowing Costs
Leasehold land is amortised equally over the lease period. Leasehold
Borrowing costs that are directly attributable to the acquisition / improvements are amortised over five years.
construction of the underlying fixed assets are capitalised as a part
of the respective asset, upto the date of acquisition / completion of Depreciation is provided on the straight line method at the rates
construction. specified in Schedule XIV to the Companies Act, 1956, except for
computer hardware which is depreciated over its estimated useful
6. Investments life of 4 years.
Long term investments are carried at cost. Provision for diminution, Depreciation on assets acquired during the year is provided for the
if any, in the value of each long term investment is made to recognise full accounting year and no depreciation is charged on the assets
a decline, other than of a temporary nature. The fair value of a long sold/discarded during the year, except in case of major additions
term investment is ascertained with reference to its market value, and deductions exceeding rupees one crore in which case,
the investee’s assets and results and the expected cash flows from proportionate depreciation is provided.
the investment.
Depreciation on the revalued component is provided on the straight
Current investments are carried at lower of cost and fair value. line method based on the balance useful life of the assets as certified
7. Inventories by the valuers. Such depreciation is withdrawn from Revaluation
Reserve and credited to Profit and Loss Account.
Inventories are valued at lower of cost and net realisable value.
Cost is computed on weighted average basis and is net of modvat. 13. Retirement Benefits
Finished goods and work in progress include cost of conversion and Retirement benefits to employees comprise payments under defined
other costs incurred in bringing the inventories to their present contribution plans like provident fund and family pension as well as
location and condition. Provision is made for the cost of obsolescence payments under defined benefit schemes like leave encashment
and other anticipated losses, wherever considered necessary. benefit on retirement and gratuity to eligible employees. Payments
8. Provisions and Contingent Liabilities under defined contribution plans are charged to revenue. The liability
in respect of defined benefit schemes is provided on the basis of an
Provisions are recognised in the accounts in respect of present actuarial valuation at the end of each financial year.
probable obligations, the amount of which can be reliably estimated.
14. Incentive Plans
Contingent Liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the The Company has a scheme of Performance Linked Variable
occurrence or non occurrence of one or more uncertain future Remuneration (PLVR) which rewards its employees based on
events not wholly within the control of the Company. Economic Value Addition (EVA). The PLVR amount is related to actual
improvement made in EVA over the previous year when compared
9. Foreign Exchange Transactions with expected improvements. The EVA awards flow through a notional
Transactions in foreign currency are recorded at the exchange rates bank whereby only the prescribed portion of the bank is distributed
prevailing on the date of the transaction. Monetary assets and each year and the balance is carried forward. The amount distributed
liabilities denominated in foreign currency are translated at the out of the notional bank is charged to profit and loss account. The
period end exchange rates. Forward exchange contracts, remaining notional bank is held at risk and charged to EVA of future years and
unsettled at the period end, backed by underlying assets or liabilities is payable at that time, if future performance so warrants.
40
15. Hedging that originate in one period and are capable of reversal in one or
Import of crude palm oil by the Company is being hedged by futures more subsequent periods. Deferred tax assets on unabsorbed tax
contract on offshore Commodities Exchange. Gains or losses on losses and tax depreciation are recognized only when there is virtual
settled contracts is recognized in the profit and loss account and is certainty of their realisation and on other items when there is
included in the cost of materials consumed. Futures contracts not reasonable certainty that sufficient future taxable income will be
settled as on the Balance Sheet date are marked to market and available against which such deferred tax assets can be realised.
losses, if any, are recognized in the profit and loss account, whereas, The tax effect is calculated on the accumulated timing differences
the unrealized profit is ignored. at the year end based on the tax rate and laws enacted or substantially
enacted on the balance sheet date.
16. Deferred Revenue Expenditure
18. Segment Reporting
The compensation payable under the Voluntary Retirement Schemes,
the benefit of which is expected to accrue in future is deferred over The Accounting Policies adopted for segment reporting are in line with
its payback period. The compensation is generally amortised over the Accounting Policies of the Company. Segment assets include all
three to five years depending on the pay back period. operating assets used by the business segments and consist principally
of fixed assets, debtors and inventories. Segment liabilities include the
17. Taxes on Income operating liabilities that result from the operating activities of the
Current tax is the amount of tax payable on the assessable income business. Segment assets and liabilities that cannot be allocated between
for the year determined in accordance with the provisions of the the segments are shown as part of unallocated corporate assets and
Income Tax Act, 1961. liabilities respectively. Income / Expenses relating to the enterprise as a
Deferred tax is recognized on timing differences, being the whole and not allocable on a reasonable basis to business segments
differences between the taxable income and accounting income are reflected as unallocated corporate income / expenses.
SCHEDULE 22 : NOTES TO ACCOUNTS

1. Background v) Stamp duties claimed on certain
The Company was incorporated under the Companies Act, 1956 on properties which are under
March 7, 1988 under the name of Gujarat-Godrej Innovative appeal by the Company 182.23 182.23
Chemicals Limited. The business and undertaking of the erstwhile vi) Income Tax demands against
Godrej Soaps Limited was transferred to the Company under a which the Company has
scheme of amalgamation with effect from April 1, 1994 and the
preferred appeals 1724.64 586.85
Company’s name was changed to Godrej Soaps Ltd. Subsequently,
under a scheme of arrangement the Consumer Products division of vii) Industrial relations matters
the Company was demerged with effect from April 1, 2001 into a under appeal 518.06 486.08
separate Company, Godrej Consumer Products Limited (GCPL) and viii) Others 217.26 262.58
the vegetable oils and processed foods manufacturing business of b) Guarantees issued by banks,
Godrej Foods Ltd. was transferred to the Company with effect from excluding guarantees issued in
June 30, 2001. The Company’s name was changed to Godrej Industries
respect of matters reported in
Limited on April 2, 2001.
(a) & (b) above 1558.31 1789.77
The Company is engaged in the businesses of manufacture and
c) Guarantees given by the
marketing of oleo-chemicals, their precursors and derivatives, bulk
edible oils, trading in medical diagnostic products, estate Company in respect of credit/
management and investment activities. guarantee limits sanctioned by
banks to subsidiary and other
2. Contingent Liabilities
companies 3085.00 5385.00
This year Previous Year d) Uncalled liability on partly paid
Rs. lac Rs. lac shares/debentures 579.15 440.03
a) Claims against the Company
3. Capital Commitments
not acknowledged as debts :
i) Excise duty demands relating This year Previous Year
to disputed classification, post Rs. lac Rs. lac
manufacturing expenses, Estimated value of contracts remaining
assessable values, etc. which to be executed on capital account,
the Company has contested and
to the extent not provided 133.99 2059.91
is in appeal at various levels 1537.41 3386.52
ii) Customs Duty demands relating 4. Secured Loans
to less charge, differential a) Term loans from banks are secured by first charge by way of
duty, classification, etc. 844.53 1062.93 equitable mortgage of the immovable properties including land,
iii) Sales Tax demand relating to building and plant & machinery at Vikhroli and Valia factory.
purchase tax on Branch Transfer/
Non availability of C Forms, etc. b) Working capital facilities sanctioned by banks are secured by
at various levels 207.13 200.96 hypothecation of stocks and book debts.
iv) Octroi demand relating to c) The Company had during the year raised Rs. 3,000 lac (Previous
classification issue on import of year Rs. 1,000 lac) against the issue of commercial paper. The
Palm Stearine and interest thereon 844.46 722.01 amount outstanding there against as on March 31, 2006 is Rs. Nil.
41
SCHEDULE 22 : NOTES TO ACCOUNTS (contd.)
5. Investments b) Loans and Advances include Rs. 1033 lac (Previous year
Rs. 1033 lac) advanced by the Company to certain individuals
a) CBay Systems Limited, USA (CBay USA) has carried out an
organizational restructuring during the year, consequent to against pledge by way of deposit of equity shares of Gharda
which, all the businesses of CBay Group have been consolidated Chemicals Ltd. The Company has enforced its security and
under CBay Systems Limited, India (CBay India), a wholly lodged the shares for transfer in its name, however, the transfer
owned subsidiary. The Shares of CBay India have been application has been rejected by Gharda Chemicals Ltd. and
distributed in specie on a pro-rata basis to all the stockholders the Company has filed an appeal before the Company Law
of CBay USA under the above scheme. The Indian Stockholders Board against the rejection. Interest on the aforesaid loan and
will be allotted the shares in CBay India on receipt of approval advances amounting to Rs. 315 lac was accrued upto March
from the Reserve Bank of India (RBI). No effect has been given 31, 2000 and has been fully provided for, no interest is being
to the aforesaid scheme in the accounts, pending approval of accrued thereafter. The recoverability of the advance is
RBI and allotment of shares in CBay India. contingent upon the transfer and / or disposal of the said shares.
b) As per the share purchase agreement dated October 29, 2004, In the opinion of the management, the value of the said shares
the Company had agreed to sell its entire holding (77,12,642 is greater than the amount of the loans.
equity shares) in Godrej Remote Services Limited, a subsidiary Maximum
company to CBay Systems Limited, USA for a consideration of balance
Rs. 842.81 lac, to be satisfied by issue of 7,04,691 common during the
stock of CBay Systems Limited, USA (par value USD 0.01 per year This year Previous year
common stock) valued at USD 2.6 per common stock. The Rs. lac Rs. lac Rs. lac
agreement was conditional upon receipt of approval from
c) Loans and Advances to
Foreign Investment Promotion Board (FIPB) and the Reserve
subsidiary companies
Bank of India (RBI). The sale of the subsidiary company was
completed during the year on receipt of the necessary i) Ensemble Holdings
approvals in July 2005. The profit on sale amounting to Rs. 71 & Finance Ltd. 35.00 — 11.00
lac is included under Profit on sale of long term investments, iii) Godrej Hicare Ltd. 35.48 — 35.48
an exceptional item. d) Loans and Advances to
c) The Company has acquired and sold the following investments associate companies
during the year: i) Swadeshi Detergents
Ltd. 57.80 47.80 57.80
Mutual Funds - Liquid Funds - Growth Plan
This Year Previous Year e) Loans and Advances where
No. of Purchase No. of Purchase there is no repayment
Units Cost Units Cost schedule or repayment is
Rs. lac Rs. lac beyond seven years :
Birla Cash Plus Liquid 3,93,85,339 4365.00 34,54,371 600.00 i) D. Kavasmanek
Prudential ICICI Liquid 3,18,68,947 4912.00 2,76,48,845 4445.00
KMMF Liquid 9,19,66,703 12598.00 7,57,03,162 9791.00
and Others 1033.00 1033.00 1033.00
Templeton India Liquid — — 7,08,398 9994.00 (refer (b) above)
ING Vysya Liquid 5,29,34,599 5608.00 5,88,05,678 6364.00 f) Consideration receivable
SBI Magnum Liquid 13,07,93,874 14271.00 11,41,25,847 11990.00
Deutsche Insta Cash
for sale of Foods divisions :
Plus Fund 45,66,794 500.00 — — Godrej Foods &
JMMF Liquid 3,74,97,975 4047.00 4,74,84,632 4970.00 Beverages Ltd. a
subsidiary Company 7000.00 3000.00 —
This year Previous Year
Rs. lac Rs. lac 9. Liabilities
6. Sundry Debtors a) No amount has been claimed from the Company under the
Sundry Debtors includes amount due Interest on Delayed Payments to Small Scale and Ancillary
from a Company under the same Industrial Undertakings Act, 1993.
management :
b) The names of small scale industrial undertakings to whom an
Godrej Consumer Products Ltd. 175.45 19.60 amount is outstanding for more than 30 days are as under:
7. Cash and Bank Balances Akshay Inorganics S. P. Fabricators
Amelon Synthetics Corporation Shree Diamond Silicates Co.
Balances with Scheduled Banks in
Deposit Accounts include deposits held Jayant Packing Industry Viraj Packging Pvt. Ltd.
by bank as security against guarantees Neo Fab
issued 18.50 36.04 c) The above information regarding small scale industrial
undertakings has been determined to the extent such parties
8. Loans and Advances
have been identified on the basis of information available with
a) Loans and Advances include an amount of Rs. Nil (Previous the Company, and has been relied upon by the Auditors.
year Rs. 0.45 lac) due from directors. Maximum balance during
the year Rs. 0.45 lac (Previous year Rs. 5.61 lac).
42
10. Employee Stock Option Plans b) Finance Leases:

The Company has during the year instituted an Employee Stock The Company has acquired vehicles under Finance Lease. Liability
Option Plan (GIL ESOP) approved by the Board of Directors and for minimum lease payment is secured by hypothecation of the
the shareholders on October 24, 2005 and December 1, 2005 vehicles acquired under the lease. The minimum lease payments
respectively. The Plan provides for the allotment of 15,00,000 options outstanding as on March 31, 2006, in respect of vehicles acquired
convertible into 15,00,000 equity shares to eligible employees of under lease are as under:
the participating companies. The compensation committee
Period Total Un-matured Present value
comprising independent members of the Board of Directors minimum Interest of minimum
administers the plan. lease payments lease payments
outstanding as on
The scheme is administered by an independent ESOP Trust which March 31, 2006
Rs. Lac Rs. Lac Rs. Lac
has purchased shares equivalent to the number of options granted
Within one year 86.87 13.06 81.76
from the market, out of the finance provided by the participating Later than one year
companies to the Trust. and not later than
five years 65.59 9.74 54.72
The number and weighted average exercise price of options granted, 152.46 22.80 136.48
exercised and forfeited are as under: 13. Deferred Tax
Major components of deferred tax arising on account of timing
No. of Wt. average differences as at the year end are:
Options exercise price Assets This Year Previous Year
Options outstanding at Rs. lac Rs. lac
the beginning of the year — — Provision for retirement benefits 294 806
Options granted 350,000 392.35 Provision for doubtful debts/advances 209 307
(plus interest) VRS Expenses 77 —
Less : Exercised — — Others 210 228
Forfeited / expired — — 790 1,341
Options outstanding at the year end 350,000 392.35 Liabilities
(plus interest) Depreciation 4,608 3,798
The options granted shall vest after three years from the date of VRS Expenses — 45
grant of option, provided the employee continues to be in 4,608 3,843
employment and the option is exercisable within two years after Net Deferred Tax Liability 3,818 2,502
vesting. 14. Hedging Contracts
The employee share based payment plans have been accounted a. Reserve Bank of India has permitted the Company to hedge its
based on the intrinsic value method and no compensation expense exposure on Crude Palm Oil on offshore exchanges to the extent
has been recognized since the market price of the underlying share of its imports. Accordingly, the Company is hedging import of
at the grant date is the same / less than the exercise price of the crude palm oil on the Malaysian Commodities Exchange by
option, the intrinsic value being Nil. way of futures contracts. The particulars of the futures contracts
Had the fair value method of accounting been used, the employee for the year are as under:
compensation cost would have been Rs. 204 lac. This Year Previous Year
11. Incentive Plans Details Purchase Sale Purchase Sale
Total number of contracts entered
There is no positive amount carried forward in notional bank as on during the year 2 2 12 11
March 31, 2006, after distribution of PLVR for the FY 2005-06 Number of units (25 MT per unit)
(Previous year Rs. 947.72 lac). under above contracts 60 60 595 595
12. Leases Future contracts not settled

as on March 31, 2006 — — — —
a) The Company has entered into leave and licence agreements Number of units under above contracts — — — —
in respect of its commercial and residential premises. These
are not non-cancellable and range between 11 months to 35 b. The Company uses forward exchange contracts to hedge its
months and are renewable by mutual consent on mutually foreign exchange exposure in accordance with its forex policy
acceptable terms. Leave and licence arrangements being similar as determined by a Forex Committee. The particulars of the
in substance to operating leases, the particulars of the premises forward exchange contracts for the year are as under:
under leave and licence arrangement are as under: This Year Previous Year
This Year Previous Year Details Purchase Sale Purchase Sale
Rs. lac Rs. lac Total number of contracts
Gross carrying amount of premises 2857.79 3816.04 entered during the year 171 77 184 36
Accumulated depreciation 995.81 957.72 Foreign currency value covered
Depreciation for the period 115.71 120.20 US Dollar (million) 101.25 33.68 105.48 20.59
Euros (million) — 3.34 — 0.18
Total number of contracts
outstanding as at the year end 54 20 39 12
43
This Year Previous Year 16. Turnover

Turnover includes: This Year Previous Year
Details Purchase Sale Purchase Sale
Rs. lac Rs. lac
Foreign currency value
US Dollar (million) 37.30 13.00 39.61 5.84 i) Processing charges 2,003.93 2,125.86
Euros (million) — 0.94 — —
ii) Export Incentives 554.42 573.27
Uncovered Foreign exchange
exposure as at the year end iii) Licence fees and service charges 2,194.51 2,148.27
US Dollar (million) 12.41 — 16.92 —
4,752.86 4,847.40
15. Discontinuing Operations: 17. Exceptional Items
During the year, in terms of the agreement dated March 14, 2006
with Godrej Tea Limited (now known as Godrej Beverages & Foods This Year Previous Year
Limited), the Foods Division (except the Wadala factory) was sold Rs. lac Rs. lac
for a consideration of Rs. 7,000 lac with effect from close of working i) Included under Other Income
hours on March 31, 2006. Of the total consideration, Rs. 4,000 lac
has been received in cash and the balance Rs. 3,000 lac is - Profit on sale of long term
receivable by way of allotment of 68,75,000 equity shares of Rs. 10 investments 2,119.81 3,422.22
each at a premium of Rs. 33.64 per share.
- Reversal of provision for
The Foods Division is a separate segment as per AS 17, Segment claims payable on culmination of
Reporting. The carrying amounts of the total assets disposed, the disputes 175.00 —
total liabilities settled and the amounts of revenues and expenses in
respect of the ordinary activities attributable to the discontinued - Interest received on deposit
operations for the current financial year are as under: placed against above
Rs. in lac
claim on execution of
Continuing Discontinuing Total
Operation Operation decree 307.00 —
(Foods Division)
ii) Payment to Mumbai Port Trust for
2005-06 2004-05 2005-06 2004-05 2005-06 2004-05
regularization of lease included in
Turnover 54,226 57,174 20,322 19,161 74,548 76,335
Rent paid. 89.00 —
Other
Income 5,487 5,962 235 56 5,722 6,018 18. Profit and Loss Account
Operating
Expenses 51,372 52,845 20,548 19,420 71,920 72,265 a) The amount of exchange loss on account of fluctuation of the
Operating Profit 8,341 10,291 9 (203) 8,350 10,088 rupee against foreign currencies and the net charges for forward
Interest 2,527 2,269 310 313 2,837 2,582 foreign exchange contracts added to the carrying amount of
Profit / (loss) fixed assets during the year is Rs. 0.42 lac (Previous year
before tax 5,814 8,022 (301) (516) 5,513 7,506
Rs. 0.90 lac). The exchange difference included in the Profit
Income Tax (1,547) 43 48 26 (1,499) 69
and Loss Account is a loss of Rs. 640.31 lac (Previous year
Profit / (loss)
after tax 4,267 8,065 (253) (490) 4,014 7,575 Rs. 1,736.08 lac). The exchange difference in respect of forward
exchange contracts to be recognised in subsequent accounting
Total Assets 94,596 76,825 5,079 6,845 94,596 83,670
periods is Rs. 24.68 lac (Previous year Rs. 715.88 lac).
Total Liabilities 54,687 47,743 1,589 2,390 54,687 50,133
b) Research and Development Expenditure of revenue nature
Cash Flow
charged to the Profit & Loss Account amounts to Rs. 139.39 lac
from operating
activity 219 6,559 1,310 (1,959) 1,529 4,600 (Previous year Rs. 108.38 lac).
from investing
activity (2,843) (3,934) (463) (127) (3,306) (4,061)
from financing
activity 2,724 (1,602) (825) 1,882 1,899 280
Note :The total assets and liabilities as on March 31, 2006, excludes the assets and libility of the Foods
Division which have been sold as at the close of working hours on March 31, 2006
19. Earnings per share:
a. Calculation of weighted average number of equity shares
Number of shares at the beginning of the year Nos. 4,86,41,942 4,86,41,942
Number of equity shares outstanding at the end of the year Nos. 4,86,41,942 4,86,41,942
Weighted average number of equity shares outstanding during the year Nos. 4,86,41,942 4,86,41,942
b. Net profit after tax excluding extraordinary items Rs. lac 4,006.62 7,577.22
c. Net profit after tax available for equity shareholders (including extraordinary items) Rs. lac 7,112.42 7,577.22
d. Basic and diluted earnings per share of Rs.6 each excluding extraordinary Items Rupees 8.24 15.58
e. Basic and diluted earnings per share of Rs.6 each including extraordinary Items Rupees 14.62 15.58
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.
44

20. Segment Information
Information about primary business segments Rs. lac
Chemicals Foods 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 51177.71 54306.55 21116.55 19197.24 2282.52 2158.44 4574.90 5822.96 1118.20 867.83 80269.88 82353.02
Add : Unallocated Income — — — — — — — — — — — —
Total Income 51177.71 54306.55 21116.55 19197.24 2282.52 2158.44 4574.90 5822.96 1118.20 867.83 80269.88 82353.02
Results
Segment result before
interest and tax 4760.35 6230.43 (341.38) (856.81) 1471.62 1361.05 4574.90 5372.94 (111.58) 114.87 10353.91 12222.48
Unallocated expenses (2003.63) (2134.79)
Interest Expense (net) (2837.42) (2581.67)
Taxes (1498.68) 69.00
Profit after taxes and
before extraordinary items 4014.18 7575.02
Add : Extraordinary Items
(Net of taxes) 3105.80 —
Add/(Less) : Prior period items (7.56) 2.20
Net Profit 7112.42 7577.22
Segment Assets 44348.01 34793.82 3701.03 8628.96 2768.09 3699.98 40283.49 36151.10 3495.06 365.62 94595.68 83,639.48
Unallocated Assets — 30.19
Total Assets 94595.68 83669.67
Segment Liabilities 19899.83 17062.14 423.86 3896.27 437.17 950.20 44.86 27.85 81.88 62.06 20887.60 21998.52
Unallocated Liabilities 36572.88 28134.80
Total Liabilities 57460.48 50133.32
Total Cost incurred
during the year to
acquire segment assets 7276.38 915.21 297.77 426.08 12.72 61.20 3,557.39 7,494.02 3,151.82 — 14296.08 8,896.51
Segment depreciation 1784.09 1741.79 239.82 240.22 128.06 133.06 — 450.02 107.46 33.36 2259.43 2598.45
Information about Secondary Business Segments
Revenue by Geographical markets
India 65120.34 66979.67
Outside India 15149.54 15373.35
Total 80269.88 82353.02
Carrying Amount of Segment assets
India 94595.68 83669.67
Outside India — —
Total 94595.68 83669.67
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 Oleo Chemicals such as Fatty Alcohols, Fatty Acids, Alfa Olefin Sulphonates and Refined Glycerin.
Foods 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 and Investments segment comprises of investment in subsidiaries, associate companies and other investments.
3. The geographical segments are as follows :
– Sales in India represent sales to customers located in India
– Sales outside India represent sales to customers located outside India.
45
21. Related Party Disclosures
List of Related Parties and Relationships Mercury Mfg. Co. Ltd.
a) Parties where control exists Godrej (Malaysia) Sdn. Bhd.
Godrej & Boyce Mfg. Co. Ltd., the holding company. Godrej (Singapore) Pte. Ltd.
Subsidiary companies: JT Dragon Pte. Ltd.
Ensemble Holdings & Finance Ltd. b) Other related parties with whom the Company had
Godrej Agrovet Ltd. transactions:
Goldmohur Foods & Feeds Ltd.
Associate / Joint Venture Companies
Golden Feed Products Ltd.
Godrej SaraLee Ltd.
Godrej Global Solutions Ltd.
Godrej Upstream Ltd.
Godrej Global Solutions (Cyprus) Limited
Godrej Global Solutions, Inc. Key Management Personnel
Godrej International Ltd. Mr. A. B. Godrej - Chairman (Non-Executive)
Godrej Global Mideast FZE Mr. N. B. Godrej - Managing Director
Godrej Properties Ltd. Ms. T. A. Dubash - Executive Director & President
Girikandra Holiday Homes & Resorts Ltd. (Marketing)
Godrej Hicare Ltd. Mr. Mathew Eipe - Executive Director & President
Godrej Beverages & Foods Ltd. (Chemicals)
(formerly known as Godrej Tea Ltd.) Mr. V. Banaji - Executive Director & President
Godrej Realty Pvt. Ltd. (Group Corporate Affairs)
Godrej Waterside Properties Pvt. Ltd. Mr. M. P. Pusalkar - Executive Director & President
Krithika Agro Farm Chemicals & Engineering Industries Pvt. Ltd. (Corporate Projects)
Fellow Subsidiaries: Enterprises over which key management personnel exercise
Godrej Appliances Ltd. significant influence
Godrej Foods Ltd. Godrej Consumer Products Ltd.
Godrej Infotech Ltd. Swadeshi Detergents Ltd.
46
c) Transactions with Related Parties

Rs. lac
Enterprises
over which
Key
Management
Relative Personnel
Associate/ Key of Key exercise
Holding Subsidiary Fellow Joint Venture Management Management significant
Nature of Transaction Company Companies Subsidiaries Companies Personnel Personnel influence Total
Sale of Goods 17.08 1.53 — 12.50 — — 890.83 921.94

Previous Year 22.14 0.59 904.96 3.18 — — — 930.87
Sale of Fixed Assets 0.05 1.40 — — — — 264.19 265.64
Previous Year — — 1.46 — — — — 1.46
Sale of undertaking (Foods Division) — 7000.00 — — — — — 7000.00
Previous Year — — — — — — — —
Purchase of goods & equipment 30.77 0.14 695.87 6.69 — — 1,033.81 1767.28
Previous Year 60.60 263.54 1086.77 11.49 — — — 1422.40
Commission received — 30.01 2.50 19.78 — — 23.15 75.44
Previous Year — — 21.05 4.50 — — — 25.55
Recovery of establishment &
Other Expenses 1.43 271.58 12.52 229.64 — — 815.74 1330.91
Previous Year 13.82 362.57 898.07 216.83 — — 0.06 1491.35
Establishment & other exps paid 228.68 19.60 10.50 14.03 — — 89.66 362.47
Previous Year 225.68 26.31 112.17 7.35 — — 0.13 371.64
Sale of Investments — — — — — — — —
Previous Year 4950.00 — — — — — — 4,950.00
Purchase of Investments — 190.68 — — — — — 190.68
Previous Year — — — — — — 10.20 10.20
Interest received — 1.18 — — — — 4.99 6.17
Previous Year — 33.47 — — — — 5.85 39.32
Interest paid — — — — — — — —
Previous Year — — — — 0.27 — — 0.27
Dividend income — 508.20 25.28 536.25 — — 1,007.66 2077.39
Previous Year — 646.66 562.72 1010.33 — — — 2219.71
Dividend paid 1,248.02 — — — 47.61 424.41 — 1720.04
Previous Year 936.01 2.97 — — 75.60 272.64 — 1287.22
Remuneration — — — — 330.85 — — 330.85
Previous Year — — — — 402.01 — — 402.01
Finance provided including loans & equity
contributions — 1,294.46 — (3.30) — — (10.00) 1,281.16
Previous Year — 4,292.37 (3.08) (24.10) — — — 4265.19
Finance repaid during the year — 103.48 — — — — — 103.48
Previous Year — 1,558.50 — — — — 8.00 1,566.50
Guarantees & collaterals given — (2,300.00) — — — — — (2,300.00)
Previous Year — (700.00) — 1,350.00 — — — 650.00
Balance Outstanding as on March 31, 2006
Receivables 1.42 3016.15 — 18.54 — — 222.25 3258.36
Previous Year 69.12 91.92 19.76 10.67 — — — 191.47
Payables 0.01 113.57 — 42.60 — — 102.85 259.03
Previous Year 4.33 198.98 61.80 35.29 — — 0.11 300.51
Guarantees Outstanding — 667.00 1,000.00 1,350.00 — — — 3017.00
Previous Year — 2,967.00 1,000.00 1,350.00 — — — 5317.00
47
d) The significant Related Party transactions are as under:
Rs. lac Rs. lac
Nature of Transaction Amount Nature of Transaction Amount
Sale of goods Interest received
- Godrej Consumer Products Ltd. 890.83 - Swadeshi Detergents Ltd. 4.99
Sale of fixed assets Finance repaid during the year
- Godrej Consumer Products Ltd. 264.19 - Ensemble Holdings & Finance Ltd. 68.00
- Godrej Hicare Ltd. 35.48
Sale of undertaking (Foods Division)
- Godrej Beverages & Foods Ltd. 7,000.00 Guarantees & collaterals given
- Godrej Beverages & Foods Ltd. (2,800.00)
Purchase of goods & equipment - Godrej Global Solutions Ltd. 500.00
- Godrej Consumer Products Ltd. 1,033.81
- Godrej Foods Ltd. 692.34 Dividend income
- Godrej Consumer Products Ltd. 1,007.66
Commission received - Ensemble Holdings & Finance Ltd. 306.67
- Godrej Consumer Products Ltd. 23.15
- Godrej Beverages & Foods Ltd. 24.85 Dividend paid
- Godrej Upstream Ltd. 19.78 - Godrej & Boyce Mfg. Co. Ltd. 1,248.02
Recovery of establishment & other expenses Remuneration
- Godrej Consumer Products Ltd. 815.74 - Mr. N. B. Godrej 82.11
- Godrej Saralee Ltd. 229.64 - Ms. T. A. Dubash 50.57
- Godrej Agrovet Ltd. 175.10 - Mr. Mathew Eipe 62.56
- Mr. V. F. Banaji 77.07
Establishment & other exps paid - Mr. M. P. Pusalkar 48.93
- Godrej & Boyce Mfg. Co. Ltd. 228.68
- Godrej Consumer Products Ltd. 89.66 Finance provided including loans & equity contributions
Purchase of Investments - Godrej Global Solutions Ltd. 210.00
- Ensemble Holdings & Finance Ltd. 190.68 - Godrej International Ltd. 866.15
- Godrej Hicare Ltd. 171.60
Rs. lac Rs. lac Rs. Lac
22. Computation of Profits under Section 349
of the Companies Act, 1956
Profit for the year after tax as per Profit & Loss Account 7112.42 7575.52
Add : Depreciation as per accounts 2259.43 2148.43
Managerial Remuneration 330.85 402.01
Profit/(loss) on sale of assets under Section 349 294.00 (127.31)
Provision for doubtful debts/advances and
depletion in value of investments 10.87 457.02
Provision for Tax (including tax on extraordinary items) 1903.68 (69.00)
4798.83 2811.15
11911.25 10386.67
Less : Depreciation under Section 350
of the Companies Act, 1956 2240.45 2093.73
Profit/(loss) on sale of assets as per books 309.13 (123.78)
Profit on sale of investments 2155.37 3491.26
Profit on sale of Foods division 3510.80 —
8215.75 5461.21
Net Profit for the purpose of Directors’ Remuneration 3695.50 4925.46
Managerial remuneration to Managing and Executive Directors
@ 10% of the net profits 369.55 492.55
Managerial remuneration paid/payable 330.85 402.01
48

Rs. lac Rs. lac
23. Managerial Remuneration
Salaries and allowances 289.12 342.48
Contribution to Provident Fund 16.66 13.64
Estimated Monetary value of perquisites 15.47 39.44
Directors’ Fees 9.60 6.45
TOTAL 330.85 402.01
24. Auditors’ Remuneration

Audit fees (including Rs. 0.92 lac to
branch auditors, Previous Year Rs. 0.98 lac) 30.92 25.48
Tax audit fees 5.50 4.50
Certification and other services 7.65 11.47
Tax Consultation and representation 9.20 3.15
Consultation and management services 4.30 2.99
Out of pocket expenses 0.71 0.13
TOTAL 58.28 47.72
25. Turnover (Net)

Item Unit Quantity Value Quantity Value
Rs. lac Rs. lac
Fatty Acids MT 56110 17447.97 51369 17014.51
Glycerin MT 8997 3491.25 8390 3796.68
Alpha Olefin and its precursors
and derivatives MT 62657 28311.15 71967 31517.63
Oils & Vanaspati MT 38048 14461.23 27597 13652.66
Fruit & Vegetable Puree, Pulp & Juices MT 4285 1724.44 3951 1616.33
Fruit beverages and fruit based products KL 8586 2289.06 8645 2264.50
Soya Milk MT 631 249.29 591 224.64
Medical Diagnostic Products 958.02 803.33
Others 5615.85 5444.96
TOTAL 74548.26 76335.24
26. Inventories - Finished Goods

March 31, 2006 March 31, 2005 March 31, 2004
Item Unit Quantity Value Quantity Value Quantity Value
Fatty Acids MT 2278 817.98 1665 629.54 2245 878.39
Glycerin MT 638 236.59 202 90.16 121 63.46
Alpha Olefin and its precursors and
derivatives MT 5710 2,300.62 1649 499.65 1867 723.39
Oils & Vanaspati MT — — 1075 509.64 1098 575.99
Fruit & Vegetable Puree, Pulp & Juices MT — — 5338 1714.67 1576 343.99
Fruit beverages and fruit based products KL — — 748 165.04 650 153.89
Soya Milk MT — — 68 15.45 — —
Medical Diagnostic Products 119.18 180.20 307.60
Others — 101.70 66.80
TOTAL 3474.37 3906.05 3113.51
49
27. Raw Materials Consumed
Unit Quantity Value Quantity Value
Rs. lac Rs. lac
Oils & Fats MT 126174 31036.70 126151 32793.15
Chemicals and Catalysts MT 19942 4550.73 21314 4546.98
Fruit Pulp & Concentrates KL 1070 1073.90 5170 2639.87
Packing Materials, etc. 3616.73 4931.72
TOTAL 40278.06 44911.72
Raw materials consumption includes consumption for production of captively consumed items.
28. Purchase of Goods

Unit Quantity Value Quantity Value
Rs. lac Rs. lac
Fatty Acids MT 134 42.63 1002 380.73
Oils & Vanaspati MT 29063 8910.68 11914 4,292.97
Pulp MT 1011 473.88 254 112.18
Medical Diagnostic Products 461.33 379.51
Others 62.25 717.82
TOTAL 9950.77 5883.21
29. Licensed, Installed and Utilised Capacity

Item Unit Licensed Installed Capacity Actual
Capacity Production
This Previous This Previous
Year Year Year Year
SCHEDULED
Fatty Acids MT } 32000 32000 46307 37014
Glycerin MT } 8280 8280 9434 8448
Alpha Olefin and its precursors }
and derivatives MT } 35000 35000 66933 72699
Soaps MT } 26381 26381 10338 10944
Cosmetics MT } 1200 1200 – –
Fruit Beverages & Fruit }
based products KL } 30000 30000 18467 46509
Fruit & Vegetable Puree, } N.A
Pulp & Juices. MT } 5000 5000 3222 8581
Refined Oils & Vanaspati MT } 38700 38700 10099 14390
Dietetic & Geriatic foods MT } 250 250 4155 –
U.H.T./Sweetened Flavoured Milk KL } 1800 1800 1182 1,136
Instant Tea/Coffee Plant MT } 3000 3000 879 690
Synthetic Detergents MT } 11250 11250 14699 16888
Hydrogen (Captive consumption) NM3 } 1224000 1224000 518091 411412
Oxygen (By-Product) NM3 } 612000 612000 259046 205706
Notes :
a) 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
b) Alpha Olefin and its precursors and derivatives includes Fatty Alcohols and A.O. Sulphonates.
c) Installed capacity excludes the installed capacity for manufacture of intermediates which are intended to be used for internal consumption
to manufacture A.O and its precursors and derivatives.
d) Production of A.O and its precursors and derivatives include 14,919 MT produced under process contracts for third parties.
50

This Year Previous Year 35. Interest in Joint Ventures:
Rs. lac Rs. lac The Company’s interests, as a venturer, in jointly controlled entities
are:
30. Value of Imports on CIF Basis (includes
Name Countries Principal Percentage of
only Imports directly made)
of activities Ownership
Raw materials 23326.81 15240.87 Incorporation interest as at
Goods for resale 50.13 1136.45 31st March, 2006
Stores & spares 290.72 270.46
Godrej India Household 20.00%
Capital goods 731.15 36.89
SaraLee Ltd. Insectisides
TOTAL 24398.81 16684.67 The Company’s interests in Joint Venture are reported as Long Term
Investments (Schedule “6”) and stated at cost less provision, if any,
31. Expenditure in Foreign Currency for permanent diminution in value of such investments. The
Interest 352.82 833.15 Company’s share of each of the assets, liabilities, income and
Travelling expenditure 83.98 80.37 expenses, etc. related to its interests in this joint venture are:
Other expenditure 399.93 353.17
Expenses for Foreign Branch: This year Previous year
- Salaries and allowance 87.17 84.91 Rs. lac Rs. lac
- Rent 20.80 21.96 I. ASSETS
- Others 38.07 32.64 1. Fixed Assets 967.17 862.07
TOTAL 982.77 1406.20 2. Investments — —
3. Current Assets,
This year Previous year Loans and Advances
Rs. lac Rs. lac a) Inventories 898.23 894.18
b) Sundry Debtors 375.64 255.10
32. Value of Consumption of % %
c) Cash and Bank Balances 577.36 865.31
Raw Materials & Spares
d) Other Current Assets 0.22 0.24
Raw Materials
e) Loans and Advances 463.50 378.54
Imported (including duty
content) 26138.87 65 28354.38 63 II. LIABILITIES
Indigenous 14139.19 35 16557.34 37 1. Loan Funds
40278.06 100 44911.72 100 a) Secured Loans 70.98 96.19
b) Unsecured Loans — —
Spares
2. Current Liabilities
Imported (including
and Provisions
duty content) 240.15 38 373.04 46
a) Liabilities 1251.71 1640.83
Indigenous 391.72 62 441.27 54
b) Provisions 127.05 52.64
631.87 100 814.31 100 3. Deferred Tax- Net 21.02 23.03
This year Previous year III. INCOME

Rs. lac Rs. lac 1. Turnover
33. Dividends Remitted in (Net of excise) 8911.43 9757.50
Foreign Currency 2. Other Income 152.84 124.16
(subject to deduction of tax, IV. EXPENSES
as applicable) 1. Material consumed
Final Dividend for and purchase of goods 4970.02 4837.66
Financial Year 2004-05 to 2. Expenses 2724.80 4039.40
6 shareholders on 1110 shares 0.04 0.01 3. Inventory change 119.20 (43.57)
4. Depreciation 91.38 137.11
TOTAL 0.04 0.01 5. Interest 12.12 20.55
6. Provision for Taxation 117.79 63.77
This year Previous year V. OTHER MATTERS

Rs. lac Rs. lac 1. Contingent Liabilities 207.02 262.35
34. Earnings in Foreign Exchange 2. Capital Commitments 2.48 0.52
Export of goods (F.O.B. : 36. Figures for the previous year have been regrouped wherever
this year Rs.14150.42 lac 15082.08 15309.42 necessary.
previous year Rs.14793.04 lac)
Dividend 65.80 62.21
Others 1.66 1.72
TOTAL 15149.54 15373.35
51
37. Additional information as required under part IV of Schedule VI to the Companies Act, 1956
1. Registration Details
Registration No : 97781
State Code : 11
Balance Sheet Date : 31/3/2006
2. Capital raised during the year (Amount in Rs. lac)
Public Issue : Nil
Rights Issue : Nil
Bonus Issue : Nil
Private Placement (Preference) : Nil
3. Position of mobilisation and deployment of funds
(Amount in Rs. lac)
Total Liabilities : 73,667.33
Total Assets : 73,667.33
Sources of Funds
Paid-up Capital : 2,918.52
Reserves & Surplus : 34,216.68
Secured Loans : 24,910.89
Unsecured Loans : 7,803.24
Deferred Tax Liability : 3,818.00
Application of Funds
Net Fixed assets : 28,594.35
Investments : 37,134.67
Net Current Assets : 5,718.95
Misc. Expenditure : 2,219.36
Accumulated Losses : —
4. Performance of Company (Amount in Rs. lac)
Turnover (Income from Operations) : 74,548.26
Total Expenditure
(Net of Other Income) : 69,035.40
Profit/(Loss) before tax : 5,512.86
Profit/(Loss) after tax : 4,014.18
Earning per Share in
Rs. (on an annualised basis) : 8.24
Dividend rate % : 83.33%
Generic Names of three principal
products/services of Company
Item Code No. : 38.23 *
Product description : Fatty Acids/Fatty Alcohols
Product description : Vanaspati/Refined Oils
Product description : Fruit Drinks
(*represents Heading No. of the Harmonized Commodity Description and Coding System)
52
Godrej Industries Limited – Consolidated Accounts
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 accordance with the requirements of Accounting Standard (AS) 21
Godrej Industries Limited and its subsidiaries as at March 31, 2006, – Consolidated Financial Statements, Accounting Standard (AS) 23
and also the Consolidated Profit and Loss Account and the – Accounting for Investments in Associates in Consolidated Financial
Consolidated Cash Flow Statement for the year then ended, both Statements and Accounting Standard (AS) 27 – Financial Reporting
annexed thereto. These consolidated financial statements are the of Interests in Joint Ventures issued by the Institute of Chartered
responsibility of Godrej Industries Limited’s management. Our Accountants of India.
responsibility is to express an opinion on these financial statements
based on our audit. 6. Reference is invited to note 10 of Schedule 21- Notes to Accounts,
regarding the recoverability of advances given to certain individuals
2. We conducted our audit in accordance with the auditing standards amounting to Rs. 1033 lakh being contingent upon the transfer
generally accepted in India. Those standards require that we plan and/or disposal of the shares pledged against the loan. The said
and perform the audit to obtain reasonable assurance whether the shares were lodged for transfer which application was rejected
financial statements are free of material misstatements. An audit and the Company has preferred an appeal to the Company Law
includes, examining on a test basis, evidence supporting the Board. The impact thereof on the profit for the year could not be
amounts and disclosures in the financial statements. An audit also ascertained.
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall 7. Based on our audit and on consideration of the reports of other
financial statement presentation. We believe that our audit provides auditors on separate financial statements, and the management’s
a reasonable basis for our opinion. certification of the unaudited financial statements, in our opinion,
the consolidated financial statements, subject to the observations in
3. We did not audit the financial statements of some subsidiaries and
para (6) above, give a true and fair view in conformity with the
joint ventures whose financial statements reflect the Group’s share
accounting principles generally accepted in India:
of total assets of Rs. 7,326 lakhs as at March 31, 2006 and the
Group’s share of total revenues of Rs. 25,348 lakhs and net cash a) in case of the Consolidated Balance Sheet, of the consolidated
outflow amounting to Rs. 38 lakhs for the year ended on that date state of affairs of the Godrej Industries Limited Group as at
as considered in the consolidated financial statements. These March 31, 2006;
financial statements have been audited by other auditors whose
reports have been furnished to us and our opinion, insofar as it b) in case of the Consolidated Profit and Loss Account, of the
relates to the amounts included in respect of the subsidiaries and consolidated results of operations for the year ended on that
joint ventures is based solely on the report of the other auditors. date; and
4. As stated in Note 2 of Schedule 21 to the Consolidated Financial c) in case of the Consolidated Cash Flow Statement, of the
Statements, a joint venture whose Financial Statements reflect the consolidated cash flows for the year ended on that date.
Group’s share of total assets of Rs. 703 lakhs as at March 31, 2006
and the Group’s share of total revenues of Rs. 242 lakhs and net
cash inflow amounting to Rs. 70 lakhs and associates insofar as it For and on behalf of
relates to the Group’s share of the associates’ net profit of Rs. 56 KALYANIWALLA & MISTRY
lakhs for the year ended on that date have not been audited and Chartered Accountants
have been considered in the consolidated financial statements based
solely on the un audited seprate financial statements certified by
the management. Viraf R. Mehta
5. We report that the consolidated financial statements have been Partner
prepared by the management of Godrej Industries Limited in Mumbai, May 26, 2006 Membership No.: 32083
53
CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2006

SOURCES OF FUNDS
1. Shareholders’ Funds
(a) Share capital 1 2918.52 2912.58
(b) Share Application Money 6000.00 –
(c) Reserves & surplus 2 33481.41 32177.16
42399.93 35089.74
2. Minority Interest 3625.67 3390.95
3. Loan Funds
(a) Secured loans 3 29982.41 27970.40
(b) Unsecured loans 4 27140.40 12295.52
57122.81 40265.92
4. Deferred Tax Liability 3876.13 2409.81
TOTAL 107024.54 81156.42
5. Fixed Assets 5
(a) Gross block 77659.89 67005.18
(b) Less : Depreciation/Impairment 32997.46 32523.15
(c) Net block 44662.43 34482.03
(d) Capital work-in-progress 2274.89 1819.61
46937.32 36301.64
6. Goodwill (on consolidation) 11275.93 10967.94
7. Investments 6 24100.96 17479.53
8. Current Assets, Loans and Advances
(a) Inventories 7 28500.97 22617.01
(b) Sundry debtors 8 23052.69 20744.80
(c) Cash and bank balances 9 9106.59 5343.11
(d) Other Current Assets 24.96 –
(e) Loans and advances 10 17212.32 16320.73
77897.54 65025.65
(a) Liabilities 11 49278.68 43302.23
(b) Provisions 12 6127.98 5455.60
55406.67 48757.83
Net Current Assets 22490.87 16267.81
9. Miscellaneous Expenditure 13 2219.46 139.49
TOTAL 107024.54 81156.42
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

54
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2006
Schedule Rs. lac Rs. lac
INCOME
Turnover (gross) 209816.33 200999.17
Less : Excise Duty 5519.15 5863.69
Turnover (net) 204297.18 195135.48
Other Income 14 6319.73 4781.82
210616.91 199917.30
EXPENDITURE
Materials consumed and cost of sales 15 150164.44 142231.77
Expenses 16 46763.12 43866.10
Inventory change 17 (2220.73) (784.23)
Interest and financial charges (net) 18 4528.44 3496.47
(Net of transfer from Revaluation Reserve
Rs. 168.43 lac, Previous year Rs. 223.80 lac)
203002.04 192170.66
Profit Before Tax 7614.87 7746.64
Provision for taxation
- Current Tax 1197.49 1359.87
- Fringe benefit Tax 114.85 –
- Deferred Tax 1242.82 (718.79)
Profit For The Year After Taxation 5059.71 7105.56
Prior Period adjustments (net) 19 (14.38) 4.17
5045.33 7109.73
Share of Loss in Associates (78.09) (137.70)
Profit before Minority Interest 4967.24 6972.03
Share of Minority Interest (67.47) (504.91)
Profit After Minority Interest 4899.77 6467.12
Surplus brought forward 17913.78 15317.18
Profit Available For Appropriation 22813.55 21784.30
APPROPRIATIONS:
Dividend on Equity Shares
– Interim 106.15 209.00
– Final 2552.25 2044.86
Tax on distributed profits 683.27 547.10
Transfer to General Reserve 1251.61 1069.56
Surplus carried forward 18220.27 17913.78
TOTAL 22813.55 21784.30
Basic and Diluted Earnings per share (Face Value Rs. 6 per share) 10.09 12.05
(refer note 17)
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

55
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2006
A. Cash Flow from operating activities : Rs. lac Rs. lac
Adjustments for :
Foreign exchange 119.45 946.54
Profit on sale of investments (2299.64) (3458.14)
Loss/(Profit) on sale of fixed assets (373.81) 182.24
Dividend income (1299.75) (580.27)
Interest income (945.81) (746.62)
Interest expense 4352.16 3214.73
Voluntary retirement compensation paid (2685.07) (100.42)
Deferred expenditure written off 704.02 209.22
Provision for diminution in value of investments (364.79) 531.76
Provision for doubtful debts and sundry balances written off (net) (6.04) (99.86)
Others 264.97 (273.48)
Operating profit before working capital changes 8847.33 10932.90
Adjustments for :
Inventories (5828.97) 1043.25
Trade and other receivables (7115.65) (2545.85)
Trade payables 8257.31 2590.17
Cash generated from operations 4160.02 12020.47
Direct taxes paid (1554.31) (1392.52)
Direct taxes refund received 125.75 140.11
Net Cash from operating activities 2731.46 10768.06
B. Cash Flow from investing activities :
Purchase of fixed assets (16143.97) (5270.97)
Proceeds from sale of fixed assets 1523.12 687.69
Acquisition of new businesses (1246.10) –
Purchase of investments (57587.86) (56076.53)
Proceeds from sale of investments 54265.71 53425.25
Intercorporate deposits/Loans (net) 1289.31 457.08
Interest received 953.84 795.29
Dividend received 1284.18 583.21
Net Cash used in investing activities (15661.77) (5398.98)
C. Cash Flow from financing activities :
Proceeds from share capital 6579.40 –
Proceeds from issue of debentures 1154.46 –
Proceeds from borrowings 55685.42 25812.12
Repayments of borrowings (37498.41) (21935.24)
Bank overdrafts (net) (2135.52) (3379.95)
Interest paid (4587.88) (3227.87)
Dividend paid (2036.10) (1571.79)
Tax on distributed profits (467.58) (448.82)
Net Cash from/(used) in financing activities 16693.79 (4751.55)
Net increase in cash and cash equivalents 3763.48 617.53
Cash and cash equivalents (Opening Balance) 5343.11 4725.58
Cash and cash equivalents (Closing Balance) 9106.59 5343.11
(including share in jointly controlled entities - Rs. 675.15 lac)
Notes :
Rs. lac Rs. lac
1. Cash and Cash equivalents.
Cash on hand and balances with banks 9113.75 5343.23
Effect of exchange rate changes (7.16) (0.12)
Cash and cash equivalents 9106.59 5343.11
2. The above cash flow statement includes share of cash flows from jointly controlled entities as under:
a. Net cash from operating activities 680.73
b. Net cash used in investing activities (642.92)
c. Net cash used in financing activities (353.35)
As per our Report attached Signatures to Cash Flow statement

56
SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS
ACCOUNT FOR THE YEAR ENDED MARCH 31, 2006 This Year Previous Year
Rs. lac Rs. lac
Authorised:
13,33,33,333 Equity shares of Rs. 6 each 8000.00 8000.00
10,00,00,000 Unclassified Shares of Rs. 10 each 10000.00 10000.00
18000.00 18000.00
Issued, Subscribed and Paid-up:
4,86,41,942 Equity shares of Rs. 6 each fully paid 2918.52 2912.58
2918.52 2912.58
Of the above 3,12,00,398 shares are held by Godrej & Boyce Mfg. Co. Limited, the holding Company
As at Additions Deductions As at
1.4.2005 31.03.2006
Securities Premium Account 1099.27 – 0.10 1099.17
1099.16 0.11 – 1099.27
Capital Investment Subsidy Reserve 80.42 – 0.03 80.39
65.97 14.45 – 80.42
Revaluation Reserve 3031.76 – 740.37 2291.39
3256.59 – 224.83 3031.76
Special Reserve u/s. 451C of RBI Act, 1934 – 117.39 – 117.39
Capital Redemption Reserve 3125.00 – – 3125.00
3125.00 – – 3125.00
General Reserve 6309.90 1251.61 – 7561.51
6152.34 1069.56 912.00 6309.90
Foreign Exchange Fluctuation Reserve 12.29 23.29 – 35.58
12.29 – – 12.29
Profit & Loss Account 17913.79 306.48 – 18220.27
15317.18 2596.61 – 17913.79
Share in Jointly Controlled Entities 604.73 345.98 – 950.71
706.87 – 102.14 604.73
Total Reserves – This Year 32177.16 2044.75 740.50 33481.41
– Previous Year 29723.11 3680.73 1238.97 32164.87

SCHEDULE 3 : SECURED LOANS Rs. lac Rs. lac
Term loans from financial institutions 565.68 1155.98
Term loans from banks 27577.29 23303.20
Bank overdrafts 1768.46 3415.03
Share in jointly controlled entities 70.98 96.19
29982.41 27970.40
Fixed deposits 158.59 471.45
Intercorporate deposits 1828.10 3663.10
Short term loans from banks 21777.87 7691.41
Other loans from banks 2337.17 –
Sales tax deferment facility – 316.43
27140.40 12295.52
SCHEDULE 5 : FIXED ASSETS Rs. lac
ASSETS GROSS BLOCK DEPRECIATION/IMPAIRMENT NET BLOCK
As on Deductions/ As on Upto Deductions/ For the Upto As on As on
1.4.2005 Additions Adjustments 31.03.2006 31.03.2005 Adjustments Year 31.03.2006 31.03.2006 31.03.2005
Tangible Assets
Land 1303.87 130.00 24.18 1409.69 60.50 16.30 3.82 48.02 1361.67 1243.37
Buildings 11430.62 1246.01 1265.25 11411.38 2988.99 314.75 359.73 3033.97 8377.41 8441.63
Plant & Machinery 43849.60 11553.81 3178.38 52225.03 24636.36 2,564.15 2523.21 24595.42 27629.61 19213.24
Research Centre 150.39 – – 150.39 59.25 – 5.05 64.30 86.09 91.14
Furniture & Fixtures 1483.35 198.82 73.69 1608.48 831.93 42.07 106.61 896.47 712.01 651.42
Office & Other Equipments 1403.91 261.32 285.31 1379.92 733.16 208.43 124.44 649.17 730.75 670.75
Vehicles 1264.62 316.54 232.93 1348.23 631.62 130.22 154.02 655.42 692.81 633.00
Trees Development Cost 454.69 – – 454.69 209.22 – 30.33 239.55 215.14 245.47
Intangible Assets
Technical Know-how Fees 200.00 – – 200.00 195.69 – 4.29 199.98 0.02 4.31
Goodwill – 1116.02 – 1116.02 – – 182.73 182.73 933.29 –
Trademarks 3211.99 450.00 152.27 3509.72 995.82 150.35 261.03 1106.50 2403.22 2216.17
Assets Acquired Under Finance Lease
Plant & Machinery 52.31 442.11 – 494.42 – – 20.99 20.99 473.43 52.31
Vehicles 274.25 69.74 31.95 312.04 117.09 12.66 72.13 176.56 135.48 157.16
Share in jointly controlled entities 1925.59 162.49 48.20 2039.88 1063.52 26.52 91.38 1128.38 911.50 862.07
TOTAL - This Year 67005.19 15946.86 5292.16 77659.89 32523.15 3465.45 3939.76 32997.46 44662.43 34482.04
- Previous Year 65238.97 3786.87 2020.65 67005.18 29845.11 906.30 3584.34 32523.15
Capital Work-in-Progress 2274.89 1819.61
TOTAL 46937.32 36301.65
1. Land includes leasehold land of Rs.291.75 lac (Previous Year Rs.232.16 lac) which is being amortised over the period of lease.
2. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on 30th June, 1992 on the basis of a Valuation Report submitted by professional valuers.
3. Depreciation for the year includes Rs.168.43 Lac (Previous Year Rs.223.80 Lac) being depreciation on revalued component of the fixed assets.
4. Buildings includes Rs.0.01 lac (Previous Year Rs.0.01 lac) being the value of investment in shares of Co-operative Housing Society.
5. Buildings include Rs. 1701.74 lac (Previous year Rs. 2651.08 lac) being the cost of equity shares in Tahir Properties Ltd., representing the right of the Company to three (previous year five) flats in the property.
6. Accumulated depreciation includes impairment loss of Rs. 707.90 lac on plant & machinery in an earlier year.
7. Capital work-in-progress is net of impairment loss of Rs. 204.10 lac provided on an infructuous asset under construction.
57
FACE NUMBER AMOUNT
Investee Company/Institutions VALUE Qty Acquired Sold Qty As on As on
As on During During As on Notes 31.03.06 31.03.05
LONG TERM INVESTMENTS - At cost
A. TRADE INVESTMENTS
Bharuch Eco-Aqua Infrastructure Ltd. 10 4,40,000 – – 4,40,000 44.00 44.00
Preference Shares : Partly Paid
Godrej Foods Ltd. 10 50,00,000 – – 50,00,000 (b) 450.00 450.00
(8% Redeemable Cumulative
Preference Shares, 2012)
Tahir Properties Ltd. (Class-A) 100 25 – – 25 (b) 0.02 0.02
B. OTHER INVESTMENTS
Quoted :
Godrej Consumer Products Ltd. 4 73,24,027 – 5,90,000 67,34,027 10730.01 11670.12
Godrej Foods Ltd. 1 14,84,864 – 14,84,864 – – 13.64
Others – – – – 1.19 1.08
Unquoted :
Associate Companies
Compass Connections Ltd. £0.25 13,692 – – 13,692 159.18 142.99
Godrej Upstream Ltd. 10 9,000,000 – – 9,000,000 457.06 591.86
Swadeshi Detergents Ltd. 10 2,09,370 – – 2,09,370 50.28 49.54
Creamline Dairy Products Ltd. 10 23,90,911 – – 23,90,911 1014.23 971.88
Creamline Nutrients Ltd. 10 3,51,352 – – 3,51,352 95.96 90.79
Polychem Hygiene Laboratories Pvt. Ltd. 10 4,55,000 – – 4,55,000 170.98 178.72
Personalitree Academy Ltd. 10 3,89,269 – – 3,89,269 68.24 68.24
Other Companies
Gharda Chemicals Ltd. 100 114 – – 114 (a) 11.57 11.57
Avestha Gengraine Technologies Pvt. Ltd. 10 1,05,500 70,244 – 1,75,744 767.13 450.25
karROX Technologies Ltd. 10 2,50,000 – – 2,50,000 100.50 100.50
Krithika Agro Farm Chemicals & Engg. Inds. Ltd. 10 – 7,600 7,600 0.76 –
Tahir Properties Ltd. (Partly Paid) 100 25 – – 25 (b) 0.01 0.01
Boston Analytics LLC (Partly Paid) $1 – 7,81,250 – 7,81,250 (b) 258.76 –
Common Stock :
Unquoted :
C Bay Systems Ltd. $0.01 13,98,798 31,87,275 – 45,86,073 (c) 5430.14 2177.23
Preferred Stock: Fully Paid
Unquoted :
Verseon LLC - Class A preferred units $1.90 – 13,15,789 – 13,15,789 1142.34 –
Convertible Debentures :
Unquoted :
Avestha Gengraine Technologies Pvt. Ltd. 10000000 – 3 – 3 300.00 –
Government Securities
Unquoted :
Kisan Vikas Patra – – – – – – 0.32
National Saving Certificate 92,000 – – – – 1.37 0.92
Indira Vikas Patra 2,000 – – – – 0.01 0.03
Shares in Co-operative Societies - Fully Paid
Unquoted :
Sachin Industrial Co-op. Society 500 3 – – 3 0.02 0.02
The Saraswat Co-op. Bank Ltd. 10 2,000 – – 2,000 0.20 0.20
Investment in partnership Firm

View Group LP 1368.01 802.44
Current Investments
Units of Mutual Fund :
Unquoted
Templeton India Treasury Fund 160.29 200.55
Kotak Liquid Scheme 63.53 30.33
Franklin Templeton Mutual Fund – 0.69
Prudential ICICI Liquid Plan 2.06 –
Grindlays Floating Rate Fund 1800.00 –
Magnum Institutional Income Fund-Savings Growth 23.00 –
24670.85 18047.94
Less: Provision for diminution in value of Investments (569.89) (568.41)
24100.96 17479.53
Aggregate Book Value of Investments
Quoted 10731.20 11684.84
Unquoted 13369.76 5794.69
24100.96 17479.53
Market Value of Quoted Investments 48875.57 22958.08
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.
- Boston Analytics LLC - Equity - USD 440,000
- Godrej Foods Ltd. - Preference - Re. 1 per share.
- Tahir Properties Ltd. - Preference - Rs. 30 per share.
c ) Preferred Stock - series E & F has been converted into Common Stock during the year.
58
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)
This Year Previous Year This Year Previous Year

Rs. lac Rs. lac Rs. lac Rs. lac
SCHEDULE 7 : INVENTORIES SCHEDULE 11 : CURRENT LIABILITIES

(at lower of cost and net realisable value) Acceptances 3843.20 6176.37
Stores and spares 1594.27 670.80 Sundry creditors 27983.12 24966.50
Raw materials 12829.31 10306.42 Advances from customers 9174.61 5231.65
Construction work-in-progress 2316.09 1928.28 Sundry deposits 1865.90 2049.12
Investor Education & Protection Fund
Finished Goods 7134.83 6892.88
– Unclaimed Dividend 46.29 51.70
– Unpaid Matured Deposits 65.15 139.24
28500.97 22617.01 – Interest accrued on above 0.20 58.70
Other liabilities 4504.59 2876.41
SCHEDULE 8 : SUNDRY DEBTORS Interest accrued but not due on loans 168.21 107.76
(Unsecured)
Debts outstanding over six months
Considered good 2115.24 1492.28 49278.68 43302.23
Considered doubtful 522.90 536.20
2638.14 2028.48 Proposed dividend 2658.37 2044.86
Other debts Provision for tax on distributed profits 473.16 305.83
Considered good 20450.21 19001.66
Provision for taxation — 23.36
23088.35 21030.14 (Net of advance tax,
Less : Provision for doubtful debts (522.90) (536.20) Previous year Rs. 3205.94 lac)
22565.45 20493.94 Provision for retirement benefits 2869.40 3028.91
Share in jointly controlled entities 487.24 250.86 Share in jointly controlled entities 127.05 52.64
23052.69 20744.80 6127.98 5455.60
SCHEDULE 9 : CASH AND BANK BALANCES SCHEDULE 13 : MISCELLANEOUS

Cash and cheques on hand 218.84 138.48 EXPENDITURE
Balances with scheduled banks (To the extent not written off or adjusted)
– on current accounts 2917.49 1685.51 Deferred revenue expenditure
– on deposit accounts 5295.11 2528.41 – Voluntary retirement compensation 2219.46 126.30
Share in jointly controlled entities 675.15 990.71 – Preliminary Expenses — 9.59
9106.59 5343.11 – Others — 3.60
SCHEDULE 10 : LOANS AND ADVANCES 2219.46 139.49

(Unsecured and considered good unless SCHEDULE 14 : OTHER INCOME
otherwise stated) Interest :
Loans and Advances (refer note 9) 4152.72 2166.54 – Government Securities — 16.90
Loans to GIL ESOP Trust 742.00 —
– Debentures 9.62 —
Advances recoverable in cash or
– Income tax refund 140.83 8.10
in kind or for value to be received
– Deposits (refer note 15) 486.54 53.05
(net of provision for doubtful advances
Rs. 382.41 lac, Dividend 1237.33 580.27
Previous Year Rs. 934.18 lac) 8642.30 8545.54 Profit on sale of fixed assets (Net) 373.81 —
Intercorporate deposits Profit on sale of long term investments
– Associate companies 41.80 2148.69 (refer note 15) 2299.64 3458.14
– Others — 55.76 Provision for depletion in value of
Deposits and balances with long term investments written back 364.89 —
– Customs & excise authorities 850.90 1008.65 Provision for doubtful debts and
– Others 1834.65 1951.90 advances written back — 3.05
Advance payment of taxes 153.75 — Miscellaneous income (refer note 15) 1253.00 538.15
(Net of provision for tax of Share in jointly controlled entities 154.07 124.16
Rs. 3863.58 lac)
Share in jointly controlled entities 794.21 443.65 6319.73 4781.82
17212.32 16320.73
59

Rs. lac Rs. lac Rs. lac Rs. lac
SCHEDULE 15 : MATERIALS SCHEDULE 18 : INTEREST AND FINANCIAL

CONSUMED AND COST OF SALES CHARGES (Net)
Raw materials consumed : Interest paid
Stocks at the commencement of the year 10306.42 11610.63 – on debentures and fixed loans 2289.97 1019.42
Add : Purchases (net) 125106.17 121494.78 – on bank overdrafts 441.92 755.63
135412.59 133105.41 – on Inter Corporate Deposits 190.10 176.40
Less : Stocks as at the close of the year 12829.30 10306.42 – other interest 1093.59 770.29
Raw Materials consumed during the year 122583.29 122798.99
4015.58 2721.74
Cost of Sales - Property Development
Stocks at the commencement of the year 1928.28 2406.54 Less : Interest during construction
period capitalised 265.47 14.25
Add : Construction Expenditure during the year 4640.33 2135.31
Less : Interest received
6568.61 4541.85
– on loans & deposits 39.19 285.90
Less : Stocks as at the close of the year 2316.09 1928.28
– on Customer balances, etc. 18.08 43.74
4252.52 2613.57 – projects and landlords 225.23 335.77
Purchase of goods for resale 18085.57 11981.55 – others 26.32 3.16
Share in jointly controlled entities 5243.06 4837.66 z
308.82 668.57
150164.44 142231.77
Net Interest 3441.29 2038.92
SCHEDULE 16 : EXPENSES Brokerage and other financial charges 602.05 507.24
Salaries, wages and allowances 10318.84 9995.87 Foreign exchange loss 457.69 927.38
Contribution to provident fund
and other funds 601.90 608.71
Employee welfare expenses 981.81 826.33 4528.44 3496.47
Stores and spares consumed 1242.06 1526.50 SCHEDULE 19 : PRIOR PERIOD
Power and fuel 5988.09 5068.20 ADJUSTMENTS
Processing charges 3795.24 3838.17 Excess provision for Income-tax 35.70 4.17
Rent (refer note 15) 728.76 527.02 Provision for pension payments (112.50) —
Rates and taxes 560.80 692.40 Dividend for previous year 62.42 —
Repairs and maintenance
– Machinery 1046.90 1363.37 (14.38) 4.17
– Buildings 294.61 261.55
– Other assets 519.84 453.54
Insurance 243.23 222.02 SCHEDULE 20 : SIGNIFICANT ACCOUNTING POLICIES
Freight 3535.04 2718.63 a) Accounting Convention
Commission 3355.81 3107.74 The financial statements are prepared under the historical cost
Discount 467.55 203.06
convention, on the accrual basis of accounting, in accordance with
Advertisement and publicity 1465.11 1427.64
Sales promotion 303.84 280.52 the generally accepted accounting principles in India and the
Selling and distribution expenses 1465.84 819.63 Accounting Standards issued by the Institute of Chartered Accountants
Bad debts written off 620.33 630.88 of India.
Provision for doubtful debts and advances 40.78 — b) Fixed Assets
Provision for depletion in the value of
long term investments 0.10 449.98 Fixed Assets are stated at cost or as revalued as the case may be, less
Loss on Sale of Fixed Assets — 182.24 accumulated depreciation. Cost includes all expenses related to
Excise duty on inventory change 284.99 (50.70) acquisition and installation, of the concerned asset. Exchange differences
Foreign Exchange loss 182.62 809.09 arising on account of repayment and year end translation of foreign
Miscellaneous expenses 5654.87 3864.31 currency liabilities relating to acquisition of fixed assets from a country
Share in jointly controlled entities 3064.16 4039.40 outside India, are adjusted to the carrying cost of the respective assets.
46763.12 43866.10 Fixed Assets acquired under finance lease are capitalised at the lower
SCHEDULE 17 : INVENTORY CHANGE of their face value and present value of the minimum lease payments.
Stocks at the commencement of the year
c) Intangible Assets
Work-in-progress 1509.69 1340.45 The cost of acquisition of trademarks is amortised equally over a
Share in jointly controlled entities 757.55 897.58 period of four to fifteen years depending on the expected utilisation.
9160.12 8375.89 d) Asset Impairment
Less : Stocks at the close of the year :
The Company reviews the carrying values of tangible and intangible
assets for any possible impairment at each balance sheet date. An
Share in jointly controlled entities 638.35 757.55 impairment loss is recognized when the carrying amount of an
asset exceed its recoverable amount. In assessing the recoverable
11380.85 9160.12
amount, the estimated future cash flows are discounted to their
(Increase)/Decrease in Inventory (2220.73) (784.23) present value based on appropriate discount rates.
60

e) Borrowing Costs in proportion to the actual cost incurred as against the total estimated
Borrowing costs that are directly attributable to the acquisition / cost of projects under execution with the Company.
construction of the underlying fixed assets are capitalised as a part Determination of revenues under the percentage of completion
of the respective asset, upto the date of acquisition / completion of method necessarily involves making estimates by the Company,
construction. some of which are of a technical nature, concerning, where relevant,
f) Investments the percentages of completion, costs to completion, the expected
revenues from the project/activity and the foreseeable losses to
Long term investments are carried at cost. Provision for diminution, completion. Such estimates have been relied upon by the auditors.
if any, in the value of each long term investment is made to recognise
Dividend income is recognised when the right to receive the same
a decline, other than of a temporary nature. The fair value of a long
is established.
term investment is ascertained with reference to its market value,
the investee’s assets and results and the expected cash flows from Interest income is recognised on a time proportion basis.
the investment. Income on assets given on operating lease is recognised on a straight
Current investments are carried at lower of cost and fair value. line basis over the lease term.
g) Inventories k) Depreciation
Inventories are valued at lower of cost and net realisable value. Leasehold land is amortised equally over the lease period. Leasehold
Cost is computed on weighted average basis and is net of modvat. improvements are amortised over five years.
Finished goods and work-in-progress include cost of conversion Depreciation is provided on the straight line method at the rates
z and other costs incurred in bringing the inventories to their present specified in Schedule XIV to the Companies Act, 1956, except in
location and condition. Provision is made for the cost of obsolescence some subsidiary companies, where depreciation has been provided
and other anticipated losses, wherever considered necessary. on the written down value method. The impact of the differing
Construction work-in-progress is valued at cost. Construction work- method of depreciation has not been ascertained but is not likely to
be material. Computer hardware is depreciated over its estimated
in-progress includes cost of land, premium for development rights,
useful life of 4 years.
construction costs, allocated interest and expenses incidental to the
projects undertaken by the Company. Depreciation on assets acquired during the year is provided for the
full accounting year and no depreciation is charged on the assets
h) Provisions and Contingent Liabilities
sold/discarded during the year, except in case of major additions
Provisions are recognised in the accounts in respect of present and deductions exceeding rupees one crore in which case,
probable obligations, the amount of which can be reliably estimated. proportionate depreciation is provided.
Contingent Liabilities are disclosed in respect of possible obligations Depreciation on the revalued component is provided on the straight
that arise from past events but their existence is confirmed by the line method based on the balance useful life of the assets as certified
occurrence or non occurrence of one or more uncertain future by the valuers. Such depreciation is withdrawn from Revaluation
events not wholly within the control of the Company. Reserve and credited to Profit and Loss Account.
i) Foreign Exchange Transactions l) Retirement Benefits
Transactions in foreign currency are recorded at the exchange rates Retirement benefits to employees comprise payments under defined
prevailing on the date of the transaction. Monetary assets and contribution plans like provident fund and family pension as well as
liabilities denominated in foreign currency are translated at the payments under defined benefit schemes like leave encashment
period end exchange rates. Forward exchange contracts, remaining benefit on retirement and gratuity to eligible employees. Payments
unsettled at the period end, backed by underlying assets or liabilities under defined contribution plans are charged to revenue. The liability
are also translated at period end exchange rates. Premium or in respect of defined benefit schemes is provided on the basis of an
discount on forward exchange contracts is amortised over the period actuarial valuation at the end of each financial year.
of the contract and recognised as income or expense for the period. m) Deferred Revenue Expenditure
Exchange gains/losses are recognised in the Profit and Loss Account
The compensation payable under the Voluntary Retirement Schemes,
except for exchange differences relating to fixed assets acquired
the benefit of which is expected to accrue in future is deferred over
from a country outside India, which are adjusted in the cost of the
its payback period. The compensation is generally amortised over
asset. Non Monetary foreign currency items like investments in three to five years depending on the pay back period.
foreign subsidiaries are carried at cost and expressed in Indian
currency at the rate of exchange prevailing at the time of making Preliminary Expenses and Share issue expenses are amortised in
the original investment. ten equal instalments.
j) Revenue Recognition n) Hedging
Sales are recognised where goods are supplied and are recorded Import of crude palm oil by the Company are being hedged by
net of returns, trade discounts, rebates, sales taxes and excise duty. futures contract on offshore Commodities Exchange. Gains or losses
on settled contracts is recognised in the profit and loss account and
Income from processing operations is recognised on completion of is included in the cost of materials consumed. Futures contracts not
production / dispatch of the goods, as per the terms of contract. settled as on the Balance Sheet date are marked to market and
Export incentives receivable under the Duty Entitlement Pass Book losses, if any, are recognised in the profit and loss account, whereas,
Scheme and the Duty Drawback Scheme are accounted on accrual the unrealised profit is ignored.
basis. o) Taxes on Income
Revenue from construction activity is recognised on “Percentage of Current tax is the amount of tax payable on the assessable income
Completion Method” of accounting. As per this method, revenue in for the year determined in accordance with the provisions of the
Profit & Loss Account at the end of the accounting year is recognised Income Tax Act, 1961.
61
Deferred tax is recognised on timing differences, being the reporting date as of the Company i.e. year ended March 31, 2006,
differences between the taxable income and accounting income except in respect of Personalitree Academy Ltd., an associate
that originate in one period and are capable of reversal in one or company whose accounts for the year ended March 31, 2006 have
more subsequent periods. Deferred tax assets on unabsorbed tax not been received till date. The investment not being significant
losses and tax depreciation are recognized only when there is virtual and fully provided for in the previous year, there is no impact on
certainty of their realisation and on other items when there is the profit & loss account.
reasonable certainty that sufficient future taxable income will be The accounts of Al Rahba International Trading Ltd., a joint venture
available against which such deferred tax assets can be realised. company with Godrej Agrovet Ltd., Compass Connections Ltd., UK,
The tax effect is calculated on the accumulated timing differences Creamline Dairy Products Ltd., Creamline Nutrients Ltd. and
at the year end and based on the tax rate and laws enacted or Polychem Hygiene Laboratories Pvt. Ltd., associate companies have
substantially enacted on the balance sheet date. not been audited for the year ended March 31, 2006 as of date and
p) Segment Reporting have been consolidated on the basis of the accounts as certified by
The Accounting Policies adopted for segment reporting are in line with their respective management.
the Accounting Policies of the Company. Segment assets include all 3. Information on subsidiaries, joint ventures and associates :
operating assets used by the business segments and consist principally (a) The subsidiary companies considered in the consolidated
of fixed assets, debtors and inventories. Segment liabilities include the financial statements are :
operating liabilities that result from the operating activities of the S. No. Name of the Company Country of Percentage of Holding
business. Segment assets and liabilities that cannot be allocated between Incorporation This Previous
the segments are shown as part of unallocated corporate assets and Year Year
liabilities respectively. Income / Expenses relating to the enterprise as a 1. Godrej Agrovet Ltd. India 57.80% 57.78%
whole and not allocable on a reasonable basis to business segments
2. Goldmohur Foods & Feeds Ltd. India 57.80% 57.78%
are reflected as unallocated corporate income / expenses. (100% subsidiary of
SCHEDULE 21 : NOTES TO ACCOUNTS Godrej Agrovet Ltd.)
1. Principles of Consolidation: 3. Golden Feed Products Ltd. India 57.80% 57.78%
The consolidated financial statements relate to Godrej Industries (100% subsidiary of
Godrej Agrovet Ltd.)
Limited, the holding company, its majority owned subsidiaries, Joint
Ventures and Associates (collectively referred to as Group). The 4. Godrej Properties Ltd. India 82.88% 82.85%
consolidation of accounts of the Company with its subsidiaries has 5. Girikandra Holiday Homes &
been prepared in accordance with Accounting Standard (AS) 21 Resorts Ltd. India 82.88% 82.85%
‘Consolidated Financial Statements’. The financial statements of the (100% subsidiary of Godrej
parent and its subsidiaries are combined on a line by line basis and Properties Ltd.)
intra group balances, intra group transactions and unrealized profits 6. Godrej Realty Pvt. Ltd. India 42.27% —
or losses are fully eliminated. (51% subsidiary of Godrej
Properties Ltd.)
In the consolidated financial statements, ‘Goodwill’ represents the
excess of the cost to the Company of its investment in the subsidiaries 7. Godrej Waterside Properties
Pvt. Ltd. India 82.88% —
and/or joint ventures over its share of equity, at the respective dates
(100% subsidiary of Godrej
on which the investments are made. Alternatively, where the share Properties Ltd.)
of equity as on the date of investment is in excess of cost of
investment, it is recognised as ‘Capital Reserve’ in the consolidated 8. Godrej Hicare Ltd. India 85.91% 86.44%
financial statements. 9. Godrej Remote Services Ltd. India — 99.99%
Minority interest in the net assets of consolidated subsidiaries consists 10. Ensemble Holdings &
of the amount of equity attributable to the minority shareholders at Finance Ltd. India 99.95% 99.95%
the respective dates on which investments are made by the Company 11. Godrej International Ltd., UK U.K. 100.00% 100.00%
in the subsidiary companies and further movements in their share in 12. Godrej Global Mid-East FZE,
the equity, subsequent to the dates of investment as stated above. UAE U.A.E. 100.00% 100.00%
Investments in Joint Ventures are dealt with in accordance with (100% subsidiary of
Accounting Standard (AS) 27 ‘Financial Reporting of Interests in Godrej International Ltd.)
Joint Ventures’. The Company’s interest in jointly controlled entities 13. Godrej Beverage & Foods Ltd. India 70.00% 70.91%
are reported using proportionate consolidation, whereby the 14. Godrej Global Solutions Ltd. India 100.00% 100.00%
Company’s share of jointly controlled assets and liabilities and the 15. Godrej Global Solutions
share of income and expenses of the jointly controlled entities are (Cyprus) Ltd. Greece 100.00% —
reported as separate line items. (100% subsidiary of
Investments in Associates are dealt with in accordance with Godrej Global Solutions Ltd.)
Accounting Standard (AS) 23 ‘Accounting for Investments in 16. Godrej Global Solutions Inc U.S.A. 100.00% —
Associates in Consolidated Financial Statements’ issued by the Institute (100% subsidiary of
of Chartered Accountants of India. Effect has been given to the Godrej Global Solutions Ltd.)
carrying amount of investments in associates using the ‘Equity Note:
method’. The Company’s share of the post acquisition profits or Krithika Agro Farm Chemicals & Engineering Pvt. Ltd., a company in which
losses is included in the carrying cost of investments. Godrej Agrovet Ltd. acquired a 76% interest during the year is excluded
2. The financial statements of the subsidiaries, joint ventures and from consolidation as the control is intended to be temporary since Godrej
associates used in the consolidation are drawn upto the same Agrovet Ltd. intends to dispose of its holding in the near future.
62

(b) Interests in Joint Ventures: 6. Contingent Liabilities
S. No. Name of the company Country of Percentage of This Year Previous Year
Incorporation Ownership Interest Rs. lac Rs. lac
This Previous
Year Year a) Claims against the Company not
acknowledged as debts:
i) Godrej SaraLee Ltd. India 20.00% 20.00% i) Excise duty demands relating to 1537.41 3386.52
ii) Godrej SaraLee disputed classification, post
Bangladesh Pvt. Ltd. Bangladesh 20.00% 20.00% manufacturing expenses,
iii) Godrej SaraLee assessable values, etc. which the
Sri Lanka Pvt. Ltd. Sri Lanka 20.00% 20.00% Company has contested and is in
appeal at various levels.
iv) Al Rahba International
ii) Customs Duty demands relating to 844.53 1036.65
Trading Limited (held by U.A.E. 70.00% —
less charge, differential duty,
Godrej Agrovet Ltd.)
classification, etc.
v) ACI Godrej Agrovet iii) Sales Tax demand relating to 512.37 532.21
Pvt. Ltd. (held by Bangladesh 50.00% 50.00% purchase tax on Branch Transfer/
Godrej Agrovet Ltd.) Non availability of C Forms, etc.
(c) Investments in Associates: at various levels.
S. No. Name of the company Country of Percentage of holdings iv) Octroi demand relating to 844.46 722.01
Incorporation This year Previous year classification issue on import of
Palm Stearine and interest thereon.
i) Swadeshi Detergents Ltd. India 41.08% 41.08%
v) Stamp duties claimed on certain 182.23 182.23
ii) Godrej Upstream Ltd. India 40.43% 40.43% properties which are under appeal
(held by Godrej Global by the Company
Solutions Ltd.) vi) Income Tax demands against which 1785.83 726.95
iii) Compass Connections Ltd. U.K. 20.74% 21.16% the company has preferred appeals
iv) Personalitree Academy Ltd. India 26.00% 26.00% vii) Industrial relations matters
(held by Ensemble Holdings under appeal 518.06 486.08
& Finance Ltd.) viii) Others 704.18 649.69
b) Guarantees issued by banks, excluding 2062.14 2207.42
v) Creamline Dairy Products Ltd. India 26.00% 26.00% guarantees issued in respect of matters
(held by Godrej Agrovet Ltd.) reported in (a) above
vi) Creamline Nutrients Ltd. India 26.00% 26.00% c) Guarantees given by the Company in 15269.59 14855.00
(held by Godrej Agrovet Ltd.) respect of credit/guarantee limits
vii) Polychem Hygiene Laboratories sanctioned by banks to subsidiary
Pvt. Ltd. India 26.00% 26.00% and other companies.
(held by Godrej Agrovet Ltd.) d) Uncalled liability on partly paid 673.97 534.85
shares/debentures
4. The accounting policies of certain subsidiaries, joint ventures &
e) Share in Jointly Controlled Entities 207.02 262.35
associates especially regarding the method of depreciation,
amortisation of technical know-how and accounting for retirement 7. Capital Commitments
benefits are not in consonance with the group accounting policies. Estimated value of contracts remaining 688.61 3105.92
No effect has been given in the consolidated financial statements to be executed on capital account,
on account of such differing accounting policies, where the impact to the extent not provided
is not expected to be material.
Share in Jointly Controlled Entities 2.48 0.52
5. The break-up of Investment in Associates is as under:
8. Investments
Rs. in lac
a) CBay Systems Limited, USA (CBay USA) has carried out an
Cost of Goodwill Share in Provision Carrying organizational restructuring during the year, consequent to
Acquisition included profits/ for cost of which, all the businesses of CBay Group have been consolidated
in cost of (loss) of diminution Invest- under CBay Systems Limited, India (CBay India), a wholly
acquisition associatesin the value ments owned subsidiary. The Shares of CBay India have been
post of
distributed in specie on a pro-rata basis to all the stockholders
acquisition investments
of CBay USA under the above scheme. The Indian Stockholders
(i) Swadeshi will be allotted the shares in CBay India on receipt of approval
Detergents Ltd. 191.34 91.48 (141.05) 50.28 Nil from the Reserve Bank of India (RBI). No effect has been given
(ii) Godrej Upstream Ltd. 900.00 95.27 (442.94) — 457.06 to the aforesaid scheme in the accounts, pending approval of
(iii) Compass RBI and allotment of shares in CBay India.
Connections Ltd. 124.54 80.56 34.63 — 159.17
b) As per the share purchase agreement dated 29th October, 2004,
(iv) Personalitree the Parent Company had agreed to sell its entire holding
Academy Ltd. 110.28 42.84 (42.04) 68.24 Nil (7712642 equity shares) in Godrej Remote Services Limited , a
(v) Creamline Dairy subsidiary company to CBay Systems Limited, USA for a
Products Ltd. 950.16 364.53 64.07 — 1014.23 consideration of Rs. 842.81 lac, to be satisfied by issue of 704691
(vi) Creamline Nutrients Ltd. 87.84 33.89 8.12 — 95.96 common stock of CBay Systems Limited, USA (par value USD
(vii) Polychem Hygiene
0.01 per comon stock) valued at USD 2.6 per common stock.
Lab. Pvt. Ltd. 162.75 88.99 8.23 — 170.98
The agreement was conditional upon receipt of approval from
Foreign Investment Promotion Board (FIPB) and the Reserve
Total 2526.91 797.56 (510.98) 118.52 1897.40 Bank of India (RBI). The sale of the subsidiary company was
63
completed during the year on receipt of the necessary The options granted shall vest after three years from the date of
approvals in July 2005. The profit on sale amounting to Rs. 71 grant of option, provided the employee continues to be in
lac is included under Profit on sale of long term investments, employment and the option is exercisable within two years after
an exceptional item. vesting.
9. Deferred Tax The employee share based payment plans have been accounted
Major components of Deferred Tax arising on account of timing based on the intrinsic value method and no compensation expense
differences as at March 31, 2006 are : has been recognized since the market price of the underlying share
This Year Previous Year at the grant date is the same / less than the exercise price of the
Rs. lac Rs. lac option, the intrinsic value being Nil.
Assets Had the fair value method of accounting been used, the employee
Provision for retirement benefits 324.14 806.00 compensation cost would have been Rs. 204 lac.
Provision for doubtful debts/advances 295.09 399.24
Business Losses 1338.33 1123.50 12. Leases :
VRS Expenses 77.00 (45.00) a) The group has entered into leave and licence agreements in
Others 346.20 334.95 respect of its commercial and residential premises. These are
Share in Jointly Controlled Entities 35.53 60.17 not non-cancelable and range between 11 months to 35 months
2416.29 2723.86 and are renewable by mutual consent on mutually acceptable
Liabilities terms. Leave and licence arrangements being similar in
Depreciation 6214.53 5005.47 substance to operating leases, the particulars of the premises
under leave and licence arrangement are as under:
Deferred Revenue Expenditure 21.34 —
Share in Jointly Controlled Entities 56.55 83.20 This Year Previous Year
Rs. lac Rs. lac
6292.42 5133.67
Gross carrying amount of premises 3357.79 4253.85
Net Deferred Tax Liability 3876.13 2409.81
Accumulated depreciation 995.81 965.30
10. Loans and Advances :
Depreciation for the period 115.71 120.58
Loans and Advances include Rs. 1033 lac (Previous Year Rs. 1033
lac) advanced by the Company to certain individuals against pledge, b) The total of future minimum lease payments under non
by way of deposit, of equity share of Gharda Chemicals Ltd. The cancelable operating leases for each of the following periods :
Company has enforced its security and lodged the shares for transfer
in its name, however, the transfer application has been rejected by Period Minimum future Jointly
Gharda Chemicals Ltd. and the Company has filed an appeal before lease rentals controlled
the Company Law Board. Interest on the aforesaid loans and advances entities
amounting to Rs. 315 lac was accrued upto March 31, 2000 and has Rs. lac Rs. lac
been fully provided for, no interest is being accrued thereafter. The Within one year 177.34 5.35
recoverability of the advance is contingent upon the transfer and/ or
Later than one year and not later
disposal of said shares. In the opinion of the management, the value
than five years 221.07 57.46
of the said shares is greater than the amount of the loans and advances.
Later than five years — 2.40
11. Employee Stock Option Plans :
Total 398.41 65.21
The Parent Company has during the year instituted an Employee
Stock Option Plan (GIL ESOP) approved by the Board of Directors Amount recognised during the year 182.76 61.09
and the shareholders on 24th October, 2005 and 1st December, c) Finance Leases :
2005 respectively. The Plan provides for the allotment of 15,00,000
The group has acquired assets under Finance Lease. Liability
options convertible into 15,00,000 equity shares to eligible employees
for minimum lease payment is secured by hypothecation of the
of the participating companies. The compensation committee
vehicles acquired under the lease. The minimum lease payments
comprising of independent members of the Board of Directors
outstanding as on March 31, 2006, in respect of vehicles
administers the plan.
acquired under lease are as under :
The scheme is administered by an independent ESOP Trust which
has purchased shares equivalent to the number of options granted Period Total Unmatured Present value
from the market, out of the finance provided by the participating minimum Interest of minimum
companies to the Trust. lease payments lease
outstanding as on payments
The number and weighted average exercise price of options granted, March 31, 2006
exercised and forfeited are as under: Rs. lac Rs. lac Rs. lac
No. of Wt. average
Options exercise price Within one year 86.87 13.06 81.76
Options outstanding at the Later than one year
beginning of the year — — and not later than five years 65.59 9.74 54.72
Options granted 350000 392.35 152.46 22.80 136.48

(plus interest) 13. Hedging :
Less: Exercised — — a) Reserve Bank of India has permitted the Parent Company to
Forfeited/expired — — hedge its exposure on Crude Palm Oil on offshore exchanges
Options outstanding at the year end 350000 392.35 to the extent of its imports. Accordingly, the Company is hedging
(plus interest) import of crude palm oil on the Malaysian Commodities
64

Exchange by way of futures contracts. The particulars of the 16. Profit & Loss Account
futures contracts for the year are as under: The amount of exchange loss on account of fluctuation of the rupee
This Year Previous Year against foreign currencies and the net charges for forward foreign
Details Purchase Sale Purchase Sale exchange contracts added to the carrying amount of fixed assets
Total number of contracts entered during the year is Rs. 0.42 lac (Previous year Rs. 0.90 lac). The
during the year 2 2 12 11 exchange difference included in the Profit & Loss Account is a loss
Number of units (25 MT per unit) of Rs. 669.94 lac (Previous year Rs. 1806.29 lac). The exchange
under above contracts 60 60 595 595 difference in respect of forward exchange contracts to be recognised
Future contracts not settled in subsequent accounting periods is Rs. 24.68 lac (Previous year Rs.
as on March 31, 2006 — — — — 739.48 lac).
Number of units under above contracts — — — —
17. Earnings Per Share
b. The Group uses forward exchange contracts to hedge its foreign This Year Previous Year
exchange exposure in accordance with its forex policy as a. Calculation of weighted average
determined by a Forex Committee. The particulars of the number of equity shares
forward exchange contracts for the year are as under: Number of shares at the beginning
of the year Nos. 48542952 48542952
Number of equity shares outstanding
Details Purchase Sale Purchase Sale at the end of the year Nos. 48641942 48542952
Total number of contracts entered Weighted average number of equity
during the year 179 77 184 36 shares outstanding during the year Nos. 48570344 48542952
Foreign currency value covered b. Net profit after tax available for
US Dollar (million) 103.30 33.68 105.48 20.59 equity shareholders Rs. lac 4899.77 6467.14
Euros (million) – 3.36 – 0.18
c. Basic and diluted earnings per share
Total number of contracts
of Rs.6 each Rupees 10.09 13.32
outstanding as at the year end 54 20 39 12
Foreign currency value 18. Related Party Disclosures
US Dollar (million) 37.30 13.00 39.61 5.84 List of Related Parties and Relationships
Euros (million) – 0.94 – –
a) Parties where control exists
Uncovered Foreign exchange
exposure as at the year end Godrej & Boyce Mfg. Co. Ltd., the holding company.
US Dollar (million) 15.10 – 17.50 0.20 Fellow Subsidiaries:
14. Turnover Godrej Appliances Ltd.
This year Previous Year Godrej Foods Ltd.
Turnover includes: Rs. lac Rs. lac Godrej Infotech Ltd.
i) Processing charges 2003.93 2125.86 Mercury Mfg. Co. Ltd.
ii) Export Incentives 554.42 573.27 Godrej (Malaysia) Sdn. Bhd.
iii) Licence fees and service charges 2561.11 2191.75 Godrej (Singapore) Pte. Ltd.
iv) Project/Development JT Dragon Pte. Ltd.
Management Fees 767.40 515.02 b) Other related parties with whom the Company had
v) Share in jointly controlled entities 9308.70 9757.50 transactions:
15195.55 15163.40 Associate/Joint Venture Companies
15. Exceptional Items Godrej SaraLee Ltd.
Godrej Upstream Ltd.
Rs. Lac Rs. Lac Key Management Personnel
i) Included under Other Income Mr. A. B. Godrej - Chairman (Non-Executive)
- Profit on sale of long term Mr. N. B. Godrej - Managing Director
investments 2119.81 3422.22 Ms. T. A. Dubash - Executive Director & President
- Reversal of provision for claims (Marketing)
payable on culmination of disputes 175.00 — Mr. Mathew Eipe - Executive Director & President
- Interest received on deposit (Chemicals)
placed against above claim on Mr. V. Banaji - Executive Director & President
execution of decree 307.00 — (Group Corporate Affairs)
ii) Payment to Mumbai Port Trust Mr. M. P. Pusalkar - Executive Director & President
for regularization of lease included (Corporate Projects)
in Rent paid. 89.00 — Enterprises over which key management personnel exercise
significant influence
Godrej Consumer Products Ltd.
Swadeshi Detergents Ltd.
65
c) Transactions with Related Parties Rs. lac
Nature of Transaction Holding Fellow Associate/ Key Relative of Key Enterprises
Company Subsidiaries Joint Venture Management Management over which Key
Companies Personnel Personnel Management
Personnel
exercise
significant
influence Total
Sale of Goods 20.17 — 12.50 — — 976.74 1009.41
Previous Year 22.14 904.96 3.18 — — — 930.28
Sale of Fixed Assets 0.05 — — — — 264.19 264.24
Previous Year — 1.46 — — — — 1.46
Purchase of goods and equipment 30.77 695.87 6.69 — — 1262.28 1995.61
Previous Year 60.60 1086.77 11.49 — — — 1158.86
Commission received — 2.50 19.78 — — 23.15 45.43
Previous Year — 21.05 4.50 — — — 25.55
Recovery of establishment and
Other Expenses 1.48 12.52 229.64 — — 816.13 1059.77
Previous Year 13.82 898.07 216.83 — — 0.06 1128.78
Establishment & other exps paid 230.49 10.50 14.03 — — 89.91 344.93
Previous Year 225.68 112.17 7.35 — — 0.13 345.33
Sale of Investments — — — — — — —
Previous Year 4950.00 — — — — — 4950.00
Purchase of Investments — — — — — — —
Previous Year — — — — — 10.20 10.20
Interest received — — — — — 4.99 4.99
Previous Year — — — — — 5.85 5.85
Interest paid — — — — — — —
Previous Year — — — 0.27 — — 0.27
Dividend income — 25.28 536.25 — — 1,007.66 1569.19
Previous Year — 562.72 1010.33 — — — 1573.05
Dividend paid 1248.02 — — 47.61 424.41 — 1720.04
Previous Year 936.01 — — 75.60 272.64 — 1284.25
Remuneration — — — 330.85 — 330.85
Previous Year — — — 402.01 — 402.01
Finance provided including loans
& equity contributions 0.42 — (3.30) — — (10.00) (12.88)
Previous Year — (3.08) (24.10) — — — (27.18)
Finance repaid during the year — — — — — — —
Previous Year — — — — — 8.00 8.00
Guarantees & collaterals given — — — — — — —
Previous Year — — 1350.00 — — — 1350.00
Balance Outstanding as on March 31, 2006
Receivables 1.42 — 18.54 — — 222.25 242.21
Previous Year 69.12 19.76 10.67 — — — 99.55
Payables 2.81 — 42.60 — — 103.93 149.34
Previous Year 4.33 61.80 35.29 — — 0.11 101.53
Guarantees Outstanding — 1000.00 1350.00 — — — 2350.00
Previous Year — 1000.00 1350.00 — — — 2350.00
d ) The significant Related Party transactions are as under:
Nature of Transaction Rs. lac Nature of Transaction Rs. lac
Sale of goods Establishment & other exps paid
- Godrej Consumer Products Ltd. 890.83 - Godrej & Boyce Mfg. Co. Ltd. 228.68
Sale of fixed assets - Godrej Consumer Products Ltd. 89.66
- Godrej Consumer Products Ltd. 264.19 Dividend income
Purchase of goods & equipment - Godrej Consumer Products Ltd. 1,007.66
- Godrej Consumer Products Ltd. 1,262.28 Dividend paid
- Godrej Foods Ltd. 692.34 - Godrej & Boyce Mfg. Co. Ltd. 1,248.02
Commission received Remuneration
- Godrej Consumer Products Ltd. 23.15 - Mr. N. B. Godrej 82.11
- Godrej Upstream Ltd. 19.78 - Ms. T. A. Dubash 50.57
Recovery of establishment & other expenses - Mr. Mathew Eipe 62.56
- Godrej Consumer Products Ltd. 815.74 - Mr. V. F. Banaji 77.07
- Godrej Saralee Ltd. 229.64 - Mr. M. P. Pusalkar 48.93
66
19. Segment Information
(Rs. lac)
Information about Chemicals Animal Feed Foods Estate & Property Household Tea Finance & Others Total
primary business Development Insecticides Investments
segments This Previous This Previous This Previous This Previous This Previous This Previous This Previous This Previous This Previous
Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
(A) Revenue
External Sales 51177.71 54160.45 67609.76 65399.74 21115.02 19191.97 9151.15 6138.94 11176.46 11087.50 782.92 1579.13 3496.29 3674.60 46107.60 38684.97 210616.91 199917.30
Intersegment Sales – 37.99 2099.21 1559.05 1.53 – 177.15 212.39 – – – – 1078.61 1694.44 4394.19 72.04 7750.69 3575.91
Total Sales 51177.71 54198.44 69708.97 66958.79 21116.55 19191.97 9328.30 6351.33 11176.46 11087.50 782.92 1579.13 4574.90 5369.04 50501.79 38757.01 218367.60 203493.21
Less: Intersegment Sales – (37.99) (2099.21) (1559.05) (1.53) – (177.15) (212.39) – – – – (1078.61) (1694.44) (4394.19) (72.04) (7750.69) (3575.91)
Total Revenue 51177.71 54160.45 67609.76 65399.74 21115.02 19191.97 9151.15 6138.94 11176.46 11087.50 782.92 1579.13 3496.29 3674.60 46107.60 38684.97 210616.91 199917.30
(B) Results
Segment result
before interest and tax 4760.35 6192.44 1586.22 2157.42 (342.91) (856.81) 3613.43 2391.61 1312.34 839.89 (740.24) (1353.58) 3496.44 3636.65 1385.97 1379.65 15071.60 14387.27
Unallocated expenses net
of unallocated income (2928.29) (3144.16)
Interest Expense (net) (4528.44) (3496.47)
Taxes (2555.16) (641.08)
Add/(Less) prior period
adjustment (14.38) 4.17
Profit after taxes 5045.33 7109.73
Share of loss in
associates (78.09) (137.70)
Profit before Minority
Interest 4967.24 6972.03
Share of Minority
Interest (67.47) (504.91)
Net Profit after
Minority Interest 4899.77 6467.12
Segment Assets 44336.13 34736.34 18497.48 16883.73 701.03 8628.96 20137.20 17422.14 4553.76 4056.21 7725.44 1554.11 29363.30 25455.30 28095.60 17967.95 153409.94 126704.74
Unallocated Assets 9021.26 3209.53
Total Assets 162431.20 129914.27
Segment Liabilities 19897.28 17062.14 16100.77 14699.04 423.86 3896.27 13355.60 11283.63 3436.97 3646.09 7132.86 5208.61 44.86 27.85 5756.06 4344.58 66148.26 60168.21
Unallocated Liabilities 53883.02 34656.31
Total Liabilities 120031.28 94824.52
Total Cost incurred
during the year to
acquire segment assets 7276.38 915.21 831.63 333.95 297.77 426.08 170.77 94.78 194.53 184.80 11.98 34.97 3557.39 – 10229.32 1797.08 22569.77 3786.87
Segment depreciation 1784.09 1741.79 518.75 498.70 239.82 240.22 178.82 166.26 100.05 149.15 30.06 32.53 – – 915.18 531.89 3766.77 3360.54
Information about
Secondary Business
Segments Total
Revenue by
Geographical markets This Year Previous Year
India 186840.48 180430.58
Outside India 23776.43 19486.72
Total 210616.91 199917.30
Carrying Amount of
Segment assets
India 158380.95 127218.51
Outside India 4050.25 2695.76
Total 162431.20 129914.27
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 Oleochemicals such as Fatty Acids, Fatty Alcohols and Alfa Olefin Sulphonates and Refined Glycerin. Animal Feed segment includes the business of compound feed for cattle, poultry, acquatic animals. Foods segment
includes the business of refined vegetable oils and vanaspati, fruit and vegetable puree, pulp, juices and fruit beverages. Estate segment comprises the business of developing commercial & residential property and giving premises on leave and licence basis. Household
Insecticides segment includes the business of household and environmental pest control solutions. Finance and Investments includes investments in subsidiaries, associates companies and other investments. Others includes Medical Diagnostics, Agri Inputs, Integrated
Poultry, Oil Palm Plantations and energy generation through windmills.
3. The geographical segments are as follows - Sales in India represent sales to customers located in India. - Sales outside India represent sales to customers located outside India.
67
STATEMENT REGARDING SUBSIDIARY COMPANIES PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956
68
1. Name of the Company Godrej Godrej Ensemble Godrej Godrej Godrej Godrej Golden Godrej Goldmohur Girikandra Krithika Godrej Godrej Godrej Godrej
Agrovet Properties Holdings International Global Beverages Hicare Feed Global Foods & Holiday Agro Farm Realty Waterside Global Global
Limited Limited & Finance Limited Solutions & Foods Limited Products MidEast Feeds Home & Chemicals & Pvt. Ltd. Properties Solutions Solutions
Limited Limited Limited Limited FZE Limited Resorts Engineering Pvt.Ltd. Inc. (Cyprus)
Limited Industries Limited
Pvt. Ltd.
2. The company’s interest in the

subsidiaries as on March 31, 2006
a. Number of Equity Shares 4112956 5264645 3770160 2605000 47672739 9624996 6647100 (See note (See note (see note (see note) (see note (see note (see note (see note (see note
Total Number of Shares 7118752 6444545 3774160 2605000 47714038 13750000 7900000
b. Face Value 10 10 10 £1 (US$1.52) 10 10 10 6 below) 7 below) 8 below) 9 below) 10 below) 11 below) 12 below) 13 below) 14 below)
c. Extent of Holding 57.78% 81.69% 99.89% 100% 99.91% 70.00% 84.14%
3. Net aggregate profit/(Loss) of the
subsidiary company so far it concerns Rs. lac Rs. lac Rs. lac US$ Rs. lac Rs. lac Rs. lac – – – – – – – – –
the members of the Company
A. For the financial year ended on
March 31, 2006
i. Not dealt with in the books
of Account of the Company 394.34 1,088.18 259.11 382,566 (6.18) (1,201.84) 87.79 – – – – – – – – –
ii. Dealt with in the books of
Account of the Company Nil – 30,700.00 Nil Nil Nil Nil – – – – – – – – –
B. For the subsidiary company’s

previous financial years since it
became a subsidiary
i. Not dealt with in the books of
Account of the Company 2,207.00 872.17 (741.66) 2,083,054 (163.07) (598.52) N.A – – – – – – – – –
ii. Dealt with in the books of
Account of the Company 2,219.48 1,205.76 Nil 1,127,905 Nil Nil N.A – – – – – – – – –
Notes:
1 The Financial Year of all subsidiary companies have ended on March 31, 2006.
2 76,795 Equity Shares of Rs.10 each fully paid up in Godrej Properties Ltd. are held by Ensemble Holdings & Finance Ltd., a subsidiary of the Company.
3 4,000 Equity Shares of Rs.10 each in Ensemble Holdings & Finance Ltd., are held by Godrej Agrovet Ltd., a subsidiary of the Company.
4 41,251 equity shares of Rs.10 each in Godrej Global Solutions Ltd. are held by Ensemble Holdings & Finance Ltd., a subsidiary of the Company.
5 4,800 Equity Shares of Rs.10 each in Godrej Hicare Ltd. are held by Ensemble Holdings and Finance Ltd., a subsidiary of the Company.
6 50,000 Equity Shares of Rs. 10 each fully paid up in Golden Feed Products Ltd. (representing 100% of the Share Capital) are held by Godrej Agrovet Ltd., a subsidiary of the Company.
7 5 Ordinary Shares of US$ 2,50,000 each fully paid up in Godrej Global MidEast FZE. (representing 100% of the Share Capital) are held by Godrej International Ltd., a subsidiary of the Company.
8 18,38,170 equity shares of Rs.10 each fully paid up in Goldmohur Foods & Feeds Ltd. (representing 100% of the share capital) are held by Godrej Agrovet Ltd., a subsidiary of the Company. During the year, 3,20,000 equity shares were bought back by Gold Mohur
Foods & Feeds Ltd. under a buyback scheme.
9 500 equity shares of the face value of Rs.1000 each fully paid up in Girikandra Holiday Homes and Resorts Ltd. (representing 100% of the share capital)are held by Godrej Properties Ltd., a subsidiary of the Company.
10 7,600 equity shares of the face value of Rs.10 each fully paid up in Krithika Agro Farm Chemicals and Engineering Industries Pvt. Ltd. are held by Godrej Agrovet Ltd., a subsidiary of the Company.
11 510,000 equity shares of the face value of Rs.10 each fully paid up in Godrej Realty Pvt. Ltd. are held by Godrej Properties Ltd., a subsidiary of the Company.
12 50,000equity shares of the face value of Rs.10 each fully paid up in Godrej Waterside Properties Pvt. Ltd. (representing 100% of the share capital)are held by Godrej Properties Ltd., a subsidiary of the Company.
13 1,000 equity shares of the face value of US 1 cent each fully paid up in Godrej Global Solutions Inc. (representing 100% of the share capital) are held by Godrej Global Solutions (Cypurs) Ltd., a sub-subsidiary of the Company.
14 26,240,229 equity shares of the face value of USD 1 each fully paid up in Godrej Global Solutions (Cyprus) Ltd. ( representing 100% of the share capital) are held by Godrej Global Solutions Ltd., a subsidiary of the Company.
A.B. Godrej N.B. Godrej M. Eipe M.P. Pusalkar

Chairman Managing Director Executive Director Executive Director
& President (Chemicals) & President (Corporate Projects)
S.K. Bhatt V. Srinivasan

Executive Vice President (Corporate Executive Vice President
Godrej Agrovet Limited

DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2006
To The Shareholders HOLDING COMPANY
Your Directors have pleasure in submitting their Report along with the audited Accounts for the financial year Your Company continues to be a subsidiary of Godrej Industries Limited as defined under Section 4(1)(b) of the
ended on March 31, 2006. Companies Act, 1956.
Financial Results SUBSIDIARY COMPANIES
Your Company’s performance during the year as compared with that during the previous year is summarised below: - Your Company continues to be the holding Company of Goldmohur Foods and Feeds Ltd (GFFL), Golden Feed
Products Ltd (GFPL).
For the year For the year
ended ended By virtue of acquisition of 76% stake in the equity share capital of “Krithika Agro Farm Chemicals and
31/3/2006 31/3/2005 Engineering Industries Pvt. Ltd.” (Krithika) as stated elsewhere in this report, Krithika Agro Farm Chemicals
Rs. lac Rs. lac and Engineering Industries Pvt. Ltd has become a subsidiary of your Company with effect from April 27, 2005.
Total Income 60555.90 56851.81 Your Company has advanced an amount of Rs.42.05 lacs to Krithika during the current year. The Auditors in
their Report have stated that they are unable to comment on the recoverability of the said loan. The Board of
Profit Before Taxation (PBT) 761.23 1949.63 Directors feel that the said loan is recoverable in view of the proposed oil palm plantation activities to be carried
Less : Provision for Taxation 78.70 532.45 out by Krithika in Orrisa.
Profit After Taxation (PAT) 682.53 1417.18
Balance brought forward from previous year 2696.74 2132.13 The audited Balance Sheet of GFFL, GFPL and Krithika as at 31st March, 2006 together with their audited Profit
& Loss Account, Directors’ Report and Auditors’ Report is attached to the Balance Sheet and Profit & Loss
Total 3379.27 3549.31 Account of your Company.
Appropriations: Also annexed hereto is the Statement required under Section 212(1) of the Companies Act, 1956 relating to
Interim Dividend – 391.53 GFFL, GFPL and Krithika.
Final Dividend 284.75 234.92
JOINT VENTURES
Tax on Dividend 39.94 84.12
General Reserve 70.00 142.00 ACI Godrej Agrovet Pvt Ltd, your Company’s Joint Venture with ACI in Bangladesh has commissioned its Feed
Balance Carried Forward to Balance Sheet 2984.58 2696.74 Mill in October, 2005. The feeds have been receiving very good response. The hatchery has also been
commissioned and is expected to add significant value in the coming years. Your company has acquired
Total 3379.27 3549.31 management control in Al Rahba International Trading LLC, United Arab Emirates for carrying on the business
of Poultry. This Joint Venture has 70% (stake in profit and 45% stake in equity) participation from your Company.
Review of Operations
This Joint Venture has already commenced production during the second half of the year 2005-06.
The year under review was one of the toughest years your company has experienced. Adverse environmental
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
factors put heavy pressure on costs while announcement of Avian Influenza impacted sales growth. Many new
AND OUTGO
initiatives and investments made during the year also impacted the bottom line, which declined by 52%
compared to previous year. The top line grew by about 7% compared to previous year. The business-wise The information in respect of these matters, required under Section 217(1)(e) of the Companies Act, 1956, read
performance is reviewed hereunder: 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).
ANIMAL FEEDS
DIRECTORS
The Animal Feeds Business continued to operate under challenging external environment. The prolonged
monsoon had its impact on key raw materials such as de-oiled rice bran, maize resulting in increased cost Dr. S.L. Anaokar and Ms. Tanya Dubash, Directors retire by rotation at the ensuing Annual General Meeting
for your Company, which could not be passed on to the customers due to increased competition. Avian in accordance with Article 124 of the Articles of Association of the Company and the provisions of the Companies
influenza detected in Western parts of the country impacted the Poultry Feed sales of your Company. Golden Act, 1956 and being eligible offer themselves for reappointment.
Feed Products Limited, a subsidiary of your company, acquired the Shrimp Feed Marketing business of AUDITORS
Higashimaru Feeds (India) Limited, with effect from October 31, 2005.
You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors
INTEGRATED POULTRY BUSINESS M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment.
The detection of Avian Influenza had severe impact on off take of the poultry products. However, your Company ADDITIONAL INFORMATION
has been able to control the cost by continuing to achieve breakthrough performance in its breeding business.
The additional information required to be given under the Companies Act, 1956, has been laid out in the
Your Company’s new TV Commercial for Real Good Chicken drew in new customers and helped the business
Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to the Auditors’
report good growth in the face of such adversities.
Report are self-explanatory and therefore do not call for any further explanation .
AGRICULTURAL INPUTS
AUDIT COMMITTEE
The Agri Inputs Division has continued to show excellent performance with growth in the top line of 40% and
Pursuant to the provisions of Section 292-A of the Companies Act, 1956, your Company has constituted the Audit
growth in the bottom line of 49%. Aadhaars have been positioned as centres of “Khushion ka, Khushhali ka”,
Committee of the Board of Directors.
i.e. centres of Happiness and Prosperity. Your Company plans to have strategic tie-ups with other corporates
for bringing this vision to fruition. Recently, an MOU was signed with Apollo Pharmacy, a member of Apollo During the year, the Audit Committee was reconstituted in view of the resignation of Mr. N.B. Godrej, a
Hospital group to bring Health solutions to the customers of Aadhaar. Similar efforts are on to find partners for Member and the Chairman of the Committee. The reconstructed Audit Committee comprises of the following
Finance/Credit needs, Insurance and a host of other critical requirements. We draw inspiration from the appeal Directors of the Company :-
made by our Honorable President to bring Urban Amenities to Rural India. The product offering at Aadhaars (1) Mr. K.N. Petigara – Chairman
has also been considerably expanded and includes most items of daily needs. Nine new Aadhaars were opened (2) Dr. S.L. Anaokar – Member
during the year taking the total to 23. Your Company’s initiative in retailing of fresh foods, especially fresh fruits (3) Mr. C.K. Vaidya - Member
and vegetables through “Nature’s Basket” has been expanding. The Company has opened two more stores
during the year in Mumbai. 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,
OIL PALM PLANTATIONS standard accounting principles, Risk Management polices, etc. The Board of Directors has since accepted the
During the year, the Division has brought over 3500 Hectares under Oil Palm. Your Company received recommendations of the Audit Committee.
allocation of fresh area in Andhra Pradesh for development of Oil Palm. An MOU has been signed with RESPONSIBILITY STATEMENT
Government of Mizoram for development of Oil Palm in that State. The development activities in the state of
Pursuant to the provisions contained in section 217(2AA) of the Companies Act, 1956, the Directors of your
Gujarat and Mizoram have started. Your Company acquired majority stake in “Krithika Agro Farm Chemicals
Company confirm :-
and Engineering Industries Pvt. Ltd,”, which has its presence in the Oil Palm cultivation activities in the state
of Orissa. 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 ;
PLANT BIOTECH BUSINESS
b) that they have selected such accounting policies and applied them consistently and made judgments
The Plant Biotech Division has introduced Banana plants in the states of UP and Bihar. It has also undertaken
and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of
an ambitious plan to help substantially increase the yield of Sugarcane.
the Company at the end of the financial year and of the profit or loss of the Company for that period ;
FINANCE AND INFORMATION SYSTEMS
c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in
Despite overall hardening of interest rates in the economy, your Company was able to reduce the cost of funds accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and
during the year by efficient treasury operations. The Company’s Commercial Paper programme continues to detecting fraud and other irregularities ;
carry the Apex rating of A1 + from ICRA for Rs 15 crore. However, after detection of Avian Influenza, ICRA d) that they have prepared the annual accounts on a going concern basis.
has put your Company’s rating under “rating watch with developing implication”. IT continues to play a crucial
role in the operations of your Company. During the year, your Company provided IT solutions for the retail HUMAN RESOURCES
businesses. Your company continues to focus on development of Human Resources. The industrial relations at all units
OTHER INITIATIVES 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.
Your Company has invested in one more 1.25 MW windmill, which was commissioned during the first quarter
of the year at Dhule, Maharashtra. The Maharashtra State Electricity Distribution Company Ltd has agreed to PARTICULARS OF EMPLOYEES
purchase all the power produced by this Windmill on terms attractive to your Company. Details of the employees covered under the provisions of Section 217(2A) of the Companies Act, 1956 read with
DIVIDEND the Companies (Particulars of Employees) (Amendment) Rules, 2002, are attached (ANNEXURE B)
Your Directors recommend a Final Dividend for 2005-06 amounting to Rs. 4.00 per share of face value of Rs. For and on behalf of the Board of Directors
10/-each i.e.40% (Previous year – Interim 55%, Final 33%). C.K. Vaidya A.B. Godrej
FIXED DEPOSITS Managing Director Director
Your Company has not accepted any public deposits during the financial year under review. Mumbai, May 25, 2006.
69
ANNEXURE ‘A’ (b) Reduction in process loss, improvement in efficiency in respect of post grinding operations
(c) Clean fuel, low fuel cost, zero storage, zero volatile losses
ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT (d) Improved oil extraction rate at oil palm mill
INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE (e) Improvement in energy efficiency and power factory
COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, III. The Company’s expenditure on R&D is given below :-
1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN Expenditure on R & D
EXCHANGE EARNINGS & OUTGO : 2005-2006 2004-2005
Rs. lac Rs. lac.
A) Conservation of Energy (a) Capital – 0.31
The Companies continues its policy of encouraging energy conservation measures. The regular review (b) Recurring 90.31 107.30
of energy consumption and the systems installed to control utilization of energy is undertaken. Some (c) Total 90.31 107.61
of the measures adopted by your Company towards conservation of energy were as follows :- (d) Total R & D expenditure as 0.15% 0.19 %
1. Pneumatic system for main plant change to elevator system a percentage of total turnover
2. Pipeline of higher diameter provided for the boiler to the pellet mill C. Foreign Exchange earnings and outgo
3. Adequate steam straps provided I. Your Company’s efforts to export agricultural inputs (Vipul – liquid, Achook, Nimin) to South
4. Provision of automatic control meters and capacitors Asian countries continued during the year. The efforts to export agricultural inputs to other
5. Replacement of 40W tube lights with 36W fluorescent candle lamps. countries are continuing.
B) Technology absorption, Adaptation and Innovation 2005-2006 2004-2005
I. During the year under review, in-house research in quality systems and standards was continuously Rs. lac Rs. lac
carried out. Some of the key measures undertaken are follows :- II. Foreign exchange used 1582.48 687.77
(a) Hammer Mill design change. III. Foreign exchange earned 108.03 55.34
(b) Post conditioning tank design change .
(c) Use of CNG in place of HSD For and on behalf of the Board of Directors
(d) Circulation of sludge water through centrifugal separator C.K. Vaidya A.B. Godrej
II. The benefits derived as a result of various measures undertaken are as follows :- Managing Director Director
(a) Better quality while grinding and saving in time Mumbai, May 25, 2006.
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 2006 and also e) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this
the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date report are in agreement with the books of account.
annexed thereto. These financial statements are the responsibility of the Company’s management. Our f) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt
responsibility is to express an opinion on these financial statements based on our audit. with by this report comply with the Accounting Standards referred to in sub-section (3C) of
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Section 211 of the Companies Act, 1956.
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, g) In our opinion and to the best of our information and according to the explanations given to us,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes the said financial statements read with the notes thereon, subject to (b) and (c) above, give the
assessing the accounting principles used and significant estimates made by management, as well as information required by the Companies Act, 1956, in the manner so required and give a true and
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable fair view in conformity with the accounting principles generally accepted in India:
basis for our opinion. i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March,
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in 2006; and
terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date.
specified in paragraphs 4 and 5 of the said Order. iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year
ended on that date.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that:
a) We have obtained all the information and explanations, which to the best of our knowledge and 5. On the basis of the written representations received from the Directors as on 31st March, 2006, and
belief were necessary for the purposes of our audit. taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st
March, 2006 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274
b) We are unable to comment on the recoverability of a loan amounting to Rs. 4,205 thousand given of the Companies Act, 1956.
to a Company.
c) As referred to in note 16 of 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 KALYANIWALLA & MISTRY
Companies Act, 1956, by Rs.3,056 thousand. The Company is in the process of making an application Chartered Accountants
to the Central Government for approval of the limits in excess of the prescribed limits. K. M. Elavia
d) In our opinion, proper books of account as required by law have been kept by the Company so Place : Mumbai Partner
far as appears from our examination of these books. Dated : May 25, 2006 Membership No. 12737
Government has not prescribed maintenance of cost records under section 209(1)(d) of the Companies
ANNEXURE TO THE AUDITORS’ REPORT Act, 1956, for any other products of the Company.
Referred to in paragraph (3) of our report of even date. 9) (a) According to the information and explanations given to us and on the basis of our examination
1) (a) The Company has maintained proper records showing full particulars, including quantitative of the books of account, during the year, the Company has been generally regular in depositing
details and situation of fixed assets. undisputed statutory dues including Provident Fund, Investor Education and Protection Fund,
(b) As explained to us, the Company has a program for physical verification of fixed assets at Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty,
periodic intervals. In our opinion, the period of verification is reasonable having regard to the size Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities.
of the Company and the nature of its assets. No material discrepancies have been reported on According to the information and explanations given to us, there are no undisputed dues payable
such verification. in respect of above as at 31st March 2006 for a period of more than six months from the date they
(c) In our opinion, the disposal of fixed assets during the year does not affect the going concern became payable.
assumption. (b) According to the information and explanations given to us, there are no dues outstanding of Sales
2) (a) The Management has conducted physical verification of inventory at reasonable intervals. Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty or cess on account of any
(b) In our opinion, the procedures of physical verification of inventory followed by the management dispute, other than the following:
are reasonable and adequate in relation to the size of the Company and the nature of its business. Name of Statute Amount (Rs.) Forum where dispute is pending
(c) The Company is maintaining proper records of inventory and no material discrepancies were Sales Tax Act 29,517,000 Commissioner, Appellate Tribunal and High Court
noticed on physical verification. Income Tax Act 6,119,000 Commissioner of Income Tax (Appeals)
3) (a) The Company has granted three unsecured loans amounting to Rs. 78,198 thousand, to three
parties covered in the register maintained under section 301 of the Companies Act, 1956. 10) The Company does not have accumulated losses at the end of the financial year and it has not incurred
(b) The Company has not charged interest on the loan of Rs. 33,600 thousand given to one party any cash losses in the current and immediately preceding financial year.
which is prima facie prejudicial to the interests of the Company. The rate of interest and the other 11) According to the information and explanations given to us and based on the documents and records
terms and conditions of the other loans is not prejudicial to the interests of the Company. produced to us, the Company has not defaulted in repayment of dues to banks. There are no dues to
(c) The Company has not taken any loans, secured or unsecured from companies, firms or other financial institutions or debenture holders.
parties covered in the register maintained under section 301 of the Act. 12) According to the information and explanations given to us and based on the documents and records
(d) Consequently, the question of commenting on the rates of interest and the other terms and produced to us, the Company has not granted loans and advances on the basis of security by way of
conditions of the loans taken being prejudicial to the interests of the Company and payment of pledge of shares, debentures and other securities.
regular 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
4) In our opinion and according to the information and explanations given to us, there are adequate internal the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/
control procedures commensurate with the size of the Company and the nature of its business, for the societies.
purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, 14) The Company does not deal in shares, securities, debentures and other investments.
we have not observed a continuing failure to correct major weaknesses in internal controls. 15) According to the information and explanations given to us, the Company has given corporate guarantees
5) (a) Based on the audit procedures applied by us and according to the information and explanations for loans taken by its subsidiary/joint venture companies from banks. The terms and conditions are not
provided by the management, we are of the opinion that the particulars of contracts and prima facie prejudicial to the interest of the Company.
arrangements referred to in section 301 of the Companies Act, 1956 have been entered into the 16) According to the information and explanations given to us, term loans were applied for the purpose for
register required to be maintained under that section. which the loans were obtained.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices 17) According to the information and explanations given to us and on an overall examination of the Balance
which are reasonable having regard to prevailing market prices at the relevant time, except for Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-
certain transactions for which, there are no similar services rendered to other parties or have term basis for long term investment.
been entered into on an reciprocal basis and hence the prices are not comparable. 18) The Company has not made any preferential allotment of shares to parties or companies covered in the
6) In our opinion and according to the information and explanations given to us, the Company has not register maintained under section 301 of the Companies Act, 1956.
accepted any deposits from the public and hence the provisions of section 58A, 58AA or any other 19) The Company did not issue any debentures during the year.
provision of the Companies Act, 1956, read with the rules framed thereunder are not applicable. 20) The Company has not raised any money through a public issue during the year.
7) In our opinion and according to the information and explanations given to us, the internal audit system 21) Based on the audit procedures performed and information and explanations given by the management,
is commensurate with the size of the Company and nature of its business. we report that no fraud on or by the Company has been noticed or reported during the year.
8) We have broadly reviewed the books of account maintained by the Company in respect of the Oil Palm For and on behalf of
Plantation Division pursuant to the order made by the Central Government for maintenance of cost KALYANIWALLA & MISTRY
records prescribed under section 209 (1)(d) of the Companies Act, 1956, and are of the opinion that prima Chartered Accountants
facie, the prescribed accounts and records have been made and maintained. We, have not, however, K. M. Elavia
made a detailed examination of the records with a view to determining whether they are accurate or Place : Mumbai Partner
complete. To the best of our knowledge and according to the information given to us, the Central Dated : May 25, 2006 Membership No. 12737
70
BALANCE SHEET AS AT MARCH 31, 2006 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON
MARCH 31, 2006
This Year This Year Previous Year
Schedule Rs. ’000 Rs. ’000 Rs. ’000
This Year This Year Previous Year
SOURCES OF FUNDS Schedule Rs. ’000 Rs. ’000 Rs. ’000
INCOME
Share Capital 1 71,188 71,188 From Operations 11 6,027,586 5,671,833
Reserves & Surplus 2 554,821 519,036 Other Income 12 28,004 13,348
626,008 590,224 6,055,590 5,685,181
Loan Funds
Secured Loans 3 1,259 139,598
EXPENDITURE
Unsecured Loans 4 1,333,526 180,243
Materials 13 4,358,477 4,163,547
1,334,785 319,841
Expenses 14 1,495,255 1,228,645
Deferred Tax Liability 50,556 51,785
Interest and Financial Charges 15 51,885 32,364
TOTAL 2,011,350 961,850 Depreciation 73,626 65,575
Miscellaneous Expenditure written off 224 87
5,979,467 5,490,218
Fixed Assets 5
Gross Block 1,194,189 1,031,495 PROFIT BEFORE TAXATION 76,123 194,963
Less : Depreciation 418,931 360,255 Provision for Taxation
Less : Provision for Impairment 19,890 19,890 Current ( including Fringe Benefit Tax) 12,509 48,000
MAT Credit entitlement (3,410) –
Net Block 755,369 651,349
Deferred (1,229) 5,245
Capital Work-in-Progress/advances 146,415 7,959
7,870 53,245
901,784 659,308
Investments 6 515,868 334,963 PROFIT AFTER TAXATION 68,253 141,718
Surplus brought forward 269,674 213,213
Current Assets, Loans
and Advances 7 AMOUNT AVAILABLE FOR APPROPRIATION 337,927 354,931
Inventories 698,849 549,737
Sundry Debtors 639,825 504,782 APPROPRIATION :
Cash and Bank Balances 267,412 82,864
Dividend
Other Current Assets 59 71
Interim – 39,153
Loans and Advances 338,914 88,462
Final (Proposed) 28,475 23,492
1,945,059 1,225,916
28,475 62,645
Less : Current Liabilities Tax on Dividend 3,994 8,412
and Provisions Transfer to General Reserve 7,000 14,200
Liabilities 8 1,303,021 1,219,020 Surplus carried forward 298,458 269,674
Provisions 9 48,339 39,541
TOTAL 337,927 354,931
1,351,360 1,258,561
Net Current Assets 593,699 (32,645) Earnings per share (Basic/Diluted) in Rs. (Refer note 25) 9.59 19.91
Miscellaneous Expenditure 10 – 224

(to the extent not written off
or adjusted)
TOTAL 2,011,350 961,850

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 and Loss Account.
As per our Report attached Signatures to Balance Sheet and As per our Report attached Signatures to Profit and Loss Account
Schedules 1 to 10 and 16 and Schedules 11 to 16
For and on behalf of For and on behalf of
KALYANIWALLA & MISTRY A.B. GODREJ Director KALYANIWALLA & MISTRY A.B. GODREJ Director
Chartered Accountants Chartered Accountants
V.V. CHAUBAL C.K. VAIDYA Managing Director V.V. CHAUBAL C.K. VAIDYA Managing Director
K.M. ELAVIA Company Secretary K.M. ELAVIA Company Secretary
Partner Partner
Membership No. 12737 Membership No. 12737
Mumbai, May 25, 2006. Mumbai, May 25, 2006.
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2006
This Year Previous Year This Year This Year Previous Year
Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000
SCHEDULE 1 : SHARE CAPITAL SCHEDULE 2 : RESERVES & SURPLUS
AUTHORISED SECURITIES PREMIUM ACCOUNT
1,00,00,000 Equity Shares of Rs. 10 each 100,000 100,000 As per last Balance Sheet 189,290 189,290
ISSUED, SUBSCRIBED AND PAID UP CAPITAL INVESTMENT SUBSIDY
71,18,752 Equity Shares of Rs. 10 each fully paid 71,188 71,188 As per last Balance Sheet 9,602 7,102
Add : Amount received during the year – 2,500
Of the above Shares 9,602 9,602
GENERAL RESERVE
(a) 41,06,956 Equity Shares of Rs. 10/- each As per last Balance Sheet 50,470 48,850
are held by Godrej Industries Limited, Less : Provision for impairment – 12,580
the Holding Company.
50,470 36,270
(b) 52,47,600 Equity Shares of Rs. 10/- each Add : Transferred from Profit & Loss Account 7,000 14,200
have been issued as fully paid Bonus Shares 57,470 50,470
by capitalising Securities Premium Account.
PROFIT AND LOSS ACCOUNT 298,458 269,674
TOTAL 554,821 519,036
71
Rs.’000 Rs.’000 Rs.’000 Rs.’000
SCHEDULE 3 : SECURED LOANS SCHEDULE 4 : UNSECURED LOANS
FROM BANKS FROM BANKS
Term Loans – 115,598 Term Loans 1,299,809 148,600
(amount due within a year Rs. Nil, (amount due within a year Rs. 1,216,476 thousand,
Previous year Rs. 23,922 thousand) Previous year Rs. 148,600 thousand)
Cash Credit/Working Capital Demand Loans 1,259 24,000 SALES TAX DEFERMENT FACILITY 33,717 31,643
TOTAL 1,259 139,598 TOTAL 1,333,526 180,243
Note : Refer Note (4)
SCHEDULE 5 : FIXED ASSETS (Rs. ’000)
GROSS BLOCK DEPRECIATION IMPAIRMENT NET BLOCK
ASSETS As at Additions Deductions As at Upto For the On Upto Upto As at As at
1.4.2005 31.3.2006 1.4.2005 Year Deductions 31.3.2006 31.3.2006 31.3.2006 31.3.2005
Goodwill – – – – – – – – – – –
Freehold Land 86,493 6,777 – 93,270 – – – – – 93,270 86,493
Leasehold Land 9,841 – – 9,841 845 112 – 956 – 8,885 8,996
Buildings 220,824 12,913 – 233,737 59,302 7,745 – 67,047 – 166,691 161,522
Staff Quarters 1,003 – 485 518 491 19 244 267 – 251 512
Plant & Machinery 546,059 115,724 6,802 654,982 202,914 46,829 5,246 244,496 19,890 390,595 323,255
Furniture & Fixtures 19,476 9,985 120 29,341 12,225 2,487 106 14,607 – 14,734 7,251
Leasehold Improvements – 9,409 – 9,409 – 859 – 859 – 8,550 –
Office & Other Equipments 25,512 7,461 326 32,647 13,335 2,888 224 16,000 – 16,647 12,177
Vehicles 53,130 22,465 14,308 61,287 29,069 9,049 9,132 28,986 – 32,300 24,061
Research Centre 3,688 – – 3,688 1,584 175 – 1,759 – 1,929 2,104
Trees, Development Costs 45,469 – – 45,469 20,922 3,033 – 23,955 – 21,514 24,547
Technical Know-How Fees 20,000 – – 20,000 19,569 429 – 19,999 – 1 431
TOTAL 1,031,495 184,734 22,041 1,194,189 360,256 73,626 14,951 418,931 19,890 755,368 –
Previous Year 919,249 136,645 24,399 1,031,495 307,941 65,575 13,260 360,255 – – 651,349
Capital Work-in-Progress / Advances 146,415 7,959
901,783 659,308
This Year This Year Previous Year This Year This Year Previous Year
Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000
SCHEDULE 6 : INVESTMENTS SCHEDULE 7 : CURRENT ASSETS, LOANS AND ADVANCES
LONG TERM (A) INVENTORIES :
UNQUOTED (AT COST) Raw Materials 351,305 316,869
Finished Products 201,993 108,490
IN GOVERNMENT SECURITIES
Poultry Stock 106,282 93,941
(All the Securities have been deposited with Stores and Spares 14,816 12,067
various Government Authorities) Stock under Cultivation 24,454 18,370
(a ) National Savings Certificates (Face value
698,849 549,737
Rs. 112 thousand; Previous year Rs. 92 thousand) 112 92
(B) SUNDRY DEBTORS
(Rs. 20 thousand purchased during the year)
Debts outstanding for a period exceeding six months
(b) Indira Vikas Patra (Face value Considered Good 130,489 95,172
Rs. 2 thousand; Previous year Rs. 3 thousand) 1 2 Considered Doubtful 21,500 23,682
(Rs. 1 thousand matured during the year)
151,989 118,854
113 94
Other Debts 509,336 409,610
IN SUBSIDIARY COMPANY
TOTAL 661,325 528,464
In Goldmohur Foods and Feeds Limited
18,38,170 (Previous year 21,58,170) equity shares 183,398 183,398 Less: Provision for doubtful debts 21,500 23,682
of Rs. 10/- each 639,825 504,782
In Golden Feeds Products Limited [Debts amounting to Rs. 12,263 thousand (Previous year
50,000 equity shares of Rs. 10/- each 500 500 Rs. 12,263 thousand) are secured by equitable mortgage/
IN JOINT STOCK COMPANIES hypothecation of assets/deposit of title deeds, Rs. 17,366
(a) 4,000 Fully-paid Equity Shares of Rs.10/- thousand (Previous year Rs.118 thousand against Security
each in Ensemble Holdings & Finance Limited 80 80 Deposits and Rs. 25,392 thousand (Previous year Rs. 12,494
(a company under the same management) thousand) against Bank Guarantees]
(b) 4,00,000 Fully-paid Equity Share of Tk. 100/- each in (C) CASH AND BANK BALANCES
ACI Godrej Agrovet Private Limited 30,814 30,814 Cash and Cheques on hand 12,713 7,375
(c) 675 Fully-paid Equity Share of AED. 100/- each in Balances with Scheduled Banks
Al Rahba International Trading Limited Liability Company 810 – i) In Current Accounts 98,827 64,530
(acquired during the year) ii) In Fixed Deposit Accounts 155,872 10,959
(d) 23,90,911 fully paid Equity Shares of Rs.10/- each (Rs. 75 thousand pledged with
in Creamline Dairy Products Limited 95,016 95,016 government authorities) 267,412 82,864
(e) 3,51,352 fully paid Equity Shares of Rs.10/- each
(D) OTHER CURRENT ASSETS 59 71
in Creamline Nutrients Limited 8,784 8,784
(f) 4,55,000 fully paid Equity Shares of Rs.10/- each (E) LOANS AND ADVANCES
in Polchem Hygiene Laboratories Private Limited 16,275 16,275 (Unsecured and considered good unless otherwise stated)
Loans and Advances recoverable in cash or in
151,779 150,969
kind or for value to be received
IN CO-OPERATIVE SOCIETY
Considered Good 292,449 76,273
3 Shares of Rs.500/- each in Sachin
Considered Doubtful 3,361 3,674
Industrial Co-operative Society Limited 2 2
Aggregate Cost of Unquoted Investments 335,792 334,962 295,810 79,947
Less: Provision for doubtful advances 3,361 3,674
CURRENT
NON-TRADE UNQUOTED 292,449 76,273
1,78,74343.368 units of Grindlays Floating Rate Fund - Other Deposits
Short term (Plan B) - Daily Dividend. 180,000 – i) Government Authorities 131 5
TRADE UNQUOTED ii) Others 35,050 25,289
IN SUBSIDIARY COMPANY Advance payment of Taxes including MAT Credit
In Krithika Agro Farm Chemicals and Engineering Entitlement Rs. 3,410 thousand (Net of
Industries Private Limited provision for taxation Rs. 73,294 thousand;
7,600 Fully-paid Equity Share of Rs. 10/- each 76 – Previous year Rs. 73,294 thousand) 11,284 (13,105)
(acquired during the year) 338,914 88,462
TRADE UNQUOTED TOTAL 1,945,058 1,225,916
In subsidiary company TOTAL 515,868 334,963
72
Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000
SCHEDULE 14 : EXPENSES (Contd.)
SCHEDULE 8 : LIABILITIES
10 Insurance 8,330 6,193
Acceptances 273,048 424,140
11 Postage, telephone and stationery 27,314 21,819
Sundry Creditors
12 Auditor's Remuneration 1,929 1,675
Dues to Small Scale Undertakings (refer Note 10) 724 5,051
13 Legal & Professional Fees 59,136 17,770
Others 854,398 597,996
14 Freight, Coolie and Cartage 83,620 64,504
855,122 603,047 15 Discount, Commission and Selling expenses 301,345 254,636
Advances from Customers 69,212 96,522 16 Advertisement and publicity 42,940 37,489
Sundry Deposits 105,638 95,311 17 Travelling expenses 80,390 58,355
TOTAL 1,303,021 1,219,020 18 Bad Debts/Advances written off 16,594 33,906
19 General Expenses 65,114 52,832
Dividend 28,475 23,492 1,521,655 1,255,045
Tax on Dividend 3,994 3,295 20 Less: Shared Expenses recovered (26,400) (26,400)
Gratuity 1,439 416 TOTAL 1,495,255 1,228,645
Leave Encashment 14,431 12,338
SCHEDULE 15 : INTEREST AND FINANCIAL CHARGES
TOTAL 48,339 39,541 (a) Interest paid on fixed loans - Banks 36,505 18,885
SCHEDULE 10 : MISCELLANEOUS EXPENDITURE (b) Interest paid on other loans
(To the extent not written off) i) Banks 3,012 1,394
Front end Fee on Term Loans – 224 ii) Others 2,157 4,796
TOTAL – 224 5,169 6,190
(c) Other Financial Charges 10,212 7,289
SCHEDULE 11 : INCOME FROM OPERATIONS
Net Sales 5,955,461 5,627,822 TOTAL 51,885 32,364
Other Business Operations
Claims & Compensations 32,167 851 SCHEDULE 16 : NOTES TO ACCOUNTS
Rent and Storage Charges – 390 1. SIGNIFICANT ACCOUNTING POLICIES
32,167 1,241 a) The accounts have been prepared on historical cost convention. The Company follows mercantile
Financial Operations system of accounting and recognises income and expenditure on accrual basis.
Dividend on Investments (Gross) 35,609 30,000 b) Fixed assets have been stated at cost and include incidental and/or installation/development
Interest (Gross) (Tax at Source Rs.114 thousand; expenses incurred in putting the asset to use and interest on borrowing incurred during construction
Previous year Rs.144 thousand) 4,349 4,696 period. Pre-operative expenses for major projects are also capitalised, where appropriate.
Profit on sale of Investments – 8,074
c) Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine
39,958 42,770 whether there is any indication of impairment. If such indication exists, the recoverable amount is
TOTAL 6,027,586 5,671,833 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.
SCHEDULE 12 : OTHER INCOME
Profit/(Loss) on sale of Fixed Assets (Net) 1,273 (431) d) Depreciation /Amortisation has been provided for as under :
Provision for Doubtful Debts and Advances no longer required 2,175 1,420 (a) The Company has grouped additions and disposals in appropriate time periods of a
Miscellaneous Income 24,556 12,359 month/quarter for the purpose of charging pro rata depreciation in respect of additions
TOTAL 28,004 13,348 and disposals of its assets keeping in view the materiality of the items involved.
SCHEDULE 13 : MATERIALS (b) 1) Building, Plant & Machinery, Computers and Research Centre: On Straight Line
a) RAW MATERIALS CONSUMED Method basis at the rates prescribed by Schedule XIV to the Companies Act, 1956.
Opening stock 316,869 256,523 2) Other assets: On Written Down Value basis at the rates prescribed by Schedule
Add : Purchases during the year 3,910,803 3,852,505 XIV to the Companies Act, 1956.
4,227,671 4,109,028 3) Amortizations
Less : Sales during the year 54,881 35,322
Asset type Period
4,172,789 4,073,706
(i) Leasehold Land, improvements and equipments Primary lease period
Less : Closing Stocks 351,305 316,869
(ii) Tress Development cost 15 years
3,821,484 3,756,837 (iii) Nursery/Greenhouse building 10 years
b) PURCHASE FOR RESALE 648,921 429,398 (iv) Technical Kno-whow of a capital nature 6 years
c) INVENTORY CHANGE (v) Poultry Equipments 3 years
Opening Stock e) Grants/Subsidies :
Finished Goods 108,490 105,297
(i) Investment Subsidy under the Central/State investment incentive scheme is credited to
Work-in-progress – 124
Capital Investment Subsidy Reserve and treated as a part of the shareholders’ funds.
Stock under cultivation 18,370 5,714
Poultry Stock 93,941 86,978 (ii) Grants/Subsidies related to specific fixed assets are shown as a deduction from the gross
220,801 198,113 value of the asset concerned in arriving at its book value.
Less : Closing Stock (iii) Grants/Subsidies related to revenue are presented as a credit to the profit and loss
Finished Goods 201,993 108,490 statement or are deducted in reporting the related expense.
Work-in-progress – – f) Long Term investments are carried at cost. Provision for diminution, if any, in the value of each
Stock under cultivation 24,454 18,370 long term investment is made to recognise a decline, other than of a temporary nature.
Poultry Stock 106,282 93,941 Current investments are stated at lower of cost and net realizable value.
332,729 220,801 g) Raw materials and Poultry Stock are valued at weighted average cost.
(111,928) (22,688) 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
TOTAL 4,358,477 4,163,547 their present location and condition. Stores and spares are valued at cost using the First-In-
SCHEDULE 14 : EXPENSES First-Out method
1 Salaries, Wages, Bonus, Gratuity and Allowances 274,449 243,118 h) Retirement benefits to employees comprise payments under defined contribution plans like
2 Contribution to Provident Fund and provident fund and family pension. Payments under defined contribution plans are charged to the
Other Funds and Administration Charges 15,852 11,458 profit and loss account. The liability in respect of defined benefit schemes like gratuity and leave
3 Employee Welfare Expenses 28,220 22,532 encashment benefit on retirement is provided on the basis of acturial valuation at the end of each
4 Processing charges 266,225 228,804 year. The liability for retirement gratuity is funded through a trust created for the purpose.
5 Consumable Stores 55,783 49,453 i) Miscellaneous expenditure :
6 Power and Fuel 141,032 118,999
i) Non-Compete fee is amortised over a period of five years or the period of the agreement
7 Rent 25,870 11,803
(wherever applicable).
8 Rates and Taxes 9,596 7,193
9 Repairs & Maintenance ii) Front-end fee paid on loans raised from financial institutions is amortised over the period
Building 2,815 1,189 of the loan.
Plant & Machinery 10,014 9,683 iii) Expenditure incurred on study of business is amortised over the period for which the
Other Assets 5,086 1,635 business plan is evolved.
17,914 12,507 iv) Expenditure incurred on glow-sign board is amortised over a period of two accounting years.
73
j) Revenue is recognised when goods are despatched to external customers. Sales are inclusive of 6. INFORMATION IN RESPECT OF JOINT VENTURE (JOINTLY CONTROLLED ENTITY)
realised exchange fluctuations on export receivables but net of returns, sales tax, rebates,etc. Name Country of Incorporation Percentage Holding
k) Revenue expenditure on Research and Development is charged to Profit and Loss Account of the This Year Previous Year
year in which it is incurred. Capital Expenditure incurred during the year on Research and ACI Godrej Agrovet Private Limited Bangladesh 50% 50%
Development is shown as an addition to Fixed Assets under the head “Research Centre”.
ACI Godrej Agrovet Private Limited has started its operations in the fields of Animal Feed,
l) 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 Poultry businesses etc.
period of time to get ready for its intended use, upto the time the said asset is put to use are Interest in Assets, Liablities, Income and Expense with respect of jointly controlled entity
capitalised, as a part of the cost of that asset. Other borrowing costs are recognised as an expense in
Assets 78,899 43,827
the period in which they are incurred.
Liablities 78,899 16,151
m) Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the
transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the Income 15,612 –
year end, are translated at the year end exchange rates. Forward exchange contracts, remaining Expense 19,758 –
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 Al Rahaba Trading International LLC Abu Dhabi 70% –
the contract. Exchange gains / losses are recognised in the Profit and Loss Account except in respect The company has a 45% share in the Equity capital of Al Rahaba International LLC but a 70% share
of liabilities incurred to acquire fixed assets in which case, they are adjusted to the carrying amount in the profits and in future investments.
of such fixed assets.
Al Rahaba Trading International LLC is in the Poultry business
n) Deferred tax is recognised on timing differences, being the differences between the taxable income
Assets 40,227
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 Liablities 40,227
carried forward only to the extent that there is a reasonable certainty that sufficient future taxable Income 24,114
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 Expense 39,883
enacted or substantially enacted on the balance sheet date. This Year Previous Year
o) The basic earnings per share is computed using the weighted average number of common shares Rs.’000 Rs.’000
outstanding during the period. Diluted earnings per share is computed using the weighted average 7. CURRENT ASSETS, LOANS AND ADVANCES
number of common and dilutive common equivalent shares outstanding during the period, except (a) Loans and Advances include due from Companies
where the results would be anti-dilutive. under the same management
p) Provisions are recognized in the accounts in respect of present probable obligations, the amount of Golden Feed Products Limited 40,393 5
which can be reliably estimated.
Maximum balance during the year 45,000 5
Contingent liabilities are disclosed in respect of possible obligations that arise from past events but
Krithika Agro Farm Chemicals and Engineering
their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future
Industries Private Limited 4,205 –
events not wholly within the control of the Company.
Maximum balance during the year 4,205
Rs.’000 Rs.’000 Al Rahba International Trading Limited Liablity Company 33,075 –
2. CONTINGENT LIABILITY Maximum balance during the year 33,075
In respect of : (b) Sundry Debtors include due from Companies
(a) Income Tax Matters 6,119 14,010 under the same management
The Income Tax Department has filed an appeal against the Goldmohur Foods and Feeds Limited 18,219 7,841
order of CIT (A), for A.Y. 1998-99, 1999-2000, 2000-2001 Godrej Consumer Products Limited – 15
and has raised a demand for A.Y.2003-04
Godrej Industries Limited – 55
(b) Sales Tax Matters 30,317 40,085
ACI Godrej Agrovet Private Limited 13 –
The Company has filed Appeal with the Sales Tax tribunal in
Tamilnadu for F.Y. 1993-94 to 1995-96, for classifying branch 8. It is the opinion of the management that the following are parties which can be classified as Small
transfer as sales. (Against the above the Company has paid Scale Industrial Undertakings to whom the Company owes sums which is outstanding for more than
advance of Rs. 800 thousand) The Company has filed an appeal 30 days. The Auditors have accepted the representations of the management in this matter.
in Mumbai High Court in connection with Agricultural Produce Name of the party Rs.’000 Name of the party Rs.’000
Market Committee(APMC) in respect of poultry business. The
Wardhaman Trading Company 28 Pharmline Industries 5
Company has preffered an appeal with the Commissioner of
Commercial Taxes, Karnataka against the order of the Joint Shivshant Industries 56 Laxmi Solvent (P) Ltd. 422
Commissioner of Commercial Taxes, Karnataka, for classifying Yashoraj Industries 171
chicken sold in crimp pack as chicken sold in sealed container.
(Against the above the Company has paid advance of Rs. 14,300 9. Deferred Tax :
thousand) The Company has filed writ petition in Andhra Pradesh The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities are :
High Court, seeking direction to the CTO, to accept the “C”
forms and waive the differential liability
Rs.’000 Rs.’000
(c) Guarantee issued to a Bank on behalf of the subsidiary company 858,459 590,000
Depreciation on Fixed Assets (82,407) (74,200)
(d) Guarantees issued by the Banks and counter guaranteed by 47,815 41,387
Provision for Impairment of Fixed Assets 7,310 7,310
the company (other than those mentioned in (c) above)
Rs.3,182 thousand (Previous year Rs. 672 thousand) have been Provision for Doubtful Debts 8,368 8,983
secured by deposit with bank Carry Forward unabsorbed depreciation 17,576 –
(e) Case / Claim filed by Processors for claiming various expenses 24,764 – Others (1,403) 6,122
3. CAPITAL COMMITMENTS Deferred Tax Liability (50,556) (51,785)
The estimated value of contracts remaining to be executed on 55,462 4,601
Capital Account to the extent not provided for This Year Previous Year
4. SECURED LOANS / UNSECURED LOANS Unit Quantity Value Quantity Value

Rs. ‘000 Rs. ‘000
a) Term Loans from Banks are secured by an equitable mortgage of specified immovable properties
and hypothecation of specified movable assets of the Company. 10. SALES TURNOVER
b) Cash Credit and other facilities from banks are secured by hypothecation of stocks and book Animal Feeds MT 467,343 3,689,176 470,227 3,790,036
debts of the Company (both present and future). Agro Inputs – 924,208 – 659,175
c) Sales Tax Deferment includes Rs. 2,780/- thousand which has been disputed by Sales Tax Integrated Poultry Business – 884,002 – 778,887
authorities. The Company has filed an appeal with the Andhra Pradesh High Court on this count.
Oil Palm Plantation – 323,862 – 298,361
5. FIXED ASSETS
Others – 134,213 – 101,363
Legal formalities relating to the transfer of title of immovable assets situated at Chennai (acquired as
TOTAL 5,955,461 5,627,822
a part of the take over of Agrovet business from Godrej Industries Limited), Hyderabad (as part of the
merger of Godrej Plant Biotech Limited) and at Coimbatore are being complied with. Stamp duty Note: Sales Turnover includes sale of items processed by third parties, and items purchased by the
payable thereon is not presently determinable. Company for resale.
74
11. FINISHED GOODS INVENTORIES (b) MANAGERIAL REMUNERATION
Animal Feeds MT 7,258 62,699 4,978 44,451 a) Salaries 6,339 4,751
(4,978) (44,451) (4,851) (34,411) b) Contribution to Provident fund 341 235
Agro Inputs
Synthetic pesticides KL 168 35,848 151 19,153 c) Estimated monetary value of perquisites 28 101
(151) (19,153) (79) (13,880) 6,708 5,086
Natural pesticides MT 4 480 22 3,477
(22) (3,477) (5) (753)) d) Directors’ Sitting Fees 72 72
Processed Chicken 40,360 8,612 6,780 5,158
(8,612) (32,522)
Others 62,606 32,797 Note: (a) All the above items have been included under respective heads under “Expenses” in Schedule 14
(32,797) (23,731) (b) Salaries include performance linked variable remuneration on provisional basis
TOTAL 201,993 108,490 (c) The remuneration paid to the Managing Director is in excess of the remuneration prescribed
(108,490) (105,297) under Section 198 read with Schedule XIII to the Companies Act, 1956 by Rs.3056 thousands.
The company is in the process of making necessary application to the Central Government for
Note : Figures in bracket pertain to the Previous Year(34,332) approval of the remuneration in excess of the prescribed limits.
12. PURCHASES FOR RESALE 17. COMMON EXPENSES SHARED BY THE COMPANIES :
Animal Feeds MT 5,220 69,987 2,379 25,848 a) Expenses (Schedule 14) include Rs 16,602 thousand (Previous Year Rs 10,846 thousand) charged
Agro Inputs by Godrej Industries Limited, the Holding Company
Plant Growth Promoter b) During the year, the Company shared the services of some of it’s employees and facilities with
Spray KL 285 21,407 293 22,395 its subsidairy Company. Consequently the value of share of costs attributable to that Company
Granules MT 5,713 65,185 5,749 65,647 calculated in accordance with the service agreement has been recovered, amounting to
Urea coating agent MT 13 2,621 45 3,149 Rs. 26,400 thousands (Previous year Rs. 26,400 thousands)
Synthetic pesticides KL 1,298 143,591 1,100 128,486 18. AUDITORS’ REMUNERATION
Others 346,130 183,873 Audit fees 1,122 880
TOTAL 648,921 429,398 Audit under Other Statutes 337 220
13. RAW MATERIALS CONSUMED Tax representation before Authorities 196 217
Cakes & Brans MT 122,403 697,964 112,066 582,799 Management Consultancy 73 44
Extractions MT 262,515 1,276,327 265,412 1,378,058
Certification 172 187
Others 1,847,193 1,795,980
Reimbursement of Expenses 29 127
TOTAL 3,821,484 3,756,837
TOTAL 1,929 1,675
14. DISCLOSURE IN RESPECT OF LEASES:
The Company’s leasing arrangements are in respect of operating leases for premises occupied by Rs.’000 Rs.’000
the Company. These leasing arrangements are cancellable, and are renewable on a periodic basis 19. VALUE OF IMPORTS ON CIF BASIS
by mutual consent on mutually acceptable terms. (INCLUDES DIRECT IMPORTS ONLY )
a. The total of future minimum lease payments under non - cancelable operating leases for each Raw Materials 103,040 60,234
of the following periods :
Spares 1,129 762
Rs.’000 Rs.’000 Capital Goods 29,990 –
i. Not later than one year 1,115 1,373 134,159 60,996
ii. Later than one year and not later than five years 2,230 2,746 20. EXPENDITURE IN FOREIGN CURRENCY
iii. Later than five years – –
Travelling Expenses 2,523 1,852
b. Lease payments recognised in the statement of Profit & Loss for the period :
Others 21,567 5,929
Minimum lease payments 1,115 1,373
24,089 7,780
15. LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION
21. EARNINGS IN FOREIGN EXCHANGE
Capacity Per Annum Actual Third Party
Item For the year Registered Installed Production Production F.O.B value of goods exported 10,803 5,534
Ended MT MT MT MT
Others 1,837 334
a) Animal Feeds 31.3.2006 Not Applicable 306,645 185,938 338,577
(Non-Scheduled) 31.3.2005 Not Applicable 306,645 188,156 279,819 12,641 5,868
b) Processed Chicken 31.3.2006 Not Applicable 15,566 12,298 –
(Non-Scheduled) 31.3.2005 Not Applicable 13,336 9,422 – 22. VALUE OF CONSUMPTION OF RAW MATERIALS, SPARES & TOOLS
c) Palm Oil 31.3.2006 Not Applicable 11,490 7,112 – (INCLUDING CANALIZED ITEMS )
(Non-Scheduled) 31.3.2005 Not Applicable 11,490 7,638 – This Year Previous Year
Million Million Million
Rs. ’000 % Rs. ’000 %
Plants Plants Plants
RAW MATERIALS :
d) Tissue Culture Plants 31.3.2006 4.25 5.00 4.21 –
(Non-Scheduled) 31.3.2005 4.25 5.00 4.21 – Imported items (including duty content) 43,946 1 47,085 1
16. (a) Computation of Profit for the purpose of mangerial remuneration Indigenous 3,777,538 99 3,709,752 99
This Year Previous Year TOTAL 3,821,484 100 3,756,837 100
Rs.’000 Rs.’000 SPARES & TOOLS :
Profit after tax as per Profit and Loss account 68,253 141,718
Imported items 750 1 599 1
Add : Depreciation as per accounts 73,626 65,575
Indigenous 55,033 99 48,854 99
Managerial Remuneration 6,708 5,086
TOTAL 55,783 100 49,453 100
Provision for Doubtful Debts / Advances (2,175) (1,420)
Profit / (Loss) on sale of fixed assets referred to in Proviso 23. Research & Development Expenditure of revenue nature charged to the Profit and Loss Account
to Sec. 349 (3)(d) of the Companies Act, 1956 1,273 (431) amounts to Rs.9,031 thousand (previous year Rs.10,620 thousand).
Provision for Tax (including Deffered tax) 7,870 53,245 24. The amount of exchange difference included in the Profit and Loss Account, under the related heads
of expenses / income, is Rs. 1,742 thousand (Previous year expense Rs.1,598 thousand). The amount
87,302 122,054 of exchange difference in respect of forward exchange contracts to be recognised in the profit and
Less : Depreciation as per Section 350 of the loss account of subsequent accounting periods Rs. Nil (previous year Rs. 940 thousand)
Companies Act, 1956 73,626 65,575 25. EARNINGS PER SHARE
Provision for Dimunition in value of investments This Year Previous Year
written back – – Profit after tax and prior period expenses (Rs.’000) 68,253 141,718
Profit / (Loss) on sale of Fixed assets (net) 1,273 (431) Weighted average number of equity shares outstanding 7,118,752 7,118,752
74,899 65,144 Basic earnings per share 9.59 19.91
Profit for the purpose of Directors remuneration 80,656 198,629 Diluted earnings per share 9.59 19.91
Nominal value of shares 10.00 10.00
5% thereof 4,033 9,931
75
26. RELATED PARTY DISCLOSURES 2. The following transactions were carried out with the related parties in the ordinary course of business :
Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below “ (i) Details relating to parties referred to in items 1(i), (ii), (iii), (iv) and (v) above
Rs.’000
1. Relationships : Nature of Tansactions Holding Subsi- Fellow Joint Assoc- Other
Comp- diaries Subsi- Ventures iates related
(i) Holding Companies : anies diaries Parties
(i) (ii) (iii) (iv) (v) (vi)
Godrej Industries Limited (GIL) holds 57.69% in the Company. GIL is the subsidiary of
Godrej & Boyce Mfg. Co. Limited, the ultimate Holding Company. 1 Purchase/Transfer of fixed assets 3,594 – 797 – – –
4,483 – 30 – – –
(ii) Subsidiary companies 2 Sales/Transfer of fixed Assets – 47 – 5,667 – –
3 Sale of Investments – – – – –
Goldmohur Foods and Feeds Limited – 4,000 – – – –
4 Investment in share capital – 886 – – – –
Golden Feed Products Limited – – – – – –
Krithika Agro Farm Chemicals and Engineering Industries 4 Advances given during the year – 79,230 – 34,511 – –
5 Intercorporate deposits
(iii) Fellow Subsidaries : placed during the year – – – – – –
1,166 – – – – –
Godrej Consumer Products Limited 6 Intercorporate deposits
Godrej Infotech Limited taken during the year – – – – – –
– – – – – –
Godrej Tea Limited 7 Sale of materials/finished goods – 216,412 – 5,667 – –
181,579 – – –
Godrej Properties & Investments Limited 8 Purchase of materials/finished goods 82 122,745 1,107 – 10,553 122,374
Godrej Hicare Limited 59 137,378 1,865 – – 152,898
9 Expenses charged to other
(iv) Joint Ventures companies – 26,592 – 1,287 – –
12 27,210 – 847 – 50
ACI Godrej Agrovet Private Limited 10 Expenses charged by other
Al Rahaba Trading International LLC companies 16,470 1,307 3,403 – – –
11,166 2,102 587 – – 168
(v) Associates 11 Interest income on loan given – 1,787 – – – –
– – – – – –
Creamline Dairy Products Limited 12 Interest expense on intercorporate
deposits taken – – – – – –
Creamline Nutrients Limited – – – – – –
Polchem Hygiene Laboratories Private Limited 13 Dividend Income – 31,000 33 – 4,576 –
– 30,000 – – – –
(v) Other related parties where persons mentioned in (vii) below exercise significant influence 14 Dividend paid 13,573 – – – – –
22,621 – – – – –
Bahar Agrochem & Feeds Private Limited 15 Outstanding receivables,
(vi) Key management personnel net of (payables) 8 35,552 – (13) (1,173) (1,373)
4,754 5,966 77 847 (11,019)
Mr. C.K.Vaidya 16 Guarantees issued in favour of – 145,000 – 123,459 – –
– 590,000 – – –
(vii) Individuals exercising control or significant influence (and their relatives) (ii) Details relating to persons referred to in items 1 (vi) & (vii) above
Mr. A.B. Godrej Current Previous
Year Year
Mr. N.B. Godrej 1 Remuneration 5,724 5,419
2 Interest income on loans given – –
3 Dividend paid 1,935 3,226
3. Significant Related Party Transactions : (Rs.'000)
Nature of Transactions Holding Company Amount Subsidiaries Amount Fellow subsidiaries Amount
(i) (ii) (iii)
1 Purchase/Transfer of fixed assets Godrej Industries Ltd 3,594 – – Godrej Tea Ltd.
3,558 – 30
Godrej & Boyce Mfg. Co. Ltd. 654 – – – –
925
2 Sale of Investments – – Goldmohur Foods & Feeds Ltd. – –
– – 40,000
3 Investment in share capital – – Kritika Agro Farm Chemical &
– – Engineering Industries Pvt. Ltd. 76 – –
– – –
4 Advances given during the year Godrej Industries Ltd. Kritika Agro Farm Chemical & 4,205 Godrej Properties & Investments Ltd. –
Engineering Industries Pvt. Ltd.
1,166 –
Golden Feeds Products Ltd. 40,393
5 Intercorporate deposits taken during the year Godrej Industries Ltd. – – – – –
– – –
6 Sale of materials/finished goods Godrej Industries Ltd. – Goldmohur Foods & Feeds Ltd. 215,661 – –
– 181,579 –
Kritika Agro Farm Chemical & 458
Engineering Industries Pvt. Ltd.
7 Purchase of materials / finished goods Godrej Industries Ltd. – Goldmohur Foods & Feeds Ltd. 111,120 Godrej Consumer Products Ltd. –
59 137,378 1,865
8 Expenses charged to other companies Godrej & Boyce Mfg. Co. Ltd. – Goldmohur Foods & Feeds Ltd. 26,592 – –
12 27,210 –
9 Expenses charged by other companies Godrej Industries Ltd. 16,470 Goldmohur Foods & Feeds Ltd. 1,307 Godrej Consumer Products Ltd. 495
10,846 2,102 563
– – Godrej Tea Ltd. –
– 708
10 Interest income on loan given – – Kritika Agro Farm Chemical &
Engineering Industries Pvt. Ltd. 230 – –
Golden Feeds Products Ltd. 1,557 – –
11 Interest expense on intercorporate deposits taken Godrej Industries Ltd. – – – – –
–
12 Dividend Income – – Goldmohur Foods & Feeds Ltd. 31,000 – –
30,000 –
13 Dividend paid Godrej Industries Ltd. 13,573 – –
22,621 –
14 Outstanding receivables, net of (payables) Godrej Industries Ltd. – Goldmohur Foods & Feeds Ltd. 18,219 Godrej Consumer Products Ltd.
4,754 5,917 (10)
Golden Feeds Products Ltd. 16,468
Kritika Agro Farm Chemical &
Engineering Industries Pvt. Ltd. 865
15 Guarantees issued in favour of – – Goldmohur Foods & Feeds Ltd 70,000
590,000
Golden Feed Products Ltd. 75,000
76
3. Significant Related Party Transactions : (Contd.) (Rs.'000)
Joint Amount Associates Amount
Nature of Transactions Ventures
(iv) (v)
1. Investment in share capital Al Rahaba Trading International LLC 810
2. Sales /Transfer of fixed Assets ACI Godrej Agrovet Private Ltd. 5,667
3. Advances given during the year Al Rahaba Trading International LLC 33,075 –
4. Intercorporate deposits taken during the year – – –
5. Sale of materials/finished goods ACI Godrej Agrovet Private Ltd. – –
6. Dividend Income – – Creamline dairy Products Ltd. 3,776
– Creamline Nutrients Ltd. 527
7. Guarantees issued in favour of Al Rahaba Trading International LLC 60,683
ACI Godrej Agrovet Private Ltd. 62,776
27. SEGMENT INFORMATION FOR THE YEAR ENDED MARCH 31, 2006
(i) Information about Primary Business Segments
For the year ended 31st March, 2006 Rs. ’000 For the year ended 31st March, 2005 Rs. ’000
Animal Agri Integrated Oil Other Unallocated Total Animal Agri Integrated Oil Other Unallocated Total
Revenue Feeds Inputs Poultry Palm Business Feeds Inputs Poultry Palm Business
Business Plantations Business Plantations
Total Sales 3,991,907 936,825 887,978 328,882 33,759 – 6,179,352 3,945,941 659,175 783,111 299,160 101,363 5,788,750
Less : Inter-segment (209,921) (16,335) (12,003) 14,369 – – (223,890) (155,905) – (4,224) (798) – (160,927)
External Sales 3,781,986 920,490 875,975 343,251 33,759 – 5,955,461 3,790,036 659,175 778,887 298,362 101,363 – 5,627,822
Result
Segment Result 105,267 65,551 (46,806) 87,613 (1,539) – 210,086 173,630 43,982 (63,532) 75,916 25 230,021
Unallocated expenditure net of unallocated income (122,034) (122,034) (37,390) (37,390)
Interest expenses (51,887) (51,887) (32,364) (32,364)
Interest Income 4,349 4,349 4,696 4,696
Dividend Income and Profit on sale of Investments 35,609 35,609 30,000 30,000
Profit before taxation and exceptional items 105,267 65,551 (46,806) 87,613 (1,539) (133,963) 76,123 173,630 43,982 (63,532) 75,916 25 (35,058) 194,963
Provision for taxation 7,870 7,870 53,245 53,245
Profit after taxation and before exceptional items 105,267 65,551 (46,806) 87,613 (1,539) (141,833) 68,253 173,630 43,982 (63,532) 75,916 25 (88,303) 141,718
Exceptional Items
Prior years adjustments – – – –
Net profit 105,267 65,551 (46,806) 87,613 (1,539) (141,833) 68,253 173,630 43,982 (63,532) 75,916 25 (88,303) 141,718
Other Information
Segment assets 956,282 389,216 628,642 194,537 29,646 1,164,386 3,362,709 910,212 257,831 459,865 187,679 27,486 377,338 2,220,412
Segment liabilities 847,930 66,230 171,650 27,983 602 1,580,794 2,695,188 869,451 82,517 178,566 27,383 5,357 466,915 1,630,188
Capital expenditure 32,056 24,102 138,396 3,429 415 124,793 323,191 26,386 2,228 36,976 5,299 1,230 70,872 142,990
Depreciation 27,030 2,202 20,121 10,731 1,413 12,128 73,626 25,457 1,188 20,009 10,748 1,214 6,960 65,575
Impairment loss 19,890 19,890 – – 19,890
Non-cash expenses other than depreciation 87 87
(ii) Information about Secondary business Segments

Rs. ’000 Rs. ’000
Revenue by Geographical segments India Outside Total India Outside Total
India India
Total Sales 6,166,711 12,641 6,179,352 5,782,882 5,868 5,788,750
Less : Inter-segment (223,890) – (223,890) (160,928) – (160,928)
External Sales 5,942,821 12,641 5,955,461 5,621,954 5,868 5,627,822
Carrying amount of segment assets 3,362,709 – 3,362,709 2,220,412 – 2,220,412

Additions to fixed assets 323,191 – 323,191 142,991 – 142,991
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 vegetables etc.
(c) Integrated Poultry business
(d) Oil Palm Plantation business
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.
77
28. INFORMATION REQUIRED TO BE FURNISHED UNDER PART IV OF SCHEDULE VI OF THE CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2006
COMPANIES ACT, 1956 Current Year Previous Year
i) Registration Details Application of Funds Rs. ’000 Rs. ’000 Rs. ’000
Registration No. 16655 Net Fixed Assets 901,784 A. Cash Flow from Operating Activities :
State Code 04 Investments 515,868 Net Profit Before Taxes 76,123 194,963
Adjustment for:
Balance Sheet Date 31/3/2006 Net Current Assets 593,699
Depreciation 73,626 65,575
ii) Capital raised during the year Misc. Expenditure Nil Loss/(Profit) on sale of fixed assets (1,273) 431
(Rupees ‘000) Accumulated Losses Nil Profit on sale of Investments – (8,074)
Dividend income (35,609) (30,000)
Public Issue Nil iv) Performance of Company Interest income (4,349) (4,696)
Rights Issue Nil (Rupees ‘000) Interest expenses 51,885 32,364
Miscellaneous expenditure written off 224 87
Bonus Issue Nil Turnover 6,055,590
Expenditure in respect of prior years – –
Private Placement Nil Total Expenditure 5,979,467 Investments Written off – –
iii) Position of mobilisation and deployment of funds Profit before tax 76,123 Promotion expenses
84,504 55,687
(Rupees ‘000) Profit after tax 68,253
Operating Profit Before Working Capital Changes 160,627 250,649
Total Liabilities 3,362,710 Earning Per Share in Rs. 9.59
Total Assets 3,362,710 Dividend rate 79% Adjustments for:
Inventories (149,113) (84,781)
Sources of Funds Debtors and Other Receivables (361,105) (48,400)
Paid-up Capital 71,188 v) Generic Names of three principal Creditors and Other Payables 87,117 247,209
Reserves & Surplus 554,821 products services of Company (423,101) 114,028
Secured Loans 1,259 Item Code No. 23099010 Cash Generated from Operations (262,474) 364,678
Direct Taxes paid (net of refund received) (33,489) (19,731)
Unsecured Loans 1,333,526 Product Description Animal Feeds
Net Cash Flow from Operating Activities (295,963) 344,947
B. Cash Flow from Investing Activities :
Capital subsidy received – 2,500
Acquisition of fixed assets (323,191) (142,991)
Proceeds from sale of fixed assets 8,363 10,708
Purchase of Investments (180,904) (150,894)
STATEMENT REGARDING SUBSIDIARY COMPANIES PURSUANT TO SECTION 212 Proceeds from sale/maturity of investments 40,001
OF THE COMPANIES ACT, 1956. Interest Received 4,361 4,691
Dividend Received 35,609 30,000
1. Name of the Subsidiary Goldmohur Foods Golden Feed Kritika Agro Farm (455,762)
and Feeds Ltd. Products Ltd. Chemicals &
Net Cash used in Investing Activities (455,762) (205,985)
Engineering
C. Cash Flow from Financing Activites :
Industries
Pvt. Ltd. Proceeds from Borrowings 1,153,283 4,997
Repayment of Borrowings (115,598) (80,932)
2. Date on which it became a Subsidiary January 1, 2001 July 14, 2003 April 27, 2006 Increase/(Decrease) in Cash Credit/WCDL (22,741) 24,000
3. Financial Year ending March 31, 2004 March 31, 2004 Interest Paid (51,885) (32,364)
4. The Company’s interest in the Subsidiary Dividend Paid (23,492) (39,153)
as on 31.3.2005 Dividend Tax Paid (3,295) (5,117)
a) Number of fully paid Equity Shares held 2,158,170 50,000 7,600 Net Cash used in Financing Activities 936,273 (128,570)
b) Face Value Rs. 10 Rs. 10 Rs. 10
c) Extent of holding 100% 100% 76% Net increase in Cash and Cash equivalents 184,548 10,392
5. Net aggregate Profit/(Loss)of the subsidiary (Rs.’000) (Rs.’000) (Rs.’000)
Company so far as it concerns the members Cash and Cash equivalents (Opening balance) 82,864 72,471
of the Company :
A) For the Financial Year ended on Cash and Cash equivalents (Closing balance) 267,412 82,864
March 31, 2005 :
i) Not dealt with in the Books of Notes:
Account of the Company 18,519 – – 1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting
ii) Dealt with in the Books of Standard (AS) 3 on “CashFlow Statements”, and presents cash flows by operating, investing and
Account of the Company 47,500 – – financing activities.
B) For the subsidiary company’s 2. Figures in brackets are outflows/deductions.
previous Financial Years since it 3. Figures for the previous year have been regrouped/restated wherever necessary to conform to this
became a subsidiary year’s classification.
i) Not dealt with in the Books of 40,590 N.A. N.A.
Account of the Company For and on behalf of
ii) Dealt with in the Books of Account of the 81,801 N.A. N.A. KALYANIWALLA & MISTRY A.B. GODREJ Director
Company
V.V. CHAUBAL C.K. VAIDYA Managing Director
V.V. CHAUBAL A.B. GODREJ C.K. VAIDYA K.M. ELAVIA Company Secretary
Company Secretary Director Managing Director
Partner
Membership No. 12737
Mumbai, May 25, 2006 Mumbai, May 25, 2006.
78
Goldmohur Foods & Feeds Limited

To The Shareholders a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed
Your Directors have pleasure in submitting their Report along with the audited Accounts for the financial year and no material departures have been made from the same;
ended on 31st March, 2006. b) that they have selected such Accounting Policies and applied them consistently and made judgements
FINANCIAL RESULTS 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;
Your Company’s performance during the year as compared with that during the previous year is summarised
below: 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
Rs. Lac detecting fraud and other irregularities;
For the For the
year ended year ended d) that they have prepared the annual accounts on a going concern basis.
31.3.2006 31.3.2005 HUMAN RESOURCES
Total Income 29587.69 30860.71 During the year, the Human Resource Organisation was considerably strengthened by induction of Managers
Profit before Taxation (PBT) 618.00 515.37 with varied experience. The Industrial Relations at all units continued to be cordial.
Less: Provision for Taxation 80.00 170.00
Profit after Taxation 538.00 345.37
Balance Brought Forward from previous year 96.10 124.48
For and on behalf of the Board of Directors
TOTAL 634.10 469.85
C. K. Vaidya V. Srinivasan
Appropriations : Director Director
Interim Dividend 310.00 300.00 Mumbai, May 22, 2006.
Final Dividend – –
Tax on Dividend 43.48 39.21
General Reserve 53.80 34.54
Balance Carried Forward to Balance Sheet 226.82 96.10
TOTAL 634.10 469.85
REVIEW OF OPERATIONS
The year 2005-06 was a challenging year for your Company. The prolonged monsoon had its impact on key
raw materials like de-oiled rice bran, maize, etc. resulting in cost pressure for your Company. However, the
Company got some respite in view of favourable prices for certain raw materials like soya etc. The detection
of Avian influenza in certain pockets of the country impacted the Poultry feed sales of your Company. The
Company’s Aqua Feed Business suffered a setback due to postponement of the shrimp farming season.
DIVIDEND
Your Directors have paid an interim dividend of Rs. 16.86 per (on 18,38,170 shares) share for the year 2005- ANNEXURE ‘A’
06 (previous year Rs. 13.89 per share on 21,58,170 shares). Your directors do not recommend any final ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT
dividend.
INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE
DIRECTORS COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES,
Mr. A.R. Subbarao and Mr. V. Srinivasan, Directors, retire by rotation at the ensuing Annual General Meeting 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN
in accordance with the provisions of the Companies Act, 1956 and being eligible, offer themselves for re- EXCHANGE EARNINGS AND OUTGO :
appointment. A. Conservation of Energy
AUDITORS Your Company is constantly endeavouring to conserve and optimize the use of energy through new and
You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors improved methods.
M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment and a certificate B. Technology absorption, adaptation and innovation
as required u/s 224 (1-B) of the Companies Act, 1956 has been received from them.
I. Your Company has also been making constant efforts for upgradation of technology and also
ADDITIONAL INFORMATION carries out in-house Research & Development activities in relation to maintenance of efficacy and
The additional information required to be given under the Companies Act, 1956, has been laid out in the quality of products manufacture.
Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ II. The benefits derived as a result of the above efforts are:
Report are self-explanatory and therefore do not call for any further explanation.
a) Reduction in per ton cost of manufacture.
STATUTORY INFORMATION
b) Improved quality of products through new formulation.
A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo
c) Savings in raw material and process costs.
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, C. Foreign Exchange earnings and outgo
1988 and forming part of the Directors’ Report is given in the Annexure ‘A’ to this report. Your Company did not have any foreign exchange earnings. Foreign Exchange expenditure during the
B) Particulars of Employees year under consideration was Rs.2267.26 lac (Previous year Rs. 3709.71 lac).
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. For and on behalf of the Board of Directors
C) Directors’ Responsibility Statement C. K. Vaidya V. Srinivasan
Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of Director Director
your Company confirm :- Mumbai, May 22, 2006.
79
REPORT OF THE AUDITORS TO THE MEMBERS OF ANNEXURE TO THE AUDITORS’ REPORT
GOLDMOHUR FOODS & FEEDS LIMITED Referred to in paragraph (3) of our report of even date.
1. We have audited the attached Balance Sheet of Goldmohur Foods & Feeds Limited, as at 31st March, 1. a) The Company is maintaining proper records showing full particulars, including quantitative details
2006 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year and situation of fixed assets.
ended on that date annexed thereto. These financial statements are the responsibility of the Company’s b) As explained to us, the Company has a program for physical verification of fixed assets at periodic
management. Our responsibility is to express an opinion on these financial statements based on our intervals. In our opinion, the period of verification is reasonable having regard to the size of the
audit. Company and the nature of its assets. No material discrepancies have been reported on such
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those verification.
Standards require that we plan and perform the audit to obtain reasonable assurance about whether the c) In our opinion, the disposal of fixed assets during the year does not affect the going concern
financial statements are free of material misstatement. An audit includes examining, on a test basis, assumption.
evidence supporting the amounts and disclosures in the financial statements. An audit also includes 2. a) The Management has conducted physical verification of inventory at reasonable intervals.
assessing the accounting principles used and significant estimates made by management, as well as b) In our opinion, the procedures of physical verification of inventory followed by the management
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable are reasonable and adequate in relation to the size of the Company and the nature of its business.
basis for our opinion. c) The Company is maintaining proper records of inventory and no material discrepancies were
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in noticed on physical verification.
terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters 3. a) The Company has not granted any loans, secured or unsecured to companies, firms or other
specified in paragraphs 4 and 5 of the said Order. parties covered in the register maintained under Section 301 of the Companies Act, 1956.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: b) Consequently, the question of commenting on the rates of interest and the other terms and conditions
a) We have obtained all the information and explanations, which to the best of our knowledge and of the loans granted being prejudicial to the interests of the Company, receipt of regular principal
belief were necessary for the purposes of our audit. and interest and reasonable steps taken for recovery of principal and interest does not arise.
b) In our opinion, proper books of account as required by law have been kept by the Company so far c) The Company has not taken any loans, secured or unsecured from companies, firms or other
as appears from our examination of these books. parties covered in the register maintained under Section 301 of the Act.
c) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this d) Consequently, the question of commenting on the rates of interest and the other terms and conditions
report are in agreement with the books of account. of the loans taken being prejudicial to the interests of the Company and payment of regular
d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt principal and interest does not arise.
with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 4. In our opinion and according to the information and explanations given to us, there are adequate internal
211 of the Companies Act, 1956. control procedures commensurate with the size of the Company and the nature of its business, for the
e) Without qualifying our opinion, we draw attention to Note 4 of Schedule 12 – Notes to Accounts, purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit,
in respect of amortization of Trademarks. The same are amortized over a period of 15 years as no major weakness has been noticed in the internal controls.
compared to the recommended period of 10 years mentioned in Accounting Standard 26 – 5. a) Based on the audit procedures applied by us and according to the information and explanations
Intangible Assets since, in the opinion of the management, the Trademarks will have a useful life provided by the management, we are of the opinion that the particulars of contracts and
matching the amortization period. Being a technical matter, we have relied upon the management’s arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the
estimates stated in Note 4, which forms the basis of this assumption. register required to be maintained under that section.
f) In our opinion and to the best of our information and according to the explanations given to us, the b) The transactions made in pursuance of such contracts or arrangements, were made at prices
said financial statements read with the notes thereon, give the information required by the Companies which are reasonable having regard to prevailing market prices at the relevant time, except for
Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting service transactions for which, there are no similar services received from other parties and
principles generally accepted in India: hence the prices are not comparable.
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006; 6. In our opinion and according to the information and explanations given to us, the Company has not
and accepted any deposits from the public and hence the provisions of Section 58A, 58AA or any other
ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date. provision of the Companies Act, 1956, read with the rules framed thereunder are not applicable.
iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended 7. In our opinion and according to the information and explanations given to us, the internal audit system
on that date. is commensurate with the size of the Company and nature of its business.
5. On the basis of the written representations received from the Directors as on 31st March, 2006, and 8. According to the information and explanation given to us, the maintenance of cost records has not been
taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on prescribed by the Central Government, under Section 209(1)(d) of the Companies Act, 1956 for any of
31st March, 2006 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section the Company’s products.
274 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
For and on behalf of statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State
KALYANIWALLA & MISTRY Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other
Chartered Accountants 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
K. M. ELAVIA 2006 for a period of more than six months from the date they became payable.
Partner b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax,
Membership No. 12737 Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty or cess on account of any dispute.
Place : Mumbai 10. The Company does not have accumulated losses at the end of the financial year and it has not incurred
Dated : May 22, 2006 any cash losses 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.
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 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 the Company has 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.
KALYANIWALLA & MISTRY
K. M. ELAVIA
Partner
Place : Mumbai
Dated : May 22, 2006
80
BALANCE SHEET AS AT MARCH 31, 2006 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED
MARCH 31, 2006
Schedule As at As at As at Schedule For the year For the year For the year
March 31, March 31, March 31, 31/03/2006 31/03/2006 31/03/2005
2006 2006 2005 Rs. '000 Rs. '000 Rs. '000
Rs. '000 Rs. '000 Rs. '000
SOURCES OF FUNDS INCOME
Shareholders' Funds Sales 2,944,439 3,068,916
Share Capital 1 18,382 18,382 Other Income 8 14,330 17,155
Reserves and Surplus 2 189,181 170,729
2,958,769 3,086,071
207,563 189,111
Loan Funds EXPENDITURE
Secured Loans 3 8,440 –
Materials 9 2,484,063 2,635,134
Unsecured Loans 4 100,000 –
Expenses 10 377,453 367,235
108,440 –
Interest and Financial Charges 11 7,155 7,629
Deferred Tax Liability 54,900 49,000
Depreciation/Amortisation 28,298 24,536
TOTAL 370,903 238,111
Miscellaneous Expenditure – –
APPLICATION OF FUNDS Written Off
Fixed Assets 5 2,896,969 3,034,534
Gross block 460,282 391,938 PROFIT BEFORE TAXATION 61,800 51,537
Less : Depreciation 123,968 95,864
Provision for Taxation
Net Block 336,314 296,074
Current 5,300 10,000
Fixed Assets Held for Disposal
at Net Realisable Value 7 7 Minimum Alternate (5,300) –
– 10,000
336,321 296,081
Current Assets, Loans Fringe Benefit 2,100 –
and Advances 6 Deferred 5,900 7,000
Inventories 323,619 251,202 8,000 17,000
Sundry Debtors 191,830 252,257
Cash and Bank Balances 8,410 11,611 PROFIT AFTER TAXATION 53,800 34,537
Loans and Advances 46,910 28,955
Profit Brought Forward 9,610 12,448
570,769 544,025
AMOUNT AVAILABLE FOR APPROPRIATION 63,410 46,985
LESS : Current Liabilities
and Provisions 7 APPROPRIATION
Liabilities 529,525 592,530 Interim Dividend 31,000 30,000
Provisions 6,662 9,465
Tax on Dividend 4,348 3,921
536,187 601,995 Transfer to General Reserve 5,380 3,454
Net Current Assets 34,582 (57,970) Surplus Carried Forward 22,682 9,610
TOTAL 370,903 238,111 TOTAL 63,410 46,985
0
Notes to Accounts 12 Earnings per share (Basic/Diluted) in Rs. (Refer Note 21) 29.27 16.02
Signatures to Balance Sheet and Schedules 1 to 7 and 12 Signatures to Profit and Loss Account and Schedules 8 to 12
As per our Report attached As per our Report attached
KALYANIWALLA & MISTRY KALYANIWALLA & MISTRY
Chartered Accountants C. K. Vaidya Director Chartered Accountants C. K. Vaidya Director
K.M. Elavia S.P. Karmarkar K.M. Elavia S.P. Karmarkar

Partner Company Secretary V. Srinivasan Director Partner Company Secretary V. Srinivasan Director
Mumbai, May 22, 2006. Mumbai, May 22, 2006.
SCHEDULES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2006
As at As at As at As at As at
March 31, March 31, March 31, March 31, March 31,
2006 2006 2005 2006 2005
Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000
Authorised SCHEDULE 3 : SECURED LOANS
5,000,000 Equity Shares of Rs .10 each 50,000 50,000 FROM BANKS
Issued, Subscribed and Paid-up Cash Credit 8,440 –
1,838,170 (Previous Year) 2,158,170 Equity Shares of 18,382 21,582
Rs.10 each fully paid Less : 320,000 Equity Shares bought TOTAL 8,440 –
back and extinguished as at the year end in accordance with
Section 77A of the Companies Act, 1956 – 3,200 Security : Refer Note (3)
18,382 18,382
All the above shares are held by Godrej Agrovet Ltd. SCHEDULE 4 : UNSECURED LOANS
(Holding Company) & its nominees 558,170 shares Short Term Loans from Banks 100,000 –
have been issued pursuant to a contract without
payment being received in cash TOTAL 100,000 –
SECURITY PREMIUM ACCOUNT
As per last Balance Sheet 136,233 173,033
Less : Utilised in accordance with Section 77A of the
Companies Act, 1956 (Refer note 2) – 36,800
136,233 136,233
GENERAL RESERVE ACCOUNT
As per last Balance Sheet 24,886 21,432
Add : Transfer from Profit & Loss Account 5,380 3,454
30,266 24,886
PROFIT AND LOSS ACCOUNT 22,682 9,610
TOTAL 189,181 170,729
81
SCHEDULE 5 : FIXED ASSETS (Rs. '000)
ASSETS GROSS BLOCK DEPRECIATION NET BLOCK
As at Additions Deductions As at As at For the On As at As at As at

April 1, March 31, April 1, period Deductions March 31, March 31, March 31,
2005 2006 2005 2006 2006 2005
Trade Marks 236,789 – 236,789 67,090 15,786 – 82,876 153,913 169,699
Land-Freehold 4,191 1,000 – 5,191 – – – – 5,191 4,191
Leasehold improvements 2,563 – – 2,563 1,651 70 – 1,721 842 912
Buildings 6,105 – – 6,105 1,261 162 – 1,423 4,682 4,844
Plant & Machinery 62,316 1,832 – 64,148 16,675 4,338 – 21,013 43,135 45,641
Power Generating Wind Mill 60,525 62,643 – 123,168 122 5,328 – 5,450 117,718 60,403
Furniture, Fittings & Fixtures 4,599 244 133 4,710 1,757 420 89 2,088 2,622 2,842
Computers 9,798 1,218 – 11,016 5,932 1,613 – 7,545 3,471 3,866
Motor Vehicles 5,052 1,766 226 6,592 1,376 581 105 1,852 4,740 3,676
TOTAL 391,938 68,703 359 460,282 95,864 28,298 194 123,968 336,314 296,074
Previous Year 340,908 68,590 17,560 391,938 82,550 24,536 11,222 95,864 296,074 –
Assets Held for Disposal at Net
Realisable Value 7 – – 7 – – – – 7 7
336,321 296,081
As at March 31, As at March 31, As at March 31, For the year ended For the year ended For the year ended
2006 2006 2005 March 31, 2006 March 31, 2006 March 31, 2005
Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000
SCHEDULE 6 : CURRENT ASSETS , LOANS SCHEDULE 8 : OTHER INCOME
AND ADVANCES Interest Income 52 51
Income from wind mill 8,222 16
A) INVENTORIES : Insurance Claim Received 2 12,871
Raw Materials and Packing Material 247,215 166,336 Miscellaneous Income (Tax Deducted at source
Stores & Spares 527 281 Rs .30 thousand; 6,054 4,217
Finished Goods 65,076 68,564 Previous year Rs. 38 thousand)
Raw Material in Transit 10,801 16,021 14,330 17,155
323,619 251,202
B) SUNDRY DEBTORS : SCHEDULE 9 : MATERIALS
(Unsecured and considered good RAW MATERIALS CONSUMED
unless otherwise stated) Opening Stock 166,336 181,499
Debts outstanding for a period Add : Purchases during the year 2,440,295 2,483,407
exceeding six months 15,982 22,717 2,606,631 2,664,906
Other Debts 175,848 229,540 Less : Sales during the year 27,946 26,422
191,830 252,257 2,578,685 2,638,484
[Debts amounting to Rs.135,409 thousands Less : Closing stocks 247,215 166,336
(Previous Year Rs.125,498 thousands) are secured
2,331,470 2,472,148
against Bank Guarantees/Security Deposit]
PURCHASE FOR RESALE 149,105 157,446
C) CASH AND BANK BALANCES : STOCK DESTROYED WRITTEN OFF – 12,697
Cash and cheque on hand 5,606 3,223 INVENTORY CHANGE
Balances with Scheduled Banks Opening Stock of Finished Goods 68,564 61,407
In Current Accounts 2,804 8,388 Less : Closing Stock of Finished Goods 65,076 68,564
8,410 11,611 3,488 (7,157)
D) LOANS AND ADVANCES :
TOTAL 2,484,063 2,635,134
(Unsecured and considered good unless
otherwise stated) SCHEDULE 10 : EXPENSES
Loans and Advances recoverable in cash or in 1. Salaries, Wages, Bonus 78,124 64,977
kind or for value to be received : 2. Provident and other funds 2,962 5,703
Considered Good 38,706 21,234 3. Workmen and staff welfare expenses 6,927 6,194
Considered Doubtful 715 715 4. Processing charges 88,889 88,365
39,421 21,949 5. Power, light, fuel and water 35,283 27,472
Less : Provision for Doubtful Advances 715 715 6. Rent 12,994 14,621
7. Rates and taxes 3,799 14,141
38,706 21,234
8. Repairs and maintenance – Buildings 279 247
Deposits 8,204 7,721
– Plant 5,627 6,389
46,910 28,955 – Other Assets 1,771 1,973
TOTAL 570,769 544,025 7,677 8,609
9. Insurance 1,417 1,060
SCHEDULE 7 : CURRENT LIABILITIES AND PROVISIONS 10. Postage, telephone and stationery 8,488 8,682
A) CURRENT LIABILITIES 11. Auditors’ Remuneration 1,447 1,134
Acceptances 111,272 187,817 12. Legal and Professional charges 1,478 1,732
Sundry Creditors (Note 5) 416,080 402,051 13. Carriage and freight 58,074 41,631
Deposits 2,091 2,662 14. Advertisement and Sales Promotion 3,422 4,928
Interest accrued but not due on loans 82 – 15. Travelling and motor car expenses 25,494 21,373
529,525 592,530 16. Provision for Advances – 415
B) PROVISIONS 17. Bad Debts Written Off 22,500 29,005
Provision for Taxation 18. Loss on Sale of Fixed Assets (Net) 41 544
(Net of Advance Tax Rs. 50,708 thousand; 19. Fixed Assets Destroyed Written Off – 682
Previous Year (2,291) 1,540 20. Provision for Assets Held for Disposal 3,804
Rs. 44,778 thousand) 21. Miscellaneous Expenses 18,437 22,163
For Gratuity 7,192 6,810 TOTAL 377,453 367,235
For Leave Encashment 1,761 1,115
6,662 9,465 SCHEDULE 11 : INTEREST AND FINANCIAL CHARGES
TOTAL 536,187 601,995 (a) Interest paid on fixed loans
i) Banks 5,149 –
(b) Interest paid on other loans – Banks – 3,642
(c) Other Financial Charges 2,006 3,987
TOTAL 7,155 7,629
82
SCHEDULE 12 : NOTES TO ACCOUNTS For the Year For the Year
1. SIGNIFICANT ACCOUNTING POLICIES 31/03/06 31/03/05
a) The accounts have been prepared on historical cost convention. The Company follows mercantile Unit Quantity Value Quantity Value
system of accounting and recognises income and expenditure on accrual basis. Rs. ‘000 Rs. ‘000
b) Fixed assets have been stated at cost and include incidental and/or installation/development expenses
6 SALES TURNOVER MT
incurred in putting the asset to use and interest on borrowing incurred during construction period.
Aqua Feed 11,217 320,624 11,206 372,700
Pre-operative expenses for major projects are also capitalised, where appropriate.
Cattle Feed 35,579 216,282 44,068 305,877
c) Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine
Poultry Feed 228,196 2,396,162 222,855 2,388,017
whether there is any indication of impairment. If such indication exists, the recoverable amount
Lab Feeds 474 3,815 218 2,322
is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any,
Others – 7,556 – –
is recognized whenever carrying amount exceeds the recoverable amount.
d) Depreciation/Amortisation has been provided for as under : TOTAL 275,466 2,944,439 278,347 3,068,916
(a) Depreciation has been provided on Straight Line Method at rates specified in Schedule XIV 7 FINISHED GOODS INVENTORIESMT
of the Companies Act ,1956. The Company has grouped additions and disposals in appropriate Aqua Feed 1,007 32,236 1,280 41,419
time periods of a month/quarter for the purpose of charging prorata depreciation in respect Cattle Feed 1,024 5,785 896 5,066
of additions and disposals of its assets keeping in view the materiality of the items involved. Poultry Feed 3,088 25,834 2,700 21,722
(b) 1) Leasehold Improvements: At a rate which will reduce the principal value of each asset Lab Feeds 46 377 30 357
to “Nil” over the primary lease period. Others – 844 –
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 TOTAL 5,165 65,076 4,906 68,563
term investment is made to recognise a decline, other than of a temporary nature. Current 8 PURCHASE FOR RESALE MT
investments are stated at lower of cost and net realizable value. Aqua Feed 86 1,314 904 9,937
f) Raw materials are valued at moving weighted average cost. Cattle Feed 19,874 113,731 21,581 125,437
Finished goods are valued at lower of cost and net realisable value after providing for cost of Poultry Feed 3,054 28,958 2,307 22,071
obsolescence and other anticipated losses, wherever considered necessary. Cost is computed on Lab Feeds – – – –
weighted average basis. Finished goods include cost of conversion and other costs incurred in Others 5,101
bringing the inventories to their present location and condition.
Stores and spares are valued at cost using the First-In-First-Out method. TOTAL 23,014 149,104 24,792 157,446
g) The liability in respect of future payments of gratuity and leave encashment payable to employees 9 RAW MATERIALS CONSUMED MT
on retirement is provided based on actuarial valuation. DLM 421 64,937 701 109,150
h) Revenue is recognised on despatch of goods to external customers. Sales are net of returns, trade Maize 92,126 605,050 75,792 463,255
discounts, rebates and sales tax. Rice Bran Extraction 22,189 71,032 23,325 58,026
i) Revenue expenditure on Research and Development is charged to Profit and Loss Account of the Rice Bran 10,361 61,019 13,117 72,362
year in which it is incurred. Capital Expenditure incurred during the year on Research and Soya 64,700 619,358 55,093 685,329
Development is shown as an addition to Fixed Assets. Others – 910,074 – 1,084,025
j) 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 TOTAL 189,797 2,331,470 168,028 2,472,148
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 10. LICENSED AND INSTALLED CAPACITY AND ACTUAL PRODUCTION
expense in the period in which they are incurred.
k) Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the Item For the Capacity Per Annum Actual Capacity Per Annum
transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at Year Registered Installed Production* Registered
the year-end, are stated at the contracted rates, when covered under forward foreign exchange MT MT MT MT
contracts and at year-end rates in other cases.The premium payable on forward foreign exchange Aqua, Cattle 31.03.06 Not 232,000 252,710 Not
contracts is amortized over the period of the contract. Exchange gains/losses are recognised in the and Poultry Feed Applicable Applicable
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. Aqua, Cattle and 31.03.05 Not 232,000 253,620 Not
l) Deferred tax is recognised on timing differences, being the differences between the taxable Poultry Feed Applicable Applicable
income and the accounting income that originate in one period and are capable of reversal in one * Actual production includes production at third party processing locations.
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 sufficent 11. COMMON EXPENSES ALLOCATED BY THE HOLDING COMPANY :
For the Year For the Year
future taxable income will be available against which such deferred tax assets can be realised. The
31/03/06 31/03/05
tax effect is calculated on the accumulated timing difference at the year-end, based on the tax rates
Rs. ‘000s Rs. ‘000s
and laws enacted or substantially enacted on the balance sheet date.
Expenses (Schedule 12) include amounts charged by
m) The basic earnings per share is computed using the weighted average number of common share
Godrej Agrovet Limited, the Holding Company 26,400 26,400
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, expect 12. AUDITORS’ REMUNERATION
where the results would be anti-dilutive. For the Year For the Year
n) Miscellaneous Expenditure: 31/03/06 31/03/05
Front-end fee paid on loans raised is amortised over the period of loan. Rs. ‘000s Rs. ‘000s
o) Provisions and Contingent Liabilities. Statutory Audit 898 702
Provisions are recognized in the accounts in respect of present probable obligations, the amount Audit under other statutes 393 270
of which can be reliably estimated. Certification 44 38
Contingent liabilities are disclosed in respect of possible obligations that arise from past events but Taxation Representation Before Authorities 112 124
their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future TOTAL 1,447 1,134
events not wholly within the control of the Company.
2. BUY BACK OF SHARES 13. Revenue expenditure on scientific research debited to respective expense heads Rs. 2,594 thousands
The Company has utilised securities premium account Nil (Previous Year Rs. 36,800/- thousand) for (Previous Year Rs.2,902 thousands).
adjusting the difference between the buy-back price and face value of equity shares bought back.
14. VALUES OF IMPORTS ON CIF BASIS
3. SECURED LOANS
Raw Materials 246,138 258,833
Working Capital Demand Loans and Cash Credit from Banks are secured by way of hypothecation of
the entire Inventory, Book Debts Receivables (Present & Future) ranking on a pari passu basis and also TOTAL 246,138 258,833
by Corporate Guarantee from the Holding Company, Godrej Agrovet Limited.
4. TRADEMARKS 15. EXPENDITURE IN FOREIGN CURRENCY
Travelling Expenses 618 124
The Trademarks of the Company have a huge market potential, strong market position and Research &
Bank Charges 1,017 1,143
Development set-up, which constantly refurbishes the products to avoid technoloical obsolecence. The
Interest – –
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 amortise the brand acquisition cost over a 15 years period. TOTAL 1,635 1,267
5. SSI CREDITORS
In spite of the absence of a data-base identifying creditors as Small Scale Industrial Undertakings, it is 16. VALUE OF CONSUMPTION OF RAW MATERIALS
the opinion of the management that there are no parties which can be classified as Small Scale Industrial For the Year For the Year
31/03/06 31/03/05
Undertakings to whom the Company owes any sum. The Auditors have accepted the representations of
% Value % Value
the management in this matter.
Rs. ‘000 Rs. ‘000
Raw Materials :
Imported Items (Including Duty Content) 10 225,141 15 369,704
Indigenous 90 2,106,329 85 2,104,748
TOTAL 100 2,331,470 100 2,474,452
83
17. The amount of exchange difference included in the Profit and Loss Account under the related heads of 25. INFORMATION REQUIRED TO BE FURNISHED UNDER THE PART IV OF SCHEDULE VI OF THE
income/expense is Rs. 740 thousands (net expense) (Previous Year Rs. 264 thousands, net income). The COMPANIES ACT, 1956
amount of exchange difference in respect of forward exchange contracts to be recognised in the Profit Balance Sheet Abstract and Company’s General Business Profile.
or Loss of subsequent accounting periods is Rs. 12 thousands (Previous Year - Rs. 10 thousands ). i) Registration Details
Registration No. 17887
18. SEGMENT REPORTING
State Code 11
The Company is primarily engaged in the business of manufacturing and distribution of Animal Feeds,
Balance Sheet 31st March, 2006
like Aqua Feed, Poultry Feed, Cattle Feed, Lab Feed, etc. Accordingly, in the opinion of the management,
ii) Capital raised during the period (Rupees ‘000)
it has only one primary segment and no further disclosure is deemed necessary pursuant to Accounting
Public Issue Nil
Standard 17 on Segment Reporting, issued by the Institute of Chartered Accountants of India.
Rights Issue Nil
19. DEFERRED TAX Bonus Issue Nil
In accordance with the Accounting Standard 22 on Accounting for Taxes on Income, the Company has Private Placement Nil
made adjustments in its accounts for deferred tax liabilities/assets. iii) Position of mobilisation and deployment of funds (Rupees ‘000)
The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities are : Total Liabilities 370,903
For the Year For the Year Total Assets 370,903
31/03/06 31/03/05 Source of Funds
Rs. ‘ 000 Rs. ‘ 000 Paid up Capital 18,382
Reserve & Surplus 189,181
Depreciation on Fixed Assets (61,732) (51,809) Secured Loans 8,440
Carried forward loss 3619 241 Unsecured Loans 1000,000
Provision for Doubtful Debts 241 – Deferred Tax Liability 54,900
Others 2972 2,568 Application of Funds
54900 (49,000) Net Fixed Assets 336,321
Investments –
20. RELATED PARTY DISCLOSURE Net Current Assets 34,582
Related party disclousere as required by AS-18 “Related Party Disclosure” are given below : Misc. Expenditure –
1. Relationships : iv) Performance of the Company (Rupees ‘000)
Holding Company Turnover 2,958,769
Godrej Agrovet Limited (GAVL) holds 100% in the Company. GAVL is the subsidiary of Godrej Total Expenditure 2,896,969
Industries Limited (GIL). GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the ultimate Profit Before Tax 61,800
Holding Company. Profit After Tax 53,800
2. The following transactions were carried out with the related parties in the ordinary course of Earnings Per Share in Rs. 29.27
business : Dividend Rate 169%
(i) Details relating to parties referred to in 1 above v) Generic Names of three Principal Products/Services of the Company
Rs. ‘000s Item Code No. 23099001
Holding Product Description Animal Feeds
Company S.P. Karmarkar C.K. Vaidya V. Srinivasan
1 Sale of Materials/Finished Goods 111,120 Company Secretary Director Director
137,378 Place : Mumbai
2 Purchase of Materials/Finished Goods 215,661 Date : May 22, 2006
181,579
3 Expenses charged to other companies 1,307
For the For the
(Inclusive of sale of services) 2,102 Year Ended Year Ended
4 Expenses charged by other companies 26,592 31-03-2006 31-03-2005
27,210 Rs. '000 Rs. '000 Rs. '000
5 Dividend paid 31,000 A. Cash Flow from Operating Activities:
30,000 Profit before Tax and Operational Items 61,800 51,537
Adjustment for:
6 Outstanding payables, net of receivables 18,219
Depreciation 28,298 24,536
5,922 Loss/(Profit) on sale of Fixed Assets 41 544
7 Guarantees taken 70,000 Exchange Difference (8,876) (5,816)
590,000 Interest Income (52) (51)
8 Amount paid for Buy Back of Equity Share Capital – Interest Expense 7,155 7,629
40,000 Provision for Fixed Assets Held for Disposal – 3,804
Note : Figures in italics pertains to the previous year. Fixed Assets written off – 682
26,566 31,328
3. Significant Related Party Transactions
Operating Profit before Working Capital Changes 88,366 82,865
All the transactions mentioned above are with Godrej Agrovet Limited. Adjustments for :
Inventories (72,417) 8,776
21. EARNINGS PER SHARE Debtors and Other receivables 42,472 18,936
For the Year For the Year Creditors and Other payables (53,183) 68,572
31/03/06 31/03/05 (83,128) 96,284
Cash Generated from Operations 5,237 179,149
Profit after tax as per Profit & Loss Account (Rs. ‘000) 53,800 34,537 Direct taxes Paid (5,930) (16,897)
Weighted average number of equity shares outstanding 1,838,200 2,155,540 Net Cash Generated from Operating Activities (693) 162,252
B. Cash from Investing Activities:
Basic earnings per share 29.27 16.02 Acquisition of Fixed Assets (68,703) (68,534)
Diluted earnings per share 29.27 16.02 Proceeds from sales of Fixed Assets 124 1,308
Interest Income 52 50
Net Cash used in Investing Activities (68,527) (67,176)
22. DISCLOSURES IN RESPECT OF LEASES C. Cash from Financing Activities:
The Company’s leasing arrangements are in respect of operating leases for premises occupied by the Proceeds from Borrowings 100,000 –
Company. These leasing arrangements are cancellable, and are renewable on a perodic basis by mutual (Decrease)/Increase in Cash Credit/
consent on mutually acceptable terms. WCDL from Banks (net) 8,440 (41,144)
The aggregate lease rental payable by the Company and charged to Profit and Loss Account Short Term Loans Paid – (17,000)
(Schedule 10) is as follows : Interest Paid (5,067) (3,814)
Amount Paid for Buy-Back of Equity Share Capital – (40,000)
For the Year
Dividend Paid (31,000) (30,000)
Particulars 31/03/06 Tax on distributed profits (4,348) (3,921)
Rs. ‘ 000 Other Financial Charges (2,006) (3,987)
Lease rental paid during the year 13,262 Net Cash used in Financing Activities 66,019 (139,866)
Future Lease Obligations Net Increase/(Decrease) in Cash and Cash Equivalents (3,201) (44,790)
Due within one year of balance sheet date 4,387 Cash and Cash equivalents (Opening Balance) 11,611 56,401
Due after one year and with in five years of balance sheet date – Cash and Cash equivalents (Closing Balance) 8,410 11,611
Due after five years of balance sheet date –
As per our Report attached
23. Information required under Schedule VI to the Companies Act, 1956 has been given to the extent For and on behalf of
applicable. KALYANIWALLA & MISTRY
Chartered Accountants C. K. Vaidya Director
24. Figures for the previous financial year have been regrouped wherever necessary. K.M. Elavia S.P. Karmarkar
Partner Company Secretary V. Srinivasan Director
Mumbai, May 22, 2006.
84
Golden Feed Products Limited

To The Shareholders a “Going Concern” as the finance will continue to be available to the company for its working capital requirements
Your Directors have pleasure in submitting their Report along with the audited Accounts for the financial year from its holding company Godrej Agrovet Limited.
ended on 31st March, 2006. ADDITIONAL INFORMATION
FINANCIAL RESULTS The additional information required to be given under the Companies Act, 1956, has been laid out in the
As the company has commenced operations in the current year, no previous year figures have been given: Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’
Rs. Lac Report are self-explanatory and therefore do not call for any further explanation.
For the year ended STATUTORY INFORMATION
31/3/2006 A ) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo
Total Income 345.00 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
Loss before Taxation 140.06
and forming part of the Directors’ Report is given in the Annexure “A” to this report.
Add: Provision for Taxation NIL
B) Particulars of Employees
Loss after Taxation 140.06
None of the employees is covered under the provisions of Section 217 (2A) of the Companies Act, 1956,
Balance Brought Forward from previous year Nil read with the Companies (Particulars of Employees) (Amendment) Rules, 2002.
Balance Carried Forward to Balance Sheet 140.06 C ) Directors’ Responsibility Statement
REVIEW OF OPERATIONS Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of
In the current year, your company has acquired Shrimp Feed Marketing Business of Higashimaru Feeds India your Company confirm :-
Limited (HFIL) effective 31st October, 2005. HFIL were the pioneer in the aqua feed sector. HFIL commenced a) that in the preparation of the annual accounts, the applicable Accounting Standards have been
commercial production from 1992, in technical and financial collabration with Higashimaru Foods Inc. of followed and no material departures have been made from the same ;
Japan. This acquisition is expected to consolidate the presence in the shrimp feed segment of your company
b) that they have selected such Accounting Policies and applied them consistently and made judgements
alongwith other Godrej group companies engaged in the shrimp feed business. Your company alongwith other
and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of
Godrej group companies engaged in similar businesses are also expected to benefit through better market
the Company at the end of the financial year and of the profit or loss of the Company for that period ;
penetration available through the distribution network of HFIL and joint sourcing of critical raw materials.
c) that they have taken proper and sufficient care for the maintenance of adequate accounting
The Company’s business suffered a setback due to delay in the shrimp farming season.
records in accordance with the provisions of this Act for safeguarding the assets of the Company
DIRECTORS for preventing and detecting fraud and other irregularities ;
Dr. S.S. Sindhu, Director, retires by rotation at the ensuing Annual General Meeting in accordance with the d) that they have prepared the annual accounts on a going concern basis.
provisions of the Companies Act, 1956 and being eligible, offers himself for re-appointment.
HUMAN RESOURCES
AUDITORS
The Board would like to place on record its sincere appreciation of the dedicated performance turned in by
You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors M/ the employees of your Company.
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. For and on behalf of the Board of Directors
QUALIFICATIONS BY AUDITORS C.K. Vaidya Dr. P.N. Narkhede
The auditors have qualified in the Auditors report that the accumulated losses as at Director Director
March 31, 2006 exceeds its paid up capital, resulting in the erosion of its net worth. Your company still remains Mumbai, May 22, 2006.
ANNEXURE ‘A’
ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT
INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, C. Foreign Exchange earnings and outgo
READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF Your Company had no foreign exchange earning as well as outgo.
THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY,
TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO :
A. Conservation of Energy For and on behalf of the Board of Directors
The Company has not established any manufacturing facility this year.
C.K. Vaidya Dr. P.N. Narkhede
B. Technology absorption, adaptation and innovation Director Director
Not Applicable since the Company does not have any manufacturing facility at Mumbai, May 22, 2006.
present.
REPORT OF THE AUDITORS TO THE MEMBERS OF GOLDEN FEED PRODUCTS LIMITED

1. We have audited the attached Balance Sheet of Golden Feed Products Limited, as at 31st March 2006 and e) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt
also the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that with by this report comply with the Accounting Standards referred to in sub-section (3C) of section
date annexed thereto. These financial statements are the responsibility of the Company’s management. 211 of the Companies Act, 1956.
Our responsibility is to express an opinion on these financial statements based on our audit.
f) In our opinion and to the best of our information and according to the explanations given to us, the
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those said financial statements read with the notes thereon, subject to para (a) above, give the information
Standards require that we plan and perform the audit to obtain reasonable assurance about whether the required by the Companies Act, 1956, in the manner so required and give a true and fair view in
financial statements are free of material misstatement. An audit includes examining, on a test basis, conformity with the accounting principles generally accepted in India:
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006; and
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 ii) in the case of the Profit and Loss Account, of the loss for the year ended on that date.
basis for our opinion. iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in on that date.
terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters 5. On the basis of the written representations received from the Directors as on 31st March, 2006, and taken
specified in paragraphs 4 and 5 of the said Order. on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March,
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: 2006 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the
a) The accumulated losses of the Company as at March 31, 2006 exceeds its paid up capital resulting Companies Act, 1956.
in the erosion of its net worth. The accounts for the year have been prepared on the ‘Going Concern’ For and on behalf of
basis on the understanding that finance will continue to be available to the Company for working KALYANIWALLA & MISTRY
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.
K. M. ELAVIA
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. Partner
d) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this Membership No. 12737
report are in agreement with the books of account. Place : Mumbai
Dated : May 22, 2006
85
ANNEXURE TO THE AUDITORS’ REPORT
Referred to in paragraph (3) of our report of even date. undisputed statutory dues including Provident Fund, Investor Education and Protection Fund,
1) (a) The Company has maintained proper records showing full particulars, including quantitative Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise
details and situation of fixed assets. 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
(b) As explained to us, the Company has a program for physical verification of fixed assets at periodic above as at 31st March 2006 for a period of more than six months from the date they became
intervals. In our opinion, the period of verification is reasonable having regard to the size of the payable.
Company and the nature of its assets. No material discrepancies have been reported on such
verification. (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
(c) In our opinion, the disposal of fixed assets during the year does not affect the going concern dispute.
assumption.
10) The Company has accumulated losses at the end of the financial year and it has incurred cash losses in
2) (a) The Management has conducted physical verification of inventory at reasonable intervals. the current financial year. There were no operations in the immediately preceding year.
(b) In our opinion, the procedures of physical verification of inventory followed by the management 11) According to the information and explanations given to us and based on the documents and records
are reasonable and adequate in relation to the size of the Company and the nature of its business. produced to us, the Company has not defaulted in repayment of dues to banks. There are no dues to
(c) The Company is maintaining proper records of inventory and no material discrepancies were financial institutions or debenture holders.
noticed on physical verification. 12) According to the information and explanations given to us and based on the documents and records
3) (a) The Company has not granted any loans, secured or unsecured to companies, firms or parties produced to us, the Company has not granted loans and advances on the basis of security by way of pledge
covered in the register maintained under section 301 of the Companies Act, 1956. of shares, debentures and other securities.
(b) Consequently, the question of commenting whether the rates of interest and other terms and 13) In our opinion and according to the information and explanations given to us, the nature of activities of
conditions are not prejudicial to the interests of the Company does not arise. the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/
(c) The Company has taken an unsecured loan, from a company covered in the register maintained societies.
under Section 301 of the Act. 14) The Company does not deal in shares, securities, debentures and other investments.
(d) The rate of interest and the other terms and conditions of the loan taken is not prejudicial to the 15) According to the information and explanations given to us, the Company has not given any guarantee.
interests of the Company. 16) According to the information and explanations given to us, term loans were applied for the purpose for
4) In our opinion and according to the information and explanations given to us, there are adequate internal which the loans were obtained.
control procedures commensurate with the size of the Company and the nature of its business, for the 17) According to the information and explanations given to us and on an overall examination of the Balance
purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, Sheet and Cash Flows of the Company, we report that the Company has utilized funds raised on short-
we have not observed a continuing failure to correct major weaknesses in internal controls. term basis for long term investment.
5) (a) Based on the audit procedures applied by us and according to the information and explanations 18) The Company has not made any preferential allotment of shares to parties or companies covered in the
provided by the management, we are of the opinion that the particulars of contracts and arrangements register maintained under section 301 of the Companies Act, 1956.
referred to in section 301 of the Companies Act, 1956 have been entered into the register required
to be maintained under that section. 19) The Company did not issue any debentures during the year.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices 20) The Company has not raised any money through a public issue during the year.
which are reasonable having regard to prevailing market prices at the relevant time, except for 21) Based on the audit procedures performed and information and explanations given by the management,
certain transactions for which, there are no similar services rendered to other parties or have been we report that no fraud on or by the Company has been noticed or reported during the year.
entered into on a reciprocal basis and hence the prices are not comparable.
6) In our opinion and according to the information and explanations given to us, the Company has not
accepted any deposits from the public and hence the provisions of section 58A, 58AA or any other KALYANIWALLA & MISTRY
provision of the Companies Act, 1956, read with the rules framed thereunder are not applicable. Chartered Accountants
7) In our opinion and according to the information and explanations given to us, the Company is in the
process of setting up an internal audit system. K. M. ELAVIA
8) The Central Government has not prescribed maintenance of cost records under section 209(1)(d) of the
Partner
Companies Act, 1956, for any of the products of the Company. Membership No. 12737
Place : Mumbai
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 Dated : May 22, 2006
86
This Year This Year Previous Year MARCH 31, 2006
Schedule Rs. Rs. Rs.
SOURCES OF FUNDS This Year This Year Previous Year
SHAREHOLDERS’ FUNDS Schedule Rs. Rs. Rs.
Share Capital 1 500,000 500,000
500,000 500,000 INCOME
LOAN FUNDS
From Operations 34,550,891 –
Unsecured Loans 2 70,393,120 –
70,393,120 – Other income 48,940 –
TOTAL 70,893,120 500,000 34,599,831 –
EXPENDITURE
FIXED ASSETS 3
Gross Block 45,046,967 – Materials 9 22,980,279 –
Less: Depreciation 1,875,000 – Expenses 10 21,606,761 –
Net Block 43,171,967 –
Capital work-in-progress/advances – – Interest and financial charges 11 2,080,190 –
43,171,967 – Depreciation 1,875,000 –
INVESTMENTS 4 25,000 –
CURRENT ASSETS,LOANS Miscellaneous Expenditure written off 64,508
AND ADVANCES 5 48,606,738 –
Inventories 27,832,117 –
LOSS BEFORE TAXATION (14,006,907) –
Sundry debtors 30,671,000 –
Cash and Bank Balances 2,604,347 487,187 Provision for Taxation – –
Other current assets 166,999 – LOSS AFTER TAXATION (14,006,907) –
61,274,462 487,187 Surplus/Deficit Brought Forward –
LESS : CURRENT LIABILITIES
AND PROVISIONS Deficit carried forward (14,006,907)
Liabilities 6 47,335,216 51,695 TOTAL (14,006,907) –
Provisions 7 250,000 –
Earnings per share (Basic/Diluted) in Rs.
47,585,216 51,695
(Refer Note 12) (280) –
NET CURRENT ASSETS 13,689,246 435,492
MISCELLANEOUS EXPENDITURE 8 – 64,508 NOTES TO ACCOUNTS 12
(to the extent not written off or adjusted)
PROFIT & LOSS ACOUNT 14,006,907 –
TOTAL 70,893,120 500,000
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 Signatures to Balance Sheet and As per our Report attached Signatures to Profit and Loss Account
Schedules 1 to 8 and 12 Schedules 9 to 12
Chartered Accountants C.K. VAIDYA Director Chartered Accountants C.K. VAIDYA Director
DR. P.N. NARKHEDE Director DR. P.N. NARKHEDE Director
K. M. ELAVIA K. M. ELAVIA
Partner Partner
Place : Mumbai Place : Mumbai
Date : May 22, 2006. Date : May 22, 2006.
This Year Previous Year This Year This Year Previous Year
Rs. Rs. Rs. Rs. Rs.
SCHEDULE 1 : SHARE CAPITAL SCHEDULE 4 : INVESTMENTS
Authorised LONG TERM
1,00,000 Equity Shares of Rs.10 each 1,000,000 1,000,000 UNQUOTED (AT COST)
IN GOVERNMENT SECURITIES
*(Previous year 1,00,000) (All the Securities have been deposited with
Issued, Subscribed and Paid up various Government Authorities)
50000 Equity Shares of Rs.10 each fully paid 500,000 500,000 (a ) National Savings Certificates (Face value
*(Previous year 50,000) Rs. 25,000 ; Previous year NIL) 25,000 –
The entire share capital is held by Godrej Agrovet TOTAL 25,000 –
Limited, the Holding Company (and its nominees) SCHEDULE 5 : CURRENT ASSETS,
LOANS & ADVANCES
SCHEDULE 2 : UNSECURED LOANS (A) INVENTORIES :
From Banks Raw Materials 25,444,477 –
Term Loans 30,000,000 – Finished Products 2,387,638 –
(amount due within a year Rs. 3,00,00,000, Previous year NIL) 27,832,115 –
From Godrej Agrovet Ltd.(including interest accured 40,393,120 – (B) SUNDRY DEBTORS
*(Refer note 2)
Rs. 15,57,118, Previous year Rs. Nil.) Debts outstanding for a period exceeding six months
TOTAL 70,393,120 – Considered Good 9,825,161
Considered Doubtful –
9,825,161 –
Other Debts 20,845,839 –
Total 30,671,000 –
Less: Provision for doubtful debts – –
30,671,000 –
SCHEDULE 3 : FIXED ASSETS (Rs.)
GROSS BLOCK DEPRECIATION NET BLOCK
ASSETS As at Additions Deductions As at Upto For the On Prior Period Upto As at As at
1.4.2005 31.3.2006 1.4.2005 Year Deductions Adjustments 31.3.2006 31.3.2006 31.3.2005
Intellectual property,
Technical Know-how etc. – 45,000,000 – 45,000,000 – 1,875,000 – – 1,875,000 43,125,000 –
*(Refer note 2)
Plant & Machinery – 46,967 – 46,967 – – – – – 46,967 –
TOTAL – 45,046,967 – 45,046,967 – 1,875,000 – – 1,875,000 43,171,967 –
Previous Year – – – – – – – – - –
87
This Year This Year Previous Year c) Carrying amount of cash generating units /assets are reviewed at balance sheet date to determine
Rs. Rs. Rs. whether there is any indication of impairment. If such indication exists, the recoverable amount
SCHEDULE 5 : INVESTMENTS (Contd.) is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any,
(C) CASH AND BANK BALANCES : is recognized whenever carrying amount exceeds the recoverable amount.
Cash and Cheques on hand 53,072 – d) Intellectual property, Technical Know-how etc. are amortised over a period of 10 years.
Balances with Scheduled
Banks in current account 2,551,275 487,187 e) Raw materials are valued at weighted average cost.
2,604,347 487,187 Finished goods and work-in-progress are valued at lower of cost and net realisable value.
(D) OTHER CURRENT ASSETS : 166,999 –
These costs include cost of conversion and other costs incurred in bringing the inventories to their
TOTAL 61,274,462 487,187 present location and condition.
SCHEDULE 6 : LIABILITIES f) Retirement benefits to employees comprise payments under defined contribution plans like
Sundry Creditors 37,637,147 51,695 provident fund and family pension. Payments under defined contribution plans are charged to the
Advances from Customers 9,698,069 - profit and loss account. The liability in respect of defined benefit schemes like gratuity and leave
TOTAL 47,335,216 51,695 encashment benefit on retirement is provided on the actual basis.
SCHEDULE 7 : PROVISIONS g) Revenue is recognised when goods are despatched to external customers.
Gratuity 200,000 – h) Deferred tax is recognised on timing differences, being the differences between the taxable income
Leave Encashment 50,000 – and the accounting income that originate in one period and are capable of reversal in one or more
TOTAL 250,000 – 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
SCHEDULE 8 : MISCELLANEOUS EXPENDITURE income will be available against which such Deferred tax liability is recognised, if material. Deferred
(To the extent not written off) tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the
Preliminary expenses – 64,508 year- end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
TOTAL – 64,508 i) The basic earnings per share is computed using the weighted average number of common shares
SCHEDULE 9 : MATERIALS outstanding during the period. Diluted earnings per share is computed using the weighted average
a) RAW MATERIALS CONSUMED number of common and dilutive common equivalent shares outstanding during the period, except
Opening stock – – where the results would be anti-dilutive.
Add : Purchases during the year 41,177,837 – j) Provisions are recognized in the accounts in respect of present probable obligations, the amount
41,177,837 – of which can be reliably estimated.
Less : Sales during the year 89,554 –
41,088,281 – 2. ACQUISITION OF SHRIMP FEED BUSINESS
Less : Closing Stocks 25,444,477 – During the year, the Company has acquired the shrimp feed Marketing Business of Higashimaru Feeds
15,643,804 on a slump sale basis,effective from 31st October, 2005.
b) PURCHASE FOR RESALE 8,049,679 – The break-up of consideration is:
c) INVENTORY CHANGE Rs.
Opening Stock – Intellectual property, Technical Know-how etc. 45,000,000
Finished Goods taken over 1,674,434 – Debtors taken over 37,900,000
*(Note 2) Inventory taken over 1,600,000
Less : Closing Stock
Less: Deposits taken over (9,500,000)
Finished Goods 2,387,638 –
(713,204) – Total consideration 75,000,000
TOTAL 22,980,279 – This Year Previous Year
SCHEDULE 10: EXPENSES Unit Quantity Value Quantity Value

Rs. Rs.
1 Salaries, Wages, Bonus, Gratuity and Allowances 2,365,840 –
2 Contribution to Provident Fund and 3. SALES TURNOVER
Other Funds and Administration Charges 191,663 – Aqua Feed MT 1,228 34,550,891
3 Employee Welfare Expenses 61,477 – Note: Sales Turnover includes sale of items processed by third parties, and items purchased by the Company for resale.
4. FINISHED GOODS INVENTORIES
4 Processing charges 12,058,653 –
Aqua Feeds MT 92 2,387,638 – –
5 Consumable Stores – – 5. PURCHASES FOR RESALE
6 Power and Fuel 252 – Aqua Feed MT 365 8,049,679 – –
7 Rent 40,700 – 6. RAW MATERIALS CONSUMED
8 Rates and Taxes 19,142 – Animal Proteins MT 445 10,217,648
Others 5,426,156
9 Repairs & Maintenance
Building 1,933 – TOTAL 15,643,804 – –
Plant & Machinery – –
7. LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION
Other assets 2,327 –
4,260 – Registered Installed Actual Third Party
10 Insurance 22,575 – Item For the year Production Production Production Production
Ended MT MT MT MT
11 Postage, telephony and stationery 116,827 –
12 Auditor’s Remuneration 112,240 – Aqua Feeds 31.03.2006 – – – 1,189.5
13 Legal & Professional fees 2,765,733 – 31.03.2005 – – – –
11 Freight, Coolie and Cartage 1,153,010 – This Year This Year Previous Year
12 Discount, Commission and Selling expenses 1,556,745 – Rs. Rs. Rs.
13 Advertisement and publicity 64,979 – 8. AUDITORS’ REMUNERATION
14 Travelling expenses 1,062,483 – Audit fees 84,180 6,612
15 Bad Debts/Advances written off – – Audit under Other Statutes 28,060 –
16 General Expenses 10,182 –
TOTAL 112,240 6,612
21,606,761 –
SCHEDULE 11 : INTEREST AND FINANCIAL CHARGES 9. VALUE OF CONSUMPTION OF RAW MATERIALS, SPARES & TOOLS
(a) Interest paid on fixed loans - This Year Previous Year
From:- Rs. % Rs. %
i ) Banks 4,808 – RAW MATERIALS :
ii ) Others 1,954,936 – Indigenous 15,643,804 100 0
1,959,744 – TOTAL 15,643,804 100 0 0
(b) Other Financial Charges 120,446 –
TOTAL 2,080,190 – 10. SEGMENT INFORMATION
The Company is in the business of manufacturing and distribution of Aqua Feed, which is its single
SCHEDULE 12 : NOTES TO ACCOUNTS primary business segment. All its operations are located in India & so no secondary segment disclosures
are required under AS - 17 segment Reporting
1. SIGNIFICANT ACCOUNTING POLICIES
11. RELATED PARTY DISCLOSURES
a) The accounts have been prepared on historical cost convention. The Company follows mercantile
Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below “
system of accounting and recognises income and expenditure on accrual basis.
1. Relationships :
b) Fixed assets have been stated at cost and include incidental and/or installation/development expenses (i) Holding Companies :
incurred in putting the asset to use and interest on borrowing incurred during construction period. Godrej Agrovet Limited (GAVL) holds 100% in the Company. GAVL is the subsidiary of
Pre-operative expenses for major projects are also capitalised, where appropriate. Godrej Industries Limited(GIL). GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the
ultimate holding company.
88
2. The following transactions were carried out with the related parties in the ordinary course of CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2006
business : Current Previous
Rs. Year Year
Holding Rs. Rs. Rs.
Nature of Transactions Company * A. Cash Flow from Operating Activities :
(i) Net Profit Before Taxes (14,006,907) (14,968)
1 Sale of materials / finished goods 1,072,000 Adjustment for:
2 Purchase of Fixed Assets 46,987 Depreciation 1,875,000
3 Purchase of materials / finished goods 293,000 Loss / (Profit) on sale of fixed assets –
4 Loan taken 40,393,120 Profit on sale of Investments –
5 Interest expense on loan taken 1,557,118 Dividend income –
6 Outstanding payables, net of (receivables) 16,467,562 Interest income –
7 Guarantees issued by 75,000,000 Interest expenses 2,080,190
* All transaction are with Godrej Agrovet Limited. Miscellaneous expenditure written off 64,508
Expenditure in respect of prior years –
12. EARNINGS PER SHARE Investments Written off –
This Year Previous Year 4,019,698 –
Rs. Rs.
Operating Profit Before Working Capital Changes (9,987,209) (14,968)
Profit after tax and prior period expenses (14,006,907) – Adjustments for:
Weighted average number of equity shares outstanding 50,000 50,000 Inventories (27,832,115)
Basic earnings per share (280) – Debtors and Other Receivables (30,837,998)
Diluted earnings per share (280) – Creditors and Other Payables 47,533,521 2,755
(11,136,592) 2,755
Cash Generated from Operations (21,123,801) (12,213)
Direct Taxes paid (net of refund received)
Net Cash Flow from Operating Activities (21,123,801) (12,213)
INFORMATION REQUIRED TO BE FURNISHED UNDER THE PART IV B. Cash Flow from Investing Activities :
Capital subsidy received –
OF SCHEDULE VI OF THE COMPANIES ACT, 1956
Acquisition of fixed assets (45,046,967)
Proceeds from sale of fixed assets –
Balance Sheet Abstract and Company’s General Business Profile
Purchase of Investments (25,000)
i) Registration Details Proceeds from sale/maturity of investments
Interest Received –
Registration No 140599 Dividend Received –
State Code 11 (45,071,967)
Balance Sheet 31/3/2006 Net Cash used in Investing Activities (45,071,967) –
ii) Capital raised during the period (Rupees) C. Cash Flow from Financing Activites :
Public Issue Nil Proceeds from Borrowings 70,393,120
Rights Issue Nil Repayment of Borrowings –
Bonus Issue Nil Increase/(Decrease) in Cash Credit/WCDL –
Interest Paid (2,080,190)
Private Placement Nil
Dividend Paid –
iii) Position of mobilisation and deployment of funds (Rupees) Dividend Tax Paid –
Total Liabilities 118,478,336 Net Cash used in Financing Activities 68,312,930 –
Total Assets 118,478,336
Source of Funds Net increase in Cash and Cash equivalents 2,117,160 (12,213)
Paid up Capital 500,000 Cash and Cash equivalents (Opening balance) 487,187 499,400
Reserve & Surplus –
Secured Loans – Cash and Cash equivalents (Closing balance) 2,604,347 487,187
Unsecured Loans 70,393,120 Notes: 0 -
Application of funds 1. The Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting
Net Fixed Assets 43,171,967 Standard (AS) 3 on “Cash Flow Statements”, and presents cash flows by operating, investing and financ-
Investments 25,000 ing activities.
Net Current Assets 13,689,246 2. Figures in brackets are outflows/deductions.
Misc Expenditure Nil 3. Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s
iv) Performance of the Company (Rupees) classification.
Turnover 34,599,831
Total Expenditure 48,606,738 For and on behalf of
Profit Before Tax -14,006,907 KALYANIWALLA & MISTRY
Profit After Tax -14,006,907 Chartered Accountants C.K. VAIDYA Director
Earnings Per Share in Rs. -280.14 DR. P.N. NARKHEDE Director
K. M. ELAVIA
Dividend Rate Partner
v) Generic Names of three Principal Membership No. 12737
products services of the company Place : Mumbai
Item Code No 23099010 Date : May 22, 2006.
Product Description Animal Feeds
Place : Mumbai C.K.Vaidya DR. P.N. NARKHEDE

Date : May 22, 2006 Director Director
89
Krithika Agro Farm Chemicals and Engineering Industries Private Limited
To The Shareholders Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report
Your Directors have pleasure in submitting their Report along with the audited Accounts of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given
for the financial year ended on 31st March, 2006. in the Annexure “A” to this report.
FINANCIAL RESULTS B) Particulars of Employees
As the company’s activities are in the developmental stage, hence no income has been None of the employees is covered under the provisions of Section 217 (2A) of the
earned in the current year. The revenue expenditure (loss) incurred in the current year Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment)
is Rs. 7,63,956 (including Fringe Benefit Tax of Rs. 13,555). Rules, 2002.
AUDITORS C) Directors’ Responsibility Statement
You are requested to appoint Auditors for the current year and fix their remuneration. Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956,
The retiring Auditors M/s. Kalyaniwalla Mistry & Associates, Chartered Accountants, the Directors of your Company confirm :-
Mumbai are eligible for re-appointment and a certificate as required u/s 224 (1-B) of a) that in the preparation of the annual accounts, the applicable Accounting Standards
the Companies Act, 1956 has been received from them. have been followed and no material departures have been made from the same;
QUALIFICATIONS BY AUDITORS b) that they have selected such Accounting Policies and applied them consistently
The auditors have qualified in the Auditors' Report that the accumulated losses as at and made judgements and estimates that are reasonable and prudent so as to give
March 31, 2006 exceeds its paid up capital, resulting in the erosion of its net worth. Your Company a true and fair view of the state of affairs of the Company at the end of the financial
still remains a “Going Concern” as the finance will continue to be available to the company for year and of the profit or loss of the Company for that period;
its working capital requirements from its holding company Godrej Agrovet Limited. c) that they have taken proper and sufficient care for the maintenance of adequate
Also, the auditors have qualified that the Company’s Capital Work in Progress of Rs. 1.99 Crores accounting records in accordance with the provisions of this Act for safeguarding the
is overstated and the accumulated deficit of the Profit and Loss Account is understated by assets of the Company for preventing and detecting fraud and other
Rs. 1.99 Crores. Your Directors are of the opinion that as this is the expenditure incurred on the irregularities;
Oil mill project and the interest thereon, it has been correctly capitalized.
d) that they have prepared the annual accounts on a going concern basis.
ADDITIONAL INFORMATION
HUMAN RESOURCES
The additional information required to be given under the Companies Act, 1956, has been laid The Board would like to place on record its sincere appreciation of the dedicated performance
out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts turned in by the employees of your Company.
referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further
explanation.
STATUTORY INFORMATION For and on behalf of the Board of Directors
A) Conservation of Energy, Technology absorption and Foreign Exchange earnings
and outgo R.S. Vijan S. Varadaraj
The information in respect of these matters, required under Section 217 (1)(e) of the Director Director
ANNEXURE ‘A’
ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT
INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ C. Foreign Exchange earnings and outgo
WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE Your Company had no foreign exchange earning as well as outgo.
BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY,
TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO :
A. Conservation of Energy For and on behalf of the Board of Directors
The Company has not established any manufacturing facility this year.
R.S. Vijan S. Varadaraj
B. Technology absorption, adaptation and innovation
Director Director
Not Applicable since the Company does not have any manufacturing facility at present. Mumbai, May 22, 2006.
REPORT OF THE AUDITORS

TO THE MEMBERS OF KRITHIKA AGRO FARM CHEMICALS AND
ENGINEERING INDUSTRIES PRIVATE LIMITED
1. We have audited the attached Balance Sheet of Krithika Agro Farm Chemicals and Engineering Industries
Accounting Standard 10 – Fixed Assets nor comply with the definition of a qualifying asset under
Private Limited, as at 31st March 2006 and also the Profit and Loss Account and the Cash Flow Statement
Accounting Standard 16 – Borrowing Costs on which interest can be allocated. Consequently, in our
of the Company for the year ended on that date annexed thereto. These financial statements are the
opinion, the Capital Work in Progress is overstated and the accumulated deficit of the Profit and Loss
responsibility of the Company’s management. Our responsibility is to express an opinion on these
Account is understated by Rs. 1,99,99,000/-.
financial statements based on our audit.
f) In our opinion, subject to para (e) above, the Balance Sheet, the Profit and Loss Account and the Cash
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those
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.
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 g) In our opinion and to the best of our information and according to the explanations given to us, the
assessing the accounting principles used and significant estimates made by management, as well as said financial statements read with the notes thereon, subject to (a) and (e) above, give the information
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable required by the Companies Act, 1956, in the manner so required and give a true and fair view in
basis for our opinion. conformity with the accounting principles generally accepted in India:
3. This report does not include a statement on the matters specified in paragraph 4 of the Companies i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006; and
(Auditor’s Report) Order, 2003, issued by the Department of Company Affairs, in terms of section 227(4A) ii) in the case of the Profit and Loss Account, of the loss for the year ended on that date.
of the Companies Act, 1956, since in our opinion and according to the information and explanations given iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended
to us, the said Order is not applicable to the Company. on that date.
4. Further we report that: 5. On the basis of the written representations received from the Directors as on 31st March, 2006, and taken
a) The accumulated losses of the Company as at March 31, 2006 exceed its paid up capital resulting on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March,
in the erosion of its net worth. The accounts have been prepared on ‘Going Concern’ basis on the 2006 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the
understanding that finance will continue to be available to the Company for Working Capital Companies Act, 1956.
requirements from the promoters. For and on behalf of
b) We have obtained all the information and explanations, which to the best of our knowledge and KALYANIWALLA MISTRY & ASSOCIATES
belief were necessary for the purposes of our audit. Chartered Accountants
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. B.S. DASTOOR
d) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this Partner
report are in agreement with the books of account. Membership No. 48936
e) The Company’s Capital Work in Progress of Rs. 1,99,99,000/- comprise of revenue expenses and
interest allocated on the same. These revenue expenses are neither fixed assets as defined under Mumbai; Dated : May 22, 2006
90
This Year This Year Previous Year MARCH 31, 2006
Schedule Rs. Rs. Rs. This Year This Year Previous Year
SOURCES OF FUNDS Rs. Rs. Rs.
Shareholders Funds INCOME
Share Capital 1 100,000 25,000 EXPENDITURE
Loan Funds Salaries, Wages, Bonus, Gratuity and Allowances 75,423 –
Unsecured Loans 2 20,205,849 19,975,000 Travelling expenses 237,852 –
Seminar / Training expenses 61,174 –
TOTAL 20,305,849 20,000,000
Interest and financial charges 229,849 –
APPLICATION OF FUNDS Auditor’s Remuneration 22,848 –
FIXED ASSETS 3 Advertisement & Publicity 18,702 –
Gross Block 29,789 – Rent 28,750 –
Less: Depreciation 14,422 – Communication expenses 26,787 –
Net Block 15,367 – General Charges 34,594 –
Capital Work-in-progress/advances 19,999,000 19,999,000 Depreciation 14,422 –
750,401 –
20,014,367 19,999,000
PROFIT/(LOSS) BEFORE TAXATION (750,401) –
Current Assets, Loans and Advances 4 PROVISION FOR TAXATION
Inventories 457,687 – FRINGE BENEFIT TAX 13,555
Cash and Bank Balances 1,105 1,000 DEFFERRED – 13,555 –
Other current assets 10,000 –
PROFIT AFTER TAXATION (763,956)
468,792 1,000 Balance Brought Forward – –
Advance payment of taxes (net of
provison of taxation 13555; BALANCE CARRIED FORWARD (763,956) –
Previous year NIL) – –
Earning per share (Basic/Diluted) in Rs. (Refer Note 4) (81) –
Less : Current Liabilities and Provisions 5
Liabilities 941,266
Net Current Assets (472,474) –
Profit and loss account 763,956 –
20,305,849 20,000,000
Notes to Accounts 6
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 Signatures to Balance Sheet and As per our Report attached
Schedules 1 to 6
KALYANIWALLA MISTRY & ASSOCIATES KALYANIWALLA MISTRY & ASSOCIATES
Chartered Accountants R. S. VIJAN Director Chartered Accountants R. S. VIJAN Director
S. VARADARAJ Director S. VARADARAJ Director
B. S. DASTOOR B. S. DASTOOR
Partner Partner
Place : Mumbai Place : Mumbai
Date : May 22, 2006. Date : May 22, 2006.
Rs. Rs. Rs. Rs. Rs. Rs.
SCHEDULE 1 : SHARE CAPITAL SCHEDULE 4 : CURRENT ASSETS,
Authorised LOANS & ADVANCES
10,000 Equity Shares of Rs.10 each 100,000 25,000 (A) INVENTORIES
Issued, Subscribed and Paid up Stock under cultivation 457,687 –
10,000 Equity Shares of Rs.10 each 100,000 25,000 (B) CASH AND BANK BALANCES
7,600 Shares are held by Godrej Agrovet Ltd. CASH IN HAND 105
(Previous year NIL) Balances with scheduled banks in current account 1,000 1,105 1,000
SCHEDULE 2 : UNSECURED LOANS (C) ADVANCE RECEIVED IN CASH/
From holding company 4,204,849 500,000 KIND - DEPOSITS 10,000 –
From others 16,001,000 19,475,000
468,792 1,000
TOTAL 20,205,849 19,975,000
SCHEDULE 5 : LIABILITIES
Sundry creditors 864,449 –
Other liabilities 76,817
TOTAL 941,266 –
SCHEDULE 3 : FIXED ASSETS (Rs.)

ASSETS As at Additions Deductions As at Upto For the On Prior Period Upto As at As at
1.4.2005 31.3.2006 1.4.2005 Year Deductions Adjustments 31.3.2006 31.3.2006 31.3.2005
Furniture & Fixtures – 28,589 – 28589 – 13,222 – – 13,222 15,367 –
Office & Other Equipments – 1,200 – 1200 – 1,200 – – 1,200 – –
TOTAL – 29,789 – 29789 – 14,422 – – 14,422 15,367 –
Previous Year – – – – – – – – – – –
Capital Work-In-Progress /Advances 19,999,000 19,999,000
TOTAL 20,014,368 19,999,000
91
Krithika Agro Farm Chemicals and Engineering Industries Private Limited
SCHEDULE 6 : NOTES TO ACCOUNTS 7. Balance Sheet Abstract and Company's General Business Profile
1. SIGNIFICANT ACCOUNTING POLICIES i) Registration Details
a) The accounts have been prepared on historical cost convention. The Company follows mercantile Registration No. 016679
system of accounting and recognises income and expenditure on accrual basis. State Code 18
Balance Sheet Date 31/3/2006
b) Fixed assets have been stated at cost and include incidental and / or installation/development ii) Capital raised during the year
expenses incurred in putting the asset to use and interest on borrowing incurred during construction (Rupees )
period. Pre-operative expenses for major projects are also capitalised, where appropriate. Public Issue Nil
c) The basic earnings per share is computed using the weighted average number of common shares Rights Issue Nil
outstanding during the period. Diluted earnings per share is computed using the weighted average Bonus Issue Nil
number of common and dilutive common equivalent shares outstanding during the period, except Private Placement 75,000
where the results would be anti-dilutive. iii) Position of mobilisation and deployment of funds
(Rupees )
d) Provisions are recognized in the accounts in respect of present probable obligations, the amount Total Liabilities 20,305,849
of which can be reliably estimated. Total Assets 20,305,849
e) Interest and commitment charges incurred in connection with borrowing of funds, which are Sources of Funds
directly attributable to the acquisition, construction or production of an asset that necessarily takes Paid-up Capital 100,000
substantial period of time to get ready for its intended use, upto the time the said asset is put to use Reserves & Surplus –
are capitalised, as a part of the cost of that asset. Other borrowing costs are recognised as an Secured Loans –
expense in the period in which they are incurred. Unsecured Loans 20,205,849
2. The Company has not commenced operations. Application of Funds
Net Fixed Assets 20,014,367
3. AUDITORS’ REMUNERATION Investments –
Audit fees 22,848 6,612 Net Current Assets (472,474)
4. EARNINGS PER SHARE Misc. Expenditure
This year Previous year Accumulated Losses 763,956
Profit after tax and prior period expenses (Rs.) (763,956) – iv) Performance of Company
Weighted average number of equity shares outstanding 9,375 2,500 Turnover –
Basic earnings per share (81) – Total Expenditure 750,401
Diluted earnings per share (81) – Profit before tax -750,401
Profit after tax -763,956
Earning Per Share in Rs. -81.49
5. RELATED PARTY DISCLOSURES Dividend rate –
Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below : v) Generic Names of three principal products services of Company
1. Relationships : Item Code No. 23099010
(i) Holding Companies : Product Description Oil palm plantation
Godrej Agrovet Limited (GAVL) holds 76% in the Company. GAVL is the subsidiary of Godrej R.S. Vijan S. Varadaraj
Industries Limited (GIL). GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the Director Director
ultimated holding company. Mumbai, May 22, 2006.
2. The following transactions were carried out with the related parties in the ordinary course
of business : CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2006
Rs. Current year Previous year
Holding Rs. Rs. Rs.
Nature of Transactions Companies A. Cash Flow from Operating Activities :
(i) Net Profit Before Taxes (750,401) –
Adjustment for:
1 Purchase of materials / finished goods 457,687 Depreciation 14,422 –
– Interest expenses 229,849 244,271 –
2 Loan taken 4,204,849
– Operating Profit Before Working Capital Changes (506,130) –
3 Interest expense on loan taken 229,849 Adjustments for:
– Inventories (457,687)
Debtors and Other Receivables (10,000)
4 Outstanding payables, net of (receivables) 864,449
Creditors and Other Payables 941,266
–
5 Share Capital invested by 76,000 473,579 –
6. Prior period financial statements have been audited by a firm of Chartered Accountants other than Cash Generated from Operations (32,551) –
Kalayaniwala Mistry & Associates. Direct Taxes paid (net of refund received) (13,555) –
The opening balances are being taken as per the last year accounts, which have been regrouped and re- Net Cash Flow from Operating Activities (46,106) –
classified wherever necessary to conform to current year’s classification. B. Cash Flow from Investing Activities :
Acquisition of fixed assets (29,789) (7,147,035)
(29,789)
Net Cash used in Investing Activities (29,789) (7,147,035)
C. Cash Flow from Financing Activities :
Proceeds from issuance of share capital 75,000 –
Proceeds from Borrowings 3,630,849 7,148,035
Repayment of Borrowings (3,400,000) –
Interest Paid (229,849)
Net Cash used in Financing Activities 76,000 7,148,035
Net increase in Cash and Cash equivalents 105 1,000
Cash and Cash equivalents (Opening balance) 1,000 –
Cash and Cash equivalents (Closing balance) 1,105 1,000
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 Statements”, and presents cash flows by operating, investing and financing
activities.
2 Figures in brackets are outflows/deductions.
3 Figures for the previous year have been regrouped/restated wherever necessary to conform to this
year’s classification.

KALYANIWALLA MISTRY & ASSOCIATES
Chartered Accountants R. S. VIJAN Director
S. VARADARAJ Director
B. S. DASTOOR
Partner
Place : Mumbai
Date : May 22, 2006.
92
Godrej Beverages & Foods Limited (Formerly Godrej Tea Limited)

DIRECTORS’ REPORT FOR THE YEAR ENDED ON MARCH 31, 2006
To The Shareholder, DIRECTORS
Your Directors have pleasure in submitting their Report along with the Audited Accounts for the year ended Mr. A.B. Godrej retires by rotation at the ensuing Annual General Meeting in accordance with the provisions
March 31, 2006. of the Companies Act, 1956 and being eligible, offers himself for re-appointment.
During the year under review, Mr. Pranab Barua resigned from the Board of the Company w.e.f. 14th March,
FINANCIAL RESULTS 2006. The Board wishes to record its appreciation of his efforts during his tenure with the Company.
Your Company’s performance during the year 2005-06 as compared with that during the previous year is In the Board Meeting held on March 27, 2006, Mr. Rahul Shah was appointed as an Additional Director who
summarized below. is the nominee director of IL&FS Investment Managers Limited and he holds office as such upto the forthcoming
This Year Last Year Annual General Meeting.
Rs. ‘000 Rs. ‘000 HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The relations with the employees were cordial. As mentioned above, as per the acquisition of the foods
Sale of Tea 77,729 156,563 business, 232 experienced employees were added by smooth transition taking the total employees strength
Other Income 621 1,350 of your Company at 246 as on 31st March, 2006.
Total Income 78,350 157,913 AUDITORS
Total expenditure other than Interest and Depreciation 210,144 342,525 The Auditors, M/s. Kalyaniwalla & Mistry, Chartered Accountants, retire at the ensuing Annual General
Profit / (Loss) before Interest, Depreciation and Taxation (131,794) (184,612) Meeting and are eligible for re-appointment for which they have given their consent.
Depreciation 3,004 3,254 AUDIT COMMITTEE
Profit / (Loss) before Interest and Taxation (134,798) (187,866) The Audit Committee, which was appointed pursuant to the provisions of Section 292A of the Companies Act,
Interest and financial charges 47,985 39,292 1956 has reviewed the Accounts for the year ended 31st March, 2006.
Profit / (Loss) before Taxation (182,783) (227,158) DIRECTORS’ RESPONSIBILITY STATEMENT
Provision for Current Tax (481) – Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your
Provision for Deferred Tax 11,572 12,900 Company confirm:
a) that in the preparation of the annual accounts, the applicable accounting standards have been followed
Profit / (Loss) for the year after Taxation (171,692) (214,258) and no material departures have been made from the same;
Surplus brought forward (348,858) (134,600) b) that they have selected such accounting policies and applied them consistently and made judgements
Profit / (Loss) After Tax carried forward (520,549) (348,858) 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;
REVIEW OF OPERATIONS c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in
The Total Income for the year under review was Rs. 7.83 Crore compared to Rs.15.79 Crore in the previous accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and
year. The total expenses reduced was Rs. 21 Crore as compared to Rs. 34.25 Crore in the previous year mainly detecting fraud and other irregularities;
due to the active steps taken towards control of the fixed expenses. As a restructuring strategy, the Company d) that they have prepared the annual accounts on a going concern basis.
has taken a one time additional write off amount to Rs.1.28 Crore of its deferred expenses and hence to that
extent loss is higher. ADDITIONAL INFORMATION
The year under review was quite eventful for your Company in many respects. The Company has entered into 1. INFORMATION PURSUANT TO SECTION 217(1)(E) OF THE COMPANIES ACT, 1956, READ WITH
a distribution agreement with Jyothy Laboratories Ltd. for distribution of tea products and the performance is THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF
satisfactory. Towards the end of the year, your Company has restructured its business and is also leveraging DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY
its products under the ‘Godrej’ brand. ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
RESTRUCTURING (A) The additional information required to be given under the Companies Act, 1956 in respect of
Your Company’s long-term plan is to be a significant player in the FMCG sector through organic as well as Conservation of Energy, Technology Absorption as per Section 217(1)(e), read with the Companies
inorganic growth. Business strategies have been developed in consonance with the growth objective, focusing (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 has not been given,
on the three key elements – partnership, acquisition & innovation. In this effort IL&FS Investment Managers since such requirement is not applicable to the Company.
Limited has decided to be a Strategic Investor by participating in equity capital of the Company. (B)
With a view to achieve the above goal, the Board of Directors of your Company had on 14th March, 2006, Rs.’000 Rs.’000
signed a slump sale agreement for the acquisition of Foods Division (except the Wadala factory) of Godrej Foreign exchange used Nil Nil
Industries Ltd. w.e.f. the close of working hours on 31st March, 2006 for a total consideration of Rs.70 Crore Foreign exchange earned Nil Nil
of which Rs. 40 Crore was paid in cash and Rs.30 Crore in the form of equity shares. To facilitate the above
deal, IL&FS Investment Managers Ltd. invested Rs.60 Crore in the equity capital of the company. This will help 2. STATEMENT UNDER SECTION 217(2A) READ WITH THE COMPANIES (PARTICULARS OF
in improving both the top and bottom line of your Company. EMPLOYEES) RULES, 1975
The major brands acquired by the Company under the terms of the above referred slump sale agreement (A) Persons employed for a part of the financial year under review and each of whom was in receipt
include brands like Jumpin, Xs, Sofit, Cooklite, Sunshakti and Sunrice. Xs & Jumpin operate in Rs. 440 Crore of remuneration for that part which, in the aggregate, was not less than Rs. 2,00,000 per month.
Tetrapack fruit drinks and nectar category. The brand Xs operates in high growth nectar segment with an exotic
range of flavours like Berry Blast, Triple Tickle, Litchi Leap, Santra Swing, Kiwi Kraze and 100% natural juices Sr. Name Designation Gross Qualification Age Particulars of
of Orange and Apple. Jumpin caters to popular and economy segment of the market with Mango, Apple and No. Remuneration (years) Previous
Pineapple drinks in tetrapak and PET bottle. With health consciousness among consumers gaining importance, (Rs.’000) Employment
Soymilk brand Sofit is positioned as “the New Taste of Health” and promises “Wellness for Now and Health 1 Mr. Zozden Chief 4,331 B.Tech, MMS 54 Godrej Sara Lee,
Forever”. Godrej Tomato Puree is another major player that operates in the nascent category of tomato puree. Lobo Operating 4 years
The edible oils are marketed under the brands Godrej Sunflower Oil, Godrej Groundnut Oil, and Vanaspati Officer
(Hydrogenated Vegetable Oil) under “Godrej Vanaspati”.
Mandideep factory, acquired as part of the deal, is one of the major aseptic packaging facilities in India. The For and on behalf of the Board of Directors
factory is ISO 9000: 2001 and HACCP certified and has been the winner of “National Productivity Award
certificate 2003-04”. A.B. Godrej
DIVIDEND Chairman
Since the profits of the Company are insufficient, your Directors do not recommend payment of equity dividend. Mumbai, May 19, 2006
REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ BEVERAGES & FOODS LIMITED (Formerly Godrej Tea Limited)
1. We have audited the attached Balance Sheet of Godrej Beverages & Foods Limited (formerly known e) During the current year, the Company changed its accounting policy with respect to amortization on
as Godrej Tea Limited), as at 31st March, 2006 and the Profit and Loss Account of the Company for the promotion of products, publicity and brand building from 36 months to 30 months. Had there been no
year ended on that date annexed thereto. These financial statements are the responsibility of the change in the period of amortization, the charge for the year would have been lower by Rs. 12,848
Company’s management. Our responsibility is to express an opinion on these financial statements thousands. Consequently the losses for the year and accumulated losses are higher by Rs. 12,848 thousands.
based on our audit. f) In our opinion, the Balance Sheet and the Profit and Loss Account dealt with by this report comply with
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.
Standards require that we plan and perform the audit to obtain reasonable assurance about whether g) In our opinion and to the best of our information and according to the explanations given to us, subject
the financial statements are free of material misstatement. An audit includes examining, on a test basis, to para (a) above, the said financial statements read with the notes thereon, give the information
evidence supporting the amounts and disclosures in the financial statements. An audit also includes required by the Companies Act, 1956, in the manner so required and give a true and fair view in
assessing the accounting principles used and significant estimates made by management, as well as conformity with the accounting principles generally accepted in India:
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006; and
basis for our opinion. ii) in the case of the Profit and Loss Account, of the loss for the year ended on that date.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on
terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters that date.
specified in paragraphs 4 and 5 of the said Order. 5. On the basis of the written representations received from the Directors as on 31st March, 2006, and
4. Further to our comments in the Annexure referred to in para (3) above, we report that: taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on
a) The accumulated losses of the Company along with miscellaneous expenditure (to the extent not 31st March, 2006 from being appointed as a Director in terms of clause (g) of sub-section (1) of section
written off or adjusted) as at March 31, 2006 exceed its paid up capital resulting in the erosion of its net 274 of the Companies Act, 1956.
worth. The accounts for the year have been prepared on the ‘Going Concern’ basis on the understanding For and on behalf of
that finance will continue to be available to the Company for working capital requirements. KALYANIWALLA & MISTRY
b) We have obtained all the information and explanations, which to the best of our knowledge and belief Chartered Accountants
were necessary for the purposes of our audit. K. M. ELAVIA
c) In our opinion, proper books of account as required by law have been kept by the Company so far as Partner
appears from our examination of these books. Membership No. 12737
d) The Balance Sheet and the Profit and Loss Account dealt with by this report are in agreement with the
books of account. Mumbai, May 19, 2006
93
Referred to in paragraph (3) of our report of even date. statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State
1) (a) The Company has maintained proper records showing full particulars, including quantitative Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other
details and situation of fixed assets. statutory dues applicable to it with the appropriate authorities. According to the information and
(b) As explained to us, the Company has a program for physical verification of fixed assets at periodic explanations given to us, there are no undisputed dues payable in respect of above as at 31st March
intervals. In our opinion, the period of verification is reasonable having regard to the size of the 2006 for a period of more than six months from the date they became payable
Company and the nature of its assets. No material discrepancies have been reported on such (b) According to the information and explanations given to us, there are no dues outstanding of Sales
verification. Tax, Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty or cess on account of any
(c) In our opinion, the disposal of fixed assets during the year does not affect the going concern assumption. dispute, other than the following:
2) (a) The Management has conducted physical verification of inventory at reasonable intervals. Name of the Statute Amount (Rs.’000) Forum where dispute is pending
(b) In our opinion, the procedures of physical verification of inventory followed by the management Sales Tax Act 121 West Bengal Sales Tax Authority
are reasonable and adequate in relation to the size of the Company and the nature of its business. Sales Tax Act 16 Appellate Tribunal
(c) The Company is maintaining proper records of inventory and no material discrepancies were Sales Tax Act 70 Assistant Commissioner
noticed on physical verification. 10) The Company’s accumulated losses at the end of the financial year are in excess of fifty percent of its net
3) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties worth and it has incurred cash losses in the current as well as the immediately preceding financial year.
covered in the register maintained under Section 301 of the Companies Act, 1956. 11) According to the information and explanations given to us and based on the documents and records
(b) Consequently, the question of commenting on the rates of interest and the other terms and conditions produced to us, the Company has not defaulted in repayment of dues to banks. There are no dues to
of the loans granted being prejudicial to the interests of the Company, receipt of regular principal financial institutions or debenture holders.
and interest and reasonable steps taken for recovery of principal and interest does not arise. 12) According to the information and explanations given to us and based on the documents and records
(c) The Company has not taken any loans, secured or unsecured from companies, firms or other produced to us, the Company has not granted loans and advances on the basis of security by way of
parties covered in the register maintained under Section 301 of the Act. pledge of shares, debentures and other securities.
(d) Consequently, the question of commenting on the rates of interest and the other terms and conditions 13) In our opinion and according to the information and explanations given to us, the nature of activities of the
of the loans taken being prejudicial to the interests of the Company and payment of regular Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.
principal and interest does not arise. 14) The Company does not deal in shares, securities, debentures and other investments.
4) In our opinion and according to the information and explanations given to us, there are adequate internal 15) According to the information and explanations given to us, the Company has not given any guarantee
control procedures commensurate with the size of the Company and the nature of its business, for the for loans taken by others from banks and financial institutions.
purchases of inventory, fixed assets and for the sale of goods. There are no sales of services. During the course 16) According to the information and explanations given to us, the term loans were applied for the purpose
of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls. for which the loans were obtained.
5) (a) Based on the audit procedures applied by us and according to the information and explanations 17) According to the information and explanations given to us and on an overall examination of the Balance
provided by the management, we are of the opinion that the particulars of contracts and Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-
arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the term basis for long-term investment.
register required to be maintained under that section. 18) The Company has not made any preferential allotment of shares to parties or companies covered in the
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices register maintained under Section 301 of the Companies Act, 1956.
which are reasonable having regard to prevailing market prices at the relevant time. 19) The Company did not issue any debentures during the year.
6) In our opinion and according to the information and explanations given to us, the Company has not 20) The Company has not raised any money through a public issue during the year.
accepted any deposits from the public and hence the provisions of Section 58A, 58AA or any other 21) Based on the audit procedures performed and information and explanations given by the management,
provision of the Companies Act, 1956, read with the rules framed there under are not applicable. we report that no fraud on or by the Company has been noticed or reported during the year.
7) In our opinion and according to the information and explanations given to us, the internal audit system For and on behalf of
is commensurate with the size of the Company and nature of its business. KALYANIWALLA & MISTRY
8) We have broadly reviewed the cost records maintained by the Company pursuant to the order made Chartered Accountants
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 K.M. ELAVIA
been made and maintained. We have not however, made a detailed examination of the records with Partner
a view to determining whether they are accurate or complete. Membership No. 12737
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 Mumbai, May 19, 2006
Schedule Rs. ’000
This Year
Rs. ’000
Previous Year
Rs. ’000
MARCH 31, 2006
SOURCES OF FUNDS
Share Capital 1 137,500 137,500 This Year Previous Year
Reserves & Surplus – –
Schedule Rs. ’000 Rs. ’000
137,500 137,500
Share Application Money 600,000 – INCOME
Loan Funds Sale of Tea 77,729 156,563
Secured Loans 2 340,090 193,833 Other Income 9 621 1,350
Unsecured Loans 3 150,000 300,000
490,090 493,833 78,350 157,913
TOTAL 1,227,590 631,333
EXPENDITURE
Fixed Assets 4 Materials 10 46,052 85,050
Gross Block 596,749 25,957 Processing and Handling Charges 2,589 23,075
Less : Depreciation 10,585 7,609 Expenses 11 163,159 206,536
Net Block 586,164 18,348 Interest and Financial Charges 12 47,986 39,292
Capital Work in Progress 1,500 41
Inventory Change 13 (1,657) 27,864
587,664 18,389
Deferred Tax Asset 99,272 87,700 Depreciation 3,005 3,254
Investments – – 261,134 385,071
Current Assets, Loans and Advances 5
Inventories 246,053 73,147 LOSS BEFORE TAX (182,783) (227,158)
Sundry Debtors 128,690 27,758
Cash & Bank Balances 130,406 30,510 Provision for taxation
Loans & Advances 31,922 5,572 Current Tax (481) –
537,071 136,987 Deferred Tax 11,572 12,900
Liabilities 6 210,187 26,181 LOSS AFTER TAXATION (171,692) (214,258)
Purchase consideration payable Deficit brought forward (348,858) (134,600)
(Refer Note No. 2) 300,000 –
Provisions 7 13,117 919 Deficit carried forward (520,549) (348,858)
523,305 27,100 Basic/Diluted Earnings per share Rs. (12.49) (15.58)
Net Current Assets 13,767 109,887
Miscellaneous Expenditure 8 6,338 66,498
(To the extent not written off or adjusted) NOTES TO ACCOUNTS 14
Profit and Loss Account 520,549 348,858
TOTAL 1,227,590 631,333
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 Signatures to Balance Sheet and Schedules 1 to 8 & 14 As per our Report Attached Signatures to Profit & Loss Account and Schedules 9 to 14
K.M. ELAVIA A.B. GODREJ A. MAHENDRAN K.M. ELAVIA A.B. GODREJ A. MAHENDRAN
Partner Chairman Director Partner Chairman Director
Mumbai, May 19, 2006 Mumbai, May 19, 2006
94

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE Rs. ’000 Rs. ’000
YEAR ENDED MARCH 31, 2006 SCHEDULE 2 : SECURED LOANS
From a Finance Company
From Banks
Foreign Currency Term Loan – 145,616
Rs. ’000 Rs. ’000
Foreign Currency Working Capital Demand Loan – 48,217
Medium Term Loans 330,000 –
AUTHORISED : Cash Credit 10,090 –
5,00,00,000 Equity Shares of Rs. 10 each
340,090 193,833
(Previous year, 1,50,00,000 Equity Shares of Rs. 10 Each) 500,000 150,000
Amounts due within a year (other than cash credit) 43,750 193,833
ISSUED, SUBSCRIBED AND PAID-UP : Refer Note 3
1,37,50,000 Equity Shares of Rs. 10 each fully paid 137,500 137,500
137,500 137,500 From Banks
Of the above : Short Term Loans 100,000 60,000
Intercoporate deposits 50,000 240,000
97,49,996 shares (Previous year 68,86,496) are held by
Godrej Industries Ltd. (GIL) the Holding Company 150,000 300,000
Amounts due within a year 150,000 300,000

Sr. Particulars GROSS BLOCK DEPRECIATION NET BLOCK
No. Balance Additions On Deductions Balance Balance For the On Balance Balance Balance
as on acquisition of as on as on year deductions as on as on as on
1/4/2005 Foods division 31/3/2006 1/4/2005 31/3/2006 31/3/2006 1/4/2005
1 Land – – 18,500 – 18,500 – – – – 18,500 –
2 Building – – 103,400 – 103,400 – – – – 103,400 –
3 Trade marks 10 – 158,470 – 158,480 5 2 – 7 158,474 5
4 Plant & Machinery 5,622 – 286,850 – 292,472 1,064 630 – 1,695 290,777 4,558
5 Office Equipment 3,500 30 – – 3,530 914 131 – 1,045 2,485 2,586
6 Furniture 4,031 58 1,146 – 5,235 659 249 – 908 4,327 3,372
7 Computer 12,079 16 2,150 84 14,161 4,818 1,982 29 6,771 7,390 7,261
8 Lab Equpiment 190 – – – 190 106 4 – 110 80 84
9 Electrical Installation 525 – – – 525 42 8 – 50 475 483
10 Leased Assets Vehicle – – 256 – 256 – – – – 256 –
TOTAL This Year 25,957 104 570,772 84 596,749 7,608 3,006 29 10,585 586,164 18,349
Previous Year 22,789 3,498 – 329 25,957 4,436 3,254 81 7,609 18,390 18,353
Capital Work-in-progress – 1,500 – – 1500 – – – – 1,500 41
TOTAL 598,249 587,664 18,389
1. Assets purchased vide slump agreement dated 14th March, 2006 has been taken in books on the basis of a Valuation Report submitted by a professional valuer.
2. Land includes leasehold land of Rs.4,250 thousands which is being amortised over the period of lease.
Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000
SCHEDULE 5 : CURRENT ASSETS, SCHEDULE 6 : CURRENT LIABILITIES
LOANS AND ADVANCES
Sundry creditors (Refer Note No. 7) 95,180 9,111
(A) INVENTORIES : Other liabilities 94,829 10,549
Raw materials 103,069 12,997 Advances from customers 18,720 2,167
Work-in-progress 29,572 19,972 Sundry deposits 699 1,620
Finished goods 95,775 24,417
Sales Tax & Other Taxes 759 1,285
Packing Material 12,722 10,599
Interest accrued but not due – 1,449
Stores and Spares 2,218 –
Promotional Items 2,696 5,163 210,187 26,181
246,053 73,147 SCHEDULE 7 : PROVISIONS
(B) SUNDRY DEBTORS (Refer Note No. 2) Leave Encashment 6,177 637
Debts outstanding over six months Gratuity 6,940 282
Considered good 20,313 14,854
Considered doubtful 7,011 – 13,117 919
27,324 14,854 SCHEDULE 8 : MISCELLANEOUS EXPENDITURE
Other Debts (To the extent not written off or adjusted)
Considered good 108,377 12,904
135,701 27,758 Deferred revenue expenditure
Less: Provision for doubtful debts 7,011 – Brand Promotion Expenses – 57,184
128,690 27,758 Pre operative Expenses – 806
(Debts amounting to Rs. 296 thousand ERP Implementation 6,338 8,508
(Previous Year Rs. 7,091 thousand)
6,338 66,498
are secured against
Bank Guarantees / Security Deposits) SCHEDULE 9 : OTHER INCOME
(C ) CASH AND BANK BALANCES Interest on Bank Deposits (Gross) 435 451
Cash and cheques on hand 774 1,226 (Tax at source Rs.42 thousand, Previous year Rs.72 thousand)
Balances with scheduled banks : Miscellaneous income 186 899
– on current accounts 15,840 6,119
621 1,350
– remittance in transit 10,326 –
on deposit accounts 103,466 23,165 SCHEDULE 10 : MATERIALS CONSUMED
(Of this, Rs.1,265 thousand Raw Materials consumed
(Previous Year Rs.1,165 thousand) is 130,406 30,510 Stocks at the commencement of the year 12,997 105,048
Pledged with sales tax authorities Add : Purchases 56,131 10,664
(D) LOANS AND ADVANCES On Acquisition 73,801 –
(Unsecured and considered good)
Loans and Advances recoverable in cash 142,929 115,712
or in kind or for value to be received Less : Sale of Raw Material – 29,201
Considered good 15,227 4,403 Less : Stocks as at the close of the year 103,069 12,997
Considered doubtful 13,910 – 39,860 73,515
29,137 4,403
Packing Material Consumed 6,192 11,535
Less: Provision for doubtful advances 13,910 –
15,227 4,403 Stores consumed
Deposits with Others 16,588 1,104 On Acquisition 2218 –
Advance payment of taxes 107 65 Less : Stocks as at the close of the year 2,218 –
31,922 5,572
46,052 85,050
537,071 136,988
95
This Year Previous Year d. Provisions & Contingencies:
Rs. ’000 Rs. ’000 Rs. ’000 Provisions are recognized in the accounts in respect of present probable obligations, the amount
SCHEDULE 11 : EXPENSES of which can be reliably estimated.
Salaries wages and allowances 19,882 37,557 Contingent liabilities are disclosed in respect of possible obligations that arise from past events but
Contribution to provident fund and other funds 684 1,249 their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future
Employee welfare expenses 70 295 events not wholly within the control of the Company.
Rent 5,805 8,991 e. Foreign Exchange Transactions:
Rates and Taxes 1,138 3,099
Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the
Repairs and maintenance 299 259
transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at
Insurance 876 793
the year-end, are translated at the year end exchange rates. Forward exchange contracts, remain-
Electricity Charges 566 786
ing unsettled at the year end, backed by underlying assets or liabilities are also translated at year
Professional Fees 9,269 2,230
end exchange rates. The premium payable on foreign exchange contracts is amortised over the
Audit Fees 362 430
period of the contract. Exchange gains / losses are recognised in the Profit and Loss Account except
Conveyance & Travelling 3,609 8,491
in respect of liabilities incurred to acquire fixed assets in which case, they are adjusted to the
Freight 6,693 4,402
carrying amount of such fixed assets.
Discount and Commission 4,393 17,748
Advertisement and publicity 11,261 39,006 f. Revenue Recognition:
Sales promotion 25,591 17,927 Revenue is recognized when goods are dispatched to external customers. Sales are recorded net
Bad Debts written off 679 – of returns, trade discounts, rebates, sales taxes.
Provision for doubtful debts 2,691 –
Provision for doubtful advances 300 – g. Depreciation:
Clearing and Forwarding Agent Expenses 3,145 4,685 Depreciation is provided on the straight line method at the rates specified in Schedule XIV to the
Consumables 228 565 Companies Act, 1956 except for Trademarks which are amortized over a period of five years.
Telephone & Telex Charges 654 1,123
The Company has grouped additions and disposals in the appropriate time period of a month for
Recruitment Cost 55 120
the purpose of charging pro rata depreciation in respect of additions and disposals of its assets
Royalty 605 634
keeping in view the materiality of the items involved.
Other Expenses 4,086 3,055
Loss on disposal of Asset 58 82 h. Retirement Benefits:
Deferred Revenue Expenses written off Retirement benefits in the form of gratuity and leave encashment are provided for on actuarial
Media Amortisation 57,184 48,318 valuation basis.
Launch Conference – 587
Pre-operative Expenses 806 1,934 i. Miscellaneous expenditure:
ERP Implementation 2,170 2,170 i) Expenditure incurred on implementation of software package is deferred over a period of six
60,159 53,009 years.
ii) Expenditure incurred prior to commencement of commercial operations is deferred over
163,159 206,536
a period of three years.
SCHEDULE 12 : INTEREST AND FINANCIAL CHARGES
j. Leases of assets under which all the risks and rewards of ownership are effectively retained by the
(a) Interest Paid on fixed loans
lessor are classified as operating leases. Lease payments under operating leases are recognized
(i) Banks 26,036 18,592 as an expense on a straight-line basis over the lease term.
(ii) Inter Corporate Deposits 14,663 10,677
k. Deferred tax assets and liabilities are based on temporary differences between the values of assets
40,699 29,269 and liabilities recorded in the financial statements and those used for the tax purpose. Tax rates
(b) Interest paid on other loans applicable to future periods are used to calculate year-end deferred income tax amounts.
Banks 167 1,784
A valuation allowance is recorded against deferred tax assets resulting from net operating losses
(c) Other financial charges 7,120 8,239 and deductible temporary differences when their future realization is not likely.
47,986 39,292 l. The basic earning 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
SCHEDULE 13 : INVENTORY CHANGE number of common and dilutive common equivalent shares outstanding during the period, except
Stocks at the beginning of the year where the results would be anti-dilutive.
Finished goods 24,417 47,681
m. The Company is engaged in the business of manufactures of tea, which is its only primary business
Work-in-progress 19,972 24,572
segment. The Company operates in economic environments which are subject to same risks and
44,389 72,253 returns and hence no disclosure is required under AS 17- Accounting Standard on Segment Report-
Add : Taken over on acquisition 79,301 – ing.
Stocks at the close of the year : 2. The Company has acquired the Foods division of Godrej Industries Limited (excluding the Wadala
Finished goods 95,775 24,417 Factory) as a going concern on a slump sale basis for net consideration of Rs.700,000 thousands by taking
Work-in-progress 29,572 19,972 over the following assets and liabilities
125,347 44,389 Particulars Rs.’000
(1,657) 27,864 Assets:
Fixed Assets 570,772
(1,657) 27,864 Stocks 155,320
Debtors (Net) 81,415
Cash & Bank 13,592
SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE Remittance-in-transit 10,326
YEAR ENDED MARCH 31, 2006 Loans & Advances (Net) 27,520
Total 858,945
SCHEDULE 14 : NOTES FORMING PART OF THE ACCOUNTS Less: Liabilities
1. SIGNIFICANT ACCOUNTING POLICIES Creditors 79,968
Other Liabilities 66,732
a. Accounting Convention:
Provision for Gratuity 6,683
The financial statements are prepared under the historical cost convention, on accrual basis, in Provision for Leave Encashment 5,562
accordance with the generally accepted accounting principles in India, the Accounting Standards Net Consideration 700,000
issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, Less: Amount paid 400,000
1956.
Consideration to be paid in kind 300,000
b. Fixed Assets:
3. CONTINGENT LIABILITIES NOT PROVIDED FOR
Fixed Assets are stated at cost, less accumulated depreciation. Cost includes all expenses related
a) Guarantees given by the Company’s Bankers against counter guarantees given by the Company
to acquisition and installation of the concerned assets.
Rs.1,325 thousands (as on 31-3-2005 Rs.205 thousands).
Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine b) Sales Tax demand pending with Commissionerate / Tribunal and disputed by the Company Rs.207
whether there is any indication of impairment. If such indication exists, the recoverable amount thousands (as on 31-3-2005 Rs.Nil).
is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any
4. During the current year, the company changed its accounting policy with respect to amortization on
is recognized whenever carrying amount exceeds the recoverable amount.
promotion of products, publicity & brand from 3 years to 2 years. Had there been no change in the period
c. Inventories: of amortization, the charge for the year would have been lower by Rs.12,848 thousands. Consequently
Raw materials and Packing materials are valued at weighted average cost. the losses for the year and accumulated losses are higher by Rs.12,848 thousand.
Promotional items are valued at cost. Finished goods and work-in-progress are valued at lower 5. SECURED LOANS
of cost and net realizable value. These costs include cost of conversion and other costs incurred Foreign currency term loan, foreign currency working capital demand loan and cash credit from a bank
in bringing the inventories to their present location and condition. is secured by hypothecation by way of a first charge on all tangible and moveable fixed assets, stock and
book debts, both present and future.
96
SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2006
6. SUNDRY DEBTORS 12. RELATED PARTY DISCLOSURES
This Year Previous Year Related Party disclosure as required by AS - 18 “Related Party Disclosures” are given below:
Rs.’000 Rs. ‘000 1. Relationships
Sundry Debtors include amount due from
Companies under the same management: (i) Shareholders ( the Godrej Group shareholding) in the company:
Godrej Consumer Products Ltd. 108 76 Godrej Industries Limited hold 70.91%
Maximum balance during the year 679 964 Godrej Industries Limited is a subsidary of Godrej & Boyce (Mfg) Co.Limited, the ultimate
Godrej & Boyce Mfg Co. Ltd. 280 228 holding company.
Maximum balance during the year 307 228 (ii) Other related parties in the Godrej Group where common control exist.
Godrej Industries Ltd. 2,437 10,657 1. Godrej Consumer Products Limited
Maximum balance during the year 11,788 10,657 2. Godrej Agrovet Limited
Godrej Sara Lee Ltd. 1,280 1,633 3. Godrej Properties Limited
Maximum balance during the year 1,842 1,633 4. Godrej Industries Limited
7. It is the opinion of the management that there are no parties, which can be classified as Small Scale 5. Geometric Software Solutions Company Limited
industrial Undertakings to whom the Company owes any sum. The Auditors have accepted the (iii) Key Management Personnel:
representation of the management in this matter. 1. Mr. A.Mahendran
8. DEFERRED TAX (iv) Enterprises over which key management personnel exercise significant influence
The tax effect of significant temporary differences that resulted in deferred tax assets and liabilities are: 1. Godrej Sara Lee Limited
This Year Previous Year 2. Godrej Hi Care Limited
Rs.’000 Rs. ‘000 (v) Individuals excercing significant influence
Assets 1. Mr. A.B.Godrej
Losses carried forward 1,12,350 1,12,350 2. Mr. N.B.Godrej
Others 12,445 300 3. Mr. J.N. Godrej
1,24,795 1,12,650 4. Mr. A.Mahendran
Liabilities 2. The following transactions were carried out with the related parties in the ordinary course of
Depreciation on Fixed Assets (23,390) (2,600) business:
Deferred Revenue Expenditure (2,134) (22,350) (i) The details relating to parties referred to in item 1(i) and (ii) above. (Rs.’000)
99,272 87,700 Sr Particulars Godrej Group Other Related parties
Deferred tax assets on carried forward tax losses have been recognized and carried forward on the No. Shareholders in the Godrej Group
ground that there is virtual certainty that sufficient taxable income will arise in future. The Company has 1 Issue of Share Capital Nil Nil
considered certain expenditure which is not expected to arise in the future, increase in business income (Nil) (Nil)
due to formalization of distribution arrangements and the acquisition and amalgamation of highly prof- 2 Inter corporate deposit taken during the year Nil 20,000
itable company as factor on the basis of which it has concluded that it is virtually certain that sufficient (Nil) (20,000)
taxable income will arise in future against which the deferred tax assets will be realized. 3 Sale of Fixed Assets Nil 58
(Nil) (Nil)
9. The amount of exchange difference included in the Profit and Loss Account, under the related heads of
4 Sale of goods & Other Income 726 26
expenses, is Rs. 1,018 thousand (Previous year Rs. 3,107 thousand). The amount of exchange difference
(18,382) (Nil)
in respect of forward exchange contracts to be recognized in the profit and loss account of subsequent
5 Credit note issued for Sales Returns 7,097 Nil
accounting periods is Rs. Nil (Previous year Rs. 1,018 thousand).
(Nil) (Nil)
10. LEASE 6 Purchase of goods 2,073 Nil
Disclosure relating to Operating Lease as required by AS – 19 “Leases”, is given below : (1,862) (Nil)
7 Expenses charged by other Companies 5,713 653
a. The total of future minimum lease payments under non - cancelable operating leases for each of (9,330) (24)
the following periods: 8 Expenses charged to other Companies 284 167
This Year Previous Year (348) (79)
Rs.’000 Rs. ‘000 9 Interest on Inter Corporate Deposit Nil 418
i. Not later than one year 2,938 4,241 (Nil) (Nil)
ii. Later than one year and not later than five years 2,546 5,648 10 Sundry Deposit with Other Companies Nil Nil
iii. Later than five years Nil Nil (398) (Nil)
b. Lease payments recognized in the statement of 11 Consideration payable on acquisition 300,000 Nil
Profit & Loss for the period : (Nil) (Nil)
Minimum Lease payments 5,013 7,944 12 Outstanding (Payables) net of Receivables 2,717 452
11. EARNINGS PER SHARE (8,672) (375)
Figures in italics are for the previous year.
Rs.’000 Rs. ‘000 (ii) Details relating to persons referred to in items 1(iii),(iv) and (v) above.
Number of shares (nominal value Rs.10/- each) 13,750,000 13,750,000 This Year Previous Year
(Loss) after tax (171,692) (214,258) Rs.’000 Rs. ‘000
1. Expenses charged by other companies and
Basic/Diluted EPS:
Reimbursement made to other companies 1,413 414
Weighted Average number of shares 13,750,000 13,750,000
2. Expenses charged to other companies 2,532 2,826
Earnings per share in Rs. (12.49) (15.58)
3. Sales & Other Income 6 Nil
Note: 4. Advances 15 Nil
No effect has been given for Share Application Money pending allotment in the diluted EPS as the results 5. Outstanding (Payables) net of Receivables 1,410 1,895
would be anti-dilutive.
97
3. Significant Related Party Transaction:
Rs. ’ 000
Nature of Transaction Godrej Group Shareholders Amount Other Related parties in the Godrej Group Amount
1 Issue of Share Capital – – – –

2 Inter Corporate Deposits taken during the year – – Geometric Software Solutions Company Limited 20,000
20,000
3 Sale of Fixed Assets – – Godrej Agrovet Limited 58
4 Sales of Goods & Other Income Godrej & Boyce Limited 309 Godrej Agrovet Limited 26
Godrej Industries Ltd. 415
18,382
5 Credit note Issued for Sales Returns Godrej Industries Ltd. 7,097 – –
6 Purchase of goods Godrej Industries Ltd. 2,073 – –
1,862
7 Expenses charged by other Godrej Industries Ltd. 5,532 Godrej Agrovet Limited 653
Companies 9,113
Godrej & Boyce Limited 181 Godrej Consumers Products Ltd. 24
217
8 Expenses charged to other Godrej Industries Ltd. 284 Godrej Consumers Products Ltd. 39
Companies 343 49
Godrej & Boyce Limited 5 Godrej Agrovet Limited 128
30
9 Sundry Deposit with Other Godrej Industries Ltd. 356 – –
Companies Godrej & Boyce Limited 42
10 Interest expense on other – – Geometric Software Solutions Company Limited 418
inter coporate deposit taken
11 Consideration Payable on acquisition Godrej Industries Ltd. 300,000
12 Outstanding (Payable), net of receivables Godrej Industries Ltd. 2,437 Godrej Consumers Products Ltd. 108
8,693 76
Godrej Agrovet Limited 45
Godrej & Boyce Limited 280 Godrej Properties Limited 299
299
(ii) Details relating to person referred to in item 1(iii) , (iv) and (v) above:
1 Issue of Share Capital – – – –
2 Remuneration – – – –
3 Expenses charged by other – – Godrej Sara Lee Limited 1413
Companies & reimbursement made 355
to other Companies Godrej Hi Care Limited 59
4 Expenses charged to other – – Godrej Sara Lee Limited 1075
Companies 2564
Godrej Hi Care Limited 1457
262
5 Sales & Other Income – – Godrej Hi Care Limited 6
6 Advances – – Godrej Sara Lee Limited 15
7 Outstanding (Payable), net of receivables – Godrej Sara Lee Limited 1280
1633
Godrej Hi Care Limited 130
262
13. MANAGERIAL REMUNERATION 17. INVENTORIES – FINISHED GOODS

This Year Previous Year Unit This Year Previous Year
Rs.’000 Rs. ‘000 Quantity Value Quantity Value
Salaries & Allowances Nil 2,61 Rs. ‘000 Rs. ‘000
Contribution to Provident Fund Nil Nil Manufactured
Estimated monetary value of perquisites Nil 14 Packet Tea MT 263 16,421 262 23,752
Total Nil 2,75 Traded
14. AUDITOR’S REMUNERATION Fruit Drinks/ FB 161 53 3700 665
Trays/Juices
This Year Previous Year Fruits Beverages KL 804 30,728 Nil Nil
Rs.’000 Rs. ‘000 Puree/Pulp/Juices KL 676 17,678 Nil Nil
Audit Fees 224 110 Refind Oil/Vanaspati MT 512 24,201 Nil Nil
Audit under other statutes 84 33 Soya & Cereals MT 70 2,048 Nil Nil
Out of pocket expenses 20 8 Trading MT 65 3,084 Nil Nil
Total 328 151 Oils Soya & Cereals 1,562 Nil Nil
15. VALUE OF CONSUMPTION OF RAW MATERIAL 95,775 24,417
This Year Previous Year 18. RAW MATERIAL CONSUMED
Rs. ‘000 % Rs. ‘000 %
Unit This Year Previous Year
Imported Items Nil – Nil – Quantity Value Quantity Value
Indigenous Item 39,860 100 73,515 100 Rs. ‘000 Rs. ‘000
Total 39,860 100 73,515 100 Tea MT 855 39,860 905 73,515
16. SALES 19. ACTUAL PRODUCTION
Unit This Year Previous Year Unit This Year Previous Year
Quantity Value Quantity Value Quantity Quantity
Rs. ‘000 Rs. ‘000 Packet Tea MT 702 830
Packet Tea MT 701 77,729 1,126 147,488
Note: Actual Production represents production at third party processing locations.
Blended Tea MT Nil Nil 175 9,075
20. Information required under Schedule VI to the Companies Act, 1956 have been given to the extent
701 77,729 1,256 156,563
applicable.
21. The previous year’s figures have been regrouped and reclassified wherever necessary to conform to the
current year’s presentation.
98
ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VI OF CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2006
THE COMPANIES ACT, 1956 Current Year Previous Year
Rs. ‘000 Rs. ‘000
i) Registration Details A. Cash Flow from Operating Activities :
Loss before tax (182,783) (227,158)
Registration No. 105714 Adjustments for :
State Code 11 Depreciation 3,005 3,254
Balance Sheet 31-Mar-06 Loss on Disposal of Asset 58 82
Expenses incurred during the year deferred – –
ii) Capital raised during the year (Amount in Rs. '000) Deferred Revenue expenditure written off 60,159 53,009
Public Issue Nil Interest income (435) (451)
Rights Issue Nil Interest expense 47,986 39,292
Bonus Issue Nil Operating Loss before working capital changes (72,010) (131,973)
Private Placement Nil Adjustments for :
Inventories (172,905) 126,842
iii) Position of mobilisation and deployment of funds (Amount in Rs. '000) Trade & Other receivables (127,239) 5,932
Total Liabilities 1,227,590 Trade & Other payables 497,173 (29,138)
Total Assets 1,227,590 197,028 103,636
Direct Taxes paid (42) 126
Source of Funds
Net Cash used in operating activities 124,976 (28,212)
Paid up Capital 137,500 B. Cash Flow from Investing Activities :
Reserve & Surplus / (Accumulated Losses) (520,549) Purchase of fixed Assets (572,376) (3,538)
Secured Loans 340,090 Sale of fixed assets 38 166
Unsecured Loans 150,000 Interest received 435 451
Net Cash used in investing activities (571,903) (2,922)
Application of Funds C. Cash Flow from Financing Activities :
Net Fixed Assets 587,664 Share Application Money 600,000 –
Net Current Assets 13,767 Changes in Cash Credit/Working Capital Demand Loans (38,127) (92,009)
Deferred Tax Asset 99,272 Term Loans/Inter Corporate Deposits taken (150,000) 177,000
Term Loans repaid 184,385 –
Misc. Expenditure 6,338 Interest paid (49,435) (38,687)
iv) Performance of Company (Amount in Rs. '000) Net Cash from financing activities 546,823 46,304
Turnover 78,350 Net Increase in Cash and Cash Equivalents 99,895 15,171
Total Expenditure 261,134 Add : Cash & Cash equivalents (Opening Balance) 30,510 15,339
Loss before Tax (182,783) Cash & Cash equivalents (Closing Balance) 130,406 30,510
Loss after Tax (171,692)
Earning per Share in Rs. (12.49) For and on behalf of
Dividend Rate % – KALYANIWALLA & MISTRY
v) Generic Names of the three principal products/
K.M. ELAVIA A.B. GODREJ A. MAHENDRAN
services of Company
Partner Chairman Director
Item Code No. 9023000
Product Description Packet Tea
99
Godrej Properties Limited
BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2006
To The Shareholders Redeemable Optionally Convertible Debentures of Rs.10/- each to your Company during the year.
Your Directors have pleasure in submitting their Report alongwith the audited Accounts for the year ended During the year your Company was allotted 40,000 equity shares of Rs.10/- each fully paid-up in Godrej
31st March, 2006. Waterside Properties Private Limited and holds the entire paid up share capital of that company.
The audited Balance Sheet as at 31st March, 2006 and Profit & Loss Account ended on that date together
1. OPERATING RESULTS : with the Reports of Directors and Auditors thereon of our Subsidiary Companies namely Girikandra
Your Company’s performance during the year as compared to the previous period is summarised Holiday Homes & Resorts Limited, Godrej Realty Pvt. Ltd. and Godrej Waterside Properties Pvt. Ltd.
below: alongwith Statement as required under Section 212 of the Companies Act, 1956, is annexed herewith.
6. LOAN TO SUBSIDIARY :
2005-2006 2004-2005 The Company has granted an interest free loan of Rs. 28,267,717/- to Girikandra Holiday Homes &
(Rs. in lacs) (Rs. in lacs) Resorts Limited (GHHRL) the wholly owned subsidiary company. The auditors have mentioned this in
their Auditors Report. The said loan was given to GHHRL for promoting the company to carry on the
Profit before Taxation 1785.84 879.67 project at Moho near Panvel.
Provision for Taxation (445.32) (300.35) 7. FIXED DEPOSITS :
Provision for Fringe Benefit Tax (4.88) — The Company has accepted Fixed Deposits to the extent of Rs. 1,740,000/- during the year.
Provision for Deferred Tax 3.29 4.00 8. ADDITIONAL INFORMATION :
Profit after Taxation 1338.93 583.32 (a) The information required to be furnished under the provision of Section 217 (2A) of the Companies
Add: Surplus brought forward 772.20 559.20 Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 and forming part of Director’s
Prior year tax adjustments (6.87) 1.97 Report is annexed hereto.
AMOUNT AVAILABLE FOR APPROPRIATION 2104.26 1144.49 (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
Appropriations: Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided
Your Directors recommend appropriations as under: hereunder:
Interim Dividend _ 255.00
Proposed Dividend 620.00 _ (i) Conservation of Energy :
Dividend Distribution Tax 86.96 58.95 Expenses on account of Energy are negligible.
Transfer to General Reserve 133.90 58.34 (ii) Technology Absorption:
Surplus carried forward 1263.40 772.20 It is an on going process.
(iii) Foreign Exchange Earnings & Outgo :
TOTAL APPROPRIATIONS 2104.26 1144.49 During 2005-06, expenditure in foreign currencies amounted to Rs. 755,506/- on account of
2. DIVIDEND : traveling and expenses incurred for business promotion.
Your Directors had announced during the year an Interim Dividend of 96.20 54% for the year ended The company has not earned any Foreign Exchange during the year.
31st March, 2006. The same is recommended as the Final Dividend for the year. 9. DIRECTORS :
3. REVIEW OF OPERATIONS : In accordance with the provision of the Articles of Association of the Company, Mr. J. N. Godrej, Mr. R.K.
Your Company has had a good financial year, posting total income of Rs. 7045.78 lacs during the year Naoroji and Ms. P. A. Godrej retire by rotation and being eligible, offer themselves for re-appointment.
ended 31st March 2006. Both commercial projects Godrej Eternia C and Godrej Castlemaine at Pune Mr. Milind Korde, Managing Director of the Company was appointed as the Managing Director of the
were completely sold out. The office spaces in first phase of the commercial project in Godrej Coliseum, Company on 1st April, 2005. His tenure as Managing Director expires on 31st March, 2006, the Company
Mumbai have also been sold out and the construction of Phase 2 is in full swing and it should be completed has proposed to re-appoint him w.e.f. 1st April, 2006 for a period of 3 years.
by end of 2006. In the residential segment, our project Godrej Woodsman Estate Bangalore, has been 10. DIRECTORS’ RESPONSIBILITY STATEMENT:
well received by the market. The construction work of Godrej Regency Park Tower B, Thane and Godrej Your Directors confirm:
Hill , Kalyan is going on as per schedule. (i) that in the preparation of the annual accounts, the applicable accounting standards have been
4. FUTURE PROSPECTS AND OUTLOOK OF THE COMPANY : followed;
The Real Estate Industry continues to flourish and your Company is on the threshold of major developments. (ii) that the Directors have selected such accounting policies and applied them consistently and made
Your Company has scaled up operations and increased its geographical footprints. The plan is to achieve judgments and estimates that are reasonable and prudent so as to give a true and fair view of the
good geographical and product balance. The company is doing bigger projects like the IT Parks in state of affairs of the Company at the end of the financial year ended 31st March, 2006 and of the
Kolkata, mixed development at Bavdhan, near Pune and residential development at Bangalore. The profit of the Company for that year;
Company is also diversifying the portfolio and doing projects like the Retail Mall in Kolkata and exploring (iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting
new locations like Cochin, Chennai and Hyderabad. records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets
5. SUBSIDIARY COMPANIES : of the Company and for preventing and detecting fraud and other irregularities;
During the year your Company acquired two Private Limited Companies viz., Godrej Waterside Properties (iv) that the Directors have prepared the annual accounts on a going concern basis.
Private Limited and Godrej Realty Private Limited. These two companies will be subsidiaries of your 11. APPOINTMENT OF AUDITORS:
Company. The project Godrej Waterside – Kolkata will be developed exclusively by the Godrej Waterside M/s. Kalyaniwalla Mistry and Associates, Chartered Accountants retire at the ensuing Annual General
Properties Private Limited and the project at Bavdhan, Pune will be developed exclusively by Godrej Meeting and are eligible for re-appointment for which they have given their consent.
Realty Private Limited.
12. ACKNOWLEDGEMENT:
Godrej Realty Private Limited allotted 4,90,000 equity shares of Rs.10/- each fully paid-up to HDFC
Your Directors take this opportunity to thank all the employees and associates for their co-operation.
Venture Trustee Company Limited a trustee of HDFC Property Fund, and 5,00,000 equity shares of
Rs.10/- each fully paid-up to your Company during the year. As such your Company holds in aggregate For and on behalf of the Board of Directors
5,10,000 Equity Shares and holds 51% of the paid up share capital of Godrej Realty Private Limited.
Further, Godrej Realty Private Limited issued 56,35,000 , 10% Secured Redeemable Optionally Convertible A. B. GODREJ
Debentures of Rs.10/- each to HDFC Venture Trustee Company Limited and 58,65,000, 10% Secured Mumbai, May 10, 2006 Chairman
ANNEXURE TO DIRECTORS’ REPORT

Information as per Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 and forming part of the Directors’ Report for the year ended March 31, 2006.
SR. NAME AGE QUALIFICATION DATE OF DESIGNATION REMUNERATION EXPERIENCE LAST EMPLOYMENT
NO. EMPLOYMENT (RS.) (YEARS) DESIGNATION COMPANY
1. Mr. Milind S. Korde 42 B.Sc., L.L.B., A.C.S. 03.12.1990 Managing Director 62,10,465 19 Commercial Officer Tata Housing
Development Co. Ltd.
NOTES :
1. NATURE OF EMPLOYMENT WHETHER CONTRACTUAL OR OTHERWISE:
a) The appointment of the Managing Director from 1st April, 2006 is contractual and terminable by three months notice on either side.
b) The appointments of the other employees are non-contractual and are terminable by three months notice on either side.
2. OTHER TERMS AND CONDITIONS:
a) In case of the Managing Director, gross remuneration as shown above includes salary, House Rent Allowance (wherever applicable), Commission (wherever applicable), Company’s contribution to Provident Fund
and monetary value of perquisites as per Income Tax Rules which are given in terms of the Agreement entered into with him.
b) The Designation represent the nature of duties performed by the Employee.
d) The age shown is as of last Birthday and the particulars of previous employment pertain to the immediate past employment.
3. RELATIVES OF DIRECTORS:
The Managing Director is not related to any of the other Directors of the Company.
100

TO THE MEMBERS OF GODREJ PROPERTIES LIMITED
1. We have audited the attached Balance Sheet of GODREJ PROPERTIES LIMITED, as at 31st March e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(f) of
2006 and also the Profit and Loss Account and the Cash Flow Statement of the Company for the year Schedule 19-Notes to Accounts, in respect of projects under long term contracts undertaken and/
ended on that date annexed thereto. These financial statements are the responsibility of the Company’s or financed by the Company, we have relied upon the management’s estimates of the percentage
management. Our responsibility is to express an opinion on these financial statements based on our of completion, costs to completion and on the projections of revenues expected from projects
audit. 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
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those project advances determined.
f) In our opinion and to the best of our information and according to the explanations given to us, the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
said accounts read with the notes thereon, give the information required by the Companies Act,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes 1956, in the manner so required and give a true and fair view in conformity with the accounting
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. principles generally accepted in India:
An audit also includes assessing the accounting principles used and significant estimates made by
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006;
management, as well as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion. ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on
that date and
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 iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended
the matters specified in paragraphs 4 and 5 of the said Order. on that date.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: 5. On the basis of the written representations received from the directors as on 31st March, 2006, and taken
on record by the Board of Directors, we report that, none of the directors is disqualified as on 31st March,
a) We have obtained all the information and explanations, which to the best of our knowledge and 2006 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the
belief were necessary for the purposes of our audit. Companies Act, 1956.
b) In our opinion, proper books of account as required by law have been kept by the Company so far For and on behalf of
as appears from our examination of such books. KALYANIWALLA MISTRY & ASSOCIATES
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. Bahadur S. Dastoor
Partner
d) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with Membership No. 48936
by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 Place : Mumbai
of the Companies Act, 1956. Date : May 10, 2006
ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph (3) of our report of even date. 9. (a) According to the information and explanations given to us and on the basis of our examination of
1. (a) The Company is maintaining proper records showing full particulars, including quantitative details books of accounts, during the year, the Company has been generally regular in depositing undisputed
and situation of fixed assets. statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State
Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and
(b) As explained to us, the Company has a program for physical verification of fixed assets at periodicals other statutory dues applicable to it with the appropriate authorities. According to the information
intervals. In our opinion, the period of verification is reasonable having regard to the size of the and explanations given to us, there are no undisputed dues, payable in respect of above as at
Company and the nature of its assets. 31st March, 2006 for a period of more than six months from the date they became payable.
(c) In our opinion, the disposal of fixed assets during the year does not affect the going concern (b) According to the information and explanations given to us, there are no dues outstanding of Sales
assumption. Tax, Income Tax, Customs duty, Wealth Tax, Service tax, Excise Duty or Cess on account of any
2. (a) The Management has conducted physical verification of inventory at reasonable intervals. dispute.
(b) In our opinion, the procedures of physical verification of inventory followed by the management 10. The Company does not have accumulated losses at the end of the financial year and it has not incurred
are reasonable and adequate in relation to the size of the Company and the nature of its business. any cash losses in the current and immediately preceding financial year.
(c) The Company is maintaining proper records of inventory and no material discrepancies were 11. According to the information and explanations given to us and based on the documents and records
noticed on physical verification. produced to us, the Company has not defaulted in repayment of dues to banks. There are no dues to
financial institutions or debenture holders.
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. 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
(b) Consequently, the question of commenting on the rates of interest and others terms and conditions
of shares, debentures and other securities.
of the loans granted being prejudicial to the interests of the Company, receipt of regular principal
and the interest and 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/
(c) The Company has not taken any loan, secured or unsecured from companies, firms or other parties
societies.
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 others terms and conditions
of the loans taken being prejudicial to the interests of the Company, payment of regular principal 15. According to the information and explanations given to us, the Company has given guarantee for loans
and the interest does not arise. taken by others from banks. The terms and conditions are not prima-facie prejudicial to the interest of
the Company.
4. In our opinion and according to the information and explanations given to us, there are adequate internal
control procedures commensurate with the size of the Company and the nature of its business, for the 16. According to the information and explanations given to us the Company has utilized the term loan for
purchases of inventory, fixed assets and for the sale of goods. There are no sales of service. During the the purpose it was taken.
course of our audit, we have not observed a continuing failure to correct major weaknesses in internal 17. According to the information and explanations given to us and on an overall examination of the Balance
controls. Sheet and cash flows of the Company, we report that the Company has not utilized funds raised on short-
5. (a) Based on the audit procedures applied by us and according to the information and explanations term basis for long-term investment.
provided by the management, we are of the opinion that the particular of contracts and arrangement 18. The Company has not made any preferential allotment of shares to parties or companies covered in the
referred to in Section 301 of the Companies Act, 1956 have been entered into the register required register maintained under Section 301 of the Companies Act, 1956.
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 marketing prices at the relevant time, where 20. The Company has not raised any money through a public issue during the year.
comparable market price exist. 21. Based on the audit procedures performed and information and explanations given by the management,
6. In our opinion and according to the information and explanations given to us, the Company has complied we report that no fraud on or by the Company has been noticed or reported during the year.
with directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the For and on behalf of
Companies Act, 1956, and the rules framed there under. KALYANIWALLA MISTRY & ASSOCIATES
7. In our opinion and according to the information and explanations given to us, the internal audit system Chartered Accountants
is commensurate with the size of the Company and nature of its business. Bahadur S. Dastoor
8. The maintenance of cost records has not been prescribed by the Central Government under Section Partner
209(1)(d) of the Companies Act, 1956, in respect of the activities carried on by the Company. Membership No. 48936
Place : Mumbai
Date : May 10, 2006
101
BALANCE SHEET AS AT 31ST MARCH, 2006 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED
Schedule This Year Previous Year
MARCH 31, 2006
Rupees Rupees
SOURCES OF FUNDS
Shareholders’ Funds Schedule Rupees Rupees
Share Capital 1 64,445,450 64,445,450 INCOME
Reserves & Surplus 2 413,988,398 351,477,988 Sales - Own Projects 441,634,459 185,429,148
Loan Funds - Development Projects 126,076,106 152,398,186
Secured Loans 3 15,553,290 187,255,573 Income from Development Projects 76,737,391 51,495,835
Unsecured Loans 4 60,859,000 254,473,000 Operating Income 13 53,142,859 26,998,677
Other Income 14 6,987,239 2,157,094
554,846,138 857,652,011
TOTAL INCOME 704,578,054 418,478,940
APPLICATION OF FUNDS 55.48 85.77
EXPENDITURE
Fixed Assets 5 Cost of sales - Own Projects 15 363,211,528 175,997,648
Gross Block 36,381,750 27,746,336 - Development Projects 62,040,000 85,358,564
Less: Depreciation 14,673,620 14,299,093 Employee Remuneration & Benefits 16 22,925,238 18,534,877
21,708,130 13,447,243 Administration Expenses 17 19,766,499 11,699,691
Interest & Finance Charges (Net) 18 52,976,531 35,601,852
Investments 6 64,264,447 24,036 Depreciation 5,074,007 3,319,210
Current Assets, Loans & Advances 525,993,804 330,511,841
Inventories 7 204,751,391 182,130,830
Sundry Debtors 8 543,247,709 277,163,500 Profit for the year 178,584,250 87,967,099
Cash & Bank Balances 9 149,863,239 41,776,280 Provision for Current Taxes - (44,532,000) (30,034,500)
Loans & Advances 10 809,055,939 948,351,137 for fringe benefit tax (487,699) –
for deferred tax 329,000 400,000
1,706,918,278 1,449,421,746
Profit After Tax 133,893,551 58,332,599
Less: Current Liabilities & Provisions
Prior years tax adjustments (687,642) 196,641
Current Liabilities 11 1,045,877,540 521,522,751
Surplus brought forward 77,220,108 55,919,900
Provisions 12 194,753,178 85,975,263
1,240,630,718 607,498,014 Amount Available for Appropriation 210,426,018 114,449,140
Less :
Net Current Assets 466,287,561 841,923,732 Interim Dividend – 25,500,000
Deferred Tax Asset 2,586,000 2,257,000 Proposed Dividend 62,000,000 –
Dividend Distribution Tax 8,695,500 5,895,032
Miscellaneous Expenditure
Transfer to General Reserve 13,390,000 5,834,000
Deferred Revenue Expenditure – – Surplus carried forward to Balance Sheet 126,340,518 77,220,108
554,846,138 857,652,011 Earnings per share (basic/diluted) in Rs. (Refer Note 9) 20.67 9.08
(0) 1
NOTES TO ACCOUNTS & NOTES TO ACCOUNTS &
ACCOUNTING POLICIES 19 ACCOUNTING POLICIES 19
As per our Report of even date. Signatures to Balance Sheet and As per our Report of even date. Signatures to Profit and Loss Account and
Schedules 1 to 12 and 19 Schedules 10, 13 to 19
Chartered Accountants A. B. GODREJ Chairman Chartered Accountants A. B. GODREJ Chairman
M. KORDE Managing Director M. KORDE Managing Director
B. S. DASTOOR S. KEMBHAVI B. S. DASTOOR S. KEMBHAVI
Partner Company Secretary Partner Company Secretary
SCHEDULES FORMING PART OF THE ACCOUNTS

Rupees Rupees Rupees Rupees
SCHEDULE 1 : SHARE CAPITAL SCHEDULE 3 : SECURED LOANS
AUTHORISED 1) Cash Credit / Working Capital Demand Loan 15,303,290 165,170,657
10,000,000 Equity Shares of Rs. 10/- each 100,000,000 100,000,000 (Secured by equitable mortgage of immovable property
100,000,000 100,000,000 of the Company’s Project at Juhu- Mumbai &
ISSUED, SUBSCRIBED & PAID UP Godrej Hill - Kalyan)
6,444,545 Equity Shares of Rs. 10/- each fully paid up. 64,445,450 64,445,450 2) Term Loan from Banks 250,000 22,084,916
(Out of above 5,264,645 (Previous year 5,073,965) shares are held by (Secured by way of equitable mortgage of immovable
Godrej Industries Ltd., the Holding Company) property of the projects undertaken by the Company as
64,445,450 64,445,450 Project Manager at Godrej Castlemaine - Pune)
15,553,290 187,255,573
Of the above,
SCHEDULE 2 : RESERVES & SURPLUS Repayable within a year 15,553,290 178,751,582
Share Premium As per last Balance Sheet 245,172,265 245,172,265
245,172,265 245,172,265 SCHEDULE 4 : UNSECURED LOANS
General Reserve - as per last Balance Sheet 29,085,615 23,251,615 Banks 45,000,000 215,000,000
Add : Transfer from Profit & Loss Account 13,390,000 5,834,000
Companies – 2,500,000
42,475,615 29,085,615
Fixed Deposits 15,859,000 36,973,000
Profit and Loss Account 126,340,518 77,220,108
60,859,000 254,473,000
413,988,398 351,477,988
Of the above,
Repayable within a year 60,859,000 250,074,000
102

As at Additions Deductions As at As at Additions Deductions As at As at As at
1st April, for the year for the year 31st March, 1st April, for the year for the year 31st March, 31st March, 31st March,
2005 2005-2006 2005-2006 2006 2005 2005-2006 2005-2006 2006 2006 2005
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Land - Leasehold 2,007,976 222,740 2,230,716 – 1,405,578 36,669 1,442,247 – – 602,398
Building 1,477,796 11,500 1,489,296 – 757,802 6,012 763,814 – – 719,994
Leasehold Improvement 4,731,182 4,027,759 604,551 8,154,390 951,344 1,424,403 235,103 2,140,644 6,013,746 3,779,838
Motor Vehicle 4,736,275 1,210,309 382,501 5,564,083 3,153,568 661,195 282,417 3,532,346 2,031,737 1,582,707
Furniture & Fixtures 3,615,082 3,773,763 45,300 7,343,545 1,256,091 959,985 28,569 2,187,507 5,156,038 2,358,991
Office Equipment 2,907,329 2,331,315 202,240 5,036,404 820,468 546,284 143,129 1,223,623 3,812,781 2,086,861
Computer 4,902,371 4,127,342 818,505 8,211,208 3,687,980 1,288,005 708,040 4,267,945 3,943,263 1,214,391
Site Equipments 3,368,325 – 1,296,205 2,072,120 2,266,262 151,454 1,096,161 1,321,555 750,565 1,102,063
Total 27,746,336 15,704,728 7,069,314 36,381,750 14,299,093 5,074,007 4,699,480 14,673,620 21,708,130 13,447,243
Previous Year 27,964,734 3,359,562 3,577,959 27,746,336 13,967,328 3,319,210 2,987,444 14,299,093 13,447,243
SCHEDULE 6 : INVESTMENTS Rupees Rupees Rupees Rupees
Long Term (At Cost) SCHEDULE 11 : CURRENT LIABILITIES
Quoted Investments (Note 3) Acceptances – 5,679,738
100 Equity Shares of Rs.10/- each of 742 742 Sundry Creditors (Note 7) 28,029,216 37,298,013
Alacrity Housing Limited Investor Education and Protection Fund – –
100 Equity Shares of Rs.10/- each of 616 616 Advances received against sale of flats / TDRs 764,446,554 295,568,286
Deposits 24,652,770 23,940,797
Alsa Construction & Housing Limited
Unclaimed Fixed Deposits 4,035,000 3,607,000
100 Equity Shares of Rs.10/- each of 1,066 1,066 Other liabilities 224,713,999 155,411,161
Ansal Buildwell Limited Interest accrued but not due on Loans – 17,755
100 Equity Shares of Rs.10/- each of 1,366 1,366
1,045,877,540 521,522,751
Ansal Properties & Construction Limited
100 Equity Shares of Rs.10/- each of 3,081 3,081 SCHEDULE 12 : PROVISIONS
Ansal Properties & Industries Limited Gratuity 2,755,825 2,223,511
100 Equity Shares of Rs.10/- each of 1,241 1,241 Leave Encashment 2,634,878 2,435,438
Proposed Dividend 62,000,000 –
Lok Housing & Construction Limited
Tax on Dividend 8,695,500 –
100 Equity Shares of Rs.10/- each of 1,641 1,641 For Taxation 118,666,975 81,316,314
Mantri Housing & Construction Limited
194,753,178 85,975,263
100 Equity Shares of Rs.10/- each of 1,516 1,516
Premier Hsg. & Industrial Ent. Limited SCHEDULE 13 : OPERATING INCOME (GROSS)
100 Equity Shares of Rs.10/- each of 891 891 Project Management fees 2,564 6,216
D.S. Kulkarni Developers Other Income from Customers – 1,405,630
100 Equity Shares of Rs.10/- each of 6,366 6,366 Lease Rent 53,128,295 25,574,830
Unitech Limited Licence Fees 12,000 12,000
100 Equity Shares of Rs.10/- each of 3,106 3,106 53,142,859 26,998,677
The Great Eastern Shipping Company Limited Tax Deducted at source 11,877,497 5,488,087
100 Equity Shares of Rs.10/- each of 266 266 SCHEDULE 14 : OTHER INCOME
Radhe Developers Limited Dividends 3,330 660
23700 Equity Shares of Rs.10/- each of 2,370 2,370 Provision for diminution in value of investments written back – 4,049
United Textiles Limited Profit on sale of Fixed Assets (net) 5,376,611 –
25000 Equity Shares of Rs.10/- each of 2,500 2,500 Miscellaneous Income 1,607,298 2,152,385
Amitabh Bachchan Corporation Limited 6,987,239 2,157,094
26,768 26,768
SCHEDULE 15 : COST OF SALES
Less : Provision for Diminution in Value 22,321 12,732 Opening Stock: 182,130,830 230,138,294
Add : Expenditure/Transfers from Advances during the year
4,447 14,036 Stock-In-Trade Acquired on Area Sharing – 34,402,940
Unquoted Investments Development Rights 190,000,000 –
1000 Equity Shares of Rs.10/- each of 10,000 10,000 Construction 99,960,010 4,083,214
Saraswat Co-operative Bank Limited Infrastructure 27,543 25,036,931
Investments In Subsidiary Companies Architect Fees 9,116,217 5,670,259
Godrej Realty Pvt. Ltd. Advertisement Expenses 11,069,565 10,909,564
510,000 Equity Shares of Rs.10/- each of 5,100,000 – Overheads / Interest 75,658,756 47,887,275
10% Secured redeemable optionally convertible debentures 58,650,000 – 385,832,091 127,990,183
Less : Closing Stock (204,751,392) (182,130,830)
Godrej Waterside Properties Pvt. Ltd. 363,211,528 175,997,648
50000 Equity Shares of Rs.10/- each of 500,000 – SCHEDULE 16 : EMPLOYEE REMUNERATION & BENEFITS
64,264,447 24,036 Salaries, Bonus, Gratuity & Allowances 19,862,794 15,957,776
1. Cost of Quoted Investments 26,768 26,768 Contribution to Provident & other funds 2,023,505 1,425,718
2. Market Value of Quoted Investments 148,408 61,874 Other Employee Benefits 1,038,939 1,151,383
22,925,238 18,534,877
SCHEDULE 7 : INVENTORIES SCHEDULE 17 : ADMINISTRATION EXPENSES
Stock in trade (Note 4) 69,281,566 61,584,415 Cost of Project Management 168,360 260,345
Construction Work in progress 135,469,825 120,546,415 Consultancy Charges 4,372,846 1,307,704
204,751,391 182,130,830 Service Charges / Licence Fees 2,328,656 2,616,469
Marketing Expenses – 370,441
SCHEDULE 8 : SUNDRY DEBTORS Compensation Claims – 791,765
(UNSECURED, CONSIDERED GOOD) Loss on sale of Fixed Assets (Net) – 175,569
Exceeding 6 months – – Other Operating Expenses 12,819,182 6,109,533
Others 543,247,709 277,163,500 Deferred Revenue Expenditure written off 67,866 67,866
543,247,709 277,163,500 Provision for diminution in value of investments 9,589 –
SCHEDULE 9 : CASH & BANK BALANCES 19,766,499 11,699,691
SCHEDULE 18 : INTEREST AND FINANCE CHARGES (NET)
Cash & Cheques on Hand 87,142 6,275
Interest Paid
Balance with Scheduled Banks - on Current Accounts 10,453,555 3,640,625 - Banks 14,630,446 38,895,784
- on Fixed Deposit Accounts 139,322,542 38,129,380 - Inter Corporate Deposits 3,525,045 8,249,217
(Refer Note 5) 149,863,239 41,776,280 - Projects and landlords 42,082,239 –
SCHEDULE 10 : LOANS & ADVANCES - Others 15,550,516 20,373,981
(UNSECURED, CONSIDERED GOOD) Total Interest Paid 75,788,246 67,518,982
Loans & Advances recoverable in cash or in kind Add : Brokerage & other Financial charges 1,941,802 1,978,807
or for value to be received (Note 3) 62,307,989 32,758,140 Total Interest/Finance Charges Paid 77,730,048 69,497,789
Development Manager Fees Accrued but not due 232,218,224 249,630,941 Less: Interest Received (Gross)
Due on Management Projects (Including Work-in-progress) 386,020,789 553,161,532 - Customers – 3,450
Less: Transfer to Cost of Sales - Development Projects (62,040,000) (85,358,565) - Projects and landlords 22,523,303 33,576,966
323,980,789 467,802,967 - Others 2,230,214 315,522
Deposits 75,744,559 112,438,437 Less: Interest Received (Gross) 24,753,517 33,895,938
Advance Tax & Tax deducted at source 114,804,377 85,720,650 NET INTEREST 52,976,531 35,601,852
809,055,939 948,351,136 Tax Deducted at source 5,980,919 3,034,602
103
SCHEDULE 19 : NOTES TO ACCOUNTS & ACCOUNTING POLICIES 2) CONTINGENT LIABILITIES:
1) ACCOUNTING POLICIES As at As at
Matters 31st March 2006 31st March 2005
a) GENERAL Rupees Rupees
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 a) Uncalled amount of Rs. 80/- & Rs. 30/-
Accountants of India and the provisions of the Companies Act, 1956. on 70 & 75 partly paid shares respectively of
b) FIXED ASSETS Tahir Properties Limited 7,850/- 7,850/-
Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Cost includes b) Consideration payable for acquisition of shares in
all incidental expenses related to acquisition and installation, other pre-operation expenses and interest Girikandra Holiday Homes & Resorts Limited
in case of construction. (a subsidiary company) for purchase of land. 9,473,750/- 9,473,750/-
Carrying amount of cash generating units /assets are reviewed at balance sheet date to determine c) Claims against the company not acknowledged
whether there is any indication of impairment. If such indication exists, the recoverable amount is as debts represents cases filed by parties in the
estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized Consumer forum and High Court and disputed
whenever carrying amount exceeds the recoverable amount. by the Company as advised by our advocates.
c) DEPRECIATION / AMORTIZATION In the opinion of the management the claim is
Depreciation has been provided on Written Down Value basis, at the rates specified in Schedule XIV of not sustainable. 9,427,512/- 5,621,273/-
the Companies Act, 1956. d) Guarantee given on behalf of project owner
Assets acquired on lease are depreciated over the period of the lease. (Simplex Mills Company Limited). The Company is
Leasehold improvements are amortized over a period of five years. entitled to create a corresponding mortgage against
d) INVESTMENTS project assets as considered necessary. 360,000,000/- 360,000,000/-
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 3) INVENTORIES, CURRENT ASSETS, LOANS AND ADVANCES:
investment is made to recognize a decline, other than of a temporary nature. a) Construction Work in Progress and Due on Management projects represents materials at site and
Current investments are carried individually at lower of cost and fair value and the resultant decline, if unbilled cost on the projects. Based on projections and estimates by the Company of the expected
any, is charged to revenue. revenues and costs to completion. In the opinion of the management, the net realisable value of the
e) INVENTORIES construction work in progress will not be lower than the costs so included.
Inventories are valued as under : b) The company has been entering into Development Agreements with landlords. Development
a) Completed Flats – At lower of Cost or Market value Manager Fees amounting to Rs.232,218,224/- (Previous Year Rs. 249,630,941/-) accrued as per
b) Construction Work-in-Progress – At cost terms of the Agreement are receivable by the Company based upon progress milestones specified
Construction Work-in-Progress includes cost of land, premium for development rights, construction in the respective Agreements and have been disclosed as Development Manager Fees accrued
costs, allocated interest and expenses incidental to the projects undertaken by the Company. but not due in Schedule 10.
f) REVENUE RECOGNITION
4) INVENTORIES
The Company is following the “Percentage of Completion Method” of accounting. As per this method,
Stock-in-Trade includes shares in the following Companies - at cost or market value (whichever is
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. lower):
Determination of revenues under the percentage of completion method necessarily involves making Current Year Previous Year
estimates by the Company, some of which are of a technical nature, concerning, where relevant, the Rupees Rupees
percentages of completion, costs to completion, the expected revenues from the project /activity and the Tahir Properties Limited
foreseeable losses to completion. Such estimates have been relied upon by the auditors. a) 32,597 Equity shares of Rs. 100/- each,
Income from operation of commercial complexes is recognized over the tenure of the lease/service fully paid up 49,993,350 42,296,198
agreement. b) 70 Equity shares of Rs. 100/- each,
Interest income is accounted on an accrual basis at contracted rates. Rs. 20/- paid up 1,400 1,400
Dividend income is recognized when the right to receive the same is established. c) 75 Redeemable Preference Class A shares of
g) DEVELOPMENT MANAGER FEES Rs.100/- each, Rs.70/- paid 5,250 5,250
The Company has been entering into Development & Project Management agreements with landlords. Girikandra Holiday Homes & Resorts Limited
Accounting for income from such projects is done on accrual basis on percentage of completion or as (a subsidiary company)
per the terms of the agreement. 498 Equity shares of Rs.1,000/- each, fully paid up 17,880,000 17,880,000
h) RETIREMENT BENEFITS
5) CASH & BANK BALANCES
Retirement benefits to employees comprise payments under defined contribution plans like provident
Balances with scheduled banks on deposit accounts include Rs. 33,829,379/- (Previous year
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 Rs. 33,829,379/-) received from flat buyers and held in trust on their behalf in a corpus fund.
on retirement is provided on the basis of actuarial valuation at the end of each year. 6) LOANS AND ADVANCES
i) BORROWING COST a) Amounts due from companies under the same management. (Amount in Rupees)
Interest and commitment charges incurred in connection with borrowing of funds, which are incurred Particulars Balance as Maximum Balance as Maximum
for the development of long term projects are transferred to Construction Work in Progress / Due on on March Debit on March Debit
Management Project, as a part of the cost of the projects at weighted average of the borrowing cost / rates 31, 2006 Balance 31, 2005 Balance
as per Agreements respectively. during the during
Other borrowing costs are recognized as an expense in the period in which they are incurred. year previous
j) EARNINGS PER SHARE year
The basic earnings per share is computed using the weighted average number of common shares Godrej Industries Ltd.
outstanding during the period. Diluted earnings per share is computed using the weighted average
- Advances 19,736 28,089 64,920 4,027,560
number of common and dilutive common equivalent shares outstanding during the period, except
- Deposits 410,000 410,000 385,000 385,000
where the results would be anti-dilutive.
Girikandra Holiday Homes & Resorts Ltd.
k) PROVISION FOR TAXATION
- Advances 28,267,717 28,267,717 28,048,667 28,048,667
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 b) Amount due from Directors of the Company towards Housing Loan / Consumer Durable Loan /
rates and tax laws. Contingency loan under the Company’s Scheme Rs. NIL (Maximum debit balance during the year
Deferred tax is recognized on timing differences, being the differences between the taxable income and Rs.21,189/-) (Previous year Rs. 21,189/- Maximum debit balance Rs. 42,403/-)
the accounting income that originate in one period and are capable of reversal in one or more subsequent c) Due on Management Projects include a sum of Rs.20,056,962/- (Previous Year Rs.19,986,141/-) on
periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward account of a project, where the matter is sub-judice with arbitrators.
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 7) SUNDRY CREDITORS AND PROVISIONS
timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the There are no parties within the definition of Small Scale Industrial Undertakings to whom the Company
balance sheet date. owes any dues. The auditors have accepted the representation of the management in this matter in the
l) FOREIGN CURRENCY TRANSACTIONS absence of a database identifying the creditors, which are small scale industrial undertakings.
Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the 8) LEASES
transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year a) The Company’s significant leasing arrangements are in respect of operating leases for Residential
end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled premises. Lease income from operating leases is recognized on a straight-line basis over the
at the year end, backed by underlying assets or liabilities are also translated at year end exchange period of lease. The particulars of the premises given under operating leases are as under:
rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Current Year Previous Year
Exchange gains / losses are recognised in the Profit and Loss Account except in respect of liabilities Rupees Rupees
incurred to acquire fixed assets in which case, they are adjusted to the carrying amount of such fixed
Gross Carrying Amount of Assets NIL 1,477,796
assets.
Accumulated Depreciation NIL 757,803
m) ALLOCATION OF EXPENSES
Depreciation for the period NIL 37,894
Corporate Employee Remuneration and Administration expenses are allocated to various projects on
Stock–in–trade (Refer note below) 50,000,000 42,302,848
a reasonable basis as estimated by the management.
n) PROVISIONS AND CONTINGENT LIABILITIES Future minimum lease receipts under
Provisions are recognized in the accounts in respect of present probable obligations, the amount of which non-cancelable operating leases
can be reliably estimated. Not later than 1 year 2,976,120 2,006,676
Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their Later than 1 year and not later than 5 years 132,000 132,000
existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not Note : The available-for-sale asset, given on lease, has been classified by the Company under
wholly within the control of the Company. Stock-in-trade.
104
b) The Company’s significant leasing arrangements are in respect of operating leases for Commercial 2. The following transactions were carried out with the related parties in the ordinary course of business.
premises. Lease expenditure for operating leases is recognized on a straight-line basis over the period (i) Details relating to parties referred to in items 1 (i), (ii) and (iii) above
of lease. The particulars of the premises taken on operating leases are as under:
Sr. Godrej & Godrej Other Related Parties
Current Year Previous Year
No. Description Boyce Industries in Godrej Group
Rupees Rupees Mfg. Co. Ltd. Ltd. GAL+VSL+GHCL
Future minimum lease payments under +GSLL+GRL+GWPL+
non-cancelable operating leases GHHRL+BAFPL+EHFL
Ø Not later than 1 year 6,400,000 4,800,000 +GCPL+GAVL
Ø Later than 1 year and not later than 5 years 5,775,000 2,200,000
1. Investment in equity share capital – – 5,600,000
9) Earnings per share
Profit after tax and prior years tax adjustments as per 2. Investment in debentures – – 58,650,000
Profit & Loss Account 133,205,909 58,529,240 3. Purchase of fixed assets 3,424,267 – 635,461
Weighted average no. of equity shares outstanding 6,444,545 6,444,545 837,177 – 87,180
Basic/Diluted earnings per share 20.67 9.08 4. Sale of fixed assets – – 100,083
Nominal value of shares 10 10 5. Loans & Advances given – – 219,050
10) The amount of exchange difference included in the Profit and Loss Account, under the related heads of 6. Deposits – 350,000 –
expenses is Rs.1,93,933/- (Previous Year Rs.2,052,134/-). The amount of exchange difference in respect 7. Expenses charged to 7,709 1,711,896 15,600,959
of forward exchange contracts to be recognized in the profit and loss account of subsequent periods Rs. other companies – 65,413
NIL (Previous year Rs. 391,673/-).
11) Expenditure in Foreign Currency :- 8. Expenses charged by other 26,475,136 2,628,243 117,401
Travelling Expenses 286,952 141,244 companies (net) 32,227,595 1,218,973 148,111
Other Expenditure 468,554 3,126,049 9. Interest expense on ICD’s taken – –
TOTAL 755,506 3,267,293 2,304,793
12) Computation of Net Profit under Section 349 of the Companies Act, 1956. 10. ICD’s taken during the year – –
Profit before Tax as per Profit and Loss Account 178,597,185 87,967,099 130,000,000
Add :- 11. Outstanding receivables, 830,409 309,739 29,439,825
Managerial Remuneration 6,210,495 4,265,465 net of (payables) – (3,170,080) 28,048,667
Depreciation 5,074,007 3,319,210 12. Dividend Paid / Payable 50,648,726 2,103,531
Less :- 20,076,841 1,619,651
Profit on sale of asset as per accounts 5,376,611 12,397
(ii) Details relating to persons referred
Depreciation 5,074,007 3,319,210
to in items 1 (iv) & (v) above
Net Profit for the purpose of Directors Remuneration 179,431,069 92,220,167 Current Previous
(a) 5% of Net Profits as computed above 8,971,554 4,611,008 Year Year
(b) Maximum remuneration permissible under the Act Key Management Personnel :
(computed on the basis of inadequacy of profits) 3,600,000 3,600,000 1. Remuneration 6,210,495 4,265465
(a) or (b) whichever is greater 8,971,554 4,611,008 2. Interest income on loans given 516 1,610
Managerial Remuneration: 3. Reimbursement of travel expenses
A Salaries 3,648,408 2,171,400 Individuals exercising significant
B Contribution to Provident Fund 240,000 165,000 Influence (and their relatives) 317,489 21,189
C Estimated Monetary Value of Perquisites 265,633 417,004 4. Dividend paid – Mr. N.B.Godrej 1,849,549 760,701
D Performance Linked Variable
Remuneration 2,056,454 1,512,061 Figures in italics are for previous year
6,210,495 4,265,465 3. Significant Related Party Transactions.
Notes : Nature of Transactions Other Related Parties Amount
In case of the Managing Director - Performance Linked Variable Remuneration of Rs.2,056,454/- (Previous in the Godrej Group Rupees
Year Rs.1,512,061/-) is on the basis of provision made in the accounts.
Investment in equity share capital Godrej Realty Limited 5,100,000
13) Deferred Tax
The tax effect of significant temporary differences that resulted in deferred tax assets are: - Investment in debentures Godrej Realty Limited 58,650,000
Depreciation on Fixed Asset 771,000 552,000 Purchase in fixed assets Godrej Agrovet Limited 635,461
Others 1,815,000 1,705,000 Godrej Agrovet Limited 87,180
Deferred Tax Asset 2,586,000 2,257,000 Sale of fixed assets Godrej Realty Limited 100,083
Loans & Advances given Girikandra Holiday Homes
14) Segment Information : As the company has only one business segment, disclosure under Accounting & Resorts Ltd 219,050
Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not Expenses charged to other cos. Godrej Realty Limited 15,600,959
applicable. Expenses charged by other cos. (net) Godrej Agovet Limited 22,811
15) Amounts paid to Auditors : Godrej Sara Lee Limited 13,400
a. Audit Fees 1,369,328 1,190,160 Godrej Hicare India Limited 70,300
b. Audit under Other Statutes 404,064 352,640 Godrej Infotech Limited 30,000
c. Certification 35,815 182,990 Godrej Hicare India Limited 96,000
d. Reimbursement of Expenses 7,368 4,373
Outstanding receivables, Girikandra Holiday Homes
16) Revised Accounting Standard 7 – Construction Contracts. net of (payables) & Resorts Limited 28,267,717
The revised Accounting Standard 7 on Construction Contracts is now applicable only to contractors and Girikandra Holiday Homes
not to developers. Accordingly the income from projects entered into after 1st April 2003, where the & Resorts Limited 28,048,667
company is a developer will be recognized in consonance with the principles laid down by Accounting Dividend Paid / Payable Bahar Agrochem & Feeds
Standard 9 for Revenue Recognition. Private Limited 1,331,675
17) Related Party Disclosures Ensemble Holdings & Finance Limited 738,184
Related party disclosures as required by AS - 18, “ Related Party Disclosures”, are given below: Bahar Agrochem & Feeds
1. Relationships: Private Limited 547,705
(i) Shareholders (the Godrej Group Shareholding ) in the Company Ensemble Holdings & Finance Limited 1,056,198
Godrej Industries Limited (GIL) holds 81.69% in the Company. GIL is the subsidiary of Godrej
Figures in italics are for previous year
& Boyce Mfg. Co. Limited, the Ultimate Holding Company.
(ii) Subsidiaries : 18) Information in respect of Joint Ventures.
Girikandra Holiday Homes & Resorts Limited (99%) (GHHRL) Jointly Controlled Operations - Development of the following Residential / Commercial Projects:
Godrej Realty Private Limited (51%) (GRL) Coliseum, Mumbai
Godrej Waterside Properties Private Limited (100%) (GWPL) Woodsman Estate, Bangalore
(iii) Other Related Parties in Godrej Group, where common control exists : Waterside I T Park, Kolkata
Vora Soaps Limited (VSL) Planet Godrej, Mumbai
Bahar Agrochem & Feeds P. Limited (BAFPL) La Vista, Mumbai
Ensemble Holdings & Finance Limited (EHFL) Waldorf, Mumbai
Godrej Appliances Limited (GAL) Glenelg, Mumbai
Godrej Agrovet Limited (GAVL) Edenwoods, Mumbai
Godrej Consumer Products Limited (GCPL) Shivajinagar, Pune
Godrej Saralee Limited (GSLL) NLM, Kalyan
Godrej Hicare Limited (GHCL) GVD, Kalyan
(iv) Key Management Personnel : RSM/HKB, Kalyan
Mr. Milind Surendra Korde Grenville Park, Mumbai
Walkeshwar, Mumbai
(v) Individuals excercising Significant Influence (and their relatives) :
Mr. A. B. Godrej 19) Additional information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent
Mr. N. B. Godrej not applicable has not been given.
105
20) STATEMENT PURSUANT TO PART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956 Cash Flow Statement for the year ended March 31, 2006
Balance Sheet Abstract for the Year Ended 31st March 2006 And Company’s General Particulars Current Year Previous Year
Business Profile Rupees Rupees Rupees
a) Registration Details Cash from Operating Activities
Registration No. : 35308 Net Profit before tax & extraordinary items 178,584,250 87,967,099
State Code : 11 Add : Non-cash / non-operating Expenses
Balance Sheet Date : 31st March, 2006 Depreciation 5,074,007 3,319,210
Interest Paid 77,730,048 69,392,361
b) Capital raised during the year (Amount in Rs. thousands) Loss on sale of Fixed Asset – 175,569
Public Issue : Nil Provision for Diminution in value of Investment 9,589
Rights Issue : Nil Deferred Revenue Expenditure 67,866 82,881,510 67,866
Bonus Issue : Nil 261,465,760 160,922,105
Private Placement : Nil Less : Non-cash / non-operating Income
c) Position of mobilisation and deployment of funds (Amount in Rs. thousands) Provision for Diminution in value of
Total Liabilities : 1,795,477 Investment w/back – 4,049
Total Assets : 1,795,477 Profit on Sale of Fixed Assets 5,376,611 –
Interest Income 24,753,517 33,895,938
Sources of Funds Dividend Received 3,330 30,133,458 660
Paid-up Capital : 64,446 231,332,302 127,021,458
Reserves and Surplus : 413,988 Add :
Secured Loans : 155,532 Change in Inventory (22,620,561) 48,007,465
Unsecured Loans : 608,590 Change in Sundry Debtors (266,084,209) 128,408,437
Application of Funds Change in Loans & Advances 168,311,061 41,954,202
Net Fixed Assets : 21,708 Change in Current Liabilities / Provisions 525,086,544 7,489,049
Investments : 64,264 636,025,137 352,880,611
Net Current Assets : 466,288 Less : Taxes Paid (Net) 37,440,410 40,308,297
Misc. Expenditure : Nil 598,584,727 312,572,314
Deferred Tax Asset : 2,586 Cash from Investing Activities
Accumulated Losses : Nil Purchase of Fixed Assets (15,704,728) (3,359,562)
d) Performance of Company (Amount in Rs. thousands) Sale of Fixed Assets 7,746,445 414,947
Turnover : 704,578 Purchase of Investments (64,250,000) –
Total Expenditure (Net of other income) : 525,994 Interest Received 24,753,517 33,895,938
Profit/(loss) before tax : 178,584 Dividend Received 3,330 660
Profit/(loss) after tax : 133,894 (47,451,436) 30,951,983
Earning per Share in Rs. Cash from Financing Activities
(on an annualized basis) : 20.67 Change in Cash Credit (149,867,367) (32,023,717)
Dividend rate % : 96.2054% Change in Term Loan (21,834,916) (157,790,886)
e) Generic Name of three principal Change in Unsecured Loan from Bank (170,000,000) (25,000,000)
products/services of Company : N.A. Change in Inter Compnay Deposit (2,500,000) (102,500,000)
Change in Fixed Deposits (21,114,000) (6,635,000)
STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956. Interest Paid (77,730,048) (69,392,361)
1. Name of the Company : Girikandra Holiday Homes & Resorts Ltd. Payment of Dividend – (45,500,000)
2. Financial Year ending : 31st March, 2006 Tax on Distrubuted Profits – (5,895,032)
3. The Company’s interest in the : 500 Equity Shares of Rs. 1,000/- each, fully paid- (443,046,331) (444,736,996)
subsidiary as on above date. up (representing 100% of the Share Capital) Cash & Cash Equivalent 108,086,959 (101,212,699)
4. Net Profit / (Loss) of the subsidiary : (Rs. 2,500/-) Add : Cash & Bank Balance as on 31.3.2005 41,776,280 142,988,979
company (Not dealt with in the accounts
of the Company) Cash & Bank Balance as on 31.3.2006 149,863,239 41,776,280
Notes :
S. KEMBHAVI A. B. GODREJ MILIND KORDE
1. The cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting
Company Secretary Chairman Managing Director
Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash flows by operating, investing and
Mumbai, May 10, 2006 financing activities.
2. Figures in brackets are outflows / deductions.
STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956. 3. Figures for the previous year have been regrouped / restated wherever necessary to conform to this
year’s classification.
1. Name of the Company : Godrej Realty Private Limited
2. Financial Year ending : 31st March, 2006 For and on behalf of
3. The Company’s interest in the : 510,000 Equity Shares of Rs. 10/- each, fully paid- KALYANIWALLA MISTRY & ASSOCIATES
subsidiary as on above date. up (representing 51% of the Share Capital) Chartered Accountants A. B. GODREJ Chairman
4. Net Profit / (Loss) of the subsidiary : Nil M. KORDE Managing Director
B. S. DASTOOR S. KEMBHAVI
Partner Company Secretary
of the Company)
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, 2006
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 : Nil
of the Company)
106
Girikandra Holiday Homes & Resorts Limited

BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2006
To The Shareholders, (iv) that the Directors have prepared the annual accounts on a going concern basis.
Your Directors have pleasure in submitting their Report alongwith the audited Accounts for the year ended 6. APPOINTMENT OF AUDITORS :
31st March, 2006. M/s. Kalyaniwalla Mistry and Associates retire at the ensuing Annual General Meeting and are
1. FINANCIAL HIGHLIGHTS : eligible for re-appointment for which they have given their consent.
The accounting results for the year ended 31st March, 2006 reveal that there is a deficit at the end of
the year. 7. ADDITIONAL INFORMATION :
2. REVIEW OF OPERATIONS : (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,
The Company has not commenced any activities during the year. are not given.
3. DIVIDEND :
(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange
The Directors regret that no dividend can be recommended. Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with
4. DIRECTORS : the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is
In accordance with the provision of the Articles of Association of the Company, Mr. V. Srinivasan provided hereunder:
retires by rotation and being eligible offers himself for reappointment.
(i) Conservation of Energy :
5. DIRECTORS’ RESPONSIBILITY STATEMENT : Expenses on account of Energy are negligible.
Your Directors confirm : (ii) Technology Absorption :
(i) that in the preparation of the annual accounts, the applicable accounting standards have been It is an on going process.
followed; (iii) Foreign Exchange Earning & Outgo :
(ii) that the Directors have selected such accounting policies and applied them consistently and The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange
made judgments and estimates that are reasonable and prudent so as to give a true and fair Expenditure during the year.
view of the state of affairs of the Company at the end of the financial year ended 31st March,
2006 and of the profit of the Company for that year; For and on behalf of the Board of Directors
(iii) that the Directors had taken proper and sufficient care for the maintenance of adequate TANYA A. DUBASH MILIND S. KORDE
accounting records in accordance with the provisions of the Companies Act, 1956, for Directors
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities; Mumbai, May 10, 2006
AUDITORS’ REPORT
To the Members of Girikandra Holiday Homes and Resorts Limited d) In our opinion, the Balance Sheet and Profit and Loss Account and the Cash flow statement
1. We have audited the attached Balance Sheet of GIRIKANDRA HOLIDAY HOMES AND RESORTS dealt with by this report comply with the accounting standards referred to in sub-section (3C) of
LIMITED, as at 31st March, 2006 and also the Profit and Loss Account and Cash Flow Statement of Section 211 of the Companies Act, 1956.
the Company for the year ended on that date anexed thereto. These financial statements are the e) In our opinion and to the best of our information and according to the explanations given to us,
responsibility of the Company’s management. Our responsibility is to express an opinion on these the said accounts read with the notes thereon, give the information required by the Companies
financial statements based on our audit. Act, 1956, in the manner so required and give a true and fair view in conformity with the
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those accounting principles generally accepted in India:
Standards require that we plan and perform the audit to obtain reasonable assurance about whether i) in the case of the Balance Sheet, the state of affairs of the Company as at 31st March,
the financial statements are free of material misstatement. An audit includes examining, on a test 2006; and
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended
includes assessing the accounting principles used and significant estimates made by management, on that date.
as well as evaluating the overall financial statement presentation. We believe that our audit provides 5. On the basis of the written representations received from the Directors as on 31st March, 2006, and
a reasonable basis for our opinion. taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in 31st March, 2005 from being appointed as a Director in terms of clause (g) of sub-section (1) of
terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement section 274 of the Companies Act, 1956.
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 KALYANIWALLA MISTRY AND ASSOCIATES
and belief were necessary for the purposes of our audit. Chartered Accountants
b) In our opinion, proper books of account as required by law have been kept by the Company so
BAHADUR S. DASTOOR
far as appears from our examination of such books.
Partner
c) The Balance Sheet and Profit and Loss Account & Cash flow Statement dealt with by this report
are in agreement with the books of account. Mumbai, May 10, 2006 Membership No. 48936
ANNEXURE TO THE AUDITORS’ REPORT undisputed dues payable in respect of above as at 31st March, 2005 for a period of more than
Referred to in paragraph (3) of our report of even date. six months from the date they became payable.
1. The Company does not have any fixed assets. (b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax,
2. The Company does not have any inventories. Income Tax, Customs Duty, Wealth Tax, Service Tax, Excise Duty or cess on account of any dispute.
3. (a) The Company has not granted any loans, secured or unsecured to companies, firms or other 10. The Company’s accumulated losses at the end of the financial year are more than fifty percent of its net
parties covered in the register maintained under Section 301 of the Companies Act, 1956. worth. However, it has incurred cash losses in the current and immediately preceding financial year.
(b) Consequently, the question of commenting on the rates of interest and conditions of the loans 11. According to the information and explanations given to us and based on the documents and records
granted being prejudicial to the interests of the Company, receipt of regular principal and produced to us, the Company does not have dues to banks, financial institutions or debenture holders.
interest and reasonable steps taken for recovery of principal and interest does not arise. 12. According to the information and explanations given to us and based on the documents and records
(c) The Company has not taken any loans, secured or unsecured from companies, firms or other produced to us, the Company has not granted loans and advances on the basis of security by way of
parties covered in the register maintained under Section 301 of the Companies Act, 1956. pledge of shares, debentures and other securities.
(d) Consequently, the question of commenting on the rates of interest and conditions of the loans 13. In our opinion and according to the information and explanations given to us, the nature of activities of the
taken being prejudicial to the interests of the Company and payment of regular principal and Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.
interest does not arise. 14. The Company does not deal in shares, securities, debentures and other investments.
4. As there are no inventories and assets, nor are there any sales during the year, the question of 15. According to the information and explanations given to us, the Company has not given any guarantee
adequate internal control procedures commensurate with the size of the Company and the nature of for loans taken by others from banks or financial Institutions.
its business, for the purchases of inventory, fixed assets and for the sale of goods and services does 16. The Company did not have any term loans during the year.
not arise. During the course of our audit, we have not observed a continuing failure to correct major
17. According to the information and explanations given to us and on an overall examination of the
weaknesses in internal controls.
Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds
5. Based on the audit procedures applied by us and according to the information and explanations
raised on short-term basis for long-term investments.
provided by the management, we are of the opinion that there are no transactions that need to be
18. The Company has not made any preferential allotment of shares to parties or companies covered in
entered into the register maintained under Section 301 of the Companies Act, 1956.
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
19. The Company did not issue any debentures outstanding during the year.
accepted any deposits from the public and hence the provisions of Sections 58A, 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. we report that no fraud on or by the Company has been noticed or reported during the year.
8. The maintenance of cost records has not been prescribed by the Central Government under Section For and on behalf of
209(1)(d) of the Companies Act, 1956, for any of the Company's products. KALYANIWALLA MISTRY AND ASSOCIATES
9. (a) According to the information and explanations given to us and on the basis of our examination Chartered Accountants
of the books of accounts, during the year, the Company has no statutory dues including Provident
Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales BAHADUR S. DASTOOR
Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues incurred Partner
during the year. According to the information and explanations given to us, there are no Mumbai, May 10, 2006 Membership No. 48936
107
Girikandra Holiday Homes & Resorts Limited
This Year Previous Year MARCH 31, 2006
Schedule Rupees Rupees
SOURCES OF FUNDS This Year Previous Year
Shareholders’ Funds Schedule Rupees Rupees
Share Capital 1 500,000 500,000
Reserves & Surplus – – INCOME
Loan Funds Sundry Balances written back (Net) – –
Unsecured Loans 28,267,717 28,048,667 – –
TOTAL 28,767,717 28,548,667
EXPENDITURE
Fixed Assets – – Administration Expenses 4 219,542 182,071
Investments – –
Current Assets, Loans and Advances Preliminary Expenses written off 2,500 2,500
Projects in Progress 2 28,796,852 28,577,310 222,042 184,571
Cash Balance – –
Less : Amount Transferred to Project
Advance Income tax A Y 2004-2005 4,239 4,239
in Progress (219,542) (182,071)
28,801,091 28,581,549
Less : Current Liabilities and Provisions (Deficit)/Surplus for the year (2,500) (2,500)
Current Liabilities 3 53,448 52,956 Deficit brought forward 7,574 5,074
53,448 52,956
Deficit carried forward to Balance Sheet 10,074 7,574
Net Current Assets 28,747,643 28,528,593
Miscellaneous Expenditure Earning per share (basic/diluted ) in Rs. (5.00) (5.00)
Preliminary Expenditure 10,000 12,500
Profit and Loss Account 10,074 7,574
TOTAL 28,767,717 28,548,667
NOTES TO ACCOUNTS & ACCOUNTING POLICIES 5
NOTES TO ACCOUNTS & ACCOUNTING POLICIES 5
As per our Report of even date. Signatures to the Balance Sheet and As per our Report of even date. Signatures to the Profit and Loss Account
Schedules 1 to 3 and 5 and Schedules 4 and 5
B. S. DASTOOR T. A. DUBASH M. S. KORDE B. S. DASTOOR T. A. DUBASH M. S. KORDE
Partner Directors Directors Partner Directors Directors
Mumbai, Dated : May 10, 2006 Mumbai, Dated : May 10, 2006
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2006
This Year Previous Year SCHEDULE 5 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES
SCHEDULE 1 : SHARE CAPITAL Rupees Rupees
ACCOUNTING POLICIES
AUTHORISED
1000 Equity Shares of Rs.1000/- each 1,000,000 1,000,000 1) GENERAL
1,000,000 1,000,000 The accounts are prepared under the Historical Cost Convention, using the accrual method of
accounting.
ISSUED & SUBSCRIBED
500 Equity Shares of Rs.1000/- each 500,000 500,000 2) MISCELLANEOUS EXPENDITURE
500,000 500,000 Miscellaneous expenditure is amortised over a period of 10 years.
PAID UP 3) The basic earnings per share is computed using the weighted average number of common shares
500 Equity Shares of Rs.1000/- each fully paid-up 500,000 500,000 outstanding during the period. Diluted earnings per share is computed using the weighted average
[The entire share capital is held by Godrej Properties Limited number of common and dilutive common equivalent shares outstanding during the period, except
the Holding Company & its nominees] where the results would be anti-dilutive.
500,000 500,000 NOTES TO ACCOUNTS :
SCHEDULE 2 : PROJECT IN PROGRESS 1. There are no parties within the definition of Small Scale Industrial Undertakings to whom the
Project Payments 28,577,310 28,395,239 Company owes any sum.
Add : Expenses transferred from Profit & Loss Account 219,542 182,071 2. Additional information required to be given under Schedule VI, Part II of the Companies Act, 1956 to
28,796,852 28,577,310 the extent not applicable is not given.
3. Earnings per share This Year Previous Year
SCHEDULE 3 : CURRENT LIABILITIES Profit after transfer to project in Progress as per
Sundry Creditors (Note 1) Profit & Loss Account Rs. (2500) Rs. (2,500)
For Expenses 53,448 52,956 Weighted average no. of equity shares outstanding 500 500
Investors Education & Protection Fund – – Basic/Diluted earnings per share Rs. (5) Rs. (5)
53,448 52,956 Nominal value of shares Rs. 1,000 Rs. 1,000
SCHEDULE 4 : ADMINISTRATION EXPENSES 4. AS 18 – RELATED PARTY DISCLOSURE
Rent, Rates & Taxes 36,002 – Related party disclosures as required by AS-18, “Related Party Disclosures”, are given below:
Payment to Auditors - Audit Fees 28,060 27,550 1. Relationships:
Other Operating Expenses 155,480 154,521 (i) 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
219,542 182,071 (GIL). GIL is subsidiary of Godrej & Boyce Manufacturing Company Limited (G&B), the
ultimate holding 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. G&B GIL GPL
1 Expenses charged by other Companies – – 219,050
2 Outstanding net of (payables) – – 28,267,717
28,048,667
Figures in italics are for previous year
108
5. STATEMENT PURSUANT TO PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956. Cash Flow Statement for the year ended March 31, 2006
BALANCE SHEET ABSTRACT FOR THE YEAR ENDED 31ST MARCH, 2006 AND COMPANY’S Particulars Current Year Previous Year
GENERAL BUSINESS PROFILE Rs. Rs. Rs.
1. Registration Details Cash from Operating Activities
Registration No. : 11-91582 Net Profit Before Tax (2,500) (2,500)
State Code : 11 Add : Non-cash / Non-operating Expenses
Balance Sheet Date : March 31, 2006 Deferred Revenue Expenditure 2,500 2,500
2. Capital raised during the year (Amount in Rs. Thousands)
Less : Non-cash / Non-operating Income – –
Public Issue : Nil
Add :
Rights Issue : Nil Change in Inventory (219,542) (182,071)
Bonus Issue : Nil Change in Loans and Advances – (4,239)
Private Placement- Capital : Nil Change in Current Liabilities 492 1,059
- Premium : Nil
(219,050) (185,251)
3. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Less : Taxes Paid – (219,050) –
Total Liabilities : 28,821
(185,251)
Total Assets : 28,821
Cash from Investing Activities –
Sources of Funds :
Cash from Financing Activities
Paid-up Capital : 500
Increase in Unsecured Loan 219,050 219,050 185,251
Reserves & Surplus : –
Secured Loans : – Cash & Cash Equivalent – –
Unsecured Loans : 28,268 Add : Cash & Bank Balance as on 31.3.2005 – –
Application of Funds : –
Cash & Bank Balance as on 31.3.2006 – –
Net Fixed Assets : –
Investments : –
Notes:
Net Current Assets : 28,748
Misc. Expenditure : 10 1) The Cash Flow Statement has been prepared under the “Indirect Method” as set out in the Accounting
Accumulated Losses : 10 Standard (AS) 3 on “Cash Flow Statements”, and presents cash flows by operating, investing and
financing activities.
4. Performance of the Company (Amount in Rs. Thousands)
2) Figures in brackets are outflows/deductions.
Turnover : –
Total Expenditure : 222 3) Figures for the previous year have been regrouped/restated wherever necessary to conform to this
Profit/(Loss) before tax : (3) year’s classification.
Profit/(Loss) after tax : (3)
Earning per Share in Rs. : (5)
Dividend Rate % : –
5. Generic Names of Three Principal Chartered Accountants
Products/Services of Company : N.A.
B. S. DASTOOR T. A. DUBASH M. S. KORDE
Partner Directors Directors
Mumbai, Dated : May 10, 2006
109
Godrej Realty Private Limited (Formerly Casablanca Properties Private Limited)
To The Shareholders 7. CHANGE OF REGISTERED OFFICE OF THE COMPANY :
Your Directors have pleasure in submitting their Report alongwith the audited Accounts for the year ended The Company changed the address of its Registered Office from 5/40, C.C.I. Colony, Unnat Nagar – 4,
31st March, 2006. M.G. Road, Goregaon (West), Mumbai – 400 062 to Godrej Bhavan, 4th Floor, 4A, Home Street, Fort,
1. FINANCIAL HIGHLIGHTS : Mumbai – 400 001 with effect from 30th January, 2006.
The accounting results for the year ended 31st March, 2006 reveal that there is no surplus/deficit at the 8. APPOINTMENT OF AUDITORS :
end of the year. M/s. Kalyaniwalla Mistry and Associates, Chartered Accountants retire at the ensuing Annual General
2. REVIEW OF OPERATIONS : Meeting and are eligible for re-appointment for which they have given their consent.
During the year the Company was taken over by Godrej Properties Limited. 9. DIRECTORS’ RESPONSIBILITY STATEMENT:
Further during the year the Company allotted 4,90,000 Nos. of equity shares of Rs.10/- each fully paid- Your Directors confirm:
up to HDFC Venture Trustee Company Limited a trustee of HDFC Property Fund, and 5,00,000 Nos. of (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;
equity shares of Rs.10/- each fully paid-up to Godrej Properties Limited. As such Godrej Properties Ltd. (ii) that the Directors have selected such accounting policies and applied them consistently and made
holds in aggregate 5,10,000 Nos. of equity shares of the Company and holds 51% of the paid up share judgments and estimates that are reasonable and prudent so as to give a true and fair view of the
capital of the Company. Further, the Company issued 56,35,000 Nos. of 10% Secured Redeemable state of affairs of the Company at the end of the financial year ended 31st March, 2006 and of the
Optionally Convertible Debentures of Rs.10/- each fully paid-up to HDFC Venture Trustee Company profit of the Company for that year;
Limited and 58,65,000 Nos. of 10% Secured Redeemable Optionally Convertible Debentures of (iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting
Rs.10/- each to Godrej Properties Ltd. records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets
3. DIVIDEND : of the Company and for preventing and detecting fraud and other irregularities;
As there are no profits, the Directors regret that no dividend can be recommended. (iv) that the Directors have prepared the annual accounts on a going concern basis.
4. DIRECTORS : 10. ADDITIONAL INFORMATION :
Mr. Pirojsha A. Godrej was appointed as Additional Director of the Company with effect from (a) Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of
30th January, 2006. He holds office till the ensuing Annual General Meeting. the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.
Mr. Milind Korde was appointed as Additional Director of the Company with effect from 30th January, (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings
2006. He holds office till the ensuing Annual General Meeting. and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies
Mr. Naresh Nadkarni was appointed as Additional Director of the Company with effect from 16th March, (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:
2006. He holds office till the ensuing Annual General Meeting. (i) Conservation of Energy :
Mr. Rakesh Desai, Director of the Company resigned on 31st January, 2006. The Board desires to place on Expenses on account of Energy are negligible.
record the valuable services rendered by Mr. Rakesh Desai during his tenure as a Director of the Company. (ii) Technology Absorption :
Mr. Sanjay Desai, Director of the Company resigned on 31st January, 2006. The Board desires to place It is an on going process.
on record the valuable services rendered by Mr. Sanjay Desai during his tenure as a Director of the (iii) Foreign Exchange Earning & Outgo :
Company The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange
5. CHANGE OF AUTHORISED CAPITAL : Expenditure during the year.
The Company has increased its Authorised Capital from Rs.1 Lac to Rs. 1 Crore during the year. For and on behalf of the Board of Directors
6. CHANGE OF NAME OF THE COMPANY : Pirojsha A. Godrej Milind Korde
The name of the Company was changed from Casablanca Properties Private Limited to Godrej Realty Director Director
Private Limited with effect from 25th January, 2006. The Registrar of Companies has accordingly issued
the new Incorporation Certificate. Mumbai, May 10, 2006

TO THE MEMBERS OF GODREJ REALTY PRIVATE LIMITED (Formerly Casablanca Properties Private Limited)
1. We have audited the attached Balance Sheet of GODREJ REALTY PRIVATE LIMITED, as at d) In our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report comply with
31st March, 2006 and also the Profit and Loss Account of the Company for the period ended 27th June the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.
2005 to 31st March, 2006. These financial statements are the responsibility of the Company’s management. e) In our opinion and to the best of our information and according to the explanations given to us, the
Our responsibility is to express an opinion on these financial statements based on our audit. said accounts read with the notes thereon, give the information required by the Companies Act,
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those 1956, in the manner so required and give a true and fair view in conformity with the accounting
Standards require that we plan and perform the audit to obtain reasonable assurance about whether the principles generally accepted in India:
financial statements are free of material misstatement. An audit includes examining, on a test basis, i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006; and
evidence supporting the amounts and disclosures in the financial statements. An audit also includes ii) in the case of the Profit and Loss Account, of the performance Company for the period ended
assessing the accounting principles used and significant estimates made by management, as well as on that date.
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the period ended
basis for our opinion. on that date.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in 5. On the basis of the written representations received from the directors as on 31st March, 2006, and taken
terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on on record by the Board of Directors, we report that, none of the directors is disqualified as on 31st March,
the matters specified in paragraphs 4 and 5 of the said Order. 2006 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: Companies Act, 1956.
a) We have obtained all the information and explanations, which to the best of our knowledge and For and on behalf of
belief were necessary for the purposes of our audit. KALYANIWALLA MISTRY & ASSOCIATES
b) In our opinion, proper books of account as required by law have been kept by the Company so far Chartered Accountants
as appears from our examination of such books. B. S. Dastoor
c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the Place : Mumbai Partner
books of account. Date : May 10, 2006 Membership No. 48936
ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph (3) of our report of even date. 9) (a) According to the information and explanations given to us and on the basis of our examination of books
1) (a) The Company is maintaining proper records showing full particulars, including quantitative details of accounts, during the year, the Company has no statutory dues including Provident Fund, Investor
and situation of fixed assets. Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service
(b) As explained to us, the Company has a program for physical verification of fixed assets at periodical Tax, Customs Duty, Excise Duty, Cess and other statutory dues incurred during the year. According to
intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company the information and explanations given to us, there are no undisputed dues, payable in respect of above
(c) In our opinion, the disposal of fixed assets during the year does not affect the going concern as at 31st March 2006 for a period of more than six months from the date they became payable.
assumption. (b) According to the information and explanations given to us, there are no dues outstanding of Sales
2) (a) The management has conducted physical verification of inventory at reasonable intervals. Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute.
(b) In our opinion, the procedures of physical verification of inventory followed by the management 10) The Company does not have accumulated losses at the end of the financial year and it has not incurred
are reasonable and adequate in relation to the size of the company and the nature of its business. any cash losses in the current and immediately preceding financial year.
(c) The company is maintaining proper records of inventory and no material discrepancies were 11) According to the information and explanations given to us and on the based on documents and records
noticed on physical verification. produced to us, the Company has not defaulted in dues to debenture holders. There are no dues to banks
3) (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties and financial institutions.
covered in the register maintained under Section 301 of the Companies Act, 1956. 12) According to the information and explanations given to us and based on the documents and records
(b) Consequently, the question of commenting on the rates of interest and conditions of the loans 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.
granted being prejudicial to the interests of the Company, receipt of regular principal and the 13) In our opinion and according to the information and explanations given to us, the nature of activities of the
interest and reasonable steps for recovery of principal and interest does not arise. Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/societies.
(c) The Company has not taken any loan, secured or unsecured from companies, firms or other parties 14) The Company does not deal in shares, securities, debentures and other investments.
covered in the register maintained under Section 301 of the Companies Act, 1956. 15) According to the information and explanations given to us, the Company has not given any guarantee
(d) Consequently, the question of commenting on the rates of interest and others terms and conditions for loans taken by others from banks or financial institutions.
of the loans taken being prejudicial to the interests of the Company, payment of regular principal 16) The Company did not have any term loans during the year.
and the interest does not arise. 17) According to the information and explanations given to us and an overall examination of the Balance
4) In our opinion and according to the information and explanations given to us, there are adequate internal Sheet and Cash Flow of the Company, we report that the Company has not utilized funds raised on short
control procedures commensurate with the size of the Company and the nature of its business, for the term basis for long term investments.
purchases of inventory, fixed assets and for the sale of goods. There are no sales of service. During the course 18) The Company has not made any preferential allotment of shares to parties or companies covered in the
of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls. register maintained under Section 301 of the Companies Act, 1956.
5) (a) Based on the audit procedures applied by us and according to the information and explanations 19) According to the information and explanations given to us, during the current perod, the Company had
provided by the management, we are of the opinion that the particulars of contracts and arrangement issued 1,15,00,000 debentures of Rs. 10 each. The Company is in process of creating securities for the same.
referred to in Section 301 of the Companies Act, 1956 have been entered into the register required 20) The Company has not raised any money through a public issue during the year.
to be maintained under that section. 21) Based on the audit procedures performed and information and explanations given by the management,
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices we report that no fraud on or by the Company has been noticed or reported during the year.
which are reasonable having regard to prevailing marketing prices at the relevant time. For and on behalf of
6) In our opinion and according to the information and explanations given to us, the Company has not KALYANIWALLA MISTRY & ASSOCIATES
accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other Chartered Accountants
provisions of the Companies Act, 1956, are not applicable. B. S. Dastoor
7) In our opinion and according to the information and explanations given to us, the internal audit system Partner
is commensurate with the size of the Company and nature of its business. Membership No. 48936
8) The maintenance of cost records has not been prescribed by the Central Government under Section Place : Mumbai
209(1)(d) of the Companies Act, 1956, for any of the Company’s products.
Date : May 10, 2006.
110
BALANCE SHEET AS AT MARCH 31, 2006 PROFIT AND LOSS ACCOUNT FOR THE PERIOD JUNE 27TH, 2005
Schedule As at TO MARCH 31, 2006
31.03.06 Schedule For the
Rupees period ended
SOURCES OF FUNDS 31.03.06
Shareholders’ Funds INCOME –
Share Capital 1 10,000,000
EXPENDITURE
Loan Funds
Administration Expenses 8 13,271,680
Secured Loans 2 115,446,417
Interest & Finance Charges 9 2,667,104
125,446,417
APPLICATION OF FUNDS Depreciation 2,769
Fixed Assets 15,941,552
Gross Block 3 100,083
Less : Depreciation 2,769 Less : Amount Transferred to Project in Progress 15,941,552
Net Block 97,314 Earning per share (basic/diluted ) in Rs. (refer note no. 3) 0.00
Investments –
Current Assets, Loans & Advances Notes to Accounts & Accounting Policies 10
Projects in Progress 4 15,941,552
Cash Balance 5 34,689,427
Loans & Advances 6 76,248,733 The Schedules referred to above form an integral part of the Profit and Loss Account
As per our Report of even date. Signatures to Profit and Loss Account
126,879,712 and Schedules 8 to 10
Less : Current Liabilities & Provisions For and on behalf of
Current Liabilities 7 1,530,610 KALYANIWALLA MISTRY & ASSOCIATES
Provisions – Chartered Accountants PIROJSHA GODREJ Director
1,530,610 MILIND KORDE Director
Net Current Assets 125,349,102 BAHADUR S. DASTOOR
Partner
125,446,417
0.0 Place : Mumbai
Notes to Accounts & Accounting Policies 10 Date : May 10, 2006
The Schedules referred to above form an integral part of the Balance Sheet
As per our Report of even date. Signatures to Balance Sheet and
Schedules 1 to 7 and 10
Chartered Accountants PIROJSHA GODREJ Director
MILIND KORDE Director
BAHADUR S. DASTOOR
Partner
Place : Mumbai
Date : May 10, 2006
As at As at
31-03-2006 31-03-2006
Rupees Rupees
SCHEDULE 1 : SHARE CAPITAL SCHEDULE 2 : SECURED LOANS
Authorised 10% Secured redeemable optionally convertible debentures @Rs. 10/- each 115,000,000
1000000 Equity Shares of Rs.10 each 10,000,000 Interest Accrued & Due 446,417
10,000,000 (The Company is in process of creating securities for the same)
Issued, Subscribed and Paid up 115,446,417
1,000,000 Equity Shares of Rs.10 each 10,000,000
(out of which 510,000 equity shares are held by
the holding company, Godrej Properties Ltd.)
10,000,000
SCHEDULE 3 : FIXED ASSETS (Rs. ’000)
ASSETS As at Additions Deductions As at As at For the As at As at
1.4.2005 31.3.2006 1.4.2005 Year 31.3.2006 31.3.2006
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Motor Vehicle – 100,083 – 100,083 – 2,769 2,769 97,314
TOTAL – 100,083 – 100,083 – 2,769 2,769 97,314
Previous Year – – – – – – –
As at As at
31-03-2006 31-03-2006
Rupees Rupees
SCHEDULE 4 : PROJECT IN PROGRESS SCHEDULE 8 : ADMINISTRATION EXPENSES
Opening Balance – Payment to Auditors - Audit Fees 101,016
Add : Expenses transferred from Profit & Loss Account 15,941,552 Consultancy Charges 7,380,371
15,941,552 Other Operating Expenses 5,790,293
SCHEDULE 5 : CASH & BANK BALANCE 13,271,680
Current account with Scheduled Bank 4,624,681
SCHEDULE 9 : INTEREST AND FINANCE CHARGES (NET)
Fixed Deposits 30,064,746
Interest Paid
34,689,427 Companies 2,246,473
SCHEDULE 6 : LOANS & ADVANCES Others 504,110
Advances recoverable in cash or kind or for value to be received 76,248,733
Total Interest paid 2,750,583
76,248,733 Less : Interest received (Gross)
SCHEDULE 7 : CURRENT LIABILITIES Others 83,479
Sundry Creditors (Note 2)
For Expenses 925,485 Total Interest received 83,479
Others 605,125 NET INTEREST 2,667,104
1,530,610
111
Godrej Realty Private Limited (Formerly Casablanca Properties Private Limited)
SCHEDULE 10 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES h) PROVISION FOR TAXATION
Tax expense comprises both current and deferred tax.
1) ACCOUNTING POLICIES
a) GENERAL Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable
The financial statements are prepared under the historical cost convention in accordance with tax rates and tax laws.
Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute
Deferred tax is recognized on timing differences, being the differences between the taxable
of Chartered Accountants of India and the provisions of the Companies Act, 1956.
income and the accounting income that originate in one period and are capable of reversal in one
b) FIXED ASSETS or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are
Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Cost recognized and carried forward only to the extent that there is a reasonable certainty that sufficient
includes all incidental expenses related to acquisition and installation, other pre-operation expenses future taxable income will be available against which such deferred tax assets can be realized. The
and interest in case of construction. tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates
Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine and laws enacted or substantially enacted on the balance sheet date.
whether there is any indication of impairment. If such indication exists, the recoverable amount i) PROVISIONS AND CONTIGENT LIABILITIES
is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, Provisions are recognized in the accounts in respect of present probable obligations, the amount
is recognized whenever carrying amount exceeds the recoverable amount. of which can be reliably estimated.
c) DEPRECIATION/AMORTIZATION Contingent liabilities are disclosed in respect of possible obligations that arise from the past events
Depreciation has been provided on Written Down Value basis, at the rates specified in Schedule but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain
XIV of the Companies Act, 1956. future events not wholly within the control of the Company.
d) INVENTORIES 2) There are no parties within the definition of Small Scale Industrial Undertakings to whom the Company
Inventories are valued as under : owes any sum.
a) Completed Flats – At lower of Cost or Market value 3) Earnings per share
b) Construction Work-in-Progress – At cost This Year (Rs.)
Profit after transfer to Project in Progress as per Profit & Loss Account NIL
Construction Work-in-Progress includes cost of land, premium for development rights, construction Weighted average no. of equity shares outstanding 1000000
costs, allocated interest and expenses incidental to the projects undertaken by the Company. Basic/Diluted earnings per share NIL
e) REVENUE RECOGNITION Nominal value of shares 10000000
The Company is following the “Percentage of Completion Method” of accounting. As per this
4) Amounts paid to Auditors: Current Year (Rs.)
method, revenue in Profit & Loss Account at the end of the accounting year is recognized in
Audit Fees 78,568
proportion to the actual cost incurred as against the total estimated cost of projects under execution
Audit under other Statutes 22,448
with the Company.
Total 101016
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 5) SEGMENT INFORMATION
relevant, the percentages of completion, costs to completion, the expected revenues from the As the Company has only one business segment, disclosure under Accounting Standard 17 on “ Segment
project/activity and the foreseeable losses to completion. Such estimates have been relied upon Reporting” issued by the Institute of Chartered Accountants of India is not applicable.
by the auditors. 6) AS 18 – RELATED PARTY DISCLOSURE
Income from operation of commercial complexes is recognized over the tenure of the lease/ 1. Relationships:
service agreement. (i) Shareholders (the Godrej Group Shareholding) in the Company Godrej Properties Limited
Interest income is accounted on an accrual basis at contracted rates. (GPL) holds 51% 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
Dividend income is recognized when the right to receive the same is established. holding company.
f) BORROWING COST (ii) Key Management Personnel :
Interest and commitment charges incurred in connection with borrowing of funds, which are Mr. Milind Surendra Korde
incurred for the development of long term projects are transferred to Construction Work-in- 2. The following transactions were carried out with the related parties in the ordinary course of the business:
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. Sr. No. G&B GIL GPL
1 Issue of equity share capital – – 5,100,000
Other borrowing costs are recognized as an expense in the period in which they are incurred.
2 Issue of debentures – – 58,650,000
g) EARNINGS PER SHARE 3 Purchase of Fixed Assets – – 100,083
The basic earnings per share is computed using the weighted average number of common shares 4 Expenses Charged by other Companies (net) – – 15,600,959
outstanding during the period. Diluted earnings per share is computed using the weighted average 5 Outstanding net of (payables) – – 911,655
number of common and dilutive common equivalent shares outstanding during the period, except
where the results would be anti-dilutive. 7) This being the first year of operations of the Company, the question of previous years figures does not arise.
ADDITIONAL INFORMATION AS REQUIRED PART IV Cash Flow Statement for the period June 27, 2005 to March 31st, 2006.
OF THE SCHEDULE VI OF THE COMPANIES ACT, 1956 Particulars Rupees Rupees
Balance Sheet Abstract and Company’s General Business Profile Cash from Operating Activities
Net Profit before Tax –
i) Registration Details Add : Non-cash / non-operating Expenses
Registration No 11-154268 Depreciation 2,769
State Code 11 Interest Income (83,479)
Balance Sheet 31/3/2006 Interest Paid 2,750,583
Loss on sale of Fixed assets –
ii) Capital raised during the year (Rupees ‘000) Tax Provision –
Public Issue Nil Deferred Revenue Expenditure –
Rights Issue Nil 2,669,873
Bonus Issue Nil Less : Non-cash / non-operating Income –
Private Placement - Capital Nil 2,669,873
- Premium Nil Add :
iii) Position of mobilisation and deployment of funds (Rupees ‘000) Change in Inventory (15,941,552)
Change in Loans & Advances (76,248,733)
Total Liabilities 126,977
Change in Current Liabilities / Provisions 1,530,610
Total Assets 126,977
Sources of Funds (87,989,803)
Paid up Capital 1,000 Less : Taxes Paid (Net) – (87,989,803)
Reserve & Surplus Nil Cash from Investing Activities
Secured Loans 115,446 Purchase of Fixed Assets (100,083)
Unsecured Loans Nil Interest Received 83,479 (16,604)
Application of Funds Cash from Financing Activities
Net Fixed Assets 97 Issue of Share Capital 10,000,000
Investments Nil Issue of Debentures 115,446,417
Net Current Assets 125,349 Interest Paid (2,750,583) 122,695,835
Misc Expenditure Accumulated Losses Nil Cash and Cash Equivalent 34,689,427
Cash and Bank Balance as on 31.3.2006 34,689,427
iv) Performance of the Company (Rupees ‘000)
Turnover Nil Notes :
Total Expenditure 15,942 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
Profit/ (Loss) Before Tax Nil financing activities.
Profit/(Loss) After Tax Nil 2. Figures in brackets are outflows / deductions.
Earnings Per Share in Rs. Nil
Dividend Rate Nil For and on behalf of
v) Generic Names of three Principal N.A. Chartered Accountants PIROJSHA GODREJ Director
products/services of the company MILIND KORDE Director
BAHADUR S. DASTOOR
Partner
Place : Mumbai
Date : May 10, 2006
112
Godrej Waterside Properties Private Limited (Formerly Bridgestone Properties Private Limited)
TO THE SHAREHOLDERS 8. APPOINTMENT OF AUDITORS :
Your Directors have pleasure in submitting their Report alongwith the audited Accounts for the year ended 31st M/s. Kalyaniwalla Mistry and Associates, Chartered Accountants retire at the ensuing Annual General
March, 2006. Meeting and are eligible for re-appointment for which they have given their consent.
1. FINANCIAL HIGHLIGHTS : 9. DIRECTORS’ RESPONSIBILITY STATEMENT:
The accounting results for the year ended 31st March, 2006 reveal that there is no surplus/deficit at the Your Directors confirm:
end of the year. (i) that in the preparation of the annual accounts, the applicable accounting standards have been
2. REVIEW OF OPERATIONS : followed;
The Company was taken over by Godrej Properties Limited during the financial year. (ii) that the Directors have selected such accounting policies and applied them consistently and made
During the year Godrej Properties Limited was allotted 40,000 nos of equity shares of Rs.10/- each fully judgements and estimates that are reasonable and prudent so as to give a true and fair view of the
paid-up of the Company and they hold the entire paid up share capital of the Company. state of affairs of the Company at the end of the financial year ended 31st March, 2006 and of the
3. DIVIDEND : profit of the Company for that year;
As there are no profits, the Directors regret that no dividend can be recommended. (iii) that the Directors had taken proper and sufficient care for the maintenance of adequate accounting
4. DIRECTORS : records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets
Mr. Pirojsha A. Godrej was appointed as Additional Director of the Company with effect from 30th of the Company and for preventing and detecting fraud and other irregularities;
January, 2006. He holds office till the ensuing Annual General Meeting. A notice has been received from (iv) that the Directors have prepared the annual accounts on a going concern basis.
a shareholder proposing the candidature of Mr. Pirojsha A. Godrej for the office of Director. 10. ADDITIONAL INFORMATION :
Mr. Milind Korde was appointed as Additional Director of the Company with effect from 30th January, (a) Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A)
2006. He holds office till the ensuing Annual General Meeting. A notice has been received from a of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not
shareholder proposing the candidature of Mr. Milind Korde for the office of Director. given.
Mr. Rakesh Desai, Director of the Company has resigned on 31st January, 2006. The Board desires to (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange
place on record the valuable services rendered by Mr. Rakesh Desai during his tenure as a Director of Earnings and Outgo, required under section 217(1)(e) of the Companies Act, 1956 read with the
the Company. Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is
Mr. Sanjay Desai, Director of the Company has resigned on 31st January, 2006. The Board desires to place provided hereunder:
on record the valuable services rendered by Mr. Sanjay Desai during his tenure as a Director of the (i) Conservation of Energy :
Company. Expenses on account of Energy are negligible.
5. CHANGE OF AUTHORISED CAPITAL : (ii) Technology Absorption :
During the year the Company has increased its Authorised Capital from Rs.1 Lac to Rs. 5 Lacs. It is an on going process.
6. CHANGE OF NAME OF THE COMPANY : (iii) Foreign Exchange Earning & Outgo :
The name of the Company was changed from Bridgestone Properties Private Limited to Godrej Waterside The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange
Properties Private Limited with effect from 25th January, 2006. The Registrar of Companies has accordingly Expenditure during the year.
issued the new Incorporation Certificate. For and on behalf of the Board of Directors
7. CHANGE OF REGISTERED OFFICE OF THE COMPANY :
The Company changed the address of its Registered Office from 5/40, C.C.I. Colony, Unnat Nagar – 4, Pirojsha Godrej Milind Korde
M.G. Road, Goregaon (West), Mumbai – 400 062 to Godrej Bhavan, 4th Floor, 4A, Home Street, Fort, Director Director
Mumbai – 400 001 with effect from 30th January, 2006. Mumbai, May 10, 2006

TO THE MEMBERS OF GODREJ WATERSIDE PROPERTIES PRIVATE LIMITED (Formerly Bridgestone Properties Private Limited)
1. We have audited the attached Balance Sheet of GODREJ WATERSIDE PROPERTIES PRIVATE LIMITED, e) In our opinion, the Balance Sheet and the Cash Flow Statement dealt with by this report comply with
as at 31st March 2006 and also the Cash Flow statement of the Company for the period 27th June, 2005 the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.
to 31st March, 2006. These financial Statements are the responsibility of the Company’s management. f) In our opinion and to the best of our information and according to the explanations given to us, the
Our responsibility is to express an opinion on these financial statements based on our audit. said accounts read with the notes thereon, give the information required by the Companies Act,
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those 1956, in the manner so required and give a true and fair view in conformity with the accounting
Standards require that we plan and perform the audit to obtain reasonable assurance about whether the principles generally accepted in India:
financial statements are free of material misstatement. An audit includes examining, on a test basis, i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2006;
evidence supporting the amounts and disclosures in the financial statements. An audit also includes and
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 ii) in the case of Cash Flow Statement, of the cash flows of the Company for the year ended on
basis for our opinion. that date.
3. This report does not include a statement on the matters specified in paragraph 4 of the Companies 5. On the basis of the written representations received from the directors as on 31st March, 2006, and taken
(Auditor’s Report) Order, 2003, issued by the Department of Company Affairs, in terms of Section on record by the Board of Directors, we report that, none of the directors is disqualified as on 31st March,
227(4A) of the Companies Act, 1956, since in our opinion and according to the information and explanations 2006 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the
given to us, the said Order is not applicable to the Company. Companies Act, 1956.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: For and on behalf of
a) We have obtained all the information and explanations, which to the best of our knowledge and KALYANIWALLA MISTRY & ASSOCIATES
belief were necessary for the purposes of our audit. Chartered Accountants
B.S. Dastoor
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.
Partner
c) No Profit and Loss Account has been prepared as the Company is yet to commence operations. Place : Mumbai
d) The Balance Sheet and the Cash Flow Statement dealt with by this report are in agreement with Date : May 10, 2006
the books of account.
113
Godrej Waterside Properties Private Limited (Formerly Bridgestone Properties Private Limited)
BALANCE SHEET AS AT MARCH 31, 2006 INFORMATION REQUIRED TO BE FURNISHED UNDER THE PART IV
OF SCHEDULE VI OF THE COMPANIES ACT, 1956
Schedule As at
Balance Sheet Abstract and Company’s General Business Profile
31.03.06
Rupees i) Registration Details
SOURCES OF FUNDS Registration No 11-154255
Shareholders’ Funds State Code 11
Share Capital 1 500,000 Balance Sheet 31/3/2006
Loan Funds – ii) Capital raised during the year (Rupees ‘000)
500,000 Public Issue Nil
Application Of Funds Rights Issue Nil
Fixed Assets – Bonus Issue Nil
– Private Placement - Capital Nil
Investments – - Premium Nil
Current Assets, Loans and Advances iii) Position of mobilisation and deployment of funds (Rupees ‘000)
Cash Balance 2 500,000 Total Liabilities 500
500,000 Total Assets 500
Less : Current Liabilities and Provisions – Source of Funds
Paid up Capital 500
Net Current Assets 500,000 Reserve & Surplus Nil
Secured Loans Nil
500,000
Unsecured Loans Nil
Notes To Accounts and Accounting Policies 3
Application of funds
Net Fixed Assets Nil
The Schedules referred to above form an integral part of the Balance Sheet
Investments Nil
As per our Report of even date. Signatures to Balance Sheet and Net Current Assets 500
Schedules 1, 2, and 3 Misc Expenditure Nil
For and on behalf of Accumulated Losses Nil
Chartered Accountants PIROJSHA GODREJ Director iv) Performance of the Company (Rupees ‘000)
MILIND KORDE Director Turnover Nil
BAHADUR S. DASTOOR Total Expenditure Nil
Partner Profit/ (Loss) Before Tax Nil
Profit/(Loss) After Tax Nil
Place : Mumbai Earnings Per Share in Rs. Nil
Date : May 10, 2006 Dividend Rate
v) Generic Names of three Principal N.A.
SCHEDULES ATTACHED TO AND FORMING PART OF THE products/services of the company
ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2006
As at 31.03.06 Cash Flow Statement for the period June 27, 2005 to March 31, 2006
Rupees Particulars Rs. Rs.
Cash from Operating Activities
Authorised
50000 Equity shares of Rs.10/- each 500,000 Net Profit Before Tax –
500,000 Cash from Investing Activities –
Issued and Subscribed and Paid Up
Cash from Financing Activities
50000 Equity Shares of Rs.10/- each 500,000
(50000 equity shares are held by the holding company, Increase in Share Capital 500,000 500,000
Godrej Properties Ltd) Cash and Cash Equivalent 500,000
500,000
Cash and Bank Balance as on 31.3.2006 500,000
SCHEDULE 2 : CASH & BANK BALANCE
Current account with Scheduled Bank 500,000 Notes:
500,000 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
SCHEDULE 3 - NOTES TO ACCOUNTS AND ACCOUNTING POLICIES activities.
ACCOUNTING POLICIES 2) Figures in brackets are outflows/deductions.
1) GENERAL
The accounts are prepared under the Historical Cost Convention, using the accrual method of accounting.
NOTES TO ACCOUNTS Chartered Accountants PIROJSHA GODREJ Director
a) As there are no operations, no Profit & Loss Account has been prepared. MILIND KORDE Director
b) Additional information required to be given under Schedule VI, Part II of the Companies Act, 1956 to the BAHADUR S. DASTOOR
Partner
extent not applicable is not given.
Place : Mumbai
2) AS 18 – RELATED PARTY DISCLOSURE
Date : May 10, 2006
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. 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) 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 G&B GIL GPL
1 Issue of equity share capital – – 500,000
3) This being the first year of operations of the Company, the question of previous years figures does not arise.
114
Godrej Hicare Limited

To The Members of GODREJ HICARE LIMITED Repayment of Loans from Group Companies (Note 3(e) of Annexure to Auditors report)
Your Directors submit their Report along with the Audited Accounts of your Company for the year ended Due to the accumulated losses, the repayment of the loans of the group companies are not being made.
March 31, 2006. Your Company is regular in repayment of loans taken from other corporates in form of Inter Corporate
Operating Results Deposits.
Your Company’s performance during the year as compared with the previous year is summarized below:
Directors Responsibility Statement:
March 31, 2006 March 31, 2005 Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your
(Rs. Lac) (Rs.Lac)
Total Income 2112.19 1205.84 Company confirm:
Profit/(Loss) for the year 104.34 (113.04) a) that in the preparation of the annual accounts, the applicable accounting standards have been
Before Extraordinary Items (After tax) followed and no material departures have been made from the same;
Profit/(Loss) After Extraordinary Items 104.34 (113.04) b) that they have selected such accounting policies and applied them consistently and made judgements
Add: Balance brought Forward (1444.94) (1331.90) and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of
Deficit Carried Forward (1340.60) (1444.94) the Company at the end of the financial year and of the profit or loss of the Company for that period.
Operations Review c) that they have taken proper and sufficient care for the maintenance of adequate accounting records
Your Company has recorded impressive growth of 75%. Total Income grew from Rs. 1206 lac in the in accordance with the provisions of this Act for safeguarding the assets of the Company for preventing
previous year to Rs. 2112 lac in the current year. The Company has been delivering profits for last 14 and detecting fraud and other irregularities;
months in a row and recorded a Profit after Tax of Rs. 103 lac as compared to loss of Rs.113 lac in the
previous year. d) that they have prepared the annual accounts on a going concern basis.
During the year the Company acquired reticulation technology (for pre-construction anti-termite treatment) Conservation of Energy, Technology Absorption:
from Termguard, Australia and Thermal imaging camera for termite detection from FLIR, Sweden. The information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange earnings
Your Company also undertook a major quality initiative called “SMILE” to improve internal processes and and outgo, required under Section 217(1)(e) of the Companies Act,1956, read with the Company’s ( Disclosure
to enhance service delivery to customers. of Particulars in the Report of the Board of Directors) Rules, 1988 has not been given, since such requirement
Your Company has planned aggressive geographical expansion in next year while continuing to grow in is not applicable to the Company.
current markets by increasing service centers. Particulars of Employees:
Dividend: None of the employees fall under the provisions of Sec 217(2A) of the Companies Act, 1956. Hence, the
In view of the accumulated losses, your Directors do not recommend any dividend for the year.
particulars required under Section 217(2A) of the Companies Act, 1956 read with the Company’s (Particulars
Directors:
There are no changes in the Directorship in the Company. of Employees) Rules, 1975 are not given.
In accordance with Article 150 of the Articles of Association of your Company, one of the Directors of the Foreign Exchange earnings and Outgo:
Company, Mr. A.B.Godrej by rotation in the ensuing Annual General Meeting and being eligible, offers Expenditure in Foreign Currency
himself for reappointment. Current Year Previous Year
Auditors: March 31, 2006 March 31, 2005
You are requested to appoint Auditors for the current year and fix their remuneration. The retiring Auditors, (Rs. Lacs) (Rs. Lacs)
M/s. Kalyaniwalla Mistry & Associates (KMA), Chartered Accountants, are eligible for re-appointment. License Fees 8.75 Nil
Audit Committee: Training Expenses 2.28 Nil
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 March 31st 2006. Travelling Expenses 0.53 0.26
Note on Auditors Report: Additional Information
Erosion of Networth (Note 4(i) of Auditors report and note 10 of Annexure to Auditors report) The additional information as required to be given under the Companies Act, 1956 has been laid out in the
Though the accumulated losses of the Company exceeds its paid up capital, the shareholders are very schedules attached to and forming part of the Balance Sheet and Profit and Loss Account , including the
supportive of the Pest management business and are committed to infuse funds as and when required to Notes to Accounts which are self explanatory
for working capital and other requirements. Acknowledgement
Change in Amortisation policy for Software (Note 4(iii) of Auditors report) Your Board wishes to thank all its Members, Bankers, Franchisees, Employees, Suppliers and Customers
The change in the amortization policy for computer software from 3 years to 6 years has been done to for their continued support and help for the growth of the Company.
reflect more appropriate value of the asset in the Balance Sheet of the Company considering the useful life
of the computer softwares. For and on behalf of the Board of Directors
Fixed Assets Register (Note 1 (a) and (b) of Annexure to Auditors report)
A. B. Godrej
Your Company is in process of updating the same. Physical verifications will be carried out after the Mumbai , May 8, 2006 Chairman
records and updated.
REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ HICARE LIMITED

1. We have audited the attached Balance Sheet of GODREJ HICARE LIMITED as at 31 March, 2006 iv) In our opinion, proper books of account, as required by law, have been kept by the Company
and also the Profit and Loss Account of the Company for the year ended on that date annexed so far as appears from our examination of such books.
thereto. These financial statements are the responsibility of the Company’s management. Our v) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this
responsibility is to express an opinion on these financial statements based on our audit. report are in agreement with the books of account.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those vi) In our opinion, the Balance Sheet and the Profit and Loss Account dealt with by this report
standards require that we plan and perform the audit to obtain reasonable assurance about whether comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the
the financial statements are free of material misstatement. An audit includes examining, on test Companies Act, 1956.
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also vii) In our opinion and to the best of our information and according to the explanations given to us,
includes assessing the accounting principles used and significant estimates made by the management, subject to paragraph (i) above, give the information required by the Companies Act, 1956, in
as well as evaluating the overall financial statement presentation. We believe that our audit provides the manner so required and give a true and fair view:
a reasonable basis for our opinion. i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31 , 2006;
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters iii) in the case of the Cash Flow Statement, of the cash flows of the company for the year
specified in paragraphs 4 and 5 of the said Order. ended on that date.
4. Further to our comments in the Annexure referred to in para (3) above, we report that: 5. On the basis of the written representations received from the Directors as on March 31, 2006, and
i) The accumulated losses of the Company as at March 31, 2006 exceed its paid up capital taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on
resulting in the erosion of its net worth. The accounts for the year have been prepared on the March 31, 2006 from being appointed as a Director in terms of clause (g) of sub-section (1) of
‘Going Concern’ basis on the understanding that finance will continue to be available to the section 274 of the Companies Act, 1956.
Company for working capital requirements from the promoters. For and on behalf of
ii) We have obtained all the information and explanations, which to the best of our knowledge KALYANIWALLA MISTRY AND ASSOCIATES
and belief were necessary for the purposes of our audit. Chartered Accountants
iii) In current year the Company has changed the amortization policy of software development B. S. Dastoor
from 3 years to 6 years. Had there been no change in the rate of depreciation, the charge for Partner
current year would have been higher by Rs. 115,786. Consequently accumulated losses and Membership No. 48936
written down value of asset as at year end are lower by Rs. 183,415. Mumbai, May 8, 2006

Referred to in paragraph (3) of our report of even date. 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.
1. (a) As per the information and explanations given to us, the Company is in the process of updating
(b) Consequently, the question of commenting on the rates of interest and the other terms and
its records showing full particulars, including quantitative details and situation of fixed assets.
conditions of the loans granted being prejudicial to the interests of the Company, receipt of
(b) The Company has not conducted a physical verification of fixed assets during the year, in view regular principal and interest and reasonable steps taken for recovery of principal and interest
of which we are unable to comment on discrepancies, if any. due does not arise
(c) The disposal of fixed assets during the year does not affect the going concern assumption. (c) The Company has taken unsecured loans of Rs. 104,310,000/- from six Companies listed in the
2. (a) The Management has conducted physical verification of inventory at reasonable intervals. Register maintained under Section 301 of the Companies Act, 1956.
(b) In our opinion, the procedures of physical verification of inventory followed by the management (d) In case of these loans, Interest has been waived by the respective companies. In our opinion,
are reasonable and adequate in relation to the size of the Company and the nature of its the rate of interest and other terms and conditions of these loans are not prima facie prejudicial
business. to the interests of the Company.
(e) The payment of principal for above amounts has not been regular. The payment of interest has
(c) The Company is maintaining proper records of inventory and no material discrepancies were
been regular wherever the same has not been waived.
noticed on physical verification.
115
ANNEXURE TO THE AUDITORS’ REPORT (Contd.)
4. In our opinion and according to the information and explanations given to us, there are adequate 11. According to the information and explanations given to us and based on the documents and records
internal control procedures commensurate with the size of the Company and the nature of its produced to us, there are no dues to banks, financial institutions or debenture holders.
business, for the purchases of inventory, fixed assets and for the sale of goods. During the course of 12. According to the information and explanations given to us and based on the documents and records
our audit, no major weakness has been noticed in the internal controls. produced to us, the Company has not granted loans and advances on the basis of security by way of
5. (a) Based on the audit procedures applied by us and according to the information and explanations pledge of shares, debentures and other securities.
provided by the management, we are of the opinion that the particulars of contracts and 13. In our opinion and according to the information and explanations given to us, the nature of activities of the
arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into
Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefit fund/ societies.
the register required to be maintained under that section.
(b) These transactions made in pursuance of such contracts or arrangements, were made at prices
15. According to the information and explanations given to us, the Company has not given any guarantee
which are reasonable having regard to the prevailing market prices at the relevant time.
for loans taken by others from banks and financial institutions.
6. In our opinion and according to the information and explanations given to us, the Company has not
16. The Company did not have any term loans during the year.
accepted any deposits from public and the provisions of Section 58A, 58AA or any other provision of
17. According to the information and explanations given to us and on an overall examination of the
the Companies Act, 1956, read with the rules framed there under are not applicable.
Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds
7. In our opinion and according to the information and explanations given to us, the internal audit
raised on short-term basis for long-term investment.
system is commensurate with the size of the Company and nature of its business.
18. The Company has made preferential allotment of shares during the year to parties covered in the
8. The maintenance of cost records has not been prescribed by the Central Government under Section
register maintained under Section 301 of the Companies Act, 1956. In our opinion and based on the
209(1)(d) of the Companies Act, 1956, in respect of the Company’s products.
information and explanations given to us, the price at which the shares are issued is not prima-facie
9. (a) According to the information and explanations given to us and on the basis of our examination
prejudicial to the interest of the Company.
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, Customs Duty, Excise Duty,
Service Tax, Cess and other statutory dues applicable to it with the appropriate authorities.
we report that no fraud on or by the Company has been noticed or reported during the year.
According to the information and explanations given to us, there are no undisputed dues
payable in respect of above as at March 31, 2006 for a period of more than six months from For and on behalf of
the date they became payable KALYANIWALLA MISTRY AND ASSOCIATES
(b) According to the information and explanations given to us, there are no dues outstanding of Chartered Accountants
Sales Tax, Income Tax, Customs Duty, Service tax, Wealth Tax, Excise Duty or Cess on account B. S. Dastoor
of any dispute. Partner
10. The Company’s accumulated losses at the end of the financial year are in excess of fifty percent of its Membership No. 48936
net worth. Though it has incurred cash losses in the immediately preceding financial year, there are
no cash losses in the current financial year. Mumbai, May 8, 2006
MARCH 31, 2005
SOURCES OF FUNDS :
SHAREHOLDERS’ FUNDS
Share Capital 1 56,200,000 36,000,000 INCOME :
LOAN FUNDS
Secured Loans – – Gross Sales 44,484,712 32,467,955
Unsecured Loans 2 139,310,000 127,358,000 Less : Excise Duty 1,321,380 –
DEFERRED TAX LIABILITY 401,000 – Net Sales 43,163,332 32,467,955
195,911,000 163,358,000 Service Income 163,155,659 86,735,748
Other Income 11 4,899,732 1,380,239
APPLICATION OF FUNDS :
FIXED ASSETS 3 211,218,723 120,583,942
Gross Block 17,353,167 14,223,379
Less : Depreciation 6,011,084 4,694,077 EXPENDITURE:
Raw Materials Consumed 12 53,190,753 17,451,768
Net Block 11,342,083 9,529,302
Purchase of Traded Goods 7,404,457 22,990,205
INVESTMENTS 4 68,905 68,905
Inventory Change 13 (1,900,192) (2,198,413)
CURRENT ASSETS, LOANS
Expenses 14 136,573,253 90,656,366
AND ADVANCES
Interest and Finance Expense 15 2,317,918 1,784,373
Inventory 5 22,276,952 20,111,010
Depreciation 3 1,324,008 1,203,817
Sundry Debtors 6 45,098,800 44,523,041
Cash and Bank Balances 7 17,917,076 2,253,597 198,910,197 131,888,116
Loans and Advances 8 31,802,401 4,236,709
117,095,229 67,124,357 Profit/(Loss) for the Year 12,308,526 (11,304,174)
LESS : CURRENT LIABILITIES Less : Fringe Benefit Tax 668,980 –
AND PROVISIONS Current Tax 805,000 –
Current liabilities 9 64,451,387 57,040,119 Deferred Tax 401,000 –
Provisions 10 2,204,243 818,404 Profit/(Loss) for the Year after Tax 10,433,546 (11,304,174)
66,655,630 57,858,523 Add : Balance Brought Forward (144,493,959) (133,189,785)
NET CURRENT ASSETS 50,439,599 9,265,834 Deficit Carried Forward (134,060,413) (144,493,959)
PROFIT & LOSS ACCOUNT 134,060,413 144,493,959
Basic/Diluted Earnings per Share 2.29 (3.29)
195,911,000 163,358,000
(Refer Note 9)
NOTES TO ACCOUNTS 16 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 and Loss Account
As per our Report of even date Signatures to Balance Sheet and As per our Report attached Signatures to Profit and Loss Account and
Schedules 1 to 10 and 16 Schedules 11 to 16
KALYANIWALLA MISTRY AND ASSOCIATES A.B. GODREJ Chairman KALYANIWALLA MISTRY AND ASSOCIATES A.B. GODREJ Chairman
D.U. MENON A. MAHENDRAN Managing Director D.U. MENON A. MAHENDRAN Managing Director
BAHADUR S. DASTOOR Company Secretary BAHADUR S. DASTOOR Company Secretary
Partner Partner
116
SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2006

Rupees Rupees
Authorised:
8,000,000 Equity Shares of Rs.10/- each (Previous year 7,500,000 Equity Shares of Rs.10 each) 80,000,000 75,000,000
Issued & Subscribed
7,900,000 (Previous year 3,600,000) Equity Shares of Rs 10/- each 79,000,000 36,000,000
Paid-up
4,100,000 (Previous year 3,600,000) Equity Shares of Rs 10/- each fully paid 41,000,000 36,000,000
3,800,000 (Previous year Nil) Equity Shares of Rs 10/- each, Rs 4/- paid. 15,200,000 –
56,200,000 36,000,000
Of the above:
6,647,100 (Previous year 3,107,100) shares are held by Godrej Industries Ltd. (GIL), the Holding Company
SCHEDULE 2
UNSECURED LOANS
Intercorporate deposits (due within a year, or at call) 139,310,000 127,358,000
139,310,000 127,358,000
SCHEDULE 3 : FIXED ASSETS (Amount in Rs.)

ASSETS As at Additions Deductions As at Up to For the year Deductions Up to As at As at
01/04/2005 31/03/2006 01/04/2005 31/03/2006 31/03/2006 31/03/2005
Intangibles
Trademarks 9,000,000 – – 9,000,000 1,070,137 900,000 – 1,970,137 7,029,863 7,929,863
Computer Software 540,000 1,274,392 – 1,814,392 135,110 48,306 – 183,416 1,630,976 404,890
Total (A) 9,540,000 1,274,392 – 10,814,392 1,205,247 948,306 – 2,153,553 8,660,839 8,334,753
Tangibles
Factory Building 82,400 – – 82,400 8,281 7,412 – 15,693 66,707 74,119
Plant & Machinery 4,407,529 1,211,234 74,675 5,544,088 3,381,774 200,196 7,001 3,574,969 1,969,119 1,025,755
Office Equipment 46,863 26,052 – 72,915 13,182 11,485 – 24,667 48,248 33,681
Furniture & Fixture 48,638 – 48,638 11,567 6,710 – 18,277 30,361 37,071
Spray and Service Kit 59,000 – – 59,000 35,077 23,923 – 59,000 – 23,923
Vehicles 38,949 – – 38,949 38,949 – – 38,949 – –
Computer Hardware – 692,785 692,785 – 125,976 – 125,976 566,809 –
Total (B) 4,683,379 1,930,071 74,675 6,538,775 3,488,830 375,702 7,001 3,857,531 2,681,244 1,194,549
TOTAL(A+B) 14,223,379 3,204,463 74,675 17,353,167 4,694,077 1,324,008 7,001 6,011,084 11,342,083 9,529,302
Previous Year Total 12,979,858 1,243,521 – 14,223,379 3,490,260 1,203,817 – 4,694,077 9,529,302
SCHEDULE 4 : INVESTMENTS : LONG TERM SCHEDULE 9 : CURRENT LIABILITIES
In Mutual Funds, Quoted Current Liabilities:
Templeton India Treasury Management Account Sundry Creditors (Refer Note 4) 12,057,968 15,631,800
Regular Plan - Growth 68,905 68,905 Security Deposits 8,620,334 7,899,449
No. of units 43.19 (Previous year 43.19) Advance from Customers 24,870,848 14,083,253
68,905 68,905 Other Liabilities 17,945,805 19,416,028
Market Value 75,728 68,905 Interest accrued but not due 956,432 9,589
64,451,387 57,040,119
SCHEDULE 5 : INVENTORY
Raw material 3,922,887 3,635,957 SCHEDULE 10 : PROVISIONS
Packing Material 930,122 785,956 Leave Encashment 1,399,243 818,404
Finished Goods 4,356,905 2,429,913 Taxation 805,000 –
Service Stock 12,252,981 12,418,328 2,204,243 818,404
Photographic equipment 814,057 840,856
22,276,952 20,111,010 SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT
SCHEDULE 6 : SUNDRY DEBTORS FOR THE YEAR ENDED MARCH 31, 2006
(Unsecured and considered good unless otherwise stated)
Due for more than six months SCHEDULE 11 : OTHER INCOME
Considered good 8,409,492 12,247,885 Miscellaneous income 4,123,113 1,232,534
Considered doubtful 379,601 379,601 Sundry Credit balances written back 776,619 147,705
8,789,093 12,627,486 4,899,732 1,380,239
Other debts
SCHEDULE 12 : MATERIALS
Considered good 36,689,308 28,275,156
a) Raw Material and Packing Material Consumed
Considered doubtful – –
Opening stock 4,421,913 69,856
45,478,401 40,902,642
Add : Purchases during the year 24,028,993 4,975,000
Less : Provision for doubtful debts 379,601 379,601
28,450,906 5,044,856
45,098,800 40,523,041
Less : Closing stocks 4,853,009 4,421,913
SCHEDULE 7 : CASH AND BANK BALANCES
23,597,897 622,943
Cash on hand 47,281 1,034
b) Service Stock Consumed 29,592,856 16,828,825
Balances with scheduled banks
in current accounts 9,303,535 1,622,216 53,190,753 17,451,768
in fixed deposit account 7,323,200 – SCHEDULE 13 : INVENTORY CHANGE
in margin deposit account 1,243,060 630,347 Opening stock
17,917,076 2,253,597 Photographic equipments 840,857 840,857
Finished goods 2,429,913 231,500
SCHEDULE 8 : LOANS AND ADVANCES
(Unsecured and considered good unless otherwise stated) 3,270,770 1,072,357
Loans and advances recoverable in cash or in Less: Closing Stock
kind or for value to be received : 22,453,920 941,023 Photographic equipments 814,057 840,857
Advance to Suppliers 4,938,556 728,090 Finished goods 4,356,905 2,429,913
Deposits 2,715,931 2,564,536 5,170,962 3,270,770
Advance Tax and Tax Deducted at Source 1,693,994 3,060
(1,900,192) (2,198,413)
31,802,401 4,236,709
117
SCHEDULES FORMING PART OF THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2006
This Year Previous Year i) Foreign Exchange Transactions :
Rupees Rupees
Transactions in foreign currency are recorded at the exchange rates prevailing on the date of
SCHEDULE 14 : EXPENSES
the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled
Salaries, Bonus & Allowances 16,448,123 12,936,622
at the year end, are translated at the year end exchange rates. Forward exchange contracts,
Contribution to Provident Fund and Other Funds 770,279 1,338,763
remaining unsettled at the year end, backed by underlying assets or liabilities are also translated
Staff Welfare Expenses 759,757 237,237
at year end exchange rates.The premium payable on foreign exchange contracts is amortised
Processing Charges 1,677,141 1,090,572
over the period of the contract. Exchange gains / losses are recognised in the Profit and Loss
Electricity Expenses 359,073 287,683
Account except in respect of liabilities incurred to acquire fixed assets in which case, they are
Rent 2,261,717 1,512,787
adjusted to the carrying amount of such fixed assets.
Rates & Taxes 2,586,662 43,073
Repairs & Maintenance : j) Earnings per Share :
Machinery & Equipment 7,802 8,494 The basic earning per share is computed using the weighted average number of common
Others 274,713 46,778 shares outstanding during the period. Diluted earning per share is computed using the weighted
282,515 55,272 average number of the common and dilutive common equivalent shares outstanding during
Insurance 104,398 171,020 the period except where the results would be anti dilutive.
Freight & Transportation Expenses 2,709,778 648,439 2. CONTINGENT LIABILITIES :
Service Center Expenses 35,717,165 19,657,815
Advertising, Publicity & Sales Promotion Expenses 52,907,561 40,361,448 1) Claims against company not acknowledged as debts amounts to Rs. 14,500,000 (Previous year
Discount 1,062,414 – Rs. 13,718,000)
Travelling & Conveyance 4,333,627 3,351,709 2) Bank Guarantee given by the company amounting to Rs.1,243,060 (Previous year Rs. 630,347)
Legal & Professional Charges 3,836,943 4,213,557
3. Capital Commitments
Bad debts and advances written off 5,111,522 120,175
IT Expenses 587,943 1,223,142 The estimated value of contracts remaining to be executed on capital account to the extent not
General Expenses 5,056,635 3,407,052 provided for is Rs. Nil (Previous Year Rs. Nil.)
136,573,253 90,656,366 4. SSI CREDITORS
SCHEDULE 15 : INTEREST AND FINANCE EXPENSES In the absence of a database identifying creditors as Small Scale Industrial Undertakings, it is the
Interest on intercorporate deposits 919,610 658,203 opinion of the management that there are no parties, which can be classified as Small Scale
Other Interest & financial charges 1,799,886 1,126,170 Industrial Undertakings to whom the company owes any sum. The auditors have accepted the
representations of the management in this matter.
2,719,496 1,784,373
Less : Interest Income 401,578 – 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
2,317,918 1,784,373
Company.
SCHEDULE 16 : NOTES TO ACCOUNTS
6. During the current year, the Company changed its accounting policy with respect to amortization of
1. SIGNIFICANT ACCOUNTING POLICIES Computer Software from 3 years to 6 years. Had there been no change in the rate of depreciation,
a) Accounting Conventions : the charge for current year would have been higher by Rs. 115,786. Consequently accumulated
losses and written down value of asset as at year end are lower by Rs.183,415.
The accounts have been prepared on historical cost convention. The Company follows mercantile
system of accounting and recognizes income and expenditure on accrual basis 7. Expenditure in Foreign Currency
b) Fixed Assets : This Year This Year
Fixed assets have been stated at cost and include incidental and / or installation/development License Fees 875,400 Nil
expenses incurred in putting the asset to use and interest on borrowing incurred during Training Expenses 227,978 Nil
construction period. Pre-operative expenses for major projects are also capitalized, where Travelling Expenses 53,389 26,720
appropriate. 8. ACCOUNTING FOR LEASES
c) Depreciation/Amortization : The lease rentals in respect of office and factory space charged during the period and maximum
1) Spray and service kits and Vehicles: On Straight Line Method basis at the rates prescribed obligations on non-cancellable operating leases payable as per the rentals stated in the lease
by Schedule XIV to the Companies Act, 1956. agreement are given in accordance with the Accounting Standard (AS-19) on “Leases” issued by the
Institute of Chartered Accountants of India.
2) Computer Hardware and Other Assets: On Written Down Value basis at the rates
prescribed by Schedule XIV to the Companies Act, 1956. (Amounts in Rupees)
3) Following assets are Amortized as follow: This Year This Year
Asset Type Period 1. Lease Rentals paid during the year 1,136,209 318,000
(a) Trademarks 10 years 2. Future Lease Obligations
(b) Computer Software 6 years – Due within one year of the Balance Sheet date 1,204,132 318,000
d) Impairment : – Due between one year and five years 2,255,473 631,000
Carrying amount of cash generating units / assets are reviewed at balance sheet date to – Due after five years – –
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. Current Year Previous Year
Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable
amount. Item Units Quantity Value Quantity Value
(Rs.) (Rs.)
e) Inventories : 9. INVENTORIES OF FINISHED GOODS
Raw materials and Service Stock are valued at weighted average cost. Traded goods
Print Leader Nos 3 352,286 3 352,286
Finished goods are valued at lower of cost and net realisable value.These costs include cost of
Imager Nos 5 461,771 6 488,571
conversion and other costs incurred in bringing the inventories to their present location and
condition. 814,057 840,857
Insecticides Ltrs 1,767 306,864 2215 515,041
Stores and spares are valued at weighted average cost.
1,120,921 1,355,898
f) Retirement Benefits :
Manufactured goods
Retirement benefits to employees comprise payments under defined contribution plans like
Insecticides Ltrs 9,352 4,050,041 7101 1,914,872
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 4,050,041 1,914,872
leave encashment benefit on retirement is provided on the basis of actuarial valuation at the Total 5,170,962 3,270,770
end of each year. The liability for retirement gratuity is funded through a trust created for the
purpose. 10. SALES (NET OF EXCISE DUTY)
Item Units Quantity Value Quantity Value
g) Research & Development : (Rs.) (Rs.)
Revenue expenditure on Research and Development is charged to Profit and Loss Account of Traded goods
the year in which it is incurred. Capital expenditure incurred during the year on Research and Spares & Consumables – – 92,596
Development is shown as addition to Fixed Assets. Insecticides Ltrs. 29,920 11,672,717 32,825 21,513,196
Manufactured goods
h) Revenue Recognition :
Insecticides Ltrs. 82,932 31,490,615 28,846 11,877,036
Revenue from Pest Management services is recognized as and when the services are rendered.
Total 43,163,332 33,482,828
Sales are net of returns, rebates, sales tax, etc.
118
2. The following transactions were carried out with the related parties in the ordinary course
SCHEDULE 16 : NOTES TO ACCOUNTS (Contd..)
of business:
Current Year Previous Year
Details relating to parties referred to in item 1(i) and (ii) above:
Item Units Quantity Value Quantity Value
(Rs.) (Rs.) Sr. Particulars Godrej Group Other Related
11. PURCHASES FOR RESALE No. Shareholders parties in the Godrej
Insecticides 29,472 7,404,457 35,240 22,983,950 Ultimate Holding Co. Group
Spares & Consumables – – – 6,255 Holding Co.
(i) (i) (ii)
Total 7,404,457 22,990,205
1. Issue of Share Capital Nil 17,160,000 Nil
12. RAW MATERIAL CONSUMED (Nil) (2,400,000) (Nil)
Basic Chemicals Kgs 127,522 22,862,147 5,523 622,943 2. Sale of Fixed Assets Nil Nil 74,675
Service Stock – 29,592,856 – 16,828,825 (Nil) (Nil) (Nil)
3. Purchase of Fixed Asset Nil Nil Nil
Others 735,750 –
(Nil) (Nil) (74,675)
Total 53,190,753 17,451,768 4. Sales & Other Income Nil Nil 4,066,038
(Nil) (Nil) (1,014,862)
13. VALUE OF CONSUMPTION OF RAW MATERIALS, 5. Purchases (net of returns) Nil Nil (454,918)
SPARES AND CONSUMABLES (Nil) (17,000) (14,312,784)
Item Value Value 6. Expenses charged by other Companies Nil 1,475,254 2,065,638
% (Rs.) % (Rs.) (2,975) (1,301,911) (3,203,865)
7. Expenses charged to other Companies Nil 5,650 1,733,582
Raw Materials
(Nil) (Nil) (Nil)
Indigenous 80 42,305,906 100 17,451,768 8. Interest on Inter Corporate Deposit Nil 88,457 Nil
Imported (including custom duty) 20 10,884,847 – – (Nil) (111,000) (Nil)
Total 53,190,753 17,451,768 9. Sundry Deposit with Other Companies 351,450 Nil Nil
(Nil) (350,000) (Nil)
14. INSTALLED CAPACITY AND ACTUAL PRODUCTION 10. Sundry Deposits refunded 350,000 Nil Nil
(Nil) (Nil) (Nil)
Units Installed Capacity Production
11. Outstanding Receivables (net) of Payables Nil (357,800) 3,004,913
Current Year Previous Year Current Year Previous Year (Nil) (-21,286) (49,008)
Insecticides Ltrs. 240,000 240,000 51,215 35,484 (ii) Details relating to person referred to in item1(iii) above
Processed Outside – – 33,968 –
Current year Previous year
240,000 240,000 51,215 35,484 1 Issue of share capital 3,040,000 2,400,000
15. CIF VALUE OF IMPORTS 3. Significant Related Party Transactions

Item Units Quantity Value Quantity Value 1. Sale of Fixed Assets Godrej Sara Lee Limited 74,675
(Rs.) (Rs.) – (Nil)
2. Purchase of Fixed Assets – Nil
Insecticide Kgs. 58,660 12,016,607 2,500 2,540,309 Godrej Sara Lee Limited (74,675)
Total 12,016,607 2,540,309 3. Sales & Other Income Godrej Sara Lee Limited 3,044,295
Godrej Properties Limited 991,250
16. EARNING PER SHARE Godrej Sara Lee Limited (1,014,862)
Current Year Previous Year 4. Purchases(net of returns) Godrej Sara Lee Limited (454,918)
Godrej Sara Lee Limited (14,312,784)
Profit/ (Loss) after Tax as per profit & loss account Rs. 10,433,546 (11,304,174) 5. Expenses charged by other Godrej Tea Limited 1,337,917
Weighted average number of equity shares of Rs. 10 each 4,557,425 3,435,616 Companies Godrej Sara Lee Limited 727,720
Basic/Diluted Earnings Per Share Rs. 2.29 (3.29) Godrej Tea Limited (1,016,303)
Godrej Sara Lee Limited (2,187,562)
17. RELATED PARTY DISCLOSURE AS REQUIRED BY AS - 18 “RELATED PARTY DISCLOSURES” 6. Expenses charged to other Godrej Sara Lee Limited 1,724,082
ARE GIVEN BELOW: Companies – (Nil)
7. Outstanding Receivables, net
1. Relationships
of Payables Godrej Tea Limited 2,018,551
(i) Shareholders (the Godrej Group shareholding) in the company: Godrej Sara Lee Limited 991,250
Godrej Industries Limited hold 84.1% Godrej Tea Limited (-262,147)
GIL is a subsidiary of Godrej & Boyce (Mfg.) Co. Limited, the ultimate holding co. Godrej Sara Lee Limited (311,155)
(ii) Other related parties in the Godrej Group where common control exists. 18. Deferred Tax
1. Godrej Tea Limited The Tax effects of significant temporary differences that resulted in deferred tax assets and liabilities are :
2. Godrej Agrovet Limited Current Year Previous Year
3. Godrej Properties Limited Rs. Rs.
4. Godrej Sara Lee Limited Depreciation on Fixed Assets (1,163,000) –
Others 762,000 –
(iii) Key Management Personnel
Deferred Tax Liability (401,000) –
Mr. A. Mahendran (Managing Director)
19. Auditors Remuneration
Statutory Audit 134,688 82,650
Audit under other Statutes 33,672 27,550
Total 168,360 110,200
20. The amount of exchange difference included in the Profit and Loss Account, under the related heads
of expenses / income, is Rs.9,856 (Previous year expense Rs.).
21. The Company is engaged in the business of rendering pest management services, 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.
22. Information required under Schedule VI to the Companies Act ,1956, have been given to the extent
applicable.
119
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2006
1. Registration details
Registration No. : 72222 Current Year Previous Year
State Code : 11 Rs. ‘000 Rs. ‘000
Balance Sheet Date : March 31, 2006 A. Cash Flow from Operating Activities :
2. Capital raised during the year Profit/(Loss) before tax 12,308,526 (11,304,174)
Public Issue : – Adjustments for :
Depreciation 1,324,008 1,203,817
Rights Issue : 20,200,000
Interest expense 2,317,918 1,784,373
Bonus Issue : –
Private Placement : – Operating Loss before working capital changes 15,950,452 (8,315,984)
3. Position of mobilisation and deployment of funds Adjustments for :
Total Liabilities : 262,566,630 Inventories (2,165,942) (17,862,984)
Total Assets : 262,566,630 Trade & Other receivables (30,447,457) (45,733,188)
Sources of funds Trade & Other payables 7,035,675 49,045,856
Paid up Capital : 56,200,000 (9,627,272) (22,866,300)
Reserves & Surplus : – Direct taxes paid (1,693,994) (3,060)
Secured Loans : – Fringe Benefit tax Paid (668,980) –
Unsecured Loans : – B. Cash Flow from Investing Activities :
Deferred Tax Liability : 401,000 Purchase of Assets (3,136,789) (1,083,521)
Application of funds Investments – (68,905)
Net Fixed Assets : 11,342,083 Net Cash used in investing activities (3,136,789) (1,152,426)
Investments : 68,905 C. Cash Flow from Financing Activities :
Net Current Assets : 50,439,599 Term Loans/Inter Corporate Deposits taken 11,952,000 19,500,000
Miscellaneous Expenditure : – Issue of Share Capital 20,200,000 4,800,000
Accumulated Losses : 134,060,413 Interest paid (1,361,486) (1,774,786)
4. Performance of Company
Turnover (Total Income) : 211,218,723 Net Cash from financing activities 30,790,514 22,525,214
Total Expenditure : 198,910,197 Net Increase in Cash and Cash Equivalents 15,663,479 (1,496,572)
Profit / (Loss) before tax : 12,308,526 Add : Cash & Cash equivalents (Opening Balance) 2,253,597 3,750,169
Profit / (Loss) after tax : 10,433,546
Earnings per share in Rs. : 2.29 Cash & Cash equivalents (Closing Balance) 17,917,076 2,253,597
Dividend rate (%) : –
Notes
5 Generic names of three principal products / services of the Company
Item Code No. Nil 1. Cash flow statement has been prepared under the Indirect method as set out in the accounting
standards AS-3 on Cash Flow Statement as present cash flows by operating, investing and financing
Product Description Pest Control Services
activities
Item Code No. 3808.1*
Product Description Insecticides 2. Figures in brackets are outflows/deductions.
Item Code No. 90.10 * 3. Previous year figures are regrouped/restated whereever necessary to confirm to this year’s
Product Description Photographic Equipment & Spares classification.

KALYANIWALLA MISTRY AND ASSOCIATES A.B. GODREJ Chairman
D.U. MENON A. MAHENDRAN Managing Director
BAHADUR S. DASTOOR Company Secretary
Partner
Mumbai, May 8, 2006
120
Ensemble Holdings & Finance Limited

DIRECTORS’ REPORT FOR THE YEAR ENDED ON MARCH 31, 2006
To The Shareholders, Auditors
Your Directors submit their Report along with the audited Accounts for the year ended on March 31, 2006. You are requested to appoint Auditors for the current year and fix their remuneration. The retiring auditors, M/
Review of operations s Kalyaniwalla Mistry & Associates, Chartered Accountants are eligible for reappointment
Your Company’s performance during the year as compared with that during the previous year is summarised Directors’ Responsibility Statement
below :- Pursuant to the provisions contained in Section 217 (2AA) of the Companies Act, 1956, the Directors of your
This Year Previous Year Company confirm :
(Rs.’000) (Rs.’000) a) that in the preparation of the annual accounts, the applicable accounting standards have been followed
Gross Revenue earned 57,332 3,039 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
Profit/(Loss) for the year 57,185 2,053 and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of
Provision for Taxation 520 – the Company at the end of the financial year and of the loss of the Company for that period;
Adjustment in respect of prior years 5 – c) that they have taken proper and sufficient care for the maintenance of adequate accounting records in
Loss brought forward (80,575) (82,628) accordance with the provisions of this Act for safeguard of the assets of the Company and for preventing
Loss carried forward (80,521) (80,575) and detecting fraud and other irregularities;
d) that they have prepared the annual accounts on a going concern basis.
Dividend
The Board of Directors have declared and paid two interim dividends for year 2005-06 aggregating to Rs.8.13 Additional Information
per share. The Directors recommend a final dividend of Rs.0.97 per share. Taken together these work out to The additional information required to be given under the Companies Act, 1956, has been laid out in the
Rs.9.11 per share (previous year Rs. Nil). Accounts to the extent applicable. The notes to the Accounts referred to in the Auditors’ Report are self-
Compliance with guidelines issued by the Reserve Bank of India explanatory and therefore do not call for any further explanation.
Your Company has been granted a Certificate of Registration by Reserve Bank of India to carry on the business The information in respect of Conservation of energy, Technology Absorption and Foreign Exchange earnings
as Non-Banking Financial Institution. and outgo, required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure
Your Company has not accepted any public deposits during the year under review, nor does it propose to accept of Particulars in the Report of the Board of Directors) Rules, 1988 has not been given, since such requirement
the same. As such, pursuant to Non-Banking Financial Companies (Reserve Bank) Directions, 1998, issued by is not applicable to the Company.
Reserve Bank of India vide notification No.DFC.114/DG (SPT) dated January 2, 1998, your Company is not The particulars, required under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars
required to obtain rating from a rating agency in this regard. Hence, rating for Fixed Deposit obtained from of Employees) Rules, 1975, have not been given, since the Company did not employ any person during the year
CRISIL in 1996-97 has not been renewed. under review.
In view of the above, there are no overdue or unclaimed deposits.
Directors For and on behalf of the Board of Directors
In accordance with Article 124 of the Articles of Association of your Company, Ms. T. A. Dubash retires by rotation
and being eligible offers herself for re-appointment. Mr. Hoshedar K. Press was appointed as Executive Director with M. EIPE C.K. VAIDYA
effect from November 16, 2005. Notice under Section 257 of the Companies Act, 1956 has been received from a Director Director
member signifying intention to propose his appointment as Director in the forthcoming Annual General Meeting. Mumbai, May 26, 2006
REPORT OF THE AUDITORS c) All parties except for Godrej Hicare Limited have repaid the principal amounts as stipulated and
have been regular in the payment of interest.
To The Members of ENSEMBLE HOLDINGS & FINANCE LIMITED 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.
1. We have audited the attached Balance Sheet of Ensemble Holdings and Finance Limited as at e) The Company had taken unsecured loans from a company covered in the register maintained
March 31, 2006 and also the Profit and Loss Account and Cash Flow Statement for the year ended on that under Section 301 of the Companies Act, 1956. The amount involved during the year was
date annexed thereto. These financial statements are the responsibility of the Company’s management. Rs. 58,00,000/-.
Our responsibility is to express an opinion on these financial statements based on our audit. f) According to information and explanations given to us, we are of the opinion that the rate of interest
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those and other terms and conditions on which loans have been taken from the company covered in the
Standards require that we plan and perform the audit to obtain reasonable assurance about whether the register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial
financial statements are free of material misstatement. An audit includes examining, on a test basis, to the interest of the Company.
evidence supporting the amounts and disclosures in the financial statements. An audit also includes g) The Company is regular in repaying the principal amounts as stipulated and has been regular in
assessing the accounting principles used and significant estimates made by management, as well as the payment of interest.
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable 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
basis for our opinion. into the register in pursuance of Section 301 of the Companies Act, 1956, have been so entered.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms b) These transactions have been made at reasonable prices having regard to the prevailing market
of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified prices at the relevant time.
in paragraphs 4 and 5 of the said Order. 3. In our opinion and according to the information and explanations given to us, the Company has not
4. Further to our comments in the Annexure referred to above, we report that: accepted any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant
a) We have obtained all the information and explanations which to the best of our knowledge and provisions of the Companies Act, 1956, and the rules framed thereunder.
belief were necessary for the purpose of our audit; 4. The Company has an internal audit system, which in our opinion, is commensurate with the size and
b) In our opinion, proper books of account as required by law have been kept by the Company so far nature of its business.
as appears from our examination of such books; 5. a) According to the records examined by us, the Company is generally regular in depositing undis-
c) The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the puted statutory dues including income tax with appropriate authorities.
books of account; b) According to the information and explanation given to us there are no dues of sales tax, income
d) In our opinion, the Profit and Loss Account and Balance Sheet dealt with by this report comply with tax, wealth tax, service tax, excise duty or cess, which have not been deposited on account of any
dispute.
the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;
6. The accumulated losses of the Company as at end of the financial year are more than fifty percent of its
e) In our opinion and to the best of our information and according to the explanations given to us, the net worth. The company has not incurred cash losses during the current financial year and in the
said accounts, read with the notes thereon, give the information required by the Companies Act, immediately preceding financial year.
1956, in the manner so required and give a true and fair view in conformity with the accounting 7. According to the information and explanations given to us and the records examined by us, we observed
principles generally accepted in India: that the Company has not borrowed any money from financial institutions or banks or debenture holders.
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2006, 8. According to the information and explanations given to us the Company has not granted loans and
(ii) in the case of the Profit and Loss Account, of the Profit of the Company for the year ended on advances on the basis of security by way of pledge of shares and other securities.
that date; 9. In our opinion and according to the information and explanation given to us, the nature of the activities of the
(iii) in the case of Cash Flow Statement, of the cash flow for the year ended on that date. Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund/ societies.
5. On the basis of the written representations received from the Directors as on March 31, 2006, and taken 10. In our opinion, the Company has maintained proper records of the transactions and contracts of the
on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, investments dealt in by the Company and timely entries have been made therein. The investments made
2006, from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the by the Company are held in its own name.
Companies Act, 1956. 11. 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.
For and on behalf of 12. According to the information and explanations given to us and the records examined by us we observed
KALYANIWALLA MISTRY AND ASSOCIATES that the Company has not taken any term loan.
Chartered Accountants 13. On the basis of an overall examination of the balance sheet and cash flows of the Company and the
V. M. PADWAL information and explanation given to us, we report that the Company has not utilised any funds raised
Partner on short-term basis for long-term investments.
Mumbai, May 26, 2006 Membership No.: 49639 14. The Company has not made any preferential allotment of shares to parties or companies covered under
Section 301 of the Companies Act, 1956.
15. The Company did not issue any debentures during the financial year.
ANNEXURE TO THE AUDITORS’ REPORT 16. The Company has not raised any money through a public issue during the year.
Referred to in Paragraph 3 of our report of even date on the accounts of Ensemble Holdings & Finance Limited 17. Based upon the audit procedures performed and the information and explanation given by the management,
for the year ended March 31, 2006: we report that no fraud on or by the Company has been noticed or reported during the year.
1. a) The Company has granted unsecured loans to two companies covered in the register maintained 18. In our opinion, clauses (i), (ii), (iv) and (viii) of paragraph 4 of the Companies (Auditor’s Report) Order, 2003
under Section 301 of the Companies Act, 1956 and the amount involved in the said transactions was are not applicable.
Rs. Nil. The outstanding amount receivable towards loans from such companies amount to Rs. For and on behalf of
2,31,81,117/-. KALYANIWALLA MISTRY AND ASSOCIATES
b) In our opinion and according to information and explanations given to us, the rate of interest and Chartered Accountants
other terms and conditions of unsecured loans given by the Company, are prima facie not prejudicial V. M. PADWAL
to the interest of the Company except for unsecured loan given to Godrej Hicare Limited which Partner
has been adequately provided for. Mumbai, May 26,2006 Membership No.: 49639
121
MARCH 31, 2006
Schedule Rupees Rupees Schedule Rupees Rupees
SOURCE OF FUNDS INCOME
1 Shareholders’ Funds Interest Income 9 457,070 842,572
Dividend 397,935 2,181,632
(a) Share Capital 1 37,741,600 37,741,600 Profit on sale of investments (Net) 19,750,323 34
(b) Reserves & Surplus 2 102,357,370 84,945,040 Provision for diminution in value of
Long term investments written back 36,488,750 –
140,098,970 122,686,640
Profit on sale of Mutual Funds 237,935 14,595
2 Loan Funds
57,332,013 3,038,833
Unsecured Loans 3 – 1,100,000
EXPENDITURE
Total 140,098,970 123,786,640 Expenses 10 127,137 54,329
Interest 11 19,554 931,130
146,691 985,459
1 Investments 4 44,027,576 35,578,755
PROFIT / (LOSS) BEFORE TAX 57,185,322 2,053,374
2 Current Assets, Loans Provision for Taxation 520,000 –
and Advances
PROFIT / (LOSS) AFTER TAX 56,665,322 2,053,374
(a) Sundry Debtors 453,350 – Adjustments for Income tax of prior years 5,779 –
(b) Cash & Bank Balances 5 504,958 7,207,669 PROFIT AVAILABLE FOR APPROPRIATION 56,671,101 2,053,374
(c) Other Current Assets 6 804 8,600 APPROPRIATION
Dividend
(d) Loans and Advances 7 18,893,472 502,273
Interim 30,700,000
19,852,584 7,718,542 Final (Proposed) 3,682,599 34,382,599 –
Less : Current Liabilities and Dividend Distribution Tax 4,822,160 –

Transfer to Special Reserve Fund u/s 45IC of RBI Act, 1934 11,745,220 –
Provisions 8
Transfer to General Reserves 5,667,110 –
Current Liabilities 103,199 85,762
Provisions 4,199,084 – 56,617,089 –
Balance available for set off against b/f deficit in P&L A/c 54,012 –
4,302,283 85,762 Loss brought forward (80,575,105) (82,628,479)
Net Current Assets 15,550,301 7,632,780 Loss Carried Forward (80,521,093) (80,575,105)
3 Profit and Loss Account 80,521,093 80,575,105 Earnings Per Share 12 (6) 15.02 0.54
Total 140,098,970 123,786,640
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 of even date attached. Signatures to Balance Sheet and As per our Report of even date attached. Signatures to Profit & Loss Account
Schedules 1 to 8 and 12 and Schedules 9 to 12
KALYANIWALLA MISTRY AND ASSOCIATES KALYANIWALLA MISTRY AND ASSOCIATES
Chartered Accountants M. EIPE Director Chartered Accountants M. EIPE Director
C.K. VAIDYA Director C.K. VAIDYA Director
V.M. PADWAL S. SRINIVASAN V.M. PADWAL S. SRINIVASAN
Partner Company Secretary Partner Company Secretary
SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2006

SCHEDULE 1 : SHARE CAPITAL SCHEDULE 2 : RESERVES & SURPLUS
AUTHORISED SHARE PREMIUM
5,000,000 Equity Shares of Rs. 10/- each 50,000,000 50,000,000 As per last Balance Sheet 84,945,040 84,945,040
ISSUED, SUBSCRIBED AND PAID UP Special Reserves u/s 45IC of RBI Act, 1934
3,774,160 Equity Shares of Rs. 10/- each fully paid up. 37,741,600 37,741,600 Opening Balance – –
Add : Transfer during the year for FY 2004-05 411,000 –
37,741,600 37,741,600 Add : Transfer during the year for FY 2005-06 11,334,220 –
11,745,220
(Out of the above, 3,770,160 shares are held by General Reserve
Godrej Industries Ltd., the Holding Company) Opening Balance –
Transfer during the year for FY 2005-06 5,667,110
5,667,110 –
102,357,370 84,945,040
Inter Corporate Borrowings – 1,100,000
– 1,100,000
(Inter Corporate Borrowings are from the Holding Company; and are due for repayment within on call.)
122
SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2006
Quantity Amount
Investee Company / Institution Face Quantity as Acquired Sold Quantity as As on As on
Value on 01.04.05 during during on 31.03.06 31.03.06 31.03.05
the year the year Rupees Rupees
Long Term Investments (At Cost)
Equity shares - Quoted
Companies under same management
Godrej Industries Ltd. 6 98,990 – 98,990 – – 40,992,795
Godrej Foods Ltd. 1 1,484,864 – 1,484,864 – – 1,363,885
Other Companies
Agro Tech Foods Ltd. 10 1 – – 1 53 53
Colgate Palmolive India Ltd. 10 1 – – 1 151 151
Dabur India Ltd. 1 1 1 – 2 59 59
(Bonus received during the year)
Henkel Spic India Ltd. 10 1 – – 1 31 31
Hindustan Lever Ltd. 1 751 – – 751 90,589 90,589
Gillette India Ltd. 10 1 – – 1 400 400
Marico Industries Ltd. 10 4 – – 4 271 271
Nirma Ltd. 10 1 – – 1 255 255
Procter & Gamble Hygiene & Health Care Ltd. 10 1 – – 1 490 490
Venkys India Ltd. 10 1 – – 1 37 37
Unquoted
Companies under the Same Management :
Godrej Properties Ltd. 10 267,410 65 190,680 76,795 5,488,590 18,957,460
Godrej Agrovet Ltd. 10 – 2,000 – 2,000 560,000 –
Godrej Remote Services Ltd. 10 10,883 – 10,883 – – 109,384
Godrej Hicare Ltd. 10 4,800 – – 4,800 48,000 48,000
Godrej Global Solutions Ltd. (Reduction of 10 49,940 – 8,689 41,251 499,400 499,400
Share Capital during the year under a
scheme of arrangement)
Other Companies :
karROX Technologies Ltd. 10 250,000 – – 250,000 10,050,000 10,050,000
Personalitree Academy Ltd. 10 389,269 – – 389,269 11,027,991 11,027,991
Reckitt Benckiser (India) Ltd. 10 10 – 10 – – 2,433
Avestha Gengraine Technologies Pvt. Ltd. 10 – 55,500 – 55,500 25,037,438 –
Current Investments
Mutual Funds - Unquoted
Magnum Institutional Income fund– Savings Growth 2,300,000 –
55,103,755 83,143,684
Less : Provision for diminution in value of Investments 11,076,179 47,564,929
44,027,576 35,578,755
Aggregate Book Value of Investments :
Quoted Investments 92,336 5,960,076
Unquoted Investments 43,935,240 29,618,677
44,027,576 35,578,753
Market Value of quoted investments 210,151 24,993,109
This Year Previous Year SCHEDULE 12 : NOTES TO ACCOUNTS

Rupees Rupees 1. Significant Accounting Policies
SCHEDULE 5 : CASH AND BANK BALANCES a. Accounting Convention
Cash on hand 1,736 1,792 The financial statements are prepared under the historical cost convention, on accrual basis in
Balances with Scheduled Banks accordance with the generally accepted accounting principles in India, the Accounting Standards
in Current Accounts 503,222 1,205,877 issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act,1956.
in Fixed Deposits with Bank – 6,000,000 b. Income recognition
504,958 7,207,669 (i) Dividend income is recognised when the right to receive the same is established.
(ii) Interest income is recognised on time proportion basis.
SCHEDULE 6 : OTHER CURRENT ASSETS (iii) Profit/loss on sale of investments is accounted on the trade dates.
Accrued Interest 804 8,600 c. Investments
804 8,600 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
SCHEDULE 7 : LOANS AND ADVANCES of a long term investment is ascertained with reference to its market value, the investee’s assets
(Unsecured, considered good, unless stated otherwise)
Loans 71,117 139,440 and results and the expected cash flows from the investments.
ESOP Loans 18,550,000 – d. Taxes on Income
Current Tax is the amount of tax payable on the taxable income for the year determined in accordance
Share Application Money (considered doubful) 300,000 300,000 with the provisions of the Income Tax Act, 1961.
Intercorporate Deposits (considered doubtful) 23,110,000 23,110,000 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
23,410,000 23,410,000 subsequent periods. Deferred tax assets subject to the consideration of prudence are recognised
Less : Provision for Doubtful Loans and Advances (23,410,000) (23,410,000) 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
Advance Payment of Taxes 272,355 362,833 laws enacted or substantially enacted on the Balance Sheet date.
(Net of provision for tax Rs.5,20,000, previous year Nil) 2. Investments
The Company has acquired and sold the following investments during the year :
18,893,472 502,273
This year Previous year
SCHEDULE 8 : CURRENT LIABILITIES & PROVISIONS
Current Liabilities No. of units/ Purchase No. of units/ Purchase
Sundry Creditors 103,199 85,762 Share (Rs.) Cost (Rs.) Share (Rs.) Cost (Rs.)
Provisions : JM Mutual Fund – – 1,895,393 20,000,000
Proposed Dividend 3,682,599 – Avestha Gengraine Technology Pvt. Ltd. – – 50,000 20,000,000
Tax on Distributed Profits 516,485 – SBI-Magnum Inst. Income Fund 4,967,729 54,503,966 Nil Nil
4,199,084 85,762 SBI- Insta Cash Fund 120,882 1,850,000 Nil Nil
Kotak -Liquid Inst Premium Fund 1,379,441 18,700,000 Nil Nil
SCHEDULE 9 : INTEREST INCOME (Gross) 3. Loans given by the Company to the ex-employees of Godrej Industries Limited and Lawkim Limited
On Loans (TDS Rs. 85,400/-, previous year Rs. Nil) 405,846 35,848 are covered by an undertaking from the respective companies to repay the instalments on due dates
On Intercorporate Deposits – 805,562 from the voluntary retirement compensation falling due to the said ex-employees.
(TDS Rs. Nil, previous year Rs. 1,68,443/-) 4. Amount due from a Company under the same management
On Income tax Refund 26,690 52 This year Previous Year
On Fixed Deposits with Bank (TDS Rs. 5,505, previous year Rs. Nil) 24,534 1,110 Rupees Rupees
457,070 842,572 Godrej Industries Ltd. 71,921 140,971
SCHEDULE 10 : EXPENSES Godrej Hicare Ltd. 23,110,000 23,110,000
Salary 22,500 – Godrej Remote Services Ltd. – 7,534
Profession Tax 2,500 2,500 23,181,921 23,258,505
Directors’ sitting fees 4,000 2,000 5. Auditors’ Remuneration :
Auditors’ Remuneration 44,896 27,550 (includes service tax wherever applicable)
Professional Charges 25,510 20,000 Audit Fees 28,060 27,550
Miscellaneous Expenses 27,731 2,279 Tax Audit Fees 16,836 –
Total 127,137 54,329 44,896 27,550
SCHEDULE 11 : INTEREST 6. Earnings per share
On Inter Corporate Borrowings 19,554 931,130 a. Net Profit/(Loss) after Tax available for shareholders 56,671,101 2,053,373
b. Weighted Average Number of Equity Shares 3,774,160 3,774,160
Total 19,554 931,130 c. Basic and Diluted Earnings per Share of Rs.10 each 15.02 0.54
123
SCHEDULES ANNEXED TO AND FORMING PART OF ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2006
7. Related Party Disclosures 10. ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VI TO THE
a) Related Parties with whom transactions have taken place during the year, with the name and description
of relationship. COMPANIES ACT, 1956
Parties where control exists. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
Godrej Industries Limited, the Holding Company 1. Registration details
Godrej & Boyce Mfg. Co. Ltd., the ultimate Holding Company
Related Parties with whom transactions have taken place during the year Registration No. : 11-65457
Holding Company State Code : 11
Godrej Industries Limited Balance Sheet Date : 31.03.2006
Fellow Subsidiaries
Godrej Properties Limited 2. Capital raised during the year (Amount in Rs. Thousands)
Godrej Remote Services Limited Public Issue : –
Individual exercising significant influence over the enterprise Rights Issue : –
Ms. T. A. Dubash Mr. M. Eipe Bonus Issue : –
Mr. C. K. Vaidya Mr. H. K. Press
b) Transactions with Related Parties Private Placement : –
(Rs. in lac)
3. Position of mobilisation and deployment of funds (Amount in Rs .Thousands)
Sr. Nature of Transaction Holding Subsidiary Fellow Associate/ Key Mang. Relatives of Total Total Liabilities : 140,099
No. Company Company Subsidiary Joint Personnel Key Mang.
Venture Personnel Total Assets : 140,099
i) Acceptance of ICB 57.00 – – – – – 57.00 Sources of funds :
Previous Year 25.00 – – – – – 25.00 Paid up Capital : 37,742
ii) Refund of ICB 68.00 – – – – – 68.00
Previous Year 258.50 – – – – – 258.50 Reserves & Surplus : 102,357
iii) Interest paid on ICB 0.19 – – – – – 0.19 Secured Loans : –
Previous Year 9.31 – – – – – 9.31
iv) Intercorporate Unsecured Loans : –
Deposits placed – – – – – – –
Previous Year – – 105.00 – – – 105.00 Application of funds :
v ) ICD Refund received – – – – – – – Net Fixed Assets : –
Previous Year – – 105.00 – – – 105.00 Investments : 44,028
vi) Interest Received
on ICD – – – – – – – Net Current Assets : 15,550
Previous Year – – 8.06 – – – 8.06 Miscellaneous Expenditure : –
vii) Dividend Received 3.96 – – – – – 3.96
Previous Year 2.97 – 18.84 – – – 21.81 Accumulated Losses : 80,521
viii) Refund of VRS Loan 0.68 – – – – – 0.68 4. Performance of Company (Amount in Rs. Thousands)
Previous Year 0.58 – – – – – 0.58
ix) Interest Received Turnover (Total Income) : 57,332
on VRS Loan 0.26 – – – – – 0.26 Total Expenditure : 147
Previous Year 0.36 – – – – – 0.36
x ) Sale of Investments 190.68 – – – – – 190.68 Profit before tax : 57,185
Previous Year 200.00 – – – – – 200.00 Profit after tax : 56,665
xi) Dividend Paid 306.67 – 0.32 – – – 307.00
Previous Year – – – – – – – Earnings per share in Rs. : Rs. 15.02
xii) Remuneration – – – – 0.23 – 0.23 Dividend rate (%) : 91.10%
Previous Year – – – – – – –
xiii) Balance Outstanding 5. Generic names of three principal The Company is a Loan
as on 31.3.06 – – – – – – – products/services of the Company : and Investment Company
Payable
Previous Year 11.00 – – – – – 11.00
Receivable 0.72 – – – – – 0.72
Previous Year 1.41 – 0.08 – – – 1.49
c) The significant Related Party Transactions are as under
Rupees Rupees
(Rs. in lac)
Nature of Transaction Amount Cash flow from Operating Activities
Profit before tax 57,185,322 2,053,374
Acceptance of ICB Adjustments for :
Godrej Industries Limited 57.00 Profit on sale of long term investments (19,750,323) (34)
Refund of ICB Profit on sale of Mutual Fund (237,936) (14,595)
Godrej Industries Limited 68.00 Provision for Dimunition in value of long term Investments (36,488,750) –
Interest Expense - GIL 19,554 931,130
Interest paid on ICB
Godrej Industries Limited 0.19 Operating Profit before working capital changes 727,867 2,969,875
Dividend Received Adjustments for :
Godrej Industries Limited 3.96 Accrued Interest 7,796 (6,453)
Sundry Debtors (453,350) 28,635,000
Refund of VRS Loan
Trade Payables 17,437 641
Godrej Industries Limited 0.68
Cash generated from operations 299,750 31,599,063
Interest Received on VRS Loan
Direct Taxes paid (590,905) (168,443)
Direct Taxes refund received 167,161 1,274
Sale of Investments Net Cash from operating activities (123,994) 31,431,894
Cash flow from Investing Activities
Dividend Paid Proceeds from sale of investments 151,018,592 14,629
Godrej Industries Limited 306.67 New investments made (102,990,404) (138,364)
Godrej Agrovet Limited 0.32 Loans (18,481,677) 57,862
Remuneration Net cash generated/(used) from investing activities 29,546,511 (65,873)
Mr. H. K. Press 0.23
Cash flow from Financing Activities
Balance Receivable Outstanding Intercorporate Borrowings (Net) (1,100,000) (23,350,000)
Godrej Industries Limited 0.72 Interest Paid on Borrowings (19,554) (931,130)
8. Additional information required under Schedule VI, Part II of the Companies Act, 1956 to the extent not Dividend Paid (30,700,000) –
applicable has not been given. Tax on Distributed Profits (4,305,675) –
9. Previous year’s figures have been regrouped/reclassified wherever necessary.
Net cash generated/(used) from financing activities (36,125,229) (24,281,130)
Net increase/(decrease) in cash and cash equivalents (6,702,712) 7,084,891
Cash in and cash equivalents (opening balance) 7,207,669 122,778
Cash in and cash equivalents (closing balance) 504,957 7,207,669
As per our Report attached. Signatures to Cash Flow Statement

KALYANIWALLA MISTRY AND ASSOCIATES
Chartered Accountants M. EIPE Director
C.K. VAIDYA Director
V.M. PADWAL S. SRINIVASAN
Partner Company Secretary
124
SCHEDULE TO BALANCE SHEET OF A NON-BANKING FINANCIAL COMPANY Long Term investments :

(as required in terms of Paragraph 9BB of 1. Quoted :
Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 (i) Share : (a) Equity 0.92
(b) Preference —
(Rs. in lakhs) (ii) Debentures and Bonds Nil
Particulars (iii) Units of mutual funds Nil
LIABILITIES SIDE : (iv) Government Securities Nil
(v) Others (Please specify) Nil
1. Loans and advances availed by the NBFCs inclusive Amount Amount 2. Unquoted :
of interest accrued thereon but not paid: outstanding overdue (i) Shares : (a) Equity 527.11
(a) Debentures : Secured Nil Nil (b) Preference —
: Unsecured Nil Nil (ii) Debentures and Bonds Nil
(other than falling within the (iii) Units of mutual funds Nil
meaning of public deposits*) (iv) Government Securities Nil
(b) Deferred Credits Nil Nil (v) Others (Please specify) Nil
(c) Term Loans Nil Nil 6. Borrower group-wise classification of all leased assets, stock-on-hire and loans and advances :
(d) Inter-corporate loans and borrowing Nil Nil Please see Note 2 below
(e) Commercial Paper Nil Nil Category Amount net of provisions
(f) Public Deposits* Nil Nil Secured Unsecured Total
(g) Other Loans (specify nature) Nil Nil 1. Related Parties **
(a) Subsidiaries Nil Nil Nil
* Please see Note 1 below (b) Companies in the same group :
2. Break-up of (1)(f) above (Outstanding public deposits Loans
Godrej Industries Ltd. Nil 0.71 0.71
inclusive of interest accrued thereon but not paid) : (c) Other related parties
(a) In the form of Unsecured debentures Nil Nil Inter Corporate Deposits -
(b) In the form of partly secured debentures i.e. debentures Nil Nil Godrej Photo-Me Ltd. Nil — —
where there is a shortfall in the value of security 2. Other than related parties
(c) Other public deposits Nil Nil a) Advance Tax Payment Nil 2.72 2.72
* Please see Note 1 below Total 3.43 3.43
ASSETS SIDE : 7. Investor group-wise classification of all investments
(current and long term) in shares and securities (both quoted and unquoted):
3. Break-up of Loans and Advances including bills Amount outstanding Please see note 3 below
receivables [other than those included in (4) below] : Category Market Value / Break up Book Value (Net
(a) Secured Nil or fair value or NAV of Provisions)
(b) Unsecured 1. Related Parties **
i) Loans/Advances 189.21 (a) Subsidiaries Nil Nil
ii) Intercorporate Deposit 231.10 (b) Companies in the same group :
iii) Advance Payment of Taxes 2.72 Quoted Nil Nil
4. Break up of Leased Assets and stock on hire and Unquoted 329.26 65.48
hypothecation loans counting towards EL/HP activities (c) Other related parties NIL NIL
(i) Lease assets including lease rentals under sundry debtors : 2. Other than related parties
(a) Financial lease Nil Quoted : 2.10 0.92
(b) Operating lease Nil Unquoted : 519.03 373.88
(ii) Stock on hire including hire charges under sundry debtors :
Total 850.39 440.28
(a) Assets on hire Nil
(b) Repossessed Assets Nil ** As per Accounting Standard of ICAI (Please see Note 3)
(iii) Hypothecation loans counting towards EL/HP activities # Start up Company hence fair value considered at face value.
(a) Loans where assets have been repossessed Nil 8. Other information
(b) Loans other than (a) above Nil Particulars Amount
(i) Gross Non-Performing Assets
5. Break-up of Investments : (a) Related parties Nil
Current Investments : (b) Other than related parties Nil
1. Quoted : (ii) Net Non-Performing Assets
(i) Shares : (a) Equity Nil (a) Related parties Nil
(b) Preference Nil (b) Other than related parties Nil
(ii) Debentures and Bonds Nil (iii) Assets acquired in satisfaction of debt Nil
(iii) Units of mutual funds Nil Notes :
(iv) Government Securities Nil 1. As defined in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits
(v) Others (please specify) Nil (Reserve Bank) Directions, 1998.
2. Unquoted : 2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Companies Prudential
(i) Shares : (a) Equity Nil Norms (Reserve Bank) Directions, 1998.
(b) Preference Nil 3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of
(ii) Debentures and Bonds Nil investments and other assets as also assets acquired in satisfaction of debt. However, market value in
(iii) Units of mutual funds 23 respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be
(iv) Government Securities Nil disclosed irrespective of whether they are classified as long term or current in column (5) above.
(v) Others (Please specify) Nil
125
Godrej International Limited
DIRECTORS’ REPORT
The Directors present their report and accounts for the year ended 31st March, 2006 Political and charitable donations
Principal activities and review of the business The company made no political or charitable contributions during the year.
The company's principal activity during the year continued to be trading in vegetable oils. The company's Directors’ responsibilities
working capital was augmented during the year by means of a Rights Issue of 1,100,000 shares of £1 each, Company law requires the directors to prepare accounts for each financial year which give a true and fair
taken up entirely by the parent company. Prices of vegetable oil remained flat for most of the year and view of the state of affairs of the company and of the profit or loss for that period. In preparing those
made trading conditions difficult. The Company managed to increase it's turnover by 30 percent as a accounts, the directors are required to:
result of better availability of workinag capital. However, margins were under severe pressure due to
those flat market conditions for most of the year. The strength in energy prices and the prospect of usage of - select suitable accounting policies and then apply them consistently;
vegetable oils in bio-diesel are expected to lead to greater market volatility and more trading opportunity - make judgements and estimates that are reasonable and prudent; and
in the coming year.
- prepare the accounts on the going concern basis unless it is inappropriate to presume that the
Results and dividends company will continue in business.
Profit for the year declined slightly to USD382,566. The directors recommend a dividend for the year at 6 The directors are responsible for maintaining proper accounting records which disclose with reasonable
cents for each £ 1 share on the entire increased share capital, amounting to USD156,300 in total. accuracy at any time the financial position of the company and to enable them to ensure that the accounts
Directors 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
The directors who served during the year and their interests in the share capital of the Company were as follows: irregularities.
£1 Ordinary shares Auditors
2006 2005 A resolution to reappoint Graham Moore as auditors will be put the members at the Annual General
Adi B Godrej (Indian) 1 1 Meeting.
Nadir B Godrej (Indian) – – This report was approved by the board on 12 May 2006.
Aspi K Bardy (Indian) – –
Dorab E Mistry (British) – – Homeric Limited
Sharon Lancaster (British) (resigned 13 October 2005) – – Secretary
Philip Collins (British) (Appointed 13 October 2005, Resigned 11 May 2006) – –
Marion Hodgson (British) (Appointed 11 May 2006) – –
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 2006. These BASIS OF AUDIT OPINION
accounts have been prepared under the historical cost convention and the accounting policies set out We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing
therein. Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS disclosures in the accounts. It also includes an assessment of the significant estimates and judgements
As described in the Statement of Directors’ Responsibilities the company’s directors are responsible for the made by the directors in the preparation of the accounts, and of whether the accounting policies are
preparation of the accounts in accordance with applicable law. In the absence of comparable accounting appropriate to the company’s circumstances, consistently applied and adequately disclosed.
standards in the Isle of Man, the Directors have chosen to apply United Kingdom Accounting Standards We planned and performed our audit so as to obtain all the information and explanations which we considered
where they do not conflict with Isle of Man Statute. necessary in order to provide us with sufficient evidence to give reasonable assurance that the accounts are
Our responsibility is to audit the accounts in accordance with relevant legal and regulatory requirements free from material misstatement, whether caused by fraud or other irregularity or error. In forming our
together with our own professional ethical guidance. opinion we also evaluated the overall adequacy of the presentation of information in the accounts.
We report to you our opinion as to whether the accounts give a true and fair view and are properly OPINION
prepared in accordance with the Companies Acts 1931 to 2004. We also report to you if, in our opinion, In our opinion the accounts give a true and fair view of the state of the company’s affairs as at 31 March
the Directors’ Report is not consistent with the accounts, if the company has not kept proper accounting 2006 and of its profit for the year then ended and have been properly prepared in accordance with the
records, if we have not received all the information and explanations we require for our audit, or if Companies Acts 1931 to 2004.
information specified by law regarding directors’ remuneration and transactions with the company is not Graham Moore
disclosed. Chartered Accountants
We read the Directors’ Report and consider the implications for our report if we become aware of any 14 Douglas Street
apparent misstatements within it. Peel Isle of Man
May 12, 2006
Notes 2006 2005 31 MARCH 2006
$ Rs. Lac $ Rs. Lac
Fixed assets
Investments 5 4,312,060 1,924 4,312,060 1,888 Notes 2006 2005
Current assets $ Rs. Lac $ Rs. Lac
Debtors 6 2,389,343 1,066 1,718,086 752 Turnover 2 50,724,030 22,633 39,031,709 17,092
Cash at bank and in hand 1,193,349 532 386,598 169 Cost of sales (50,239,122) (22,417) (38,491,244) (16,855)
3,582,692 1,598 2,104,684 922
Gross profit 484,908 216 540,465 237
Creditors: amounts falling
due within one year 7 (177,876) (79) (844,314) (370) Administrative expenses (72,417) (32) (131,660) (58)
Other operating income – – 12,000 5
Net current assets 3,404,816 1,519 1,260,370 552
Total assets less Operating profit 412,491 184 420,805 184
current liabilities 7,716,876 3,443 5,572,430 2,440 Interest receivable 22,158 10 7,206 3
Creditors: amounts Interest payable 3 (52,083) (23) (28,749) (13)
falling due after more
than one year 8 (1,169,000) (521) (1,169,000) (512) Profit on ordinary activities before taxation 382,566 171 399,262 175
Tax on profit on ordinary activities – – – –
6,547,876 2,922 4,403,430 1,928
Profit for the financial year 382,566 171 399,262 175
Capital and reserves
Called up share capital 9 4,209,327 1,878 2,291,147 1,003 Dividends:
Profit and loss account 10 2,338,549 1,044 2,112,283 925 ordinary dividend on equity shares 4 (156,300) (70) (150,500) (66)
Shareholders’ funds:
Retained profit for the financial year 10 226,266 101 248,762 109
Equity 6,547,876 2,922 4,403,430 1,928
Continuing operations
11 6,547,876 2,922 4,403,430 1,928
None of the Company's activities were acquired or discontinued during the above two financial years.
Note: The Rupee equivalents of US $ have been given at the closing exchange rates has on March 31,
2006 (US $1.00 = Rs. 44.62) and March 31, 2005 (US $ 1.00 = Rs. 43.79)
M Hodgson D E Mistry
Director Director
Approved by the board on 12 May 2006
126
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 8. Creditors: amounts falling due after one year 2006 2005
$ Rs. Lac $ Rs. Lac
FOR THE YEAR ENDED 31 MARCH 2006 Bank loans 1,169,000 521 1,169,000 512
Notes 2006 2005 9. Share capital
$ Rs. Lac $ Rs. Lac Authorised:
Profit for the financial year 382,566 171 399,262 175 Ordinary shares of £1 each 4,000,000 1,785 2,000,000 876
Total recognised gains and losses related to the year 382,566 171 399,262 175
2006 2005 2005 2006 2005 2005
No. No. $ Rs. Lac $ Rs. Lac
Allotted, called up
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED and fully paid:
Ordinary shares
MARCH 31, 2006 of £1 each 2,605,000 1,505,000 4,209,327 1,878 2,291,147 1,003
1. Accounting policies 10. Profit and loss account

Accounting convention At 1 April 2,112,283 943 1,863,521 816
The accounts have been prepared under the historical cost convention and in accordance with Retained profit 226,266 101 2,112,283 109
applicable accounting standards. At 31 March 2,338,549 1,044 2,112,281 925
Foreign currencies 11. Reconciliation of movement in shareholders’ funds
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. At 1 April 4,403,430 1,965 4,154,668 1819
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of Retained Profit 382,566 171 399,262 175
exchange ruling at the balance sheet date. All differences are taken to the profit and loss account. Dividends (156,300) (70) (150,500) (66)
2. Turnover Shares issued 1,918,180 856 – –
Turnover represents the invoiced value of goods supplied by the Company, net of value added tax
and trade discounts. At 31 March 6,547,876 2,922 4,403,430 1,928
Turnover is attributable to one continuing activity, the trading of vegetable oils.
12. Gross cash flows
3. Interest payable 2006 2006 2005 2005 Returns on investments and servicing of finance
$ Rs. Lac $ Rs. Lac Interest received 22,158 10 7,206 3
Bank loans and overdrafts 37,633 17 – – Interest paid (52,083) (23) (28,749) (13)
Other loans 14,450 6 28,749 13
(29,925) (13) (21,543) (9)
52,083 23 28,749 13
Capital expenditure
4. Equity dividends Receipts from sales of tangible fixed assets – – 767,014 336
Equity dividends on ordinary shares - final proposed 156,300 70 150,500 66
Financing
5. Investments Issue of share capital 1,918,180 856 – –
Investments in Other investments Total
subsidiary undertakings 13. Analysis of changes in net debt
$ Rs. Lac $ Rs. Lac $ Rs. Lac At 1 Apr 2005 Cash flows Non-cash changes At 31 Mar 2006
$ Rs. Lac $ Rs. Lac $ Rs. Lac $ Rs. Lac
Cost
Cash at bank and
At 1 April 2005 1,257,060 550 3,055,000 1,338 4,312,060 1,888 in hand 386,598 169 806,751 360 – – 1,193,349 532
At 31 March 2006 1,257,060 561 3,055,000 1,363 4,312,060 1,924 Debt due after
On 11 December 1997 the Company acquired the entire issued share capital (US$507060) of 1 year (1,169,000) (512) – – – – (1,169,000) (521)
Godrej Global ME, a Company incorporated in the United Arab Emirates on 1 November 1997. On Total (782,402) (343) 806,751 360 – – 24,349 11
10 March 2003 the Company invested a further sum of US$750,000 in the equity share capital of
GGME. 14. Ultimate Parent Company
Other investments 2006 2006 2005 2005 In April 2001 Godrej Soaps Limited, the owner of all the company's share capital, was demerged
$ Rs. Lac $ Rs. Lac 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
Unlisted investments 3,055,000 1,363 3,055,000 1,338
entire share capital of Godrej International Limited is now held by Godfej Industries Limited.
On 4 April 2001, the Company invested US$1million in 495,000 C Bay Systems Ltd. (C Bay) 8% Godrej Industries Limited is currently listed on the Mumbai Stock Exchange.
Series E Cumulative Convertible Redeemable Preferred Stock of US$ 0.1 per share at a price of US$ The financial statements of Godrej Industries Limited are available from : The Secretary, Godrej
0.2 per share. This represents approximately 6% of the issued share capital of C Bay. Industries Limited, Eastern Express Highway, Vikroli, Mumbai 400 079, India.
CB ay is incorporated in Delaware, USA.
On 8 March 2004, the Company invested US$2,055,000 in equity shares of Newmarket Limited, a
Company incorporated in the lisle of Man. This represents approximately 18% of the issued share
capital of Newmarket Limited. Notes 2006 2006 2005 2005
6. Debtors 2006 2006 2005 2005 $ Rs. Lac $ Rs. Lac
$ Rs. Lac $ Rs. Lac Reconciliation of operating profit to net
cash inflow from operating activities
Trade debtors 577,578 258 315,072 138 Operating profit 412,491 184 420,805 184
Amounts owned by group undertakings Increase in debtors (671,257) (299) (1,050,190) (460)
and undertakings in which the company 113,764 51 113,764 50 Decrease in creditors (672,238) (300) (186,772) (82)
has a participating interest
Other debtors 1,689,614 754 1,283,837 562 Net cash outflow from operating activities (931,004) (415) (816,157) (357)
Prepayments and accrued income 8,387 3 5,412 2
Net cash outflow from operating activities (931,004) (415) (816,157) (357)
2,389,343 1,066 1,718,086 752 Returns on investments and
servicing of finance 12 (29,925) (13) (21,543) (9)
7. Creditors: amounts falling due within one year Capital expenditure 12 – – 767,014 336
Amounts owed to group undertakings and
undertakings in which the Company has a (960,929) (429) (70,686) (31)
participating interest – – 650,000 285 Equity dividends paid (150,500) (67) (135,450) (59)
Other creditors 235 – 235 –
(1,111,429) (496) (206,136) (90)
Accruals and deferred income 21,341 9 43,579 19
Proposed dividend 156,300 70 150,500 66 Financing 12 1,918,180 856 – –
177,876 79 844,314 370 Increase/(decrease) in cash 806,751 360 (206,136) (90)
Reconciliation of net cash flow to
movement in net debt
Increase/(decrease) in cash in the period 806,751 360 (206,136) (90)
Change in net debt 13 806,751 360 (206,136) (90)
Net debt at 1 April (782,402) (349) (576,266) (252)
Net funds/(net debt) at 31 March 24,349 11 (782,402) (343)
127
Godrej Global Mid East FZE
DIRECTORS’ REPORT
Your Company’s performance for the year under review is summarized below: FUTURE OUTLOOK
2005-06 2004-05 Your Company is planning to launch Cinthol soaps in Syria. Cinthol soaps manufactured in the UAE has duty
AED Mio. AED Mio. rebates in the Arab league countries.
Sales 7.56 6.21 Your Company is working towards launch of newly acquired Cuticura and Erasmic brands in the GCC.
Cost of Sales 5.23 4.25 Bottom line improvement is envisaged through lower cost raw material suppliers which includes GIL for
supply of soap noodles.
Gross Profit 2.33 1.96 AUDITORS
Expenses 2.14 1.83 You are required to appoint Auditors for the current year. The Auditors, M/s. Pannell Kerr Forster, Chartered
Other Income – 0.06 Accountants Co. being eligible, offer themselves for reappointment.
Profit Before Tax 0.19 0.19 PARTNERS IN PROGRESS
Tax – – Your company wishes to thank the Sharjah Airport International Free Zone, HSBC Bank Middle East, Alseer
Trading Agencies , Khimji Ramdas, A. Latiff Al Aujan Food International, Gulf Trading Corporation, Zahem &
Profit after Tax 0.19 0.19 Malhotra, Nasser Bin Khalid Trading Company, Godrej Consumer Products Ltd. and Godrej Industries Limited,
REVIEW OF OPERATIONS who through their continued support and co-operation, have been partners in your Company’s progress.
Your Company has achieved breakthrough in exports to Sudan, Yemen.
Your Company hopes to open up the Pakistan market through initial launch of Powder Haircolour sachets and On behalf of the Board of directors
later consolidate their position through launch of other range.
Since the net assets of your Company are below 75 percent of the share capital, the Auditors have qualified A.B.GODREJ
in their report. Remedial measure of providing sufficient funds will have to be taken by the parent company Director
in due course in accordance with the implementation procedures of Sharjah Airport Free Zone. Date : May 15, 2006
AUDITORS’ REPORT TO THE SHAREHOLDERS OF GODREJ GLOBAL MIDEAST FZE

We have audited the accompanying financial statements of GODREJ GLOBAL MIDEAST FZE for the year Opinion
ended 31 March 2006 set out on pages 2 to 15.
In our opinion, the financial statements give a true and fair view of the financial position of GODREJ GLOBAL
Respective responsibilities of the management and the auditors MIDEAST FZE as of 31 March 2006 and of the results of its operations and its cash flows for the year then ended
in accordance with International Financial Reporting Standards and comply with Implementation Procedures
These financial statements are the responsibility of the establishment’s management. Our responsibility is to issued by the Sharjah Airport Free Zone Authority pursuant to Law No. 2 of 1995.
express an opinion on these financial statements based on our audit.
As required by the Sharjah Airport Free Zone Authority pursuant to Law No. 2 of 1995, we further confirm that
Basis of opinion we have obtained all the information and explanations necessary for our audit, proper books of account and
We conducted our audit in accordance with International Standards on Auditing. Those Standards require that other records have been maintained in accordance with the said regulation.
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 Sharjah Pannell Kerr Forster
significant estimates made by management, as well as evaluating the overall financial statement presentation. United Arab Emirates
We believe that our audit provides a reasonable basis for our opinion. 15 May 2006
BALANCE SHEET AS AT MARCH 31, 2006 INCOME STATEMENT FOR THE YEAR ENDED
MARCH 31, 2006
Notes 2006 2005 Notes 2006 2005
AED Rs. AED Rs. AED Rs. AED Rs.
NON-CURRENT ASSETS
REVENUE 7,562,467 9,1883,974 6,213,663 74,066,863
Property, plant and equipment 3 21,863 265,636 35,861 427,463
Intangible assets 4 — — 10,344 123,300 Cost of sales 14 (5,233,800) (63,590,670) (4,253,630) (50,703,270)
21,863 2,65,636 46,205 550,764
CURRENT ASSETS GROSS PROFIT 2,328,667 28,293,304 1,960,033 23,363,593
Inventories 5 719,232 8,738,669 845,697 10,080,708
Trade and other receivables 6 2,220,868 26,983,546 1,691,775 20,165,958 Other operating income 2,074 25,199 60,783 724,533
Amounts due from related parties 7 2,755 33,473 1,755 20,920
Cash and cash equivalents 8 191,120 2,322,108 286,881 3,419,621 Staff costs 15 (479,832) (5,829,959) (429,688) (5,121,881)
3,133,975 38,077,796 2,826,108 33,687,207
TOTAL ASSETS 3,155,838 38,343,432 2,872,313 34,237,971 Depreciation 3 (18,196) (221,081) (18,402) (219,352)
CURRENT LIABILITIES
Amortisation 4 (10,344) (125,680) (10,344) (123,300)
Bank borrowings 9 714,674 8,683,289 1,151,394 13,724,616
Trade and other payables 10 1,840,403 22,360,896 1,332,953 15,888,800 Other operating expenses 16 (1,438,059) (17,472,417) (1,235,313) (14,724,931)
Loan from the parent company 11 418,030 5,079,065 418,030 4,982,918
2,973,107 36,123,250 2,902,377 34,596,334 PROFIT FROM OPERATING ACTIVITIES 384,310 4,669,366 327,069 3,898,662
NON-CURRENT LIABILITY
Staff end-of-service gratuity 12 92,300 1,121,445 70,672 842,410 Interest income on bank call deposits 2,310 28,067 762 9,083
SHAREHOLDER’S FUNDS Finance costs 17 (195,453) 2,374,754 (137,452) (1,638,428)
Share capital 13 4,586,250 55,722,938 4,586,250 54,668,100
Accumulated losses (4,495,819) (54,624,201) (4,686,986) (55,868,873) PROFIT FOR THE YEAR 191,167 2,322,679 190,379 2,269,318
90,431 10,98,737 (100,736) (1,200,773)
TOTAL EQUITY AND LIABILITIES 3,155,838 38,343,432 2,872,313 34,237,971
The Rupee equivalents of AED have been given at the closing exchange rates as on March 31, 2006. The Rupee equivalents of AED have been given at the closing exchange rates as on March 31, 2006. (1 AED
(1 AED = Rs. 12.15) and as on March 31, 2005 (1 AED = Rs.11.92) = Rs. 12.15) and as on March 31, 2005 (1 AED = Rs.11.92)
The accompanying notes form an integral part of these financial statements. The accompanying notes form an integral part of these financial statements.
The report of the auditor is set forth as given above
The report of the auditor is set forth as given above
We confirm that we are responsible for these financial statements, including selecting the accounting policies
We confirm that we are responsible for these financial statements, including selecting the accounting policies and making the judgements underlying them. We confirm that we have made available all relevant accounting
and making the judgements underlying them. We confirm that we have made available all relevant accounting records and information for their compilation.
records and information for their compilation.
Approved by the directors on 15 May 2006. Approved by the directors on 15 May 2006.
For GODREJ GLOBAL MIDEAST FZE For GODREJ GLOBAL MIDEAST FZE
A.B.GODREJ A.B.GODREJ
Director Director
128
STATEMENT OF CHANGES IN EQUITY CASH FLOW STATEMENT YEAR ENDED MARCH 31, 2006
YEAR ENDED MARCH 31, 2006 Notes 2006 2005
AED Rs. AED Rs.
REVENUE
Share capital Accumulated losses Total
AED Rs. AED Rs. AED Rs. Cash flows from operating activities
Cash generated from/(used in) operations 18 512,572 6,227,750 (144,279) (1,719,806)
As at 31.03.2004 4,586,250 54,438,788 (4,877,365) (57,894,323) (291,115) (3,455,535)
Interest paid (169,725) (2,062,159) (137,452) (1,638,428)
Profit for the year — — 190,379 2,269,318 190,379 2,269,318
Net cash from/(used in) operating activities (A) 342,847 4,165,591 (281,731) (3,358,234)
As at 31.03.2005 4,586,250 54,668,100 (4,686,986) (55,868,873) (100,736) (1,200,773) Cash flows from investing activities
Profit for the year — — 191,167 2,322,679 191,167 2,322,679 Purchase of property, plant and equipment (4,198) (51,006) (1,600) (19,072)
Interest received 2,310 28,067 762 9,083
As at 31.03.2006 4,586,250 55,722,938 (4,495,819) (54,624,201) 90,431 1,098,737
Net cash used in investing activities (B) (1,888) (22,939) (838) (9,989)
Cash flows from financing activities
Receipt of loan from the parent company — — 25,725 306,642
(Payment of)/proceeds from clean
import loans (401,267) (4,875,394) 365,052 4,351,420
Payment of bank overdraft (net) (35,453) (430,754) (206,135) (2,457,129)
Net cash (used in)/from financing activities (C) (436,720) (5,306,148) 184,642 2,200,933
Net decrease in cash and cash equivalents (A+B+C) (95,761) (1,163,496) (97,927) (1,167,290)
Cash and cash equivalents at beginning
of year 286,881 3,485,604 384,808 4,586,911
Cash and cash equivalents at end of year 8 191,120 2,322,108 286,881 3,419,622
The Rupee equivalents of AED have been given at the closing exchange rates as on March 31, 2006. (1 AED The Rupee equivalents of AED have been given at the closing exchange rates as on March 31, 2006. (1 AED
= Rs. 12.15) and as on March 31, 2005 (1 AED = Rs.11.92) = Rs. 12.15) and as on March 31, 2005 (1 AED = Rs.11.92)
The accompanying notes form an integral part of these financial statements. The accompanying notes form an integral part of these financial statements.
The report of the auditor is set forth as given above The report of the auditor is set forth as given above
Approved by the directors on 15 May 2006. Approved by the directors on 15 May 2006.
For GODREJ GLOBAL MIDEAST FZE For GODREJ GLOBAL MIDEAST FZE
A.B.GODREJ A.B.GODREJ
Director Director
Gains or losses resulting from foreign currency transactions are taken to the income statement.
NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED
g) Cash and cash equivalents
MARCH 31, 2006 Cash and cash equivalents comprise cash, bank current accounts, bank deposits free of encumbrance
1. LEGAL STATUS AND BUSINESS ACTIVITY with a maturity date of three months or less from the date of deposit and highly liquid investments
a) GODREJ GLOBAL MIDEAST FZE was incorporated on 1 November 1997 in the Sharjah Airport with a maturity date of three months or less from the date of investment.
Free Zone, Sharjah, UAE as a Free Zone Establishment pursuant to Law No. 2 of 1995 of H.H. h) Financial instruments
Sheikh Sultan Bin Mohammed Al Qassimi, The Ruler of Sharjah. The registered office is P. O. Box
Financial assets and financial liabilities are recognised when, and only when, the establishment
7966, Sharjah, United Arab Emirates.
becomes a party to the contractual provisions of the instrument.
b) The establishment’s principal activity consists of trading in soaps and toiletries in the United Arab
Financial assets are de-recognised when, and only when, the contractual rights to receive cash
Emirates and other AGCC countries.
flows expire or when substantially all the risks and rewards of ownership have been transferred.
c) The establishment is a wholly owned subsidiary of Godrej International Limited, a company
Financial liabilities are de-recognised when, and only when, they are extinguished, cancelled or
incorporated in the Isle of Man. Godrej International Limited is a wholly owned subsidiary of Godrej
expired.
Industries Limited, a company incorporated in India and which is a subsidiary of the ultimate parent
company Godrej & Boyce Mfg. Co. Ltd., India. Current financial assets that have fixed or determinable payments and for which there is no active
market, which comprise trade and other receivables and related party receivables, are classified
2. SIGNIFICANT ACCOUNTING POLICIES, JUDGEMENTS AND KEY ASSUMPTIONS
as receivables and stated at cost or, if the impact is material, at amortised cost using the effective
The financial statements are prepared under the historical cost convention and in accordance with interest method, less any write down for impairment losses plus reversals of impairment losses.
International Financial Reporting Standards issued or adopted by the International Accounting Standards Impairment losses and reversals thereof are recognised in the income statement.
Board (IASB) and which are effective for accounting periods beginning on or after 1 January 2005, and
Current financial liabilities, which comprise current bank borrowings, trade and other payables,
the laws of Sharjah Airport Free Zone Authority. The significant accounting policies adopted, and that
related party payables are measured at cost or, if the impact is material, at amortised cost using
have been consistently applied, are as follows:
the effective interest method.
a) Property, plant and equipment
i) Significant judgments and key assumptions
Property, plant and equipment are stated at cost less accumulated depreciation and impairment
The significant judgments made in applying accounting policies that have the most significant
losses. The cost less estimated residual value, where material, is depreciated using the straight-line
effect on the amounts recognised in the financial statements are as follows:
method over the estimated useful lives of five years.
Impairment
An assessment of residual values is undertaken at each balance sheet date and, where material,
if there is a change in estimate, an appropriate adjustment is made to the depreciation charge. At each balance sheet date, management conducts an assessment of property, plant, equipment
and all financial assets to determine whether there are any indications that they may be
b) Intangible assets
impaired. In the absence of such indications, no further action is taken. If such indications do
Intangible assets are stated at cost less accumulated amortisation and impairment losses. Product exist, an analysis of each asset is undertaken to determine its net recoverable amount and,
development expenses are amortised over their estimated useful life of five years. if this is below its carrying amount, a provision is made.
c) Inventories Key assumptions made concerning the future and other key sources of estimation uncertainty
Inventories are stated at the lower of cost and net realizable value. Cost is arrived at using the First- at the balance sheet date, that have a significant risk of causing a material adjustment to the
In First-Out (FIFO) method and comprises invoice value plus applicable landing charges. Net carrying amounts of assets and liabilities within the next financial year, are as follows:
realizable value is based on estimated selling price less any estimated cost of disposal. Carrying values of property, plant and equipment
d) Staff end-of-service gratuity Residual values are assumed to be zero unless a reliable estimate of the current value can
Provision is made for end-of-service gratuity payable to the staff at the balance sheet date in be obtained for similar assets of ages and conditions that are reasonably expected to exist at
accordance with the local labour laws. the end of the assets’ estimated useful lives.
e) Revenue Inventory provisions
Revenue represents the net amount invoiced for goods delivered during the year. Management regularly undertakes a review of the establishment’s inventory, stated at AED
590,000 (previous year AED 876,690) in order to assess the likely realisation proceeds, taking
f) Foreign currency transactions into account purchase and replacement prices, technological changes, age, likely
Transactions in foreign currencies are translated into UAE Dirhams at the rate of exchange ruling obsolescence, the rate at which goods are being sold and the physical damage. Based on the
on the date of the transactions. assessment assumptions are made as to the level of provisioning required.
Monetary assets and liabilities expressed in foreign currencies are translated into UAE Dirhams Doubtful debt provisions
at the rate of exchange ruling at the balance sheet date. Management regularly undertakes a review of the amounts of loans and receivables owed
to the establishment either from third parties, (see note 6) or from related parties (see note
129
Godrej Global Mid East FZE
NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED MARCH 31, 2006
7) and assesses the likelihood of non-recovery. Such assessment is based upon the age of the 7. RELATED PARTIES
debts, historic recovery rates and assessed creditworthiness of the debtor. Based on the
assessment assumptions are made as to the level of provisioning required. The establishment enters into transactions with entities that fall within the definition of a related party
as contained in International Accounting Standard 24. The directors consider such transactions to be
Impairment in the normal course of business.
Assessments of net recoverable amounts of property, plant, equipment and all financial assets Related parties comprise the parent companies, companies under common ownership and/or
other than loans and receivables (see above) are based on assumptions regarding future cash
common management control.
flows expected to be received from the related assets.
Staff end-of-service gratuity At the balance sheet date significant balances with related parties were as follows:
The establishment computes the provision for the liability to staff end-of-service gratuity 2006 2005
stated at AED 92,300 (previous year AED 70,672), assuming that all employees were to leave AED Rs. AED Rs.
as of the balance sheet date. The management is of the opinion that no significant difference Trade and other payables
would have arisen had the liability been calculated on an actuarial basis as salary inflation to other related parties 589,632 7,164,029 190,333 2275921
and discount rates are likely to have approximately equal and opposite affects.
Due from other related parties 2,755 33,473 1,755 20920
j) Adoption of revised and new International Financial Reporting Standards
Loan from the parent company 418,030 5,079,065 418,030 4982918
The adoption of revised International Financial Reporting Standards effective for accounting periods
beginning on or after 1 January 2005 has impacted only on presentation and disclosures. Guarantee received 1,400,000 17,010,000 1,400,000 16,688,000
The following International Financial Reporting Standards, amendments thereto and Interpretations All balances other than loan from a parent company are unsecured and are expected to be settled in
that are assessed by management as likely to have an impact on the financial statements, have cash. Other terms are set out in note 11 and 19.
been issued by the IASB prior to 31 March 2006 but have not been applied in these financial Significant transactions with related parties during the year were as follows:
statements as their effective dates of adoption are for future accounting periods, as referred to
below. It is anticipated that their adoption in the relevant accounting periods will have an impact Sales 712,358 8,655,150 684,980 8,164,962
only on disclosures within the financial statements: Purchases 1,894,517 23,018,382 2,284,240 27,228,141
Amendment to IAS39: Cash Flow Accounting of Forecast Intragroup Transactions (1 January Interest expenses 39,724 482,647 39,730 473,582
2006)
8. CASH AND CASH EQUIVALENTS
Amendment to IAS1: Capital Disclosures (1 January, 2007)
3. PROPERTY, PLANT AND EQUIPMENT Cash on hand 5,625 68,344 1,459 17,391
Furniture, fixtures, computers and equipment Bank call deposits accounts 185,495 2,253,764 285,422 3,402,231
AED Rs. 191,120 2,322,108 286,881 3,419,622
Net book values 9. BANK BORROWINGS
As at 31.03.2005 Overdraft 124,914 1,517,705 160,367 1,911,574
Cost 178,121 2,123,202
Clean import loans 589,760 7,165,584 991,027 11,813,042
Accumulated depreciation (142,260) (1,695,739)
Net book value 35,861 427,463 714,674 8,683,289 1,151,394 13,724,616
As at 31.03.2006 An analysis by bank of amounts
Cost 182,319 2,215,176 outstanding is as follows:
Accumulated depreciation (160,456) (1,949,540) HSBC Bank Middle East Limited 714,674 8,683,289 1,151,394 13,724,616
Net book value 21,863 265,636
Bank borrowings are secured by assignment of insurance policies covering inventories and assets,
Reconciliation of net book values corporate guarantee from a parent company, letter of awareness and comfort from the parent companies
As at 1.4.2004 52,663 625,110 and assignment of dues from one of the customers.
Additions 1,600 19,072
Depreciation for the year (18,402) (219,352) The bank borrowings are subject to certain financial covenants including non withdrawal of profits.
As at 31.03.2005 35,861 427,463 10. TRADE AND OTHER PAYABLES

Additions 4,198 51,006 Trade payables 1,385,735 16,836,680 961,013 11,455,275
Depreciation for the year (18,196) (221,081)
Accruals 454,668 5,524,216 371,940 4,433,525
As at 31.03.2006 21,863 265,636
1,840,403 22,360,896 1,332,953 15,888,800
4. INTANGIBLE ASSETS
11. LOAN FROM THE PARENT COMPANY
Product development expenses
This represents a short term loan, secured by a first floating charge on property, plant and equipment,
Net book values
inventories and book debts. Interest is paid @ 7% (previous year 7% per annum).
As at 31.03.2005
2006 2005
Cost 51,720 616,502 AED Rs. AED Rs.
Accumulated amortisation (41,376) (493,202)
Net book value 10,344 123,300 12 PROVISION FOR STAFF END-OF-SERVICE GRATUITY
As at 31.03.2006 Opening balance 70,672 858,665 61,628 734,605
Cost 51,720 628,398 Provision for the year 21,628 262,780 20,802 247,960
Accumulated amortisation (51,720) (628,398)
Paid during the year – – (11,758) (140,155)
Net book value — —
Reconciliation of net book values Closing balance 92,300 1,121,445 70,672 842,410
As at 1.4.2004 20,688 251,360 13. SHARE CAPITAL

Amortisation for the year (10,344) (125,680) Authorised, issued and paid-up:
As at 31.03.2005 10,344 125,680
5 ordinary shares of US$ 250,000 each 4,586,250 55,722,938 4,586,250 54,668,100
Amortisation for the year (10,344) (125,680)
[2 shares converted @ 1 US$ = AED 3.66]
As at 31.03.2006 — —
[3 shares converted @ 1 US$ = AED 3.675]
2006 2005
AED Rs. AED Rs. 14. COST OF SALES
5. INVENTORIES Inventory, beginning of the year 876,690 10,651,784 673,846 8,032,244

Goods held for sale 590,000 7,168,500 876,690 10,450,145 Add: Purchases (including direct expenses) 4,947,110 60,107,386 4,456,474 53,121,170
Less: Provision for slow moving inventories — — (66,690) (794,945) Less: Inventory, end of the year (590,000) (7,168,500) (876,690) (10,450,145)
590,000 7,168,500 810,000 9,655,200 5,233,800 63,590,670 4,253,630 50,703,270
Goods in transit 129,232 1,570,169 35,697 425,508 15. STAFF COSTS
719,232 8,738,669 845,697 10,080,708 Staff salaries and benefits 458,204 5,567,179 408,886 4,873,921
6. TRADE AND OTHER RECEIVABLES Staff end-of-service gratuity 21,628 262,780 20,802 247,960
Trade receivables 2,182,058 26,512,005 1,650,234 19,670,789 479,832 5,829,959 429,688 5,121,881
Prepayments 10,510 127,697 9,741 116,113
Deposits 28,300 343,845 31,800 379,056
2,220,868 26,983,547 1,691,775 20,165,958
130
NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED MARCH 31, 2006

2006 2005 The establishment buys and sells goods and services in foreign currencies. Exposure is minimised where
AED Rs. AED Rs. possible by denominating such transactions in US dollars to which the UAE Dirham is pegged.
16. OTHER OPERATING EXPENSES Management continuously monitors its cash flows to determine its cash requirements and makes
comparison with its funded and un-funded facilities with banks in order to manage exposure to liquidity
Rent 80,000 972,000 80,002 953,624
risk.
Advertisement and promotion expenses 991,625 12,048,244 901,321 10,743,746
Borrowing facilities are regularly reviewed to ensure that the establishment obtains the best available
Bad debts written off 5,839 70,944 — — pricing, terms and conditions on it borrowings.
Other expenses 360,595 4,381,229 253,990 3,027,561 Exposures to the aforementioned risks are detailed below:
1,438,059 17,472,417 1,235,313 14,724,931 Credit risk
17. FINANCE COSTS Financial assets that potentially expose the establishment to concentrations of credit risk comprise
On other bank short term loans and overdraft 106,106 1,289,188 72,947 869,528 principally bank accounts, trade and other receivables and amounts due from related parties.
On loan from the parent company 25,728 312,595 25,725 306,642 The establishment’s bank accounts are placed with high credit quality financial institutions.
On related party guarantees 13,996 170,051 14,005 166,940 Amounts due from related parties, trade and other receivables are stated net of the allowance for doubtful
recoveries. The establishment’s trade receivables mainly comprise of duly appointed distributors in the
On supplier’s delayed payments 49,623 602,920 24,775 295,318 UAE and other Middle East countries.
195,453 2,374,754 137,452 1,638,428 At the balance sheet date, the establishment’s maximum exposure to credit risk from trade receivables
situated outside the UAE amounts to AED 1,484,223 due from distributors/customers in other Middle East
18. CASH GENERATED FROM/(USED IN) OPERATIONS countries (Previous year AED 933,586).
Profit for the year 191,167 2,322,679 190,379 2,269,318 At the balance sheet date 61% of trade receivables was due from two distributors (Previous year 69 %
Adjustments for: due from three distributors).
Depreciation of property, plant and equipment 18,196 221,081 18,402 219,352 There are no significant concentrations of credit risk outside the industry in which the establishment
operates.
Amortisation 10,344 125,680 10,344 123,300
Interest rate risk
Finance costs 195,453 2,374,754 137,452 1,638,428
Call and fixed deposit accounts, amounts due to related parties and suppliers are subject to fixed interest
Interest income (2,310) (28,067) (762) (9,083) rates at levels generally obtained in the UAE and are therefore exposed to fair value interest rate risk.
Operating profit before changes in All other bank borrowings are subject to floating interest rates at levels generally obtained in the UAE
operating assets and liabilities 412,850 5,016,128 355,815 4,241,315 and are therefore exposed to cash flow interest rate risk.
Exchange rate risk
Decrease/(increase) in inventories 126,465 1,536,550 (164,217) (1,957,467) There are no significant exchange rate risks as substantially all financial assets and financial liabilities
Increase in trade and other receivables (529,093) (6,428,480) (521,739) (6,219,129) are denominated in UAE Dirhams or US Dollars to which the Dirham is fixed.
Increase in trade and other payables 481,722 5,852,922 176,534 2,104,285 Fair values
Increase in staff gratuity provision 21,628 262,780 9,044 107,804 The fair value of a financial instrument is the amount for which an asset could be exchanged, or a liability
settled, between knowledgeable, willing parties in an arm’s length transaction. The fair values of the
(Increase)/decrease in amounts due establishment’s financial assets and financial liabilities which are required to be stated at cost or at
from related parties (1,000) (12,150) 284 3,385 amortised cost, approximate to their carrying values.
512,572 6,227,750 (144,279) (1,719,806)
19. FINANCIAL INSTRUMENTS
The management conducts and operates the business in a prudent manner, taking into account the
significant risks to which the business is or could be exposed.
For GODREJ GLOBAL MIDEAST FZE
The primary risks to which the business is exposed comprise credit, currency, liquidity and cash flow A.B.GODREJ
interest rate risks. Director
Credit risk is managed by assessing the creditworthiness of potential distributors/customers and the
potential for exposure to the market in which they operate, combined with regular monitoring and
follow-up.
131
Godrej Global Solutions Limited
DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2006.
To, During the year under review, the Company has earned Rs. 8,22,65,686/- in foreign currency.
The Members of However, it has spent Rs. 13,75,844/- in foreign currency, the details of which are available in points
GODREJ GLOBAL SOLUTIONS LIMITED 3 and 4 of the Notes to the Accounts (Schedule 18) for the year. Further, the Company has not
Your Directors present their Forth Annual Report together with the Audited Accounts of the Company for imported any foreign technology and hence the requisite particulars in this regard are not applicable.
the year ended 31st March, 2006. b. Particulars of Employees:
FINANCIAL RESULTS
The particulars required under Section 217(2A) of the Companies Act, 1956 read with the Companies
Particulars Year ended Period ended
(Particulars of Employees) Rules 1975 :
31.3.06 31.3.05
(Rupees) (Rupees) Name Designation Gross Qualification Experie- Date of Age Particulars
remu- nce (yrs.) commen- of previous
Income from Services 82,265,686 1,667,018 neration cement employment
Other Income 14,364,895 27,390,126 (Rs.) of employ-
Total Income 96,630,581 29,057,144 ment
Less: Total Expenditure 97,286,753 28,023,912 * Sanjay Wholetime 43,44,492 B.Com., ACA 22 1-09-2004 41 Godrej
Profit / [Loss] Before Tax (656,172) 1,033,233 Tipnis Director Remote
Less: Fringe Benefit Tax (250,381) — Services Ltd.
Income Tax - Deferred 288,313 —
c. Audit Committee :
Profit [Loss] After Tax (618,240) 1,033,233
As required under Section 292A of the Companies Act, 1956, the Audit Committee of Directors of the
Profit /(Loss) brought forward (14,244,299) (15,277,532)
Company consisted of Mr. N.B. Godrej, Mr. F.P. Sarkari and Mr. K.N. Petigara. The said Committee
Loss written off in Capital Reorganisation 14,244,299 —
met Four times during the year and has performed the functions as prescribed under the said Section
Profit/(Loss) carried forward (618,240) (14,244,299)
and its terms of reference.
DIVIDEND
d. Fixed Deposits :
In view of the loss sustained by the Company, your Directors do not recommend any dividend for the year The Company has not accepted any deposits from the public during the year under review.
under review.
e. Directors’ Responsibility Statement :
OPERATIONS & FUTURE OUTLOOK
In accordance with the requirement under Section 217(2AA) of the Companies Act, 1956, the Directors
Your Company is focused on providing transaction processing services. During the year under review hereby confirm :
your Company acquired, through its US subsidiary, Godrej Global Solutions Inc., the business of Outsource
Offshore Inc., a US based healthcare forms processing service provider. Your Company successfully 1. that in the preparation of the accounts for the financial year ended 31st March, 2006, the
completed the acquisition of the Data Conversion Business of Softpage Data Conversion Services Private applicable accounting standards have been followed along with proper explanation relating to
Ltd., Navi Mumbai during the year. Your Company also successfully set up state-of-art service delivery material departures;
capabilities at Chennai and Navi Mumbai which can support customers in areas of healthcare such as 2. that the Directors have selected such accounting policies and applied them consistently and
medical transcription, medical billing, claims processing and document management services. made judgements and estimates that were reasonable and prudent, so as to give a true and fair
INVESTMENTS IN SUBSIDIARIES AND ASSOCIATE COMPANIES view of the state of affairs of the Company at the end of the financial year under review and
To enable your Company to facilitate business development and manage the customer relationships, your also of the loss of the Company for that period;
company set-up an US subsidiary, Godrej Global Solutions, Inc. The US entity is held through a holding 3. that the Directors have taken proper and sufficient care for the maintenance of adequate
company in Cyprus, viz. Godrej Global Solutions (Cyprus) Limited. accounting records in accordance with the provisions of the Companies Act, 1956 for
Your Company has investments in The View Group LP, an US based private equity group and Godrej safeguarding the assets of the Company and for preventing and detecting fraud and other
Upstream Limited, a travel focused customer care and service company. During the year your company irregularities;
also made investments in Verseon LLC, a Delaware based Limited Liability company engaged in the business 4. that the Directors have prepared the accounts for the financial year ended 31st March, 2006 on
of development and exploitation of technology relating to pharmaceutical research and development. To a going concern basis.
enable your company to focus on its core BPO business, your Company proposes to divest these investments
in the coming year. Your company has already initiated necessary action in this regard. INSURANCE
All the assets of the Company are adequately insured.
CAPITAL RESTRUCTURING
Pursuant to demerger of Data Conversion business of Softpage Data Conversion Services Private Limited AUDITORS
(Softpage) into the Company during the year, the Equity Share Capital of the Company was restructured The present Auditors of the Company, M/s. Kalyaniwalla Mistry and Associates, Chartered Accountants,
which presently stands at Rs.46,22,26,090 divided into 4,27,42,609 Equity Shares of Rs.10/-each fully paid-up Mumbai, holds their office until the conclusion of the ensuing Annual General Meeting. The Company has
and 49,71,429 Equity Shares of Rs.10/- each, Rs.7/- each paid-up respectively. During the year the Company received an eligibility Certificate from them pursuant to Section 224(IB) of the Companies Act, 1956.
issued and allotted 18,000 Redeemable Preference Shares of Rs.10/- each at par to shareholders of Softpage. Your Directors recommend their re-appointment at the ensuing Annual General Meeting for your approval.
DIRECTORS ACKNOWLEDGEMENTS
In accordance with the provisions of the Companies Act, 1956, read with the Articles of Association of the Your Directors place on record their sincere thanks to all the Government Departments concerned with
Company, Mr. Sanjay S. Tipnis and Mr. K. N. Petigara will retire by rotation at the ensuing Annual General the operations of the Company, the Bankers and employees of the Company, and to Godrej Industries
Meeting. However, being eligible, they have offered themselves for re-appointment. Your Directors Limited, for their continued support and co-operation.
recommend their re-appointment for your approval.
STATUTORY INFORMATION
a. Conservation of Energy, Foreign Exchange Earnings & Outgo and Technology Absorption:
For and on behalf of the Board
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 S.S. Tipnis C.K. Vaidya
respect of conservation of energy are not applicable. However, all efforts are being made by the Director Director
Company to conserve energy at all the stages of its activities. Mumbai, May 5, 2006

TO THE MEMBERS OF GODREJ GLOBAL SOLUTIONS LIMITED d. In our opinion, the Profit and Loss Account and Balance Sheet dealt with by this report comply
1. We have audited the attached Balance Sheet of Godrej Global Solutions Limited as at March 31, with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies
2006 and the Profit and Loss Account for the year ended on that date annexed thereto. These financial Act, 1956;
statements are the responsibility of the Company’s management. Our responsibility is to express an e. In our opinion and to the best of our information and according to the explanations given to us,
opinion on these financial statements based on our audit. the said accounts, read with the notes thereon, give the information required by the Companies
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Act, 1956, in the manner so required and give a true and fair view in conformity with the
Standards require that we plan and perform the audit to obtain reasonable assurance about whether accounting principles generally accepted in India:
the financial statements are free of material misstatement. An audit includes examining, on a test (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also 2006; and
includes assessing the accounting principles used and significant estimates made by management, (ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended
as well as evaluating the overall financial statement presentation. We believe that our audit provides on that date.
a reasonable basis for our opinion. (iii) in the case of cash flow statement, of the cash flow for the year ended on that date.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in 5. On the basis of the written representations received from the Directors as on March 31, 2006, and
terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters taken on record by the Board of Directors, we report that none of the Directors is disqualified as on
specified in paragraphs 4 and 5 of the said Order. March 31, 2006, from being appointed as a Director in terms of clause (g) of sub-section (1) of
4. Further to our comments in the Annexure referred to above, we report that: Section 274 of the Companies Act, 1956.
a. We have obtained all the information and explanations which to the best of our knowledge and For and on behalf of
belief were necessary for the purpose of our audit; KALYANIWALLA MISTRY AND ASSOCIATES
b. In our opinion, proper books of account as required by law have been kept by the Company so Chartered Accountants
far as appears from our examination of such books; V. M. PADWAL
c. The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with Partner
the books of account; Membership No.: 49639
132

Referred to in Paragraph 3 of our report of even date on the accounts of Godrej Global Solutions Limited for as at the last date of the financial year concerned for a period of more than six months from the date
the period ended March 31, 2006: they became payable.
1. a) The Company is maintaining proper records showing full particulars, including quantitative details b) According to the information and explanations given to us and the records examined by us, there
and situation of fixed assets. are no dues of Income tax or Cess outstanding on account of any dispute.
b) The Company has a program for physical verification of fixed assets at periodic intervals. In our 8. The Company’s accumulated losses at the end of the financial year do not exceed fifty percent of its net
opinion, the frequency of verification is reasonable having regard to the size of the Company and worth and it has not incurred any cash losses in the immediately preceding financial year.
the nature of its assets. The discrepancies reported on such verification were not material and have 9. According to the information and explanations given to us and records examined by us, we observed that the
been properly dealt with in the books of account. Company has not has not defaulted in repayment of dues to a financial institution or bank or debenture holders.
2. a) The Company has granted unsecured loans to a company listed in the register maintained under 10. According to the information and explanations given to us the Company has not granted loans and
Section 301 of the Companies Act, 1956 and the said loan has been repaid during the year. The total advances on the basis of security by way of pledge of shares and other securities.
amount of loan granted during the year was Rs. 100 lac and the total amount of loan repaid during 11. In our opinion and according to the information and explanations given to us, the nature of the activities of the
the year was Rs. 2192 lac. Company does not attract any special statute applicable to chit fund and nidhi/mutual benefit fund /societies.
b) In our opinion and according to the information and explanations given to us, the rate of interest and 12. In our opinion, the Company has maintained proper records of the transactions and contracts in respect
other terms and conditions of loan given are prima facie not prejudicial to the interest of the company. of the investments purchased and sold during the year and timely entries have been made therein. The
c) In our opinion and according to the information and explanation given to us the company is investments made by the Company have been held in its own name.
generally regular in repayment of principal amount and interest. 13. According to information and explanations given to us and records examined by us, on overall basis, the
d) There are no overdue amount of principal and interest. term loans were applied for the purpose for which they were obtained.
e) The Company has not taken any loans, secured or unsecured, from companies, firms or other 14. According to the information and explanations given to us and the records examined by us, the Company
parties listed in the register maintained under section 301 of the Companies Act, 1956. has not given any guarantees for loans taken by others from banks or financial institutions, the terms and
3. In our opinion and according to the information and explanations given to us, there is an adequate internal conditions whereof are prima facie prejudicial to the interest of the Company.
control system commensurate with the size of the Company and the nature of its business, for the 15. On the basis of an overall examination of the balance sheet of the Company and the information and
purchase of fixed assets and sale of services. During the course of our audit no major weakness have been explanations given to us, we report that the Company has not utilised any funds raised on short-term basis
observed in the internal controls. for long-term investments.
4. a) Based on the audit procedures applied by us and according to the information and explanation 16. The Company has not made any preferential allotment of shares to parties or companies covered under
provided by the management, the particulars of contracts or arrangements referred to in Section Section 301 of the Act.
301 of the Act have been entered in the register required to be maintained under that section. 17. According to the information and explanations given to us and the records examined by us, no debentures
b) In our opinion and according to the information and explanations given to us, having regard to the have been issued by the Company.
explanation that many of the items are of a special nature and their prices cannot be compared with 18. The Company has not raised any money through a public issue during the period.
alternative quotations, the transactions made in pursuance of contracts or arrangements entered 19. Based upon the audit procedures performed and the information and explanation given by the management,
in the register maintained under Section 301 of the Companies Act, 1956 in respect of any party we report that no fraud on or by the Company has been noticed or reported during the year.
during the period have been made at prices which are reasonable having regard to the prevailing 20. In our opinion, clauses (ii) and (viii) of paragraph 4 of the companies (Auditors Report) Order, 2003 are
market prices at the relevant time. not applicable.
5. In our opinion and according to the information and explanations given to us, the Company has not For and on behalf of
accepted any deposits from the public within the meaning of Section 58A, 58AA or any other relevant KALYANIWALLA MISTRY AND ASSOCIATES
provisions of the Companies Act, 1956 and the rules framed there under. Chartered Accountants
6. The Company has an internal audit system, which in our opinion, is commensurate with the size and V. M. PADWAL
nature of its business.
Partner
7. a) According to the records examined by us the Company is generally regular in depositing the
undisputed statutory dues including Provident Fund, Employees State Insurance, Income tax, Cess Membership No.: 49639
and other statutory dues with the appropriate authorities and there is no arrears of outstanding dues Mumbai, May 5, 2006.
MARCH 31, 2006
March 31, 2006 March 31, 2005 Year Ended Year Ended
Schedule (Amount Rs.) (Amount Rs.) March 31, 2006 March 31, 2005
SOURCE OF FUNDS Schedule (Amount Rs.) (Amount Rs.)
1 SHAREHOLDERS’ FUNDS
(a) Share Capital 1 462,406,093 538,465,000 INCOME
(b) Reserves & Surplus 2 51,374,134 – Income from Services 82,265,686 1,667,018
Other Income 13 14,364,895 27,390,126
513,780,227 538,465,000
2 BORROWED FUNDS 96,630,581 29,057,144
(a) Secured Loans 3 17,300,244 – EXPENDITURE
(b) Unsecured Loan 4 22,654,141 – Staff Expenses 14 38,846,547 4,655,619
39,954,385 – Establishment Expenses 15 27,369,723 6,510,716
553,734,612 538,465,000 Other Operating Expenses 16 19,945,861 13,692,634
Interest & Finance Charges 17 2,864,457 –
1 FIXED ASSETS 5 Amortizations – 556,671
(a) Gross Block 37,589,595 7,813,568 Depreciation 8,260,166 2,608,271
(b) Less : Accumulated Depreciation 11,900,449 3,691,261 97,286,753 28,023,911
(c) Net Block 25,689,146 4,122,307
PROFIT / (LOSS) FOR THE YEAR -Before Tax (656,172) 1,033,233
2 INVESTMENTS 6 455,394,643 193,332,114 Fringe Benefit Tax (250,381) –
3 DEFERRED TAX ASSET 288,313 – Income Tax - Current – –
4 CURRENT ASSETS, LOANS
AND ADVANCES Income Tax - Deferred 288,313 –
(a) Cash & Bank Balances 7 32,800,201 105,830,447 PROFIT / (LOSS) FOR THE YEAR -After Tax (618,240) 1,033,233
(b) Debtors 8 26,950,942 150,132
(c) Loans and Advances 9 22,626,693 221,759,874 Profit / (Loss) brought forward (14,244,299) (15,277,532)
82,377,836 327,740,453 Loss written off in Capital Regorganisation 14,244,299 –
LESS : CURRENT LIABILITIES AND (Refer Note number 3 in Schedule 18)
PROVISIONS Profit / (Loss) carried forward (618,240) (14,244,299)
Current Liabilities 10 9,818,433 2,756,895
Basic Earning Per Share (Face value of Rs 10 per share) (0.01) 0.02
Provisions 11 815,132 468,066
10,633,565 3,224,961
NET CURRENT ASSETS 71,744,271 324,515,492
5 MISCELLANEOUS EXPENDITURE 12 – 2,250,789
6 PROFIT AND LOSS ACCOUNT 618,240 14,244,299
553,734,612 538,465,000
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 As per our Report attached. For and on behaof of the

KALYANIWALLA MISTRY AND ASSOCIATES KALYANIWALLA MISTRY AND ASSOCIATES
S. S. Tipnis Whole time Director S. S. Tipnis Whole time Director

V. M. Padwal C. K. Vaidya Director V. M. Padwal C. K. Vaidya Director
Partner A.K. Singla Company Secretary Partner A.K. Singla Company Secretary
133
SCHEDULES ANNEXED TO AND FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2006
March 31, 2006 March 31, 2005 March 31, 2006 March 31, 2005
(Amount Rs.) (Amount Rs.) (Amount Rs.) (Amount Rs.)
SCHEDULE 2 : RESERVES & SURPLUS
AUTHORISED
Capital Reserve
59,900,000 (Previous Year 60,000,000) Equity Shares 599,000,000 600,000,000
Opening Balance –
of Rs.10/- each
Add : Additions during the year 1,554,134 1,554,134 –
100,000 (Previous Year Nil) Preference Shares 1,000,000 –
(Refer note 3, Schedule 18)
of Rs.10/- each
600,000,000 600,000,000 Securities Premium Account
Opening Balance –
ISSUED AND SUBSCRIBED
Add : Additions during the year 49,820,000 49,820,000 –
47,714,038 (Previous Year 57,746,500) Equity Shares
of Rs.10/- each. 477,140,380 577,465,000 51,374,134 –
18,000 (Previous Year NIL) Preference Shares
of Rs.10/- each. 180,000 – SCHEDULE 3 : SECURED LOANS
477,320,380 577,465,000 Term Loan from bank 17,300,244 –
PAID UP 17,300,244 –
42,742,609 (Previous Year 51,746,500) Equity Shares of
Rs.10/- each fully paid up 427,426,090 517,465,000 SCHEDULE 4 : UNSECURED LOANS
4,971,429 (Previous Year 6,000,000) Equity Shares of of Rs.10/- Demand Loan from bank 22,654,141 –
each Rs. 7.00 each paid up (P.Y. Rs 3.50) 34,800,003 21,000,000 (Repayable within one year)
18,000 (Previous Year NIL ) Preference Shares of Rs.10/- each. 180,000 –
22,654,141 –
462,406,093 538,465,000
Of the above 4,76,72,739 (Previous Year 5,22,96,500) equity shares
are held by Godrej Industries Limited, the Holding Company.
18,000 Preference shares of Rs. 10/- each were issued for
consideration other than cash. Refer Note Number 3 in Schedule 18.

As on Additions Deletions As on As on For the Reductions As on As on As on
01.04.2005 31.03.2006 01.04.2005 Year 31.03.2006 31.03.2006 31.03.2005
Leasehold Improvements 3,457,993 2,957,260 – 6,415,253 1,440,299 1,625,317 – 3,065,616 3,349,637 2,017,694
Computers 3,176,990 21,494,567 – 24,671,557 1,878,452 5,889,972 – 7,768,424 16,903,133 1,298,538
Office Equipments 169,825 5,006,757 190,065 4,986,517 73,638 535,254 50,978 557,914 4,428,603 96,187
Furniture & Fixtures 633,400 507,508 – 1,140,908 223,800 134,551 – 358,351 782,557 409,600
Vehicle 375,360 – – 375,360 75,072 75,072 – 150,144 225,216 300,288
Total 7,813,568 29,966,092 190,065 37,589,595 3,691,261 8,260,166 50,978 11,900,449 25,689,146 4,122,307
Previous Year 6,142,511 1,671,057 – 7,813,568 1,082,990 2,608,271 – 3,691,261 4,122,307 5,059,521
Investee Face Value Quantity Acquired Sold Quantity Amount (Rs.) Amount (Rs.)
Company/Institutions As on during during As on As on As on
(Rs.) 1/04/05 Year Year 31/3/2006 31/3/2006 31/3/2005
LONG TERM INVESTMENTS
Unquoted
Equity Shares-Fully Paid
Godrej Upstream Limited 10 9,000,000 – – 9,000,000 90,000,000 90,000,000
Verseon LLC - Class A preferred units (US$)** 1.90** – 1,315,789 1,315,789 114,233,750 –
Investment in Subsidiary Company
Equity Shares in Godrej Global Solutions (Cyprus) Ltd
face value of US$ 1.00 each 26,240,229 – 26,240,229 26,240,229 –
Preference Shares in Godrej Global Solutions (Cyprus) Ltd
face value of US$ 1.00 each – 65,600,571 – 65,600,571 65,600,571 –
Investment in the capital of Partnership firm
View Group LP – – – – – 136,801,078 80,243,788
CURRENT INVESTMENTS
Unquoted
Units of Mutual Fund
Templeton India Treasury Management 1,000 13,264 50,195 52,904 10,555 15,959,680 20,055,234
Prudential ICICI Liquid Plan Institutional Plus 10 – 4,236,307 4,218,875 17,432 206,590 –
Kotak Liquid Scheme 10 303,094 10,109,650 9,787,072 625,672 6,352,745 3,033,092
TOTAL 455,394,643 193,332,114
March 31, 2006 March 31, 2005 March 31, 2006 March 31, 2005
(Amount Rs.) (Amount Rs.) (Amount Rs.) (Amount Rs.)
SCHEDULE 7 : CASH AND BANK BALANCES SCHEDULE 10 : CURRENT LIABILITIES
Cash on hand 97,371 34,804 Sundry creditors 3,076,823 1,451,295
Balances with Scheduled Bank (Due to SSI Undertakings Rs: Nil / Prev. Year Rs : Nil )
In Current Account 32,536,330 5,726,644 Other Liabilities 6,741,610 –
In Fixed Deposit 166,500 100,069,000 Advance from Customers – 1,305,600
32,800,201 105,830,447 9,818,433 2,756,895
SCHEDULE 8 : DEBTORS SCHEDULE 11 : PROVISIONS
Unsecured and Considered Good Provision for employee retirement benefit 815,132 468,067
Outstanding for more than six months 1,293,710 – 815,132 468,067
Outstanding for less than six months 25,657,232 150,132
SCHEDULE 12 : MISCELLANEOUS EXPENDITURE
26,950,942 150,132 [To the extent not written off or adjusted]
SCHEDULE 9 : LOANS AND ADVANCES Preliminary Expenses 929,240 1,045,395
Advances recoverable in cash or in kind Less : Adjusted during the year (929,240) –
or for value to be received 723,721 398,820 Less : written off during the year – (116,155)
Intercorporate deposits – 214,868,647 – 929,240
Security Deposits 13,357,804 1,720,272
Accrued Interest – 331,644 Pre-operative Expenses 1,321,549 1,762,065
Staff Loan 78,500 21,000 Less : Adjusted during the year (1,321,549) –
Advance Payment of Taxes 8,466,668 4,419,491 Less : written off during the year – (440,516)
22,626,693 221,759,874 – 1,321,549
– 2,250,789
134
SCHEDULES ANNEXED TO AND FORMING PART OF THE PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2006
March 31, 2006 March 31, 2005 i) Taxes on Income

(Amount Rs.) (Amount Rs.) Provision for current tax is ascertained on the basis of the taxable income for the year determined
SCHEDULE 13 : OTHER INCOME in accordance with the provision of Income Tax Act, 1961.
Interest (Gross) Deferred tax is recognised on timing differences; being the difference between the taxable
– Bank - (TDS : C.Y : Rs. 7,687/-, P.Y: Rs. 354,340/-) 52,363 2,042,707 incomes and accounting income that originate in one period and are capable of reversal in
– Companies - (TDS : C.Y : Rs. 2,781,773/- P.Y. : Rs. 4,054,506/-) 12,396,488 25,132,315 one or more accounting periods. Deferred tax assets subject to the consideration of prudence
Dividend 1,910,349 116,391 are recognised and carried forward only to the extent that there is reasonable certainly that
Miscellaneous Income 5,696 98,713 sufficient future taxable income will be realised. The tax effect is calculated on the accumulated
14,364,895 27,390,126 timing difference at the year-end and based on the tax rate and laws enacted on substantially
enacted on the balance sheet date.
SCHEDULE 14 : STAFF EXPENSES j) Foreign Currency Transactions
Salary, bonus, exgratia 34,990,456 4,097,232 Transactions in foreign currency are recorded at the exchange rates prevailing on the date of
Contribution to Providend Fund and other funds 2,617,899 61,820 the transaction. Monetary assets and Liabilities denominated in foreign currency are translated
Staff Welfare 1,238,192 496,567 at the period end exchange rates. Exchange gain/losses are recognised in the profit and loss
38,846,547 4,655,619 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
SCHEDULE 15 : ESTABLISHMENT EXPENSES carried at cost and expressed in Indian currency at the rate of exchange prevailing at the time
Rent 11,251,006 1,170,071 of making the original investment.
Office Maintenance 5,785,814 3,510,296 3. Scheme of Arrangement
Electricity 5,409,147 993,315 The scheme of arrangement under Sections 391 and 394 of the Companies Act, 1956 between the
Communication expenses 4,406,888 837,034 Company, Softpage Data Conversion Services Private Limited and their respective Shareholders for
Repairs and Maintenance - Plant and Machinery 516,868 – vesting the Data Conversion business of the Company was approved by the Honorable High Court of
27,369,723 6,510,716 Mumbai on November 9, 2005. Accordingly all the Assets and Liabilities pertaining to the Data
SCHEDULE 16 : OTHER OPERATING EXPENSES Conversion Business of Softpage Data Conversion Services Private Limited were transferred to and
Legal & Professional Expenses 9,532,816 7,611,612 vested in the company with retrospective effect from April 1, 2005, the appointed date. The scheme
Insurance 183,094 71,970 has accordingly been given effect to in these accounts.
Conveyance and Travelling 2,916,553 2,774,267 Pursuant to the scheme, all the assets and liabilities of data Conversion Business of Softpage Data
Recruitment & Training 1,415,302 1,508,896 Conversion Services Private Limited as at April 1, 2005 have been taken over at their book value
Outsourcing expenses 2,690,130 – and accounted for under the “Pooling of Interest Method”. The assets and liabilities taken over consist
Loss on Sale of Assets 82,837 – of fixed assets Rs. 5.98 lac, current assets Rs. 3.87 lac, bank loan Rs. 1.69 lac.
Exchange Difference – Loss 287,282 – Pursuant to the scheme, consideration for vesting of the Data Conversion Business of Softpage Data
General Expenses 2,837,848 1,725,889 Conversion Services Private limited was discharged by payment of Rs. 300 lac in cash and issue of
18,000 redeemable preference shares of the face value of Rs. 10/- each issued at a premium of
19,945,861 13,692,634 Rs. 498.20 lac to be redeemed as under:
SCHEDULE 17 : INTEREST & FINANCE CHARGES a. 4,000 preference shares of Rs. 10/- each on January 31, 2006
Interest on Bank Loan 2,392,882 – b. 10,000 preference shares of Rs .10 each on May 31, 2006
Finance Commission 471,575 – c. 4,000 preference shares of Rs. 10 each on May 31, 2007
The maximum premium payable on redemption of these shares is Rs. 498.20 lac subject to
2,864,457 –
achievement of predetermined performance on the date of redemption.
Pursuant to the scheme, equity share capital of the company is reduced by Rs. 972.39 lac and the
SCHEDULES ANNEXED TO AND FORMING PART OF THE said amount is credited to capital reorganization account. The difference of aggregate of value of
ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2006 Redeemable Preference Shares (i.e. face value and the maximum premium payable) allotted and
cash over the value of net assets of Data cConversion Business of Softpage Data Conversion Services
SCHEDULE 18 : NOTES TO ACCOUNTS Private Limited amounting to Rs. 791.83 lac is debited to capital reorganization account. The debit
1. Background balance in profit and loss account of Rs. 142 lac and the balance in miscellaneous expenditure
Godrej Global Solutions Limited (“the Company”) was incorporated on February 28, 2003 as a account of Rs. 23 lac as on April 1, 2005 is also debited to capital reorganization account. The
limited liability company. The main business of the company is to carry out IT enabled services and
balance lying in capital reorganization account after the above adjustment is transferred to capital
back office support functions.
reserve account.
2. Significant Accounting Policies
As per the scheme of arrangement, the company has taken over all the employees of the Data
a) Accounting Convention
The financial statements are prepared under the historical cost convention, on accrual basis in accordance Conversion Business of Softpage Data Conversion Services Private Limited.
with the generally accepted accounting principles in India, the Accounting Standards issued by the 4. Redemption of Preference Shares
Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956. The Company has not redeemed 4,000 preference shares of Rs 10/- each at par on January 31, 2006
b) Fixed Asset due to inadequacy of divisible profits.
Fixed Assets are stated at cost less accumulated depreciation. Cost includes all expenses 5. Secured Loan
related to acquisition and installation of the concerned asset. Term loan from bank are secured by
c) Asset Impairment - Charge by way of hypothecation of assets on movable fixed assets of the Company
The Company reviews the carrying values of tangible and intangible assets for any possible - Hypothecation of the entire current assets of the Company.
impairment at each balance sheet date. An Impairment loss is recognised when the carrying - Irrevocable and unconditional Corporate Guarantee from Godrej Industries Limited.
amount of an asset exceeds its recoverable amount. In assessing the recoverable amount, the 6. Investments
estimated future cash flows are discounted to their present value at appropriate discount rate. The Company is in the process of disposing off the investment made in the equity shares of Godrej
d) Investments Upstream Limited and in the capital of view Group LP, a partnership firm formed under the laws of
Long-term investments are carried at cost. Provision for diminution, if any, in the value of each the state of Delaware, USA and does not expect to incur any loss on such sale.
long-term investment is made to recognize a decline, other than that of a temporary nature. 7. Operating Lease
The fair value of a long-term investment is ascertained with reference to its market value, the The Company’s significant leasing agreements are in respect of operating lease for office premises.
investee’s assets and results and the expected cash flows from the investments. These leasing agreements are cancelable and renewable by mutual consent on mutually acceptable
Current investments are carried at lower of cost and fair value. terms. The aggregate lease rentals payable by the company are charged to profit and loss account as
e) Provisions and Contingent Liabilities a rent amounting to Rs. 101.34 Lacs. (Previous year. Rs. 11.70 Lacs). The future minimum lease
Provisions are recognized in the accounts in respect of present probable obligations, the amount payments under non-cancelable operating leases due within a period of one year are estimated at
of which can be reliably estimated. Rs. 103.92 Lacs (Previous year. Rs. 11.23 Lacs) and due within a period of one year but less than five
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events
years are estimated at Rs. 126.58 Lacs. (Previous year. Rs. 6.55 Lacs)
but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain
8. Related Party Disclosures
future events not wholly within the control of the company.
f) Revenue Recognition a) Related Parties with whom transactions have taken place during the year, with the name and
Income from services is recognized on completion of service as per terms of the contract. description of relationship.
Interest income is recognized on a time proportion basis. Dividend income is recognised when Parties with whom control exists :
the right to receive the same is established. Godrej Industries Limited (GIL); the Holding company.
g) Depreciation
Godrej & Boyce Manufacturing Co. Ltd (GBMCL); the Ultimate Holding Company
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 Associate Companies :
estimated useful life of assets which is as under: Godrej Upstream Limited (GUL)
Computers 3 Years Fellow Subsidiaries :
Office Equipment 5 Years Godrej Remote Services Limited (GRSL)
Furniture & Fixture 5 Years
Motor Vehicle 5 Years Wholly Owned Subsidiaries :
h) Retirement Benefits Godrej Global Solutions Inc. (GGSI)
Retirement Benefits to employees comprises payment under approved provident fund plans, Godrej Global Solutions (Cyprus) Ltd. (GGSCL)
leave encashment and gratuity to eligible employees. Payments under approved provident Key Management Personnel
fund plans are charged to revenue. The liability in respect of future payment of gratuity to
Mr. N.B. Godrej (NBG)
retiring employees and leave encashment benefit on retirement is provided on the basis of an
actuarial valuation at the end of each financial year. Mr. Sanjay Tipnis (SST)
135
SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2006
b) Transactions with Related Parties – Parent and Fellow Subsidiaries (Amount Rs.) Disclosure as required vide Part IV of Schedule VI of the Companies Act, 1956.
Nature of Transaction Ultimate Holding Fellow Total Balance Sheet Abstract and Company’s General Business Profile
Holding Co. Company Subsidiaries Amount in Rs. Thousands
(GBMCL) (GIL) (GRSL) I. Registration Details
Leave & Licence – 1,123,440 – 1,123,440 Registration No. 11-139431
Previous Year – 1,011,700 – 1,011,700 State Code 11
Service Charges – 2,808,000 – 2,808,000 Balance Sheet date March 31, 2006
Previous Year – 2,529,250 – 2,529,250 II. Capital raised during the year
Other Expenses – 571,604 – 571,604 Public Issue –
Previous Year – 153,799 – 153,799 Rights Issue –
Issue of Equity Shares – – – – Bonus Issue –
Previous Year – 288,465,000 – 288,465,000 Private Placement
Call Money Received – 21,000,000 – 21,000,000 III. Position of mobilisation and deployment of funds
Previous Year – – – – Total Liabilities 553,734
Purchase of Fixed Assets 12,240 – – 12,240 Total Assets 553,734
Previous Year – – 375,360 375,360 Sources of Funds
Balance Outstanding as of 31-3-2005 Paid-up Capital 462,406
Payables – 17,447 – – Reserves and surplus 51,374
Secured Loans 17,300
c) Transactions with Related Parties – Subsidiaries and Others Unsecured Loans 22,654
(Amount Rs) Application of Funds
Nature of Transaction Wholly Wholly Associate Key Total Net Fixed Assets 25,689
Owned Owned Company Management Investments 455,395
Subsidiary Subsidiary Personnel Deferred Tax Asset 288
Company Company Net Current Assets 71,744
(GGSI) (GGSCL) (GUL) (SST) Miscellaneous Expenditure –
Investment in Preference Shares – 65,600,571 – – 65,600,571 Accumulated Losses 618
Previous Year – – – – – IV. Performance of the Company
Investment in Equity Shares – 26,240,229 – – 26,240,229 Total Income 96,631
Previous Year – – – – – Total Expenditure 97,287
Export of Services 54,733,608 – – – 54,733,608 Profit / (loss) before Tax (656)
Previous Year – – – – – Profit / (loss) after Tax (618)
Interest Income – – 12,396,488 – 12,396,488 Earning per share (in Rs.) 0.01
Previous Year – – 25,132,315 – 25,132,315 Dividend Rate % –
Inter Corporate Deposit - V. Generic names of principle products / services of company (as per monetary terms)
Given– – – 10,000,000 – 10,000,000 Item Code N.A.
Previous Year – – 335,000,000 – 335,000,000 Product Description IT Service
Inter Corporate Deposit CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2006
Repaid – – 219,200,000 – 219,200,000
Particulars March 31, 2006 March 31, 2005
Previous Year – – 135,000,000 – 135,000,000
(Amount Rs) (Amount Rs)
Managerial Remuneration – – – 4,344,492 4,344,492
Cash Flow from Operating Activities
Previous Year – – – 1,605,206 1,605,206
Net Loss Before Tax (656,172) 1,033,233
9. Computation of Profits under Section 349 of Companies Act, 1956 Adjustment for:
Depreciation 8,260,166 2,608,271
Particulars Current Year Previous Year Interest Paid 2,864,457 –
Profit for the year as per Profit and Loss Account (618,240) 1,033,233 Deferred Revenue Expenditure written off – 556,671
Add : (Profit)/Loss on Fixed Assets Scrapped / Sold 84,122 –
Depreciation as per Accounts 8,260,166 2,608,271 (Profit)/Loss on Investments Sold (5,696) –
Managerial Remuneration 4,344,492 1,645,206 Dividend Income (1,910,349) (116,391)
11,986,418 4,253,447 Interest Income (12,448,851) (27,175,022)
Less : Operating Profit before Working Capital Changes (3,812,322) (23,093,238)
Depreciation u/s 350 (4,922,868) (1,733,139) Adjustment for:
Net Profit / (Loss) 7,063,550 2,520,338 Trade and Other Receivables (38,101,714) (155,192,413)
Trade Payables 7,408,603 2,656,405
10. Management Remuneration Cash Generated from Operations (34,505,433) (175,629,246)
Salaries and allowances 4,118,460 1,501,720 Direct Taxes Paid -FBT (250,381) –
Contribution to Provident Fund and other fund 226,032 103,486 Direct Taxes Paid (4,047,177) –
Sitting Fees – 40,000 Total Cash Generated from Operating Activites (38,802,991) (175,629,246)
Total 4,344,492 1,645,206 Net Cash from/(used) in Operating Activities (38,802,991) (175,629,246)
Cash Flow from Investing Activities
11. Auditors Remuneration included in General Expenses
Purchase of Fixed Assets (29,375,208) (1,671,057)
(Excluding service tax)
Sale of Fixed Assets 56,250 –
Audit Fees 9,00,000 75,000
Acquisitions of Data Conversion Business (80,000,000) –
Tax Audit Fees 1,00,000 25,000
Purchase of Long Term Investments (262,631,840) (11,094,000)
Total 10,00,000 1,00,000 Purchase of Current Investments (277,318,150) (43,147,045)
12. Earning in Foreign Currency Sale of Current Investments 277,893,157 20,058,719
Income from services 82,265,686 1,667,018 Recovery of Inter Corporate Deposits 214,868,647 –
13. Expenditure in Foreign Currency Interest Income 12,448,851 27,175,022
Marketing Expenses 3,209 86,250 Dividend Income 1,910,349 116,391
Travelling Expenses 106,389 875,538 Net Cash from/(used) in Investing Activities (142,147,944) (8,561,970)
Books & Periodicals 18,849 Nil Cash Flow from Financing Activities
Technical Services Nil 36,171 Proceeds from Issue of Share Capital 71,000,000 288,465,000
Professional Fees Nil 788,357 Proceeds from Long Term Borrowings 48,190,146 –
Training 1,176,955 1,093,500 Repayment of Long Term Borrowing (8,405,000) –
Liability Insurance 26,581 Nil Interest Paid (2,864,457) –
Net Cash from Financing Activities 107,920,689 288,465,000
Software Development & Maintenance 43,861 Nil Net Increase in Cash and Cash Equivalents (73,030,246) 104,273,785
14. Earning Per Share Cash and Cash Equivalents as at beginning of the year 105,830,447 1,556,662
Net profit / (loss) after tax available to shareholders (618,240) 1,033,233 Cash and Cash Equivalents as at end of the year 32,800,201 105,830,447
Number of Equity Shares: Note: To finance working capital requirements, the Company’s Bankers have sanctione a total fund based limit
As at commencement of the year 57,746,500 25,000,000 of Rs 450 lac. Of this, limits utilized as on March 31, 2006 is Rs Nil.
As at the end of the year 47,714,038 57,746,500
Weighted Average Number of Equity Shares 52,952,098 46,038,992 As per our Report attached. For and on behalf of the board
Basic Earning per Share of Rs. 10/- each (0.01) 0.02
KALYANIWALLA MISTRY AND ASSOCIATES
15. Additional information required under Schedule VI Part II of the Companies Act, 1956, to the extent CHARTERED ACCOUNTANTS
not applicable has not been given.
V M Padwal S. S. Tipnis C. K. Vaidya
16. Figures of the previous year have been regrouped wherever necessary. Partner Whole Time Director Director
Mumbai, May 5, 2006 A.K.Singla
Company Secretary
136

DIRECTORS’ REPORT
For the period from January 19, 2005 to December 31, 2005 Company’s results
The Directors have pleasure in enclosing the Company’s first set of financial statements for the period from 19.01.2005- 31.12.2005
January 19, 2005 to December 31, 2005. US$
Profit for the period 32.962
Principal activities Balance carried forward 32.962
The Company’s principal activity during the period under review was that of holding of investments and Dividends
financing. The Directors recommend no dividend to be paid for the period ended December 31, 2005.
Directors Auditors
The Directors of the Company during the period were the following : A resolution will be put forward to the Annual General Meeting to reappoint PKF Savvides & Co Limited as
Stelios Savvides auditors for the next year.
Eva Agathangelou By order of the Board
For Godrej Global Solution (Cyprus) Limited
Rohinton Homi Khajotia
Dorab Erach Mistry Secretary
Sanjay Tipnis
Limassol : April 13, 2006
AUDITORS’ REPORT TO THE MEMBERS OF GODREJ GLOBAL SOLUTIONS (CYPRUS) LIMITED

1. We have audited the financial statements of Godrej Global Solutions (Cyprus) Limited which comprise Solutions (Cyprus) Limited for the period from January 19, 2005 to December 31, 2005 and of its financial
the balance sheet as at December 31, 2005 and the income statement, statement of changes in equity performance and its cash flows for the period then ended in accordance with International Financial
and cash flow statement for the period from January 19, 2005 to December 31, 2005 and the related Reporting Standards and the requirements of Cyprus Companies Law, Cap. 113.
notes. These financial statements are the responsibility of the Company’s Board of Directors. Our respon- Report on other legal requirements
sibility is to express an opinion on these financial statements based on our audit. This report is made solely Pursuant to the requirements of the Companies Law, Cap. 113, we report the following :
to the Company’s members, as a body, in accordance with Section 156 of the Companies Law, Cap. 113. We have obtained all the information and explanations we considered necessary for the purposes of our
Our audit work has been undertaken so that we might state to the Company’s members those matters audit.
we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent In our opinion, proper books of account have been kept by the Company.
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the The Company’s financial statements are in agreement with the books of account.
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. In our opinion and to the best of our information and according to the explanations given to us, the
2. We conducted our audit in accordance with International Standards on Auditing. Those Standards financial statements give the information required by the Companies Law, Cap. 113, in the manner so
require that we plan and perform the audit to obtain reasonable assurance about whether the financial required.
statements are free of material misstatement. An audit includes examining, on a test basis, evidence In our opinion, the information given in the report of the Board of Directors on page 1 is consistent with
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the the financial statements.
accounting principles used and significant estimates made by the Board of Directors, as well as Certified Public Accountants
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable Limassol: April 13, 2006
basis for our opinion.
3. In our opinion, the financial statements give a true and fair view of the financial position of Godrej Global
BALANCE SHEET AS AT DECEMBER 31, 2005 INCOME STATEMENT For the year ended
from January 19, 2005 to December 31, 2005
Note US$ Rs. Lac
Assets
Non-current Assets Note
Investments 6 1,000,000 450.70 Particulars US$ Rs. Lac
Loan receivable 7 1,055,000 475.49 Interest receivable 49,844 22.46
Current Assets Administration expenses (9,850) (4.44)
Interest receivabe 49,844 22.46 (Loss)/profit from operations 3 39,994 18.03
Cash at Bank 35,428 15.97 Financial (expenses)/income-net 4 (1,449) (0.65)
Incorporation expenses writen off (5,583) (2.52)
85,272 38.43
(Loss)/profit for the period before taxation 32,962 14.86
Total Assets 2,140,272 964.62 Taxation 5 – –
Equity and Liabilities (Loss)/profit for the period after taxation 32,962 14.86
Share capital 8 2,245 1.01 Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on December 31,
Equity to be issued 2,097,755 945.46 2005 (US$ 1.00 = Rs. 45.07).
Reserves 9 32,962 14.86
2,132,962 961.33 By order of the Board
Current liabilities – For Godrej Global Solution (Cyprus) Limited
Creditors and accruals 10 7,310 3.29
– Secretary
Total equity and liabilities 2,140,272 964.62
Limassol: April 13, 2006
Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on December 31,
2005 (US$ 1.00 = Rs. 45.07).
By order of the Board
Limassol: April 13, 2006 Secretary
STATEMENT OF CHANGES IN EQUITY

For the Period from January 19, 2005 to December 31, 2005
Share Share Equity Equity Profit & Loss Profit & Loss
capital capital to be issued to be issued Reserve Reserve Total Total
US$ Rs. Lac US$ Rs. Lac US$ Rs. Lac US$ Rs. Lac
Issue of share capital 2,245 1.01 – – – – 2,245 1.01

Funds received – – 2,097,755 945.46 – – 2,097,755 945.46
Profit for the period – – – - 32,962 14.86 32,962 14.86
At December 31, 2005 2,245 1.01 2,097,755 945.46 32,962 14.86 2,132,962 961.33
Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on December 31, 2005 (US$ 1.00 = Rs. 45.07).
137
7. Loan receivable
NOTES TO THE FINANCIAL STATEMENTS 2005
DECEMBER 31, 2005 US$
Godrej Global Solutions Inc.
1. Introduction
(Subsidiary company registered in USA) 1,055,000
The Company was incorporated in Cyprus on January 19, 2005 as a private limited liability company in
accordance with the provisions of the Cyprus Companies Law Cap. 113. The Company’s principal activity The above loan carries interest at the rate of 7% per annum on the outstanding amount and it is receivable
during the period was that of holding of in investments and financing. by the end of March 31, 2010. The interest receivable is accounted for on an accruals basis. The interest
2. Principal accounting policies expense for the period ended December 31, 2005 was US$ 49.844.
The following is a summary of the most important accounting policies used by the Company : 8. Share capital
a) Basis of accounting 2005
The financial statements have been prepared under the historical cost convention and in accordance £C US$
with the International Financial Reporting Standards and the Companies Law. Authorised, issued and fully paid
b) Foreign exchange 1.000 ordinary shares of £C1 each 1,000 2,245
The financial statements are expressed in US Dollars. 9. Reserves
Current assets and liabilities of the Company other than in US Dollars are translated at the rate of As at 31 December, 2005 the reserves available for distribution amounted to US$32.962.
exchange ruling at the balance sheet date. 10. Creditors and accruals
Transactions during the period other than in US Dollars are converted at the rate of exchange ruling 2005
on the dates when they occur. US$
Differences on exchange are included in the income statement. Accruals 7,310
c) Taxation The above amounts are payable within one year.
Tax is calculated as follows : 11. Capital commitments
The current and deferred taxation are recognised as income or expense for the period. At the balance sheet date there were no capital commitments.
12. Contingent liabilities
The provision for income tax and defence contribution for the period is calculated in accordance
At the balance sheet date there were no contingent liabilities.
with the Income Tax Laws. Deferred taxation is calculated on the basis of the rates ruling at
13. Fair value of assets and liabilities
the balance sheet date.
The fair value of an asset or liability represents the replacement cost or an obligation to be settled at an
The debit balances of the deferred taxation arriving from deductible temporary differences
arms length transaction. The fair value of all the assets and liabilities of the Company approaches their
are recognised to the extent of the anticipated taxable profits.
accounting value as stated in the financial statements.
d) Investments
Investments in subsidiaries are stated at cost unless there is an impairment of value. Any such
impairment is recognised in the income statement. Investments held for trading are classified as
current assets and are stated at fair value, with any resultant gain or loss recognised in the income Cash Flow Statement for the Period from January 19, 2005 to December 31, 2005
statement. When the Company has the positive intent and ability to hold bonds to maturity, these
are stated at amortised cost less impairment losses. Other investments held by the Company are Particulars US$ Rs. Lac
Cash flows from operating activities
classified as being available-for-sale and are stated at fair value, with any resultant gain or loss
(Loss)/profit for the period before taxation 32,962 14.86
recognised directly to equity. When an investment is sold collected or otherwise disposed of or
Operating (loss)/profit before working
when the carrying amount of the investment is impaired, the cumulative gain or loss recognised
capital changes 32,962 14.86
in equity is transferred to the income statement.
Increase in creditors and accruals 7,310 3.29
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 Net cash from operating activities 40,272 18.15
other methods of determining fair value are inappropriate, the investment is stated at cost. Cash flows from investing actinities
Any sale of investment is recognised when the actual transfer of shares from the registrar takes Purchase of investments (1,000,000) (450.70)
place. Interest receivable (49,844) (22.46)
e) Provisions Net cash used in investing activities (1,049,844) (473.16)
Provisions are recognised when the Company has a present obligation as a result of a past event, Cash flows from financing activities
which it is probable will result in an outflow of economic benefits that can be reasonably estimated. Issuance of share capital 2,245 1.01
f) Contingent liabilities Equity to be issued 2,097,755 945.46
Contingent liabilities are disclosed as expenditure and liability if the confirmation of the expense Loan receivable (1,055,000) (475.49)
or loss is considered possible from future events.
Net cash generated from financing activities 1,045,000 470.98
g) Post balance sheet events
Current assets and liabilities of the Company are adjusted to reflect any post balance sheet events (Decrease)/increase in cash and cash equivalents 35,428 15.97
and include additional information for amounts calculated on the basis ruling at the balance sheet Cash and cash equivalents at beginning of period – –
date. Cash and cash equivalents at end of period 35,428 15.97
3. Profit from operations Cash and cash equivalents are as follows :
Profit from operations is arrived at after charging the following : Cash at bank 35,428 15.97
19.1.2005-31.12.2005
US$
Auditors’ remuneration 5,066
4. Financial expenses Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on December 31,
19.01.2005-31.12.2005 2005 (US$ 1.00 = Rs. 45.07).
US$
Bank charges 1,449
5. Taxation
The Company is liable to income tax at the rate of 10% on its taxable profits. Defence contribution is
charged on interest receivable at the rate of 10% per annum. By order of the Board
6. Investments For Godrej Global Solution (Cyprus) Limited
Country of Class of
Incorporation/ shares Holding 2005 Secretary
Registration held % US$
Godrej Global Solutions Inc. USA Ordinary 100 1,000,000 Limassol: April 13, 2006
138
DIRECTORS’ REPORT
For the period from January 1, 2006 to March 31, 2006 Company’s results
The Directors have pleasure in enclosing the Company’s set of financial statements for the period from 1.1.2006–31.3.2006
US$
1 January, 2006 to March 31, 2006. Balance brought forward 32,962
Loss for the period (7,260)
Principal activities
Balance carried forward 25,702
The Company’s principal activity during the period under review was that of holding of investments and
financing. Dividends
The Directors recommend no dividend to be paid for the period ended March 31, 2006.
Directors Auditors
The Directors of the Company during the period were the following : A resolution will be put forward to the Annual General Meeting to reappoint PKF Savvides & Co. Limited as
Stelios Savvides auditors for the next year.
Eva Agathangelou For Godrej Global Solution (Cyprus) Limited
Rohinton Homi Khajotia
Dorab Erach Mistry Secretary
Sanjay Tipnis Limassol : April 13, 2006
AUDITORS’ REPORT TO THE MEMBERS OF GODREJ GLOBAL SOLUTIONS (CYPRUS) LIMITED

1. We have audited the financial statements of Godrej Global Solutions (Cyprus) Limited on which comprise 3. In our opinion, the financial statements give a true and fair view of the financial position of Godrej Global
the balance sheet as at March 31, 2006 and the income statement, statement of changes in equity and Solutions (Cyprus) Limited for the period from January 1, 2006 to March 31, 2006 and of its financial
cash flow statement for the period from January 1, 2006 to March 31, 2006 and the related notes. These performance and its cash flows for the period then ended in accordance with International Financial
financial statements are the responsibility of the Company’s Board of Directors. Our responsibility is to Reporting Standards and the requirements of Cyprus Companies Law, Cap. 113.
express an opinion on these financial statements based on our audit. This report is made solely to the Report on other legal requirements
Company’s members, as a body, in accordance with Section 156 of the Companies Law, Cap. 113. Our Pursuant to the requirements of the Companies Law, Cap. 113, we report the following :
audit work has been undertaken so that we might state to the Company’s members those matters we are We have obtained all the information and explanations we considered necessary for the purposes of our
required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted audit.
by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s In our opinion, proper books of account have been kept by the Company.
members as a body, for our audit work, for this report, or for the opinions we have formed. The Company’s financial statements are in agreement with the books of account.
2. We conducted our audit in accordance with International Standards on Auditing. Those Standards require In our opinion and to the best of our information and according to the explanations given to us, the
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements financial statements give the information required by the Companies Law, Cap. 113, in the manner so
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the required.
amounts and disclosures in the financial statements. An audit also includes assessing the accounting In our opinion, the information given in the report of the Board of Directors on page 1 is consistent with
principles used and significant estimates made by the Board of Directors, as well as evaluating the the financial statements.
overall financial statement presentation. We believe that our audit provides a reasonable basis for our Certified Public Accountants
opinion. Limassol : April 13, 2006
BALANCE SHEET AS AT MARCH 31, 2006 INCOME STATEMENT FOR THE YEAR ENDED
January 1, 2006 to March 31, 2006
Note 31.3.2006 31.12.2005 1.1.2006 to 19.1.2005 to
US$ Rs. Lac US$ Rs. Lac Note 31.3.2006 31.12.2005
Assets
Particulars US$ Rs. Lac US$ Rs. Lac
Non-current Assets
Investments 6 1,000,000 446.10 1,000,000 450.70 Interest receivable 18,210 8.12 49,844 22.46
Loan receivable 7 1,055,000 470.64 1,055,000 475.49 Administration expenses (25,363) (11.31) (9,850) (4.44)
Current Assets (Loss)/profit from operations 3 (7,153) (3.19) 39,994 18.03
Interest receivabe 68,054 30.36 49,844 22.46
Cash at bank 27,718 12.36 35,428 15.97 Financial (expenses)/income-net 4 (107) (0.05) (1,449) (0.65)
Incorporation expenses writen off – – (5,583) (2.52)
95,772 42.72 85,272 38.43
(Loss)/profit for the period
Total Assets 2,150,772 959.46 2,140,272 964.62
before taxation (7,260) (3.24) 32,962 14.86
Equity and Liabilities Taxation 5 – – – –
Share capital 8 2,100,000 936.81 2,245 1.01 (Loss)/profit for the period after taxation (7,260) (3.24) 32,962 14.86
Equity to be issued – – 2,097,755 945.46
Reserves 9 25,702 11.47 32,962 14.86 Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on March 31, 2006
2,125,702 948.28 2,132,962 961.33 (US$ 1.00 = Rs. 44.61).
Current Liabilities
Creditors and accruals 10 25,070 11.18 7,310 3.29
Total equity and liabilities 2,150,772 959.46 2,140,272 964.62
Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on March 31, 2006
(US$ 1.00 = Rs. 44.61). By order of the Board
For Godrej Global Solution (Cyprus) Limited For Godrej Global Solution (Cyprus) Limited
Secretary Secretary
Limassol : 13 April, 2006 Limassol : April 13, 2006
STATEMENT OF CHANGES IN EQUITY

For the Period from January 1, 2006 to March 31, 2006
Share Share Equity Equity Profit & Loss Profit & Loss
capital capital tobe issued to be issued Reserve Reserve Total Total
US$ Rs. Lac US$ Rs. Lac US$ Rs. Lac US$ Rs. Lac
Issue of share capital 2,245 1.01 – – – – 2,245 1.01

Funds received – – 2,097,755 945.46 – – 2,097,755 945.46
Profit for the period – – – – 32,962 14.86 32,962 14.86
At December 31, 2005 2,245 1.01 2,097,755 945.46 32,962 14.86 2,132,962 961.33
Issue of share capital 2,097,755 935.81 (2,097,755) (935.81) – – – –
Loss for the period – – – – (7,260) (3.24) (7,260) (3.24)
At March 31, 2006 2,100,000 936.81 – – 25,702 11.47 2,125,702 948.28
Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on December 31, 2005 (US$ 1.00 = Rs. 45.07).
139
NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 7. Loan receivable
31.3.2006 31.12.2005
MARCH 31, 2006 Godrej Global Solutions Inc.
US$ US$
1. Introduction (Subsidiary company registered in USA) 1,055,000 1,055,000

The Company was incorporated in Cyprus on January 19, 2005 as a private limited liability company in The above loan carries interest at the rate of 7% per annum on the outstanding amount and it is receivable
accordance with the provisions of the Cyprus Companies Law Cap. 113. The Company’s principal activity by the end of March 31, 2010. The interest receivable is accounted for on an accruals basis. The interest
during the period was that of holding of in investments and financing. expense for the period ended March 31, 2006 was US$ 18,210
2. Principal accounting policies 8. Share capital
The following is a summary of the most important accounting policies used by the Company : 31.3.2006
a) Basis of accounting US$ £C US$
The financial statements have been prepared under the historical cost convention and in accordance
with the International Financial Reporting Standards and the Companies Law. Authorised, issued and fully paid
b) Foreign exchange 1.000 ordinary shares of £C1 each 1,000 2,245
The financial statements are expressed in US Dollars. Authorised, issued and fully paid
Current assets and liabilities of the Company other than in US Dollars are translated at the rate of 600.000 ordinary shares of US$ 1 each 600,000
exchange ruling at the balance sheet date. 1.500.100 preference shares of US$ 1 each 1,500,000
Transactions during the period other than in US Dollars are converted at the rate of exchange ruling 2,100,000
on the dates when they occur. 9. Reserves
Differences on exchange are included in the income statement. As at March 31, 2006 the reserves available for distribution amounted to US$ 25,702.
c) Taxation 10. Creditors and accruals
Tax is calculated as follows: 31.3.2006 31.12.2005
The current and deferred taxation are recognised as income or expense for the period. US$ US$
The provision for income tax and defence contribution for the period is calculated in accordance Accruals 25,070 7,310
with the Income Tax Laws. Deferred taxation is calculated on the basis of the rates ruling at the The above amounts are payable within one year.
balance sheet date. 11. Capital commitments
At the balance sheet date there were no capital commitments.
The debit balances of the deferred taxation arriving from deductible temporary differences are
12. Contingent liabilities
recognised to the extent of the anticipated taxable profits. At the balance sheet date there were no contingent liabilities.
d) Investments 13. Fair value of assets and liabilities
Investments in subsidiaries are stated at cost unless there is an impairment of value. Any such The fair value of an asset or liability represents the replacement cost or an obligation to be settled at an arms
impairment is recognised in the income statement. Investments held for trading are classified as length transaction. The fair value of all the assets and liabilities of the Company approaches their accounting
current assets and are stated at fair value, with any resultant gain or loss recognised in the income value as stated in the financial statements.
statement. When the Company has the positive intent and ability to hold bonds to maturity, these are
stated at amortised cost less impairment losses. Other investments held by the Company are classified
as being available-for-sale and are stated at fair value, with any resultant gain or loss recognised Cash Flow Statement for the period from January 1, 2006 to March 31, 2006
directly to equity. When an investment is sold collected or otherwise disposed of or when the carrying
amount of the investment is impaired, the cumulative gain or loss recognised in equity is transferred 1.1.2006- 1.1.2006- 19.1.2005- 19.1.2005-
to the income statement. 31.3.2006 31.3.2006 31.12.2005 31.12.2005
The fair value of investments held for trading and investments available-for-sale is their quoted price, Particulars US$ Rs. Lac US$ Rs. Lac
excluding disposal costs, at the balance sheet date. Where a quoted price is not available and other
Cash flows from operating activities
methods of determining fair value are inappropriate, the investment is stated at cost.
Any sale of investment is recognised when the actual transfer of shares from the registrar takes place. (Loss)/profit for the period before taxation (7,260) (3.24) 32,962 14.70
e) Provisions Operating (loss)/profit before working
Provisions are recognised when the Company has a present obligation as a result of a past event, capital changes (7,260) (3.24) 32,962 14.70
which it is probable will result in an outflow of economic benefits that can be reasonably estimated. Increase in creditors and accruals 17,760 7.92 7,310 3.26
f) Contingent liabilities Net cash from operating activities 10,500 4.68 40,272 17.97
Contingent liabilities are disclosed as expenditure and liability if the confirmation of the expense or Cash flows from investing actinities
loss is considered possible from future events.
g) Post balance sheet events Purchase of investments – – (1,000,000) (446.10)
Current assets and liabilities of the Company are adjusted to reflect any post balance sheet events and Interest receivable (18,210) (8.12) (49,844) (22.24)
include additional information for amounts calculated on the basis ruling at the balance sheet date. Net cash used in investing activities (18,210) (8.12) (1,049,844) (468.34)
3. (Loss)/profit from operations Cash flows from financing activities
(Loss)/profit from operations is arrived at after charging the following: Issuance of share capital 2,097,755 935.81 2,245 1.00
1.1.2006- 19.01.2005-
31.3.2006 31.12.2005 Equity to be issued (2,097,755) (935.81) 2,097,755 935.81
US$ US$ Loan receivable – – (1,055,000) (470.64)
Auditors’ remuneration 1.826 5.066 Net cash generated from financing activities – – 1,045,000 466.17
4. Financial (expenses)/income - net (Decrease)/increase in cash and cash equivalents (7,710) (3.44) 35,428 15.80
1.1.2006- 19.01.2005-
31.3.2006 31.12.2005 Cash and cash equivalents at beginning of period 35,428 15.80 – –
US$ US$ Cash and cash equivalents at end of period 27,718 12.36 35,428 15.80
Bank charges (146) (1.449) Cash and cash equivalents are as follows :
Exchange differences – gain 39 – Cash at bank 27,718 12.36 35,428 15.80
(107) (1.449)
5. Taxation
The Company is liable to income tax at the rate of 10% on its taxable profits. Defence contribution is charged Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on March 31, 2006
on interest receivable at the rate of 10% per annum. (US$ 1.00 = Rs. 44.61).
6. Investments
Country of Class of
Incorporation/ shares Holding 31.3.2006 31.12.2005
Registration held % US$ US$
Limassol : April 13, 2006 Secretary
Godrej Global Solutions Inc. USA Ordinary 100 1.000.000 1.000.000
140
Godrej Global Solutions, Inc.

DIRECTORS’ REPORT
We are pleased to submit the report for the period from April 8, 2005 to December 31, 2005. 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 Political or Charitable Contributions
Business Process Outsourcing Services. The company acquired the business of Outsource Offshore Inc, during The company made no political or charitable contributions during the year.
this period.
Company’s results
For Godrej Global Solutions, Inc.
Net loss for the period : $ 10,970
Sanjay Tipnis
Retained deficit as of December 31, 2005 : $ 10,970 Director
Dividends
No dividend is recommended to be paid for the period ended December 31, 2005 March 6, 2006
AUDITORS’ REPORT TO THE MEMBERS OF GODREJ GLOBAL SOLUTIONS, INC.

To the Board of Directors' and Stockholder basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
Godrej Global Solutions, Inc. 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
Boston, Massachusetts opinion.
We have audited the accompanying balance sheet of Godrej Global Solutions, Inc. ( a Delaware corporation) In our opinion, the financial statement referred to above present fairly, in all material respects, the financial
as of December 31, 2005, and the related statements of operations and retained earnings (deficit) and cash flow position of Godrej Global solutions, Inc. as of December 31, 2005, and the results of its operations and its cash
for the period of April 8, 2005 (inception of operations) to December 31, 2005. These financial statements are flow for the period then ended in conformity with accounting principles generally accepted in the United States
the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial of America.
statements based on our audit.
Braver PC
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 Accountants & Advisors
whether the financial statements are free of material misstatement. An audit includes examining, on a test March 6, 2006
BALANCE SHEET AS AT DECEMER 31, 2005 STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(ACCUMULATED DEFICIT)
Assets
US$ Rs. Lac For the period April 8, 2005 (Inception of Operations) to
Current Assets December 31, 2005
Cash and cash equivalents 553,414 249.42
Accounts receivable - trade, net of allowance for Particulars US$ Rs. Lac
doubtful accounts of $0 345,253 155.61 Sales 1,534,150 691.44
Deferred tax asset 8,275 3.73 Cost of goods sold 1,077,669 485.71
Total current assets 906,942 408.76 Gross Profit 456,481 205.71
Intangible assets, net of accumulated amortization of $168,723 482,112 217.29 Operating expenses 259,651 117.02
Goodwill 1,580,093 712.15 Operating income 196,830 88.71
Total non-current assets 2,062,205 929.44 Other income (expense)
Total assets 2,969,147 1,338.19 Interest income 2,492 1.12
Amortization (168,723) (76.04)
Liabilities and stockholder’s equity
Interest expense (49,844) (22.46)
Current liabilities
Accounts payable 741,927 334.39 (216,075) (97.39)
Note payable 112,346 50.63 Net loss before income tax benefit (19,245) (8.67)
Accrued expenses 70,844 31.93 Income tax benefit 8,275 3.73
Total current liabilities 925,117 416.95 Net loss (10,970) (4.94)
Note payable 1,055,000 475.49 Retained earnings, (deficit) April 8, 2005 – –
Retained earnings, (deficit) December 31, 2005 (10,970) (4.94)
Stockholder’s equity
Common stock, .01 par value, 1,000 shares authorized,
The accompanying notes are an integral part of these financial statements
issued and outstanding 10 0
Additional paid in capital 999,990 451
Retained earnings (deficit) (10,970) (5)
2005 (US$ 1.00 = Rs. 45.07).
Total stockholder’s equity 989,030 446
Total liabilities and stockholder’s equity 2,969,147 1,338
2005 (US$ 1.00 = Rs. 45.07).
For Godrej Global Solutions, Inc. For Godrej Global Solutions, Inc.
Sanjay Tipnis Sanjay Tipnis
Director Director
March 6, 2006 March 6, 2006
141
Godrej Global Solutions, Inc
NOTES TO THE FINANCIAL STATEMENTS
For the Period April 8, 2005 (Inception of Operations) to December 31, 2005 Note 7 – Income Taxes
Deferred tax assets consist of the following at December 31, 2005 :
Note 1 – Nature of the Business
Federal net operating loss $ 6,543
Godrej Global Solutions, Inc. (the “Company” or “GGSI”) was incorporated on January 21, 2005 under the
State net operating loss 1,732
laws of the state of Delaware; however, the Company did not begin its operations until April 8, 2005 when it
acquired the assets of another company (Note 9). The Company’s principal activity is to provide information $ 8,275
technology services consisting of business process outsourcing services. Presently, the principal areas of Management determined a valuation allowance was not applicable. For the period ended
industry it services are claims processing for insurance companies and healthcare third party administrators. December 31, 2005, the income tax benefit consisted of the following :
Note 2 – Summary of Significant Accounting Policies Deferred taxes $ (8,275)
Fair Value of Financial Instruments
The carrying amounts of the Company’s financial instruments, which include accounts receivable, accounts At December 31, 2005, the Company has net tax operating loss carryforwards of approximately $1,000
payable and other accrued expenses approximate their fair values due to their short maturities. available to reduce future taxable income which begin to expire in December 31, 2006 through 2025.
Use of Estimates Note 8 – Employee Benefit Plans
The preparation of financial statements in conformity with accounting principles generally accepted in the The Company sponsors a defined contributions plan (individual retirement account) covering substantially all
United States of America requires management to make estimates and assumptions that affect the reported its employees. Company contributions are at the discretion of the board of directors. Defined contribution
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial pension expenses for the Company was $37,500 for the period ended December 31, 2005.
statements and the reported amounts of revenue and expenses during the reporting period. Although these Note 9 – Acquisitions
estimates are based upon management’s best knowledge of current events and actions, actual results could During the current year, the Company acquired the assets, liabilities and the business of Outsource Offshore
differ from those estimates. Inc. (OOI), a Minnesota Corporation, for an initial cash consideration of $1.68 million. The rights and obligations
Cash and Cash Equivalents as agreed between OOI and its customers have been assumed by the Company. The stockholders of OOI are
The Company considers all highly liquid investment with maturity of three months or less at the date of also to receive two earn-out payments (see Note 5) on May 31, 2006 and 2007. The Company has calculated
the earn-out payment to be $112,346 as of December 31, 2005. The Company has also paid to a former vendor
purchase to be cash equivalents. Cash equivalents are stated at cost plus accrued interest, which approximates
of date-entry services, consideration of approximately $439,000 as set up and termination fees. Data entry and
fair value. At December 31, 2005, cash equivalents consist of bank deposits of $553,414.
related services were thereafter provided by an affiliate company, Godrej Global Solutions Limited for servicing
Accounts Receivable
its US Clients. As of December 31, 2005 the total acquisition cost is approximately, $2,231,000.
Accounts receivable are stated at the amount the Company expects to collect from outstanding balances. An
Note 10 – Related Party Transactions
allowance for doubtful accounts is provided for that potion of accounts receivable considered to be uncollectible,
The Company’s data entry and related services are provided by Godrej Global Solutions Limited, an affiliate,
based upon historical experience and management’s evaluation of outstanding accounts receivable at the end of the
for servicing the Company’s clients. During the period ended December 31, 2005, the Company's expenses
year. Bad debts expense was $0 as of December 31, 2005. Bad debts are written off against the allowance when
include $741,165 to Godrej Global Solution Limited for these services. As of December 31, 2005 the amount
identified. Management has determined that any uncollectible amounts at December 31, 2005 are not material. in accounts payable due to Godrej Global Solutions Limited is $741,165.
Impairment of Long-Lived Assets Note 11 – Commitment and Contingencies
The Company reviews long-lived assets for impairment whenever an event or change in circumstances Certain conditions may exist as of the date of the financial statements are issued, which may result in a loss
indicate that the carrying amount of such assets may not be recoverable. The carrying values of long-lived to the Company but which will only be resolved when one or more future events occur or fail to occur. The
assets are assessed for recoverability by reference to the estimated future undiscounted cash flows associated Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently
with them. Where this assessment indicates a deficit, the assets are written down to market value. For assets involves an exercise of judgment. In assessing loss contingencies related to legal proceedings or unasserted
which do not have a readily determinable market value, the assets are written down to their estimated market claims as well as perceived merits of the amount of relief sought or expected be sought therein.
value calculated by reference to the estimated future discounted cash flows. Assets to be disposed are reported If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the
at the lower of the written down value or the fair value, less the cost to sell. amount of the liability can be estimated, than the estimated liability would be accrued in the Company’s
Goodwill financial statements. If assessment indicates that a potentially material loss contingency is not probable, but
The Company evaluates the carrying value of goodwill each year. When evaluating whether goodwill is is reasonably possible, or is probable but can not be estimated, the nature of the contingent liability, together
impaired, the Company compares the fair value of the reporting unit to which the goodwill is assigned to with an estimate of the range of possible loss if determined material, would be disclosed.
reporting unit’s carrying amount, including goodwill. If the carrying amount exceeds its fair value, then the Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which
amount of the impairment loss is measured and recorded. At December 31, 2005, the Company has not case the nature of the guarantee would be disclosed.
identified any impairment related goodwill. In connection with the Company’s purchase of assets of OOI, the Company must pay earn out payments on May
Revenue Recognition 31, 2006 and 2007. These earn out payments are calculated based on a percentage of revenues and net income
Revenues generated from providing services to customer are recognized at the time the services are being for the previous fiscal year. Amounts paid for earn out payments will increase the Company’s purchase price.
provided. Revenue earned from fixed-price engagements is recognized on a monthly basis during the period Note 12 – Intangible Assets
when services are being provided. In connection with acquisition of Outsource Offshore Inc., (see Note 9) the assets acquired included $650,835
Income Taxes of intangible assets other than goodwill. All of the $650,835 of intangible assets is attributable to value of the
Deferred tax assets and liabilities are determined based on the future effect on the temporary differences between contracts purchased from Outsource Offshore Inc. The Company estimates the useful lives of the contracts
the carrying amounts for financial statement purposes and the income tax basis of assets and liabilities and are remaining at December 31, 2005 to extend over a period of up to three years. Amortization in amount of
measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. $168,723 was recorded in 2005.
The future effect on deferred taxes of change in tax rates or laws are adjusted for on the date of the enactment. Amortization expense for the next three years would be as follows :
Deferred tax assets are recognized, net of any valuation allowance, for the estimated future tax effects of the 2006 213,569
deductible temporary differences and tax credit carryforwards. A valuation allowance against deferred tax 2007 162,265
assets is recorded when and if, based upon available evidence, it is more likely than not that some or all 2008 106,278
deferred tax assets will not be realized.
Concentration of Credit Risk Note 13 – Subsequent Events
Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily Following the period ended December 31, 2005, the Company has changed its fiscal year end to March 31st.
of accounts receivable. To minimize customer credit risk, ongoing credit evaluations of customer’ financial
condition are performed, although collateral generally is not required. Statement of cash flows For the period april 8, 2005 (inception of operations) to december 31, 2005
The Company maintains its cash in bank deposit accounts which, at times, may exceed the federally insured
limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. At Particulars US$ Rs. Lac
December 31, 2005. The Company has approximately $447,939 in excesss of the FDIC insured limites. The Cash flows from operating activities
Company has not experienced any losses in such accounts. Net loss (10,970) (4.94)
Adjustments to reconcile net loss to net cash
During 2005, the Company provided services to three customers that constituted approximately 83% of sales
provided by operating activities
for the period ending December 31, 2005. The Company anticipates the growth of the business will overcome
Amortization 168,723 76.04
any loss of future revenue from these customers. Changes in operating assets and liabilities
The Company currently uses only one vendor, an affiliate, for the outsourcing of date processing. Management Accounts receivable (345,253) (155.61)
believes the vendor can be replaced with other outsourcing vendors, if necessary. Deferred tax asset (8,275) (3.73)
Note 3 – Goodwill Accounts payable 741,927 334.39
The total amount the Company paid for the acquisition (see Note 9) as of December 31, 2005 is $2,230,928 of Accrued expenses 70,844 31.93
which $650,835 has been allocated to intangible assets as the value of the contracts. The remaining amount Net cash provided by operating activities 616,996 278.08
of $1,580,093 has been identified as goodwill. Cash flows from investing activities
Goodwill is comprised of the following at December 31, 2005 : Purchase of intangible asset (650,835) (293.33)
Expertise of employees $ 158,009 Purchase of goodwill (1,467,747) (661.51)
Customer list 474,028 Net cash used in investing activities (2,118,582) (954.84)
Entry into U.S. markets 948,056 Cash flows from financing activities
Proceeds from note payable 1,055,000 475.49
Total Goodwill $ 1,580,093
Proceeds from stock issuance 1,000,000 450.70
Note 4 – Stockholder’s Equity Net cash provided by financing activities 2,055,000 926.19
Common Shares Net increase in cash and cash equivalents 553,414 249.42
In April 2005, the Company issued 1,000 Common Shares of $0.01 par for $1,000,000 to Godrej Global Solutions Cash and cash equivalents April 8, 2005 – –
(Cyprus) Limited. Each share of common stock is entitled to one vote. The holders of common stock are entitled Cash and cash equivalents at December 31, 2005 553,414 249.42
to receive dividends whenever funds are legally available and when declared by the Board of Directors. Supplemental disclosure of non-cash investing and finansing activities :
Note 5 – Note Payable (Current) Investment in Goodwill financed by a note payable 112,346 50.63
As part of the Company’s acquisition (see Note 9) the Company must pay earn out payments to the stockholders Supplemental disclosure of cash flow information
of the acquired company. These earn-out payments are calculated based on a percentage of revenues and net Cash paid during the period for interest – –
income for the previous year April 1st to March 31st. There is one payment due on May 31, 2006 calculated The accompanying notes are an integral part of these financial statements
on the 2005 year’s operations and another payment due May 31, 2007 calculated on the 2006 operations. The
amount of the note payable as an earn out payment as of December 31, 2005 is $112,346. Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on December 31,
Note 6 – Note Payable (Non-current) 2005 (US$ 1.00 = Rs. 45.07).
In April 2005, the Company issued an unsecured Note, in favor of Godrej Global Solutions (Cyprus) Limited, For Godrej Global Solutions, Inc.
(GGSC), its stockholder, in exchange for installments totaling $1,055,000. The note bears interest at the rate of Sanjay Tipnis
7% per annum. The entire amount of principal is payable at maturity on March 31, 2010, while interest is Director
payable every March 31st. Interest expense was $49,844 for the period ended December 31, 2005. March 6, 2006
142
DIRECTORS’ REPORT
We are pleased to submit the report for the period January 1, 2006 to March 31, 2006 Political Or Charitable Contributions
Principal activities The Company made no political or charitable contributions during the year.
The Company’s principal activity during the period under review was that of providing Healthcare related
Business Process Outsourcing Services.
Companys’ Results For Godrej Global Solutions, Inc.
Net income for the period : $ 27,845
Retained deficit as of March 31, 2006 : $ 16,875
Dividends Sanjay Tipnis
No dividend is recommended to be paid for the period ended March 31, 2006 Director
Events Since Balance Sheet Date
There have been no events since the balance sheet date which affect the company’s results or performance. April 14, 2006
AUDITORS’ REPORT TO THE MEMBERS OF GODREJ GLOBAL SOLUTIONS, INC.

To the Board of Directors' and Stockholder assessing the accounting principles used and significant estimates made by management, as well as evaluating
Godrej Global Solutions, Inc. the overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinion.
Boston, Massachusetts
In our opinion, the financial statement referred to above present fairly, in all material respects, the financial
We have audited the accompanying balance sheet of Godrej Global Solutions, Inc. ( a Delaware corporation) position of Godrej Global solutions, Inc. as of March 31, 2006, and the results of its operations and its cash flow
as of March 31, 2006, and the related statements of operations and retained earnings (accumulated deficit) and for the three month then ended in conformity with accounting principles generally accepted in the United
cash flow for the three months then ended. These financial statements are the responsibility of the Company’s States of America.
management. Our responsibility is to express an opinion on these financial statements based on our audit.
Braver PC
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 includes examining, on a test Accountants & Advisors
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes April 14, 2006
BALANCE SHEET AS AT MARCH 31, 2006 STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(ACCUMULATED DEFICIT)
Assets
US$ Rs. Lac For the period January 1, 2006 to March 31, 2006
Current Assets
Cash and cash equivalents 342,281 152.69
Accounts receivable - trade, net of allowance for Particulars US$ Rs. Lac
doubtful accounts of $0 378,862 169.01 Sales 706,995 315 .39
Total current assets 721,143 321.70 Cost of goods sold 488,137 217.76
Intangible assets, net of accumulated amortization of $224,964 425,871 189.98 Gross Profit 218,858 218,858.00
Goodwill 1,891,721 843.90 Operating expenses 84,490 37.69
Total non-current assets 2,317,592 1,033.88 Operating income 134,368 59.94
Other income (expense)
Total assets 3,038,735 1,355.58
Interest income 3,452 1.54
Liabilities and stockholder’s equity Amortization of intangible assets (56,241) (25.09)
Current liabilities Interest expense (18,210) (8.12)
Note payable 423,974 189.13
(70,999) (31.67)
Accounts payable 488,137 217.76
Income taxes payable 27,249 12.16 Net income before provision for income taxes 63,369 28.27
Accrued expenses 27,500 12.27 Provision for income taxes 35,524 15.85
Total current liabilities 966,860 431.32 Net income 27,845 12.42
Accumulated deficit - January 1, 2006 (10,970) (4.89)
Note payable 1,055,000 470.64
Retained earnings - March 31, 2006 16,875 7.53
Stockholder’s equity
Common stock, .01 par value, 1,000 shares authorized,
issued and outstanding 10 –
Additional paid in capital 999,990 446.10
Retained earnings 16,875 7.53
(US$ 1.00 = Rs. 44.61).
Total stockholder’s equity 1,016,875 453.63
Total liabilities and stockholder’s equity 3,038,735 1,355.58
(US$ 1.00 = Rs. 44.61).
For Godrej Global Solutions, Inc. For Godrej Global Solutions, Inc
Sanjay Tipnis Sanjay Tipnis

Director Director
April 14, 2006 April 14, 2006
143
Godrej Global Solutions, Inc
NOTES TO THE FINANCIAL STATEMENTS
For the Period January 1, 2006 to March 31, 2006 Note 5 – Note payable (Current)
Note 1 – Nature of the Business As part of the Company’s acquisition (see Note 9) the Company must pay earn out payment to the
Godrej Global Solutions, Inc. (the “Company” or “GGSI”) was incorporated on January 21, 2005 under the stockholders of the acquired company. These earn-out payments are calculated based on a percentage
laws of the state of Delaware; however, the Company did not begin its operations until April 8, 2005 when it of revenues and net income for the previous fiscal year ended March 31st. There is one payment due on
acquired the assets of another company (Note 9). The Company’s principal activity is to provide information May 31, 2006 calculated on the 2005 year’s operations and another payment due May 31, 2007 calculated
technology services consisting of business process outsourcing services. Presently, the principal areas of on the 2006 operations. The amount of the note payable as an earn-out payment as of March 31, 2006 is
industry it services are claims processing for insurance companies and healthcare third party administrators. approximately $424,000.
Note 2 – Summary of Significant Accounting Policies Note 6 – Note Payable (Non-current)
Fair Value of Financial Instruments In April 2005, the Company issued an unsecured Note, in favor of Godrej Global Solutions (Cyprus) Limited,
The carrying amounts of the Company’s financial instruments, which include accounts receivable, accounts (GGSC), its stockholder, in exchange for installments totaling $1,055,000. The note bears interest at the rate of
payable and other accrued expenses approximate their fair values due to their short maturities. 7% per annum. The entire amount of principal is payable at maturity on March 31, 2010, while interest is
Use of Estimates payable every March 31st. Interest expense was $18,210 for the period ended March 31, 2006.
The preparation of financial statements in conformity with accounting principles generally accepted in the Note 7 – Income Taxes
United States of America requires management to make estimates and assumptions that affect the reported Provision for income taxes for the three months ended March 31, 2006, is $35,524. A net operating loss was
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial available in the amount of $8,275. The balance of $27,249 is in income tax payable.
statements and the reported amounts of revenue and expenses during the reporting period. Although these Note 8 – Employee Benefit Plans
estimates are based upon management’s best knowledge of current events and actions, actual results could The Company sponsors a defined contributions plan (individual retirement account) covering substantially all
differ from those estimates. its employees. Company contributions are at the discretion of the board of directors. Defined contribution
Cash and Cash Equivalents pension expenses for the Company was $12,500 for the period ended March 31, 2006.
The Company considers all highly liquid investment with maturity of three months or less at the date of Note 9 – Acquisitions
purchase to be cash equivalents. Cash equivalents are stated at cost plus accrued interest, which approximates The Company acquired the assets, liabilities and the business of Outsource Offshore Inc. (OOI), a Minnesota
fair value. At March 31, 2006, cash equivalents consist of bank deposits of $342,281. Corporation, for an initial cash consideration of $1.68 million. The rights and obligations as agreed between
Accounts Receivable OOI and its customers have been assumed by the Company. The stockholders of OOI are also to receive two
Accounts receivable are stated at the amount the Company expects to collect from outstanding balances. An earn-out payments (see Note 5) on May 31, 2006 and 2007. The Company has calculated the first earn-out
allowance for doubtful accounts is provided for that potion of accounts receivable considered to be uncollectible, payment to be $423,974 as of March 31, 2006. The Company has also paid to a former vendor of date-entry
based upon historical experience and management’s evaluation of outstanding accounts receivable at the end services, consideration of approximately $439,000 as set up and termination fees. Data entry and related
of the year. The allowance is $0 as of March 31, 2006. Bad debts are written off against the allowance when services were thereafter provided by an affiliate company, Godrej Global Solutions Limited for servicing its
identified. Management has determined that any uncollectible amounts at March 31, 2006 are not material. US Clients. As of March 31, 2006 the total acquisition cost is approximately, $2,542,556.
Impairment of Long-Lived Assets Note 10 – Related Party Transactions
The Company reviews long-lived assets for impairment whenever an event or change in circumstances The Company’s data entry and related services are provided by Godrej Global Solutions Limited, an affiliate,
indicate that the carrying amount of such assets may not be recoverable. The carrying values of long-lived for servicing the Company’s clients. During the period ended March 31, 2006, the Company's expenses include
assets are assessed for recoverability by reference to the estimated future undiscounted cash flows associated $488,137 to Godrej Global Solution Limited for these services. As of March 31, 2006 the amount in accounts
with them. Where this assessment indicates a deficit, the assets are written down to market value. For assets payable due to Godrej Global Solutions Limited is $488,137.
which do not have a readily determinable market value, the assets are written down to their estimated market Note 11 – Commitment and Contingencies
value calculated by reference to the estimated future discounted cash flows. Assets to be disposed are reported In connection with the Company’s purchase of assets of OOI, the Company must pay earn-out payments on
at the lower of the written down value or the fair value, less the cost to sell. May 31, 2006 and 2007. These earn-out payments are calculated based on a percentage of revenues and net
Goodwill income for the previous fiscal year. Amounts paid for earn out payments will increase the Company’s purchase
The Company evaluates the carrying value of goodwill each year. When evaluating whether goodwill is price.
impaired, the Company compares the fair value of the reporting unit to which the goodwill is assigned to Note 12 – Intangible Assets
reporting unit’s carrying amount, including goodwill. If the carrying amount exceeds its fair value, then the In connection with acquisition of Outsource Offshore Inc., (see Note 9) the assets acquired included $650,835
amount of the impairment loss is measured and recorded. At March 31, 2006, the Company has not identified of intangible assets other than goodwill. All of the $650,835 of intangible assets is attributable to value of the
any impairment related goodwill. contracts purchased from Outsource Offshore Inc. The Company estimates the useful lives of the contracts
Revenue Recognition remaining at March 31, 2006 to extend over a period of up to three years. Amortization in amount of $56,241
Revenues generated from providing services to customer are recognized at the time the services are being was recorded in the period January 1, 2006 to March 31, 2006.
provided. Revenue earned from fixed-price engagements is recognized on a monthly basis during the period Amortization expense for the next three fiscal years ending March 31would be as follows:
when services are being provided. 2007 $ 198,191
Income Taxes 2008 161,757
Deferred tax assets and liabilities are determined based on the future effect on the temporary differences 2009 65,923
between the carrying amounts for financial statement purposes and the income tax basis of assets and liabilities
and are measured using enacted tax rates and laws that will be in effect when the differences are expected
to reverse. The future effect on deferred taxes of change in tax rates or laws are adjusted for on the date of the Statement of Cash Flows for the period January 1, 2006 To March 31,2006
enactment.
Deferred tax assets are recognized, net of nay valuation allowance, for the estimated future tax effects of the Particulars US$ Rs. Lac
deductible temporary differences and tax credit carryforwards. A valuation allowance against deferred tax Cash flows from operating activities
assets is recorded when and if, based upon available evidence, it is more likely than not that some or all Net income 27,845 12.42
deferred tax assets will not be realized. Adjustments to reconcile net income to net cash
Concentration of Credit Risk provided by operating activities
Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily Amortization of intangible assets 56,241 25.09
of accounts receivable. To minimize customer credit risk, ongoing credit evaluations of customer’ financial Changes in operating assets and liabilities
condition are performed, although collateral generally is not required. Accounts receivable (33,609) (14.99)
The Company maintains its cash in bank deposit accounts which, at times, may exceed the federally insured Deferred tax asset 8,275 3.69
limits. The balances are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. At Accounts payable (253,790) (113.22)
March 31, 2006, the Company has approximately $131,000 in excess of the FDIC insured limits. The Company Income taxes payable 27,249 12.16
has not experienced any losses in such accounts. Accrued expenses (43,344) (19.34)
During the period January to March 2006, the Company provided services to three customers that constituted Net cash used in operating activities (211,133) (94.19)
approximately 93% of sales for the period ending March 31, 2006. The Company anticipates the growth of the Cash and cash equivalents - January 1, 2006 553,414 246.88
business will overcome any loss of future revenue from these customers. Cash and cash equivalents - March 31, 2006 342,281 152.69
The Company currently uses only one vendor, an affiliate, for the outsourcing of data processing. Management Supplemental disclosure of non-cash investing and finansing activities
believes the vendor can be replaced with other outsourcing vendors, if necessary. Increse in note payable (current) 311,628 139.02
Note 3 – Goodwill Supplemental disclosure of cash flow information
The total amount the Company paid for the acquisition (see Note 9) as of March 31, 2006 is $2,542,556; of which Cash paid during the period for interest 68,054 30.36
$650,835 has been allocated to intangible assets as the value of the contracts. The remaining amount of
$1,891,721 has been identified as goodwill. The accompanying notes are an integral part of these financial statements
Goodwill is comprised of the following at March 31, 2006 :
Expertise of employees $ 189,172 Note : The Rupee equivalents of US$ have been given at the closing exchange rates as on March 31, 2006
Customer list 567,516 (US$ 1.00 = Rs. 44.61).
Entry into U.S. markets 1,135,033
Total Goodwill $ 1,891,721 For Godrej Global Solutions, Inc.
Note 4 – Stockholder’s Equity
Common Shares Sanjay Tipnis
In April 2005, the Company issued 1,000 Common Shares of $0.01 par for $1,000,000 to Godrej Global Director
Solutions (Cyprus) Limited. 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. April 14, 2006
144

GIL Annualreport 2005 06

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

GIL Annualreport 2005 06

Uploaded by

Copyright:

Available Formats

Annual Report 2005 -2006

GODREJ INDUSTRIES LIMITED

A.B. Godrej Chairman

N.B. Godrej Managing Director

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)

Kalyaniwalla & Mistry, Chartered Accountants

Godrej Properties Limited ..................................... 100 BANKERS : Central Bank of India

GODREJ INDUSTRIES LIMITED – FINANCIAL HIGHLIGHTS

Total Income 2005-2006 Total Expenditure 2005-2006

ANNEXURE "A" FORMING PART OF THE DIRECTORS’ REPORT

ANNEXURE B FORMING PART OF THE DIRECTORS’ REPORT

equal to or exceeding 1% of the issued capital (excluding outstanding

ANNEXURE "C" FORMING PART OF THE DIRECTORS’ REPORT

ANNEXURE 'D' FORMING PART OF THE DIRECTORS’ REPORT

II. Impact of measures on reduction of energy consumption and d. Glycerin

REPORT ON CORPORATE GOVERNANCE

Declaration by Managing Director

Auditors’ Certificate on Corporate Governance

For and on behalf of

REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ INDUSTRIES LIMITED

15. According to the information and explanations given to us and the

BALANCE SHEET AS AT MARCH 31, 2006

V. R. Mehta S.K. Bhatt V. Srinivasan

V. R. Mehta S.K. Bhatt V. Srinivasan

This Year Previous Year

As per our Report attached Signatures to Cash Flow Statement

V. R. Mehta S.K. Bhatt V. Srinivasan

This Year Previous Year

SCHEDULE 3 : SECURED LOANS

SCHEDULE 4 : UNSECURED LOANS

Amount repayable within one year 7803.24 3557.13

SCHEDULE 5 : FIXED ASSETS

ASSETS GROSS BLOCK DEPRECIATION/IMPAIRMENT NET BLOCK

Investee Company/Institutions Face Number Amount

SCHEDULE 8 : SUNDRY DEBTORS

This Year Previous Year

SCHEDULE 10 : LOANS AND ADVANCES

This Year Previous Year

SCHEDULE 14 : OTHER INCOME

This Year Previous Year

SCHEDULE 17 : INVENTORY CHANGE

SCHEDULE 18 : INTEREST AND FINANCIAL CHARGES (Net)

SCHEDULE 19 : EXTRAORDINARY ITEMS

SCHEDULE 20 : PRIOR PERIOD ADJUSTMENTS

SCHEDULE 22 : NOTES TO ACCOUNTS

10. Employee Stock Option Plans b) Finance Leases:

12. Leases Future contracts not settled

This Year Previous Year 16. Turnover

SCHEDULE 22 : NOTES TO ACCOUNTS (contd.)

SCHEDULE 22 : NOTES TO ACCOUNTS (contd.)

c) Transactions with Related Parties

Sale of Goods 17.08 1.53 — 12.50 — — 890.83 921.94

Managerial remuneration paid/payable 330.85 402.01

SCHEDULE 22 : NOTES TO ACCOUNTS (contd.)

24. Auditors’ Remuneration

25. Turnover (Net)

26. Inventories - Finished Goods

28. Purchase of Goods

29. Licensed, Installed and Utilised Capacity

SCHEDULE 22 : NOTES TO ACCOUNTS (contd.)