GODREJ INDUSTRIES LIMITED · 2009-11-19 · focused FMCG company, with effect from April 1, 2002 and the residual entity which retained the Chemicals, Estate, medical diagnostics,

Annual Report 2001-2002....................................................................................................................................................................................

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GODREJ INDUSTRIES LIMITED

DIRECTORS

A.B. Godrej Chairman

J.N. Godrej

N.B. Godrej Managing Director

K.N. Naoroji

V.M. Crishna

S.A. Ahmadullah

N.C. Gawankar

V.N. Gogate

T.A. Dubash Director (Marketing)

M. Eipe Executive Director & President (Chemicals)

C.K. Vaidya Executive Director (Corporate HR)

F.P. Sarkari

M.P. Pusalkar Executive Director & President (Foods Division)

K.N. Petigara

K.K. Dastur

COMPANY SECRETARY

S.K. Bhatt

AUDITORS

Kalyaniwalla & Mistry, Chartered Accountants

Godrej Industries Limited....................................................................................................................................................................................

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REGISTERED OFFICE : Pirojshanagar,Eastern Express Highway,Vikhroli (East), Mumbai 400 079.Phone: 022 - 518 8010, 518 8020, 518 8030Fax : 022 - 518 8074, 518 8066website : http://www.godrejinds.com

FACTORIES : Vikhroli Pirojshanagar, Eastern Express Highway,Vikhroli, Mumbai 400 079.Phone : 022 - 518 8010, 518 8020, 518 8030Fax : 022 - 518 8068/518 8074

Valia Burjorjinagar,Plot No. 3, Village Kanerao,Taluka - Valia, District Bharuch,Gujarat 393 135.Phone : 02643 - 70756 to 70760Fax : 02643 - 70018

Wadala L.M.Nadkarni MargNear M.P. T. HospitalWadala (East), Mumbai - 400 37Phone : 022 - 412 6320/23, 414 6296Fax : 022 - 412 6204, 416 4599

Mandideep Plot No. 5, New Industrial Area No. 1Mandideep, District Raisen,Bhopal - 462 046, MPPhone : 07480 - 33405 - 7Fax : 07480 - 33409

Mysore Plot No. 310, 342 & 343,Hebbal Industrial Area, Metagalli,Mysore - 570 017Phone : 0821 - 402418Fax : 0821 - 402419

BRANCHES : Delhi Laxmi Insurance Building,2/2-A, Asaf Ali Road, New Delhi 110 002.Phone : 011 - 323 3775, 323 3777, 323 6776Fax : 011 - 323 3778

Kolkata Block GN, Sector-V,Salt Lake City, Kolkata 700 091.Phone : 033 - 357 3556, 357 3555Fax : 033 - 357 3945

Chennai Basement, Kasi Arcade,116, Sir Thyagaraya Road,T. Nagar, Chennai 600 017.Phone : 044 - 815 2456Fax : 044 - 815 2756

London 284A, Chase Road, Southgate,London N14 - 6HF., EnglandPhone : (004420) - 88860145Fax : (004420) - 88869424

BANKERS : Central Bank of IndiaState Bank of IndiaBank of IndiaHDFC Bank Ltd.Citibank N.A.

REGISTRARS : Computech Sharecap Ltd.147, Mahatma Gandhi Road,Fort, Mumbai 400 023.Phone: 022 - 267 1824-26Fax : 022 - 267 0380E-Mail : [email protected]

CONTENTS Page Nos.

Financial Highlights ........................................................ 3

Management Discussion and Analysis Report ........... 4-6

Corporate Governance .................................................. 7-9

Shareholders' Information ............................................ 10-11

Notice .............................................................................. 12-20

Directors’ Report ........................................................... 21-24

Auditors’ Report ............................................................. 25

Accounts ......................................................................... 26-43

Consolidated Accounts .................................................. 44-54

Statement Pursuant to Section 212 ............................ 55

SUBSIDIARIES

Godrej Agrovet Limited ................................................. 56-65

Goldmohur Foods & Feeds Limited ............................ 66-71

Godrej Properties & Investments Limited ................... 72-76

Tahir Properties Limited ................................................ 77-79

Girikandra Holiday Homes & Resorts Private Ltd. .... 80-81

Ensemble Holdings & Finance Limited ....................... 82-84

Godrej Remote Services Limited .................................. 85-87

Godrej International Limited ......................................... 88-89

Godrej Global Mid East FZE ......................................... 90-92

Sahyadri Aerosols Limited ............................................ 93-94

Annual Report 2001-2002....................................................................................................................................................................................

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Total Income 2001-2002

Chemicals 35935

Foods 9095

Estate Management 2178

Processing Charges 2737

Medical Diagnostics 515Income from Mfg. & Other BusinessOperations 734Income from Financial operations 2113

Others 158

Total 53465

Total Expenditure 2001-2002

Materials 29821

Staff Costs 5627

Depreciation 2154

Interest 3218

Other Operating Expenses 7960

Total 48780

Break-up of Total Income

Rs. Lac

Break-up of Total Expenditure

Rs. Lac

GODREJ INDUSTRIES LIMITED – FINANCIAL HIGHLIGHTS(Rs. lac)

2001-02 2000-01 1999-00 1998-99 1997-98BALANCE SHEETSOURCES OF FUNDS :Shareholders’ Funds

Share Capital 3699 5979 5979 6313 6514Reserves & Surplus 21030 27559 25679 22051 26206

Loan FundsSecured Loans 15051 16701 22375 33312 26120Unsecured Loans 13456 9547 11881 13131 18718Deferred Tax Liability 1347

54583 59786 65914 74807 77558APPLICATION OF FUNDS :Fixed Assets 29099 33799 32815 32309 32970Investments 14619 17075 19043 24081 23180Net Working Capital 9987 8076 12666 17489 18886Miscellaneous Expenditure 878 836 1390 928 2522

54583 59786 65914 74807 77558INCOME AND PROFIT FIGURES

Total Income 53465 79786 71620 90981 71796Expenditure other than Interest and Depreciation 43408 65935 57218 85894 62268Profit before Interest, Depreciation and Tax 10057 13851 14402 5087 9528Interest (net) 3218 3711 4774 5976 6594Profit/ (Loss) before Depreciation and Tax 6839 10140 9628 (889) 2934Depreciation 2154 2531 2342 2104 1971Profit/ (Loss) before Tax and exceptional items 4685 7609 7286 (2993) 963Exceptional items- expense 624 3194 547 — —Provision for Current Tax 150 350 641 — 110Net Profit/(Loss) after Tax 3911 4065 6098 (2993) 853Provision for Deferred Tax 923 — –– –– ––Adjustment in respect of prior years -(Income)/Expense (121) (25) (90) 383 (708)Net Profit/(Loss) after taxes and adjustments 3109 4090 6188 (3376) 1561

Note : The figures for 2001-02 are not comparable with those of the previous years in view of the schemes of arrangement with Godrej Consumer Products Limited and Godrej Foods Limited, details of which havebeen given in the Management Discussion and Analysis and in the Directors' Report


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An Overview

It has been an eventful year for Godrej Industries Limited (GIL).The Consumer ProductsDivision (CPD) was carved out to form Godrej Consumer Products Limited (GCPL), afocused FMCG company, with effect from April 1, 2002 and the residual entity whichretained the Chemicals, Estate, medical diagnostics, financial operations, etc., was renamedGodrej Industries Limited.

The year also saw another restructuring wherein the manufacturing business of GodrejFoods Limited, together with its marketing, sales, finance and other related functions wasde-merged and made part of GIL as its Foods Division effective June 30, 2001.

2001-02 saw the lowest rate of Industrial growth witnessed in the country during thepast several years and the Index of Industrial Production grew by just 2.7%.

Financial Performance

The financial performance of the Company during the year as compared to that of theprevious year is summarised below:

Abridged Profit and Loss Account of GIL for the year 2001-02

(in Rs. lac)

2001-02 2000-01

Sales of products and services 51195 78172

Other Income 2270 1614

Total income 53465 79786

Material costs 29821 39514

Staff costs 5627 6020

Other expenditures 7960 20401

Total expenditure 43408 65935

Profit Before Depreciation, Interest and Tax 10057 13851

Depreciation 2154 2531

Profit Before Interest and Tax 7903 11320

Interest and financial charges (net) 3218 3711

Profit Before Tax (before exceptional items) 4685 7609

Exceptional items (624) (3194)

Profit Before Tax 4061 4415

Provision for Current Tax 150 350

Profit after Current Tax 3911 4065

Provision for Deferred Tax 923 -

Adjustments in respect of prior years – net income 121 25

Profit After Tax 3109 4090

GIL’s total income for 2001-02 was Rs. 53,465 lac as compared to Rs. 79,786 lac inthe previous year.

GIL generated a Profit Before Tax (PBT) of Rs.4061 lac and a Profit After Tax of Rs.3109 lac in 2001-02.

Profitability ratios (%)

2001-02 2000-01

PBDIT/Sales 14.28 13.42

PBT/Sales 7.93 5.65

PAT/Sales 6.07 5.23

Return on Capital Employed 14.61 19.20

Return on Net Worth 12.84 12.51

Basic EPS * (Rs.) 5.08 6.84

Diluted EPS * (Rs.) 5.08 6.84

* Face value per share reduced from Rs.10/- to Rs. 6/- w.e.f. April 1, 2001.

Financial Risk Ratios

2001-02 2000-01

Debt/Equity 1.17 0.80

Interest coverage 2.45 3.05

The figures for the previous year are inclusive of Consumer Products Business, butwithout Manufacturing Business of Godrej Foods Limited. The figures for the year underreview include figures of Manufacturing Business of Godrej Foods Limited w.e.f. June30, 2001 but do not include figures of Consumer Products Business. Hence the figuresare not comparable.

Segment-wise performance

We give below the segment-wise break-up of sales, PBIT and capital employed for theyear under review:

(Amounts in Rs. lac)

1. Segment Revenue (Income from Operations)

Chemicals 38930

Foods 9652

Estate Management 2178

Others 2650

Total 53410

2. Segment Results (Profit before Interest & Tax)

Chemicals 4612

Foods 1219

Estate 1649

Others 679

Profit Before Interest and Tax 8159

Less: Interest (Net) (3218)

Unallocated expenses (Net), Prior period items (880)

Profit Before Tax 4061

3. Segment Capital Employed

Chemicals 27896

Foods 6160

Estate 1867

Others 18458

Unallocated Assets 572

Total 54953

CHEMICALS DIVISION

Sales of the division grew 9 % in value and 17% in volume terms.

The Chemicals business won the BEST BUSINESS AWARD for 2001-02, within theGodrej Group of Companies. It also won the “CHEMEXCIL AWARD” from BasicChemicals, Pharmaceuticals and Cosmetics Export Promotion Council for 2000-01for the third year in succession.

Industry Outlook:

The Chemicals Division operates in the Oleo-Chemicals Industry.

On the supply side, weather conditions (factors like El Nino), demand for edible oils forhuman consumption, oilseed production, etc., affect the availability and price of vegetableoils. On the demand side, the growth of the end-user industries like detergents, industrialapplications, cosmetics and personal care, etc. affect the volume and profitability of thesales of this division.

To mitigate the risks of this industry, the Division has been concentrating on efficientsourcing and coverage of raw materials, de-bottlenecking and improving efficiencies in themanufacturing operations, and providing customized products to the end-users, toreduce costs and improve profitability.

MANAGEMENT DISCUSSION AND ANALYSIS

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Category-wise performance and future outlook is reviewed below:

Fatty Acids:

Fatty acids accounted for 28% of the turnover of this division. Fatty acids segmentcomprises Stearic Acids, Oleic Acids, and other speciality Fatty Acids. Stearic Acidsaccounted for around 50% of the turnover of this segment.

This product category recorded a growth of 34% in value over the last year. This growthwas driven by growth in end-use segments of Cosmetics, Polymers and Rubber. Themarket opportunity in sales of soap maker fatty acids also contributed to the growth.

Exports in the above product category increased substantially due to the launch of shortchain fatty acids.

Glycerin

Glycerin, which is a by-product of the oil splitting process, accounted for 11% of theturnover of this division. In the past year, the domestic supply of Glycerin was more thanthe demand and the industry exported the surplus.

During the year, our Glycerin sales increased 23% in volume. Despite the increase involumes, GIL has been able to improve its margins. During the year, there has been nosignificant change in the structure of the Industry, and outlook for the year continues tobe good.

Alpha Olefin Sulphonate (AOS):

GIL is a pioneer and market leader in AOS production and marketing with a market sharein excess of 80%. GODREJ Alpha Olefin Sulphonate (AOS) constituted 19% of theturnover of this division. AOS sales have grown by 10% increasingly substituting theother surfactants. Godrej AOS is incorporated in a number of well-known detergentbrands and shampoos in the country. Godrej Consumer Products Limited, an associateof GIL uses AOS in the manufacture of its liquid detergent brand Ezee.

Godrej AOS is now sold in different forms, such as, liquid (38% matter), paste (70%matter), powder (95% matter) and needles form (95% matter), to suit the convenienceof the end-users.

GIL has identified new market opportunities for AOS, which should sustain and growsales of this segment in the coming year.

Fatty Alcohols:

Fatty Alcohols contributed to 42% of the turnover of this division. This segment hascontinued to grow steadily over the years. Fatty Alcohols are mainly used in Laundry andpersonal care applications in the domestic market. It finds use in the Cosmetics andIndustrial applications abroad.

During the year GIL was able to enter new markets like Vietnam and the Middle Eastcountries.

The year also saw major initiatives in reducing supply chain costs and de-bottlenecking,which has helped GIL to be competitive in the Export Market. GIL has more than 85%market share in the domestic market in this category.

New capacities being added world wide in fatty alcohols could lead to pressure onmargins in this segment in the coming years.

FOODS DIVISION

The total sales was Rs. 9095 lac during the year under review.

The Honourable High Courts at Jabalpur and Mumbai sanctioned the Scheme ofArrangement with Godrej Foods Limited (GFL), wherein the manufacturing business ofGFL together with sales, marketing, finance and other related functions was de-mergedinto GIL thus forming the Foods division.

Edible Oils and Processed Foods are the two categories in this division.

Outlook

The uncertainty in the business of Foods Division continues. The price of Edible Oil aswell as fruit pulp, which is an essential raw material for the above category, continues torise due to lower production. Intense competition is preventing profitable rise in sellingprice. The focus of the division continues to be on increasing margins and reducing cost.Decentralisation of production is being considered as one of the ways to improve marginsin the Edible Oils category.

Edible Oils and Fats:

The turnover during the year under review was Rs. 7690 lac. During the year uncertaintyprevailed in the Edible Oil and Fats category due to frequent changes in the Import duties.The entry of international players in this category intensified the already existing competitionwith local players. As a result margins were under pressure during the year. The divisionsuccessfully introduced bakery shortening in the Edible Oil category, which catered to theneeds of biscuit manufacturers and bakeries.

Processed Foods:

The total turnover of products in this category was Rs.1405 lac.

The division’s presence in the Processed Food industry is restricted to tetrapak Fruit Drinksand similar products. This business has seen very low growth due to the increasedcompetition by the carbonated soft drink products. The division markets brands like“Jumpin” and “Xs” tetrapak fruit drinks. During the year Guava Fruit Drink was alsolaunched under the “Xs” brand. Sale of mango pulp during the year was higher than inthe previous year.

Whilst the volumes in both Edible Oil and Processed Food suffered, the focus of theDivision was predominantly on profitability which improved considerably in both thesecategories.

ESTATE MANAGEMENT

The total income from this business was Rs. 2178 lac as compared to Rs.1845 lac in theprevious year.

GIL continues to look at optimizing space required for its own operations and release theunutilized space to be given on Leave & Licence basis to other corporate entities. Withmore and more space becoming available in Central Mumbai, mainly the land which wasearlier used by textile mills, there is pressure on pricing.

Manufacturing Facilities

During the year, both the factories at Vikhroli and Valia have done well, in terms ofproductivity and plant reliability.

The Vikhroli factory has been certified to be ISO 14001 compliant by BVQI. Valia Factoryis gearing up for obtaining ISO 14001 certification for environment management system.

Various initiatives in both plants, for de-bottlenecking have helped in improving throughputwell beyond the rated capacities.

The manufacturing facilities of Foods Division are located at Wadala in Mumbai, Mandideepin Bhopal and at Mysore in Karnataka.

Research and Development

During the year under review, the R&D efforts of the Company were targeted at oils,fats, fatty acids, fatty alcohols, glycerin and surfactants.

This resulted in launch of two new fatty acids of international standards, modifiedprocess for manufacture of medium chain fatty acids and a process for making fatty acids/ fatty alcohols of global standards with cheaper raw materials.

Information Technology

Information Technology (IT) performs an important role in making the company competitiveand is poised to play an even greater part in enhancing the efficiency of the supply chain.GIL has successfully implemented MFG/PRO, an enterprise wide resource planning (ERP)software developed by QAD Inc. The objective is to integrate manufacturing, financial anddistribution activities across all locations. This is leading to lower inventory, improvedcustomer service and online tracking of costs, which have standardised and enforceddiscipline in the entire workflow.

GIL has embarked on an ambitious project in managing customer relationship by leveragingthe immense potential of the web. This initiative would provide tremendous convenienceto customers. This e-commerce initiative of Customer Relationship Management (e-CRM)is expected to be launched in November this year.

Another IT initiative undertaken by GIL relates to converting data into meaningful businessinformation by developing data warehousing solutions. These solutions will contain allhistorical sales and cost patterns, and will enable line managers to view, interpret andanalyse data across several combinations and permutations, thereby giving them new andmeaningful insights.


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Human Resources

The success of a Company depends on its employees. GIL is proud of its human capitaland believes that it constitutes an invaluable asset of the Company. The Company iscommitted to upgrade the skill set of its employees and to create an environment whereexcellence is recognised and rewarded.

In 2001-02, the Company commissioned an external consultant to undertake an exerciseto evaluate and assess talent in the Company. This talent assessment exercise identifiedthe competencies required at different positions and assessed the capabilities and potentialof employees vis-à-vis these desired competencies. The objective was to identify futureleaders as well as to look at ways to bridge the gap, if any, between desired and existingcompetencies.

During the year, GIL implemented performance linked variable remuneration (PLVR)scheme for employees on improvement in EVA of the Company. EVA is a measure ofshareholder value, and the idea is to directly link remuneration of employees to theimprovement in shareholder value. The PLVR scheme has been devised in such a mannerthat it provides an incentive for employees to create EVA on a long term and sustainedbasis.

As always, GIL continues to enjoy harmonious and cordial relations with its workers.During the year, there were no strikes and not a single day’s work was lost due toindustrial unrest. Total Productive Maintenance (TPM) movement was launched in themanufacturing locations.

GIL believes that learning should be holistic and fun and hence has introduced ‘GuruKool’a summer trainee program which includes a live project with a structured goal, workshopsconducted by our senior leaders, as also an award for the best summer project.

GIL has also introduced "e-Gyan", the e-learning initiative taken to facilitate world classlearning opportunities through electronic media for its employees.

Economic value added

GIL has adopted the Stern Stewart and Company’s EVA framework to generate superiorreturns for its shareholders on a sustained basis. Apart from being a company levelperformance measure, EVA has been adopted as a management process as well as amotivation driver of employees.

Scheme of Arrangement

The Shareholders of GIL at their meeting held on April 6, 2002 approved the Scheme ofArrangement u/s 391 of the Companies Act, 1956 for purchase of equity shares,representing up to 40% of the Company’s paid-up Equity Capital from the shareholders.The Scheme was subsequently approved by the High Court of Bombay. The salientfeatures of the Scheme are as under:-

• The Company shall purchase up to 2,46,84,087 Equity Shares of Rs. 6 each

(representing approximately 40% of its paid-up equity share capital) at a considerationof Rs. 18 per share.

• The consideration for every one Equity Share purchased would be discharged byway of cheque for Rs. 18, payable at par at identified centres in India.

• Consequent to the purchase of Equity Shares, if the public shareholding reducesto less than 10%, the Company will apply to the stock exchanges for de-listing.

• The Equity Shares so purchased will be cancelled.

As required by the Scheme, the Board of Directors had fixed July 26, 2002 as the RecordDate by reference to which the eligibility of the shareholders for the purchase of equityshares pursuant to the Scheme shall be determined. Option forms have been sent tothese shareholders. Shareholders who do not wish to offer their shares for purchase bythe Company are required to return the Option Form duly filled in all respects so as toreach the Company’s Registrars & Share Transfer Agent, M/s. Computech SharecapLimited on or before 7/9/2002.

Internal control systems and their adequacy

GIL has institutionalized system of internal controls. The objectives of the system are:

i. Continuously monitor the efficiency of operations.

ii. Optimum utilization of assets.

iii. Safeguarding all the assets of the Company.

The Corporate Audit & Assurance Department of GIL issues well documented operatingprocedures and authorizations, which have adequate built-in controls, right at the beginningof any activity. Adequate checks are built in to cover all monetary transactions with properdelineation of authority, which provides checks and balances at every stage.

This is supplemented by regular internal audits & reviews to monitor, strengthen andmodify the internal controls from time to time to meet the changing needs of theCompany.

The Company has also implemented an ERP solution viz. MFG/PRO, which providesadequate level of system based checks and controls.

Cautionary Statement

Statements in this management discussion and analysis describing the Company’sobjectives, projections, estimates and expectations may be ‘forward looking statements’within the meaning of applicable laws and regulations. Actual results might differsubstantially or materially from those expressed or implied. Important developments thatcould affect the Company’s operations include a downtrend in domestic industry, significantchanges in political and economic environment in India, tax laws, import duties, litigationand labour relations.

Annual Report 2001-2002....................................................................................................................................................................................

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Based on the report of the Kumar Mangalam Birla Committee on corporate governanceset up by the Securities and Exchange Board of India (SEBI), Clause 49 was introducedin the listing agreement by the Indian Stock Exchanges in the year 2000. This clausestipulates the norms and disclosure standards that have to be followed on the corporategovernance front by listed Indian companies. This section along with the sections onmanagement discussion and analysis and additional shareholder information constituteGodrej Industries Limited’s (GIL) compliance report with Clause 49.

The Company’s philosophy of corporate governance stems from its belief that all actionsand strategic plans should be consistent with the welfare of all stakeholders.

Board of Directors

a) Composition of the Board

As of March 31, 2002, GIL’s Board consisted of fourteen Directors, five of whomare Whole-Time, Executive Directors. The remaining nine are Non-Executive Directors,with five of them being Independent Directors. Details are given in Table 1.

b) Number of Board meetings

The Board of GIL held six meetings during the year. These were on 7th May 2001,28th July 2001, 8th September, 2001, 23 October, 2001, 30th January, 2002and 22nd February, 2002.

c) Directors’ attendance record and directorships held

See Table 1 for details.

Table 1: Details about GIL’s Board of Directors during the year

Name of Director Category Board Meetings Board Meetings Whether Directorships

held during the attended during attended held in public

year the year last AGM companies

incorporated

in India

A.B. Godrej Chairman, Non-Executive 6 5 Yes 14(3)

J.N. Godrej Non-Executive 6 3 Yes 12 (5)

Director

N.B. Godrej Managing 6 5 Yes 14 (4)

Director

K.N. Naoroji Non-Executive 6 1 No 2(1)

Director

V.M. Crishna Non-Executive 6 4 No 7(3)

Director

S.A. Ahmadullah Non-Executive and 6 6 Yes 1(1)

Independent Director

N.C. Gawankar Non-Executive and 6 6 Yes 2(1)


V.N. Gogate Non-Executive and 6 5 Yes 3(1)


K.K. Dastur Whole-time Director 6 6 Yes 5(1)

T.A. Dubash Whole-time Director 6 6 Yes 5(1)

M. Eipe Whole-time Director 6 5 No 3(1)

C.K. Vaidya Whole-time Director 6 5 Yes 5(1)

F.P. Sarkari Non-Executive and 2 2 - 2(1)


K.N. Petigara Non-Executive and 2 2 - 5(1)


CORPORATE GOVERNANCENotes:

1) Figures in ( ) denote listed companies.

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

3) Mr. K.K. Dastur was a Whole-time Director upto April 30, 2002 and is now aNon-Executive and Independent Director from May 1, 2002.

4) Mr. F.P. Sarkari and Mr. K.N. Petigara have been appointed as an AdditionalDirector w.e.f. January 30, 2002.

5) Mr. M.P. Pusalkar has been appointed as an Additional Director w.e.f. April 1,2002.

Independent Director means a Director who, apart from receiving sitting fees, does nothave any other material/pecuniary relationship or transactions with the company, itspromoters, its management, or its subsidiaries, which in the judgement of the Boardmay affect the independence of judgement of the Director.

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

d) Information supplied to the Board

Among others, this includes:

� Annual operating plans and budgets, capital budgets, updates,

� Quarterly results of the Company along with detailed business analysis,

� Minutes of meeting of audit committee and other committees,

� Information on recruitment and remuneration of senior officers just belowthe Board level,

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

� Fatal or serious accidents or dangerous occurrences,

� Any materially significant effluent or pollution problems,

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

� Any issue which involves possible public or product liability claims of asubstantial nature,

� Details of any joint venture or collaboration agreement,

� Transactions that involve substantial payment towards goodwill, brand equityor intellectual property,

� Significant labour problems and their proposed solutions,

� Significant development in the human resources and industrial relationsfronts,

� Sale of material nature, of investments, subsidiaries, assets, which is not inthe normal course of business,

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

� Non-compliance of any regulatory, statutory nature or listing requirementsas well as shareholder services such as non-payment of dividend and delaysin share transfer.

The Board of GIL is regularly presented with all information under the aboveheads, whenever applicable. These are submitted either as part of the agendapapers well in advance of the Board meetings or are tabled in the course of theBoard meetings.

e) Directors with materially significant related party transactions, pecuniary orbusiness relationship with the company

The Directors, apart from drawing Directors remuneration, have no other materiallysignificant related party transactions, pecuniary or business relationship with theCompany.


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f) Remuneration of Directors: sitting fees, salary, perquisites and commissions

Table 2 gives the details of the remuneration package of Directors and theirrelationships with each other.

Table 2: Remuneration paid or payable to Directors for the year endedMarch 31, 2002 (Rs.)

Name of Relationship with Sitting Commission Salary Perquisites Total

Director other Directors fees on profits

A.B. Godrej Brother of N.B. Godrej Nil Nil Nil Nil Nil

J.N. Godrej None Nil NA NA NA Nil

N.B. Godrej Brother of A.B. Godrej Nil NA 3328000 1133442 4461442

K.N. Naoroji None Nil NA NA NA Nil

V.M. Crishna None 15000 NA NA NA 15000

S.A. Ahmadullah None 50000 NA NA NA 50000

N.C. Gawankar None 30000 NA NA NA 30000

V.N. Gogate None 50000 NA NA NA 50000

K.K. Dastur None Nil Nil 2577300 223337 2800637

T.A. Dubash Daugher of A.B.Godrej Nil Nil 1624000 524202 2148202

M. Eipe None Nil Nil 2732200 564140 3296340

C.K. Vaidya None Nil Nil 2484300 253913 2738213

F.P. Sarkari None 10000 NA NA NA 10000

K.N. Petigara None 10000 NA NA NA 10000

Notes:

Salary paid to Mr. K.K. Dastur, Mr. M. Eipe and Mr. C.K. Vaidya includes a performancelinked bonus of Rs. 624300, Rs. 655800 and Rs.624300 respectively for the previousyear, i.e. the year ended March 31, 2001.

Performance linked variable remuneration based on Economic Value Added in the businessand other relevant factors for Mr. N.B. Godrej, Ms. T.A. Dubash, Mr. K.K. Dastur, Mr.M. Eipe and Mr. C.K. Vaidya for 2001-02, is payable in 2002-03 based on the Company’sperformance in 2001-02, for which necessary applications have been made to CentralGovernment for approval. The service contracts of the Whole-Time Directors are for aperiod of three years with a notice period of three months.

g) Committees of the Board

Audit Committee

The audit committee of GIL performs the following functions:

� Overview of the Company’s financial report process and the disclosure of itsfinancial information to ensure that the financial statement is correct, sufficient andcredible.

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

� Reviewing with management the annual financial statements before submission tothe board, focusing primarily on

� Any changes in accounting policies and practices.

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

� Qualifications in draft audit report.

� Significant adjustments arising out of audit.

� The going concern assumption.

� Compliance with accounting standards.

� Compliance with stock exchanges and legal requirements concerning financialstatements.

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

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

� Reviewing the adequacy of internal audit function including the structure of internal

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

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

� Reviewing the findings of any internal investigations by the internal auditors intomatters where there is suspected fraud or irregularity or failure of internal controlsystems of a material nature and reporting the matter to the Board.

� Discussing with external auditors before the audit commences, nature and scopeof audit as well as conducting post-audit discussion to ascertain any area ofconcern.

� Reviewing the Company’s financial and risk management policies.

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

GIL’s audit committee was constituted with one Executive Director and two Non-Executive Directors. They were Mr. V.N. Gogate (Chairman of the Committee andIndependent Director); Mr.S.A. Ahmadullah (Independent Director) and Mr. N.B. Godrej(Managing Director). Subsequently the composition was changed to comply with theprovisions of the listing agreement as well as the Companies Act, 1956 and in place ofMr. N.B. Godrej, Mr. J.N. Godrej (Non-Executive Director) was appointed with effectfrom May 7, 2001. Later Mr. F.P. Sarkari (Independent Director) was appointed witheffect from March 5, 2002 in place of Mr. J.N. Godrej who resigned from the AuditCommittee. Thus the composition of the audit committee as on March 31, 2002 is asfollows: Mr. V.N. Gogate (Chairman), Mr. S.A. Ahmadullah and Mr. F.P. Sarkari, all threeIndependent and Non-Executive Directors. Mr. V.N. Gogate, the Chairman of the auditcommittee is a qualified Chartered Accountant and Company Secretary and is knowledgeablein finance, accounts and company law. All the members of the committee are eminentprofessionals and draw upon their experience and expertise across a wide spectrum offunctional areas such as finance and corporate strategy. Minutes of each of the auditcommittee meetings are placed before, and discussed in the Board meetings. TheCompany Secretary acts as secretary to the audit committee.

The audit committee met four times during the year: May 3, 2001; July 28, 2001,October 23, 2001 and January 30, 2002. Table 3 gives the attendance record.

Table 3: Attendance record of audit committee members

Name of Director No. of meetings held Meetings attended

Mr. V.N. Gogate 4 4

Mr. S.A. Ahmadullah 4 4

Mr. F.P. Sarkari Nil Nil

Mr. N.B. Godrej 1 1

Mr. J.N. Godrej 3 2

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

Remuneration Committee

Setting up of a remuneration committee for determining a company’s policy onremuneration packages for Executive Directors constitutes a non-mandatory provision ofClause 49. GIL set up its remuneration committee on February 22, 2002 to review thehuman resources policies and practices of the Company and, in particular, policiesregarding remuneration of Whole-Time Directors and senior managers. The committeediscusses human resources policies such as compensation and performance management.GIL has made detailed presentation to the committee on matters such as competencymanagement, performance management, compensation management and the EconomicValue Added (EVA) initiative.

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

GIL’s remuneration committee consists of the following directors: Mr. S.A. Ahmadullah(Chairman and Independent Director); Mr. N.B. Godrej (Managing Director); Mr. V.N.Gogate (Independent Director) and Mr. K.N. Petigara (Independent Director). During theyear ended March 31, 2002, the committee met once on February 22, 2002 where all themembers of the Committee attended.

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................9

Auditors Certificate on Corporate GovernanceAs stipulated in Clause 49 of the Listing Agreement, the Auditors' certificate regarding compliance of conditions of corporate governance is given below :

To the Members ofGodrej Industries Limited,Mumbai.

We have reviewed the relevant records of Godrej Industries Limited (the Company) for the year ended on March 31, 2002 relating to compliance with therequirements of Corporate Governance as stipulated in Clause 49 of the Listing Agreement of the Company with the Stock Exchange.The compliance of the conditions of Corporate Governance is the responsibility of the management. Our review was limited to the procedures andimplementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor anexpression of opinion on the financial statements.In our opinion and according to the information and explanations given to us, we state that to the best of our knowledge the Company has complied wth theconditions of Corporate Governance stipulated in Clause 49 of the above mentioned Listing Agreement.Based on the report given by the Registrars of the Company to the Investor's Grievance Committee, there were no investor grievance matters against theCompany remaining unattended/pending for more than 30 days.We further state that such compliance is neither an assurance as to future viability of the Company nor the efficiency or effectiveness with which themanagement has conducted the affairs of the Company.

For and on behalf ofKALYANIWALLA & MISTRY

Chartered Accountants

V. R. MehtaPartner

Mumbai, August 14, 2002

Shareholders Committee

Among other functions, this committee looks into redressal of shareholder complaintsregarding transfer of shares, non-receipt of balance sheet and non-receipt of declareddividends, as required in clause 49 of the Listing Agreement. The committee consists ofthe following members: Mr. K.N. Petigara (Chairman and Independent Director); Mr.N.B. Godrej (Executive Director); Mr. V.M. Crishna ( Non-Executive Director), Ms. T.A.Dubash (Whole-Time Director) and Mr. K.K. Dastur (Whole-Time Director), who hassubsequently become a non-Whole-Time Independent Director w.e.f. May 1, 2002.

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 mayhave a potential interest are provided to the Board, and the interested Directorsneither participate in the discussion, nor do they vote on such matters.

Shareholders

a) Disclosures regarding appointment or re-appointment of Directors

According to the Articles of Association of GIL, at every annual general meeting ofthe Company one-third of the Directors are liable to retire by rotation. Thus,Mr. J.N. Godrej and Mr. V.N. Gogate, and Mr. V.M. Crishna shall retire at thisAnnual General Meeting of the Company and being eligible, offer themselves forre-election to shareholders.

Mr. K.N. Petigara, Mr. F.P. Sarkari, Mr. K.K. Dastur and Mr. M.P. Pusalkar beingappointed as Additional Directors hold office upto the forthcoming AnnualGeneral Meeting and offer themselves for re-election.

Information about the Directors who are being appointed/reappointed is given asan annexure to the Notice of the AGM.

b) Communication to shareholders

GIL has its own web-site and all vital information relating to the Company and its

performance, including quarterly results, official press releases are posted on theweb-site. The Company’s web-site address is www.godrejinds.com The quarterly,half-yearly and annual results of the Company’s performance are published inleading English dailies like Business Standard / Financial Express.

c) Investor grievances

As mentioned before, the Company has constituted a Shareholders Committee tolook into and redress Shareholders and investor complaints. Mr. S.K. Bhatt,General Manager (Corporate Services) & Company Secretary is the complianceofficer.

d) Share transfer

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

e) Details of non-compliance

There has been no instance of GIL not complying with any matter related to capitalmarkets.

f) General body meetings

Year Venue Date Time

1998-99 Udayachal Primary School Hall, September 24, 1999 10.30 A.M.

Pirojshanagar, Vikhroli (East),

Mumbai 400 079

1999-00 - do - July 1, 2000 3.30 P.M.

2000-01 - do - July 28, 2001 3.30 P.M.

g) Postal ballots

No item of business, which required the members’ approval through postal ballot,was transacted during 2001-02.


....................................................................................................................................................................................10

Annual General Meeting

Date : September 28, 2002

Time : 3.00 P.M.

Venue : Udayachal Primary School Hall, Pirojshanagar,

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

Financial Calendar

Financial year: April 1 to March 31

For the year ended March 31, 2002, results were announced on:

● July 28, 2001 : First quarter

● Oct 23, 2001 : Half yearly

● January 30, 2002 : Third quarter

● April 30, 2002 : Fourth quarter and annual (unaudited)

● August 14, 2002 : Annual (audited)

Record Date/Book Closure

The Company had fixed Record Date of July 26, 2002 for determining the eligibility ofthe shareholders for the purchase of equity shares pursuant to the Scheme of Arrangementunder Section 391 of the Companies Act, 1956 for the purchase of shares of theCompany at the rate of Rs. 18/- per share.

For payment of interim dividend the book closure is on September 6, 2002

Listing

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

Table 1: Listing information

Name of the Stock Exchange Stock code

Stock Exchange Mumbai 500164

National Stock Exchange GODREJINDS

Ahmedabad Stock Exchange 20840

Delhi Stock Exchange 07124

Madras Stock Exchange GODREJSOAP

Calcutta Stock Exchange 17038 (for physical)

10017038 (for demat)

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

Stock Data

Tables 2 and 3 respectively give the monthly high and low prices and volumes of GILshares at The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE)for the year ended March 31, 2002. Chart A compares GIL’s share price at the BSEversus the sensex.

Table 2: Monthly high and low share prices and trading volumes of GIL at BSE forthe year ended March 31, 2002

Date High Low Volume

(Rs.) (Rs.) (No. of Shares)

April-01 64.50 14.60 222046

May -01 20.70 15.75 1062370

June -01 19.60 17.00 849226

July -01 18.00 11.50 375757

August -01 15.05 11.75 187361

September-01 14.70 11.90 178296

October -01 13.95 12.00 227867

November -01 14.30 12.50 241201

December -01 15.00 11.90 197809

January -02 13.50 12.20 86967

February -02 16.35 12.05 548370

March-02 17.80 15.50 236549

SHAREHOLDERS' INFORMATIONNote:

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

� The announcement regarding scheme of arrangement under Section 391 ofthe Companies Act, 1956 was intimated to Stock Exchanges on February22, 2002.

Table 3: Monthly high and low share price and trading volumes of GIL at NSE forthe year ended March 31, 2002

Date High (Rs.) Low (Rs.) Volume

(No. of Shares)

April-01 65.00 14.60 265516

May –01 22.00 15.65 1605505

June –01 19.75 17.15 1579887

July –01 18.20 11.45 784189

August –01 15.00 11.90 265906

September-01 14.65 10.60 292531

October –01 14.00 12.00 478418

November –01 15.05 12.50 445083

December –01 14.90 12.30 379131

January –02 13.90 12.00 236485

February –02 16.30 11.50 1832512

March-02 16.45 15.25 656288

Note :

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

� The announcement regarding scheme of arrangement under Section 391 ofthe Companies Act, 1956 was intimated to Stock Exchanges on February22, 2002.

Chart A - GIL share performance compared to the BSE Sensex for FY02

3900

3700

3500

3300

3100

2900

2700

2500

60

BSE Sensex

BSE Sensex

GIL Price

GIL

May-01

Note : May 03, 2001 - Demerger of GCPL

Jun-01 Jul-01 Aug-01 Sep-01 Oct-01 Nov-01 Dec-01 Jan-02 Feb-02 Mar-02

55

50

45

40

35

30

25

20

15

10

Distribution of shareholding

Tables 4 and 5 give the distribution pattern of shareholding of GIL by size class andownership respectively as on March 31, 2002.

Table 4: Distribution of shareholding by size class, 31 March, 2002

Number of Number of Shareholders Number Shareholding

shares shareholders % of shares held %

1 - 500 153559 98.04 8887450 14.40

501 - 1000 1805 1.15 1475298 2.39

1001 - 2000 665 0.42 1004421 1.63

2001 - 3000 200 0.13 515062 0.83

3001 - 4000 81 0.05 290337 0.47

4001 - 5000 72 0.05 347555 0.56

5001 - 10000 110 0.07 830082 1.35

10001 & above 139 0.09 48360013 78.37

Total 156631 100.00 61710218 100.00

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................11

Table 5: Distribution of shareholding by ownership, March 31, 2002

Category Shares held % of holding

(as being reported to stock exchanges) (nos.)

Promoter’s holding

Promoters 41382480 67.06

Persons deemed to act in concert with promoters 2679546 4.34

Institutional investors

Mutual funds & UTI 393294 0.64

Banks, financial institutions & insurance companies 1029860 1.67

Foreign institutional investors 9000 0.01

Others

Private corporate bodies 1726455 2.80

Indian public 13890534 22.51

NRI / OCBs 599049 0.97

Total 61710218 100.00

Shares held in physical and dematerialised form

As on March 31, 2002, 90.8 per cent of GIL’s shares were held in dematerialised formand the remaining 9.2 per cent in physical form. Table 6 lists out the details.

Table 6: Break up of physical and dematerialised shares as on March 31, 2002

No. of Folios No.of Folios No. of Shares No. of Total Total

in Physical In Demat in Physical shares Folios Shares

Mode Mode Mode in Demat

Mode

110045 46586 5658192 56052026 156631 61710218

Outstanding GDRs/ADRs/Warrants/Convertible Instruments and their impact on equity

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

Share Transfer

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

Address for Correspondence:Investor correspondence should be addressed to:Computech Sharecap Ltd.,147, M.G. Road,Opp. Jehangir Art GalleryMumbai 400023Tel: 022-2671824/2671825/2671826Email: [email protected]: 022-2670380Number and nature of complaints regarding sharesTable 7 gives the number and nature of complaintsTable 7: Details of complaints regarding shares for the year ended March 31, 2002

Nature of complaint Number of Numbercomplaints redressed

Non-receipt of dividend 116 116Non-receipt of shares lodged for transfer 166 166Others 42 42Total 324 324

Exchange of old Godrej Soaps Ltd. shares for GIL and GCPL sharesAny shareholder who has not yet exchanged his/her old GSL shares for GCPL and GILshares can do so by surrendering the GSL certificate(s) to the registrar, after cancellingthe certificate(s) and defacing them with the words “submitted for exchange''.Allotment of GIL shares to Shareholders of Godrej Foods Ltd. (GFL)In terms of the Scheme of Arrangement between GFL and GIL approved by the Courts,the shareholders of GFL were allotted 1 equity share of Rs. 6/- each in GIL against every15 shares of Rs.10 held by them in GFL.Scheme of Arrangement for BuybackThe Shareholders of the Company at their meeting held on April 6, 2002 approved theScheme of Arrangement u/s 391 of the Companies Act, 1956 for purchase of equityshares, representing upto 40% of the Company’s paid-up Equity Capital from theshareholders. The Scheme was subsequently approved by the High Court of Bombay.Option Letters have been sent to the shareholders based on the Record Date of July 26,2002 to enable them to participate in the scheme.


....................................................................................................................................................................................12

NOTICE is hereby given that the FOURTEENTH ANNUAL GENERAL MEETING of themembers of GODREJ INDUSTRIES LIMITED will be held on Saturday, September 28,2002 at 3.00 P.M. in Udayachal Primary School Hall, Pirojshanagar, Vikhroli (East),Mumbai 400 079, to transact the following business :ORDINARY BUSINESS :1. To consider and adopt the Audited Profit & Loss Account for the year ended

March 31, 2002, the Balance Sheet as at that date, the Auditors’ Report thereonand the Directors’ Report.

2. To confirm and approve the interim dividend declared as the final dividend for thefinancial year ended March 31, 2002.

3. To appoint a Director in place of Mr. J.N. Godrej, who retires by rotation and beingeligible offers himself for reappointment.

4. To appoint a Director in place of Mr. V.M. Crishna, who retires by rotation andbeing eligible offers himself for reappointment.

5. To appoint a Director in place of Mr. V.N. Gogate, who retires by rotation andbeing eligible offers himself for reappointment.

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

SPECIAL BUSINESS :7. To consider and, if thought fit, to pass with or without modification, the

following resolution as an ORDINARY RESOLUTION :-RESOLVED THAT Mr. K.N. Petigara, who was appointed as an Additional Directorwith effect from January 30, 2002 by the Board of Directors vide Resolutionpassed on January 30, 2002, and who holds office as such upto the date of thismeeting and is eligible for appointment as Director, and in respect of whom noticeunder Section 257 of the Companies Act, 1956, has been received, be and ishereby appointed as a Director of the Company, retiring by rotation.

8. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as an ORDINARY RESOLUTION :-RESOLVED THAT Mr. F.P. Sarkari, who was appointed as an Additional Directorwith effect from January 30, 2002 by the Board of Directors vide Resolutionpassed on January 30, 2002, and who holds office as such upto the date of thismeeting and is eligible for appointment as Director, and in respect of whom noticeunder Section 257 of the Companies Act, 1956, has been received, be and ishereby appointed as a Director of the Company, retiring by rotation.

9. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as an ORDINARY RESOLUTION :-RESOLVED THAT Mr. K.K. Dastur, who was appointed as an Additional Directorwith effect from May 1, 2002 by the Board of Directors vide Resolution passed onApril 30, 2002, and who holds office as such upto the date of this meeting andis eligible for appointment as Director, and in respect of whom notice underSection 257 of the Companies Act, 1956, has been received, be and is herebyappointed as a Director of the Company, retiring by rotation.

10. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as an ORDINARY RESOLUTION :-RESOLVED THAT Mr. M.P. Pusalkar, who was appointed as an Additional Directorwith effect from April 1, 2002 by the Board of Directors vide Resolution passedon February 22, 2002, and who holds office as such upto the date of this meetingand is eligible for appointment as Director, and in respect of whom notice underSection 257 of the Companies Act, 1956, has been received, be and is herebyappointed as a Director of the Company, retiring by rotation.

11. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-.RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIII asamended vide Government Notification No. GSR 36(E), dated 16-1-2002 (hereinafterreferred to as “amended Schedule XIII”), and other applicable provisions, if any, ofthe Companies Act, 1956, and further to the approval granted by the Shareholdersat their Meeting held on July 28, 2001, approval of the Company be and is herebyaccorded under the amended Schedule XIII for the payment of remuneration toMr. M. Eipe from April 1, 2002 to March 31, 2004 in terms of the Agreementdated April 4, 2001 entered into between the Company and Mr. M. Eipe, abstractof which was circulated to the members of the Company in terms of Section 302of the Companies Act, 1956.

NOTICE TO SHAREHOLDERS12. To consider and, if thought fit, to pass with or without modification,

the following resolution as a SPECIAL RESOLUTION :-RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIII asamended vide Government Notification No. GSR 36(E), dated 16-1-2002 (hereinafterreferred to as “amended Schedule XIII), and other applicable provisions, if any, ofthe Companies Act, 1956, and further to the approval granted by the Shareholdersat their Meeting held on July 28, 2001, approval of the Company be and is herebyaccorded under the amended Schedule XIII for the payment of remuneration toMr. C.K. Vaidya from April 1, 2002 to March 31, 2004 in terms of the Agreementdated April 4, 2001 entered into between the Company and Mr. C.K. Vaidya,abstract of which was circulated to the members of the Company in terms ofSection 302 of the Companies Act, 1956.

13. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIII asamended vide Government Notification No. GSR 36(E), dated 16-1-2002 (hereinafterreferred to as “amended Schedule XIII”), and other applicable provisions, if any, ofthe Companies Act, 1956, and further to the approval granted by the Shareholdersat their Meeting held on July 28, 2001, approval of the Company be and is herebyaccorded under the amended Schedule XIII for the payment of remuneration toMr. K.K. Dastur from April 1, 2002 to April 30, 2002 in terms of the Agreementdated April 4, 2001 entered into between the Company and Mr.K.K. Dastur,abstract of which was circulated to the members of the Company in terms ofSection 302 of the Companies Act, 1956.

14. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIII asamended vide Government Notification No. GSR 36(E), dated 16-1-2002 (hereinafterreferred to as “amended Schedule XIII”) , and other applicable provisions, if anyof the Companies Act, 1956, approval of the Company be and is hereby accordedfor the appointment and remuneration of Mr. M.P. Pusalkar as Executive Director& President (Foods Division), being a Whole-Time Director of the Company fromApril 1, 2002 to March 31, 2004 on the remuneration, terms and conditions ascontained in the Agreement dated March 5, 2002 entered into between theCompany and Mr. M.P. Pusalkar, abstract of which was circulated to the membersof the Company as per Section 302 of the Companies Act, 1956.

15. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as an SPECIAL RESOLUTION :-RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIII asamended vide Government Notification no.GSR 36(E), dated 16-1-2002, (hereinafterreferred to as “amended Schedule XIII”) and other applicable provisions, if any ofthe Companies Act, 1956, and further to the approval granted by the Shareholdersat their Meeting held on July 28, 2001, approval of the Company be and is herebyaccorded under the amended Schedule XIII for the payment of remuneration toMr. N.B. Godrej, Managing Director from April 1, 2002 to March 31, 2005, interms of the Agreement dated April 1, 2002 entered into between the Companyand Mr. N.B. Godrej, abstract of which was circulated to the members of theCompany in terms of Section 302 of the Companies Act, 1956.

16. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-RESOLVED THAT subject to the provisions of Sections 269, 309, Schedule XIII asamended vide Government Notification No. GSR 36(E), dated 16-1-2002, (hereinafterreferred to as “amended Schedule XIII”) and other applicable provisions, if any ofthe Companies Act, 1956, and subject to the approval granted by the Shareholdersat their Meeting held on July 28, 2001, approval of the Company be and is herebyaccorded under the amended Schedule XIII for the payment of remuneration toMs. T.A. Dubash from April 1, 2002 to March 31, 2004 in terms of theAgreement dated July 31, 2001 entered into between the Company and Ms. T.A.Dubash, abstract of which was circulated to the members of the Company interms of Section 302 of the Companies Act, 1956.

17. To consider and, if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-.RESOLVED THAT subject to the provisions of Section 314 of the Companies Act,1956 Mr. K.K. Dastur, Director of the Company, be and is hereby appointed on a“Retainer” basis for a period of one year, with effect from May 1, 2002 at a totalcost to the Company not exceeding Rs. 5 lac per annum as may be determined bythe Managing Director from time to time.

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................13

18. To consider and if thought fit, to pass with or without modification, thefollowing resolution as a SPECIAL RESOLUTION :-RESOLVED THAT pursuant to Section 372A and all other applicable provisions, ifany, of the Companies Act, 1956 (including any statutory modification or re-enactment thereof for the time being in force and as may be enacted from time totime) (hereinafter referred to as ‘the Act’), the Company be and is hereby authorisedto invest (in addition to the amount, if any, already invested) in the securities ofthe following companies, by way of subscription, purchase or otherwise andsubject to the limit mentioned against the said company’s name notwithstandingthat the aggregate of the loans and investments so far made in or to be made inand the guarantees so far given or to be given to all bodies corporate, exceeds thelimits laid down by the Act.Name of the Company Limit for investment in

addition to the amounts,if any, already invested

(Rs. In crore)

Godrej Consumer Products Ltd. 25Godrej Tea Pvt. Ltd. 10Hybrigene Biotechnology Pvt. Ltd. 5Cbay Systems Ltd. 10Compass Connections Ltd., UK 5

RESOLVED FURTHER THAT the Board of Directors of the Company be and ishereby authorised to take from time to time all decisions and steps necessary orexpedient or proper in respect of the above investments including the timing, thetype, the amount and other terms and conditions of such investment and varyingthe same through transfer, sale, disinvestment or otherwise, either in part or infull, as it may, in its absolute discretion, deem appropriate.

By Order of the Board of Directors

S. K. BHATTGeneral Manager (Corporate Services)

& Company SecretaryMumbai, August 14, 2002

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

NOTES :1. The relative Explanatory Statement in respect of business under Item Nos. 1 to 18

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 theCompany. Proxies in order to be effective must be received by the Company notless than 48 hours before the meeting. A proxy so appointed shall not have anyright to speak at the meeting.

3. The Board of Directors has declared an Interim Dividend of 10% i.e., Rs. 0.60 perequity share of Rs. 6/- for the Financial Year 2001-02. The Register of Membersand Share Transfer Books of the Company will be closed on September 6, 2002for ascertaining the names of the shareholders to whom the said Interim Dividendis payable.

4. Members are requested to inform the Registrars & Transfer Agents of the Company,M/s. Computech Sharecap Ltd., 147 M.G. Road, Mumbai 400 023 their IncomeTax Permanent Account Number (PAN)/General Index Register Number (GIR), ifany, allotted to them by the Income Tax Authorities, to be stated in the TaxDeduction Certificate.

5. Pursuant to Section 205A (5) of the Companies Act, 1956, as amended, anymoney transferred to the Unpaid Dividend Account of the Company which remainsunpaid or unclaimed for a period of seven years from the date of such transfer tothe unpaid dividend account shall be transferred by the Company to the InvestorEducation and Protection Fund of the Central Government and the Shareholdersshall not be able to claim any unpaid dividend from the said fund or from theCompany thereafter.

6. Members are requested to bring their copy of the Annual Report to the AnnualGeneral Meeting.

7. Members are requested to send in their queries atleast a week in advance to theCompany Secretary at the Registered Office of the Company to facilitate clarificationsduring the meeting.

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THECOMPANIES ACT, 1956Items 7 to 9The Board of Directors of the Company has appointed the following persons asAdditional Directors:Name of Director Date of appointmentMr. K.N. Petigara January 30, 2002Mr. F.P. Sarkari January 30, 2002Mr. K.K. Dastur May 1, 2002

Since the above persons were appointed by the Board of Directors as AdditionalDirectors, they hold office upto the date of this Annual General Meeting, in termsof the provisions contained in Section 260 of the Companies Act, 1956. Noticesunder Section 257 of the Companies Act, 1956 have been received from amember signifying intention to propose the appointment of the aforesaid personsas Directors retiring by rotation at this Annual General Meeting.The details of the aforesaid Directors are given in the Annexure to the Notice.The Board of Directors of the Company recommends passing of the resolution.Mr. K.N. Petigara is interested in Resolution at Item No. 7 of the Notice. Mr. F.P.Sarkari is interested in Resolution at Item No. 8 of the Notice. Mr. K.K. Dastur isinterested in Resolution at Item No. 9 of the Notice. None of the other Directorsof the Company are concerned or interested in these resolutions.Item No.10 & 14The Board of Directors of the Company had appointed Mr. M.P. Pusalkar asWhole-time Director with effect from April 1, 2002. The Company had circulatedthe abstract of the terms of the agreement which is required to be given to everyMember under Section 302 of the Companies Act, 1956 on March 6, 2002. Theresolution is sought to be passed for approval of his appointment and remunerationfor the period April 1, 2002 to March 31, 2004.Mr. M.P. Pusalkar is a B.Tech (Elec) from Indian Institute of Technology (Kanpur)and MMS from JBIMS, Mumbai and has been in the Godrej group for over 25years. Earlier he was the Managing Director of Godrej Foods Ltd. He has handledvarious functions in manufacturing, marketing, etc. After the demerger of theFoods division of GFL into the Company, Mr. Pusalkar became President &Executive Director (Foods Division) of the Company from April 1, 2002.Since Mr. Pusalkar was appointed as Additional Director, he holds office upto thedate of this Annual General Meeting, in terms of the provisions contained inSection 260 of the Companies Act, 1956. Notice under Section 257 of theCompanies Act, 1956 has been received from a member signifying intention topropose the appointment of the aforesaid person as Director retiring by rotation atthis Annual General Meeting.Your Board is of the opinion that considering the qualifications and experience ofMr. Pusalkar, his appointment as Whole-time Director of the Company will bebeneficial to the Company.

1. Mr. M.P. Pusalkar shall perform his duties subject to the superintendence, controland direction of the Board of Directors of the Company.

2. Period of appointment : from 1/4/2002 to 31/3/2004.3. In consideration of the performance of his duties, the Whole-time Director shall be

entitled to receive remuneration as stated hereinbelow:-I. Basic Salary :

Rs. 1,02,000/- in the scale of Rs. 70,000 to Rs. 2,00,000 per month. TheRemuneration Committee of the Board of Directors will determine theamount of salary payable to Mr. M.P. Pusalkar from time to time dependingon his performance, profitability of the Company and other relevant factors.The Basic Salary approved by the Remuneration Committee of the Board ofDirectors for the year 2002-03 is Rs. 1,02,000/- per month.

II. Performance Linked Variable Remuneration:Performance Linked Variable Remuneration according to the Scheme of theCompany for each of the financial years 2001-02, 2002-03 and 2003-04 asmay be decided by the Remuneration Committee/Board based on EconomicValue Added in the business and other relevant factors and having regard tothe performance of Mr. M.P. Pusalkar subject to a ceiling of 36 monthsaverage basic salary, for every years.


....................................................................................................................................................................................14

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

Category A(1) Housing

A. Unfurnished residential accommodation subject to recovery of10% of basic salary, the perquisite value of which, shall becalculated in accordance with the Income-tax Rules, 1962,and House Rent Allowance equivalent to 40% of Basic salary.

ORHouse rent allowance equivalent to 55% of the Basic salary.

B. Furnishing at residence subject to a ceiling of Rs. 2,00,000for a period of 2 years in accordance with the Company’sScheme.

(2) Medical Reimbursement :Reimbursement of domicilary medical expenses incurred/insurancepremium paid for Mr. M.P. Pusalkar and his family (excludinghospitalisation, nursing home and surgical charges), subject to aceiling of one month’s average basic salary in a financial year.Reimbursement of hospitalisation, nursing home and surgical chargesfor Mr M P Pusalkar and his family subject to a limit of Rs.1 lac perfinancial year which can be accumulated according to the Company’sRules.

(3) Leave Travel Concession :Leave Travel Concession (for Mr M P Pusalkar and his family once ina financial year incurred in accordance with the Rules specified by theCompany) subject to a ceiling of 10% of average basic salary in afinancial year, subject to a maximum of Rs. 50,000/- in a financialyear as may be decided by the Board.

(4) Club :Reimbursement of Club fees of a maximum of two Clubs subject toa ceiling of Rs. 50,000 (excluding entrance fees/life membershipfees) in a Financial year.For the purposes of medical reimbursements and leave travelconcession under Category A, ‘family’ means the spouse and dependentchildren and dependent parents of Mr. M.P. Pusalkar.

Category B(1) Company’s contributions towards Provident Fund, Superannuation Fund or

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

(2) Gratuity not exceeding 50% of average basic salary drawn in last year ofservice for each completed year of service. Such gratuity shall be payableaccording to the rules of the Company. If Mr. M. P. Pusalkar is reappointed,gratuity will be paid at the end of his tenure with the Company.

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

Category CThe following shall not be included in the computation of perquisites :-(1) Provision for use of Company’s cars for official use.(2) Provision of free telephone facilities or reimbursement of telephone

expenses at residence, including payment of local calls and longdistance official calls.

Category D - Loans(a) - Granting of housing loans according to Company’s Scheme.

- Continuation of loan outstanding as on 31/3/02Rs. 671462/-

(b) - Granting of contingency loans subject to a limit of Rs. 3 lacaccording to Company’s Scheme subject to Central Governmentapproval.

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 bedetermined.

II. Notwithstanding the foregoing, where in any Financial Year during the

currency of the tenure of Mr. M.P. Pusalkar, the Company has no profits orits profits are inadequate, the remuneration by way of salary, commissionand perquisites shall not exceed, the maximum limits prescribed in ScheduleXIII to the Companies Act, 1956 as amended vide Government NotificationNo. GSR 36(E), dated 16-1-02 and subsequent amendments, if any, exceptwith the approval of the Central Government.

III. The limits specified above are the maximum limits and the Board may in itsabsolute discretion pay to Mr. M.P. Pusalkar lower remuneration and revisethe same from time to time within the maximum limits stipulated above.

IV. In the event of any re-enactment or re-codification of the Companies Act,1956 or the Income Tax Act, 1961 or amendments thereto, the foregoingshall continue to remain in force and the reference to various provisions ofthe Companies Act, 1956 or the Income Tax Act, 1961 shall be deemed tobe substituted by the corresponding provisions of the new Act or theamendments thereto or the Rules and notifications issued thereunder.

V. If at any time Mr. M.P. Pusalkar ceases to be a Director of the Company forany cause whatsoever, he shall cease to be a Whole-time Director of theCompany. If at any time Mr. M.P. Pusalkar ceases to be in the employmentof the Company for any cause whatsoever, he shall cease to be a Directorof the Company.

VI. Mr. M.P. Pusalkar is appointed by virtue of his employment in the Companyand his appointment is subject to the provisions of Section 283(1)(l) of theAct, while at the same time Mr. M.P. Pusalkar is liable to retire by rotation.The appointment is terminable by giving three months’ notice in writing oneither side.

The Agreement entered into with the Whole-time Director is available for inspectionat the Regd. Office of the Company from 10.00 A.M. to 12.00 Noon, Monday toFriday (except public holidays) upto the date of the Annual General Meeting.The abstract of the terms of the agreements as aforesaid which is required to begiven to every member under the provisions of Section 302 of the Companies Act,1956 had been sent to all Members of the Company.The Statement containing information as required under Schedule XIII of theCompanies Act, 1956 as amended vide Notification No. GSR 36(E) dated 16-1-2002 is enclosed.The Board of Directors of the Company recommends the passing of the resolutionsas set out at Item nos. 10 and 14 of the Notice.Mr. M.P. Pusalkar may be deemed to be interested in the resolution to the extentof the remuneration that may be received by him.None of the other Directors of the Company are concerned or interested in theresolution.Items 11 to 13At the last Annual General Meeting of the Company held on July 28, 2001, theshareholders had approved the remuneration payable to the following Whole-timeDirectors, subject to the approval of Central Government under the provisions ofSections 269, 309 and Schedule XIII of the Companies Act 1956.

Sr. No. Name Designation Tenure

1 Mr. K.K. Dastur Executive Director(Finance) 1/4/01 to 30/4/02

2 Mr. M. Eipe Executive Director &President (Chemicals) 1/4/01 to 31/3/04

3 Mr. C.K. Vaidya Executive Director(Corporate HR) 1/4/01 to 31/3/04

The Department of Company Affairs, New Delhi, has by its Notification No. GSR36(E), dated January 16, 2002, amended Schedule XIII to the Companies Act,1956, by revising and liberalizing the limits for payment of managerial remunerationby Companies having no profits or inadequate profits. As per the said notification,such companies are now permitted to pay remuneration, on a graded scale basedon the effective capital, upto a maximum of Rs. 48 lac per annum or Rs. 4 lac permonth as against the earlier limit of Rs. 24 lac per annum or Rs. 2 lac per month,subject to certain conditions including approval of such remuneration by theRemuneration Committee and the approval of shareholders by way of a specialresolution and certain additional disclosures to be made to the Shareholders.The Company has been informed vide Central Government letter no. 1/264/2001-CL VII dated April 9, 2002 that since the remuneration paid to the aforesaidWhole-Time Directors for Financial year ended March 31, 2002 which included thePerformance Bonus for the financial year 00-01, paid in Financial Year 01-02, (i.e.the period when they were not Directors on the Board of the Company.) did notexceed the maximum limits specified in Schedule XIII to the Companies Act,

Annual Report 2001-2002....................................................................................................................................................................................

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1956, the approval of the Central Government was not required for the same. TheShareholders’ approval is now being sought by way of special resolutions for thepayment of remuneration for the period from April 1, 2002, including theperformance bonus for the Financial Year 01-02 payable in the Financial Year 02-03.The remuneration payable to the aforesaid Whole-Time Directors and other termsand conditions are as under :-1. The aforesaid Whole-Time Directors viz. Mr. K.K. Dastur, Mr. M. Eipe and

Mr. C.K. Vaidya shall perform their duties subject to the superintendence,control and direction of the Board of Directors of the Company.

2. Period of remuneration for which the approval of shareholders is beingobtained.

Mr. K.K. Dastur - from 1/4/2002 to 30/4/2002Mr. M. Eipe - from 1/4/2002 to 31/3/2004Mr. C.K. Vaidya - from 1/4/2002 to 31/3/2004

3. In consideration of the performance of their duties the aforesaid Whole-Time Directors shall be entitled to receive remuneration as stated below :-

I. Basic Salary :In the scale of Rs. 70,000 to Rs. 2,00,000 per month.The Remuneration Committee of the Board of Directors will determine theamount of salary payable to each one of the Whole-time Directors fromtime to time depending on the performance of the Whole-Time Director,profitability of the Company and other relevant factors.The Basic Salary approved by the Remuneration Committee of the Board ofDirectors for 2002-03 is as under :-Name of the Whole-Time Director Basic Salary (Rupees)Mr. K.K. Dastur 1,25,000Mr. M. Eipe 1,37,000Mr. C.K. Vaidya 1,22,000

II. Performance Linked Bonus :Performance linked bonus according to Scheme of the Company for eachof the financial years 2001-02, 2002-03 and 2003-04 as may be decided bythe Board based on Economic Value Added in the business and otherrelevant factors and having regard to the performance of the Whole-TimeDirectors subject to a ceiling of 36 months average basic salary, for everyyear.

III. Perquisites and other matters :Classified into four categories A, B, C and D as detailed below :Category A(1) Housing

A. Unfurnished residential accommodation subject to recovery of10% of basic salary, the perquisite value of which, shall becalculated in accordance with the Income-tax Rules, 1962, andHouse Rent Allowance equivalent to 40% of Basic salary.

ORHouse rent allowance equivalent to 55% of the Basic salary.

B. Furnishing at residence subject to a ceiling ofRs. 2,00,000 for a period of 3 years in accordance with theCompany’s Scheme.

(2) Medical Reimbursement :Reimbursement of domicilary medical expenses incurred/insurancepremium paid for the Whole-Time Director and his family (excludinghospitalisation, nursing home and surgical charges), subject to aceiling of one month’s average basic salary in a financial year.Reimbursement of hospitalisation, nursing home and surgical chargesfor the Whole-Time Director and his family subject to a limit of Rs.1 lac per financial year which can be accumulated according to theCompany’s Rules.

(3) Leave Travel Concession :Leave Travel Concession (for the Whole-Time Director and his familyonce in a financial year incurred in accordance with the Rules specifiedby the Company) subject to a ceiling of 10% of average basic salaryin a financial year, subject to a maximum of Rs. 50,000/- in afinancial year as may be decided by the Board.

(4) Club fees :Reimbursement of Club fees of a maximum of two Clubs subject toa ceiling of Rs.50,000 (excluding entrance fees/life membership fees)

in a Financial year. For the purposes of medical reimbursements andleave travel concession under. Category A, ‘family’ means the spouseand dependent children and dependent parents of the Whole-TimeDirector.

Category B(1) Company’s contributions towards Provident Fund, Superannuation

Fund or Annuity Fund as per the Rules framed under the Company’srelevant Scheme. These shall be subject to a ceiling of the amountupto which the said contributions are either singly or put togethernot taxable, under the Income Tax Act, 1961.

(2) Gratuity not exceeding 50% of average basic salary drawn in last yearof service for each completed year of service. Such gratuity shall bepayable according to the rules of the Company. If the Whole-TimeDirector is reappointed gratuity will be paid at the end of the tenureof the Whole-Time Director with the Company.

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

Category CThe following shall not be included in the computation of perquisites :-(1) Provision for use of Company’s cars for official use.(2) Provision of free telephone facilities or reimbursement of telephone

expenses at residence, including payment of local calls and longdistance official calls.

Category D - Loans(a) - Granting of housing loans according to Company’s Scheme.

- Continuation of loan outstanding as on 31/3/02Mr. M. Eipe - Rs. 23,02,447/-.Mr. C.K. Vaidya – Rs. 29,41,143/-.

(b) - Granting of contingency loans subject to a limit of Rs.3 lac accordingto Company’s Scheme subject to Central Government approval.Continuation of Contingency loan availed of by Mr. M. Eipe – Amountoutstanding as on 31/3/02 – Rs. 11,702/-

Notes :I. Unless otherwise stipulated, for the purpose of the above, the perquisites


II. Notwithstanding the foregoing, where in any Financial Year during thecurrency of the tenure of the Whole-time Director, the Company has noprofits or its profits are inadequate, the remuneration by way of salary,commission and perquisites shall not exceed, the maximum limits prescribedin Schedule XIII to the Companies Act, 1956, as amended vide GovernmentNotification No. GSR 36(E), dated 16-1-2002 and subsequent amendments,if any, except with the approval of the Central Government.

III. The limits specified above are the maximum limits and the Board may in itsabsolute discretion pay to the Whole-time Director lower remuneration andrevise the same from time to time within the maximum limits stipulatedabove.

IV. In the event of any re-enactment or re-codification of the Companies Act,1956 or the Income Tax Act, 1961 or amendments thereto, the foregoingshall continue to remain in force and the reference to various provisions ofthe Companies Act, 1956 or the Income Tax Act, 1961 shall be deemed tobe substituted by the corresponding provisions of the new Act or theamendments thereto or the Rules and notifications issued thereunder.The Agreements entered into with the Whole-Time Directors are available forinspection at the Regd. Office of the Company from 10.00 A.M. to 12.00Noon, Monday to Friday (except public holidays) upto the date of theAnnual General Meeting.The abstract of the terms of the agreements as aforesaid which is requiredto be given to every member under the provisions of Section 302 of theCompanies Act, 1956 had been sent to all Members of the Company on6th April, 2001.The Statement containing information as required under Schedule XIII ofthe Companies Act, 1956 as amended vide Notification No.GSR 36(E)dated 16-1-2002 is enclosed. The Board of Directors of the Companyrecommends the passing of the resolutions as set out at item nos. 11 to13 of the Notice.


....................................................................................................................................................................................16

Mr. K.K. Dastur, Mr. M. Eipe and Mr. C.K. Vaidya may be deemed to beinterested in the resolution, to the extent of the remuneration that may bereceived by them.None of the other Directors of the Company are concerned or interested inthe resolution.

Item 15At the last Annual General Meeting of the Company held on July 28, 2001, theshareholders had approved the remuneration payable to Mr. N.B. Godrej as ManagingDirector for a period from April 1, 2002 to March 31, 2005 subject to theapproval of Central Government under the provisions of sections 269, 309 andSchedule XIII of the Companies Act 1956.The Department of Company Affairs, New Delhi, has by its Notification No. GSR36(E), dated January 16 2002, amended Schedule XIII to the Companies Act,1956, by revising and liberalizing the limits for payment of managerial remunerationby Companies having no profits or inadequate profits. As per the said notification,such companies are now permitted to pay remuneration, on a graded scale basedon the effective capital, upto a maximum of Rs. 48 lac per annum or Rs. 4 lac permonth as against the earlier limit of Rs. 24 lac per annum or Rs. 2 lac per month,subject to certain conditions including approval of such remuneration by theRemuneration Committee and the approval of shareholders by way of a specialresolution and certain additional disclosures to be made to the shareholders.The Shareholders’ approval is being sought by way of special resolution forpayment of remuneration for the period from April 1, 2002 to March 31, 2005.The remuneration payable to Mr. N.B. Godrej and other terms and conditions aregiven below :I. Basic Salary :

Rs. 2,25,000/- in the scale of Rs. 1,20,000/- to Rs. 3,00,000/- per month,payable monthly. The Remuneration Committee of the Board of Directorswill determine the amount of basic salary payable from time to timedepending on the performance of the Managing Director, profitability of theCompany and other relevant factors. The Basic Salary approved by theRemuneration Committee of the Board of Directors for the Financial Year2002-03 is Rs. 2,25,000/- per month.

II. Performance Linked Bonus :Performance linked bonus according to Scheme of the Company for eachof the Financial years 2001-02, 2002-03, 2003-04 and 2004-05 as may bedecided by the Remuneration Committee/ Board based on Economic ValueAdded in the business and other relevant factors and having regard to theperformance of the Managing Director subject to a ceiling of 36 months’average basic salary, for every year.

III. Perquisites : Classified into three categories A, B, and C as detailed below:Category A(1) Housing

Furnished residential accommodation, the perquisite value for which, shallbe calculated in accordance with the Income-tax Rules, 1962. The perquisitevalue of provision of, or reimbursement of expenditure incurred on, gas,electricity, water and furnishings being valued in accordance with the Incometax Rules, 1962.ORHouse rent allowance equivalent to 60% of the basic salary.

(2) Medical Benefits :a) Reimbursement of domiciliary medical expenses incurred/insurance

premium paid for the Managing Director and his family (excludinghospitalisation, nursing home and surgical charges subject to a ceilingof one month’s average basic salary in a financial year. Reimbursementof hospitalisation, nursing home and surgical charges for the ManagingDirector and his family subject to a limit of Rs.1 lac per financial yearwhich can be accumulated according to the Company’s Rules.

b) Health Insurance for the Managing Director and his family, subject toa ceiling of Rs. 50,000 in a financial year for the premium payable inrespect of such insurance.

(3) Leave Travel Concession :Leave Travel Concession (for the Managing Director and his family once ina financial year incurred in accordance with the Rules specified by theCompany) subject to a ceiling of one month’s average basic salary in afinancial year.

(4) Club Fees :Reimbursement of fees of a maximum of two Clubs, subject to a ceiling of

Rs. 50,000 (excluding entrance fees/life membership fees) in a financialyear.

(5) Personal Accident Insurance :Personal Accident Insurance, subject to a ceiling of Rs.50,000 in a financialyear for the premium payable in respect of such insurance.For the purposes of medical benefits and leave travel concession underCategory A, ‘family’ means the spouse and dependent children of theManaging Director.



(2) Gratuity not exceeding 50% of average basic salary drawn in last year ofservice for each completed year of service. Such gratuity shall be payableaccording to the Rules of the Company. If the Managing Director isreappointed, gratuity will be paid at the end of the tenure of the ManagingDirector with the Company.


Category CThe following shall not be included in the computation of perquisites :(1) Provision for use of Company’s cars with driver for official use.(2) Provision of free telephone facilities or reimbursement of telephone expenses

at residence including payment of local calls and long distance official calls.Notes :I. Unless otherwise stipulated, for the purpose of the above, the perquisites


II. Notwithstanding the foregoing, where in any Financial Year during thecurrency of the tenure of the Managing Director, the Company has noprofits or its profits are inadequate, the remuneration by way of salary,commission and perquisites shall not exceed, the maximum limits prescribedin Schedule XIII to the Companies Act, 1956, as amended vide GovernmentNotification No.GSR 36(E), dated 16-1-2002 and subsequent amendments,if any, except with the approval of the Central Government.

III. The limits specified above are the maximum limits and the Board may in itsabsolute discretion pay to the Managing Director lower remuneration andrevise the same from time to time within the maximum limits stipulatedabove.

IV. In the event of any re-enactment or re-codification of the Companies Act,1956 or the Income Tax Act, 1961 or amendments thereto, the foregoingshall continue to remain in force and the reference to various provisions ofthe Companies Act, 1956 or the Income Tax Act, 1961 shall be deemed tobe substituted by the corresponding provisions of the new Act or theamendments thereto or the Rules and notifications issued thereunder.

The Agreement entered into with Mr. N.B. Godrej is available for inspection at theRegistered Office of the Company from 10.00 A.M. to 12.00 Noon, Monday toFriday (except public holidays) upto the date of the Annual General Meeting.The abstract of the agreement under Section 302 of the companies Act, 1956 wassent to Shareholders on May 7th, 2001. The statement containing information asrequired under Schedule XIIIof the Companies Act, 1956 as amended vide notificationNo. GSR 36(E) dated 16.1.2002 is enclosed.The Board recommends passing of the resolution. Mr. N.B. Godrej may bedeemed to be interested in the resolution. Mr. A.B. Godrej being relative of Mr.N.B. Godrej may be deemed to be interested in the resolution. None of the otherDirectors of the Company are interested in the resolution.Item 16At the last Annual General Meeting of the Company held on July 28, 2001, theshareholders had approved the remuneration payable to Ms. T.A. Dubash asDirector (Marketing) for a period from 1-8-2001 to 31-3-2004 subject to theapproval of Central Government under the provisions of sections 269, 309 andSchedule XIII of the Companies Act 1956.The Department of Company Affairs, New Delhi, has by its Notification No. GSR36(E), dated January 16 2002, amended Schedule XIII to the Companies Act,

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................17

1956, by revising and liberalizing the limits for payment of managerial remunerationby Companies having no profits or inadequate profits. As per the said notification,such companies are now permitted to pay remuneration, on a graded scale basedon the effective capital, upto a maximum of Rs. 48 lac per annum or Rs. 4 lac permonth as against the earlier limit of Rs. 24 lac per annum or Rs. 2 lac per month,subject to certain conditions including approval of such remuneration by theRemuneration Committee and the approval of shareholders by way of a specialresolution and certain additional disclosures to be made to the shareholders.The Shareholders’ approval is being sought by way of special resolution for thepayment of remuneration for the period from April 1, 2002 to March 31, 2004.For the sake of brevity, the particulars of the remuneration of Ms. T.A. Dubash arenot being set out in the explanatory statement and the members are requested torefer to the same as set out in the body of the resolution.I. Basic Salary :

Rs. 1,22,000/- in the scale of Rs. 70,000 to Rs. 2,00,000 per month,payable monthly. The Remuneration Committee of the Board of Directorswill determine the amount of basic salary payable from time to timedepending on the performance of the Whole Time Director, profitability ofthe Company and other relevant factors. The Basic Salary approved by theRemuneration Committee of the Board of Directors for the Financial Year2002-03 is Rs. 1,22,000/- per month.

II. Performance Linked Bonus :Performance linked bonus according to scheme of the Company for each ofthe financial years 2001-02, 2002-03 and 2003-04 as may be decided bythe Remuneration Committee/ the Board based on Economic Value Addedin the business and other relevant factors and having regard to theperformance of Ms. T.A. Dubash subject to a ceiling of 36 months’ averagebasic salary, for every year.

III. Perquisites and other matters :Classified into three categories A, B, and C as detailed below :

Category A(1) Housing

A. Unfurnished residential accommodation subject to recovery of 10%of basic salary, the perquisite value of which, shall be calculated inaccordance with the Income-tax Rules, 1962, and House RentAllowance equivalent to 40% of Basic salary.ORHouse rent allowance equivalent to 55% of the basic salary.

B. Furnishing at residence subject to a ceiling of Rs.2,00,000 for aperiod of 3 years in accordance with the Company’s Scheme.

(2) Medical Benefits :a) Reimbursement of domiciliary medical expenses incurred/

insurance premium paid for Ms. T.A. Dubash and her family (excludinghospitalisation, nursing home and surgical charges) subject to aceiling of one month’s average basic salary in a financial year.Reimbursement of hospitalisation, nursing home and surgical chargesfor Ms. T.A. Dubash and her family subject to a limit of Rs.1 lac perfinancial year which can be accumulated according to the Company’sRules.

b) Health Insurance for Ms. T.A. Dubash and her family, subject to aceiling of Rs. 50,000 in a financial year for the premium payable inrespect of such insurance.

(3) Leave Travel Concession :Leave Travel Concession (for Ms. T.A. Dubash and her family once in afinancial year incurred in accordance with the Rules specified by the Company)subject to a ceiling of one month’s average basic salary in a financial year.

(4) Club Fees :Reimbursement of fees of a maximum of two Clubs, subject to a ceiling ofRs. 50,000 (excluding entrance fees/life membership fees) in a financialyear.

(5) Personal Accident Insurance :Personal Accident Insurance, subject to a ceiling of Rs. 50,000 in a financialyear for the premium payable in respect of such insurance.For the purposes of medical benefits and leave travel concession underCategory A, ‘family’ means the spouse and dependent children ofMs. T.A. Dubash.



(2) Gratuity not exceeding 50% of average basic salary drawn in the last year ofservice for each completed year of service. Such gratuity shall be payableaccording to the Rules of the Company. If Ms. T.A. Dubash is reappointed,gratuity will be paid at the end of her tenure with the Company.


Category CThe following shall not be included in the computation of perquisites:-(1) Provision for use of Company’s cars with driver for official use.(2) Provision of free telephone facilities or reimbursement of telephone expenses

at residence including payment of local calls and long distance official calls.Notes :I. Unless otherwise stipulated, for the purpose of the above, the perquisites


II. Notwithstanding the foregoing, where in any Financial Year during thecurrency of the tenure of Ms. T.A. Dubash, the Company has no profits orits profits are inadequate, the remuneration by way of salary, commissionand perquisites shall not exceed, the maximum limits prescribed in ScheduleXIII to the Companies Act, 1956, as amended vide Government NotificationNo.GSR 36(E), dated 16-1-2002 and subsequent amendments, if any,except with the approval of the Central Government.

III. The limits specified above are the maximum limits and the Board may in itsabsolute discretion pay to Ms. T.A. Dubash lower remuneration and revisethe same from time to time within the maximum limits stipulated above.

IV. In the event of any re-enactment or re-codification of the Companies Act,1956 or the Income Tax Act, 1961 or amendments thereto, the foregoingshall continue to remain in force and the reference to various provisions ofthe Companies Act, 1956 or the Income Tax Act, 1961 shall be deemed tobe substituted by the corresponding provisions of the new Act or theamendments thereto or the Rules and notifications issued thereunder.The Agreement entered into with Ms.T.A. Dubash is available for inspectionat the Registered Office of the Company from 10.00 A.M. to 12.00 Noon,Monday to Friday (except public holidays) upto the date of the AnnualGeneral Meeting.The abstract of the agreement under Section 302 of the companies Act,1956 was sent to Shareholders on May 7th, 2001. The statement containinginformation as required under Schedule XIIIof the Companies Act, 1956 asamended vide notification No. GSR 36(E) dated 16.1.2002 is enclosed.The Board recommends passing of the resolution. Ms. T.A. Dubash may bedeemed to be interested in the resolution. Mr. A.B. Godrej being relative ofMs. T.A. Dubash may also be deemed to be interested in the resolution.None of the other Directors of the Company are concerned or interested inthe resolution.

Item 17Mr. K.K. Dastur is an Additional Director of the Company with effect fromMay 1, 2002. Before that he was a Whole-Time Director of the Company designatedas Executive Director (Finance). The Company has been taking the advice ofMr. Dastur on various matters after his retirement. It is therefore proposed toappoint him as a retainer for a period of 1 year with effect from 1st. May, 2002, ata total cost not exceeding Rs. 5 lac as may be determined by the Managing Director.In terms of section 314 of the Companies Act, 1956, consent of the shareholdersby a Special Resolution and approval of Central Government is required for suchappointment.The Board of Directors of the Company recommends passing of the resolution.Mr. K.K. Dastur may be deemed to be interested in the resolution at item no.17.None of the other Directors of the Company are concerned or interested in theresolution.


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By Order of the Board of DirectorsS. K. BHATTGeneral Manager (Corporate Services)& Company Secretary

Mumbai, August 14, 2002.Registered Office :Pirojshanagar,Eastern Express Highway,Vikhroli (East), Mumbai 400 079.

Name of the Company & address of Regd. Office

Principal business of the Company Purpose of investment Source of funds Nature of concern or interest of directors

Godrej Consumer Products LimitedPirojshanagar, Eastern Express Highway,Vikhroli, Mumbai 400 079

Manufacturing and marketing of fast movingconsumer products such as soaps,detergents, toiletries, etc.

A good investment opportunity Internal generation of funds/borrowings.

Mr. A. B. Godrej, Mr. J. N. Godrej,Mr. N.B. Godrej, Mr.C.K.Vaidya, Mr.K.K.Dastur, Mr.M. Eipe, Mr. V.M. Crishna, Mr. S.A. Ahmadullah,Mr. V.N. Gogate, Mr. M.P. Pusalkar, Mr. K. N.Petigara and Ms.T.A.Dubash and may be deemedto be interested in this resolution on accountof their being directors and/or shareholders inGodrej Consumer Products Ltd. None of theother Directors of the Company is concerned orinterested in the resolution.

Godrej Tea Pvt. Ltd. Pirojshanagar, EasternExpress Highway, Vikhroli, Mumbai 400 079

Tea and Coffee Business Godrej Tea Pvt. Ltd. is theCompany co-promoted by theGodrej group for doing Teabusiness. The proposedinvestment is towardssubscription of share capital.

Internal generation of funds/borrowings.

Mr. A.B. Godrej, Mr. J.N. Godrej, Mr. N.B.Godrej, may be deemed to be interestedin the resolution on account of their beingDirectors in Godrej Tea Pvt. Ltd. None ofthe other Directors of the Company isconcerned or interested in the passing ofthis resolution.

Financial Operations

Compass Connections Ltd., UK 5th Floor,Hanover Square London, WIR 9RD, UK

Development of software and back officeoperations

To consolidate the stake of theCompany and increase itspresence in the InformationTechnology Services


Mr. N.B. Godrej may be deemed to beinterested in the resolution on account ofhis being director of Compass ConnectionsLtd. U.K. None of the other directors isconcerned or interested.

Hybrigene Biotechnology Pvt. Ltd.Pirojshanagar, Eastern Express Highway,Vikhroli, Mumbai 400 079

To capitalize it adequately toenable it to fund venture capitalin software companies


Mr. C.K. Vaidya may be deemed to beinterested in the resolution on account ofhis being Director of HybrigeneBiotechnology Pvt. Ltd. None of the otherDirectors of the Company is concerned orinterested in the passing of this resolution.

CBay Systems Ltd. U.S.A 121, Cathedral Street,Suite No 300, Annapolis MD 21401

Medical Transcription To fund platform development,Capital Expenditure & WorkingCapital


Mr N B Godrej may be deemed to beinterested in the resolution on account ofhis being director of CBay Systems Ltd.,U.S.A None of the other directors isconcerned or interested.

Item 18Particulars of the company where investment is proposed to be made :

Statement In Terms Of Schedule XIII Of The Companies Act, 1956 a Amended VideNotification No. Gsr 36(E), Dated 16-1-2002 Relating To Remuneration Payable ToManaging Director & Whole-Time DirectorsI. General Information1. Nature of Industry – Chemicals & Foods2. Date or expected date of commencement of commercial production – The

Company was incorporated on March 7, 1988 as a Public Limited Company.3. Financial performance based on given indicators – as per the audited financial

results for the year ended March 31, 2002Particulars Amt. (Rs. lac)Sales of products and services 51195Other Income 2270Total income 53465Material costs 29821Staff costs 5627Other expenditures 7960Total expenditure 43408Profit Before Depreciation, Interest and Tax 10057Depreciation 2154Profit Before Interest and Tax 7903Interest and financial services (net) 3218Profit Before Tax (before exceptional items) 4685Exceptional items (624)Profit Before Tax 4061Provision for Current Tax 150Profit after Current Tax 3911

Amt. (Rs. lac)Provision for Deferred Tax 923Adjustments in respect of prior years – net income 121Profit After Tax 3109

4. Export performance and net foreign exchange earnedfor the year ended March 31, 2002FOB value of Exports 10428Dividend income 63

5. Foreign investmentsIn shares of Godrej International Ltd,the Company’s wholly owned subsidiary 818In equity shares of Compass Connections, UK 97

II Information about the appointee1 Background details :

� Mr. N.B. Godrej is B.S., Chem. Engg (M.I.T., U.S.A) and M.S, Chem.Engg (Stanford, U.S.A). He is qualified, fit and a right person to head theCompany. He has been a Director since 1976.

� Mr. K.K. Dastur is a Chartered Accountant by profession. He was headingthe finance department of the Company, designated as Executive Director(Finance), before retiring from the services of the Company in April, 2002.

� Mr. Mathew Eipe is B.Tech. (Chem.) from IIT, Mumbai, PGDM from IIM,Calcutta and has been with the Company for over 23 years. Before takingover the Chemicals Division he handled various responsibilities in Sales,Marketing and Operations of the Company.

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................19

Description

Basic Salary range pm

Performance linkedbonus

HRA

Perquisities

Managing Director

Rs. 120000 - Rs. 300000currently Rs. 225000 pm

Based on performancesubject to a ceiling of 36months' average basic salary

Furnished residentialAccomodation Or HouseRent Allowance equivalent to60% of basic salary

As per rules of the Company

Whole-Time Director

Rs. 70000 - Rs. 200000The present basic salary aregive below :Mr. K.K. Dastur- Rs.125000Mr. M. Eipe - Rs.137000Mr. C.K. Vaidya- Rs.122000Ms. T.A. Dubash- Rs.122000Mr.M.P. Pusalkar - Rs.102000Based on performance subjectto a ceiling of 36 months'average basic salary

Unfurnished residentialAccomodation and House RentAllowance equivalent to 40%of basic salary Or House RentAllowance equivalent to 55%of basic salary

As per rules of the Company

� Mr. C.K. Vaidya is B. Tech. (Mech.) from IIT, Mumbai and PGDM fromIIM, Calcutta, and has been with the Godrej Group for over 26 years.Each of the above Directors have over twenty years post qualificationexperience.

� Ms. T. A. Dubash is A.B. with Economics & Political Science from BrownUniversity, Rhode Island, USA and has been with the Company since1994.

2 Past remuneration :The remuneration paid during the year ended March 31, 2002 is as under :-

Salary (Rs.) Perquisites (Rs.) Total (Rs.)Mr. N.B. Godrej 3328000 1133442 4461442Mr. K.K. Dastur 2577300 223337 2800637Ms. T.A. Dubash 1624000 524202 2148202Mr. M. Eipe 2732200 564140 3296340Mr. C.K. Vaidya 2484300 253913 2738213Mr. M.P. Pusalkar * * **Mr.M.P.Pusalkar was appointed as a director w.e.f April 1, 2002

3 Job profile and suitability :� Mr. N.B. Godrej: Renders services as the Managing

Director of the company.� Mr. K.K. Dastur: Was the Executive Director (Finance) till his superannuation

from the Company on April 30, 2002 and until then headed the financefunction of the Company.

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

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

� Mr. C.K. Vaidya: is the Executive Director (Corporate H.R.) and heads thepersonnel and H.R. functions of the Company.

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

4 Remuneration proposed :Mr. N.B. Godrej, Mr. K.K. Dastur, Ms. T.A. Dubash, Mr. M. Eipe andMr. C.K. Vaidya : The remuneration is the same as what was approved by theshareholders in the last Annual General Meeting held on July 28, 2001.Mr. M.P. Pusalkar: Abstract of the terms and conditions of appointment andremuneration, dated March 6, 2002 has already been circulated to the shareholders.Brief particulars of the remuneration are given below:

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

6 Pecuniary relationship directly or indirectly with the Company, or relationshipwith the managerial personnel, if any :Besides the remuneration proposed, the Managing Director / Executive Directorsdo not have any other pecuniary relationship with the Company and its managerialpersonnel. However, certain amounts are outstanding in respect of housing loans/ contingency loans, availed earlier by the Appointees for which, monthly deductionsare being made in accordance with the rules applicable to the employees of theCompany.

III Other information1 Reasons of loss or inadequate profits :

The Company has been making profits except for the year ended March 31, 1999.However, in view of the brought forward losses under section 198 of the CompaniesAct, 1956 for the earlier years, there are no profits available under Section 198 forthe purpose of managerial remuneration. The Company had undertaken variousrestructuring activities during the last five years like divestment of its stake inGodrej SaraLee Ltd. and restructuring of alliance with Procter & Gamble Ltd.,whcih generated receipts of capital nature. However profits on sale of investmentis not considered for the computation of profits under Section 198.Also the Company is depreciating its assets on the straight line method at therates provided in Schedule XIV. But for the purpose of managerial remuneration,as per section 350, the depreciation is considered on the written down valuemethod, at the rates specified in Schedule XIV, and these rates are higher andtherefore there is higher depreciation charge and lower profits.

2. Steps taken or proposed to be taken for improvement :The Company has undertaken various restructuring exercises like divestment of partof our strategic investments, exit from high risk activity of trading in edible oils.The Company is concentrating its efforts on increasing exports. These havecontributed to reduction of interest cost and improved the operating profits. Thisis evident with the turnaround of the Company achieved after the loss it posted forthe year ended March 31,1999. The company earned a PAT of Rs. 2988 lac duringthe year ended March 31, 2002 and the accumulated loss under section 349 of theCompanies Act, 1956 as at the year end reduced to Rs. 8210 lac from Rs. 12220lac as on March 31, 2001.

3. Expected increase in productivity and profits in measurable terms :The total income from some of our major product categories for the current yearas compared to the previous year are given below :

This Year Previous YearItem Rs. lac Rs. LacConsumer Products – 41173Chemicals :Domestic 25034 23170Export 10901 9777Total 35935 32947Foods :Refined Oils & Vanaspati 7690 –Fruit & Vegetable Puree, Pulp & Juices 585 –Fruit beverages and fruit based products 820 –Total 9095 –Estate management 2178 1845Processing charges 2737 596Medical Diagnostics Products 515 710Income from mfg. and other business operations 734 901Income from financial operations 2113 1291Others 158 323Total Income 53465 79786

The overall performance of the current year is not comparable with that of theprevious year because of the demerger of the Consumer Products business w.e.fApril 1, 2001, and the demerger of Godrej Foods Ltd. and the vesting of themanufacturing business of Godrej Foods Ltd. into the Company w.e.fJune 30, 2002.

By Order of the Board of DirectorsS. K. BHATT

General Manager (Corporate Services& Company Secretary)

Mumbai, August 14, 2002.

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


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Details of the Directors seeking appointment/reappointment in the forthcomingAnnual General Meeting (In pursuance of Clause 49 of the Listing Agreement)

J.N. Godrej (53) holds a bachelor's degree in Mechanical Engineering and a masters' degreein Business Administration from the Illinois Institute of Technology, USA. He is a Director onthe Board of the Company from 7-3-1988. He joined the board of Directors of Godrej &Boyce Mfg Co Ltd (G&B) in 1974. He was appointed Managing Director of G&B in 1990 andbecame Chairman of the Board of G&B in 2000. Mr. Godrej is President of WorldWide Fundfor Nature, India, past president of Confederation of Indian Industry, and past president of theIndian Machine Tool Manufacturers’ Association.Directorships in other Companies (excluding foreign Companies): Godrej ConsumerProducts Ltd., Godrej Foods, Ltd., Godrej Agrovet Ltd., Godrej & Boyce Mfg. Co. Ltd.,Godrej Appliances Ltd., Godrej Properties & Investments Ltd., Godrej Sara Lee Ltd.,Geometric Software Solutions Ltd., Bajaj Auto Ltd., SKF Bearings India Ltd., AntrixCorporation Ltd., Godrej Investments Pvt. Ltd., Lawkim Pvt. Ltd., Tata TD WaterhouseTrustee Company Pvt. Ltd., Illinois Institute of Technology (India) Pvt. Ltd., 3D PLMSoftware Solutions Ltd., Godrej Tea Private Ltd.,Chairman/Member of other committees of Companies :Chairman – Investor Grievances & Redressal Committee:Geometric Software Solutions Co. Ltd.Chairman – Compensation Committee:Geometric Software Solutions Co. Ltd.Member – Audit Committee: Godrej & Boyce Mfg. Co. Ltd.,Bajaj Auto Ltd., Godrej Appliances Ltd.Member – Shareholder / Investors Grievances Committee:Bajaj Auto Ltd., Godrej Consumer Products Ltd.,Member – Human Resources Committee,Godrej Consumer Products Ltd.V.M. Crishna (57 ) is B.A. (Economics) from St. Stephen’s College, University of Delhi.He is a Director of the Company since January 3, 1995. He was appointed as a Directorof Lawkim Pvt. Ltd. in 1977. In 1993 he was appointed as a Director in Godrej-GEAppliances Ltd. He is now Managing Director in Godrej Appliances Ltd. and in LawkimPvt. Ltd. He serves on the Board of Governors of National Institute of IndustrialEngineering (NITIE), Mumbai, and as a Member of the Advisory Board of the Centre forSupply Chain Management at the Management Development Institute, Gurgaon. He isthe current Chairman, Gateway Initiative (Task Force) Sub-Committtee of the WesternRegional Council of the Confederation of the Indian Industry, and is a Trustee of theIndia Foundation for the Arts, Bangalore.Directorships in other Companies (excluding foreign Companies) :Statomat Special Machines (India) Pvt. Ltd., Godrej Appliances Ltd., Lawkim Pvt. Ltd.,Godrej & Boyce Mfg. Co. Ltd., Godrej Foods Ltd., Godrej Agrovet Ltd., Godrej Photo-Me Ltd., Precision Wires India Ltd.Chairman/Member of other committees of companies:Member - Shareholders Committee, Godrej Industries Ltd.Mr. V.N. Gogate (69) : Mr. V.N. Gogate is a Chartered Accountant and a qualifiedCompany Secretary by profession. Mr. Gogate was heading the finance function of theformer Godrej Soaps Limited before retiring in 1994 after more than 35 years of service.He is a director of the Company since 1994.

Directorship in other companies: Doothpapeshwar Ayurvedic Research Foundation, ShreeDootapapeshwar Ltd., Solumik Piramal Ltd.Chairman/Member of other committees of Companies:Chairman – Audit Committee: Godrej Industries Ltd.,Member – Human Resources Committee: Godrej Industries Ltd.Mr. K.N. Petigara (53) : Mr. K.N. Petigara is a graduate in chemical engineering fromMassachusetts Institute of Technology (MIT), USA. He has been associated with chemicaland allied business activities in India and abroad for many years. He was appointed as anAdditional Director on the Board of the Company w.e.f. January 30, 2002.Directorship in other companies :Godrej & Boyce Mfg. Co. Ltd., Godrej Agrovet Ltd., Swadeshi Detergents Ltd., VoraSoaps Ltd., The Zoroastrian Co-operative Bank Ltd., Petigara AromAccess (P) Ltd.Chairman/Member of other committees of Companies :Chairman - Shareholders’ Committee, Godrej Industries Ltd.Member - Remuneration Committee, Godrej Industries Ltd.Mr. F.P. Sarkari (70) : Mr. F.P. Sarkari is a Practising Chartered Accountant. He wasappointed as an Additional Director of the Company with effect from January 30, 2002.Directorship in other companies :Godrej & Boyce Mfg. Co. Ltd., Tropicana Enterprises Pvt. Ltd.Chairman/Member of other committees of Companies :Chairman-Audit Committee, Godrej & Boyce Mfg. Co. Ltd.Chairman- Remuneration Committee, Godrej & Boyce Mfg. Co. Ltd.Member- Audit Committee, Godrej Industries Ltd.Mr. K.K. Dastur (60) : Mr. K.K. Dastur is a Chartered Accountant by profession. He washeading the finance department of the Company, designated as Executive Director (Finance),before retiring from the services of the Company in April, 2002. Mr. Dastur wasappointed as an Additional Director of the Company with effect from 1st May, 2002.Directorship in other companies :Godrej Appliances Ltd., Godrej Capital Ltd., Godrej Infotech Ltd.,Lawkim Upstream Contract Management Pvt. Ltd.Chairman/Member of other committees of Companies :Chairman- Audit Committee : Godrej Appliances Ltd.Member- Shareholders’ Committee : Godrej Industries Ltd.M.P. Pusalkar (52) is a B.Tech (Elec) from Indian Institute of Technology (Kanpur) andMMS from JBIMS, Mumbai and has been in the Godrej group for over 25 years. Earlierhe was the Managing Director of Godrej Foods Ltd. (GFL). He has handled variousfunctions in manufacturing, marketing, etc. On the demerger of the Foods division ofGFL into the Company Mr. Pusalkar became President & Executive Director (FoodsDivision) of the Company from 1st April 2002.Directorship in other companies : Godrej Foods Ltd.Chairman/Member of other committees of Companies :Member- Audit Committee : Godrej Foods Ltd.Member- Shareholders’ Grievance Committee : Godrej Foods Ltd.

Annual Report 2001-2002....................................................................................................................................................................................

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Dear Shareholder,Your Directors have pleasure in submitting their Report along with the Audited Accountsfor the year ended March 31, 2002.OPERATING RESULTSYour Company’s performance during the year as compared with that during the previousyear is summarized below. This being the first year of operation after demerger of theconsumer products business from your Company and demerger of the manufacturingbusiness of Godrej Foods Limited into your Company, the figures of the previous year arenot comparable with those of the current year.

This PreviousYear Year

Rs. lac Rs. lacSales of products and services 51195 78172Other Income 2270 1614Total Income 53465 79786Total expenditure other than Interest and Depreciation 43408 65935Profit before Interest, Depreciation and Taxation 10057 13851Depreciation 2154 2531Profit before Interest and Taxation 7903 11320Interest and Financial Charges (net) 3218 3711Profit before Tax before Exceptional items. 4685 7609Exceptional items (624) (3194)Profit before Taxation 4061 4415Provision for Current Tax 150 350Profit after Current Tax 3911 4065Provision for Deferred Tax 923 -Profit after Current and Deferred Taxation 2988 4065Adjustments in respect of prior years – net income 121 25Surplus brought forward 6745 5864Profit after Tax available for appropriation 9854 9954AppropriationYour Directors recommend appropriation as under:Dividend on Equity Shares 370 1794Tax on distributed profits - 183Transfer to Debenture Redemption Reserve - 782Transfer to General Reserve 250 450Surplus Carried Forward 9234 6745Total Appropriation 9854 9954DIVIDENDThe Board of Directors of your Company has declared an interim dividend of Rs. 0.60per share of Rs. 6/- each, aggregating to Rs. 370.26 lac, as against a final dividend ofRs. 3/- per equity share of Rs.10/- each aggregating to Rs.1793 lac in the previous year.The Board proposes the same as final dividend.REVIEW OF OPERATIONSDuring the year under review your Company recorded Profit After Tax ofRs. 2988 lac as against Rs. 4065 lac in the previous year.The year under review saw the demerger of the Consumer Products Division of theCompany into a focused FMCG company, Godrej Consumer Products Limited, effectiveApril 1, 2001. Later, the manufacturing business of Godrej Foods Limited together withits marketing, sales, finance and other related functions vested into the Company onJanuary 25, 2002 with retrospective effect from June 30, 2001.The broad break-up of Total Income is as follows:-Item This Year Previous Year

Rs. lac Rs. LacConsumer Products - 41173Chemicals:Domestic 25034 23170Export 10901 9777Total 35935 32947Foods:Refined Oils & Vanaspati 7690 -Fruit & Vegetable Puree, Pulp & Juices 585 -Fruit beverages and fruit based products 820 -Total 9095 -

DIRECTORS' REPORT FOR THE YEAR ENDED MARCH 31, 2002Estate management 2178 1845Processing charges 2737 596Medical Diagnostics Products 515 710Income from mfg. and other business operations 734 901Income from financial operations 2113 1291Others 158 323Total Income 53465 79786CHEMICALS:The Chemicals business performed well during the year with sales increasing by 17% involume and 9% in value, helped by favourable raw material prices. Several initiatives forreducing supply chain costs in manufacturing as well as in logistics have helped thebusiness significantly.Domestic Business:Domestic sales increased to Rs. 25034 lac from Rs. 23170 lac in the previous year. Soapmaker fatty acids and glycerin helped lead this growth.Exports business:Export sales were at Rs. 10901 lac as against Rs. 9777 lac in the previous year. Newproduct categories such as short chain fatty acids contributed Rs.836 lac to the exports.To increase the breadth of exports, exports of Fatty Alcohol to countries such as Iran andRussia is being pursued.Your Company was awarded the ‘CHEMEXCIL’ first export award (year 2000-01) by BasicChemicals, Pharmaceuticals and Cosmetics Export Promotion Council for third year in arow, in the Cosmetics and Toiletries category, for its export performance.FOODS:Your Company acquired the manufacturing business of Godrej Foods Limited, whichnow represents its Foods Division. The financial strength of your Company has helpedreduce the costs of this division by significantly reducing the interest costs therebymaking it more competitive in the market place.The Foods Division is now focused on bottom-line improvement through sale of highmargin products and reduction in cost of operations. To improve capacity utilization, thedivision processed third party products, thereby reducing the operating costs apart fromearning revenues. Rationalisation of the marketing infrastructure resulted in a lean sellingand distribution network that led to considerable savings in the distribution cost of thedivision.During the year, the Foods Division has ventured into products catering to the needs ofbakeries through its Himgiri, Zesta Puff brands of bakery shortening and Margarine.ESTATE MANAGEMENT:The Income from Licencing of office space and the related services was Rs.2178 lac inthe year under review as compared to Rs.1845 lac in the previous year.MEDICAL DIAGNOSTICS:The sales of Medical Diagnostics Division dropped to Rs. 515 lac in the current year fromRs. 710 lac in the previous year. This reduction was the result of a conscious effort tocorrect the working capital imbalance. Working capital in the form of both inventory anddebtors has since been significantly reduced to make the operations more cost effective.New products, product mixes, supply chain efficiencies are being pursued to improveprofitability.FINANCE:The Dividend & Other Income increased from Rs.1291 lac in the previous year to Rs.2113 lac during the year.DEMERGER OF MANUFACTURING BUSINESS OF GODREJ FOODS LTD.The manufacturing business of Godrej Foods Ltd. (GFL), comprising the Vegetable Oilsand Processed Foods Divisions, together with its marketing, sales, finance and otherrelated functions was demerged and vested in your Company on January 25, 2002 withretrospective effect from June 30, 2001, being the appointed date. The Scheme wasearlier approved by the Shareholders of both the Companies and the High Courts atMumbai and Jabalpur. Under the scheme the shareholders of GFL were allotted oneequity share of the Company (face value Rs. 6/-) for every 15 equity shares held in GFL.SHARE CAPITALPursuant to the demerger of the Consumer Products business of the Company intoGodrej Consumer Products Ltd. (GCPL), the shareholders of the Company were allotted1 equity share of the face value of Rs. 4/- in GCPL for every equity share held in theformer Godrej Soaps Limited. The face value of equity share of your Company wasreduced from Rs.10/- to Rs.6/-. Accordingly, effective April 1, 2001 the paid up capitalof your Company stood at Rs. 3585 lac as against Rs. 5979 lac as at March 31, 2001& the name of the company was changed from Godrej Soaps Ltd. to Godrej IndustriesLtd. with effect from April 2, 2001. Further, consequent to the allotment of shares to theshareholders of GFL on March 13, 2002, the paid up share capital of your Companyincreased to Rs. 3698 lac.


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SCHEME OF ARRANGEMENTThe Board of Directors at its meeting held on February 22, 2002 approved a Scheme ofArrangement for Buyback of equity shares of your Company up to a maximum of 40%of its paid up equity capital, at a price of Rs.18/- per share. Subsequently, the shareholdersand creditors of the Company approved the Scheme at their Meeting held on April 6,2002. The High Court of Bombay has given its consent to the Scheme vide its orderdated June 6, 2002. Your Company has sent option letters to all its shareholders forparticipating in the Scheme.SUBSIDIARY AND ASSOCIATE COMPANIESYour Company has interests in several industries including animal feeds, poultry andagro-products, property development, household insecticides, etc. through its subsidiary/associate companies.Godrej Sara Lee Limited has continued to post excellent results in terms of sales, profitsand market share. It maintained its leadership in household insecticides.During the year under review, Godrej Agrovet Limited (GAVL) performed well with itstotal income increasing to Rs.43964 lac as compared to Rs. 37074 lac in the previousyear. GAVL has earned a Profit after Tax of Rs. 510 lac as against Rs. 262 lac in theprevious year. Pursuant to a scheme of amalgamation approved by the High Courts ofMumbai and Hyderabad, Godrej Plant Biotech Ltd., a subsidiary of GAVL, has beenamalgamated into GAVL with effect from January 1, 2002. The Board of GAVL declaredan interim dividend of 40% during the year as against 20% final dividend declared in theprevious year. Goldmohur Foods & Feeds Limited (GFFL), a 100% subsidiary of GAVL,recorded an increase in total income to Rs.32677 lac during the fifteen months periodended March 31, 2002 from Rs. 22202 lac in the year ended December 31, 2000. GFFL’sProfit After Tax increased substantially to Rs. 612 lac during this period from Rs.130 lacearned in the year ended December 31, 2000. The Board of GFFL declared an interimdividend of Rs. 12 per share on the Face Value of Rs.10/- per share.Godrej Properties & Investments Ltd. (GPIL) had a difficult year with its total incomedeclining to Rs.1525 lac as compared to Rs. 2601 lac achieved in the previous year.Profit after Tax declined to Rs. 408 lac from Rs.499 lac. GPIL has declared final dividendof 38.79% as against 46.55% declared in the previous year.Godrej International Limited has posted net profit of US$ 70331 as compared to US$341559 in the previous year. They have not declared any dividend for the year. GodrejGlobal Mid East FZE has posted a loss of AED 2580710 as against a profit of AED212962 in the previous year.Godrej Remote Services Limited (GRSL) formerly known as Godrej Oil Palm KonkanLimited commenced back office operations during the year under review. During thecurrent year the Company incurred loss of Rs. 181 lacs as against Rs. 36 lacs in theprevious year.RESEARCH AND DEVELOPMENTDuring the year under review, Research & Development efforts strengthened your Company’soperations. Your Company’s R & D efforts in Oils and Fats technology helped theChemicals business by contributing to the development of new products and reducingthe costs of manufacturing. The revenue expenditure during the year on Research andDevelopment was Rs.111 lac and the capital expenditure was nil, as against Rs.185 lacand Rs. 6 lac respectively in the previous year.FINANCIAL POSITIONThe financial position of your Company continues to be sound. The loan funds at theyear end stood at Rs.28507 lac as compared to Rs. 26248 lac as at the end of theprevious year, the increase mainly accounted by the borrowings assumed on the transferof the manufacturing business of Godrej Foods Limited. Good operating profits of theother businesses of your Company helped to maintain the debts at a reasonable level.Your Company has since been able to secure the top most rating of A1+ from ICRA forits Commercial Paper programme. The rating indicates that the prospect of timelyrepayment of debt/obligation is the best.INFORMATION SYSTEMSYour Company is one of the early adopters of ERP systems, having implemented MFG/PRO, an ERP package from QAD Inc., to integrate manufacturing, financial and distributionactivities at all the locations. Your Company has now embarked on an ambitious projectin managing Customer Relationship by leveraging the immense potential of the web. Thisinitiative would provide significant convenience to customers in the area of ‘OrderManagement’ by providing proactive information to them on dispatches, order details etc.Data warehousing systems are also being developed and customized to suit the fast-changing requirements of the business. Developed on Oracle Express suite of products,the system has been serving as a decision support platform for line managers based onhistorical sales, cost pattern and trend analysis.ENVIRONMENT AND SOCIAL CONCERNYour Company continues its efforts for the betterment of the environment.Your Company’s Vikhroli Factory received ISO 14001 certification. The Valia factory isgearing up for obtaining ISO 14001 Certification for Environment Management System.

Total Productivity Management (TPM) has been successfully implemented in the AlphaOlefin Sulphonate (AOS) plant and now has been horizontally deployed across the wholefactory. Several new initiatives for Energy Conservation have been launched. The PrimaryHealth Centre and drinking water supply to Kanerao village residents have benefited thelocal populace.EVAYour Company has adopted the Economic Value Added (EVA) framework to reinforce itscommitment to shareholder value creation and for measuring and rewarding performance.The training and communication plans have been implemented with the assistance ofStern Stewart & Company, a US management consulting firm. EVA implementation isexpected to complement your Company’s other initiatives like TQM and TPM and add toshareholder value.FIXED DEPOSITSYour Company has accepted Fixed Deposits from public during the year. Public depositsof an aggregate amount of Rs.1.29 lac which have matured, remained unpaid for overseven years from the date they became due, for want of requisite instructions from thedepositors concerned and have been transferred in March, 2002 to the Investor Education& Protection Fund established by the Government under Section 205C of the CompaniesAct, 1956.HUMAN RESOURCESIndustrial Relations continued to be cordial throughout the year at all locations. Significantmeasurable benefits accrued to your Company due to deployment of Total ProductiveMaintenance (TPM) at all manufacturing locations.Human Resource development continues to receive focused attention. Your Directorswish to place on record their appreciation of the contribution made by your Company’semployees at all levels during the year under review.DIRECTORSIn accordance with Article 127 of the Articles of Association of your Company Mr. J.N.Godrej and Mr. V.N. Gogate and Mr. V.M. Crishna retire by rotation and being eligibleoffer themselves for reappointment.Mr. K.N. Petigara and Mr. F.P. Sarkari have been appointed as Additional Directors witheffect from January 30, 2002. Mr. M.P. Pusalkar has been appointed as a Whole-timeDirector with effect from April 1, 2002 and designated as Executive Director & President(Foods Division). Mr. K.K. Dastur who ceased to be a Whole-time Director due to hissuperannuation from the services of Company on April 30, 2002, has been appointed asan Additional Director with effect from May 1, 2002. Since all of them have beenappointed as Additional Directors, they hold office upto the date of the forthcomingAnnual General Meeting in terms of Section 260 of the Companies Act, 1956. Noticesunder Section 257 of the Companies Act, 1956 have been received from a Membersignifying intention to propose their appointment as Directors in the forthcoming AnnualGeneral Meeting.AUDITORSYou are requested to appoint Auditors for the current year and fix their remuneration. Theretiring auditors, Kalyaniwalla & Mistry, Chartered Accountants, are eligible forreappointment.Pursuant to directions from the Department of Company Affairs, P.M. Nanabhoy & Co.,Cost Accountants, have been appointed as cost auditors for the year 2001-02. They arerequired to submit their report to the Central Government within 180 days from the endof the accounting year.AUDIT COMMITTEEThe Audit Committee, which was constituted pursuant to the provisions of Section292A of the Companies Act, 1956 and the listing agreement, has reviewed the Accountsfor the year ended March 31, 2002.DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to the provisions contained in Section 217(2AA) of the Companies Act, 1956,the Directors of your Company confirm:a. that in the preparation of the annual accounts, the applicable accounting standards

have been followed and no material departures have been made from the same;b. that they have selected such accounting policies and applied them consistently and

made judgements and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company at the end of the financialyear and of the profit or loss of the Company for that period;

c. that they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguardingthe 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.AUDITORS' CERTIFICATEThe Auditors have certified the Company’s compliance of the requirements of CorporateGovernance in terms of Clause 49 of the Listing Agreement and the same is annexed tothe Report on Corporate Governance.

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................23

ADDITIONAL INFORMATIONAnnexure A to this Report gives the information in respect of conservation of Energy,Technology absorption and Foreign Exchange earnings and outgo, required under Section217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particularsin the Report of the Board of Directors) Rules, 1988 and forms a part of the Directors’Report.Annexure B to this Report provides the particulars, required under Section 217(2A) ofthe Companies Act, 1956, read with the Companies (Disclosure of Particulars in theReport of the Board of Directors) Rules, 1988 and forms a part of the Directors’ Report.The notes to the Accounts referred to in the Auditors’ Report are self-explanatory andtherefore do not call for any further explanation.

ANNEXURE A FORMING PART OF THE DIRECTORS’ REPORT

INFORMATION PURSUANT TO SECTION 217(1)(e) OF THE COMPANIES ACT, 1956,READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARSIN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 INRESPECT OF CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

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

i) Installation of Energy Savers on the motors of chilling units andcompressors

ii) Heat recovery from the bleeding process in Fat Splitting Plant.Prototype tested and installed on one of 8 autoclaves.

iii) Use of Flux Maxguard for conserving municipal water by usingborewater for makeup in clean cooling towers.

iv) Use of Oleo Stearin Pitch as fuel in fuel mix in HP Boiler.v) Reconfiguration and upgradation of fractionation plants to reduce

operating costs.vi) Optimisation of splitting column process parameter.vii) Conversion of Batch Fractionation plant into continuous fractionation

plant for increasing capacity.viii) Energy audit by M/s. Saket Projects Ltd., Ahmedabad for exploring

further savings potential.ix) Electrical motor management to enhance motor efficiency.x) PLC based thermic fluid system for fractionation plant for better

efficiency.xi) Efficient utilisation of heat evaporation in fractionation column.xii) Trimming of pump impellers to reduce electrical energy.xiii) Use of static mixture in place of agitators in AOS plant.xiv) Upgradation of Sweet Water Evaporation plant resulting in conservation

of heat energy and efficient treatment and filtration.xv) Installation of CT Scanner in AOS Cooling Tower for reducing electrical

energyxvi) Use of high pressure Natural Gas in mobile cogeneration unit to

reduce electrical energy of compressor.(B) Proposed energy conservation measures

i) Heat recovery from the Discharge cycle of the Autoclave in Fat SplittingPlant.

ii) Horizontal deployment of heat recovery from the bleeding process onthe remaining 7 autoclaves.

iii) Study of condensate recovery through consultant,M/s. Forbes Marshall.

iv) Use of natural gas for Thermic Fluid Heaters and Hot water generatorsin the Distillation Plants.

v) Reduction of self consumption of steam in Co-Generation Plant.vi) Horizontal deployment of Flux Maxguard units to all other Heat

exchangers of remaining cooling towers.vii) Installation of back pressure steam turbine to generate surplus powerviii) Installation of Vapour absorption chilling plant in place of conventional

Freon refrigeration system.ix) Installation of thermic fluid heater for preheating of feed stock in

Alcohol Synthesis plant.x) Installation of new designed pumps in utility and Alcohol Synthesis

Plant.xi) Installation of VFD (Variable Frequency Drive) in HP Boilersxii) Installation of waste heat recovery system in AOS Plant.xiii) Use of High Pressure Natural gas for fuel in Alcohol Synthesis Plant

reformer to save compressor electrical energy.xiv) Installation of CT Scanner in utility cooling tower to save electrical

energy.xv) Installation of Furnace Oil based generating set.

II. Impact of measures on reduction of energy consumption and consequent impactonthe cost of production of goods:-Saving in energy costs during the period under consideration.

III. The details of energy consumption are given below. These details cover theoperations of your Company’s factories at Vikhroli, Valia, Wadala, Mandideep, andMysore.

ACKNOWLEDGEMENTYour Directors thank the Union Government, the Government of Maharashtra, MadhyaPradesh, Karnataka, Gujarat as also all the Government agencies, banks, financial institutions,shareholders, customers, employees, fixed deposit holders vendors and other relatedorganizations, who, through their continued support and co-operation, have helped aspartners, in your Company’s progress.

For and on behalf of the Board of DirectorsA.B. Godrej

Mumbai, August 14, 2002 Chairman

a) Power and Fuel consumptionThis Year Previous Year

Electricityi) Purchased

Units (kWh in lac) 149.20 247.20Total Amount (Rs. in lac) 774.60 1150.70Rate per Unit (Rs.) 5.19 4.66

ii) Own generated through D.G. SetsUnits (kWh in lac) 12.60 8.80KWH per litre of N. Gas 0.51KWH/NG 2.49Cost 8.62Rate per unit (Rs.) 6.82kWh per litre of Diesel – 2.70Rate per Unit (Rs.) – 5.50

iii) Own generated through SteamTurbine Generator -Co-generationUnits (KWh in lac) 167.80 260.40KWH per litre of N. Gas 8.36 –KWH/NG 2.01 –Cost 62.38 –Rate per Unit (Rs.) 3.72 –kWh per litre of Diesel 4.02Rate per Unit (Rs.) 2.86

Fuel Oil (LSHS, FO, SKO and LDO)Total Quantity (KL) 8907.52 14,910.26Total Amount (Rs. in lac) 901.10 1295.60Rate per unit (Rs. per litre) 10.12 8.69

Natural GasTotal Quantity (NM3 lac) 89.40 28.50Total Amount (Rs. in lac) 673.60 202.30Rate per unit (Rs. per NM3) 7.53 7.11

PitchesTotal Quantity (KL) 1322.00 1,202.83Total Cost (Rs. in lac) 60.9 30.3Rate per unit (Rs. per litre) 4.61 2.52

b) Consumption per unit of productionNatual Gas Electricity Furnace Oil(NM3/MT) (kWh/MT) (Litre/MT)

2001-02 2000-01 2001-02 2000-01 2001-02 2000-01

Fatty Acid 22.41 27.94 100.86 107.33 50.05 81.85Fatty Alcohol 54.66 73.72 435.34 449.59 4.03 2.08Alpha OlefinSulphonate 71.13 60.57 144.63 160.36 5.86 12.90Fruit Juice/Pulp – – 513.95 – – –Oils/Vanaspati – – 186.96 – 73.54 –Glycerin 479.67 337.39 595.06 530.07 89.58 228.54B. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

I. Specific areas in which R&D was carried out by the Company - During theyear under review, Research & Development efforts in the following are asstrengthened the Company’s operations through technology absorption,adaptation and innovation:i Oils, Fats, Fatty Acids & Fatty Alcoholsii. Glycerin and Surfactantsiii. Packaging

2. Benefits derived as a result of the above R&D -i. Launch of 2 new fatty acids of international standardsii. Development of modified process for manufacture of medium chain

fatty acids.iii. Development of process for making fatty acids/fatty alcohols of global

standards with cheaper raw materials.iv. Development of analytical methods to detect impurities in our products.


....................................................................................................................................................................................24

ANNEXURE "B" FORMING PART OF DIRECTORS' REPORTSTATEMENT UNDER SECTION 217(2A) READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975 AND FORMING PART OF THE DIRECTORS’ REPORT FORTHE YEAR ENDED MARCH 31, 2002.A- Persons employed throughout the financial year under review and each of whom was in receipt of remuneration for the financial year which, in the aggregate, was

not less than Rs. 24,00,000 per annum.B - Persons employed for a part of the financial year under review and each of whom was in receipt of remuneration for that part which, in the aggregare, was not less

than Rs. 2,00,000 per month

Sr Name Designation Gross Qualifications Age Particulars Of PreviousNo. Remuneration (Years) Employment

(Rs.)

A. Persons employed throughout the Financial Year.1 C K Vaidya Executive Director(Corp. Personnel) 2738213 B. Tech (Mech.), IIT Mumbai, 52 Godrej Agrovet Ltd.,

P.G.D.M., IIM Calcutta Mumbai5 Years

2 K K Dastur Executive Director (Finance) 2800637 B.Com. A.C.A. 61 First Job3 Mathew Eipe Executive Director& 3296340 B.Tech. (Chemis.), IIT Mumbai 50 First Job

President (Chemicals) P.G.D.M., IIM Calcutta.4 N B Godrej Managing Director 4461442 B.S., Chem.Engg. 50 First Job

(M.I.T., U.S.A.)M.S Chem Engg.(Stanford U.S.A.)

B. Persons employed for part of the Financial Year.1 Baban M Dudhal Worker 704008 S.S.C. 49 First Job2 Gajanan R Hande Worker 697550 S.S.C. 49 First Job3 H A Hande Executive (Administration) 588180 B.A., L.L.B. 61 Hind Razor & Blade Co., For 6 Years.4 Hanumant T Patil Worker 662343 S.S.C. 47 First Job5 Ishwara N Patil Worker 646821 S.S.C. 51 First Job6 M V Monterio Junior Officer 364991 IX Standard 62 Burmach Steel Co.Ltd.7 (Late) Mrs E Christian Secretary To N B Godrej 864984 B.A. 56 Bharat Insulation Co., For 4 Months8 Nandkumar R Desai Worker 736092 IX Standard 52 First Job9 Ravindra B Dalvi Worker 440243 S.S.C. 59 First Job10 S.Ganapathy Export Manager (Chemical) 562249 B.A. 62 First Job11 Shivaji V Waidande Worker 650581 S.S.C. 50 First Job12 Surendra R Jadhav Worker 716309 S.S.C. 50 Fisrst Job13 Suresh R Yadav Worker 629393 S.S.C. 43 First Job14 Tukaram S Bhandare Worker 705293 S.S.C. 51 First Job15 Uttam A Salunkhe Worker 675925 S.S.C. 48 First Job

NOTES :1. Nature of Employment Contractual or otherwise :

i) The appointments of Managing Director and Executive Directors are contractual and terminable by three month’s notice on either side.ii) The appointments of the remaining employees are non-contractual and are terminable by three months'/one months' notice on either side.

2. Other terms and conditions :(a) In case of Managing Director and Executive Directors, gross remuneration as shown above, includes salary, performance bonus pertaining to FY 00-01 received by them

in the current financial year (wherever applicable), house rent allowances wherever applicable, Company’s contribution to Provident Fund and monetary value ofperquisites which are given in terms of the agreement entered into with them.

(b) In case of all other employees, gross remuneration shown above, includes salary, performance bonus (wherever applicable), reimbursement of medical expenses, gratuity,compensation on voluntary retirement (wherever applicable), Performance Bonus (wherever applicable), house rent allowance(wherever applicable) other allowances,monetary value of perquisites (wherever applicable) as per Income Tax Rules, leave travel assistance, Company’s contribution to Provident Fund and other funds. All thisas per Company’s Rules and Regulations in force.

(c) The designations represent the nature of duties performed by the employees.(d) In the case of all the employees, the ages shown are as of last birth date and the particulars of previous employment pertain to the immediate past employment.

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

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

3. Future Plan of Action -i. Development of new processesii. Development of new productsiii. Development of fatty amines and derivativesiv. Development of processes for use of our by products like high

hydrocarbon alcohols and odour cuts.No technology has been imported during the year.4. Expenditure on R & D

This Year Previous YearRs. Lac Rs. lac

(a) Capital Nil 6(b) Recurring 111 185(c) Total 111 191(d) Total R & D expenditure

as a percentage of totalsales turnover 0.36% 0.22%

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:The Chemicals Division’s exports improved from Rs.9777 lac in the previous year(including deemed exports Rs. 247 lac) to Rs.10901 lac in the current year(including deemed exports of Rs. 473 lac). Exports of Consumer Products wereRs. 948 lac in the previous year. The Company continues to export refinedglycerin, fatty alcohol and other chemicals to developed as well as developingcountries all over the world mainly U.S.A., U.A.E., Japan, South Africa, Germany,U.K., France, Malaysia, Singapore and Sri lanka.

Rs. Lac Rs. lacForeign exchange used 14867 15238Foreign exchange earned 10492 11082

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................25

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 Industries Limited, as at March31, 2002 and also the Profit and Loss Account of the Company for the year ended onthat date annexed thereto. These financial statements are the responsibility of theCompany's management. Our responsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally acceptedin India. Those Standards require that we plan and perform the audit to obtian reasonableassurance about whether the financial staements are free of material mis-statement. AnAudit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well evaluating tooverall financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.

3. As required by the Manufacturing and Other Companies (Auditor's Report) Order, 1988,issued by the Company Law Board in terms of Section 227 (4A) of the Companies Act,1956, we annex hereto a statement on the matters speicified in paragraphs 4 and 5 ofthe 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 Profit and Loss Account dealt with by this report are in

agreement with the books of account.d) In our opinion, the Balance Sheet and the Profit and Loss Account 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) As stated in notes 12(d) and 17 of Schedule 22 : Notes to Accounts the

remuneration paid/payable to a relative of a Director in excess of the limitsprescribed under Section 314 of the Companies Act, 1956 amounting to Rs.0.68 lac and paid or payable to the Managing Director, Whole-time Director andthe three Executive Directors, in excess of the limits prescribed under ScheduleXIII to the Companies Act, 1956 amounting to Rs. 95.36 lac respectively and issubject to the approval of the Central Government.

f) In our opinion and to the best of our information and according to theexplanations given to us, the said accounts subject to para (e) above, and readwith 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 withthe 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, 2002; andii) in the case of the Profit and Loss Account, of the profit of the Company

for the year ended on that date.5. On the basis of confirmations received from the companies in which the Directors are

Directors or in their absence the written representations received from the Directors ason March 31, 2002 and taken on record by the Board of Directors, we report that noneof the Directors is disqualified as on March 31, 2002 from being appointed as a Directorin terms of clause (g) of sub-section (1) of Sectiion 274 of the Companies Act, 1956.


Chartered AccountantsV. R. Mehta

PartnerMumbai, August 14, 2002

REPORT OF THE AUDITORS TO THE MEMEBRS OF GODREJ INDUSTRIES LIMITED

1. The Company has maintained adequate records showing particulars including quantitativedetails and situation of fixed assets. Some fixed assets have been verified by themanagement during the year in accordance with a phased programme of verificationadopted by the Company. In our opionion, the frequency of verification is reasonablehaving regard to the size of the Company and nature of its assets. No materialdiscrepancies between the book records and the physical inventory were noticed inrespect of the assets physically verified during the year.

2. The fixed assets have not been revalued during the year.3. The stocks of finished goods, stores, spare parts and raw materials have been physically

verified by the management during the year. In our opinion, the frequency of suchverification is reasonable.

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

5. The discrepancies noticed on verification between the physical stocks and the bookrecords were not material in relation to the operations of the Company and the samehave been properly dealt with in the books of account.

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

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

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

9. The parties to whom loans and advances in the nature of loans have been given arerepaying the principal amounts as stipulated and are also generally regular in paymentof interest, wherever applicable.

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

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

12. As explained to us, the Company has a regular procedure for the determination ofunserviceable or damaged stores, raw materials and finished goods. Adequate provision

has been made in the accounts for the loss arising on the items so determined.13. In our opinion and according to the information and explanations given to us, the

Company has complied with the provisions of Section 58A of the Companies Act,1956, and the Companies (Acceptance of Deposits) Rules, 1975 with regard to depositsaccepted from the public.

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

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

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

17. According to the records of the Company, the Provident Fund and Employees' StateInsurance dues have been regularly deposited during the year with the appropriateauthorities.

18. According to the information and explanations given to us, there were no undisputedamounts payable in respect of income-tax, wealth tax, sales tax, customs duty andexcise duty which have remained outstanding as at March 31, 2002 for a period ofmore than six months from the date they became payable.

19. In our opinion and according to the information and explanations given to us, nopersonal expenses have been charged to revenue accounts other than those payableunder contractual obligations or in accordance with the generally accepted businesspractice.

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

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

22. In respect of the investment activities, the Company has maintained proper records andregisters of transactions and contracts in respect of the investments purchased andsold during the year and timely entries have been made therein. The investments madeby the Company are held in its own name except for the shares of Gharda ChemicalsLtd.


Chartered Accountants

V. R. MehtaPartner

Mumbai, August 14, 2002


....................................................................................................................................................................................26

BALANCE SHEET AS AT MARCH 31, 2002This Year Previous Year

Schedule Rs. lac Rs. lac Rs. lac

SOURCES OF FUNDS

1. Shareholders’ Funds

(a) Share capital 1 3698.30 5978.57

(b) Reserves & surplus 2 21029.98 27559.31

24728.28 33537.88

2. Loan Funds

(a) Secured loans 3 15051.15 16700.94

(b) Unsecured loans 4 13456.31 9547.43

28507.46 26248.37

3. Deferred Tax Liability 1347.00 –

TOTAL 54582.74 59786.25

APPLICATION OF FUNDS

4. Fixed Assets 5

(a) Gross block 48611.88 53211.75

(b) Less: Depreciation 19770.26 19879.83

(c) Net block 28841.62 33331.92

(d) Capital work-in-progress 257.73 467.30

29099.35 33799.22

5. Investments 6 14618.46 17074.98

6. Current Assets, Loans and Advances

(a) Inventories 7 8064.03 11498.00

(b) Sundry debtors 8 7474.26 8398.16

(c) Cash and bank balances 9 1543.32 2266.91

(d) Accrued intreest 52.55 2.91

(e) Loans and advances 10 5178.77 6365.41

22312.93 28531.39

Less : Current Liabilities and Provisions

(a) Liabilities 11 10114.55 16983.31

(b) Provisions 12 2211.29 3471.97

12325.84 20455.28

Net Current Assets 9987.09 8076.11

7. Miscellaneous Expenditure 13 877.84 835.94

(To the extent not written off or adjusted)

TOTAL 54582.74 59786.25

Notes to Accounts 22

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

As per our Report attached Signatures to Balance Sheet and Schedules 1 to 13 and 22

For and on behalf ofKalyaniwalla & MistryChartered Accountants A.B. Godrej Chairman


V. R. Mehta S. K. BhattPartner Company Secretary

Mumbai, 14th August, 2002

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................27

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 0N MARCH 31, 2002

The Schedules referred to above form an integral part of the Profit and Loss Account

As per our Report attached Signatures to Profit & Loss Account and Schedules 14 to 22

This Year Previous YearSchedule Rs. lac Rs. lac

INCOME

Sale of Products & Services 14 51194.66 78171.88

Other Income 15 2270.55 1614.48

53465.21 79786.36

EXPENDITURE

Materials consumed and purchase of goods 16 29218.49 38061.04

Expenses 17 13587.68 26420.30

Inventory change 18 602.10 1453.27

Interest and financial charges (net) 19 3217.50 3711.23

Depreciation 2154.04 2531.39

(Net of transfer from Revaluation Reserve

Rs. 237.33 lac, Previous year Rs. 239.21 lac) 48779.81 72177.23

Profit Before Tax & Exceptional items 4685.40 7609.13

Exceptional items 20 (624.47) (3193.73)

Profit Before Tax 4060.93 4415.40

Provision for taxation

— Current Tax 150.00 350.00

— Deferred Tax 923.00 –

Profit for the year after taxation 2987.93 4065.40

Prior Period adjustments (net) 21 121.65 24.74

3109.58 4090.14

Surplus brought forward 6744.88 5863.81

Profit After Tax Available For Appropriation 9854.46 9953.95

APPROPRIATIONS

Proposed Dividend

— Interim 370.26 –

— Final – 1793.57

Tax on distributed profits – 182.94

Transfer to Debenture Redemption Reserve – 782.56

Transfer to General Reserve 250.00 450.00

Surplus carried forward 9234.20 6744.88

TOTAL 9854.46 9953.95

NOTES TO ACCOUNTS 22






....................................................................................................................................................................................28

SCHEDULES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2002

This Year Previous YearRs. lac Rs. lac

SCHEDULE 1 : SHARE CAPITAL

AUTHORISED :

13,33,33,333 Equity Shares of Rs. 6 each 8000.00 8000.00(Previous year 8,00,00,000 Equity Shares of Rs.10 each)

10,00,00,000 Unclassified Shares of Rs.10 each 10000.00 10000.00

18000.00 18000.00ISSUED, SUBSCRIBED AND PAID-UP :

6,17,10,218 Equity Shares of Rs. 6 each fully paid 3702.61 5982.88(Previous year 5,98,28,780 Equity Shares of Rs.10 each)Less : Calls in Arrears 4.31 4.31

3698.30 5978.57Of the above :

(i) 4,10,59,727 (Previous year 4,01,16,502) shares are held by Godrej & Boyce Mfg. Co. Limited, the holding Company

(ii) 3,50,00,938 (Previous year 3,31,19,500) shares are allotted for consideration other than cash pursuant to schemes of amalgamation/arrangement. These include 18,81,438 shares issued during the year pursuant to the scheme of arrangement with Godrej Foods Limited.

(iii) 1,99,42,927 Shares are allotted as fully paid bonus shares by way of capitalisation of Securities premium account.

This Year Previous YearRs. lac Rs. lac Rs. lac

SCHEDULE 2 : RESERVES AND SURPLUS

Securities Premium AccountAs per last balance sheet 6903.67 6903.67Less : Reduction consequent to scheme of

arrangement with GFL 6433.77 —

469.90 6903.67Capital Investment Subsidy ReserveAs per last balance sheet 40.00 27.75Add : Subsidy received during the year — 12.25Less : Transferred to GCPL consequent to scheme of arrangement 15.00 —

25.00 40.00

Revaluation ReserveAs per last balance sheet 4012.50 4258.20Less : Depreciation on revalutation component

transferred to Profit and Loss account 237.33 245.70

3775.17 4012.50Debenture Redemption ReserveAs per last balance sheet 782.56 —Add : Transferred from Profit & Loss Account — 782.56Less : Transferred to GCPL consequent to scheme of arrangement 782.56 —

— 782.56

Capital Redemption ReserveAs per last balance sheet 3125.00 3125.00General ReserveAs per last balance sheet 5950.70 — 5500.70Add : Transferred from Profit & Loss Account 250.00 — 450.00Less : Deferred tax liability as on April 1, 2001 424.00 —Less : Reduction consequent to scheme of arrangement 1375.99 —

4400.71 5950.70

Profit & Loss Account 9234.20 6744.88

21029.98 27559.31

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................29


SCHEDULE 3 : SECURED LOANS

Debentures :

– 14% Secured redeemable non-convertible Debentures of Rs.100 each (Class C) — 500.00– 14.25% Secured redeemable non-convertible Debentures of Rs.100 each (Class D) — 500.00

Term loans from Financial Institutions 682.80 910.20

Term loans from Banks 10151.40 8552.86

Bank overdrafts 4216.95 4605.17

Sales tax deferment loan from MPSIDC — 1632.71

15051.15 16700.94

Particulars of securities (refer note 6)

SCHEDULE 4 : UNSECURED LOANS

Fixed deposits 7056.65 5860.82

Intercorporate deposits 2240.00 250.00

Short term loans from banks 4159.66 3436.61

13456.31 9547.43

Amount repayable within one year 8868.41 6934.89

SCHEDULE 5 : FIXED ASSETS

(Rs. lac)

ASSETS GROSS BLOCK DEPRECIATION NET BLOCK

Assets Assets Depreciation Depreciationtransferred taken over upto 1-4-2001 upto 30-6-2001

consequent to consequent to transferred taken overscheme of scheme of consequent to consequent to

As at arrangement on arrangement on Deductions/ As on Upto scheme of scheme of Deductions/ For the Upto As on As on01.04.2001 1-4-2001 30-6-2001 Additions Adjustments 31-03-2002 31-03-2001 arrangement arrangement Adjustments Year 31-3-2002 31-3-2002 31-3-2001

LAND 681.52 443.73 33.37 0.18 –– 271.34 20.53 6.99 1.41 — 1.61 16.56 254.78 660.99

BUILDINGS 8237.84 2859.80 832.47 2547.33 17.17 8740.67 1713.36 388.18 197.42 — 156.10 1678.70 7061.97 6524.48

PLANT & MACHINERY 37597.61 7331.17 5001.13 866.64 48.25 36085.96 16580.63 3345.90 1604.70 18.34 1989.02 16810.11 19275.85 21016.98

RESEARCH CENTRE 418.24 298.20 — — — 120.04 198.68 163.62 — — 3.66 38.72 81.32 219.56

FURNITURE & FIXTURES 1088.74 184.22 77.97 87.24 22.47 1047.26 478.74 56.82 44.44 3.15 48.14 511.35 535.91 610.00

OFFICE & OTHEREQUIPMENTS 676.02 113.90 225.19 48.66 25.97 810.00 227.62 45.08 149.88 10.14 44.94 367.22 442.78 448.40

VEHICLES 827.42 185.94 93.17 150.89 102.93 782.61 258.86 49.84 23.33 45.22 72.50 259.63 522.98 568.56

TRADEMARKS 3684.36 2930.36 — — — 754.00 401.41 388.84 — — 75.40 87.97 666.03 3282.95

TOTAL – This Year 53211.75 14347.32 6263.30 3700.94 216.79 48611.88 19879.83 4445.27 2021.18 76.85 2391.37 19770.26 28841.62 33331.92

– Previous Year 49876.40 — — 3697.09 361.74 53211.75 17306.60 197.37 2770.60 19879.83

CAPITAL WORK-IN-PROGRESS 257.73 467.30

TOTAL 29099.35 33799.22

NOTES :

1. Land includes leasehold land of Rs. 141.10 lac (Previous Year Rs. 185.66 lac) which is being amortised over the period of lease.

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

3. Depreciation for the year includes Rs. 237.33 lac (Previous Year Rs. 239.21 lac) being depreciation on revalued component of the fixed assets.

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

5. Buildings include Rs. 2484.32 lac ( previous year Rs. NIL) being the value of investment in Preference shares - class B in Tahir Properties Ltd., representing the right of the Company to five flats in the property.


....................................................................................................................................................................................30

LONG TERM INVESTMENTS

A. TRADE INVESTMENTSEquity Shares : Fully PaidQuoted :Godrej Foods Ltd. 10 2128831 – 2128831 – – 472.20

Unquoted :Gharda Chemicals Ltd. 100 114 – — 114 (a) 11.57 11.57Godrej Sara Lee Ltd 4 6501750 – — 6501750 5479.63 5479.63Godrej Photo-Me Ltd. 10 971100 – — 971100 97.11 97.11General Mills Pvt. Ltd.(formerly Godrej Pillsbury Ltd) 10 11566800 – 11566800 – – 1156.68Swadeshi Detergents Ltd 10 209370 – – 209370 191.33 191.33Godrej Capital Ltd. 10 1456250 1456250 – – 1264.97Compass Connections Ltd. £0.25 – 10029 – 10029 97.01 –

B. INVESTMENT IN SUBSIDIARY COMPANIES :Equity Shares: Fully PaidUnquoted:Ensemble Holdings & Finance Ltd. 10 3104104 666056 – 3770160 1318.12 627.13Godrej Agrovet Ltd. 10 3985004 121952 – 4106956 (b) 3367.11 3267.11Godrej International Ltd. £1 625000 695000 – 1320000 817.91 349.36Godrej Remote Services Ltd. 10 663390 2116172 – 2779562 277.95 66.33(formerly Godrej Oil Palm Konkan Ltd.)Godrej Properties & Investments Ltd. 10 5073965 – – 5073965 3836.46 3836.46Puran Plastics & Chemicals Ltd. 10 12742 – 12742 – - 34.99(voluntarily liquidated)Sahyadri Aerosols Ltd. 100 3202 – – 3202 (c) 2.17 11.67(under voluntary liquidation)Tahir Properties Ltd. (Partly Paid) 100 25 – – 25 (d) 0.01 0.01

Preference Shares (Partly paid)Tahir Properties Ltd (Class-A) 100 25 – – 25 (e) 0.02 0.02Tahir Properties Ltd (Class-B) 100 128376 – 128376 – (f) – 1735.60

C. OTHER INVESTMENTS :Equity Shares: Fully PaidQuotedTata Engineering & Locomotive Co. Ltd. 10 – 9376 9376 (g) 30.00 –The Great Eastern Shipping Co. Ltd. 10 – 86 86 (g) 0.01 –

UnquotedBharuch Eco-Aqua Infrastructure Ltd. 10 – 440000 – 440000 17.60 –- partly paidGovernment SecuritiesUnquoted :National Plan Certificate 4000 – – – (g) 0.04 0.02Kisan Vikas Patra (g) 0.30 –11.99% Govt. Stock 2009 5000000 – – – – 51.78 51.7814% Govt. Stock 2005 450000 – – – – 5.22 5.2210.25% Govt Stock 2012 7120000 – – – – 71.09 –

Units of Mutual FundsUnquotedUnit Trust Of India - Unit Scheme 1964 10 2520939 45764 - 2566703 (g) 383.00 376.93

Shares in Co-operative Societies - Fully PaidUnquoted :Eden Woods Linden House Co-op Hsg Soc Ltd 50 25 - 25 - - 0.01The Super Bazar Co-op.Store Ltd. 10 500 - 500 - (h) - 0.05

Investee Company / Institutions Face Number Amount (Rs.)Value Qty. Acquired Sold Qty. As on As on

as on during during as on Notes 31.03.02 31.03.01(Rs.) 01.04.01 the Year the Year 31.03.02 Rs. lac Rs. lac

SCHEDULE 6 : INVESTMENTS

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................31

The Saraswat Co-op Bank Ltd 10 1000 - - 1000 0.10 0.1016055.54 19036.28

Less: Provision for diminution in value of Investments (1437.08) (1961.30)14618.46 17074.98

AGGREGATE BOOK VALUE OF INVESTMENTSQuoted 30.01 113.89Unquoted 14588.45 16961.10

14618.46 17074.99

Market Value of Quoted Investments 14.55 113.89

NOTES :

(a) The said shares are under the process of registration.(b) Right shares subscribed during the year(c) Sahyadri Aerosols Ltd. is under liquidation (Rs.7000/- per share is still payable on 990 shares).(d) Rs.80/- per share is payable in one or more calls on these shares.(e) Rs.30/- per share is payable in one or more calls on these shares.(f) These investments have been transferred to Fixed Assets in view of the company’s entitlement to five residential flats in the property.(g) Assets acquired on merger of Foods Division.(h) Under the scheme of arrangement investment in The Super Bazar Co-op. Store Ltd. was allocated to Godrej Consumer Products Ltd.(i) The Company’s wholly owned subsidiary Puran Plastics & Chemicals Ltd has been wound up on January 14, 2002 & Sahyadri Aerosols Ltd. is in the process of member’s

voluntary winding-up. The assets received by the Company on distribution have been recorded at the value attributable to such assets and the value of the Company’s investmentin the shares of the said subsidiary stands reduced by the amount received on distribution.


SCHEDULE 7 : INVENTORIES(at lower of cost and net realisable value)Stores and spares 399.13 432.35Raw materials 4656.23 5490.63Work-in-progress 1094.43 1683.87Finished goods 1914.24 3891.15

8064.03 11498.00

SCHEDULE 8 : SUNDRY DEBTORS (UNSECURED)Debts outstanding over six monthsConsidered good 1.63 48.41Considered doubtful 217.49 434.62

219.12 483.03Other debts (considered good) 7472.63 8349.75

7691.75 8832.78Less : Provision for doubtful debts 217.49 434.62

7474.26 8398.16

SCHEDULE 9 : CASH AND BANK BALANCESCash and cheques on hand 16.13 64.81Balances with scheduled banks :– on current accounts 817.28 2114.11– on deposit accounts (refer note 8) 709.91 87.99

1543.32 2266.91

SCHEDULE 10 : LOANS AND ADVANCES(Unsecured and considered good unless otherwise stated)Loans (refer note 9) 1762.36 1786.30Advances recoverable in cash or in kind or forvalue to be received (net of provision for doubtful advancesRs. 770.87 lac, Previous year Rs. 156.78 lac) 549.87 2521.60Inter-corporate deposits– Subsidiary companies 546.40 324.00– Others 277.38 305.50Deposits and balances with– Customs & excise authorities 800.94 620.33– Others 669.65 642.80Advance payment of taxes 572.17 164.88(Net of provision for tax Rs. 1301 lac Previous year Rs.1039 lac)

5178.77 6365.41

Investee Company / Institutions Face Number Amount (Rs.)Value Qty. Acquired Sold Qty. As on As on

as on during during as on Notes 31.03.02 31.03.01(Rs.) 01.04.01 the Year the Year 31.03.02 Rs. lac Rs. lac


....................................................................................................................................................................................32

This Year Previous YearSCHEDULE 11 : CURRENT LIABILITIES Rs. lac Rs. lac Rs. lacSundry creditors 7033.80 13967.77Other liabilities 1433.13 966.60Advances from customers 158.30 277.44Sundry deposits 1061.74 1244.97Interest accrued but not due 349.16 477.09Unclaimed dividend 78.42 49.44

10114.55 16983.31SCHEDULE 12 : PROVISIONS

Proposed dividend– Interim 370.26 —– Final — 1793.57Provision for tax on distributed profits — 182.94Provision for retirement benefits 1841.03 1495.46

2211.29 3471.97SCHEDULE 13 : MISCELLANEOUS EXPENDITURE(To the extent not written off or adjusted)Deferred revenue expenditure– Gratuity

Balance at the beginning of the year 91.00 131.00Less : Amortised during the year 40.00 40.00Balance at the end of the year 51.00 91.00

– Voluntary retirement compensationBalance at the beginning of the year 744.94 892.48Add : Deferred during the year 67.18 41.35Less : Amortised during the year 212.36 188.89Balance at the end of the year 599.76 744.94

– Deferred revenue expenditureBalance at the beginning of the year — 365.94Add : Deferred during the year 227.08 —Less : Amortised during the year — 365.94Balance at the end of the year 227.08 —

877.84 835.94SCHEDULE 14 : SALE OF PRODUCTS AND SERVICESSales (gross) 49825.63 84424.85Less : Excise duty 3934.44 9352.05Sales (net) 45891.19 75072.80Processing charges 2736.82 595.82Storage charges 83.53 127.88Export incentives 304.70 530.27Licence fees and service charges 2178.42 1845.11

51194.66 78171.88SCHEDULE 15 : OTHER INCOMEInterest :– Government Securities 13.65 6.66– Income tax refund 4.80 —Dividend– from subsidiary companies 538.86 155.88– from long term trade investments 1526.61 382.82– from other investments 25.50 46.24Lease rentals and lease management fees 8.30 —Non-compete fees - extraordinary income — 699.23Miscellaneous income 152.83 323.65

2270.55 1614.48SCHEDULE 16 : MATERIALS CONSUMED AND PURCHASE OF GOODS

Raw Materials Consumed :

Stocks at the commencement of the year 5995.95 2914.91Less : Stocks transferred to GCPL consequent to the scheme of arrangement 1689.62 —

4306.33 2914.91

Add : Purchases (Net) 28730.99 33450.51

33037.32 36365.42Less : Stocks as at the close of the year 4656.23 5490.63Raw Materials consumed during the year 28381.09 30874.79Purchase of goods for resale 837.40 7186.25

29218.49 38061.04

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................33

This Year Previous YearRs. lac Rs. lac Rs. lac

SCHEDULE 17 : EXPENSES

Salaries wages and allowances 4943.85 5345.66Contribution to provident fund and other funds 306.64 315.34Employee welfare expenses 376.61 359.06Stores and spares consumed 767.27 488.15Power and fuel 3124.87 3720.95Processing charges 31.78 107.72Rent 107.47 93.01Rates and taxes 420.39 309.82Repairs and maintenance :

– Machinery 582.17 297.54– Buildings 198.18 434.26– Other Assets 26.00 74.02

Insurance 133.76 129.57Freight 1118.24 1887.67Commission 317.21 291.81Discount 80.11 102.26Advertisement and publicity 48.96 7753.70Sales promotion 264.98 809.56Selling and distribution expenses 445.71 1442.85Bad debts written off 321.38 24.27Provision / (write back of provision) for doubtful debts and advances (1110.54) 51.47Loss on sale of fixed assets 34.12 27.54Miscellaneous expenses 1048.52 2354.07

13587.68 26420.30

SCHEDULE 18 : INVENTORY CHANGEStocks at the commencement of the year :

Finished goods 4592.08 4273.83Work-in-progress 1744.35 2748.76Shares, securities, etc. — 5.70

6336.43 7028.29Less : Stocks transferred to GCPL

consequent to scheme of arrangementFinished goods 2451.58 —Work-in-progress 274.08 —

2725.66 —

Less : Stocks at the close of the year :Finished goods 1914.24 3891.15Work-in-progress 1094.43 1683.87Shares, securities, etc. — —

3008.67 5575.02Decrease in Inventory 602.10 1453.27SCHEDULE 19 : INTEREST AND FINANCIAL CHARGES (NET)Interest Paid– On debentures and fixed loans 1110.74 2716.69– On bank overdrafts 268.14 307.83– Other interest 1468.12 358.05

2847.00 3382.57Less : Interest Received– on loans and deposits 121.89 116.02– on Customer balances etc. 54.52 83.20

176.41 199.22Net Interest 2670.59 3183.35Brokerage and other financial charges 546.91 527.88

3217.50 3711.23

SCHEDULE 20 : EXCEPTIONAL ITEMSLoans/deposits written off — 1430.25(net of provisions written back Rs. Nil previous year Rs. 919.37 lac)Loss on sale of long term investments 1174.31 369.49Provision / (write back of provision) for depletion in value of long term investments (549.84) 1393.99

624.47 3193.73

SCHEDULE 21 : PRIOR PERIOD ADJUSTMENTSIncome-tax 31.50 (18.65)Depreciation 7.03 17.55Excess provision for expenses (net) 83.12 25.84

121.65 24.74


....................................................................................................................................................................................34

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 businessand undertaking of the erstwhile Godrej Soaps Limited was transferred to theCompany under a scheme of amalgamation with effect from April 1, 1994 and theCompany’s name was changed to Godrej Soaps Ltd. on January 6, 1995.Subsequently, under a scheme of arrangement the Consumer Products division ofthe Company was demerged with effect from April 1, 2001 into a separatecompany Godrej Consumer Products Limited (GCPL). The Company’s name wasthereafter changed to Godrej Industries Limited on April 2, 2001.

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

2. Significant Accounting Policies

a) Accounting Convention

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

b) Fixed Assets

Fixed Assets are stated at cost or as revalued as the case may be, lessaccumulated depreciation. Cost includes all expenses related to acquisitionand installation of the concerned assets. Exchange differences arising onaccount of repayment and year end translation of foreign currency liabilitiesrelating to acquisition of fixed assets is adjusted to the carrying cost of therespective assets.

c) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition / constructionof the underlying fixed assets are capitalised as a part of the respectiveasset.

d) 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 investmentis ascertained with reference to its market value, the investee’s assets andresults and the expected cash flows from the investment.

Current investments are stated at lower of cost and net realisable value.

e) Inventories

Inventories are valued at lower of cost and net realisable value. Cost iscomputed on weighted average basis and is net of modvat. Finished goodsand work in progress include cost of conversion and other costs incurred inbringing the inventories to their present location and condition.

f) Foreign Exchange Transactions

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

g) Revenue Recognition

Sales are recognised where goods are supplied and are recorded net ofreturns, 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 are accounted on accrual basis and include the estimatedvalue of duty free import entitlement under the Advance Licence BenefitScheme and export incentives receivable under the Duty Entitlement PassBook Scheme and the Duty Drawback Scheme.

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

Interest income is recognised on a time proportion basis.

h) Research and Development Expenditure

Revenue expenditure on Research & Development is charged to the Profitand Loss Account of the year in which it is incurred. Capital expenditureincurred during the year on Research & Development is shown as additionto fixed assets.

i) Depreciation

Leasehold land is amortised equally over the lease period.

Trademarks are amortised over a period of ten years.

Depreciation is provided on the straight line method at the rates specified inSchedule XIV to the Companies Act, 1956, except for computer hardware.Computer hardware is depreciated over its estimate useful life of 4 years.

Depreciation on assets acquired during the year is provided for the fullaccounting year and no depreciation is charged on the assets sold/discardedduring the year, except in case of major additions and deductions exceedingrupees one crore in which case, proportionate depreciation is provided.

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

j) Retirement Benefits

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

k) Deferred Revenue Expenditure

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

The compensation payable under the Voluntary Retirement Schemes, thebenefit of which is expected to accrue in future is deferred over its paybackperiod. The compensation is generally amortised over three to five yearsdepending on the pay back period.

l) Taxes on Income

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

Deferred tax is recognized on timing differences, being the differencesbetween the taxable income and accounting income that originate in oneperiod and are capable of reversal in one or more subsequent periods.Deferred tax assets subject to the consideration of prudence are recognisedand carried forward only to the extent that there is a reasonable certaintythat sufficient future taxable income will be available against which suchdeferred tax assets can be realised.

3. Schemes of Arrangement

a) Demerger of the Consumer Products business:

The scheme of arrangement under Sections 391 and 394 of the CompaniesAct, 1956 between the Company, Godrej Consumer Products Limited (theResulting Company) and their respective shareholders, for the transfer and

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................35

vesting of the Consumer Products business of the Company, as a goingconcern, to and in the Resulting Company was approved by the Hon’bleHigh Court at Mumbai on March 14, 2001. Pursuant to the said schemeof arrangement all the assets and liabilities pertaining to the business of theConsumer Products division were transferred to and vested in the resultingCompany with effect from April 1, 2001, the appointed date. The schemehas, accordingly, been given effect to in these accounts.

Pursuant to the scheme, 5,98,28,780 equity shares of Rs. 4 each in theResulting Company have been issued and allotted to the shareholders of theCompany in the ratio of one share of the Resulting Company for every oneshare held in the Company. Simultaneously, the subscribed and paid-upequity capital of the Company has been reorganised from Rs. 5982.88 lacdivided into 5,98,28,780 equity shares of Rs.10 each fully paid up toRs. 3589.73 lac divided into 5,98,28,780 equity shares of Rs .6 each fullypaid.

The excess of the amount of capital reduction due to reorganisation of theequity share capital over the book value of assets and liabilities of theConsumer Products business transferred amounting to Rs.1375.97 lac hasbeen credited to General Reserve, in accordance with the scheme.

b) In view of the transfer of the Consumer Products business of the Companyfrom April 1, 2001, the previous year's figures to that extent are not comparable.

c) Transfer of the Vegetable oils and Processed foods manufacturing businessof Godrej Foods Ltd.:

The scheme of arrangement under Sections 391 and 394 of the CompaniesAct, 1956 between the Company, Godrej Foods Limited (the DemergedCompany) and their respective shareholders, for the vesting of themanufacturing business of Godrej Foods Limited to and in the Companywas approved by the Hon’ble High Courts at Mumbai and Jabalpur onOctober 17, 2001 and January 17, 2002 respectively. Accordingly, all theassets and liabilities pertaining to the vegetable oils and processed foodsmanufacturing business of Godrej Foods Limited together with its marketing,sales, finance and other related functions were transferred to and vested inthe Company with retrospective effect from June 30, 2001, the appointeddate. The scheme has, accordingly, been given effect to in these accounts.

Pursuant to the scheme, all the assets and liabilities of the manufacturingbusiness of Godrej Foods Limited as at June 30, 2001 have been taken overat their book values subject to adjustment made for the differences in theaccounting policies between the two companies and accounted for underthe “Pooling of Interests method”.

Pursuant to the scheme, 18,81,438 equity shares of Rs. 6 each have beenissued to the shareholders of Godrej Foods Limited in the ratio of one shareof the Company for every fifteen shares held in the Demerged Company.

Accordingly, Rs. 6433.77 lac, being the excess of the value of liabilities andthe amount of share capital issued under the scheme over the value ofassets taken over has been charged to Securities Premium Account inaccordance with the scheme.

As per the terms of the scheme of arrangement, the Company has takenover the employees of the demerged company relatable to the businessactivity taken over. The accumulated funds in respect of Provident Fund,Gratuity Fund, etc. pertaining to the transferred employees will be transferredto the Company’s Trust funds on completion of legal formalities.

Certain assets and liabilities including properties, investments and bankaccounts taken over under the scheme of arrangement are in the process ofbeing transferred in the name of the Company.

d) Figures for the current year include the figures for the manufacturingbusiness of Godrej Foods Limited from June 30, 2001. The current year’s

figures are accordingly not comparable to those of the previous year.

4. Contingent Liabilities


Rs. lac Rs. lac

a) Claims for excise duties, taxes and othermatters not acknowledged by theCompany:

i ) excise duty - Rs. 3868.18 lac

(Previous Year Rs.3615.53lac)

- net of tax: 2487.25 4815.08

ii) lease rent claimed by Mumbai

Port Trust in respect of land leasedto Foods division. The lease hasnot been renewed since 1990-Rs.1862.97 lac

-net of tax 1197.89 –

iii ) other matters - Rs.3302.37 lac

(Previous Year Rs.3313.87

lac) - net of tax: 2123.42 2033.04

b) Guarantees issued by banks, excludingguarantees issued in respect of mattersreported in

(a) above 354.67 403.33

c) Guarantees given by the Company

in respect of credit/guarantee limitssanctioned by banks to subsidiaryand other companies. 207.00 5807.00

d) Uncalled liability on partly paid

shares/ debentures 95.73 94.28

5. Capital Commitments

Estimated value of contracts remaining tobe executed on capital account, to theextent not provided 227.31 188.24

6. Secured Loans

a) Term loans from financial institutions are secured by:

- a first pari passu charge by way of equitable mortgage of the immovableproperties at Valia factory; and

- hypothecation of movable assets at Valia factory, save and exceptthose hypothecated to banks for a term loan and working capitalfacilities.

b) Term loans from banks are secured by:

- first charge by way of equitable mortgage of the immovable propertiesat Vikhroli factory,

- hypothecation of specified movable assets of the Company at Vikhroliand Valia factories,

- second charge by way of equitable mortgage of the immovableproperties at Valia factory.

c) Bank overdrafts, working capital demand loans and guarantees issued bybanks are secured by:

- hypothecation of stocks and book debts, and

- second charge by way of equitable mortgage of the immovableproperties at Wadala, Mandideep and Mysore.

Schedule 22 : Notes to Accounts (contd.)


....................................................................................................................................................................................36

7. Sundry Debtors


Rs. lac Rs. lac

Sundry Debtors include amount duefrom a company under the same

management:

Godrej Consumer Products Ltd. 439.78 –

8. Cash and Bank Balances

Balances with Scheduled Banks in DepositAccounts include deposits held by Bank assecurity against guarantees issued on behalf

of suppliers of the Company 113.41 87.159. Loans and Advances

a) Loans include an amount of Rs. 66.66 lac (Previous YearRs. Nil) due from directors and Rs. 7.10 lac (Previous yearRs. 7.98 lac) from an Officer of the Company under the contingency andhousing loan scheme of the Company. Maximum balance during the yearRs. 7.98 lac (Previous Year Rs. 8.23 lac.)

b) Loans aggregating Rs. 1282.96 lac (Previous Year Rs. 1340.04 lac) andinterest accrued thereon Rs. 357.05 lac (Previous Year Rs. 322.05 lac) aresecured by pledge of shares.

10. Liabilities

a) The liability for future payment of Voluntary Retirement Compensationaggregating Rs. 26.78 lac (Previous Year Rs. 69.06 lac) will be accountedin subsequent years as and when the same accrues and becomes due to theworkmen. This compensation is payable in future and is over and above thecompensation already paid under other schemes and included in deferredrevenue expenditure.

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

c) Sundry creditors include Rs. 66 lac (Previous Year Rs. 89.24 lac) due tosmall scale industrial undertakings. The names of small scale industrialundertakings to whom an amount is outstanding for more than 30 days areas under:

Name of Small Scale Industrial Undertakings:

Amelon Synthetics Corporation

Akshay Inorganics

Royal Plastics

Himachal Carbons Pvt. Ltd.

Jay Gaskets Pvt. Ltd.

Scientific Devices (Bombay)

Rajasthan Tin Industries

Mahawar Packaging Industries

Ashok Enterprises.

d) The above information regarding small scale industrial undertakings hasbeen determined to the extent such parties have been identified on the basisof information available wih the Company, which has been relied upon bythe Auditors.

11. Deferred Tax

a) Consequent to Accounting Standard (AS-22) “Accounting for Taxes onIncome” issued by the Institute of Chartered Accountants of India, theCompany has recorded the cumulative net deferred tax liability as at March31, 2001 amounting to Rs. 424.00 lac as a charge to General Reserve onApril 1, 2001.

b) Major components of deferred tax arising on account of timing differencesas on March 31, 2002 are:

Rs. lac

Assets

Business Losses 4226.83

Provision for retirement benefits 538.31

Provision for doubtful debts / advances 360.61

Others 36.00

5161.75

Liabilities

Depreciation 6233.62

VRS Expenses 191.31

Deferred Revenue Expenditure 83.82

6508.75

Net Deferred Tax Liability 1347.00

12. Profit & Loss Account

a) The amount of exchange loss on account of fluctuation of the rupee againstforeign currencies and the net charges for forward foreign exchange contractsadded to the carrying amount of fixed assets during the year is Rs.123.50lac (Previous year Rs.72.43 lac). The exchange difference included in theProfit & Loss Account is a loss of Rs. 219.29 lac (Previous yearRs. 198.28 lac). The exchange difference in respect of forward exchangecontracts to be recognised in subsequent accounting periods is Rs. 99.94lac (Previous year Rs. 123.96 lac).

b) Research & Development Expenditure of revenue nature charged to theProfit & Loss Account amounts to Rs.111.29 lac (Previous year Rs.185.32 lac).

c) The Company has changed its accounting policy for providing depreciationon Computer Hardware. Upto the previous year depreciation was providedon the straight line method at the rates prescribed in Schedule XIV to theCompanies Act, 1956. Effective this year, Computer Hardware has beendepreciated on straight line method over its estimated useful life of 4 years.Consequent to the change in the accounting policy, charge of depreciationfor the year is higher by Rs 87.25 lac.

d) The remuneration paid/payable to a relative of a director is in excess of thelimits prescribed under Section 314 of the Companies Act, 1956 by Rs.0.68 lac. The Company has made the necessary applicatioin to the CentralGovernment for approval of the amount in excess of the prescribed limits,which is pending approval.


Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................37


13. Segment InformationRs. lac

Information about primary business segments.Chemicals Foods Estate Others Total

RevenueExternal Sales 38930.25 9651.96 2178.42 2649.71 53410.34Inter Segment Sales 1.33 29.02 0.70 - 31.05Total Sales 38931.58 9680.98 2179.12 2649.71 53441.39Less : Inter Segment Sales (1.33) (29.02) (0.70) – (31.05)

Total Revenue 38930.25 9651.96 2178.42 2649.71 53410.34

Segment result before interest, exceptional items and tax 4612.01 1219.03 1649.40 1303.42 8783.86

Exceptional items- Loss on sale of long term investment, net of provision written back –– –– –– (624.47) (624.47)

Segment result before interest and tax 4612.01 1219.03 1649.40 678.95 8159.39

Unallocated expenses net of unallocated income (759.31)

Interest Expense (net) (3217.50)

Profit before tax 4182.58

Taxes (1073.00)

Profit after taxes 3109.58

Segment Assets 36814.24 7838.50 2664.62 19019.23 66336.59Unallocated Assets 572.00Total Assets 66908.59

Segment Liabilities 15019.21 1998.55 798.20 561.00 18376.96Unallocated Liabilities 23433.18Total Liabilities 41810.14

Total Cost incurred during the year to acquire segment assets 1179.00 17.00 1756.00 749.00 3701.00Segment depreciation 1866.28 232.72 53.02 2.02 2154.04

Information about Secondary Business SegmentsRevenue by Geographical markets

India 42961.87Outside India 10448.47Total 53410.34

Carrying Amount Total Cost incurred toof Segment assets acquire segment assets

India 66908.59 3701.00Outside India –– ––Total 66908.59 3,701.00

Notes:

1. The Company has disclosed Business Segment as the primary segment. Segments have been identified taking intoaccount the nature of the products, the different risks and returns, the organisational structure and the internalreporting system. Others include Medical diagnostic business and Financing operations.

2. The geographical segments considered for disclosure are as follows- Sales in India represent sales to customers located in India- Sales outside India represent sales to customers located outside India.


....................................................................................................................................................................................38


14. Related Party Disclosuresa) Names of related parties and description of relationship:

Parties where control existsGodrej & Boyce Mfg. Co. Ltd., the holding company.Subsidiary companies:Godrej Agrovet Ltd.Godrej Properties & Investments Ltd.Godrej Remote Services Ltd.Gold Mohur Foods & Feeds Ltd.Puran Plastics & Chemicals Ltd., ( upto January 14, 2002)Sahyadri Aerosols Ltd.Godrej International Ltd.Godrej Global Mid-East FZEGirikendra Holiday Homes & Resorts Ltd.Ensemble Holdings & Finance Ltd.Tahir Properties Ltd.

b) Related Parties with whom transactions have taken place during the year:Fellow Subsidiaries:Godrej Consumer Products Ltd.Godrej Capital Ltd.Godrej Infotech Ltd.Godrej Appliances Ltd.Godrej Foods Ltd.

Associate / Joint Venture CompaniesGodrej SaraLee Ltd.General Mills Pvt.Ltd.Godrej Photo-Me Ltd.Key Management PersonnelMr. N. B. GodrejMr. K. K. DasturMs. T. A. DubashMr. Mathew EipeMr. C. K. VaidyaMr.M.P.PusalkarRelative of Key Management personnelMs. Nisaba A. GodrejEnterprises over which key management personnel excerise significantinfluenceSwadeshi Detergents Ltd.Vora Soaps Ltd.Bahar Agrochem & Feeds Pvt. Ltd.Hybrigene Biotechnology Pvt. Ltd.

c) Transactions with Related PartiesRs. lac

Nature of Transaction

Sale of Goods 13.42 0.90 1433.07 37.84 - - 1.26 1486.49

Purchase of goods & equipment 89.11 - 1290.08 7.57 - - - 1386.76

Processing charges received - - 1786.03 - - - - 1786.03

Commission received - - 20.49 - - - - 20.49

Recovery of establishment & Other Expenses - 281.72 2015.78 261.44 - - 0.05 2558.99

Establishment & other expenses paid 107.77 64.91 54.32 28.59 - - - 255.60

Interest received - 34.40 27.31 - 3.03 - - 64.74

Interest paid - 15.67 7.65 - - - - 23.32

Finance received including loans - 800.00 1765.00 - - - - 2565.00

Finance provided including loans & equity

contributions - 2921.18 817.32 - 1.20 - - 3739.70

Guarantees & collaterals given - - 5000.00 - - - - 5000.00

Dividend income - 538.86 - 1526.61 - - - 2065.47

Dividend paid 1203.29 - - - 12.68 - - 1215.97

Provision for diminution in value of investments - 901.34 - 97.11 - - 191.32 1189.77

Balances Written Off - - - 76.61 - - - 76.61

Remuneration - - - - 242.36 1.88 - 244.24

Balance Outstanding as on March 31, 2002

Receivables 0.85 69.54 967.46 7.45 73.37 - 252.40 1371.07

Payables 5.82 - 568.80 17.08 - - - 591.70

HoldingCompany

SubsidiaryCompanies

FellowSubsidiaries

AssociateJoint VentureCompanies

KeyManagement

Personnel

Enterprise overwhich key

ManagementPersonnelexercise

significantinfluence Total

Relativeof Key

ManagementPersonnel

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................39


15. Earnings per ShareThis Year Previous Year

a. Calculation of weighted average number of equity shares

Number of shares at the beginning of the year Nos. 5,98,28,780 5,98,28,780

Shares issued pursuant to the scheme of arrangement Nos. 18,81,438 -

Number of equity shares outstanding at the end of the year Nos. 6,17,10,218 5,98,28,780

Weighted average number of equity shares outstanding during the year Nos. 6,12,39,858 5,98,28,780

b. Net profit after tax available for equity shareholders Rs. lac 3109.58 4090.14

c. Basic and diluted earnings per share of Rs.6 each

(previous year Rs.10 each) Rupees 5.08 6.84

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

This Year Previous YearRs.lac Rs.lac Rs.lac

Profit for the year as per Profit & Loss Account 2987.93 4065.40

Add: Depreciation as per accounts 2154.04 2531.39

Managerial Remuneration 225.42 58.44

Loss on sale of assets as per books 34.12 27.54

Prior period adjustments (Income) 121.65 24.74

Provision for doubtful debts / advances and

depletion in value of investments (1660.38) 2002.63

Provision for Tax 1073.00 350.00

1947.85 4994.74

4935.78 9060.14

Less: Losses of the earlier year 12219.97 18515.58

Depreciation under Section 350

of the Companies Act, 1956 2066.79 2531.39

Loss on sale of assets under

Section 349 34.12 45.46

Profit / ( loss ) on sale of investments (1174.31) 187.68

13146.57 21280.11

Net Profit / (Loss) for the purpose of Directors’ Remuneration (8210.79) (12219.97)

17. Managerial RemunerationThis PreviousYear Year

Rs. lac Rs. lac

Salaries and allowances 196.78 31.05

Contribution to Provident Fund 8.41 3.73

Estimated Monetary value of perquisites 18.58 21.81

Directors’ Fees 1.65 1.85

TOTAL 225.42 58.44

The remuneration paid/payable to the Managing Director, Whole-time Director,and the three Executive Directors is in excess of the remuneration prescribedunder Schedule XIII to the Companies Act, 1956 by Rs.95.36 lac. TheCompany has made the necessary applications to the Central Governmentfor approval of the remuneration in excess of the prescribed limits, which ispending approval.

18. Auditors’ RemunerationThis PreviousYear Year

Rs. lac Rs. lac

Audit fees (including Rs. 0.64 lac tobranch auditors, Previous Year Rs. 0.55 lac) 22.50 22.75

Tax audit fees 4.00 4.30Certification and other services 5.50 7.26

Tax Consultation and representation 7.90 5.02

Consultation and management services 10.07 7.45

Out of pocket expenses 1.42 1.24TOTAL 51.39 48.02


....................................................................................................................................................................................40

19. Sales

This Year Previous YearItem Unit Quantity Value Quantity Value

Rs.lac Rs.lac

Soaps MT – – 39937 26761.76

Detergents MT – – 3410 2823.47

Cosmetics MT – – 2000 11588.23

Fatty Acids MT 40940 10067.22 27194 7486.11

Glycerin MT 7831 4051.57 6352 3820.82

Alpha Olefin and its precursors and derivatives MT 57951 21816.04 57706 21640.22

Oils & Vanaspati MT 17635 7689.98 – –

Fruit & Vegetable Puree, Pulp & Juices MT 3254 585.00 – –

Fruit beverages and fruit based products KL 2946 820.00 – –

Medical Diagnostic Products – 515.05 – 709.52

Shares, and Securities – – – 5.70

Others 346.33 – 236.97

TOTAL 45891.19 75072.80


20. Inventories - Finished Goods

MARCH 31, 2002 MARCH 31, 2001 MARCH 31, 2000

Item Unit Quantity Value Quantity Value Quantity ValueRs. lac Rs. ’lac Rs. ’lac

Soaps MT – – 2945 1570.60 2104 1203.49

Detergents MT – – 143 57.94 451 107.86

Cosmetics MT – – 448 823.05 249 403.23

Fatty Acids MT 949 318.65 1052 323.05 1477 516.71

Glycerin MT 37 19.54 23 12.83 689 363.28

Alpha Olefin and its precursors and

derivatives MT 2066 732.63 1658 750.58 3321 1249.43

Oils & Vanaspati MT 1127 455.15 – – – –

Fruit & Vegetable Puree, Pulp & Juices MT 220 52.00 – – – –

Fruit beverages and fruit based products KL 652 149.00 – – – –

Medical Diagnostic Products – 187.27 – 353.10 – 429.83

TOTAL 1914.24 3891.15 4273.83

21. Raw Materials Consumed

This Year Previous YearUnit Quantity Value Quantity Value

Rs. lac Rs. lac

Oils & Fats MT 127812 23070.45 109646 21717.04

Chemicals and Catalysts MT 12720 2372.03 25027 6806.22

Fruit Pulp & Concentrates KL 4291 210.00 – –

Packing Materials, etc. – 2728.61 – 2351.53

TOTAL 28381.09 30874.79

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

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................41

22. Purchase of GoodsThis Year Previous Year

Unit Quantity Value Quantity ValueRs.lac Rs. lac

Soaps MT – – 31 31.23Detergents MT – – 3182 1400.48Cosmetics MT – – 1911 5047.48Fatty Acids MT 142 38.08 – –Oils & Vanaspati MT 1462 510.00 – –Medical Diagnostic Products – 224.58 – 559.08Others – 64.74 – 147.98

TOTAL 837.40 7186.25


23. Licensed, Installed and Utilised Capacity

Item Unit Licensed Installed Capacity ActualCapacity Production

This Previous This PreviousYear Year Year Year

SCHEDULED

Fatty Acids MT } 32000 84500 40397 25167Glycerin MT } 8280 10580 7909 6375Alpha Olefin and its }precursors and MT } 35000 35000 51624 50548derivatives }Soaps MT } 26381 71381 19075 45530Cosmetics MT } 1200 1850 – 432Fruit Beverages & Fruit }based products KL } 30000 – 3392 –Fruit & Vegetable Puree, } N.APulp & Juices. MT } 5000 – 1561 –Refined Oils & Vanaspati MT } 38700 – 16046 –Dietetic & Geriatic foods MT } 250 – 28U.H.T./Sweetend Flavoured Milk KL } 1800 – – –Synthetic Detergents MT } 11250 22500 11492 10357Hydrogen (Captive consumption) NM 3 } 1224000 1224000 543602 758386

}Oxygen (By-Product) NM 3 } 612000 612000 271801 379193

NOTES :

a. The Licensed capacities are not applicable in view of the exemption from licensing granted under Notification SO 477(E) dated 25th July 1991, issued under theIndustries (Development & Regulation) Act, 1951

b. Alpha Olefin and its precursors and derivatives includes Fatty Alcohols and A.O. Sulphonates.

c. Installed capacity excludes the installed capacity for manufacture of intermediates which are intended to be used for internal consumption to manufacture A.O and itsprecursors and derivatives.

d. Installed capacity for this year has been allocated location-wise between GIL & GCPL in view of the demerger of the consumer products division.


....................................................................................................................................................................................42

29. Figures for the previous year have been regrouped wherever necessary.

30. Additional Information As Required Under Part IV of Schedule VI To The Companies Act, 1956

4. Performance of Company(Amount in Rs. lac.)Turnover (Income from Operations) : 51194.66Total Expenditure (Net of Other Income) : 47133.73Profit/(Loss) before tax : 4060.93Profit/(Loss) after tax : 2987.93Earning per Share in Rs.(on an annualised basis) : 5.08Dividend rate % : 10%Generic Names of the three principalproducts/services of CompanyItem Code No. : 38.23*Product description : Fatty Acids/ FattyAlcoholsItem Code No. : 15.16*Product description : Vanaspati/Refined OilsItem Code No. : 22.02*Product description : Fruit Drinks(* represents Heading No. of the Harmonized Commodity Description and CodingSystem)

1. Registration DetailsRegistration No. : 97781State Code : 11Balance Sheet Date : 31/3/2002

2. Capital raised during the year(Amount in Rs. lac.)Public Issue : NilRights Issue : NilBonus Issue : NilPrivate Placement (Preference) : Nil

3. Position of mobilisation anddeployment of funds (Amount in Rs. lac)Total Liabilities : 54582.74Total Assets : 54582.74Sources of Funds

Paid-up Capital : 3698.30Reserves & Surplus : 2109.98Secured Loans : 15051.15Unsecured Loans : 13456.31Defered Tax Liability : 1347.00

Application of FundsNet Fixed Assets : 29099.35Investments : 14618.46Net Current Assets : 9987.09Misc. Expenditure : 877.84Accumulated Losses : Nil



24. Value of Imports on CIF Basis (includes only Imports directly made)Raw materials 12797.81 13591.89Goods for resale 166.14 363.17Stores & spares 402.01 62.39Capital goods 40.95 18.02

TOTAL 13406.91 14035.4725. Expenditure in Foreign Currency

Consultancy Fee 44.67 53.81Interest 621.36 525.60Travelling expenditure 78.32 90.50Other expenditure 299.73 145.91Expenses for Foreign Branch:- Salaries and allowance 70.77 51.25- Rent 17.01 14.73- Others 26.83 26.64TOTAL 1158.69 908.44

26. Value of Consumption of Raw Materials & Spares% %

Raw MaterialsImported (including duty content) 17939.75 63 17129.77 55Indigenous 10441.34 37 13745.02 45

28381.09 100 30874.79 100SparesImported (including duty content) 323.15 42 72.59 15Indigenous 444.12 58 415.56 85

767.27 100 488.15 10027. Dividends Remitted in Foreign Currency

(subject to deduction of tax, as applicable)Interim Dividend for Financial Year 2000-01 to142 shareholders on 10,026 shares 0.30 0.29

TOTAL 0.30 0.2928. Earnings in Foreign Exchange

Export of goods ( F.O.B. : this year Rs.9833.41 lac 10428.17 10383.66previous year Rs.9934.64 lac)Dividend 63.56 -Non-compete fee - 699.23

TOTAL 10491.73 11082.89

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................43

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2002This Year Previous Year

Rs. lac Rs. lacA. Cash Flow from Operating Activities :

Profit before tax and exceptional items 4060.93 7796.81Adjustments for :Depreciation 2154.04 2531.39Foreign exchange 103.49 117.63Loss/(Profit) on sale of investments 1174.31 (187.68)Loss on sale of fixed assets 34.12 27.54Dividend income (2090.97) (584.94)Interest income (194.86) (199.22)Interest expense 3393.91 3910.45Voluntary retirement compensation and other expenses deferred (294.26) (41.35)Deferred expenditure written off 252.36 594.83(Write in)/Provision & write off of doubtful debts (net) (1339.00) 75.74Others 111.17 (128.88)Operating profit before working capital changes 7365.24 13912.32Adjustments for :Inventories 286.59 (1115.58)Trade and other receivables 1743.49 (1129.56)Trade payables (2243.64) 5181.46Cash generated from operations 7151.68 16848.64Direct taxes paid (571.24) (526.25)Direct taxes refund received 64.51 589.92Net Cash from operating activities 6644.95 16912.31

B. Cash Flow from Investing Activities :Purchase of fixed assets (1036.86) (2304.30)Purchase of trade marks – (1830.36)Proceeds from sale of fixed assets 106.02 382.80Purchase of investments (1656.87) (885.74)Proceeds from sale of investments 1764.03 348.64Tax paid on sale of investments – (22.27)Intercorporate deposits/Loans (net) (166.96) 1182.71Interest received 158.15 612.36Dividend received 2090.97 584.94

Net Cash generated/(used) from investing activities 1258.48 (1931.22)C. Cash Flow from Financing Activities :

Capital subsidy received from Gujarat State Government – 12.25Proceeds from borrowings 26124.46 4560.92Repayments of borrowings (29636.44) (12010.98)Bank overdrafts (net) 1333.14 (655.83)Repayment of finance lease liabilities (1.63) (3.49)Interest paid (3737.14) (4099.62)Dividend paid (1765.20) (1596.88)Tax on distributed profits (182.94) –Net Cash used in financing activities (7865.75) (13793.63)

Net increase in cash and cash equivalents 37.68 1187.46Cash and cash equivalents (Opening Balance) 2266.91 1079.45Add : Cash and cash equivalents taken over from Godrej Foods Limited 447.00 –Less : Cash and cash equivalents transferred to Godrej Consumer Products Limited (1208.27) –

1505.64 1079.45Cash and cash equivalents (Closing Balance) 1543.32 2266.91

Notes :1. Cash and Cash equivalents.

Cash on hand and balances with banks 1540.33 2264.71Effect of exchange rate changes 2.99 2.20Cash and cash equivalents 1543.32 2266.91

2. The vesting of the consumer products business of Godrej Soaps Limited as a going concern to Godrej Consumer Products Limited with effect from April 1, 2001 pursuantto the scheme of arrangement and the the vesting of the manufacturing business of Godrej Foods Limited as a going concern to and in the Company with effect from June30, 2001 pursuant to the scheme of arrangement are cash neutral and do not affect the cash flow. The previous year figures are not comparable with those of the currentyear on account of the said schemes of arrangement.

3. Repayments of borrowings are net of Intercorporate borrowings aggregating Rs. 19,060.59 lac (Previous year Rs. 8,520 lac).4. To finance working capital requirements, the Company’s Bankers have sanctioned a total fund-based limit of Rs. 5800 lac. Of this, limits utilised as on March 31, 2002 is Rs.

4,216.96 lac.5. The figures of previous year have been regrouped wherever necessary.

S.K. BHATT A.B. GODREJ ChairmanMumbai, August 14, 2002 Company Secretary N.B. GODREJ Managing Director

AUDITORS’ CERTIFICATEWe have verified the above Cash Flow Statement of Godrej Industries Limited derived from the Audited Financial Statements for the year ended March 31, 2002 and found the sameto be drawn in accordance therewith and also with the requirements of Clause 32 of the listing agreements with stock exchanges.For and on behalf of KALYANIWALLA & MISTRYChartered AccountantsV.R. MEHTAPartnerMumbai, August 14, 2002


....................................................................................................................................................................................44

Schedule Rs. lac Rs. lacSOURCES OF FUNDS

1. Shareholders’ Funds(a) Share capital 1 3692.36(b) Reserves & surplus 2 24018.09

27710.452. Minority Interest 2668.113. Loan Funds

(a) Secured loans 3 25618.83(b) Unsecured loans 4 19798.20

45417.034. Deferred Tax Liability 1663.50

TOTAL 77459.09

APPLICATION OF FUNDS5. Fixed Assets 5

(a) Gross block 59847.59(b) Less: Depreciation 22566.10(c) Net block 37281.49(d) Capital work-in-progress 274.13

37555.626. Goodwill ( on Consolidation) 6927.705. Investments 6 5697.016. Current Assets, Loans and Advances

(a) Inventories 7 19145.45(b) Sundry debtors 8 16887.27(c) Cash and bank balances 9 3271.77(d) Other Current Assets 59.14(e) Loans and advances 10 14184.53

53548.16Less : Current Liabilities and Provisions(a) Liabilities 11 24634.08(b) Provisions 12 2547.52

27181.60Net Current Assets 26366.56

7. Miscellaneous Expenditure 13 912.20(To the extent not written off or adjusted)

TOTAL 77459.09Notes to Accounts 22

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2002

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

As per our Report attached Signatures to Balance Sheet and Schedules 1 to 13 and 22





Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................45

Schedule Rs. lac Rs. lacINCOMESale of Products & Services 14 127820.85Other Income 15 1944.52

129765.37EXPENDITUREMaterials consumed and purchase of goods 16 89834.47Cost of Project Management 64.53Expenses 17 26417.78Inventory change 18 681.55Interest and financial charges (net) 19 4845.74Depreciation 2981.21(Net of transfer from revaluation reserve Rs. 237.33 lac)

124825.28Less : Amount transferred to project in progress 97.72

124727.56Profit Before Tax & Exceptional items 5037.81Exceptional items 20 (673.71)Profit Before Tax 4364.11Provision for taxation- Current Tax 449.21- Deferred Tax 1129.00Profit for the year after taxation 2785.90Prior Period adjustments (net) 21 136.52Profit Before Minority Interests 2922.42Share of Minority Interest (282.44)Profit After Minority Interest 2639.98Transfer from Debenture Redemptioin Reserve 112.50Surplus brought forward 8783.21Amount available for appropriation 11535.68APPROPRIATIONS :Proposed Dividend- Interim 369.66Tax on distributied profit 54.97Transfer to General Reserve 505.00Surplus carried forward 10606.05

TOTAL 11535.68NOTES TO ACCOUNTS 22

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2002

The Schedules referred to above form an integral part of the Profit & Loss Account.

As per our Report attached Signatures to Profit & Loss Account and Schedules 14 to 22






....................................................................................................................................................................................46

Rs. lac

SCHEDULE 1 : SHARE CAPITAL

Authorised:

13,33,33,333 Equity shares of Rs.6 each 8000.0010,00,00,000 Unclassified Shares of Rs.10 each 10000.00

18000.00Issued, Subscribed and Paid Up:

6,16,11,228 Equity shares of Rs. 6 each fully paid 3696.67Less : Calls in arrears 4.31

3692.36Of the above,

(i) 4,10,59,727 shares are held by Godrej &Boyce Mfg. Co. Limited, the holding company

(ii) 3,50,00,938 shares are alloted for consideration other than cash pursuantto schemes of amalgamation / arrangement. These include18,81,438 share issued during the year pursuant to the schemeof arrangement with Godrej Foods Limited.

(iii) 1,99,42,927 shares are alloted as fully paid bonus shares by way ofcapitalisation of Securities premium account.

iv) 98,990 equity shares held by Ensemble Holding & FinanceLimited have been cancelled on consolidation.

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED MARCH 31, 2002

SCHEDULE 3 : SECURED LOANSTerm loans from financial institutions 2682.80Term loans from banks 15738.12Bank overdrafts 6447.91From State Industrial Corporation of Maharashtra Ltd. 750.00

25618.83

SCHEDULE 4 : UNSECURED LOANSFixed deposits 8011.32Intercorporate deposits 3714.77Commercial paper 1000.00Short term loans from banks 5829.66Loan from financial institutions 1020.25Sales tax deferment facility 222.20

19798.20

Rs. lacSCHEDULE 2: RESERVES AND SURPLUS

Securities Premium Account 1560.55Capital Investment Subsidy Reserve 40.01Revaluation Reserve 3775.17Capital Redemption Reserve 3125.00General Reserve 4911.31Profit and Loss Account 10606.05

24018.09

Goodwill 56.17 0.00 0.00 6.44 56.17 6.44 21.02 0.00 0.00 21.02 1.29 1.29 5.15Land 1848.51 443.73 46.92 3.24 0.00 1454.94 35.67 6.99 1.41 0.00 11.06 41.15 1413.79Building 11396.60 2859.80 928.97 487.14 24.53 9928.37 2032.07 388.18 228.33 0.41 214.42 2086.22 7842.15Plant & Machinery 40851.99 7331.17 5108.57 2128.84 103.61 40654.63 17538.05 3345.90 1662.54 52.39 2359.70 18162.00 22492.62Research Center 449.98 298.20 0.00 3.91 0.00 155.69 208.10 163.62 0.00 0.00 4.90 49.38 106.31Furniture & Fixtures 1350.11 184.22 80.31 140.88 29.67 1357.41 615.04 56.82 46.32 7.82 81.87 678.59 678.82Office & Other Equipments 928.99 113.90 230.42 75.73 29.15 1092.10 339.02 45.08 152.91 11.91 69.21 504.15 587.95Vehicles 1430.56 185.94 98.77 293.36 224.72 1412.04 495.77 49.84 28.52 115.40 179.86 538.92 873.12Trees Development Cost 448.23 0.00 0.00 15.86 0.00 464.09 93.08 0.00 0.00 0.00 30.33 123.41 340.68Technical Knowhow Fees 200.00 0.00 0.00 0.00 0.00 200.00 62.37 0.00 0.00 0.00 33.33 95.70 104.30Trademarks 6063.48 2930.36 0.00 0.00 11.23 3121.89 449.76 388.84 0.00 8.20 232.57 285.29 2836.60Total 65024.63 14347.32 6493.96 3155.40 479.08 59847.59 21889.95 4445.27 2120.03 217.15 3218.54 22566.10 37281.49

Capital Work-in-Progress 274.13

TOTAL 37555.62

1. Land includes leasehold land of Rs. 281.61 Lac which is being amortised over the period of lease.2. Buildings, Plant & Machinery and Research Centre at Vikhroli Factory were revalued on 30th June, 1992 on the basis of a Valuation Report submitted by professional valuers.3. Depreciation for the year includes Rs. 237.33 Lac being depreciation on revalued component of the fixed assets.4. Buildings includes Rs. 0.01 lac being the value of investment in shares of Co-operative Housing Society.

NET BLOCK

As on31.03.02

For theYear

DeductionsDepreciationtaken over

consequentto scheme ofarrangement

Depreciationtransferred


Up to31.03.01

As on31.03.02

DeductionsAdditionsAssetstaken over


Assetstransferredconsequent

to scheme ofarrangement

As at01.04.01

ASSETS GROSS BLOCK DEPRECIATION

As on31.03.02

(Rs. In Lacs)SCHEDULE 5 : FIXED ASSETS

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................47

LONG TERM INVESTMENTSA. TRADE INVESTMENTS

Equity Shares : Fully PaidQuotedAlacrity Housing Ltd. 10 100 - - 100 0.01Alsa Construction & Housing Ltd. 10 100 - - 100 0.01Ansal Buildwell Ltd. 10 100 - - 100 0.01Ansal Properties & Construction Ltd. 10 100 - - 100 0.01Ansal Properties & Industries Ltd. 10 100 - - 100 0.03D. S. Kulkarni Developers Ltd. 10 100 - - 100 0.01Godrej Foods Ltd. 10 3613695 - 2128831 1484864 13.64Golden Agro-tech Industries Ltd. 10 23500 - - 23500 0.02Lok Housing & Construction Ltd. 10 100 - - 100 0.01Mantri Housing & Construction Ltd. 10 100 - - 100 0.02Premier Housing & Industrial Ent. Ltd. 10 100 - - 100 0.02Radhe Developers Ltd. 10 100 - - 100 0.01Unquoted :Compass Connections Ltd. £0.25 – 10029 - 10029 97.01Gharda Chemicals Ltd. 100 114 - - 114 (a) 11.57Godrej Capital Ltd. 10 1456250 1456250 - -Godrej Photo-Me Ltd. 10 975900 - - 975900 97.59Godrej Pillsbury Ltd. 10 11566800 - 11566800 - -Godrej Sara Lee Ltd. 4 6501750 - - 6501750 5479.63KarROX Technologies Ltd. 10 – 250000 - 250000 100.50Personalitree Academy Ltd. 10 – 389269 - 389269 110.28Swadeshi Detergents Ltd. 10 209370 - - 209370 191.33Preference Shares (Fully paid)C Bay Systems Ltd. $0.10 – 495050 - 495050 465.30

B. OTHER INVESTMENTS :Equity Shares: Fully PaidQuoted :A. B. Corp. Ltd. 10 25000 - - 25000 0.03Reckitt Benckiser Ltd. 10 - 10 - 10 0.03Sandesh Ltd. 10 6300 - 6300 6.30Tata Engineering & Locomotive Co. Ltd. 10 - 9376 9376 (c) 30.00The Great Eastern Shipping Co. Ltd. 10 100 86 - 186 0.04Unitech Ltd. 10 100 - - 100 0.06United Textiles Ltd. 10 23700 - - 23700 0.02Unquoted :Bharuch Eco-Aqua Infrastructure Ltd. 10 - 440000 - 440000 17.60-partly paidGovernment SecuritiesUnquoted :10.25% Govt. Stock 2012 7120000 - - - - 71.0911.99% Govt. Stock 2009 5000000 - - - - 51.7814% Govt. Stock 2005 450000 - - - - 5.22Indira Vikas Patra 13000 - - - - 0.13Kisan Vikas Patra - - - - (c) 0.30National Plan Certificate 4000 - - - (c) 0.04National Savings Certificate 142000 - - - - 1.42Units of Mutual FundsUnquotedUnit Trust Of India 10 2520939 45764 - 2566703 383.00- Unit Scheme 1964

INVESTEE COMPANY/INSTITUTIONS FACE VALUE

(Rs.)

QTYAS ON

01.04.01

ACQUIREDDURING YEAR

SOLDDURING YEAR

QTYAS ON

31.03.02

Notes AS ON31.03.02Rs. Lac.

SCHEDULE 6 : INVESTMENTS................................................................ NUMBER...............................................................

Schedules forming part of Consolidated Accounts for the year ended March 31, 2002


....................................................................................................................................................................................48

Shares in Co-operative Societies - Fully Paid Unquoted :Eden Woods Linden House 50 25 – 25 – –Co-op Hsg. Soc. Ltd.Sachin Industrial Co-op. Soc. Ltd. 500 3 – – 3 0.02The Saraswat Co-op. Bank Ltd. 10 2,000 – – 2,000 0.20The Super Bazar Co-op.Store Ltd. 10 500 – 500 – (b) –

7134.29Less: Provision for diminution (1437.28)

in value of Investments5697.01

Aggregate Book Value of InvestmentsQuoted 50.28Unquoted 5646.73

5697.01Market Value of Quoted Investments 21.64

NOTES :(a) The said shares are under the process of registration.(b) Under the scheme of arrangement, investment in The Super Bazar Co-op. Store Ltd. was allocated to Godrej Consumer Products Ltd.(c) Assets acquired on merger of Foods Division.

INVESTEE COMPANY/INSTITUTIONS FACE VALUE

(Rs.)

QTYAS ON

01.04.01

ACQUIREDDURING YEAR

SOLDDURING YEAR

QTYAS ON

31.03.02

Notes AS ON31.03.02Rs. Lac.

................................................................ NUMBER...............................................................

SCHEDULE 7: INVENTORIES(at lower of cost and net realisable value)Stores and spares 527.37Raw materials 8849.43Work-in-progress 1198.36Finished goods 4184.08Projects-in-progress 4386.21

19145.45

SCHEDULE 8: SUNDRY DEBTORS(Unsecured)Debts outstanding over six monthsConsidered good 978.70Considered doubtful 1084.74

2063.44Other debts, considered good 15908.57

17972.01Less: Provision for doubtful debts 1084.74

16887.27

SCHEDULE 9: CASH AND BANK BALANCESCash and cheques on hand 212.59Balances with scheduled banks- on current accounts 2211.90- on deposit accounts 847.27

3271.77

SCHEDULE 10: LOANS AND ADVANCES

Rs. lacIntercorporate deposits- Associate companies 546.40- Others 377.38Deposits and balances with- Customs & excise authorities 804.56- Others 998.13Advance payment of taxes (net of Provision for tax) 646.24

14184.53

SCHEDULE 11 : CURRENT LIABILITIESAcceptances 271.05Sundry creditors 14706.65Other liabilities 1676.77Advances from customers 5544.47Sundry deposits 1924.38Interest accrued but not due 432.33Unclaimed dividend 78.42

24634.08

SCHEDULE 12 : PROVISIONSProposed dividend 369.66Provision for retirement benefits 2177.86

2547.52

SCHEDULE 13: MISCELLANEOUS EXPENDITURE( To the extent not written off or adjusted)Deferred revenue expenditure - Gratuity 51.00 - Voluntary retirement compensation 612.46 - Deferred Revenue Exp 248.74

912.20

(Unsecured and considered good unlessotherwise stated)Loans 9129.52Advances recoverable in cash or in kind or for value to bereceived (net of provision for doubtful advances Rs. 785.47 lac) 1682.30

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................49

SCHEDULE 14: SALE OF PRODUCTS AND SERVICESRs. lac Rs. lac

Sales (gross) 125526.99Less: Excise duty 3934.44Sales (net) 121592.55Processing charges 2736.82Storage charges 103.27Export incentives 304.70Licence fees and service charges 2024.92Consultancy & Other charges 52.52Project / Development Management Fees 1006.07

127820.85

SCHEDULE 15: OTHER INCOMEInterest : - Government Securities 13.65 - Income tax refund 4.80 - Others 29.19Dividend - from long term trade investments 1527.56 - from other investments 25.50Lease rentals and lease management fees 8.30Miscellaneous income 335.52

1944.52

SCHEDULE 16 : MATERIALS CONSUMED AND PURCHASE OF GOODSRaw materials consumed :Stocks at the commencement of the year 12,467.01Less : Stocks transferred to GCPL consequent to the schemeof arrangement 1,689.62

10777.39Add : Purchases (net) 86015.64

96793.03Less : Stocks as at the close of the year 11206.01Raw Material consumed during the year 85587.02Purchase of goods for resale 4247.44

89834.47

SCHEDULE 17: EXPENSESSalaries, wages and allowances 7169.75Contribution to provident fund and other funds 445.77Employee welfare expenses 619.15Stores and spares consumed 1050.05Power and fuel 4128.41Processing charges 2873.70Rent 365.61Rates and taxes 487.22Repairs and maintenence- Machinery 681.08- Buildings 231.78- Other assets 51.06Insurance 180.74Freight 2109.73Commission 1910.94Discount 80.11Advertisement and publicity 284.54Sales promotion 264.98Selling and distribution expenses 445.71Bad debts written off 321.38Provisions for doubtful debts and advances written back (282.07)

Loss on sale of fixed assets 16.73Miscellaneous expenses 2981.41

26417.78

SCHEDULE 18 : INVENTORY CHANGEStocks at the commencement of the year

Finished goods 6674.59Work-in-progress 1939.18Shares,securities,etc. 47.72

8661.49Less: Stocks transfered to GCPL

consequent to scheme of arrangementFinished goods 2451.58Work-in-progress 274.08

2725.66Less: Stocks at the close of the year :

Finished goods 4055.92Work-in-progress 1198.36Shares, Securities, etc. –

5254.28 Decrease in Inventory 681.55

SCHEDULE 19 : INTEREST AND FINANCIAL CHARGES (Net)Interest paid- on debentures and fixed loans 1880.60- on bank overdrafts 806.05- other interest 2211.98

4898.63Less: Interest received- on loans & deposits 82.27- on customer balances, etc 64.27- projects and landlords 617.77- others 26.99

791.30Net Interest 4107.33Brokerage and other financial charges 738.41

4845.74

SCHEDULES FORMING PART OF THE CONSOLIDATED .. (contd.)

SCHEDULE 20 : EXCEPTIONAL ITEMSLoss on Sale of long term investments 1174.31Provision for depletion in valueof long term investments written back (500.60)

673.71

SCHEDULE 21 : PRIOR PERIOD ADJUSTMENTSIncome -tax 31.50Depreciation 7.03Excess provision for expenses (net) 97.99

136.52


....................................................................................................................................................................................50

NOTES TO ACCOUNTS:

1. Basis of Consolidation :The consolidated financial statements relate to Godrej Industries Limited(the Company) and its majority owned Subsidiary Companies.

(a) Principles of consolidation :a) The financial statements of the Company and its subsidiary companies

have been combined on a line-by-line basis by adding together likeitems of assets, liabilities, income and expense. The intra-groupbalances and intra-group transactions and unrealized profits or lossesare fully eliminated.

b) The financial statements of the subsidiary companies used in theconsolidation are drawn upto the same reporting date as of theCompany i.e. year ended March 31, 2002.

c) Investments in Associate Companies have been accounted as per theAccounting Standard – 13 “Accounting of Investment” issued by theInstitute of Chartered Accountants of India.

d) The excess of cost to the Company of its investments in the subsidiarycompanies over its share of the equity of the subsidiary companies,at the dates on which the investments in the subsidiary companiesare made, is recognised as ‘goodwill’ being an asset in the consolidatedfinancial statements. Alternatively, where the share of equity in thesubsidiary companies as on the date of investment, is in excess ofcost of investment of the Company, it is recognised as ‘capitalreserve’ and shown under the head ‘Reserves and Surplus’ in theconsolidated financial statements.

e) Minority interest in the net assets of consolidated subsidiaries consistsof the amount of equity attributable to the minority shareholders atthe dates on which investments are made by the Company in thesubsidiary companies and further movements in their share in theequity, subsequent to the dates of investments as stated above.

(b) Information on subsidiary companies:The following subsidiary companies are considered in the consolidatedfinancial statements :Name of the company Proportion of ownership interest as on

March 31, 2002

i) Godrej Agrovet Ltd. 57.69 %ii) Goldmohur Foods & Feeds Ltd. 57.69 % (a)iii) Godrej Properties & Investments Ltd.. 82.85 %iv) Tahir Properties Ltd. 87.05 % (b)v) Girikandra Holiday Homes & Resorts Ltd. 82.02 % (c)vi) Godrej Remote Services Ltd. 99.99 %vii) Ensemble Holdings & Finance Ltd. 99.95 %viii) Sahyadri Aerosol Ltd. 100.00 %ix) Godrej International Ltd., UK 100.00 %x) Godrej Mid-East FZE, UAE 100.00 % (d)a) Goldmohur Foods & Feeds Ltd., is 100% subsidiary of Godrej Agrovet

Ltd.,b) Tahir Properties Ltd. is a 75.49% subsidiary of Godrej Properties and

Investments Ltd.c) Girikandra Holiday Homes and Resorts Ltd., is a 99% subsidiary of

Godrej Properties & Investments Ltd.,d) Godrej Mid-East FZE, UAE is a 100% subsidiary of Godrej International

Ltd.,(c) The current year being the first year for which consolidated financial

statements have been prepared, the previous year figures are not compiled.2. Significant Accounting Policies :

a) Accounting ConventionThe financial statements are prepared under the historical cost convention,on accrual basis, in accordance with the generally accepted accountingprinciples in India, the Accounting Standards issued by the Institute ofChartered Accountants of India and the provisions of the Companies Act,1956.

b) Fixed AssetsFixed Assets are stated at cost or as revalued as the case may be, less accumulateddepreciation. Cost includes all expenses related to acquisition and installation, ofthe concerned asset. Exchange differences arising on account of repayment andyear end translation of foreign currency liabilities relating to acquisition of fixedassets are adjusted to the carrying cost of the respective assets. Preoperativeexpenses for major projects are also capitalized wherever appropriate.

c) Borrowing CostsBorrowing costs that are directly attributable to the acquisition/ constructionof the underlying fixed assets are capitalised as a part of the respectiveasset.

d) InvestmentsLong 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 investmentis ascertained with reference to its market value, the investee’s assets andresults and the expected cash flows from the investment.Current investments are stated at lower of cost and net realisable value.

e) InventoriesInventories are valued at lower of cost and net realisable value. Cost iscomputed on weighted average basis and is net of modvat. Finished goodsand work-in-progress include cost of conversion and other costs incurred inbringing the inventories to their present location and condition. Obsolescenceand other anticipated losses are provided for wherever considered necessary.Construction Work-in-progress is valued at cost.

f) Foreign Exchange TransactionsTransactions in foreign currency are recorded at the exchange rates prevailingon the date of the transaction. Assets and liabilities related to foreigncurrency transactions, remaining unsettled at the year end, are stated at thecontracted rates, when covered under forward foreign exchange contractsand at year-end rates in other cases. The premium payable on forwardforeign exchange contracts is amortised over the period of the contract.Exchange gains/losses are recognised in the Profit and Loss Account exceptin respect of liabilities incurred to acquire fixed assets in which case they areadjusted to the carrying amount of such fixed assets.

g) Revenue RecognitionSales are recognised where goods are supplied, and are recorded net ofreturns, trade discounts, rebates, sales taxes and excise duty.Income from processing operations is recognised on completion ofproduction/dispatch of the goods, as per the terms of contract.Export incentives are accounted on accrual basis and include the estimatedvalue of duty free import entitlement under the Advance Licence BenefitScheme and export incentives receivable under the Duty Entitlement PassBook Scheme and the Duty Drawback Scheme.Dividend income is recognised when the right to receive the same isestablished.Interest income is recognised on a time proportion basis.

h) Research and Development ExpenditureRevenue expenditure on Research & Development is charged to the Profitand Loss Account of the year in which it is incurred. Capital expenditureincurred during the year on Research & Development is shown as additionto fixed assets.

i) DepreciationLeasehold land is amortised equally over the lease period.Trademarks are amortised over a period of four to fifteen years dependingon the expected utilisation.Depreciation is provided on the straight line method at the rates specified inSchedule XIV to the Companies Act, 1956, except in the some subsidiarycompanies the impact of which is not material. Computer hardware isdepreciated over its estimated useful life of 4 years.Depreciation on assets acquired during the year is provided for the fullaccounting year and no depreciation is charged on the assets sold/discardedduring the year, except in case of major additions and deductions exceedingrupees one crore in which case, proportionate depreciation is provided.Depreciation on the revalued component is provided on the straight linemethod based on the balance useful life of the assets as certified by thevaluers. Such depreciation is withdrawn from Revaluation Reserve andcredited to Profit and Loss Account.

j) Retirement BenefitsRetirement benefits to employees comprise payments under approvedprovident fund plans, leave encashment and gratuity to eligible employees.Payments under approved provident fund plans are charged to revenue. Theliability in respect of future payment of gratuity to retiring employees andleave encashment benefit on retirement is provided on the basis of anactuarial valuation at the end of each financial year.

k) Deferred Revenue ExpenditureThe incremental gratuity liability for the service period prior to March 31,

SCHEDULES FORMING PART OF THE CONSOLIDATED BALANCE SHEET AND CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THEYEAR ENDED ON MARCH 31, 2002

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................51

1994 arising as a result of the amendment to The Payment of Gratuity Act,1972 has been deferred and is being amortised equally over a period of tenfinancial years.The compensation payable under the Voluntary Retirement Schemes, thebenefit of which is expected to accrue in future is deferred over its paybackperiod. The compensation is generally amortised over three to five yearsdepending on the pay back period.Miscellaneous expenditure is amortised as under.� Preliminary Expenses and Share issue expenses are amortised in ten

equal instalments.� Technical know-how fees paid for training of personnel are being

amortised over a period of 3 years.l) Taxes on Income

Current tax is the amount of tax payable on the taxable income for the yeardetermined in accordance with the provisions of the Income Tax Act, 1961.Deferred tax is recognised on timing differences, being the differencesbetween the taxable income and accounting income that originate in oneperiod and are capable of reversal in one or more subsequent periods.Deferred tax assets subject to the consideration of prudence are recognisedand carried forward only to the extent that there is a reasonable certaintythat sufficient future taxable income will be available against which suchdeferred tax assets can be realised.

3. Schemes of Arrangement :a) Demerger of the Consumer Products business:

The scheme of arrangement under Sections 391 and 394 of the CompaniesAct, 1956 between the Company, Godrej Consumer Products Limited (theResulting Company) and their respective shareholders, for the transfer andvesting of the Consumer Products business of the Company, as a goingconcern, to and in the Resulting Company was approved by the Hon’bleHigh Court at Mumbai on March 14, 2001. Pursuant to the said schemeof arrangement all the assets and liabilities pertaining to the business of theConsumer Products division were transferred to and vested in the ResultingCompany with effect from April 1, 2001, the appointed date. The schemehas, accordingly, been given effect to in these accounts.Pursuant to the scheme, 5,98,28,780 equity shares of Rs. 4 each in theResulting Company have been issued and allotted to the shareholders of theCompany in the ratio of one share of the Resulting Company for every oneshare held in the Company. Simultaneously, the subscribed and paid-upequity capital of the Company has been reorganised from Rs. 5,982.88 lacdivided into 5,98,28,780 equity shares of Rs.10 each fully paid up toRs. 3,589.73 lac divided into 5,98,28,780 equity shares of Rs.6 each fullypaid.The excess of the amount of capital reduction due to reorganisation of theequity share capital over the book value of assets and liabilities of theConsumer Products business transferred amounting to Rs.1375.97 lac hasbeen credited to General Reserve, in accordance with the scheme.

b) Merger of the Vegetable oils and Processed foods manufacturing business:The scheme of arrangement under Sections 391 and 394 of the CompaniesAct, 1956 between the Company, Godrej Foods Limited (the DemergedCompany) and their respective shareholders, for the vesting of themanufacturing business of Godrej Foods Limited to and in the Companywas approved by the Hon’ble High Courts at Mumbai and Jabalpur onOctober 17, 2001 and January 17, 2002 respectively. Accordingly, all theassets and liabilities pertaining to the vegetable oils and processed foodsmanufacturing business of Godrej Foods Limited together with its marketing,sales, finance and other related functions were transferred to and vested inthe Company with retrospective effect from June 30, 2001, the appointeddate. The scheme has, accordingly, been given effect to in these accounts.Pursuant to the scheme, all the assets and liabilities of the manufacturingbusiness of Godrej Foods Limited as at June 30, 2001 have been taken overat their book values subject to adjustment made for the differences in theaccounting policies between the two companies and accounted for underthe “Pooling of Interests method”.Pursuant to the scheme, 18,81,438 equity shares of Rs.6 each have beenissued to the shareholders of Godrej Foods Limited in the ratio of one shareof the Company for every fifteen shares held in the Demerged Company.Accordingly, Rs. 6,433.77 lac, being the excess of the value of liabilities andthe amount of share capital issued under the scheme over the value ofassets taken over has been charged to Securities Premium Account inaccordance with the scheme.As per the terms of the scheme of arrangement, the Company has takenover the employees of the demerged company relatable to the business

activity taken over. The accumulated funds in respect of Provident Fund,Gratuity Fund, etc. pertaining to the transferred employees will be transferredto the Company’s Trust Funds on completion of legal formalities.Certain assets and liabilities including properties, investments and bankaccounts taken over under the scheme of arrangement are in the process ofbeing transferred in the name of the Company.

4. Contingent Liabilities:Rs. lac

a) Claims for excise duties , taxes and other mattersnot acknowledged by the Company - net of tax 6063.78

b) Guarantees issued by Banks 466.73c) Guarantees issued to banks on behalf of subsidiaries 4007.00d) Uncalled Liability on partly paid shares 95.73e) Consideration Payable for acquisition of shares in

subsidiary company 76.005. Deferred Tax :

Consequent to Accounting Standard (AS-22) "Accounting for Taxes on Income”issued by the Institute of Chartered Accountants of India, the Company hasrecorded a cumulative deferred tax liability as at March 31, 2001 amounting toRs. 788 lac as a charge to general reserve on April 1, 2001.Major components of Deferred Tax arising on account of timing differences as atMarch 31, 2002 are :

Assets Rs. lacBusiness Losses 4226.83Provision for retirement benefits 543.25Provision for doubtful debts/ advances 437.61Others 145.57

5353.36LiabilitiesDepreciation 6741.73VRS Expenses 191.31Deferred Revenue Expenditure 83.82

7016.86

Net Deferred Tax Liability 1663.50

6 Related Party Disclosuresa) Names of related parties and description of relationship:

Parties where control existsGodrej & Boyce Mfg Co. Ltd, the holding company.

b) Related Parties with whom transactions have taken place duringthe year.Fellow Subsidiaries:Godrej Consumer Products Ltd.Godrej Capital Ltd.Godrej Infotech Ltd.Godrej Appliances Ltd.Godrej Foods Ltd.Godrej (Singapore) Pte. Ltd.Associate / Joint Venture CompaniesGodrej SaraLee Ltd.General Mills Pvt.Ltd.Godrej Photo-Me Ltd.Key Management PersonnelMr. N.B. GodrejMr. K.K. DasturMs. T.A. DubashMr. Mathew EipeMr. C.K. VaidyaMr. M.P. PusalkarRelative of Key Management PersonnelMs Nisaba A. GodrejEnterprises over which key management personnel excerisesignificant influenceSwadeshi Detergents Ltd.Vora Soaps Ltd.Bahar Agrochem & Feeds Pvt. Ltd.Hybrigene Biotechnology Pvt. Ltd.


....................................................................................................................................................................................52

7. Earning Per Share:- This Year

a. Calculation of weighted average number of equity sharesNumber of shares at thebeginning of the year Nos. 5,98,28,780Shares issued pursuant to the scheme ofarrangement Nos. 18,81,438Less : Shares of the Company held by Ensemble

Holdings & Finance Ltd. a subsidiarycompany Nos. (98,990)

Number of equity shares outstanding at theend of the year Nos. 6,16,11,228Weighted average number of equity sharesoutstanding during the year Nos. 6,11,65,616

b. Net profit after tax available for equityshareholders Rs. lac 2639.98

c. Basic and diluted earnings per share ofRs. 6 each Rupees 4.32

6. Related Party Disclosure

c) Transactions with Related Parties(Rs. lac)

Nature of Transaction Holding Fellow Associated/ Key Relative of Enterprises Total

Company Subsidiaries joint Venture Management Key Over which

Companies Personnel Management Key Mgmt.Personnel Personnel

Exercise

Significant

influence

Sale of Goods 13.42 1433.07 37.84 – – 1.26 1485.59

Purchase of goods & equipment 106.63 1,290.22 7.57 – – – 1404.42

Processing charges received – 1,786.03 – – – – 1786.03

Commission received – 20.49 – – – – 20.49

Recovery of establishment & Other Expenses – 2017.16 261.44 0.27 – 0.05 2278.92

Establishment & other exps paid 111.18 64.34 28.59 – – – 204.11

Interest received – 20.73 – – – 3.03 23.76

Interest paid – 7.78 – – – – 7.78

Finance received including loans – 1785.00 – – – – 1785.00

Finance provided including loans & equity

contributions – 1995.29 514.36 – – 1.20 2510.85

Guarantees & collaterals given – – – – – – –

Dividend income – 0.76 – – – 140.68 141.44

Dividend paid 1203.29 – – 12.68 – 5.58 1221.55

Provision for diminution in value of investments – – – – – – –

Balances Written Off – 65.00 – – – – 65.00

Managerial remuneration – 65.00 – 242.36 1.88 289.26 598.50

Balance Outstanding as on March 31, 2002

Receivables 23.85 967.46 7.45 73.37 – 252.40 1324.53

Payables 7.23 568.83 17.08 – – – 593.14

Annual Report 2001-2002....................................................................................................................................................................................

....................................................................................................................................................................................53

8 Segment InformationRs. ‘lacs

Information about primary business segments.

Chemicals Animal Feed Foods Estate and Property Others TotalDevelopment

Revenue

External Sales 38930.25 55825.00 9651.96 2981.33 22321.96 129710.50

Intersegment Sales 1.33 29.02 723.15 9.87 763.37

Total Sales 38931.58 55825.00 9680.98 3704.48 22331.83 130473.87

Less : Inter Segment Sales (1.33) (29.02) (723.15) (9.87) (763.37)

Total Revenue 38930.25 55825.00 9651.96 2981.33 22321.96 129710.50

Segment result before interest, exceptional items and tax 4612.01 3701.05 1219.03 2397.81 (476.92) 11452.98

Exceptional items (673.71) (673.71)

Segment result after exceptional items, before interest and tax 4612.01 3701.05 1219.03 2397.81 (1150.63) 10779.27

Unallocated expenses net of unallocated income (1432.87)

Interest Expense (net) (4845.74)

Profit before tax 4500.66

Taxes (1578.21)

Profit after taxes 2922.45

Segment Assets 36814.24 16105.00 7838.50 18276.86 18254.19 97288.79

Unallocated Assets 7351.90

Total Assets 104640.69

Segment Liabilities 15019.21 6718.00 1998.55 13545.10 13881.73 51162.59

Unallocated Liabilities 25767.65

Total Liabilities 76930.24

Total Cost incurred during the year to acquire segment assets 1179.00 485.00 17.00 26.00 1448.00 3155.00

Segment depreciation 1866.28 467.00 232.72 85.00 330.21 2981.21

Information about Secondary Business Segments

Revenue by Geographical markets

India 112203.86

Outside India 17506.65

Total 129710.51

Carrying Amount of Total Cost incurred to

Segment assets acquire segment assets

India 102749.09 3143.77

Outside India 1891.60 11.23

Total 104640.69 3155.00

Notes :

1. The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products, the different risks andreturns, the organisational structure and the internal reporting system. Others include Medical diagnostic business, Trading and Financing operations.

2. The geographical segments considered for disclosure are as follows

- Sales in India represent sales to customers located in India.

- Sales outside India represent sales to customers located outside India.

9. Managerial Remuneration of the Parent Company

This Year

Rs. lac

Salaries and allowances 196.78

Contribution to Provident Fund 8.41

Estimated Monetary value of perquisities 18.58

Directors' Fees 1.65

Total 225.42

The remuneration paid/payable to the Managing Director, Whole-time Director, andthe three Executive Directors is in excess of the remuneration prescribed underSchedule XIII to the Companies Act, 1956 by Rs. 95.36 lac. The Company hasmade the necessary application to the Central Government for approval of theremuneration in excess of the prescribed limits, which is pending approval.

10. The remuneration paid/payable to relative of a Director is in excess of the limitsprescribed under Section 314 of the Companies Act, 1956 by Rs. 0.68 Lac. TheCompany has made the necessary application to the Central Government forapproval of the amount in excess of the prescribed limits, which is pendingapproval.


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11. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2002This year

Rs. lacA. Cash Flow from Operating Activities :

Profit before tax and exceptional items 4364.11

Adjustments for :Depreciation 2981.21Foreign exchange 136.79Loss on sale of investments 1174.31Loss on sale of fixed assets 16.73Dividend income (1553.06)Interest income (838.94)Interest expense 5637.04Voluntary retirement compensation and other expenses deferred (261.08)Deferred expenditure written off 265.34Write in of doubtful debts (net) (461.29)Others 163.03Operating profit before working capital changes 11624.19

Adjustments for :Inventories (206.15)Trade and other receivables 9405.71Trade payables (9449.41)Cash generated from operations 11374.34

Direct taxes paid (914.94)Direct taxes refund received 64.51

Net Cash from operating activities 10523.91

B. Cash Flow from Investing Activities :Purchase of fixed assets (2539.61)Proceeds from sale of fixed assets 208.32Purchase of investments (2034.12)Proceeds from sale of investments 1754.69Intercorporate deposits/Loans (net) (5.46)Interest received 804.37Dividend received 1553.06

Net Cash used in investing activities (258.75)

C. Cash Flow from Financing Activities :Proceeds from borrowings 38823.23Repayments of borrowings (40875.57)Bank overdrafts (net) (4.42)Repayment of finance lease liabilities (1.63)Interest paid (6017.09)Dividend paid (2010.32)Tax on distributed profits (282.78)

Net Cash used in financing activities (10368.58)

Net decrease in cash and cash equivalents (103.42)Cash and cash equivalents (Opening Balance) 4132.44Add : Cash and cash equivalents taken over from Godrej Foods Limited 447.00Add : Cash and cash equivalents taken over from Godrej Plant Biotech Limited 4.02Less : Cash and cash equivalents transferred to Godrej Consumer Products Limited (1208.27)

3375.19

Cash and cash equivalents (Closing Balance) 3271.77Notes :1. Cash and Cash equivalents.

Cash on hand and balances with banks 3268.78Effect of exchange rate changes 2.99Cash and cash equivalents 3271.77

2. Repayments of borrowings are net of Intercorporate borrowings aggregating Rs. 25,034.41 lac3. The vesting of the consumer products business of Godrej Soaps Limited as a going concern to Godrej Consumer Products Limited with effect form April 1, 2001 pursuant to the scheme

of arrangement, the vesting of the manufacturing business of Godrej Foods Limited as a going concern to and in Godrej Industries Limited with effect from June 30, 2001 and the vestingof Godrej Plant Biotech Limited as a going concern to Godrej Agrovet w.e.f. January 1, 2002 pursuant to the scheme of arrangement are cash neutral and do not affect the cash flow.

Annual Report 2001-2002....................................................................................................................................................................................

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STATEMENT REGARDING SUBSIDIARY COMPANIES PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956

1. Name of the Company Godrej Godrej Tahir Sahyadri Godrej Ensemble Godrej Godrej Gold Mohur Girikandra HolidayAgrovet Properties & Properties Aerosols Remote Holdings International Global Foods & Homes & ResortsLimited Investments Limited Limited Services & Finance Limited MidEast Feeds Ltd. Pvt Ltd..

Limited Limited Limited FZE

2. The Company’s interest in thesubsidiaries as on March 31, 2002(a) Number of Equity Shares 4106956 5073965 25 3202 2779562 3770160 1320000 (See Note (See Note (See Note

7 below) 8 below) 9 below)(b) Face Value 10 10 100 100 10 10 £1 (US$1.59)(c) Extent of Holding 57.69% 78.73% 24.51% 100% 99.61% 99.89% 100%

3. Net aggregate Profit/(Loss) of thesubsidiary company so far it Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs US$ _ _ _concerns the members of the CompanyA. For the financial year ended on March 31, 2002 i. Not dealt with in the books of Account of the Company 118.60 321.26 Nil -0.23 -179.91 -209.39 70331 _ _ _ ii. Dealt with in the books of Account of the Company 159.40 Nil Nil Nil Nil Nil Nil _ _ _

B. For the subsidiary company’s previous financial years since it became a subsidiary i. Not dealt with in the books of Account of the Company 1183.71 428.46 Nil 59.43 -1.31 -435.07 1370191.00 _ _ _ ii. Dealt with in the books of Account of the Company 1065.66 571.97 Nil 265.14 Nil Nil 736605.00 _ _ _

NOTES :1 The Financial Year of all subsidiary companies have ended on March 31, 2002. In case of Goldmohur Foods & Feeds Ltd. (GFFL) the accounts are made for 15 month's period

ending March 31,2002

2 All the Equity Shares are fully paid-up except 990 shares in Sahyadri Aerosols Ltd. which are partly paid-up to the extent of Rs. 80 per share, 25 shares in Tahir Properties Ltd.which are partly paid-up to the extent of Rs. 20 per share.

3 2 Equity Shares of Rs. 100 each fully paid-up and 75 Equity Shares of Rs. 100 each (Rs. 20 paid-up) in Tahir Properties Ltd. (representing 75.49% of the Share Capital) are held byGodrej Properties & Investments Ltd. Godrej Properties & Investment Ltd. and the Company hold 75 and 25 Preference Class A shares of Rs. 100 each (Rs. 70 paid-up) out of thetotal of 100 Preference Class A shares in Tahir Properties Ltd. Godrej Properties & Investments Ltd. and the Company hold 2,93,712 and 1,28,688 Preference Class B shares ofRs. 100 each fully paid-up respectively in Tahir Properties Ltd. out of the total of 4,22,400 Preference Class B shares in Tahir Properties Ltd.

4 2,65,680 Equity Shares of Rs.10 each fully paid up in Godrej Properties & Investments Ltd., are held by Ensemble Holdings & Finance Ltd. which is a subsidiary of the Company.

5 4,000 Equity Shares of Rs.10 each in Ensemble Holdings & Finance Ltd., are held by Godrej Agrovet Ltd., a subsidiary of the Company.

6 Sahyadri Aerosols Ltd. is undergoing members’ voluntary winding-up with effect from July 17, 1997.

7 2 Ordinary Shares of US$ 2,50,000 each fully paid up in Godrej Global MidEast FZE. (representing 100% of the Share Capital) are held by Godrej International Ltd., a subsidiary ofthe Company.

8 2158170 equity shares of the face value of Rs.10 each fully paid in Gold Mohur Foods & Feeds Ltd. (representing 100% of the share capital) is held by Godrej Agrovet Ltd,asubsidiary of the Company.

9 99 equity shares of the face value of Rs.1000 each partly paid to the extent of Rs. 200/- in Girikandra Holiday Homes and Resorts Pvt. Ltd. is held by Godrej Properties &

Investments Ltd. (representing 99% of the share capital), a subsidiary of the Company.

10 1484884 equity shares of face value of Rs. 1/- each fully paid-up in Godrej Foods Ltd. , 4 equity shares of Rs. 10/- each fully paid-up in Hybrigene Biotechnology Pvt. Ltd. , 10883equity shares of Rs. 10 each fully paid up in Godrej Remote Services Ltd. ‘ and 4800 equity shares of Rs. 10/- each fully paid up in Godrej Photo Me Ltd. are held by EnsembleHolding & Finance Ltd., which is a subsidiary of the Company.

A. B. GODREJ Chairman

N. B. GODREJ Managing Director

S.K.BHATTMumbai, August 14, 2002 Company Secretary

Documents

GODREJ INDUSTRIES LIMITED · 2009-11-19 · focused FMCG company, with effect from April 1, 2002 and the residual entity which retained the Chemicals, Estate, medical diagnostics,