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G O D R E J I N D U S T R I E S L I M I T E DG O D R E J I N D U S T R I E S L T D.
www.godrejinds.com
INNOVATING FOR ABRIGHTER FUTURE.
Annual Report 2009–2010
1
GODREJ INDUSTRIES LIMITED
DIRECTORS
A.B. Godrej Chairman
J.N. Godrej
N.B. Godrej Managing Director
S.A. Ahmadullah
J.S. Bilimoria
A.B. Choudhury
V.M. Crishna
K.K. Dastur
N.D. Forbes
V.N. Gogate
K.N. Petigara
F.P. Sarkari
T.A. Dubash Executive Director & President (Marketing)
M. Eipe Executive Director & President (Chemicals)
COMPANY SECRETARY
V. Srinivasan
AUDITORS
Kalyaniwalla & Mistry, Chartered Accountants
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CONTENTS Page Nos.
Chairman’s Statement .............................. 03
Financial Highlights .................................. 04
Notice ................................................. 05
Directors’ Report along with Management
Discussion and Analysis Report .................... 11
Report on Corporate Governance ................. 24
Shareholders’ Information .......................... 31
Auditors’ Report ...................................... 33
Standalone Accounts ................................ 36
Consolidated Accounts .............................. 66
Statement Pursuant to Section 212 ............... 88
SUBSIDIARIES
Godrej Agrovet Limited ............................. 92
Golden Feed Products Limited ...................108
Godrej Oil Palm Limited ...........................112
Cauvery Palm Oil Limited .........................119
Natures Basket Limited ............................126
Ensemble Holdings & Finance Limited ..........133
Godrej Properties Limited .........................139
Godrej Realty Private Limited ....................152
Godrej Real Estate Private Limited ..............156
Godrej Developers Private Limited ..............160
Godrej Seaview Properties Private Limited ....164
Happy Highrises Limited ...........................168
Godrej Waterside Properties Limited............172
Godrej Estate Developers Private Limited .....176
Godrej International Limited .....................180
REGISTERED OFFICE : Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai 400 079. Phone : 022-2518 8010, 2518 8020, 2518 8030 Fax : 022-2518 8074, 2518 8066 website : www.godrejinds.com
FACTORIES : Vikhroli Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai 400 079. Phone : 022-2518 8010, 2518 8020, 2518 8030 Fax : 022-2518 8066, 2518 8064 Valia Burjorjinagar, (DTA & EOU) Plot No. 3, Village Kanearo, Taluka - Valia, District Bharuch, Gujarat 393 135. Phone : 02643 - 270756 to 270760 Fax : 02643 - 270018 Wadala L.M. Nadkarni Marg, Near M.P.T. Hospital, Wadala (East), Mumbai 400 037. Phone : 022 - 2415 4816, 2414 8770 Fax : 022 - 2414 6204
BRANCHES : Delhi 4th Floor, Delite Theatre Building, 4/1, Asaf Ali Road, New Delhi 110 002. Phone : 011 - 2326 1066 Fax : 011 - 2326 1088 Kolkata Block GN, Sector - V, Salt Lake City, Kolkata 700 091. Phone : 033 - 2357 3555 Fax : 033 - 2357 3945 London 284A, Chase Road, Southgate, London N14 - 6HF., UK Phone : (004420) - 88860145 Fax : (004420) - 88869424
BANKERS : Central Bank of India State Bank of India Bank of India HDFC Bank Ltd. Citibank N.A. Hong Kong and Shanghai Banking Corp. Ltd. DBS Bank Ltd. IDBI Bank Ltd.
REGISTRARS& TRANSFER AGEN T : Computech Sharecap Ltd. 147, Mahatma Gandhi Road, Opp. Jehangir Art Gallery, Fort, Mumbai 400 001. Phone : 022 - 2263 5000 to 2263 5002 Fax : 022 - 2263 5001 e-Mail : [email protected]
Annual Report 2009–2010
3
CHAIRMAN’S STATEMENT
Dear Shareholders,
It is my pleasure to write to you following a positive year that began in recovery from the global economic crisis and turned into a good year for Godrej Industries. During the economic downturn, we focused on various initiatives to improve our operational effi ciencies and de-risk our portfolio. These initiatives have enabled us to reinvent our processes and reinvigorate our business and we expect to reap benefi ts in this current growth cycle.
Our diversifi ed business model is unique with interests in the form of operating businesses, subsidiaries, joint ventures and investments. This variety allows our shareholders to partake in growth in our entire range of businesses, including oleo-chemicals, agriculture, real estate, consumer products, and foods. These sectors are essential parts of the Indian economy, and with
growth in the Indian economy now in full swing, these are very exciting times at Godrej. We have always laid strong emphasis on green and environmentally friendly business practices, which in turn have lead to strong advantages and dividends.
We have maintained our position as market leaders in the Indian oleo-chemicals and surfactants space. Our chemical business had healthy profi t margins this year due to consistently strong demand and normalized raw material prices. In addition, we have signifi cantly improved effi ciencies and reduced costs in the division, which will yield results in the years to come.
Results from the agri and palm oil business have been especially encouraging and we anticipate these businesses to be among the most impressive growth drivers going forward. There has been considerable growth in the consumer and healthcare business due to high consumer demand for our products across the country. The Godrej brand reaches over 470 million consumers daily and our business always strives to exceed our customers’ changing expectations.
Our property development business was successfully listed on the stock exchanges this year and we have projects under construction in several cities across India. There is tremendous demand for residential housing, and affordable housing is an area of particular interest. We expect a housing boom in the next decade, supported by robust economic progress and readily available mortgages. We will harness this potential by continuing to cater to this need and anticipate very aggressive growth for our property development business.
The downturn challenged us at Godrej, but we viewed it as an opportunity to evaluate our operations to energize ourselves and our businesses. We focused on initiatives that would enable us to be a company of the future. We have worked on redefi ning the Godrej brand to strengthen brand unity across our broad range of businesses. We reinforced our commitment to innovation, adding technology while improving effi ciency to processes that uphold our high quality standards while sustaining product affordability.
Godrej has over a century of industry experience and is one of the most trusted business houses in India. Our management practices and code of conduct have ensured good governance across our businesses. In line with our corporate values, we renewed our responsibility to create social capital by implementing initiatives to improve and create social awareness on issues like disability rights, healthcare, education, environmental issues, and social welfare. Our high standards are present throughout the group’s various businesses and ensure our dedication to our shareholders, business partners, and employees. We hope to continually improve our businesses and envision an even brighter future for Godrej.
I appreciate our employees for their outstanding contribution, our business partners, vendors, business associates as well as the Central and State Governments for their support. I would also like to thank our shareholders for their sustained encouragement and support.
Yours faithfully,
Adi GodrejChairman
D
Itgdoo
Osinc
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Break-up of Total IncomeRs. Lac
Break-up of Total ExpenditureRs. Lac
Total Expenditure 2009-2010Total Income 2009-2010
Chemicals 78,123.55
Estate 2,775.39
Finance & Investment 17,081.77
Materials 51,680.87
Other Operating 20,043.39Expenses
Interest 6,024.79
Depreciation 2,838.80
91,170.46
Others 1,189.02
99,169.73
Staff Costs 10,582.61
FINANCIAL HIGHLIGHTS
(Rs. Lac)
2009-10 2008-09 2007-08 2006-07 2005-06 2004-05
BALANCE SHEET
SOURCES OF FUNDS :
Shareholders’ Funds
Share Capital 3,176.25 3,197.59 3,197.59 2,918.52 2,919.00 2,919.00
Reserves & Surplus 99,093.36 99,514.61 102,644.47 38,142.56 34,217.00 30,618.00
Secured Loans 20,418.89 23,282.16 24,948.07 33,092.48 24,910.00 22,075.00
Unsecured Loans 34,342.14 36,814.31 18,618.92 13,677.13 7,803.00 3,557.00
Deferred Tax Liability 3,198.20 3,278.20 3,619.20 3,980.00 3,818.00 2,502.00
160,228.84 166,086.87 153,028.25 91,810.69 73,667.00 61,671.00
APPLICATION OF FUNDS :
Fixed Assets 29,828.78 28,870.84 27,142.37 28,704.33 28,594.00 25,100.00
Investments 114,761.99 114,808.02 77,548.43 48,566.78 37,135.00 33,577.00
Net Working Capital 15,638.07 22,022.14 47,269.56 12,937.47 5,719.00 2,868.00
Miscellaneous Expenditure - 385.87 1,067.89 1,602.11 2,219.00 126.00
160,228.84 166,086.87 153,028.25 91,810.69 73,667.00 61,671.00
INCOME AND PROFIT
Total Income 99,169.73 97,148.32 83,881.74 78,291.22 80,270.00 82,353.00
Expenditure other than Interest and Depreciation 82,306.87 86,745.94 67,119.44 64,077.98 69,661.00 70,117.00
Profi t before Interest, Depreciation and Tax 16,862.86 10,402.38 16,762.30 14,213.24 10,609.00 12,236.00
Interest (net) 6,024.79 6,106.12 3,443.74 3,830.78 2,837.00 2,582.00
Profi t before Depreciation and Tax 10,838.07 4,296.26 13,318.56 10,382.46 7,772.00 9,654.00
Depreciation 2,838.80 2,646.19 2,547.00 2,426.36 2,259.00 2,148.00
Profi t before Tax and exceptional items 7,999.27 1,650.07 10,771.56 7,956.10 5,513.00 7,506.00
Exceptional items - (expense)/income - 26.00 310.28 94.75 3,510.80 -
Provision for Current Tax (13.47) 123.27 561.87 82.77 545.16 401.00
Net Profi t after Tax 8,012.74 1,552.80 10,519.97 7,968.08 8,478.64 7,105.00
Provision for Deferred Tax (80.00) (341.00) (361.00) 162.00 1,316.00 (470.00)
Adjustment in respect of prior years - (expense)/income - (86.11) - - 50.08 2.00
Net Profi t after taxes and adjustments 8,092.74 1,807.69 10,880.97 7,806.08 7,112.56 7,577.00
Annual Report 2009–2010
5
NOTICE TO SHAREHOLDERS
NOTICE is hereby given that the TWENTY-SECOND ANNUAL GENERAL MEETING of the members of GODREJ INDUSTRIES LIMITED will be held on Tuesday, July 27, 2010 at 4.30 P.M. at Y B Chavan Centre, Nariman Point, Mumbai – 400 021, to transact the following business:-
ORDINARY BUSINESS:
1. To consider and adopt the Audited Profi t & Loss Account and Cash Flow Statement for the year ended March 31, 2010, the Balance Sheet as at that date, the Auditors’ Report thereon, the Directors’ Report along with Management Discussion and Analysis Report and the Statement of Corporate Governance.
2. To declare dividend for the fi nancial year ended March 31, 2010.
3. To appoint a Director in place of Mr. F.P. Sarkari, who retires by rotation and being eligible, offers himself for reappointment.
4. To appoint a Director in place of Mr. S.A. Ahmadullah, who retires by rotation and being eligible, offers himself for reappointment.
5. To appoint a Director in place of Mr. A.B. Godrej, who retires by rotation and being eligible, offers himself for reappointment.
6. To appoint a Director in place of Mr. K.K. Dastur, who retires by rotation and being elgible, offers himself for reappointment.
7. To appoint Auditors to hold offi ce from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting, and to authorize the Board of Directors of the Company to fi x their remuneration. M/s. Kalyaniwalla & Mistry, Chartered Accountants, the retiring Auditors are eligible for reappointment.
SPECIAL BUSINESS:
To consider and if thought fi t, to pass with or without modifi cation(s), the following resolutions :-
8. Approval for not fi lling up the vacancy caused by the retirement of Mr. V.N. Gogate as an Ordinary Resolution :
RESOLVED THAT pursuant to Section 256 and all other applicable provisions, if any, of the Companies Act, 1956, the vacancy caused by the retirement of Mr. V.N. Gogate who retires by rotation at this Annual General Meeting and who does not seek reappointment be not fi lled up.
9. Appointment of Mr. A.B. Choudhury as a Director, liable to retire by rotation as an Ordinary Resolution :
RESOLVED THAT Mr. A.B. Choudhury, who was appointed by the Board of Directors as an Additional Director with effect from August 5, 2009 and who holds offi ce upto the date of this Annual General Meeting in terms of Section 260 of the Companies Act, 1956 (“the Act”) and is eligible for appointment as Director in terms of Section 258 of the Act, and in respect of whom the Company has received notice under Section 257 of the Act, proposing his candidature for the offi ce of Director of the Company, be and is hereby appointed as a Director of the Company, liable to retire by rotation.
10. Reappointment of and remuneration payable to Mr. N.B. Godrej, Managing Director as a Special Resolution :
RESOLVED THAT pursuant to the provisions of Sections 198, 269, 309, 310, Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956, approval of the Company be and is hereby accorded for the reappointment of and terms of remuneration payable to including the remuneration to be paid in the event of loss or inadequacy of profi t in any fi nancial year during the tenure of appointment of Mr. N.B. Godrej as Managing Director of the Company, for a period of three years from April 1, 2011 to March 31, 2014 on the terms and conditions as contained in the Agreement to be entered into between the Company and Mr. N.B. Godrej, a draft of which is placed before the meeting and for the purpose of identifi cation,initialled by the Chairman with liberty to the directors/compensation committee to alter and vary the terms and conditions of the said appointment in such manner as may be agreed to between the directors and Mr. N.B. Godrej.
11. Approval to invest in CBay Infotech Ventures Pvt. Ltd. under Section 372A of the Companies Act, 1956 as a Special Resolution:
RESOLVED THAT pursuant to Section 372A and all other applicable provisions, if any, of the Companies Act, 1956 (including any statutory modifi cation or re-enactment thereof for the time being in force and as may be enacted from time to time) (hereinafter referred to as ‘the Act’), and/or subject to any other approvals, as may be required, the Company be and is hereby authorised to further invest in securities of CBay Infotech Ventures Pvt. Ltd. (CIVPL) by subscription/ purchase from other shareholders or otherwise in addition to the limits already sanctioned, upto a sum of Rs.2 crore (Rupees Two Crore Only), notwithstanding that the aggregate of the loans and investments so far made in or to be made in and the guarantees so far given or to be given to all bodies corporate, exceed the limits laid down by the Act.
RESOLVED FURTHER THAT the Management Committee of the Board of Directors, Mr. A.B. Godrej, Chairman, Mr. N.B. Godrej, Managing Director, Ms. T.A. Dubash, Executive Director & President (Marketing), Mr. M. Eipe, Executive Director & President (Chemicals), Mr. V. Srinivasan, Executive Vice-President (Finance & Estate) & Company Secretary, and Mr. C.G. Pinto, Associate Vice-President (Finance), be and are hereby severally authorised to take from time to time all decisions and steps necessary or
6
expedient or proper in respect of the above investment including the timing, the amount and other terms and conditions of such transactions and also to take all other decisions including varying any of them through recall, renewal, transfer, sale, disinvestment or otherwise, either in part or in full, as it may, in its absolute discretion, deem appropriate, subject to the limits specifi ed above.
RESOLVED FURTHER THAT this resolution be valid for a period from the date of approval of the shareholders to March 31, 2014 and that during this period, the limits indicated hereinabove in case of divestment, renewal, transfer or sale of investment as the case may be, be restored to the original sanctioned limit of Rs. 2 crore.
By Order of the Board of Directors
V. SRINIVASAN Executive Vice-President (Finance & Estate)
& Company SecretaryMumbai, May 26, 2010Registered Offi ce :Pirojshanagar, Eastern Express Highway,Vikhroli (East), Mumbai 400 079.
NOTES:
1. The relative Explanatory Statement in respect of business under Item No. 8 to 11 as set out in the Notice is annexed hereto.
2. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND ON POLL, TO VOTE INSTEAD OF HIMSELF. SUCH A PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES IN ORDER TO BE EFFECTIVE MUST BE RECEIVED BY THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE MEETING. A PROXY SO APPOINTED SHALL NOT HAVE ANY RIGHT TO SPEAK AT THE MEETING.
3. The Register of Members and Share Transfer Books of the Company will be closed from July 20, 2010 to July 27, 2010 (both days inclusive) for ascertaining the names of the shareholders to whom the dividend which, if declared at the Annual General Meeting, is payable. In respect of shares held in electronic form, the dividend will be payable on the basis of benefi cial ownership as per details furnished by National Securities Depository Ltd. and Central Depository Services (India) Ltd., for this purpose.
4. Those Members who have so far not encashed their dividend warrants for the below mentioned fi nancial years, may claim or approach the Company for the payment thereof as the same will be transferred to the ‘Investor Education and Protection Fund’ of the Central Government, pursuant to Section 205C of the Companies Act, 1956 on the respective dates mentioned there against. Please note that as per Section 205C of the Companies Act, 1956, no claim shall lie against the Company or the aforesaid Fund in respect of individual amounts which remain unclaimed or unpaid for a period of seven years from the date the dividend became due for payment and no payment shall be made in respect of such claims.
Dividend for the Financial Year ended Due date for transfer31.03.2003
31.03.2004
31.03.2005
31.03.2006
31.03.2007
31.03.2008
31.03.2009
25.08.2010
26.07.2011
26.07.2012
24.07.2013
27.07.2014
29.07.2015
29.07.2016
5. Members are requested to bring their copy of the Annual Report to the Annual General Meeting.
6. Members are requested to send in their queries at least a week in advance to the Company Secretary at the Registered Offi ce of the Company to facilitate clarifi cations during the meeting.
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.
Item No. 8
In accordance with Article 127 of the Articles of Association of the Company, Mr. V.N. Gogate retires by rotation at the ensuing Annual General Meeting. In view of his advanced age, Mr. V.N. Gogate, has not offered himself for reappointment. The Board proposes that the vacancy caused by his retirement shall not be fi lled up. Mr. V.N. Gogate has been on the Board of the Company since 1995 and the Board records its appreciation for the contribution made by him during his tenure with the Company.
Annual Report 2009–2010
7
The Board recommends passing of this resolution. None of the Directors of the Company except Mr. V.N. Gogate, are interested in the resolution.
Item No.9
The Board of Directors had on August 4, 2009, appointed Mr. A.B. Choudhury as an Additional Director with effect from August 5, 2009, to hold offi ce till the date of the next Annual General Meeting of the Company. It is proposed to appoint him as Director, liable to retire by rotation. Brief profi le of Mr. A.B. Choudhury, in terms of the Listing Agreement, is provided elsewhere in the Notice.
The Board recommends passing of this resolution. None of the Directors of the Company except Mr. A.B. Choudhury, are interested in the resolution.
Item No.10
Reappointment of and remuneration payable to Mr. N.B. Godrej, Managing Director
The tenure of Mr. N.B. Godrej as Managing Director of the Company will expire on March 31, 2011.
It is proposed to reappoint Mr. N.B. Godrej for a further period of three years from April 1, 2011 to March 31, 2014.
Mr. N.B. Godrej shall perform his duties subject to the superintendence, control and direction of the Board of Directors of the Company.
In consideration of the performance of his duties, Mr. N.B. Godrej shall be entitled to receive remuneration as stated hereinbelow :-
1. Fixed Compensation:
Fixed Compensation shall include Basic Salary and the Company’s Contribution to Provident Fund and Gratuity Fund.
The Basic Salary shall be in the range of Rs. 7,00,000/- p.m. to Rs. 13,00,000/-p.m. (presently Rs. 5,00,000/- p.m. to Rs. 9,00,000/- p.m.). The Basic Salary approved by the Compensation Committee to Managing Director for the year 2010-11 is Rs. 77,22,000 p.a. The Annual Basic Salary and increments will be decided by the Compensation Committee/Board of Directors depending on the performance of the Managing Director, the profi tability of the Company and other relevant factors.
2. Performance Linked Variable Remuneration (PLVR):
Performance Linked Variable Remuneration according to the Scheme of the Company for each of the fi nancial years as may be decided by the Compensation Committee/Board of Directors of the Company based on Economic Value Added (EVA) in the business and other relevant factors and having regard to the performance of the Managing Director for each year.
3. Flexible Compensation:
In addition to the Fixed Compensation and PLVR, the Managing Director shall be entitled to the following allowances, perquisites, benefi ts, facilities and amenities as per rules of the Company and subject to the relevant provisions of the Companies Act, 1956 (collectively called “perquisites and allowances”). These perquisites and allowances may be granted to the Managing Director in the manner as the Board may decide as per the Rules of the Company.
• Housing (i.e. unfurnished residential accommodation OR House Rent Allowance at 85% of Basic Salary);
• Furnishing at residence;
• Supplementary Allowance;
• Leave Travel Assistance;
• Payment/reimbursement of domiciliary medical expenses for self and family;
• Payment/reimbursement of Food Vouchers, fuel reimbursement;
• Company cars with driver for offi cial use, provision of telephone(s) at residence, payment/reimbursement of expenses there of;
• Housing Loan, Contingency Loan as per rules of the Company. These loans shall be subject to Central Government approval, if any;
• Earned/privilege leave, on full pay and allowance, not exceeding 30 days in a fi nancial year. Encashment/accumulation of leave will be permissible in accordance with the Rules specifi ed by the Company. Casual/Sick leave as per the rules of the Company;
• Such other perquisites and allowances as per the policy/rules of the Company in force and/or as may be approved by the Board from time to time.
The maximum cost to the Company per annum for the aggregate of the allowances listed above for the Managing Director shall be Rs. 60,00,000/- p.a. (Presently Rs. 26,40,000/-) plus car (including driver salary, fuel, maintenance and other incidental expenses) plus housing (i.e. furnished residential accommodation cost of which shall be at actuals OR House Rent Allowance at 85% of the basic salary). In addition to the above, the Managing Director shall be eligible to encashment of leave, club facilities, group insurance cover, group hospitalisation cover and/or any other allowances, perquisites and facilities as per the rules of the Company.
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Explanation:
i) For the Leave Travel Assistance and reimbursement of medical and hospitalisation expenses, ‘family’ means the spouse, dependent children and dependent parents.
ii) Perquisites shall be evaluated at actual cost or if the cost is not ascertainable the same shall be valued as per Income Tax Rules.
4. Overall Remuneration:
The aggregate of salary and perquisites as specifi ed above or paid additionally in accordance with the rules of the Company in any fi nancial year, which the Board in its absolute discretion pay to the Managing Director from time to time, shall not exceed the limits prescribed from time to time under Sections 198, 309 and other applicable provisions of the Companies Act, 1956 read with Schedule XIII to the said Act as may for the time being, be in force, unless approved by the Central Government.
5. Loans:
(a) Granting of loans according to Company’s Scheme subject to Central Government’s approval, if applicable.
(b) Continuation of Loans, if already availed.
Notes :
I. Unless otherwise stipulated, for the purpose of the above, the perquisites shall be evaluated as per Income Tax Rules wherever actual cost cannot be determined.
II. Notwithstanding the foregoing, where in any Financial Year during the currency of the tenure of the Managing Director, the Company has no profi ts or its profi ts are inadequate, the remuneration by way of salary, commission and perquisites shall not exceed, the maximum limits prescribed in Schedule XIII to the Companies Act, 1956, except with the approval of the Central Government.
III. The limits specifi ed above are the maximum limits and the Compensation Committee / Board may in its absolute discretion pay to the Managing Director lower remuneration and revise the same from time to time within the maximum limits stipulated above.
IV. In the event of any re-enactment or re-codifi cation of the Companies Act, 1956 or the Income Tax Act, 1961 or amendments thereto, the foregoing shall continue to remain in force and the reference to various provisions of the Companies Act, 1956 or the Income Tax Act, 1961 shall be deemed to be substituted by the corresponding provisions of the new Act or the amendments thereto or the Rules and notifi cations issued thereunder.
V. If at any time the Managing Director ceases to be in the employment of the Company for any cause whatsoever, he shall cease to be the Managing Director of the Company.
VI. The Managing Director is appointed by virtue of his employment in the Company and his appointment is subject to the provisions of Section 283(1) of the Companies Act, 1956. The appointment is terminable by giving three months’ notice in writing on either side.
Mr. N.B. Godrej, may be deemed to be interested in the resolution at item no.10. Mr. A.B. Godrej, being relative of Mr. N.B. Godrej, may be deemed to be interested in the resolution. None of the other Diretors are interested in the resolution.
Item No.11
Particulars of the Company where investment is proposed:
Name & Regd. Offi ce of the Company
Investment as on date in Rs. Crore and % of existing holding
Amount of proposed investment
(Rs. Crore)
Principal business of the Company
Purpose of investment
Source of funds Nature of Concern/ interest of Directors
CBay Infotech Ventures Pvt. Ltd.Godrej Industries Complex, Gate No. 4, Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai – 400 079.
1.00(8%)
2.00 Development of IT Park, IT and ITES, Software Development, BPO activities
A good investment opportunity
Internal sources/ borrowings
None of the Directors are interested in the resolution.
Annual Report 2009–2010
9
Brief Resume of Directors seeking appointment/reappointment at this Annual General Meeting (in pursuance of Clause 49 of the Listing Agreement)
Name of the Director
Mr. F.P. Sarkari Mr. S.A. Ahmadullah
Mr. A.B. Godrej Mr. K.K. Dastur Mr. A.B. Choudhury Mr. N.B. Godrej
Age 78 70 68 68 67 58Nationality Indian Indian Indian Indian Indian IndianDate of appointment on the Board
30-01-2002 03-01-1995 07-03-1988 01-04-2001 05-08-2009 07-03-1988
Shareholding in the company
20,000 6,000 Nil 3,606 Nil 12,20,572
Qualifi cation(s) F.C.A. B.A. (Cantab.) B.S., M.S. from Massachusetts Institute of Technology, U.S.A.
B.Com., A.C.A. Masters in Economics and MMS from JBIMS
B.S.from Massachusetts Institute of Technology, U.S.A.M.S. in Chem. Engg., Stanford University.MBA, Harvard Business School.
Expertise in specifi c functional area
Finance Marketing and General Management
Engineering and Management
Finance and Accounts
Marketing, General Management and Real Estate
Engineering and Management
Directorships held in other companies
Godrej & Boyce Mfg. Co. Ltd.Tropicana Enterprise Pvt. Ltd.
Globe Theatres Private Ltd.Nadir Company Private Ltd.Motorsports Association of India
Godrej Consumer Products Ltd.Godrej Hershey Ltd.Godrej Sara Lee Ltd.Swadeshi Detergents Ltd.Vora Soaps Ltd.Godrej Properties Ltd.Godrej Hygiene Products Ltd.Nutrine Confectionery Company Ltd.Godrej & Boyce Mfg. Co. Ltd.Godrej Agrovet Ltd.Godrej Investments Pvt. Ltd.Godrej Consumer Products (UK) Ltd.Keyline Brands Ltd.Rapidol (Pty) Ltd.Godrej International Ltd.Godrej Global Mid East FZEGodrej Consumer Products Mauritius Ltd.Godrej Kinky Products Holdings Ltd.Godrej Consumer Products Holding (Mauritius) Ltd.Godrej Nigeria Holdings Ltd.Indian School of Business, Member of the Executive Board
Godrej Infotech Ltd.Oil Field Instrumentation (India) Ltd.Cartini India Ltd.Wadala Commodities Ltd.Netel (India) Ltd.Transwarranty Finance Ltd.
Wadala Commodities Ltd.Godrej Agrovet Ltd.Swadeshi Detergents Ltd.Godrej Properties Ltd.Vora Soaps Ltd.Godrej Waterside Properties Pvt. Ltd.
Godrej Agrovet Ltd.Godrej Tyson Foods Ltd.Godrej Oil Palm Ltd.Godrej & Boyce Mfg. Co Ltd.Godrej Properties Ltd.Godrej Consumer Products Ltd.Mahindra & Mahindra Ltd.Godrej Sara Lee Ltd. KarROX Technologies Ltd. Godrej Gold Coin Aquafeed Ltd.The Indian Hotels Co.Ltd.Tata Teleservices (Mah.) Ltd.Cauvery Palm Oil Ltd.Godrej International Ltd.Godrej Global Mid East FZE, ACI Godrej Agrovet Pvt. Ltd., Bangladesh.Keyline Brands Ltd. Rapidol (Pty) Ltd. Poultry Processors Association of India (Chairman).
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Name of the Director
Mr. F.P. Sarkari Mr. S.A. Ahmadullah
Mr. A.B. Godrej Mr. K.K. Dastur Mr. A.B. Choudhury Mr. N.B. Godrej
Chairmanships/ Memberships of committees in other companies
Godrej & Boyce Mfg. Co. Ltd.:Chairman of Audit CommitteeChairman of Remuneration Committee
Nil Godrej Consumer Products Ltd.:Member of Shareholders CommitteeGodrej Sara Lee Ltd.:Chairman of Audit CommitteeGodrej Hershey Ltd.:Chairman of Audit CommitteeGodrej Properties Ltd.:Chairman of Investors’ Grievance Cum Share Transfer Committee
Wadala Commodities Ltd.:Chairman of Audit Committee Chairman of Remuneration CommitteeOil Field Instrumentation (India) Ltd.:Chairman of Audit CommitteeNetel (India) Ltd.:Chairman of Audit CommitteeTranswarranty Finance Ltd.:Member of Audit Committee
Wadala Commodities Ltd.:Member of Shareholder’s CommitteeMember of Audit CommitteeGodrej Properties Ltd.:Member of Audit CommitteeMember of Investors Grievance Committee
Godrej Consumer Products Ltd.:Chairman of Shareholders CommitteeGodrej Sara Lee Ltd.:Member of Audit CommitteeMahindra & Mahindra Ltd.:Member of Audit Committee
By Order of the Board of Directors
V. SRINIVASAN Executive Vice-President (Finance & Estate)
& Company SecretaryMumbai, May 26, 2010Registered Offi ce :Pirojshanagar, Eastern Express Highway,Vikhroli (East), Mumbai 400 079.
Annual Report 2009–2010
11
DIRECTORS’ REPORT
To the Shareholders,
Your Directors have pleasure in submitting the Annual Report along with the Audited Accounts for the year ended March 31, 2010.
REVIEW OF OPERATIONS
Your Company’s performance during the year as compared with that during the previous year is summarized below.
Rs. Crore
Year ended March 31,2010 2009
Sales of products and services 816.37 817.45Other Income 175.33 154.03Total Income 991.70 971.48Total Expenditure other than Interest and Depreciation 823.07 867.46Profit before Interest, Depreciation and Tax 168.63 104.02Depreciation 28.39 26.46Profi t before Interest and Tax 140.24 77.56Interest and Financial Charges (net) 60.25 61.06Profi t before Tax 79.99 16.50Provision for Current Tax (0.14) 1.23Profi t after Current Tax 80.13 15.27Provision for Deferred Tax (0.80) (3.41)Profi t after Current and Deferred Taxation 80.93 18.68Profi t on sale of undertaking (extraordinary item, net of tax) – 0.26Net Profi t 80.93 18.94Adjustments in respect of prior years – (0.86)Surplus brought forward (after adjusting excess provision for dividend & tax on distributed profi t) 294.18 324.37Profi t after Tax available for appropriation 375.11 342.45
AppropriationYour Directors recommend appropriation as under: Dividend on Equity Shares 47.65 39.97Tax on distributed profi ts 7.91 6.79Transfer to General Reserve 8.09 1.81Surplus Carried Forward 311.46 293.88Total Appropriation 375.11 342.45
The total income increased by Rs. 20.22 crore from Rs. 971.48 crore to Rs. 991.70 crore. The Net Profi t for the year was Rs. 80.93 crore as compared to Rs.18.94 crore in the previous year.
DIVIDEND
The Board of Directors of your Company recommends a fi nal dividend of Rs. 1.50 per equity share of Re. 1/- each, aggregating Rs. 47.65 crore (previous year Rs. 1.25 per equity share).
MANAGEMENT DISCUSSION AND ANALYSIS
There is a separate section on Management Discussion and Analysis appended as Annexure A to this Report, which includes the following:• Industry Structure and Developments• Discussion on fi nancial performance with respect to operational
performance• Segmentwise performance• Human Resources and Industrial Relations• Opportunities and Threats• Internal Control Systems and their adequacy• Risks and Concerns• Outlook
SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES
Your Company has interests in several industries including animal feeds, poultry and agro-products, oil palm plantation, property development, personal and home care, beverages and confectionery, etc. through its subsidiary / associate / joint venture companies.
Godrej Agrovet Limited (GAVL):
The turnover of GAVL increased from Rs. 1,283.46 crore to Rs. 1,391.60 crore, an 8% increase over the previous year. The Profi t after tax but before extra ordinary income increased from Rs. 13.32 crore to Rs. 21.71 crore.
The year under review saw the core businesses of Animal Feeds and Agri Inputs returning an extremely good performance, both in revenue and profi t.
The Animal Feed business recorded a growth of 16% in revenue and 31% in profi t. The profi tability grew due to expansion of contribution margins and control over fixed overheads. The expansion of contribution margins was possible due to effi cient sourcing, improved formulation and successful R & D efforts.
The Agricultural Inputs business grew by 19% in revenue and 22% in profi tability. This success is even more impressive in the light of a failed monsoon and drought conditions that followed. The sales growth was fuelled by innovative products from in-house R & D in addition to growth in the more commoditised pesticides and Organic Manure Mixture.
GAVL enjoyed signifi cantly lower borrowing costs on account of effi cient treasury management. GAVL also successfully implemented SAP in its Animal Feed business and the implementation has started yielding signifi cant business benefi ts.
During the year, GAVL transferred its entire shareholding in Natures Basket Limited (NBL) to your Company. GAVL continues to be the holding Company of Godrej Oil Palm Limited (GOPL), Cauvery Palm Oil Limited (CPOL) and Golden Feed Products Limited (GFPL).
Godrej Properties Limited (GPL):
During the year 2009–10, GPL entered the capital market with an Initial Public Offer (IPO) of 9,429,750 equity shares of Rs. 10/- each, through 100% Book Building Process wherein 7,732,405 equity shares were allotted to the subscribers, at a premium of Rs. 480/- per share and 1,697,345 equity shares were allotted to certain Anchor Investors at a premium of Rs. 520/- per share. The issue was subscribed about 3.6 times. GPL shares were listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited on January 5, 2010.
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GPL posted a total revenue of Rs. 313.43 crore for the year ended March 31, 2010 from Rs. 255.52 crore for the year ended March 31, 2009, thereby a growth of 23% over last year. The net profi t grew by 62% at Rs. 124.19 crore for the year ended March 31, 2010 from Rs. 76.62 crore for the year ended March 31, 2009. During the year, GPL successfully completed several projects, most notably the 1st Phase of Godrej Waterside - commercial project in Kolkata, Godrej Woodsman Estate - a residential project in Bangalore and Godrej Coliseum in Mumbai. At the end of 2009-10, the completed developed area of GPL stood at 7.55 mn sq. ft. compared to 3.63 mn sq. ft. in 2008-09. During the year GPL successfully launched mid-income residential projects in Ahmedabad and Kolkata and it commenced operations in Chandigarh, Chennai and Mangalore.
GPL launched a state-of-the art township project, Godrej Garden City in Ahmedabad in March 2010. It is one amongst 16 founding projects of the Climate Positive Development Program, a Clinton Climate Initiative (CCI) program that will support the development of large-scale urban projects that demonstrate cities can grow in ways that are “Climate Positive.” Climate Positive real estate developments will strive to reduce the amount of on-site CO2 emissions to below zero. The project received an overwhelming response, the fi rst phase has been entirely booked within 10 days of its launch.
Godrej International Limited (GINL):
GINL trades worldwide in vegetable oils. GINL’s turnover increased by about 4% to US$ 120.27 million from US$ 115.50 million whilst profi ts increased by about 11% to US$ 1.53 million from US$ 1.38 million. The company improved its turnover and profi ts despite diffi cult markets and lower unit value of vegetable oils. As the world economy recovers, the company should continue to do well.
Godrej Hershey Limited (GHL):
Your Company holds a 43.4% stake in GHL. During the year under review, beverages grew 8% over the previous year and chocolate syrup grew 82% over the previous year. The gross margin was under pressure due to unprecedented rise in commodity prices particularly, sugar, glucose and dairy products. There were some major cost saving projects undertaken that yielded benefi ts during this year.
Nutrine Confectionery Company Limited (NCCL):
NCCL, a 100% subsidiary of GHL, is a major player in confectionery business in India. Its product portfolio includes strong brands such as MahaLacto, Nutrine Eclairs, Koko Naka, Honey Fab, Aam Ras, Aasay, SuperStar and Gulkand. Nutrine Lollipop was re-launched with an innovative packaging that provided the much needed momentum to the brand thereby doubling its sales. Nutrine Froot Shoot was re-launched with a modern and contemporary packaging to appeal more to the kids and upgrade the brand to justify Rs. 2/- price point. Nutrine Chatkeeli Imli was launched in Q4 which marked the move of GHL into spicy / tangy segment of fruit candies. This market contributes to about 30% of fruit confectionary and is growing at a very healthy rate.
For the fi rst time, a customer relationship program was held for Maha Lacto in which over 2,000 channel partners were invited in a ‘Meet & Greet’ Dhoni event. This was held in Chennai and turned out to be a huge hit with the wholesalers and distributors who participated in the same.
Apart from this, a consumer promotion was launched in which kids were invited to meet their idol – M.S. Dhoni. This promotion
saw an overwhelming response in key states leading to a jump in sales post the event.
Godrej Consumer Products Limited (GCPL):GCPL is one of the leading companies in the FMCG sector with a presence in the Personal and Household Care business. During the year under review the company has endeavored to build on its strong foundation and to create an even stronger future. The year has seen the introduction of many new products combined with several other growth initiatives which included a focused expansion into the rural and interior regions. GCPL’s new product introductions span all the company’s categories comprising soaps, hair colourants, toiletries and a new range of hand hygiene products. All these launches have been after a rigorous amount of research and interaction with the target consumer.
In the soaps business GCPL introduced two new variants of Godrej No. 1 namely ‘Lime and Aloe Vera’ and ‘Moisturising soap’ with nourishment of Milk Cream & Almonds. With this the Godrej No. 1 portfolio now comprises nine variants. Godrej No. 1 is one of the three chosen power brands of GCPL and is today valued at over Rs. 500 crore. During the year, Godrej No. 1 maintained its leadership position in the States of Uttaranchal, Punjab, Himachal, and Gujarat and has emerged as the leader in Uttar Pradesh as well.
In the hair colourants business, GCPL re-launched its ‘Godrej Expert Hair colour’ brand during the year. This is GCPL’s power brand. Godrej Expert Colour is now available in liquid form as well as powder form. In Renew brand, GCPL launched Godrej Renew’s Ravishing Reds Collection with two new shades, Wine Red and Plum Crazy. Both these new launches have been very well liked.
GCPL’s international operations too performed encouragingly especially on the back of the ‘One Africa’ program which enabled it to derive numerous synergies across the continent and thereby strengthen GCPL’s presence. Keyline brands’ key offerings, namely the ‘Cuticura’ Hand Hygiene range, ‘Bio-oil’, P20 performed strongly. In South Africa ‘Inecto’ Powder Hair Colours have been relaunched. ‘Cuticura’ Hand Hygiene range, Godrej Expert Hair Colour and Godrej Nupur Mehendi were launched in the GCC and the Middle East in the current year.
GCPL acquired 49% stake in Godrej Sara Lee Limited (GSLL), an unlisted joint venture between the Godrej Group and Sara Lee Corporation USA earlier during the year. Subsequently in, May 2010 it entered into an agreement to acquire the remaining 51% stake. GSLL has a range of products that are complementary to GCPL’s existing offerings and there is signifi cant potential to derive synergies from the combined operations. GCPL has also been able to acquire strong, local, personal and household care brand in key emerging markets. It has acquired Megasari, a leading FMCG player in household care sector in Indonesia and has agreed to acquire Tura, a leading personal care player in Nigeria.
Financial Performance of GCPLOn a consolidated basis, GCPL registered a net income of Rs. 2,088.50 crore as compared to Rs. 1,433.13 crore in the previous year and GCPL’s profi t after tax increased by 96% from Rs. 173.26 crore in the previous year to Rs. 339.59 crore in the current year. GCPL has paid a total dividend at the rate of Rs. 4.25 per equity share of face value Re. 1.
Godrej Hygiene Care Limited (GHCL)The Board of Directors of your Company, at its meeting held in May 2009, approved a scheme for the merger of GHCL a 100% subsidiary of your Company, into Godrej Consumer Products Limited (GCPL).
Annual Report 2009–2010
13
The scheme has been approved by the Hon’able High Court, Bombay in October 2009. The Appointed date of the merger is June 1, 2009 and the assets and liabilities of GHCL stands transferred to and vested in GCPL from that date. Pursuant to the said scheme of arrangement, 51,07,125 equity shares held by GHCL in Godrej Sara Lee Limited, stood transferred to and vested in GCPL and your Company received 209,39,409 equity shares of GCPL in lieu thereof as per the terms of the Scheme of Arrangement. 25% of these shares are locked in till November 2012.
FINANCIAL POSITION
The fi nancial position of your company continues to be sound.
The loan funds at the end of the year stand at Rs. 547.61 crore as compared to Rs. 600.96 crore at the end of the previous year. The debt equity ratio is 0.52 as compared to 0.57 last year.
Your Company continues to hold the topmost rating of A1+ from ICRA for its commercial paper program (Rs. 140 crore) (enhanced from Rs. 100 crore). ICRA has also assigned an A1+ rating for its short term debt instruments/other banking facilities (Rs. 595 crore) (enhanced from Rs. 570 crore). This rating of ICRA represents highest-credit quality carrying lowest-credit risk. ICRA also assigned LAA rating for long-term debt, working capital and other banking facilities (Rs. 370 crore) (enhanced from Rs. 330 crore). This rating represents high-credit quality carrying low-credit risk.
MANUFACTURING FACILITIES
The Chemicals Division of your Company has manufacturing facilities at Vikhroli and Valia. Effective January 1, 2010, leadership across both the factories has been integrated with one head for manufacturing and engineering services.
Vikhroli:
Vikhroli factory has successfully implemented OHSAS 18001: 2007 standards last year.
Post implementation of OHSAS 18001: 2007, surveillance audit of the Integrated Management System (Quality Management Systems-ISO 9001:2000, Environment Management Systems-ISO 14001:2004 and Occupational Health & Safety Assessment Series-OHSAS 18001:2007), was conducted by Bureau Veritas.
The factory has been re-certifi ed for the Integrated Management System in which ISO 9001:2000 has been upgraded to ISO 9001:2008 standards during last year.
Valia:
Valia factory has successfully recertifi ed for ISO-14001:2004 & ISO-9001:2008 upgradation after surveillance audit conducted by Bureau Veritas to check the effectiveness and improvements under the system and on environment and quality front. The factory is recommended for continuation of both certifi cates. This factory has successfully implemented cost effective separation of C8, C10, C12 and C14 alcohols.
Vegoils Division:
This Division continues as a contract processor of edible oils and vanaspati. The division recorded a turnover of Rs. 2.44 crore as against Rs. 2.45 crore in the previous year.
RESEARCH AND DEVELOPMENT
Activities have been initiated to develop new process/modify existing processes for the manufacturing of premium quality fatty acids from economy grade raw materials for high value
fractionated fatty acids for the polymer, oilfi eld and lubricant industries. Parallel to these activities, the R&D department has taken up initiatives to develop customers for specialty surfactants and glycerin for oral care and personal care products to meet their specifi c needs.
INFORMATION SYSTEMS
Your Company had entered into a strategic alliance with Hewlett Packard (HP) for a comprehensive IT outsourcing and transformation project. The transition to HP services has been smooth and without any disruption to business operations.
The customer relationship management package (eCRM) has been re-launched on the robust SAP platform. The domestic portal, named Rishta has been rolled out to 150 plus customers. The international eCRM was launched in February 2010 and already has 50 plus key customers.
EMPLOYEE STOCK OPTION PLAN (ESOP):
During the fi nancial year 2009-10, 20 employees of the Company were granted ESOPs based on their leadership responsibility and potential:
Date of Grant of ESOP No. of ESOP No. of employeesAugust 10, 2009 8,60,000 20
Disclosure in compliance with clause 12 of the Securities and Exchange Board of India (Employees Stock Purchase Scheme) Guidelines, 1999 is given in Annexure B attached and forms a part of this report.
GROUP FOR INTERSE TRANSFER OF SHARES
As required under Clause 3(1) (e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, persons constituting Group (within the meaning as defi ned in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of the aforesaid SEBI Regulations are given in Annexure C attached herewith and forms a part of this Report.
HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS
Your Company encourages a culture that develops and empowers people, promotes team building, nurtures new ideas and uses information technology to support HR processes and initiatives. These efforts were recently recognized when the Company received an award for “Excellence in HR through Technology” at the World HRD Congress held in Mumbai on February 13, 2010.
Your Company has always emphasized on quality and its employees are encouraged to get involved in the never-ending process of improving quality through Total Quality Management and quality circles. Two quality circles from the Vikhroli Factory of the Company were recognized as “Excellent Quality Circles” by the Quality Circle Forum of India in the 23rd National Convention on Quality Circles held in Bangalore from 19–21 December 2009.
Industrial relations at all plant locations remained harmonious. Regular structured safety meetings were held with employees and safety programmes were conducted for them throughout the year.
Inclusiveness
It has been the endeavour of your Company to provide opportunities to socially and economically underprivileged persons, particularly those belonging to Scheduled Castes / Scheduled Tribes and physically challenged individuals. Your Company supports
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underprivileged children for education through scholarships and mid-day meal programs at the school level.
Your Company gave permanent employment to fi ve physically challenged persons.
CORPORATE SOCIAL RESPONSIBILITYYour Company as part of the Godrej group aims to build a brighter, more sustainable India.During the year your Company undertook various activities as a part of its Corporate Social Responsibility. Your Company instituted the Indian chapter of ‘Table For Two’ initiative at the World Economic Forum’s India Summit in December last year. This initiative was targeted at addressing hunger and malnutrition in the developing world by combining our organization’s tradition of serving society and your individual involvement.Your Company continues to support Heroes AIDS Project (HAP). HAP is a national HIV/AIDS initiative launched in July 2004 to work with media organizations and societal leaders in India. It seeks to develop coordinated campaigns to address the spread of HIV/AIDS and reduce stigma and discrimination by infl uencing public perception and policy through two platforms, advocacy and communications.Under the Teach for India initiative, your Company has sponsored one Company employee for a period of 2 years under Teach for India Fellowship program which is run by Teach for India, an organization established in 2008 to bridge the educational divide and increase the participation of highly skilled leaders in the education sector of India. Under this program, the sponsored employee is committed to teach for two years in low-income urban and rural public schools. During the year, your Company donated fl y catcher machines through Lions Club to various hospitals, orphanages, old age homes, home for blind, BMC run schools etc. Your Company distributed scholarships to Scheduled Caste (SC) / Scheduled Tribes (ST) primary school children covering three schools and also distributed note books to SC/ST primary school children in village Kanerao.ENVIRONMENT AND SOCIAL CONCERNYour Company continues its efforts for the betterment of the environment and conservation of scarce natural resources.Your Company planted 4,500 trees in the Company’s premises at Valia and environmental training sessions were conducted by Company’s personnel at ITI Valia and Anchor Institute, DDIT, Ahmedabad and Ankleshwar.Your Company continued “Rain water harvesting” initiatives undertaken at its factory and in the staff quarters at Vikhroli. So far 18,500 m3 of water has been collected at Vikhroli factory and staff quarters for the Year 2009-10. This process has resulted in saving water and consequently, the costs, thereof.To prevent pollution to environment, efforts are made to convert waste from the factories into an environment friendly product and then dispose off the same safely. Your Company continued its arrangement with Trans Thane Creek Waste Management Association for the treatment of solid waste being generated at the Company’s factory at Vikhroli. More areas of wasteland have been converted into garden using water from ETP.As part of your Company’s continued commitment to conserve natural resources, and also to ward off the ever increasing water shortage, the Company has successfully commissioned a Reverse Osmosis plant to upgrade ETP treated water to boiler feed water resulting into effective recycling of ETP treated water.
Vikhroli factory continues to convert the bio degradable waste into bio compost with the help of an NGO. The Vikhroli factory focused on waste elimination and also continued energy conservation measures.
The Valia factory has improved / modifi ed in Generation / Transfer/ Treatment / Monitoring and disposal pattern of waste water and treated water. Achieved signifi cant reduction of main waste water pollutant parameter i.e. COD Value at inlet of ETP compared to last year and streamlined/optimized the operation and treatment capability of ETP.
FIXED DEPOSITS
Your Company continues to accept public deposits for 13, 24 and 36 months’ tenure. The Fixed Deposits scheme has received an overwhelming response and the management of the company is thankful to all the investors for participating in the scheme and for the trust reposed in the company. During the year ended March 31, 2010, deposits aggregating to Rs. 76.38 crore have been mobilised and deposits aggregating to Rs. 0.60 crore have been repaid on maturity. The Company has no overdue deposits other than unclaimed deposits.
DEPOSITORY SYSTEM
Your Company’s equity shares are available for dematerialisation through National Securities Depository Limited and Central Depository Services (India) Limited. As of March 31, 2010, 99.68 % of the equity shares of your Company were held in demat form.
BUYBACK
Pursuant to the resolution passed by the Board of Directors of the Company and in accordance with the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998, the Company made a Public Announcement to Buyback 57,00,000 equity shares (“Maximum Offer Shares”) of Re. 1 each, from the existing owners of equity shares other than Persons in Control, at a price not exceeding Rs. 275 (Rupees Two Hundred and Seventy Five Only) per equity share (the “Maximum Offer Price”) payable in cash, for an aggregate amount not exceeding Rs. 99 crore (“Maximum Offer Size”). During the year your Company bought back and extinguished 21,33,710 equity shares of face value Re. 1 each. The total amount invested in the Buyback is Rs. 28,86,58,132/- representing 29.16% of the Maximum Offer Size. The change in the paid up capital of the Company consequent to the Buyback is given hereunder :-
Particulars No. of sharesEquity share capital before Buyback (i.e. on May 24, 2009)
319,758,602
Less: Equity Shares bought back and extinguished (from May 25, 2009 to July 28, 2009 )
2,133,710
Equity share capital after Buyback (i.e. on July 29, 2009)
317,624,892
DEVELOPMENT OF PROPERTY AT VIKHROLI
During the year your Company has entered into a Memorandum of Understanding (MoU) with Godrej & Boyce Mfg. Co. Ltd. and Godrej Properties Ltd. for development of the property at Vikhroli.
The binding MoU provides for setting up of suitable Special Purpose Vehicle(s) to execute joint development of the property as also the commercial terms for such development including the sharing of costs and revenues/profi t between your Company and GPL, who
Annual Report 2009–2010
15
would be developing the said property. The MoU is subject to all the parties obtaining appropriate corporate and statutory permissions/consents to execute the defi nitive agreements inter-se and the Company obtaining appropriate shareholders’ approval.
DIRECTORS
In accordance with Article 127 of the Articles of Association of the Company, Mr. F.P. Sarkari, Mr. S.A. Ahmadullah, Mr. A.B. Godrej, Mr. K.K. Dastur retire by rotation at the ensuing Annual General Meeting and offer themselves for reappointment. Mr. V.N. Gogate, also retires by rotation at this Annual General Meeting. However in view of his advanced age, Mr. V.N. Gogate has not offered himself for reappointment. Mr. V.N. Gogate has been on the Board of the Company since 1995 and the Board records its appreciation for the contribution made by him during his tenure with the Company.
AUDITORS
You are requested to appoint Auditors for the current year and to authorise the Board to fi x their remuneration. The retiring auditors, Kalyaniwalla and Mistry, Chartered Accountants, are eligible for reappointment. A certifi cate from the Auditors has been received to the effect that their reappointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.
AUDIT COMMITTEE
The Audit Committee, which was constituted pursuant to the provisions of Section 292A of the Companies Act, 1956 and the listing agreement, has reviewed the Accounts for the year ended March 31, 2010. The members of the Audit Committee are Mr. F.P. Sarkari (Chairman), Mr. V.N. Gogate, Mr. S.A. Ahmadullah and Mr. K.N. Petigara, all Independent Directors. The Board of Directors of the Company at its meeting held on May 26, 2010 has appointed Mr. K.K. Dastur as an Audit Committee member with immediate effect.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confi rm:
a) that in the preparation of the annual accounts, the applicable accounting standards have been followed and no material departures have been made from the same;
b) that such accounting policies have been selected and applied consistently, and such judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the profi t or loss of the Company for that period;
c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company, for preventing and detecting fraud and other irregularities;
d) that the annual accounts have been prepared on a going concern basis.
CORPORATE GOVERNANCE
As required by the existing clause 49 of the Listing Agreements with the Stock Exchanges, a detailed report on Corporate Governance is included in the Annual Report. The Auditors have certifi ed
the Company’s compliance of the requirements of Corporate Governance in terms of clause 49 of the Listing Agreement and the same is annexed to the Report on Corporate Governance.
ADDITIONAL INFORMATION
Annexure D to this Report gives information in respect of Conservation of Energy, Technology absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forms a part of the Directors’ Report.
Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 forms a part of the Directors’ Report. As per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to the Shareholders of the Company, excluding the statement of particulars of employees u/s 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary at the registered offi ce of the Company.
The Notes to the Accounts referred to in the Auditors’ Report is self-explanatory. However in respect of the qualifi cations in the Audit Report, we state as follows:
Loans and Advances include Rs. 10.33 crore (Previous year Rs. 10.33 crore) advanced by the Company to certain individuals against pledge by way of deposit of equity shares of Gharda Chemicals Ltd. The Company has enforced its security and lodged the shares for transfer in its name, however, the transfer application has been rejected by Gharda Chemicals Ltd. and the Company fi led an appeal before the Company Law Board against the rejection. The investee company had in the meanwhile, moved the Bombay High Court and the Court remanded the matter back to CLB. The CLB has advised that the parties may approach the Bench after fi nal disposal of the suit fi led by the investee company and the application made by minority shareholders under section 397/398 before the Hon’ble High Court. The Company has fi led an appeal with the Hon’ble High Court against the order of the Company Law Board under Section 10 F of the Companies Act 1956, which has been admitted.
The recoverability of the advance is contingent upon the transfer and/or disposal of the said shares. It is the opinion of the management that the underlying value of the said shares is substantially greater than the amount of the loan.
ACKNOWLEDGEMENT
Your Directors thank the Union Government, the Governments of Maharashtra and Gujarat as also all the Government agencies, banks, fi nancial institutions, shareholders, customers, employees, fi xed deposit holders, vendors and other business associates, who, through their continued support and co-operation, have helped as partners in your Company’s progress.
For and on behalf of the Board of Directors
A.B. GodrejChairman
Mumbai, June 4, 2010
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ANNEXURE “A” FORMING PART OF THE DIRECTORS’ REPORTMANAGEMENT DISCUSSIONS AND ANALYSIS
Business Structure
GIL
Own businessChemicals, Estate Management,
Finance & Investment
Shareholding%
GodrejAgrovet75.2%
GodrejConsumer Products
23.5%
GodrejHershey43.4%
GodrejProperties
69.4%
Other Investments
Godrej FeedProducts
100%
Godrej Oil Palm80%
Cauvery OilPalm90%
JVs Godrej Tyson FoodsACI Godrej AgrovetGodrej IJM Palm Oil
Godrej Goldcoin Aquafeed
Godrej Sara Lee Ltd. Keyline, Rapidol, Godrej
Hygiene, GGME
NutrineConfectionery
100%
VariousSPVs
INDUSTRY STRUCTURE AND DEVELOPMENTS
The global meltdown experienced last year, with India being no exception, has given way to a strong recovery shown this year particularly by the Indian economy. The GDP growth rate is expected to remain relatively strong in 2009-10 at around 7.2% as per the advance estimate by Central Statistical Organisation (CSO). The manufacturing sector contribution in this is high at 9%. The per capita income is up by 5.4% as per advance estimate by CSO. With the Index of Industrial Production showing growth of 10.1% and within that, manufacturing sector growing at 10.5% compared to same period of last year, the outlook for the coming year looks promising. However, rising food infl ation is an area of concern. Overall, the Indian economy has shown signs of growth in almost all the sectors. With the resurgence of positive sentiments, the Indian economy is expected to maintain and expand its growth rate in the coming year.
FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The highlights of overall performance are as follows:
Rs. Crore
Particulars 2009-10 2008-09Sales 816.37 817.45Total Income 991.70 971.48
Particulars 2009-10 2008-09Profi t Before Taxation 79.99 16.50Profi t After Current Taxation 80.13 15.27Profi t After Current & Deferred Taxation 80.93 18.68Earnings per Equity Share (Rs.) 2.54 0.56
Profi tability ratios are as follows:PBDIT/Total Income 17.00 10.71PBT/Total Income 8.07 1.70PAT/Total Income 8.16 1.86Return on Capital Employed 8.61 4.70Return on Net Worth 7.67 1.71Basic EPS (Rs.) 2.54 0.56
The Financial risk ratios are as follows:Debt/Equity 0.52 0.57Interest coverage 2.33 1.27
Rs. CroreSegment Performance 2009-10 2008-091. Segment Revenue Chemicals 781.24 778.19 Estate 27.75 31.54 Finance & Investments 170.82 147.26 Others 11.89 14.49 Total 991.70 971.48
Annual Report 2009–2010
17
Rs. CroreSegment Performance 2009-10 2008-092. Segment Results (PBIT) Chemicals 52.38 (18.32) Estate 18.19 21.78 Finance & Investments 158.28 147.26 Others (5.39) (4.80) Total 223.46 145.92 Less: Interest (Net) (60.25) (61.06) Less: Unallocated expenses (Net) (83.22) (68.36) Profi t Before Tax 79.99 16.503. Segment Capital Employed Chemicals 266.00 250.11 Estate 61.12 42.36 Finance & Investments 1,276.63 1,343.08 Others 22.95 25.51 Unallocated (604.00) (633.94) Total 1,022.70 1,027.12
CHEMICALS DIVISIONThe Chemicals division operates in the oleo-chemical and surfactant industries. The division has a blend of domestic and international operations and continued its leadership position in the Indian market. The division achieved export turnover of Rs. 300 crore in this fi scal, accounting for about 37% of its turnover. The recovery of the global economy leading to a robust increase in demand helped the growth in this division. The product category-wise review follows:Fatty AcidsFatty Acids portfolio, comprising stearic acid, oleic acid, as well as specialty fatty acids, accounted for about 40% of the turnover of the division. Continuous cost reduction and market development initiatives have helped grow this category by about 9% in value terms and 8% in volume terms. The division plans to enhance the sales of its specialty fatty acids in the domestic as well as export markets.Fatty AlcoholFatty Alcohols accounted for 34% of the sales revenue of the Chemicals division. Revenue decreased by 11% largely due to the fall in commodity prices leading to a reduction in unit selling price though volume increased by 3%.Through effective customer relationship management and supply chain initiatives, the division could maintain and grow its share with major global corporations. The growth in sales of fatty alcohols in Europe was aided by ‘Just in Time’ (JIT) supplies with improved logistics management. Your Company has reached over 62 countries in the world through its exports.With customer focused manufacturing and marketing strategies, it is expected that revenues from this segment will improve in the coming year.SurfactantsSurfactants contributed 18% to the turnover of the division. As a forward integration and de-risking strategy, the division is strongly focusing on fatty alcohol based surfactants such as Sodium Lauryl Ethoxy Sulphate (SLES) and Sodium Lauryl Sulphate (SLS) in addition to Alpha Olefi n Sulphonate (AOS), particularly in improving the presence in the international market. Your company has started exporting SLES and SLS to various countries. Sales grew by 41% in value terms as compared to last year. This portfolio is expected to grow steadily in the future.
GlycerinGlycerin accounted for 4% of the turnover of this division. Revenues decreased by 36% in view of the low price of Glycerin. This is largely a by-product and additional sales are mostly opportunistic, depending on market conditions.Other initiativesYour Company continued its strong focus on cost reduction and operational effi ciency improvement initiatives, which included reduction in the net working capital employed and reduction in the variable costs of production.Your Company also successfully added specialty and value added products in its portfolio which are expected to improve the margins for the division going forward.Your Company has developed a customer relationship management website (eCRM) that enables customers to track their orders and transactions as also receive updates through personalized web pages 24x7. This initiative has been accorded recognition from Businessweek magazine and your Company was adjudged as amongst the top 25 unsung innovators.Your Company had made an application to Maharashtra Industrial Development Corporation (MIDC) for allotment of 20 acres of industrial land in their industrial area at Ambernath to enable expansion/relocation of some of the plants of the Chemicals division and/or for the purpose of diversifi cation of business. MIDC has favourably considered the Company’s application and an Offer Letter has been issued based on which the Company has signed the agreement to lease.OutlookThe outlook for the coming year 2010-11 is mixed at this point in time. International prices and demand are showing signs of improvement and if the recovery trend continues, the chemicals business is well poised to take advantage. If new capacities for oleo-chemicals that were announced earlier go on stream, there could be an oversupply situation in the market affecting the prices. However, most of the new plants are set up to produce mid chain alcohols. Your Company has a competitive advantage due to its unique strategy of offering higher chain alcohols.Focus on increasing sales of integrated specialty derivative products of fatty alcohol will improve profi tability as well as de-risk the business from the adverse movements in the fatty alcohol market.Your Company is actively expanding its presence in the international market for its specialty derivative products by getting R&D approvals from multinational corporations.Your Company is also focusing on specialty fatty acids and their co-products, which will improve its leadership position in terms of market share as also profi tability.ESTATE MANAGEMENTThe Ghatkopar - Vikhroli – Kanjur - Powai belt, of Mumbai suburb is continuing to witness major development activity. The area around the registered offi ce of your Company at Vikhroli is developing at a brisk pace. The ongoing projects of widening of the Eastern Express Highway, additional fl yovers on the southern end, metro terminal in the vicinity and other infrastructure projects will be a catalyst for attracting mixed use developmental activity and is expected to make this suburb, a desired location in the coming years.Reputed corporates continue to lease spaces in your Company for their business operations. The green environment, excellent infrastructure and close proximity to CBD, airport, New Mumbai and the extended suburbs are major positives, in making Vikhroli a preferred location.Your Company has entered into a Memorandum of Understanding (MoU) with Godrej & Boyce Manufacturing Co. Ltd. and Godrej
18
Properties Ltd. for development of property at Vikhroli. In view of the proposed development, some areas given on leave and licence basis would not be renewed for further periods. The revenue could also be affected due to the reduction in average rentals as areas given on higher rentals come up for renewal.The total income from this business for the year was Rs. 27.75 crore as compared to Rs. 31.54 crore in the previous year.FINANCE AND INVESTMENTSDuring the year, your Company continued to earn return from its investments in the form of dividend of Rs. 42.80 crore (previous year Rs. 50.21 crore) and realised capital appreciation of Rs. 104.38 crore (previous year Rs. 56.27 crore).During the year, Godrej Hygiene Care Limited (GHCL) (formerly known as Godrej Hygiene Care Private Limited), 100% subsidiary of your Company, was merged with Godrej Consumer Products Limited (GCPL) under a scheme of arrangement fi led with Hon’ble High Court, Bombay w.e.f. June 1, 2009 and all assets and liabilities of GHCL stand transferred to and vested in GCPL. Your Company received 209,39,409 equity shares of GCPL in lieu thereof as per the scheme of arrangement. Out of the equity shares received, 25% equity shares are locked in till November 2012.During the year, our subsidiary Godrej Properties Limited successfully completed its IPO and listed on BSE and NSE.Your Company acquired 100% stake in Natures Basket Limited during the year. Your Company sold its entire stake in Compass BPO Limited.As earlier reported, your Company had sold its subsidiary company Godrej Hi Care Ltd. The per capita income is up by 5.4% as per advance estimate by CSO. (GHCL) in March, 2009 last year. As per the Share Purchase Agreement entered into with the purchaser, the sellers of GHCL were entitled to additional consideration on achievement of stipulated fi nancial parameters based on which your Company received additional consideration during the year which is refl ected in the accounts.HUMAN RESOURCES, INDUSTRIAL RELATIONSIndustrial Relations at all locations were cordial. The total number of persons employed in your Company as on March 31, 2010 was 1,264.INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACYYour Company has a proper and adequate system of Internal Controls, to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposal and that transactions are authorized, recorded and reported correctly. Your Company’s Corporate Audit and Assurance Department which is ISO 9001 certifi ed, issues well documented operating procedures and authorities with adequate built-in controls at the beginning of any activity and revised procedures if there is any major change. The internal control is supplemented by an extensive programme of internal, external audits and periodic review by the management. The system is designed to adequately ensure that fi nancial and other records are reliable for preparing fi nancial information and other data and for maintaining accountability of assets.Corporate Audit & Assurance Department, during the year, facilitated a review of your Company’s risk management programme. The risks and mitigation measures were reviewed by your Company’s Risk Committee and corrective measures initiated.During the year the Corporate Audit & Assurance Department carried out various reviews and provided assurance on compliances to laid down policies, process and internal controls.INFORMATION SECURITYYour Company accords great importance to the security of its information assets. To ensure that this gets desired focus and attention, a Chief Information Security Offi cer, who is attached to the Corporate Audit and Assurance Department, is entrusted with the task of ensuring that your Company has the requisite security posture.
Your Company has in place, all the procedures and practices that are in line with the ISO Security Standards. Your Company is now ISO 27001 certifi ed.OPPORTUNITIES AND THREATSThe improvement in the global economic and liquidity situation coupled with more stable commodity prices, the stimulus package by the Indian Government and various Governments globally, provides an opportunity for growth for the Chemicals division. At the same time, if new capacity additions announced earlier go on stream, there could be an over supply situation in the market which can put pressure on margins. Specialty products are expected to improve margin and strengthen your Company’s position in the oleo-chemicals space.The Estate management business can continue to do well, by optimizing the available space usage in the campus and leveraging the benefi ts of the location such as assured power supply, better connectivity and infrastructural benefi ts. The over supply situation for commercial space in the Real Estate market continues to put pressure on the rentals and the margins. In the coming months the rentals will continue to be under pressure till the demands for commercial space picks-up and the sentiments turn buoyant with the improvement in the economic situation.RISKS AND CONCERNSYour Company has put a risk management framework in place post a comprehensive review of its risk management process. The review involved understanding the existing risk management initiatives, zero-based identifi cation and assessment of risks in the various businesses as also the relative control measures and arriving at the desired counter measures keeping in mind the risk appetite of the organization. The Risk Committee has periodically reviewed the risks in the various businesses and recommended appropriate risk mitigating actions.The Commodity based businesses are likely to be affected by vagaries of the weather, demand for edible oil, oilseed production, etc. The increase in bio-diesel manufacturing capacity is expected to impact vegetable oil prices. The business is exposed to commodity price risks relating to raw materials which account for the largest portion of the costs of both the Chemicals and Vegoils businesses. The Chemicals business growth will also depend on the growth of end user industries like polymer, detergent, cosmetic and personal care.As a signifi cant employer and chemicals producer, to ensure occupational safety, employment standards, production safety, and environmental protection, your Company maintains strict safety, health, environmental protection and quality control programs to monitor and control these operational risks.Macro economic factors including economic and political developments, natural calamities which affect the industrial sector generally would also affect the businesses of your Company. Legislative changes resulting in a change in the taxes, duties and levies, whether local or central, also impact business performance and relative competitiveness of the businesses.
CAUTIONARY STATEMENT
Some of the statements in this management discussion and analysis describing the Company’s objectives, projections, estimates and expectations may be ‘forward looking statements’ within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Company’s operations include a downtrend in industry, signifi cant changes in political and economic environment in India and abroad, tax laws, import duties, litigation and labour relations.
Annual Report 2009–2010
19
ANNEXURE “B” FORMING PART OF THE DIRECTORS’ REPORTAs per the Securities & Exchange Board of India (Employee Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 following information is disclosed in respect of Godrej Industries Limited Employee Stock Option Plans I and II:
Sr. No.
Heading Particulars
a Options granted during the year ESOP II : 8,60,000b The pricing formula ESOP I :
Market Price plus Interest at such a rate not being less than the Bank Rate then prevailing compoundable on an annual basis for the period commencing from the date of Grant of the Option and ending on the date of intimating Exercise of the Option to the Company.ESOP II :Grant Price* plus Interest at such a rate as may be decided from time to time compoundable on an annual basis for the period commencing from the date of Granting of the Options and ending on the date of intimating Exercise of the Option to the Company.* Grant Price means higher of market price or average cost of shares purchased by the Trust for that specifi c grant, including any unallotted shares lying with the Trust if utilized for that specifi c grant, plus interest on the loan taken to purchase the said shares at such rate as may be decided from time to time and compoundable on annual basis till the date of grant.
c Options vested during the year ESOP I : 18,00,000d Options exercised during the year ESOP I : 21,00,000e The total number of shares arising as a result of exercise of
optionNil.As shares purchased from secondary market, there is no further issue of shares as a result of exercise of options.
f Options lapsed/revoked during the year ESOP I : 1,19,250g Variation of terms of options Annexure 2h Money realized by exercise of options ESOP I : Rs.19,28,61,756/-i Total number of options in force ESOP I : 55,80,700 equity shares of nominal value of Re.1/- each.
ESOP II: 8,60,000 equity shares of nominal value of Re.1/- each.j Employee-wise details of options granted to:
i) senior managerial personnel; ii) any other employee who receives a grant in any one year
of option amounting to 5% or more of option granted during that year.
iii) identifi ed employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant;
Annexure 1
Annexure 1
NIL
k Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20 ‘Earnings Per Share’.
There is no fresh issue of shares hence, not applicable.
l Where the company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options, shall be disclosed. The impact of this difference on profi ts and on EPS of the Company shall also be disclosed.
The company has calculated the employee compensation cost using the intrinsic value of stock options. Had the fair value method been used, in respect of stock options granted the employee compensation cost for the Company would have been higher by Rs. 11.02 crore, Profi t after tax lower by Rs. 11.02 crore and basic EPS would have been lower by Rs. 0.35.
m Weighted average exercise prices and weighted average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock.
Weighted average exercise price of the options granted during the year is Rs. 179.86 plus interest.Weighted average fair value of the option granted during the year is Rs. 84.77.
20
n A description of the method and signifi cant assumptions used during the year to estimate the fair values of options, including the following weighted average information:
The fair value of the options granted has been calculated using Black – Scholes Options pricing formula and the signifi cant assumptions made in this regard are as follows:
i) risk-free interest rate, 6.68%ii) expected life, 4 yearsiii) expected volatility, 70%iv) expected dividends, and 0.69%
Rs. 1.25 per sharev) the price of the underlying share in market at the time of
option grantWeighted average market price at the time of grant of option Rs. 153.05 per option.
Annexure 1 : Senior Managerial Personnel
Name Options grantedVivek Gambhir 6,00,000Rajiv Bakshi 50,000Praful Bhat 50,000Options granted to all the above employees are in excess of 5% of the total options granted during the year.
Annexure 2 :
Amendment to ESOP terms for employees who were granted ESOP’s on April 5, 2007 and April 11, 2007:
(a) Clause no.5.4:
Existing Clause:
The Employee Stock Options granted under GIL ESOP shall vest as follows:
The Options shall vest in the eligible employees within such period as may be prescribed by the Compensation Committee, which period shall be not less than one year and may extend upto three years from the date of grant of Options. Vesting may occur in tranches, subject to the terms and conditions of vesting, as may be stipulated by the Compensation Committee.
Amended Clause:
The Employee Stock Options granted under GIL ESOP shall vest as follows:
The Options shall vest in the eligible employees within such period as may be prescribed by the Compensation Committee,
which period shall be not less than one year and may extend upto fi ve years from the date of grant of Options. Vesting may occur in tranches, subject to the terms and conditions of Vesting, as may be stipulated by the Compensation Committee.
In the event that, during the 4th and 5th year of the vesting period, the average of the closing market price of the shares of the Company on the Bombay Stock Exchange and National Stock Exchange on each day exceeds the Exercise Price by not less than Rs. 50/- for a consecutive period of thirty days, the Options shall be deemed to have vested on the day immediately following the thirtieth day, as determined by the Compensation Committee.
(b) First paragraph of Clause No.5.5
Existing Clause:
From the date of Vesting of the Options, the Option Grantee shall be entitled to Exercise the Options within such period as may be prescribed by the Compensation Committee which period shall not exceed a period of two years from the date of the respective Vesting of the Options.
Amended Clause:
From the date of Vesting of the Options, the Option Grantee shall be entitled to Exercise the Options within such period as may be prescribed by the Compensation Committee which period shall not exceed a period of three years from the date of the respective Vesting of the Options.
Annual Report 2009–2010
21
ANNEXURE “C” FORMING PART OF THE DIRECTORS’ REPORTThe following is the list of persons constituting Group (within the meaning as defi ned in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of regulation 10 to 12 of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 1997 (“the said Regulations”), provided Clause 3(1)(e) of the said Regulations:
1. Godrej & Boyce Mfg. Co. Ltd.
2. Cartini India Ltd.
3. Godrej Investments Pvt. Ltd.
4. Godrej Efacec Automation & Robotics Ltd.
5. Godrej Holdings Pvt. Ltd.
6. Godrej (Malaysia) Sdn. Bhd.
7. Godrej (Singapore) Pte. Ltd.
8. J T Dragon Pte. Ltd.
9. Mercury Mfg. Co. Ltd.
10. Veromatic International BV
11. Water Wonder Benelux BV
12. Geomeric Ltd.
13. Godrej & Khimji (Middle East) LLC
14. Godrej Infotech Ltd.
15. Veromatic Services B.V.
16. Godrej International Ltd.
17. Ensemble Holdings & Finance Ltd.
18. Swadeshi Detergents Ltd.
19. Vora Soaps Ltd.
20. Godrej Properties Ltd.
21. Godrej Realty Pvt. Ltd.
22. Godrej Waterside Properties Pvt. Ltd.
23. Godrej Real Estate Pvt. Ltd.
24. Godrej Developers Pvt. Ltd.
25. Godrej Sea View Properties Pvt. Ltd.
26. Godrej Estate Developers Pvt. Ltd.
27. Happy Highrises Ltd.
28. Godrej Agrovet Ltd.
29. Golden Feed Products Ltd.
30. Godrej Oil Palm Ltd.
31. Cauvery Palm Oil Ltd.
32. Godrej Tyson Foods Limited
33. Bahar Agrochem & Feeds Pvt. Ltd.
34. Natures Basket Ltd.
35. Aadhaar Retailing Ltd.
36. Godrej IJM Palm Oil Ltd.
37. Godrej Gold Coin Aquafeed Ltd.
38. Polychem Hygiene Laboratories Pvt. Ltd.
39. Creamline Dairy Products Ltd.
40. ACI Godrej Agrovet Pvt. Ltd.
41. Godrej Hersheys Ltd.
42. Nutrine Confectionery Co. Ltd.
43. Godrej SaraLee Ltd.
44. Tahir Properties Ltd.
45. Godrej Consumer Products Ltd.
46. Rapidol (Pty) Ltd.
47. Godrej Netherlands BV
48. Godrej Global Mid East FZE
49. Godrej Consumer Products Mauritius Ltd.
50. Godrej Hygiene Products Ltd. (formerly known as SCA Hygiene)
51. Godrej Consumer Products Holdings Mauritius Ltd.
52. Godrej Consumer Products Dutch Cooperatief U.A. (Netherlands)
53. ABG Venture LLP
54. NBG Enterprise LLP
55. JNG Enterprise LLP
56. SVC Enterprise LLP
57. RKN Enterprise LLP
58. Godrej & Boyce Enterprise LLP
59. Mr. Adi B. Godrej
60. Mrs. Parmeshwar A. Godrej
61. Mrs. Tanya A. Dubash
62. Mr. Pirojsha A. Godrej
63. Ms. Nisaba A. Godrej
64. Mr. Nadir B. Godrej
65. Mrs. Rati N. Godrej
66. Master Burjis N. Godrej
67. Master Sorab N. Godrej
68. Master Hormuzd N. Godrej
69. Mr. Jamshyd N. Godrej
70. Mrs. Phiroza J. Godrej
71. Mr. Navroze J. Godrej
72. Ms. Raika J. Godrej
73. Mrs. Smita V. Crishna
74. Mr. Vijay M. Crishna
75. Ms. Freyan Crishna
76. Ms. Nyrika Crishna
77. Mr. Rishad K. Naoroji
22
ANNEXURE “D” FORMING PART OF THE DIRECTORS’ REPORTINFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
A. Conservation of Energy
I. (A) Energy Conservation measures undertaken: Vikhroli
1. Heat Exchanger for fl aker installed to reduce the power consumption & improve the quality of stearic acid. Annual savings of Rs. 0.01 crore accrued.
2. Continued working in consultation with CII for the Mission for Sustainable Growth.
3. Dedicated lines for fatty acid transfer to eliminate steam wastage resulting in savings in fuel worth Rs. 0.15 crore per annum.
4. Installation of VFDs in splitting and Flaking sections resulting in power savings worth Rs. 0.02 crore per annum.
Valia
1. Power saving in AOS cooling tower by process improvement resulting into saving of Rs. 0.21 crore per annum.
2. Saving in power due to stopping of chiller & utilizing of VAM in fl aker worth Rs. 0.25 crore per annum.
3. Reduction in NG consumption in various sections by improvement of process resulting in savings of Rs. 0.52 crore per annum.
4. Installation of VFD’s in AOS & EOU plant resulting in power savings worth Rs. 0.08 crore per annum.
5. Installation of lighting transformer in DTA plant resulting in power savings worth Rs. 0.02 crore per annum.
(B) Proposed Energy Conservation Measures:
1. Change of Vacuum system of fractionation plant to save fuel cost.
2. To improve steam distribution network at Valia factory to eliminate steam wastages.
3. Replacement of feed pumps running in series by higher capacity pump with savings in power consumption.
4. Installation of powerless wind ventilators in all godowns of Valia & thereby saving power consumed by the exhaust fans.
II. Impact of measures on reduction of energy consumption and consequent impact on the cost of production of goods
Saving in energy costs during the period under consideration.
III. Details of energy consumption
The details of energy consumption are given below. These details cover the operations of your Company’s factories at Vikhroli, Valia and Wadala.
(A) Power and Fuel consumption
Electricity This Year Previous
Yeari) Purchased
Units (KWH in lac) 313.27 290.55Total Amount (Rs. in crore) 20.55 19.35Rate per Unit (Rs.) 6.56 6.66
ii) Own generated through D.G. Sets Units (KWH in lac) 0.54 1.00Cost (Rs. in crore) 0.08 0.16Rate per unit (Rs.) 15.42 15.73
iii) Own generated through Steam Turbine Generator - Co-generation Units (KWH in lac) 202.90 218.54Cost (Rs. in crore) 16.22 13.25Rate per Unit (Rs.) 7.99 6.07
Fuel Oil (LSHS, FO and LDO)Total Quantity (KL) 2,309.93 7,242.70Total Amount (Rs. in crore) 3.85 16.00Rate per Unit (Rs. per litre) 16.67 22.09
Natural GasTotal Quantity (SM3 lac) 270.49 223.14Total Amount (Rs. in crore) 38.98 29.80Rate per Unit (Rs. per SM3) 14.41 13.35
PitchesTotal Quantity (MT) 683.05 957.05Total Cost (Rs. in crore) 0.88 1.51Rate per unit (Rs. per MT) 12,870.00 15,812.00
(B) Consumption per unit of production
Particulars Natural Gas ( SM3/MT )
Electricity (Kwh/MT)
Furnace Oil (Litre/MT) Pitches
2009-10 2008-09 2009-10 2008-09 2009-10 2008-09 2009-10 2008-09
Fatty Acid 79.28 56.95 77.07 76.01 18.82 24.69 - 15.86
Fatty Alcohol 96.49 89.57 429.96 424.64 3.24 7.61 - -
A.O.S. 22.12 16.39 142.89 146.22 1.26 4.38 - 1.38
Glycerin 343.74 247.43 606.30 614.59 58.17 109.08 - 49.46
Oils & Vanaspati - - 144.09 174.72 - 60.00 54.28 85.86
Annual Report 2009–2010
23
B. Technology Absorption, Adaptation and Innovation
I. Specifi c areas in which R&D carried out by the Company :
During the year under review, Research & Development efforts in the following areas strengthened the Company’s operation through technology absorption, adaptation and innovation.
Oils and Fatty Acids•
Fatty Alcohol•
Surfactants•
Glycerin•
Customer Centric Formulations for Personal Care• Product Applications
II. Benefi ts derived as a result of the above R&D. :
Premium quality fatty acids from economy grade raw• materials.
Understanding the impact of raw material quality • and manufacturing process on the quality of the fi nished goods.
Manufacture of high value pure cut fatty acids, • specifi cally for the polymer, oil fi eld and lubricant industries.
Qualifi cation of specialty surfactants for oral care and • personal care products.
Value added derivatives of glycerin so as to enter • certain niche markets.
Value added formulations of fatty acids so as to enter • niche markets.
III. Future Plan of Actions :
Specialty chemicals from Glycerin, so as to enter • niche markets in the field of Pharmaceuticals, Personal Care and Industrial Lubricants.
Specialty chemicals used in personal care • formulations – foam boosters, conditioning agents, co-surfactants, viscosifying and pearlizing agents.
IV. Expenditure on R&D : Rs. crore
This Year Previous Year
(a) Capital Nil Nil(b) Recurring 3.27 1.73(c) Total 3.27 1.73(d) Total R&D expenditure as
a percentage of total sales turnover
0.40% 0.21%
C. Foreign Exchange earnings and outgo
The Chemicals Division’s exports were Rs. 339.26 crore in the current year (including deemed exports of Rs. 39.62 crore) as compared to Rs. 367.74 crore in the previous year (including deemed exports Rs. 45.91 crore). The Company continues to export refi ned glycerin, fatty alcohol and other chemicals to over 62 countries including U.S.A., U.A.E., Japan, South Africa, Germany, U.K., France, Malaysia, China, Australia, Mexico, Singapore and Sri Lanka.
Rs. crore
This Year Previous Year
Foreign exchange used 242.10 257.41Foreign exchange earned 299.70 323.90
24
REPORT ON CORPORATE GOVERNANCE
Table 1: Details about the Company’s Board of Directors & meetings attended by the Directors during the year
Name of Director Category Board meetings
held during the year
Board meetings attended
during the year
Whether attended last AGM
Directorships held in public
companies incorporated in India as at year- end
$
Number of Chairmanship/ Membership in other
Board Committees as at the year-end
Chairmanship MembershipA.B. Godrej Chairman
– Non-Executive 4 4 Yes 11(3) 4 1J.N. Godrej Non-Executive 4 3 Yes 9(5) 1 3N.B. Godrej Managing Director 4 4 Yes 14(5) 1 2S.A. Ahmadullah Non-Executive
– Independent 4 4 Yes 1(1) - 1Jimmy Bilimoria Non-Executive
- Independent 4 3 Yes 8(5) 4 4V.M. Crishna Non-Executive 4 4 Yes 4(1) - -K.K. Dastur Non-Executive
- Independent 4 4 Yes 7(3) 3 1N.D. Forbes Non-Executive
- Independent 4 3 Yes 3(3) - -V.N. Gogate Non-Executive
– Independent 4 4 Yes 1(1) - 1A. Maira* Non-Executive
Independent 1 1 NA NA NA NAA.B. Choudhury* Non-Executive
- Independent 2 2 NA 6(3) - 4K.N. Petigara Non-Executive
- Independent 4 4 Yes 5(1) 1 2F.P. Sarkari Non-Executive
- Independent 4 4 Yes 1(1) 2 -V.F. Banaji Whole-time 4 4 Yes 2(2) - 1T.A. Dubash Whole-time 4 3 Yes 6(1) - 2M. Eipe Whole-time 4 4 Yes 3(1) - 1M.P. Pusalkar Whole-time 4 3 Yes 2(2) 1 2Note:(i) $ Alternate directorships and directorships in private companies, foreign companies and associations are excluded.(ii) Figures in ( ) denote listed companies.
Clause 49 of the listing agreement with the Indian Stock Exchanges stipulates the norms and disclosure standards that have to be followed on the Corporate Governance front by listed Indian companies. 1. THE COMPANY’S PHILOSOPHY The Company is a part of the Godrej Group which has
established a reputation for honesty and integrity. The Company’s philosophy of corporate governance is to achieve business excellence by enhancing the long-term welfare of all its stakeholders. The Company believes that corporate governance is about creating outperforming organisations, i.e. organizations that consistently succeed in the marketplace against competition and thereby enhance the value of all its stakeholders.
THE GOVERNANCE STRUCTURE2. BOARD OF DIRECTORS a) Board Structure The Board of Directors of the Company comprises sixteen
Directors, which includes one Managing Director and four Whole-time Executive Directors. The remaining eleven
are Non-Executive Directors, with eight of them being Independent Directors. On April 30, 2010 two Whole-time Executive Directors retired from the services of the Company and hence ceased to be Directors. No Director is related to any other Director on the Board in terms of the defi nition of “relative” given under the Companies Act, 1956, except (1) Mr. A.B. Godrej and Mr. N.B. Godrej, who are brothers, (2) Ms. T.A. Dubash who is the daughter of Mr. A.B. Godrej and (3) M r. J. N. Godrej and Mr. V. M. Crishna, who are brothers-in-law. The details are given in Table 1 and 2 respectively:
b) Board meetings held and Directors’ attendance record
The Board meets atleast once in a quarter to consider among other businesses, quarterly performance of the Company and fi nancial results. To enable the Board to discharge its responsibilities effectively and take informed decisions, necessary information is made available to the Board. During the year four Board meetings were held on May 27, 2009, July 29, 2009, October 31, 2009 and January 25, 2010. The details are given in Table 1:
Annual Report 2009–2010
25
(iii) *Mr. A. Maira resigned with effect from July 24, 2009 and Mr. A.B. Choudhury was appointed with effect from August 5, 2009 in his place.
(iv) Board Meetings held during the year represent the number of meetings held during the tenure of that director.
None of the Directors is a member of more than 10 Board-level committees, or a Chairman of more than fi ve such committees, as required under Clause 49 of the listing agreement.
c) Information supplied to the Board Among others, this includes: Annual operating plans and budgets, capital budgets,
and any updates thereon, Quarterly results of the Company, Minutes of meetings of audit committee and other
committees, Information on recruitment and remuneration of
senior offi cers just below the Board level, Materially important show cause, demand, prosecution
and penalty notices, Fata l or ser ious acc idents or dangerous
occurrences, Any materially significant effluent or pollution
problems, Any materially relevant default in fi nancial obligations
to and by the Company or substantial non-payment for goods sold by the Company,
Any issue which involves possible public or product liability claims of a substantial nature,
Details of any joint venture or collaboration agreement,
Transactions that involve substantial payment towards goodwill, brand equity or intellectual property,
Significant labour problems and their proposed solutions,
Signifi cant development in the human resources and industrial relations front,
Sale of material nature of investments, subsidiaries, assets, which is not in the normal course of business,
Quarterly details of foreign exchange exposure and the steps taken by management to limit the risks of adverse exchange rate movement,
Non-compliance of any regulatory, statutory nature or listing requirements as well as shareholder services such as non-payment of dividend and delays in share transfer.
The Board of the Company is presented with all information under the above heads, whenever applicable. These are submitted either as part of the agenda papers well in advance of the Board meeting or are tabled in the course of the Board meeting.
d) Directors with materially significant related party transactions, pecuniary or business relationship with the Company
Except for drawing remuneration, none of the Directors have any other materially significant related party transactions, pecuniary or business relationship with the Company. Attention of Members is drawn to the disclosures of transactions with related parties set out in Notes to Accounts – Schedule 22, Note No.20, forming part of the Annual Report.
e) Remuneration of Directors: sitting fees, salary, perquisites and commissions and Number of Shares held by Non-Executive Directors
The details of remuneration package of Directors and their relationships with each other are given in Table 2. The number of shares held and dividend paid are given in Table 3.
Table 2: Remuneration in Rupees paid or payable to Directors for the year ended March 31, 2010 Amt. in Rs.
Name of Director Relationship with Directors Sitting fees
Commission on profi ts
Salary Perquisites Provident Fund
Total
A. B. Godrej Brother of N.B. GodrejFather of T.A. Dubash
1,60,000 Nil Nil Nil Nil 1,60,000
J. N. Godrej Brother-in-law of V. M. Crishna Nil Nil Nil Nil Nil NilN. B. Godrej Brother of A.B. Godrej Nil Nil 1,31,33,314 1,01,74,378 8,25,840 2,41,33,532S. A. Ahmadullah None 1,20,000 Nil Nil Nil Nil 1,20,000J.S. Bilimoria None 60,000 Nil Nil Nil Nil 60,000V. M. Crishna Brother-in-law of J. N. Godrej 80,000 Nil Nil Nil Nil 80,000K. K. Dastur None 80,000 Nil Nil Nil Nil 80,000N.D. Forbes None 60,000 Nil Nil Nil Nil 60,000V. N. Gogate None 1,20,000 Nil Nil Nil Nil 1,20,000A. Maira None 20,000 Nil Nil Nil Nil 20,000A.B. Choudhury None 40,000 Nil Nil Nil Nil 40,000K. N. Petigara None 1,20,000 Nil Nil Nil Nil 1,20,000F. P. Sarkari None 1,00,000 Nil Nil Nil Nil 1,00,000V. F. Banaji None Nil Nil 1,39,10,873 64,31,173 7,93,800 2,11,35,846T. A. Dubash Daughter of A.B. Godrej Nil Nil 1,12,17,514 76,69,659 5,95,944 1,94,83,117M. Eipe None Nil Nil 1,16,46,514 54,14,434 6,47,424 1,77,08,372M. P. Pusalkar None Nil Nil 1,44,25,226 51,23,157 4,29,696 1,99,78,079
26
Notes:
1. Salary to Mr. N.B. Godrej, Mr. V.F. Banaji, Ms. T.A. Dubash, Mr. M. Eipe and Mr. M.P. Pusalkar includes a performance linked variable remuneration of Rs.62,51,314/- Rs.72,95,873/-, Rs. 62,51,314/-, Rs.62,51,314/- and Rs.1,08,44,426/- respectively for the year ended March 31, 2010 payable in 2010-11.
2. The service contracts of the Whole-time Directors are for a period of three years with a notice period of three months.
Table 3: Number of shares held by Non-Executive Directors and dividend paid
Name of Non-Executive Director
Shares held as on March 31,
2010
Dividend paid during the
year (Rupees)A.B. Godrej Nil NilA.B. Godrej * 11,21,226 NilJ.N. Godrej * 32,21,472 NilF.P. Sarkari 20,000 25,000.00F.P. Sarkari * 62,000 NilS.A. Ahmadullah 6,000 7,500.00S.A. Ahmadullah * 11,700 NilV.N. Gogate 1,878 2,347.50V.N. Gogate * 270 NilV.M. Crishna Nil NilJ.S. Bilimoria Nil NilN.D. Forbes 5,000 NilA.B. Choudhury Nil NilK.N. Petigara Nil NilK.K. Dastur 3,606 4,507.50K.K. Dastur * 25,400 NilK.K. Dastur ** 9,570 Nil
* Shares held as second holder ** Shares held as third holder
Committees of the Board3. AUDIT COMMITTEE
The Company’s Audit Committee comprises of four Independent and Non-Executive Directors. They are Mr. F.P. Sarkari (Chairman), Mr. S.A. Ahmadullah, Mr. V.N. Gogate and Mr. K.N. Petigara. Effective May 26, 2010, Mr. K. K. Dastur (Independent Director) was appointed as a member of the committee. Mr. F.P. Sarkari is the Chairman of the Committee, a Chartered Accountant and is knowledgeable in fi nance, accounts and company law. All the members of the committee are eminent professionals and draw upon their experience and expertise across a wide spectrum of functional areas such as fi nance and corporate strategy. Minutes of each of the audit committee meetings are placed before the Board Meeting. Mr. V. Srinivasan, Executive Vice-President (Finance & Estate) & Company Secretary acts as a secretary to the audit committee. The Audit Committee met four times during the year i.e. on May 27, 2009, July 29, 2009, October 31, 2009 and January 25, 2010. Table 4 gives the attendance record.
Table 4: Attendance record of audit committee members
Name of Director No. of meetings held
Meetings attended
Mr. F.P. Sarkari 4 4Mr. S.A. Ahmadullah 4 4Mr. V.N. Gogate 4 4Mr. K.N. Petigara 4 4
Notes: Committee Meetings held during the year represents the no. of meetings held during the tenure of that director.
The Audit Committee of the Company performs the following functions:
Overview of the Company’s fi nancial reporting process and the disclosure of its fi nancial information to ensure that the fi nancial statement is correct, suffi cient and credible.
Recommending the appointment/removal of external auditor, fi xation of audit fees and approval for payment for any other services.
Reviewing with management the annual fi nancial statements before submission to the board for approval with particular reference to:
Matters that needs to be included in the Director’s Responsibility Statement to be included in the Board’s Report in terms of Clause (2AA) of the Section 217 of the Companies Act, 1956.
Change if any in accounting policies and practices and reasons for the same.
Major accounting entries involving estimates based on exercise of judgement by the management.
Signifi cant adjustments made in the fi nancial statements arising out of audit fi ndings.
Compliance with listing and other requirements relating to fi nancial statements.
Disclosure of any related party transactions.
Any qualifi cation in the draft audit report.
Reviewing with the management, the quarterly fi nancial statement before submission to the Board for approval.
Reviewing with the management, performance of the statutory and internal auditors, and adequacy of the internal control system.
Reviewing the adequacy of internal audit function, if any, including the structure of Internal Audit Department, staffi ng and seniority of the offi cial heading the department, reporting structure coverage and frequency of internal audit.
Discussion with internal auditors any signifi cant fi ndings and follow up thereon.
Reviewing the fi ndings of any internal investigation by the internal auditors into matters where there is suspected fraud or irregularity or failure of internal control systems of a material nature and reporting the matter to the Board.
Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussions to ascertain any area of concern.
Annual Report 2009–2010
27
Looking into the reasons for substantial defaults in payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividend) and creditors.
Reviewing the functioning of Whistle Blower mechanism.
4. COMPENSATION COMMITTEE Setting up of a Compensation Committee for determining a
company’s policy on remuneration packages for Executive Directors constitutes a non-mandatory provision of Clause 49. The Company set up its Remuneration Committee on February 22, 2002 to review the human resources policies and practices of the Company and in particular, policies regarding remuneration of Whole-Time Directors. The Committee discusses human resources policies such as compensation and performance of management. The Remuneration Committee was renamed as Compensation Committee by the Board of Directors at its meeting held on October 24, 2005.
The Compensation Committee consists of the following directors: Mr. S.A. Ahmadullah (Chairman and Independent Director); Mr. N.B. Godrej (Managing Director); Mr. V.N. Gogate (Independent Director) and Mr. K.N. Petigara (Independent Director). Effective May 26, 2010, Mr. A.B. Choudhary (Independent Director) was appointed as a memeber of the committee. During the year ended March 31, 2010, the committee met on May 27, 2009, July 29, 2009, August 10, 2009 and January 25, 2010. The attendance details are given in Table 5.
Table 5: Attendance record of Compensation Committee members
Name of Director No. of meetings held
Meetings attended
Mr. S.A. Ahmadullah 4 4Mr. V.N. Gogate 4 4Mr. K.N. Petigara 4 4Mr. N.B. Godrej 4 4
Mr. V. Srinivasan, Executive Vice-President (Finance & Estate) & Company Secretary acts as the secretary to the Committee.
The Company has adopted EVA as a tool for driving performance, and has linked improvements in EVA to Performance Linked Variable Remuneration (PLVR) of Managing Director, Whole-Time Directors, Managers and Offi cers of the Company.
5. SHAREHOLDERS COMMITTEE Among other functions, this committee looks into redressal
of shareholder complaints regarding transfer of shares, non-receipt of Balance Sheet and non-receipt of declared dividends, as required in Clause 49 of the Listing Agreement. The Committee consists of the following members: Mr. A.B. Godrej (Chairman), Mr. V.F. Banaji, Ms. T.A. Dubash, Mr. M. Eipe and Mr. M.P. Pusalkar. On April 30, 2010 Mr. V. F. Banaji and Mr. M. P. Pusalkar retired from the services of the Company and hence ceased to be Directors of the Company. During the year, 11 meetings of the Committee were held.
Mr. V. Srinivasan, Executive Vice-President (Finance & Estate) & Company Secretary acts as the secretary to the Committee.
Name and designation of Compliance Offi cer: Mr. V. Srinivasan, Executive Vice-President (Finance & Estate)
& Company Secretary.
Number of complaints regarding shares for the year ended March 31, 2010
Complaints outstanding as on April 1, 2009 NilComplaints received during the year ended March 31, 2010
20
Complaints resolved during the year ended March 31, 2010
20
Complaints outstanding as on March 31, 2010 Nil
There are no pending share transfers as on March 31, 2010.
6. MANAGEMENT a) Management discussion and analysis This annual report has a detailed chapter on management
discussion and analysis.
b) Disclosures by management to the Board All details relating to financial and commercial
transactions where Directors may have a potential interest are provided to the Board, and the interested Directors neither participate in the discussion, nor do they vote on such matters.
7. DISCLOSURES a) Materially signifi cant related party transaction that
may have potential confl ict of interests of Company at large
During the year 2009-10, there were no materially signifi cant related party transactions, i.e. transactions of the Company of material nature, with its promoters, the Directors or the management, their subsidiaries or relatives, etc. that may have potential confl ict with the interests of the Company at large. Attention of Members is drawn to the disclosures of transactions with related parties set out in Notes to Accounts – Schedule 22, Note No. 20, forming part of the Annual Report.
b) Whistle Blower Policy With a view to establish a mechanism for protecting the
employees reporting unethical behaviour, fraud, violation of Company’s Code of Conduct, the Board of Directors has adopted a Whistle Blower Policy. During the year 2009-10, no personnel has been denied access to the Audit Committee.
c) Policy to Prevent Sexual Harassment at the work place
The Company is committed to creating and maintaining an atmosphere in which employees can work together, without fear of sexual harassment, exploitation or intimidation. Every employee is made aware that the Company is strongly opposed to sexual harassment and that such behaviour is prohibited both by law and by the Godrej group. To redress complaints of sexual harassment, a Complaint Committee has been formed which is headed by Ms. T.A. Dubash, Executive Director & President (Marketing). Members of the Committee include, among others, a representative from an NGO familiar with the issue of sexual harassment.
28
d) Details of compliance with mandatory requirement
Particulars Clause of Listing
Agreement
Compliance Status
Yes / NoI. Board of Directors 49 I Yes (A) Composition of Board 49 (IA) Yes (B) Non-Executive Directors’ compensation & disclosures 49 (IB) Yes (C) Other provisions as to Board and Committees 49 (IC) Yes (D) Code of Conduct 49 (ID) YesII. Audit Committee 49 (II) (A) Qualifi ed & Independent Audit Committee 49 (IIA) Yes (B) Meeting of Audit Committee 49 (IIB) Yes (C) Powers of Audit Committee 49 (IIC) Yes (D) Role of Audit Committee 49 (IID) Yes (E) Review of Information by Audit Committee 49 (IIE) YesIII. Subsidiary Companies 49 (III) YesIV. Disclosures 49 (IV) (A) Basis of related party transactions 49 (IV A) Yes (B) Board disclosures 49 (IV B) Yes (C) Proceeds from public issues, rights issues, preferential issues etc.
49 (IV C)
49 (IV D)
Not } applicable at present
(D) Remuneration of Directors 49 (IV E) Yes (E) Management 49 (IV F) Yes (F) Shareholders 49 (IV G) YesV. CEO/CFO Certifi cation 49 (V) YesVI. Report on Corporate Governance 49 (VI) YesVII. Compliance 49 (VII) Yes
e) Details of Non-compliance There has not been any non-compliance by the Company
and no penalties or strictures were imposed on the Company by the Stock Exchanges or SEBI or any statutory authority, on any matter related to capital markets.
f) Declaration by Chairman & Managing Director The declaration by the Managing Director stating that all
the Board Members and senior management personnel have affi rmed their compliance with the said code of conduct for the year ended March 31, 2010, is annexed to the Corporate Governance Report.
8. GENERAL BODY MEETINGS
a) Details of last three AGMs
Year Venue Date Time2006-07 Y. B. Chavan Centre,
Nariman Point, Mumbai 400 021.
July 27, 2007 4.30 P.M.
2007-08 - do - July 29, 2008 4.30 P.M.2008-09 - do - July 29, 2009 4.30 P.M.
b) Details of Special Resolutions Passed in previous three Annual General Meetings.
Date of AGM
Number of Special Resolution
passed
Details of Special Resolution Passed
July 27, 2007
1 1) Reappointment and remuneration payable to Mr. N.B. Godrej as Managing Director of the Company.
July 29, 2008
6 1) To further invest in securities of and/or place intercorporate deposits with and/or make loans or any other form of debt to and/or investment in Godrej Properties Ltd., upto a sum of Rs. 25 crore, u/s 372A of the Companies Act, 1956.
2) To further invest in securities of and/or place intercorporate deposits with and/or make loans or any other form of debt to and/or investment in Godrej Agrovet Ltd., upto a sum of Rs. 20 crore, u/s 372A of the Companies Act, 1956.
3) To further invest in securities of and/or place intercorporate deposits with and/or make loans or any other form of debt to and/or investment in Ensemble Holdings & Finance Ltd., upto a sum of Rs. 10 crore, u/s 372A of the Companies Act, 1956.
4) To further invest in securities of and/or place intercorporate deposits with and/or make loans or any other form of debt to and/or investment in Boston Analytics Inc., upto a sum of Rs. 15 crore, u/s 372A of the Companies Act, 1956.
5) Revision in the terms of remuneration payable to Ms. Nisaba A. Godrej.
6) Amendment to Articles of Association of the Company.
July, 29 2009
5 1) Reappointment and remuneration of Ms. T.A. Dubash as a Whole-time Director of the Company.
2) Reappointment and remuneration of Mr. V.F. Banaji as a Whole-time Director of the Company.
3) Reappointment and remuneration of Mr. M. Eipe as a Whole-time Director of the Company.
4) Reappointment and remuneration of Mr. M. P. Pusalkar as a Whole-time Director of the Company.
5) To approve New Employees Stock Option Scheme and to authorize persons in this regard.
Annual Report 2009–2010
29
c) Postal Ballot During the year, pursuant to the provisions of Section
192A of the Companies Act, 1956 read with the Companies (Passing of the Resolution by Postal Ballot) Rules 2001, certain resolutions were passed by shareholders by postal ballot. The Notice of postal ballot were mailed to
all shareholders along with postage prepaid envelopes. Mr. Bharat Shemlani, Chartered Accountant, had been appointed as scrutinizer for the postal ballots, who submitted his reports to the Chairman, Mr. A.B. Godrej. The details of the postal ballots are given below :-
Sr. No.
Date of announcement of results
Nature of resolution
Item Total no. of votes
polled
No. of votes in
favour
%
No. of votes
against
%
No. of invalid
votes
%1. September
23,2009Special To invest in securities of and/or place
intercorporate deposits with and/or make loans or any other form of debt to and/or investment in and/or give guarantees in connection with loan(s) given by any other person to Godrej Hershey Limited.
1550 99.96 0.01 0.03
Special To place intercorporate deposits with and/or make loans or any other form of debt to Tricom India Limited.
1550 99.80 0.01 0.19
2. March 26, 2010 Special Modifi cation of the Godrej Industries Limited Employees Stock Option Plan
2206 99.38 0.30 0.32
d) Procedure adopted for Postal Ballot (i) The Board at its meeting approves the items to be
passed through postal ballot and authorizes one of the functional Directors and the Company Secretary to be responsible for the entire process of postal ballot.
(ii) A professional such as a Chartered Accountant/Company Secretary, who is not in employment of the Company, is appointed as the Scrutinizer for the poll process.
(iii) Notice of postal ballot along with the ballot papers are sent to the shareholders along with a self-addressed envelope addressed to the Scrutinizer.
(iv) An advertisement is published in a National news paper about the dispatch of ballot papers and notice of postal ballot.
(v) The duly completed postal ballot papers are received by the Scrutinizer.
(vi) Scrutinizer gives his report to the Chairman.
(vii) The Chairman announces the results of the postal ballot in a meeting convened for the same.
(viii) Results are intimated to the Stock Exchange and are put up on the Notice Board of the Company as well as on the Company’s Website.
SHAREHOLDERS AND MEANS OF COMMUNICATIONa) Disclosures regarding appointment or reappointment of
Directors According to the Articles of Association of the Company, at
every Annual General meeting of the Company one-third of the Directors are liable to retire by rotation. Mr. F.P. Sarkari, Mr. S.A. Ahmadullah, Mr. A.B. Godrej, Mr. K.K. Dastur shall retire at this Annual General Meeting of the Company and being eligible offer themselves for reappointment. Mr. V.N.
Gogate, also retires by rotation at this Annual General Meeting. However in view of his advanced age, Mr. V.N. Gogate has not offered himself for reappointment and the Board proposes that the vacancy caused by his retirement shall not be fi lled up.
Information about the Directors who are being appointed/ reappointed is given as an annexure to the Notice of the AGM.
b) Communication to shareholders All vital information relating to the Company and its
performance, including quarterly results, offi cial press releases are posted on the web site of the Company. The Company’s web-site address is www.godrejinds.com. The quarterly and annual results of the Company’s performance are published in leading English dailies like Economic Times, Business Standard, Business Line, etc. The Company has also posted information relating to its fi nancial results and shareholdings pattern on electronic data information fi ling and retrieval system (EDIFAR) at www.sebiedifar.nic.in. Effective fron April 1, 2010, the EDIFAR system was discontinued and now the information is uploaded at www.corfi ling.co.in.
c) Investor grievances As mentioned before, the Company has constituted a
Shareholders Committee to look into and redress Shareholders and investor complaints. Mr. V. Srinivasan, Executive Vice-President (Finance & Estate) & Company Secretary is the compliance offi cer.
d) Share transfer The Company has outsourced its share transfer function to
M/s. Computech Sharecap Ltd., which is registered with the SEBI as a Category 1 Registrar and Transfer Agent.
e) Details of non-compliance There has been no instance of the Company not complying
with any matter related to capital markets.
30
Declaration by Managing DirectorI, N.B. Godrej, Managing Director of Godrej Industries Limited (GIL), hereby confi rm pursuant to clause 49(1)(D) of the listing agreement that:
The Board of Directors of GIL has laid down a code of conduct for all Board members and senior management of the Company. The said code of conduct has also been posted on the Company’s website viz. www.godrejinds.com. All the Board members and senior management personnel have affi rmed their compliance with the said code of conduct for the year ended March 31, 2010.
N.B. GodrejMumbai, May 26, 2010 Managing Director
Auditors’ Certifi cate on Corporate GovernanceTo the Members of
Godrej Industries Limited
We have examined the compliance of conditions of Corporate Governance by Godrej Industries Limited for the year ended on March 31, 2010, as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock exchanges. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to a review of procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the fi nancial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance stipulated in Clause 49 of the above mentioned Listing Agreement. We state that such compliance is neither an assurance as to the future viability of the Company nor of the effi ciency or effectiveness with which the management has conducted the affairs of the Company.
For and on behalf ofKALYANIWALLA & MISTRY
Chartered AccountantsV.R. Mehta
Partner Membership No. 32083Mumbai, May 26, 2010 Firm Registration No. 104607W
Annual Report 2009–2010
31
Shareholders’ Information
i) Annual General Meeting
Date : July 27, 2010 Time : 4.30 p.m. Venue : Y.B. Chavan Centre, Gen. Jagannathrao Bhonsle
Marg, Nariman Point, Mumbai- 400 021.
ii) Financial Calendar
Financial year: April 1 to March 31
For the year ended March 31, 2010, results were announced on:
• July 29, 2009 : First quarter • October 31, 2009 : Half year • January 25, 2010 : Third quarter • May 26, 2010 : Annual
iii) Record Date/Book Closure
A dividend of Rs. 1.50/- per equity share of Re. 1/- each has been recommended by the Board of Directors of the Company. For payment of dividend, the book closure is from July 20, 2010 to July 27, 2010 (both days inclusive).
iv) Listing information
The Company’s equity shares are listed on The Bombay Stock Exchange Ltd. and The National Stock Exchange of India Ltd.
Name of the Stock Exchange Stock codeThe Bombay Stock Exchange Ltd. (BSE) 500164National Stock Exchange of India Ltd. (NSE) GODREJIND
The ISIN Number of the Company on both NSDL and CDSL is INE233A01035.
v) Stock Data
Tables 1 and 2 respectively give the monthly high and low prices and volumes of equity shares of the Company at BSE and the NSE for the year ended March 31, 2010. Chart A compares the Company’s share price at the BSE versus the Sensex.
Table 1: Monthly high and low prices and trading volumes of equity shares of the Company at BSE for the year ended March 31, 2010
Date High (Rs.) Low (Rs.)Volume
(No. of Shares)April 2009 86.55 52.30 1,52,37,302May 2009 139.75 75.30 2,04,97,428June 2009 155.95 120.10 90,52,324July 2009 158.45 112.00 84,05,526August 2009 189.55 138.60 1,19,45,092September 2009 213.70 174.00 1,67,92,934October 2009 217.85 175.50 1,16,42,200November 2009 212.20 162.00 59,25,713December 2009 218.95 171.50 83,91,771January 2010 193.40 139.50 52,78,904February 2010 163.85 136.60 41,85,306March 2010 166.50 140.00 31,37,601
Note: High and low are in Rupees per traded share. Volume is the total monthly volume of trade (in numbers) in equity shares of the Company on the BSE.
Table 2: Monthly high and low prices and trading volumes of equity shares of the Company at NSE for the year ended March 31, 2010
Date High (Rs.) Low (Rs.)Volume
(No. of Shares)April 2009 86.50 52.50 1,85,98,529May 2009 139.90 75.10 3,07,36,903June 2009 154.00 118.25 1,23,06,921July 2009 158.80 112.00 1,16,30,542August 2009 189.40 138.45 1,66,41,474September 2009 213.30 171.25 2,63,58,688October 2009 217.60 175.60 1,91,87,884November 2009 212.20 162.50 98,77,792December 2009 219.00 171.50 1,46,84,999January 2010 193.30 141.00 93,89,024February 2010 164.00 135.00 83,01,926March 2010 166.50 139.40 68,74,674
Note: High and low are in Rupees per traded share. Volume is the total monthly volume of trade (in numbers) in equity shares of the Company on the NSE.
Chart A – The Company’s share performance compared to the BSE Sensex for FY 2009-2010
vi) Distribution of shareholding:
Tables 3 and 4 give the distribution pattern of shareholding of the Company by size and ownership respectively as on March 31, 2010.
Table 3: Distribution of shareholding by size as on March 31, 2010
Number of shares
Number of shareholders
Share-holders %
Number of shares held
Share-holding %
1 - 500 56,302 86.94% 67,33,123 2.12%501 – 1,000 4,540 7.01% 35,57,110 1.12%
1,001 – 2,000 1,977 3.05% 29,87,570 0.94%2,001 – 3,000 645 1.00% 16,82,675 0.53%3,001 – 4,000 262 0.40% 9,41,923 0.30%
BSE
Sens
ex
BSE Sensex
GIL
Sha
re P
rice
(Rs
.)
GIL Share Price
Mar
32
Number of shares
Number of shareholders
Share-holders %
Number of shares held
Share-holding %
4,001 – 5,000 214 0.33% 9,98,210 0.31%5,001 – 10,000 391 0.60% 28,58,707 0.90%
10,001 & above 428 0.66% 29,78,65,574 93.78%Total 64,759 100.00% 31,76,24,892 100.00%
Table 4: Distribution of shareholding by ownership as on March 31, 2010
Category (as being reported to Stock Exchanges)
Shares held (nos.)
% of holding
Promoter’s holdingPromoters 25,12,34,174 79.10Persons deemed to act in concert with promoters – –Institutional investorsMutual funds & UTI 71,242 0.02Banks, financial institutions & insurance companies
1,31,28,996 4.13
Foreign institutional investors 68,44,623 2.15OthersPrivate corporate bodies 1,17,31,995 3.69Indian public 3,32,96,779 10.48NRI / OCBs 13,17,083 0.41Total 31,76,24,892 100.00
vii) Shares held in physical and dematerialised form
As on March 31, 2010, 99.68 percent of the Company’s shares were held in dematerialised form and the remaining 0.32 percent in physical form. The break up is listed below:
CategoryNumber of
shareholdersShareholders
%Number of
shares heldShareholding
%Physical 2,685 4.15% 10,11,687 0.32%
Electronic 62,074 95.85% 31,66,13,205 99.68%Total 64,759 100.00% 31,76,24,892 100.00%
viii) Outstanding GDRs/ADRs/Warrants/Convertible instruments and their impact on equity
The Company does not have any outstanding GDRs / ADRs / warrants / convertible instruments.
ix) Share Transfer
Share transfers and related operations for the Company are conducted by Computech Sharecap Limited, which is registered with the SEBI as a Category 1 Registrar. Share transfer is normally effected within the maximum period of 30 days from the date of receipt, if all the required documentation is submitted.
x) Investor correspondence should be addressed to:
Computech Sharecap Limited 147, M.G. Road, Opp. Jehangir Art Gallery, Mumbai 400 001. Tel: 022-22635000 / 22635001 Email: [email protected] Fax: 022-22635001
Annual Report 2009–2010
33
REPORT OF THE AUDITORS' TO THE MEMBERS OF GODREJ INDUSTRIES LIMITED
1. We have audited the attached Balance Sheet of Godrej Industries Limited as at March 31, 2010 and also the Profi t and Loss Account and Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:
a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.
b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us. The Branch Auditor’s Report has been forwarded to us and has been appropriately dealt with.
c) The Balance Sheet, Profi t 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, Profi t and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.
e) Without qualifying our opinion, we draw attention to Note 11 (b) of Schedule 22 – Notes to Accounts, regarding a loan of Rs. 8,113 lac (previous year Rs. 7,359 lac) to a Trust for purchase of the company’s shares from the market equivalent to options granted under an Employee Stock Option Plan. As at March 31, 2010, the market value of the shares held by the ESOP Trust is lower than the cost of acquisition of the shares by Rs. 3,456 lac (previous year Rs. 5,331 lac). The repayment of the loans granted to the ESOP Trust is dependent on the exercise of options
by the employees and the market price of the underlying equity shares of the unexercised options at the end of the exercise period. In the opinion of the management, the fall in the value of the underlying equity shares is on account of market volatility and the loss, if any, can be determined only at the end of the exercise period, in view of which provision for the diminution is not considered necessary in the fi nancial statements.
f) Reference is invited to note 9 (a) of Schedule 22 - Notes to Accounts, regarding the recoverability of advances given to certain individuals amounting to Rs. 1,033 lac being contingent upon the transfer and/or disposal of the shares pledged against the loan. The said shares were lodged for transfer which application was rejected and the Company has preferred an appeal to the Company Law Board. The investee company had in the mean while moved the High Court but the matter was referred back to the Company Law Board, where the matter is awaiting hearing. The impact thereof on the profi t for the year and the reserves as at March 31, 2010 could not be ascertained.
g) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to paragraph (f) above, and read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;
ii) in the case of the Profi t and Loss Account, of the profi t of the Company for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.
5. On the basis of the written representations received from the directors of the Company as on March 31, 2010 and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualifi ed as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
For and on behalf of
Kalyaniwalla & MistryChartered Accountants
Registration No. 104607W
Viraf R. MehtaPartner
M. No: 32083
Mumbai, May 26, 2010
Godrej Industries Limited
34
ANNEXURE TO THE AUDITORS' REPORTReferred to in Paragraph (3) of our report of even date on the accounts of Godrej Industries Limited for the year ended 31st March, 2010.
1) (a) The Company is generally maintaining proper records showing full particulars, including quantitative details and situation of fi xed assets, except in case of certain continuous process plants where item-wise values are not available and in case of furniture, fittings and equipment at Vikhroli where the records maintained show quantitative details with their situation and values based on valuation by an approved valuer.
(b) The Company has a program for physical verifi cation of fi xed assets at periodic intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies between the book records and the physical inventory were reported for the assets verifi ed during the year.
(c) In our opinion the fi xed assets disposed off by the Company during the year were not substantial and therefore do not affect the going concern assumption.
2) (a) The management has conducted physical verifi cation of inventory at reasonable intervals.
(b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical inventories and book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.
3) (a) The Company had granted unsecured loans to three companies listed in the register maintained under section 301 of the Companies Act, 1956, of which two loans of Rs. 474 lakh were outstanding at the year end. The maximum amount of loans granted to the said companies during the year was Rs. 1,040 lakh.
(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of loans given are prima facie not prejudicial to the interest of the Company.
(c) The loans outstanding at the year end are at call and have not been recalled during the year. The companies are generally regular in payment of interest.
(d) There are no overdue amounts exceeding Rs. one lakh. (e) The Company has taken unsecured loans from three
companies listed in the register maintained under section 301 of the Companies Act, 1956, of which one loan of Rs. 100 lakh was outstanding at the year end. The maximum amount of loans taken from the said companies during the year was Rs. 480 lakh.
(f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of loans taken are prima facie not prejudicial to the interest of the Company.
(g) The loans outstanding at the year end are at call and have not been recalled during the year. The company is generally regular in payment of interest.
(h) There are no overdue amounts exceeding Rs. one lakh.
4) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fi xed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records and the information and explanations given to us, we have not come across any continuing failure to correct major weakness in the internal control system.
5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have generally been entered in the register required to be maintained under that section.
(b) In our opinion and according to the information and explanations given to us, having regard to the explanation that many of the items are of a special nature and their prices cannot be compared with alternative quotations, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.
6) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under in respect of the deposits accepted from the public.
7) The Company has an internal audit system, which in our opinion, is commensurate with the size of the Company and the nature of its business.
8) In our opinion and to the best of our knowledge and according to the information given to us, the Central Government has not prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for any of the products of the Company.
9) (a) According to the records examined by us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2010 for a period of more than six months from the date of becoming payable.
(b) According to the information and explanations given to us and the records examined by us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs
Annual Report 2009–2010
35
Duty, Excise Duty or cess which have not been deposited on account of any dispute, other than those stated hereunder:
Name of statute Rs in Lac. Period to which amount relates Forum where dispute is pendingCentral Excise 3.60 2002-03,2006-07 Assistant Commissioner 28.23 1996-97, 2005-06,2009-10 Commissioner 74.03 1982-83,1998-99,1999-02,1993-94 CESTAT 695.04 1978-79,1976-85,1995-96 High Court 391.15 1993-97 The Supreme CourtCustom Duty 39.43 1978-83,1991-92,2003-04 Assistant Commissioner 112.08 1987-93 Commissioner 25.44 1978-79,2003-04 CESTAT 109.11 1978-93 High CourtSales Tax 26.16 1996-97,1997-98,2001-02,2002-06 Sales Tax Offi cer
40.13 1996-00,2001-02,2003-05,2006-07 Assistant Commissioner
76.97 2000-03,2004-05,2006-07 Commissioner 63.10 1990-92,1994-96,1997-98,2003-05 Tribunal 9.88 2003-04 High Court
OthersStamp Duty 182.23 2000 Controlling Revenue AuthorityMunicipal Taxes 1,188.78 1984-2002 The Bombay High CourtEntry Tax 4.26 1997-99 Dy. Commissioner 23.56 1997-2003 Tribunal 1.03 2000-01 The Supreme Court
10) The Company has no accumulated losses as at the end of the fi nancial year and it has not incurred any cash losses in the current and immediately preceding fi nancial years.
11) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to a fi nancial institution, bank or debenture holders as at the balance sheet date.
12) The Company has maintained adequate documents and records in respect of loans and advances granted on the basis of security by way of pledge of shares and other securities, except for the shares referred to in note 9(b) of Schedule 22 which have not been transferred in the name of the Company.
13) In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi / mutual benefi t fund / societies.
14) In our opinion, the Company has maintained proper records of the transactions and contracts in respect of investments purchased and sold during the year and timely entries have been made therein. The investments made by the Company are held in its own name except for the shares referred to in note (d) of Schedule 6.
15) According to the information and explanations given to us and the records examined by us, it is our opinion that the terms and conditions of the guarantees given by the Company for loans taken by others from banks or fi nancial institutions are not prejudicial to the interest of the Company.
16) According to the information and explanations given to us and the records examined by us, on an overall basis, the term loans have been applied for the purpose for which the loans were obtained.
17) On the basis on an overall examination of the balance sheet and cash fl ows of the Company and the information and explanations given to us, we report that the Company has not utilized the funds raised on short-term basis for long term investment.
18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.
19) The Company did not issue any debentures during the year.
20) 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 any fraud by the Company has been noticed or reported during the year.
For and on behalf of
Kalyaniwalla and Mistry Chartered Accountants
Registration No. 104607W
Viraf R. Mehta Partner
M. No. 32083
Mumbai, May 26, 2010
Godrej Industries Limited
36
The Schedules referred to above form an integral part of the Balance Sheet.
As per our Report attached Signatures to Balance Sheet and Schedules 1 to 13, 21 and 22
For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants
V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company SecretaryMumbai, May 26, 2010
BALANCE SHEET AS AT MARCH 31, 2010
This Year Previous Year Schedule Rs. lac Rs. lac Rs. lac
SOURCES OF FUNDS 1. Shareholders’ Funds
(a) Share capital 1 3,176.25 3,197.59 (b) Reserves & surplus 2 99,093.36 99,514.61
102,269.61 102,712.20 2. Loan Funds
(a) Secured loans 3 20,418.89 23,282.16 (b) Unsecured loans 4 34,342.14 36,814.31
54,761.03 60,096.47 3. Deferred Tax Liability 3,198.20 3,278.20
TOTAL 160,228.84 166,086.87 APPLICATION OF FUNDS 4. Fixed Assets 5
(a) Gross block 61,512.98 57,854.70 (b) Less: Depreciation / Impairment 33,881.80 31,467.99 (c) Net block 27,631.18 26,386.71 (d) Capital work-in-progress 2,197.60 2,484.13
29,828.78 28,870.84 5. Investments 6 114,761.99 114,808.02 6. Current Assets, Loans and Advances
(a) Inventories 7 13,476.87 9,355.62 (b) Sundry debtors 8 11,086.55 16,099.98 (c) Cash and bank balances 9 1,508.61 2,851.17 (d) Loans and advances 10 17,535.41 14,794.20
43,607.44 43,100.97 Less : Current Liabilities and Provisions (a) Liabilities 11 21,035.53 14,045.42 (b) Provisions 12 6,933.84 7,033.41
27,969.37 21,078.83 Net Current Assets 15,638.07 22,022.14
7. Miscellaneous Expenditure 13 — 385.87 (To the extent not written off or adjusted)
TOTAL 160,228.84 166,086.87 Signifi cant Accounting Policies 21 Notes to Accounts 22
Annual Report 2009–2010
37
The Schedules referred to above form an integral part of the Profi t & Loss Account.
As per our Report attached Signatures to Profi t and Loss Account and Schedules 14 to 22
For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants
V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company SecretaryMumbai, May 26, 2010
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010 Schedule This Year Previous Year
Rs. lac Rs. lac Rs. lac INCOME Turnover (gross) (refer note 15) 85,629.45 87,468.82 Less: Excise duty 3,992.70 5,723.44 Turnover (net) 81,636.75 81,745.38 Other Income 14 17,532.98 15,402.94
99,169.73 97,148.32 EXPENDITURE Materials consumed and purchase of goods 15 53,416.89 54,317.99 Expenses 16 30,626.00 30,173.54 Inventory change 17 (1,736.02) 2,254.41 Interest and fi nancial charges (net) 18 6,024.79 6,106.12 Depreciation 2,838.80 2,646.19 (Net of transfer from Revaluation Reserve Rs. 99.50 lac, Previous year Rs. 133.69 lac) 91,170.46 95,498.25 Profi t before Taxation and Extraordinary Items 7,999.27 1,650.07 Provision for Taxation
- Current Tax 877.00 - - MAT credit (877.00) - - Deferred Tax (80.00) (341.00)- Fringe benefi t Tax - 58.00 - Adjustment for tax of previous years (net) (13.47) 65.27
(93.47) (217.73)Profi t after Taxation and before Extraordinary Items 8,092.74 1,867.80 Extraordinary Items (Net of Tax) 19 - 26.00 Profi t after Extraordinary Items 8,092.74 1,893.80 Prior Period adjustments (net) 20 - (86.11)Net Profi t 8,092.74 1,807.69 Surplus brought forward 29,387.78 32,437.14 Add : Excess provision of proposed dividend 26.05 - Add : Excess provision of tax on distributed profi t 4.43 -
29,418.26 32,437.14 Amount Available For Appropriation 37,511.00 34,244.83 Appropriations Proposed Dividend - Final 4,764.37 3,996.99 Tax on distributed profi ts 791.30 679.29 Transfer to General Reserve 809.28 180.77 Surplus carried forward 31,146.05 29,387.78 TOTAL 37,511.00 34,244.83 Basic & Diluted Earnings per share before Extraordinary Items 2.54 0.56 Basic & Diluted Earnings per share after Extraordinary Items 2.54 0.57 (refer note 19) Signifi cant Accounting Policies 21 Notes to Accounts 22
Godrej Industries Limited
38
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010 This year Previous year
Rs. lac Rs. lac A. Cash Flow from operating activities :
Profi t before tax 7,999.27 1,650.07 Adjustments for :Depreciation 2,838.80 2,646.19 Unrealised Foreign exchange (182.56) 494.16 Profi t on sale of investments (10,538.71) (5,939.18)Profi t on sale of fi xed assets (9.44) (99.01)Dividend income (4,280.11) (5,021.39)Interest income (1,274.66) (1,747.39)Interest expense 6,042.10 5,850.65 Deferred expenditure written off 385.87 682.02 Provision/(write back) for diminution in value of investments 1,253.52 (1,686.04)Provision/(Write back) for doubtful debts & sundry balances (net) (25.56) 480.63 Others - (86.11)Operating Profi t/(Loss) before working capital changes 2,208.52 (2,775.40)Adjustments for :Inventories (4,121.25) 10,415.57 Trade and other receivables 4,516.48 9,501.27 Trade payables 6,320.95 (10,714.37)Cash generated from operations 8,924.70 6,427.07 Direct taxes paid (1,227.00) (2,384.91)Direct taxes refund / received 12.56 407.86 Net Cash from operating activities 7,710.26 4,450.02
B. Cash Flow from investing activities :Purchase of fi xed assets (4,020.67) (4,635.73)Proceeds from sale of fi xed assets 49.67 135.37 Purchase of investments (82,577.71) (173,103.49)Proceeds from sale of investments 91,908.92 135,094.16 Intercorporate deposits / Loans (net) (922.17) (562.95)Interest received 1,193.14 1,265.99 Dividend received 4,280.11 5,021.39 Net Cash used in investing activities before extraordinary item 9,911.29 (36,785.26)Proceeds from sale of Medical Diagnostics Division - 26.00 Net Cash from/(used in) investing activities after extraordinary item 9,911.29 (36,759.26)
C. Cash Flow from fi nancing activities :Proceeds from borrowings 82,500.00 122,617.69 Repayments of borrowings (84,620.90) (103,825.30)Equity share capital bought back (2,886.58) - Bank overdrafts (net) (3,193.27) (2,644.43)Interest paid (6,115.79) (5,724.49)Dividend paid (3,972.71) (4,012.62)Tax on distributed profi ts (674.86) (679.29)Net Cash (used in)/from fi nancing activities (18,964.11) 5,731.56 Net decrease in cash and cash equivalents (1,342.56) (26,577.68)Cash and cash equivalents (Opening Balance) 2,851.17 29,428.85 Cash and cash equivalents (Closing Balance) 1,508.61 2,851.17
Notes :1. Cash and Cash equivalents Cash on hand and balances with banks 1,504.39 2,845.86 Effect of exchange rate changes 4.22 5.31 Cash and cash equivalents 1,508.61 2,851.17 2. Cash and cash equivalents include Deposits with Bank as security against guarantees issued
amounting to Rs. 18.50 lac (Previous year Rs.18.50 lac).3. To fi nance working capital requirements, the Company’s Bankers have sanctioned a total fund-
based limit of Rs. 7,500 lac. Of this, limits utilised as on March 31, 2010 is Rs. 3,918.89 lac.4. The fi gures of previous year have been regrouped wherever necessary.
As per our Report attached Signatures to Cash Flow StatementFor and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company SecretaryMumbai, May 26, 2010
Annual Report 2009–2010
39
SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010 This Year Previous Year Rs. lac Rs. lac
SCHEDULE 1 : SHARE CAPITAL
Authorised:
800,000,000 Equity shares of Re. 1 each 8,000.00 8,000.00 100,000,000 Unclassifi ed Shares of Rs.10 each 10,000.00 10,000.00
18,000.00 18,000.00 Issued, Subscribed and Paid Up:
317,624,892 (Previous Year 319,758,602) Equity shares of Re.1 each fully paid 3,176.25 3,197.59 3,176.25 3,197.59
Of the above, (i) 187,202,388 (Previous Year 187,202,388) shares are held by Godrej & Boyce Mfg. Co. Limited, the holding company.
(ii) 155,547,816 (Previous Year 155,547,816) shares are allotted for consideration other than cash pursuant to schemes of amalgamation/arrangement.
(iii) 95,705,718 (Previous Year 95,705,718) shares are allotted as fully paid bonus shares by way of capitalisation of Securities Premium Account.
SCHEDULE 3: SECURED LOANS Term loans from banks 10,000.00 12,170.00 Bank overdrafts, packing credits, etc. 1,418.89 4,612.16 Commercial paper 2,500.00 -Other loans 6,500.00 6,500.00
20,418.89 23,282.16Particulars of securities (refer note 5)
SCHEDULE 4: UNSECURED LOANS Short term loans - From Banks 18,500.00 21,000.00- From others — 2,500.00Other loans from banks — 8,000.00Commercial paper 6,000.00 3,000.00Fixed Deposits 9,742.14 2,164.31Intercorporate borrowing 100.00 150.00
34,342.14 36,814.31
Amount repayable within one year 25,610.31 26,650.00
This Year Previous Year SCHEDULE 2: RESERVES AND SURPLUS Rs. lac Rs. lac Rs. lac Securities Premium Account As per last balance sheet 58,515.68 58,515.68 Less : Premium paid to buyback of shares (2,865.24) -
55,650.44 58,515.68 Capital Investment Subsidy Reserve As per last balance sheet 25.00 25.00 Capital Redemption Reserve As per last balance sheet 3,125.00 3,125.00 Add : Transfer from General Reserve on buyback of shares 21.34 -
3,146.34 3,125.00 Revaluation Reserve As per last balance sheet 1,409.93 1,671.21 Less : Depreciation on revalued component and deduction due to sale/discard of fi xed assets (123.55) (261.28)
1,286.38 1,409.93 General Reserve As per last balance sheet 7,051.21 6,870.44 Less: Transfer to Capital Redemption Reserve (21.34) - Add :Transferred from profi t & loss account 809.28 180.77
7,839.15 7,051.21 Profi t & Loss Account 31,146.05 29,387.79
99,093.36 99,514.61
Godrej Industries Limited
40
SCHEDULE 5 : FIXED ASSETSRs. Lac
SCHEDULE 6 : INVESTMENTSPARTICULARS OF INVESTMENTS :
ASSETS GROSS BLOCK DEPRECIATION / IMPAIRMENT NET BLOCK As on
01.04.2009 Additions Deductions/
Adjustments As on
31.03.2010 Upto
31.03.2009 Deductions/ Adjustments
For the Year
Upto 31.03.2010
As on 31.03.2010
As on 31.03.2009
Tangible Assets Land - Freehold 113.90 — — 113.90 — — — — 113.90 113.90 - Leasehold 147.97 — — 147.97 25.86 — 1.54 27.40 120.57 122.11 Buildings 6,659.12 3,074.02 2.83 9,730.31 2,477.52 0.07 209.62 2,687.07 7,043.24 4,181.60 Plant & Machinery 44,142.40 870.10 460.18 44,552.32 25,824.88 427.14 2,225.62 27,623.36 16,928.96 18,317.52 Research Centre 127.06 — — 127.06 57.46 — 3.68 61.14 65.92 69.60 Furniture & Fixtures 1,194.56 136.75 62.13 1,269.18 701.71 44.66 78.25 735.30 533.88 492.85 Offi ce & Other Equipments
1,137.34 100.87 34.01 1,204.20 598.42 15.93 55.01 637.50 566.70 538.92
Vehicles / Vessels 2,597.88 14.55 17.91 2,594.52 396.60 16.71 199.99 579.88 2,014.64 2,201.28 Intangible Assets Trademarks 463.00 — — 463.00 378.12 — 46.30 424.42 38.58 84.88 Software 964.84 68.00 — 1,032.84 805.57 — 64.65 870.22 162.62 159.27 Assets acquired under fi nance lease
Vehicles 306.63 — 28.95 277.68 201.85 19.98 53.64 235.51 42.17 104.78 TOTAL - This Year 57,854.70 4,264.29 606.01 61,512.98 31,467.99 524.49 2,938.30 33,881.80 27,631.18 26,386.71 - Previous Year 55,822.44 2,693.68 661.42 57,854.70 29,173.75 485.64 2,779.88 31,467.99 Capital Work-in-Progress 2,197.60 2,484.13 TOTAL 29,828.78 28,870.84
1. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on 30th June, 1992 on the basis of a Valuation Report submitted by professional valuers.
2. Depreciation for the year includes Rs.99.50 Lac (Previous Year Rs.133.69 lac) being depreciation on revalued component of the fi xed assets. 3. Gross block deductions includes Rs. 82.63 lac (Previous Year Rs.313.25 lac) being the revalued component of assets sold/discarded during the year. 4. Accumulated depreciation includes impairment loss of Rs. 510.36 lac (Previous year Rs 510.36 lac) on certain plant & machinery. 5. Capital work-in-progress is net of impairment loss of Rs.204.10 lac (Previous Year Rs. 204.10 lac) provided on an infructuous asset under construction.
Investee Company / Institutions
Face value (Rs.)
Number AmountQty. as on 01.04.09
Acquired during the
year
Sold/adjusted during the
year
Qty. as on 31.03.10
Notes As on 31.03.10
Rs. lac
As on 31.03.09
Rs. lacLONG TERM INVESTMENTS : At CostA. TRADE INVESTMENTS
Equity Shares : Fully PaidBharuch Eco-Aqua Infrastructure Ltd. 10 440,000 - - 440,000 44.00 44.00 Preference Shares : Partly paid Wadala Commodities Ltd. 10 5,000,000 - - 5,000,000 (a) 450.00 450.00 (8% Redeemable Cumulative Preference Shares, 2012)
B. OTHER INVESTMENTS : Fully Paid unless stated otherwiseEquity Shares : Quoted :Godrej Consumer Products Ltd. 1 55,369,989 21,074,631 4,000,000 72,444,620 (b) 51,372.93 49,223.86 Unquoted :Avesthagen Limited 10 195,577 6,626 - 202,203 1,242.83 1,142.83 Compass BPO Ltd. £0.25 13,692 1,805 15,497 - (c) - 124.55 CBay Infotech Ventures Pvt. Ltd. 10 32,258 - 32,258 100.00 100.00 Gharda Chemicals Ltd. 100 114 - - 114 (d) 11.57 11.57 Godrej Hershey Ltd. 10 32,587,046 - - 32,587,046 17,740.44 17,740.44 HyCa Technologies Pvt. Ltd. 10 12,222 - 12,222 125.00 125.00 Swadeshi Detergents Ltd. 10 209,370 - - 209,370 191.33 191.33 Tahir Properties Ltd. (Partly paid) 100 25 - - 25 (a) 0.01 0.01 Common Stock/Membership Units :QuotedCBay Systems Holdings Ltd., BVI $0.10 8,182,148 - - 8,182,148 3,809.30 3,809.30 Unquoted :CBay Systems Ltd., USA $0.01 4,091,073 - - 4,091,073 253.52 253.52 Boston Analytics Inc. $1 1,055,629 - - 1,055,629 688.09 688.09 Verseon Corporation - Class A Preferred Shares $1.90 2,631,578 - 2,631,578 1,142.34 1,142.34
Annual Report 2009–2010
41
Investee Company / Institutions
Face value (Rs.)
Number AmountQty. as on 01.04.09
Acquired during the
year
Sold/adjusted during the
year
Qty. as on 31.03.10
Notes As on 31.03.10
Rs. lac
As on 31.03.09
Rs. lacPreference Shares :Unquoted :Tahir Properties Ltd. (Class - A) (partly paid) 100 25 - - 25 (a) 0.02 0.02 Optionally convertible Loan notes/Debentures :Unquoted :Compass BPO Ltd. (10%) £1000 97 - 97 - (c) - 83.19 Verseon Corporation (13%) $1,000,000 - - - - (e) 397.60 397.60 Boston Analytics Inc. (15%) $750,000 - - - - (f) 299.68 299.68 Boston Analytics Inc. (20%) $1,550,000 - - - - (f) 673.03 673.03 Boston Analytics Inc. (12%) $950,000 - - - - (g) 469.21 469.21 Tricom India Limited (8%) 10 13,135,050 - 13,135,050 - - 1,313.51 Non-convertible Debentures :Godrej Oil Plantations Limited 10 175,737 - 175,737 - - 17.57 Shares in Co-operative Society : Fully PaidUnquoted :The Saraswat Co-op Bank Ltd. 10 1,000 - - 1,000 0.10 0.10 Investment in the capital of Partnership Firm :View Group LP - - - - 0.01 0.01
C. INVESTMENT IN SUBSIDIARY COMPANIESEquity Shares :Quoted : Godrej Properties Ltd. (listed on 5.1.2010) 10 48,495,209 - - 48,495,209 18,528.60 18,528.60 Unquoted :Ensemble Holdings & Finance Ltd. 10 3,774,160 - - 3,774,160 1,318.94 1,318.94 Godrej Agrovet Ltd. 10 9,112,956 - - 9,112,956 16,317.91 16,317.91 Godrej Gokarna Oil Palm Limited 10 2,584 - 2,584 41.86 41.86 Godrej International Ltd. £1 2,355,000 - - 2,355,000 1,651.61 1,651.61 Godrej Hygiene Care Pvt. Ltd. (received 22,03,190 bonus shares & thereafter sub divided into 10 shares of Re 1 each)
1 500,000 22,533,350 23,033,350 - (b) - 4.00
Natures Basket Limited 10 7,050,000 7,050,000 501.25 - 117,371.18 116,163.68
Less : Provision for diminution in value of Investments (2,609.19) (1,355.67) 114,761.99 114,808.02
Aggregate book value of InvestmentsQuoted 73,710.83 53,033.16 Unquoted 41,051.16 61,774.86
114,761.99 114,808.02
Market Value of Quoted Investments 443,052.00 75,725.27
NOTES:
(a) Uncalled Liability on partly paid shares
- Tahir Properties Ltd. - Equity - Rs. 80 per share.
- Tahir Properties Ltd. - Preference - Rs. 30 per share.
- Wadala Commodities Limited - Preference - Re. 1 per share.
(b) 97,50,000 shares of Godrej Consumer Products Limited have been pledged as security against loan from J.P. Morgan Securities India Pvt. Ltd. and 52,34,852 received under the scheme of arrangement are locked in till November 24, 2012.
(c) 1,805 equity shares received on conversion of loan notes.
(d) The said shares have been refused for registration by the investee company.
(e) Optionally Convertible Notes are convertible as under :
- Verseon Corporation - After December 1, 2008 until the due date but not later than Sepember 15, 2012.
(f) The optionally convertible Promissory notes (15%) of Boston Analytics Inc. in respect of which the company did not exercise the conversion option and Boston Analytics Inc. promissory notes (20%) were due for redemption on June 30, 2009 and August 21, 2009 respectively. The said promissory notes have not been redeemed as of the Balance Sheet date.
(g) 12% promissory notes repayable on or before March 31, 2011 along with interest on maturity.
Godrej Industries Limited
42
This Year Rs. lac
Previous Year Rs. lac
SCHEDULE 7: INVENTORIES (at lower of cost and net realisable value)
Stores and spares 1,192.44 1,333.39
Raw materials 5,030.25 2,504.07
Work-in-progress 4,237.76 2,676.28
Finished goods 3,016.42 2,841.88
13,476.87 9,355.62
SCHEDULE 8: SUNDRY DEBTORS
(Unsecured)
Debts outstanding over six months
Considered doubtful 102.21 144.63
Other debts
Considered good 11,086.55 16,099.98
11,188.76 16,244.61
Less: Provision for doubtful debts 102.21 144.63
11,086.55 16,099.98
SCHEDULE 9: CASH AND BANK BALANCES Cash and cheques on hand 15.55 14.35
Balances with scheduled banks
- on current account 1,459.56 215.32
- on deposit account (refer note 8) 33.50 2,621.50
1,508.61 2,851.17
SCHEDULE 10: LOANS AND ADVANCES (Unsecured and considered good unless
otherwise stated)
Loans and Advances (refer note 9 a) 2,482.64 2,307.33
Loan to GIL ESOP Trust 7,301.80 7,358.70
(net of provision for doubtful advances Rs. 329.14 lac, previous year Rs.313 lac)
Advances recoverable in cash or in kind or for value
to be received (net of provision for doubtful advances
Rs. 585.67 lac, previous year Rs.549.58 lac) 1,964.60 1,932.72
Intercorporate deposits 1,387.51 35.00
Deposits and balances with
- Customs & excise authorities 540.62 619.19
- Others 776.56 687.48
Advance payment of taxes 3,081.68 1,853.78
(Net of Provision for tax Rs. 1670.91 lac, previous year Rs.761.90 lac)
17,535.41 14,794.20
Annual Report 2009–2010
43
This Year Rs. lac
Previous Year Rs. lac
SCHEDULE 11 : CURRENT LIABILITIES
Sundry creditors (refer note 10)
- Outstanding dues of micro enterprises and small enterprises 85.28 47.17
- others 18,399.08 10,906.31
Advances from customers 307.22 577.76
Sundry deposits 1,521.81 1,280.79
Investor Education & Protection Fund *
- Unclaimed dividend 16.97 18.74
- Unclaimed Matured Deposits 9.46 9.21
- Unclaimed interest on Matured Deposits 4.87 -
Other liabilities 423.42 864.32
Interest accrued but not due on loans 267.42 341.12
21,035.53 14,045.42
* There is no amount due and outstanding to be credited to the Investor
Education and Protection Fund.
SCHEDULE 12 : PROVISIONS Proposed dividend 4,764.37 3,996.99
Provision for tax on distributed profi ts 791.30 679.29
Provision for retirement benefi ts 1,378.16 2,357.13
6,933.84 7,033.41
SCHEDULE 13: MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted)
Deferred revenue expenditure
Voluntary retirement compensation
Balance at the beginning of the year 385.87 1,067.89
Less : Amortised during the year (385.87) (682.02)
- 385.87
SCHEDULE 14: OTHER INCOME Interest (Gross) :
- Debentures 76.27 159.46
- Income tax refund - 41.98
- Deposits 1,181.08 1,537.60
(Tax deducted at source Rs. 121.11 lac, previous year Rs. 584 lac)
Dividend
- from subsidiary companies 1,384.58 2,132.25
- from long term investments 2,895.53 2,889.14
Profi t on sale of fi xed assets (Net) 9.44 99.01
Profi t on sale of long term investments 10,437.56 5,626.55
(refer notes 6 and 16)
Profi t on sale of current investments 101.15 312.63
Provision for diminution in investment written back (refer note 16) - 1,686.04
Bad debt recovered 747.97 9.24
Miscellaneous income 699.40 909.04
17,532.98 15,402.94
Godrej Industries Limited
44
This Year Rs. lac
Previous Year Rs. lac
SCHEDULE 15 : MATERIALS CONSUMED AND PURCHASE OF GOODS Raw materials consumed :
Stocks at the commencement of the year 2,504.07 10,380.37
Add : Purchases (net) 55,556.98 45,917.74
58,061.05 56,298.11
Less : Stocks as at the close of the year 5,030.25 2,504.07
Raw Materials consumed during the year 53,030.80 53,794.04
Purchase of goods for resale 386.09 523.95
53,416.89 54,317.99
SCHEDULE 16: EXPENSES Salaries, wages and allowances 9,273.84 7,033.16
Contribution to provident fund and other funds 731.23 662.42
Employee welfare expenses 577.54 597.28
Stores and spares consumed 797.21 1,203.58
Power and fuel 6,561.57 6,820.18
Processing charges 648.50 292.12
Rent 440.44 418.17
Rates and taxes 535.08 534.75
Repairs and maintenance
- Machinery 853.70 703.34
- Buildings 706.15 646.46
- Other assets 27.48 159.30
Insurance 140.66 128.40
Freight 2,557.85 3,146.21
Commission 388.44 351.38
Discount 378.66 286.08
Advertisement and publicity 1,264.97 1,095.29
Selling and distribution expenses 627.36 821.54
Provision for doubtful debts and advances (25.56) 480.63
Provision for depletion in value of investments 1,253.52 -
Excise duty 194.79 429.64
(Including Rs. 38.91 lac, previous year Rs. 329.09 lac on inventory change )
Foreign exchange loss 5.22 2,160.50
Miscellaneous expenses 2,904.85 2,828.84
Less: Expenses recovered under cost sharing agreement for use of common facilities (217.50) (625.73)
30,626.00 30,173.54
Annual Report 2009–2010
45
Rs. lac This Year Rs. lac
Previous Year Rs. lac
SCHEDULE 17 : INVENTORY CHANGE
Stocks at the commencement of the year
- Finished goods 2,841.88 3,447.66
- Work-in-progress 2,676.28 4,324.91
5,518.16 7,772.57
Less: Stocks at the close of the year :
- Finished goods (3,016.42) (2,841.88)
- Work-in-progress (4,237.76) (2,676.28)
(7,254.18) (5,518.16)
(Increase)/Decrease in Inventory (1,736.02) 2,254.41
SCHEDULE 18 : INTEREST AND FINANCIAL CHARGES (Net)
Interest paid
- on fi xed loans 4,367.92 4,627.93
- on bank overdrafts 25.14 36.12
- other interest 667.83 375.40
5,060.89 5,039.45
Less: Interest received
- on Customer balances, etc. 17.31 5.68
- others - 2.67
17.31 8.35
Net Interest 5,043.58 5,031.10
Other fi nancial charges 981.21 811.20
Foreign exchange loss - 263.82
6,024.79 6,106.12
SCHEDULE 19 : EXTRAORDINARY ITEMS
Profi t on sale of Medical Diagnostics business - 26.00
- 26.00
SCHEDULE 20 : PRIOR PERIOD ADJUSTMENTS
Short provision for expenses - (86.11)
- (86.11)
Godrej Industries Limited
46
SCHEDULE 21: SIGNIFICANT ACCOUNTING POLICIES
1. Accounting ConventionThe fi nancial statements are prepared Under the historical cost convention, on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India, the Accounting Standards presecribed in the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956.
2. Use of EstimatesThe preparation of fi nancial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities as of the date of the fi nancial statements and reported amounts of income and expenses during the period. Management believes that the estimates used in the preparation of fi nancial statements are prudent and reasonable. Actual results could differ from the estimates.
3. Fixed AssetsFixed Assets are stated at cost or as revalued as the case may be, less accumulated depreciation. Cost includes expenses related to acquisition and any directly attributable cost of bringing the assets to it’s intended working condition. Fixed Assets acquired under fi nance lease are capitalised at the lower of their face value and present value of the minimum lease payments.
4. Intangible AssetsIntangible assets are stated at cost of acquisition less accumulated amortisation. The cost of acquisition of trade marks is amortised equally over a period of ten years. Computer software is amortised over a period of six years on the straight line method.
5. Impairment of AssetsThe Company reviews the carrying amounts of tangible and intangible assets for any possible impairment at each balance sheet date. An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Impairment loss, if any, is recognised in the period in which impairment takes place.
6. Borrowing CostsBorrowing costs that are directly attributable to the acquisition / construction of the qualifying asset are capitalised as a part of the cost of such asset, upto the date of acquisition / completion of construction.
7. InvestmentsInvestments are classified into long-term and current investments. Long term investments are carried at cost. Provision for diminution, if any, in the value of each long term investment is made to recognise a decline, other than of a temporary nature. The fair value of a long term investment is ascertained with reference to its market value, the investee’s assets and results and the expected cash fl ows from the investment. Current investments are stated at lower of cost and fair value.
8. InventoriesInventories are valued at lower of cost and net realisable value. Cost is computed on weighted average basis and is net of modvat. Finished goods and work in progress include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Provision is made for the cost of obsolescence and other anticipated losses, wherever considered necessary.
9. Provisions and Contingent LiabilitiesProvisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confi rmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.
10. Foreign Exchange Transactions(i) Transactions in foreign currency are recorded at exchange
rates prevailing on the day of the transaction. Monetary assets and liabilities denominated in foreign currency, remaining unsettled at the period end are translated at closing rates. The difference in translation of monetary assets and liabilities and realised gains and losses on foreign currency transactions are recognised in the Profi t and Loss Account.
(ii) Forward exchange contracts other than those entered into to hedge foreign currency risk of fi rm commitments or highly probable forecast transactions are translated at period end exchange rates. Premium or discount on such forward exchange contracts is amortised as income or expense over the life of the contract.
(iii) Realised gain or losses on cancellation of forward exchange contracts are recognised in the Profi t and Loss Account of the period in which they are cancelled.
(iv) Exchange differences in respect of other unexpired foreign currency derivative contracts, which have been entered into to hedge foreign currency risks are marked to market and losses, if any, are recognised in the Profi t and Loss Account.
11. Revenue RecognitionSales are recognised when goods are supplied and are recorded net of returns, trade discounts, rebates, sales taxes and excise duties. Income from processing operations is recognised on completion of production / dispatch of the goods, as per the terms of contract.Export incentives receivable under the Duty Entitlement Pass Book Scheme and Duty Drawback Scheme are accounted on accrual basis.Dividend income is recognised when the right to receive the same is established.Interest income is recognised on a time proportion basis.Income on assets given on operating lease is recognised on a straight line basis over the lease term.
Annual Report 2009–2010
47
SCHEDULE 21: SIGNIFICANT ACCOUNTING POLICIES16. Hedging
The company uses forward exchange contracts to hedge it’s foreign exchange exposures and commodity futures contracts to hedge the exposure to oil price risks. Gains or losses on settled contracts is recognized in the profi t and loss account. Futures contracts not settled as on the Balance Sheet date are marked to market and losses, if any, are recognized in the profi t and loss account, whereas, the unrealized profi t is ignored. Gains or losses on the commodity futures contracts is recorded in the profi t & loss account under cost of materials consumed.
17. Deferred Revenue ExpenditureThe compensation payable under the Voluntary Retirement Schemes, the benefi t of which is expected to accrue in future is deferred over its payback period. The compensation is generally amortised over three to fi ve years depending on the pay back period, however, the pay back period is restricted to March 31, 2010.
18. Taxes on IncomeTax expense comprises both current and deferred tax. Current tax is the amount of tax payable on the assessable income for the year determined in accordance with the provisions of the Income Tax Act, 1961.Deferred tax is recognized on timing differences, being the differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets on unabsorbed tax losses and tax depreciation are recognized only when there is virtual certainty of their realisation and on other items when there is reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year end based on the tax rate and laws enacted or substantially enacted on the balance sheet date.
19. Segment ReportingThe Accounting Policies adopted for segment reporting are in line with the Accounting Policies of the Company. Segment assets include all operating assets used by the business segments and consist principally of fi xed assets, debtors and inventories. Segment liabilities include the operating liabilities that result from the operating activities of the business. Segment assets and liabilities that cannot be allocated between the segments are shown as part of unallocated corporate assets and liabilities respectively. Income / Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are refl ected as unallocated corporate income / expenses.
12. Research and Development ExpenditureRevenue expenditure on Research & Development is charged to the Profi t and Loss Account of the year in which it is incurred. Capital expenditure incurred during the year on Research & Development is included under additions to fi xed assets.
13. DepreciationLeasehold land is amortised equally over the lease period. Leasehold improvements are amortised over fi ve years.Depreciation is provided on the straight line method at the rates specifi ed in Schedule XIV to the Companies Act, 1956, except for computer hardware which is depreciated over its estimated useful life of 4 years.Depreciation on assets acquired during the year is provided for the full accounting year and no depreciation is charged on the assets sold/discarded during the year, except in case of major additions and deductions exceeding rupees one crore in which case, proportionate depreciation is provided. Depreciation on the revalued component is provided on the straight line method based on the balance useful life of the assets as certifi ed by the valuers. Such depreciation is withdrawn from Revaluation Reserve and credited to Profi t and Loss Account.
14. Employee Benefi ts Liability is provided for the retirement benefits of
provident fund, gratuity, leave encashment and pension benefit in respect of all eligible employees of the company.
(i) Defi ned Contribution Plan Employee benefi ts in the form of Provident Fund and
family pension are considered as defi ned contribution plans and the contributions are charged to the Profi t and Loss of the year when the contributions to the respective funds are due.
(ii) Defi ned Benefi t Plan Retirement benefi ts in the form of Gratuity and Pension
plan for eligible employees considered as defined benefi t obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.
(iii) Other long-term benefi ts Long-term compensated absences and Long Service
awards are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.
Actuarial gain/losses comprising of experience adjustments and the effects of changes in acturial assumptions are immediately recognized in the Profi t and Loss Account.
15. Incentive PlansThe Company has a scheme of Performance Linked Variable Remuneration (PLVR) which rewards its employees based on Economic Value Addition (EVA). The PLVR amount is related to actual improvement made in EVA over the previous year when compared with expected improvements.
Godrej Industries Limited
48
SCHEDULE 22: NOTES TO ACCOUNTS
1. Background
The Company was incorporated under the Companies Act, 1956 on March 7, 1988 under the name of Gujarat-Godrej Innovative Chemicals Limited. The business and undertaking of the erstwhile Godrej Soaps Limited was transferred to the Company under a scheme of amalgamation with effect from April 1, 1994 and the Company’s name was changed to Godrej Soaps Ltd. Subsequently, under a scheme of arrangement the Consumer Products division of the Company was demerged with effect from April 1, 2001 into a separate company, Godrej Consumer Products Limited (GCPL) and the vegetable oils and processed foods manufacturing business of Godrej Foods Ltd. was transferred to the Company with effect from June 30, 2001. The Foods division (except Wadala factory) was then sold to Godrej Hershey Ltd., on March 31, 2006 The Company’s name was changed to Godrej Industries Limited on April 2, 2001.
The Company is engaged in the businesses of manufacture and marketing of oleo-chemicals, their precursors and derivatives, bulk edible oils, estate management and investment activities.
2. Contingent Liabilities
This YearRs. Lac
Previous YearRs. Lac
a) Claims against the Company not acknowledged as debts:(i) Excise duty demands
relating to disputed classifi cation, post manufacturing expenses, assessable values, etc. which the Company has contested and is in appeal at various levels. 1,192.05 1,198.23
(ii) Customs Duty demands relating to lower charge, differential duty, classifi cation, etc. 286.08 856.94
(iii) Sales Tax demands relating to purchase tax on Branch Transfer / Non availability of C Forms, etc at various levels. 216.24 1,697.68
(iv) Octroi demand relating to classifi cation issue on import of Palm Stearine and interest thereon. 1,217.63 1,124.04
(v) Stamp duties claimed on certain properties which are under appeal by the Company 182.23 182.23
(vi) Income Tax demands against which the company has preferred appeals 1,498.03 1,220.36
This YearRs. Lac
Previous YearRs. Lac
(vii) Industrial relations matters under appeal 199.70 204.71
(viii) Others 130.76 224.43 b) Guarantees issued by banks,
excluding guarantees issued in respect of matters reported in (a) above 733.04 666.65
c) Guarantees given by the Company in respect of credit/guarantee limits sanctioned by banks to subsidiary and other companies. 1,431.21 2,225.00
d) Letter of credit issued by bank on behalf of the company 617.74 84.26
e) Uncalled liability on partly paid shares/debentures 50.03 50.03
f) Additional consideration payable for acquisition of certain shares on the occurrence of certain contingent events - 104.13
3. Capital Commitments
This YearRs. Lac
Previous YearRs. Lac
Estimated value of contracts remaining to be executed on capital account, to the extent not provided 86.35 1,694.43
4. Share Capital
Post receipt of SEBI exemption under regulation 3(1)(l) of the Takeover Code, the Company issued a Public Announcement on 29th April, 2009 and on 20th May, 2009 for Buyback upto 57,00,000 of its shares from the open market at a price not exceeding Rs. 275/- per share for an aggregate consideration not exceeding Rs. 99 crore. Under the Buyback programme, the Company has bought back and extinguished 21,33,710 shares at a consideration of Rs. 2,887 lac. The premium paid on Buyback of shares amounting to Rs 2,865.24 lac has been adjusted from the Securities Premium Account. The Buyback programme has been completed.The resultant excess provision of proposed divided and tax on distributed profi t due to Buyback of shares is added in surplus brought forward of profi t & loss account
5. Loans
a) Term loans from banks are secured by fi rst charge by way of equitable mortgage of the immovable properties including land, building and plant & machinery at Valia factory.
b) Working capital facilities sanctioned by banks are secured by hypothecation of stocks and book debts.
c) Other loans are secured by pledge of 97,50,000 shares of Godrej Consumer Products Limited so as to result in a collateral cover of three times the loan facility.
Annual Report 2009–2010
49
SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)
d) The Company had during the year raised Rs. 37500 lac (Previous year Rs.15000 lac) against the issue of commercial paper. The amount outstanding there against as on March 31, 2010 is Rs. 8500 lac.
6. Investments
a) The Company had sold its entire holding in Godrej Hicare Limited, a subsidiary company, in March 2009. The profi t thereon based on the minimum consideration received was recognised in the accounts for the year ended on 31st March 2009. During the year, the company has received an additional consideration of Rs 2759 lac (net) on Godrej HiCare achieving certain fi nancial performance parameters which consideration has been recognised as exceptional income in this year.
b) The Board of Directors at its meeting held on May 27, 2009, approved a scheme for the merger of Godrej Hygiene Care Limited (GHCL), a 100% subsidiary of Godrej Industries Limited, into Godrej Consumer Products Limited (GCPL). The scheme has been approved by the Hon’ble High Court, Bombay on 8th October, 2009. The Appointed date of the merger being June 1, 2009, the assets and liabilities of GHCL stand transferred to and vested in GCPL from that date. Pursuant to the said scheme of arrangement, 51,07,125 (20%) equity shares held by GHCL in Godrej Sara Lee Limited , a 49:51 unlisted joint venture Company between the Godrej Group and Saralee Corporation, USA stand transferred to and vested in GCPL and the Company has received 209,39,409 equity shares of GCPL in lieu thereof as per the terms of the Scheme of Arrangement. 25% of these shares are locked in till 24th November, 2012.
c) The Company has acquired and sold the following investments during the year:
Mutual Funds - Liquid - Growth
schemes
This Year Previous Year
No. of Unts Rs Lac No. of Unts Rs LacBirla Cash Plus Liquid 88,296,420 12,715.00 96,361,450 13,080.00 Prudential ICICI Liquid
141,505,480 25,742.00 160,464,990 19,870.00
KMMF Liquid 18,592,371 3,455.00 12,196,981 2,000.00 LIC MF Liquid Fund - - 69,580,260 10,425.00 UTI Liquid fund 545,617 7,710.00 1,223,373 16,875.00 SBI Magnum Liquid 55,087,628 11,000.00 158,554,280 23,695.00 Templeton Mutual Fund - - 476,664 6,155.00 Standard Chartered Liquidity Manager Fund - - 385,209 4,485.00 ING Vysya Liquid - - 32,822,955 4,230.00 Deutsche Insta Cash Plus Fund 4,364,601 500.00 76,356,419 8,140.00
HDFC Liquid Fund 87,569,997 15,869.00 113,755,533 19,190.00
7. Sundry Debtors
This YearRs. Lac
Previous YearRs. Lac
Sundry Debtors include the following amounts due from companies under the same management:Godrej Consumer Products Ltd.
- 123.27
Godrej Agrovet Ltd. - 18.71 Godrej Hershey Ltd. 5.18 49.32 Godrej Properties Ltd. - 21.33 Godrej Saralee Ltd. - 25.60 Godrej SCA Hygiene Ltd. - 0.02 Godrej & Boyce Mfg. Co. Ltd. - 5.44 Godrej International Ltd. 1.59 1.59 Godrej Hygiene Care Pvt. Ltd.(Formerly known as Build Tough Properties Pvt. Ltd.) - 4,741.61 Natures Basket Ltd. 17.67 - Godrej Oil Palm Ltd. 4.57 -
8. Cash and Bank Balances
This YearRs. Lac
Previous YearRs. Lac
Balances with Scheduled Banks in Deposit Accounts include:- deposits held by bank as
security against guarantees issued.
18.50 18.50
9. Loans and Advances
a) Loans and Advances include Rs. 1,033 lac (Previous year Rs. 1,033 lac) advanced by the Company to certain individuals against pledge by way of deposit of equity shares of Gharda Chemicals Ltd. The Company has enforced its security and lodged the shares for transfer in its name, however, the transfer application has been rejected by Gharda Chemicals Ltd. and the Company fi led an appeal before the Company Law Board against the rejection. The investee company had in the meanwhile, moved the Bombay High court and the Court remanded the matter back to CLB. The CLB has advised that the parties may approach the Bench after fi nal disposal of the suit fi led by the investee company and the application made by minority shareholders under Section 397/398 before the Hon’ble High Court. The company has fi led an appeal with the Hon’ble High Court against the order of the Company Law Board under Section 10 F of the Companies Act to the High Court, which has been admitted.”
Interest on the aforesaid loan amounting to Rs. 315 lac was accrued upto March 31, 2000 and has been fully provided for, no interest is being accrued thereafter. The recoverability of the advance is contingent upon the transfer and/ or disposal of the said shares. It is the
Godrej Industries Limited
50
SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)
opinion of the management that the underlying value of the said shares is substantially greater than the amount of the loan.
b) Loans and Advances include a loan of Rs 1382.43 lac to an individual secured by pledge of 38,97,454 shares of Godrej Hershey Ltd.
c)Maximum
Balance during
the year
Rs. Lac
This Year
Rs. Lac
Previous Year
Rs. LacI. Loans & Advances to
subsidiary companies Godrej Properties Ltd. 550.00 - - Natures Basket Ltd. 455.00 455.00 - II. Loans and Advances
to associate companies
Swadeshi Detergents Ltd.
35.00 19.00 35.00
III. Loans and Advances where there is no repayment schedule or repayment is beyond seven years
D. Kavasmanek and Others (refer (a) above).
1,033.00 1,033.00 1,033.00
IV. Investments by the loanee in the shares of parent company and subsidiary company
GIL ESOP Trust 8,728.27 7,301.80 7,358.70
10. Disclosure of sundry creditors under current liabilities is based on the information available with the company regarding the status of the suppliers as defi ned under the “Micro, Small and Medium Enterprises Development Act, 2006”. Amount overdue as on 31st March 2010 to Micro, Small and Medium Enterprises on account of principal amount together with interest, aggregate to Rs. Nil (Previous year – Rs. Nil).
11. Employee Stock Option Plans
a) In December 2005, the Company had instituted an Employee Stock Option Plan (GIL ESOP) as approved by the Board of Directors and the Shareholders, for the allotment of 15,00,000 options, increased to 90,00,000 options on split of shares convertible into 90,00,000 equity shares of Re.1 each to eligible employees of participating companies.
The scheme is administered by an independent ESOP Trust created with ILFS Trust Co. Ltd. which purchases from the market shares equivalent to the number of options granted by the Compensation Committee. The particulars of the scheme and movements during the year are as under:
ESOP IThis Year Previous Year
No. of Options
Wt. average
exercise price ( * )
No. of Options
Wt. average exercise
price ( * )Options outstanding at the beginning of the year 7,799,950 190.43 7,309,500 177.10 Options granted during the year :2 May, 2008 - - 340,000 284.60 26 May, 2008 - - 835,450 276.70 3 June, 2008 - - 150,000 254.45 Options exercised during the year : 2,100,000 91.84 - - Options forfeited / expired during the year : 119,250 284.45 835,000 209.87Options outstanding at the year end 5,580,700 228.06 7,799,950 190.43
ESOP IIThis Year Previous Year
No. of Options
Wt. average
exercise price ( * )
No. of Options
Wt. average exercise
price ( * )Options outstanding at the beginning of the year
- - - -
Options granted during the year :10 August, 2009 860,000 179.86 - - Options exercised during the year :
- - - -
Options forfeited / expired during the year :
- - - -
Options outstanding at the year end 860,000 179.86 - -
( * ) The Wt. average exercise price stated above is the price on the grant date and will be increased by the interest cost at the prevailing rates upto the exercise of the option.
The weighted average balance life of options outstanding as on 31st March 2010 is 4.08 years.
The options granted shall vest after three to fi ve years from the date of grant of option, provided the employee continues to be in employment and the option is exercisable within two years after vesting.
Modifi cation of the ESOP scheme : The vesting period for options granted on 05/04/07 and on 11/04/07 was increased to a maximum of 5 years and the exercise period to 3 years from vesting.
The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognized since the market price of the underlying share at the grant date is the same / less than the exercise price of the option, the intrinsic value therefore being Nil.
Annual Report 2009–2010
51
The fair value of the share options has been determined using the Black-Scholes Option Pricing Model. Had the fair value method of accounting been used, the net profi t and earnings per share would have been as per the pro forma amounts indicated below.
This YearRs. Lac
Previous Year
Rs. LacNet Profi t (as reported) 8,092.74 1,807.69 Less : Stock based compensation expense determined under fair value based method (Pro Forma) 1,102.33 1,072.14 Net Profi t (Pro Forma) 6,990.41 735.55
Amt. Rs. Amt. Rs. Basic & Diluted Earnings per share before Extraordinary Items (as reported) 2.55 0.58 Basic & Diluted Earnings per share before Extraordinary Items (Pro Forma) 2.20 0.25Basic & Diluted Earnings per share after Extraordinary Items (as reported) 2.55 0.57 Basic & Diluted Earnings per share after Extraordinary Items (Pro Forma) 2.20 0.23
b) The independent ESOP trust has purchased shares of the Company from the market against the options granted. The purchases are fi nanced by loans from the Company amounting to Rs. 8,113.31 lac (previous year Rs. 7,358.70 lac). As on 31 March 2010, the market value of the shares purchased by the Trust is lower than the acquisition cost of the shares by Rs. 3,456.05 lac (previous year Rs. 5,331.24 lac).
The repayment of the loans granted to the ESOP trust is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options at the end of the exercise period. The fall in value of the underlying equity shares is on account of market volatility and the loss, if any, can be determined only at the end of the exercise period. In view of the aforesaid, provision for diminution of Rs. 3,456.05 lac (previous year Rs. 5,331.24 lac) is not considered necessary in the fi nancial statements.
12. Lease Leases granted by the Company (a) Operating Lease:
The company has entered into leave and licence agreements in respect of its commercial and residential premises. The non-cancelable portion of the leases range between 3 months to 36 months and are renewable by mutual consent on mutually acceptable terms. Leave and licence arrangements being similar in substance to operating leases. The company has also granted lease for freehold land. The particulars of the operating lease arrangements are as under:
This YearRs. Lac
Previous YearRs. Lac
Gross carrying amount of premises
1,913.45 1,785.95
Accumulated depreciation 870.14 763.43 Depreciation for the period 50.89 50.87
SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)
The aggregate future minimum lease payments are as under :
Period This YearRs. Lac
Previous YearRs. Lac
Lease payment recognised in the profi t & loss account
2,625.40 2,949.71
Future lease payments - Within one year 2,625.72 2,791.35 - Later than one year and not later than fi ve years
4,719.23 2,745.00
Lease taken by the Company (b) Operating Lease: The Company’s signifi cant leasing arrangements are in
respect of operating lease for land, offi ce premises, residential premises, machinery and storage tanks. The agreegate lease rentals paid by the Company are charged to profi t & loss account.
Period This YearRs. Lac
Previous YearRs. Lac
Lease payment recognised in the profi t & loss account
440.44 418.17
Future lease commitments- Within one year 399.87 412.53 - Later than one year and not later than fi ve years
323.41 336.07
(c) Finance Leases: The company has acquired vehicles under Finance Lease.
Liability for minimum lease payment is secured by hypothecation of the vehicles acquired under the lease. The minimum lease payments outstanding as on March 31, 2010, in respect of vehicles acquired under lease are as under:
Period Total minimum
lease payments
outstanding as on March 31,
2010
Un-matured Interest
Present value of
minimum lease
payments
Rs. Lac Rs. Lac Rs. LacWithin one year 48.54 8.47 45.71Later than one year and not later than fi ve years
14.43 2.07 11.73
62.97 10.54 57.44
Godrej Industries Limited
52
SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)
13. Deferred Tax
Major components of deferred tax arising on account of timing differences as at the year end are:
This YearRs Lac
Previous YearRs Lac
AssetsProvision for retirement benefi ts 225.00 521.00 Provision for doubtful debts / advances
338.00 355.00
VRS Expenses 215.00 298.00 Others 327.00 30.00
1,105.00 1,204.00 LiabilitiesDepreciation 4,303.20 4,482.20 Net Deferred Tax Liability 3,198.20 3,278.20
14. Hedging Contracts The Company uses forward exchange contracts to hedge
its foreign exchange exposure relating to the underlying transactions and fi rm commitments. The use of the foreign exchange forward contracts reduces the risk on cost to the company. The Company also uses commodity futures contracts to hedge it’s exposure to vegetable oil price risk. The Company does not use foreign exchange forward contracts or commodity future contracts for trading or speculation purposes.
i) Derivative instruments outstanding:a) Commodity futures contractsDetails This Year Previous Year
Purchase Sale Purchase SaleFutures contracts outstanding
1 - 6 -
Number of units under above contracts in MT.
1,040 - 4,500 -
b) Forward Exchange contractsDetails This Year Previous Year
Purchase Sale Purchase SaleTotal number of contracts outstanding
31 9 24 6
Foreign currency value- US Dollar (million) 9.47 1.85 10.04 2.42 - Euro (million) - 2.00 - 0.50
ii) Un-hedged foreign currency exposuresDetails This Year Previous Year
Purchase Sale Purchase SaleUncovered Foreign exchange exposure as at the year end- US Dollar (million) 13.78 8.42 2.08 3.56 - Euro (million) 0.04 - 0.04 0.17 - GBP (million) - 0.03 - -
15. Turnover
This YearRs Lac
Previous YearRs Lac
Turnover includesi) Processing charges 607.58 1,048.51 ii) Export Incentives 180.20 963.18 iii) Licence fees and service
charges 2,803.19 3,140.68
3,590.97 5,152.37
16. Exceptional Items
This YearRs Lac
Previous YearRs Lac
i) Profi t on sale of long term investments
10,437.56 5,626.55
ii) Write back / (Provision) for diminution in investment
- 1,686.04
17. Profi t & Loss Account
a) Exchange differences recognised in the Profi t & Loss Account for the year is a loss of Rs. 5.22 lac (Previous year loss of Rs. 2424.32 lac). The exchange difference in respect of forward exchange contracts to be recognised in subsequent accounting periods is Rs. 26.38 lac (Previous year Rs. 21.31 lac).
b) Research & Development Expenditure of revenue nature charged to the Profi t & Loss Account amounts to Rs. 327.31 lac (Previous year Rs.173.30 lac).
Annual Report 2009–2010
53
SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)
18. Earning Per Share
This Year Previous Yeara) Calculation of weighted average number of equity shares
Number of shares at the beginning of the year Nos. 319,758,602 319,758,602 Number of equity shares outstanding at the end of the year Nos. 317,624,892 319,758,602 Weighted average number of equity sharesoutstanding during the year Nos. 318,247,978 319,758,602
b) Net profi t after tax excluding extraordinary items Rs. lac 8,092.74 1,781.69 c) Net profi t after tax available for equity shareholders Rs. lac 8,092.74 1,807.69
(including extraordinary items)d) Basic and diluted earnings per share of Re 1 each Rupees 2.54 0.56
excluding extraordinary Itemse) Basic and diluted earnings per share of Re 1 each Rupees 2.54 0.57
including extraordinary ItemsNote: There is no impact on basic as well as diluted earnings per share on account of the ESOP, as the scheme does not envisage any fresh issue of share capital.
19. Segment Information Information about primary business segments.
Rs. lac
Chemicals Estate Finance & Investments Others TotalThis Year Previous
YearThis Year Previous
YearThis Year Previous
YearThis Year Previous
YearThis Year Previous
YearRevenueExternal Sales 78123.55 77818.57 2775.39 3154.26 17081.77 14726.08 1189.02 1449.41 99169.73 97148.32 Inter segment sale - - - - - - - - Total Income 78123.55 77818.57 2775.39 3154.26 17081.77 14726.08 1189.02 1449.41 99169.73 97148.32 ResultsSegment result before interest and tax
5238.25 (1832.02) 1819.47 2177.91 15828.25 14726.08 (539.48) (480.10) 22346.49 14591.87
Unallocated expenses (8322.43) (6835.68)Interest Expense (net) (6024.79) (6106.12)Profi t before tax 7999.27 1650.07 Taxes 93.47 217.73 Profi t after taxes and before extraordinary items
8092.74 1867.80
Add: Extraordinary Items (Net of taxes)
- 26.00
Add/(Less): Prior Period Items
- (86.11)
Net Profi t 8092.74 1807.69 Segment Assets 44848.58 38806.09 7943.25 5571.54 129455.39 134973.07 2836.10 3157.69 185083.32 182508.39 Unallocated Assets 3114.89 4657.31 Total Assets 188198.21 187165.70 Segment Liabilities 18248.42 13795.00 1831.58 1335.98 1792.64 664.75 541.05 606.82 22413.69 16402.55 Unallocated Liabilities 63514.91 68050.95 Total Liabilities 85928.60 84453.50 Total Cost incurred during the year to acquire segment assets
902.36 1261.72 3057.49 1688.52 17.91 1,724.12 14.67 7.77 3992.43 4682.13
Segment depreciation 2083.57 2034.48 108.97 64.92 155.50 59.98 237.14 213.72 2585.18 2373.10 Unallocated depreciation 253.62 273.09 Total Depreciation 2838.80 2646.19
Information about Secondary Business SegmentsRevenue by Geographical marketsIndia 69199.69 64737.13 Outside India 29970.04 32390.47 Total 99169.73 97127.60
Carrying Amount of Segment AssetsIndia 188198.21 187165.70 Outside India - - Total 188198.21 187165.70
Godrej Industries Limited
54
SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)
20. Related Party Disclosuresa) Names of related parties and description of relationship
Parties where control exists Key Management PersonnelGodrej & Boyce Mfg. Co. Ltd., the holding company Mr. A.B. Godrej Chairman
Mr. N.B. Godrej Managing DirectorSubsidiary companies Ms. T.A. Dubash Executive Director
& President (Marketing)Godrej Agrovet Ltd. Mr. M. Eipe Executive DirectorGolden Feeds Products Ltd. & President (Chemicals)Cauvery Palm Oil Ltd. Mr. V. Banaji Executive Director & PresidentGodrej Oil Palm Ltd. (Group Corporate Affairs)Godrej Properties Ltd. Mr. M.P. Pusalkar Executive Director & PresidentGodrej Developers P. Ltd. (Corporate Projects)Godrej Real Estate P. Ltd.Godrej Realty P. Ltd. Relatives of Key Management PersonnelGodrej Sea View Properties P. Ltd. Ms. P.A. Godrej Wife of Mr. A.B. GodrejGodrej Waterside Properties P. Ltd. Ms. N.A. Godrej Daughter of Mr. A.B. GodrejHappy Highrises Ltd. Mr. P.A. Godrej Son of Mr. A.B. GodrejGodrej Estate Developers P. Ltd. Ms. R.N. Godrej Wife of Mr. N.B. GodrejNatures Basket Ltd. Mst. B.N. Godrej Son of Mr. N.B. GodrejEnsemble Holdings & Finance Ltd. Mst. S.N. Godrej Son of Mr. N.B. GodrejGodrej International Ltd. Mst. H.N. Godrej Son of Mr. N.B. GodrejGodrej Hygiene Care Pvt. Ltd. ( up to 31.05.2009)
Fellow Subsidiaries: Enterprises over which key management personnel exercise signifi cant infl uenceWadala Commodities Ltd.
Godrej (Malaysia) Sdn Bhd Godrej Netherlands BVGodrej (Singapore) Pte Ltd. Rapidol (Pty) Ltd.Godrej Infotech Ltd. Godrej Global Mideast FZEVeromatic International BV Godrej Hygiene Products Ltd.Veromatic Services BV Godrej Consumer Products Mauritius Ltd.Water Wonder Benelux BV Godrej Consumer Products Holding (Mauritius) Ltd.Godrej ConsumerBiz Ltd. (up to 01.06.2009) Godrej Holdings Pvt. Ltd. Godrej Investments Pvt. Ltd.
Bahar Agrochem & Feeds Pvt. Ltd.Other related parties with whom the Company had Vora Soaps Ltd.transactions during the year Tahir Properties Ltd.Associate / Joint Venture Companies Godrej Tyson Foods Ltd.Godrej Consumer Products Ltd. (also fellow subsidiary)Godrej Hershey Ltd.Swadeshi Detergents Ltd.Compass BPO Ltd. (up to 08.03.2010)Godrej Sara Lee Ltd. (up to 31.05.2009)
Notes:
1. The Company has disclosed Business Segment as the primary segment. Segments have been identifi ed taking into account the nature of the products, the different risks and returns, the organisational structure and the internal reporting system.
2. Chemicals segment includes Oleo Chemicals such as Fatty Alcohols, Fatty Acids, Alfa Olefi n Sulphonates and Refi ned Glycerin.
Estate segment comprises the business of giving premises on leave and license basis.
Finance & Investments segment comprises of investment in subsidiaries, associate companies & other investments. Others includes business of refi ned vegetable oils and vanaspati and energy generation through windmills.
3. The geographical segments are as follows
- Sales in India represent sales to customers located in India
- Sales outside India represent sales to customers located outside India.
Annual Report 2009–2010
55
SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)
b) Transaction with Related Parties (Rs. lac)
Nature of Transaction HoldingCompany
SubsidiaryCompanies
FellowSubsidiaries
Associate/Joint Venture
Companies
Key Management
Personnel
Relative of Key
Management Personnel
Enterprises over which Key
Mangement Personnel exercise
signifi cant infl uence
Total
Sale of Goods - 5.64 - 935.93 - - 13.54 955.11 Previous Year - - - 1,277.97 - - 5.29 1,283.26 Sale of Fixed Assets - - - - - - - Previous Year - 4.94 - - - - - 4.94 Purchase of goods 0.73 17.87 - 753.97 - - - 772.57 Previous Year 23.29 4.78 - 761.99 - - 0.06 790.12 Purchase of Fixed Assets 45.48 883.30 - - - - 928.78 Previous Year 207.10 1,441.40 - - - 100.00 - 1,748.49 Processing charges received - - - 157.55 - - - 157.55 Previous Year - - - 198.38 - - - 198.38 Commission / Royalty received - 123.59 - 182.99 - - - 306.58 Previous Year - 105.14 - 178.89 - - - 284.03 Licence fees / Service charges / Storage Income 0.27 203.12 - 426.66 - - - 630.05 Previous Year 0.39 165.66 7.69 707.30 - - 9.45 890.49 Other Income 0.12 22.63 - 18.09 - - - 40.84 Previous Year 1.11 28.85 - 41.71 - - 0.02 71.69 Recovery of establishment & Other Expenses - 175.86 0.78 756.33 - - - 932.97 Previous Year 30.90 154.75 0.89 1,192.16 - - 3.40 1,382.11 Rent, Establishment & other exps paid 294.49 49.51 7.40 243.07 - 64.68 0.49 659.64 Previous Year 304.36 73.93 19.11 168.62 - 82.31 0.84 649.17 Interest received - 61.43 - 2.24 - - - 63.67 Previous Year - 17.22 - - - - 3.50 20.72 Interest paid - 12.51 8.00 6.12 - - - 26.63 Previous Year - 6.54 8.00 - - - - 14.54 Dividend income - 1,303.51 - 2,895.51 - - - 4,199.02 Previous Year - 2,132.25 - 2,889.12 - - - 5,021.37 Dividend paid 2,340.03 - - - 70.93 249.23 - 2,660.19 Previous Year 2,340.03 - - - 68.62 729.47 - 3,138.11 Remuneration - - - - 1,024.39 87.07 - 1,111.46 Previous Year - - - - 792.16 55.74 - 847.90 Purchase of Investments - 5,244.97 - - - - - 5,244.97 Previous Year - 4.00 - 35,129.26 - - - 35,133.26 Sale of Investments - 17.57 - - - - - 17.57 Previous Year 4,291.80 4,729.78 - - - - - 9,021.58 Intercorporate Deposits -Accepted - 525.00 - 405.00 - - - 930.00 Previous Year - 265.78 - 17.44 - - - 283.22 Intercorporate Deposits Repaid during the year - 575.00 - 405.00 - - - 980.00 Previous Year - 231.15 - 22.30 - - - 253.45 Intercorporate Deposits -Advanced - 1,005.00 - - - - - 1,005.00 Previous Year - 1,300.00 - - - - - 1,300.00 Intercorporate Deposits Repayment received during the year - 550.00 - 16.00 - - - 566.00 Previous Year - 1,300.00 - - - - - 1,300.00 Shares in Associate Compnay acquired under a scheme of arrangement - - - 4,747.72 - - - 4,747.72 Previous Year - - - - - - - - Directors Fees - - - - 1.60 - - 1.60 Previous Year - - - - 2.1 0 - - 2.10 Balance Outstanding as on March 31, 2010Receivables - 18.34 3.11 4.72 - - 12.61 38.78 Previous Year 20.52 4,764.21 0.13 177.16 - - 9.65 4,971.67 Payables 22.91 243.76 0.27 108.15 - - 0.09 375.18 Previous Year - 163.01 6.84 155.01 - - (0.12) 324.74 Guarantees Outstanding - 500.00 - 1,431.21 - - - 1,931.21 Previous Year - - - 2,225.00 - - - 2,225.00
Godrej Industries Limited
56
SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)
Nature of Transaction This Year Rs. Lac
Previous Year Rs. Lac
Nature of Transaction This Year Rs. Lac
Previous Year Rs. Lac
Sale of goods Interest received - Godrej Consumer Products Ltd. 927.98 1,188.61 - Godrej Properties Ltd. 35.71 - - Rapidol PTY Ltd. 11.95 - - Natures Basket Ltd. 25.72 - - Godrej Properties Ltd. 3.83 - - Swadeshi Detergents Ltd. 2.24 3.50 - Godrej Saralee Ltd. - 89.36 - Godrej Agrovet Ltd. - 17.22
Sale of fi xed assets Interest paid - Godrej Properties Ltd. - 4.94 - Ensemble Holdings & Finance Ltd. 12.51 6.54
- Wadala Commodities Ltd. 8.00 8.00 Purchase of Fixed Assets - Godrej Consumer Products Ltd. 6.12 - - Godrej Properties Ltd. 883.30 1,398.48 - Godrej & Boyce Mfg. Co. Ltd. 45.48 186.03 Processing Charges received
- Godrej Hershey Ltd. 157.55 198.38 Purchase of goods - Godrej Consumer Products Ltd. 538.07 531.11 Inter Corporate Deposits - Accepted - Godrej Hershey Ltd. 215.16 225.02 - Ensemble Holdings & Finance Ltd. 525.00 250.00 - Godrej Oil Palm Ltd. 17.87 - - Godrej Consumer Products Ltd. 405.00 - - Godrej & Boyce Mfg. Co. Ltd. 0.73 44.36 - Heroes Aids Project - 100.00 Inter Corporate Deposits - Repaid - Godrej Hi Care Ltd. - 46.87 - Ensemble Holdings & Finance Ltd. 575.00 200.00 - Godrej Saralee Ltd. - 5.86 - Godrej Consumer Products Ltd. 405.00 -
Commission / Royalty received Inter Corporate Deposits - Advanced - Godrej Hershey Ltd. 180.04 173.43 - Godrej Properties Ltd. 550.00 - - Godrej Properties Ltd. 122.34 102.63 - Natures Basket Ltd. 455.00 - - Godrej Consumer Products Ltd. 2.95 5.46 - Godrej Agrovet Ltd. - 1,300.00 - Natures Basket Ltd. 1.25 - - Godrej Global Solutions Ltd. - 2.51 Inter Corporate Deposits - Repayment
Received - Godrej Properties Ltd. 550.00 -
Licence fees / Service charges / Storage income - Swadeshi Detergents Ltd. 16.00 -
- Godrej Consumer Products Ltd. 182.26 211.72 - Godrej Agrovet Ltd. - 1,300.00 - Compass BPO Ltd. 154.79 172.69 - Godrej Agrovet Ltd. 103.24 101.31 Dividend income - Godrej Properties Ltd. 73.52 33.09 - Godrej Consumer Products Ltd. 2,895.51 1,854.93 - Godrej Hershey Ltd. 49.88 84.75 - Godrej Properties Ltd. 1,212.38 1,961.86 - Godrej Saralee Ltd. 39.73 238.14 - Godrej Agrovet Ltd. 91.13 91.13 - Natures Basket Ltd. 22.21 7.69 - Godrej Saralee Ltd. - 1,034.19 - Godrej Oil Palm Ltd. 4.15 - - Ensemble Holdings & Finance Ltd. - 79.26 - Godrej Hicare Ltd. - 25.88 - Godrej SCA Hygiene Ltd. - 9.45 Dividend paid - Godrej Global Solutions Ltd. - 5.37 - Godrej & Boyce Mfg. Co. Ltd. 2,340.03 2,340.03
c) The Signifi cant Related Party transactions are as under:
Annual Report 2009–2010
57
SCHEDULE 22: NOTES TO ACCOUNTS (Contd.)
Nature of Transaction This Year Rs. Lac
Previous Year Rs. Lac
Nature of Transaction This Year Rs. Lac
Previous Year Rs. Lac
Other Income Remuneration to Key Management Personnel
- Godrej Agrovet Ltd. 20.07 22.32 - Mr. N. B. Godrej 241.34 219.84
- Godrej Consumer Products Ltd. 11.14 17.65 - Mr. V. F. Banaji 211.36 151.58
- Godrej Hershey Ltd. 5.66 10.98 - Mr. M. P. Pusalkar 199.78 131.84
- Godrej Properties Ltd. 1.37 3.64 - Ms. T. A. Dubash 194.83 137.82
- Natures Basket Ltd. 1.18 - - Mr. M. Eipe 177.08 135.02
- Godrej Saralee Ltd. 1.29 13.08 - Mr. C. K. Vaidya - 16.06
- Godrej Hicare Ltd. - 2.89
- Godrej & Boyce Mfg. Co. Ltd. - 1.11 Remuneration to Relatives of Key Management Personnel
- Ms. Nisaba A. Godrej 87.07 53.57
Recovery of Establishment & other expenses
- Mr. Pirojsha Godrej - 2.17
- Godrej Consumer Products Ltd. 686.49 983.25
- Godrej Agrovet Ltd. 121.14 96.31 Sale of Investments
- Godrej Hershey Ltd. 63.22 108.88 - Godrej Oil Palm Ltd. 17.57 -
- Godrej Properties Ltd. 54.50 41.04 - Godrej & Boyce Mfg. Co. Ltd. - 4,291.80
- Godrej Saralee Ltd. 6.24 100.00 - Godrej Hygiene Care Pvt. Ltd. - 4,729.78
- Godrej Hicare Ltd. - 16.52
- Godrej & Boyce Mfg. Co. Ltd. - 30.90 Purchase of Investments
- Godrej SCA Hygiene Ltd. - 3.42 - Godrej Agrovet Ltd. 501.25 -
- Godrej Global Solutions Ltd. - 0.89 - Godrej Hygiene Care Pvt. Ltd. 4,743.72 4.00
- Godrej Consumer Products Ltd. - 31,689.26
Rent, Establishment & other exps paid
- Godrej Hershey Ltd. - 3,440.00
- Godrej & Boyce Mfg. Co. Ltd. 294.49 304.36
- Godrej Consumer Products Ltd. 232.14 136.39 Shares in Associate company acquired under a scheme of arrangement
- Ms. R.N. Godrej 64.68 82.31 - Godrej Consumer Products Ltd. 4,747.72 -
- Godrej Properties Ltd. 42.63 18.24
- Godrej Hershey Ltd. 7.26 -
- Wadala Commodities Ltd. 5.77 6.38
- Godrej Agrovet Ltd. 3.92 29.31
- Natures Basket Ltd. 2.96 2.88
- Godrej Infotech Ltd. 1.63 9.85
- Godrej Saralee Ltd. - 32.20
- Godrej Hicare Ltd. - 26.38
Godrej Industries Limited
58
SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.)
Rs.’lacThis YearRs.’lac
Previous Year Rs.’lac
21. Computation of Profi ts under Section 349of the Companies Act, 1956Profi t for the year after tax as per Profi t & Loss Account 8,092.74 1,807.69 Add: Depreciation as per accounts 2,838.80 2,646.19
Managerial Remuneration 1,024.39 827.26 Directors’ Fees 9.60 10.35 Profi t / (loss) on sale of assets under Section 349 9.44 27.49 Provision for doubtful debts / advances (25.53) 480.63 Provision for depletion in value of investments 1,253.49 - Provision for Tax (including tax on extraordinary items) 93.47 217.73
5,203.66 4,209.65 13,296.40 6,017.34
Less: Depreciation under Section 350 of the Companies Act, 1956 2,812.80 2,619.81 Profi t / (loss) on sale of assets as per books 9.44 99.01 Profi t on sale of investments 10,437.56 5,626.55 Profi t on sale of M.D. division - 26.00 Provision for diminution in investment written back - 1,686.04
Brought forward loss u/s 349 of the Companies Act 1956 4,867.33 - 18,127.13 10,057.41
Net Profi t for the purpose of Directors’ Remuneration (4,830.73) (4,040.07)Managerial remuneration payable - - Managerial remuneration paid / payable as per approval of Central Govt. 1,024.39 827.26
22. Managerial Remuneration Salaries and allowances 902.65 686.97 Contribution to Provident Fund 32.93 30.27 Estimated Monetary value of perquisites 88.81 110.02 TOTAL 1,024.39 827.26 The above does not include contribution to Gratuity Fund as separate fi gures are not available.
23. Auditors’ Remuneration Audit fees (including Rs. 1.09 lac to branch auditors, Previous Year Rs.1.13 lac) 32.09 30.02 Tax audit fees 5.00 4.80 Certifi cation and other services 9.70 11.30 Tax Consultation and representation 10.47 9.40 Consultation and management services 4.80 5.45 Out of pocket expenses 1.28 1.12 TOTAL 63.34 62.09
Annual Report 2009–2010
59
SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.)
24. Turnover (Net)
Item Unit This Year Previous Year Quantity Value Quantity Value
Rs.’lac Rs.’lacFatty Acids MT 58888 31624.03 51352 27554.26 Glycerin MT 9120 3192.27 8904 4832.14 Alpha Olefi n and its precursors MT 49598 28942.92 47959 32247.82 Synthetic Detergent MT 19089 13439.79 15137 10988.08 Medical Diagnostic Products 0.00 160.29 Others 4437.74 5841.13 TOTAL 81636.75 81623.72
25. Inventories - Finished Goods
Item Unit MARCH 31, 2010 MARCH 31, 2009 MARCH 31, 2008Quantity Value Quantity Value Quantity Value
Rs.’lac Rs.’lac Rs.’lacFatty Acids MT 1653 855.86 1054 555.60 1437 667.62Glycerin MT 250 91.04 140 55.44 282 197.69Alpha Olefi n and its precursors MT 2920 1,737.81 2822 1,876.34 3627 2171.95Synthetic Detergent MT 445 327.41 519 352.84 1185 408.36Others 4.30 1.66 2.04TOTAL 3016.42 2841.88 3447.66
26. Raw Materials Consumed
Unit This Year Previous YearQuantity Value
Rs.’lac Quantity Value
Rs.’lac Oils & Fats MT 127646 39731.74 103421 39893.90 Chemicals and Catalysts MT 22540 9512.07 22412 10208.01 Packing Materials, etc. 3786.99 3692.13
TOTAL 53030.80 53794.04
Raw materials consumption includes consumption for production of captively consumed items.
27. Purchase of Goods
Unit This Year Previous YearQuantity Value
Rs.’lac Quantity
Value Rs.’lac
Refi ned oil, Soaps, Toileteries, etc. 262.82 361.72
Others 123.27 162.23
TOTAL 386.09 523.95
Godrej Industries Limited
60
SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.)
28. Licensed, Installed and Utilised CapacityItem Unit Licensed
CapacityInstalled Capacity Actual
Production
ThisYear
Previous Year
ThisYear
Previous Year
Fatty Acids MT } 73300 73300 59488 50969 Glycerin MT } 8280 8280 9230 8663 Alpha Olefi n and its precursors MT } 65000 65000 49696 47154 Refi ned Oils & Vanaspati MT } 38700 38700 6354 9189 Synthetic Detergents MT } 29250 29250 23126 22738 Hydrogen (Captive consumption) NM 3 } 19200000 19200000 - - Oxygen (By-Product) NM 3 } - - - -
NOTES :1. The Licensed Capacities are not applicable in view of the exemption from licensing granted under Notifi cation SO 477
( E ) dated 25th July 1991, issued under the Industries ( Development & Regulation Act,1951).2. Installed capacity excludes the installed capacity for manufacture of intermediates which are intended to be used for
internal consumption to manufacture A.O. and its precursors and derivatives.3. Production of Synthetic Detergent includes 4111 MT (Previous year 7871 MT) produced under process contracts for third
parties.4. Production of Refi ned Oils & Vanaspati is under process contract.
This Year Rs.’lac
Previous Year
Rs.’lac 31. Value of Consumption
of Raw Materials & Spares
% %Raw MaterialsImported (including duty content)
25,897.78 49 33,844.55 63
Indigenous 27,133.02 51 19,949.49 37 53,030.80 100 53,794.04 100
SparesImported (including duty content)
232.89 29 370.54 31
Indigenous 564.32 71 833.04 69 797.21 100 1,203.58 100
32. Dividends Remitted in Foreign Currency(subject to deduction of tax, as applicable)Final Dividend for Financial Year 2008-09 to 89 shareholders on 77548 shares
0.97 0.07
TOTAL 0.97 0.07 33. Earnings in Foreign
ExchangeExport of goods (F.O.B. : this year Rs. 28065.74 lac
29,964.26 32,183.63
previous year Rs.30616.20 lac)Others 5.78 206.84
29,970.04 32,390.47
This Year Rs.’lac
Previous Year Rs.’lac
29. Value of Imports on CIF Basis (includes only Imports directly made)
Raw materials 23,095.75 22,264.53 Goods for resale - 156.93 Stores & spares 183.62 247.65 Capital goods 1.69 1,251.24
23,281.06 23,920.35 30. Expenditure in Foreign
CurrencyInterest - 33.53 Travelling expenditure 83.05 62.21 Other expenditure 675.70 1,553.56 Expenses for Foreign Branch:- Salaries and allowance 135.81 136.26 - Rent 21.05 23.05 - Others 13.79 12.14
929.40 1,820.75
Annual Report 2009–2010
61
34. Employee Benefi ts The amounts recognised in the Company’s fi nancial statements as at the year end are as under:
Gratuity Pension This Year
Rs.’lac Previous Year
Rs.’lac This Year
Rs.’lac Previous Year
Rs.’lac a) Change in Present Value of Obligation
Present value of the obligation at the beginning of the year 2,435.53 2,214.96 106.64 73.28 Current Service Cost 106.44 102.70 - - Interest Cost 183.46 177.20 - - Contribution by Plan Participants - - - - Actuarial (Gain) / Loss on Obligation 12.67 (57.45) (50.89) 45.67 Foreign Currency exchange rate changes - - - - Benefi ts Paid (2.22) (1.88) (12.00) (12.31) Past Service Cost - - - - Amalgamations - - - - Curtailments - - - - Settlements - - - -
Present value of the obligation at the end of the year 2,735.88 2,435.53 43.75 106.64
b) Change in Plan Assets Fair value of Plan Assets at the beginning of the year 1,536.33 1,458.81 - - Expected return on Plan Assets 115.22 116.70 - - Actuarial (Gain)/Loss on Plan Assets (46.40) 39.18 - - Foreign Currency exchange rate changes - - - - Contributions by the Employer 900.00 - - - Contributions by Plan Participants - - - - Benefi ts Paid - - - - Amalgamations - - - - Settlements - - - -
Fair value of Plan Assets at the end of the year 2,597.95 1,536.33 - -
c) Amounts Recognised in the Balance Sheet: Present value of Obligation at the end of the year 2,735.88 2,435.53 - - Unrecognised Past Service Cost - - - - Fair value of Plan Assets at the end of the year 2,597.95 1,536.33 - - Net Obligation at the end of the year 137.93 899.20 - -
d) Amounts Recognised in the statement of Profi t and Loss: Current Service Cost 106.44 102.70 - - Interest cost on Obligation 183.46 177.20 - - Expected return on Plan Assets (115.22) (116.70) - - Expected return on Reimbursement Right recognised as an asset - - - - Net Actuarial (Gain) / Loss recognised in the year (33.71) (18.28) - - Past Service Cost - - - - Effect of Curtailment or Settlement - - - - Net Cost Included in Personnel Expenses 140.97 144.92 - -
e) Actual return on Plan Assets 161.61 77.53 - -
f) Estimated contribution to be made in next fi nancial year
g) Actuarial Assumptions i) Discount Rate 8.00% P.A. 7.5% P.A. 8.00% P.A. 7.5% P.A. ii) Expected Rate of Return on Plan Assets 8.00% P.A. 7.5% P.A. - - iii) Salary Escalation Rate 5.00% P.A. 4.5% P.A. 5.00% P.A. 4.5% P.A. iv) Employee Turnover - - - - v) Mortality L.I.C 1994-96
ULTIMATE L.I.C 1994-96
ULTIMATE L.I.C 1994-96
ULTIMATE L.I.C 1994-96
ULTIMATE
The estimates of future salary increases, considered in actuarial valuation, take account of infl ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.)
Godrej Industries Limited
62
35. Interest in Joint Ventures:
The Company’s interests, as a venturer, in jointly controlled entities are:
Name Countries of Incorporation
Principal activities Percentage of Ownership interest as at 31st March, 2010
Percentage of Ownership interest as at 31st March, 2009
Godrej SaraLee Ltd. India Household Insectisides - - (upto 28 March 2009)Godrej Hersheys Ltd India Beverages & Foods 43.00% 43.00%
The Company’s interests in Joint Venture are reported as Long Term Investments (Schedule “6”) and stated at cost less provision, if any, for permanent diminution in value of such investments. The Company’s share of each of the assets, liabilities, income and expenses, etc. related to its interests in these joint ventures are:
This year Rs. ‘lac
Previous year Rs. ‘lac
I. ASSETS 1. Fixed Assets 3,565.13 3,522.56 2. Investments - 17,740.44 3. Current Assets, Loans and Advances a) Inventories 1,765.15 2,278.14 b) Sundry Debtors 633.39 1,142.08 c) Cash and Bank Balances 564.59 664.78 d) Other Current Assets - - e) Loans and Advances 2,856.06 2,304.36
II. LIABILITIES 1. Loan Funds a) Secured Loans 3,669.19 5,772.32 b) Unsecured Loans 4,031.25 462.25 2. Current Liabilities and Provisions a) Liabilities 2,492.71 2,443.69 b) Provisions 248.54 287.24 3. Deferred Tax- Net - -
III. INCOME 1. Turnover (net of excise) 15,404.32 32,772.45 2. Other Income 774.86 329.42
IV. EXPENSES 1. Material consumed and purchase of goods 10,195.30 18,702.96 2. Expenses 6,943.21 11,792.39 3. Inventory change 246.82 (102.89) 4. Depreciation 331.96 419.87 5. Interest 591.25 556.48 6. Provision for Taxation - 376.01
V. OTHER MATTERS 1. Contingent Liabilities 1,828.36 683.70 2. Capital Commitments 263.16 13.33
SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.)
Annual Report 2009–2010
63
36. Figures for the previous year have been regrouped wherever necessary.37. Additional Information as Required Under Part IV Of Schedule VI To The Companies Act, 1956
1. Registration Details Registration No. : 97781 State Code : 11 Balance Sheet Date : 31/3/2010
2. Capital raised during the year (Amount in Rs. lac) Public Issue : Nil Rights Issue : Nil Bonus Issue : Nil Private Placement : Nil
3. Position of mobilisation and deployment of funds (Amount in Rs. lac) Total Liabilities : 160,228.84 Total Assets : 160,228.84 Sources of Funds Paid-up Capital : 3,176.25 Reserves & Surplus : 99,093.36 Secured Loans : 20,418.89 Unsecured Loans : 34,342.14 Defered Tax Liability : 3,198.20 Application of Funds Net Fixed Assets : 29,828.78 Investments : 144,761.99 Net Current Assets : 15,638.07 Misc. Expenditure : – Accumulated Losses : -
4. Performance of Company (Amount in Rs. lac) Turnover (Total Income) : 99,169.73 Total Expenditure : 91,170.46 Profi t/(Loss) before tax (Including extra ordinary income) : 7,999.27 Profi t/(Loss) after tax : 8,092.74 Earning per Share in Rs. (on an annualised basis) : 2.54 Dividend rate % : 150.00 Generic Names of three principal products/services of Company Item Code No. : 38.23 * Product description : Fatty Acids/Fatty Alcohols Item Code No. : 15.16 * Product description : Vanaspati/Refi ned Oils (*represents Heading No. of the Harmonized Commodity Description and Coding System)
SCHEDULE 22 : NOTES TO ACCOUNTS (Contd.)
Godrej Industries Limited
64
1. We have audited the attached Consolidated Balance Sheet
of Godrej Industries Limited and its subsidiaries as at March
31, 2010, and also the Consolidated Profi t and Loss Account
and Consolidated Cash Flow Statement for the year then
ended, both annexed thereto. These consolidated fi nancial
statements are the responsibility of Godrej Industries Limited’s
management. Our responsibility is to express an opinion on
these fi nancial statements based on our audit.
2. We conducted our audit in accordance with the auditing
standards generally accepted in India. Those standards require
that we plan and perform the audit to obtain reasonable
assurance whether the financial statements are free of
material misstatements. An audit includes, examining on a
test basis, evidence supporting the amounts and disclosures
in the fi nancial statements. An audit also includes assessing
the accounting principles used and signifi cant estimates made
by management, as well as evaluating the overall fi nancial
statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
3. (a) We did not audit the fi nancial statements of certain
subsidiaries and joint ventures, whose fi nancial statements
refl ect the group’s share of total assets of Rs. 13,241.63
lakhs as at March 31, 2010, and the group’s share of
total revenues of Rs. 80,780.27 lakhs and net cash
infl ows amounting to Rs. 91.99 lakhs for the year ended
on that date as considered in the consolidated fi nancial
statements. These fi nancial statements have been audited
by other auditors whose reports have been furnished to
us and our opinion, insofar as it relates to the amounts
included in respect of the subsidiaries and joint ventures
is based solely on the report of the other auditors.
(b) As stated in Note 2 of Schedule 23, the fi nancial statements
of a Jointly controlled entity, whose fi nancial statements
refl ect the Group’s share of total revenue of Rs. 1,958.75
lakhs and net cash inflows amounting to Rs. 284.00
lakhs for the year ended on that date are not audited
as of the date of this report and have been included in
the consolidated fi nancial statements on the basis of
unaudited management accounts.
(c) As stated in Note 2 of Schedule 23, the fi nancial statements
of certain associates whose fi nancial statements refl ect
REPORT OF THE AUDITORS TO THE BOARD OF DIRECTORS OF THE GODREJ INDUSTRIES LIMITED ON CONSOLIDATED FINANCIAL STATEMENTS
the Group’s share of associates’ profit upto March
31, 2010 of Rs. 1,325.14 lakhs and the share of profi t
for the year of Rs. 387.62 lakhs has been included in
the consolidated fi nancial statements on the basis of
unaudited management accounts.
4. We report that the consolidated fi nancial statements have been
prepared by the management of Godrej Industries Limited in
accordance with the requirements of Accounting Standard
(AS) 21 - Consolidated Financial Statements, Accounting
Standard (AS) 23 – Accounting for Investments in Associates in
Consolidated Financial Statements and Accounting Standard
(AS) 27 – Financial Reporting of Interests in Joint Ventures
issued by the Institute of Chartered Accountants of India.
5. Without qualifying our opinion, we draw attention to Note 15
(b) of Schedule 23 – Notes to Accounts, regarding a loan of
Rs.17,330 lakh to a Trust for purchase of the Godrej Industries
Ltd. shares from the market equivalent to options granted
under an Employee Stock Option Plan. As at March 31, 2010,
the market value of the shares held by the ESOP Trust is lower
than the cost of acquisition of the shares by Rs. 7,871 lakh. The
repayment of the loans granted to the ESOP Trust is dependent
on the exercise of options by the employees and the market
price of the underlying equity shares of the unexercised
options at the end of the exercise period. In the opinion of
the management, the fall in the value of the underlying equity
shares is on account of market volatility and the loss, if any,
can be determined only at the end of the exercise period, in
view of which provision for the diminution is not considered
necessary in the fi nancial statements.
6. Reference is invited to note 14 (a) of Schedule 23 - Notes
to Accounts, regarding the recoverability of advances given
to certain individuals amounting to Rs. 1033 lac being
contingent upon the transfer and/or disposal of the shares
pledged against the loan. The said shares were lodged for
transfer which application was rejected and the Company has
preferred an appeal to the Company Law Board. The investee
company had in the mean while moved the High Court but
the matter was referred back to the Company Law Board,
where the matter is awaiting hearing. The impact thereof
on the profi t for the year and the reserves as at March 31,
2010 could not be ascertained.
Annual Report 2009–2010
65
7. Based on our audit and on consideration of the reports of
other auditors on separate fi nancial statements and the
management’s certification of the unaudited financial
statements, in our opinion, the consolidated financial
statements, subject to the observations in paragraphs 3 and
6 above, give a true and fair view in conformity with the
accounting principles generally accepted in India:
a) in case of the Consolidated Balance Sheet, of the
consolidated state of affairs of the Godrej Industries
Limited Group as March 31, 2010;
b) in case of the Consolidated Profi t and Loss Account, of the
consolidated results of operations for the year ended on
that date; and
c) in case of the Consolidated Cash Flow Statement, of
the consolidated cash fl ows for the year ended on that
date.
For and on behalf of
Kalyaniwalla & MistryChartered Accountants
Registration No. 104607W
Viraf R. MehtaPartner
Membership No: 32083
Mumbai, May 26, 2010
Godrej Industries Limited — Consolidated Account
66
CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2010
The Schedules referred to above form an integral part of the Balance Sheet.As per our Report attached Signatures to Balance Sheet and Shedules 1 to 13, 22 and 23
For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants
V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company SecretaryMumbai, May 26, 2010
Schedule Rs. lac This Year
Rs. lac Previous Year
Rs. lacSOURCES OF FUNDS1. Shareholders’ Funds (a) Share capital 1 3,176.26 3,197.59 (b) Reserves & surplus 2 173,382.79 137,590.92
176,559.05 140,788.512. Minority Interest 31,546.64 11,831.77 3. Loan Funds (a) Secured loans 3 71,494.68 80,264.90 (b) Unsecured loans 4 76,624.40 77,081.89
148,119.08 157,346.79 4. Deferred Tax Liability 5,078.50 5,016.16 TOTAL 361,303.27 314,983.23 APPLICATION OF FUNDS 5. Fixed Assets 5 (a) Gross block 92,508.15 86,908.24 (b) Less: Depreciation / Impairment 44,841.35 41,811.79 (c) Net block 47,666.80 45,096.45 (d) Capital work-in-progress 3,857.57 2,454.54
51,524.37 47,550.99 6. Goodwill (on consolidation) 48,096.18 52,346.04
7. Investments 6 92,747.15 65,266.38 8. Current Assets, Loans and Advances (a) Inventories 7 103,581.11 74,335.73 (b) Sundry debtors 8 42,305.82 87,519.93 (c) Cash and bank balances 9 14,788.78 12,520.42 (d) Other Current Assets 23.34 21.94 (e) Loans and advances 10 84,498.52 77,718.56
245,197.57 252,116.58 Less : Current Liabilities and Provisions (a) Liabilities 11 67,949.70 94,525.35 (b) Provisions 12 8,312.30 8,287.59
76,262.00 102,812.94 Net Current Assets 168,935.57 149,303.64 9. Miscellaneous Expenditure 13 - 516.18 (To the extent not written off or adjusted)TOTAL 361,303.27 314,983.23 Signifi cant Accounting Policies 22Notes to Accounts 23
Annual Report 2009–2010
67
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
The Schedules referred to above form an integral part of the Profi t and Loss Account.As per our Report attached Signatures to Profi t and Loss account and Shedules 14 to 23
For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants
V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company SecretaryMumbai, May 26, 2010
Schedule This Year Previous Year Rs. lac Rs. lac Rs. lac
INCOMETurnover (gross) 345,802.11 343,467.80 Less: Excise duty 4,384.96 7,298.81 Turnover (net) 341,417.15 336,168.99 Other Income 14 36,705.14 25,175.62
378,122.29 361,344.61 EXPENDITUREMaterials consumed and purchase of goods 15 249,771.66 240,819.35 Cost of sales - Property Development 16 20,004.58 12,123.89 Expenses 17 68,740.66 72,048.13 Inventory change 18 (1,671.29) 3,583.96 Interest and fi nancial charges (net) 19 14,961.81 14,959.54 Depreciation 5,017.27 4,702.77 (Net of transfer from Revaluation Reserve Rs. 99.50 lac previous year Rs. 133.69 lac)
356,824.69 348,237.64 Profi t Before Tax & Extraordinary Items 21,297.60 13,106.97 Profi t from continuing operations before tax 21,297.60 12,976.80 Income tax
- current tax (5,252.58) (5,158.47) - MAT credit entitlement 877.04 - - deferred tax (95.69) 29.88 - Adjustment for tax of previous years (net) (5.47) (166.41)
Profi t from continuing operations after tax 16,820.90 7,681.80 Profi t from discontinuing operations before tax - 130.17 Income tax
- current tax - (34.59) - deferred tax - (7.53)
Profi t from discontinuing operations after tax - 88.05 Profi t for the year after taxation before extraordinary items 16,820.90 7,769.85 Extraordinary Items (net of tax) 20 - 2,122.32 Profi t for the year after extraordinary items 16,820.90 9,892.17 Prior Period adjustments (net) 21 - (85.02)
16,820.90 9,807.15 Share of profi t in Associates 8,102.60 3,622.24 Profi t before Minority Interest 24,923.50 13,429.39 Share of Minority Interest (4,598.78) (2,282.39)Profi t after Minority Interest 20,324.72 11,147.00 Surplus brought forward 41,254.15 36,308.59 Excess provision of proposed dividend 26.05 - Excess provision of tax on distributed profi t 4.43 - Adjustment of opening profi t of subsidiaries/Jointlly controlled entities on acquisition/deletion (1,806.20) 316.99
39,478.43 36,625.58 Adjustment of goodwill pursuant to scheme of arrangement in a jointly controlled entity - (52.85)Amount available For Appropriation 59,803.15 47,719.73 APPROPRIATIONS:Proposed Dividend on Equity Shares 4,764.37 3,996.99 Tax on distributed profi ts 1,327.89 1,135.14 Transfer to Special Reserve under Section 45IC of RBI Act, 1934 64.04 27.97 Transfer to General Reserve 2,278.37 1,305.48 Surplus carried forward 51,368.48 41,254.15 TOTAL 59,803.15 47,719.73 Basic & Diluted Earnings per share before extra ordinary items 6.39 2.82 Basic & Diluted Earnings per share after extra ordinary items 6.39 3.49 (refer note 21)Signifi cant Accounting Policies 22Notes to Accounts 23
Godrej Industries Limited — Consolidated Account
68
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010
As per our Report attached Signatures to Cash Flow Statement
For and on behalf of A.B. Godrej N.B. Godrej Kalyaniwalla & Mistry Chairman Managing Director Chartered Accountants
V. R. Mehta M. Eipe V. Srinivasan Partner Executive Director Executive Vice President & President (Chemicals) (Finance & Estate) & Company SecretaryMumbai, May 26, 2010
This year Rs. lac
Previous year Rs. lac
A. Cash Flow from operating activities :Profi t before tax 21,297.60 13,106.97 Adjustments for :Depreciation 5,017.27 4,702.77 Unrealised Foreign exchange (360.72) 504.23 Profi t on sale of investments (24,652.84) (13,490.71)(Loss)/Profi t on sale of fi xed assets 133.30 (80.64)Dividend income (326.04) (563.35)Interest income (9,874.59) (7,994.24)Interest expense 14,288.85 14,108.75 Deferred expenditure written off 1,002.03 744.50 Provision/(write-back) of provision in diminution on value of investments 1,022.42 (1,688.19)Provision/(write-back) of provision for doubtful debts/advances (net) (58.01) 1,127.83 Others - 811.76 Operating profi t before working capital changes 7,489.27 11,289.68 Adjustments for :Inventories (30,594.47) (10,587.80)Trade and other receivables 37,819.53 (22,241.61)Trade payables (20,286.20) (7,278.80)Cash used in operations (5,571.87) (28,818.53)Direct taxes paid (5,494.70) (8,965.26)Direct taxes refund received 12.56 408.44 Voluntary retirement compensation paid (486.33) - Net Cash used in operating activities (11,540.34) (37,375.35)
B. Cash Flow from investing activities :Purchase of fi xed assets (9,460.17) (7,522.79)Proceeds from sale of fi xed assets 177.25 448.86 Purchase of investments (112,664.01) (171,623.51)Proceeds from sale of investments 117,453.21 140,269.02 Intercorporate deposits/Loans (net) (362.54) (1,177.63)Interest received 9,809.00 7,224.42 Dividend received 326.04 561.36 Net Cash from/(used in) investing activities before extraordinary items 5,278.78 (31,820.27)Proceeds from transfer of business/demerger - 8,894.05 Proceeds from sale of Medical Diagnostics Division - 26.00 Net Cash from/(used in) investing activities after extraordinary items 5,278.78 (22,900.22)
C. Cash Flow from fi nancing activities :Equity shares capital bought back (2,886.58) -Proceeds from issue of share capital to minority 42,816.71 1,371.13 Proceeds from borrowings 107,062.65 151,045.60 Repayments of borrowings (106,939.77) (105,546.62)Bank overdrafts (net) (9,748.96) 8,870.35 Interest paid (15,351.63) (14,773.73)Dividend paid (4,283.53) (3,248.47)Tax on distributed profi ts (1,100.18) (1,186.79)Net Cash from fi nancing activities 9,568.71 36,531.47
Net increase/(decrease) in cash and cash equivalents 3,307.15 (23,744.10)
Cash and cash equivalents (Opening Balance) 12,520.42 36,491.60 Add: cash and cash equivalents taken over pursuant to Business Acquisition - 23.92 Le ss : cash and cash equivalents on Demerger/Transfer/Dilution (1,038.79) (251.00)
Cash and cash equivalents (Closing Balance) 14,788.78 12,520.42
(including share in jointly controlled entities - Rs. 1,163.24 lac)Notes :1. Cash and Cash equivalents. Cash on hand and balances with banks 14,630.24 12,515.11 Effect of exchange rate changes 158.54 5.31 Cash and cash equivalents 14,788.78 12,520.42 2. Cash and cash equivalents include Deposit with Bank as security amounting to Rs. 25.00 lac (previous year Rs. 18.50 lac) and
Rs. 344.23 lac (previous year Rs. 340.15 lac) received from fl at buyers and held in trust. 3. The above cashfl ow statement includes share of cashfl ows from jointly controlled entities as under: a. Net cash used in operating activities (738.82) b. Net cash used in investing activities (1,054.08) c. Net cash from fi nancing activities 2,128.584. During the year, Godrej Hygiene Care Ltd., a 100% subsidiary of Godrej Industries Ltd. (GIL) was merged with Godrej Consumer
Products Ltd. (GCPL) as approved by Hon'ble High Court, Bombay on 8th October, 2009. GIL received 2,09,39,409 equity shares of GCPL under the scheme of arrangement. The said transation has no impact on the cash fl ows of the Company.
5. The fi gures of previous year have been regrouped wherever necessary.
Annual Report 2009–2010
69
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010
This Year Rs. lac
Previous Year Rs. lac
SCHEDULE 1 : SHARE CAPITAL Authorised: 800,000,000 Equity shares of Re. 1 each 8,000.00 8,000.00 100,000,000 Unclassifi ed Shares of Rs.10 each 10,000.00 10,000.00
18,000.00 18,000.00 Issued, Subscribed and Paid Up: 317,624,892 (previous year 319,758,602) Equity shares of Re.1 each fully paid 3,176.26 3,197.59
3,176.26 3,197.59
Of the above, (i) 187,202,388 (Previous year 187,202,388) shares are held by Godrej & Boyce Mfg. Co. Limited, the holding company (ii) 155,547,816 (Previous year 155,547,816) shares are allotted for consideration other than cash pursuant to schemes of amalgamation/arrangement. (iii) 95,705,718 (Previous year 95,705,718) shares are allotted as fully paid bonus shares by way of capitalisation of Securities premium account.
SCHEDULE 2 : RESERVES AND SURPLUS
As at Additions Deductions Adjustment on As at1.4.2009 aquisition/deletion 31.03.2010
Securities Premium Account 80,200.24 31,935.05 6,933.24 - 105,202.05 81,804.71 - 1,604.47 - 80,200.24
Capital Investment Subsidy Reserve 71.04 - - - 71.04 52.27 18.77 - - 71.04
Revaluation Reserve 1,409.93 - 123.55 - 1,286.38 1,671.21 - 261.28 - 1,409.93
Special Reserve u/s. 451C of RBI Act, 1934 194.95 64.02 - - 258.97 166.98 27.97 - - 194.95
Capital Redemption Reserve 3,125.00 21.34 - - 3,146.34 3,301.34 - 176.34 - 3,125.00
Capital Reserve 3.87 - - - 3.87 - 3.87 - - 3.87
General Reserve 10,875.12 1,697.98 21.34 (537.63) 12,014.13 10,316.14 1,305.48 746.50 - 10,875.12
Foreign Exchange Fluctuation Reserve 456.62 (432.44) - 7.35 31.52 (176.79) 764.93 131.52 - 456.62
Profi t & Loss Account 41,254.15 20,355.20 8,434.67 (1,806.20) 51,368.48 36,308.58 11,147.00 6,518.42 316.99 41,254.15
Total - This Year 137,590.92 53,641.15 15,512.80 (2,336.48) 173,382.79 Total - Previous Year 133,444.44 13,268.02 9,438.53 316.99 137,590.92
SCHEDULE 3 : SECURED LOANS Term loans from banks 36,931.40 39,144.71 1% Secured Redeemable Optionally Convertible Debentures 2,156.00 2,156.00 Bank overdrafts, packing credits, etc . 17,474.81 25,338.37 Commercial Paper 2,500.00 -Other Loans 6,500.00 6,500.00 Share in jointly controlled entities 5,932.47 7,125.82
71,494.68 80,264.90
The Secured Redeemable Optionally Convertible Debentures issued by a Subsidiary company are redeemable at the end of 7 years from the date of allotment i.e. in 2013-14.
Godrej Industries Limited — Consolidated Account
70
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)
SCHEDULE 5 : FIXED ASSETS Rs. Lac
ASSETS GROSS BLOCK DEPRECIATION / IMPAIRMENT NET BLOCK As on Deductions/ As on Upto Deductions/ For the Upto As on As on
01.04.2009 Additions Adjustments 31.03.2010 01.04.2009 Adjustments Year 31.03.2010 31.03.2010 31.03.2009 Tangible Assets Land - Freehold 988.96 395.94 0.54 1,384.36 4.13 4.13 - - 1,384.36 984.83 - Leasehold 170.84 188.89 (0.54) 360.27 27.43 (4.13) 3.87 35.43 324.84 143.41 Buildings 9,473.96 3,294.84 14.93 12,753.87 3,474.91 (28.73) 430.24 3,933.88 8,819.99 5,999.05 Plant & Machinery 52,398.27 3,145.01 737.58 54,805.70 29,036.31 706.51 2,990.95 31,320.75 23,484.95 23,361.96 Research Centre 164.13 0.20 18.21 146.12 80.43 11.61 4.93 73.75 72.37 83.70 Furniture & Fixtures 1,768.40 231.16 134.44 1,865.12 943.94 83.77 123.08 983.25 881.87 824.46 Offi ce & Other Equipments 1,856.38 344.74 123.43 2,077.69 819.22 54.14 112.38 877.46 1,200.23 1,037.16 Vehicles / vessels 3,266.00 138.13 169.13 3,235.00 637.12 108.85 278.17 806.44 2,428.56 2,628.88 Trees Development Cost 117.03 - - 117.03 39.95 - 19.96 59.91 57.12 77.08 Intangible Assets Trademarks 1,180.47 - - 1,180.47 449.85 - 82.17 532.02 648.45 730.62 Technical Know-how 200.00 - - 200.00 199.98 (0.01) - 199.99 0.01 0.02 Software 1,057.23 737.22 0.38 1,794.07 829.55 0.15 158.26 987.66 806.41 227.68 ASSETS ACQUIRED UNDER FINANCE LEASE Vehicles 306.63 - 28.95 277.68 201.85 19.98 53.64 235.51 42.17 104.78 Share in jointly controlled entities 13,959.94 912.52 2,561.69 12,310.77 5,067.14 1,130.57 858.73 4,795.30 7,515.47 8,892.80 TOTAL - This Year 86,908.24 9,388.65 3,788.74 92,508.15 41,811.81 2,086.84 5,116.38 44,841.35 47,666.80 45,096.43 - Previous Year 91,262.05 6,035.11 10,388.92 86,908.24 41,543.06 4,567.73 4,836.46 41,811.79 Capital Work in-Progress 3,857.57 2,454.54 TOTAL 51,524.37 47,550.97
1. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on 30th June, 1992 on the basis of a Valuation Report submitted by professional valuers.
2. Depreciation for the year includes Rs. 99.50 lac (Previous Year Rs. 133.69 lac) being depreciation on revalued component of the fi xed assets.
3. Accumulated depreciation includes impairment loss of Rs. 540.26 lac on plant & machinery in an earlier year.
4. Capital work-in-progress is net of impairment loss of Rs. 204.10 lac provided in an earlier year on an infructuous asset under construction.
This Year Rs. lac
Previous Year Rs. lac
SCHEDULE 4 : UNSECURED LOANSFixed deposits 17,231.57 2,164.31 Intercorporate deposits 750.72 300.00 Commercial Paper 6,000.00 3,000.00 Short term loans - from Banks 47,656.57 60,150.28 - from Others - 2,500.00 Other loans from banks - 8,000.00 Sales tax deferment facility 466.74 466.74 Share in jointly controlled entities 4,518.80 500.56
76,6 24.40 77,081.89
Annual Report 2009–2010
71
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)SCHEDULE 6 : INVESTMENTS
Number Amount (Rs. lac)Investee Company / Institutions Face value
(Rs)Qty. as on 01.04.09
Acquired during the year
Sold/adjusted during the year
Qty. as on 31.03.10
Notes As on 31.03.10 As on 31.03.09
LONG TERM INVESTMENTS : At CostA. TRADE INVESTMENTS
Equity Shares : Fully PaidBharuch Eco-Aqua Infrastructure Ltd. 10 440,000 - - 440,000 44.00 44.00 Preference Shares : Partly paid Wadala Commodities Ltd. 10 5,000,000 - - 5,000,000 (a) 450.00 450.00 (8% Redeemable Cumulative Preference Shares, 2012)
B. OTHER INVESTMENTS : Fully paid unless stated otherwise Equity Shares Quoted :Godrej Consumer Products Ltd. 1 55,369,989 21,074,631 4,000,000 72,444,620 (b) 58,040.80 51,163.47 Amrutanjan Healthcare Limited 10 15,423 15,423 - - 54.11 Mafatlal Industries Limited 10 - 122,050 7,716 114,334 87.35 - Others 7.58 7.68 Unquoted :Associate CompaniesSwadeshi Detergents Ltd. 10 209,370 - - 209,370 - - Creamline Diary Products Ltd. 10 2,671,993 - - 2,671,993 1,689.46 1,504.98 Polychem Hygine Laboratories Pvt. Ltd. 10 455,000 - - 455,000 306.99 242.21 Personalitree Academy Ltd. 10 389,269 - - 389,269 - - Compass BPO Ltd. £0.25 13,692 1,805 15,497 - (c) - 132.24 Other CompaniesAvesthagen Limited 10 195,577 6,626 - 202,203 1,080.43 980.43 Cbay Infotech Ventures Pvt. Ltd. 10 32,258 - - 32,258 100.00 100.00 Gharda Chemicals Ltd. 100 114 - - 114 (d) 11.57 11.57 Tahir Properties Ltd. (Partly paid) 100 25 - - 25 (a) 0.01 0.01 KaROX Technologies Ltd. 10 250,000 - - 250,000 100.50 100.50 HyCa Technologies Pvt. Ltd. 10 12,222 - - 12,222 125.00 125.00 Aadhar Retailing Ltd. 10 1,900,000 2,565,000 - 4,465,000 2,099.50 121.21 Common Stock/Membership Units :Unquoted :CBay Systems Ltd., USA $0.01 4,091,073 - - 4,091,073 253.52 253.52 Boston Analytics Inc. $1 1,067,754 - - 1,067,754 688.09 688.09 Verseon Corporation - Class A Preferred Shares $1.90 2,631,578 - 2,631,578 1,142.34 1,142.34 Newmarket Limited £1.00 100 - - 100 922.70 1,042.30 Quoted:CBaySystems Holdings Ltd., BVI $0.10 9,604,540 - - 9,604,540 4,258.30 4,316.50 Preference Shares :Unquoted :Tahir Properties Ltd. (Class - A) (partly paid) 100 25 - - 25 (a) 0.02 0.02 Government SecuritiesUnquoted :National Saving Certifi cate - - - - - - 0.25 Optionally convertible Loan notes / debentures :Unquoted :Compass BPO Ltd. (10%) £1000 97 - 97 - (c) - 83.19 Verseon Corporation (13%) $1,000,000 - - - - (e) 397.60 397.60 Boston Analytics Inc. (15%) $750,000 - - - - (f) 299.68 299.68 Boston Analytics Inc. (20%) $1,550,000 - - - - (f) 673.03 673.03 Boston Analytics Inc. (12%) $950,000 - - - - (g) 469.21 469.21 Tricom India Limited (8%) 10 13,135,050 - 13,135,050 - - 1,313.51 Shares in Co-operative Society : Fully PaidUnquoted :The Saraswat Co-op Bank Ltd. 10 2,000 2,500 - 4,500 0.45 0.13 Sachin Industrial Co-op Society 500 3 - - 3 0.02 0.02 Amitabh Bachhan Corporation Ltd. 10 25,000 - - 25,000 0.03 - Investment in the capital of Partnership Firm :View Group LP - - - - - 0.01 0.01 CURRENT INVESTMENTSUnits of Mutual Fund :Unquoted:SBI Mutual Fund - Cash option 477.73 - National Savings certifi cate 0.25 - Kotak Floater - LT - Daily Dividend Reinvest 3,533.03 - JPMorgan India Treasury Fund - Super IP - Daily Dividend Reinvest 1,948.56 - Reliance Money Manager Fund - IP - Daily Dividend Reinvest 1,931.11 - ICICI Prudential Flexible Income Plan - Premium - Daily Dividend Reinvest 3,532.79 - LIC MF Savings Plus Fund - Daily Dividend Reinvest 3,535.16 - HDFC Cash Mgmt. Fund - Treasury Advantage - WP - Dly Dividend Reinvest 3,532.84 - IDFC Money Manager - Treasury Plan - Plan C - Daily Dividend Reinvest 2,523.42 - FORTIS Money Plus Fund - IP - Daily Dividend Reinvest 243.52 -
94,506.60 65,716.81 Less : Provision for diminution in value of Investments (1,759.45) (450.43)
92,747.15 65,266.38 Aggregate book value of InvestmentsQuoted 61,945.03 55,034.56 Unquoted 30,802.12 10,231.82
92,747.15 65,266.38 Market Value of Quoted Investments 194,388.98 73,559.03
NOTES:(a) Uncalled Liability on partly paid shares - Tahir Properties Ltd. - Equity - Rs. 80 per share. - Tahir Properties Ltd. - Preference - Rs. 30 per share. - Wadala Commodities Limited - Preference - Re. 1 per share.(b) 97,50,000 shares of Godrej Consumer Products Limited have been pledged as security against loan from J.P. Morgan Securities India Pvt. Ltd. and 52,34,852 received under the scheme of arrangement are locked in till November 24, 2012.(c) 1,805 equity shares received on conversion of loan notes(d) The said shares have been refused for registration by the investee company.(e) Optionally Convertible Notes are convertible as under : - Verseon Corporation - After December 1, 2008 until the due date but not later than Sepember 15, 2012.(f) The optionally convertible promissory notes (15%) of Boston Analytics Inc. in respect of which the company did not exercise the conversion option and Boston Analytics Inc. promissory notes (20%) were due for redemption on June 30, 2009 and August 21, 2009 respectively. The said promissory notes have not been redeemed as of the Balance Sheet date.(g) 12% promissory notes repayable on or before March 31, 2011 along with interest on maturity.
Godrej Industries Limited — Consolidated Account
72
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)This Year
Rs. lacPrevious Year
Rs. lacSCHEDULE 7: INVENTORIES(at lower of cost and net realisable value)Stores and spares 1,657.41 1,469.59 Raw materials 13,725.24 10,191.17 Construction work-in-progress 72,461.01 47,550.14 Work-in-progress 4,240.06 2,680.98 Stock under cultivation 778.53 445.09 Finished Goods 5,862.88 5,412.59 Stock-in-trade 48.17 36.28 Poultry stock 1,703.98 2,055.76 Share in jointly controlled entities 3,103.83 4,494.13
103,581.11 74,335.73 SCHEDULE 8: SUNDRY DEBTORS (Unsecured)Debts outstanding over six monthsConsidered good 2,506.44 1,878.50 Considered doubtful 500.11 744.33
3,006.55 2,622.83 Other debtsConsidered good 38,593.42 82,962.61 (Includes unbilled revenue of Rs. 7,502.36 lac, previous year Rs. 2,197.48 lac)
41,599.97 85,585.44 Less: Provision for doubtful debts (500.11) (789.00)
41,099.86 84,796.44 Share in jointly controlled entities 1,205.96 2,723.49
42,305.82 87,519.93 SCHEDULE 9: CASH AND BANK BALANCESCash and cheques on hand 756.40 1,019.74 Balances with scheduled banks- on current accounts 6,356.39 4,623.28 - on deposit accounts (refer note 11) 6,315.99 5,242.80 Share in jointly controlled entities 1,360.00 1,634.60
14,788.78 12,520.42 SCHEDULE 10: LOANS AND ADVANCES(Unsecured and considered good unlessotherwise stated)Loans and Advances (refer note 14 a) 2,482.64 5,135.76 Loan to ESOP Trusts 18,524.85 15,375.82 (net of provision for doubtful loans Rs. 329.14 lac, previous year Rs. 313 lac) Advances recoverable in cash or in kind or for value to be received
10,881.44 12,757.21
(net of provision for doubtful advances of Rs. 875.53 lac previous year Rs. 1214.10 lac)Mobilisation Advances (secured against bank/corporate guarantee)
3,417.43 4,254.77
Intercorporate deposits 2,839.63 1,973.75 Deposits and balances with- Customs & excise authorities 562.26 635.28 - Others 32,643.85 21,650.90 Due on Management Projects (refer note 14 b) 6,777.18 8,704.80 Advance payment of taxes 3,692.25 2,437.37 (Net of provision for tax)Share in jointly controlled entities 2,676.99 4,792.90
84,498.52 77,718.56
This Year Rs. lac
Previous YearRs. lac
SCHEDULE 11 : CURRENT LIABILITIESAcceptances 12,359.30 2,131.81 Sundry creditors 38,189.03 30,321.59 Advances from customers 3,694.02 44,598.35 Sundry deposits 2,463.87 2,070.00 Investor Education & Protection Fund - Unclaimed Dividend 16.97 18.74 - Unpaid Matured Deposits 11.29 16.82 - Interest accrued on above 4.87 - Other liabilities 7,009.70 7,727.20 Interest accrued but not due on loans 613.34 667.64 Share in jointly controlled entities 3,587.31 6,973.20
67,949.70 94,525.35 SCHEDULE 12 : PROVISIONSProposed dividend 4,764.37 3,996.99 Provision for tax on distributed profi ts 1,327.89 956.60 Provision for retirement benefi ts 1,917.87 2,788.80 Share in jointly controlled entities 302.17 545.20
8,312.30 8,287.59 SCHEDULE 13: MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted)Deferred revenue expenditure - Voluntary retirement compensation - 386.75 Share in jointly controlled entities - 129.43
- 516.18 SCHEDULE 14: OTHER INCOMEInterest : - Debentures 14.84 159.46 - Income tax refund - 41.98 - Deposits 2,765.71 2,702.32 - From projects, landlords & others 7,073.41 4,921.11 Dividend 326.04 563.35 Profi t on sale of fi xed assets (Net) - 80.64 Profi t on sale of long term investments (refer note 19)
24,549.96 13,168.66
Profi t on sale of current investments 102.88 322.05 Provision for depletion in value of investment written back - 1,688.19 Bad debt recovered 747.97 9.24 Miscellaneous income 1,082.69 1,173.12 Share in jointly controlled entities 41.64 345.50
36,705.14 25,175.62
Annual Report 2009–2010
73
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)This Year Previous Year
Rs. lac Rs. lacSCHEDULE 15 : MATERIALS CONSUMED AND PURCHASE OF GOODSRaw materials consumed : Stocks at the commencement of the year 10,191.17 15,422.68 Add : Purchases (net) 232,232.28 207,103.36
242,423.45 222,526.04 Less : Stocks as at the close of the year 13,725.24 10,191.17 Raw Materials consumed during the year 228,698.21 212,334.87 Purchase of goods for resale 10,026.27 9,781.52 Share in jointly controlled entities 11,047.18 18,702.96
249,771.66 240,819.35 SCHEDULE 16 : COST OF SALES-PROPERTY DEVELOPMENTStocks at the commencement of the year 47,586.42 28,479.19 Add : Construction Expenditure during the year
44,927.34 31,231.12
92,513.76 59,710.31 Less : Stocks as at the close of the year 72,509.18 47,586.42
20,004.58 12,123.89 SCHEDULE 17: EXPENSESSalaries, wages and allowances 15,844.26 12,483.81 Contribution to provident fund and other funds 1,121.04 990.99 Employee welfare expenses 983.41 983.86 Stores and spares consumed 1,321.29 1,717.51 Power and fuel 8,522.70 8,757.36 Processing charges 5,229.55 4,920.46 Rent 1,190.35 1,106.45 Rates and taxes 664.71 632.61 Repairs and maintenance - Machinery 1,035.57 992.03 - Buildings 735.50 683.43 - Other assets 301.54 218.80 Insurance 237.84 203.65 Freight 3,601.47 4,363.60 Commission 6,789.95 5,636.75 Discount 400.54 286.24 Advertisement and publicity 1,349.32 1,816.18 Selling and distribution expenses 627.36 821.39 Bad debts written off 404.40 285.39 Provision for doubtful debts and advances (462.41) 1,127.83 Provision for depletion in the value of long term investments
1,022.42 -
Loss on Sale of Fixed Assets 133.30 - Excise duty on inventory change 194.79 429.64 Foreign Exchange loss / (gain) 4.91 2,155.55 Miscellaneous expenses 6,264.14 7,214.61 Share in jointly controlled entities 11,222.71 14,219.99
68,740.66 72,048.13
This Year Previous YearRs. lac Rs. lac
SCHEDULE 18 : INVENTORY CHANGEStocks at the commencement of the year
Finished goods 5,412.59 5,955.89 Work-in-progress 2,680.98 6,242.45 Stock under cultivation 445.09 534.57 Poultry stock 2,055.76 1,917.53 Share in jointly controlled entities 2,137.63 2,034.73
12,732.05 16,685.17 Less: Stock adjustment for subsidiaries deleted
- 369.16
Less: Stocks at the close of the year :Finished goods 5,862.88 5,412.59 Work-in-progress 4,240.06 2,680.98 Stock under cultivation 778.53 445.09 Poultry stock 1,703.98 2,055.76 Share in jointly controlled entities 1,817.89 2,137.63
14,403.34 12,732.05 (Increase)/Decrease in Inventory (1,671.29) 3,583.96 SCHEDULE 19 : INTEREST AND FINANCIAL CHARGES (Net)Interest paid- on debentures and fi xed loans 5,725.24 7,004.19 - on bank overdrafts 5,314.90 4,174.71 - on Intercorporate deposits 482.76 223.55 - other interest 1,342.24 1,416.99
12,865.14 12,819.44 Less: Interest received - on loans & deposits - 26.95 - on Customer balances, etc. 17.31 5.68 - others 3.32 136.74
20.63 169.37 Net Interest 12,844.51 12,650.07 Other fi nancial charges 1,423.71 1,289.31 Foreign exchange loss - 263.82 Share in jointly controlled entities 693.59 756.34
14,961.81 14,959.54 SCHEDULE 20 : EXTRAORDINARY ITEMSProfi t on Sale of business - 2,122.32
- 2,122.32 SCHEDULE 21 : PRIOR PERIOD ADJUSTMENTS Short provision for expenses - (85.02)
- (85.02)
Godrej Industries Limited — Consolidated Account
74
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)SCHEDULE 22: SIGNIFICANT ACCOUNTING POLICIES:-
a) Accounting Convention
The fi nancial statements are prepared under the historical cost convention, on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India and the Accounting Standards prescribed in the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956.
b) Use of Estimates The preparation of fi nancial statements in conformity with
generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities as of the date of the fi nancial statements and reported amounts of income and expenses during the period. Management believes that the estimates used in the preparation of fi nancial statements are prudent and reasonable. Actual results could differ from the estimates.
c) Fixed Assets Fixed Assets are stated at cost or as revalued as the case may
be, less accumulated depreciation. Cost includes expenses related to acquisition and any directly attributable cost of bringing the assets to its intended working condition.
Fixed Assets acquired under fi nance lease are capitalised at the lower of their face value and present value of the minimum lease payments.
d) Intangible Assets The group has evaluated the useful lives of the Intangible
Assets – Goodwill, Trademarks, Non-compete fees, Acquisition value of contracts, etc based on the nature of business, growth rates and estimated discounted cash fl ows. The intangible assets are amortised over the estimated useful lives as follows.
Particulars Estimated useful lives
Goodwill 8 - 20 years
Trade marks 8 - 15 years
Technical Know-how 10 years
Non-compete fees 7 - 8 years
Computer software 4 - 6 years
e) Impairment of Assets The group reviews the carrying amounts of tangible and
intangible assets for any possible impairment at each balance sheet date. An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Impairment loss, if any, is recognised in the period in which impairment takes place.
f) Borrowing Costs Borrowing costs that are directly attributable to the acquisition/
construction of the qualifying asset are capitalised as a part of the cost of such asset, upto the date of acquisition/completion of construction. Borrowing costs incurred for the development of long term projects are included under Construction work in
progress/Management Project Receivables at weighted average of the borrowing cost/rates as per agreement respectively.
g) Investments Investments are classified into long-term and current
investments. Long term investments are carried at cost. Provision for diminution, if any, in the value of each long term investment is made to recognise a decline, other than of a temporary nature. The fair value of a long term investment is ascertained with reference to its market value, the investee's assets and results and the expected cash fl ows from the investment.
Current investments are carried at lower of cost and fair value.
h) Inventories Inventories are valued at lower of cost and net realisable
value. Cost is computed on weighted average basis and is net of modvat. Finished goods and work in progress include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Provision is made for the cost of obsolescence and other anticipated losses, wherever considered necessary.
Construction work-in-progress includes cost of land, premium for development rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Group.
i) Provisions and Contingent Liabilities Provisions are recognised in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.
j) Foreign Exchange Transactions i) Transactions in foreign currency are recorded at exchange
rates prevailing on the day of the transaction. Monetary assets and liabilities denominated in foreign currency, remaining unsettled at the period end are translated at closing rates. The difference in translation of monetary assets and liabilities and realised gains and losses on foreign currency transactions are recognised in the Profi t and Loss Account.
ii) Forward exchange contracts other than those entered into to hedge foreign currency risk of fi rm commitments or highly probable forecast transactions are translated at period end exchange rates. Premium or discount on such forward exchange contracts is amortised as income or expense over the life of the contract.
iii) Realised gain or losses on cancellation of forward exchange contracts are recognised in the Profi t and Loss Account of the period in which they are cancelled.
iv) Exchange differences in respect of other unexpired foreign currency derivative contracts, which have been entered
Annual Report 2009–2010
75
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)into to hedge foreign currency risks are marked to market and losses, if any, are recognised in the Profi t and Loss Account.
k) Revenue Recognition
Sales are recognised where goods are supplied and are recorded net of returns, trade discounts, rebates, sales taxes and excise duty.
Income from processing operations is recognised on completion of production / dispatch of the goods, as per the terms of contract.
Export incentives receivable under the Duty Entitlement Pass Book Scheme and the Duty Drawback Scheme are accounted on accrual basis.
Revenue from construction activity is recognized on “Percentage of Completion Method” of accounting. As per this method, revenue is recognised in proportion to the actual cost incurred for the work completed as against the total estimated cost of project under execution with the Company.
Determination of revenues under the percentage of completion method necessarily involves making estimates, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.
Dividend income is recognised when the right to receive the same is established.
Interest income is recognised on a time proportion basis.
Income on assets given on operating lease is recognised on a straight line basis over the lease term.
l) Research and Development Expenditure Revenue expenditure on Research & Development is charged to
the Profi t and Loss Account of the year in which it is incurred. Capital expenditure incurred during the year on Research & Development is included under additions to fi xed assets.
m) Depreciation Leasehold land is amortised equally over the lease period.
Leasehold improvements are amortised over fi ve years.
Depreciation is provided on the straight line method at the rates specifi ed in Schedule XIV to the Companies Act, 1956, except in some subsidiary companies, where depreciation has been provided on the written down value method. The impact of the differing method of depreciation has not been ascertained but is not likely to be material. Computer hardware is depreciated over its estimated useful life of 4 years.
Depreciation on assets acquired during the year is provided for the full accounting year and no depreciation is charged on the assets sold/discarded during the year, except in case of major additions and deductions exceeding rupees one crore in which case, proportionate depreciation is provided.
Depreciation on the revalued component is provided on the straight line method based on the balance useful life of the assets as certifi ed by the valuers. Such depreciation is
withdrawn from Revaluation Reserve and credited to Profi t and Loss Account.
n) Employee Benefi ts
Liability is provided for the retirement benefi ts of provident fund, gratuity, leave encashment and pension benefi t in respect of all eligible employees of the Group.
i) Defi ned Contribution Plan Employee benefi ts in the form of Provident Fund and family
pension are considered as defi ned contribution plans and the contributions are charged to the Profi t and Loss of the year when the contributions to the respective funds are due.
ii) Defi ned Benefi t Plan Retirement benefi ts in the form of Gratuity and Pension
plan for eligible employees considered as defined benefi t obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.
iii) Other Long-term Benefi ts Long-term compensated absences and Long Service awards
are provided for on the basis of an actuarial valuation, using the projected unit credit method, as at the date of the Balance Sheet.
Actuarial gain/losses comprising of experience adjustments and the effects of changes in acturial assumptions are immediately recognized in the Profi t and Loss Account.
o) Incentive Plans The Group has a scheme of Performance Linked Variable
Remuneration (PLVR) which rewards its employees based on Economic Value Addition (EVA). The PLVR amount is related to actual improvement made in EVA over the previous year when compared with expected improvements.
p) Hedging The group uses forward exchange contracts to hedge its
foreign exchange exposures and commodity futures contracts to hedge the exposure to oil price risks. Gains or losses on settled contracts is recognized in the profi t and loss account. Futures contracts not settled as on the Balance Sheet date are marked to market and losses, if any, are recognized in the profi t and loss account, whereas, the unrealized profi t is ignored. Gains or losses on the Commodity futures contracts is recorded in the profi t & loss account under cost of materials consumed.
q) Deferred Revenue Expenditure The compensation payable under the Voluntary Retirement
Schemes, the benefi t of which is expected to accrue in future is deferred over its payback period. The compensation is generally amortised over three to fi ve years depending on the pay back period, however the pay back period is restricted to March 31, 2010.
r) Taxes on Income Tax expense comprises both current and deferred tax. Current
tax is the amount of tax payable on the assessable income for the year determined in accordance with the provisions of the Income Tax Act, 1961.
Godrej Industries Limited — Consolidated Account
76
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) Deferred tax is recognized on timing differences, being the
differences between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets on unabsorbed tax losses and tax depreciation are recognized only when there is virtual certainty of their realisation and on other items when there is reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year end and based on the tax rate and laws enacted or substantially enacted on the balance sheet date.
s) Segment Reporting The Accounting Policies adopted for segment reporting are
in line with the Accounting Policies of the Company. Segment assets include all operating assets used by the business segments and consist principally of fi xed assets, debtors and inventories. Segment liabilities include the operating liabilities that result from the operating activities of the business. Segment assets and liabilities that cannot be allocated between the segments are shown as part of unallocated corporate assets and liabilities respectively. Income / Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are refl ected as unallocated corporate income / expenses.
SCHEDULE 23: NOTES TO ACCOUNTS:-1. Principles of Consolidation: The consolidated financial statements relate to Godrej
Industries Limited, the holding company, its majority owned subsidiaries, Joint ventures and Associates (collectively referred to as Group). The consolidation of accounts of the Company with its subsidiaries has been prepared in accordance with Accounting Standard (AS) 21 ‘Consolidated Financial Statements’. The fi nancial statements of the parent and its subsidiaries are combined on a line by line basis and intra group balances, intra group transactions and unrealized profi ts or losses are fully eliminated.
In the consolidated fi nancial statements, ‘Goodwill’ represents the excess of the cost to the Company of its investment in the subsidiaries and/or joint ventures over its share of equity, at the respective dates on which the investments are made. Alternatively, where the share of equity as on the date of investment is in excess of cost of investment, it is recognised as ‘Capital Reserve’ in the consolidated fi nancial statements.
Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the respective dates on which investments are made by the Company in the subsidiary companies and further movements in their share in the equity, subsequent to the dates of investment as stated above.
Investments in Joint Ventures are dealt with in accordance with Accounting Standard (AS) 27 ‘Financial Reporting of Interests in Joint Ventures’. The Company’s interest in jointly controlled entities are reported using proportionate consolidation, whereby the Company’s share of jointly controlled assets and liabilities and the share of income and expenses of the jointly controlled entities are reported as separate line items.
Investments in Associates are dealt with in accordance with Accounting Standard (AS) 23 ‘Accounting for Investments in Associates in Consolidated Financial Statements’. Effect has been given to the carrying amount of investments in associates using the ‘Equity method’. The Company’s share of the post acquisition profi ts or losses is included in the carrying cost of investments.
2. The fi nancial statements of the subsidiaries, joint ventures and associates used in the consolidation are drawn upto the same reporting date as of the Company i.e. year ended March 31, 2010.
The accounts of Creamline Dairy Products Ltd., Polychem Hygiene Laboratories Pvt. Ltd., & Al Rahba International Trading Ltd., associate companies, have not been audited for the year ended March 31, 2010 as of the Balance Sheet date and have been consolidated on the basis of the accounts as certifi ed by their respective management.
3. Information on subsidiaries, joint ventures and associates:
(a) The subsidiary companies considered in the consolidated fi nancial statements are:
Sr. No.
Name of the Company Country of Incorporation
Percentage of Holding
This Year Previous Year
1 Godrej Agrovet Ltd. India 75.26% 75.26%2 Golden Feed Products
Ltd.India 75.26% 75.26%
(100% subsidiary of Godrej Agrovet Ltd.)
3 Godrej Oil Palm Limited India 60.21% 60.21%(formerly known as Godrej Aquafeed Limited)(80% subsidiary of Godrej Agrovet Ltd.)
4 Cauvery Palm Oil Limited
India 67.73% 38.38%
(51% subsidiary of Godrej Agrovet Ltd. upto 19-05-09)(90% subsidiary of Godrej Agrovet Ltd. from 20-05-09)
5 Natures Basket Ltd.100% subsidiary of (Godrej Agrovet Ltd. upto 30-06-09)
India 75.26% 75.26%
(100% subsidiary of Godrej Industries Ltd. from 01-07-09)
India 100.00% 0.00%
6 Godrej Properties Ltd. India 70.42% 81.40%7 Godrej Realty Pvt. Ltd. India 35.91% 41.51%
(51% subsidiary of Godrej Properties Ltd.)
Annual Report 2009–2010
77
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)
Sr. No.
Name of the Company Country of Incorporation
Percentage of Holding
This Year Previous Year
8 Godrej Waterside Properties Pvt. Ltd.
India 35.91% 41.51%
(51% subsidiary of Godrej Properties Ltd.)
9 Godrej Developers Pvt Ltd.
India 35.91% 41.51%
(51% subsidiary of Godrej Properties Ltd.)
10 Godrej Real Estate Private Limited
India 70.42% 81.40%
(100% subsidiary of Godrej Properties Ltd.)
11 Godrej Seaview Properties Private Limited
India 54.74% 81.40%
(77.73% subsidiary of Godrej Properties Ltd.)
12 Happy Highrises Limited India 35.91% 81.40%(51% subsidiary of Godrej Properties Ltd.)
13 Godrej Estate Developers Pvt. Ltd.
India 35.91% 81.40%
(51% subsidiary of Godrej Properties Ltd.)
14 Godrej Hygiene Care Pvt. Ltd.
India 100% 100%
(up to 31-05-09)15 Ensemble Holdings &
Finance Ltd.India 100% 100%
16 Godrej International Ltd., UK
UK 100% 100%
(b) Interests in Joint Ventures:
Sr. No.
Name of the Company Country of Incorporation
Percentage of Holding
This Year Previous Year
1 Godrej Sara Lee Ltd. India 20.00% 20.00%(Shares held by 100% subsidiary Godrej Hygiene Care Pvt. Ltd.)(up to 31-05-09)
2 Godrej Sara Lee Bangladesh Pvt. Ltd.
Bangladesh 20.00% 20.00%
(100% subsidiary of Godrej Sara Lee Ltd.)(up to 31-05-09)
3 Godrej Sara Lee Lanka Pvt. Ltd.
Sri Lanka 20.00% 20.00%
(100% subsidiary of Godrej Sara Lee Ltd.)(up to 31-05-09)
4 ACI Godrej Agrovet Pvt. Ltd.
Bangladesh 37.63% 37.63%
(joint venture partner of Godrej Agrovet Ltd.)
5 Godrej Gold Coin Acqafeed Ltd.
India 36.88% 36.88%
(joint venture partner of Godrej Agrovet Ltd.)
6 Godrej IJM Palm Oil Ltd. (formerly Godrej Gokarna Oil Palm Ltd.)
India 36.29% 36.29%
(joint venture partner of Godrej Agrovet Ltd.)
7 Godrej Tyson Foods Ltd.
India 36.88% 36.88%
(joint venture partner of Godrej Agrovet Ltd.)
8 Godrej Hershey Limited
India 43.00% 43.00%
9 Nutrine Confectionery Ltd.(100% subsidiary of Godrej Hershey Limited)
India 43.00% 43.00%
Godrej Industries Limited — Consolidated Account
78
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.) (c) Investment in Associates:
Sr. No.
Name of the Company Country of Incorporation
Percentage of Holding
This Year Previous Year
1 Swadeshi Detergents Ltd.
India 41.08% 41.08%
2 Godre j Con sumer Products Limited
India 23.51% 21.55%
3 Personalitree Academy Ltd.
India 26.00% 26.00%
(associate of Ensemble Holdings & Finance Ltd.)
4 C r e a m l i n e D a i r y Products Ltd.
India 19.57% 19.57%
(associate of Godrej Agrovet Ltd.)
5 Al Rahba International Trading LLC
U.A.E. 33.87% 25.08%
(associate of Godrej Agrovet Ltd.)
6 Polychem Hygiene Laboratories Pvt. Ltd.
India 19.57% 19.57%
(associate of Godrej Agrovet Ltd.)
7 Compass Connections Limited
UK 20.71% 20.71%
(up to 08-03-10)
4. The accounting policies of certain subsidiaries, joint ventures & associates especially regarding the method of depreciation, amortization of technical know-how and accounting for retirement benefi ts are not in consonance with the group accounting policies. No effect has been given in the consolidated fi nancial statements on account of such differing accounting policies, where the impact is not expected to be material.
5. The break-up of Investment in Associates is as under:
Sr.
No.
Name of the Company
Cost of Acquisition
Goodwill included
in cost of acquisition
Share in profi ts / (loss) of
associates post
acquisition
Provision for
diminution in the
value of investments
Carrying cost of
Investments
1 Swadeshi Detergents Ltd. 191.32 91.46 (130.27) 61.05 –
191.32 91.46 (135.81) 55.51 – 2 Godrej Consumer
Products Limited 51,372.93 35,540.15 6,667.87 – 58,040.80 49,223.86 37,845.36 1,939.61 – 51,163.47
3 Personalitree Academy Ltd. 110.28 42.84 (42.04) 68.24 –
110.28 42.84 (42.04) 68.24 – 4 Creamline Dairy
Products Ltd. 1,038.00 398.41 651.46 – 1,689.46 1,038.00 398.41 466.98 – 1,504.98
Sr.
No.
Name of the Company
Cost of Acquisition
Goodwill included
in cost of acquisition
Share in profi ts / (loss) of
associates post
acquisition
Provision for
diminution in the
value of investments
Carrying cost of
Investments
5 Al Rahba International Trading LLC 8.10 (246.37) (8.10) –
8.10 69.55 (8.10) – – 6 Polychem
Hygiene Lab Pvt. Ltd. 162.75 88.99 144.24 306.99
162.75 88.99 79.46 – 242.21 7 Compass
Connection Ltd. – – – – – (up to 08-03-10) 124.54 80.56 73.87 66.17 132.24 Total this year 52,883.38 35,915.48 7,283.16 129.29 60,037.25 Total previous year
50,858.85 38,617.17 2,373.97 189.92 53,042.90
6. Contingent Liabilities
Sr. No.
Description This Year Rs. Lac
Previous Year Rs. Lac
(a) Claims against the Company not acknowledged as debts:
1) Excise duty demands relating to disputed classifi cation, post manufacturing expenses, assessable values, etc. which the Company has contested and is in appeal at various levels
2,388.53 2,029.35
2) Customs Duty demands relating to less charge, differential duty, classifi cation, etc
286.08 856.94
3) Sales Tax demand relating to purchase tax on Branch Transfer / Non availability of C Forms, etc at various levels
557.75 2,054.42
4) Octroi demand relating to classifi cation issue on import of Palm Stearine and interest thereon
1,217.63 1,124.04
5) Stamp duties claimed on certain properties which are under appeal by the Company
330.73 330.73
6) Income Tax demands against which the company has preferred appeals
1,561.02 2,297.56
7) Industrial relations matters under appeal 219.59 234.60 8) Others 238.07 289.67 (b) Guarantees issued by banks, excluding guarantees
issued in respect of matters reported in (a) above 733.04 666.65
(c) Guarantees given by the Company in respect of credit/guarantee limits sanctioned by banks to subsidiary and other companies
6,932.97 4,313.66
(d) Letters of credit issued by bank on behalf of the company
617.74 84.26
(e) Uncalled liability on partly paid shares/debentures - 41.70 (f) Additional consideration against acquisition of
shares 50.03 50.11
(g) Case/Claim fi led by Processors for claiming various expenses
41.70 104.13
(h) Share in Jointly Controlled Entities 1,828.36 1,106.70
7. Capital Commitments
Sr. No.
Description This Year Rs. Lac
Previous Year Rs. Lac
1 Estimated value of contracts remaining to be executed on capital account, to the extent not provided
755.09 1,938.14
2 Share in Jointly Controlled Entities 378.82 138.74
Annual Report 2009–2010
79
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)8. Share capital Post receipt of SEBI exemption under regulation 3(1)(l) of the
Takeover Code, the Company issued a Public Announcement on 29th April, 2009 and on 20th May, 2009 for Buyback upto 57,00,000 of its shares from the open market at a price not exceeding Rs. 275/- per share for an aggregate consideration not exceeding Rs. 99 crore. Under the Buyback programme, the Company has bought back and extinguished 21,33,710 shares at a consideration of Rs. 2,887 lac. The premium paid on Buyback of shares amounting to Rs 2,865.24 lac has been adjusted from the Securities Premium Account. The Buyback programme has been completed.
The resultant excess provision of proposed divided and Tax on distributed profi t due to Buyback of shares is added in surplus brought forward of profi t & loss account.
9. Loans a) Term loans from banks are secured by fi rst charge by
way of equitable mortgage of the immovable properties including land, building and plant & machinery at Valia factory.
b) Working capital facilities sanctioned by banks are secured by hypothecation of stocks and book debts.
c) Other loans are secured by pledge of 97,50,000 shares of Godrej Consumer Products Limited so as to result in a collateral cover of three times the loan facility.
d) The Company had during the year raised Rs. 37,500 lac (Previous year Rs.15,000 lac) against the issue of commercial paper. The amount outstanding there against as on March 31, 2010 is Rs. 8,500 lac.
e) The Secured Redeemable Optionally Convertible Debentures are secured to the extent of specific immovable assets of the Group disclosed under the head “Fixed Assets”.
10. Investments a) The Company had sold its entire holding in Godrej Hicare
Limited, a subsidiary company, in March 2009. The profi t thereon based on the minimum consideration received was recognised in the accounts for the year ended on 31st March 2009. During the year, the company has received an additional consideration of Rs. 2,759 lac (net) on Godrej HiCare achieving certain fi nancial performance parameters which consideration has been recognised as exceptional income in this year.
b) The Board of Directors at its meeting held on May 27, 2009, approved a scheme for the merger of Godrej Hygiene Care Limited (GHCL), a 100% subsidiary of Godrej Industries Limited, into Godrej Consumer Products Limited (GCPL). The scheme has been approved by the Hon’able High Court, Bombay on 8th October, 2009 . The Appointed date of the merger being June 1st, 2009, the assets and liabilities of GHCL stand transferred to and vested in GCPL from that date. Pursuant to the said scheme of arrangement, 51,07,125 (20%) equity shares held by GHCL in Godrej Sara Lee Limited, a 49:51 unlisted joint venture Company between the Godrej Group and Saralee Corporation, USA stand transferred to and vested in GCPL
and the Company has received 209,39,409 equity shares of GCPL in lieu thereof as per the terms of the Scheme of Arrangement. 25% of these shares are locked in till 24th November, 2012.
11. Cash & Bank Balances Balances with scheduled banks on deposit accounts include
Rs.344.23 lac (Previous year Rs.340.15 lac) received from fl at buyers and held in trust on their behalf in a corpus fund and Rs. 6.50 lac deposit pledged with government authorities
12. Deferred Tax Major components of Deferred Tax arising on account of timing
differences as at March 31, 2010 are:
Description This Year Previous YearAssetsProvision for retirement benefi ts 228.64 521.00 Provision for doubtful debts/advances 547.55 784.71 VRS Expenses 215.00 298.00 Others 581.31 (213.42)
1,572.50 1,390.29 LiabilitiesDepreciation 6,648.53 6,385.94 Share in Jointly Controlled Entities 2.47 20.51
6,651.00 6,406.45 Net Deferred Tax Liability 5,078.50 5,016.16
Loans & Advances:
13. The Group has been entering into Development Agreements with landlords. Development Manager Fees amounting to Rs. 60,230,839/- (Previous Year Rs. 60,230,839/-) accrued as per terms of the Agreement are receivable by the Group based upon progress milestones specifi ed in the respective Agreements and have been disclosed as Development Manager Fees accrued but not due in Schedule 10.
14. a) Loans and Advances include Rs. 1,033 lac (Previous year Rs. 1,033 lac) advanced by the Company to certain individuals against pledge by way of deposit of equity shares of Gharda Chemicals Ltd. The Company has enforced its security and lodged the shares for transfer in its name, however, the transfer application has been rejected by Gharda Chemicals Ltd. and the Company fi led an appeal before the Company Law Board against the rejection. The investee Company had in the meanwhile, moved the Bombay High Court and the Court remanded the matter back to CLB. The CLB has advised that the parties may approach the Bench after fi nal disposal of the suit fi led by the investee company and the application made by minority shareholders under Section 397/398 before the Hon’ble High Court. The Company has fi led an appeal with the Hon’ble High Court against the order of the Company Law Board under Section 10 F of the Companies Act to the High Court, which has been admitted.
Interest on the aforesaid loan amounting to Rs. 315 lac was accrued upto March 31, 2000 and has been fully
Godrej Industries Limited — Consolidated Account
80
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)provided for, no interest is being accrued thereafter. The recoverability of the advance is contingent upon the transfer and/or disposal of the said shares. It is the opinion of the management that the underlying value of the said shares is substantially greater than the amount of the loan.
14. b) Due on Management Projects include a sum of Rs. 21,564,700/- (Previous Year Rs. 21,479,389/-) on account of a project, where the matter is sub-judice with arbitrators.
15. Employee Stock Option Plans a) In December 2005, the group had instituted an Employee
Stock Option Plan (GIL ESOP) as approved by the Board of Directors and the Shareholders, for the allotment of 15,00,000 options, increased to 90,00,000 options on split of shares convertible into 90,00,000 equity shares of Re.1 each to eligible employees of participating companies.
In July 2009, the Company had instituted an Employee Stock Option Plan II (GIL ESOP II) as approved by the Board of Directors and the Shareholders, for the allotment of 90,00,000 convertible into 90,00,000 shares of the nominal value of Re.1 each to eligible employees of participating companies.
In F.Y. 2007-08, Godrej Properties Limited (GPL) instituted an Employee Stock Option Plan (GPL ESOP) approved by the Board of Directors, Shareholders and the Remuneration Committee which provides for the allotment of 442,700 options convertible into 442,700 Equity Shares of Rs. 10/- each to eligible employee of Godrej Properties Limited and its subsidiary companies (the participating companies).
The schemes are administered by an independent ESOP Trust created with ILFS Trust Co. Ltd. which purchases from the market, shares equivalent to the number of options granted by the Compensation Committee. The particulars of the scheme and movements during the year are as under:
ESOP IThis Year Previous Year
No. of Options
Wt. average exercise
price ( * )
No. of Options
Wt. average exercise
price ( * )Options outstanding at the beginning of the year
7,799,950 190.43 7,309,500 177.10
Options granted during the year :2nd May, 2008 - - 340,000 284.6026th May, 2008 - - 835,450 276.703rd June, 2008 - - 150,000 254.45Options exercised during the year
2,100,000 91.84 - -
Options forfeited / expired during the year : 119,250 284.45 835,000 209.87Options outstanding at the year end
5,580,700 235.48 7,799,950 190.43
ESOP II :This Year Previous Year
No. of Options
Wt. average exercise
price ( * )
No. of Options
Wt. average exercise
price ( * )Options outstanding at the beginning of the year - - - - Options granted during the year:10th August, 2009 860,000 179.86 - - Options exercised during the year : - - - - Options forfeited / expired during the year : - - - - Options outstanding at the year end 860,000 179.86 - -
GPL ESOPThis Year Previous Year
No. of Options
Wt. average exercise
price ( * )
No. of Options
Wt. average exercise
price ( * )Options outstanding at the beginning of the year 442,700 620.00 442,700 620.00 Options granted during the year: - - - - Options exercised during the year : - - - - Options forfeited / expired during the year : 39,000 620.00 - - Options outstanding at the year end 403,700 620.00 442,700 620.00
(*) The Wt. average exercise price stated above is the price on the grant date and will be increased by the interest cost at the prevailing rates upto the exercise of the option.
The weighted average balance life of options outstanding as on 31st March, 2010 is 3.82 years.
The weighted average balance life of options outstanding as on 31st March, 2010 for ESOP I is 3.74 years and for ESOP II is 4.30 years.
The options granted shall vest after three years from the date of grant of option, provided the employee continues to be in employment and the option is exercisable within two years after vesting.
Modifi cation of the ESOP scheme :
1. The vesting period for options granted on 05/04/07 and on 11/04/07 was increased to a maximum of 5 years and the exercise period to 3 years from vesting.
2. The exercise period of unvested options of retiring employees increased from 6 months to 2 years.
3. The options granted to the employees of participating company shall continue in case of restructuring including sale of shares of participating Company.
Annual Report 2009–2010
81
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognized since the market price of the underlying share at the grant date is the same / less than the exercise price of the option, the intrinsic value therefore being Nil.
The fair value of the share options has been determined using the Black-Scholes Option Pricing Model. Had the fair value method of accounting been used, the net profi t and earnings per share would have been as per the pro forma amounts indicated below.
This Year Previous YearRs. Lac Rs. Lac
Net Profi t (as reported) 20,317.34 11,147.00 Less : Stock based compensation expense determined under fair value based method (Pro Forma) 2,665.86 2,645.00 Net Profi t (Pro Forma) 17,651.48 8,502.00
Amt. Rs. Amt. Rs. Basic & Diluted Earnings per share before Extraordinary Items (as reported) 6.39 2.82 Basic & Diluted Earnings per share before Extraordinary Items (Pro Forma) 5.56 2.68 Basic & Diluted Earnings per share after Extraordinary Items (as reported) 6.39 3.49 Basic & Diluted Earnings per share after Extraordinary Items (Pro Forma) 5.56 2. 66
b) The independent ESOP trust has purchased shares of
GIL from the market against the options granted. The purchases are fi nanced by loans from the group companies amounting to Rs 17330.08 lac (previous year Rs 17304.07 lac). As on 31 March 2010, the market value of the shares purchased by the Trust is lower than the acquisition cost of the shares by Rs 7871.22 lac (previous year Rs 12306.77 lac)
The repayment of the loans granted to the ESOP trust is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options at the end of the exercise period. The fall in value of the underlying equity shares is on account of market volatility and the loss, if any, can be determined only at the end of the exercise period. In view of the aforesaid, provision for diminution of Rs 7871.22 lac (previous year Rs 12306.77 lac) is not considered necessary in the fi nancial statements.
16 Leases: Leases granted by the group a) Operating Lease:
The company has entered into leave and licence agreements in respect of its commercial and residential premises. The non-cancelable portion of the leases range between 3 months to 36 months and are renewable by
mutual consent on mutually acceptable terms. Leave and licence arrangements being similar in substance to operating leases. The company has also granted lease for freehold land. The particulars of the operating lease arrangements are as under:
This Year Previous YearRs Lac Rs Lac
Gross carrying amount of premises 1,913.45 1,785.95 Accumulated depreciation 870.14 763.43 Depreciation for the period 50.89 50.87
The aggregate future minimum lease payments are as under :
This Year Previous YearPeriod Rs Lac Rs LacLease payment recognised in the profi t & loss account
3,157.87 3,433.55
Future lease payments - Within one year 3,484.95 3,347.89 - Later than one year and not later than fi ve years
6,622.90 3,632.33
Lease taken by the group b) Operating Lease: The Company’s signifi cant leasing arrangements are in
respect of operating lease for land, offi ce premises, residential premises, machinery and storage tanks. The agreegate lease rentals paid by the Company are charged to profi t & loss account
This Year Previous YearPeriod Rs Lac Rs LacLease payment recognised in the profi t & loss account
440.44 418.17
Future lease commitments- Within one year 399.87 412.53 - Later than one year and not later than fi ve years
323.41 336.07
c) Finance Leases: The company has acquired vehicles under Finance Lease.
Liability for minimum lease payment is secured by hypothecation of the vehicles acquired under the lease. The minimum lease payments outstanding as on March 31, 2010, in respect of vehicles acquired under lease are as under:
Period
Total minimum lease
payments outstanding as
on March 31, 2010
Un-matured Interest
Present value of
minimum lease
paymentsRs Lac Rs Lac Rs Lac
Within one year 48.54 8.47 45.71Later than one year and not later than fi ve years 14.43 2.07 11.73
62.97 10.54 57.44
Godrej Industries Limited — Consolidated Account
82
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)17. Hedging Contracts The group uses forward exchange contracts to hedge its foreign
exchange exposure relating to the underlying transactions and fi rm commitments. The use of the foreign exchange forward contracts reduces the risk on cost to the company. The group also uses commodity futures contracts to hedge it’s exposure to vegetable oil price risk. The group does not use foreign exchange forward contracts or commodity future contracts for trading or speculation purposes.
i) Derivative instruments outstanding:
a) Commodity futures contracts
Details This Year Previous YearPurchase Sale Purchase Sale
Futures contracts outstanding 1 - 6 - Number of units under above contracts in MT. 1,040 - 4,500 -
b) Forward Exchange contracts
Details This Year Previous YearPurchase Sale Purchase Sale
Total number of contracts outstanding 31 9 24 6 Foreign currency value - US Dollar (million) 9.47 1.85 10.04 2.42 - Euro (million) - 2.00 - 0.50
ii) Un-hedged foreign currency exposures
Details This Year Previous YearPurchase Sale Purchase Sale
Uncovered Foreign exchange exposure as at the year end - US Dollar (million) 13.78 8.42 2.08 3.56 - Euro (million) 0.04 - 0.04 0.17 - GBP (million) - 0.03 - -
18. Turnover
This YearRs Lac
Previous YearRs Lac
Turnover includesi) Processing charges 539.83 948.01 ii) Export Incentives 180.20 963.18 iii) Licence fees and service
charges 2,494.50 6,679.45
iv) Project / Development Management Fees
2,230.18 1,352.69
v) Claims 717.84 45.10 vi) Other i ncome f rom
customers 145.52 84.87
vii) Share in jointly controlled entities
12,604.92 13,949.39
18,912.99 24,022.69
19. Exceptional Items
This YearRs Lac
Previous YearRs Lac
Included under Other Incomei) Profi t on sale of long term
investments 10,564.43 8,969.63ii) Write back / (Provision) for
diminution in investment - 1,688.19
20. Profi t & Loss Account a) Exchange differences recognised in the Profi t & Loss
Account for the year is a loss of Rs. 4.91 lac (Previous year loss of Rs. 2,419.37 lac). The exchange difference in respect of forward exchange contracts to be recognised in subsequent accounting periods is Rs. 26.38 lac (Previous year Rs. 21.31 lac).
b) Research & Development Expenditure of revenue nature charged to the Profi t & Loss Account amounts to Rs. 327.31 lac (Previous year Rs. 173.30 lac).
21. Earnings Per Share:
This Year Previous Yeara. Calculation of
weighted average number of equity shares:
Number of shares at the beginning of the year
Nos. 319,758,602 319,758,602
Number of equity shares outstanding at the end of the year
Nos. 317,624,892 319,758,602
Weighted average number of equity shares outstanding during the year
Nos. 318,247,978 319,758,602
b. Net profi t after tax excluding extraordinary items
Rs. 'lac 20,324.72 9,024.68
c. Net profi t after tax available for equity shareholders including extraordinary items
Rs. 'lac 20,324.72 11,147.00
d. Basic and diluted earnings per share of Re. 1 each excluding extraordinary Items
Rupees 6.39 2.82
e. Basic and diluted earnings per share of Re. 1 each including extraordinary Items
Rupees 6.39 3.49
Note: There is no impact on basic as well as diluted earnings per share on account of the ESOP, as the scheme does not envisage any fresh issue of share capital.
Annual Report 2009–2010
83
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)
22. Related Party Disclosuresa) Names of related parties and description of relationship
Parties where control exists Key Management PersonnelGodrej & Boyce Mfg. Co. Ltd., the holding company Mr. A.B. Godrej Chairman
Mr. N.B. Godrej Managing DirectorFellow Subsidiaries: Ms. T.A. Dubash Executive DirectorWadala Commodities Ltd. & President (Marketing)Godrej (Malaysia) Sdn Bhd Mr. M. Eipe Executive DirectorGodrej (Singapore) Pte Ltd. & President (Chemicals)Godrej Infotech Ltd. Mr. V. Banaji Executive Director & PresidentVeromatic International BV (Group Corporate Affairs)Veromatic Services BV Mr. M.P. Pusalkar Executive Director & PresidentWater Wonder Benelux BV (Corporate Projects)Godrej ConsumerBiz Ltd. (up to 01.06.2009) Mr. B.S. Yadav Managing Director
(Godrej Agrovet Ltd.)Other related parties with whom the Company had Mr. M.S. Korde Managing Directortransactions during the year (Godrej Properties Ltd.) Associate / Joint Venture Companies Mr. Pirojsha Godrej Executive DirectorGodrej Consumer Products Ltd. (also a fellow subsidiary) (Godrej Properties Ltd.) Godrej Hershey Ltd. Mr. H.K. Press Vice-ChairmanSwadeshi Detergents Ltd. (Godrej Consumer Products Ltd.)Compass BPO Ltd. ( up to 08.03.2010) Mr. Dalip Sehgal Managing DirectorHDFC Venture Trustee Co. Ltd. (Godrej Consumer Products Ltd.)Red Fort India Real Estate Mr. Vivek Mathur Managing DirectorHDFC PMS (Godrej Hershey Ltd.)Milestone Real Estate Fund Mr. C.H. Gopal Deputy General Manager
(Godrej Hershey Ltd.)Enterprises over which key managementpersonnel exercise signifi cant infl uence Relatives of Key Management PersonnelGodrej Netherlands BV Ms. P.A. Godrej Wife of Mr. A.B. GodrejRapidol (Pty) Ltd. Ms. N.A. Godrej Daughter of Mr. A.B. GodrejGodrej Global Mideast FZE Mr. P.A. Godrej Son of Mr. A.B. GodrejGodrej Hygiene Products Ltd. Ms. R.N. Godrej Wife of Mr. N.B. GodrejGodrej Consumer Products Mauritius Ltd. Mst. B.N. Godrej Son of Mr. N.B. GodrejGodrej Consumer Products Holding (Mauritius) Ltd. Mst. S.N. Godrej Son of Mr. N.B. GodrejGodrej Holdings P. Ltd. Mst. H.N. Godrej Son of Mr. N.B. GodrejGodrej Investments Pvt. Ltd.Cartini India Ltd.Bahar Agrochem & Feeds Pvt. Ltd.Vora Soaps Ltd.Tahir Properties Ltd.Godrej Tyson Foods Ltd.
Godrej Industries Limited — Consolidated Account
84
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)
b) Transactions with Related Parties Rs. Lac
Nature of Transaction HoldingCompany
FellowSubsidiaries
Associate/Joint Venture
Companies
Key Management
Personnel
Relative of Key
Management Personnel
Enterprises over which Key Mangement
Personnel exercise signifi cant infl uence
Total
Sale of Goods 19.88 - 945.78 - - 13.53 979.19 Previous Year 29.09 - 1,327.34 - - 49.28 1,405.71 Advance given 140.13 - - - - - 140.13 Previous Year 88.22 - - 20.16 40.00 - 148.38 Loan given - - - - - - - Previous Year - - - 173.00 - - 173.00 Loan repaid - - - - - - - Previous Year - - - 23.99 - - 23.99 Purchase of goods 76.84 - 687.92 - - 1,218.72 1,983.48 Previous Year 141.57 - 1,087.79 - - 1.99 1,231.35 Purchase of Fixed Assets 233.17 - - - - - 233.17 Previous Year 242.00 - 4.16 - 100.00 - 346.16 Processing charges received - - 89.81 - - - 89.81 Previous Year - - 198.38 - - - 198.38 Commission / Royalty received - - 105.57 - - - 105.57 Previous Year - - 178.89 - - - 178.89 Licence fees / Service Charges / Storage Income 0.27 - 397.27 - - - 397.54 Previous Year 0.39 7.69 - - - - 8.08 Other Income 0.12 - 15.40 - - - 15.52 Previous Year 1.11 - - - - - 1.11 Recovery of establishment & Other Expenses - 2.13 772.04 2.40 - 2.39 778.96 Previous Year 30.90 0.89 1,991.57 - - - 2,023.36 Rent, Establishment & other exps. paid 1,656.58 52.57 267.96 - 193.76 0.49 2,171.36 Previous Year 1,604.75 21.73 174.51 2.17 117.33 0.84 1,921.33 Interest received - - 2.24 - - - 2.24 Previous Year - - 2.26 147.26 - 3.50 153.02 Interest paid - 8.00 27.68 - - - 35.68 Previous Year - 8.00 167.75 - - - 175.75 Dividend income - - 2,895.51 - - - 2,895.51 Previous Year - - 1,854.93 - - - 1,854.93 Dividend paid 7,334.07 - - 135.17 264.03 31.92 7,765.19 Previous Year 2,340.03 - - 92.40 729.47 71.33 3,233.23 Remuneration - - - 1,830.76 87.07 - 1,917.83 Previous Year - - - 1,258.80 55.74 - 1,314.54 Purchase of Investments - - - - - - - Previous Year - - 39,331.56 - - - 39,331.56 Sale of Investments - - 20,357.72 - - - 20,357.72 Previous Year 4,291.80 - 4,202.30 - - - 8,494.10 Intercorporate Deposits -Accepted - - 405.00 - - - 405.00 Previous Year - - 17.44 - - - 17.44 Intercorporate Deposits Repaid during the year - - 405.00 - - - 405.00 Previous Year - - 22.30 - - - 22.30 Intercorporate Deposits -Advanced - - - - - - - Previous Year - - 175.00 - - - 175.00 Intercorporate Deposits Repayment received during the year - - 16.00 - - - 16.00 Previous Year - - 175.00 - - - 175.00 Issue of equity shares 302.97 - - - - - 302.97 Previous Year - - - - - - - Directors Fees - - - 2.23 - - 2.23 Previous Year - - - 4.17 - - 4.17 Balance Outstanding as on March 31, 2010Receivables - 3.11 4.72 - - 12.61 20.44 Previous Year 29.93 0.13 187.14 - - 9.65 226.85 Payables 212.64 0.27 450.29 - - 32.55 695.75 Previous Year 90.06 6.84 319.23 - - 0.12 416.25 Debentures Outstanding - - 2,156.00 - - - 2,156.00 Previous Year - - 2,156.00 - - - 2,156.00 Guarantees Outstanding - - 1,431.21 - - - 1,431.21 Previous Year - - 2,225.00 - - - 2,225.00
Annual Report 2009–2010
85
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)c) The signifi cant Related Party transactions are as under:
Nature of Transaction
This Year Rs. Lac
Previous Year Rs. Lac
Nature of Transaction This Year Rs. Lac
Previous Year Rs. Lac
Sale of goods Interest received - Godrej Consumer Products Ltd. 927.98 1,204.21 - Swadeshi Detergents Ltd. 2.24 3.50 - Godrej & Boyce Mfg. Co. Ltd. 19.88 29.09 - Mr. A. Mahendran - 147.26 - Rapidol PTY Ltd. 11.95 - - Godrej Hershey Ltd. - 2.26 - Godrej Hershey Ltd. 11.44 15.87 - Godrej Saralee Ltd. 6.36 107.26 Interest paid - Godrej Global Mideast FZE - 43.99 - HDFC Venture Trustee Co. Ltd. 21.56 -
- Wadala Commodities Ltd 8.00 8.00 Purchase of Fixed Assets - Godrej Consumer Products Ltd. 6.12 - - Godrej & Boyce Mfg. Co. Ltd. 233.17 186.03 - Red Fort India Real Estate - 167.75
Purchase of goods Inter Corporate Deposits - Accepted - Bahar Agrochem & Feeds Pvt. Ltd. 1,218.72 - - Godrej Consumer Products Ltd. 405.00 - - Godrej Consumer Products Ltd. 538.07 531.11 - Godrej Hershey Ltd. 149.26 225.02 Inter Corporate Deposits - Repaid - Godrej & Boyce Mfg. Co. Ltd. 76.84 197.53 - Godrej Consumer Products Ltd. 405.00 - - Godrej Saralee Ltd. 0.59 18.50 - Godrej Hygiene Products Ltd. - 317.32 Inter Corporate Deposits - Advanced - Heroes Aids Project - 100.00 - Godrej Hershey Ltd. - 175.00
Processing Charges received Inter Corporate Deposits - Repayment Received - Godrej Hershey Ltd. 89.81 198.38 - Swadeshi Detergents Ltd. 16.00 -
- Godrej Hershey Ltd. - 175.00 Commission received - Godrej Hershey Ltd. 102.62 173.43 Dividend income - Godrej Consumer Products Ltd. 2.95 5.46 - Godrej Consumer Products Ltd. 2,895.51 1,854.93
Licence fee / Storage income Dividend paid - Godrej Consumer Products Ltd. 182.26 211.72 - Godrej & Boyce Mfg. Co. Ltd. 7,334.07 2,340.03 - Compass BPO Ltd. 154.79 172.69 - Mr. Pirojsha Godrej 65.47 23.78 - Godrej Saralee Ltd. 31.78 238.14 - Mr. N. B. Godrej 64.38 71.33 - Godrej Hershey Ltd. 28.43 84.75 - Ms. T. A. Dubash 53.36 -
- Ms. Nisaba A. Godrej 53.36 -Other Income - Bahar Agrochem & Feeds Pvt. Ltd. 31.14 - - Godrej Consumer Products Ltd. 11.14 17.65 - Godrej Hershey Ltd. 3.23 10.98 Remuneration to Key Management Personnel - Godrej Saralee Ltd. 1.03 13.08 - Mr. A. B. Godrej 132.79 58.55
- Mr. H. K. Press 117.59 34.76 Recovery of Establishment & other expenses - Mr. Dalip Sehgal 105.22 1.35 - Godrej Consumer Products Ltd. 716.41 983.25 - Mr. N. B. Godrej 241.34 219.84 - Godrej Hershey Ltd. 50.26 108.87 - Mr. V. F. Banaji 211.36 151.58 - Godrej Saralee Ltd. 4.99 107.06 - Mr. M. P. Pusalkar 199.78 131.84 - Godrej Hygiene Products Ltd. 2.28 30.46 - Ms. T. A. Dubash 194.83 137.82 - Compass BPO Ltd. 0.38 - - Mr. Mathew Eipe 177.08 135.02 - Godrej & Boyce Mfg. Co. Ltd. - 32.40 - Mr. M.S. Korde 149.46 145.89
- Mr. Vivek Mathur 78.66 - Rent, Establishment & other exps. paid - Mr. B.S. Yadav 130.49 91.75 - Godrej & Boyce Mfg. Co. Ltd. 1,656.58 1,604.75 - Mr. Pirojsha Godrej 84.74 34.63 - Godrej Consumer Products Ltd. 260.90 136.65 - Mr. C.H. Gopal 7.41 - - Ms. P.A. Godrej 129.07 27.82 - Mr. A. Mahendran - 68.64 - Ms. R.N. Godrej 64.68 82.31 - Mr. Ravi Venkateswar - 31.07 - Godrej Infotech Ltd. 46.80 12.47 - Mr. C. K. Vaidya - 16.06 - Wadala Commodities Ltd. 5.77 6.38 - Godrej Hershey Ltd. 4.14 0.56 Remuneration to Relatives of Key Management - Godrej Saralee Ltd. 2.93 37.25 Personnel - Ms. M. Mahendran - 7.20 - Ms. Nisaba A. Godrej 87.07 53.57
- Mr. Pirojsha Godrej - 2.17 Advance given - Godrej & Boyce Mfg. Co. Ltd. 140.13 88.23 Sale of Investments - Ms. M. Mahendran - 40.00 - Milestone Real Estate Fund 8,610.00 -
- HDFC PMS 7,000.00 - Loan given - Godrej & Boyce Mfg. Co. Ltd. - 4,291.80 - Mr. A. Mahendran - 193.15 - Red Fort India Real Estate - 4,202.30
Loan repaid Purchase of Investments - Mr. A. Mahendran - 23.17 - Godrej Consumer Products Ltd. - 31,689.26 - Mr. Ravi Venkateswar - 0.81 - Godrej Hershey Ltd. - 3,440.00
Issue of equity shares Shares in Associate Compnay acquired under a scheme of arrangement
- Godrej & Boyce Mfg. Co. Ltd. 302.97 - - Godrej Consumer Products Ltd. 4,747.72 -
Godrej Industries Limited — Consolidated Account
86
23.
Seg
men
t In
form
atio
n
(Rs.
lac)
Info
rmat
ion
abou
t pr
imar
y bu
sine
ss s
egm
ents
Chem
ical
sA
nim
al F
eed
Veg
Oils
Esta
te &
Pro
pert
y D
evel
opm
ent
Hou
seho
ld
Inse
ctic
ides
Bev
erag
es &
Foo
dsFi
nanc
e &
In
vest
men
tsO
ther
sTo
tal
This
Ye
arPr
evio
us
Year
This
Ye
arPr
evio
us
Year
This
Ye
arPr
evio
us
Year
This
Ye
arPr
evio
us
Year
This
Ye
arPr
evio
us
Year
This
Ye
arPr
evio
us
Year
This
Ye
arPr
evio
us
Year
This
Ye
arPr
evio
us
Year
This
Ye
arPr
evio
us
Year
(A)
Reve
nue
Exte
rnal
Sal
es78
130.
02
7780
0.70
114
179.
55
9819
1.92
57
642.
70
5382
7.63
48
012.
35
3202
2.48
19
58.7
4 19
490.
78
1606
3.87
17
727.
17
1268
5.36
10
528.
25
4944
9.70
51
755.
68 3
7812
2.29
361
344.
61
Inte
rseg
men
t Sa
les
-
17.
87
-
2,5
53.3
1 6
7.75
1
00.5
0 30
8.95
54
6.79
0
.15
1.4
7 9
2.52
9
6.76
43
96.2
8 41
77.1
1 79
8.07
35
.19
5663
.72
7529
.00
Tota
l Sal
es78
130.
02
7781
8.57
114
179.
55 1
0074
5.23
57
710.
45
5392
8.13
48
321.
30
3256
9.27
19
58.8
9 19
492.
25
1615
6.39
17
823.
93
1708
1.64
14
705.
36
5024
7.77
51
790.
87 3
8378
6.01
368
873.
61
Less
: In
ters
egm
ent
Sale
s -
(
17.8
7) -
(2,
553.
31)
(67
.75)
(10
0.50
)(3
08.9
5)(5
46.7
9) (
0.15
) (
1.47
) (
92.5
2) (
96.7
6)(4
396.
28)
(417
7.11
)(7
98.0
7)(3
5.19
)(5
663.
72)
(752
9.00
)To
tal R
even
ue78
130.
02
7780
0.70
114
179.
55
9819
1.92
57
642.
70
5382
7.63
48
012.
35
3202
2.48
19
58.7
4 19
490.
78
1606
3.87
17
727.
17
1268
5.36
10
528.
25
4944
9.70
51
755.
68 3
7812
2.29
361
344.
61
(B)
Resu
lts
Se
gmen
t re
sult
bef
ore
inte
rest
, ex
cept
iona
l it
ems
and
tax
5238
.25
(184
9.89
)38
79.4
9 30
13.2
4 67
.62
(44.
52)
2459
2.46
17
349.
22
165.
47
3171
.31
(156
1.80
)(3
00.1
6)11
431.
97
1052
7.95
62
33.8
5 60
76.8
4 50
047.
31
3794
3.99
Una
lloca
ted
expe
nses
(137
87.9
0)(9
877.
48)
Inte
rest
Exp
ense
(ne
t)(1
4961
.81)
(149
59.5
4)Pr
ofi t
bef
ore
tax
2129
7.60
13
106.
97
Taxe
s(4
476.
70)
(533
7.12
)Ad
d : E
xtra
Ord
inar
y ite
ms (
Net o
f Tax
)0.
00
2122
.32
Add:
Pri
or P
erio
d it
ems
0.00
(8
5.02
)Pr
ofi t
aft
er t
axes
1682
0.90
98
07.1
5 Sh
are
of p
rofi t
in a
ssoc
iate
s81
02.6
0 3
622.
24
Profi
t b
efor
e M
inor
ity
Inte
rest
2492
3.50
13
429.
39
Shar
e of
Min
orit
y In
tere
st
(459
8.78
)(2
282.
39)
Net
Profi t
aft
er M
inor
ity
Inte
rest
2032
4.72
11
147.
00
Segm
ent
Asse
ts44
848.
58
4061
2.67
19
582.
88
1822
3.73
29
35.9
5 36
38.2
6 17
3369
.69
1488
57.1
1 0.
00
6238
.98
9034
.76
9769
.19
1353
45.3
2 14
0208
.92
3244
6.88
31
808.
16 4
1756
4.06
399
357.
02
Una
lloca
ted
Asse
ts
2000
1.24
18
439.
15
Tota
l Ass
ets
4375
65.3
0 41
7796
.17
Segm
ent
Liab
iliti
es18
248.
42
1379
5.00
21
821.
48
1069
3.03
54
7.80
13
60.6
4 18
682.
70
5463
2.79
0.
00
3275
.18
2711
.15
2730
.93
1792
.64
664.
75
6902
.16
1098
4.34
70
706.
35
9813
6.66
U
nallo
cate
d Li
abili
ties
1902
99.9
0 17
8871
.00
Tota
l Lia
bilit
ies
2610
06.2
5 27
7007
.66
Cost
incu
rred
dur
ing
the
year
to
acqu
ire
segm
ent
asse
ts90
2.36
96
4.52
12
08.1
4 45
3.84
14
.67
7.77
31
84.6
0 92
7.16
0.
00
310.
09
423.
55
474.
72
17.
91
1,9
17.9
7 25
21.6
3 14
14.9
7 82
72.8
6 64
71.0
4
Cost
incu
rred
on
unal
loca
ted
asse
ts11
38.8
6 17
9.63
To
tal C
ost
incu
rred
dur
ing
the
year
to
acqu
ire
segm
ent
asse
ts94
11.7
2 66
50.6
7
Segm
ent
Dep
reci
atio
n20
83.5
7 20
94.4
6 39
6.40
40
2.10
73
.36
49.9
4 35
9.88
17
9.75
28
.38
222.
27
331.
96
245.
96
155
.50
59.
98
1299
.35
993.
78
4728
.40
4248
.24
Una
lloca
ted
Dep
reci
atio
n28
8.87
45
4.53
To
tal D
epre
ciat
ion
5017
.27
4702
.77
Info
rmat
ion
abou
t Se
cond
ary
Bu
sine
ss S
egm
ents
Tota
l
Reve
nue
by G
eogr
aphi
cal
mar
kets
This
Yea
rPr
evio
wus
Ye
arIn
dia
2833
39.8
5 27
0259
.70
Out
side
Indi
a94
782.
44
9108
4.91
To
tal
3781
22.2
9 36
1344
.61
Carr
ying
Am
ount
of
Segm
ent
asse
tsTh
is Y
ear
Prev
ious
Ye
arIn
dia
4324
49.0
1 41
2944
.23
Out
side
Indi
a51
16.2
9 48
51.9
4 To
tal
4375
65.3
0 41
7796
.17
Not
es:
1.
The
Com
pany
has
dis
clos
ed B
usin
ess
Segm
ent
as t
he p
rim
ary
segm
ent.
Seg
men
ts h
ave
been
ide
ntifi
ed t
akin
g in
to a
ccou
nt t
he n
atur
e of
the
pro
duct
s, t
he.
diff
eren
t ri
sks
and
retu
rns,
the
org
anis
atio
nal s
truc
ture
and
the
inte
rnal
rep
orti
ng s
yste
m.
2.
Chem
ical
s se
gmen
t in
clud
es t
he b
usin
ess
of p
rodu
ctio
n an
d sa
le o
f O
leoc
hem
ical
s an
d su
rfac
tant
s su
ch a
s Fa
tty
Acid
s, F
atty
Alc
ohol
s, r
efi n
ed g
lyce
rine
, Alf
a O
lefi n
Sul
phon
ates
, So
dium
Lau
ryl S
ulph
ate
and
Sodi
um L
aury
l Eth
er S
ulph
ate.
3.
Anim
al F
eed
segm
ent
incl
udes
the
bus
ines
s of
pro
duct
ion
and
sale
of
com
poun
d fe
eds
for
catt
le,
poul
try,
shr
imp
and fi s
h.4.
Ve
g oi
ls s
egm
ent
incl
udes
the
bus
ines
s of
pro
cess
ing
and
bulk
tra
ding
of
refi n
ed v
eget
able
oils
& v
anas
pati
and
inte
rnat
iona
l veg
etab
le o
il tr
adin
g.
5.
Esta
te &
pro
pert
y de
velo
pmen
t se
gmen
t in
clud
es t
he b
usin
ess
of d
evel
opm
ent
and
sale
of
real
est
ate
and
leas
ing
and
leav
e an
d lic
ensi
ng o
f pr
oper
ties
.6.
H
ouse
hold
Inse
ctic
ides
seg
men
t in
clud
es t
he b
usin
ess
of p
rodu
ctio
n an
d sa
le o
f ho
useh
old
inse
ctic
ides
& c
omm
erci
al p
est
man
agem
ent
serv
ices
.7.
Be
vera
ges
and
Food
s se
gmen
t in
clud
es t
he b
usin
ess
of p
roce
ssin
g, p
rodu
ctio
n an
d sa
le o
f fr
uit
pulp
, to
mat
o pu
ree,
fru
it j
uice
s, n
ecto
rs a
nd d
rink
s, o
ther
bev
erag
es a
nd
conf
ecti
onar
y pr
oduc
ts a
nd s
ale
of r
efi n
ed v
eget
able
oils
, va
nasp
ati a
nd t
ea.
8.
Fina
nce
& In
vest
men
ts in
clud
es in
vest
men
ts in
sub
sidi
arie
s, a
ssoc
iate
s co
mpa
nies
and
oth
er in
vest
men
ts9.
O
ther
s in
clud
es In
tegr
ated
Pou
ltry
, Ag
ri In
puts
and
tis
sue
cult
ure,
Oil
Palm
Pla
ntat
ions
, en
ergy
gen
erat
ion
thro
ugh
win
dmill
s.10
. Th
e ge
ogra
phic
al s
egm
ents
are
as
follo
ws
- Sa
les
in In
dia
repr
esen
t sa
les
to c
usto
mer
s lo
cate
d in
Indi
a. -
Sal
es o
utsi
de In
dia
repr
esen
t sa
les
to c
usto
mer
s lo
cate
d ou
tsid
e In
dia.
SCH
EDU
LES
FORM
ING
PA
RT O
F TH
E CO
NSO
LID
ATED
ACC
OU
NTS
(co
ntd.
)
Annual Report 2009–2010
87
24. Employee Benefi ts
The amounts recognised in the Company’s fi nancial statements as at the year end are as under: Gratuity Leave Encashment Pension
This Year Previous Year This Year Previous Year This Year Previous Year Rs. lac Rs. lac Rs. lac Rs. lac Rs. lac Rs. lac
a) Change in Present Value of Obligation Present value of the obligation at the beginning of the year 3,108.98 2,897.14 126.67 110.51 106.64 73.28 Current Service Cost 173.00 172.53 14.20 18.33 - - Interest Cost 233.20 228.81 8.75 7.83 - - Contribution by Plan Participants - - - - - - Actuarial (Gain) / Loss on Obligation 100.08 (43.51) (11.03) 19.29 (50.89) 45.67 Foreign Currency exchange rate changes - - - - - - Effect of Liability Transfer in 2.39 8.42 - - - - Benefi ts Paid (175.73) (154.41) (21.41) (29.29) (12.00) (12.31)Past Service Cost - - - - - - Amalgamations - - - - - - Curtailments - - - - - - Settlements 8.60 - 0.86 - - - Plan Amendments - - (2.40) - - - Present value of the obligation at the end of the year 3,450.52 3,108.98 115.64 126.67 43.75 106.64
b) Change in Plan Assets Fair value of Plan Assets at the beginning of the year 1,872.84 1,806.12 - - - - Expected return on Plan Assets 143.01 144.69 - - - - Actuarial (Gain) / Loss on Plan Assets (66.31) 48.68 - - - - Foreign Currency exchange rate changes - - - - - - Contributions by the Employer 1,035.75 83.76 - - - - Contributions by Plan Participants - - - - - - Benefi ts Paid (139.62) (113.05) - - - - Amalgamations - - - - - - Settlements - - - - - -
Fair value of Plan Assets at the end of the year 2,978.29 1,872.84 - - - -
c) Amounts Recognised in the Balance Sheet: Present value of Obligation at the end of the year 3,369.53 3,029.24 - - - - Unrecognised Past Service Cost - - - - - - Fair value of Plan Assets at the end of the year 2,985.39 1,882.86 - - - - Net Obligation at the end of the year 384.14 1,146.38 - - - -
d) Amounts Recognised in the statement of Profi t and Loss: Current Service Cost 173.43 172.37 14.20 18.33 - - Interest cost on Obligation 233.20 228.76 8.75 7.83 - - Expected return on Plan Assets (143.01) (144.69) - - - - Expected return on Reimbursement Right recognised as an asset
- - - - - -
Net Actuarial (Gain) / Loss recognised in the year 31.28 0.87 (11.03) 19.29 - - Past Service Cost - - - - - - Effect of Curtailment or Settlement 8.60 - 0.86 - - - Net Cost Included in Personnel Expenses 303.50 257.31 12.78 45.45 - -
e) Actual return on Plan Assets 209.32 96.01 - - - -
f) Estimated contribution to be made in next fi nancial year
g) Actuarial Assumptions i) Discount Rate (p.a.) 7.55%-8.00% 7.55%-8.00% 8.00% 7.55% 8.00% 7.5% ii) Expected Rate of Return on Plan Assets (p.a.) 7.55%-8.00% 7.55%-8.00% - - - -iii) Salary Escalation Rate (p.a.) 5%-6% 5%-6% 4.00% 4.00% 5.00% 4.5% iv) Employee Turnover (p.a.) -
The estimates of future salary increases, considered in actuarial valuation, take account of infl ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
SCHEDULES FORMING PART OF THE CONSOLIDATED ACCOUNTS (contd.)
Godrej Industries Limited — Consolidated Account
88
Statement regarding Subsidiary Companies pursuant to Section 212 of the Companies Act, 19561. Name of the Subsidiary Company Godrej
AgrovetLimited
GodrejProperties
Limited
EnsembleHoldings &
FinanceLimited
GodrejInternational
Limited
NaturesBasket
Limited
Godrej Oil
PalmLtd.
2. The company's interest in thesubsidiaries as on March 31, 2010a. Number of Equity Shares 9,112,956 48,495,209 3,774,160 2,355,000 7,050,000 (See note Total Number of Shares 12,118,752 69,850,009 3,774,160 2,355,000 7,050,000 1 below)b. Face Value 10 10 10 £1 10c. Extent of Holding 75.20% 69.43% 100.00% 100.00% 100.00%
3. Net aggregate profi t/(Loss) of thesubsidiary company so far it concerns Rs. lac Rs. lac Rs. lac Rs. lac Rs. lacthe members of the Company
A. For the fi nancial year ended on March 31, 2010 i. Not dealt with in the books of 2,452.13 8,647.93 320.12 725.85 (624.07) Account of the Company ii. Dealt with in the books of Account — — — — — of the Company
B. For the subsidiary company's previous fi nancial years since it became a subsidiary i. Not dealt with in the books of 3,195.70 10,209.77 (347.58) 26,510.57 — Account of the Company ii. Dealt with in the books of Account 3,294.33 7,606.35 560.80 11,348.28 — of the Company
Notes:The Financial Year of the subsidiary companies has ended on March 31, 2010
1. 56,400 Equity Shares of Rs.10 each in Godrej Oil Palm Ltd. (formerly Godrej Oil Plantations Ltd.) (representing 80% of the share capital) are held by Godrej Agrovet Ltd.
2. 50,000 Equity Shares of Rs.10 each in Golden Feed Products Ltd. (representing 100% of the share capital) are held by Godrej Agrovet Ltd.
3. 34,20,000 Equity Shares of Rs.10 each in Cauvery Palm Oil Ltd. (representing 90% of the share capital) are held by Godrej Agrovet Ltd.
4. 25,500 Equity Shares of Rs.10 each in Godrej Estate Developers Pvt. Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd.
5. 34,031 Equity Shares of Rs.10 each in Godrej Developers Pvt. Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd.
6. 49,999 Equity Shares of Rs.10 each in Godrej Real Estate Pvt. Ltd. (representing 99.99% of the share capital) are held by Godrej Properties Ltd.
7. 5,10,000 Equity Shares of Rs.10 each in Godrej Realty Pvt. Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd.
Annual Report 2009–2010
89
GoldenFeed
ProductsLimited
CauveryPalm
OilLimited
GodrejEstate
DevelopersPvt. Ltd.
GodrejDevelopers
Pvt. Ltd.
Godrej Real Estate
Pvt. Ltd.
GodrejRealty
Pvt. Ltd.
GodrejSeaview
PropertiesLtd.
GodrejWatersideProperties
Pvt. Ltd.
HappyHighrises
Ltd.
(See note (See note (See note (See note (See note (See note (See note (See note (See note2 below) 3 below) 4 below) 5 below) 6 below) 7 below) 8 below) 9 below) 10 below)
8. 3,88,636 Equity Shares of Rs.10 each in Godrej Sea View Properties Pvt. Ltd. (representing 77.73% of the share capital) are held by Godrej Properties Ltd.
9. 5,10,000 Equity Shares of Rs.10 each in Godrej Waterside Properties Pvt. Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd.
10. 103,592 Equity Shares of Rs.10 each in Happy Highrises Ltd. (representing 51% of the share capital) are held by Godrej Properties Ltd.
11. 691,155 Equity Shares of Rs.10 each in Godrej Properties Ltd. are held by Ensemble Holdings & Finance Ltd.
12. 8,100 Equity Shares of Rs.10 each in Godrej Agrovet Ltd. are held by Ensemble Holdings & Finance Ltd.
A.B. Godrej N.B. Godrej Chairman Managing Director
M. Eipe V. Srinivasan Executive Director & Executive Vice President President (Chemicals) (Finance & Estate) &Mumbai, May 26, 2010 Company Secretary
NOTES
Annual Report 2009–2010
91
Godrej Industries Limited
ACCOUNTS OFSUBSIDIARY COMPANIES
2009-2010
Godrej Agrovet Limited
92
DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010
To The ShareholdersYour Directors have pleasure in submitting their Report along with the audited Accounts for the fi nancial year ended on March 31, 2010.Financial ResultsYour Company’s performance during the year as compared with that during the previous year is summarised below: -
THIS YEAR
Rs. lacPREVIOUS YEAR
Rs. lacTotal Income 141306.37 132068.88Profi t Before Taxation (PBT) 2493.22 2684.46Less : Provision for Taxation 322.54 1352.81Add : Extraordinary Income/(Expense)(Net) — 4505.67Profi t After Taxation (PAT) 2170.68 5837.72Balance Brought Forward from Previous Year 11535.09 5987.82Total 13705.77 11825.14Appropriations:Final Dividend 242.37 121.18Tax on Dividend 41.20 20.60General Reserve 217.07 148.28Balance Carried Forward to Balance Sheet 13205.13 11535.09Total 13705.77 11825.14
Review of OperationsThe year under review saw the core businesses of Animal Feeds and Agricultural Inputs returning an extremely good performance, both in revenue and profi tability. This represents the fulfi llment of the strategy kicked off in FY2008 to refocus Godrej Agrovet on its core competency of selling high-quality, yield-improving inputs to Indian farmers. Since then we have divested, partially or fully, our non-core businesses in areas such as rural retail (Aadhaar), poultry integration/processing (Godrej Tyson Foods), and gourmet food retail (Natures Basket). Going forward, we remain steadfastly committed to improving the productivity of Indian farmers by innovating products and services that sustainably increase crop and livestock yields.The business-wise performance is reviewed hereunder:ANIMAL FEEDS:The Animal Feed business recorded a good growth of 16% in revenue and 31% in profi tability. Despite almost-fl at sales volumes, profi tability grew due to expansion of contribution margins and control over fi xed overheads.Cattle Feed volumes rose modestly year-on-year, arresting the persistent trend of falling sales volumes in that category. We attribute this success to our decision to divide the Animal Feed sales force into seperate teams for Cattle, Poultry and Aqua, which came into effect in September 2009.Poultry Feed had a more diffi cult year, suffering de-growth in some regions. This was mostly due to market conditions, where industry growth stalled from lower placement of chicks. The situation is expected to be corrected in the coming year, and with more beaks to feed, sales volumes are projected to rise again.Expansion of contribution margins was possible due to effi cient sourcing, improved formulation, and successful R&D efforts. The Central Buying Organization (CBO) was successful in forecasting the soya meal market, as well as in their positions in imported amino acids and fi sh meal. Aggressive efforts to stock raw materials for Cattle Feed also paid off. The Animal Nutrition Innovation Center (ANIC) also supported margin expansion through breakthroughs in feed formulation, performance, and quality. Additionally, ANIC made substantial progress in advancing their pipeline of innovative cattle nutrition products towards commercialization. Over time, it is expected that ANIC will help transform Godrej Agrovet into the most innovative feed company in South Asia.AGRICULTURAL INPUTS:The Agricultural Inputs business grew by 19% in revenue and 22% in profi tability. This success is even more impressive in light of the failed monsoon, and the drought conditions which followed. Sales growth was fueled by innovative products from in-house R&D (HBR, Hitweed and Zymegold) in addition to growth in more commoditized pesticides and OMM.Contribution margins remained relatively steady at the product level. Working capital requirements for the business increased due to rising trade receivables and the interest cost on the same impacted profi tability. Going forward, greater efforts will be made to grow the business aggressively while keeping working capital requirements in check.Agricultural Inputs R&D continued their focus on the development of innovative agrochemicals this year. Key projects include the development of crop-specifi c selective herbicides, synthesis of intermediates, and innovation of a next generation PGR for cereals.FINANCE AND INFORMATION SYSTEMS:Your Company managed treasury operations very effi ciently. Excellent treasury management resulted in your Company procuring funds at a signifi cantly lower pricing. Your Company continues to enjoy the apex rating of A1+ from ICRA for its Commercial Paper Programme of Rs. 15 crore and for its short-term borrowing program of Rs. 230 crore. Your Company also continues to enjoy the rating LA+ for its long-term borrowing program of Rs. 27 crore. Your Company, successfully implemented SAP, a world renowned, ERP solution in the Animal Feed business of your Company. Your Company is also in the process of implementing SAP in the rest of the businesses and the corporate offi ce. Implementation of SAP in your Company has already started to yield signifi cant business benefi ts.OTHER INITIATIVES:Your Company continues to accord great importance to the security of its information assets. During the year under review, your Company was accredited with ISO 27001 for Information Security Management System in all its Regional Offi ces in addition to the accreditation for Information Security Management System in its Corporate Offi ce.DIVIDENDYour Directors have recommended a Final dividend for 2009-10 amounting to Rs. 2 per share of face value of Rs. 10/- each, i.e. 20%.FIXED DEPOSITSYour Company has not accepted any public deposits during the fi nancial year under review.SUBSIDIARY COMPANIESYour Company continues to be the Holding Company of Golden Feed Products Ltd. (GFPL), Cauvery Palm Oil Limited (CPOL) and Godrej Oil Palm Limited (GOPL). During the year under review, your Company sold 100% of the shares in Natures Basket Limited (NBL). Consequent to this sale, the aforesaid Company ceases to be the subsidiary of your Company.The audited Balance Sheets of GFPL, CPOL and GOPL as at March 31, 2010 together with their audited Profi t & Loss Accounts, Directors’ Reports and Auditors’ Reports are attached to the Balance Sheet
and Profi t & Loss Account of your Company.JOINT VENTURESYour Company continues to have Joint Venture arrangement in ACI Godrej Agrovet Private Limited (Bangladesh), Godrej Gold Coin Aquafeed Limited, Godrej IJM Palm Oil Limited and Godrej Tyson Foods Limited.CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOThe information in respect of these matters, required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of this Report, is annexed hereto (Annexure - A).DIRECTORSDuring the year under review, there have been no changes in the Directors of the Company. Mr. B. S. Yadav, formerly the ‘Executive Director & President’ has been redesignated as “Managing Director” w.e.f. May 20, 2009.Mr. A. B. Godrej, Ms. Nisaba A. Godrej and Mr. Amit B. Choudhury retire by rotation at the ensuing Annual General Meeting of the Company in accordance with Section 256 of the Companies Act, 1956 and Article 124 of the Articles of Association of the Company and being eligible offer themselves for re-appointment.AUDITORSYou are requested to appoint Auditors for the current year and authorize the Board to fi x their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment. A certifi cate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act,1956.ADDITIONAL INFORMATIONThe additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to the Auditors’ Report are self-explanatory and therefore do not call for any further explanation .AUDIT COMMITTEEPursuant to the provisions of Section 292 A of the Companies Act, 1956, your Company has constituted the Audit Committee of the Board of Directors.The following Directors are the Members of the Audit Committee: -(1) Mr. K. N. Petigara – Chairman(2) Dr. S. L. Anaokar – Member(3) Mr. B. S. Yadav – MemberThe Audit Committee, pursuant to the terms of reference specifi ed by the Board from time to time has made recommendations to the Board in respect of internal control systems, half-yearly & annual fi nancial statements, standard accounting principles, Risk Management policies, etc. The Board of Directors has since accepted the recommendations of the Audit Committee.REMUNERATION COMMITTEEPursuant to the provisions of Schedule XIII to the Companies Act, 1956, your Company has constituted Remuneration Committee of the Board of Directors to approve the payment of remuneration to the Managerial Personnel.The following Directors are the Members of the Remuneration Committee :-(1) Mr. K. N. Petigara – Chairman(2) Dr. S. L. Anaokar – Member(3) Mr. Amit Choudhury – MemberMANAGING COMMITTEEYour Company has constituted the Managing Committee of Board of Directors consisting of the following Directors pursuant to Article 144 of the Articles of Association of the Company :-(1) Mr. N. B. Godrej (Chairman)(2) Mr. A. B. Godrej (Member)(3) Mr. B. S. Yadav (Member)(4) Dr. S. L. Anaokar (Member)(5) Ms. Nisaba A. Godrej (Member)RESPONSIBILITY STATEMENTPursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confi rm :-a) that in the preparation of the annual accounts, the applicable accounting standards have
been followed and no material departures have been made from the same;
b) that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the profi t or loss of the Company for that period;
c) that they have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities;
d) that they have prepared the annual accounts on a going concern basis.
HUMAN RESOURCESYour Company continues to take various initiatives for the development of its human resources and has maintained healthy and harmonious industrial relations. The Board would like to place on record its sincere appreciation for the unstinted support it continues to receive from all associates.PARTICULARS OF EMPLOYEES
Information as per Section 217(2A) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 forms a part of the Directors’ Report. As per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to the Shareholders of the Company, excluding the statement of particulars of employees u/s 217(2A) of the Companies Act, 1956. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary at the registered offi ce of the Company.
For and on behalf of the Board of Directors
N. B. GODREJ Mumbai, May 17, 2010. Chairman
Annual Report 2009–2010
93
1. We have audited the attached Balance Sheet of Godrej Agrovet Limited, as at 31st March 2010 and also the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that:
a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.
b) As referred to in Note 6 of Schedule 15, Notes to accounts, investments in a joint venture and an associate aggregating to Rs. 90,852 thousands, exceeds the book value of the shares of those companies. The Company has also advanced Rs. 80,618 thousands to those companies. However, in view of the benefi ts of future profi tability of these companies being non-quantifi able at this stage, we are unable to determine the quantum of the possible diminution in the value of these investments / advances.
c) Without qualifying our opinion, we draw attention to Note 27 of Schedule 15, Notes to accounts, regarding a loan of Rs. 676,212 thousand to an ESOP Trust for purchase of the holding company’s shares from the market equivalent to options granted under an Employee Stock Option Plan. As at March 31, 2010, the market value of the shares held by the ESOP Trust is lower than the cost of acquisition of the shares by Rs. 325,404 thousand. The repayment of this loan granted to the ESOP trust is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options at the end of the exercise period. The fall in value of the underlying equity shares is on account of current market volatility and the loss, if any,
can be determined only at the end of the exercise period, in view of which provision for the diminution is not considered necessary in the fi nancial statements.
d) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of these books.
e) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.
f) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.
g) In our opinion and to the best of our information and according to the explanations given to us, the said fi nancial statements read with the notes thereon, subject to (b) above, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; and
ii) in the case of the Profi t and Loss Account, of the profi t for the year ended on that date.
iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.
5. On the basis of the written representations received from the Directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that, none of the Directors is disqualifi ed as on 31st March, 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
For and on behalf of
KALYANIWALLA & MISTRYChartered Accountants
Firm Registration No. : 104607W
ERMIN K. IRANIPartner
Membership No. 35646
Mumbai, May 17, 2010
REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ AGROVET LIMITED
ANNEXURE 'A'ANNEXURE FORMING PART OF THE DIRECTORS’ REPORTINFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO :A) Conservation of Energy Your Company continues its policy of implementing/promoting various energy conservation
measures as the same is an effective means of saving cost and also a corporate social responsibility. Various systems installed to conserve energy are regularly reviewed.
Some of the measures adopted by the Company during the year under review for conservation of energy were as follows :-
1) Use of DG set as an alternative source of energy 2) Use of CNG, a clean fuel without adulteration, in genset, boiler, lab and canteen as
an alternate to HSD 3) Change in offi ce weekly off to power staggering day 4) Maintenance of power factor level at 0.98 5) Installation of wood fi re boiler in place of diesel fi re boiler 6) Plant-wise installation of sub energy meter to know product-wise actual energy
consumption 7) Installation of appropriate meters in accordance with the equipment load requirement The adoption of above energy conservation measures has resulted in the following benefi ts
to the Company :- a) Direct reduction in fuel & steam cost b) Low combustion on account of clean fuels c) Decline in process & storage losses d) Enhancement in the life of plant & machineryB) Technology Absorption, Adaptation and Innovation I. Your Company continuously carried out during the year under review, in-house research
in quality systems and standards. Some key initiatives undertaken in this regard include the following :- 1. Continuous R&D activities in the areas of – (i) development of selective herbicides for different crops; (ii) reduction of TDC of existing products through improvements in chemical
processes, purifications, raw material substitutions, synthesis of intermediates and making and testing of improved formulations
2. Development of a package of herbicide application practices for total control of weeds in cotton
3. University trials on a new PGR for improving cereal yields under progress
4. Nimin, a urea use effi ciency enhancer being evaluated at the University of Mauritius
5. Patents granted to the Company on:- (a) the use of a mycoherbicide in combination with Hitweed, the cotton herbicide for control of weeds; and (b) on the technology of online urea coating with Nimin
6. Patent applications published on:- (a) a neem based composition for coating nitrogenous fertilizers; and (b) a novel process for synthesis of rice herbicide
7. Development of two neem based customized products for a US customer and the same being registered with US EPA
8. Bountee, HBR based PGR product registered as ‘Zaidee’ by a Kenyan distributor
9. CIB registration obtained for export of both Technical Material and Formulation of a rice herbicide
10. New customer-centric initiative taken for developing an alternative to very toxic Hydrogen Cyanamide product used in grape growing
11. A project sponsored with the National Research Centre for Citrus for enhancing sweetness in oranges.
II. The Company’s expenditure on R&D is given below :- Expenditure on R & D THIS YEAR PREVIOUS YEAR Rs. lac Rs. lac. (a) Capital — — (b) Recurring 212.22 129.99 (c) Total 212.22 129.99 (d) Total R & D expenditure as 0.15% 0.10 % a percentage of total turnoverC. Foreign Exchange earnings and outgo I. Your Company’s efforts to export agricultural inputs (Vipul–liquid, Achook, Nimin) to
US, Kenya and other promising markets continued during the year. THIS YEAR PREVIOUS YEAR Rs. lac Rs. lac II. Foreign exchange used 3155.58 3398.69 III. Foreign exchange earned 73.20 151.73 For and on behalf of the Board of Directors N. B. GODREJ Chairman Mumbai, May 17, 2010.
Godrej Agrovet Limited
94
Annexure to the Auditors’ ReportReferred to in paragraph (3) of our report of even date.
1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fi xed assets.
(b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodic intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been reported on such verifi cation.
(c) In our opinion, the disposal of fi xed assets during the year does not affect the going concern assumption.
2) (a) The Management has conducted physical verifi cation of inventory at reasonable intervals.
(b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The discrepancies noticed on physical verifi cation of inventory as compared to book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.
3) (a) The Company has granted unsecured loans amounting to Rs. 186,130 thousands to seven companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 234,054 thousands and the year end balance of loan granted to such parties was Rs. 138,864 thousands.
(b) The Company has not charged interest on unsecured loans / advances amounting to Rs. 12,216 thousands given to one company which is prima facie prejudicial to the interest of the Company. The rate of interest of other unsecured loans and the other terms and conditions of the all the loans are not prima facie prejudicial to the interests of the Company.
(c) As informed to us the receipt of principal and interest, to the extent due, has been regular.
(d) As informed to us, there are no overdue amounts exceeding rupees one lakh and hence the question of commenting on reasonable steps taken for recovery of principal and interest does not arise.
(e) The Company has not taken any loans, secured or unsecured from companies, fi rms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 during the year. The maximum amount involved during the year was Rs. 11,700 thousands and year-end balance of loan taken from such party was Rs. Nil.
(f) The rate of interest and the other terms and conditions of the unsecured loan taken is not prima facie prejudicial to the interest of the Company.
(g) The payment of principal amounts and interest was also regular.
4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods and services. During the course of our audit, we have not observed a continuing failure to correct major weakness in internal controls.
5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, except for certain transactions for which, there are no similar services rendered to other parties or have been entered into on an reciprocal basis and hence the prices are not comparable.
6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public and hence the provisions of section 58A, 58AA or any other provision of the Companies Act, 1956, read with the rules framed thereunder are not applicable.
7) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business.
8) According to the information and explanation given to us, the maintenance of cost records has not been prescribed by the Central Government, under section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.
9) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor
Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues payable in respect of above as at 31st March 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty or cess on account of any dispute, other than the following:
Name of Statute Nature of the Dues Amount (Rs.’000)
Forum where dispute is pending
Excise Duty Act Excise duty & interest from April 2006 to March 2010 on account of Classifi cation matter.
119,648 Commissioner of Central Excise
Sales Tax Act Sales tax & interest thereon from FY 1993-94 to 1995-96.
34,151 Commissioner, Appellate Tribunal and High Court
Income Tax Act Demand raised for AY 2007-08
2,929 Commissioner of Income Tax (Appeals)
10) The Company does not have accumulated losses at the end of the fi nancial year and it has not incurred any cash losses in the current and immediately preceding fi nancial 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. The Company does not have dues to fi nancial 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 benefi t fund/ societies.
14) In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments.
15) According to the information and explanations given to us, the Company has given a corporate guarantee for loans taken by its subsidiary/associate from banks. The terms and conditions are not prima facie prejudicial to the interest of the Company.
16) According to the information and explanations given to us, term loans were applied for the purpose for which the loans were obtained.
17) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long term investment.
18) The Company has not made 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 have outstanding debentures during the year.
20) The Company has not raised any money through a public issue during the year.
21) During the course of our examination of the book of account and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given and representations made by the Management, no major fraud on or by the Company, has been noticed or reported during the year.
For and on behalf of
KALYANIWALLA & MISTRY
CHARTERED ACCOUNTANTS
Firm Registration No.: 104607W
E. K. IRANIPARTNER
Membership No. 35646
Place: Mumbai
Dated: May 17, 2010.
Annual Report 2009–2010
95
BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
The Schedules referred to above form an integral part of the Balance Sheet.Signatures to Balance Sheet and
As per our Report attached Schedules 1 to 9 and 15For and on behalf of For and on behalf of the BoardKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTS
ERMIN K. IRANI V. V. CHAUBAL N. B. GODREJ B. S. YADAVPartner Company Secretary Chairman Managing DirectorMembership no. 35646Mumbai, May 17, 2010
The Schedules referred to above form an integral part of the Profi t and Loss Account.Signatures to Profi t & Loss Account and
As per our Report attached Schedules 10 to 15For and on behalf of For and on behalf of the BoardKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTS
ERMIN K. IRANI V. V. CHAUBAL N. B. GODREJ B. S. YADAVPartner Company Secretary Chairman Managing DirectorMembership no. 35646Mumbai, May 17, 2010
THIS YEAR PREVIOUS YEAR
Schedule Rs.’000 Rs.’000 Rs.’000
SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share Capital 1 121,188 121,188
Reserves & Surplus 2 2,751,104 2,562,393
2,872,292 2,683,580
LOAN FUNDS
Secured Loans 3 580,675 290,294
Unsecured Loans 4 400,263 2,036,165
980,938 2,326,459
DEFERRED TAX LIABILITY 102,004 124,050
TOTAL 3,955,234 5,134,089
APPLICATION OF FUNDS
FIXED ASSETS 5
Gross Block 1,200,117 1,094,958
Less: Depreciation 445,810 423,515
Net Block 754,307 671,443
Capital work-in-progress/ Advances 76,054 41,523
830,361 712,966
INVESTMENTS 6 1,949,717 1,663,714
CURRENT ASSETS, LOANS AND ADVANCES 7
Inventories 1,334,991 1,198,601
Sundry Debtors 935,349 868,572
Cash and Bank Balances 92,384 311,922
Other Current Assets 55 60
Loans and Advances 1,490,590 1,890,640
3,853,369 4,269,796
LESS : CURRENT L IAB IL IT IES AND PROVISIONS
Liabilities 8 2,619,376 1,471,616
Provisions 9 58,837 40,770
2,678,213 1,512,386
NET CURRENT ASSETS 1,175,156 2,757,409
TOTAL 3,955,234 5,134,089
NOTES TO ACCOUNTS 15
THIS YEAR PREVIOUS YEARSchedule Rs.’000 Rs.’000 Rs.’000 Rs.’000
INCOMEFrom Operations 10 14,077,595 12,935,470Other Income 11 53,042 271,418
14,130,637 13,206,888EXPENDITUREMaterials 12 11,418,404 10,512,600Expenses 13 2,248,445 2,093,989Interest and Financial Charges 14 151,082 259,668Depreciation 63,384 72,185
13,881,315 12,938,442PROFIT BEFORE TAX AND EXTRAORDINARY INCOME 249,322 268,446
Profi t on Continuing Operations 250,623 310,155 Provision for Tax
Current Tax 54,300 115,603 Fringe Benefi t Tax — 9,112Deferred Tax (22,046) 10,280
32,254 134,995 218,369 175,160
Profi t/(Loss) on Discontinuing Operations for Live Bird Business
(1,301) —
Provision for TaxCurrent Tax — —
(1,301) - Profi t/(Loss) on Discontinuing Operations for Processed Chicken
— (19,800)
Provision for TaxCurrent Tax — —Fringe Benefi t Tax — 195
— (19,995)Profit/(Loss) on Discontinuing Operations for Retail Business
— (21,910)
Provision for TaxFringe Benefi t Tax — 91
— (22,001)PROFIT BEFORE EXTRAORDINARY INCOME/EXPENSE 217,068 133,165 Extraordinary Income (on transfer of) Part of Processed Chicken Business
— 476,654
Provision for Current Tax — - — 476,654
Extraordinary Income (on transfer of) of Retail Business — 7,376 Provision for Current Tax — -
— 7,376 Extraordinary Expenditure for Employee Benefi ts — (17,568)Extraordinary Expenditure on stamp charges — (1,795)Extraordinary Expenditure for Advisory Services for Business Transfer
— (14,099)
— (33,462)PROFIT AFTER TAX AND EXTRAORDINARY INCOME 217,068 583,732 Surplus Brought Forward 1,153,509 598,782 AMOUNT AVAILABLE FOR APPROPRIATION 1,370,577 1,182,514 APPROPRIATION:DividendProposed Dividend 24,236 12,118 Tax on Dividend 4,120 2,060 Transfer to General Reserve 21,707 14,828 Surplus carried forward 1,320,514 1,153,509
TOTAL 1,370,577 1,182,514Earnings per share before extraordinary items (Basic/Diluted) in Rs. (Refer Note 28) 17.91 10.99 Earnings per share after extraordinary items (Basic/Diluted) in Rs. (Refer Note 28) 17.91 48.17 NOTES TO ACCOUNTS 15
Godrej Agrovet Limited
96
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010
SCHEDULE 5 : FIXED ASSETS
THIS YEAR PREVIOUS YEARRs.’000 Rs.’000 Rs.’000
SCHEDULE 1 : SHARE CAPITALAUTHORISED150,00,000 Equity Shares of Rs. 10 each 150,000 150,000ISSUED, SUBSCRIBED AND PAID UP1,21,18,752 Equity Shares of Rs. 10/- each fully paid Of the above shares
121,188 121,188
(a) 91,12,956 Equity Shares of Rs. 10/- each fully paid up are held by Godrej Industries Limited the Holding Company.
(b) 52,47,600 Equity Shares of Rs. 10/- each have been issued as fully paid bonus shares by capitalising Securities Premium Account
SCHEDULE 2 : RESERVES & SURPLUSSECURITIES PREMIUM ACCOUNTAs per last Balance Sheet 1,269,782 1,392,125 Less : Trade Marks adjusted as per court order — 122,343
1,269,782 1,269,782CAPITAL INVESTMENT SUBSIDY As per last Balance Sheet 8,102 5,602 Add : Received during the year — 2,500
8,102 8,102GENERAL RESERVEAs per last Balance Sheet 131,000 116,172 Add : Transferred from Profi t & Loss Account 21,707 14,828
152,707 131,000PROFIT AND LOSS ACCOUNT 1,320,514 1,153,509
TOTAL 2,751,104 2,562,393
THIS YEAR PREVIOUS YEARRs.’000 Rs.’000 Rs.’000
SCHEDULE 3 : SECURED LOANS
From Banks
Term Loans 280,000 200,200
(amount due within a year Rs. 280,000 thousand, Previous year Rs. 133,200 thousand)
Cash Credit/Working Capital Demand Loans 300,675 90,094
(Refer Note 4)
TOTAL 580,675 290,294
SCHEDULE 4 : UNSECURED LOANS
From Banks
Term Loans 400,000 2,036,165
(Amount due within a year Rs. Nil, Previous year Rs. 2,036,165 thousand)
Interest Accrued and due 263 —
TOTAL 400,263 2,036,165
(Rs.’000)
ASSETSGROSS BLOCK DEPRECIATION NET BLOCK
As at 1.4.2009
Additions Deletions As at31.3.10
Upto1.4.2009
For the Year Deductions/ Adjustments
Upto31.3.10
As at31.3.10
As at31.3.2009
Tangible AssetsFreehold Land 83,498 39,594 — 123,092 — — 123,092 83,498 Leasehold Land 2,287 18,889 — 21,176 570 233 — 803 20,373 1,717 Buildings 175,122 5,287 958 179,451 66,080 5,975 439 71,616 107,835 109,042 Plant & Machinery 676,887 60,663 27,119 710,431 281,875 46,574 24,236 304,213 406,218 395,012 Furniture & Fixtures 36,875 594 6,999 30,470 16,054 1,594 3,772 13,876 16,594 20,821 Leasehold Improvements 3,863 - 252 3,611 2,133 454 252 2,335 1,276 1,730 Offi ce & Other Equipments 39,454 5,683 8,375 36,762 14,767 2,400 3,709 13,458 23,304 24,687 Vehicles 53,265 5,121 12,400 45,986 19,739 4,925 7,520 17,144 28,842 33,526 Research Centre 3,707 20 1,821 1,906 2,298 125 1,161 1,262 644 1,409 Intangible Assets — —SAP Software — 27,232 — 27,232 — 1,104 1,104 26,128 — Technical Know-How Fees 20,000 — 20,000 19,999 19,999 1 1 TOTAL 1,094,958 163,083 57,924 1,200,117 423,515 63,384 41,089 445,810 754,307 671,443 Previous Year 1,876,695 79,734 861,471 1,094,958 619,743 72,185 268,413 423,515
Capital Work-In-Progress/Advances 76,054 41,523830,361 712,966
THIS YEAR PREVIOUS YEARRs.’000 Rs.’000 Rs.’000
SCHEDULE 6 : INVESTMENTSTRADE UNQUOTEDIN SUBSIDIARY COMPANIES(a) Golden Feed Products Limited 50,000 Equity Shares of Rs.10/- each 500 500 (b) Godrej Oil Palm Ltd. 56,400 Equity Shares of Rs. 10/- each 398,395 398,395 (c) Natures Basket Ltd. Nil (Previous year 705,000) Equity Shares of
Rs. 10 each(Sold during the year)— 70,500
(d) Cauvery Palm Oil Ltd. 34,20,000 (Previous year 19,38,000) Equity
shares of Rs. 10/- each, (Acquired 14,82,000 shares during the year) 311,510 142,830
710,405 612,225IN OTHER COMPANIES(a) ACI Godrej Agrovet Private Limited 13,50,000 (Previous year 12,00,000) Equity share
of Tk. 100/- each 90,042 79,954 (Acquired 1,50,000 shares during the year)(b) Al Rahba International Trading Limited Liability Company '45 Equity share of AED. 1500/- each 810 810
THIS YEAR PREVIOUS YEARRs.’000 Rs.’000 Rs.’000
SCHEDULE 6 : INVESTMENTS (Contd.)(c) Creamline Dairy Products Limited 26,71,993 Equity shares of Rs. 10/- each 103,800 103,800(d) Polchem Hygiene Laboratories Private Limited 4,55,000 Equity shares of Rs. 10/- each 16,275 16,275(e) Godrej Gold Coin Aquafeed Limited 53,80,916 Equity shares of Rs. 10/- each 198,729 198,729(f) Godrej IJM Palm Oil Limited 62,867 Equity shares of Rs. 10/- each 63,542 63,542 (g) Aadhaar Retailing Limited 44,65,000 (Previous year 19,00,000) Equity shares
of Rs. 10/- each 209,950 81,700 (Acquired 25,65,000 shares during the year)(h) Godrej Tyson Foods Limited 85,880 (Previous year 80,409) Equity shares of
Rs. 10/- each555,521 506,035
(Acquired 5,471 shares during the year) 1,238,669 1,050,845IN CO-OPERATIVE SOCIETYSachin Industrial Co-operative Society Limited3 Shares of Rs. 500/- each 2 2
1,949,076 1,663,072
Annual Report 2009–2010
97
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010
THIS YEAR PREVIOUS YEARRs.’000 Rs.’000 Rs.’000
SCHEDULE 6 : INVESTMENTS (Contd.)NON TRADE QUOTEDIN COMPANIES(a) Castrol India Limited 1,207 Equity Shares of Rs. 10/- each 316 316 (b) Colgate Palmolive (India) Limited 840 Equity Shares of Re. 1/- each 326 326 AGGREGATE COST OF QUOTED INVESTMENTS 642 642
TOTAL 1,949,717 1,663,714
SCHEDULE 7 : CURRENT ASSETS, LOANS & ADVANCES(A) INVENTORIES : Raw Materials including in Transit & Packing material 849,783 748,521 Finished Products 254,101 226,965 Poultry stock 170,398 205,576 Stock under cultivation 16,989 7,192 Stores and Spares 43,720 10,347
1,334,991 1,198,601(B) SUNDRY DEBTORS : (Unsecured and considered good unless otherwise
stated) Debts outstanding for a period exceeding six
months Considered Good 218,078 204,216 Considered Doubtful 35,597 59,970
253,675 264,186 Other Debts 717,271 664,356
TOTAL 970,946 928,542 Less: Provision for doubtful debts 35,597 59,970
935,349 868,572 [Debts amounting to Rs. 12,263 thousand (Previous
year Rs. 12,263/- thousand) are secured by equitable mortgage/ hypothecation of assets/ deposit of title deeds, Rs. 78,231/- thousand (Previous year Rs. 60,575/-thousand) against Security Deposits, Rs. 189,362/- thousand (previous year Rs. 117,310/-) against Bank Guarantees]
(C) CASH AND BANK BALANCES : Cash and Cheques on hand 65,783 33,350 Balances with Scheduled Banks i) In Current Accounts 20,475 236,586 ii) In Fixed Deposit Accounts [(Rs. 40 thousand (Previous year Rs. 40 thousand)
pledged with government authorities)] 6,126 41,986 92,384 311,922
(D) OTHER CURRENT ASSETS : 55 60(E) LOANS AND ADVANCES : (Unsecured and considered good unless otherwise
stated) Loans and Advances recoverable in cash or in kind
or for value to be received (Refer Note - 8(b)) Considered Good 1,213,990 1,456,629 Considered Doubtful 27,109 66,452
1,241,099 1,523,081 Less: Provision for doubtful advances 27,109 66,452
1,213,990 1,456,629 (Of the above Rs. 156,684 (Previous year
Rs. 470,000) thousand is receivable on account of sale of business/investments)
Share application money pending allotment 25,060 93,190 Inter Corporate Deposits 122,100 201,600 Other Deposits i) Government Authorities 397 419 ii) Others 57,700 64,366 Advance payment of Taxes (Net of provision for taxation Rs. 361,945
thousand; Previous year Rs. 302,042 thousand) 71,343 74,436 1,490,590 1,890,640
TOTAL 3,853,369 4,269,796
THIS YEAR PREVIOUS YEARRs.’000 Rs.’000 Rs.’000
SCHEDULE 8 : LIABILITIESAcceptances 1,235,930 213,181Investor Education and Protection Fund — —Inter Corporate Deposits — 11,700 Sundry Creditors Dues to Micro, Small and Medium enterprises (Refer
Note - 9) 57 —
Others 1,177,742 1,062,442 1,177,799 1,074,142
Advances from Customers 111,962 107,820Sundry Deposits 93,685 76,473
TOTAL 2,619,376 1,471,616
SCHEDULE 9 : PROVISIONSProposed Dividend 24,236 12,118 Tax on Dividend 4,120 2,060 Gratuity 10,826 6,444 Leave Encashment 19,655 20,148
TOTAL 58,837 40,770
SCHEDULE 10 : INCOME FROM OPERATIONS
Sales 13,916,059 12,834,626
Less : Excise Duty recovered on Sales - -
Net Sales 13,916,059 12,834,626
Claims and Compensations 1,784 610
Financial Operations
Dividend on Investments (Gross) 7,226 6,964
Interest (Gross) (Tax at Source Rs. 22,245 thousand;
Previous year Rs. 19,533 thousand) 152,526 93,270
159,752 100,234
TOTAL 14,077,595 12,935,470
SCHEDULE 11 : OTHER INCOME
Profi t on sale of Investments - 235,376
Miscellaneous Income 53,042 36,042
TOTAL 53,042 271,418
SCHEDULE 12 : MATERIALS
a) RAW MATERIALS CONSUMED
Opening stock 748,521 666,955
Add : Purchases during the year 10,915,477 10,117,700
11,663,998 10,784,655
Less : Sales during the year 58,578 187,507
11,605,420 10,597,148
Less : Closing Stocks 849,783 748,521
10,755,637 9,848,627
b) PURCHASE FOR RESALE 664,522 706,766
c) INVENTORY CHANGE
Opening Stock
Finished Goods 226,965 224,847
Stock under cultivation 7,192 10,983
Poultry Stock 205,576 191,753
439,733 427,583
Less : Transferred on sale/demerger of business - 30,643
439,733 396,940
Less : Closing Stock
Finished Goods 254,101 226,965
Stock under cultivation 16,989 7,192
Poultry Stock 170,398 205,576
441,488 439,733
(1,755) (42,793)
11,418,404 10,512,600
Godrej Agrovet Limited
98
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010
THIS YEAR PREVIOUS YEARRs.'000 Rs.'000 Rs.'000
SCHEDULE 13 : EXPENSES
1. Salaries, Wages, Bonus, Gratuity and Allowances 478,404 378,758
2. Contribution to Provident Fund and Other Funds and Administration Charges
27,002 20,078
3. Employee Welfare Expenses 38,317 35,355
4. Processing charges 441,761 446,636
5. Consumable Stores 41,331 36,843
6. Power and Fuel 165,748 164,528
7. Rent 42,272 39,533
8. Rates and Taxes 12,118 7,275
9. Repairs & Maintenance
Building 2,755 3,633
Plant & Machinery 13,985 22,646
Other assets 5,562 3,570
22,302 29,849
10. Insurance 8,571 5,701
11. Postage, telephony and stationery 27,727 29,667
12. Auditor's Remuneration 4,956 4,440
13. Legal & Professional Fees 18,496 28,552
14. Freight, Coolie and Cartage 95,563 102,263
15. Discount, Commission and Selling Expenses 635,678 524,249
16. Advertisement and Publicity 4,893 11,710
17. Travelling Expenses 81,948 74,825
18. Bad Debts/Advances written off 39,212 24,072
19. (Write Back)/Provision for Doubtful Debts and Advances
(43,412) 67,286
20. Loss on Sale of Investments 20,500 —
21. Loss on Sale of Fixed Assets/Write off 14,077 1,747
22. Research Expenses 5,976 1,065
23. General Expenses 80,603 75,531
2,264,045 2,109,964
24. Less: Shared Expenses recovered (15,600) (15,975)
TOTAL 2,248,445 2,093,989
SCHEDULE 14 : INTEREST AND FINANCIAL CHARGES
(a) Interest paid on fi xed loans
i) Banks 130,340 236,909
ii) Inter Corporate Deposits — 9,582
130,340 246,491
(b) Interest paid on other loans
i) Banks 597 3,915
ii) Others 5,157 3,131
5,754 7,046
(c) Other Financial Charges 14,988 6,131
TOTAL 151,082 259,668
SCHEDULE 15 : NOTES TO ACCOUNTS1 SIGNIFICANT ACCOUNTING POLICIES:
a) The fi nancial statements are prepared under the historical cost convention and on the 'going concern basis', with revenues recognised and expenses accounted on their accrual in accordance with the generally accepted accounting principles, and in compliance with the applicable Accounting Standards and other requirements of the Companies Act, 1956.
b) Fixed assets have been stated at cost and include incidental and/or installation development expenses incurred in putting the asset to use and interest on borrowing incurred during construction period. Pre-operative expenses for major projects are also capitalized, where appropriate.
c) Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.
d) Depreciation/Amortisation has been provided for as under:
(a) The Company has grouped additions and disposals in appropriate time periods of a month/quarter for the purpose of charging pro rata depreciation in respect of additions and disposals of its assets keeping in view the materiality of the items involved.
(b) 1) Depreciation is provided on the straight line method at the rates specifi ed in schedule XIV to the Companies Act, 1956, except for computer hardware which is depreciated over its estimated useful life of four years.
2) Amortizations
Asset type Period (i) Leasehold Land Primary lease period (ii) Leasehold improvements and equipments Primary lease period or 16 years whichever is less (iii) Trees Development cost 15 years (iv) Nursery/Greenhouse building 10 years (v) Poultry Equipments/Signage 3 years (vi) Technical Know-how of a capital nature 6 years (vii) Computer software 6.17 years (viii) Moulds 2 years
e) Grants/Subsidies :
(i) Investment Subsidy under the Central/State investment incentive scheme is credited to Capital Investment Subsidy Reserve and treated as part of the shareholders' funds.
(ii) Grants/Subsidies related to specifi c fi xed assets are shown as a deduction from the gross value of the asset concerned in arriving at its book value.
(iii) Grants/Subsidies related to revenue are presented as a credit to the profi t and loss statement or are deducted in reporting the related expense.
f) Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognise a decline, other than of a temporary nature. Current investments are stated at lower of cost and net realizable value.
g) Raw materials/Stores & Spares and Poultry Stock are valued at weighted average cost. Finished goods and work-in-progress are valued at lower of cost and net realizable value. These costs include cost of conversion and other costs incurred in bringing the inventories to their present location and condition.
h) Employee Benefi ts:
i) Short-term employee benefi ts (payable wholly within twelve months of rendering the service):
Short-term benefi ts such as salaries, wages, short-term compensation absences, etc., are determined on an undiscounted basis and recognized in the period in which the employee renders the related service.
ii) Post-employment benefi ts:
Defi ned Contribution Plans: The Company's contributions paid/payable to provident Fund, Employees State Insurance Scheme, Employees Pension Schemes, 1995 and other funds, are determined under the relevant approved schemes and/or statutes and are recognized as expense in the Profi t and Loss Account during the period in which the employee renders the related service. There are no further obligations other than the contributions payable to the approved trusts/appropriate authorities. However, the rules of Company's Provident Fund Scheme, 1952, for the reason that the return on investment is less or for any other reason, then the defi ciency shall be made good by the Company. The Company's PF does not have any existing Defi cit or Interest shortfall. In view of the track record of the Company's PF Trust - its assets, return on investments and acumulated reserves - the Company does not anticipate any defi ciency in the foreseeable future. In any case making reasonable actuarial assumptions for determining and measuring any probable future obligations arising due to interest shortfall, would pose a formidable challenge.
Defi ned Benefi t Plans: The Company's gratuity and leave encashment/long-term compensated absences schemes are defi ned benefi t plans. The Company's liability for the defi ned benefi t schemes is actuarially determined based on the projected unit credit method. The Company's net obligations in respect of such plans is calculated by estimating the amount of future benefi t that the employees
Annual Report 2009–2010
99
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010
have earned in return for their services and the current and prior periods that benefi t is discounted to determine its present value and the fair value of the plan asset is deducted. Actuarial gains and losses are recognized immediately in the Profi t and Loss Account.
Terminal Benefits: All terminal benefits including voluntary retirement compensation are fully written off to the Profi t and Loss Account.
i) Miscellaneous expenditure:
i) Non-Compete fee is amortised over a period of fi ve years or the period of the agreement (wherever applicable).
ii) Front-end fee paid on loans raised from fi nancial institutions is amortized over the period of the loan.
j) Revenue is recognized when goods are despatched to external customers. Sales are inclusive of realized exchange fl uctuations on export receivables but net of returns, sales tax, rebates, etc.
k) Revenue expenditure on Research and Development is charged to Profi t and Loss Account of the year in which it is incurred. Capital Expenditure incurred during the year on Research and Development is shown as an addition to Fixed Assets under the head "Research Centre".
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 period of time to get ready for its intended use, upto the time the said asset is put to use are capitalized, as a part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.
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 year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortized over the period of the contract. Exchange gains/losses are recognized in the Profi t and Loss Account.
n) Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
o) The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
p) Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
THIS YEAR Rs.'000
PREVIOUS YEAR Rs.'000
2 CONTINGENT LIABILITY:In respect of:(a) Income Tax Matters 2,929 5,922 Demand raised by the Deputy Commissioner
of Income Tax after the completion of scrutiny assessment for the A.Y. 2007-2008.
(b) Sales Tax Matters 34,151 35,674 The Company has fi led Appeal with the Sales Tax
tribunal in Tamilnadu for F.Y. 1993-94 to 1995-96, for classifying branch transfer as sales. [Against the above the Company has paid advance of Rs. 800 thousand (Previous year Rs. 800 thousand)]
The Company has fi led an appeal in Bombay High Court against an order of the Director of Marketing, Pune in connection with Agricultural Produce Market Committee (APMC) in respect of poultry business.
(Against the above the Company has paid advance of Rs. 14,300 thousand (Previous year Rs. 14,300 thousand)
(c) Excise Matter 119,648 83,112 The Company has preferred an appeal with the
Excise Dept in the matter of classifi cation of Agri Products and presently the case is pending with the Commissioner of Central Excise.
(d) Guarantee issued to Banks on behalf of the Joint venture/Associates companies.
448,706 125,839
(e) Guarantees issued by the Banks and counter guaranteed by the company (other than those mentioned in (d) above) have been secured by deposit with bank.
55,187 61,927
(f) Case/Claim fi led by Processors for claiming various expenses
4,170 4,170
THIS YEAR Rs.'000
PREVIOUS YEAR Rs.'000
3 CAPITAL COMMITMENTS:The estimated value of contracts remaining to be executed on Capital Account to the extent not provided for.
29,030 17,357
4 SECURED LOANS:
a) Term Loans from Banks are secured by an equitable mortgage of specifi ed immovable properties and hypothecation of specifi ed movable assets of the Company.
b) Cash Credit and other facilities from banks are secured by hypothecation of stocks and book debts of the Company (both present and future).
c) During the year, the Company had raised Rs. 600,000 thousand (Previous year Rs. Nil) as Commercial Papers. Outstanding balance as at year end of such Commercial Papers is Rs. Nil (Previous year Rs. Nil).
5 FIXED ASSETS:
a) Legal formalities relating to the transfer of title of immovable assets situated at Chennai (acquired as a part of the takeover of Agrovet business from Godrej Industries Limited) and Hyderabad (as part of the merger of Godrej Plant Biotech Limited) are being complied with. Stamp duty payable thereon is not presently determinable.
b) Pursuant to provisions of Section 78 of the Companies Act , 1956 and Article 8 of the Articles of Association of the Company and based on the confi rmation of the Honourable High Court of Judicature at Bombay, an amount of Rs. 114,448 thousand standing in the Securities Premium Account of the Company has been utilized for adjustment of amount standing in Trade Marks as of March 31, 2009.
6 INVESTMENTS IN JOINT VENTURES/ASSOCIATES:
The Company has equity investment of Rs. 90,042 thousand (Previous year Rs. 79,954 thousand) in ACI Godrej Agrovet Private Limited and Rs. 810 thousand (Previous year Rs. 810 thousand) in Al Rahaba International Trading LLC. The Company’s investments in Joint Ventures/Associates are carried at costs, which are higher than their respective book values. The diminution in the value of these investments is considered to be of a temporary nature, in view of the Company’s long-term fi nancial involvement in, and the future profi tability projected by the two companies. No provision for diminution in the value of investments is therefore considered necessary in the accounts. Similarly, no provision for Debtors/Loans and advance of Rs. 5,073 thousand (Previous year Rs. 4,558 thousands) in ACI Godrej Agrovet Private Limited has been made.In view of dilution of Godrej Agrovet Limited's stake in Al Rahba, from 70% to 33% in the previous years, and it no longer being GAVL's subsidiary it was considered necessary to provide for Debtors/Loans to the tune of Rs 19,700 thousand. The same has been reprovided in the current year out of the total of Rs. 65,370 thousand (Previous year Rs. 37,605 thousand).
7 INFORMATION IN RESPECT OF JOINT VENTURES (JOINTLY CONTROLLED ENTITY):Name Country of Incorporation Percentage Holding
THIS YEAR PREVIOUS YEAR Rs. in '000 Rs. in '000
(a) ACI Godrej Agrovet Private Limited Bangladesh 50% 50% ACI Godrej Agrovet Private Limited has its operations in the fi elds of Animal Feed,
Poultry businesses etc. Interest in Assets, Liabilities, Income and Expense with respect of jointly controlled
entityAssets 119,015 193,407 Liablities 119,015 193,407 Income 768,555 466,613 Expense 747,342 450,434
(b) Godrej Tyson Foods Limited India 49% 49% The company is in the Poultry Business Interest in Assets, Liablities, Income and Expense with respect of jointly controlled
entityAssets 575,082 579,594 Liabilities 575,082 579,594 Income 909,862 772,601 Expense 950,988 852,483
(c) Godrej Gold Coin Aquafeed Limited India 49% 49%The Company is in the Aqua feed business.Interest in Assets, Liablities, Income and Expense with respect of jointly controlled entity
Assets 292,076 289,712 Liabilities 292,076 289,712 Income 117,553 79,811 Expense 145,094 115,547
(d) Godrej IJM Palm Oil Limited India 48.22% 48.22%The Company is in the Oil Palm business.Interest in Assets, Liabilities, Income and Expense with respect of jointly controlled entity
Assets 67,265 74,296 Liabilities 67,265 74,296 Income 11,490 17,371 Expense 16,751 20,722
Godrej Agrovet Limited
100
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010
THIS YEAR PREVIOUS YEAR Rs. in '000 Rs. in '000
8 CURRENT ASSETS, LOANS AND ADVANCES:(a) Sundry Debtors include due from Companies
under the same management(i) Godrej Industries Limited - 317 (ii) Godrej International Limited 70 70 (iii) Godrej Consumer Products Limited 378 - (iv) Polchem Hygiene Laboratories - 5 (v) Godrej Properties Limited 64 15
(b) Loans and Advances include due from Companies under the same management
(i) Golden Feed Products Limited 11,906 9,376 Maximum balance during the year 11,906 9,376 (ii) Krithika Agro Farm Chemicals
and Engineering Industries Private Limited
- 4,197
Maximum balance during the year 4,197 4,197 (iii) Al Rahaba International Trading
Limited Liability Company 65,370 37,605
Maximum balance during the year 65,370 37,605 (iv) ACI Godrej Agrovet Limited 5,073 4,558 Maximum balance during the year 5,073 4,558 (v) Godrej Gold Coin Aquafeed Limited 95,751 90,672 Maximum balance during the year 95,751 90,672 (vi) Aadhaar Retailing Limited 156,684 535,681 Maximum balance during the year 156,684 535,681 (vii) Cauvery Palm Oil Limited 6,700 3,311 Maximum balance during the year 6,700 3,311 (viii) Godrej Oil Plantations Limited - 13,195 Maximum balance during the year 13,195 13,967 (ix) Godrej Tyson Foods Limited - 15,698 Maximum balance during the year 15,698 15,698 (x) Natures Basket Limited 18,742 63,051 Maximum balance during the year 63,051 63,051 (xi) Godrej IJM Palm Oil Limited 917 - Maximum balance during the year 12,676 -
9 CURRENT LIABILITIES:Disclosure of sundry creditors under current liabilities is based on the information available with the Company regarding the status of the suppliers as defi ned under the "Micro,Small & Medium Enterprises Development Act, 2006". Accordingly the amount overdue as on March 31, 2010 on account of principal amount together with interest, aggregate to Rs 70 thousand ( Previous year - Rs Nil.). The amount payable to Simple Package is Rs. 70 thousand.
10 DEFERRED TAX:The tax effects of signifi cant temporary differences that resulted in deferred tax assets and liabilities are :
THIS YEAR PREVIOUS YEAR Rs.'000 Rs.'000
Depreciation on Fixed Assets (130,769) (137,722)Provision for Doubtful Debts 20,943 42,971 Others 7,822 (29,299)Deferred Tax Liability (102,004) (124,050)
THIS YEAR PREVIOUS YEAR Unit Quantity Value Quantity Value
Rs. '000 Rs. '000 11 SALES TURNOVER:
Animal Feeds MT 727,790 11,110,947 726,724 9,739,745 Agro Inputs - 1,284,274 - 1,066,690 Integrated Poultry Business - 1,363,809 - 1,733,834 Retail Segment - 0 - 43,462 Parent Chicks - 46,221 - Others - 110,808 - 250,894
TOTAL 13,916,059 12,834,625 Note: Sales Turnover includes sale of items processed by third parties, and items purchased by the Company for resale.
12 FINISHED GOODS INVENTORIES:Animal Feeds MT 8,046 117,344 7,613 107,439 Agri InputsSynthetic pesticides KL 353 76,427 278 32,607 Natural pesticides MT 5 653 94 19,114 Others 59,677 67,805
TOTAL 254,101 226,965
THIS YEAR PREVIOUS YEAR Unit Quantity Value Quantity Value
Rs. '000 Rs. '000 13 PURCHASES FOR RESALE:
Animal Feeds MT 39 477 5,151 63,292 Agri InputsPlant Growth Promoter
Spray KL 535 51,993 406 43,902 Granules MT 6,390 97,193 6,041 98,598 Synthetic pesticides KL 2,536 418,483 1,535 231,550
Retail Segment - - - - Others 96,376 332,716
TOTAL 664,522 706,766
14 RAW MATERIALS CONSUMED:Cakes & Brans MT 221,422 1,721,242 248,483 2,027,835 Extractions MT 268,286 4,437,535 400,129 4,404,741 Others 4,596,860 3,416,051
TOTAL 10,755,637 9,848,627
15 DISCLOSURE IN RESPECT OF LEASES:The Company’s leasing arrangements are in respect of operating leases for premises occupied by the Company. These leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually acceptable terms.
a. The total of future minimum lease payments under cancellable operating leases for each of the following periods:
THIS YEAR PREVIOUS YEAR
Rs. '000 Rs. '000
i. Not later than one year 4,550 8,604 ii. Later than one year and not later than fi ve
years 10,658 16,273
iii. Later than fi ve years 10,112 6,006
b. Lease payments recognised in the statement of Profi t & Loss for the period :
Minimum lease payments 466 3,252
16 LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION:Item For the year Capacity Per Annum Actual Third Party
Ended Registered Installed Production Production a) Animal Feeds 31.3.2010 Not Applicable 350,000 MT 233,991 MT 494193 MT
31.3.2009 Not Applicable 359,974 MT 383,496 MT 442283 MT Million Plants Million Plants
b) Tissue Culture Plants 31.3.2010 4.25 5 3 - 31.3.2009 4.25 5 3 -
c) Agri Inputs (i) Plant Growth Promoter Liquids 31.3.2010 500 KL 500 KL 500 KL 95 KL
31.3.2009 500 KL 500 KL 467 KL - (ii) Plant Growth Regulator Granules 31.3.2010 5000 MT 5000 MT 4063 MT -
31.3.2009 5000 MT 5000 MT 3384 MT
17 (a) COMPUTATION OF PROFIT FOR THE PURPOSE OF MANAGERIAL REMUNERATION:THIS YEAR PREVIOUS YEAR
Rs.'000 Rs.'000 Profi t after tax as per Profi t and Loss Account 217,068 583,732 Add : Depreciation as per accounts 63,384 72,185 Add : Extraordinary expenses 0 33,462 Managerial Remuneration, including Directors sitting fees 13,048 9,250 Provision for Doubtful Debts/Advances (43,412) 67,286 Provision for Tax (including Deferred tax) 32,254 56,723 (Loss)/Profi t on sale of Fixed Assets (net) 14,077 1,747 (Loss)/Profi t on sale of Investments 20,500 -
99,851 240,653 Less : Depreciation as per Section 350 of the Companies Act, 1956 63,384 72,185 Less : Profi t on transfer of business - 484,029 Less : Profi t on sale of Investments - 235,376
63,384 791,591
Net Profi t / (Loss) for the purpose of Directors' remuneration 253,535 32,794 5% thereof 12,677 1,640 MAXIMUM REMUNERATION PERMISSIBLE UNDER THE ACT 12,677 4,200 (Computed on the basis of inadequacy of profi ts as per Schedule XIII- Part II)
Annual Report 2009–2010
101
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010
THIS YEAR PREVIOUS YEAR Rs.'000 Rs.'000
(b) MANAGERIAL REMUNERATIONa) Salaries 12,320 8,760 b) Contribution to Provident Fund 527 412 c) Estimated monetary value of perquisites 110 3
12,957 9,175 d) Directors' Sitting Fees 91 75
13,048 9,250
18 COMMON EXPENSES SHARED BY THE COMPANIES :Expenses (Schedule 13) include Rs. 25,180 thousand (Previous year Rs. 21,344 thousand) charged by Godrej Industries Limited, the Holding Company.
19 AUDITORS' REMUNERATION:Audit fees 2,698 2,565 Audit under Other Statutes 852 806Tax representation before Authorities 896 713 Management Consultancy 55 88 Certifi cation 278 15 Reimbursement of Expenses 177 112
TOTAL 4,956 4,300
20 VALUE OF IMPORTS ON CIF BASIS:(INCLUDES DIRECT IMPORTS ONLY)Raw Materials 295,178 326,518 Spares 18,832 4,804 Capital Goods - 940
314,010 332,262
21 EXPENDITURE IN FOREIGN CURRENCY:Travelling Expenses 742 5,928 Others 806 1,679
1,548 7,607
22 EARNINGS IN FOREIGN EXCHANGE:F.O.B value of goods exported 7,320 15,173 Others - -
7,320 15,173
23 VALUE OF CONSUMPTION OF RAW MATERIALS, SPARES & TOOLS: (INCLUDING CAPITALIZED ITEMS )
THIS YEAR PREVIOUS YEAR Rs.'000 % Rs.'000 %
RAW MATERIALS : Imported items (including duty content) 300,442 3% 129,865 1% Indigenous 10,455,195 97% 9,718,762 99%TOTAL 10,755,637 100 9,848,627 100 SPARES & TOOLS : Imported items 2,283 0 – – Indigenous 941 100 36,843 100 TOTAL 41,331 100 36,843 100
24 EMPLOYEE BENEFITS:I. Defi ned Contribution Plans: THIS YEAR
Rs '000 PREVIOUS YEAR
Rs '000 Contribution to Defi ned Contribution Plan, recognised as
expense for the year are as under: Employers' Contribution to Provident Fund 19,503 9,827 II. Defi ned Benefi t Plans: Contribution to Gratuity Fund The Company makes annual contributions to the Employees' Group Gratuity-cum-Life
Assurance Scheme of ICICI Prudential Ltd, a funded defi ned benefi t plan for qualifying employees. Gratuity is payable to all eligible employees on superannuation, death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company's policy whichever is benefi cial to the employees.
The following table sets out the funded status of the gratuity plan and the amounts recognised in the Company's fi nancial statements as at 31 March 2010
THIS YEAR Rs '000
PREVIOUS YEAR Rs '000
Change in present value of obligationPresent value of obligation as at 1st April 2009 34,203 37,167Interest Cost 2,736 2,973 Service Cost 2,475 3,704 Benefi ts Paid (9,824) (8,424)Actuarial (gain)/loss on obligation 10,815 (1,218)Present value of obligation, as at 31st March 2010 40,405 34,203
THIS YEAR PREVIOUS YEAR Rs '000 Rs '000
Change in plan assetsFair value of plan assets as at 1st April 2009 27,760 28,539 Expected return on plan assets 2,220 2,283 Contributions 6,450 7,000 Benefi ts paid (9,824) (8,424)Actuarial gain/(loss) on plan assets 2,718 (1,639)Fair value of plan assets as at 31st March 2010 29,324 27,760 Amount recognised in the Balance SheetPresent value of obligation, as at 1st April 2009 40,405 34,203 Fair value of plan assets as at 31st March 2010 29,324 27,759 Net obligation as at 31st March 2010 11,081 6,444 Net gratuity cost for the year ended 31st March 2010Current Service Cost 2,475 3,704 Interest Cost 2,736 2,973 Expected return on plan assets (2,221) (2,283)Net Actuarial (gain)/loss to be recognised 8,097 422 Net gratuity cost 11,087 4,816 Assumptions used in accounting for the gratuity plan
% %Discount Rate 8 8Salary escalation rate 5 4Expected rate of return on plan assets 8 8
The estimates of future salary increases, considered in actuarial valuation, take into account infl ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets.
25 Research & Development Expenditure of revenue nature charged to the Profi t and Loss Account amounts to Rs.21,222 thousand (previous year Rs.12,999 thousand).
26 The amount of exchange difference included in the Profi t and Loss Account, under the related heads of expenses /(income), is Rs. 11328 thousand (Previous year expense Rs.366 thousand). The amount of exchange difference in respect of forward exchange contracts to be recognised in the profi t and loss account of subsequent accounting periods Rs. 450 thousand (Previous Year Rs. Nil thousand).
27 The Company has provided loan to Godrej Industries Limited Employee Stock Option Scheme (GIL ESOP), which is administered by an independent ESOP Trust which purchases shares of GIL from the market equivalent to the number of stock options granted from time to time to eligible employees. The repayment of the loans granted to the ESOP trust is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options at the end of the exercise period. The fall in value of the underlying equity shares is on account of current market volatility and the loss, if any, can be determined only at the end of the exercise period. In view of the aforesaid, provision for diminution of Rs. 325,404 thousand is not considered necessary in the fi nancial statements.
28 EARNINGS PER SHARE: THIS YEAR Rs.'000
PREVIOUS YEARRs.'000
Profi t / (Loss) after tax before extraordinary income 217,068 133,165Profi t/ (Loss) after tax and extraordinary income 217,068 583,732 Weighted average number of equity shares outstanding 12,118,752 12,118,752EPS before extraordinary itemsBasic earnings per share (Rs.) 17.91 10.99 Diluted earnings per share(Rs.) 17.91 10.99 EPS after extraordinary itemsBasic earnings per share (Rs.) 17.91 48.17 Diluted earnings per share(Rs.) 17.91 48.17 Nominal value of shares (Rs.) 10.00 10.00
Godrej Agrovet Limited
102
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010
(i) Information about Primary business Segments For the year ended 31st March 2010 Rs.'000
Animal Agri Integrated Other Unallocated Total Revenue Feeds Poultry Business
Business (A) (B) (C) (D) (E) (A+B+C+D+E+F)
Total Sales 11,462,048 1,292,906 1,410,030 67,222 14,232,206 Less : Inter-segment (158,553) - (157,594) - (316,147)
External Sales 11,303,495 1,292,906 1,252,437 67,222 - 13,916,059 Result Segment Result 393,671 191,791 26,137 7,715 611,180 Unallocated expenditure net of unallocated income
(378,661) (370,528)
Interest expenses (151,082) (151,082)Interest Income 152,526 152,526 Dividend Income and Profi t on sale of Investments
7,226 7,226
Profi t before taxation and exceptional items
393,671 191,791 26,137 7,715 (369,991) 249,322
Provision for taxation 32,254 32,254 Profi t after taxation and before exceptional items
393,671 191,791 26,137 7,715 (402,245) 217,068
Profi t after taxation and exceptional items
393,671 191,791 26,137 7,715 (402,245) 217,068
Other Information Segment assets 1,813,979 718,509 406,672 223,743 3,470,543 6,633,448 Segment liabilities 2,048,229 89,198 61,148 13,990 1,534,413 3,746,977 Capital expenditure 120,611 1,579 6,173 - 34,721 163,084 Depreciation 35,043 1,957 8,399 14,295 3,689 63,384
29. SEGMENT INFORMATION
For the year ended 31st March 2009 Rs.'000 Animal Agri Nature's Integrated Other Unallocated Total
Revenue Feeds Basket Poultry Business Retail Business
(A) (B) (C) (D) (E) (F) (A+B+C+D+E+F) Total Sales 9,995,075 1,082,950 43,462 1,733,834 234,635 13,089,956 Less : Inter-segment -255331 - - (255,331)External Sales 9,739,745 1,082,950 43,462 1,733,834 234,635 - 12,834,626 Result Segment Result 300,245 156,870 (21,910) 7,044 5,747 447,996 Unallocated expenditure net of unallocated income
(255,492) (255,492)
Interest expenses (259,668) (259,668)Interest Income 93,270 93,270 Dividend Income and Profi t on sale of Investments
242,340 242,340
Profi t before taxation and exceptional items
300,245 156,870 (21,910) 7,044 5,747 (179,551) 268,446
Provision for taxation 135,281 135,281 Profi t after taxation and before exceptional items
300,245 156,870 (21,910) 7,044 5,747 (314,832) 133,165
Exceptional Items 450,567 450,567 Exceptional item (net of Tax) 450,567 450,567 Prior years adjustments - Profi t after taxation and exceptional items
300,245 156,870 (21,910) 7,044 5,747 135,736 583,732
Other Information Segment assets 1,650,011 599,008 - 479,197 235,457 3,682,803 6,646,476 Segment liabilities 963,693 72,036 - 69,177 11,545 2,846,450 3,962,901 Capital expenditure 42,638 1,353 6,317 11,180 282 17,963 79,734 Depreciation 27,334 2,215 3,567 13,508 14,544 11,016 72,185 (ii) Information about Secondary business Segments
THIS YEAR Rs.'000Revenue by geograph ica l segment
India Outside India
Total
Total Sales 14,223,574 8,632 14,232,206 Less : Inter-segment (316,147) - (316,147)External Sales 13,907,428 8,632 13,916,059
(ii) Information about Secondary business Segments PREVIOUS YEAR Rs.'000
Revenue by geog raph i ca l segment
India Outside India
Total
Total Sales 13,073,696 16,260 13,089,956 Less : Inter-segment (255,331) - (255,331)External Sales 12,818,365 16,260 12,834,626 Carrying amount of segment assets
6,646,476 - 6,646,476
Additions to fi xed assets 79,734 - 79,734
30 RELATED PARTY DISCLOSURES:
Related party disclosures as required by AS - 18, "Related Party Disclosures", are given below
1. Relationships :
(i) Holding Companies:
Godrej Industries Ltd. (GIL) holds 75.19% (Previous year 75.19%)in the Company. GIL is the subsidiary of Godrej & Boyce Mfg. Co. Ltd., the ultimate Holding Company.
(ii) Subsidiary Companies:
Golden Feed Products Ltd. Cauvery Palm Oil Ltd. Godrej Oil Palm Ltd. Natures Basket Ltd. (upto June 30, 2009)
(iii) Fellow Subsidaries:
Godrej Consumer Products Ltd. Godrej Infotech Ltd. Natures Basket Ltd. (from July 1, 2009) Godrej International Ltd. Godrej Properties Ltd. Ensemble Holdings & Finance Ltd.
(iv) Joint Ventures:
ACI Godrej Agrovet Private Ltd. Godrej Tyson Foods Ltd. Godrej Gold Coin Aquafeed Ltd. Godrej IJM Palm Oil Ltd.
(v) Associates:
Creamline Dairy Products Ltd. Polchem Hygiene Laboratories Private Ltd. Al Rahaba International Trading LLC
(vi) Other related parties where persons mentioned in (viii) below exercise signifi cant infl uence:
Avesthagen Ltd.
Krithika Agro Farm Chemicals and Engineering Industries Private Ltd.
(vii) Key management personnel:
Mr. B.S.Yadav Dr. S.L. Anaokar
(viii) Individuals exercising control or signifi cant infl uence (and their relatives): Mr. A.B. Godrej Mr. N.B. Godrej
2. The following transactions were carried out with the related parties in the ordinary course of business :
(i) Details relating to parties referred to in items 1(i), (ii), (iii), (iv),(v) and (vi) above
Rs.'000Nature of Transactions Holding
CompaniesSubsidiaries Fellow
SubsidiariesJoint
VenturesAssociates Other
related Parties
(i) (ii) (iii) (iv) (v) (vi)1 Purchase / Transfer of fi xed assets 843 252
633 2 Sale of Business / Investments - 50,000
70,000 464,832 30,100 3 Investment in share capital 168,681 73,943
500 93,462 19,825 4 Advances given during the year 27,764
5 Intercorporate deposits placed during the year
-
230,000 86,600 580,000 53,932 40,000 6 Intercorporate deposits taken during
the year 45,500
7 Loan Given 125,000
8 Sale of materials / fi nished goods - 1,241,709 12,916 24,222 1,264,135 38,959
9 Sundry deposits placed 6,811 3,154
10 Purchase of materials / fi nished goods 4,875 10,865 19,829 121,872 369 8,636 1,008 12,086 53,547 124,656
11 Expenses charged to other companies 318 55,418 7,617 92,577 25 11 1,856 55,892 282 21,504 17,599 26
12 Expenses charged by other companies 22,692 8,135 8,243 18,854 21,627 (636) 7,373 (3,056) 232
13 Interest income on loan given 9,252 1,955
14 Interest expense on intercorporate deposits taken
1,722 15 Interest income on intercorporate
deposits placed 3,140 2,016
5,022 3,888 2,057 16 Intercorporate deposits written off17 Dividend Income 7,226
6,680 - 18 Dividend paid 9,113
9,113 19 Outstanding Loans Receivable 71,575 20 Outstanding receivables, net of
(payables) (541) 15,906 19,255 169,607 4,355 (3,246)
(1,360) 115,245 343 146,498 49,796 33,213 21 Guarantees issued in favour of 19,200
19,200 22 Gurantees Outstanding 125,843
129,039
(ii) Details relating to persons referred to in items 1 (vii) & (viii) above
THIS YEAR PREVIOUS YEAR
1 Remuneration 12,957 9,175 2 Dividend Paid 586 586 3 Director's Sitting Fees 15 20
Annual Report 2009–2010
103
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010
3. Signifi cant Related Party Transactions
Nature of Transactions Holding Companies (i)
Amount Subsidiaries
(ii)
Amount Fellow Subsidiaries (iii)
Amount Joint Ventures
(iv)
Amount Associate Companies(v)
Amount Other related Parties(vi)
Amount
1 Issue of share capital (incl. Premium)
Godrej Industries Ltd.
2 Sale of Investments Godrej Industries Ltd.
Natures Basket Ltd.
Natures Basket Ltd.
50,000 Bahar Agrochem & Feeds Private Ltd.
- 70,000 30,100 Investment in Share Capital Cauvery Palm
Oil Ltd.168,681 Godrej Tyson
Foods Ltd.49,485 Bahar
Agrochem & Feeds Private Ltd.
Natures Basket Ltd.
40,832 19,825
500 ACI Godrej Agrovet Pvt. Ltd.
24,458
34,990 Godrej Gold Coin Aquafeed Ltd.
17,640 Loan Given Al Rahba
International Trading LLC
27,764
Godrej Gold Coin Aquafeed Ltd.
125,000 Sale of Business Godrej Tyson
Foods Ltd. 464,832
1 Purchase/Transfer of fi xed assets
Godrej & Boyce Mfg. Co. Ltd.
843 Godrej IJM Palm Oil Ltd.
27
633 Godrej Tyson Foods Ltd.
226
2 Intercorporate deposits taken during the year
Godrej Industries Ltd.
Ensemble Holdings & Finance Ltd.
Godrej Tyson Foods Ltd.
230,000 45,500 2 Intercorporate deposits
placed during the yearCauvery Palm Oil Ltd.
Godrej Hershey Ltd.
— Godrej Tyson Foods Ltd.
Aadhar Retailing Ltd.
25,500 200,000 53,932 40,000 Natures Basket Ltd.
Godrej Hi Care Ltd.
61,600 30,000 Godrej Properties Ltd.
350,000 2 Sale of materials/fi nished
goods/debtorsGodrej Industries Ltd.
Godrej Oil Palm Ltd.
Godrej Gold Coin Aqua Feed Ltd.
230 Aadhaar Retailing Ltd.
24,222 6,856 36,454 Golden Feed Products Ltd.
— Godrej IJM Palm Oil Ltd.
150 Creamline Dairy Products Ltd.
7,984
2,505 Godrej Tyson Foods Ltd.
1,240,831 Polchem Hygiene Laboratories Pvt. Ltd.
4,933
1,257,279 —ACI Godrej Agrovet Pvt. Ltd.
498
3 Sundry Deposits Placed Godrej & Boyce Mfg. Co. Ltd.
3
2,100 Godrej Industries Ltd.
6,808
1,054 4 Interest Income on
Intercorporate DepositsGodrej Oil Palm Ltd.
2,709 Godrej Hershey Ltd.
— Godrej Tyson Foods Ltd.
Aadhaar Retailing Ltd.
2,082 2,057 Cauvery Palm Oil Ltd.
431 Godrej Hi Care Ltd.
2,555 842 Natures Basket Ltd.
Godrej Properties Ltd.
2,467 964 Natures Basket Ltd.
2,016
5 Purchase of materials/ fi nished goods
Godrej & Boyce Mfg. Co. Ltd.
Godrej Oil Palm Limited
4,462 Godrej Consumer Products Ltd.
Godrej Gold Coin Aquafeed Limited
334 Polchem Hygiene Laboratories Pvt. Ltd.
19,829 Bahar Agrochem & Feeds Pvt. Ltd.
121,872
369 8,378 898 42 52,723 124,656
Godrej Agrovet Limited
104
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010
3. Signifi cant Related Party Transactions (Contd.)
Nature of Transactions Holding Companies (i)
Amount Subsidiaries
(ii)
Amount Fellow Subsidiaries (iii)
Amount Joint Ventures
(iv)
Amount Associate Companies(v)
Amount Other related Parties(vi)
Amount
Cauvery Palm Oil Ltd.
Godrej Hershey Ltd.
Godrej Tyson Foods Ltd.
10,531 Aadhaar Retailing Ltd.
258 15 7,776 823 Golden Feed Products Ltd.
413 Godrej IJM Palm Oil Ltd.
4,268 6 Expenses charged to other
companiesGolden Feed Products Ltd.
— Godrej Hershey Ltd
— Godrej Gold Coin Aquafeed Ltd.
11,080 Aadhaar Retailing Ltd.
Bahar Agrochem & Feeds Pvt. Ltd.
11
107 28 6,371 17,599 Godrej Oil Palm Ltd.
52,459 Godrej Consumer Products Ltd.
2,992 Godrej IJM Palm Oil Ltd.
8,265 Creamline Dairy Products Ltd.
25 Kritika Agro Farm Chemical & Engineering Industries Pvt. Ltd.
52,475 16 13,267 26 Cauvery Palm Oil Ltd.
2,959 Godrej Tyson Foods Ltd.
72,686 1,283
3,311 1,606 Godrej Industries Ltd.
318 Godrej Hi Care Ltd.
— ACI Godrej Agrovet Pvt. Ltd.
545
1,856 229 230 AL Rahba International Trading LLC
Godrej Properties Ltd.
49 31
8 Godrej Sara Lee Ltd.
—
Natures Basket Ltd.
4,576
7 Expenses charged by other companies
Godrej Industries Ltd.
18,372 Godrej Oil Palm Ltd.
8,135 Godrej Consumer Products Ltd.
2,826 Godrej Gold Coin Aquafeed Ltd.
16,369 Aadhaar Retailing Ltd.
21,344 (636) 643 924 232 Natures Basket Ltd.
900 Godrej IJM Palm Oil Ltd.
177
Godrej & Boyce Mfg. Co. Ltd.
4,319 Godrej Hi Care Ltd.
— (3,980)
94 283 Godrej
Infotech Ltd. 4,517 Godrej Tyson
Foods Ltd. 2,309
6,730 8 Interest income on loan
given— Godrej Gold Coin
Aquafeed Ltd. 9,252
1,955 9 Interest expense on
intercorporate deposits taken
Godrej Industries Ltd.
Ensemble Holdings & Finance Ltd.
1,722 10 Dividend paid Godrej Industries
Ltd. 9,113 Ensemble
Holdings & Finance Ltd.
9,1138 Dividend Income Creamline Dairy
Products Ltd. 6,680
6,680 Polchem Hygiene Laboratories Pvt. Ltd.
546
Outstanding Loans Receivable
Godrej Gold Coin Aquafeed Ltd.
72,100
Godrej Tyson Foods Ltd.
(525)
11 Outstanding intercorporate deposits receivable
—
9 Outstanding receivables, net of (payables)
Godrej Industries Ltd.
(323) Golden Feed Products Ltd.
11,906 Godrej Hi Care Ltd.
- Godrej Gold Coin Aquafeed Ltd.
95,891 Creamline Dairy Products Ltd.
4,068 Bahar Agrochem & Feeds Pvt. Ltd.
(3,246)
(1,360) 9,376 81,869 1,738 29,017 Godrej Oil PalmLtd.
(769) Godrej IJM Palm Oil Ltd.
949 Kritika Agro Farm Chemical & Engineering Industries Pvt.Ltd.
Godrej & Boyce Mfg. Co. Ltd.
(219) 14,008 Godrej Properties Ltd.
64 (13,132) Aadhaar Retailing Ltd.
4,197
Annual Report 2009–2010
105
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010
3. Signifi cant Related Party Transactions (contd.) :
Nature of Transactions Holding Companies (i)
Amount Subsidiaries
(ii)
Amount Fellow Subsidiaries (iii)
Amount Joint Ventures
(iv)
Amount Associate Companies(v)
Amount Other related Parties(vi)
Amount
(1) Cauvery Palm Oil Ltd.
4,769 15 51,754
28,811 Godrej Tyson Foods Ltd.
2,324 Polchem Hygiene Laboratories Pvt. Ltd.
287
Natures Basket Ltd.
— Godrej Sara Lee Ltd
— 35,597 (3,695)
63,051 5 ACI Godrej Agrovet Pvt. Ltd.
5,073
4,558 Godrej Consumer Products Ltd.
378 AL Rahba International Trading LLC
65,370
16 37,605 Godrej Hershey Ltd.
—
65 Godrej International Ltd.
70
Guraantees Issued Natures Basket Ltd.
18,742 ACI Godrej Agrovet Pvt. Ltd.
19,200
19,200 Guarantees outstanding Godrej IJM Palm
Oil Ltd.3
3 ACI Godrej Agrovet Ltd.
66,257
66,257 AL Rahba International
59,582
59,582
Godrej Agrovet Limited
106
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2010
For and on behalf of the Board
V. V. CHAUBAL N. B. GODREJ B. S. YADAVCompany Secretary Chairman Managing Director
Mumbai, May 17, 2010
STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIES
ACT, 1956.
1. Name of the Subsidiary Golden Feed Products Limited
Cauvery Palm Oil Limited
Godrej Oil Palm Limited
2. Date on which it became a Subsidiary July 14, 2003 March 1, 2008 August 18, 2006
3. Financial Year ending March 31, 2010 March 31, 2010 March 31, 2010
4. The Company's interest in the Subsidiary as on 31.3.2010
a) Number of fully paid Equity Shares held 50,000 34,20,000 56,400
b) Face Value Rs. 10 Rs. 10 Rs. 10
c) Extent of holding 100% 90% 80%
5. Net aggregate Profit/(Loss) of the Subsidiary Company so far as it concerns the members of the Company :-
(Rs.’000) (Rs.’000) (Rs.’000)
A) For the Financial Year ended on March 31, 2010 :
i) Not dealt with in the Books of Account of the Company
- - -
ii) Dealt with in the Books of Account of the Company
- - -
B) For the subsidiary company's previous Financial Years since it became a Subsidiary
i) Not dealt with in the Books of Account of the Company
- - -
ii) Dealt with in the Books of Account of the Company
- - -
31. Figures of the previous year have been regrouped & re-classifi ed wherever necessary to conform to the current year's classifi cation.
32. INFORMATION REQUIRED TO BE FURNISHED UNDER PART IV OF SCHEDULE VI OF THE COMPANIES ACT, 1956:
i) Registration Details Registration No. 16655 State Code 11 Balance Sheet Date 31/3/2010
ii) Capital raised during the year(Rupees ’000)
Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement Nil
iii) Position of mobilisation and deployment of funds
(Rupees ’000) Total Liabilities 6,633,447 Total Assets 6,633,447 Sources of Funds
Paid-up Capital 121,188 Reserves & Surplus 2,751,104 Secured Loans 580,675 Unsecured Loans 400,263
Application of Funds Net Fixed Assets 830,361 Investments 1,949,717 Net Current Assets 1,175,156 Misc. Expenditure - Accumulated Losses Nil
iv) Performance of Company(Rupees ’000)
Turnover 14,130,637 Total Expenditure 13,881,315 Profi t before tax before extraordinary income 249,322 Profi t before tax after extraordinary income 249,322 Profi t after tax 217,068 Earning Per Share before extraordinary 17.91 Earning Per Share after extraordinary 17.91 Dividend rate 20.00%
v) Generic Names of three principal products/services of Company Item Code No. 23099010 Product Description Animal Feeds
Annual Report 2009–2010
107
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010
For and on behalf of For and on behalf of the Board
KALYANIWALLA & MISTRY
CHARTERED ACCOUNTANTS
ERMIN K. IRANI V. V. CHAUBAL N. B. GODREJ B. S. YADAV
Partner Company Secretary Chairman Managing Director
Membership no. 35646
Mumbai, May 17, 2010
THIS YEAR PREVIOUS YEAR
Rs. (’000) Rs. (’000) Rs. (’000) Rs. (’000)
A. Cash Flow from Operating Activities :
Net Profi t Before Taxes(after extraordinary income)
249,322 718,733
Adjustment for:
Depreciation 63,384 72,185
Loss on sale of fi xed assets 14,077 1,747
Extraordinary Income:
Profi t on transfer of business — (484,029)
Profi t on Demerger
— (484,029)
Exchange difference 450 (152)
Dividend income (7,226) (6,964)
Finance charges — 6,131
Interest income (152,526) (93,270)
Interest expenses 151,082 253,538
Provision for Doubtful Debts and Advances (43,412) 67,286
Loss on sales on investments 20,500 (235,376)
Bad Debts Written off 39,212 —
85,542 (418,905)
Operating Profi t Before Working Capital Changes
334,864 299,828
Adjustments for:
Inventories (136,389) (97,382)
Debtors and Other Receivables 257,978 (120,038)
Creditors and Other Payables 1,128,742 (463,541)
1,250,331 (680,962)
Cash Generated from Operations 1,585,194 (381,134)
Direct Taxes paid (net of refund received) (31,845) (134,800)
Net Cash Flow from Operating Activities
1,553,349 (515,934)
B. Cash Flow from Investing Activities :
Capital subsidy received — 2,500
Acquisition of fi xed assets (197,614) (95,850)
Proceeds from sale of fi xed assets 2,759 6,408
Intercorporate Deposits Given 79,500 (85,900)
Purchase of Investments (356,503) (138,721)
Proceeds from sale of investments in subsidiaries
50,000
Proceeds from sale of investments in ARL — 30,100
Interest Received 152,526 73,737
Dividend Received 7,226 6,964
Net Cash used in Investing Activities before extraordinary item
(262,107) (200,762)
Proceeds from Extraordinary Items;
Proceeds from transfer of business/demerger (Note 3) — 889,405
Net Cash used in Investing Activities after extraordinary item
(262,107) 688,643
THIS YEAR PREVIOUS YEAR
Rs. (’000) Rs. (’000) Rs. (’000) Rs. (’000)
C. Cash Flow from Financing Activities :
other fi nancial charges - (6,131)
Repayment of Borrowings (2,326,460) (258,200)
Proceeds from Secured Borrowings 580,675 -
Proceeds from Unsecured Borrowings 400,263 372,093
Interest Paid (151,082) (253,538)
Dividend Paid (12,118) (12,118)
Dividend Tax Paid (2,060) (2,060)
Net Cash used in Financing Activities (1,510,781)
(159,952)
Net increase in Cash and Cash equivalents (219,539) 12,757
Cash and Cash equivalents (Opening balance)
311,922 299,165
Cash and Cash equivalents (Closing balance)
92,384 311,922
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 fl ows by operating, investing and fi nancing activities.
2 Figures in brackets are outfl ows/deductions.
3 Proceeds from transfer of business/demerger is for a total consideration of Rs. Nil (Previous year Rs. 1,410,610 thousands) for the three business. Out of the total consideration Rs. Nil (Previous year Rs. 374,424 thousands) has been received in cash and the balance by way of allotment of equity shares in demerged/transfer of business companies.
4 Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s classifi cation.
Golden Feed Products Limited
108
DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010To The Shareholders
Your Directors have pleasure in submitting their Report along with the audited Accounts for the fi nancial year ended on March 31, 2010.
FINANCIAL RESULTS
Your Company’s performance during the year as compared with that during the previous year is summarized below:
(Rs. Lac)
This Year Previous Year
Total Income - -
Loss before Taxation 1.61 (2.22)
Add: Provision for Taxation - -
Loss after Taxation 1.61 (2.22)
Balance Brought Forward from previous year (160.90) (158.68)
Balance Carried Forward to Balance Sheet (159.29) (160.90)
REVIEW OF OPERATIONS
In the current year, your Company initiated trading activities.
DIVIDEND
Your Directors do not recommend any dividend for the year 2009-10.
FIXED DEPOSITS
Your Company has not accepted any public deposits during the fi nancial year under review.
HOLDING COMPANY
Your Company continues to be a subsidiary of Godrej Agrovet Limited as defi ned under Section 4(1)(b) of the Companies Act, 1956.
SUBSIDIARY COMPANIES
The Company has no subsidiary companies during the year under review.
DIRECTORS
The Board of Directors of the Company presently comprises of the following Directors:
Mr. B. S. Yadav1.
Dr. P. N. Narkhede2.
Dr. S. L. Anaokar3.
During the year under review (i.e., from April 1, 2009 upto March 31, 2010), there have been no changes in the directorship of the Company. Dr. S. S. Sindhu has resigned from directorship of the Company w.e.f. May 14, 2010.
Dr. P. N. Narkhede retires by rotation at the ensuing Annual General Meeting of the Company in accordance with Section 256 of the Companies Act, 1956 and Article 15 of the Articles of Association of the Company and being eligible offers himself for reappointment.
AUDITORS
You are requested to appoint Auditors for the current year and fi x their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai, are eligible for re-appointment and a certifi cate as required u/s 224 (1 B) of the Companies Act, 1956, has been received from them.
QUALIFICATIONS BY AUDITORS
The auditors of the Company have qualifi ed in the Auditors' Report that the accumulated losses as at March 31, 2010 exceed its paid up capital, resulting in the erosion of its net worth. Your Company still remains a “Going Concern” as the fi nance will continue to be available to the Company for its working capital requirements from its holding company Godrej Agrovet Limited.
ADDITIONAL INFORMATION
The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.
STATUTORY INFORMATION
A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo
The information in respect of these matters, required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report.
B) Particulars of Employees
None of the employees is covered under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002.
C) Directors’ Responsibility Statement
Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confi rm:
a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same;
b) that they have selected such Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the profi t or loss of the Company for that period;
c) that they have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities;
d) that they have prepared the annual accounts on a going concern basis.
HUMAN RESOURCES
There are no employees in the Company.
For and on behalf of the Board
B. S. Yadav P. N. Narkhede Director Director
Mumbai, May 14, 2010
ANNEXURE ‘A’ANNEXURE FORMING PART OF THE DIRECTORS’ REPORTINFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO :
A. Conservation of Energy
The Company has not established any manufacturing facility this year.
B. Technology absorption, adaptation and innovation
Not Applicable since the Company does not have any manufacturing facility at present.
C. Foreign Exchange earnings and outgo
Your Company had no foreign exchange earning as well as outgo.
For and on behalf of the Board
B. S. Yadav P. N. Narkhede Director Director
Mumbai, May 14, 2010
Annual Report 2009–2010
109
REPORT OF THE AUDITORS TO THE MEMBERS OF GOLDEN FEED PRODUCTS LIMITED
ANNEXURE TO THE AUDITORS’ REPORT
1. We have audited the attached Balance Sheet of Golden Feed Products Limited, as at 31st March 2010 and also the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that:
a) The accumulated losses of the Company as at March 31, 2010 exceed its paid up capital resulting in the erosion of its net worth. The accounts for the year have been prepared on the ‘Going Concern’ basis on the understanding that fi nance will continue to be available to the Company for working capital requirements.
b) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.
c) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of these books.
d) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.
e) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.
f) In our opinion and to the best of our information and according to the explanations given to us, the said fi nancial statements read with the notes thereon, subject to (a) above, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; and
ii) in the case of the Profi t and Loss Account, of the loss for the year ended on that date.
iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.
5. On the basis of the written representations received from the Directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that, none of the Directors is disqualifi ed as on 31st March, 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
For and on behalf ofKALYANIWALLA & MISTRY
Chartered AccountantsFirm Registration No.: 104607W
ERMIN K. IRANIPartner
Mumbai, May 14, 2010 Membership No. 35646
Referred to in paragraph (3) of our report of even date.
The Company does not have any Fixed Assets and hence maintenance of records, physical 1) verifi cation and disposal of fi xed assets does not arise.
The Company does not have any inventories. 2)
(a) The Company has not granted any loans, secured or unsecured to companies, fi rms 3) or parties covered in the register maintained under section 301 of the Companies Act, 1956.
(b) Consequently, the question of commenting whether the rates of interest and other terms and conditions are not prejudicial to the interest of the Company does not arise.
(c) The Company has taken unsecured loans of Rs. 2,840 thousand from a Company covered in the register maintained under section 301 of the Act. The maximum amount involved during the year was Rs. 12,216 thousand and year-end balance of loan taken from such party was Rs. 12,216 thousand.
(d) The Loan as aforesaid is interest free and the other terms and conditions are not prejudicial to the interest of the company.
(e) There is no schedule of repayment and hence the question of regular repayment does not arise.
In our opinion and according to the information and explanations given to us, there are 4) adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods and services. During the course of our audit, we have not observed a continuing failure to correct major weakness in internal controls.
(a) Based on the audit procedures applied by us and according to the information 5) and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to the prevailing market prices at the relevant time, where comparable market price exists.
In our opinion and according to the information and explanations given to us, the Company 6) has not accepted any deposits from the public and hence the provisions of section 58A, 58AA or any other provision of the Companies Act, 1956, read with the rules framed thereunder are not applicable.
In our opinion and according to the information and explanations given to us, the internal 7) audit system is commensurate with the size of the Company and nature of its business.
According to the information and explanation given to us, the maintenance of cost records 8) has not been prescribed by the Central Government, under section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.
(a) According to the information and explanations given to us and on the basis of 9) our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other
statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed dues payable in respect of above as at 31st March 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty or cess on account of any dispute.
The accumulated losses of the Company at the end of the 31st March 2010 are more than 10) 50% of its net worth. The Company has incurred cash loss during the fi nancial year and also in the immediately preceding fi nancial year.
According to the information and explanations given to us and based on the documents and 11) records produced to us, the Company does not have dues to banks, fi nancial institutions or debenture holders.
According to the information and explanations given to us and based on the documents and 12) records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
In our opinion and according to the information and explanations given to us, the nature 13) of activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefi t fund/ societies.
The Company does not deal in shares, securities, debentures and other investments. 14)
According to the information and explanations given to us, the Company has not given any 15) guarantee for loans taken by others from banks or fi nancial institutions.
The Company has not taken any term loans during the year.16)
According to the information and explanations given to us and on an overall examination 17) of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long term investment.
The Company has not made any preferential allotment of shares to parties or companies 18) covered in the register maintained under section 301 of the Companies Act, 1956.
The Company did not have outstanding debentures during the year.19)
The Company has not raised any money through a public issue during the year.20)
Based on the audit procedures performed and information and explanations given by the 21) management, we report that no fraud on or by the Company has been noticed or reported during the year.
For and on behalf ofKALYANIWALLA & MISTRY
Chartered AccountantsFirm Registration No.: 104607W
ERMIN K. IRANIPartner
Mumbai, May 14, 2010 Membership No. 35646
Golden Feed Products Limited
110
The Schedules referred to above form an integral part of the Balance SheetAs per our Report of even date attached Signatures to Balance Sheet and Schedules 1 to 4For and on behalf of For and on behalf of the BoardKALYANIWALLA & MISTRYChartered Accountants ERMIN K. IRANI B. S. YADAV P. N. NARKHEDE Partner Director DirectorMembership No. 35646 Mumbai, May 14, 2010
The Schedules referred to above form an integral part of the Profi t and Loss AccountAs per our Report of even date attached Signatures to Profi t and Loss Account Schedule 4For and on behalf of For and on behalf of the Board KALYANIWALLA & MISTRYChartered Accountants ERMIN K. IRANI B. S. YADAV P. N. NARKHEDE Partner Director DirectorMembership No. 35646 Mumbai, May 14, 2010
SCHEDULES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010
BALANCE SHEET AS AT MARCH 31, 2010This Year Previous Year
Schedule Rs.’000 Rs.’000 Rs.’000 SOURCES OF FUNDS
SHAREHOLDERS’ FUNDSShare Capital 1 500 500 Reserves and Surplus - -
500 500 LOAN FUNDS
Secured loans - - Unsecured loans from Holding Company 11,906 9,376
TOTAL 12,406 9,876 APPLICATION OF FUNDS
FIXED ASSETS - - INVESTMENTS 25 25
CURRENT ASSETS, LOANS AND ADVANCESInventoriesSundry Debtors 2 413 - Cash and Bank Balances - 6 Other Current Assets - 43 Loans and Advances - 18
413 67 LESS : CURRENT LIABILITIES
AND PROVISIONS Liabilities 3 3,961 6,305 Provisions - -
3,961 6,305 NET CURRENT ASSETS (3,548) (6,239)PROFIT & LOSS ACCOUNT 15,929 16,090
TOTAL 12,406 9,876 NOTES TO ACCOUNTS 4
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
This Year Previous Year Schedule Rs. ’000 Rs. ’000
INCOMESales 413 - Credit Balances Written Back - 4,417
413 4,417
EXPENDITUREPurchase for Resale 405 - Auditors’ Remuneration 55 55 Legal and Professional Charges 2 -Dr Balances in Current Assets/Loans and advances written off 61 -Provision for Doubtful Debts & Advances (310) 4,467 Bank Charges 39 54 Sundry Expenses - 63
252 4,639 PROFIT/(LOSS) BEFORE TAXATION 161 (222)Provision for Taxation - - PROFIT/(LOSS) AFTER TAXATION 161 (222)(Defi cit) Brought Forward (16,090) (15,868)DEFICIT CARRIED OVER TO BALANCE SHEET (15,929) (16,090)Earnings per share (Basic/Diluted ) in Rs. (Refer Note 4) 3.22 (4.45)NOTES TO ACCOUNTS 4
This Year This Year Previous Year Rs.’000 Rs.’000 Rs.’000
SCHEDULE 1 : SHARE CAPITAL
AUTHORISED
100,000 Equity Shares of Rs. 10 each 1,000 1,000
ISSUED, SUBSCRIBED AND PAID UP
50,000 Equity Shares of Rs.10 each fully paid 500 500
All the above shares are held by Godrej Agrovet Ltd. (Holding Company) & its nominees
SCHEDULE 2 : SUNDRY DEBTORS
Debts outstanding for a period exceeding six months
Considered Good - 4,467
Considered Doubtful 4,157 -
4,157 4,467
Other Debts 413 -
TOTAL 4,570 4,467
Less: Provisions for doubtful debts 4,157 4,467
413 -
SCHEDULE 3 : CURRENT LIABILITIES AND PROVISIONS
A) CURRENT LIABILITIES
Investor Education and Protection Fund - -
Sundry Creditors 1,450 1,045
Bank Overdraft as per books 3 -
Other Liabilities 2,427 2,437
Advance from Customers 81 2,823
TOTAL 3,961 6,305
SCHEDULE 4 : NOTES TO ACCOUNTS
1. SIGNIFICANT ACCOUNTING POLICIES
a) The fi nancial statements have been prepared on historical cost convention and on the 'going concern basis', with revenues recognised and expenses accounted on their accrual in accordance with the generally accepted accounting principles, and in compliance with the applicable Accounting Standards and other requirements of the Companies Act, 1956.
b) Fixed assets have been stated at cost and include incidental and/or installation/development expenses incurred in putting the asset to use and interest on borrowing incurred during construction period. Pre-operative expenses for major projects are also capitalised, where appropriate.
c) Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognised whenever carrying amount exceeds the recoverable amount.
d) Depreciation/Amortisation has been provided for as under :
(a) The Company has grouped additions and disposals in appropriate time periods of a month/quarter for the purpose of charging pro rata depreciation in respect of additions and disposals of its assets keeping in view the materiality of the items involved.
(b) 1) Depreciation is provided on the straight line method at the rates specifi ed in Schedule IV to the Companies Act, 1956, except for computer hardware which is depreciated over its estimated useful life of four years.
2) Amortisations
Asset type Period
(i) Leasehold Land Primary lease period (ii) Leasehold improvements Primary lease period or 16 years and equipments whichever is less (iii) Signages 3 years (iv) Technical Knowhow, technical knowhow fees of a capital nature 10 years (v) Computer software 6.17 years
Annual Report 2009–2010
111
SCHEDULES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010
e) Raw materials are valued at weighted average cost.
Finished goods and work-in-progress are valued at lower of cost and net realisable value.
These costs include cost of conversion and other costs incurred in bringing the inventories to their present location and condition.
f) Retirement benefi ts to employees comprise payments under defi ned contribution plans like provident fund and family pension. Payments under defi ned contribution plans are charged to the profi t and loss account.
The liability in respect of defi ned benefi t schemes like gratuity and leave encashment benefi t on retirement is provided on the actual basis.
g) Revenue is recognised when goods are despatched to external customers.
h) Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such Deferred tax liability is recognised, if material. Deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year-end, based on the tax rates and laws enacted on the balance sheet date.
i) The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
j) Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.
2. AUDITORS’ REMUNERATION This Year Previous Year
Rs. Rs.
Audit fees 55,150 55,150
Reimbursement of Expenses - -
TOTAL 55,150 55,150
3. RELATED PARTY DISCLOSURESRelated party disclosures as required by AS - 18, “Related Party Disclosures”, are given below:1. Relationships :
(i) Holding Companies: Godrej Agrovet Limited (GAVL) holds 100% in the Company. GAVL is the
subsidiary of Godrej Industries Limited (GIL). GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the ultimate holding company.
(ii) Fellow subsidiaries: Cauvery Palm Oil Ltd. Godrej Oil Palm Ltd. (formerly Godrej Oil Plantations Ltd.)
2. The following transactions were carried out with the related parties in the ordinary course of business :
(Rs. in Thousands) Holding
Nature of Transactions Company*1. Loan taken 2,530
521 2. Loan repaid -
(2,530)3. Expenses charged to other companies -
107 -
4. Sale of Material/Finished Goods 413 -
5. Outstanding payables, net of (receivables) 11,906 9,376
* All transactions are with Godrej Agrovet Limited.
4. EARNINGS PER SHAREThis Year
Rs.Previous Year
Rs.Profi t after tax and prior period expenses 161 (222)Weighted average number of equity shares outstanding 50,000 50,000Basic earnings per share 3.22 (4.45)Diluted earnings per share 3 (4.45)Nominal value of shares 10.00 10.00
5. Information required to be furnished under Part IV of Schedule VI of the Companies Act, 1956 i) Registration Details Application of Funds
Registration No. 140599 Net Fixed Assets - State Code 11 Investments 25 Balance Sheet Date 31/3/2010 Net Current Assets (3,548)
ii) Capital raised during the year Misc. Expenditure - (Rupees ’000) Accumulated Losses 15,929
Public Issue Nil iv) Performance of CompanyRights Issue Nil (Rupees ’000)Bonus Issue Nil Turnover 413 Private Placement Nil Total Expenditure 252
iii) Position of mobilisation and deployment of funds
Profi t before tax 161
(Rupees ’000) Profi t after tax 161 Total Liabilities 16,367 Earning Per Share in Rs. 3.22 Total Assets 16,367 Dividend rate - Sources of FundsPaid-up Capital 500 v) Generic names of three principalReserves & Surplus - products/services of CompanySecured Loans - Item Code No. 23099010Unsecured Loans 11,906 Product Description Animal
Feeds
For and on behalf of the Board B. S. YADAV P. N. NARKHEDE Director Director Mumbai, May 14, 2010
As per our Report of even date attached
For and on behalf of For and on behalf of the Board KALYANIWALLA & MISTRYChartered Accountants
ERMIN K. IRANI B. S. YADAV P. N. NARKHEDE Partner Director DirectorMembership No. 35646 Mumbai, May 14, 2010
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010This Year Previous Year
Rs. ’000 Rs. ’000 Rs. ’000
A. Cash Flow from Operating Activities :
Net Profi t Before Taxes (after extraordinary income) 161 (222)
Adjustment for:
Provision for Doubtful Debts written (back)/off (310) 4,467
Advances written off 61 -
(250) 4,467
Operating Profi t Before Working Capital Changes (89) 4,245
Adjustments for:
Debtors and Other Receivables (103) 15,191
Creditors and Other Payables (2,347) (4,391)
(2,450) 10,800
Cash Generated from Operations (2,539) 15,045
Direct Taxes paid (net of refund received) - -
Net Cash Flow from Operating Activities (2,539) 15,045
B. Cash Flow from Investing Activities: - -
C. Cash Flow from Financing Activities:
Proceeds from Unsecured Borrowings 2,530 (15,084)
Net Cash used in Financing Activities 2,530 (15,084)
Net increase in Cash and Cash Equivalents (9) (39)
Cash and Cash equivalents (Opening Balance) 6 45
Cash and Cash equivalents (Closing Balance) (3) 6
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 fl ows by operating, investing and fi nancing activities.
2. Figures in brackets are outfl ows/deductions.
3. Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s classifi cation.
Godrej Oil Palm Limited
112
DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010TO THE SHAREHOLDERS
Your Directors have pleasure in submitting their Report along with the audited Accounts for the fi nancial year ended on March 31, 2010.
FINANCIAL RESULTS
Your Company’s performance during the year as compared with that during the previous year is summarised below: -
THIS YEAR(Rs. lac)
PREVIOUS YEAR(Rs. lac)
Total Income 6465.82 7431.68
Profi t Before Taxation (PBT) 1068.20 975.35
Less : Provision for Taxation 387.91 385.29
Profi t After Taxation (PAT) 680.29 590.05
Balance brought forward from previous year 1426.96 868.36
Total 2107.25 1426.96
Balance Carried Forward to Balance Sheet 2107.25 1426.96
OPERATIONAL HIGHLIGHTS
Your Company operated under highly adverse conditions during the year which witnessed a severe drought resulting in a major drop in the FFB yield per hectare. The drop in targets approved by the Government constrained area coverage and sales from the nursery. CPO prices were substantially below the average levels of 2008-09. Improvement in operational effi ciencies and additional arrivals from newly emerging areas helped the Company face the adversity and post improved results for the year.
During the year, the Company successfully completed a capital expenditure programme including augmentation of capacity from 20 TPH to 30 TPH, installation of a COGEN plant and an EFB press station. The setting up of a COGEN plant not only ensured self suffi ciency in power but also savings in power cost. It is proposed to further augment the capacity to 40 TPH during 2010-11 and also increase the capacity of the Palm Kernel Oil Mill.
DIVIDEND
The Directors do not recommend any dividend for the year 2009-10.
FIXED DEPOSITS
The Company has not accepted any public deposits during the fi nancial year under review.
HOLDING COMPANY
The Company is a subsidiary of Godrej Agrovet Limited as defi ned under Section 4(1)(b) of the Companies Act, 1956.
SUBSIDIARY COMPANIES
The Company has no subsidiary companies during the year under review.
DIRECTORS:
The following are the current Directors of the Company:-
1. Mr. N. B. Godrej (Chairman) 2. Mr. B. S. Yadav (Director) 3. Mr. R. R. Govindan (Director) 4. Mr. S. Varadaraj (Director) 5. Mr. Velayuthan Tan (Director)
Mr. R. R. Govindan and Mr. S. Varadaraj retire by rotation at the ensuing Annual General Meeting of the Company in accordance with Section 256 of the Companies Act, 1956 and Article 124 of Articles of Association of the Company and being eligible offer themselves for reappointment.
AUDITORS
You are requested to appoint Auditors for the current year and fi x their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment and a certifi cate as required u/s 224 (1 B) of the Companies Act, 1956, has been received from them.
ADDITIONAL INFORMATION
The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.
STATUTORY INFORMATION
A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo
The information in respect of these matters, required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report.
B) Particulars of Employees
None of the employees is covered under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002.
C) Directors’ Responsibility Statement
Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confi rm:-
a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same;
b) that they have selected such Accounting Policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the profi t or loss of the Company for that period;
c) that they have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities;
d) that they have prepared the annual accounts on a going concern basis.
HUMAN RESOURCES
Your Company continues to focus on development of Human Resources. The industrial relations are cordial and the Board would like to place on record its sincere appreciation for the unstinted support from all the employees.
For and on behalf of the Board of Directors
N. B. GodrejMumbai, May 17, 2010 Chairman
ANNEXURE ‘A’ANNEXURE FORMING PART OF THE DIRECTORS’ REPORTINFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:
A] Conservation of Energy
The Company continues its policy of implementation of various measures for energy conservation recognizing the same as a necessary means of saving cost and a social responsibility. A regular review of various systems installed to conserve energy is undertaken.
The measures adopted by the Company during the year under review for conservation of energy include the following:-
1) Provision of limit switches for tanks for automatic switching on & off the motors 2) Switching off unwanted motive load when not in use 3) Installation of energy saving blowers to reduce the load 4) Installation of additional capacitors at MCCs 5) Replacement of 40W tubes with slim energy effi cient tube-36W 6) Installation of Gensets of capacity of 160 KVA and 500 KVA 7) Installation of Co-Generation Plant (a captive power generation plant) of Capacity of
1.6 MW per hour at Pothepally Factory.
The adoption of above energy conservation measures has resulted in accrual of the following benefi ts to the Company:-
a) Reduction of load on cables b) Improvement in power factor level
c) Substantial saving in terms of cost of energy d) Increase in the life of equipment
B] Technology absorption, adaptation and innovation
I. The Company constantly endeavours for technological upgradation in order to have improved quality at a lower cost and a Leaf and Soil Analysis Laboratory is being set up for the same.
II. The Company’s expenditure on R&D is given below:
THIS YEARRs. lac
PREVIOUS YEARRs. lac
(a) Capital 6 Nil(b) Recurring 1 Nil(c) Total 7 Nil(d) Total R & D expenditure as a percentage
of total turnover0.1% Nil
C] Foreign Exchange earnings and outgo
THIS YEARRs. lac
PREVIOUS YEARRs. lac
I. Foreign exchange used Nil 0.66II. Foreign exchange earned Nil Nil
For and on behalf of the Board of Directors
N. B. GodrejMumbai, May 17, 2010 Chairman
Annual Report 2009–2010
113
1. We have audited the attached Balance Sheet of Godrej Oil Palm Limited, as at March 31, 2010 and also the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above we report that:
a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.
b) As stated in Note 4 of Schedule 10, notes to accounts, the Company has amortised Licenses/Rights, an intangible asset for oil palm plantation business over a period of 20 years which exceeds the maximum limit of 10 years as prescribed by Accounting Standard 26 “Intangible Assets” issued by the Institute of Chartered Accountants of India. The Company is of the view that the oil palm plantation business operates on a command area basis with the government allotting to various companies clearly demarcated area for the development of the oil palm plantation. With this responsibility for the development of the oil plantation comes the exclusive rights for the procurement of Fresh Fruit Bunches produced in the allotted area. Oil Palm Plantation has relatively long productive life of 30 years. Since the allotment right is expected to yield benefi ts over a long period, the amount paid towards the same is amortised over a 20-year period.
c) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of these books.
d) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.
e) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.
f) In our opinion and to the best of our information and according to the explanations given to us, the said fi nancial statements read with the notes thereon, subject to (b) above give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, the state of affairs of the Company as at March 31, 2010; and
ii) in the case of the Profi t and Loss Account, of the profi t for the period ended on that date.
iii) in the case of the Cash Flow Statement, the cash fl ows of the Company for the period ended on that date.
5. On the basis of the written representations received from the Directors as on March 31, 2010, and taken on record by the Board of Directors, we report that, none of the Directors is disqualifi ed as on March 31, 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
For and on behalf ofKALYANIWALLA & MISTRY
Chartered Accountants
ERMIN K. IRANI PartnerMumbai, May 17, 2010 Membership No. 35646
REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ OIL PALM LIMITED
ANNEXURE TO THE AUDITORS' REPORTReferred to in paragraph (3) of our report of even date.
1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fi xed assets.
(b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodic intervals. In our opinion, the periodic verifi cation is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been reported on such verifi cation.
(c) In our opinion, the disposal of fi xed assets during the year does not affect the going concern assumption.
2) (a) The Management has conducted physical verifi cation of inventory at reasonable intervals.
(b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifi cation.
3) (a) The Company has granted unsecured loans amounting to Rs. 65,500 thousands to two companies covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 65,500 thousands and the year end balance of loan granted to such parties was Rs. 65,500 thousands.
(b) The rate of interest and the other terms and conditions of the loan is not prima facie prejudicial to the interests of the Company.
(c) As informed to us the receipt of principal and interest, to the extent due, has been regular.
(d) As informed to us, there are no overdue amounts exceeding rupees one lakh and hence the question of commenting on reasonable steps taken for recovery of principal and interest does not arise.
(e) The Company has taken unsecured loans of Rs. 10,500 thousands from a company covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year was Rs. 25,540 thousands and year-end balance of loan taken from such party is Rs. Nil.
(f) The rate of interest and the other terms and conditions of the unsecured loan taken is not prima facie prejudicial to the interest of the Company.
(g) The payment of principal amounts and interest was also regular.4) In our opinion and according to the information and explanation given to us, there are
adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods and services. During the course of our audit, we have not observed a continuing failure to correct major weakness in internal controls.
5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time.
6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.
7) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and the nature of its business.
8) We have broadly reviewed the books of accounts maintained by the Company pursuant to the order made by the Central Government for maintenance of cost records prescribed
under Section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts and records have been maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
9) (a) According to the information and explanations given to us and on the basis of our examination of books of accounts, during the period, the Company has no statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues incurred during the period covered. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at March 31, 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Income Tax, Wealth Tax, Excise Duty, Cess on account of any dispute.
10) As the Company has been registered for a period less than fi ve years the question of commenting on its accumulated losses being less than fi fty percent of its net worth does not arise. The Company has not incurred cash loss during the fi nancial year or in the immediately preceding fi nancial year.
11) According to the information and explanations given to us and based on the documents and records produced to us, there are no dues to banks, fi nancial 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 benefi t 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 or fi nancial institutions.16) According to the information and explanations provided to us, there are no term loans, hence
the question of its application for the purposes for which they were obtained is not applicable.17) According to the information and explanations given to us and an overall examination of the
Balance Sheet and Cash Flows of the Company, we report that the Company has not raised funds on short term or long term basis.
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) During the year, the Company has not issued any debentures. However, in respect of private placement of Debentures in an earlier year, we have been informed that the security was not created, but these debentures have since been redeemed.
20) The Company has not raised any money through a public issue during the year.21) Based on the audit procedures performed and information and explanations given by the
management, we report that no fraud on or by the Company has been noticed or reported during the year.
For and on behalf ofKALYANIWALLA & MISTRY
Chartered AccountantsFirm Registration Number : 104607W
ERMIN K. IRANI PartnerMumbai, May 17, 2010 Membership No. 35646
Godrej Oil Palm Limited
114
THIS YEAR PREVIOUS YEARRs.’000 Rs.’000 Rs.’000
SCHEDULE 1 : SHARE CAPITALAUTHORISED1,00,00,000 Equity Shares of Rs. 10 each 100,000 100,000 ISSUED, SUBSCRIBED AND PAID UP70,500 Equity Shares of Rs. 10 each fully paid. 705 705
Of the above : a) 56,400 equity shares are held by Godrej
Agrovet Ltd. the holding Company.b) 20,500 equity shares have been issued
pursuant to the scheme of demerger without payment being received in cash.
SCHEDULE 2 : RESERVES & SURPLUSSecurities Premium Account 497,289 497,289 Profi t and Loss Account 210,725 142,696 TOTAL 708,014 639,985
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010
THIS YEAR PREVIOUS YEARRs.’000 Rs.’000 Rs.’000
SCHEDULE 3 : UNSECURED LOANS
2,50,000, 10% Redeemable non-convertible Debentures of Rs. 10 each (amount due within a year Rs. 2,500 thousand, previous year Rs. 2,500 thousand) - 2,500
Add: Interest accured and due - - 202
- 2,702
Sales Tax Deferment facility (Refer Note 3) 46,674 46,674
TOTAL 46,674 49,376
The Schedules referred to above form an Signatures to Balance Sheet and integral part of the Balance Sheet. Schedules 1 to 6 and 11As per our Report of even date attachedFor and on behalf of For and on behalf of the BoardKALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI N. B. GODREJ R. R. GOVINDANPartner Chairman DirectorMembership No. 35646Mumbai, May 17, 2010
The Schedules referred to above form an Signatures to Profi t and Loss Account &integral part of the Profi t & Loss Account Schedules 7 to 11As per our Report of even date attachedFor and on behalf of For and on behalf of the BoardKALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI N. B. GODREJ R. R. GOVINDANPartner Chairman DirectorMembership No. 35646Mumbai, May 17, 2010
BALANCE SHEET AS AT MARCH 31, 2010THIS YEAR PREVIOUS YEAR
Schedule Rs.’000 Rs.’000 Rs.’000SOURCES OF FUNDSSHAREHOLDERS’ FUNDS
Share Capital 1 705 705 Reserves & Surplus 2 708,014 639,985
708,719 640,690 LOAN FUNDS
Unsecured Loans 3 46,674 49,376 DEFERRED TAX LIABILITY 91,779 52,988 TOTAL 847,172 743,054 APPLICATION OF FUNDS FIXED ASSETS 4
Gross Block 679,950 497,842 Less: Depreciation 97,352 56,882 Net Block 582,598 440,960 Capital work-in-progress/Advances 6,778 29,625
589,376 470,585 CURRENT ASSETS, LOANS AND ADVANCES 5
Inventories 68,378 50,425 Sundry Debtors 108,614 131,690 Cash and Bank Balances 20,796 84,392 Other Current Assets 139 60 Loans and Advances 87,663 32,160
285,590 298,727 LESS : CURRENT LIABILITIES AND PROVISIONS
6
Liabilities 25,649 18,753 Provisions 2,145 7,505
27,794 26,258 NET CURRENT ASSETS 257,796 272,469 TOTAL 847,172 743,054 NOTES TO ACCOUNTS 11
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
THIS YEAR PREVIOUS YEAR
Schedule Rs.’000 Rs.’000 Rs.’000INCOME Sales 638,769 742,805 Other income 7 7,813 364
646,582 743,168 EXPENDITURE Materials 8 408,392 539,492 Expenses 9 89,245 75,950 Interest 10 1,560 250 Depreciation 40,565 29,941
539,762 645,633 PROFIT BEFORE TAXATION 106,820 97,535 Provision for Taxation
Current Tax including MAT credit entitlement 18,200 16,281 Fringe Benefi t Tax - 714 MAT Credit entitlement (18,200) - Deferred Tax 38,791 21,534
38,791 38,529 PROFIT AFTER TAXATION 68,029 59,005 Prior years adjustments - 3,145 Profi t after Tax and prior period item 68,029 55,860 Surplus Brought Forward 142,696 86,836 Surplus carried to Balance Sheet 210,725 142,696 Earnings per share (Basic/Diluted) in Rs. (Refer Note 20) 964.95 792.34 NOTES TO ACCOUNTS 11
SCHEDULE 4: FIXED ASSETS (Rs.’000)ASSETS GROSS BLOCK DEPRECIATION NET BLOCK
As on01.04.09
Additions Deductions As on31.03.10
As on01.04.09
For the Year OnDeductions
Upto31.03.10
As on31.03.10
As on31.03.09
Tangible AssetsFreehold Land 2,980 - - 2,980 - - - - 2,980 2,980 Buildings 39,382 22,471 - 61,853 2,550 1,939 - 4,489 57,364 36,832 Plant & Machinery 87,748 159,231 181 246,798 14,677 18,408 55 33,030 213,768 73,070 Furniture & Fixtures 422 117 14 525 122 67 7 182 343 301 Offi ce & Other Equipments 812 323 60 1,075 98 57 17 138 937 713 Vehicles 2,271 - - 2,271 73 297 - 370 1,901 2,198 Tree Development Cost 11,703 - - 11,703 3,994 1,997 - 5,991 5,712 7,709 Computer 679 259 38 900 183 207 15 375 525 496 Intangible Assets - Grant of Licenses 351,845 - - 351,845 35,184 17,593 - 52,777 299,068 316,661 Total 497,842 182,401 293 679,950 56,881 40,565 94 97,352 582,598 -Previous Year 476,549 21,307 14 497,842 26,943 29,941 3 56,882 - 440,960 Capital Work-In-Progress/Advance 6,778 29,625
589,376 470,585
Annual Report 2009–2010
115
SCHEDULES ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31,2010THIS YEAR PREVIOUS YEAR
Rs.’000 Rs.’000 Rs.’000
SCHEDULE 5 : CURRENT ASSETS, LOANS & ADVANCES
(A) INVENTORIES :
Raw Materials 217 547
Finished Products 5,177 3,242
Stores and Spares 2,120 2,127
Stock under Cultivation 60,864 44,509
68,378 50,425
(B) SUNDRY DEBTORS(Unsecured and considered good unless otherwise stated)Debts outstanding for a period exceeding six months
Considered Good 30,542 40,476
Considered Doubtful 36 -
30,578 40,476
Other Debts (less than six months) 78,072 91,214
TOTAL 108,650 131,690
Less: Provision for doubtful debts 36 -
108,614 131,690
(C) CASH AND BANK BALANCES :
Cash and Cheques on hand 168 181
Balances with Scheduled Banks
i) In Current Accounts 11,128 4,211
ii) In Fixed Deposit Accounts 9,500 80,000
20,796 84,392
(D) OTHER CURRENT ASSETS :
Interest Accrued 139 60
(E) LOANS AND ADVANCES :
(Unsecured and considered good)
Advances recoverable in cash or in
kind or for value to be received 4,251 29,374
Inter Corporate Deposits 67,915 -
Advance Income Tax Paid (net of Provision Rs. 51,883 thousand Previous year Rs. Nil) 12,570 -
Deposits
i) Government Authorities 1,506 1,004
ii) Others 1,421 1,782
87,663 32,160
TOTAL 285,590 298,727
SCHEDULE 6 : LIABILITIES & PROVISIONS
LIABILITIES
Sundry Creditors
Dues to Micro, Small & Medium Enteriprises (refer Note 6)
- -
Others 24,898 17,263
24,898 17,263
Investors Education and Protection Fund - -
Advances from Customers 481 853
Sundry Deposits 270 637
TOTAL 25,649 18,753
PROVISIONS
For Taxes (net of advance tax paid Rs. Nil previous year Rs. 45,960 thousand) - 5,923
For Gratuity 1,542 1,167
For Leave Encashment 603 415
2,145 7,505
TOTAL 27,794 26,258
THIS YEAR PREVIOUS YEAR
Rs.’000 Rs.’000 Rs.’000
SCHEDULE 7 : OTHER INCOME
Interest Income (Gross) (Tax at Sources Rs.740 thousands previous year Rs. 1 thousand)
7,486 303
Sundry Balances written back 47 54
Sundry income 280 7
TOTAL 7,813 364
SCHEDULE 8 : MATERIALS
a) RAW MATERIALS CONSUMED
Opening stock 547 1,224
Add : Purchases during the year 392,087 498,826
392,634 500,050
Less : Closing Stocks 217 547
392,417 499,503
b) PURCHASE FOR RESALE 34,265 43,233
c) INVENTORY CHANGE
Opening Stock
Finished Goods 3,242 4,576
Stock under Cultivation 44,509 39,931
47,751 44,507
Less : Closing Stock
Finished Goods 5,177 3,242
Stock under Cultivation 60,864 44,509
66,041 47,751
(18,290) (3,244)
TOTAL 408,392 539,492
SCHEDULE 9 : EXPENSES `
1.Salaries, Wages, Bonus,Gratuity and Allowances 27,423 20,365
2. Contribution to Provident Fund and
Other Funds and Administration Charges 1,269 852
3. Employee Welfare Expenses 458 339
4. Processing Charges 8,397 5,459
5. Consumable Stores 4,460 4,659
6. Power and Fuel 9,742 8,701
7. Rent 944 824
8. Rates and Taxes 391 2,249
9. Repairs & Maintenance
Building 180 211
Plant & Machinery 4,202 2,080
Other Assets 12 76
4,394 2,367
10. Insurance 522 235
11. Postage, Telephony and Stationery 844 786
12. Auditor’s Remuneration 217 210
13. Legal & Professional Fees 2,232 2,267
14. Bank Charges 223 560
15. Freight, Coolie and Cartage 3,336 2,201
16. Advertisement and Publicity 142 154
17. Travelling Expenses 1,820 1,138
18.Provision for Doubtful Debts and Advances/(Writeback) 36 (131)
19. Loss on sale of Fixed Assets/Write off 174 8
20. Discounts, Commission & Brokerage 3,320 3,675
21. General Expenses 18,901 19,031
TOTAL 89,245 75,950
SCHEDULE 10 : INTEREST
1. On Debenture 63 250
2. On Inter Corporate Deposit 1,497 -
1,560 250
Godrej Oil Palm Limited
116
SCHEDULE ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010SCHEDULE 11: NOTES TO ACCOUNTS1. SIGNIFICANT ACCOUNTING POLICIES: a) The fi nancial statements are prepared under the historical cost convention and on
the ‘going concern basis’, with revenues recognised and expenses accounted on their accrual in accordance with the generally accepted accounting principles, and in compliance with the applicable Accounting Standards and other requirements of the Companies Act, 1956.
b) Fixed assets have been stated at cost and include incidental and/or installation/development expenses incurred in putting the asset to use and interest on borrowing incurred during construction period.
c) Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognised whenever carrying amount exceeds the recoverable amount.
d) Depreciation/Amortization has been provided for as under : (a) The Company has grouped additions and disposals in appropriate time periods
of a month/quarter for the purpose of charging pro rata depreciation in respect of additions and disposals of its assets keeping in view the materiality of the items involved.
(b) 1) Depreciation on asset purchased/acquired other than acquired under the scheme of demerger are provided on the straight line method at the rates specifi ed in Schedule XIV to the Companies Act, 1956, except for computer hardware which is depreciated over its estimated useful life of four years.
2) Assets acquired under the scheme of demerger are depreciated on straight line basis over the remaining useful life of the asset.
3) Amortizations Asset type Period (i) Leasehold Land Primary lease period (ii) Trees Development cost 15 years (iii) Grant of Licenses/Rights 20 years e) Inventories: Raw materials and stock under cultivation are valued at weighted average cost.
Finished goods are valued at lower of cost and net realisable value. These costs include cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Stores and spares are valued at cost using the First-In-First-Out method.
f) Employee Benefi ts: i) Short-term employee benefi ts (payable wholly within twelve months of
rendering the service): Short-term benefi ts such as salaries, wages, short-term compensation absences,
etc., are determined on an undiscounted basis and recognised in the period in which the employee renders the related service.
ii) Post-employment benefi ts: Defi ned Contribution Plans: The Company’s contributions paid/payable to
Provident Fund, Employees State Insurance Scheme, Employees Pension Schemes, 1995 and other funds, are determined under the relevant approved schemes and/or statutes and are recognised as expense in the Profi t and Loss Account during the period in which the employee renders the related service. There are no further obligations other than the contributions payable to the approved trusts/appropriate authorities. However, the rules of Company’s Provident Fund Scheme, 1952, for the reason that the return on investment is less or for any other reason, then the defi ciency shall be made good by the Company. The Company’s PF does not have any existing Defi cit or Interest shortfall. In view of the track record of the Company’s PF Trust - its assets, return on investments and accumulated reserves - the Company does not anticipate any defi ciency in the foreseeable future. In any case making reasonable actuarial assumptions for determining and measuring any probable future obligations arising due to interest shortfall, would pose a formidable challenge.
Defi ned Benefi t Plans: The Company’s gratuity and leave encashment/long-term compensated absences schemes are defi ned benefi t plans. The Company’s liability for the defi ned benefi t schemes is actuarially determined based on the projected unit credit method. The Company’s net obligations in respect of such plans is calculated by estimating the amount of future benefi t that the employees have earned in return for their services in the current and prior periods that benefi t is discounted to determine its present value and the fair value of the plan asset is deducted. Actuarial gains and losses are recognised immediately in the Profi t and Loss Account.
Terminal Benefi ts: All terminal benefi ts including voluntary retirement compensation are fully written off to the Profi t and Loss Account.
g) Revenue is recognised when goods are dispatched to external customers. Sales are inclusive of realised exchange fl uctuations on export receivables but net of returns, sales tax, rebates, etc.
h) Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates. The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains/losses are recognised in the Profi t and Loss Account.
i) Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is
calculated on the accumulated timing difference at the year-end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
j) The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
k) Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
2. CAPITAL COMMITMENTS:
THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000
The estimated value of contracts remaining to be executed on Capital Account to the extent not provided for 35,522 786
3. UNSECURED LOANS: Sales Tax Deferment availed under the scheme fl oated by the Directorate of Industries,
Government of Andhra Pradesh is classifi ed under Unsecured Loans.4. AMORTIZING GRANT OF LICENSES/RIGHTS OVER 20 YEARS: The oil palm plantation business operates on a command area basis with the government
allotting to various companies clearly demarcated area for the development of oil palm plantation. With this responsibility for development for oil palm plantations, comes the exclusive rights for the procurement of Fresh Fruit Bunches produced in the allotted area. Oil Palm Plantation has a relatively long productive life of 30 years. Since the allotment right is expected to yield benefi ts over a long period, the amount paid towards the same is amortized over a 20 year period.
5. CURRENT ASSETS, LOANS & ADVANCES: (a) Loans & Advances and other Current Assets include dues from Companies under the
same Management
THIS YEAR PREVIOUS YEARRs. ‘000 Rs. ‘000
(i) Godrej Agrovet Limited 449 - Maximum Balance during the year 4,957 - (ii) Cauvery Palm Oil Limited 27,872 - Maximum Balance during the year 27,872 -
6. CURRENT LIABILITIES: Under the Micro, Small & Medium Enterprises Development Act, 2006, which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro, Small & Medium Enterprises. The Company is still in the process of compiling relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosures have been made in the accounts.
7. SALES TURNOVER:
THIS YEAR PREVIOUS YEARUnit Quantity Value Quantity Value
Rs. ’000 Rs. ’000 Crude Palm Oil MT 14,519 486,691 13,051 508,655 Palm Kernel Oil MT 1,536 53,393 1,832 91,023 Palm Kernel Cake MT 2,670 14,219 3,217 14,605 Seedlings Nos 556,740 44,023 1,009,078 73,783 Agri Inputs 33,360 47,847 Others 7,083 6,892 TOTAL 638,769 742,805
Note: Sales Turnover includes sale of items purchased by the Company for resale.8. FINISHED GOODS INVENTORIES:
Crude Palm Oil MT 30.72 823 70.66 1,544 Palm Kernel Oil MT 3.05 99 6.07 176 Palm Kernel Cake MT 4.70 28 57.54 247 Agri Inputs 4,227 1,275 TOTAL 5,177 3,242
9. PURCHASES FOR RESALE:
Agri Inputs 34,265 43,233 TOTAL 34,265 43,233
10. RAW MATERIALS CONSUMED:
Fresh Fruit Bunches MT 78,873.81 344,800 73,833.02 429,740 Palm Nuts MT 9,144.98 4,947 9,300.17 11,441 Palm Kernel MT - - 399.91 8,868 Palm Sprouts Nos 556,740 42,573 1,009,078 45,524 Others 97 3,931 TOTAL 392,417 499,504
11. LICENSED & INSTALLED CAPACITY AND ACTUAL PRODUCTION:
Item For the year ended
Capacity Per Annum Actual Third Party Registered
MT Installed
MT Production
MT Processing
MT a) Crude Palm Oil 31.3.2010 Not Applicable 18,000 14,349 130
31.3.2009 Not Applicable 11,880 13,102 - b) Palm Kernel Oil 31.3.2010 Not Applicable 2,160 1,533 -
31.3.2009 Not Applicable 2,160 1,819 - Installed capacity is calculatd at 18% Oil Extraction Rate of the input capacity of the FFB
Crushed in case of Crude Palm Oil and Palm Kernel Nut crushed in case of Palm Kernel Oil.
Annual Report 2009–2010
117
SCHEDULE ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010SCHEDULE 11: NOTES TO ACCOUNTS (Contd.)12. (a) COMPUTATION OF PROFIT FOR THE PURPOSE OF MANAGERIAL REMUNERATION:
THIS YEAR Rs.’000
Profi t after Tax as per Profi t & Loss Account 68,029 Add : Depreciation as per Accounts 40,565 Add : Managerial Remuneration 4,025 Add : Provision for Taxation (Including Deferred Tax) 38,791 Add : Loss on sales of Fixed Assets/Write off 174
151,584
Less : Depreciation as per Section 350 of the Companies Act, 1956 40,565
40,565
Net profi t/(Loss) for the purpose of Director's Remuneration 111,019 5% thereof 5,551 MAXIMUM REMUNERATION PERMISSIBLE UNDER THE ACT 5,551 (b) MANAGERIAL REMUNERATION a) Salaries 3,811 b) Contribution to Providend Fund 186 c) Estimated monetary value of Perquisites 28
4,025Note : Previous year Managerial Remunerations are Rs. Nil.
13. DISCLOSURE IN RESPECT OF LEASES: The Company’s leasing arrangements are in respect of operating leases for premises
occupied by the Company. These leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually acceptable terms.
a. The total of future minimum lease payments under non-cancelable operating leases for each of the following periods :
THIS YEAR PREVIOUS YEAR Rs. ’000 Rs. ’000
i. Not later than one year 458 509 ii. Later than one year and not later than fi ve
years - - iii. Later than fi ve years - - b. Lease payments recognised in the statement of
Profi t & Loss for the period : 458 509 14. AUDITORS’ REMUNERATION:
THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000
Audit fees 165 138 Audit under Other Statutes 50 44 Taxation Services - 28 TOTAL 215 210
15. EXPENDITURE IN FOREIGN CURRENCY:
Travelling Expenses - 66 TOTAL - 66
16. VALUE OF CONSUMPTION OF RAW MATERIALS, SPARES & TOOLS:
THIS YEAR PREVIOUS YEARRs.’000 % Rs.’000 %
RAW MATERIALS :Imported items - - - - (including duty content)Indigenous 392,417 100 499,504 100TOTAL 392,417 100 499,504 100 SPARES & TOOLS :Imported items - - - - Indigenous 4,460 100 4,659 100TOTAL 4,460 100 4,659 100
17. Schedule 9, item No. 21 - General Expenses includes, share of corporate overhead charged by Group Company for Rs.12,000 thousand (previous year Rs. 9,600 thousand)
18. EMPLOYEE BENEFITS: I. Defi ned Contribution Plans: Contribution to Defi ned Contribution Plan, recognised as expense for the year are as
under:
THIS YEAR PREVIOUS YEARRs.’000 Rs.’000
Employers’ Contribution to Provident Fund 1,269 852 II. Defi ned Benefi t Plans: a. Contribution to Gratuity Fund The Company makes provision for Gratuity in the books of accounts for qualifying
employees. Gratuity is payable to all eligible employees on superannuation, death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company's policy whichever is benefi cial to the employees.
The following table sets out the funded status of the gratuity plan and the amounts recognised in the Company's fi nancial statements as at March 31, 2010:
THIS YEAR PREVIOUS YEARRs.’000 Rs.’000
Change in present value of obligationPresent value of obligation as at April 1, 2009 1,167 1,028 Interest Cost 65 - Service Cost 148 - Benefi ts Paid (80) - Actuarial (gain)/loss on obligation 242 139 Present value of obligation, as at March 31, 2010 1,542 1,167
THIS YEAR PREVIOUS YEARRs.’000 Rs.’000
Amount recognised in the Balance SheetPresent value of obligation, as at March 31, 2010
1,542 1,167
Fair value of plan assets as at March 31, 2009 - - Net obligation as at March 31, 2010 1,542 1,167 Net gratuity cost for the year ended March 31, 2010Current Service Cost 148 - Interest Cost 65 - Expected return on plan assets - - Net Actuarial (gain)/loss to be recognised 242 139 Net gratuity cost 455 139 Assumptions used in accounting for the gratuity plan
% % Discount Rate 8 8 Salary escalation rate 5 4 The estimates of future salary increases, considered in actuarial valuation, take into account infl ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
19. DEFERRED TAX : Major components of deferred tax arising on account of timing differences as on March 31,
2010 are:
THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000
AssetProvision for Doubtful Debts 12 - Others 6,188 538
6,200 538 LiabilitiesDepreciation on Fixed Assets (97,979) (53,526)
(97,979) (53,526)Net Deferred Tax Liability 91,779 52,988
20. EARNINGS PER SHARE:
THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000
Profi t after tax and prior period expenses 68,029 55,860 Weighted average number of equity shares outstanding 70,500 70,500 Basic earnings per share (Rs.) 964.95 792.34 Diluted earnings per share (Rs.) 964.95 792.34 Nominal value of shares (Rs.) 10 10
21. SEGMENT INFORMATION FOR THE YEAR ENDED MARCH 31, 2010 (i) Information about Primary Business Segments
Current Year Rs.’000Revenue Oil
Palm Plantations
Agri Inputs
Unallocated Total
(A) (B) (C) (A)+(B)+(C) Total Sales 605,409 33,360 638,769 Less : Inter-segment External Sales 605,409 33,360 638,769 Result Segment Result 98,367 967 99,334 Unallocated expenditure net of unallocated income - Interest expenses Interest Income 7,486 7,486 Dividend Income and Profi t on sale of Investments Profi t before taxation and exceptional items 98,367 967 7,486 106,820 Provision for taxation 38,791 38,791 Profi t after taxation and before exceptional items 98,367 967 (31,305) 68,029 Exceptional Items - Prior years adjustments - - Profi t after taxation and exceptional items 68,029 Other Information Segment assets 737,629 4,968 132,368 874,966 Segment liabilities 74,428 40 91,779 166,247 Capital expenditure 159,554 159,554 Depreciation 40,565 40,565 Non-cash expenses other than depreciation
Last Year Revenue Oil
Palm Plantations
Agri Inputs
Unallocated Total
(A) (B) (C) (A)+(B)+(C) Total Sales 694,958 47,847 742,805 Less : Inter-segment External Sales 694,958 47,847 - 742,805 Result Segment Result 105,457 1,928 107,385 Unallocated expenditure net of unallocated income 9,600 9,600 Interest expenses - - Interest Income 250 250 Dividend Income and Profi t on sale of Investments - - Profi t before taxation and exceptional items 105,457 1,928 9,850 97,535 Provision for taxation 38,529 38,529 Profi t after taxation and before exceptional items 105,457 1,928 59,006 Exceptional Items - Prior years adjustments 3,145 3,145 Profi t after taxation and exceptional items 55,861 Other Information Segment assets 768,038 1,274 769,312 Segment liabilities 128,622 128,622 Capital expenditure 21,307 21,307 Depreciation 29,941 29,941 Impairment Loss Non-cash expenses other than depreciation
Godrej Oil Palm Limited
118
SCHEDULE ATTACHED TO AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010SCHEDULE 11: NOTES TO ACCOUNTS (Contd.) (ii) Information about Secondary business Segments The Company operates only within India and hence the information related to
Secondary Business Segment is not furnished. (iii) Notes (i) The Company is organised into two main business segments,Namely (a) Oil Palm Plantation business (b) Agri-business - comprising of plant growth promoters, pesticides etc. Segments have been identifi ed and reported taking into account, the
nature of products and services, the differing risks and returns, the organisation structure, and the internal fi nancing reporting systems.
(ii) The Segment revenue in each of the above business segments consists of sales (net of returns, sales tax, rebates etc.)
(iii) Segment Revenue, Results, Assets and liabilities include the respective amounts identifi able to each of the segments and amounts allocated on a reasonable basis
22. RELATED PARTY DISCLOSURES: Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below : 1. Relationships : (i) Holding Companies: Godrej Agrovet Limited (GAVL) holds 80% in the Company. GAVL is the subsidiary of
Godrej Industries Limited (GIL) & GIL is the subsidiary of Godrej & Boyce Mfg Co Ltd, the ultimate Holding Company.
(ii) Fellow Subsidiaries: Golden Feed Products Limited Cauvery Palm Oil Limited. (iii) Other related parties where persons mentioned (iv) below exercise signifi cant
infl uence: Godrej IJM Palm Oil Limited Godrej Gold Coin Aquafeed Limited Godrej Tyson Foods Ltd. Nature Basket Limited. (iv) Key management persons Mr. B. S. Yadav Mr. R. R. Govindan 2. The following transactions were carried out with the related parties in the ordinary course
of business :
Rs.’000 Holding Other Related
Nature of Transactions Companies Parties (i) (iii)
I Expenses charged by other companies 3,926 447 (52,475) (875)
II Expenses charged to other companies - 2,683 III Sale of materials/fi nished goods 6,249 405
(8,378) - IV Purchase of Material - 1,680
(24,222) (2,044)V Inter Corporate Deposit placed - 65,500 VI Fixed Assets Purchased 825 - VII Advance paid for Fixed Assets 68 - VIII Debenture redumption with interest repayment 1,931 - IX Recoveries from other Group Companies 2,415 63
(636) (846)X Recoveries by other Group Companies 35,771 206 XI Outstanding Payables - 103
(14,008) - XII Outstanding receivables 837 27,872 XIII Inter Corporate Deposit taken 10,500 - XIV Inter Corporate Deposit repaid 25,540 - Transactions with Fellow Subsidiaries and key management persons are Rs. Nil
3. Signifi cant Related Party Transactions :Nature of Transactions Holding Companies Other Related
Parties (i) Amount Amount
1 Expenses Charged by other Companies
Godrej Agrovet Ltd. 3,414 Cauvery Palm Oil Ltd. 447
(52,475) - Godrej Industries Ltd. 512
2 Expenses Charged to other Companies
Cauveri Palm Oil Ltd. 2683
3 Sale of materials/fi nished goods Godrej Agrovet Ltd. 4,462 Godrej IJM Oil Palm Ltd.
322
(8,378) - Godrej Industries Ltd. 1,787 Cauvery Palm Oil Ltd. 83
4 Purchase of Material Godrej Agrovet Ltd. - Godrej IJM Oil Palm Ltd.
1,296
(24,222) (2,044)Cauvery Palm Oil Ltd. 384
5 Inter Corporate Deposit placed Cauvery Palm Oil Ltd. 25,500 Nature Basket Limited 40,000
6 Fixed Assets Purchased Godrej Agrovet Ltd. 230Godrej & Boyce Mfg.Co.Ltd.
595
7 Advance paid for Fixed Assets Godrej & Boyce Mfg.Co.Ltd.
68
8 Debenture redumption with interest repayment
Godrej Industries Ltd. 1,931
9 Recoveries from other Group Companies
2,415 Godrej IJM Oil Palm Ltd.
63
(636) (846)
10 Recoveries by other Group Companies
Godrej Agrovet Ltd. 35,771 Godrej IJM Oil Palm Ltd.
206
- (875)11 Outstanding Payables Godrej Agrovet Ltd. - Godrej IJM Oil Palm
Ltd. 103
(14,008) - 12 Outstanding receivables Godrej Agrovet Ltd. 769 Cauvery Palm Oil Ltd. 27,872
Godrej & Boyce Mfg.Co. Ltd.
68
13 Inter Corporate Deposit taken Godrej Agrovet Ltd. 10,500 14 Inter Corporate Deposit repaid Godrej Agrovet Ltd. 25,540 Transactions with Fellow Subsidiaries and key management persons are Rs. Nil.
23. Figures of the previous year have been regrouped and re-classifi ed wherever necessary to conform to the current year’s classifi cation.
24. Information required to be furnished under Part IV of Schedule VI of the Companies Act, 1956.i) Registration Details Application of Funds
Registration No. U15122MH2006TLC163857 Net Fixed Assets 589,376 State Code 11 Investments - Balance Sheet Date 31/3/2010 Net Current Assets 257,796
ii) Capital raised during the year Misc. Expenditure - (Rupees ’000) Accumulated Losses Nil
Public Issue Nil iv) Performance of Company Rights Issue Nil (Rupees ’000) Bonus Issue Nil Turnover 646,582 Private Placement Nil Total Expenditure 539,762
iii) Position of mobilisation and deployment of funds Profi t before tax 106,820 (Rupees ’000) Profi t after tax 68,029
Total Liabilities 874,966 Earning Per Share in Rs. 964.95 Total Assets 874,966 Dividend rate - Sources of FundsPaid-up Capital 705 v) Generic Names of three principal Reserves & Surplus 708,014 products services of Company Secured Loans Item Code No. 151110 and
151321 Unsecured Loans 46,674 Product Description Crude Palm
Oil and Palm Kernel Oil
For and on behalf of Board N. B. GODREJ R. R. GOVINDAN Chairman DirectorMumbai, May 17, 2010
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010 THIS YEAR PREVIOUS YEAR
Rs.’000 Rs.’000 Rs.’000 A. Cash Flow from Operating Activities:
Profi t before Tax and Operational Items 106,820 97,535 Adjustments for:Depreciation 40,565 29,941 Loss on sale of Fixed Assets/Write off 174 8 Interest Income (7,486) (303)Interest paid 1,560 250 Provision for Doubtful Debts and Advance 36 - Sundry Balances written back (47)Prior Period Adjustment - (3,145)
34,802 26,751 Operating Profi t before Working Capital Changes 141,622 124,286 Adjustments for:Inventories (17,953) (3,185)Debtors increase/decrease 23,040 (39,308)Other receivable increase/decrease (79) (330)Loans and advances increase/decrease 24,982 79,098 Creditors and Other payables 7,303 4,413
37,293 40,688 Cash Generated from Operations 178,915 164,974 Direct taxes Paid (18,493) (45,960)Net Cash Generated from Operating Activities 160,422 119,014
B. Cash from Investing Activities:Acquisition of Fixed Assets (159,554) (36,651)Proceeds from sales of Fixed Assets 25 3 Interest Income 7,486 303 Net Cash used in Investing Activities (152,043) (36,344)
C. Cash from Financing Activities:Debenture (2,500) - Interest on Debenture (63) 202 Inter Corporate Deposits (67,915)Interest paid (1,497) (250)Net Cash used in Financing Activities (71,975) (48)Net Increase/(Decrease) in Cash and Cash Equivalents (63,596) 82,622 Cash and Cash equivalents at beginning of period 84,392 1,769 Cash and Cash equivalents at end of period 20,796 84,392
As per our Report of even date attachedFor and on behalf of For and on behalf of Board KALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI N. B. GODREJ R. R. GOVINDANPartner Chairman DirectorMembership No. 35646 Mumbai, May 17, 2010
Annual Report 2009–2010
119
Cauvery Palm Oil Limited
DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010
ANNEXURE 'A'ANNEXURE FORMING PART OF THE DIRECTORS’ REPORTINFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:A] Conservation of Energy Your Company continues its policy of implementing various energy conservation measures
considering the same as an effective means of saving cost and also a corporate social responsibility. The systems installed to conserve energy are regularly reviewed.
Some measures adopted by the Company during the year under review for conservation of energy were as follows:-
1) HT connection proposed to be obtained. 2) Installation of 250 KVA transformer. 3) Use of DG set for running of the factory. The adoption of above energy conservation measures will result in the following benefi ts to
the Company:- a) Considerable saving on energy cost. b) Increase in the life of plant & machinery.
To The ShareholdersYour Directors have pleasure in submitting their Report along with the audited Accounts for the fi nancial year ended on March 31, 2010.
FINANCIAL RESULTSYour Company’s performance during the year as compared with that during the previous year is summarized below:-
Rs. in Lac
This Year Previous YearTotal Income 219.02 385.85Profi t Before Taxation (PBT) (329.19) (190.52)Less : Provision for Taxation 0.00 (2.83)Profi t After Taxation (PAT) (329.19) (193.36)Adjustment to Capital Reserve for previous year depreciation 0.00 41.80Balance brought forward from previous year (252.56) (101.00)Total (581.75) (252.56)Balance Carried Forward to Balance Sheet (581.75) (252.56)
OPERATIONAL HIGHLIGHTSYour Company operated under highly adverse conditions during the year which witnessed a severe drought leading to a major drop in the FFB yield per hectare. The area coverage was extremely constrained due to fall in the prices of fresh fruit bunches coupled with highly attractive economics of competing crops such as sugar.
FINANCIAL POSITIONThe Accumulated los of your company exceeds 50% of its networth. Your Directors propose to infuse further share capital into the Company to strengthen its fi nancial position. The accounts have been prepared on a goind concern basis on the assumption that requisite funds will be available to Your Company. Your Company operates in the Oil Palm Plantation business, which is a long gestation business. Your Company is strongly placed in view of allotment of potentially high yielding area in the Cauvery delta. Your Company has made a major area expansion of Oil Plam Plantation during 2006-07 to 2009-10, the benefi t of which is goint to be fl own in the coming years.
Shares issued out of Revaluation Reserve have been capitalized by issue of Bonus Shares during 2001-02, which, presently your company is not in a position to rectify.
DIVIDENDThe Directors do not recommend any dividend for the year 2009-10.
FIXED DEPOSITSThe Company has not accepted any public deposits during the fi nancial year under review.
HOLDING COMPANYThe Company is a subsidiary of Godrej Agrovet Limited as defi ned under Section 4(1)(b) of the Companies Act, 1956.
SUBSIDIARY COMPANIESThe Company has no subsidiary companies during the year under review.
DIRECTORSThe following are the present Directors of the Company:
1. Dr. V. Krishnamurthy (Chairman)
2. Mr. Jayakar Krishnamurthy (Director)
3. Mr. N. B. Godrej (Director)
4. Mr. B. S. Yadav (Director)
5. Mr. R. R. Govindan (Director)
Dr. V. Krishnamurthy and Mr. Jayakar Krishnamurthy retire by rotation at the ensuing Annual General Meeting of the Company in accordance with Section 256 of Companies Act, 1956 and provisions of Articles of Association of the Company and being eligible offer themselves for reappointment.
AUDITORS
You are requested to appoint Auditors for the current year and fi x their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment and a certifi cate as required u/s 224 (1-B) of the Companies Act, 1956, has been received from them.
ADDITIONAL INFORMATION
The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.
STATUTORY INFORMATION
A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo
The information in respect of these matters, required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report.
B) Particulars of Employees
None of the employees is covered under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002.
C) Directors’ Responsibility Statement
Pursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956, the Directors of your Company confi rm:-
a) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same;
b) that they have selected such Accounting Policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the profi t or loss of the Company for that period;
c) that they have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and detecting fraud and other irregularities;
d) that they have prepared the annual accounts on a going concern basis.
HUMAN RESOURCES
Your Company continues to focus on development of Human Resources. The industrial relations are cordial and the Board would like to place on record its sincere appreciation for the unstinted support from all the employees.
For and on behalf of the Board of Directors
V. Krishnamurthy Mumbai, May 17, 2010 Chairman
B] Technology Absorption, Adaptation and Innovation I. Your Company continues its endeavours for technological upgradation. II. The Company’s expenditure on R&D is given below:-
This YearRs. in Lac
Previous YearRs. in Lac
(a) Capital Nil Nil(b) Recurring Nil Nil(c) Total Nil Nil(d) Total R & D expenditure as a percentage of total turnover Nil Nil
C] Foreign Exchange earnings and outgo
This YearRs. in Lac
Previous YearRs. in Lac
I. Foreign exchange used Nil NilII. Foreign exchange earned Nil Nil
For and on behalf of the Board of Directors
V. Krishnamurthy Mumbai, May 17, 2010 Chairman
Cauvery Palm Oil Limited
120
ANNEXURE TO THE AUDITORS’ REPORTReferred to in paragraph (3) of our report of even date1) (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fi xed assets. (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at
periodic intervals. In our opinion, the periodic verifi cation is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been reported on such verifi cation.
(c) In our opinion, the disposal of fi xed assets during the year does not affect the going concern assumption.
2) (a) The Management has conducted physical verifi cation of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the
management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifi cation.
3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.
(b) Consequently, the question of commenting on the rates of interest and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and the interest and reasonable steps for recovery of principal and interest does not arise.
(c) The Company has taken unsecured loans of Rs. 25,500 thousand from a company covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year was Rs. 25,500 thousand and year-end balance of loan taken from such party was Rs. 25,500 thousand.
(d) The rate of interest and the other terms and conditions of the unsecured loan taken is not prima facie prejudicial to the interest of the Company.
(e) As informed to us the payment of principal and interest, to the extent due, has been regular.
4) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods and services. During the course of our audit, we have not observed a continuing failure to correct major weakness in internal controls.
5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956, have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time.
6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.
7) In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and the nature of its business.
8) According to the information and explanation given to us, the maintenance of cost records has not been prescribed by the Central Government, under Section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.
AUDITORS’ REPORTToThe Members ofCauvery Palm Oil Limited1. We have audited the attached Balance Sheet of Cauvery Palm Oil Limited, as at
31st March 2010 and also the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above we report that:
a) The accounts have been prepared on a going concern basis on the assumption that funds will be available for working capital as the net worth of the Company has been eroded.
b) Shares issued out of Revaluation Reserve have been capitalised by issue of Bonus Shares.
c) 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.
d) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of these books.
e) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.
f) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.
g) In our opinion and to the best of our information and according to the explanations given to us, the said fi nancial statements subject to b) & c) above and read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010; and
ii) in the case of the Profi t and Loss Account, of the loss for the period ended on that date. iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the
period ended on that date.5. On the basis of the written representations received from the Directors as on
March 31, 2010, and taken on record by the Board of Directors, we report that, none of the Directors is disqualifi ed as on March 31, 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
For and on behalf ofKALYANIWALLA & MISTRY
Chartered AccountantsFirm Registration No: 104607W
ERMIN K. IRANIPartner
Membership No. 35646Mumbai, May 17, 2010
9) (a) According to the information and explanations given to us and on the basis of our examination of books of accounts, during the period, the Company has no statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues incurred during the period covered. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at March 31, 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Income Tax, Wealth Tax, Excise Duty, Cess on account of any dispute.
10) The accumulated losses of the Company at the end of the fi nancial year exceed fi fty percent of its net worth. The Company has incurred cash losses in the current fi nancial year and also in the immediately preceding fi nancial year.
11) According to the information and explanations given to us and based on the documents and records produced to us, there are no dues to banks, fi nancial 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 benefi t 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 or fi nancial institutions.16) According to the information and explanations provided to us, there are no term loans,
hence the question of its application for the purposes for which they were obtained is not applicable.
17) According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not raised funds on short-term or long-term basis.
18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.
19) The Company did not issue any debentures during the year.20) The Company has not raised any money through a public issue during the year.21) Based on the audit procedures performed and information and explanations given by the
management, we report that no fraud on or by the Company has been noticed or reported during the year.
For and on behalf of
KALYANIWALLA & MISTRY Chartered Accountants
Firm Registration No: 104607W
ERMIN K. IRANI Partner
Membership No. 35646Mumbai, May 17, 2010
Annual Report 2009–2010
121
BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
SCHEDULES TO ACCOUNTS
This Year Previous YearSchedule Rs. Rs.
SOURCES OF FUNDS Shareholders’ Funds Share Capital 1 38,000,000 38,000,000 Reserves & Surplus 2 25,730,017 26,775,013 Loan Funds Secured Loans 3 59,409,919 35,568,732 Unsecured Loans 4 28,302,594 27,033,896
151,442,530 127,377,641 APPLICATION OF FUNDS Fixed Assets Gross Block 48,869,150 49,640,849 Less : Depreciation 5 12,177,091 10,632,189 Net Block 36,692,059 39,008,660 Project Development Cost 6 13,800,000 14,950,000 Current Assets, Loans & Advances 7 Inventories 19,818,322 21,257,643 Sundry Debtors 14,523,850 14,578,807 Cash and Bank Balances 303,694 982,743 Loans & Advances 717,995 835,598
35,363,861 37,654,791 Less: Current Liabilities & Provisions 8 Current Liabilities 10,377,242 5,929,276 Provisions 950,582 2,615,940
11,327,824 8,545,216 Net Current Assets 24,036,037 29,109,575 Miscellaneous Expenditure 9 18,739,082 19,053,394 (to the extent not written off or adjusted) Profi t & Loss Account 58,175,352 25,256,012 TOTAL 151,442,530 127,377,641 Notes to Accounts & Signifi cant Accounting Policies 15 The Schedules referred to above form an Signatures to Balance Sheet and integral part of the Balance Sheet Schedules 1 to 9 and 15As per our Report of even date attachedFor and on behalf of For and on behalf of the BoardKALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI Nilesh N. Pingale V. Krishnamurthy R. R. GovindanPartner Company Secretary Chairman DirectorMembership No. 35646 Mumbai, May 17, 2010
This Year Previous YearSchedule Rs. Rs.
Income 10Sales - Palm Oil Mill 13,348,807 15,067,287 Revenue from Nursery Operations 8,268,540 23,454,055 Other Income 284,197 64,243
21,901,544 38,585,585 ExpenditureMaterials 11 8,951,082 10,511,104 Payroll Cost 12 15,748,526 14,419,336 Expenses 13 18,467,199 24,026,248 Interest & Finance Charges 14 9,063,453 5,841,271 Depreciation 2,171,308 2,415,124 Less: Adjustment of Capital Reserve for Current Year 1,044,996 1,126,312 1,045,001 1,370,123 Project Development Cost Written Off 1,150,000 1,150,000 Misc Expenditure Written Off 314,312 320,371
54,820,884 57,638,453 (Loss) before tax (32,919,340) (19,052,868)Provision for Taxation - Current – - - Deferred (Note 13 of Schedule 15) – - - Fringe Benefi t Tax – 283,000 (Loss) after Tax (32,919,340) (19,335,868)Adjustment of Capital Reserve for Previous Years to Depreciation - 4,180,004 Defi cit brought forward from previous year (25,256,012) (10,100,148)Defi cit carried to Balance Sheet (58,175,352) (25,256,012)Earnings Per Share (Basic/Diluted) in Rs. (Refer Note 8 Schedule 15) (8.66) (5.09)Notes to Accounts & Signifi cant Accounting Policies 15
The Schedules referred to above form an Signatures to Profi t and Loss and integral part of the Profi t and Loss Account Schedules 10 to 15As per our Report of even date attachedFor and on behalf of For and on behalf of the BoardKALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI Nilesh N. Pingale V. Krishnamurthy R. R. GovindanPartner Company Secretary Chairman DirectorMembership No. 35646 Mumbai, May 17, 2010
This Year Previous YearRs. Rs.
SCHEDULE 1: SHARE CAPITALAuthorised50,00,000 Equity Shares of Rs. 10/- each 50,000,000 50,000,000 TOTAL 50,000,000 50,000,000 Issued, Subscribed and Paid up38,00,000 Equity Shares of Rs.10/- each fully paid.
38,000,000 38,000,000
- Of the above 34,20,000 shares is held by Godrej Agrovet Limited, the Holding Company.- Includes 23,00,000 Equity Shares of Rs. 10/- each Issued as Fully paid Bonus Shares by capitalising the Revaluation ReserveTOTAL 38,000,000 38,000,000 SCHEDULE 2: RESERVES & SURPLUSCapital Reserve As per last Balance Sheet 16,775,013 22,000,018 Less : Adjustment to Depreciation for Previous Year - 4,180,004 Less : Adjustment to Depreciation for Current Year 1,044,996 1,045,001
15,730,017 16,775,013 Share Premium Account 10,000,000 10,000,000 TOTAL 25,730,017 26,775,013
This Year Previous YearRs. Rs.
SCHEDULE 3: SECURED LOANS
From Bank
- Term Loan (including Interest Accrued and Due Rs.24,15,243)
39,176,936 19,970,687
Repayable within One Year: Rs.33,58,596(Previous Year: Rs.18,14,594)
- Overdraft (Refer Note 5 of Schedule 15) 20,232,983 15,598,045
TOTAL 59,409,919 35,568,732
SCHEDULE 4: UNSECURED LOANS
Inter Corporate Deposit 25,500,000 25,500,000
Interest accrued and due on Inter Corporate Deposits
2,802,594 1,533,896
TOTAL 28,302,594 27,033,896
SCHEDULE 5: FIXED ASSETS Rs.
Particulars Gross Block Depreciation Net BlockAs at Additions Deletions As at Upto Additions Deletions Upto As at As at
01.04.2009 31.03.2010 01.04.2009 31.03.2010 31.03.2010 31.03.2009Lands - Freehold 396,544 - - 396,544 - - - - 396,544 396,544 Lands - Leasehold 54,000 - - 54,000 - - - - 54,000 54,000 Buildings 14,475,707 - - 14,475,707 1,760,662 351,797 - 2,112,459 12,363,248 12,715,045 Plant & Machinery 30,477,564 29,255 - 30,506,819 6,876,481 1,452,797 - 8,329,278 22,177,541 23,601,083 Offi ce Equipment 330,222 911 - 331,133 291,146 3,668 - 294,814 36,319 39,076 Furniture & Fixtures 107,835 1,395 - 109,230 70,676 5,362 - 76,038 33,192 37,159 Computers 447,015 37,533 16,445 468,103 320,999 51,150 14,885 357,264 110,839 126,016 Vehicles 3,351,962 - 824,348 2,527,614 1,312,225 306,534 611,521 1,007,238 1,520,376 2,039,737 TOTAL 49,640,849 69,094 840,793 48,869,150 10,632,189 2,171,308 626,406 12,177,091 36,692,059 39,008,660 PREVIOUS YEAR 48,080,249 1,622,462 61,862 49,640,849 8,237,977 2,415,124 20,912 10,632,189 39,008,660 -
Cauvery Palm Oil Limited
122
SCHEDULES TO ACCOUNTSThis Year Previous Year
Rs. Rs.SCHEDULE 6: PROJECT DEVELOPMENT COSTAs per last Balance Sheet 14,950,000 16,100,000 Less : Written Off for the year 1,150,000 1,150,000 TOTAL 13,800,000 14,950,000 SCHEDULE 7: CURRENT ASSETS, LOANS & ADVANCESINVENTORIES(At Cost)Stock of Stores & Spares 657,197 1,146,019 Stock of Crude Palm Oil 230,480 469,937 Stock of Seedlings 18,930,645 19,641,687
19,818,322 21,257,643 SUNDRY DEBTORS(Unsecured, considered good)Debts outstanding for more than six months 8,803,530 4,123,100 Other Debts 5,720,320 10,455,707
14,523,850 14,578,807 CASH & BANK BALANCESCash on hand 5,976 37,562 Balance with Scheduled Banks in Current Accounts 175,170 238,736 Fixed Deposit with Bank 122,548 706,445
303,694 982,743 LOANS & ADVANCES(Unsecured and considered good)Advances recoverable in cash or in kind or for value to be received 652,837 725,220 Interest Receivable - 13,117 Deposits 65,158 97,261 TOTAL 717,995 835,598 SCHEDULE 8: CURRENT LIABILITIES & PROVISIONSCURRENT LIABILITIESSundry Creditors - Total outstanding dues of Micro Enterprises and Small Enterprises - - - Others 624,066 2,366,667 - Investor Education & Protection Fund - - Advance from Customers 19,377 168,025 Other Liabilities 9,733,799 3,394,584
10,377,242 5,929,276 PROVISIONS- For Bonus 327,347 607,711 - For Super Annuation - 1,147,582 - For Leave Encashment 623,235 845,647 - For Fringe Benefi t Tax - 15,000 TOTAL 950,582 2,615,940 SCHEDULE 9: MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)Preliminary ExpensesAs per the Last Balance Sheet - 6,067 Less : Written off during the year - 6,067 TOTAL (A) - - Pre-Operative Expenses - Nursery Operations 314,312 628,616 Less : Written off during the year 314,312 314,304 TOTAL (B) - 314,312 Pre-Project Activities - Cuddalore & Villupuram Districts 18,739,082 18,739,082 Incurred during the year - TOTAL (C) 18,739,082 18,739,082 TOTAL (A+B+C) 18,739,082 19,053,394 SCHEDULE 10: INCOMESales - Palm Oil MillSale of Crude Palm Oil 12,274,765 13,204,369 Sale of Oil Palm Nuts 1,074,042 1,862,918
13,348,807 15,067,287 Revenue from Nursery OperationsSprouts Revenue - 9,420,000 Seedlings Revenue 8,268,540 14,034,055
8,268,540 23,454,055 Other IncomeInterest Received on Deposits 21,504 14,293 Gain on Fluctuation of Foreign Exchange - 49,950 Profi t on sale of Fixed Assets 66,082 - Miscellaneous Income 196,611 -
284,197 64,243 SCHEDULE 11: MATERIALSRaw Materials ConsumedOpening Stock - - Add: Purchases during the year 8,711,625 10,744,828 Less: Closing Stock - -
8,711,625 10,744,828 Inventory ChangeOpening Stock of Finished Goods 469,937 236,213 Less: Closing Stock of Finished Goods 230,480 469,937
239,457 (233,724) 8,951,082 10,511,104
This Year Previous YearRs. Rs.
SCHEDULE 12: PAYROLL COSTSalaries, Wages, Bonus 14,582,810 13,195,851 Contribution to Provident and other Funds 886,575 967,378 Staff Welfare Expenses 279,141 256,107
15,748,526 14,419,336 SCHEDULE 13: EXPENSESAdvertisement and Sales Promotion 251,339 382,142 Auditors' Remuneration 354,972 245,000 Carriage and Freight 240,637 1,686,112 Insurance 237,270 305,653 Legal and Professional Charges 1,349,144 1,634,435 Miscellaneous Expenses 876,852 755,619 Nursery Daily Expenses 6,616,850 9,891,028 Postage, Telephone and Stationery 454,415 736,744 Power, Light and Fuel 659,964 917,290 Loss on Sale of Assets - 40,950 Bad Debts Written Off 1,166,730 - Rates and Taxes 102,320 127,871 Rent 1,138,816 964,870 Repairs and Maintenance
- Building 13,600 49,495 - Machinery 427,591 510,293 - Others 52,360 28,408
Travelling and Motor Car Expenses 4,524,339 5,750,338 18,467,199 24,026,248
SCHEDULE 14: INTEREST & FINANCE CHARGESOn Fixed Loans- Banks 4,316,240 705,775 - Others 3,113,993 2,539,603 On Other Loans- Banks 1,399,805 2,297,210 - Bank Charges 233,415 298,683
9,063,453 5,841,271
SCHEDULE 15 : NOTES TO ACCOUNTS 1. Signifi cant Accounting Policies a. Cost Convention The fi nancial statements have been prepared and presented under the historical
cost convention, on the accrual basis of accounting and comply with the Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956 (‘the Act’), to the extent applicable.
b. Revenue Recognition All receivables and expenditures are accounted on accrual basis except where stated
otherwise. c. Sales Sales are exclusive of Sales Tax/VAT. d. Valuation of Stock of Seedlings The Valuation of stock of seedlings is at actual cost. The Valuation of Stores, Tools and
Spares, Crude Palm Oil and Nuts are valued at cost or net realisable value whichever is lower.
e. Fixed Assets Fixed Assets are stated at cost, which include all direct expenses incurred to bring the
assets to the working condition for its intended use. f. Depreciation The Depreciation on Fixed Assets is calculated on Straight Line Method at rates specifi ed
in the Schedule XIV of the Companies Act, 1956. Depreciation is charged on a pro-rata basis for assets purchased/sold during the year. Individual assets costing Rs. 5,000/- or less are depreciated in full in the year of purchase. Depreciation on assets purchased against grant in aid is adjusted against capital reserve.
g. Employee Benefi ts a) Short-term employee benefi ts: All employee benefi ts payable wholly within twelve months of rendering the
service are classifi ed as short-term employee benefi ts. Benefi ts such as salaries, wages, performance incentives, etc. are recognised at actual amounts due in the period in which the employee renders the related service.
b) Post-employment benefi ts: (i) Defi ned Contribution Plans: Payments made to defi ned contribution plans such as Provident Fund are
charged as an expense as they fall due. (ii) Defi ned Benefi t Plans: Gratuity: The Company accounts its liability for future gratuity benefi ts
based on actuarial valuation as at the Balance Sheet date, determined using the Projected Unit Credit method. Gratuity benefi t is funded with Life Insurance Corporation of India. Actuarial gains and losses are recognised immediately in the Profi t & Loss Account.
Leave Encashment: Liability for Leave encashment payable at the time of retirement/resignation determined as on the Balance Sheet date, based on actuarial valuation using the Projected Unit Credit Method, is provided for. Actuarial gains and losses in respect of such benefi ts are charged to the Profi t and Loss Account.
Other Benefi ts: All other benefi ts are either paid or provision is created in the Accounts.
Annual Report 2009–2010
123
h. Government Grants Grants in terms of Capital/Investment Subsidy are treated as Capital Reserve. i. Foreign Exchange Fluctuations Transactions in foreign currency are recorded at the exchange rates prevailing on the
date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year-end, are stated at year-end rates. Exchange gains/ losses are recognised in the Profi t and Loss Account.
j. Borrowing Cost The Company had availed Term Loan from a Bank and the funds were utilised for the
purchase of Assets in the regular course of the business of the Company. The Company also availed Working Capital facility from the said Bank. The interest cost on these loans is included in the fi nance charges. The interest cost of this Term Loan and the Working Capital facility is apportioned between Nursery Operations and Palm Oil Mill in the ratio of 60 : 40, which is the ratio of Income of these activities.
k. Income Tax Deferred tax is recognised on timing differences, being the differences between
the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year-end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
l. Earnings Per Share The basic earnings per share are computed using the weighted average number of
common share outstanding during the period. Diluted earning per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, expcept where the results would be anti-dilutive.
m. Intangible Assets The Company did not acquire any Intangible Asset during the year. n. Miscellaneous Expenditure i. The Miscellaneous Expenditure is amortised over a period of 5 years commencing
from the year 2004-05, as allowed under Section 35D of the Income-Tax Act. ii. Pre-operative Expenses of Rs. 15,71,543/- representing the net of expenditure
over the income upto 31.03.2005, after considering stock of seedlings as on that date for the Nursery Operations, is being written off in 5 years commencing from the fi nancial year 2005-2006.
iii. Pre Project Expenses are written off in the year the expenses are incurred. o. Project Development Cost The Company writes off the balance Project Development Cost of Rs. 230 Lacs (after
netting of the Revaluation Reserve of Rs. 630 Lacs) over a period of twenty years. From the fi nancial year 2008-09 Company has changed the accounting policy for
treatment of project development cost, as per the new policy the expenses incurred towards the project development cost will be charged off in the same year.
2. Contingent Liabilities. The Company has given a Bank Guarantee of Rs. 10 Lacs (Previous Year: Rs.10 Lacs) to
Government of Tamil Nadu, through the Commissioner of Agriculture.3. The common expenses of Nursery Operations and Palm Oil Mill are apportioned in the
appropriate working ratios.4. The Company commenced Area Development Activity in Cuddalore and Villupuram Districts
during 2006-2007 based on the Allotment Letter issued by Government of Tamil Nadu. The expenses capitalised upto March 2008 totalling to Rs. 187.39 Lacs shall be written off in the subsequent years.
5. The Term Loan and Bank Overdraft Facility from City Union Bank is secured by Equitable Mortgage of Palm Oil Mill Land, Buildings and Hypothecation of Plant and Machinery and other equipments, present and future, situated at the Palm Oil Mill and stock of oil palm seedlings at Company’s Nurseries and the said loans are further guaranteed by a comfort letter from Godrej Agrovet Limited.
6. The Company has been granted Financial Assistance in the form of Grant-in-aid by the Government of India of Rs. 240 Lacs for establishment of demonstration unit of oil palm processing mill of 2.5 Tonnes per hour capacity at a total cost of Rs. 400 Lacs. Against this Financial Assistance, during the fi nancial years 2002-03 and 2003-04, the Company received a total fi nancial assistance of Rs. 2,20,00,018/-. This amount is credited to the ‘Capital Reserve’ and shown under the Head ‘Reserves and Surplus’.
7. Leasehold Land is not amortised over the period of the Lease.8. Earnings Per Share:
This Year Previous YearProfi t/(loss) after tax and prior period items (Rs.) (32,919,338) (19,335,868)Weighted average number of equity shares outstanding 3,800,000 3,800,000Basic & Diluted earnings per share - (8.66) (5.09)Nominal value of shares – Rs. 10.00 10.00
9. The Company has no fi nancial leases. Operating leases are in the nature of lease of Nursery Lands with no restrictions and renewable at mutual consent.
The Company’s leasing arrangements are in respect of operating leases for premises occupied by the Company. These leasing arrangements are cancellable, and are renewable on a periodic basis by mutual consent on mutually accepted terms.
The aggregate lease rental payable by the Company and charged to Profi t and Loss Account (Schedule 13) is as follows:
Particulars This Year Previous YearRs. Rs.
Lease rental paid during the year 1,138,816 938,720Future Lease ObligationsDue within one year of balance sheet date 1,100,438 1,088,475Due after one year and within fi ve years of balance sheet date 1,829,982 2,428,348Due after fi ve years of balance sheet date - -
10. As per the information available with the Company, there is no overdue outstanding payable to Small Scale Industrial Units as at March 31, 2010.
11. Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 2, 2006, the Company is required to make certain disclosures relating to Micro, Small and Medium Enterprises. The Company is in the process to compiling and assimilating the relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosures have been made in the Accounts.
12. Disclosure Under AS – 15 : I. Defi ned Contribution Plans: Contribution to Defi ned Contribution Plan, recognised as expense for the year are as
under: This Year Rs. Employers’ Contribution to Provident Fund 886,575 II. Defi ned Benefi t Plan: a. Contribution to Gratuity Fund The Company makes provision for gratuity in the books of accounts for qualifying
employees. Gratuity is payable to all eligible employees on superannuation, death or on separation/termination in terms of the provisions of the Payment of Gratuity Act.
Reconciliation of the projected benefi t obligations
This YearRs.
Change in projected benefi t obligationObligations at period beginning 807,305Service Cost 187,535Interest Cost 64,584Benefi ts Paid (371,202)Actuarial (Gain)/Loss (29,356)Obligations at period end 658,866
This YearRs.
Reconciliation of present value of obligation and fair value of plan assetsFair Value of plan assets at the end of the year 710,341Present Value of defi ned benefi t obligation at the end of the year 658,866Liability recognised at the balance sheet 51,475
This YearRs.
Gratuity cost for the periodService cost 187,535Interest cost 64,584Expected return on plan assets (80,300)Actuarial (Gain)/Loss (26,851)Net Gratuity Cost 144,968
AssumptionsDiscount Rate 8%Salary Escalation Rate 5%
13. Deferred Tax
This YearIn Rs.
A. Deferred Tax Liabilities arising from: Differences between carrying amount of fi xed Assets in fi nancial statements & the Income Tax Return
5,102,587
5,102,587B. Deferred Tax Assets arising from: Provision for Gratuity Provision for Bonus Provision for Leave Encashment Unabsorbed depreciation allowance carried forward as per Income
Tax Act, 1961
–97,35577,685
4,927,547
5,102,587 The deferred tax asset as at March 31, 2010 computed on unabsorbed depreciation amounts
to Rs. 8,603,305 (Previous Year Rs. 8,647,054). However, the same is restricted to the amount of deferred tax liability on timing differences amounting to Rs. 4,927,547. The difference amounting to Rs. 3,675,758 has not been recognised in the absence of virtual certainty of future taxable income in accordance with Accounting Standards Interpretation (ASI) 9, on “Virtual certainty supported by convincing evidence”, issued by the Institute of Chartered Accountants of India.
The tax impact for the above purpose has been arrived by applying tax rate of 30.99% being prevailing tax rate for Indian Companies under Income Tax Act, 1961.
14. The additional information pursuant to the provisions of paragraphs 3 and 4 of Part II of Schedule VI of Companies Act, 1956.
A. Description of Capacities, Production, Turnover, etc.
Sl. No. Palm Oil Mill This Year Previous Year(in MT) (in MT)
a. Licensed Capacity (Fresh Fruit Bunches) 12500 12500b. Installed Capacity (Fresh Fruit Bunches of Oil Palm) 12500 12500c. Opening Stock 14.337 7.660d. Production (Crude Palm Oil) 364.624 365.510e. Sales 370.236 358.833f. Closing Stock 8.725 14.337
Cauvery Palm Oil Limited
124
B. Turnover
Sl. No. Particulars This Year Previous Yeara. Crude Palm Oil MT 370.236 358.833
Rs. 12,274,765 13,204,369b. Oil Palm Nuts MT 247.635 251.558
Rs. 1,074,042 1,862,918 C. Break-up of Raw Material Consumed
Sl. No. Particulars This Year Previous YearMT MT
a. Fresh Fruit Bunches of Oil Palm (FFBs) 2079.570 1987.573 D. C.I.F. Value of Imports
Sl. No. Particulars This Year Previous YearRs Rs
a. Oil Palm Sprouts NIL 3,427,481 E. Value of Raw Material Consumed
Sl. No. Particulars This Year Previous YearRs. Rs.
a. Imports 0% NIL NILb. Indigenous 100% 8,951,082 10,511,104
15. Information as required under Part IV, Schedule VI of the Companies Act, 1956 is given in the Annexure.
16. The previous year fi gures have been regrouped and reclassifi ed wherever necessary.17. Segment Information for Tthe Year ended March 31, 2010(i) Information about Primary business Segments Rs.'000
This Year Previous year Revenue
Oil Palm Plantations
Area Expansion & Nursery Unallocated Total
Oil Palm Plantations
Area Expansion & Nursery Unallocated Total
(A) (B) (A)+(B) (A) (B) (A)+(B) Total Sales 13,349 8,269 263 21,881 15,067 23,454 50 38,571 Less : Inter-segment External Sales 13,349 8,269 263 21,881 15,067 23,454 50 38,571 Result Segment Result (3,211) (20,929) 263 (23,877) (1,884) (11,391) 50 (13,225)Unallocated expenditure net of unallocated income Interest expenses 9,063 9,063 5,841 5,841 Interest Income 21 21 14 14 Dividend Income and Profi t on sale of Investments Profi t before taxation and exceptional items
(3,211) (20,929) (8,779) (32,919) (1,884) (11,391) (5,777) (19,052)
Provision for taxation (283) (283)Profi t after taxation and before exceptional items
(3,211) (20,929) (8,779) (32,919) (2,167) (11,391) (5,777) (19,335)
Exceptional Items Prior years adjustments Profi t after taxation and exceptional items
(3,211) (20,929) (8,779) (32,919) (2,167) (11,391) (5,777) (19,335)
Other Information Segment assets 162,770 162,770 135,923 135,923 Segment liabilities 162,770 162,770 135,923 135,923 Capital expenditure 5 64 69 1,623 - 1,623 Depreciation 10,036 2,141 12,177 8,360 2,272 10,632 Non-cash expenses other than depreciation
-
(ii) Information about Secondary business Segments The Company operates only within India and hence the information related to Secondary
Business Segment is not furnished. (iii) Notes (i) The Company is organized into two business segments, namely (a) Oil Palm Plantation business (b) Agri-business - comprising of plant growth promoters, pesticides etc. Segments have been identifi ed and reported taking into account, the nature of
products and services, the differing risks and returns, the organisation structure, and the internal fi nancing 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
identifi able to each of the segments and amounts allocated on a reasonable basis.18. RELATED PARTY DISCLOSURES: Related party disclosures as required by AS - 18, "Related Party Disclosures", are given below: 1. Relationships : (i) Holding Companies : Godrej Agrovet Limited (GAVL) holds 90% in the Company. GAVL is the subsidiary
of Godrej Industries Limited (GIL) & GIL is the subsidiary of Godrej & Boyce Mfg. Co. Ltd., the ultimate Holding Company.
(ii) Fellow Subsidiaries : Golden Feed Products Limited Godrej Oil Palm Limited
(iii) Other related parties where persons mentioned (v) below exercise signifi cant infl uence :
Godrej IJM Palm Oil Limited Godrej Gold Coin Aquafeed Limited Godrej Tyson Foods Ltd. (iv) Key management person Mr. B. S. Yadav Mr. R. R. Govindan 2. The following transactions were carried out with the related parties in the ordinary
course of business : Rs. '000
Nature of Transactions Holding Companies
Fellow Subsidiaries
Other Related Parties
(i) (ii) (iii) 1 Expenses Charged by other Companies 431 2,683
3,311 -2 Expenses Charged to other Companies 29 1,208 52
- - -3 Purchase of materials/fi nished goods 83
-4 Sale of materials/fi nished goods 1,691 384
258 -5 Inter Corporate Deposit Accepted - 25,500
28,055 -6 Inter Corporate Deposit Repaid 25,500
-7 Recoveries made by other Companies 2,970 2
- -8 Fixed Assets Purchased 32
-9 Fixed Assets Sold 211
-10 Outstanding Payables 4,769 27,872
3,311 -11 Outstanding Receivable 50
3. Signifi cant Related Party Transactions :
Nature of Transactions
Holding Companies
Amount Fellow Subsidiaries
Amount Other Related Parties
Amount
(i) (ii) (iii) 1 Expenses Charged by
other CompaniesGodrej Agrovet Ltd.
431 Godrej Oil Palm Ltd.
2,683
3,311 - 2 Expenses Charged to
other CompaniesGodrej Agrovet Ltd.
29 Godrej Oil Palm Ltd.
1,208 Godrej IJM Palm Oil Ltd.
52
- - - 3 purchase of
materials/fi nished goods
Godrej Oil Palm Ltd.
83
- 4 Sale of materials/
fi nished goodsGodrej Agrovet Ltd.
1,691 Godrej Oil Palm Ltd.
384
258 - 5 Inter Corporate
Deposit AcceptedGodrej Agrovet Ltd.
- Godrej Oil Palm Ltd.
25,500
28,055 - 6 Inter Corporate
Deposit RepaidGodrej Agrovet Ltd.
25,500
- 7 Recoveries made by
other CompaniesGodrej Agrovet Ltd.
2,970 Godrej IJM Palm Oil Ltd.
2
- - 8 Fixed Assets
PurchasedGodrej Agrovet Ltd.
32
- 9 Fixed Assets Sold Godrej
Agrovet Ltd.
211
- 10 Outstanding Payables Godrej
Agrovet Ltd.
4,769 Godrej Oil Palm Ltd.
27,872
3,311 - 11 Outstanding
ReceivableGodrej IJM Palm Oil Ltd.
50
-
Annual Report 2009–2010
125
CASH FLOW STATEMENT FOR THE PERIOD ENDED MARCH 31, 2010
For and on behalf of For and on behalf of the BoardKALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI V. Krishnamurthy R. R. GovindanPartner Chairman DirectorMembership No. 35646 Mumbai, May 17, 2010
Nilesh N. PingaleCompany Secretary
19. Additional information as required under part iv of schedule vi of the companies act, 1956 Balance Sheet Abstract and Company's General Business Profi le:
I. Registration Details: Registration No. 36551 State Code 18 Balance Sheet Date
II. Capital Raised during the year: Rs.Public Issue - Rights Issue - Bonus Issue - Private Placement -
III. Position of Mobilisation and Deployment of Funds:Total Liabilities 162,770,354 Total Assets 162,770,354
Source of Funds:Paid up Capital 38,000,000 Reserves & Surplus 25,730,017 Secured Loans 59,409,919 Unsecured Loans 28,302,594 Application of Funds:Net Fixed Assets 50,492,059 Investments - Net Current Assets 24,036,037 Misc. Expenditure 18,739,082 Accumulated Losses 58,175,352
IV. Performance of Company:Turnover 21,901,544 Total Expenditure 54,820,884 Profi t/(Loss) Before Tax (32,919,340)Profi t/(Loss) After Tax (32,919,340)Earnings Per Share (Rs.) (8.66)Dividend Rate -
V. Generic names of three Principal Products/Services of Company (as per monetary terms)Item Code No. (ITC Code) - Product Description Crude Palm Oil
Oil Palm Nuts For and on behalf of the Board
Nilesh N. Pingale V. Krishnamurthy R. R. Govindan Company Secretary Chairman Director
Mumbai, May 17, 2010
This Year Rs.
Previous Year Rs.
A. Cash Flow from Operating Activities: Profi t before Tax and Operational Items (32,919,340) (19,052,868) Adjustment for: Depreciation 1,126,312 1,370,123 Loss/(Profi t) on sale of Fixed Assets (66,082) 40,950 Interest Expense 9,063,453 5,841,271 Project Development Cost/Miscellaneous
Expenditure written off 1,464,312 1,470,371 11,587,995 8,722,715
Operating Profi t before Working Capital Changes (21,331,345) (10,330,153) Adjustments for: Inventories 1,439,321 (7,301,621) Debtors and Other receivables 172,560 (7,519,819) Creditors and Other payables 2,782,608 4,951,576
4,394,490 (9,869,864) Cash Generated from Operations (16,936,856) (20,200,017) Direct taxes Paid - (283,000) Net Cash Generated from Operating Activities (16,936,856) (20,483,017)B. Cash from Investing Activities: Acquisition of Fixed Assets (69,094) (1,622,462) Proceeds from sales of Fixed Assets 280,469 - Net Cash used in Investing Activities 211,375 (1,622,462)C. Cash from Financing Activities: ICD received from GAVL - 27,500,000 ICD Repaid to Sujo Lands and Properties - (2,500,000) ICD Repaid to Godrej Agrovet Limited - (7,000,000) (Decrease)/ Increase in Cash Credit/ Loan
from Banks (net) 25,109,885 10,714,750 Interest Paid (9,063,453) (5,841,271) Net Cash used in Financing Activities 16,046,432 22,873,479 Net Increase/(Decrease) in Cash and Cash
Equivalents (679,049) 768,000 Cash and Cash equivalents (Opening Balance) 982,743 214,743 Cash and Cash equivalents (Closing Balance) 303,694 982,743
Natures Basket Limited
126
To,The Members
Your Directors hereby present the Second Annual Report on the business and operations of the Company together with the Statements of Audited Accounts of the Company for the year ended March 31, 2010.
FINANCIAL RESULTS AND PERFORMANCE:
(Rs in Lac)
Particulars THIS YEAR PREVIOUS YEAR
Total Income 3391.23 1553.00
Loss before taxation 852.64 702.14
Loss after taxation 825.39 699.64
Balance brought forward from previous year 699.64 0.00
Balance carried forward to Balance sheet 1525.03 699.64DIVIDEND:
In view of the losses incurred, your Directors have not recommended any Dividend for the year 2009-2010.
REVIEW OF OPERATIONS AND FUTURE OUTLOOK:
During the year under review business responded very well to several operational improvement initiatives. The Overall growth level of approx 70% in a diffi cult business year established that the business proposition amongst core target consumers is well accepted.
In store, layouts were altered to make it more consumer friendly and to enable consumers to spend more time browsing through products. Several initiatives on greater customer interaction and service orientation helped the business extract greater revenues through increase in average bill values by at least Rs 125 per store per transaction from the same customer. Inventories were controlled and stock rotation was improved by nearly 50%. Control of inventory also enabled the business to limit its losses through expiry, damages and wastage of food products to signifi cantly reduced levels as compared to the previous fi nancial year.
Renegotiation with suppliers helped the business improve its operating margins substantially. Several initiatives were undertaken on the cost front to limit or minimize the fi xed expenses including renegotiation of rentals, measures to control electricity costs as well as actions to control the cost of consumables inside the stores. This was also the fi rst year in which the business expanded from Mumbai into another city - Delhi. The initial response to the stores and to our service levels in Delhi has been very positive.
The future outlook for the business appears bright with most Mumbai stores poised to break even (at store level). Also the business is set to expand its foot print further into atleast one more metro city besides planning expansion within Mumbai and Delhi.
FIXED DEPOSIT:
Your Company has not accepted any deposit from public as contemplated under Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposit) Rules, 1975, during the year under review.
HOLDING COMPANY:
Your Company is subsidiary of Godrej Industries Limited as defi ned under Section 4(1) (b) of the Companies Act, 1956.
SUBSIDIARIES:
The Company has no subsidiary companies during the year under review.
DIRECTORS:
The following are the current Directors of the Company:
Mr. Mohit Khattar
Ms. Tanya Dubash
Mr. A. Mahendran
Mr. Mohit Khattar who was appointed as Additional Director of the Company in the Board Meeting dated August 25, 2009 to hold offi ce upto the date of Annual General Meeting has been confi rmed as Director in the Annual General Meeting held on September 22, 2009.
Mr. Mohit Khattar has been appointed as Managing Director of the Company for the period of three years w.e.f. August 25, 2009 who is not liable to retire by rotation.
Ms. Tanya Dubash and Mr. A. Mahendran who were appointed as Additional Director to hold offi ce upto last Annual General Meeting have been confi rmed as Directors of the Company in the Annual General Meeting of the Company held on September 22, 2009.
Ms. Tanya Dubash retires by rotation at the ensuing Annual General Meeting of the Company in accordance with Section 256 of the Companies Act, 1956 and Article 124 of the Articles of the Association of the Company and being eligible offers herself for reappointment.
DIRECTORS’ REPORT FOR THE PERIOD ENDED MARCH 31, 2010
DIRECTORS’ RESPONSIBILITY STATEMENT:
As required under the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confi rm:
i) that in the preparation of the Annual Accounts for the year ended March 31, 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
ii) that the Directors had selected such accounting policies and applied consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year ended March 31, 2010 and the loss of the Company for the year under review;
iii) that proper and suffi cient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv) that the Annual Accounts for the year ended March 31, 2010, have been prepared on a ‘going concern’ basis.
AUDITORS:
You are requested to appoint Auditors for the current year and fi x their remuneration. The retiring Auditors M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai are eligible for re-appointment.
ADDITIONAL INFORMATION:
The additional information required to be given under the Companies Act, 1956, has been laid out in the Schedules attached to and forming part of the Accounts. The Notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.
STATUTORY INFORMATION:
A) Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo:
The information in respect of these matters, required under Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report is given in the Annexure “A” to this report.
B) Particulars of Employees:
Mr. Mohit Khattar is the only employee covered under the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) (Amendment) Rules, 2002.
ACKNOWLEDGEMENT:
Your Board of Directors takes this opportunity to express its gratitude for the assistance and co-operation received, especially in such tough times and diffi cult circumstances faced by the Company, from bankers, Government authorities, customers and vendors all of whom have contributed to the Company’s working.
Your Company also places on record its appreciation for the dedicated services of all its employees.
FOR AND ON BEHALF OF THE BOARD
MOHIT KHATTAR A. MAHENDRANMumbai, May 21,2010 Managing Director Director
ANNEXURE 'A'
ANNEXURE FORMING PART OF THE DIRECTORS’ REPORT:INFORMATION PURSUANT TO SECTION 217(1) (e) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 IN RESPECT OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:
A. Conservation of Energy, Technology absorption, adaptation and innovation
These provisions are Not Applicable the Company during the year under review.
B. Foreign Exchange earnings and outgo:
Foreign Exchange earnings : NIL
Foreign Exchange outgo : NIL
FOR AND ON BEHALF OF THE BOARD
MOHIT KHATTAR A. MAHENDRANMumbai, May 21,2010 Managing Director Director
Annual Report 2009–2010
127
Referred to in paragraph (3) of our report of even date.
1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fi xed assets purchased after April 01, 2009. In respect of fi xed assets acquired / purchased prior to April 01, 2009, the register is not complete in respect of particulars such as quantitative details and situation of fi xed assets.
(b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodic intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been reported on such verifi cation.
(c) In our opinion the disposal of fi xed assets during the year does not affect the going concern assumption.
2) (a) The Management has conducted physical verifi cation of inventory at reasonable intervals.
(b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory. The discrepancies noticed on physical verifi cation of inventory as compared to book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.
3) (a) The Company has not granted any loans, secured or unsecured, to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, clauses (iii)(b) to (iii)(d) of paragraph 4 of the Order are not applicable to the Company for the current year.
(b) Consequently, the question of commenting on the rates of interest and other terms and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and the interest and reasonable steps taken for recovery of principal and interest does not arise.
(c) The Company has taken unsecured loans from two companies covered in the register maintained under Section 301 of the Act. The balance outstanding is Rs. 60,568 thousand and the maximum balance during the year is Rs.108,578 thousand. The Company has not taken any loans, secured or unsecured, from fi rms or other parties covered in the register maintained under Section 301.
(d) In our opinion, the rate of interest and the other terms and conditions of the aforesaid unsecured loans taken by the Company, are not prima facie prejudicial to the interest of the Company.
(e) As per the information and explanations given to us, there are no fi xed terms of repayment of the principal and hence the question of the regular payment of the principal amount does not arise. The repayment of interest on the aforesaid loans was regular.
4) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with size of the Company and the nature of its business, for the purchase of inventory and fi xed assets and for the sale of goods and services. During the course of our audit, no major weaknesses have been noticed in internal controls.
5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956, have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market prices exist.
6) In our opinion, and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Sections 58A and 58AA or any other provisions of the Companies Act, 1956, read with the rules framed thereunder are not applicable.
REPORT OF THE AUDITORS TO THE MEMBERS OF NATURES BASKET LIMITED1. We have audited the attached Balance Sheet of Natures Basket Limited, as at March 31, 2010
and also the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above we report that:
a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.
b) As referred to in Note 6 of Schedule 11, Notes to Accounts, the managerial remuneration paid to the Managing Director is in excess of the limits laid down under Section 198 read with Schedule XIII of the Companies Act, 1956 by Rs.1,016 thousands. The amount is pending approval from the Central Government.
c) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of these books.
d) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.
e) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.
f) In our opinion and to the best of our information and according to the explanations given to us, the said fi nancial statements read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010; and
ii) in the case of the Profi t and Loss Account, of the loss for the year ended on that date.
iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.
5. On the basis of the written representations received from the Directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that, none of the Directors is disqualifi ed as on March 31, 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
For and on behalf ofKALYANIWALLA AND MISTRY
Chartered AccountantsFirm Registration No. 104607W
ERMIN K IRANIPartner
Membership No. 35646
Mumbai, May 21, 2010
Annexure to the Auditors' Report7) In our opinion and according to the information and explanations given to us, the internal
audit system is commensurate with the size of the Company and the nature of its business. 8) According to the information and explanations given to us, the maintenance of cost
records has not been prescribed by the Central Government, under Section 209(1)(d) of the Companies Act, 1956, for any of the Company’s products.
9) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, 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, Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues as applicable, 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 March 31, 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute.
10) As the Company has been registered for a period of less than fi ve years the question of commenting on its accumulated losses being less than fi fty percent of its net worth and whether the Company has incurred cash losses in the current fi nancial year and in the immediately preceding fi nancial year does not arise.
11) According to the information and explanations given to us and based on the documents and records produced to us, there are no dues to banks, fi nancial 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 benefi t 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 or fi nancial institutions.16) According to the information and explanations given to us, the term loan was applied for the
purpose for which the loan was obtained.17) According to the information and explanations given to us, and on an overall examination
of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short term basis for long term investment.
18) The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.
19) The Company did not have outstanding debentures during the year.20) The Company has not raised any money through a public issue during the year.21) During the course of our examination of the book of account and records of the Company,
carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given and representations made by the management, we report that no major fraud on or by the Company, has been noticed or reported during the year.
For and on behalf ofKALYANIWALLA AND MISTRY
Chartered AccountantsFirm Registration No. 104607W
ERMIN K. IRANI Partner
Membership No. 35646
Mumbai, May 21, 2010
Natures Basket Limited
128
The Schedules referred to above form an Signatures to the Balance Sheetintegral part of the Balance Sheet. and Schedules 1 to 7 and 11As per our Report attached.
For and on behalf of For and on behalf of the BoardKALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI MOHIT KHATTAR A. MAHENDRANPartner Managing Director DirectorMembership No. 35646
Mumbai, May 21, 2010
The Schedules referred to above form an Signatures to the Profi t & Loss Accountintegral part of the Profi t & Loss Account. and Schedules 8 to 11As per our Report attached.
For and on behalf of For and on behalf of the BoardKALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI MOHIT KHATTAR A. MAHENDRANPartner Managing Director DirectorMembership No. 35646
Mumbai, May 21, 2010
SCHEDULES ATTACHED AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010
BALANCE SHEET AS AT MARCH 31, 2010
Schedule Rs. ‘000
As at31.03.2010
Rs. ‘000
As at31.03.2009
Rs. ‘000SOURCES OF FUNDSSHAREHOLDERS’ FUNDS
Share Capital 1 70,500 70,500 Reserves & Surplus - -
70,500 70,500 LOAN FUNDS
Secured Loans 2 42,763 - Unsecured Loan 3 110,572 63,008
153,335 63,008
TOTAL 223,835 133,508 APPLICATION OF FUNDSFIXED ASSETS 4
Gross Block 107,282 74,775 Less: Depreciation 41,853 26,299 Net Block 65,429 48,476
INVESTMENT 5 25 - DEFERRED TAX ASSET 3,268 431 CURRENT ASSETS, LOANS AND ADVANCES
6
Inventories 25,936 19,672 Sundry Debtors 4,548 2,781 Cash and Bank Balances 5,046 661 Loans and Advances 29,299 14,759 Other Current Asset 9 -
64,838 37,873 LESS: CURRENT LIABILITIES &
PROVISIONS7
Liabilities 61,128 22,585 Provisions 1,101 650
62,229 23,235 NET CURRENT ASSETS 2,609 14,638 PROFIT & LOSS ACCOUNT 152,504 69,964 TOTAL 223,835 133,508 NOTES TO ACCOUNTS 11
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
Schedule Rs. ‘000
For the YearEnded
31.03.2010Rs. ‘000
For the Period Ended
31.03.2009Rs. ‘000
INCOME
Sales 333,853 154,515
Other Income 5,270 785
339,123 155,300
EXPENDITURE
Purchase of Traded Goods 274,093 133,724
Acquisition of Traded goods on Business Transfer
- 16,484
Inventory Change 8 (5,697) (19,672)
Expenses 9 127,327 80,768
Interest & Financial Charges 10 13,101 3,586
Depreciation/Amortisation 15,564 10,624
424,388 225,514
(LOSS) BEFORE TAX (85,265) (70,214)
Less: Provision For Tax
Current Tax - -
Deferred Tax (2,837) (431)
Fringe Benefi t Tax - 181
Fringe Benefi t Tax of previous year 112 -
(2,725) (250)
(LOSS) AFTER TAX (82,540) (69,964)
(Defi cit) Brought Forward (69,964) -
(DEFICIT) CARRIED TO BALANCE SHEET (152,504) (69,964)
Earnings Per Share (Basic/Diluted) in Rs. (Refer Note 9)
(11.71) (13.23)
NOTES TO ACCOUNTS 11
Rs. ‘000
As at31.03.2010
Rs. ‘000
As at31.03.2009
Rs. ‘000SCHEDULE 1: SHARE CAPITALAUTHORISED100,000,000 Equity Shares of Rs.10/- each 1,000,000 1,000,000 ISSUED, SUBSCRIBED AND PAID UP7,050,000 Equity Shares of Rs.10/- each fully paid 70,500 70,500 All the above shares are held by Godrej Industries Limited, the Holding Company and its nominees (Previous year all the above shares were held by Godrej Agrovet Limited, the then Holding Company and its nominees)SCHEDULE 2: SECURED LOANSTerm Loan 42,400 - (Secured by hypothecation of tangible fi xed assets of the Company, present and future (except motor cars) and Inventory and Debtors.) (Amount due within a year Rs.Nil)Interest accrued and due on Term Loan 363 -
42,763 - SCHEDULE 3: UNSECURED LOANSIntercorporate Deposits 110,568 61,100 (Amount due within a year Rs.110,568 thousand, Previous Year Rs.61,100 thousand)Interest accrued and due 4 1,908
110,572 63,008
SCHEDULE 4: FIXED ASSETS Rs. ‘000
ASSETS GROSS BLOCK DEPRECIATION NET BLOCK
As At 01.04.09
Assets Taken Over
Addi-tions
Deduc-tions
As At 31.12.09
Upto 01.04.09
Accum Depn On
Assets Taken Over
For the period
On Deduc-
tions
Upto 31.03.10
As At 31.03.10
As At 31.03.09
Tangible Assets
Computers 7,376 - 2,475 - 9,851 3,893 - 1,885 - 5,778 4,073 3,483
Furniture & Fixtures
5,792 - 1,878 - 7,670 1,307 - 585 - 1,892 5,778 4,486
Equipments 6,200 - 2,358 - 8,558 687 - 629 - 1,316 7,242 5,513
Air Conditioners/Water Coolers
11,799 - 7,217 47 18,969 1,164 - 650 5 1,809 17,160 10,634
Motor Cars 435 - - 11 424 143 - 41 5 180 244 291
Leasehold Improvements
35,797 - 18,637 - 54,434 18,551 - 11,036 - 29,587 24,847 17,246
Intangible Assets
Goodwill 7,376 - - - 7,376 553 - 738 - 1,291 6,085 6,823
Total 74,775 - 32,565 58 107,282 26,299 - 15,564 10 41,853 65,429 48,476
Previous Year - 62,607 12,169 - 74,775 - 15,675 10,624 - 26,299 48,476 -
Annual Report 2009–2010
129
SCHEDULE 5: INVESTMENTS As at
31.03.2010 As at
31.03.2009 Rs. ‘000 Rs. ‘000 Rs. ‘000
LONG TERM - TRADEEQUITY SHARES AT COST2500 Equity Shares of Rs.10/- each fully paid in 25 - The Saraswat Co-operative Bank Limited(Purchased during the year)
25 -
SCHEDULE 6: CURRENT ASSETS, LOANS AND ADVANCES (A) INVENTORIES Traded Goods 25,368 19,672 Packing Materials 568 -
25,936 19,672 (B) SUNDRY DEBTORS (Unsecured and considered good unless
otherwise stated) Debts outstanding for a period exceeding six
months - -
Other Debts 4,548 2,781 4,548 2,781
(C) CASH AND BANK BALANCES Cash in Hand 1,544 423 Balances with Scheduled Banks (a) In Current Accounts 2,852 238 (b) In Fixed Deposit Accounts 650 - (Rs.650 thousand (Previous Year Rs.Nil) pledged
with Government Authorities) 5,046 661
(D) OTHER CURRENT ASSET Interest Accrued 9 - (E) LOANS AND ADVANCES (Unsecured and considered good unless
otherwise stated) Advances recoverable in cash or in kind or for
value to be received 6,598 975
Advances to Creditors 744 - Deposits (a) Government Authorities 261 186 (b) Others 21,696 13,569 Advance Payment of Taxes (Net of provision for
taxation Rs.292 thousand, Previous Year Rs.181
thousand) - 29
29,299 14,759 64,838 37,873
SCHEDULE 7: CURRENT LIABILITIES AND PROVISIONS(A) CURRENT LIABILITIES Investor Education and Protection Fund - - Sundry Creditors (a) Dues to Micro, Small and Medium
enterprises (Refer Note 2) - -
(b) Others 44,314 16,345 44,314 16,345
Other Liabilities - 16,814 6,240 61,128 22,585
(B) PROVISIONS Gratuity 581 413 Leave Encashment 520 237
1,101 650 62,229 23,235
Rs. ‘000
For the YearEnded
31.03.2010Rs. ‘000
For the PeriodEnded
to 31.03.2009Rs. ‘000
SCHEDULE 8: INVENTORY CHANGEOpening Stock of Traded Goods Traded Goods 19,671 - Less : Closing Stock Traded Goods 25,368 19,672
(5,697) (19,672)
SCHEDULE 9: EXPENSESSalaries, Wages, Gratuity & Allowances 34,656 17,498 Contribution to Provident Fund and other Fundsand Administration Charges 1,635 670 Employee Welfare Expenses 1,886 1,075 Labour Charges 11,350 8,650 Consumption of Packing Material 3,437 Rent 30,930 21,032 Rates & Taxes 233 378 Repairs & Maintenance - Others 880 1,662 Insurance 153 78 Postage, Telephone and Stationery 2,209 977 Computer Expenses 3,065 2,639 Electricity Charges 14,783 9,413 Licence Fees 582 114 Auditors’ Remuneration 513 469 Legal & Professional Fees 2,441 1,750 Freight, Coolie and Cartage 5,222 7,078 Discount and Selling Expenses 3,341 613 Advertisement and Publicity 3,148 3,156 Travelling Expenses 1,954 620 Loss on Sale of Fixed Assets 29 - General Expenses 4,880 2,896
127,327 80,768
SCHEDULE 10: INTEREST AND FINANCIAL CHARGES(a) Interest paid on fi xed loans Term Loan 1,076 - Inter Corporate Deposits 9,569 2,467
10,645 2,467 (b) Other Financial Charges 2,456 1,119
13,101 3,586
SCHEDULES ATTACHED AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010
SCHEDULE 11 : NOTES TO ACCOUNTS1. Signifi cant Accounting Policies a) The fi nancial statements have been prepared on historical cost convention. The
Company follows mercantile system of accounting and recognises income and expenditure on accrual basis
b) Fixed assets have been stated at cost and include incidental and/or installation/development expenses incurred in putting the asset to use and interest on borrowing incurred during construction period. Pre-operative expenses for major projects are also capitalised, where appropriate.
c) Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.
d) Depreciation /Amortisation has been provided for as under : (a) The Company charges depreciation in respect of additions from the date of
addition and upto the date of disposals in respect of disposals. (b) i) Depreciation is provided on the straight line method at the rates specifi ed
in schedule XIV to the Companies Act, 1956, except for Computers, which are depreciated over its estimated useful life of four years.
ii) Amortisations (i) Leasehold improvements and equipments-Primary lease period (ii) Goodwill is amortised over a period of 10 years e) Trading inventories are valued at lower of cost and net realisable value. These
costs include costs incurred in bringing the inventories to their present location and condition.
f) Retirement benefi ts to employees comprise payments under defi ned contribution plans like provident fund and family pension. Payments under defi ned contribution plans are charged to the profi t and loss account.
The liability in respect of defi ned benefi t schemes like gratuity and leave encashment benefi t on retirement is provided on the basis of actuarial valuation at the end of each year.
Natures Basket Limited
130
SCHEDULES ATTACHED AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 2010 g) Revenue is recognised when goods are despatched to external customers. Sales are
net of returns, sales tax rebates, etc. h) Deferred tax is recognised on timing differences, being the differences between
the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognised and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing difference at the year-end, based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
i) The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
j) Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
2. Current Liabilities Disclosure of sundry creditors under current liabilities is based on the information available
with the Company regarding the status of the suppliers as defi ned under the “ Micro,Small & Medium Enterprises Development Act 2006”.
3. Deferred Tax The Deferred Tax Asset as at March 31, 2010 computed on unabsorbed depreciation amounts
to Rs.26,188 thousands (Previous Year - Rs. 23,434 thousands). The above amount has not been recognised in the absence of virtual certainity of future taxable income in accordance with Accounting Standard Interpretation (ASI) 9, on “virtual certainity supported by convincing evidence”, issued by the Insitute of Chartered Accountants of India.
THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000
The tax effects of signifi cant temporary differences that resulted in deferred tax assets and liabilities are :Depreciation on Fixed Assets 2,904 210 Provision for Gratuity 192 140 Provision for Leave Encashment 172 81 Deferred Tax Asset 3,268 431
4. Quantitative Details for Sales/Inventories & Purchases Since the Company operates in the gourmet food retailing business, it deals with
heterogenous range of products. In view of the same quantitative details have not been disclosed.
5. Disclosure in respect of leases The Company’s leasing arrangements are in respect of operating leases for premises
occupied by the Company. These leasing arrangements are cancellable, and are renewable on a periodic basis by
mutual consent on mutually acceptable terms. a. The total of future minimum lease payments under cancelable operating leases for
each of the following periods :
i. Not later than one year 44,521 25,550 ii. Later than one year and not later than fi ve
years 108,606 44,278
iii. Later than fi ve years - - b. Lease payments recognised in the statement of Profi t
& Loss for the period : 30,930 21,032 6. Managerial Remuneration a) Computation of Profi t for the purpose of Managerial Remuneration
(Loss) After Tax as per Profi t & Loss Account (82,540) (69,964)Add: Depreciation as per Accounts 15,564 10,624 Managerial Remuneration 2,766 - Provision for Tax (including Deferred Tax) 2,725 250 Loss on Sale of Fixed Assets 29 -
(61,455) (59,090)Less: Depreciation as per Section 350 of the
Companies Act, 1956 15,564 10,624
Net (Loss) for the purpose of Director’s Remuneration
(77,019) (69,714)
5% thereof - - Maximum Remuneration permissible under Schedule XIII Part II Section II 1(B) of the Companies Act, 1956
1,750 -
(computed on the basis of inadequacy of profi ts)b) Managerial Remuneration
i. Salaries 2,753 - ii. Contribution to Provident Fund 13 -
2,766 - Note: a) All the above items have been included under respective heads under “Expenses” in
Schedule 9. b) Performance linked variable remuneration is on the basis of provision made in the
books of accounts. Provision for Gratuity has not been considered in the above computation.
c) The remuneration paid to the Managing Director is in excess of the remuneration prescribed under Section 198 read with Schedule XIII to the Companies Act, 1956 by Rs.1,016 thousands (previous year Rs.Nil). The Company has made an application for the necessary approval from the Central Government for the remuneration in excess of the prescribed limits.
7. Auditors Remuneration
THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000
Audit fees 403 358 Audit under Other Statutes 110 110 TOTAL 513 469
8. Employee Benefi ts
I. Defi ned Contribution Plans:Contribution to Defi ned Contribution Plan, recognised as expense for the period are as under:Employers’ Contribution to Provident Fund 1,429 670 II. Defi ned Benefi t Plans:Contribution to Gratuity FundThe Company makes provision for Grauity in the books of accounts for qualifying employees. Gratuity is payable to all eligible employees on superannuation, death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company’s policy whichever is benefi cial to the employees.The following table sets out the funded status of the gratuity plan and the amounts recognised in the Company’s fi nancial statements as at March 31, 2010:Change in present value of obligationPresent value of obligation as at April 1, 2009 413 - Interest Cost 33 - Service Cost 210 - Benefi ts Paid - - Actuarial (gain)/loss on obligation (75) - Present value of obligation, as at March 31, 2010 581 413 Change in plan assetsFair value of plan assets as at April 1, 2009 - - Expected Return on plan assets - - Contributions 413 - Benefi ts Paid - - Actuarial gain/(loss) on plan assets 2 - Fair Value of plan assets, as at March 31, 2010 415 - Amount recognised in the Balance SheetPresent value of obligation, as at March 31, 2010 581 - Fair value of plan assets as at March 31, 2010 415 413 Net obligation as at March 31, 2010 166 413 Net gratuity cost for the year ended March 31, 2010Current Service Cost 210 - Interest Cost 33 - Expected return on plan assets - - Net Actuarial (gain)/loss to be recognised 77 413 Net gratuity cost 319 413 Assumptions used in accounting for the gratuity plan
%Discount Rate 8 8Salary escalation rate 4 4Expected rate of return on plan assets 8 - The estimates of future salary increases, considered in actuarial valuation, take into account infl ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets.
9. Earnings Per Share
THIS YEAR PREVIOUS YEAR Rs.’000 Rs.’000
Profi t after tax and before extraordinary items (Rs.’000) (82,540) (69,964)Profi t after tax and after extraordinary items (Rs.’000) (82,540) (69,964)Weighted average number of equity shares outstanding 7,050 5,288 Basic and Diluted earnings per share before extraordinary items(Rs.)
(11.71) (13.23)
Basic and Diluted earnings per share after extraordinary items(Rs.)
(11.71) (13.23)
Nominal value of shares (Rs.) 10 10 10. Related Party Transactions Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below’’ 1. Relationships : (i) Holding Company Godrej Industries Ltd. the Holding Company (From 25.08.2009) Godrej Agrovet Limited, the Holding Company (Upto 24.08.2009) Godrej & Boyce Mfg Co. Ltd., the ultimate Holding Company (ii) Fellow Subsidaries Godrej Agrovet Ltd. (From 25.08.2009) Ensemble Holdings & Finance Ltd. (From 25.08.2009) Godrej Properties Ltd. (From 25.08.2009) Godrej International Ltd. (From 25.08.2009) Golden Feed Products Ltd. (Upto 24.08.2009) Cauvery Palm Oil Ltd. (Upto 24.08.2009) Godrej Oil Palm Ltd. (Upto 24.08.2009) (iii) Key management personnel Mr. Mohit Khattar (From 25.08.2009) (iv) Individuals exercising control or signifi cant infl uence (and their relatives) Mrs. T. Dubash Mr. A. Mahendran
Annual Report 2009–2010
131
SCHEDULES ATTACHED AND FORMING PART OF THE ACCOUNTS FOR THE PERIOD ENDED MARCH 31, 20102. The following transactions were carried out with the related parties in the ordinary
course of business : (i) Details relating to parties referred to in items 1(i), to (iv) above
Rs.’000
Nature of Transactions
Holding Company
(i)
Fellow Subsidiaries
(ii)
Other Related Parties
(iii) & (iv) 1 Issue of share capital (incl. Premium) -
70,500 2 Business acquired during the year -
72,556 3 Intercorporate deposits taken during the
year 20,753 41,764
61,100 - 4 Intercorporate deposits repaid during the
year 50,000
5 Interest expense on intercorporate deposits taken
2,922 2,277
1,908 - 6 Outstanding Intercorporate deposits 45,500
63,051 7 Intercorporate deposits placed during the
year 10,000
8 Recovery of Intercorporate deposit placed 10,000 -
9 Interest income on intercorporate deposit placed 31 -
10 Expenses charged by other companies 1,724 619
11 Outstanding receivables, net of (payables) (28) (43)
12 Interest Accrued and due on Intercorporate deposits
4
1,908 13 Sale of Traded Goods 448
-14 Remuneration 2,766
-3. Signifi cant Related Party Transactions :
Rs.’000Nature of Transactions
Holding Company
(i)
Amount Fellow Subsidiaries
(ii)
Amount Other Related Parties
(iii)
Amount
1 Issue of share capital (incl. Premium)
Godrej Agrovet Ltd.
-
70,500 2 Business acquired during
the yearGodrej Agrovet Ltd.
-
72,556 3 Intercorporate deposits
taken during the yearGodrej Industries Ltd.
20,500 Godrej Agrovet Ltd.
1,764
- - Godrej Agrovet Ltd.
253 Godrej Oil Palm Ltd.
40,000
61,100 - 4 Intercorporate deposits
repaid during the yearGodrej Industries Ltd.
50,000
- 5 Interest expense on
intercorporate deposits taken
Godrej Industries Ltd.
1,928 Godrej Agrovet Ltd.
758
- - Godrej Agrovet Ltd.
994 Godrej Oil Palm Ltd.
1,519
1,908 - 6 Outstanding
Intercorporate depositsGodrej Industries Ltd.
45,500
- Godrej Agrovet Ltd.
-
63,051
7 Intercorporate deposits placed during the year
Godrej Properties Ltd.
10,000
- 8 Recovery of
Intercorporate deposit placed
Godrej Properties Ltd.
10,000
- 9 Interest income on
intercorporate deposit placed
Godrej Properties Ltd.
31
- 10 Expenses charged by
other companiesGodrej Industries Ltd.
1,724
- Godrej Agrovet Ltd.
-
619
Rs.’000Nature of Transactions
Holding Company
(i)
Amount Fellow Subsidiaries
(ii)
Amount Other Related Parties
(iii)
Amount
11 Outstanding receivables, net of (payables)
Godrej Industries Ltd.
(28)
- Godrej Agrovet Ltd.
-
(43)
12 Interest Accrued and due on Intercorporate deposits
Godrej Industries Ltd.
4
- Godrej Agrovet Ltd.
-
1,908 13 Sale of Traded Goods Mrs. T. Dubash 448 14 Remuneration Mr. Mohit
Khattar 2,766
-
11. The previous year’s fi gures are for a period of nine months and hence are not strictly comparable with those of the current year.
12. Previous period amounts have been reclassifi ed wherever necessary to confi rm with current year’s classifi cation.
Natures Basket Limited
132
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 fl ows by operating, investing and fi nancing activities.
2. Figures in brackets are outfl ows/deductions.
For and on behalf of For and on behalf of the BoardKALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI MOHIT KHATTAR A. MAHENDRANPartner Managing Director DirectorMembership no. 35646
Mumbai, May 21, 2010 For and on behalf of the Board
MOHIT KHATTAR A. MAHENDRAN Managing Director Director
Mumbai, May 21, 2010
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010
For the Year For the PeriodEnded Ended
31.03.2010 31.03.2009Rs. ‘000 Rs. ‘000 Rs. ‘000
A. Cash Flow from Operating Activities :(Loss)/Profi t Before Taxes (85,265) (70,214)Adjustments for: Depreciation 15,564 10,624 Loss On Sale Of Assets 29 - Interest expenses 10,645 2,467 Interest income (41) -
26,197 13,091 Operating Profi t Before Working Capital Changes
(59,068) (57,123)
Adjustments for:Inventories (6,264) (5,744)Debtors and Other Receivables (16,337) (3,922)Creditors and Other Payables 38,994 10,769
16,393 1,102 Cash Generated from Operations (42,675) (56,021)Direct Taxes Paid 83 210 Net Cash Flow from Operating Activities (42,758) (56,231)
B. Cash Flow from Investing Activities :Acquisition of Fixed Assets (32,565) (12,169)Proceeds from Sale of Fixed Assets 19 - Purchase of Investments (25) - Intercorporate Deposit Placed (10,000) - Recovery of Intercorporate Deposit Placed 10,000 - Interest Received 31 - Net Cash used in Investing Activities (32,540) (12,169)
C. Cash Flow from Financing Activites : Proceeds from issue of capital - 70,500 Proceeds from Borrowings 141,868 384 Repayment of Borrowings (50,000) - Interest Paid (12,185) (2,467)Net Cash used in Financing Activities 79,683 68,417 Net increase in Cash and Cash equivalents 4,385 17 Cash and Cash equivalents (Opening Balance) 661 - Add: Cash Balance Taken over from GodrejAgrovet Limited - 644 Cash and Cash equivalents (Closing Balance) 5,046 661
ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV TO THE COMPANIES ACT, 1956
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
I Registration Details
Registration No. U15310MH2008PLC182816
State Code. 11
Balance Sheet Date. 31.03.2010
II Capital Raised during the period (Amounts in Rs. ‘000)
Public Issue NIL
Rights Issue NIL
Bonus Issue NIL
Private Placement NIL
III Position of mobilisation and deployment of funds (Amounts in Rs. ‘000)
Total Liabilities 286,064
Total Assets 286,064
Sources of Funds
Paid-up Capital 70,500
Reserves and Surplus -
Secured Loans 42,763
Unsecured Loans 110,572
Application of Funds
Net Fixed Assets 65,429
Investments 25
Net Current Assets 2,609
Misc Expenditure -
Accumulated Losses 152,504
IV Performance of Company
Turnover 333,853
Total Expenditure 424,388
(Loss) / Profi t before tax (85,265)
(Loss) / Profi t after tax (82,540)
Earnings per share Rs. (11.71)
(on an annualised basis)
Dividend rate % -
V Generic Names of principal products/services of the Company
Item code no 651
Product description Retail Trade in Vegetables and Fruits together
659
Retail trade in food and food articles, beverages, tobacco and intoxicants
not elsewhere classifi ed.
( * represents Heading no of the Harmonised Commodity Description and coding system)
Annual Report 2009–2010
133
Ensemble Holdings & Finance Limited
DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31, 2010
ANNEXURE TO THE AUDITORS’ REPORT
TO THE SHAREHOLDERS,Your Directors submit their Report along with the audited Accounts for the year ended March 31, 2010.REVIEW OF OPERATIONSYour Company’s performance during the year as compared with that of the previous year is summarised below:-
THIS YEAR(Rs.’000)
PREVIOUS YEAR(Rs.’000)
Gross Revenue earned 33,240 15,710Total Expenditure 166 167Profi t / (Loss) for the year before Tax 33,074 15,543Provision for Taxation 1,300 1,416Profi t / (Loss) after Tax 31,774 14,127Adjustment in respect of prior years 244 (13)Profi t available for appropriation 32,018 14,114Proposed Dividend 18,871 -Interim Dividend - 79,26Dividend Distribution Tax 31,34 13,47Transfer to Special Reserve Fund u/s 45IC of RBI Act, 1934 64,04 28,23Transfer to General Reserve 32,02 14,11Balance available for set off against b/f defi cit in P&L A/c 4,07 6,07Loss brought forward (78,663) (79,270)Loss carried forward (78,255) (78,663)DIVIDENDThe Board of Directors of your Company recommends a fi nal dividend of Rs. 5/- per equity share (Previous year Rs. 2.10 per share) of Rs. 10/- each aggregating to Rs. 188.71 lac.
COMPLIANCE WITH GUIDELINES ISSUED BY THE RESERVE BANK OF INDIAYour Company has been granted a Certifi cate of Registration by Reserve Bank of India to carry on the business as Non-Banking Financial Institution.Your Company has not accepted any public deposits during the year under review, nor does it propose to accept the same. As such, pursuant to Non-Banking Financial Companies (Reserve Bank) Directions, 1998, issued by Reserve Bank of India vide notifi cation No.DFC.114/DG (SPT) dated January 2, 1998, your Company is not required to obtain rating from a rating agency in this regard. Hence, rating for Fixed Deposit obtained from CRISIL in 1996-97 has not been renewed.In view of the above, there are no overdue or unclaimed deposits.
DIRECTORSMs. T.A. Dubash retires by rotation at the ensuing Annual General Meeting and being eligible offer herself for reappointment
During the year under review, Mr. H. K. Press resigned from the Board of the Company w.e.f. May 1, 2010. Mr. B. S. Yadav has been appointed as an Additional Director w.e.f. May 1, 2010. He is being appointed as Diretor, liable to retire by rotation at the forthcoming Annual General Meeting. Mr. Yadav is a Bachelor of Science (Agricultural Sciences) and has done his PGDBM from IIM, Ahmedabad. He has 19 years of experience. Presently he is the Managing Director of Godrej Agrovet Limited.AUDITORSYou are requested to appoint Auditors for the current year and to authorise the Board of Directors to fi x their remuneration. The retiring auditors, M/s Kalyaniwalla Mistry And Associates, Chartered Accountants are eligible for reappointment.DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to the provisions contained in Section 217 (2AA) of the Companies Act, 1956, the Directors of your Company confi rm:a) that in the preparation of the annual accounts, the applicable accounting standards have been
followed and no material departures have been made from the same;b) that they have selected such accounting policies and applied them consistently and made judgements
and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the profi t of the Company for that year;
c) that they have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguard of the assets of the Company and for preventing and detecting fraud and other irregularities;
d) that they have prepared the annual accounts on a going concern basis.ADDITIONAL INFORMATIONThe additional information required to be given under the Companies Act, 1956, has been laid out in the Accounts to the extent applicable. The notes to the Accounts referred to in the Auditors’ Report are self-explanatory and therefore do not call for any further explanation.The information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo, required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 has not been given, since such requirement is not applicable to the Company.During the year under review, the Company did not have any employee attracting the provisions of Section 217(2A) of Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 requiring disclosure in the Report. For and on behalf of the Board of Directors
M. EIPE DirectorMumbai, May 26, 2010
REPORT OF THE AUDITORSTo The Members of ENSEMBLE HOLDINGS & FINANCE LIMITED
1. We have audited the attached Balance Sheet of Ensemble Holdings and Finance Limited as at March 31, 2010 and also the Profi t and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by the Companies (Auditors’ Report) (Amendment) Order 2004, issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we report that: a. We have obtained all the information and explanations which to the best of our knowledge and
belief were necessary for the purpose of our audit; b. In our opinion, proper books of account as required by law have been kept by the Company so
far as appears from our examination of such books; c. The Balance Sheet and Profi t and Loss Account dealt with by this report are in agreement with
the books of account;
d. In our opinion, the Profi t and Loss Account and Balance Sheet dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;
e. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010,
(ii) in the case of the Profi t and Loss Account, of the Profi t of the Company for the year ended on that date
(iii) in the case of Cash Flow Statement, of the cash fl ow for the year ended on that date.5. On the basis of the written representations received from the Directors as on March 31, 2010, and
taken on record by the Board of Directors, we report that none of the Directors is disqualifi ed as on March 31, 2010, from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
For and on behalf ofKALYANIWALLA MISTRY & ASSOCIATESChartered Accountants
V. M. PADWALPartnerMembership No. 49639Firm Regn. No. 121157W
Mumbai, May 26, 2010
Referred to in Paragraph 3 of our report of even date on the accounts of Ensemble Holdings & Finance Limited for the year ended March 31, 2010:1. a) The Company had granted unsecured loans to a company listed in the register maintained under section
301 of the Companies Act, 1956. The maximum amount of loan granted to the said company during the year was Rs. 2,25,00,000. No amount is outstanding at the year end.
b) In our opinion and according to information and explanations given to us, the rate of interest and other terms and conditions of unsecured loan given by the Company, are prima facie not prejudicial to the interest of the Company.
c) All parties have repaid the principal amounts as stipulated and have been regular in the payment of interest.
d) The Company had not taken unsecured loans from a Company covered in the register maintained under section 301 of the Companies Act, 1956.
2. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that all transactions that need to be entered into the register in pursuance of Section 301 of the Companies Act, 1956, have been so entered.
b) These transactions have been made at reasonable prices having regard to the prevailing market prices at the relevant time.
3. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956, and the rules framed thereunder.
4. The Company has an internal audit system, which in our opinion, is commensurate with the size and nature of its business.
5. a) According to the records examined by us, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Income Tax and other statutory dues as applicable to it. According to the information and explanation given to us, no undisputed amounts payable in respect of statutory dues were outstanding, at the year end for a period of more than six months from the date they became payable.
b) According to the information and explanation given to us there are no dues of sales tax, income tax, wealth tax, service tax, excise duty or cess, which have not been deposited on account of any dispute.
6. The accumulated losses of the Company as at end of the fi nancial year are more than fi fty percent of its net worth. The company has not incurred cash losses during the current fi nancial year and in the immediate preceding fi nancial year.
7. According to the information and explanations given to us and the records examined by us, we observed that the company has not borrowed any money from fi nancial institutions or banks or debenture holders.
8. According to the information and explanations given to us the Company has not granted loans and advances on the basis of security by way of pledge of shares and other securities.
9. In our opinion and according to the information and explanation given to us, the nature of the activities of the Company does not attract any special statute applicable to chit fund and nidhi/ mutual benefi t fund/ societies.
10. In our opinion, the Company has maintained proper records of the transactions and contracts of the investments dealt in by the Company and timely entries have been made therein. The investments made by the Company are held in its own name.
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 fi nancial institutions.
12. According to the information and explanations given to us and the records examined by us we observed that the Company has not taken any term loan.
13. On the basis of an overall examination of the balance sheet and cash fl ows of the Company and the information and explanation given to us, we report that the company has not utilized any funds raised on short-term basis for long-term investments.
14. The Company has not made any preferential allotment of shares to parties or companies covered underSection 301 of the Companies Act, 1956.
15. The Company did not issue any debentures during the fi nancial year.16. The Company has not raised any money through a public issue during the year.17. Based upon the audit procedures performed and the information and explanation given by the management,
we report that no fraud on or by the Company has been noticed or reported during the year.18. In our opinion, clauses (i), (ii), (iii) (d), (iii) (f), iii(g), (iv) and (viii) of paragraph 4 of the Companies (Auditor’s
Report) Order, 2003 are not applicable.For and on behalf ofKALYANIWALLA MISTRY & ASSOCIATESChartered AccountantsV. M. PADWALPartnerMembership No. 49639Firm Regn. No. 121157WMumbai, May 26, 2010
Ensemble Holdings & Finance Limited
134
The Schedules referred to above form an integral part of the Balance Sheet
As per our Report of even date attached Signatures to Balance Sheet and Schedules 1 to 7 and 10For and on behalf of For and on behalf of the BoardKALYANIWALLA MISTRY & ASSOCIATESChartered Accountants
V.M. PADWAL M.G. SUBRAMANIAM M. EIPE B.S. YADAV Partner Company Secretary Director DirectorMumbai, May 26, 2010
SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010
The Schedules referred to above form an integral part of the Profi t and Loss Account
As per our Report of even date attached Signatures to Profi t & Loss Account and Schedules 8 to 10For and on behalf of For and on behalf of the BoardKALYANIWALLA MISTRY & ASSOCIATESChartered Accountants
V.M. PADWAL M.G. SUBRAMANIAM M. EIPE B.S. YADAV Partner Company Secretary Director DirectorMumbai, May 26, 2010
BALANCE SHEET AS AT MARCH 31, 2010
Schedule
AS AT31.03.10
Rupees
AS AT31.03.09
Rupees
SOURCE OF FUNDS
1 SHAREHOLDERS’ FUNDS
(a) Share Capital 1 37,741,600 37,741,600
(b) Reserves & Surplus 2 123,585,245 113,979,815
161,326,845 151,721,415
APPLICATION OF FUNDS
1 INVESTMENTS 3 73,951,817 17,366,029
2 CURRENT ASSETS, LOANS AND ADVANCES
(a) Cash & Bank Balances 4 168,114 1,840,175
(b) Other Current Assets 5 386,137 1,104,004
(c) Loans and Advances 6 30,711,660 48,765,882
31,265,911 51,710,061
LESS: CURRENT LIABILITIES AND PROVISIONS 7
Current Liabilities 140,943 159,112
Provisions 22,005,004 1,346,980
22,145,947 1,506,092
NET CURRENT ASSETS 9,119,964 50,203,969
3 PROFIT AND LOSS ACCOUNT 78,255,064 78,662,729
TOTAL 161,326,845 146,232,727
NOTES TO ACCOUNTS 10
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
Schedule
YEAR ENDED 31.03.10
Rupees
YEAR ENDED31.03.09
RupeesINCOMEInterest Income 8 5,503,538 5,533,647 Dividend 1,811,748 3,045,473 Profi t on sale of investments (Net) 2,567,195 5,973,980 Profi t on sale of Mutual Funds 173,359 942,121 Sundry Income 74,141 Reversal of Prov. for depletion in Investment 23,110,000 215,293
33,239,981 15,710,514 EXPENDITUREExpenses 9 166,242 167,252
166,242 167,252 PROFIT/(LOSS) BEFORE TAX 33,073,739 15,543,262 Provision for Taxation 1,300,000 1,416,000 PROFIT/(LOSS) AFTER TAX 31,773,739 14,127,262 Adjustments for prior years 244,360 (12,917)PROFIT AVAILABLE FOR APPROPRIATION 32,018,099 14,114,345 APPROPRIATIONDividendProposed Dividend 18,870,800 –Interim Dividend - 7,925,736 Dividend Distribution Tax 3,134,204 1,346,980 Transfer to Special Reserve Fund u/s 45IC of RBI Act, 1934 6,403,620 2,822,869 Transfer to General Reserves 3,201,810 1,411,434
31,610,434 13,507,019 Balance available for set off against b/f defi cit in P&L A/c 407,665 607,326 Loss brought forward (78,662,729) (79,270,055)Loss Carried Forward (78,255,064) (78,662,729)
Earnings Per Share 10 (5) 8.48 3.74 NOTES TO ACCOUNTS 10
AS AT31.03.10
AS AT31.03.09
SCHEDULE 1 : SHARE CAPITAL
AUTHORISED
5,000,000 Equity Shares of Rs.10/- each 50,000,000 50,000,000
ISSUED, SUBSCRIBED AND PAID UP
3,774,160 Equity Shares of Rs.10/- each fully paid up. (100% shares are held by Godrej Industries Ltd., the Holding Company)
37,741,600 37,741,600
37,741,600 37,741,600
AS AT 31.03.10
Rupees
AS AT 31.03.09
Rupees
SCHEDULE 2 : RESERVES & SURPLUS
SHARE PREMIUM
As per last Balance Sheet 84,945,040 84,945,040
Special Reserves u/s 45IC of RBI Act, 1934
Opening Balance 19,493,517
Add : Transferred from Profi t & Loss A/c 6,403,620 -
25,897,137 19,493,517
General Reserve
Opening Balance 9,541,258
Add : Transferred from Profi t & Loss A/c 3,201,810
12,743,068 9,541,258
123,585,245 113,979,815
Annual Report 2009–2010
135
SCHEDULE 10 : NOTES TO ACCOUNTS
SCHEDULES ANNEXED TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2010SCHEDULE 3 : INVESTMENTS
Investee Company/InstitutionQuantity Amount
Fac Value Quantity as on 01.04.09
Acquired during the year
Sold during the year
Quantity as on 31.03.10
As on 31/03/10 Rupees
As on 31.03.09 (Rupees)
Long Term Investments (At Cost)Equity shares - QuotedCompanies under Same Management:Godrej Properties Ltd. 10 691,155 - - 691,155 5,488,688 5,488,688 Other Companies:Agro Tech Foods Ltd. 10 1 - - 1 53 53 Colgate Palmolive India Ltd. 10 1 - - 1 151 151 Dabur India Ltd. 1 3 - - 3 59 59 Henkel India Ltd. 10 1 - - 1 31 31 Hindustan Unilever Ltd. 1 751 - - 751 90,589 90,589 Gillette India Ltd. 10 1 - - 1 400 400 Marico Industries Ltd. 1 40 - - 40 271 271 Nirma Ltd. 5 2 - - 2 255 255 Procter & Gamble Hygiene & Health Care Ltd. 10 1 - - 1 490 490 Venkys India Ltd. 10 1 - - 1 37 37 Amrutanjan Health Care Ltd. 10 15,423 - 15,423 - – 5,410,332 Mafatlal Industries Ltd. 10 – 122,050 7,716 114,334 8,734,664 -UnquotedCompanies under the Same Management :Godrej Agrovet Ltd. 10 8,100 - - 8,100 1,809,717 1,808,707 Godrej Gokarna Oil Palm Limited 10 2 - - 2 3,240 3,240 Other Companies :karROX Technologies Ltd. 10 250,000 - - 250,000 10,050,000 10,050,000 Personalitree Academy Ltd. 10 389,269 - - 389,269 11,027,991 11,027,991 Unquoted : Non-Convertible DebenturesCompanies under the Same Management :Godrej Oil Plantations Limited 10 160 - 160 - - 1,600 Current InvestmentsMutual Funds - UnquotedSBI Mutual Fund - Cash option 47,773,359 -
84,979,995 28,394,207 Less : Provision for diminution in value of Investments 11,028,178 11,028,178
73,951,817 17,366,029 Aggregate Book Value of Investments :Quoted Investments 14,315,688 5,502,668 Unquoted Investments 59,636,129 17,352,049
73,951,817 22,854,717
Market Value of quoted investments 370,078,667 5,458,501
AS AT 31.03.10
Rupees
AS AT 31.03.09
Rupees SCHEDULE 4 : CASH AND BANK BALANCESCash on hand 1,561 1,301 Balances with Scheduled Banks in Current Accounts 166,553 1,838,874
168,114 1,840,175 SCHEDULE 5 : OTHER CURRENT ASSETSOutstanding Income 386,137 1,104,004
386,137 1,104,004 SCHEDULE 6 : LOANS AND ADVANCES(Unsecured, considered good, unless stated otherwise)ESOP Loans – 24,691,000 Share Application Money (considered doubtful) 300,000 300,000 Intercorporate Deposits (considered good) 29,000,000 24,000,000 Intercorporate Deposits (considered doubtful) - 23,110,000
29,300,000 47,410,000 Less : Provision for Doubtful Loans and Advances (300,000) (23,410,000)
29,000,000 24,000,000 Advance Payment of Taxes 1,711,660 74,882
30,711,660 48,765,882 SCHEDULE 7: CURRENT LIABILITIES & PROVISIONSCurrent LiabilitiesSundry Creditors 140,943 159,112 Provisions :Proposed Dividend 18,870,800 –Tax on Distributed Profi ts 3,134,204 1,346,980
22,145,947 1,506,092 SCHEDULE 8 : INTEREST INCOME (Gross)On Loans (TDS Rs. 292,440/-, previous year Rs. 554,712/-) 1,290,555 2,447,977 On Intercorporate Deposits (TDS Rs. 668,134/-, previous year Rs. 688,933/-) 4,212,823 3,040,300 On Fixed Deposits with Bank (TDS Rs. Nil, previous year Rs. Nil) - 45,370 On Investment (Non-convertible Debentures) 160 –
5,503,538 5,533,647 SCHEDULE 9 : EXPENSESSalary 60,000 60,000 Profession Tax 2,500 2,500 Auditors’ Remuneration 25,120 49,635 Professional Charges 60,665 44,944 Miscellaneous Expenses 17,957 10,173
166,242 167,252
1. Signifi cant Accounting Policies a. Accounting Convention: The fi nancial statements are prepared under the historical cost convention, on
accrual basis in accordance with the generally accepted accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the Companics Act, 1956.
b. Income recognition: (i) Dividend income is recognised when the right to receive the same is
established. (ii) Interest income is recognised on time proportion basis. (iii) Profi t/loss on sale of investments is accounted on the trade dates. c. Investments: Long term investments are carried at cost. Provision for diminution, if any, in the
value of each long-term investment is made to recognise decline, other than that of a temporary nature. The fair value of a long Term investment is ascertained with reference to its market value, the investee's assets and results and the expected cash fl ows from the investments.
d. Taxes on Income: Current Tax is the amount of tax payable on the taxable income for the year
determined in accordance with the provisions of the Income Tax Act, 1961. Deferred tax is recognised on timing differences, being the differences between the
taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets subject to the consideration of prudence are recognised and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realised. The tax effect is calculated on the accumulated timing differences at the year end based on the tax rate and laws enacted or substantially enacted on the Balance Sheet date.
2. Investments: i) The Company has acquired and sold the following investments during the year:
This Year Previous YearNo.of units/shares
Purchase Cost (Rs.)
No.of units/shares
Purchase Cost (Rs.)
LIC Mutual Fund - - 2,996,333 44,600,000 SBI Mutual Fund 1,958,697 38,826,641 128,507 2,500,000 Fem Care Pharma - - 15,242 4,189,265Mafatlal Industries 7,716 589,472 - -Godrej Global Solutions Ltd. (Pref. shares)
- - 18,000 180,000
Ensemble Holdings & Finance Limited
136
SCHEDULE 10: NOTES TO ACCOUNTS (Contd.)
As per our Report attached Signatures to Cash Flow StatementFor and on behalf of For and on behalf of BoardKALYANIWALLA MISTRY & ASSOCIATESChartered Accountants
V.M. PADWAL M.G. SUBRAMANIAM M. EIPE B.S. YADAV Partner Company Secretary Director DirectorMumbai, May 26, 2010
As per our Report attached Signatures to Balance sheet StatementFor and on behalf of For and on behalf of BoardKALYANIWALLA MISTRY & ASSOCIATESChartered Accountants
V.M. PADWAL M.G. SUBRAMANIAM M. EIPE B.S. YADAV Partner Company Secretary Director DirectorMumbai, May 26, 2010
b) Transactions with Related Parties
(Rs. in Lac)
Sr.No.
Nature of Transaction HoldingCompany
SubsidiaryCompany
FellowSubsidiary
Associate/Joint
Venture
Key Management
Personnel
Relatives of Key
Mangement Personnel
Total
i) Dividend Received - - 17.36 - - - 17.36
Previous year - - 28.57 - - - 28.57
ii) ICD Placed 525.00 - - - - - 525.00
Previous year 250.00 - - - - - 250.00
iii) ICD Refunded 575.00 - - - - - 575.00
Previous year 200.00 - - - - - 200.00
iv) Interest Received on ICD 12.51 - - - - - 12.51
Previous year 6.54 - - - - - 6.54
v) Dividend Paid - - - - - - -
Previous year 79.26 - - - - - 79.26
vi) Remuneration - - - - 0.60 - 0.60
Previous year - - - - 0.60 - 0.60
6. Related Party Disclosures: a) Related Parties with whom transactions have taken place during the year, with the
name and description of relationship. Parties where control exists Godrej Industries Limited, the holding company Godrej & Boyce Mfg. Co. Ltd., the ultimate holding company Related Parties with whom transactions have taken place during the year
Holding Company Fellow Subsidiaries Godrej Industries Limited Godrej Properties Limited Godrej Agrovet Limited Individual exercising signifi cant infl uence over the enterprise Ms. T. A. Dubash Mr. H. K. Press Mr. M. Eipe
(Rs. in Lac)
Nature of Transaction Amount Nature of Transaction Amount
Placement of ICD Interest recd on ICD placed
Godrej Industries Limited 525.00 Godrej Industries Limited 12.51
Refund of ICD Remunertion
Godrej Industries Limited 575.00 Mr. H. K. Press 0.60
c) The signifi cant Related Party Transactions are as under
9. ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF SCHEDULE VI TO THE COMPANIES ACT, 1956BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE1. Registration details
Registration No : 11-65457 State Code : 11 Balance Sheet Date : 31.03.2010
2. Capital raised during the year (Amount in Rs. Thousands) Public Issue : - Rights Issue : - Bonus Issue : - Private Placement : -
3. Position of mobilisation and deployment of funds (Amount in Rs. Thousands) Total Liabilities : 161,327 Total Assets : 161,327 Sources of funds: Paid up Capital : 37,742 Reserves & Surplus : 123,585 Secured Loans : - Unsecured Loans : - Application of funds: Net Fixed Assets : - Investments : 73,952 Net Current Assets : 9,120 Miscellaneous Expenditure : - Accumulated Losses : 78,255
4. Performance of Company (Amount in Rs. Thousands)Turnover (Total Income) : 33,240 Total Expenditure : 166 Profi t before tax : 33,074 Profi t after tax : 31,774 Earnings per share in Rs. : 8.48 Dividend rate (%) : 50%
5. Generic names of three principal : The Company is a Loan products/services of the Company and Investment Company
THIS YEARRupees
PREVIOUS YEAR Rupees
3. Amount due from a Company under the same management
Godrej Hicare Ltd. - 23,110,000 Godrej Industries Ltd. - 5,000,000
- 28,110,000 4. Auditors’ Remuneration:
(includes service tax wherever applicable)Audit Fees 33,090 33,090 Tax Audit Fees 16,545 16,545
49,635 49,635 5. Earnings per share
a. Net Profi t/(Loss) after Tax available for shareholders 32,018,099 4,110,101 b. Weighted Average Number of Equity Shares 3,774,160 3,774,160 c. Basic and Diluted Earnings per Share of Rs.10 each 8.48 3.74
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010
7. Additional information required under Schedule VI, Part IV of the Companies Act, 1956 to the extent not applicable has not been given.
8. Previous year’s fi gures have been regrouped/reclassifi ed wherever necessary.
YEAR ENDED 31.03.10
YEAR ENDED 31.03.09
Rupees RupeesCash fl ow from Operating ActivitiesProfi t before tax 33,073,739 15,543,262 Adjustments for :Dividend Income (1,811,748) - Profi t on sale of long term investments (2,567,195) (5,973,980)Profi t on sale of Mutual Funds (173,359) (942,121)Reversal of Provision for Dimunition in value of Investments/Loan (23,110,000) (215,293)Interest Income (1,250,959) (653,589)Operating Profi t before working capital changes 4,160,478 7,758,279 Adjustments for :Accrued Interest 717,867 826,985 Trade Payables (18,169) 1,345,470 Cash generated from operations 4,860,176 9,930,734 Direct Taxes paid (2,936,778) (1,387,216)Direct Taxes refund received - 57,988 Net Cash from operating activities 1,923,398 8,601,506
Cash fl ow from Investing ActivitiesProceeds from sale of investments 47,812,960 67,482,850 Dividend Income 1,811,748 - New investments made (95,925,146) (57,280,607)Interest Income 1,250,959 653,589 Interest Income - - Loans 42,801,000 (28,424,363)
Net cash generated / (used) from investing activities (2,248,479) (17,568,531)
Cash fl ow from Financing ActivitiesDividend Paid - (7,925,736)Tax on Distributed Profi ts (1,346,980) (1,346,980)Net cash generated / (used) from fi nancing activities (1,346,980) (9,272,716)Net increase / (decrease) in cash and cash equivalents (1,672,061) (18,239,741)Cash in and cash equivalents (opening balance) 1,840,175 20,079,916 Cash in and cash equivalents (closing balance) 168,114 1,840,175 Notes:Since the Company is a loan and investment company, changes in inter-corporate loans and deposits given are considered as working capital changes.
Annual Report 2009–2010
137
ParticularsLIABILITIES SIDE :
(1) Loans and advances availed by the NBFCs inclusive of interest accrued thereon but not paid:(a) Debentures : Secured : Unsecured (other than falling within the meaning of public deposits*)(b) Deferred Credits(c) Term Loans(d) Inter-corporate loans and borrowing (e) Commercial Paper(f) Public Deposits* (g) Other Loans (specify nature)* Please see Note 1 below
Amount outstanding NILNILNILNILNIL
NIL NILNILNIL
Amount overdueNILNILNILNILNILNILNILNILNIL
(2) Break-up of (1)(f) above (Outstanding public deposits inclusive of interest accrued thereon but not paid):(a) In the form of Unsecured debentures (b) In the form of partly secured debentures i.e. debentures where there is a shortfall in the value of security(c) Other public deposits
* Please see Note 1 below
NILNILNIL
NILNILNIL
ASSETS SIDE :
Schedule to Balance Sheet of a Non-Banking Financial Company(as required in terms of Paragraph 9BB of
Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 (Rs. in lakhs)
Amount outstanding(3) Break-up of Loans and Advances including bills receivables
[other than those included in (4) below] :(a) Secured NIL(b) Unsecured
i) Loans /Advances NILii) Inter Corporate Deposits 290.00iii) Advance Payment of Taxes 17.12
(4) Break up of Leased Assets and stock on hire and hypothecation loans counting towards EL/HP activities(i) Lease assets including lease rentals under sundry debtors : (a) Financial lease NIL (b) Operating lease NIL(ii) Stock on hire including hire charges under sundry debtors: (a) Assets on hire NIL (b) Repossessed Assets NIL(iii) Hypothecation loans counting towards EL/HP activities (a) Loans where assets have been repossessed NIL (b) Loans other than (a) above NIL
(5) Break-up of Investments :Current Investments :1. Quoted : (i) Shares : (a) Equity NIL (b) Preference NIL (ii) Debentures and Bonds NIL (iii) Units of mutual funds NIL (iv) Government Securities NIL (v) Others (please specify) NIL2. Unquoted : (i) Shares : (a) Equity NIL (b) Preference NIL (ii) Debentures and Bonds NIL (iii) Units of mutual funds 477.73 (iv) Government Securities NIL (v) Others (Please specify) NILLong Term investments :1. Quoted : (i) Share : (a) Equity 143.16 (b) Preference NIL (ii) Debentures and Bonds NIL (iii) Units of mutual funds NIL (iv) Government Securities NIL (v) Others (Please specify) NIL2. Unquoted : (i) Shares : (a) Equity 228.91 (b) Preference NIL (ii) Debentures and Bonds NIL (iii) Units of mutual funds NIL (iv) Government Securities NIL (v) Others (Please specify) NIL
Ensemble Holdings & Finance Limited
138
(6) Borrower group-wise classifi cation of all leased assets, stock-on-hire and loans and advances :Please see Note 2 below
Category Amount net of provisions
Secured Unsecured Total
1. Related Parties ** (a) Subsidiaries NIL NIL NIL (b) Companies in the same group : Loans NIL NIL NIL
(c) Other related parties Inter Corporate Deposits - NIL NIL NIL2. Other than related parties a) Advance Tax Payment b) Inter Corporate Deposits
NILNIL
17.12290.00
17.12290.00
Total NIL 307.12 307.12
(7) Investor group-wise classifi cation of all investments (current and long term) in shares and securities (both quoted and unquoted):Please see note 3 below
Category Market Value / Break up for fair value or NAV
Book Value (Net of Provi-sions)
1. Related Parties ** (a) Subsidiaries NIL NIL (b) Companies in the same group : Quoted Unquoted
3546.3218.13
54.8918.13
(c) Other related parties NIL NIL2. Other than related parties Quoted : Unquoted :
154.47787.63
88.27578.23
Total 4506.55 739.52
** As per Accounting Standard of ICAI (Please see Note 3) # Start up Company hence fair value considered at face value.
(8) Other information
Particulars Amount(i) Gross Non-Performing Assets
(a) Related parties NIL
(b) Other than related parties NIL
(ii) Net Non-Performing Assets
(a) Related parties NIL
(b) Other than related parties NIL
(iii) Assets acquired in satisfaction of debt NIL
Notes:1. As defi ned in Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.
2. Provisioning norms shall be applicable as prescribed in the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998.
3. All Accounting Standards and Guidance Notes issued by ICAI are applicable including for valuation of investments and other assets as also assets acquired in satisfaction of debt. However, market value in respect of quoted investments and break up/fair value/NAV in respect of unquoted investments should be disclosed irrespective of whether they are classifi ed as long term or current in column (5) above.
139
Annual Report 2009–2010 Godrej Properties Limited
DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010TO THE SHAREHOLDERS
Your Directors have pleasure in submitting their 25th Annual Report along with the Audited Accounts for the year ended March 31, 2010.
1. OPERATING RESULTS:
Your Company’s performance during the year as compared to the previous period is summarised below:
2009 – 2010(Rs. In Lacs)
2008-2009(Rs. in Lacs)
Profi t before Taxation 15,874.60 10,603.42
Provision for Taxation (3,669.83) (3,124.00)
Provision for Fringe Benefi t Tax - (16.50)
Provision for deferred tax (20.65) 10.61
Profi t after taxation 12,184.12 7,473.53
Add: Surplus brought forward 7,510.69 2,655.39
Prior year tax adjustments (21.37) (101.01)
AMOUNT AVAILABLE FOR APPROPRIATION 19,673.44 10,027.91
Appropriations:
Your Directors recommend appropriations as under:
Proposed Dividend 2,794.00 1,510.51
Dividend Distribution Tax 464.05 256.71
Transfer to General Reserve 1,220.00 750.00
Surplus carried forward 15195.39 7,510.69
TOTAL APPROPRIATIONS 19,673.44 10,027.91
2. INITIAL PUBLIC OFFER:
During the year 2009-2010 your Company has entered the capital market with the Initial Public Offer (IPO) of 9,429,750 equity shares of Rs.10/- each, through 100% Book Building Process wherein 7,732,405 equity shares were allotted to the Shareholders at a premium of Rs.480/- per share and 1,697,345 equity shares were allotted to certain Anchor Investors at a premium of Rs.520/- per share.
Your Company’s shares were listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited on January 5, 2010.
Your Directors take this opportunity to thank all the investor for their overwhelming response and the confi dence reposed by them.
3. DIVIDEND:
Your Directors recommend for approval of the members at the ensuing Annual General Meeting payment of dividend of 40% (Rs. 4.00 per share) for the year ended March 31, 2010.
4. REVIEW OF OPERATIONS:
Your Company posted a total income of Rs. 35,701.18 lacs during the year ended March 31, 2010.
During the year, the company successfully completed several projects, most notably the 1st Phase of Godrej Waterside - commercial project in Kolkata, Godrej Woodsman Estate - a residential project in Bangalore and Godrej Coliseum in Mumbai. At the end of 2009-10, the completed developed area for the company stands at 7.55 mn sq.ft compared to 3.63 mn sq.ft in 2008-09.
The highlight of the year has been successful launch of mid-income residential projects in Ahmedabad and Kolkata. The company commenced operations in Chandigarh, Chennai and Mangalore.
Your company signed MOU for development of project at Pune, where due diligence is currently underway. Your Company also signed an MOU with Godrej Industries Limited and Godrej and Boyce Mfg. Company Limited for undertaking the development of a 35 acre project at Vikhroli, Mumbai.
HDFC PMS, a real estate private equity fund, invested 49% each in subsidiaries, Godrej Estate Developers Private Limited and Godrej Sea View Properties Private Limited, for development of a commercial project, Godrej Eternia in Chandigarh and a residential project, Godrej Palm Grove in Chennai respectively. In Godrej Sea View Properties Private Limited, 22.27% of the equity share capital out of 49% was transferred before March 31, 2010. Also, Milestone Real Estate Fund invested 49% in Happy Highrises Limited, a subsidiary for development of Godrej Prakriti, a mix-use project in Kolkata.
Continuing with the commitment towards customer delight, your company had set up a dedicated team for Customer Centricity initiatives led by Chief Customer Offi cer.
5. FUTURE PROSPECTS AND OUTLOOK OF THE COMPANY:
Your Company has a well diversifi ed portfolio spread across established Tier-1 and emerging Tier-II and III locations. The strategy of partnering with leading fi rms like L&T for construction services and P.G. Patki for architectural services is likely to be a key driver in scaling up the projects across regions. The strategy of Joint Venture for sourcing land continues to help in minimizing capital requirement during the initial stages of project development.
6. FIXED DEPOSITS:
Your Company has accepted Fixed Deposits for 12, 24 and 36 Months tenure. During the year ended March 31, 2010 deposits aggregating to Rs.7489.43 Lacs have been mobilized.
7. DEPOSITORY SYSTEM:
Your Company’s equity shares are available for dematerialization through National Securities Depository Limited and Central Depository Services (India) Limited. 16.09% of the equity shares of your Company were held in demat form as on March 31, 2010.
8. CORPORATE GOVERNANCE:
As required by the existing Clause 49 of the Listing Agreements with the Stock Exchanges, a detailed report on Corporate Governance together with Management Discussion and Analysis Report are included in the Annual Report. The Auditors have certifi ed the Company’s compliance of the requirements of Corporate Governance in terms of Clause 49 of the Listing Agreement and the same is annexed to the Report on Corporate Governance.
9. AWARDS & RECOGNITIONS:
Your directors take pleasure in informing you that the Company was acknowledged with the following Awards during the year:-
“Best Business Practices Award by Accommodation” times.
“CNBC AWAAZ CRISIL CREDAI Real Estate Awards 09” for the best residential project in the western India for Planet Godrej.
Ranked 1st in the Construction and Real Estate Category in India’s Best Companies to Work for 2009 awarded by The Great Place to Work® Institute, India, in partnership with The Economic Times.
Ranked one of India’s Top 10 Builders by the Construction World Architect and Builder Awards, 2009.
10. MODIFICATION OF EMPLOYEES STOCK OPTION SCHEME:
The Shareholders had vide special resolution passed by the Postal Ballot on March 10, 2010 approved the amendments to the Employees Stock Option Plan (ESOP) of the Company inter alia to increase the limit of shares from 442,700 upto 1,500,000, which may be purchased by GPL ESOP Trust for granting options to the employees.
The disclosure relating to ESOP is given in Annexure A.
11. SUBSIDIARY COMPANIES:
A. Subsidiaries Accounts
The audited Balance Sheet as at March 31, 2010 and Profi t & Loss account ended on that date together with the Reports of Directors and Auditors thereon of our Subsidiaries along with Statement as required under Section 212 of the Companies Act, 1956, forms part of the Annual Report .
B. Transfer of Stake
The Company has diluted its stake in the following Subsidiaries:-
1) Happy Highrises Limited by transferring 49% of equity share capital to IL&FS Trust Company Ltd. A/C Milestone Real Estate Fund for a consideration of Rs.8,610 Lakhs.
2) Godrej Estate Developers Private Limited (“GEDPL”) by transferring 49% of the equity share capital to HDFC PMS (under HDFC Asset Management Company Limited Portfolio Management Services Real Estate Portfolio-I, through its Portfolio Manager HDFC Asset Management Company Limited), for a consideration of Rs. 4,500 Lakhs.
3) Godrej Sea View Properties Private Limited (GSVPPL) by transferring 49% (22.27% before March 31, 2010) of the equity share capital to HDFC PMS (under HDFC Asset Management Company Limited Portfolio Management Services Real Estate Portfolio-I, through its Portfolio Manager HDFC Asset Management Company Limited), for a consideration of Rs.5,500 Lakhs in two tranches.
Now the Company holds 51% of the paid up capital of the above mentioned subsidiaries.
C. Material Non Listed Indian Subsidiary
Pursuant to Clause 49 of the Listing Agreement, if the turnover or net worth (i.e. paid-up capital and free reserves) of any unlisted Indian Subsidiary Company exceeds 20% of the consolidated turnover or net worth respectively, of the Listed Holding Company and its subsidiaries in the immediately preceding Accounting year; that subsidiary is termed as Material Non Listed Indian Subsidiary. Accordingly, Godrej Waterside Properties Private Limited (GWPPL) has become the Material Non Listed Indian subsidiary of Godrej Properties Limited. As per Clause 49 of the Listing Agreement the Company has appointed Mr. Amit B. Choudhury, Independent Director on the Board of GWPPL.
12. OBJECTS OF THE INITIAL PUBLIC OFFERING
Certain deviations/amendments to the objects of the initial public offering as disclosed on page 43 of the Prospectus of the Company dated December 16, 2009 (the “Prospectus”) have taken place details of which are set forth below:
1. Schedule of deployment
The schedule of deployment of net proceeds as disclosed on page 43 of the Prospectus has undergone change due to the following reasons:
a) Acquisition of land development rights for our Forthcoming Projects
In relation to the property located at Ahmedabad, the Company was required to utilise an amount of Rs. 132.00 crores in fi scal year 2010. The Company has already utilised an amount of Rs. 25 crores in fi scal year 2010 out of the sum of Rs. 132.00 crores. The Company had entered into an agreement to grant development rights dated April 15, 2008 for the said project and thereafter the Company has entered into development agreements for part of the area. It is proposed to enter into a development agreement for the
140
Godrej Properties Limited
DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED ON MARCH 31, 2010
remaining area by March 2011. Accordingly, the Company shall utilise the balance amount of Rs. 107 Crores in fi scal year 2011 as compared to utilizing this amount in fi scal year 2010 as stated in the Prospectus.
In relation to the property located at Kalyan, the Company was required to pay an amount of Rs. 20.00 crores in fi scal year 2010. However, due to the aggregation of the entire 160 acres of land at Kalyan not being completed till date, the Company shall pay the amount of Rs. 20.00 crores in fi scal year 2011 when the aggregation of land is completed.
In relation to the property located at Pune, the Company was required to pay an amount of Rs. 51.00 crores in fi scal year 2010. However, the owners of the property at Pune did not receive a certifi cate of conversion of land to non-agricultural use in fi scal year 2010. Accordingly, the Company shall pay the amount of Rs. 51.00 crores in fi scal year 2011.
b) Construction of our Forthcoming project
In relation to construction of the project located at Chandigarh, the Company was required to utilise an amount of Rs. 75.00 crores from the Net Proceeds. An amount of Rs. 20.00 crores was proposed to be utilised in fi scal year 2010, Rs. 40.00 crores was to be utilised in fi scal year 2011 and
Rs. 15.00 crores was to be utilised in fi scal year 2012. However, there has been delay in implementation of the project at Chandigarh as construction was delayed due to certain approvals not being received in a timely manner and now the activities have been accelerated to complete the project on time. Accordingly, the Company now proposes to utilise an amount of Rs. 60.00 crores in fi scal year 2011 and Rs. 15.00 crores in fi scal year 2012 towards construction of the project.
Further the Company has now assigned the development rights of this project to its subsidiary, Godrej Estate Developers Private Limited (“GEDPL”) and has transferred 49% of the equity share capital of GEDPL to HDFC PMS (under HDFC Asset Management Company Limited Portfolio Management Services Real Estate Portfolio-I, through its Portfolio Manager HDFC Asset Management Company Limited), for a consideration of Rs. 45 Crores. It is now proposed to invest a sum of Rs. 60.00 crores in fi scal year 2011 and Rs. 15.00 crores in fi scal year 2012 in this project through the subsidiary, GEDPL.
In light of the abovementioned changes to the Objects of the Issue it is proposed to amend the utilisation of the Net Proceeds of the IPO as under:
(Rs. in Crores)
S. No.
Expenditure Items Total Estimated Cost
Amount deployed till November 15, 2009
Balance Payable as on November 15, 2009
Proposed to be funded by inter-nal accruals
Amount upto which will be fi nanced from Net Proceeds
Estimated schedule of deployment of Net Proceeds for
FY 2010 FY 2011 FY 2012
1. Acquisition of land development rights for our Forthcoming Projects
444.82 152.50 292.32 Nil 203.00 25.00* 178.00** -
2. Construction of our Forthcoming project
100.84 22.82 78.02 Nil 75.00 -# 60.00#3 15.00
3. Repayment of loans 172.00 Nil 172.00 Nil 150.17 150.17 - -
Total 717.66 175.32 542.34 Nil 428.17 175.17 238.00 15.00
* The Prospectus stated that an amount of Rs. 203.00 crores was proposed to be utilised in fi scal year 2010. Now amended to state that Rs. 25.00 crores was utilised in fi scal year 2010.** The Prospectus stated that no amount was proposed to be utilised in fi scal year 2011. Now amended to state that Rs. 178.00 crores is proposed to be utilised in fi scal year 2011.# The Prospectus stated that an amount of Rs. 20.00 crores was proposed to be utilised in fi scal year 2010, Now amended to state that no amount was utilised in fi scal year 2010 #3 The Prospectus stated that an amount of Rs. 40.00 crores was proposed to be utilised in fi scal year 2011, Now amended to state that the amount of Rs. 60..00 crores is proposed to be utilised
in fi scal year 2011.
13. DIRECTORS:
In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 1956, Mr. Adi B Godrej, Mr. Jamshyd N Godrej, Mr.Pranay Vakil and Dr. Pritam Singh, retire by rotation and being eligible, offer themselves for re-appointment.
The Board of Directors in their meeting held on May 17, 2010, has appointed Mr.K.T. Jithendran and Mr. Amitava Mukherjee as Additional Directors of the Company. They will hold offi ce up to the ensuing Annual General Meeting of the Company. Mr. K. T.Jithendran, was appointed as an Executive Director subject to the approval of the shareholders and Mr. Amitava Mukherjee was appointed as an Independent Director.
14. APPOINTMENT OF AUDITORS:
M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent.
15. COMMITTEES OF DIRECTORS:
a) Audit Committee: The Audit Committee which was constituted pursuant to the provisions of Section
292A of the Companies Act, 1956 and the Listing Agreement has reviewed the Accounts for the year ended March 31, 2010. The members of the Audit Committee are Mr. Keki B. Dadiseth - Chairman, Mrs. Lalita D. Gupte, Mr. Amit B. Choudhury, Mr. Pranay D. Vakil, Dr. Pritam Singh and Mr. S. Narayan, all Independent Directors. The Scope of the Audit Committee has been revised at the meeting of the Board of Directors held on October 24, 2009 to include review and monitoring of the issue proceeds of the public or rights issue.
b) Investor Grievance cum Share Transfer Committee: The Board of Directors in their meeting held on October 24, 2009 re-constituted
the Investor Grievance Cum Share Transfer Committee by appointing Mr. Amit B. Choudhury as a member of the Committee.
c) Management Committee: The Board of Directors in their meeting held on January 22, 2010 has formed the
Management Committee for administrative convenience and for handling day to day affairs of the Company. The Committee comprises of Mr. Adi B. Godrej, Chairman, Mr. Milind S. Korde, Managing Director and Mr. Pirojsha A. Godrej, Executive Director.
16. ADDITIONAL INFORMATION:
(a) In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956 and the rules framed there under, the names and other particulars of employees are required to be set out in the annexure to the Director’s Report. In terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors Report and Accounts are being sent to all the members of the Company excluding the statement of particulars of the employee under Section 217 (2A) of the Companies Act, 1956. Any member interested in obtaining a copy of the annexure may write to the Company Secretary at the Registered Offi ce of the Company.
(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies
Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:
(i) Conservation of Energy: Expenses on account of Energy are negligible. (ii) Technology Absorption: It is an on going process. (iii) Foreign Exchange Earnings & Outgo:
During 2009-10, expenditure in foreign currencies amounted to Rs. 667.52 Lakhs/- (Previous Year Rs. 482.52 Lakhs) on account of travelling and expenses incurred for business promotion.
The Company has not earned any Foreign Exchange during the year.
17. GROUP FOR INTERSE TRANSFER OF SHARES:
As required under Clause 3(1) (e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, persons constituting Group (within the meaning as defi ned in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of the aforesaid SEBI Regulations are given in Annexure B attached herewith and forms a part of this Report.
18. DIRECTORS’ RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2A) of the Companies Act, 1956, Your Directors based on the representation received from the Operation Management, and after due enquiry confi rms :
(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;
(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year ended March 31, 2010 and of the profi t of the Company for that year;
(iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the annual accounts on a going concern basis.
19. ACKNOWLEDGEMENT:
Your Directors wish to place on record, sincere thanks to the Government, Government agencies, Banks, Financial Institutions, Joint Venture Partners, Customers, Shareholders, Fixed Deposit Holders, Vendors, and other related organizations who through their continued support and co-operation, have helped, as partners, in your Company’s progress.
For and on behalf of the Board of Directors Adi. B. Godrej
Chairman
Mumbai,Date: June 4, 2010
141
Annual Report 2009–2010
ANNEXURE ADisclosure Relating To Employees Stock Option Plan
Particulars Details
Options granted 442,700
Exercise price of options Rs. 620 per share plus interest at a compounding rate of 10 % per annum or at such other rate as may be defi ned by the Remuneration Committee and intimated to the option grantees. In addition to it, such other amount as intimated by the Remuneration Committee from time to time viz. amount of stamp duty and trusteeship fees will be recoverable from the employees.
Total options vested Nil
Options exercised Nil
Total number of Equity Shares that would arise as a result of full exercise of options already granted 442,700
Options forfeited/ lapsed/ cancelled 39,000
Variations in terms of options Nil
Money realised by exercise of options Nil
Options outstanding (in force) 403,700
Vesting schedule Options shall vest in the eligible employees under the ESOP within such period as may be prescribed by the Remuneration Committee, which period shall not be less than one year and may extend upto three years from the date of grant of options. The Remuneration Committee of the Company at its meeting held on December 24, 2007 has decided that the above mentioned options would be vested in the employees on December 27, 2010. Further there is a change in the vesting schedule for the grants made on or after March 10, 2010, the said vesting schedule is provided herein after.
Person wise details of options granted to
i) Directors and key management employees Please see Note 1 below
ii) Any other employee who received a grant in any one year of options amounting to 5% or more of the options granted during the year
Nil
iii) Identifi ed employees who are granted options, during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant
Nil
Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise ofoption calculated in accordance with Accounting Standard (AS) 20 ‘Earnings Per Share’.
There is no fresh issue of shares on exercise of option therefore the same is not applicable.
Difference between employee compensation cost using the intrinsic value method and the employee compensation cost that shall have been recognised if the Company has used fair value of options and impact of this difference on profi ts and EPS of the Company
Nil
Weighted average exercise prices and weighted average fair values of options whose exercise price either equals or exceeds or is less than the market price of the stock Weighted average exercise price is Rs. 620 per share plus interest
Description of the method and signifi cant assumptions used during the year to estimate the fair values of options, including weighted-average information, namely, risk-free interest rate, expected life, expected volatility, expected dividends and the price of the underlying share in market at the time of grant of the option
N.A.
Lock-in Three years from the date of grant i.e., December 28, 2007
Impact on profi ts of the last three years and on the EPS of the last three years if the issuer had followed the accounting policies specifi ed in clause 13 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 in respect of options granted in the last three years
Nil
Details regarding options granted to our Directors and our Key Management Personnel are set forth below:
Name Position Number of options granted under ESOP
Mr. Milind S. Korde Managing Director 60,000
Mr. K. T. Jithendran Executive Director 30,000
Mr. Nishikant Shimpi Executive Vice President (Bangalore region) 20,000
Mr. K. P. Sudheer Vice President (Mumbai region) 20,000
Mr. Nitin Wagle Vice President (Operations) 10,000
Mr. Shodhan A. Kembhavi Vice President (Legal) and Company Secretary 10,000
Mr. Rajendra Khetawat Vice President (Finance and Accounts) 10,000
Mr. Santosh Tamhane Vice President (Projects) 10,000
Ms. Krishnakoli S. Kumar Vice President (Marketing and Sales) 10,000
Ms. Aylona D’Souza Vice President (Human Resources and Administration) 7,000
Amendments to the Employee Stock Option Scheme:The Shareholders had vide special resolution passed by Postal Ballot on March 10, 2010 approved the following amendments to the Godrej Properties Limited Employees Stock Option Plan (GPL ESOP). The following amendments would be effective for the grants made on or after March 10, 2010.1. Grant additional options to the extent of 50% to the employees who have been granted options in December 2007.2. Grant options to new employees and additional options to the old employees on account of promotions.3. Allot options in 3 tranches for new employees (who have joined after December 2007) fi rst on the date of joining, second on completion of one year and third on completion of two years.4. Curtail the vesting period proportionately for employees who have joined or who have been promoted between December 2007 to December 2009, and for additional allotments to existing
employees.5. Change the defi nition of exercise price from: ‘‘The Market Price plus Interest at such a rate not being less than the Bank Rate then prevailing compoundable on an annual basis for the period commencing from the date of Granting of the
Option and ending on the date of intimating Exercise of the Option to the Company" to “Grant price plus interest at such rate as may be decided from time to time compoundable on an annual basis, for the period commencing from the date of granting of the options and ending
on the date of intimating exercise of the option to the Company plus all other expenses as may be incurred by the Company to give effect to the GPL ESOP ” where “Grant Price” means higher of market price or average cost of shares purchased by the Trust for that specifi c grant, including any unalloted shares lying with the Trust if utilized for that specifi c grant, plus interest on the loan taken to purchase the said shares at such rate as may be decided from time to time and compoundable on annual basis till the date of grant.”
6. The GPL ESOP Trust shall purchase not more than 4,30,000 equity shares at any one point of time.7. The maximum equity shares that can be purchased by GPL ESOP Trust for grant of options under the scheme will be 15,00,000 equity shares including 4,42,700 equity shares already purchased
by the trust.
142
Godrej Properties Limited
ANNEXURE B
“Group” for interse transfer of shares under clause 3(1) (e) of the Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
Godrej Industries Limited 1) Godrej & Boyce Manufacturing Co. Ltd.2) Ensemble holdings & Finance Ltd. 3) Godrej Investments Private Ltd.4) Godrej Efacec Automation & Robotics Ltd.5) Veromatic International BV 6) Water Wonder Benelux BV 7) Wadala Commodities Ltd.8) Swadeshi Detergents Ltd.9) Natures’s Basket Ltd. 10) Godrej Hershey 11) Ltd.
Godrej Consumer Products Ltd. 12) Godrej Agrovet Ltd.13) Golden Feed Products Ltd.14) Godrej Oil Palm Ltd. 15) Cauvery Palm Oil 16) Ltd. Godrej Infotech Ltd.17) Geometric Ltd.18) Mercury Mfg. Co. Ltd.19) Godrej (Malaysia) Sdn. Bhd.20) Godrej (Singapore) Pte. Ltd.21) Godrej International Ltd.22) Veromatic Services BV 23) Boston Analytics Inc., USA24) CBay Systems Limited, USA25) HyCa Technologies Pvt. Ltd. 26) Bahar Agrochem & Feeds Pvt. Ltd.27) Vora Soaps 28) Ltd.
Godrej Sara Lee 29) Ltd.
Godrej Consumer Products (UK) Ltd.30) Keyline Brands 31) Ltd.
Rapidol (Pty) Ltd.32)
Godrej Global Mid East FZE33) Godrej Consumer Products Mauritius 34) Ltd.
Godrej Kinky Holding 35) Ltd.
Kinky Group Pty. Ltd.36) Godrej Hygiene Products 37) Ltd.
Cartini India Ltd.38) Godrej Holdings Pvt. Ltd.39) Godrej (Vietnam) Co.Ltd.40) ABG Venture LLP 41) NBG Enterprise LLP 42) JNG Enterprise LLP 43) SVC Enterprise LLP 44) RKN Enterprise LLP 45) Godrej & Boyce Enterprise LLP 46) Mr. Adi B. Godrej47) Mr. Jamshyd N. Godrej48) Mr. Nadir B. Godrej 49) Mr. Pirojsha A. Godrej 50) Mr. Rishad K. Naoroji 51) Ms. Freyan V. Crishna 52) Mr. Navroze J. Godrej 53) Ms. Nyrika V. Crishna 54) Ms. Raika J. Godrej 55) Ms. Tanya Arvind Dubash 56) Ms. Nisaba A. Godrej 57) Master Burjis Nadir Godrej58) Mst. Hormuzd N. Godrej59) Mrs. Rati Nadir Godrej60) Mr. Sohrab Nadir Godrej61) Ms. Parmeshwar A. Godrej62) Mrs. Smita V. Crishna63) Mrs. Pheroza Godrej64) Mr. V. M. Crishna65)
143
Annual Report 2009–2010
ANNEXURE TO THE AUDITORS REPORTReferred to in paragraph (3) of our report of even date.1) (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fi xed assets. (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets
at periodic intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the Company and the nature of its assets.
(c) In our opinion, the disposal of fi xed assets during the year does not affect the going concern assumption.
2) (a) The Management has conducted physical verifi cation of inventory at reasonable intervals.
(b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifi cation.
3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.
(b) Consequently, the question of commenting on the rates of interest, terms and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and interest and reasonable steps for recovery of the same does not arise.
(c) The Company has taken unsecured loans amounting to of Rs. 650 lakh from two companies covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 550 lakh and year-end balance of loans taken from such parties is Rs. Nil.
(d) The rate of interest and the other terms and conditions of the unsecured loans taken were 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 purchase of inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.
5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist.
6) In our opinion and according to the information and explanations given to us, the Company has complied with directives issued by the Reserve Bank of India and the provisions of Section 58A and 58AA of the Companies Act, 1956, and the rules framed there under, in respect of the deposit accepted from the public.
7) The Company has an internal audit system which in our opinion is commensurate with the size of the Company and nature of its business.
8) In our opinion and according to the information and explanation given to us the Central Government has not prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company.
9) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues applicable to it with the appropriate authorities. According to the
information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March, 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Income Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty, Wealth Tax, Excise Duty or Cess on account of any dispute other than the following:
Sr. No. Name of the Statute Amount Forum where dispute is pending1 Income Tax Act, 1961 3,369,812/- Commissioner of Income Tax (Appeals)
10) The Company does not have accumulated losses at the end of the fi nancial year and has not incurred any cash losses in the current and immediately preceding fi nancial years.
11) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to banks. The Company does not have dues to fi nancial institutions or outstanding debentures.
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 benefi t fund/ societies.
14) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of the transactions and contracts in respect of investments purchased and sold during the year and timely entries have been made therein .The investments made by the Company are held in its own name.
15) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and other fi nancial institutions.
16) According to the information and explanations given to us and based on the documents and records examined by us, on an overall basis, the term loan has been applied for the purpose for which the loan were obtained.
17) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investment.
18) The Company has not made 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) We have verifi ed the end use of money raised by public issue as disclosed in Note 2 of Schedule
19. Pending utilization of the funds raised through public issue, a sum of Rs. 25,559.01 lakh has been temporarily invested in Mutual Funds and Bank Deposits.
21) Based on the audit procedures performed and information and explanations given by the Management, we report that no fraud on or by the Company has been noticed or reported during the year.
For and on behalf ofKALYANIWALLA & MISTRY CHARTERED ACCOUNTANTSFirm Registration No. 104607W
ERMIN K. IRANIPARTNERMembership No. 35646Place: MumbaiDated: May 17, 2010
REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ PROPERTIES LIMITED1. We have audited the attached Balance Sheet of GODREJ PROPERTIES LIMITED, as at 31st March, 2010, the
Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: a) We have obtained all the information and explanations, which to the best of our knowledge and belief
were necessary for the purpose of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as
appears from our examination of such books. c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are
in agreement with the books of account. d) In our opinion, the Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by
this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.
e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(f) of Schedule 19-Notes to Accounts, in respect of projects under long term contracts undertaken and/or fi nanced by the Company, we have relied upon the management’s estimates of the percentage of completion, costs to completion and on the projections of revenues expected from projects owing to the technical nature of such estimates, on the basis of which profi ts/losses have been accounted, interest income accrued and realizability of the construction work in progress and project advances determined.
5. a) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 9a of Schedule 19-Notes to Accounts, regarding a loan of Rs.3751.19 lakh to the GPL ESOP Trust for purchase of the Company’s shares from Godrej Industries Ltd. equivalent to options granted under an Employee Stock Option Plan. As at 31st March, 2010, the market value of the shares held by the GPL ESOP Trust is lower than the cost of acquisition of the shares by Rs.1177.50 lakh. The repayment of the loans granted to the GPL ESOP Trust is dependant on the exercise of the options by the employees and the market price of the underlying equity shares of the unexercised options at the end of the exercise period. In the opinion of the management, the fall in value of the underlying equity shares is on account of current
market volatility and the loss, if any, can be determined only at the end of the exercise period, in view of which provision for the diminution is not considered necessary in the fi nancial statements.
b) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 9b of Schedule 19-Notes to Accounts, regarding a loan of Rs.709.74 lakh to GIL ESOP Trust for purchase of the Holding Company’s shares from the market equivalent to options granted under an Employee Stock Option Plan. As at 31st March, 2010, the market value of the shares held by the GIL ESOP Trust is lower than the cost of acquisition of the shares by Rs.290.16 lakh. The repayment of the loans granted to the GIL ESOP Trust is dependant on the exercise of the options by the employees and the market price of the underlying equity shares of the unexercised options at the end of the exercise period. In the opinion of the management, the fall in value of the underlying equity shares is on account of current market volatility and the loss, if any , can be determined only at the end of the exercise period, in view of which provision for the diminution is not considered necessary in the fi nancial statements.
6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; ii) in the case of the Profi t and Loss Account, of the profi t of the Company for the year ended on that date
and iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that
date.7. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on
record by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
For and on behalf ofKALYANIWALLA & MISTRY CHARTERED ACCOUNTANTSFirm Registration No. 104607W
ERMIN K. IRANIPARTNERMembership No. 35646Place: MumbaiDated: May 17, 2010
144
Godrej Properties Limited
BALANCE SHEET AS AT 31ST MARCH, 2010
The Schedules referred to above form an integral Signatures to the Balance Sheetpart of the Balance Sheet and Schedules 1 to 12 and 19
As per our Report of even date.For and on behalf ofKALYANIWALLA & MISTRY Adi. B. GODREJ MILIND S. KORDEChartered Accountants Chairman Managing Director
ERMIN K. IRANI SHODHAN A. KEMBHAVIPartner Company Secretary
Mumbai, Dated : May 17, 2010
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31STMARCH, 2010
The Schedules referred to above form an integral Signatures to the Profi t and Loss Accountpart of the Profi t and Loss Account and Schedules 13 and 19
As per our Report of even date.For and on behalf ofKALYANIWALLA & MISTRY Adi. B. GODREJ MILIND S. KORDEChartered Accountants Chairman Managing Director
ERMIN K. IRANI SHODHAN A. KEMBHAVIPartner Company Secretary
Mumbai, Dated : May 17, 2010
SCHEDULES FORMING PART OF THE ACCOUNTS
Schedule For the year ended
For the year ended
31.03.2010 31.03.2009
Rupees Rupees
INCOME
Sales 1,123,900,693 1,259,401,567
Operating Income 13 1,019,813,958 685,207,029
Other Income 14 1,426,460,639 421,112,992
TOTAL INCOME 3,570,175,290 2,365,721,588
EXPENDITURE
Cost of sales 15 1,038,528,297 644,528,613
Employee Remumeration & Benefi ts 16 106,851,547 37,508,060
Administration Expenses 17 141,490,427 99,708,180
Interest & Finance Charges 18 671,317,930 512,956,238
Depreciation 24,528,123 10,677,865
1,982,716,324 1,305,378,956
Profi t for the year 1,587,458,966 1,060,342,632
Provision for Taxation
for Current Tax (366,983,000) (312,400,000)
for Fringe Benefi t Tax - (1,650,000)
for Deferred Tax (2,064,500) 1,061,000
Profi t After Tax 1,218,411,466 747,353,632
Less : Prior years tax adjustments (2,137,248) (10,101,372)
Surplus brought forward 751,069,518 265,538,964
Amount Available for Appropriation 1,967,343,736 1,002,791,224
Less :
Proposed Dividend 279,400,036 151,050,648
Dividend Distribution Tax 46,404,854 25,671,058
Transfer to General Reserve 122,000,000 75,000,000
Surplus carried forward to Balance Sheet 1,519,538,846 751,069,518
Earnings per share Basic/ Diluted in Rs. (Refer Note 10) 19.31 12.20
NOTES TO ACCOUNTS & ACCOUNTING POLICIES 19
Schedule As at 31.03.2010
As at 31.03.2009
Rupees Rupees
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
Share Capital 1 698,500,090 604,202,590
Reserves & Surplus 2 7,455,718,586 2,377,875,458
LOAN FUNDS
Secured Loans 3 1,284,680,753 2,566,929,456
Unsecured Loans 4 3,264,337,035 1,903,589,895
12,703,236,464 7,452,597,399
APPLICATION OF FUNDS
FIXED ASSETS 5
Gross Block 165,480,100 75,040,934
Less: Depreciation 60,419,981 37,313,275
Net Block 105,060,119 37,727,659
Capital Work-In-Progress / Advances - 32,536,657
105,060,119 70,264,316
INVESTMENTS 6 2,477,723,964 557,189,373
DEFERRED TAX ASSET 2,794,500 4,859,000
CURRENT ASSETS, LOANS & ADVANCES
Inventories 7 1,435,939,077 525,039,067
Sundry Debtors 8 1,377,092,002 1,140,203,131
Cash & Bank Balances 9 723,493,415 147,337,283
Loans & Advances 10 8,214,075,359 5,886,785,733
11,750,599,853 7,699,365,214
LESS: CURRENT LIABILITIES & PROVISIONS
Current Liabilities 11 1,268,608,022 682,915,473
Provisions 12 364,333,950 196,165,031
1,632,941,972 879,080,504
NET CURRENT ASSETS 10,117,657,881 6,820,284,710
12,703,236,464 7,452,597,399
NOTES TO ACCOUNTS & ACCOUNTING POLICIES 19
As at 31.03.2010
Rupees
As at 31.03.2009
Rupees
SCHEDULE 1
SHARE CAPITAL
AUTHORISED
100,000,000 Equity Shares of Rs. 10/- each 1,000,000,000 1,000,000,000
1,000,000,000 1,000,000,000
ISSUED, SUBSCRIBED & PAID UP
69,850,009 Equity Shares of Rs. 10/- each fully paid up. 698,500,090 604,202,590
(Of the above 48,495,209 (previous year 48,495,209) shares are held
by Godrej Industries Ltd., the Holding Company)
Of the above 54,239,845 (previous year 54,239,845) shares issued as
Bonus shares by capitalising Share Premium, General Reserve &
Profi t & Loss Account
698,500,090 604,202,590
As at 31.03.2010
Rupees
As at 31.03.2009
Rupees
SCHEDULE 2
RESERVES & SURPLUS
Share Premium As per last Balance Sheet 1,475,805,940 1,475,805,940
Add : Received during the year 4,594,173,800 -
Less : Utilised for Initial Public Issue expenses 406,800,000 -
5,663,179,740 1,475,805,940
General Reserve - As per last Balance Sheet 151,000,000 76,000,000
Add : Transfer from Profi t & Loss Account 122,000,000 75,000,000
273,000,000 151,000,000
Profi t and Loss Account 1,519,538,846 751,069,518
7,455,718,586 2,377,875,458
145
Annual Report 2009–2010
SCHEDULES FORMING PART OF THE ACCOUNTS
As at 31.03.2010
Rupees
As at31.03.2009
RupeesSCHEDULE 6 : INVESTMENTSAt CostLong TermQuoted Investments100 Equity Shares of Rs.10/- each of 742 742 Alacrity Housing Limited100 Equity Shares of Rs.10/- each of - 616 Alsa Construction & Housing Limited(Written off during the year)100 Equity Shares of Rs.10/- each of 1,066 1,066 Ansal Buildwell Limited100 Equity Shares of Rs.10/- each of 1,366 1,366 Ansal Housing & Construction Limited600 Equity Shares of Rs.5/- each of 3,081 3,081 Ansal Properties & Infrastructure Limited100 Equity Shares of Rs.10/- each of 1,241 1,241 Lok Housing & Construction Limited100 Equity Shares of Rs.10/- each of 1,641 1,641 Global Infrastructure & Technologies Limited(Formerly Known as Mantri Housing & Construction Limited)100 Equity Shares of Rs.10/- each of 1,516 1,516 Premier Energy & Infrastructure Limited(Formerly Known as Premier Hsg & Industrial Ent Limited)100 Equity Shares of Rs.10/- each of 891 891 D.S. Kulkarni Developers13,000 Equity Shares of Rs.2/- each of 6,366 6,366 Unitech LimitedSCHEDULE 6 : INVESTMENTS (Contd.)72 Equity Shares of Rs.10/- each of 2,485 2,485 The Great Eastern Shipping Company Limited18 Equity Shares of Rs.10/- each of 621 621 The Great Offshore Limited
As at 31.03.2010
Rupees
As at31.03.2009
Rupees1,000 Equity Shares of Re.1/- each of 266 266 Radhe Developers Limited(900 Shares are received on Split of Face Value Per Share from Rs. 10/- to Re. 1/-)23,700 Equity Shares of Rs.10/- each of 2,370 2,370 United Textiles Limited
23,652 24,268 Less : Provision for Dimunition in Value 7,564 7,765
16,088 16,503 Unquoted Investments 1,000 Equity Shares of Rs.10/- each of 10,000 10,000 Saraswat Co-operative Bank Limited25,000 Equity Shares of Rs.10/- each of 2,500 2,500 Amitabh Bachchan Corporation LimitedInvestments In Subsidiary Companies510,000 Equity Shares of Rs.10/- each ofGodrej Realty Pvt. Ltd. 5,100,000 5,100,000 1% Secured Redeemable optionally Convertible Debentures 76,500,000 76,500,000 Godrej Realty Pvt. Ltd.510,000 Equity Shares of Rs.10/- each ofGodrej Waterside Properties Pvt. Ltd. 5,100,000 5,100,000 1% Secured Redeemable optionally Convertible Debentures ofGodrej Waterside Properties Pvt. Ltd. 147,900,000 147,900,000 388,636 (Previous Year 50,000 Equity Shares of Rs. 10 Each) Equity Shares of Re.1/- each ofGodrej Seaview Properties Pvt. Ltd. 388,636 500,000 50,000 Equity Shares of Rs.10/- each ofGodrej Real Estate Pvt. Ltd. 500,000 500,000 34,032 (Previous Year 50,000) Equity Shares of Rs.10/- each ofGodrej Developers Pvt. Ltd. 340,320 340,320 103,592 (Previous Year 203,120) Equity Shares of Rs. 10/- each ofHappy Highrises Limited 163,568,489 320,720,050 25,500 (Previous Year 50,000) Equity Shares of Rs.10/- each of
As at 31.03.2010
Rupees
As at 31.03.2009
Rupees
SCHEDULE 3
SECURED LOANS
1) Cash Credit / Working Capital Demand Loan 1,284,680,753 1,966,929,456
(Secured by equitable mortgage of immovable property
of the Company's Project at Juhu, Mumbai)
2) Short Term Loan from Banks
(Secured by way of equitable mortgage of its interest, - 600,000,000
in the immovable property of the project undertaken
by the Company at Chandigarh
1,284,680,753 2,566,929,456
Of the above,
Repayable within a year (Other than cash credit accounts) - 600,000,000
As at 31.03.2010
Rupees
As at 31.03.2009
Rupees
SCHEDULE 4
UNSECURED LOANS
Fixed Deposits 748,943,000 -
Banks 2,515,394,035 1,883,589,895
Companies - 20,000,000
3,264,337,035 1,903,589,895
Of the above,
Repayable within a year (other than cash credit accounts) 2,440,193,000 1,903,589,895
SCHEDULE 5 : FIXED ASSETSGROSS BLOCK DEPRECIATION NET BLOCK
ASSETS As at 1st April, 2009
Rs.
Additions
Rs.
Deductions
Rs.
As at31st March,
2010Rs.
As at 1st April, 2009
Rs.
For the Year
Rs.
Deductions
Rs.
As at31st March
2010Rs.
As at31st March
2010Rs.
As at 31st April, 2009
Rs.Tangible AssetsBuilding - 17,031,600 - 17,031,600 - - - - 17,031,600 - Leasehold Improvement 12,844,708 15,981,411 - 28,826,119 8,667,024 6,809,838 - 15,476,862 13,349,257 4,177,684 Offi ce Equipment 10,799,115 7,158,788 461,606 17,496,297 3,369,810 1,754,256 88,171 5,035,895 12,460,402 7,429,305 Site Equipments 2,072,120 - - 2,072,120 1,593,219 66,615 - 1,659,834 412,286 478,901 Furniture & Fixtures 13,237,691 3,816,383 217,574 16,836,500 6,375,541 1,693,702 132,554 7,936,689 8,899,811 6,862,150 Computer 20,871,953 3,486,202 424,622 23,933,533 12,672,051 4,036,212 125,607 16,582,656 7,350,877 8,199,902 Motor Vehicle 6,654,645 6,526,978 1,888,069 11,293,554 2,421,065 2,117,664 1,075,088 3,463,641 7,829,913 4,233,580 Intangible AssetsLicenses & Software 8,560,702 39,429,675 - 47,990,377 2,214,568 8,049,836 - 10,264,404 37,725,973 6,346,134 Total 75,040,934 93,431,037 2,991,871 165,480,100 37,313,278 24,528,123 1,421,420 60,419,981 105,060,119 37,727,657 Previous Year 54,138,926 22,141,833 1,239,825 75,040,934 27,357,996 10,677,865 722,584 37,313,278 37,727,657 Capital Work-in-progress - 32,536,657
TOTAL 105,060,119 70,264,314
146
Godrej Properties Limited
SCHEDULES FORMING PART OF THE ACCOUNTSAs at
31.03.2010 Rupees
As at31.03.2009
RupeesSCHEDULE 6 : INVESTMENTS (Contd.)Godrej Estate Developers Pvt. Ltd. 255,000 500,000 Total Long Term Investments 399,681,033 557,189,373 Current Investments(In Debt Mutual Funds) - Refer Note 235050618.61 Units Kotak Floater - LT - Daily Dividend Reinvest 353,303,226 - 19468215.87 Units JPMorgan India Treasury Fund - Super IP - Daily Dividend Reinvest 194,855,426 - (Purchased 3,52,85,408.57 Units and Sold 1,58,17,192.70 Units)192892.196 Units Reliance Money Manager Fund - IP - Dly Dividend Reinvest 193,111,414 - (Purchased 3,52,702.278 Units and Sold 1,59,810.082 Units)3341176.86 Units ICICI Prudential Flexible Income Plan - Premium - Daily Dividend Reinvest
353,279,335 -
35351542.24 Units LIC MF Savings Plus Fund - Dly Dividend Reinvest 353,515,422 - 35217481.74 UnitsHDFC Cash Mgmt Fund - Treasury Advantage - WP - Dly Div Reinvest 353,284,168 - 25230374.17 UnitsIDFC Money Manager - Treasury Plan - Plan C - Dly Dividend Reinvest 252,341,587 - 2434480.63 UnitsFORTIS Money Plus Fund - IP - Daily Dividend Reinvest 24,352,353 - Total Current Investments 2,078,042,931 - Total Investments 2,477,723,964 557,189,373
1. Cost of Quoted Investments 23,652 24,268 2. Market Value of Quoted Investments 1,142,410 611,739 SCHEDULE 7 : INVENTORIESStock in trade (Refer Note 4) 4,816,919 3,628,193 Construction Work in progress 1,431,122,158 521,410,874
1,435,939,077 525,039,067 SCHEDULE 8 : SUNDRY DEBTORS (UNSECURED, CONSIDERED GOOD)
Due over Six months 822,054,523 834,666,553 Others (includes unbilled revenue of Rs. 348,931,645/- 555,037,479 305,536,578 Previous year Rs. 13,349,711/-) 1,377,092,002 1,140,203,131 SCHEDULE 9 : CASH & BANK BALANCESCash & Cheques-in-Hand 6,381,985 66,444,003 Balance with Scheduled Banks - on Current Accounts 178,010,937 42,959,442 - on Fixed Deposit Accounts 539,100,493 37,933,838 (Refer Note 2 & 5) 723,493,415 147,337,283 SCHEDULE 10 : LOANS & ADVANCES (UNSECURED, CONSIDERED GOOD)Advances recoverable in cash or in kind or for value to be received (Refer Note 6(a), 6(b)) 4,178,949,152 2,501,432,277 Loan to GIL ESOP Trust 70,974,033 89,091,768 Loan to GPL ESOP Trust 375,119,478 282,842,884 Due on Management Projects (Refer Note 6(c)) 677,718,723 870,480,333
Development Manager Fees Accrued but not due (Refer Note 7 (b) 60,230,839 60,230,839
Interest Accrued 75,236,194 67,412,273 Deposits 2,775,846,940 2,015,295,359 8,214,075,359 5,886,785,733 SCHEDULE 11 : CURRENT LIABILITIESSundry Creditors (Refer Note 11) 485,786,105 103,978,759 Investor Education and Protection Fund - -Advances received against sale of fl ats 220,256,051 5,707,812 Deposits 250,590 250,590 Unclaimed Fixed Deposits 183,000 761,000 Other liabilities 433,284,414 529,652,976 Due to Management Projects 128,847,862 42,564,336
1,268,608,022 682,915,473 SCHEDULE 12 : PROVISIONSFor Taxation 18,907,926 7,093,175 (Net of Advance Tax & Tax of deducted at source of Rs. 1,351,335,693/-, Previous Year Rs. 994,065,196/-)Proposed Dividend 279,400,036 151,050,648 Tax on Dividend 46,404,854 25,671,058 Gratuity 7,625,984 6,450,060 Leave Encashment 11,995,150 5,900,090
364,333,950 196,165,031
For the period ended
31.03.2010 Rupees
For the period ended
31.03.2009 Rupees
SCHEDULE 13 : OPERATING INCOME (GROSS)
Income From Development Projects 227,228,811 188,348,882
Compensation Received from Project 70,000,000 3,900,000
Project Management fees 3,888 31,676
Other Income from Customers 14,552,183 8,486,786
Lease Rent 14,400 14,400
Licence Fees 12,000 12,000
Interest Income
- Customers 2,250 82,879
- Projects and landlords 659,090,950 425,219,562
- Others 48,909,476 59,110,844
1,019,813,958 685,207,029
Tax Deducted at source 61,459,829 94,282,458
SCHEDULE 14 : OTHER INCOME
Dividends 24,417,754 7,469
Profi t on sale of Fixed Assets (Net) 5,932 -
Profi t on sale of Long Term Investments 1,398,581,955 419,903,138
Miscellaneous Income 3,454,998 1,202,385
1,426,460,639 421,112,992
SCHEDULE 15 : COST OF SALES
Own Projects
Opening Stock: 525,039,070 115,552,452
Add : Expenditure/ Transfers from Advances during the period
Stock-In-Trade Acquired during the year 317,741,314 -
Development Rights 115,882,000 100,000,000
Construction, Material & Labour 974,292,348 474,430,413
Architect Fees 75,974,660 52,628,095
Advertisement Expenses 41,859,043 7,481,511
Overheads 377,376,685 270,052,154
Interest 305,833,636 149,423,052
2,208,959,686 1,054,015,225
Less : Project transferred to Subsidiary Company (259,531,382) -
Less : Closing Stock: (1,435,939,077) (525,039,070)
1,038,528,297 644,528,613
1,038,528,297 644,528,613
SCHEDULE 16 : EMPLOYEE REMUNERATION & BENEFITS
Salaries, Bonus, Gratuity & Allowances 98,665,676 30,994,798
Contribution to Provident & other funds 8,185,871 6,489,379
Other Employee Benefi ts - 23,883
106,851,547 37,508,060
SCHEDULE 17 : ADMINISTRATION EXPENSES
Cost of Project Management 187,177 1,321,416
Consultancy Charges 7,094,890 7,861,766
Service Charges 135,478 98,139
Loss on sale of Fixed Assets (Net) - 17,548
Power & Fuel 4,445,260 3,516,734
Rent 28,094,016 10,971,849
Insurance 234,543 263,030
Rates & Taxes 119,371 21,284
Repairs & Maintenance 19,472,695 235,645
Other Operating Expenses 81,706,582 75,400,769
Dimunition in value of investments written back 415 -
141,490,427 99,708,180
SCHEDULE 18 : INTEREST AND FINANCE CHARGES
Interest Paid
- Banks 526,978,921 406,638,640
- Inter Corporate Deposits 8,234,384 1,566,422
- Projects and landlords 76,841,766 64,905,596
- Others 32,952,168 2,142,981
Total Interest Paid 645,007,239 475,253,639
Add : Brokerage & other Financial charges 26,310,691 37,702,599
Total Interest/ Finance Charges Paid 671,317,930 512,956,238
147
Annual Report 2009–2010
SCHEDULES FORMING PART OF THE ACCOUNTSSCHEDULE 19 : NOTES TO ACCOUNTS & ACCOUNTING POLICIES1) Accounting Policies:
a) General
The fi nancial statements are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.
b) Fixed Assets
Fixed assets are stated at cost of acquisition or construction less accumulated depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.
Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.
c) Depreciation/Amortization
Depreciation has been provided on Written Down Value basis, at the rates specifi ed in Schedule XIV of the Companies Act, 1956.
Assets acquired on lease are depreciated over the period of the lease.
Leasehold improvements are amortized over a period of lease or fi ve years whichever is less.
Intangible Assets are amortized over a period of six years.
d) Investments
Investments are classifi ed into long term and current investments.
Long-term investments are carried at cost. Provision for diminution, if any, in the value of each long-term investment is made to recognize a decline, other than of a temporary nature.
Current investments are carried individually at lower of cost and fair value and the resultant decline, if any, is charged to revenue.
e) Inventories
Inventories are valued as under:
Completed Flats
Construction Work-in-Progress
- At lower of Cost or Market value
- At cost Construction Work-in-Progress includes cost of land, premium for development
rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.
f) Revenue Recognition
The Company is following the “Percentage of Completion Method” of accounting. As per this method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project / activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.
Revenue on bulk deals on sale of its properties is recognized on execution of documents.
Income from operation of commercial complexes is recognized over the tenure of the lease/service agreement.
Interest income is accounted on an accrual basis at contracted rates.
Dividend income is recognized when the right to receive the same is established.
g) Development Manager Fees
The Company has been entering into Development & Project Management agreements with landlords. Accounting for income from such projects is done on accrual basis on percentage of completion or as per the terms of the agreement.
h) Employee Benefi ts
a) Short-term employee benefi ts:
All employee benefi ts payable wholly within twelve months of rendering the service are classifi ed as short term employee benefi ts. Benefi ts such as salaries, wages, performance incentives, etc. are recognized at actual amounts due in the period in which the employee renders the related service.
b) Post-employment benefi ts:
(i) Defi ned Contribution Plans:
Payments made to defi ned contribution plans such as Provident Fund are charged as an expense as they fall due.
(ii) Defi ned Benefi t Plans:
The cost of providing benefi ts i.e. gratuity is determined using the Projected Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Profi t & Loss Account.
The fair value of the plan assets is reduced from the gross obligation under the defi ned benefi t plan, to recognize the obligation on net basis.
Past service cost is recognized as expense on a straight-line basis over the average period until the benefi ts become vested.
(iii) Other long-term employee benefi ts:
Other long-term employee benefi ts viz., leave encashment is recognized as an expense in the profi t and loss account as and when they accrue. The Company determines the liability using the Projected Unit Credit Method, with actuarial valuations carried out as at the balance sheet date. Actuarial gains and losses in respect of such benefi ts are charged to the profi t and loss account.
i) Borrowing Cost
Interest and fi nance charges incurred in connection with borrowing of funds, which are incurred for the development of long term projects are transferred to Construction Work in Progress / Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost / rates as per Agreements respectively.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
j) Earnings Per Share
The basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
k) Provision For Taxation
Tax expense comprises both current and deferred tax.
Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates and tax laws.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
l) Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are translated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profi t and Loss Account.
m) Allocation of Expenses
Corporate Employee Remuneration and Administration expenses are allocated to various projects on a reasonable basis as estimated by the management.
n) Provisions and Contingent Liabilities
Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
2) The Initial Public Offer (IPO) proceeds have been utilized as per objects of the issue as stated in the prospectus as under:
Particulars (Rs. in Lacs)
Amount Received from IPO 46,884.71
Utilization of Funds upto March 31, 2010
Funding to part fi nance the acquisition of land developments rights and construction costs
2,500.00
Repayment of Loans 15,017.00
Issue Expenses 3,808.70
Balance unutilised Amount temporarily invested in
Mutual Funds 20,559.01
Fixed Deposit / Bank Balance 5,000.00
TOTAL 46,884.71 As on 31st March 2010, unutilized funds have been temporarily invested in mutual funds
schemes and fi xed deposit / balance with banks as mentioned in the prospectus of the Company.
148
Godrej Properties Limited
SCHEDULES FORMING PART OF THE ACCOUNTS
3) Contingent Liabilities:
Matters As at 31st March 2010
(Rs.)
As at 31st March 2009
(Rs.)a) Uncalled amount of Rs. 80/- & Rs. 30/- on 70
& 75 partly paid shares respectively of Tahir Properties Limited
7,850/- 7,850/-
b) Claims against the company not acknowledged as debts represents cases fi led by parties in the Consumer forum and High Court and disputed by the Company as advised by our advocates. In the opinion of the management the claims are not sustainable
798,647/- 6,523,647/-
c) Claims against the Company under the Labour Laws for disputed cases
1,989,240/- 2,989,240/-
d) Guarantees given by Bank, counter guaranteed by the Company
30,500,000/- 20,100,000/-
e) Claims against the Company under Bombay Stamp Act, 1958
14,850,000/- 14,850,000/-
f) Other Claims against the Company not acknowledged as debts
9,925,000/- NIL
g) Claims against the Company under Income Tax Act, Appeal preferred to Commissioner of Income Tax (Appeals)
3,369,812/- 101,798,275/-
Capital Commitment outstanding for the year ended March 31, 2010 (Net of Advance) is amounting to Rs. NIL (Previous Year Rs. 6,227,909/-)
4) Inventories
Stock - in - Trade includes shares in the following Companies - at cost or market value (whichever is lower):
Particulars Current Year(Rs.)
Previous Year(Rs.)
Tahir Properties Limited
a) 70 Equity shares of Rs. 100/- each, Rs. 20/- paid up
1,400 1,400
b) 75 Redeemable Preference Class A shares of Rs.100/- each, Rs.70/- paid
5,250 5,250
5) Cash & Bank Balances:
Balances with scheduled banks on deposit accounts include Rs.34,422,705/- (Previous year Rs. 34,014,876/-) received from fl at buyers and held in trust on their behalf in a corpus fund.
6) Loans and Advances:
a) Amounts due from companies under the same management:
Particulars MaximumDebit Balance
during the year
Balance ason March 31, 2010
Balance ason March 31, 2009
Godrej Industries Ltd. 3,249,136 3,249,136 1,649,136
b) Loan & Advance to Subsidiary Companies:
Particulars MaximumDebit Balance
during the year
Balance ason March 31,
2010
Balance ason March 31,
2009
Godrej Realty Private Limited 16,032,697 16,032,697 15,344,207
Godrej Waterside Properties Private Limited
768,962,487 556,396,071 203,194,595
Godrej Sea View Properties Private Limited
141,219,295 141,085,481 22,379
Godrej Real Estate Private Limited
983,867,205 983,867,205 845,998,414
Godrej Developers Private Limited
768,328,450 501,260,304 392,825,438
Happy Highrises Limited 1,227,097,105 1,227,097,105 885,915,640
Godrej Estate Developers Private Limited
590,977,587 590,596,924 18,000
c) Due on Management Projects include a sum of Rs. 21,564,700/- (Previous Year Rs. 21,479,389/-) on account of a project, where the matter is sub-judice with arbitrators.
7) Inventories, Current Assets, Loans and Advances:
a) Construction Work in Progress and Due on Management projects represents materials at site and unbilled cost on the projects based on projections and estimates by the Company of the expected revenues and costs to completion. In the opinion of the management, the net realizable value of the construction work in progress will not be lower than the costs so included.
b) The company has been entering into Development Agreements with landlords. Development Manager Fees amounting to Rs. 60,230,839/- (Previous Year Rs. 60,230,839/- ) accrued as per terms of the Agreement are receivable by the Company based upon progress milestones specifi ed in the respective Agreements and have been disclosed as Development Manager Fees accrued but not due in Schedule 10.
8) Leases
a) The Company’s signifi cant leasing arrangements are in respect of operating leases for Residential premises. Lease income from operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises given under operating leases are as under:
Particulars Current YearRs.
Previous YearRs.
Future minimum lease receipts under non-cancelable operating leasesNot later than 1 year 26,400 26,400
Later than 1 year and not later than 5 years 105,600 105,600
b) The Company’s signifi cant leasing arrangements are in respect of operating leases for Commercial/Residential premises. Lease expenditure for operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises taken on operating leases are as under:
Particulars Current YearRs.
Previous YearRs.
Future minimum lease payments under non-cancelable operating leasesNot later than 1 year 28,603,511 23,191,357Later than 1 year and not later than 5 years 33,332,065 30,558,198Later than 5 years 6,047,901 7,061,962
9) Employee Stock Option Plan :
a) During the fi nancial year ended 31st March, 2008, the Company instituted an employee Stock Option Plan (GPL ESOP) approved by the Board of Directors, shareholders and the Remuneration Committee, which provided allotment of 442,700 options convertible into 442,700 Equity Shares of Rs. 10/- each to eligible employees of Godrej Properties Limited and its Subsidiary Companies (the Participating Companies) with effect from 28th December, 2007.
The Scheme is administered by an Independent ESOP Trust which has purchased shares from Godrej Industries Limited (The holding Company), equivalent to the number of options granted to the eligible employees of the Participating Companies.
Particulars No. of Options Weighted Average
Exercise PriceCurrent
YearPrevious
YearOptions Outstanding at the beginning of the year
412,700 442,700 620.00 (plus interest)
Options granted - - -Options exercised - - -Less : Forfeited / Expired / Lapsed / Idle / Available for re-issue
9,000 30,000 -
Options Outstanding at the year end 403,700 412,700 620.00 (plus interest)
The Option granted shall vest after three years from the date of grant of option, provided the employee continues to be in employment and the option is exercisable within two years after vesting.
The employee share based payment plans have been accounted based on the intrinsic value method and no compensation expense has been recognized since, the price of the underlying equity shares on the grant date is same /less than exercise price of the option, the intrinsic value of option, therefore being determined as nil.
The Company has provided loan of Rs. 375,119,478/- (Previous Year Rs. 282,842,884/-) to GPL ESOP, which is administered by an independent ESOP Trust which has purchased shares of GPL from Godrej Industries Limited equivalent to the number of stock options granted from time to time to eligible employees. The repayment of the loans granted by the Company to ESOP Trust is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options at the end of the exercise period. The fall in value of the underlying equity shares is on account of market volatility and the loss, if any, can be determined only at the end of the exercise period. In view of the aforesaid, provision for diminution of Rs. 117,750,174/- (Previous Year N.A. as equity shares were not listed) is not considered necessary in the fi nancial statements.
The Company has provided loan of Rs. 70,974,033/- (Previous Year Rs. 89,091,768/-) to Godrej Industries Limited Employee Stock Option Scheme (GIL ESOP), which is administered by an independent ESOP Trust which purchases shares of GIL from the market equivalent to the number of stock options granted from time to time to eligible employees. The repayment of the loans granted by the Company to ESOP trust is dependent on the exercise of the options by the employees and the market price of the underlying shares of the unexercised options at the end of the exercise period.
b) The fall in value of the underlying equity shares is on account of market volatility and the loss, if any, can be determined only at the end of the exercise period. In view of the aforesaid, provision for diminution of Rs. 29,016,289/- (Previous Year Rs. 63,591,019/-) is not considered necessary in the fi nancial statements.
149
Annual Report 2009–2010
SCHEDULES FORMING PART OF THE ACCOUNTS10) Earnings Per Share
Particulars Current Year Previous YearProfi t after tax and prior years tax adjustments as per Profi t & Loss Account
Rs. 1,216,274,218 Rs. 737,252,260
Weighted average No. of equity shares outstanding
62,977,917 60,420,259
Basic earnings per share Rs. 19.31 Rs. 12.20
Nominal value of shares Rs.10 /- Rs. 10 /-
11) Dues to Micro, Small and Medium Industries
Disclosure of sundry creditors under current liabilities is based on the information available with the Company regarding the status of the suppliers as defi ned under the “Micro, Small & Medium Enterprises Development Act 2006”. There is no amount overdue as on 31st March, 2010 to Micro, Small & Medium Enterprises on account of principal amount together with interest and also during the previous year.
12) The amount of exchange difference included in the Profi t and Loss Account, under the related heads of expenses is Rs. (25,624/-). (Previous Year Rs. 13,971,672/-).
13) Expenditure in Foreign Currency
Particulars Current YearRs.
Previous YearRs.
Travelling Expenses 1,788,397 1,663,605Other Expenditure 64,963,887 46,588,039Total 66,752,284 48,251,644
14) Deferred Tax
The tax effect of signifi cant temporary differences that resulted in deferred tax assets are:
Particulars Current YearRs.
Previous YearRs.
Depreciation on Fixed Assets (3,523,000) 661,000
Others 6,317,500 4,198,000
Deferred Tax Asset 2,794,500 4,859,000
15) Computation of Net Profi t under Section 349 of the Companies Act, 1956
Particulars Current YearRs.
Previous YearRs.
Profi t before Tax as per Profi t and Loss Account 1,587,458,966 1,060,342,632
Add :-
Managerial Remuneration 39,754,731 29,267,596
Depreciation 24,528,123 10,677,865
Loss on sale of Fixed Asset - 17,548
Less :-
Depreciation 24,528,123 10,677,865
Profi t on sale of Fixed Asset 5,932 -
Net Profi t for the purpose of Directors Remuneration 1,627,207,765 1,089,627,776
(a) 11% (Previous Year 11%) of Net Profi t as computed above
178,992,854 119,859,055
Managerial Remuneration:-
Particulars Current YearRs.
Previous YearRs.
A Salaries 20,196,168 15,609,280B Contribution to Provident Fund 1,048,608 823,552C Estimated Monetary Value of Perquisites 1,474,955 1,123,358D Performance Linked Variable Remuneration 11,030,000 6,139,346E Director Sitting Fees to Non-Executive Director 1,005,000 772,060F Commission to Non-Executive Director 5,000,000 4,800,000
Total 39,754,731 29,267,596
Notes:
In case of the Managing Director and Executive Director, Performance Linked Variable Remuneration of Rs. 11,030,000/- (Previous Year Rs. 6,139,346/-) is on the basis of provision made in the accounts.
16) Amounts paid to Auditors:
Particulars Current YearRs.
Previous YearRs.
Audit Fees 1,963,340 2,525,870Audit under other Statutes 1,036,820 904,460Certifi cation under other Statutes 1,384,265 3,418,553Other Certifi cations 118,703 108,995Consultancy Charges 4,412 495,788Reimbursement of Expenses 8,553 2,121
17) Segment Information: As the company has only one business segment, disclosure under Accounting Standard 17 on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.
18) Related Party Disclosures:
1. Related party disclosures as required by AS - 18, “Related Party Disclosures”, are given below:
(i) Relationships:Shareholders (Holding Company)Godrej Industries Limited (GIL) holds 69.43% (Previous Year 80.26%) shares in the Company. GIL is the subsidiary of Godrej & Boyce Mfg. Co. Limited, the Ultimate Holding Company.
(ii) Subsidiaries :Godrej Realty Private Limited (51%) Godrej Waterside Properties Private Limited (51%)Godrej Real Estate Private Limited (100%)Godrej Developers Private Limited (51%)Godrej Sea View Properties Private Limited (77.73%) (100% upto 30th March, 2010)Happy Highrises Limited (51%) (100% upto 13th September, 2009)Godrej Estate Developers Private Limited (51%) (100% upto 19th March, 2010)
(iii) Other Related Parties in Godrej Group, where common control exists :Vora Soaps LimitedBahar Agrochem & Feeds Private LimitedEnsemble Holdings & Finance LimitedGodrej Appliances LimitedGodrej Agrovet LimitedGodrej Consumer Products LimitedGodrej Saralee LimitedGodrej SCA Hygiene LimitedGodrej Hershey LimitedGodrej Infotech LimitedLawkim LimitedNatures Basket Limited
(iv) Key Management Personnel :Mr. Milind Surendra KordeMr. Pirojsha A. Godrej
(v) Individuals exercising Signifi cant Infl uence :Mr. A. B. GodrejMr. N. B. Godrej
2. The following transactions were carried out with the related parties in the ordinary course of business.
(i) Details relating to parties referred to in items 1 (i), (ii) and (iii) above
Sr.No.
Description Godrej & Boyce Mfg.
Co. Ltd.(i)
Godrej Industries
Ltd.(ii)
Subsidiaries
(iii)
Other Related Parties In
Godrej Group(iv)
1. Investment in equity/preference share capital
--
--
-500,000
--
2. Sale of Investments (Preference Shares)
--
--
-214,944,318
--
3. Purchase of fi xed assets 16,358,0852,977,879
-555,627
--
--
4. Advances given -8,822,568
--
2,042,546,9701,697,797,318
--
5. Advance received against sale of fl ats
--
86,284,840135,484,520
--
--
6. Loans & Advances repaid --
--
1,092,756,8631,876,301,328
--
7. Deposit given --
1,600,000625,000
--
--
8. Deposit repaid --
-350,000
--
--
9. Inter-Corporate Deposit taken
--
55,000,000-
--
10,000,000350,000,000
10. Inter-Corporate Deposit repaid
--
55,000,000-
--
10,000,000350,000,000
11. Interest (Paid)/Received on Inter-Corporate Deposit
--
(3,571,233)-
--
(39,041)(964,383)
12. Construction & other expenses incurred on behalf of other companies
--
2,286,7991,108,550
735,552,192406,168,736
228,393 -
13. Expenses charged by other companies (net)
94,505,898107,880,517
26,706,2135,323,036
9,604,5117,178,648
10,864353,686
14. Dividend paid 1,725,000-
121,238,023196,185,842
--
4,919,6258,112,751
15. Outstanding receivables, net of (payables)
(14,470,248)(9,005,774)
(7,838,443)24,136
4,016,335,7872,347,580,672
--
16. Deposits receivable --
3,225,0001,625,000
--
--
150
Godrej Properties Limited
SCHEDULES FORMING PART OF THE ACCOUNTSFigures in italics are for previous year.(ii) Details relating to persons referred to in items 1 (iv) & (v) above
Sr.No.
Key Management Personnel Current YearRs.
Previous YearRs.
1.2.3.4.
RemunerationReimbursement of Travel ExpensesDividend PaidIndividuals exercising signifi cant Infl uence :Dividend paid – Mr. N.B. Godrej
33,749,731240,000
1,466,868
4,325,625
23,695,536217,200
2,477,724
7,133,210
3. Signifi cant Related Party Transactions
Nature of Transactions Subsidiaries & Other Related Parties in the Godrej Group
AmountRs.
Investment in equity share capital Godrej Estate Developers Pvt. Ltd. -500,000
Sale of Investments (Preference Shares) Godrej Developers Private Limited -214,944,318
Purchase of fi xed assets Godrej & Boyce Mfg. Co. Limited
Godrej Industries Limited
16,358,0852,977,879
-555,627
Advances given Godrej Waterside Properties Private Limited
763,850,0001,186,033,000
Godrej Developers Private Limited 501,687,500333,644,318
Godrej Estate Developers Private Limited
329,645,356-
Advances repaid Godrej Waterside Properties Private Limited
500,752,0381,674,651,328
Godrej Developers Private Limited 453,900,00088,250,000
Advance received against sale of fl ats Godrej Industries Limited 86,284,840135,484,520
Inter-Corporate Deposits taken during the year
Godrej Agrovet Ltd. -350,000,000
Godrej Industries Limited 55,000,000-
Natures basket Limited 10,000,000-
Inter-Corporate Deposits repaid during the year
Godrej Agrovet Ltd. -350,000,000
Godrej Industries Limited 55,000,000-
Natures basket Limited 10,000,000-
Deposit given Godrej Industries Limited 1,600,000625,000
Deposit repaid Godrej Industries Limited -350,000
Construction & other expenses incurred on behalf of other companies
Happy Highrises Ltd. 181,214,018 114,240,742
Godrej Waterside Properties Private Ltd. 77,778,258 Godrej Real Estate Private Limited
Godrej Developers Private Limited
136,308,667118,101,621108,151,75661,571,20247,353,570
Godrej Estate Developers Pvt. Ltd. 264,496,38418,000
Expenses charged by other companies (net)
Godrej & Boyce Mfg. Co. Limited
Godrej Industries Limited
94,505,898107,880,51726,706,2135,323,036
Interest (Paid)/Received on Inter-Corporate Deposits given
Godrej Industries Limited
Godrej Agrovet Ltd.
(3,571,233)--
(964,384)Outstanding receivables, net of (payables)
Godrej Real Estate Private Limited 983,867,205 845,998,414
Happy Highrises Limited
Godrej Developers Private Limited
Godrej Waterside Properties Private Ltd.
Godrej Estate Developers Private Limited
1,227,097,105885,915,639501,260,304397,087,438556,396,071203,194,595590,596,924
18,000
Dividend paid Godrej Industries Limited 121,238,023196,185,842
Deposit receivable Godrej Industries Limited 3,225,0001,625,000
19) Employee Benefi ts
(i) Defi ned Contribution Plans:
Contribution to Defi ned Contribution Plan, recognized as expense for the year are as under:
Particulars Current Year(Rs.)
Previous Year(Rs.)
Employers’ Contribution to Provident Fund 8,144,688 6,444,909
Employers’ Contribution to ESIC 41,183 44,470
(ii) Defi ned Benefi t Plans:
a. Contribution to Gratuity Fund
Gratuity is payable to all eligible employees on death or on separation/termination in terms of the provisions of the Payment of Gratuity Act or as per the Company’s policy whichever is benefi cial to the employees.
The following table sets out the funded status of the gratuity plan and the amounts recognized in the Company’s fi nancial statements:
Particulars Current Year(Rs.)
Previous Year(Rs.)
Change in present value of obligation Present value of obligation as at beginning of the year 6,450,060 4,211,619Interest Cost 499,880 336,929Service Cost 1,231,678 727,433Benefi ts Paid (1,224,663) (392,197)Effect of Liability Transfer in 238,552 841,500Actuarial (gain)/loss on obligation 430,477 724,776Present value of obligation, as at end of the year 7,625,984 6,450,060Amount recognized in the Balance Sheet Present value of obligation, as at end of the year (430,477) (724,776)Fair value of plan assets as at end of the year - -Net obligation as at end of the year (430,477) (724,776)Net gratuity cost for the year ended Current Service Cost 1,231,678 727,433Interest Cost 499,880 336,929Expected return on plan assets - -Net Actuarial (gain)/loss to be recognized 430,477 724,776Net gratuity cost 2,162,035 1,789,138Assumptions used in accounting for the gratuity plan (In %) (In %)Discount Rate 7.75 7.75Salary escalation rate 4.75 4.75
The estimates of future salary increases, considered in actuarial valuation, take into account infl ation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
20) Information in respect of Joint Ventures
Jointly Controlled Operations - Development of the following Residential/Commercial Projects:
Coliseum, Mumbai - Profi t sharing
Woodsman Estate, Bengaluru - Revenue Sharing
Gold County, Bengaluru - Profi t Sharing
Planet Godrej, Mumbai - Profi t Sharing
Glenelg, Mumbai - Profi t Sharing
Edenwoods, Mumbai - Revenue / Profi t Sharing
Shivajinagar, Pune - Profi t Sharing
Bhugaon, Pune
Avalon Project - Area Sharing/Revenue Sharing
Sanjay Khan, Bengaluru - Revenue Sharing
Grenville Park, Mumbai - Profi t Sharing
Godrej Garden City, Ahmedabad - Area Sharing
K. Syama Raju, Bengaluru - Area Sharing
Vikhroli - Profi t Sharing
Kochi - Revenue Sharing
Umbarde, Kalyan - Revenue Sharing
21) Previous year's fi gures have been regrouped/rearranged wherever necessary to confi rm to current year’s classifi cation.
22) Additional information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.
151
Annual Report 2009–2010
SCHEDULES FORMING PART OF THE ACCOUNTS
Current year Rupees
Previous year Rupees
Cash Flow from Operating Activities
Profi t for the Year before Taxation 1,587,458,966 1,060,342,632
Adjustment for:
Depreciation 24,528,123 10,677,865
Interest Paid 671,317,930 512,956,238
(Profi t) /Loss on sale of Fixed Asset (Net) (5,932) 17,548
Provision for Dimunition in value of Investment written back (201) -
Investment Written Off 616 -
Interest Income (708,002,676) (484,413,285)
Dividend Received (24,417,754) (7,469)
Profi t on Sale of Long Term & Current Investment (1,398,590,265) (419,903,138)
Operating Profi t before working capital changes 152,288,807 679,670,391
Adjustment for:
Change in Inventory (910,900,009) (409,486,615)
Change in Sundry Debtors (236,888,871) (400,673,167)
Change in Loans & Advances (2,319,465,704) (941,598,612)
Change in Current Liabilities / Provisions 588,980,038 (394,976,650)
(2,725,985,739) (1,467,064,653)
Taxes Paid (Net) (357,305,497) (422,073,561)
Net Cash Flow from Operating activities (3,083,291,236) (1,889,138,213)
Cash Flow from Investing Activities
Purchase of Fixed Assets (60,894,380) (52,537,298)
Sale of Fixed Assets 1,576,383 499,693
Purchase of Investments (2,978,561,060) (500,000)
Sale of Investments 2,456,616,320 420,162,818
Interest Received 700,178,755 450,878,689
Dividend Received 24,417,754 7,469
Net Cash Flow from Investing Activities 143,333,772 818,511,371
Cash Flow from Financing Activities
Proceeds from Issue of Equity Share Capital (Net of Issue Expenses) 4,285,654,795 -
Change in Cash Credit (682,248,703) 981,174,047
(Repayment)/ Proceeds from Term Loan (600,000,000) 600,000,000
Proceeds from Unsecured Borrowings 631,804,140 372,843,185
(Repayment)/ Proceeds from Inter Company Deposit (20,000,000) 20,000,000
(Repayment)/ Acceptance of Fixed Deposits 748,943,000 (19,098,000)
Interest Paid (671,317,930) (512,956,239)
Payment of Dividend (151,050,648) (246,124,143)
Tax on Distributed Profi ts (25,671,058) (41,828,800)
Net Cash Flow from Financing Activities 3,516,113,596 1,154,010,050
Net Increase in Cash & Cash Equivalent 576,156,132 83,383,208
Cash & Cash Equivalent -Opening Balance 147,337,283 63,954,075
Cash & Cash Equivalent -Closing Balance 723,493,415 147,337,283
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010
Notes :-
1. The cash fl ow statement has been prepared under the 'Indirect Method' as set out in the Accounting Standard (AS) 3 on 'Cash Flow Statement', and presents cash fl ows by operating, investing and fi nancing activities.
2. Figures for the previous year have been regrouped / restated wherever necessary to conform to this year's classifi cation.
For and on behalf of
KALYANIWALLA & MISTRY Adi. B. GODREJ MILIND S. KORDEChartered Accountants Chairman Managing Director
ERMIN K. IRANIPartner SHODHAN A. KEMBHAVIMumbai, Dated : May 17, 2010 Company Secretary
23) Statement Pursuant to Part IV of Schedule VI of the Companies Act, 1956
Balance Sheet Abstract for the Year Ended March 31, 2010 And Company’s General Business Profi le
a) Registration Details Registration No. U74120MH1985PLC035308 State Code 11 Balance Sheet Date March 31, 2010
b) Capital raised during the year (Amount in Rs. Thousands)
Public Issue (Including Premium) 4,688,471 Rights Issue Nil Bonus Issue Nil Private Placement Nil
c) Position of mobilisation and deployment of funds (Amount in Rs. Thousands) Total Liabilities 14,336,178 Total Assets 14,336,178 Sources of Funds Paid-up Capital 698,500 Reserves & Surplus 7,455,719 Secured Loans 1,284,681 Unsecured Loans 3,264,337 Application of Funds Net Fixed Assets 105,060 Investments 2,477,724 Net Current Assets 10,117,658 Misc. Expenditure Nil Deferred Tax Asset 2,795 Accumulated Losses Nil
d) Performance of Company (Amount in Rs. thousands) Turnover 3,570,175 Total Expenditure (Net of other income) 1,982,716 Profi t before tax 1,587,459 Profi t after tax 1,218,411 Earning per Share in Rs. (on an annualized basis) 19.31 Dividend rate % 40%
e) Generic Name of three principal products/services of Company N.A
STATEMENT REGARDING SUBSIDIARY COMPANY PURSUANT TO SECTION 212 OF THE COMPANIESACT, 1956
1 Name of the Subsidiary Company
Godrej Developers
Private Limited
Godrej Estate
Developers Private Limited
Godrej Real Estate
Private Limited
Godrej Realty
Private Limited
Godrej Sea View
Properties Private Limited
Godrej Waterside Properties
Private Limited
Happy Highrises
Limited
2 The Company’s interest in the subsidiaries as on 31st March, 2010
a. Number of Equity Shares
34,032 25,500 50,000 510,000 388,636 510,000 103,592
Total Number of Shares 66,730 50,000 50,000 1,000,000 500,000 1,000,000 203,120 b. Face Value (Rs.) 10 10 10 10 1 10 10c. Extent of Holding 51.00% 51.00% 100.00% 51.00% 77.73% 51.00% 51.00%
3 Net aggregate profi t/(loss) of the subsidiary company so far it concerns the members of the Company
A. For the fi nancial year ended on 31st March, 2010
i. Not dealt with in the books of Accounts of the Company
(35,678) (29,397) (388,913) 2,824,096 (25,239) 2,005,492 10,659,915
ii. Dealt with in the books of account of the Company
- - - - - - -
B. For the subsidiary company’s previous fi nancial years since it became a subsidiary
i. Not dealt with in the books of Accounts of the Company
(56,438) (45,095) (75,917) 343,981 (145,288) 5,412,437 (13,606)
ii. Dealt with in the books of account of the Company
- - - - - - -
152
Godrej Realty Private Limited
BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31, 2010
1. We have audited the attached Balance Sheet of GODREJ REALTY PRIVATE LIMITED, as at 31st March, 2010, the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: a) We have obtained all the information and explanations, which to the best of our knowledge and belief
were necessary for the purpose of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as
appears from our examination of such books. c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are
in agreement with the books of account. d) In our opinion, the Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by
this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.
e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(e) of Schedule 12-Notes to Accounts, in respect of projects under long term contracts undertaken and/or fi nanced by the Company, we have relied upon the management’s estimates of the percentage of completion, costs to completion and on the projections of revenues expected from projects owing to the technical
REPORT OF THE AUDITORSTO THE MEMBERS OF GODREJ REALTY PRIVATE LIMITED
nature of such estimates, on the basis of which profi ts/losses have been accounted, interest income accrued and realizability of the construction work in progress and project advances determined.
f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;
ii) in the case of the Profi t and Loss Account, of the profi t of the Company for the year ended on that date and
iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.
5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
For and on behalf ofKALYANIWALLA AND MISTRYChartered AccountantsFirm Registration No. 104607WERMIN K. IRANIPartnerMembership No. 35646Place : Mumbai,Dated : May 14, 2010
TO THE SHAREHOLDERS
Your Directors have pleasure in submitting their Report along with the Audited Accounts for the year ended March 31, 2010.1. FINANCIAL HIGHLIGHTS: The accounting results for the period ended March 31, 2010 reveal that there is surplus at the end of the
period. During the year the Company has created Debenture Redemption Reserve as required under Section 117(C)
of the Companies Act, 1956.2. REVIEW OF OPERATIONS: The Company has conceptualized and fi nalized the design for the First Phase of the Project and is awaiting
further approvals for the same.3. DIVIDEND : There is no Dividend declared for the year ended March 31, 2010.4. DIRECTORS : In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company, Mr.
Naresh Nadkarni, retires by rotation and being eligible, offers himself for re-appointment. 5. APPOINTMENT OF AUDITORS: M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are
eligible for re-appointment for which they have given their consent.6. DIRECTORS’ RESPONSIBILITY STATEMENT: Your Director’s confi rm: (i) that in the preparation of the annual accounts, the applicable accounting standards have been
followed; (ii) that the Directors have selected such accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year ended March 31, 2010 and of the profi t of the Company for that year;
(iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the annual accounts on a going concern basis.
7. ADDITIONAL INFORMATION: (a) Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A)
of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.
(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:
(i) Conservation of Energy : Expenses on account of Energy are negligible. (ii) Technology Absorption: It is an on going process. (iii) Foreign Exchange Earning & Outgo: The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange
Expenditure during the year. 8. ACKNOWLEDGEMENT: Your Directors take this opportunity to thank all the associates for their co-operation.
For and on behalf of the board of directors
Milind S. Korde NARESH NADKARNI
Place : Mumbai Director Director
Dated : May 14, 2010
ANNEXURE TO THE AUDITORS' REPORTReferred to in paragraph (3) of our report of even date.1) (a) The Company is maintaining proper records showing full particulars, including quantitative details and
situation of fi xed assets. (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodic intervals.
In our opinion, the period of verifi cation is reasonable having regard to the size of the Company. (c) There is no disposal of fi xed assets during the year.2) (a) The management has conducted physical verifi cation of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are
reasonable and adequate in relation to the size of the company and the nature of its business. (c) The company is maintaining proper records of inventory and no material discrepancies were noticed
on physical verifi cation.3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties
covered in the register maintained under Section 301 of the Companies Act, 1956. (b) Consequently, the question of commenting on the rates of interest, terms and conditions of the loans
granted being prejudicial to the interests of the Company, receipt of regular principal and interest and reasonable steps for recovery of the same does not arise.
(c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.
(d) Consequently, the question of commenting on the rates of interest and others terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise.
4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.
5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist.
6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.
7) The Company has an internal audit system, which in our opinion is commensurate with the size of the Company and nature of its business.
8) In our opinion and according to the information and explanations given to us, The Central Government has not been prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company.
9) (a) According to the information and explanations given to us and on the basis of our examination of books of accounts, during the year, the Company has been generally regular in depositing undisputed statutory
dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and other statutory dues incurred during the year. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute.
10) The Company does not have accumulated losses at the end of the fi nancial year and has not incurred any cash losses in the current and immediately preceding fi nancial year.
11) According to the information and explanations given to us and based on documents and records produced to us, the Company has not defaulted in repayment of dues to banks and debenture holders. There are no dues to fi nancial institutions.
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 benefi t fund/ societies.
14) In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments.
15) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or fi nancial institutions.
16) Based on our examination and according to the information and explanations given to us, there were no term taken during the year.
17) According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investments.
18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.
19) The Company did not issue any debentures during the year.20) The Company has not raised any money through a public issue during the year.21) Based on the audit procedures performed and information and explanations given by the management, we
report that no fraud on or by the Company has been noticed or reported during the year.For and on behalf ofKALYANIWALLA AND MISTRYChartered AccountantsFirm Registration No. 104607W
ERMIN K. IRANIPartnerMembership No. 35646Mumbai, May 14, 2010
Annual Report 2009–2010
153
SCHEDULES FORMING PART OF THE ACCOUNTS
BALANCE SHEET AS AT 31ST MARCH, 2010Schedule As at
31.03.2010 Rupees
As at 31.03.2009
Rupees
SOURCES OF FUNDSShareholders’ Funds Share Capital 1 10,000,000 10,000,000 Reserves & Surplus 2 6,211,915 674,472 Loan FundsSecured Loans 3 150,000,000 150,000,000 Deferred Tax Liability 1,000 1,000
166,212,915 160,675,472 APPLICATION OF FUNDSFixed Assets Gross Block 4 247,525 247,525 Less : Depreciation 22,421 20,468 Net Block 225,104 227,057 Investments - - Current Assets, Loans & Advances Inventory 5 90,702,935 84,163,008 Cash & Bank Balances 6 105,396,053 101,915,567 Loans & Advances 7 3,925,054 9,490,264
200,024,042 195,568,839 Less : Current Liabilities & Provisions Current Liabilities 8 34,036,231 35,120,424
34,036,231 35,120,424 Net Current Assets 165,987,811 160,448,415
166,212,915 160,675,472 Notes To Accounts & Accounting Policies 12
The Schedules referred to above form an Signatures to Balance sheet integral part of the Balance sheet and Schedules 1 to 8 and 12
As per our Report of even date.
For and on behalf ofKALYANIWALLA & MISTRYChartered Accountants
ERMIN K. IRANI MILIND S. KORDE NARESH NADKARNIPartner Directors Mumbai, Dated: May 14, 2010
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010
Schedule For theYear ended31.03.2010
Rupees
For theYear ended31.03.2009
RupeesINCOMEInterest Income 9,654,565 28,785,599
(Tax deducted at Source Rs.9,70,762/- [Previous Year Rs. 6,507,756/-])EXPENDITURE Cost of Sales 9 - -
Administration Expenses 10 - 23,451
Interest & Finance Charges 11 1,500,150 24,727,520
Depreciation 1,953 7,917
Profi t/ (Loss) for the Year 8,152,462 4,026,711
Provision for Taxation
For Current Tax (2,614,000) (1,248,000)
For Deferred Tax - (4,000)
Profi t/ (Loss) After Tax 5,538,462 2,774,711
Prior Year Tax Adjustment (1,019) -
Defi cit Brought Forward - (2,100,239)
Amount available for appropriation 5,537,443 674,472
Transfer to Debenture Redemmption Reserve 5,537,443 674,472
Balance Carried Forward - -
Earning per share Basic in Rs. (Refer Note 5) 5.54 2.77
Earning per share Diluted in Rs. (Refer Note 5) 0.41 0.65
Notes to Accounts & Accounting Policies 12
The Schedules referred to above form an Signatures to Profi t and Loss Account integral part of the Profi t and Loss Account and Schedules 9 to 12
As per our Report of even date.
For and on behalf ofKALYANIWALLA & MISTRYChartered Accountants
ERMIN K. IRANI MILIND S. KORDE NARESH NADKARNIPartner Directors Mumbai, Dated: May 14, 2010
As at31.03.2010
Rupees
As at31.03.2009
RupeesSCHEDULE 1 : SHARE CAPITALAuthorised1,000,000 Equity shares of Rs.10/- each 10,000,000 10,000,000
10,000,000 10,000,000
Issued & Subscribed & Paid Up1,000,000 Equity Shares of Rs.10/- each, fully paid-up(Out of the above 510,000 equity shares are held by Godrej Properties Limited, the Holding Company and its nominee)
10,000,000 10,000,000
10,000,000 10,000,000
SCHEDULE 2 : RESERVES & SURPLUSDEBENTURE REDEMPRION RESERVEBalance as per last Balance Sheet 674,472 -
Transferred from Profi t & Loss Account 5,537,443 674,472
Less : Utilised during the year - -
Balance at the end of the year 6,211,915 674,472
PROFIT & LOSS ACCOUNT - -
Balance at the end of the year 6,211,915 674,472
SCHEDULE 3 : SECURED LOANS1% Secured Redeemable optionally Convertible Debentures 150,000,000 150,000,000
(Refer Note 2)
150,000,000 150,000,000
As at31.03.2010
Rupees
As at31.03.2009
RupeesSCHEDULE 5 : INVENTORYConstruction Work in Progress 90,702,935 84,163,008
90,702,935 84,163,008
SCHEDULE 6 : CASH & BANK BALANCECash in Hand 667 667
Balance with Scheduled Bank - on Current Account 105,395,386 410,413
- on Fixed Deposit Account - 101,504,487
105,396,053 101,915,567
SCHEDULE 7 : LOANS & ADVANCES(Unsecured & considered good unless otherwise stated)
Advances recoverable in cash or kind or for value to be received
Others 412 3,922,385
Advance Tax and Tax Deducted at Source 3,924,642 5,567,879
(Net of provision for Tax of Rs. 38,62,000/- previous year
Rs. 15,82,610/- )
3,925,054 9,490,264
SCHEDULE 8 : CURRENT LIABILITIESSundry Creditors ( Refer Note 3) 888,634 809,480
Other Liabilities 369,923 2,883,271
Interest Accrued but not due 32,777,674 31,427,673
34,036,231 35,120,424 SCHEDULE 4 : FIXED ASSET
Particulars Gross Block Depreciation Net BlockAs at
1st April2009
Additions Deductions As at31st March
2010
Upto1st April
2009
For the Year
Deductions Upto31st March
2010
As at31st March
2010
As at31st March
2009Rs. Rs Rs Rs Rs Rs Rs Rs Rs Rs
Land (Refer Note 2) 222,175 - - 222,175 - - - - 222,175 222,175 Computers 25,350 - - 25,350 20,468 - - 20,468 4,882 4,882 Motor Vehicle - - - - - - - - - - Total 247,525 - - 247,525 20,468 - - 20,468 227,057 227,057 Previous Year 347,608 - 100,083 247,525 63,850 7,917 51,299 20,468 227,057
154
Godrej Realty Private Limited
SCHEDULES FORMING PART OF THE ACCOUNTS
SCHEDULE 12 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES1) Accounting Policies a) General The fi nancial statements are prepared under the historical cost convention in
accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.
b) Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated
depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.
Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.
c) Depreciation / Amortization Depreciation has been provided on Written Down Value basis, at the rates specifi ed
in Schedule XIV of the Companies Act, 1956. d) Inventories Inventories are valued as under : a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At cost Construction Work in Progress includes cost of land, premium for development
rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.
e) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting.
As per this method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.
Interest income is accounted on an accrual basis at contracted rates. f) Borrowing Cost Interest and fi nance charges incurred in connection with borrowing of funds,
which are incurred for the development of long term projects are transferred to Construction Work in Progress / Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost / rates as per Agreements respectively.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
g) Earnings Per Share The basic earnings per share is computed using the weighted average number
of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
h) Provision for Taxation Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities,
using the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between
the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent
For the year ended
31.03.2010Rupees
For the year ended
31.03.2009Rupees
SCHEDULE 9 : COST OF SALESOpening Stock: 84,163,009 88,563,479 Add : Expenditure/ Transfers from Advances during the period Construction Material & Labour 150,724 7,809,660 Architect Fees 5,027,474 - Overheads 1,361,728 756,159 Interest - 4,527,861
90,702,935 101,657,159 Less : Transferred to Interest & Finance Charges - 17,494,151 Less : Closing Stock: 90,702,935 84,163,008 Cost of Sales - - SCHEDULE 10 : ADMINISTRATION EXPENSESLoss on sale of Fixed Assets - 23,451
- 23,451 SCHEDULE 11 : INTEREST AND FINANCE CHARGES (NET)Interest PaidOthers 1,500,000 11,761,030 Total Interest paid 1,500,000 11,761,030 Add : Trfd from Cost of Sales - 17,494,151 Add : Brokerage & Other Financial Charges 150 200 GROSS INTEREST 1,500,150 29,255,381 Less : Transferred to Cost of Sales - 4,527,861 NET INTEREST 1,500,150 24,727,520
that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and loss exacted on substantially exacted on the balance sheet date.
i) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing
on the date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profi t and Loss Account.
j) Provisions and Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations,
the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from
the past events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. As on the balance sheet date there is no contingent liability.
2) Secured Loans The 1% secured optionally convertible debentures are redeemable at the end of the 7 years
from the deed date of allotment and are secured to the extent of specifi c immovable assets of the Company disclosed under the head “Fixed Assets”.
The Company has created a Debenture Redemption Reserve as required under Section 117 ( C ) of the Companies Act, 1956 to the extent of Profi t available for distribution.
3) Micro, Small and Medium Enterprises Development Act, 2006: Disclosure of sundry creditors under current liabilities is based on the information available
with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, 2010 to Micro, Small and Medium Enterprises on account of principal amount together with interest and also during the previous year.
4) Deferred Tax The Tax effect of signifi cant temporary differences that resulted in deferred tax liabilities
are :
Particulars Current Year(Rs.) Previous Year (Rs.)Liabilities-Depreciation on Fixed Assets (1,000) (1,000)Deferred Tax Liabilities (1,000) (1,000)
5) Earnings per share
Particulars Current Year(Rs.) Previous Year (Rs.)Profi t for the year as per Profi t & Loss Account 55,37,443 2,774,711Weighted average no. of Equity Shares outstanding 1,000,000 1,000,000Weighted average no. of Potential Equity Shares outstanding 16,000,000 16,000,000Basic Earnings Per Share (Rs.) 5.54 2.77Diluted Earnings Per Share (Rs.) 0.41 0.65Nominal value of shares 10 10
6) Amounts paid to Auditors:
Particulars Current Year(Rs.) Previous Year (Rs.)Audit Fees 159,935 159,935Audit & Other Statutes 55,150 55,150Certifi cation - 1,124Consultancy charges 67,293 33,708Total 282,378 249,917
7) Segment Information As the company has only one business segment, disclosure under Accounting Standard 17
on “ Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.
8) AS 18 – Related Party Disclosure 1. Relationships: (i) Shareholders (`the Godrej Group Shareholding) in the Company Godrej
Properties Limited (GPL) holds 51% in the Company. GPL is the Subsidiary of Godrej Industries Limited (GIL). GIL is subsidiary of Godrej & Boyce Manufacturing Company Limited (G&B), the ultimate holding company.
(ii) Investing party in respect of which the reporting enterprise is an associate. – HDFC Venture Trustee Company Limited
2. The following transactions were carried out with the related parties in the ordinary course of the business:
Sr. No
G&B GPL HDFC Venture Trustee
Company Limited
1 Expenses Charged to other Companies --
9,604,5114,612,506
--
2 Expenses Charged by other Companies --
15094,852
--
3 Debenture Interest --
765,0005,952,329
735,0005,718,904
4 Loans / Advances taken --
105,400,000112,400,000
--
5 Advances repaid --
105,400,000112,400,000
--
6 Outstanding receivables, net of (payables) (703)(703)
(16,032,697)(15,344,207)
(16,744,977)(16,083,477)
7 Debentures Outstanding --
76,500,00076,500,000
73,500,000 73,500,000
(Figures in italics are for previous year)9) Previous year fi gures have been rearranged / regrouped wherever necessary to confi rm to
current year’s classifi cation.10) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956
to the extent not applicable has not been given.
Annual Report 2009–2010
155
ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF THE SCHEDULE VI TO THE COMPANIES ACT, 1956Balance Sheet Abstract for the year ended 31st March, 2010 and Company’s General Business Profi le
1 Registration DetailsRegistration No. U70100MH2005PTC154268State Code 11Balance Sheet Date 31st March, 2010
2 Capital raised during the year (Amount in Rs. thousands)Public Issue NilRights Issue NilBonus Issue NilPrivate Placement - Capital Nil - Premium Nil
3 Position of mobilisation and deployment of funds (Amount in Rs. thousands)Total Liabilities 200,249 Total Assets 200,249 Sources of FundsPaid-up capital 10,000 Reserves & Surplus 6,212 Secured Loans 150,000 Unsecured Loans - Deferred Tax Liability 1 Application of FundsNet Fixed Assets 225 Investments - Net Current Assets 165,988 Misc. Expenditure - Accumulated Losses -
4 Performance of Company (Amount in Rs. thousands)Total Expenditure 1,502 Profi t / (Loss) before Tax 8,152 Profi t / (Loss) after Tax 5,537 Earning per Share (Basic) in Rs. 5.54 Earning per Share (Diluted) in Rs. 0.41 Dividend Rate % -
5 Generic Names of three principalproducts / services of Company N.A.
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2010Particulars Current Year
RupeesPrevious Year
Rupees
Cash Flow from Operating ActivitiesProfi t / (Loss) for the Year 8,152,462 4,026,711 Adjustment for:Depreciation 1,953 7,917 Interest Paid 1,500,000 29,255,181 (Profi t) /Loss on sale of Fixed Asset (Net) - 23,451 Interest Income (9,654,565) (28,785,599)Operating Profi t / (Loss) before working capital changes (150) 4,527,661
Adjustment for:Change in Inventory (6,539,927) 4,400,471 Change in Loans & Advances 3,921,973 84,061,521 Change in Current Liabilities / Provisions (2,584,192) (32,401,802)
(5,202,296) 60,587,851 Taxes Paid (Net) (971,783) (6,507,199)Net Cash Flow from Operating activities (6,174,079) 54,080,652
Cash Flow from Investing ActivitiesSale of Fixed Assets - 25,333 Interest Received 9,654,565 28,785,599 Net Cash Flow from Investing Activities 9,654,565 28,810,932
Cash Flow from Financing Activities - -
Net Increase/ (Decrease) in Cash & Cash Equivalent 3,480,486 82,891,584
Cash & Cash Equivalent -Opening Balance 101,915,567 19,023,983
Cash & Cash Equivalent -Closing Balance 105,396,053 101,915,567
Notes :1. The cash fl ow statement has been prepared under the ‘Indirect Method’ as set out in the
Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows by operating, investing and fi nancing activities.
2. Figures for the previous year have been regrouped/restated wherever necessary to conform to this year’s classifi cation.
For and on behalf ofKALYANIWALLA & MISTRYChartered Accountants
ERMIN K. IRANI MILIND S. KORDE NARESH NADKARNIPartner Directors Mumbai, Dated: May 14, 2010
Godrej Real Estate Private Limited
156
TO THE SHAREHOLDERSYour Directors have pleasure in submitting their Report together with the Audited Accounts for the year ended March 31, 2010.1. FINANCIAL HIGHLIGHTS : The accounting results for the period ended March 31, 2010 reveal that there is a defi cit at the end
of the period.2. REVIEW OF OPERATIONS : During the year the Company has made an application to the authorities for conversion of land use
from IT to mixed use and is awaiting approval. 3. DIVIDEND : As there are no profi ts, the Directors regret that no dividend can be recommended.4. DIRECTORS : In accordance with the provisions of the Companies Act, 1956 and Articles of Association of the Company,
Mr. Milind S Korde, retires by rotation and being eligible, offers himself for re-appointment.5. APPOINTMENT OF AUDITORS: M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and
are eligible for re-appointment for which they have given their consent. 6. DIRECTORS’ RESPONSIBILITY STATEMENT: Your Director’s confi rm: (i) that in the preparation of the annual accounts, the applicable accounting standards have been
followed; (ii) that the Directors have selected such accounting policies and applied them consistently and
made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year ended 31st March, 2010 and of the loss of the Company for that year;
(iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for
BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2010
safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the annual accounts on a going concern basis.7. ADDITIONAL INFORMATION: (a) Since the company has no employees, the particulars of the employees to be disclosed u/s
217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, are not given.
(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:
(i) Conservation of Energy : Expenses on account of Energy are negligible. (ii) Technology Absorption : It is an on going process. (iii) Foreign Exchange Earning & Outgo : The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange
Expenditure during the year.8. ACKNOWLEDGEMENT: Your Directors take this opportunity to thank all the associates for their co-operation. FOR AND ON BEHALF OF THE BOARD Milind S. Korde K.T. Jithendran DirectorMumbai,Dated : May 14, 2010
1. We have audited the attached Balance Sheet of GODREJ REAL ESTATE PRIVATE LIMITED, as at 31st March 2010, the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: a) We have obtained all the information and explanations, which to the best of our knowledge and belief
were necessary for the purpose of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as
appears from our examination of such books. c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are
in agreement with the books of account. d) In our opinion, the Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by
this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.
e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(e) of Schedule 9-Notes to Accounts, in respect of projects under long term contracts undertaken and/or fi nanced by the Company, we have relied upon the management’s estimates of the percentage of completion, costs
REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ REAL ESTATE PRIVATE LIMITEDto completion and on the projections of revenues expected from projects owing to the technical nature of such estimates, on the basis of which profi ts/losses have been accounted, interest income accrued and realizability of the construction work in progress and project advances determined.
f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; ii) in the case of the Profi t and Loss Account, of the loss of the Company for the year ended on
that date and iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended
on that date.5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on
record by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
For and on behalf of
KALYANIWALLA & MISTRY CHARTERED ACCOUNTANTSFirm Registration No. 104607W
ERMIN K. IRANIPARTNERMembership No. 35646Place: MumbaiDated: May 14, 2010
Annexure to the Auditors’ ReportReferred to in paragraph (3) of our report of even date.
1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fi xed assets.
(b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodic intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the Company.
(c) There is no disposal of fi xed assets during the year.
2. (a) The management has conducted physical verifi cation of inventory at reasonable intervals.
(b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.
(c) The company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifi cation.
3. (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.
(b) Consequently, the question of commenting on the rates of interest and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and the interest and reasonable steps for recovery of principal and interest does not arise.
(c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.
(d) Consequently, the question of commenting on the rates of interest and others terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise.
4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.
5. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist.
6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.
7. In our opinion and according to the information and explanations given to us, the internal audit system is commensurate with the size of the Company and nature of its business.
8. The maintenance of cost records has not been prescribed by the Central Government under section 209(1)(d) of the Companies Act, 1956, in respect of the activities carried on by the Company.
9. (a) According to the information and explanations given to us and on the basis of our examination of books of accounts, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and other statutory dues incurred during the year. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute.
10. The Company’s accumulated losses at the end of the fi nancial year are more than fi fty percent of its net worth. The Company has not incurred any Cash losses during the current and immediately preceding fi nancial year.
11. According to the information and explanations given to us and based on documents and records produced to us, the Company has not defaulted in repayment of dues to debenture holders. There are no dues to banks and fi nancial institutions.
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 benefi t 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 or fi nancial institutions.16. Based on our examination and according to the information and explanations given to us, there were no term
loans taken during the year.17. According to the information and explanations given to us and an overall examination of the Balance Sheet
and Cash Flows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investments.
18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.
19. The company did not issue any debentures during the year.20. The Company has not raised any money through a public issue during the year.21. Based on the audit procedures performed and information and explanations given by the management, we
report that no fraud on or by the Company has been noticed or reported during the year.
For and on behalf ofKALYANIWALLA & MISTRYChartered AccountantsFirm Registration No. 104607W
ERMIN K. IRANIPartnerMembership No. 35646Place: MumbaiDated : May 14, 2010
Annual Report 2009–2010
157
BALANCE SHEET AS AT 31ST MARCH, 2010 PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010
The Schedules referred to above form an Signatures to the Balance Sheetintegral part of the Balance Sheet. and Schedules 1 to 6 and 9As per our Report of even date. For and on behalf ofKALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS
ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner Directors Mumbai, Dated : May 14, 2010
The Schedules referred to above form an Signatures to the Profi t & Loss Accountintegral part of the Profi t & Loss Account. and Schedules 7 to 9As per our Report of even date. For and on behalf ofKALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS
ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner Directors Mumbai, Dated : May 14, 2010
SCHEDULES FORMING PART OF THE ACCOUNTS
SCHEDULE 2: FIXED ASSETS
As at31.03.2010
Rupees
As at31.03.2009
RupeesSCHEDULE 1SHARE CAPITALAUTHORISED50,000 Equity shares of Rs. 10/- each 500,000 500,000
500,000 500,000ISSUED, SUBSCRIBED & PAID UP50,000 Equity shares of Rs. 10/- each, fully paid up 500,000 500,000(All the above Shares are held by Godrej Properties Limited, the Holding company and its nominee)
500,000 500,000
Schedule As at As at31.03.2010 31.03.2009
Rupees RupeesSOURCES OF FUNDSShareholders’ Funds
Share Capital 1 500,000 500,000 Loan Funds - -
500,000 500,000 APPLICATION OF FUNDSFixed Assets 2
Gross Block 2,272,694 99,990 Less : Depreciation 446,373 46,302 Net Block 1,826,321 53,688
INVESTMENTS - -
DEFERRED TAX ASSETS 13,000 -
CURRENT ASSETS, LOANS & ADVANCESInventory 3 985,846,618 857,517,086 Cash & Bank Balances 4 68,345 218,014 Loans and advances 5 7,303,998 8,830,043
993,218,961 866,565,143 LESS : CURRENT LIABILITIES & PROVISIONS
Current Liabilities 6 995,034,164 866,207,642 995,034,164 866,207,642
NET CURRENT ASSETS (1,815,203) 357,501 MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted) Preliminary Expenditure 11,052 12,894 PROFIT & LOSS ACCOUNT 464,830 75,917
500,000 500,000 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 9
Schedule For the Year Ended31.03.2010
Rupees
For the Year Ended31.03.2009
Rupees
INCOME - -
EXPENDITURE
Cost of sales 7 - -
Interest & Finance Charges 8 - -
Depreciation 400,071 32,518
Preliminary Expenses written off 1,842 1,842
Defi cit for the Year (401,913) (34,360)
Deferred Tax 13,000 -
(Loss) / Profi t for the Year (388,913) (34,360)
Defi cit Brought Forward (75,917) (41,557)
Defi cit Carried Forward to Balance Sheet (464,830) (75,917)
Earning per share Basic/Diluted in Rs. (Refer Note 4) (7.78) (0.69)
NOTES TO ACCOUNTS & ACCOUNTING POLICIES 9
Particulars Gross Block Depreciation Net Block As at
1st April 2009
Additions Deductions As at 31st
March 2010
Upto 1st April
2009
For the Year
Upto 31st
March 2010
As at 31st
March 2010
As at 31st March
2009
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Offi ce Equipment
7,990 565,017 - 573,007 1,509 67,233 68,742 504,265 6,481
Furniture & Fixtures
- 1,455,099
- 1,455,099
- 263,159
263,159 1,191,940
-
Computer 92,000 152,588 - 244,588 44,793 69,679 114,472 130,116 47,207 TOTAL 99,990
2,172,704 -
2,272,694 46,302
400,071 446,373
1,826,321 53,688
Previous Year
99,990 - - 99,990 13,784 32,518 46,302 53,688 –
As at31.03.2010
Rupees
As at31.03.2009
Rupees
SCHEDULE 3INVENTORYConstruction Work in Progress 985,846,618 857,517,086
985,846,618 857,517,086 SCHEDULE 4CASH & BANK BALANCECash & Cheques In hand 5,224 131 Balances with Scheduled Bank - On Current Accounts 63,121 217,883
68,345 218,014 SCHEDULE 5LOANS & ADVANCES (Unsecured Considered good unless otherwise stated)Advances recoverable in cash or kind or for value to be received
7,303,998 8,830,043
7,303,998 8,830,043 SCHEDULE 6CURRENT LIABILITIESSundry Creditors (Refer Note No 3) 1,410,886 557,318 Investor Education & Protection Fund - - Other Liabilities 993,623,278 865,650,324
995,034,164 866,207,642
Godrej Real Estate Private Limited
158
For the year ended
31.03.2010Rupees
For the year ended
31.03.2009Rupees
Opening Stock 857,517,086 728,176,550 Add : Expenditure/Transfers from Advances/Taken over during the year Construction 2,060,605 6,321,935 Architect Fees 3,441,360 - Advertisement Expenses 138,096 - Overheads 32,111,180 41,396,718 Interest 90,578,291 81,621,882
985,846,618 857,517,086 Less : Closing Stock: 985,846,618 857,517,086 Cost of Sales - -
SCHEDULE 8INTEREST AND FINANCIAL CHARGESInterest PaidOther loans 90,578,291 81,621,882 Total Interest Paid 90,578,291 81,621,882 Add: Brokerage & other Financial Charges - - Total Interest/Finance Charges Paid 90,578,291 81,621,882 Less: Transferred to Cost of Sales 90,578,291 81,621,882 NET INTEREST - -
SCHEDULES FORMING PART OF THE ACCOUNTS
SCHEDULE 91) Accounting Policies a) General The fi nancial statements are prepared under the historical cost convention in accordance
with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.
b) Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated
depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.
Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.
c) Depreciation / Amortization Depreciation has been provided on Written Down Value basis, at the rates specifi ed in
Schedule XIV of the Companies Act, 1956. d) Inventories Inventories are valued as under : Completed Flats - At lower of Cost or Market value Construction Work-in-Progress - At Cost Construction Work in Progress includes cost of land, premium for development
rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.
e) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As
per this method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.
f) Borrowing Cost Interest and Finance charges incurred in connection with borrowing of funds, which are
incurred for the development of long term projects are transferred to Construction Work in Progress as a part of the cost of the projects at weighted average of the borrowing cost.
g) Earnings Per Share The basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
h) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the
date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange
rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profi t and Loss Account.
i) Provision for taxation Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities,
using the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between
the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
j) Provisions And Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations,
the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from
the past events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. There is no contingent liability as on the balance sheet date.
k) Miscellaneous Expenditure Miscellaneous expenditure is amortized over a period of 10 years.2) Leases The Company’s signifi cant leasing arrangements are in respect of operating leases for
commercial premises. Lease expenditure from operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises taken under operating leases are as under:
Particulars Current Year
Rs.
Previous Year
Rs.
Future minimum lease Payment under non-cancelable operating leases
Not later than 1 year 1,384,320 1,384,320
Later than 1 year and not later than 5 years 3,918,395 5,299,117
3) Micro, Small and Medium Enterprises Development Act, 2006: Disclosure of sundry creditors under current liabilities is based on the information available
with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, 2010 to Micro, Small and Medium Enterprises on account of principal amount together with interest and also during the previous year.
4) Earnings per share
Particulars Current Year Previous Year
Profi t / (Loss) as per Profi t & Loss Account (Rs.) (388,913) (34,360)
Weighted average no. of equity shares outstanding 50,000 50,000
Basic / Diluted earnings per share (Rs.) (7.78) (0.69)
Nominal value of shares (Rs.) 10 /- 10 /-
5) Deferred Tax The Tax effect of signifi cant temporary differences that resulted in the deferred tax assets
are:
Particulars Current Year(Rs.)
Previous Year(Rs.)
Assets- Depreciation on Fixed Assets
13,000 -Deferred Tax Assets 13,000 -
6) Amounts paid to Auditors
Particulars Current Year(Rs.)
Previous Year(Rs.)
Audit Fees 159,935 159,935
Consultancy Charges 40,388 33,708
Total 200,323 1,93,643
7) Segment Information As the company has only one business segment, disclosure under Accounting Standard 17
on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.
8) AS 18 – Related Party Disclosure Related party disclosures as required by AS-18, “Related Party Disclosures’, are given
below: 1. Relationships: Shareholders: Godrej Properties Limited (GPL) holds 100% of the Share Capital of the
Company. GPL is the Subsidiary of Godrej Industries Limited (GIL). GIL is subsidiary of Godrej & Boyce Manufacturing Company Limited (G&B), the ultimate holding company.
Annual Report 2009–2010
159
SCHEDULES FORMING PART OF THE ACCOUNTS CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010
For and on behalf ofKALYANIWALLA & MISTRY CHARTERED ACCOUNTANTS
ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRANPartner Directors Mumbai, Dated : May 14, 2010
Balance Sheet Abstract for the Year ended 31st March, 2010 And Company’s General Business Profi le
1 Registration Details Registration No. : U45200MH2007PTC168818 State Code : 11 Balance Sheet Date : 31st March, 20102 Capital raised during the year (Amount in Rs. thousands) Public Issue : Nil Rights Issue : Nil Bonus Issue : Nil Private Placement - Capital : Nil - Premium : Nil3 Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities : 995,534 Total Assets : 995,534 Sources of Funds Paid-up capital : 500 Reserves & Surplus : - Secured Loans : - Unsecured Loans : - Application of Funds Net Fixed Assets : 1,826 Investments : - Deferred Tax Assets : 13 Net Current Assets : (1,815) Misc. Expenditure : 11 Accumulated Losses : 465 4 Performance of Company (Amount in Rs. thousands) Turnover : - Total Expenditure : (402) Profi t/(Loss) before Tax : (402) Profi t/(Loss) after Tax : (389) Earning per Share in Rs. : (7.78) Dividend Rate % : -5 Generic Names of three principal products/services of Company : N.A.
Current YearRupees
Previous YearRupees
Cash Flow from Operating Activities
Loss for the Year (401,913) (34,360)
Adjustment for:
Depreciation 400,071 32,518
Interest Paid 90,578,291 81,621,882
Preliminary expenses 1,842 1,842
Operating Loss before working capital changes 90,578,291 81,621,882
Adjustment for:
Change in Inventory (128,329,532) (129,340,535)
Change in Loans & Advances 1,526,045 (7,152,543)
Change in Current Liabilities / Provisions 38,248,231 54,960,253
Net Cash Flow from Operating activities 2,023,035 89,057
Cash Flow from Investing Activities
Purchase of Fixed Assets (2,172,704) -
Net Cash Flow from Investing Activities (2,172,704) -
Cash Flow from Financing Activities - -
Net Increase/ (Decrease) in Cash & Cash Equivalent (149,669) 89,057
Cash & Cash Equivalent -Opening Balance 218,014 128,957
Cash & Cash Equivalent -Closing Balance 68,345 218,014
Notes :
1. The cash fl ow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows by operating, investing and fi nancing activities.
2. Figures for the previous year have been regrouped/ restated wherever necessary to conform to this year’s classifi cation.
2. The following transactions were carried out with the related parties in the ordinary course of the business:
Sr. No Particulars GPL G&B
1. Expenses charged by other companies 118,101,621108,151,756
--
2. Purchase of Fixed Assets --
14,86,527-
3. Advances received 29,625,00034,450,000
--
4. Advances repaid 800,00010,00,000
--
5. Outstanding payables 983,867,205845,998,414
--
Figures in italics are for previous year9) Previous year fi gures have been rearranged / regrouped wherever necessary to confi rm to
current year’s classifi cation.10) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956
to the extent not applicable has not been given.
11) Additional Information as required under Part IV of the Schedule VI to the Companies Act, 1956
Godrej Developers Private Limited
160
DIRECTORS’ REPORT FOR THE PERIOD ENDED ON MARCH 31, 2010
Annexure to the Auditors' Report
TO THE SHAREHOLDERSYour Directors have pleasure in submitting their Report together with the Audited Accounts for the year ended March 31, 2010.1. FINANCIAL HIGHLIGHTS: The accounting results for the year ended March 31, 2010 reveal that there is a defi cit at the end of the year.2. REVIEW OF OPERATIONS: During the year the Company has completed piling work for Phase - I. Structural work up to 12th level have also
been completed for Phase-I. Contracting for MEP service & Elevators are in process. Shifting of existing Simoco offi ce to the new building has been initiated.
3. DIVIDEND: As there are no profi ts, Directors regret their inability to recommend any dividend for the year under
consideration.4. DIRECTORS: In accordance with the provisions of the Articles of Association, Mr. Milind Korde and Mr. K. T. Jithendran, retire
by rotation and being eligible, offers themselves for re-appointment. Mr. G.B. Singh resigned as Director from the Board of Directors with effect from March 15, 2010. The Board
wishes to place on record its appreciation for the valuable guidance extended by him during his association with the Company.
During the year Mr.Y. Kalyan Chakrabarti has been appointed as an Additional Director on March 15, 2010, who will hold offi ce till the conclusion of the ensuing Annual General Meeting of the Company. It is proposed to appoint him as a Director liable to retire by rotation in this Annual General Meeting.
5. APPOINTMENT OF AUDITORS: M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are
eligible for re-appointment for which they have given their consent.6. DIRECTORS’ RESPONSIBILITY STATEMENT: Your Directors confi rm: (i) that in the preparation of the annual accounts, the applicable accounting standards have been followed; (ii) that the Directors have selected such accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year ended March 31, 2010 and of the loss of the Company for that year;
(iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the annual accounts on a going concern basis.7. ADDITIONAL INFORMATION: (a) Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of
the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given. (b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings
and Outgo, required under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:
(i) Conservation of Energy: Expenses on account of Energy are negligible. (ii) Technology Absorption: It is an on going process. (iii) Foreign Exchange Earning & Outgo: The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure
during the year.8. ACKNOWLEDGEMENT: Your Directors take this opportunity to thank all the associates for their co-operation.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
MILIND S. KORDE ChairmanMumbai, Dated: May 05, 2010
REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ DEVELOPERS PRIVATE LIMITED1. We have audited the attached Balance Sheet of GODREJ DEVELOPERS PRIVATE LIMITED, as at 31st March 2010, the
Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: a) We have obtained all the information and explanations, which to the best of our knowledge and belief were
necessary for the purpose of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as
appears from our examination of such books. c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in
agreement with the books of account. d) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with
by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.
e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(e) of Schedule 11-Notes to Accounts, in respect of projects under long term contracts undertaken and/or fi nanced by the Company, we have relied upon the management’s estimates of the percentage of completion, costs to completion and on the projections of revenues expected from projects owing to the technical nature
Referred to in paragraph (3) of our report of even date.1) (a) The Company has maintained proper records showing full particulars, including quantitative details and
situation of fi xed assets. (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodical
intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the Company.
(c) There is no disposal of fi xed assets during the year.2) (a) The management has conducted physical verifi cation of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are
reasonable and adequate in relation to the size of the company and the nature of its business. (c) The company is maintaining proper records of inventory and no material discrepancies were noticed on
physical verifi cation.3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties
covered in the register maintained under Section 301 of the Companies Act, 1956. (b) Consequently, the question of commenting on the rates of interest, terms and conditions of the loans
granted being prejudicial to the interests of the Company, receipt of regular principal and interest and reasonable steps for recovery of the same does not arise.
(c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956
(d) Consequently, the question of commenting on the rates of interest and others terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise.
4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.
5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.
(b) In our opinion and according to the information and explanations given to us ,the transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist.
6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.
7) The Company has an internal audit system, which in our opinion is commensurate with the size of the Company and nature of its business.
8) In our opinion and according to the information and explanations given to us, The Central Government has not been prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company.
9) (a) According to the information and explanations given to us and on the basis of our examination of books of accounts, during the year, the Company has been generally regular in depositing undisputed statutory
of such estimates, on the basis of which profi ts/losses have been accounted, interest income accrued and realizability of the construction work in progress and project advances determined.
f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; ii) in the case of the Profi t and Loss Account, of the loss of the Company for the year ended on that date
and iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that
date.5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on record
by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTSFirm Registration No. 104607W
ERMIN K. IRANIpartnerMembership No. 35646
Place: MumbaiDated: May 05, 2010
dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and other statutory dues incurred during the year. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute.
10) The Company’s accumulated losses at the end of the fi nancial year are less than fi fty percent of its networth. Further, the company has not incurred any cash losses in the current and immediately preceding fi nancial years.
11) According to the information and explanations given to us and based on documents and records produced to us, the Company has not defaulted in repayment of dues to bank and fi nancial institutions. The Company does not have any outstanding debentures.
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 benefi t fund/ societies.
14) In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments.
15) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or fi nancial institutions.
16) According to the information and explanations given to us and based on the documents and records examined by us, on an overall basis, the term loan has been applied for the purpose for which the loan was obtained.
17) According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short term basis for long term investments.
18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.
19) The Company did not issue any debentures during the year.20) The Company has not raised any money through a public issue during the year.21) Based on the audit procedures performed and information and explanations given by the management, we
report that no fraud on or by the Company has been noticed or reported during the year.For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTSFirm Registration No. 104607W
ERMIN K. IRANIPartnerMembership No. 35646Place : MumbaiDated : May 05, 2010
Annual Report 2009—2010
161
BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
SCHEDULES FORMING PART OF THE ACCOUNTS
The Schedules referred to above form an integral Signatures to the Balance Sheetpart of the Balance Sheet. and Schedules 1 to 8 and 11
As per our Report of even date.
For and on behalf ofKALYANIWALLA & MISTRYChartered Accountants
ERMIN K. IRANI MILIND S. KORDE K T JITHENDRANPartner Directors
Mumbai, Dated: May 05, 2010
The Schedules referred to above form an integral Signatures to Profi t & Loss Accountpart of the Profi t & Loss Account. and Schedules 9 to 11
As per our Report of even date.
For and on behalf ofKALYANIWALLA & MISTRYChartered Accountants
ERMIN K. IRANI MILIND S. KORDE K T JITHENDRANPartner Directors
Mumbai, Dated: May 05, 2010
SCHEDULE 4 : FIXED ASSETS
Schedule As at31.03.2010
Rupees
As at31.03.2009
RupeesSOURCES OF FUNDSShareholders’ Funds
Share Capital 1 667,300 667,300 Reserves & Surplus 2 - -
Loan Funds 3 453,900,000 - Deferred Tax Liability 13,000 -
454,580,300 667,300 APPLICATION OF FUNDSFixed AssetsGross Block 4 173,585 139,464 Less : Depreciation 98,521 43,406 Net Block 75,064 96,058 INVESTMENTS - - Current Assets, Loans & Advances
Inventory 5 808,334,259 313,882,169 Cash & Bank Balances 6 5,585,346 102,229 Loans & Advances 7 197,458,358 100,272,825
1,011,377,963 414,257,223 Less : Current Liabilities & Provisions Current Liabilities 8 557,026,757 413,771,896
557,026,757 413,771,896 Net Current Assets 454,351,206 485,327 Miscellaneous Expenditure(to the extent not written off or adjusted)
Preliminary Expenditure 11,052 12,894 Profi t & Loss Account 142,978 73,021
454,580,300 667,300
Notes To Accounts & Accounting Policies 11
Schedule For the year ended 31.03.2010
Rupees
For the year ended 31.03.2009
Rupees
INCOME - -
EXPENDITURE
Cost of Sales 9 - -
Interest & Finance Charges 10 - -
Depreciation 55,115 43,406
Preliminary Expenses written off 1,842 1,842
Defi cit for the year (56,957) (45,248)
Provision for Deferred Tax (13,000) -
Defi cit After Tax (69,957) (45,248)
Defi cit Brought Forward (73,021) (27,773)
Defi cit Carried Forward to Balance Sheet (142,978) (73,021)
Earning per share Basic/Diluted in Rs. (Refer Note 6) (1.05) (0.72)
NOTES TO ACCOUNTS & ACCOUNTING POLICIES 11
As at31.03.2010
Rupees
As at31.03.2009
RupeesSCHEDULE 1: SHARE CAPITALAuthorised90,000 Equity shares of Rs. 10/- each 900,000 900,000 10,000 10% Non Convertible Cumulative Redeemable Preference Shares of Rs. 10/- each
100,000 100,000
1,000,000 1,000,000Issued, Subscribed & Paid Up66,730 Equity shares of Rs. 10/- each, fully paid-up 667,300 667,300(Out of which 34,032 Equity Shares are held by Godrej Properties Limited, the Holding company and its nominee)
667,300 667,300SCHEDULE 2: RESERVE & SURPLUSReceived During the Year - 214,844,318 Less : Utilised for Redemption of Preference Shares during the
year - (214,844,318)
- -
Particulars Gross Block Depreciation Net Block
As at 1st
April2009
Additions Deductions As at 31st March2010
As at1st
April2009
For the Year
As at31st
March2010
As at 31st March2010
As at 31st
March2009
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Offi ce Equipment - 5,063 - 5,063 - 546 546 4,517 -
Computer 139,464 29,058 - 168,522 43,406 54,569 97,975 70,547 96,058
Total 139,464 34,121 - 173,585 43,406 55,115 98,521 75,064 96,058
Previous Year - 139,464 - 139,464 - 43,406 43,406 96,058 –
As at31.03.2010
Rupees
As at31.03.2009
RupeesSCHEDULE 5: INVENTORYConstruction work-in-progress 808,334,259 313,882,169
808,334,259 313,882,169
SCHEDULE 6: CASH & BANK BALANCECash & Cheques in hand 54,119 10,622 Balances with Scheduled Bank - on Current Accounts 5,531,227 91,607
5,585,346 102,229
SCHEDULE 7: LOANS & ADVANCES(Unsecured & considered good unless otherwise stated)Advances recoverable in cash or kind or for value to be received - Secured (Secured against Bank / Corporate Guarantee) 97,062,129 - - Others 100,396,229 100,272,825
197,458,358 100,272,825
SCHEDULE 8: CURRENT LIABILITIESSundry Creditors (Refer Note 4) 42,034,294 13,435,028 Investors Education & Protection Fund - - Other Liabilities 514,992,463 400,336,868
557,026,757 413,771,896
SCHEDULE 3: SECURED LOANSTerm Loan from State Bank of India 453,900,000 - (Secured against Company’s share of undivided interest in the project Godrej Genesis at Kolkata)
453,900,000 -
Godrej Developers Private Limited
162
SCHEDULE 11 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES1) Accounting Policies a) General The accounts are prepared under the Historical Cost Convention, using the accrual
method of accounting, the accounting standard issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.
b) Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated
depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.
Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.
c) Depreciation / Amortization Depreciation has been provided on Written Down Value basis, at the rates specifi ed in
Schedule XIV of the Companies Act, 1956. d) Inventories Inventories are valued as under: a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At Cost Construction Work in Progress includes cost of land, premium for development
rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.
e) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As
per this method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.
Interest income is accounted on an accrual basis at contracted rates. f) Borrowing Cost Interest and Finance charges incurred in connection with borrowing of funds, which are
incurred for the development of long term projects, are transferred to Construction Work-in-Progress as a part of the cost of the projects at weighted average of the borrowing cost.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
g) Earnings Per Share The basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
h) Provision For Taxation Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using
the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between
the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
i) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the
date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange
rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profi t and Loss Account.
j) Provisions and Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations,
the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from
the past events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. There is no contingent liability as on the balance sheet date.
k) Miscellaneous Expenditure Miscellaneous expenditure is amortized over a period of 10 years.2) 10,000 10% Non Convertible Cumulative Redeemable Preference shares of Rs.10/- each
issued on 24th March 2008 are redeemed on 31st March 2009 @ premium of Rs. 21,484.43/- Per Share as per the provision of Companies Act ,1956.
3) Preference dividend
Particulars Current Year (Rs.) Previous Year (Rs.)Arrears of Cumulative Preference Dividend 10,163 10,163
4) Due to Micro, Small and Medium Enterprises Disclosure of sundry creditors under current liabilities is based on the information available
with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, 2010 to Micro, Small and Medium Enterprises on account of principal amount together with interest and also during the previous year.
5) Deferred Tax The Tax effect of signifi cant temporary differences that resulted in the deferred tax
liabilities are :
Particulars Current Year (Rs.)
Previous Year (Rs.)
Liabilities- Depreciation on Fixed Assets 13,000 -Deferred Tax Liabilities 13,000 -
6) Earnings Per Share
Particulars Current Year Previous YearLoss for the year as per Profi t & Loss Account(Rs.) (69,957) (45,248)Weighted average no. of equity shares outstanding 66,730 62,513Basic Earnings Per Share (Rs.) (1.05) (0.72)Nominal value of shares (Rs.) 10 /- 10 /-
7) Amounts paid to Auditors
Particulars Current Year (Rs.)
Previous Year (Rs.)
Audit Fees 159,935 159,935Certifi cation 33,092 11,236Consultancy Charges 40,388 -Total 233,415 171,171
8) Segment Information As the company has only one business segment, disclosure under Accounting Standard 17
on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.
9) Related Party Disclosure Related party disclosures as required by AS-18, “Related Party Disclosures”, are given
below: 1. Relationships: Shareholders: Godrej Properties Limited (GPL) holds 51% of the Share Capital of the
Company. Red Fort India Real Estate Babur (RFIREB) holds 49% of the Share Capital of the Company.
2. The following transactions were carried out with the related party in the ordinary course of the business:
Sr. No Particulars GPL RFIREB
1 Issue of Equity/Preference Shares --
-215,011,618
2 Redemption of Preference Shares -214,944,318
--
3 Expenses Charged by other companies 61,571,20247,353,570
--
4 Expenses Charged to other companies -2,566,142
--
5 Advances received 501,687,500333,644,318
--
6 Advances paid 453,900,00088,250,000
--
7 Outstanding payables 501,260,304397,087,438
--
Figures in italics are for previous year
SCHEDULE 9: COST OF SALESOpening Stock: 313,882,169 141,768,467 Add : Expenditure/Transfers from Advances/Taken over during the year
Construction, Material & Labour 379,990,860 42,400,487 Architect Fees 6,563,741 10,112,400 Overheads 39,387,620 108,714,649 Interest 68,509,869 10,886,166
808,334,259 313,882,169 Less : Closing Stock: 808,334,259 313,882,169 Cost of Sales - -
SCHEDULE 10: INTEREST AND FINANCIAL CHARGESInterest Paid - Banks 16,651,505 38 - Others 51,858,364 10,886,128 Total Interest Paid 68,509,869 10,886,166
Less: Transferred to Cost of Sales 68,509,869 10,886,166 NET INTEREST - -
Annual Report 2009—2010
163
10) Previous year fi gures have been regrouped / rearranged where ever necessary to confi rm to current year’s classifi cation.
11) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.
12) Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956
Balance Sheet abstract for the Year ended 31st March, 2010 And Company’s General Business Profi le
1. Registration DetailsRegistration No. : U45200MH2007PTC168783State Code : 11Balance Sheet Date : 31st March, 2010
2. Capital raised during the year (Amount in Rs. thousands)Public Issue : NilRights Issue : NilBonus Issue : NilPrivate Placement - Capital : Nil - Premium : Nil
3. Position of mobilisation and deployment of funds (Amount in Rs. thousands)Total Liabilities : 1,011,607 Total Assets : 1,011,607 Sources of Funds Paid-up capital : 667 Reserves & Surplus : - Secured Loans : 453,900 Unsecured Loans : - Deferred Tax Liability : 13 Application of Funds Net Fixed Assets : 75 Investments : - Net Current Assets : 454,351 Misc. Expenditure : 11 Accumulated Losses : 143
4. Performance of Company (Amount in Rs. thousands)Turnover : - Total Expenditure : (57)Profi t / (Loss) before Tax : (57)Profi t / (Loss) after Tax : (70)Earning per Share in Rs. : (1.05)Dividend Rate % : -
5. Generic Names of three principalproducts / services of Company : N.A.
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010Current Year
Rupees Previous Year
Rupees Cash Flow from Operating Activities
Loss For the period (56,957) (45,248)
Adjustment for:
Depreciation 55,115 43,406
Interest Paid 68,509,869 10,886,166
Preliminary Expenses 1,842 1,842
Operating Profi t before working capital changes 68,509,869 10,886,166
Adjustment for:
Change in Inventory (494,452,090) (172,113,702)
Change in Loans & Advances (97,185,533) 155,185
Change in Current Liabilities/Provisions 86,481,320 161,040,793
Net Cash Flow from Operating activities (436,646,434) (31,558)
Cash Flow from Investing Activities
Purchase of Fixed Assets (34,121) (139,464)
(34,121) (139,464)
Cash Flow from Financing Activities
Proceeds from Issue of Equity Share Capital including Share Premium Amount
- 215,011,618
Increase in Secured Loan 453,900,000 -
Redemption of Preference Shares - (214,944,318)
Interest Paid (11,736,328) (38)
Net Cash Flow from Financing Activities 442,163,672 67,262
Net Increase/ (Decrease) in Cash & Cash Equivalent 5,483,117 (103,760)
Cash & Cash Equivalent -Opening Balance 102,229 205,989
Cash & Cash Equivalent -Closing Balance 5,585,346 102,229
Notes :
1. The cash fl ow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows by operating, investing and fi nancing activities.
2. Figures for the previous year have been regrouped/ restated wherever necessary to conform to this year’s classifi cation.
For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTS
ERMIN K. IRANI MILIND S. KORDE K. T. JITHENDRANPartner Director
Mumbai, Dated: May 05, 2010
Godrej Sea View Properties Private Limited
164
DIRECTORS’ REPORT FOR THE PERIOD ENDED MARCH 31, 2010TO THE SHAREHOLDERSYour Directors have pleasure in submitting their Report together with the Audited Accounts for the year ended March 31, 2010.1. FINANCIAL HIGHLIGHTS: The accounting results for the period ended March 31, 2010 reveal that there is a defi cit at the end of the
period.2. REVIEW OF OPERATIONS: The Company has executed an assignment agreement with Godrej Properties Limited for undertaking
development of their project called ‘Godrej Palm Grove’ at Chennai. Further HDFC PMS (under HDFC Asset Management Company Limited Portfolio Management Services Real Estate Portfolio-I, through its Portfolio Manager HDFC Asset Management Company Limited) has purchased a 49% equity in the Company. Post transfer of shares to HDFC PMS, Godrej Properties Limited now holds 51% stake in the Company.
The Company is developing a residential project and has conceptualized and fi nalized the design for the First Phase of the Project.
3. DIVIDEND: As there are no profi ts, the Directors regret that no dividend can be recommended.4. SUBDIVISION OF SHARES: During the year your Company has sub-divided the equity share capital from Rs.10/- each to Re.1/- each,
consequently the total number of equity shares of the Company has increased from 50,000 to 5,00,000.5. DIRECTORS: During the year Mr. Vipul Roongta was appointed as a nominee Director of HDFC Asset Management Company
Limited w.e.f March 31, 2010. In accordance with the provisions of the Articles of Association, Mr. Milind S. Korde retires by rotation and being
eligible, offers himself for re-appointment.6. APPOINTMENT OF AUDITORS: M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are
eligible for re-appointment for which they have given their consent.7. DIRECTORS’ RESPONSIBILITY STATEMENT: Your Director’s confi rm: (i) 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;
(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year ended 31st March, 2010 and of the loss of the Company for that year;
(iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the annual accounts on a going concern basis.8. ADDITIONAL INFORMATION: a. Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of
the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given. b. Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings
and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:
i. Conservation of Energy : Expenses on account of Energy are negligible.
ii. Technology Absorption : It is an on going process.
iii. Foreign Exchange Earning & Outgo : The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure
during the year.
9. ACKNOWLEDGEMENT: Your Directors take this opportunity to thank all the associates for their co-operation. For and on Behalf of the Board of Directors
MILIND S. KORDE K.T. JITHENDRAN Directors Mumbai, Dated: May 14, 2010
REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ SEA VIEW PROPERTIES PRIVATE LIMITED
Annexure to the Auditors' Report Referred to in paragraph (3) of our report of even date.
1. We have audited the attached Balance Sheet of GODREJ SEA VIEW PROPERTIES PRIVATE LIMITED, as at 31st March, 2010, the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that: a) We have obtained all the information and explanations, which to the best of our knowledge and belief
were necessary for the purposes of our audit. b) In our opinion, proper books of account as required by law have been kept by the Company so far as
appears from our examination of such books. c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in
agreement with the books of account. d) In our opinion, the Balance Sheet and the Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956. e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(e) of Schedule
11-Notes to Accounts, in respect of projects under long term contracts undertaken and/or fi nanced by the Company, we have relied upon the management’s estimates of the percentage of completion, costs
to completion and on the projections of revenues expected from projects owing to the technical nature of such estimates, on the basis of which profi ts/losses have been accounted, interest income accrued and realizability of the construction work-in-progress and project advances determined.
f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; ii) in the case of the Profi t and Loss Account, of the loss of the Company for the year ended on that
date and, iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on
that date.5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on
record by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTSFirm Registration No.: 104607W
ERMIN K. IRANIPartnerMembership No. 35646Place : Mumbai, Date : May 14, 2010
1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fi xed assets.
(b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodical intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the Company.
(c) There is no disposal of fi xed assets during the year.2) (a) The management has conducted physical verifi cation of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the management are
reasonable and adequate in relation to the size of the company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on
physical verifi cation.3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties
covered in the register maintained under Section 301 of the Companies Act, 1956. (b) Consequently, the question of commenting on the rates of interest, terms and conditions of the loans
granted being prejudicial to the interests of the Company, receipt of regular principal and interest and reasonable steps for recovery of the same does not arise.
(c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.
(d) Consequently, the question of commenting on the rates of interest and others terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise.
4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.
5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist.
6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.
7) The Company has an internal audit system, which in our opinion is commensurate with the size of the Company and nature of its business.
8) In our opinion and according to the information and explanations given to us, The Central Government has not been prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company.
9) (a) According to the information and explanations given to us and on the basis of our examination of books of accounts, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance,
Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and other statutory dues incurred during the year. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March, 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute.
10) The Company’s accumulated losses at the end of the fi nancial yearare less than fi fty percent of its networth. In Current year the Company has not incurred cash losses, however, it has incurred cash losses in the immediately preceding fi nancial year
11) According to the information and explanations given to us and based on documents and records produced to us, the Company has not defaulted in repayment of dues to bank. The Company does not have any outstanding debentures or dues to fi nancial institutions.
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 benefi t fund/ societies.
14) In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments.
15) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or fi nancial institutions.
16) Based on our examination and according to the information and explanations given to us, there were no term loans taken during the year.
17) According to the information and explanations given to us and an overall examination of the Balance Sheet and cash fl ows of the Company, we report that the Company has not utilized funds raised on short term basis for long term investments.
18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.
19) The Company did not issue any debentures during the year.20) The Company has not raised any money through a public issue during the year.21) Based on the audit procedures performed and information and explanations given by the management, we
report that no fraud on or by the Company has been noticed or reported during the year.
For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTSFirm Registration No.: 104607W
ERMIN K. IRANIPartnerMembership No. 35646Place : Mumbai, Date : May 14, 2010
Annual Report 2009–2010
165
BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
SCHEDULES FORMING PART OF THE ACCOUNTS As at As at 31.03.2010 31.03.2009 Rupees Rupees
SCHEDULE 1 : SHARE CAPITALAuthorised500,000 Equity shares of Re. 1/- each 500,000 500,000(Previous Year 50,000 Equity shares of Rs. 10/- each) 500,000 500,000
Issued, Subscribed and Paid-up500,000 Equity shares of Re. 1/- each, fully paid-up 500,000 500,000(Of the above 388,636 (Previous year 50,000 Equity sharesof Rs. 10/- each) Shares are held by Godrej Properties Limited,the Holding company and its nominee) 500,000 500,000
The Schedules referred to above form an integral Signatures to the Balance Sheetpart of the Balance Sheet. and Schedules 1 to 7 and 11
As per our Report of even date.
For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTS
ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRANPartner Directors
Mumbai, Dated: May 14, 2010
The Schedules referred to above form an integral Signatures to Profi t & Loss Accountpart of the Profi t & Loss Account. and Schedules 8 to 11
As per our Report of even date.
For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTS
ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRANPartner Directors
Mumbai, Dated: May 14, 2010
Schedule As at31.03.2010
Rupees
As at31.03.2009
Rupees
SOURCES OF FUNDSSHAREHOLDERS' FUNDSShare Capital 1 500,000 500,000 LOAN FUNDS — —DEFERRED TAX LIABILITY 31,000 —
531,000 500,000 APPLICATION OF FUNDSFIXED ASSETS 2Gross Block 587,902 —Less : Depreciation 7,967 —Net Block 579,935 —Capital Work-In-Progress / Advances 2,182,485 —
2,762,420 —INVESTMENTS — —CURRENT ASSETS, LOANS & ADVANCESInventory 3 36,331,024 —Cash & Bank Balances 4 19,926,791 392,781 Loans & Advances 5 82,945,430 —
139,203,245 392,781 LESS : CURRENT LIABILITIES & PROVISIONSCurrent Liabilities 6 141,616,260 50,963 Provisions 7 — —
141,616,260 50,963
NET CURRENT ASSETS (2,413,015) 341,818
MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)
Preliminary Expenditure 11,052 12,894
PROFIT AND LOSS ACCOUNT 170,543 145,288
531,000 500,000
Notes To Accounts & Accounting Policies 11
Schedule For the year ended 31.03.2010
Rupees
For the year ended 31.03.2009
Rupees
INCOME
Interest Income 15,554 —
EXPENDITURE
Cost of Sales 8 — —
Administration Expenses 9 — 77,186
Interest & Finance Charges 10 — —
Depreciation 7,967 —
Preliminary Expenses written off 1,842 1,842
Profi t / (Defecit) for the Year 5,745 (79,028)
Provision for Taxation
For Current Tax (1,000) —
For MAT Credit Entitlement 1,000 —
For Deferred Tax (31,000) —
Defi cit After Tax (25,255) (79,028)
Defi cit Brought Forward (145,288) (66,260)
Defi cit carried to the Balance sheet (170,543) (145,288)
Earning per share - Basic in Rs. (Refer Note 3) (0.05) (0.16)
NOTES TO ACCOUNTS & ACCOUNTING POLICIES 11
Particulars Gross Block Depreciation Net Block
As at1st
April, 2009
Additions Deductions
As at31st
March, 2010
Upto1st
April, 2009
For the Year
Upto31st
March, 2010
As at31st
March, 2010
As at31st
March, 2009
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Offi ce Equipment — 135,000 — 135,000 — 848 848 134,152 —
Furniture & Fixtures — 152,061 — 152,061 — 528 528 151,533 —
Computer — 300,841 — 300,841 — 6,591 6,591 294,250 —
TOTAL — 587,902 — 587,902 — 7,967 7,967 579,935 Previous Year — — — — — — — — —
Capital Work-in-Progress
— — — — — — — 2,182,485 —
TOTAL 2,762,420 —
SCHEDULE 2 : FIXED ASSETS
Godrej Sea View Properties Private Limited
166
As at 31.03.2010
Rupees
As at 31.03.2009
Rupees
SCHEDULE 3INVENTORYConstruction Work-in-Progress 36,331,024 —
36,331,024 —
SCHEDULE 4CASH & BANK BALANCECash & Cheques-in-Hand 1,960 —Balance with Scheduled Bank - on Current Account 674,831 392,781 - on Fixed Deposit Accounts 19,250,000 -
19,926,791 392,781
SCHEDULE 5LOANS & ADVANCES(Unsecured & considered good unless otherwise stated)
Advances recoverable in cash or kind or for value to be received
2,929,876 —
Interest accrued 15,554 —Deposits 80,000,000 —
82,945,430 —
SCHEDULE 6CURRENT LIABILITIESSundry Creditors (Refer Note 2) 1,009 23,388Other Liabilities 141,615,251 27,575
141,616,260 50,963
SCHEDULE 7PROVISIONS — —Provision for Income Tax (Net of MAT Credit entitlement of Rs. 1,000/-)
— —
SCHEDULE 8COST OF SALES Opening Stock — —Add : Stock-In-Trade Acquired during the year 27,403,964 —Construction, Material & Labour 10,000 —Over heads 8,677,327 —Interest 239,733 —
36,331,024 —Less : Closing Stock 36,331,024 —Cost of Sales — —
SCHEDULE 9ADMINISTRATION EXPENSESAudit fees — 27,575Other Expenses — 49,611
— 77,186
SCHEDULE 10INTEREST AND FINANCE CHARGES (NET)INTEREST PAIDInterest Paid - Others 239,733 —TOTAL INTEREST PAID 239,733 —Less: Transferred to Cost of Sales 239,733 —NET INTEREST — —
Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.
c. Depreciation / Amortization Depreciation has been provided on Written Down Value basis, at the rates specifi ed in
Schedule XIV of the Companies Act, 1956. d. Inventories Inventories are valued as under : Completed Flats - At lower of Cost or Market value Construction Work-in-Progress - At Cost Construction Work in Progress includes cost of land, premium for development
rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.
e. Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As
per this method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.
f. Borrowing Cost Interest and Finance charges incurred in connection with borrowing of funds, which
are incurred for the development of long term projects are transferred to Construction Work in Progress as a part of the cost of the projects at weighted average of the borrowing cost.
g. Earnings Per Share The basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
h. Provision for Taxation Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using
the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between
the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
i. Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the
date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsettled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profi t and Loss Account.
j. Provisions And Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations,
the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from
the past events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. There is no contingent liability as on the balance sheet date.
k. Miscellaneous Expenditure Miscellaneous expenditure is amortized over a period of 10 years.2) Contingent Liabilities Capital Commitment outstanding for the year ended 2009-10 (Net of Advance) is amounting
to Rs. 2,322,203/- (Previous Year Rs. NIL).3) Due to Micro, Small and Medium Enterprises Disclosure of sundry creditors under current liabilities is based on the information available
with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, 2010 to Micro, Small and Medium Enterprises on account of principal amount together with interest and also during the previous year.
4) Earnings per Share
Particulars Current Year (Rs.)
Previous Year(Rs.)
Loss for the Year as per Profi t & Loss Account (25,255) (79,028)Weighted average no. of equity shares outstanding 500,000 500,000Basic / Diluted earnings per share (Rs.) (0.05) (0.16)*
Nominal value of shares (Rs.) 1/- 1/-
* Earning per share of previous year has been recomputed based on the no of shares outstanding after split of shares during the year.
SCHEDULE 11NOTES TO ACCOUNTS AND ACCOUNTING POLICIES1) Accounting Policies a. General The fi nancial statements are prepared under the historical cost convention in
accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.
b. Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated
depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.
Annual Report 2009–2010
167
9. Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956
Balance Sheet Abstract for the period ended 31st March, 2010 and Company’s General Business Profi le.
1. Registration Details Registration No. : U45200MH2007PTC168730 State Code : 11 Balance Sheet Date : 31st March, 2010
2. Capital raised during the year (Amount in Rs. thousands) Public Issue : Nil Rights Issue : Nil Bonus Issue : Nil Private Placement - Capital : Nil - Premium : Nil 3. Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities : 142,147 Total Assets : 142,147 Sources of Funds Paid-up capital : 500 Reserves and Surplus : — Secured Loans : — Unsecured Loans : — Deferred Tax Liability : 31 Application of Funds Net Fixed Assets : 2,762 Investments : — Deferred Tax Assets : — Net Current Assets : (2,413) Miscellaneous Expenditure : 11 Accumulated Losses : 171 4. Performance of Company (Amount in Rs. thousands) Turnover : — Total Expenditure : 10 Profi t/(Loss) before Tax : 6 Profi t/(Loss) after Tax : (25) Earning per Share in Rs. : (0.05) Dividend Rate % : — 5. Generic Names of three principal products/services of Company : N.A.
Current Year Previous YearRupees Rupees
Cash Flow from Operating ActivitiesProfi t/(Loss) for the Year 5,745 (79,028)Adjustment for:
Depreciation 7,967 – Interest Paid 239,733 – Preliminary Expenses 1,842 1,842 Ineterst Received (15,554) –
Operating Profi t before working capital changes 239,733 (77,186)Adjustment for:
Change in Inventory (36,331,024) –Change in Loans & Advances (82,929,876) – Changes in Current Liabilities & Provisions 141,325,564 1,643
Net Cash Flow from Operating Activities 22,304,397 (75,543)Purchase of Fixed Assets (2,770,387) - Net Cash Flow from Investing Activities (2,770,387) –Net Cash Flow from Financing Activities – –Net Increase/ (Decrease) in Cash & Cash Equivalent 19,534,010 (75,543)Cash & Cash Equivalent -Opening Balance 392,781 468,324 Cash & Cash Equivalent -Closing Balance 19,926,791 392,781 Notes :1. The cash fl ow statement has been prepared under the
‘Indirect Method’ as set out in the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows by operating, investing and fi nancing activities.
2. Figures for the previous year have been regrouped/ restated wherever necessary to conform to this year’s classifi cation.
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010
As per our Report of even date.
For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTS
ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRANPartner Directors
Mumbai, Dated: May 14, 2010
5) Deferred Tax The Tax effect of signifi cant temporary differences that resulted in the deferred tax
liabilities are :
Particulars Current Year(Rs.)
Previous Year(Rs.)
Liabilities- Depreciation on Fixed Assets 31,000 -
Deferred Tax Liabilities 31,000 -
6) Lease
The Company’s signifi cant leasing arrangements are in respect of operating leases for Commercial premises. Lease expenditure for operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises taken under operating leases are as under :
Particulars Current Year(Rs.)
Previous Year(Rs.)
Future minimum lease payments under non-cancelable operating leases
- Not later than 1 year 2,241,396 NIL- Later than 1 year and not later than 5 years 9,709,390 NIL
- Later than 5 years 2,030,206 NIL
7) Amounts paid to Auditors:
Current Year (Rs.)
Previous Year(Rs.)
Audit Fees 159,935 27,575
Consultancy Charges 40,388 33,708
Total 200,323 61,283
8) Segment Information As the company has only one business segment, disclosure under Accounting Standard 17
on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.
9) Related Party Disclosure
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 77.73% 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) Investing party in respect of which the reporting enterprise is an associate. – HDFC PMS.
2. The following transactions were carried out with the related party in the ordinary course of the business:
Sr. No. Particulars GPL G&B
1 Reimbursement of Expenses 29,170,6861,149
––
2. Advance Received/(Given) 109,839,114–
(304,284)-
3. Purchase of Fixed Assets 2,454,873–
--
4. Outstanding payables/(Receivable) 141,085,48122,379
(304,284)-
Figures in italics are for previous year.
10) Previous year fi gures have been regrouped / rearranged whereever necessary to confi rm to current year’s classifi cation.
11) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.
Happy Highrises Limited
168
DIRECTORS’ REPORT FOR THE YEAR ENDED MARCH 31, 2010TO THE SHAREHOLDERS
Your Directors have pleasure in submitting their Report alongwith the Audited Accounts for the year ended March 31, 2010.
1. FINANCIAL HIGHLIGHTS:
The accounting results for the year ended March 31, 2010 reveal that there is profi t at the end of the period.
2. REVIEW OF OPERATIONS:
The project will have a total developable area of 3.2 million sq.ft in two phases, Phase 1 will have a total developable area of 0.54 million sq ft and Phase 2 would have a total developable area of 2.66 million sq.ft.
The Company has obtained approvals for Phase 1 and it is expected to receive approval for Phase 2 by end of September 2010. Phase 1 was launched by the Company in October 2009, wherein the Company had sold 214117 sq.ft. out of total of 514046 sq.ft.
3. DIVIDEND:
There is no Dividend declared for the year ended March 31, 2010.
4. CHANGE IN SHAREHOLDING PATTERN:
During the year Godrej Properties Limited, the holding Company has diluted its 49% stake in the Company to IL&FS Trust Company Limited A/C Milestone India Real Estate Fund.
Post transfer of shares to Milestone India Real Estate Fund Godrej Properties Limited now holds 51% stake in the Company.
5. DIRECTORS:
During the year Mr. Paritosh Kakkad and Mr. Ashish Joshi were appointed as nominee Directors of Milestone India Real Estate Fund w.e.f September 14, 2009.
In accordance with the Provisions of the Companies Act, 1956 and the Articles of Association of the Company Mr. K.T.Jithendran retire by rotation and offers himself for reappointment.
6. APPOINTMENT OF AUDITORS:
M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General Meeting and are eligible for re-appointment for which they have given their consent.
7. DIRECTORS’ RESPONSIBILITY STATEMENT:
Your Director’s confi rm:
(i) that in the preparation of the annual accounts, the applicable accounting standards have been followed;
(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year ended March 31, 2010 and of the profi t of the Company for that year;
(iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the annual accounts on a going concern basis.
8. ADDITIONAL INFORMATION:
(a) Since the company has no employees, the particulars of the employees to be disclosed u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.
(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:
(i) Conservation of Energy :
Expenses on account of Energy are negligible.
(ii) Technology Absorption:
It is an on going process.
(iii) Foreign Exchange Earning & Outgo:
The Company has not earned any Foreign Exchange nor incurred any Foreign Exchange Expenditure during the year.
9. ACKNOWLEDGEMENT:
Your Directors take this opportunity to thank all the associates for their co-operation.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
MILIND S. KORDE K.T. JITHENDRAN
DIRECTORS
Place : Mumbai
Dated : May 14, 2010
1. We have audited the attached Balance Sheet of HAPPY HIGHRISES LIMITED, as at 31st March, 2010, the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that:
a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.
b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books.
c) The Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.
d) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.
REPORT OF THE AUDITORS TO THE MEMBERS OF HAPPY HIGHRISES LIMITED
e) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;
ii) in the case of the Profi t and Loss Account, of the profi t of the Company for the year ended on that date and
iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.
5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
For and on behalf ofKALYANIWALLA & MISTRYChartered AccountantsFirm Registration No.: 104607W
ERMIN K. IRANIPartnerMembership No. 35646
Place: MumbaiDated : May 14, 2010
Annual Report 2009–2010
169
Referred to in paragraph (3) of our report of even date.1) (a) The Company is maintaining proper records showing full particulars, including
quantitative details and situation of fi xed assets. (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets
at periodicals intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the Company.
(c) There is no disposal of fi xed assets during the year.2) (a) The management has conducted physical verifi cation of inventory at reasonable
intervals. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the
management are reasonable and adequate in relation to the size of the company and the nature of its business.
(c) The company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifi cation.
3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956
(b) Consequently, the question of commenting on the rates of interest, terms and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and interest and reasonable steps for recovery of the same does not arise.
(c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956
(d) Consequently, the question of commenting on the rates of interest and other terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise.
4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.
5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing marketing prices at the relevant time, where comparable market price exist.
6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.
7) The Company has an internal audit system, which in our opinion is commensurate with the size of the Company and nature of its business.
8) In our opinion and according to the information and explanations given to us, The Central Government has not been prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company.
9) (a) According to the information and explanations given to us and on the basis of our
ANNEXURE TO THE AUDITORS’ REPORTexamination of 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, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and other statutory dues incurred during the year. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute.
10) The Company does not have accumulated losses at the end of the fi nancial year and has not incurred any cash losses in the current and immediately preceding fi nancial year.
11) According to the information and explanations given to us and based on documents and records produced to us, the Company has not defaulted in repayment of dues to bank. The Company does not have any outstanding debentures or dues to fi nancial institutions.
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 benefi t fund/ societies.
14) In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments.
15) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or fi nancial institutions.
16) Based on our examination and according to the information and explanations given to us, there were no term loans taken during the year.
17) According to the information and explanations given to us and an overall examination of the Balance Sheet and cash fl ows of the Company, we report that the Company has not utilized funds raised on short-term basis for long-term investments.
18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.
19) The Company did not issue any debentures during the year.20) The Company has not raised any money through a public issue during the year.21) Based on the audit procedures performed and information and explanations given by the
management, we report that no fraud on or by the Company has been noticed or reported during the year.
For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTSFirm Registration No.: 104607WERMIN K. IRANIPartnerMembership No. 35646Place: MumbaiDated: May 14, 2010
BALANCE SHEET AS AT 31ST MARCH, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2010Schedule As at
31.03.2010Rupees
As at31.03.2009
RupeesSOURCES OF FUNDSSHAREHOLDERS’ FUNDS
Share Capital 1 2,031,200 2,031,200 Reserve & Surplus 2 14,472,024 -
LOAN FUNDS - - DEFERRED TAX LIABILITY 12,000 -
16,515,224 2,031,200 APPLICATION OF FUNDSFIXED ASSETS
Gross Block 3 2,618,114 137,360 Less : Depreciation 392,900 33,445 Net Block 2,225,214 103,915
INVESTMENTS - - CURRENT ASSETS, LOANS & ADVANCES
Inventory 4 1,256,666,886 907,618,712 Debtors 5 67,616,112 - Cash & Bank Balances 6 14,481,093 87,980 Loans & Advances 7 19,898,842 1,155,172
1,358,662,933 908,861,864 LESS : CURRENT LIABILITIES & PROVISIONS
Current Liabilities 8 1,336,263,427 907,020,485 Provisions 9 8,121,578 -
1,344,385,005 907,020,485 NET CURRENT ASSETS 14,277,928 1,841,379 MISCELLANEOUS EXPENDITURE(to the extent not written off or adjusted)Preliminary Expenditure 12,082 13,808 PROFIT & LOSS ACCOUNT - 72,098
16,515,224 2,031,200 NOTES TO ACCOUNTS & ACCOUNTING POLICIES 12
The Schedules referred to above form an integral part of the Balance Sheet.As per our Report of even date.
Signatures to the Balance Sheet and Schedules 1 to 9 and 12
For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTSERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRANPartner DIRECTORSMumbai, Dated : May 14, 2010
Schedule For the Year ended 31.03.2010
Rupees
For the Year ended 31.03.2009
Rupees INCOMESales 121,057,106 - EXPENDITURE
Cost of Sales 10 97,971,803 - Interest & Finance Charges 11 - - Depreciation 359,455 30,245 Preliminary Expenses written off 1,726 1,726
Profi t / (Defecit) for the Year 22,724,122 (31,971)Provision for Tax
for Current Tax (8,168,000) -for Deferred Tax (12,000) -
Profi t / (Defecit) after tax 14,544,122 (31,971)Defi cit Brought Forward (72,098) (40,127)Profi t Carried Forward to Balance Sheet 14,472,024 (72,098)Earning per share Basic/Diluted in Rs. (Refer Note 3)
71.60 (0.16)
NOTES TO ACCOUNTS & ACCOUNTING POLICIES 12
part of the Profi t & Loss Account.As per our Report of even date.
Signatures to Profi t & Loss Account and Schedules 10 to 12
For and on behalf ofKALYANIWALLA & MISTRY CHARTERED ACCOUNTANTSERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner DIRECTORSMumbai, Dated : May 14, 2010
The Schedules referred to above form an integral
Happy Highrises Limited
170
As at 31.03.10
Rupees
As at 31.03.00
Rupees SCHEDULE 1: SHARE CAPITAL AUTHORISED250,000 Equity shares of Rs. 10/- each 2,500,000 2,500,000
2,500,000 2,500,000 ISSUED, SUBSCRIBED & PAID UP203,120 Equity shares of Rs. 10/- each, fully paid-up 2,031,200 2,031,200 (Of the above 1,03,592 (previous year 2,03,120) shares are held by Godrej Properties Limited, the Holding Company and its nominee)
2,031,200 2,031,200
SCHEDULE 2RESERVES & SURPLUSPROFIT AND LOSS ACCOUNT 14,472,024 –
14,472,024 –
SCHEDULES FORMING PART OF THE ACCOUNTS
SCHEDULE 3: FIXED ASSETSParticulars Gross Block Depreciation Net Block
As at1st
April, 2009
Additions Deductions As at31st
March, 2010
Upto1st April,
2009
For theYear
Upto31st
March, 2010
As at31st
March, 2010
As at31st
March, 2009
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.Furniture & Fixtures -
1,369,693 - 1,369,693 - 156,032 156,032
1,213,661 -
Offi ce Equipments 3,200 386,246 - 389,446 3,200 38,151 41,351 348,095 - Computers
134,160 724,815 - 858,975 30,245 165,272 195,517 663,458 103,915 Total
137,360
2,480,754 - 2,618,114 33,445 359,455 392,900
2,225,214 103,915 Previous Year 3,200 134,160 - 137,360 3,200 30,245 33,445 103,915 -
As at 31.03.2010
Rupees
As at 31.03.2009
Rupees
SCHEDULE 4
INVENTORY
Construction work in progress 1,256,666,886 907,618,712
1,256,666,886 907,618,712
SCHEDULE 5
SUNDRY DEBTORS (UNSECURED, CONSIDERED GOOD)
Others 67,616,112 -
(Includes unbilled revenue of Rs. 57,999,721/- (Previous year Rs. NIL))
67,616,112 -
SCHEDULE 6
CASH & BANK BALANCE
Cash & Cheques-in-Hand 54,110 14,085
Balances with Scheduled Bank 14,426,983 73,895
14,481,093 87,980
SCHEDULE 7
LOANS & ADVANCES
(Unsecured & considered good unless otherwise stated)
- Secured (Secured against Bank Guarantee) 16,212,613 -
Advances recoverable in cash or kind or for value to be received
3,686,229 1,108,750
Advance Tax and Tax Deducted at Source - 46,422
19,898,842 1,155,172
SCHEDULE 8
CURRENT LIABILITIES
Sundry Creditors (Refer Note 2) 90,373,592 1,087,650
Investor Education & Protection Fund - -
Advances received against Sale 1,278,797 -
Other liabilities 1,244,611,038 905,932,835
1,336,263,427 907,020,485
SCHEDULE 9
PROVISIONS
Provision for Income Tax 8,121,578 -
(Net of Advance Tax & Tax of deducted at source of Rs. 46,422/-, Previous Year Rs. 46,422/-)
8,121,578 -
For the Year ended
31.03.2010 Rupees
For the Year ended 31.03.2009
Rupees SCHEDULE 10COST OF SALES Opening Stock 907,618,712 774,188,736 Add : Expenditure during the periodConstruction, Material & Labour 123,579,224 5,662,615 Architect Fees 1,416,852 - Advertisment Expenses 32,826,545 545,093 Overheads 182,866,518 39,873,381 Interest 106,330,838 87,348,887
1,354,638,689 907,618,712 Less : Closing Stock 1,256,666,886 907,618,712 Cost of Sales 97,971,803 - SCHEDULE 11INTEREST AND FINANCIAL CHARGESInterest PaidInterest Paid - Others 106,325,525 87,345,656 Total Interest Paid 106,325,525 87,345,656 Add: Brokerage & other Financial Charges 5,313 3,231 Total Interest/Finance Charges Paid 106,330,838 87,348,887 Less: Transferred to Cost of Sales 106,330,838 87,348,887 NET INTEREST - -
SCHEDULE 12 : NOTES TO ACCOUNT AND ACCOUNTING POLICIES1) Accounting Policiesa) General The fi nancial statements are prepared under the historical cost convention in accordance
with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.
b) Miscellaneous Expenditure Miscellaneous expenditure is amortized over a period of 10 years.c) Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated depreciation.
Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.
Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.
d) Depreciation / Amortization Depreciation has been provided on Written Down Value basis, at the rates specifi ed in Schedule
XIV of the Companies Act, 1956. e) Inventories Inventories are valued as under: a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At cost Construction Work in Progress includes cost of land, premium for development rights,
construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.
f) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As per this
method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.
Interest income is accounted on an accrual basis at contracted rates.g) Borrowing Cost Interest and fi nance charges incurred in connection with borrowing of funds, which are
incurred for the development of long term projects, are transferred to Construction Work in Progress / Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost / rates as per Agreements respectively.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
h) Earnings Per Share The basic earnings per share is computed using the weighted average number of common
shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
i) Provision For Taxation Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using the
applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between the taxable
income and the accounting income that originate in one period and are capable of reversal in
Annual Report 2009–2010
171
10. Additional information as required under Part IV of the Schedule VI to the Companies Act, 1956Balance Sheet Abstract for the Year ended 31st March, 2010 And Company’s General Business Profi le
1 Registration Details :Registration No. : U51909MH1993PLC180464 State Code : 11 Balance Sheet Date : 31st March, 2010
2 Capital raised during the year (Amount in Rs. thousands)Public Issue : Nil Rights Issue : Nil Bonus Issue : Nil Private Placement - Capital : Nil
- Premium : Nil 3 Position of mobilisation and deployment of funds (Amount
in Rs. thousands) :
Total Liabilities : 1,360,900 Total Assets : 1,360,900 Sources of Funds :
Paid-up capital : 2,031 Reserves & Surplus : 14,472 Secured Loans : - Unsecured Loans : - Deferred Tax Liability : 12
Application of Funds :Net Fixed Assets : 2,225 Investments : - Net Current Assets : 14,278 Misc. Expenditure : 12 Accumulated Losses : –
4 Performance of Company (Amount in Rs. thousands) :Turnover : 121,057 Total Expenditure : 98,333 Profi t/(Loss) before Tax : 22,724Profi t/(Loss) after Tax : 14,544 Earning per Share in Rs. : 71.60 Dividend Rate % : -
5 Generic Names of three principal products/services of Company : N.A.
SCHEDULES FORMING PART OF THE ACCOUNTS
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010Current Year
Rupees Previous Year
RupeesCash Flow from Operating ActivitiesProfi t / (Loss) before taxation 22,724,122 (31,971)
Adjustment for:Depreciation 359,455 30,245
Interest Paid 106,330,838 87,348,887
Preliminary Expenses 1,726 1,726
Operating Profi t /(Loss) before working capital changes 129,416,141 87,348,887
Adjustment for:Change in Inventory (349,048,174) (133,429,976)
Increase in Sundry Debtors (67,616,112) -
Change in Loans & Advances (18,790,092) (705,278)
Change in Current Liabilities / Provisions 322,912,104 45,012,567
Net Cash Flow from Operating Activities 16,873,867 (1,773,800)
Cash Flow from Investing ActivitiesPurchase of Fixed Assets (2,480,754) (134,160)
Net Cash Flow from Investing Activities (2,480,754) (134,160)
Cash Flow from Financing Activities - -
Net Increase/ (Decrease) in Cash & Cash Equivalent 14,393,113 (1,907,960)
Cash & Cash Equivalent -Opening Balance 87,980 1,995,940
Cash & Cash Equivalent -Closing Balance 14,481,093 87,980
Notes :1. The cash fl ow statement has been prepared under the 'Indirect Method' as set out in the
Accounting Standard (AS) 3 on 'Cash Flow Statement', and presents cash fl ows by operating, investing and fi nancing activities.
2. Figures for the previous year have been regrouped/ restated wherever necessary to conform to this year's classifi cation.
For and on behalf ofKALYANIWALLA & MISTRYCHARTERED ACCOUNTANTS
ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner DIRECTORS Place : MumbaiDated : May 14, 2010
one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
j) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the date
of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortised over the period of the contract. Exchange gains / losses are recognised in the Profi t and Loss Account.
k) Provisions And Contigent Liabilities Provisions are recognized in the accounts in respect of present probable obligations, the
amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from the past
events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
2. Micro, Small and Medium Enterprises Development Act, 2006: Disclosure of sundry creditors under current liabilities is based on the information available
with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, 2010 to Micro, Small and Medium Enterprises on account of principal amount together with interest and also during the previous year.
3. Earnings per share
Current Year Previous YearProfi t / (Loss) for the period as per Profi t & Loss Account (Rs.)
14,544,122 (31,971)
Weighted average no. of equity shares outstanding 203,120 203,120Earnings Per Share (Basic /Diluted) (Rs.) 71.60 (0.16)
Nominal value of shares (Rs.) 10/- 10/-4. Deferred Tax The Tax effect of signifi cant temporary differences that resulted in deferred tax liabilities
are :
Particulars Current Year
(Rs.)
Previous Year
(Rs.)Liabilities- Depreciation on Fixed Assets 12,000 -Deferred Tax Liabilities 12,000 -
5. Amounts paid to Auditors
Current Year(Rs.)
Previous Year(Rs.)
Audit FeesAudit Under Other Statutes
1,59,93555,150
1,59,935-
Consultancy Charges 40,388 -Total 255,473 159,935
6. Segment Information As the company has only one business segment, disclosure under Accounting Standard 17
on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.
7. Related Party Disclosure Related party disclosures as required by AS-18, “Related Party Disclosures”, are given
below: (i) Relationships: Shareholders (the Godrej Group Shareholding) in the Company Godrej Properties
Limited (GPL) hold 51% in the Company. GPL is the Subsidiary of Godrej Industries Limited (GIL). GIL is a subsidiary of Godrej & Boyce Manufacturing Company Limited (G&B), the ultimate holding Company.
(ii) Investing party in respect of which the reporting enterprise is an associate. - Milestone Real Estate Fund.
2. The following transactions were carried out with the related party in the ordinary course of the business:
Sr. No Particulars GPL AmountRs.
G&BRs.
1. Expenses incurred by other company towards Construction work in progress and Revenue expenditure
181,214,018114,240,742
--
2. Advances Received 202,500,00031,270,000
--
3. Advances Repaid 31,900,000-
--
4. Outstanding payables 1,227,097,105885,915,639
--
5. Purchase of Fixed Assets --
81,702-
Figures in italics are for previous year8. Previous year fi gures have been rearranged / regrouped wherever necessary to confi rm to
current year’s classifi cation.9. Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956
to the extent not applicable has not been given.
Godrej Waterside Properties Private Limited
172
BOARD OF DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2010TO THE SHAREHOLDERSYour Directors have pleasure in submitting their Report along with the Audited Accounts for the year ended March 31, 2010.1. FINANCIAL HIGHLIGHTS: The accounting results for the year ended March 31, 2010 reveal that there is a surplus at
the end of the year. During the year the Company has created Debenture Redemption Reserve as required under
Section 117(C) of the Companies Act, 1956.2. REVIEW OF OPERATIONS : The project has a total Developable area of 2.16 million sq.ft spanning two towers with
parking facility for approximately 1400 car parks. The Project comprises of two towers, Tower 1 having a developable area of 0.72 million
sq.ft. and Tower 2 having a developable area of 1 .44 million sq.ft. Tower I is fully complete and the Company has sold 3,31,772 sq.ft. Tower II is under construction.
3. DIVIDEND: There is no Dividend declared for the year ended March 31, 2010.4. DIRECTORS: During the year Mr. Amit B. Choudhury has been appointed as an Additional Director w.e.f
February 1, 2010 who will hold offi ce till the conclusion of the ensuing Annual General Meeting of the Company.
In accordance with the provisions of the Articles of Association, Mr. Pirojsha A Godrej and Mr. K. T. Jithendran retire by rotation and being eligible, offer themselves for re-appointment.
5. MATERIAL SUBSIDIARY: During the year your Company has become the Material Non Listed Indian Subsidiary of
Godrej Properties Limited as per Clause 49 of listing agreement.6. APPOINTMENT OF AUDITORS: M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General
Meeting and are eligible for re-appointment for which they have given their consent.7. DIRECTORS’ RESPONSIBILITY STATEMENT: Your Director’s Confi rm: (i) that in the preparation of the annual accounts, the applicable accounting standards
have been followed; (ii) that the Directors have selected such accounting policies and applied them consistently
and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year ended March 31, 2010 and of the profi t of the Company for that year;
(iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the annual accounts on a going concern basis.8. ADDITIONAL INFORMATION: (a) Since the Company has no employees, the particulars of the employees to be disclosed
u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.
(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:
i) Conservation of Energy : Expenses on account of Energy are negligible. ii) Technology Absorption: It is an on going process. iii) Foreign Exchange Earning & Outgo: The Company has not earned any Foreign Exchange nor incurred any Foreign
Exchange Expenditure during the year.9. ACKNOWLEDGEMENT: Your Directors take this opportunity to thank all the associates for their co-operation.
For And On Behalf Of The Board Of Directors MILIND S. KORDE NARESH NADKARNI DirectorsMumbai, Dated : May 14, 2010
1. We have audited the attached Balance Sheet of GODREJ WATERSIDE PROPERTIES PRIVATE LIMITED, as at 31st March 2010, the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that:
a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit.
b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books.
c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.
d) In our opinion, the Balance Sheet, the Profi t and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.
e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(e) of Schedule 14-Notes to Accounts, in respect of projects under long term contracts undertaken and/or fi nanced by the Company, we have relied upon the management’s
REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ WATERSIDE PROPERTIES PRIVATE LIMITED
estimates of the percentage of completion, costs to completion and on the projections of revenues expected from projects owing to the technical nature of such estimates, on the basis of which profi ts/losses have been accounted, interest income accrued and realizability of the construction work in progress and project advances determined.
f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;
ii) in the case of the Profi t and Loss Account, of the profi t of the Company for the year ended on that date and
iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.
5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
For and on behalf ofKALYANIWALLA & MISTRY Chartered AccountantsFirm Registration No.: 104607W
ERMIN K. IRANIPartnerMembership No. 35646Place: MumbaiDated: May 14, 2010
Annual Report 2009–2010
173
ANNEXURE TO THE AUDITORS’ REPORTReferred to in paragraph (3) of our report of even date.1. (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fi xed assets. (b) As explained to us, the Company has a program for physical verifi cation of fi xed assets
at periodical intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the Company.
(c) There is no disposal of fi xed assets during the year.2. (a) The management has conducted physical verifi cation of inventory at reasonable
intervals. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the
management are reasonable and adequate in relation to the size of the company and the nature of its business.
(c) The company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifi cation.
3. (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.
(b) Consequently, the question of commenting on the rates of interest, terms and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and interest and reasonable steps for recovery of the same does not arise.
(c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.
(d) Consequently, the question of commenting on the rates of interest and others terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise.
4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.
5. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist.
6. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.
7. The Company has an internal audit system, which in our opinion is commensurate with the size of the Company and nature of its business.
8. In our opinion and according to the information and explanations given to us, the Central Government has not been prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company.
9. (a) According to the information and explanations given to us and on the basis of our examination of books of accounts, during the year, the Company has been generally
regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value Added Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and other statutory dues incurred during the year. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute.
10. The Company’s does not have accumulated losses at the end of the fi nancial year and has not incurred any cash losses in the current and immediately preceding fi nancial year.
11. According to the information and explanations given to us and based on documents and records produced to us, the Company has not defaulted in repayment of dues to debenture holders, banks and fi nancial institutions.
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 benefi t fund/ societies.
14. In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments.
15. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or fi nancial institutions.
16. According to the information and explanations given to us and based on the documents and records examined by us, on an overall basis, the term loan has been applied for the purpose for which the loan was obtained.
17. According to the information and explanations given to us and an overall examination of the Balance Sheet and cash fl ows of the Company, we report that the Company has not utilized funds raised on short term basis for long term investments.
18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.
19. The Company did not issue any debentures during the year.20. The Company has not raised any money through a public issue during the year.21. Based on the audit procedures performed and information and explanations given by the
management, we report that no fraud on or by the Company has been noticed or reported during the year.
For and on behalf ofKALYANIWALLA & MISTRYChartered AccountantsFirm Registration No.: 104607W
ERMIN K. IRANIPartnerMembership No. 35646
Place: MumbaiDated: May 14, 2010
BALANCE SHEET AS AT 31ST MARCH, 2010
The Schedules referred to above form an integral Signatures to the Balance Sheetpart of the Balance Sheet and Schedules 1 to 10 and 14As per our Report of even dateFor and on behalf of Kalyaniwalla & MistryChartered Accountants Ermin K. Irani Milind S. Korde Naresh NadkarniPartner Directors
Mumbai, Dated : May 14, 2010
The Schedules referred to above form an integral Signatures to Profi t and Loss Accountpart of the Profi t and Loss Account and Schedules 11 to 14As per our Report of even dateFor and on behalf of Kalyaniwalla & MistryChartered Accountants Ermin K. Irani Milind S. Korde Naresh NadkarniPartner Directors
Mumbai, Dated : May 14, 2010
Schedule As at31.03.2010
Rupees
As at31.03.2009
RupeesSOURCES OF FUNDSShareholders’ FundsShare Capital 1 10,000,000 10,000,000 Reserve & Surplus 2 16,875,800 12,943,462 Loan FundsSecured Loans 3 2,167,300,000 2,167,300,000
2,194,175,800 2,190,243,462 Application Of FundsFixed AssetsGross Block 4 4,218,878 3,958,506 Less : Depreciation 2,065,890 1,449,504 Net Block 2,152,988 2,509,002 Investments - - Deferred Tax Asset 30,000 4,000 Current Assets, Loans & AdvancesInventory 5 2,371,895,669 2,070,421,912 Debtors 6 353,254,319 245,317,300 Cash & Bank Balances 7 40,233,572 18,190,356 Loans & Advances 8 139,307,911 326,307,823
2,904,691,471 2,660,237,391 Less : Current Liabilities & ProvisionsCurrent Liabilities 9 711,233,052 465,089,851 Provisions 10 1,465,607 7,417,080
712,698,659 472,506,931 Net Current Assets 2,191,992,812 2,187,730,460
2,194,175,800 2,190,243,462 Notes To Accounts & Accounting Policies 14
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON 31ST MARCH, 2010
Schedule For the year ended 31.03.2010
Rupees
For the year ended 31.03.2009
Rupees INCOMESales 870,207,675 592,449,300 Other Income 11 3,662,561 3,169,314 (Tax Deducted at Source Rs.361,270 /- [Previous year Rs. 718,167/-])
873,870,236 595,618,614 EXPENDITURECost of Sales 12 863,770,951 566,538,934 Interest & Finance Charges 13 3,662,561 3,169,314 Depreciation 616,386 691,460
868,049,898 570,399,708 Profi t for the Year 5,820,338 25,218,906 Provision for Taxation for Current Tax (1,914,000) (8,890,000)for Deferred Tax 26,000 23,000 Profi t / (Loss) After Tax 3,932,338 16,351,906 Defi cit Brought Forward - (3,408,444)Amount available for appropriation 3,932,338 12,943,462 Transfer to Debenture Redemption Reserve 3,932,338 12,943,462 Balance Carried Forward to Balance Sheet - - Earning per share Basic in Rs. (Refer Note 7) 3.93 16.35 Earning per share Diluted in Rs. (Refer Note 7) 0.13 0.55
Notes To Accounts & Accounting Policies 14
Godrej Waterside Properties Private Limited
174
SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED ON 31st MARCH, 2010
As at 31.03.2010
Rupees
As at 31.03.2009
Rupees SCHEDULE 1 : SHARE CAPITALAuthorised1.000,000 Equity shares of Rs. 10/- each 10,000,000 10,000,000
10,000,000 10,000,000 Issued, Subscribed & Paid Up1,000,000 Equity shares of Rs. 10/- each, fully paid -up 10,000,000 10,000,000 (510,000 equity shares are held by Godrej Properties Limited the Holding Company & its nominee)
10,000,000 10,000,000 SCHEDULE 2 : RESERVES & SURPLUSDEBENTURE REDEMPTION RESERVEBalance as per last Balance Sheet 12,943,462 12,943,462 Transferred from Profi t & Loss Account 3,932,338 - Less : Utilised during the year - - Balance at the end of the year 16,875,800 12,943,462 Profi t & Loss Account - -
16,875,800 12,943,462 SCHEDULE 3 : SECURED LOANS1% Secured Redeemable Optionally Convertible Debentures 290,000,000 290,000,000 (Refer Note 3)Term Loan from State Bank of India 1,877,300,000 1,877,300,000 (Secured by charge of development rights of company's project Godrej Waterside IT Park at Kolkata)
2,167,300,000 2,167,300,000
As at 31.03.2010
Rupees
As at 31.03.2009
Rupees SCHEDULE 5 : INVENTORYConstruction work in progress 2,371,895,669 2,070,421,912
2,371,895,669 2,070,421,912 SCHEDULE 6 : SUNDRY DEBTORS (UNSECURED, CONSIDERED GOOD)Due over Six months - - Others 353,254,319 245,317,300 (Includes unbilled revenue of Rs. 343,305,025/- (Previous Year Rs. 206,398,200/-))
353,254,319 245,317,300
SCHEDULE 7 : CASH & BANK BALANCECash 53,799 55,700 Balance with Scheduled Bank - On current Account 32,079,773 18,134,656 - On Fixed Deposit Accounts (Refer Note 2) 8,100,000 -
40,233,572 18,190,356 SCHEDULE 8 : LOANS & ADVANCES(Unsecured & considered good)Advances recoverable in cash or kind or for value to be received - Secured (Secured against Bank / Corporate Guarantee) - 182,218,588 - Others 128,072,448 139,063,304 Interest accrued 11,235,463 5,025,931
139,307,911 326,307,823 SCHEDULE 9 : CURRENT LIABILITIESSundry Creditors (Refer Note 4) 107,553,132 185,152,842 Investor Education & Protection Fund - - Advances received against Sale 4,602,544 - Other liabilities 562,654,237 246,123,870 Interest Accrued but not due 36,423,139 33,813,139
711,233,052 465,089,851 SCHEDULE 10 : PROVISIONSProvision for Income Tax (Net of Advance Tax and TDS Rs. 9,338,393/- (Previous Year 1,418,920/-))
1,465,607 7,417,080
1,465,607 7,417,080 SCHEDULE 11 : INCOMEInterest received 3,662,561 3,169,314
3,662,561 3,169,314 Tax deducted at source 361,270 718,167
SCHEDULE 12 : COST OF SALESOpening Stock 2,070,421,912 992,961,241 Add : Expenditure during the periodConstruction Material & Labour 801,220,508 1,347,051,271 Architect Fees 3,351,975 33,324,612 Advertisment Expenses 3,656,835 15,713,436 Over heads 98,870,978 95,011,311 Interest 258,144,412 152,898,975
3,235,666,620 2,636,960,846 Less: Closing Stock 2,371,895,669 2,070,421,912 Cost of Sales 863,770,951 566,538,934
SCHEDULE 13 : INTEREST AND FINANCIAL CHARGESInterest Paid - Bank 211,191,523 97,990,609 Interest Paid - Others 50,615,450 58,077,680 Total Interest/Finance Charges Paid 261,806,973 156,068,289 Less: Transferred to Cost of Sales 258,144,412 152,898,975 Net Interest 3,662,561 3,169,314
SCHEDULE 4 : FIXED ASSETSParticulars Gross Block Depreciation Net Block
As at1st April
2009 AdditionsDeduc-
tions
As at31st
March2010
Upto1st April
2009For the
Year
Upto31st
March2010
As at31st
March2010
As at31st
March2009
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Land (Refer Note 2) 356,380 - - 356,380 - - - 356,380 356,380 Offi ce Equipments 427,943 197,462 - 625,405 103,993 66,651 170,644 454,761 323,950 Furniture & Fixtures 948,920 - - 948,920 294,721 118,410 413,131 535,789 654,199 Computers 1,388,771 62,910 - 1,451,681 687,318 308,860 996,178 455,503 701,453 Motor Car 836,492 - - 836,492 363,472 122,465 485,937 350,555 473,020 Total 3,958,506 260,372 - 4,218,878 1,449,504 616,386 2,065,890 2,152,988 2,509,002 Previous Year 3,098,290 860,216 - 3,958,506 758,044 691,460 1,449,504 2,509,002 -
SCHEDULE 14 : NOTES TO ACCOUNTS AND ACCOUNTING POLICIES
1) Accounting Policies a) General The fi nancial statements are prepared under the historical cost convention in
accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.
b) Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated
depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.
Carrying amount of cash generating units / assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.
c) Depreciation / Amortization Depreciation has been provided on Written Down Value basis, at the rates specifi ed
in Schedule XIV of the Companies Act, 1956. d) Inventories Inventories are valued as under : a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At cost Construction Work in Progress includes cost of land, premium for development
rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.
e) Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As
per this method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.
Income from operation of commercial complexes is recognized over the tenure of the lease/ service agreement.
Interest income is accounted on an accrual basis at contracted rates. f) Borrowing cost Interest and Finance charges incurred in connection with borrowing of funds,
which are incurred for the development of long term projects are transferred to Construction Work in Progress / Due on Management Project, as a part of the cost of the projects at weighted average of the borrowing cost / rates as per Agreements respectively.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
g) Earnings Per Share The basic earnings per share is computed using the weighted average number
of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
h) Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the
date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortized over the period of the contract. Exchange gains / losses are recognised in the Profi t and Loss Account.
i) Provision for taxation Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities,
using the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between
the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
j) Provisions and Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations,
the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise
from the past events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
2) Contingent Liabilities:
Matters As at 31st March 2010
(Rs.)
As at 31st March 2009
(Rs.)a) Guarantees given by Bank, counter guaranteed
by the Company (The said bank guarantee is issued by marking a lien on Fixed Deposit of Rs. 81,00,000/- held with State Bank of India)
81,00,000/- NIL
Annual Report 2009–2010
175
3) Secured Loans 29,000,000 1% Secured redeemable optionally Convertible Debentures of Rs. 10 each are
redeemable at the end of the 7 years from the deemed date of allotment 4th July 2007 and are secured to the extent of specifi c immovable assets of the Company disclosed under the head “Fixed Assets”.
The Company has created a Debenture Redemption Reserve as required under Section 117 (C) of the Companies Act, 1956 to the extent of Profi t available for distribution.
4) Due to Micro, Small and Medium Enterprises Disclosure of sundry creditors under current liabilities is based on the information available
with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, 2010 to Micro, Small and Medium Enterprises on account of principal amount together with interest and also during the previous year.
5) Expenditure in Foreign Currency:
Particulars Current YearRs.
Previous YearRs.
Travelling Expenses - 9,244Other Expenditure - 68,510,943Total - 68,520,187
6) Deferred Tax The Tax effect of signifi cant temporary differences that resulted in the deferred tax assets are :
Particulars Current Year(Rs.)
Previous Year(Rs.)
Assets- Depreciation on Fixed Assets 30,000 4,000Deferred Tax Asset 30,000 4,000
7) Earnings per share
Particulars Current YearRs.
Previous Year Rs.
Profi t / (Loss) for the Year as per Profi t & Loss Account 3,932,339 16,351,906Weighted average no. of Equity Shares outstanding 1,000,000 1,000,000Weighted average no. of Potential Equity Shares outstanding
30,000,000 30,000,000
Basic Earnings Per Share Rs. 3.93 Rs.16.35Diluted Earnings Per Share Rs. 0.13 Rs. 0.55Nominal value of shares 10/- 10/-
8) Lease The Company’s signifi cant leasing arrangements are in respect of operating leases for
Commercial premises. Lease expenditure for operating leases is recognized on a straight-line basis over the period of lease. The particulars of the premises taken under operating leases are as under :
Particulars Current Year(Rs.)
Previous Year(Rs.)
Future minimum lease payments under non-cancelable operating leases- Not later than 1 year 4,18,192 NIL
9) Amounts paid to Auditors
Particulars Current Year(Rs.)
Previous Year(Rs.)
Audit Fees 159,935 159,935Audit under other Statutes 55,150 55,150Certifi cation 33,092 28,635Consultancy charges 40,388 33,708Total 288,565 277,446
10) Segment Information As the company has only one business segment, disclosure under Accounting Standard 17 on
“Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.11) Related Party Disclosure 1. Relationships: (i) Shareholders in the Company : Godrej Properties Limited (GPL) holds 51% of
the share capital of the Company. GPL is the Subsidiary of Godrej Industries Limited (GIL). GIL is subsidiary of Godrej & Boyce Manufacturing Company Limited (G&B), the ultimate holding company.
(ii) Investing party in respect of which the reporting enterprise is an associate. – HDFC Venture Trustee Company Limited
2. The following transactions were carried out with the related party in the ordinary course of the business:
Sr.No
Particulars G&B GPL HDFC Venture Trustee Company Limited
1. Expenses charged by other company 36,319,95021,457,218
76,299,258136,308,667
--
2. Interest on Debentures --
1,479,00011,507,835
1,421,00011,056,548
3. Advances Received --
763,850,0001,186,033,000
--
4. Advances repaid/given 13,708,8095,440,871
500,752,0381,674,651,328
--
5. Outstanding payables (4,599,669)-
(556,396,071)(220,439,297)
(17,847,337)(16,568,438)
6. Debentures Outstanding --
147,900,000147,900,000
142,100,000142,100,000
Figures in italics are for previous year12) Previous year fi gures have been regrouped / rearranged where ever necessary to confi rm to
current year’s classifi cation.13) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956
to the extent not applicable has not been given.
14) ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF THE SCHEDULE VI TO THE COMPANIES ACT, 1956
Balance Sheet Abstract for the year ended 31st March, 2010 and Company’s General Business Profi le
1 Registration Details Registration No. U70100MH2005PTC154255 State Code 11 Balance Sheet Date 31st March, 2010 2 Capital raised during the year (Amount in Rs. thousands) Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement - Capital Nil - Premium Nil 3 Position of mobilisation and deployment of funds (Amount in Rs. thousands) Total Liabilities 2,906,874 Total Assets 2,906,874 Sources of Funds Paid-up capital 10,000 Reserves & Surplus 16,876 Secured Loans 2,167,300 Unsecured Loans - Deferred Tax Liability - Application of Funds Net Fixed Assets 2,153 Investments - Net Current Assets 2,191,993 Deferrred Tax Asset 30 Misc. Expenditure - Accumulated Losses - 4 Performance of Company (Amount in Rs. thousands) Turnover 873,870 Total Expenditure 868,050 Profi t/(Loss) before Tax 5,820 Profi t/(Loss) after Tax 3,932 Earning per Share (Basic) in Rs. 3.93 Earning per Share (Diluted) in Rs. 0.13 Dividend Rate % - 5 Generic Names of three principal products/services of Company N.A.
For and on behalf of Kalyaniwalla & MistryChartered Accountants Ermin K. Irani Milind S. Korde Naresh NadkarniPartner Directors
Mumbai, Dated : May 14, 2010
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010
Current YearRupees
Previous YearRupees
Cash Flow from Operating ActivitiesProfi t for the Year 5,820,338 25,218,906 Adjustment for:Depreciation 616,386 691,460 Interest Paid 261,806,973 156,068,289 Interest Income (3,662,561) (3,169,314)Operating Profi t before working capital changes 264,581,136 178,809,341 Adjustment for:Change in Inventory (301,473,757) (1,077,460,671)Increase in Sundry Debtors (107,937,019) (245,317,300)Change in Loans & Advances 193,209,444 (60,208,861)Change in Current Liabilities / Provisions 195,527,751 (573,653,234)
243,907,555 (1,777,830,725)Taxes Paid (Net) (7,865,473) (718,167)Net Cash Flow from Operating activities 236,042,082 (1,778,548,892)Cash Flow from Investing ActivitiesPurchase of Fixed Assets (260,372) (860,216)Interest Received (2,546,971) 718,167 Net Cash Flow from Investing Activities (2,807,343) (142,049)Cash Flow from Financing Activities Increase in Secured Loan - 1,877,300,000 Interest Paid (211,191,523) (80,942,500)Net Cash Flow from Financing Activities (211,191,523) 1,796,357,500 Net Increase/ (Decrease) in Cash & Cash Equivalent 22,043,216 17,666,559 Cash & Cash Equivalent -Opening Balance 18,190,356 523,797 Cash & Cash Equivalent -Closing Balance 40,233,572 18,190,356
Notes :1. The cash fl ow statement has been prepared under the ‘Indirect Method’ as set out in the
Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows by operating, investing and fi nancing activities.
2. Figures for the previous year have been regrouped/ restated wherever necessary to conform to this year’s classifi cation.
Godrej Estate Developers Private Limited
176
TO THE SHAREHOLDERSYour Directors have pleasure in submitting their Report together with the Audited Accounts for the period ended 31st March, 2010.1. FINANCIAL HIGHLIGHTS: The accounting results for the period ended 31st March, 2010 reveal that there is a defi cit
at the end of the period.2. REVIEW OF OPERATIONS: The Company has executed an assignment agreement with Godrej Properties Limited for
undertaking development of their project called ‘Godrej Eternia’ at Chandigarh. Further HDFC PMS (under HDFC Asset Management Company Limited Portfolio Management Services Real Estate Portfolio-I, through its Portfolio Manager HDFC Asset Management Company Limited) has purchased 49% equity shares in the Company. Post transfer of shares to HDFC PMS, Godrej Properties Limited now holds 51% stake in the Company.
The Company is developing a commercial cum retail project and has commenced construction on site.
3. DIVIDEND: As there are no profi ts, the Directors regret that no dividend can be recommended.4. DIRECTORS: During the year Mr. Vipul Roongta was appointed as a nominee Director of HDFC Asset
Management Company Limited w.e.f. March 20, 2010. Mr. K. T. Jithendran retires by rotation at the ensuing Annual General Meeting and being
eligible offers himself for re-appointment.5. APPOINTMENT OF AUDITORS: M/s. Kalyaniwalla & Mistry, Chartered Accountants retire at the ensuing Annual General
Meeting and are eligible for re-appointment for which they have given their consent.6. DIRECTORS’ RESPONSIBILITY STATEMENT: Your Directors confi rm: (i) that in the preparation of the annual accounts, the applicable accounting standards
have been followed; (ii) that the Directors have selected such accounting policies and applied them consistently
and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year ended 31st March, 2010 and of the loss of the Company for that year;
BOARD OF DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2010
(iii) that the Directors had taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the annual accounts on a going concern basis.
7. ADDITIONAL INFORMATION: (a) Since the company has no employees, the particulars of the employees to be disclosed
u/s 217 (2A) of the Companies Act, 1956 read with Companies (particulars of employees) Rules, 1975, are not given.
(b) Information in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is provided hereunder:
(i) Conservation of Energy: Expenses on account of Energy are negligible. (ii) Technology Absorption: It is an on going process. (iii) Foreign Exchange Earning & Outgo: The Company has not earned any Foreign Exchange nor incurred any Foreign
Exchange Expenditure during the year.
8. ACKNOWLEDGEMENT: Your Directors take this opportunity to thank all the associates and authorities for their
co-operation.
For and on Behalf of the Board of Directors
MILIND S. KORDE K.T. JITHENDRAN
Directors
Mumbai, Dated: May 14, 2010
1. We have audited the attached Balance Sheet of GODREJ ESTATE DEVELOPERS PRIVATE LIMITED, as at 31st March, 2010, the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These fi nancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specifi ed in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph (3) above, we report that:
a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of such books.
c) The Balance Sheet, Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account.
d) In our opinion, the Balance Sheet and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.
e) Without qualifying our opinion, we draw attention to the fact that as referred to in Note 1(e) of Schedule 10-Notes to Accounts, in respect of projects under long
REPORT OF THE AUDITORS TO THE MEMBERS OF GODREJ ESTATE DEVELOPERS PRIVATE LIMITED
term contracts undertaken and/or fi nanced by the Company, we have relied upon the management’s estimates of the percentage of completion, costs to completion and on the projections of revenues expected from projects owing to the technical nature of such estimates, on the basis of which profi ts/losses have been accounted, interest income accrued and realizability of the construction work-in-progress and project advances determined.
f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;
ii) in the case of the Profi t and Loss Account, of the loss of the Company for the year ended on that date and,
iii) in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date.
5. On the basis of the written representations received from the directors as on 31st March, 2010, and taken on record by the Board of Directors, we report that, none of the directors is disqualifi ed as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
For and on behalf of
KALYANIWALLA & MISTRYChartered AccountantsFirm Registration No. : 104607W
ERMIN K. IRANIPartnerMembership No. 35646
Place: MumbaiDated: May 14, 2010
Annual Report 2009–2010
177
1) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fi xed assets.
(b) As explained to us, the Company has a program for physical verifi cation of fi xed assets at periodical intervals. In our opinion, the period of verifi cation is reasonable having regard to the size of the Company.
(c) There is no disposal of fi xed assets during the year.2) (a) The management has conducted physical verifi cation of inventory at reasonable intervals. (b) In our opinion, the procedures of physical verifi cation of inventory followed by the
management are reasonable and adequate in relation to the size of the company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifi cation.
3) (a) The Company has not granted any loans, secured or unsecured to companies, fi rms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.
(b) Consequently, the question of commenting on the rates of interest, terms and conditions of the loans granted being prejudicial to the interests of the Company, receipt of regular principal and interest and reasonable steps for recovery of the same does not arise.
(c) The Company has not taken any loan, secured or unsecured from companies, fi rms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.
(d) Consequently, the question of commenting on the rates of interest and others terms and conditions of the loans taken being prejudicial to the interests of the Company, payment of regular principal and the interest does not arise.
4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchases of inventory, fi xed assets and for the sale of goods. There are no sales of service. During the course of our audit, we have not observed a continuing failure to correct major weaknesses in internal controls.
5) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of contracts and arrangements referred to in Section 301 of the Companies Act, 1956 have been entered into the register required to be maintained under that section.
(b) The transactions made in pursuance of such contracts or arrangements, were made at prices which are reasonable having regard to prevailing market prices at the relevant time, where comparable market price exist.
6) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public hence the provisions of Section 58A and 58AA or any other provisions of the Companies Act, 1956, are not applicable.
7) The Company has an internal audit system, which in our opinion is commensurate with the size of the Company and nature of its business.
8) In our opinion and according to the information and explanations given to us, The Central Government has not been prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect of the activities carried on by the Company.
9) (a) According to the information and explanations given to us and on the basis of our examination of books of accounts, during the year, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Value
Added Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other statutory dues incurred during the year. According to the information and explanations given to us, there are no undisputed dues, payable in respect of above as at 31st March, 2010 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no dues outstanding of Sales Tax, Value Added Tax, Income Tax, Wealth Tax, Excise Duty, cess on account of any dispute.
10) The Company’s accumulated losses at the end of the fi nancial year are less than fi fty percent of its net worth. In Current year the Company has not incurred cash losses, however, it has incurred cash losses in the immediately preceding fi nancial year.
11) According to the information and explanations given to us and based on documents and records produced to us, the Company has not defaulted in repayment of dues to bank. The Company does not have any outstanding debentures or dues to fi nancial institutions.
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 benefi t fund/societies.
14) In our opinion and according to the information and explanations given to us, the Company does not deal in shares, securities, debentures and other investments.
15) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or fi nancial institutions.
16) Based on our examination and according to the information and explanations given to us, there were no term loans taken during the year.
17) According to the information and explanations given to us and an overall examination of the Balance Sheet and Cash Flows of the Company, we report that the Company has not utilized funds raised on short term basis for long term investments.
18) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.
19) The Company did not issue any debentures during the year.20) The Company has not raised any money through a public issue during the year.21) Based on the audit procedures performed and information and explanations given by the
management, we report that no fraud on or by the Company has been noticed or reported during the year.
For and on behalf of
KALYANIWALLA & MISTRYChartered AccountantsFirm Registration No. : 104607W
ERMIN K. IRANIPartnerMembership No. 35646
Place: MumbaiDated: May 14, 2010
ANNEXURE TO THE AUDITORS’ REPORTREFERRED TO IN PARAGRAPH (3) OF OUR REPORT OF EVEN DATE.
The Schedules referred to above form an Signatures to the Balance Sheetintegral part of the Balance Sheet. and Schedules 1 to 6 and 10As per our Report of even date.
For and on behalf ofKALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN
Partner DirectorsMumbai, May 14, 2010
The Schedules referred to above form an Signatures to the Profi t & Loss Accountintegral part of the Profi t & Loss Account. and Schedules 7 and 10As per our Report of even date.
For and on behalf ofKALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner DirectorsMumbai, May 14, 2010
BALANCE SHEET AS AT 31ST MARCH, 2010Schedule As at
31.03.2010Rupees
As at31.03.2009
Rupees SOURCES OF FUNDSSHAREHOLDERS’ FUNDS
Share Capital 1 500,000 500,000 LOAN FUNDS — — DEFERRED TAX LIABILITY 49,000 —
549,000 500,000 APPLICATION OF FUNDSFixed AssetsGross Block 2 1,425,010 — Less : Depreciation 17,008 — Net Block 1,408,002 — INVESTMENTS — — Current Assets, Loans & Advances
Inventory 3 265,201,213 — Cash & Bank Balances 4 45,817,082 500,000 Loans & Advances 5 279,637,849 —
590,656,144 500,000 Less : Current Liabilities & Provisions
Current Liabilities 6 591,603,880 60,575 591,603,880 60,575
Net Current Assets (947,736) 439,425 Miscellaneous Expenditure(to the extent not written off or adjusted)Preliminary Expenditure 13,760 15,480 Profi t and Loss Account 74,974 45,095
549,000 500,000 Notes to Accounts & Accounting Policies 10
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED31ST MARCH, 2010
Schedule For theyear ended31.03.2010
Rupees
For the Period11.07.2008 to
31.03.2009Rupees
INCOME
Interest Income(Tax deducted at Source Rs.2,090/- [Previous Year Nil])
37,849 —
EXPENDITURE
Cost of Sales 7 — —
Administration Expenses 8 — 43,375
Interest & Finance Charges 9 — —
Depreciation 17,008 —
Preliminary Expenses written off 1,720 1,720
Profi t / (Defecit) for the Year 19,121 (45,095)
Provision for Taxation
For Current Tax (3,000) —
For MAT Credit Entitlement 3,000 —
For Deferred Tax (49,000) —
Profi t/ (Loss) After Tax (29,879) (45,095)
Defi cit Brought Forward (45,095) —
(74,974) (45,095)
Earning per share Basic in Rs. (Refer Note 3) (0.60) (0.90)
Notes to Accounts & Accounting Policies 10
Godrej Estate Developers Private Limited
178
SCHEDULES FORMING PART OF THE ACCOUNTS As at
31.03.2010Rupees
As at31.03.2009
Rupees SCHEDULE 1SHARE CAPITALAUTHORISED50,000 Equity shares of Rs. 10/- each 500,000 500,000
500,000 500,000 ISSUED, SUBSCRIBED & PAID UP50,000 Equity shares of Rs. 10/- each, fully paid-up(Of the above 25,500 (Previous year 50,000) shares are held by Godrej Properties Limited, the Holding Company and its nominee)
500,000 500,000
500,000 500,000
For theYear ended31.03.2010
Rupees
For the Period11.07.2008 to
31.03.2009Rupees
SCHEDULE 8ADMINISTRATION EXPENSESAudit fees — 27,575 Other Operating Expenses — 15,800
— 43,375 SCHEDULE 9INTEREST AND FINANCE CHARGES (NET)INTEREST PAIDInterest Paid - Others 3,225,620 —TOTAL INTEREST PAID 3,225,620 —Less: Transferred to Cost of Sales 3,225,620 —NET INTEREST — —
SCHEDULE 2FIXED ASSETSParticulars Gross Block Depreciation Net Block
As at1st
April,2009
Additions Deduc-tions
As at31st
March,2010
As at1st
April,2009
For the
Year
As at31st
March,2010
As at31st
March,2010
As at31st
March,2009
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Offi ce Equipment — 358,017 — 358,017 — 1,774 1,774 356,243 —
Furniture & Fixtures — 58,213 — 58,213 — 376 376 57,837 —
Computer — 299,015 — 299,015 — 8,313 8,313 290,702 —
Motor Vehicle — 709,765 — 709,765 — 6,545 6,545 703,220 —
TOTAL — 1,425,010 — 1,425,010 — 17,008 17,008 1,408,002 Previous Year — — — — — — — — —
As at31.03.2010
Rupees
As at31.03.2009
Rupees SCHEDULE 3INVENTORYConstruction Work-in-Progress 265,201,213 —
265,201,213 — SCHEDULE 4CASH & BANK BALANCECash & Cheques-in-Hand 31,038 — Balance with Scheduled Bank- On Current Account 386,044 500,000 - On Fixed Deposit Accounts 45,400,000 —
45,817,082 500,000 SCHEDULE 5LOANS & ADVANCES(Unsecured & considered good unless otherwise stated)Advances recoverable in cash or kind or for value to be received
29,600,000 —
Interest accrued 35,759 —Advance Tax and Tax Deducted at Source (Net of Provision for Tax and MAT Credit Entitlement of Rs. 3,000/-)
2,090 —
Deposits 250,000,000 — 279,637,849 —
SCHEDULE 6CURRENT LIABILITIESSundry Creditors (Refer Note 2) 514,348 13,300 Investor Education and Protection Fund — — Other Liabilities 591,089,532 47,275
591,603,880 60,575
For theYear ended31.03.2010
Rupees
For the Period11.07.2008 to
31.03.2009Rupees
SCHEDULE 7COST OF SALES Opening Stock — — Add : Stock-In-Trade Acquired during the year 259,531,383 — Advertisment Expenses 505,541 — Overheads 1,938,669 — Interest 3,225,620 —
265,201,213 —Less : Closing Stock 265,201,213 — Cost of Sales — —
SCHEDULE 10NOTES TO ACCOUNTS AND ACCOUNTING POLICIES1) Accounting Policies a. General The fi nancial statements are prepared under the historical cost convention in
accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956.
b. Fixed Assets Fixed assets are stated at cost of acquisition or construction less accumulated
depreciation. Cost includes all incidental expenses related to acquisition and installation, other pre-operation expenses and interest in case of construction.
Carrying amount of cash generating units/assets are reviewed at balance sheet date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount is estimated as the net selling price or value in use, whichever is higher. Impairment loss, if any, is recognized whenever carrying amount exceeds the recoverable amount.
c. Depreciation/Amortization Depreciation has been provided on Written Down Value basis, at the rates specifi ed in
Schedule XIV of the Companies Act, 1956. d. Inventories Inventories are valued as under : a) Completed Flats - At lower of Cost or Market value b) Construction Work-in-Progress - At Cost Construction Work in Progress includes cost of land, premium for development
rights, construction costs, allocated interest and expenses incidental to the projects undertaken by the Company.
e. Revenue Recognition The Company is following the “Percentage of Completion Method” of accounting. As
per this method, revenue in Profi t & Loss Account at the end of the accounting year is recognized in proportion to the actual cost incurred as against the total estimated cost of projects under execution with the Company.
Determination of revenues under the percentage of completion method necessarily involves making estimates by the Company, some of which are of a technical nature, concerning, where relevant, the percentages of completion, costs to completion, the expected revenues from the project/activity and the foreseeable losses to completion. Such estimates have been relied upon by the auditors.
f. Borrowing Cost Interest and Finance charges incurred in connection with borrowing of funds, which
are incurred for the development of long term projects are transferred to Construction Work in Progress as a part of the cost of the projects at weighted average of the borrowing cost.
g. Provision for taxation Tax expense comprises both current and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities,
using the applicable tax rates and tax laws. Deferred tax is recognized on timing differences, being the differences between
the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that there is a reasonable certainty that suffi cient future taxable income will be available against which such deferred tax assets can be realized. The tax effect is calculated on the accumulated timing difference at the year-end based on the tax rates and laws enacted or substantially enacted on the balance sheet date.
h. Earning Per Share The basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period, except where the results would be anti-dilutive.
Annual Report 2009–2010
179
i. Foreign Currency Transactions Transactions in foreign currency are recorded at the exchange rates prevailing on the
date of the transaction. Assets and liabilities related to foreign currency transactions, remaining unsettled at the year end, are transalated at the year end exchange rates. Forward exchange contracts, remaining unsetteled at the year end, backed by underlying assets or liabilities are also translated at year end exchange rates.The premium payable on foreign exchange contracts is amortized over the period of the contract. Exchange gains/losses are recognised in the Profi t and Loss Account.
j. Provisions And Contingent Liabilities Provisions are recognized in the accounts in respect of present probable obligations,
the amount of which can be reliably estimated. Contingent liabilities are disclosed in respect of possible obligations that arise from
the past events but their existence is confi rmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. There is no contingent liability as on the balance sheet date.
k. Miscellaneous Expenditure Miscellaneous expenditure is amortized over a period of 10 years.2) Due to Micro, Small and Medium Enterprises Disclosure of sundry creditors under current liabilities is based on the information available
with the Company regarding the status of the suppliers as defi ned under the "Micro, Small & Medium Enterprises Development Act 2006". There is no amount overdue as on 31st March, 2010 to Micro, Small and Medium Enterprises on account of principal amount together with interest and also during the previous year.
3) Earnings per share
Particulars Current Year(Rs.)
Previous Year(Rs.)
Loss for the Year as per Profi t & Loss Account (Rs.) (29,879) (45,095)
Weighted average no. of equity shares outstanding 50,000 50,000
Basic/Diluted earnings per share (Rs.) (0.60) (0.90)
Nominal value of shares (Rs.) 10/- 10/-
4) Deferred Tax The Tax effect of signifi cant temporary differences that resulted in the deferred tax
liabilities are:
Particulars Current Year(Rs.)
Previous Year(Rs.)
Liabilities- Depreciation on Fixed Assets (49,000) —
Deferred Tax Liabilities (49,000) —
5) Amounts paid to Auditors:
Particulars Current Year(Rs.)
Previous Year(Rs.)
Audit Fees 159,935 27,575
Total 159,935 27,575
6) Segment Information As the company has only one business segment, disclosure under Accounting Standard 17
on “Segment Reporting” issued by the Institute of Chartered Accountants of India is not applicable.
7) Related Party Disclosure Related party disclosures as required by AS-18, “Related Party Disclosures”, are given
below: 1. Relationships: (i) Shareholders (the Godrej Group Shareholding) in the Company Godrej Properties
Limited (GPL) holds 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 holding company.
(ii) Investing party in respect of which the reporting enterprise is an associate. – HDFC PMS.
2. The following transactions were carried out with the related party in the ordinary course of the business:
Sr. No
Particulars Current Year(Rs.)GPL
Previous Year(Rs.)GPL
1 Issue of Equity Share Capital — 500,0002 Expenses charged by other companies 264,496,384 18,0003 Advances received 329,645,356 —4 Advances repaid 4,825 —5 Repayment of Expenses Charged 4,660,439 —6 Purchase of Fixed Assets 1,425,010 —7 Outstanding payables 590,596,924 18,000
8) Previous year fi gures have been regrouped/rearranged where ever necessary to confi rm to current year’s classifi cation.
9) Additional Information as required under Part IV of Schedule VI of the Companies Act, 1956 to the extent not applicable has not been given.
SCHEDULES FORMING PART OF THE ACCOUNTS
Balance Sheet Abstract for the Year ended 31st March, 2010 and Company’s General Business Profi le1. Registration Details
Registration No. U70102MH2008PTC184595 State Code 11 Balance Sheet Date 31st March, 20102. Capital raised during the year (Amount in Rs. Thousands) Public Issue Nil Rights Issue Nil Bonus Issue Nil Private Placement - Capital Nil - Premium Nil
3. Position of mobilisation and deployment of funds (Amount in Rs. Thousands) Total Liabilities 592,153 Total Assets 592,153
Sources of Funds Paid-up Capital 500 Reserves & Surplus — Secured Loans — Unsecured Loans — Deferred Tax Liability 49 Application of Funds Net Fixed Assets 1,408 Investments — Net Current Assets (948) Misc. Expenditure 14 Accumulated Losses 754. Performance of Company (Amount in Rs. Thousands) Turnover — Total Expenditure 19 Profi t/(Loss) before Tax 19 Profi t/(Loss) after Tax (30) Earning per Share in Rs. (0.60) Dividend Rate % —5. Generic Names of three principal products/services of Company N.A.
ADDITIONAL INFORMATION AS REQUIRED UNDER PART IV OF THE SCHEDULE VI TO THE COMPANIES ACT, 1956
For and on behalf ofKALYANIWALLA & MISTRY Chartered Accountants
ERMIN K. IRANI MILIND S. KORDE K.T. JITHENDRAN Partner DirectorsMumbai, Dated : May 14, 2010
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2010 Current Period
RupeesPrevious Year
RupeesCash Flow from Operating ActivitiesProfi t/(Loss) for the Year 19,121 (45,095)Adjustment for:Depreciation 17,008 — Interest Paid 3,225,620 — Preliminary Expenses 1,720 1,720 Interest Received (37,849) — Operating Profi t/(Loss) before working capital changes 3,225,620 (43,375)Adjustment for:Change in Inventory (265,201,213) — Change in Loans & Advances (279,600,000) — Changes in Current Liabilities & Provisions 588,317,685 60,575 Preliminary Expenses Incurred — (17,200)Net Cash Flow from Operating Activities 46,742,092 — Taxes Paid (Net) 2,090 — Net Cash Flow from Operating Activities 46,740,002 —Cash Flow (used) from Financing Activities Purchase of Fixed Assets (1,425,010) — Issue of Share Capital — 500,000 Interest Received 2,090 — Net Cash Flow from Financing Activities (1,422,920) 500,000 Net Increase in Cash & Cash Equivalent 45,317,082 500,000 Cash & Cash Equivalent - Opening Balance 500,000 —
Cash & Cash Equivalent - Closing Balance 45,817,082 500,000
Notes :1. The cash fl ow statement has been prepared under the ‘Indirect Method’ as set out in
the Accounting Standard (AS) 3 on ‘Cash Flow Statement’, and presents cash fl ows by operating, investing and fi nancing activities.
2. Figures for the previous year have been regrouped / restated wherever necessary to conform to this year's classifi cation.
Godrej International Limited
180
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF GODREJ INTERNATIONAL LIMITED
BALANCE SHEET AS AT MARCH 31, 2010 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010
DIRECTORS’ REPORTThe directors aim to maintain the management policies which have resulted in the company’s substantial growth in recent years. They consider that the next year will show a further signifi cant growth in sales.Principal activitiesThe company’s principal activity during the year continued to be trading worldwide in vegetable oils. The recovery in commodity prices improved the market outlook through the year. The company has reported higher sales by 4.06% and higher profi ts of 9.08%.DirectorsThe following persons served as directors during the year:
2010 2009Adi B Godrej (Indian) 1 1Nadir B Godrej (Indian) - -Aspi K Bardy (Indian) (Deceased December 27, 2009) - -Dorab E Mistry (British) - -Andrew B Byers - -Lynsey Elliott (British) - -
The Directors acknowledge the contribution made by the late Mr Aspi K Bardy right from the establishment of the company, who sadly passed away during the year.Directors’ responsibilitiesThe directors are responsible for preparing the report and accounts in accordance with applicable law and regulations.Company law requires the directors to prepare accounts for each fi nancial year. Under that law the directors have elected to prepare the accounts in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The accounts are required by law to give a true and fair view of the state of affairs of the company
and of the profi t or loss of the company for that period. In preparing these accounts, the directors are required to:– select suitable accounting policies and then apply them consistently;– make judgements and estimates that are reasonable and prudent;– prepare the accounts on the going concern basis unless it is inappropriate to presume that
the company will continue in business.The directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the fi nancial position of the company and enable them to ensure that the accounts comply with the Isle of Man Companies Acts 1931 to 2004. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.Disclosure of information to auditorsEach person who was a director at the time this report was approved confi rms that:– so far as he is aware, there is no relevant audit information of which the company’s auditor
is unaware; and– he has taken all the steps that he ought to have taken as a director in order to make himself
aware of any relevant audit information and to establish that the company’s auditor is aware of that information.
Small company provisionsThis report has been prepared in accordance with the provisions of the Isle of Man Companies Acts 1931 to 2004 applicable to companies subject to the small companies regime.This report was approved by the board on April 28, 2010.
Mr D Mistry Director
Date : April 28, 2010
We have audited the accounts of Godrej International Limited for the year ended March 31, 2010 which comprise the Profi t and Loss Account, the Balance Sheet, the Cash Flow Statement, the Statement of Total Recognised Gains and Losses and the related notes. The fi nancial reporting framework that has been applied in their preparation is applicable law and the Financial Reporting Standard For Smaller Entities (effective April 2008) (United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities).This report is made solely to the company’s members, as a body, in accordance with the Isle of Man Companies Acts 1931 to 2004. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.Respective responsibilities of directors and auditorsAs explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the accounts and for being satisfi ed that they give a true and fair view. Our responsibility is to audit the accounts in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.Scope of the audit opinionAn audit involves obtaining evidence about the amounts and disclosures in the accounts suffi cient to give reasonable assurance that the accounts are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of signifi cant accounting estimates made by the directors; and the overall presentation of the accounts.Opinion on the accountsIn our opinion the accounts:
– give a true and fair view of the state of the company’s affairs as at March 31, 2010 and of its profi t for the year then ended;
– have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities; and
– have been prepared in accordance with the requirements of the Isle of Man Companies Acts 1931 to 2004.
Opinion on other matters prescribed by the Isle of Man Companies Acts 1931 to 2004In our opinion the information given in the Directors’ Report for the fi nancial year for which the accounts are prepared is consistent with the accounts.Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Isle of Man Companies Acts 1931 to 2004 requires us to report to you if, in our opinion:- adequate accounting records have not been kept, or returns adequate for our audit have not
been received from branches not visited by us; or- the accounts are not in agreement with the accounting records and returns; or- certain disclosures of directors’ remuneration specifi ed by law are not made; or- we have not received all the information and explanations we require for our audit; or the
directors were not entitled to prepare the accounts and the Directors’ Report in accordance with the small companies regime.
(Senior Statutory Auditor) Heritage Housefor and on behalf of Keith Woods & Co.LLC Ramsey RoadAccountants and Statutory Auditors PeelApril 28, 2010 Isle of Man
IM5 1RH
2010 2009Notes US $ Rs. Lac US $ Rs. Lac
Fixed assetsInvestments 3 3,055,000 1,371.70 3,055,000 1,549.50Current assetsDebtors 4 3,301,638 1,482.44 3,225,756 1,636.10Cash at bank and in hand 2,635,139 1,183.18 2,651,558 1,344.87
5,936,777 2,665.61 5,877,314 2,980.97Creditors: amounts falling duewithin one year 5 (15,000) (6.74) (7,574) (3.84)Net current assets 5,921,777 2,658.88 5,869,740 2,977.13Total assets less currentliabilities 8,976,777 4,030.57 8,924,740 4,526.63Creditors: amounts falling dueafter more than one year — — (1,478,655) (749.97)Net assets 8,976,777 4,030.57 7,446,085 3,776.65Capital and reservesCalled up share capital 6 3,805,361 1,708.61 3,805,361 1,930.08Profi t and Loss Account 7 5,171,416 2,321.97 3,640,724 1,846.58Shareholders’ funds 8,976,777 4,030.57 7,446,085 3,776.65
Note: The Rupee equivalent of US $ have been given at the closing exchange rates as on March 31, 2010 (US $ 1 = Rupees 44.90) and March, 2009 (US $ 1 = Rupees 50.72)
Mr. D MistryDirector
Approved by the board on April 28, 2010
2010 2009
Notes US $ Rs. Lac US $ Rs. Lac
Turnover 120,267,513 54,000.11 115,504,010 58,583.63
Cost of sales (118,446,906) (53,182.66) (113,823,249) (57,731.15)
Gross profi t 1,820,607 817.45 1,680,761 852.48
Administrative expenses (283,324) (127.21) (277,280) (140.64)
Operating profi t 1,537,283 690.24 1,403,481 711.85
Interest receivable 7,000 3.14 31,561 16.01
Interest payable 2 (13,592) (6.10) (55,431) (28.11)
Profi t on ordinary activities before taxation 1,530,691 687.28 1,379,611 699.74
Tax on profi t on ordinary activities — — — —
Profi t for the fi nancial year 1,530,691 687.28 1,379,611 699.74
Note: The Rupee equivalent of US $ have been given at the closing exchange rates as on March 31, 2010 (US $ 1 = Rupees 44.90) and March, 2009 (US $ 1 = Rupees 50.72)
Annual Report 2009–2010
181
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED MARCH 31, 2010
2010 2009Notes US $ Rs. Lac US $ Rs. Lac
Profi t for the fi nancial year 1,530,691 687.28 1,379,611 699.74Total recognised gains and losses related to the year 1,530,691 687.28 1,379,611 699.74
Note: The Rupee equivalent of US $ have been given at the closing exchange rates as on March 31, 2010 (US $ 1 = Rupees 44.90) and March, 2009 (US $ 1 = Rupees 50.72)
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 20101. Accounting policies
Basis of preparation
The accounts have been prepared under the historical cost convention and in accordance with the Financial Reporting Standard for Smaller Entities (effective April 2008).
Turnover
Turnover represents the invoiced value of goods supplied by the company, net of value added tax and trade discounts.
Turnover is attributable to one continuing activity, the trading of vegetable oils.
Foreign currencies
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the Balance Sheet date. All differences are taken to the Profi t and Loss Account.
2. Interest payable 2010 2009US $ Rs. Lac US $ Rs. Lac
Interest payable 13,592 6.10 55,431 28.11
3. InvestmentsOther
investmentsUS $ Rs. Lac
Cost At April 1, 2009 3,055,000 At March 31, 2010 3,055,000
Other investments 2010 2009US $ Rs. Lac US $ Rs. Lac
Unlisted investments 3,055,000 1,371.70 3,055,000 1,549.50
On April 4, 2001, the company invested US$1million in 495,000 C Bay Systems Ltd. (C Bay) 8% Series E Cumulative Convertible Redeemable Preferred Stock of US$ 0.1 per share at a price of US$ 0.2 per share. As a result of organisational restructuring of C Bay, the company now holds 721,195 common stock in C Bay Systems USA Ltd. and 1,422,392 shares in C Bay Systems Holdings Limited BVI.
On March 8, 2004, the company invested US$2,055,000 in equity shares of Newmarket Limited, a company incorporated in the Isle of Man. This represents approximately 18% of the issued share capital of Newmarket Limited.
4. Debtors 2010 2009US $ Rs. Lac US $ Rs. Lac
Trade debtors (106,340) (47.75) 3,322,526 1,685.19Amounts owed by group undertakings and undertakings in which the company has a participating interest 108,203 48.58 108,764 55.17Other debtors 3,299,775 1,481.60 (210,946) (106.99)Prepayments and accrued income — — 5,412 2.74
3,301,638 1,482 3,225,756 1,636.10
2010 2009
5. Creditors: amounts falling due within one year
US $ Rs. Lac US $ Rs. Lac
Trade creditors — — (2,425) (1.23)Accruals and deferred income — — 9,999 5.07Other creditors 15,000 — —
15,000 — 7,574 3.84
6. Share capital 2010 2009 2010 2009No. No. US $ Rs. Lac US $ Rs. Lac
Allotted, called up and fully paid:Ordinary shares of £1 each 2,355,000 2,355,000 3,805,361 1,708.61 3,805,361 1,930.08
7. Profi t and Loss Account 2010 2009US $ Rs. Lac US $ Rs. Lac
At April 1, 2009 3,640,725 1,634.69 2,261,113 1,146.84Profi t for the year 1,530,691 687.28 1,379,612 699.74At March 31, 2010 5,171,416 2,321.97 3,640,725 1,846.58
8. Controlling party In April 2001 Godrej Soaps Limited, the owner of all the company's share capital, was
demerged into two separate entities: Godrej Consumer Products Limited and Godrej Industries Limited. The assets and liabilities of Godrej Soaps Limited were divided between the two new companies. The entire share capital of Godrej International Limited is now held by Godrej Industries Limited.
Godrej Industries Limited is currently listed on the Mumbai Stock Exchange as well as the National Stock Exchange of India.
The fi nancial statements of Godrej Industries Limited are available from : The Secretary, Godrej Industries Limited, Eastern Express Highway, Vikhroli, Mumbai 400079, India.
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010
2010 2009US $ Rs. Lac US $ Rs. Lac
Cash generated from operations
Operating profi tReconciliation to cash generated from operations:
1,537,283 690.24 1,403,481 711.85
Increase in debtors (3,301,638) (1,482.44) (1,017,763) (516.21)
Increase in creditors 15,000 6.74 7,365 3.74
(1,749,355) (785.46) 393,083 199.37
Cash from other sources
Interest received 7,000 3.14 (23,870) (12.11)
7,000 3.14 (23,870) (12.11)
Application of cash
Interest paid (13,592) (6.10) 19,167 9.72
(13,592) (6.10) 19,167 9.72
Net decrease in cash (1,755,947) (788.42) 388,380 187.26
Cash at bank and in hand less overdrafts at April 1 — — — —
Cash at bank and in hand less overdrafts at March 31 (1,755,947) (788.42) 388,380 187.26
Consisting of:
Cash at bank and in hand 2,635,139 1,183.18 2,651,558 1,344.87
Note: The Rupee equivalent of US $ have been given at the closing exchange rates as on March 31, 2010 (US $ 1 = Rupees 44.90) and March, 2009 (US $ 1 = Rupees 50.72)
Godrej International Limited
182
NOTES
Registered Offi ce : Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai – 400 079.
PROXY FORM Folio No. ............................... Client ID No. .......................... DP ID No. ..............................
I/We ....................................................................................................................................................of ................................................................................................................................. being a member/members of the abovementioned Company, hereby appoint ................................................................................or failing him ...................................................................... as my/our proxy to vote for me/us on my/our behalf at the TWENTY-SECOND ANNUAL GENERAL MEETING of the Company to be held on Tuesday, July 27, 2010 at 4.30 p.m. and at anyadjournment thereof. This form is to be used in favour of the resolution(s)......................................................................... /against the resolution/s..................................................................................................... Unless otherwise instructed the proxy will act as he thinks fi t.Signed this ................. day of ......................... 2010.
Signature ...........................................................
Note : Proxy Forms must reach the Company’s Registered Offi ce not less than 48 hours before the Meeting.
Registered Offi ce : Pirojshanagar, Eastern Express Highway, Vikhroli (East), Mumbai – 400 079.
ATTENDANCE SLIP
Godrej Industries Limited
I hereby record my presence at the TWENTY-SECOND ANNUAL GENERAL MEETING of the Company to be held at Y.B. Chavan Centre, Nariman Point, Mumbai - 400 021 on Tuesday, July 27, 2010 at 4.30 p.m.
..................................................................................................... .......................................................................... Name of attending Member/Proxy Member’s/Proxy’s Signature (To be signed at the time of handing over this slip)
Notes :1. Shareholder/Proxyholder wishing to attend the Meeting must bring the Attendance Slip to the Meeting and hand-over at the
entrance duly signed.2. Shareholder/Proxyholder should bring his/her copy of the Annual Report for reference at the Meeting.
Godrej Industries Limited
Folio No. ............................... Client ID No. .......................... DP ID No. ..............................
Affi xRe 1/-
RevenueStamp
File : GIL Annual Report10 Pg 9-26 / Size: Close Size: 20.3cm(w)x26cm(h)
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